1. The World Leader in Serving Science
GAAP/Non-GAAP Reconciliation
and Financial Package
April 22, 2015
Page 6 of this document contains
segment data for historical
periods that has been recast to
reflect the creation of the Life
Sciences Solutions segment and
the transfer of businesses
between segments for Thermo
Fisher Scientific.
2. 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 restructuring and other costs/income and
amortization of acquisition-related intangible assets. Adjusted EPS also excludes certain other gains and losses, tax provisions/benefits related to the
previous items, benefits from tax credit carryforwards, the impact of significant tax audits or events and 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 excludes operating cash flows from discontinued operations and deducts net capital expenditures. 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 5 to 20 years. 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, benefits from tax credit carryforwards and the impact of significant tax audits or events (such
as the one-time effect on deferred tax balances of enacted changes in tax rates), which are either isolated or cannot be expected to occur again with any
regularity or 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, significant litigation-related matters, curtailments of pension plans, the early retirement of debt and
discontinued operations.
We also report free cash flow, which is operating cash flow, net of 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 herein 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.
3. Table of Contents
Page
1. Annual Reconciliation of GAAP to Adjusted P&L (2009 - 2014)
3. Quarterly Reconciliation of GAAP to Adjusted P&L (2014 - 2015)
5. Free Cash Flow, Return on Invested Capital and Return on Equity (2009 - 2015)
6. Recast Segment Data - Thermo Fisher Stand-alone (2012 - 2013)
7. Segment Data (2014 - 2015)
8. Balance Sheet and Leverage Ratios (2012 - 2015)
9. Debt (2012 - 2015)
10. Publicly Announced Acquisitions/Divestitures (2012 - 2015)
11. Capital Deployment (2012 - 2015)
12. Fiscal Calendar (2014 - 2015)
4. Page 1 of 12
(Dollars in millions except EPS)
GAAP Consolidated Revenues
Revenue Growth
Acquisitions net of Divestitures
Currency Translation
Organic Revenue Growth
Pro Forma Revenue Growth (a)
Acquisitions net of Divestitures
Currency Translation
Pro Forma Organic Revenue Growth (a)
$ % $ % $ % $ % $ % $ %
GAAP Gross Margin 3,854.5 39.6% 4,261.5 41.0% 4,794.0 41.5% 5,295.5 42.3% 5,529.1 42.2% 7,492.0 44.4%
Cost of Revenues Charges (b) 6.7 0.1% 13.2 0.1% 72.6 0.6% 55.6 0.4% 28.6 0.2% 327.6 1.9%
Amortization of Acquisition-related Intangible Assets 118.8 1.2% 129.2 1.3% 175.9 1.5% 221.4 1.8% 222.0 1.8% 427.0 2.5%
Adjusted Gross Margin 3,980.0 40.9% 4,403.9 42.4% 5,042.5 43.6% 5,572.5 44.5% 5,779.7 44.2% 8,246.6 48.8%
GAAP SG&A Expense 2,575.8 26.4% 2,728.8 26.3% 3,106.5 26.9% 3,354.9 26.8% 3,446.3 26.3% 4,896.1 29.0%
Selling, General and Administrative Costs (c) (1.5) 0.0% (3.0) 0.0% (61.5) -0.5% (12.5) -0.1% (73.5) -0.6% (130.7) -0.8%
Amortization of Acquisition-related Intangible Assets (461.1) -4.7% (425.5) -4.2% (472.0) -4.1% (526.2) -4.2% (541.1) -4.1% (904.7) -5.3%
Adjusted SG&A Expense 2,113.2 21.7% 2,300.3 22.1% 2,573.0 22.3% 2,816.2 22.5% 2,831.7 21.6% 3,860.7 22.9%
GAAP R&D Expense 243.5 2.5% 284.4 2.7% 340.2 2.9% 376.4 3.0% 395.5 3.0% 691.1 4.1%
GAAP Operating Income 976.3 10.0% 1,188.1 11.4% 1,250.8 10.8% 1,482.1 11.8% 1,609.6 12.3% 2,503.0 14.8%
Cost of Revenues Charges (b) 6.7 0.1% 13.2 0.1% 72.6 0.6% 55.6 0.4% 28.6 0.2% 327.6 1.9%
Selling, General and Administrative Costs (c) 1.5 0.0% 3.0 0.0% 61.5 0.5% 12.5 0.1% 73.5 0.6% 130.7 0.8%
Restructuring and Other Costs (Income), Net (d) 58.9 0.6% 60.2 0.6% 96.5 0.9% 82.1 0.7% 77.7 0.6% (598.2) -3.5%
Amortization of Acquisition-related Intangible Assets 579.9 6.0% 554.7 5.4% 647.9 5.6% 747.6 6.0% 763.1 5.8% 1,331.7 7.9%
Adjusted Operating Income 1,623.3 16.7% 1,819.2 17.5% 2,129.3 18.4% 2,379.9 19.0% 2,552.5 19.5% 3,694.8 21.9%
Add back Depreciation Expense 179.4 1.8% 185.0 1.8% 211.7 1.9% 236.1 1.9% 236.8 1.8% 353.1 2.1%
Adjusted EBITDA 1,802.7 18.5% 2,004.2 19.3% 2,341.0 20.3% 2,616.0 20.9% 2,789.3 21.3% 4,047.9 24.0%
(a) Revenue growth in 2011 and 2012 is calculated on a pro forma basis which includes the pre-acquisition results of 1) Dionex from the beginning of the second quarter 2011 and for the comparable prior year quarters; and 2) the pre-acquisition results of Phadia from the beginning
of the third quarter 2011 and for the comparable prior year quarters.
(b) The excluded items from cost of revenues include inventory charges, principally for the sale of inventories revalued at the date of acquisition and accelerated depreciation on assets to be abandoned as a result of real estate consolidation; and in 2014, charges to conform the
accounting policies of Life Technologies with the company's accounting policies.
(c) The excluded items from selling, general and administrative costs include significant acquisition transaction costs and revisions of estimated contingent consideration for recent acquisitions; in 2009, 2010 and 2012 gains due to settlement of certain product liability-related
matters; in 2011, 2012, 2013 and 2014, charges associated with product liability litigation; and in 2014, charges to conform the accounting policies of Life Technologies with the company's accounting policies.
(d) Restructuring and other costs/income consist principally of severance and retention costs; abandoned facility and other expenses of real estate consolidation; material impairments; and significant gains and losses on litigation-related matters, curtailments/settlements of pension
plans, and the sale of businesses, product lines and property.
(Annual P&L Reconciliation continued on the next page)
4%
2014
16,889.6
29%
25%
0%
-4%
3%
4%3% **
2% -2%
3%
1%
7%
1%
2009
9,741.0
2011
11,558.8
0%
11%-4% 7%
2%
-2%
** Results do not sum due to rounding.
Annual Reconciliation of GAAP to Adjusted P&L
13,090.3
5%
2013
2%
0%
3%4%
8%
2012
12,509.9
2010
10,393.1
5. Page 2 of 12
(Dollars in millions except EPS) 20142009 2011
Annual Reconciliation of GAAP to Adjusted P&L
201320122010
$ % $ % $ % $ % $ % $ %
GAAP Tax Provision 46.7 5.5% 101.6 9.3% 109.4 9.7% 11.0 0.9% 40.4 3.1% 191.7 9.2%
Tax Effect of Adjusted Items (f) 239.8 13.3% 242.6 10.4% 269.1 9.4% 351.7 15.8% 300.7 11.6% 283.3 5.3%
Adjusted Tax Provision 286.5 18.8% 344.2 19.7% 378.5 19.1% 362.7 16.7% 341.1 14.7% 475.0 14.5%
GAAP Net Income 850.3 1,035.6 1,329.9 1,177.9 1,273.3 1,894.4
Cost of Revenues Charges (b) 6.7 13.2 72.6 55.6 28.6 327.6
Selling, General and Administrative Costs (c) 1.5 3.0 61.5 12.5 73.5 130.7
Restructuring and Other Costs (Income), Net (d) 58.9 60.2 96.5 82.1 77.7 (598.2)
Amortization of Acquisition-related Intangible Assets 579.9 554.7 647.9 747.6 763.1 1,331.7
Other Expense (Income) (e) 20.4 28.3 (31.8) 5.3 60.4 (3.1)
Income Tax Benefit (f) (239.8) (242.6) (269.1) (351.7) (300.7) (283.3)
(Income) Loss from Discontinued Operations, Net of Tax (43.2) (49.5) (306.5) 80.5 5.8 1.1
Adjusted Net Income 1,234.7 1,402.9 1,601.0 1,809.8 1,981.7 2,800.9
GAAP Diluted EPS 2.01 2.53 3.46 3.21 3.48 4.71
GAAP Diluted EPS Growth -11% 26% 37% -7% 8% 35%
Cost of Revenues Charges, Net of Tax (b) 0.01 0.02 0.13 0.11 0.05 0.55
Selling, General and Administrative Costs, Net of Tax (c) 0.00 0.01 0.13 0.03 0.16 0.24
Restructuring and Other Costs, Net of Tax (d) 0.10 0.10 0.16 0.15 0.16 (0.79)
Amortization of Acquisition-related Intangible Assets, Net of Tax 0.88 0.89 1.12 1.36 1.45 2.27
Other Expense (Income), Net of Tax (e) 0.03 0.04 (0.05) 0.00 0.09 (0.01)
Income Tax (Benefit) Provision (f) (0.01) (0.04) 0.01 (0.14) 0.01 (0.01)
(Income) Loss from Discontinued Operations, Net of Tax (0.10) (0.12) (0.80) 0.22 0.02 0.00
Adjusted Diluted EPS 2.92 3.43 4.16 4.94 5.42 6.96
Adjusted Diluted EPS Growth -3% 17% 21% 19% 10% 28%
(e) The excluded items from other expense/income, net, represent amortization of acquisition-related intangible assets and restructuring charges of the company's equity-method investments; in 2009, 2010 and 2012, losses on the extinguishment of debt; in 2009 and 2014 losses
from other-than-temporary declines in fair market value of investments; in 2010, 2011 and 2013, costs to obtain short-term financing commitments related to acquisitions; in 2011, 2013 and 2014, gains on available-for-sale and equity investments; and in 2013, realized gains on
available-for-sale investments irrevocably contributed to the company's U.K. pension plans.
(f) The excluded items from income tax benefit/provision include the tax benefits/provisions related to the above excluded items, benefit from tax credit carryforwards, the impact of the resolution of significant tax audits and the tax benefit from adjusting the company's deferred tax
balances as a result of tax rate changes.
(a) Revenue growth in 2011 and 2012 is calculated on a pro forma basis which includes the pre-acquisition results of 1) Dionex from the beginning of the second quarter 2011 and for the comparable prior year quarters; and 2) the pre-acquisition results of Phadia from the beginning
of the third quarter 2011 and for the comparable prior year quarters.
(b) The excluded items from cost of revenues include inventory charges, principally for the sale of inventories revalued at the date of acquisition and accelerated depreciation on assets to be abandoned as a result of real estate consolidation; and in 2014, charges to conform the
accounting policies of Life Technologies with the company's accounting policies.
(c) The excluded items from selling, general and administrative costs include significant acquisition transaction costs and revisions of estimated contingent consideration for recent acquisitions; in 2009, 2010 and 2012 gains due to settlement of certain product liability-related
matters; in 2011, 2012, 2013 and 2014, charges associated with product liability litigation; and in 2014, charges to conform the accounting policies of Life Technologies with the company's accounting policies.
(d) Restructuring and other costs/income consist principally of severance and retention costs; abandoned facility and other expenses of real estate consolidation; material impairments; and significant gains and losses on litigation-related matters, curtailments/settlements of pension
plans, and the sale of businesses, product lines and property.
6. Page 3 of 12
(Dollars in millions except EPS)
Revenue
Life Sciences Solutions Segment
Analytical Instruments Segment
Specialty Diagnostics Segment
Laboratory Products and Services Segment
Eliminations
Total Revenue
Reported Revenue Growth
Acquisitions net of Divestitures
Currency Translation
Organic Revenue Growth
$ % $ % $ % $ % $ %
GAAP Cost of Goods Sold 2,283.5 58.5% 2,475.4 57.3% 2,237.8 53.6% 2,400.9 53.4% 2,096.3 53.5%
Cost of Revenues Charges (a) (168.5) -4.3% (156.1) -3.6% (2.1) -0.1% (0.9) 0.0% (0.6) 0.0%
Amortization of Acquisition-related Intangible Assets (91.7) -2.4% (114.4) -2.7% (110.8) -2.6% (110.1) -2.4% (107.7) -2.8%
Adjusted Cost of Goods Sold 2,023.3 51.8% 2,204.9 51.0% 2,124.9 50.9% 2,289.9 51.0% 1,988.0 50.7%
GAAP Gross Margin 1,620.0 41.5% 1,846.5 42.7% 1,933.6 46.4% 2,091.9 46.6% 1,822.5 46.5%
Cost of Revenues Charges (a) 168.5 4.3% 156.1 3.6% 2.1 0.1% 0.9 0.0% 0.6 0.0%
Amortization of Acquisition-related Intangible Assets 91.7 2.4% 114.4 2.7% 110.8 2.6% 110.1 2.4% 107.7 2.8%
Adjusted Gross Margin 1,880.2 48.2% 2,117.0 49.0% 2,046.5 49.1% 2,202.9 49.0% 1,930.8 49.3%
GAAP SG&A Expense 1,177.0 30.2% 1,253.8 29.0% 1,228.7 29.5% 1,236.6 27.5% 1,137.4 29.0%
Selling, General and Administrative Costs, Net (b) (82.8) -2.1% (14.9) -0.3% (20.3) -0.5% (12.7) -0.3% (7.6) -0.2%
Amortization of Acquisition-related Intangible Assets (194.2) -5.0% (229.2) -5.3% (252.1) -6.1% (229.2) -5.1% (221.4) -5.6%
Adjusted SG&A Expense 900.0 23.1% 1,009.7 23.4% 956.3 22.9% 994.7 22.1% 908.4 23.2%
GAAP R&D Expense 149.7 3.8% 183.7 4.3% 175.2 4.2% 182.5 4.1% 165.8 4.2%
GAAP Operating Income 875.5 22.4% 348.1 8.1% 640.3 15.3% 639.1 14.2% 487.3 12.4%
Cost of Revenues Charges (a) 168.5 4.3% 156.1 3.6% 2.1 0.1% 0.9 0.0% 0.6 0.0%
Selling, General and Administrative Costs (b) 82.8 2.1% 14.9 0.3% 20.3 0.5% 12.7 0.3% 7.6 0.2%
Restructuring and Other Costs (Income), Net (c) (582.2) -14.9% 60.9 1.4% (110.6) -2.7% 33.7 0.7% 32.0 0.9%
Amortization of Acquisition-related Intangible Assets 285.9 7.4% 343.6 8.0% 362.9 8.7% 339.3 7.6% 329.1 8.4%
Adjusted Operating Income 830.5 21.3% 923.6 21.4% 915.0 21.9% 1,025.7 22.8% 856.6 21.9%
Add back Depreciation Expense 79.7 2.0% 91.2 2.1% 92.8 2.3% 89.4 2.0% 87.2 2.2%
Adjusted EBITDA 910.2 23.3% 1,014.8 23.5% 1,007.8 24.2% 1,115.1 24.8% 943.8 24.1%
1,682.91,628.7
863.0811.8
902.4786.5
1,185.2
Q3-14
Quarterly Reconciliation of GAAP to Adjusted P&L
2% **
(Quarterly P&L Reconciliation continued on the next page)
1,019.9
727.4
785.2
1,513.4
5%
-6%
** Results do not sum due to rounding.
27%
1%
6% **
20%
0%
(a) The excluded items from cost of revenues include inventory charges, principally for the sale of inventories revalued at the date of acquisition, and accelerated depreciation on assets to be abandoned as a result of real estate consolidation; and in Q1
2014, charges to conform the accounting policies of Life Technologies with the company's accounting policies.
(b) The excluded items from selling, general and administrative costs include significant acquisition transaction costs and revisions of estimated contingent consideration for recent acquisitions; in Q3 2014, charges associated with product liability litigation;
in Q1 2014, charges to conform the accounting policies of Life Technologies with the company's accounting policies; and in Q1 2015, accelerated depreciation on information systems to be abandoned due to integration synergies.
(c) Restructuring and other costs/income consist principally of severance and retention costs; abandoned facility and other expenses of real estate consolidation; material impairments; significant gains and losses on litigation-related matters,
curtailments/settlements of pension plans; and the sale of businesses, product lines and property.
26%
-3%
4%5%2%
0%
27%
Q1-15
3,918.8
0%
(127.1)
Q1-14
22% 31%
Q2-14 Q4-14
835.5
813.7
(106.1)
1,590.5
1,071.9
855.1
1,699.4
1,103.1
769.9
3,903.5
793.4
(129.1) (140.7)(127.5)
30%33%
4,492.84,171.44,321.9
7. Page 4 of 12
(Dollars in millions except EPS) Q3-14
Quarterly Reconciliation of GAAP to Adjusted P&L
Q1-15Q1-14 Q2-14 Q4-14
$ % $ % $ % $ % $ %
GAAP Tax Provision 231.3 29.9% (42.0) -17.8% 69.3 12.9% (66.9) -12.5% (3.1) -0.8%
Tax Effect of Adjusted Items (e) (115.0) -13.9% 158.0 32.1% 50.7 1.9% 189.6 25.7% 109.8 14.8%
Adjusted Tax Provision 116.3 16.0% 116.0 14.3% 120.0 14.8% 122.7 13.2% 106.7 14.0%
GAAP Net Income 543.1 278.5 471.6 601.2 385.1
Cost of Revenues Charges (a) 168.5 156.1 2.1 0.9 0.6
Selling, General and Administrative Costs (b) 82.8 14.9 20.3 12.7 7.6
Restructuring and Other Costs (Income), Net (c) (582.2) 60.9 (110.6) 33.7 32.0
Amortization of Acquisition-related Intangible Assets, Net of Tax 285.9 343.6 362.9 339.3 329.1
Other (Income) Expense, Net (d) (2.3) (0.9) (3.6) 3.7 11.0
Income Tax (Benefit) Provision (e) 115.0 (158.0) (50.7) (189.6) (109.8)
Loss from Discontinued Operations, Net of Tax 0.0 0.0 (1.7) 2.8 0.0
Adjusted Net Income 610.8 695.1 690.3 804.7 655.6
GAAP Diluted EPS 1.36 0.69 1.17 1.49 0.96
GAAP Diluted EPS Growth 46% -9% 36% 62% -29%
Cost of Revenues Charges, Net of Tax (a) 0.34 0.29 (0.04) (0.03) 0.00
Selling, General and Administrative Costs, Net of Tax (b) 0.17 0.02 0.02 0.02 0.01
Restructuring and Other Costs (Income), Net of Tax (c) (0.92) 0.09 0.00 0.02 0.05
Amortization of Acquisition-related Intangible Assets, Net of Tax 0.59 0.64 0.57 0.47 0.59
Other (Income) Expense, Net of Tax (d) 0.00 0.00 (0.01) 0.00 0.02
Income Tax (Benefit) Provision (e) (0.01) (0.01) 0.00 0.01 0.00
Loss from Discontinued Operations, Net of Tax 0.00 0.00 0.00 0.01 0.00
Adjusted Diluted EPS 1.53 1.72 1.71 1.99 1.63
Adjusted Diluted EPS Growth 12% 30% 32% 39% 7%
Reconciliation of Free Cash Flow
GAAP Net Cash Provided by Operating Activities 101.2 888.7 676.0 953.7 80.0
Net Cash Used in Discontinued Operations 1.0 0.9 1.6 0.8 2.1
Purchases of Property, Plant, and Equipment (104.7) (75.5) (90.7) (156.7) (97.2)
Proceeds from Sale of Property, Plant and Equipment 3.4 9.3 7.0 29.6 0.6
Free Cash Flow 0.9 823.4 593.9 827.4 (14.5)
(b) The excluded items from selling, general and administrative costs include significant acquisition transaction costs and revisions of estimated contingent consideration for recent acquisitions; in Q3 2014, charges associated with product liability litigation;
in Q1 2014, charges to conform the accounting policies of Life Technologies with the company's accounting policies; and in Q1 2015, accelerated depreciation on information systems to be abandoned due to integration synergies.
(c) Restructuring and other costs/income consist principally of severance and retention costs; abandoned facility and other expenses of real estate consolidation; material impairments; significant gains and losses on litigation-related matters,
curtailments/settlements of pension plans; and the sale of businesses, product lines and property.
(d) The excluded items from other (income) expense, net, represent amortization of acquisition-related intangible assets and restructuring charges of the company's equity-method investments; gains and losses on equity and available-for-sale investments;
in Q1 2014, charges related to amortization of fees paid to obtain bridge financing commitments related to the Life Technologies acquisition; and in Q1 2015, costs associated with entering interest rate swap arrangements and a loss on the early
extinguishment of debt.
(e) The excluded items from income tax benefit/provision include the tax benefits/provisions related to the above excluded items, benefit from tax credit carryforwards, the impact of the resolution of significant tax audits and the tax benefit from adjusting the
company's deferred tax balances as a result of tax rate changes.
(a) The excluded items from cost of revenues include inventory charges, principally for the sale of inventories revalued at the date of acquisition, and accelerated depreciation on assets to be abandoned as a result of real estate consolidation; and in Q1
2014, charges to conform the accounting policies of Life Technologies with the company's accounting policies.
8. Page 5 of 12
(Dollars in millions) 2009 2010 2011 2012 2013 2014 Q1 2015
Reconciliation of Free Cash Flow
GAAP Net Cash Provided by Operating Activities 1,659.2 1,497.8 1,691.0 2,039.5 2,010.7 2,619.6 80.0
Net Cash (Provided by) Used in Discontinued Operations (61.8) (47.7) (14.4) 28.4 4.9 4.3 2.1
Purchases of Property, Plant, and Equipment (197.5) (245.4) (260.9) (315.1) (282.4) (427.6) (97.2)
Proceeds from Sale of Property, Plant and Equipment 13.3 10.2 8.2 12.8 20.7 49.3 0.6
Free Cash Flow 1,413.2 1,214.9 1,423.9 1,765.6 1,753.9 2,245.6 (14.5)
GAAP Return on Invested Capital (ROIC) 5.6% 6.5% 7.1% 5.5% 5.9% 5.9% 5.0%
Cost of Revenues Charges (a) 0.0% 0.1% 0.4% 0.3% 0.1% 1.0% 0.5%
Selling, General and Administrative Costs (b) 0.0% 0.0% 0.3% 0.1% 0.3% 0.4% 0.2%
Restructuring and Other Costs (Income), Net (c) 0.4% 0.4% 0.5% 0.4% 0.4% -1.8% 0.0%
Amortization of Acquisition-related Intangible Assets 3.8% 3.5% 3.5% 3.5% 3.5% 4.1% 3.9%
Net Interest Expense 0.7% 0.4% 0.7% 0.8% 1.0% 0.8% 0.8%
Other Expense (Income) (d) 0.1% 0.2% -0.2% 0.0% 0.3% 0.0% 0.0%
Income Tax Benefit (e) -1.7% -1.6% -1.4% -1.7% -1.4% -0.9% -1.5%
(Income) Loss from Discontinued Operations, Net of Tax -0.2% -0.2% -1.7% 0.4% 0.0% 0.0% 0.0%
Adjusted ROIC 8.7% 9.3% 9.2% 9.3% 10.1% 9.5% 8.9%
GAAP Return on Equity (ROE) 5.6% 6.7% 8.7% 7.7% 7.9% 9.5% 8.5%
Cost of Revenues Charges (a) 0.0% 0.1% 0.5% 0.4% 0.2% 1.7% 0.8%
Selling, General and Administrative Costs (b) 0.0% 0.0% 0.4% 0.1% 0.5% 0.7% 0.3%
Restructuring and Other Costs (Income), Net (c) 0.4% 0.4% 0.7% 0.6% 0.5% -3.0% 0.1%
Amortization of Acquisition-related Intangible Assets 3.8% 3.6% 4.2% 4.9% 4.8% 6.7% 6.7%
Net Interest Expense 0.6% 0.5% 0.7% 1.2% 1.2% 1.3% 1.3%
Other Expense (Income) (d) 0.1% 0.2% -0.2% 0.0% 0.4% 0.0% 0.0%
Income Tax Benefit (e) -1.5% -1.6% -1.8% -2.3% -1.9% -1.4% -2.5%
(Income) Loss from Discontinued Operations, Net of Tax -0.2% -0.3% -2.0% 0.5% 0.0% 0.0% 0.0%
Adjusted ROE 8.8% 9.6% 11.2% 13.1% 13.6% 15.5% 15.2%
Definitions:
(e) The excluded items from income tax benefit include the tax benefits/provisions related to the above excluded items, benefit from tax credit carryforwards, the impact of the resolution of significant tax audits and the tax benefit from adjusting
the company's deferred tax balances as a result of tax rate changes.
Invested capital is equity plus short-term and long-term debt and net liabilities of discontinued operations less cash and short-term investments.
Adjusted return on invested capital is annual adjusted net income excluding net interest expense, net of tax benefit therefrom, divided by trailing five quarters average invested capital.
Adjusted return on equity is annual adjusted net income excluding net interest expense, net of tax benefit therefrom, divided by trailing five quarters average shareholders equity.
Free Cash Flow, Return on Invested Capital and Return on Equity
(a) The excluded items from cost of revenues include inventory charges, principally for the sale of inventories revalued at the date of acquisition and accelerated depreciation on assets to be abandoned as a result of real estate consolidation;
and in 2014, charges to conform the accounting policies of Life Technologies with the company's accounting policies.
(b) The excluded items from selling, general and administrative costs include significant acquisition transaction costs and revisions of estimated contingent consideration for recent acquisitions; in 2009, 2010 and 2012 gains due to settlement of
certain product liability-related matters; in 2011, 2012, 2013 and 2014, charges associated with product liability litigation; in 2014, charges to conform the accounting policies of Life Technologies with the company's accounting policies; and in
2015, accelerated depreciation on information systems to be abandoned due to integration synergies.
(c) Restructuring and other costs/income consist principally of severance and retention costs; abandoned facility and other expenses of real estate consolidation; material impairments; and significant gains and losses on litigation-related
matters, curtailments/settlements of pension plans, and the sale of businesses, product lines and property.
(d) The excluded items from other expense/income, net, represent amortization of acquisition-related intangible assets and restructuring charges of the company's equity-method investments; in 2009, 2010, 2012 and Q1 2015, losses on the
extinguishment of debt; in 2009 and 2014 losses from other-than-temporary declines in fair market value of investments; in 2010, 2011 and 2013, costs to obtain short-term financing commitments related to acquisitions; in 2011, 2013 and 2014,
gains on available-for-sale and equity investments; in 2013, realized gains on available-for-sale investments irrevocably contributed to the company's U.K. pension plans; and in Q1 2015, costs associated with entering interest rate swap
arrangements.
9. Page 6 of 12
(Dollars in millions) Q1-12 Q2-12 Q3-12 Q4-12 2012 Q1-13 Q2-13 Q3-13 Q4-13 2013
Life Sciences Solutions Segment
Revenues 161.4 165.5 164.2 167.7 658.8 172.6 181.0 167.2 191.7 712.5
Total Revenue Growth 6% 7% 8% 12% 8% 7% 9% 2% 14% 8%
Acquisitions net of Divestitures 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
Currency Translation -1% -2% -3% -1% -2% -1% -1% 0% 0% 0%
Organic Revenue Growth 7% 9% 11% 13% 10% 8% 10% 1% † 14% 8%
Operating Income 41.6 36.8 37.3 39.1 154.8 41.0 43.5 38.9 46.3 169.7
Operating Income Margin 25.8% 22.2% 22.7% 23.3% 23.5% 23.8% 24.0% 23.3% 24.2% 23.8%
Operating Income Margin Expansion +5.4 pts -0.3 pts -0.7 pts +2.3 pts +1.7 pts -2.0 pts +1.8 pts +0.6 pts +0.9 pts +0.3 pts
Analytical Instruments Segment
Revenues 755.9 745.6 760.8 852.4 3,114.7 740.1 761.0 765.4 887.7 3,154.2
Total Revenue Growth -1% 1% -2% 2% 1% 4% 1%
Acquisitions net of Divestitures 0% 0% 1% 0% 0% 0% 0%
Currency Translation -3% -1% -1% -1% -1% 0% -1%
Organic Revenue Growth 2% 1% † -1% † 2% † 1% † 4% 2%
Pro Forma Revenue Growth* 7% 1% 2%
Acquisitions net of Divestitures 0% 0% 0%
Currency Translation -1% -4% -2%
Pro Forma Organic Revenue Growth* 8% 4% † 4%
Operating Income 128.5 119.4 138.1 168.6 554.6 120.5 125.3 131.0 181.9 558.7
Operating Income Margin 17.0% 16.0% 18.2% 19.8% 17.8% 16.3% 16.5% 17.1% 20.5% 17.7%
Operating Income Margin Expansion +1.6 pts -0.7 pts -0.2 pts -1.4 pts -0.4 pts -0.7 pts +0.5 pts -1.1 pts +0.7 pts -0.1 pts
Specialty Diagnostics Segment
Revenues 732.3 731.7 706.3 791.2 2,961.5 805.6 793.6 759.3 833.2 3,191.7
Total Revenue Growth 12% 10% 8% 8% 5% 8%
Acquisitions net of Divestitures 7% 7% 7% 6% 0% 5%
Currency Translation -1% -1% 0% 0% 0% 0%
Organic Revenue Growth 6% 4% 2% † 1% † 5% 3%
Pro Forma Revenue Growth** 1% 1% 2% 4%
Acquisitions net of Divestitures 2% 2% 1% 3%
Currency Translation -1% -4% -3% -2%
Pro Forma Organic Revenue Growth** 1% † 3% 4% 4% †
Operating Income 184.9 199.1 169.5 204.6 758.1 222.9 216.3 204.2 220.3 863.7
Operating Income Margin 25.2% 27.2% 24.0% 25.9% 25.6% 27.7% 27.3% 26.9% 26.4% 27.1%
Operating Income Margin Expansion +0.8 pts +4.0 pts -0.7 pts +1.8 pts +1.5 pts +2.5 pts +0.1 pts +2.9 pts +0.5 pts +1.5 pts
Laboratory Products & Services Segment
Revenues 1,488.1 1,547.3 1,537.7 1,529.7 6,102.8 1,556.3 1,595.0 1,594.7 1,652.8 6,398.8
Total Revenue Growth 4% 2% 5% 4% 4% 5% 3% 4% 8% 5%
Acquisitions net of Divestitures 0% 1% 2% 2% 1% 2% 1% 0% 0% 1%
Currency Translation -1% -3% -2% 0% -2% 0% 0% 0% 0% 0%
Organic Revenue Growth 4% † 4% 5% 3% † 4% † 3% 3% † 4% 8% 4%
Operating Income 221.5 234.8 230.8 225.3 912.4 230.7 238.7 245.3 245.7 960.4
Operating Income Margin 14.9% 15.2% 15.0% 14.7% 15.0% 14.8% 15.0% 15.4% 14.9% 15.0%
Operating Income Margin Expansion -0.2 pts +0.2 pts +0.2 pts +0.1 pts +0.1 pts -0.1 pts -0.2 pts +0.4 pts +0.2 pts +0.0 pts
Note: Recast segment data reflects Thermo Fisher stand-alone and does not include Life Technologies. The results of the Life Sciences Solutions Segment reflected above include, among other businesses, the sera and media, gene
modulation and magnetic beads businesses which were sold on March 21, 2014. Revenues of these businesses in 2013 were approximately $250 million.
Recast Segment Data - Thermo Fisher Stand-alone
* Pro forma results include the pre-acquisition results of Dionex from the beginning of the second quarter 2011.
** Pro forma results include the pre-acquisition results of Phadia from the beginning of the third quarter 2011.
† Results do not sum due to rounding.
Note: All prior period segment data has been adjusted to reflect the Q1 2014 transfer of businesses between segments. These transfers did not change our consolidated results.
10. Page 7 of 12
(Dollars in millions) Q1-14 Q2-14 Q3-14 Q4-14 2014 Q1-15
Life Sciences Solutions Segment
Revenues 835.5 1,103.1 1,071.9 1,185.2 4,195.7 1,019.9
Pro Forma Revenue Growth* 0% -1% -2% -2% -1% -8%
Acquisitions net of Divestitures 0% -4% -4% -5% -3% -2%
Currency Translation 0% 1% 0% -4% -1% -7%
Pro Forma Organic Revenue Growth* 1% † 3% † 3% † 7% 4% † 2% †
Operating Income 244.6 299.1 306.3 364.9 1,214.9 298.7
Operating Income Margin 29.3% 27.1% 28.6% 30.8% 29.0% 29.3%
Operating Income Margin Expansion +5.5 pts +3.1 pts +5.3 pts +6.6 pts +5.2 pts +0.0 pts
Analytical Instruments Segment
Revenues 769.9 793.4 786.5 902.4 3,252.2 727.4
Total Revenue Growth 4% 4% 3% 2% 3% -6%
Acquisitions net of Divestitures 0% 1% 0% 1% 0% 0%
Currency Translation 0% 1% 0% -4% -1% -6%
Organic Revenue Growth 4% 3% † 3% 5% 4% 1% †
Operating Income 130.9 130.4 137.8 182.0 581.1 121.7
Operating Income Margin 17.0% 16.4% 17.5% 20.2% 17.9% 16.7%
Operating Income Margin Expansion +0.7 pts -0.1 pts +0.4 pts -0.3 pts +0.2 pts -0.3 pts
Specialty Diagnostics Segment
Revenues 813.7 855.1 811.8 863.0 3,343.6 785.2
Total Revenue Growth 1% 8% 7% 4% 5% -4%
Acquisitions net of Divestitures 0% 0% 0% 0% 0% 0%
Currency Translation 0% 1% 0% -3% 0% -6%
Organic Revenue Growth 0% † 6% † 6% † 7% 5% 3% †
Operating Income 221.0 236.4 224.3 234.3 916.0 214.1
Operating Income Margin 27.2% 27.6% 27.6% 27.1% 27.4% 27.3%
Operating Income Margin Expansion -0.5 pts +0.3 pts +0.7 pts +0.7 pts +0.3 pts +0.1 pts
Laboratory Products & Services Segment
Revenues 1,590.5 1,699.4 1,628.7 1,682.9 6,601.5 1,513.4
Total Revenue Growth 2% 7% 2% 2% 3% -5%
Acquisitions net of Divestitures 0% 0% -2% -4% -2% -3%
Currency Translation 0% 1% 0% -2% 0% -5%
Organic Revenue Growth 2% 6% 4% 8% 5% 3%
Operating Income 234.0 257.7 246.6 244.5 982.8 222.1
Operating Income Margin 14.7% 15.2% 15.1% 14.5% 14.9% 14.7%
Operating Income Margin Expansion -0.1 pts +0.2 pts -0.3 pts -0.4 pts -0.1 pts -0.0 pts
† Results do not sum due to rounding.
Segment Data
* Life Technologies was acquired on February 3, 2014. Pro forma results include the pre-acquisition results of Life Technologies from the beginning of the first quarter 2013.
11. Page 8 of 12
(Dollars in millions)
12/31/2012 12/31/2013 12/31/2014 3/28/2015
Assets
Current Assets:
Cash and cash equivalents 805.6 5,826.0 1,343.5 864.6
Short-term investments 4.3 4.5 8.5 8.4
Accounts receivable, net 1,804.9 1,942.3 2,473.6 2,538.0
Inventories 1,443.3 1,494.5 1,859.5 1,898.8
Other current assets 776.7 613.4 854.7 870.7
Total Current Assets 4,834.8 9,880.7 6,539.8 6,180.5
Property, Plant and Equipment, Net 1,726.4 1,767.4 2,426.5 2,384.2
Acquisition-related Intangible Assets 7,804.5 7,071.3 14,110.1 13,622.5
Other Assets 604.4 640.7 933.1 937.2
Goodwill 12,474.5 12,503.3 18,842.6 18,732.9
27,444.6 31,863.4 42,852.1 41,857.3
Liabilities and Shareholders' Equity
Current Liabilities:
Short-term obligations and current maturities of long-term obligations 93.1 987.7 2,212.4 4,160.6
Accounts payable 641.4 691.5 820.7 827.6
Other current liabilities 1,358.8 1,446.8 2,316.7 1,872.8
Total Current Liabilities 2,093.3 3,126.0 5,349.8 6,861.0
Other Long-term Liabilities 2,855.4 2,381.7 4,602.6 4,385.3
Long-term Obligations 7,031.2 9,499.6 12,351.6 10,696.2
Total Shareholders' Equity 15,464.7 16,856.1 20,548.1 19,914.8
27,444.6 31,863.4 42,852.1 41,857.3
Leverage Ratios
Total Debt / TTM EBITDA 2.9X 4.0X 3.5X 3.9X
Effect of Adjusted Items -0.2X -0.2X 0.1X -0.3X
Total Debt / Adjusted TTM EBITDA(a)
2.7X 3.8X 3.6X 3.6X
Net Debt
(b)
/ TTM EBITDA 2.6X 1.8X 3.2X 3.6X
Effect of Adjusted Items -0.2X -0.1X 0.1X -0.2X
Net Debt
(b)
/ Adjusted TTM EBITDA
(a)
2.4X 1.7X 3.3X 3.4X
(a)
Adjusted EBITDA equals adjusted operating income excluding depreciation.
(b)
Net debt is short-term and long-term debt less cash and short-term investments.
Balance Sheet and Leverage Ratios
13. Page 10 of 12
Revenue
(a)
($ millions)
2015
February 4 Advanced Scientifics, Inc. Acquisition LSS $80
2014
August 15 Cole-Parmer Divestiture LPS $232
March 21
Select businesses within
Biosciences portfolio
Divestiture LSS $250
February 3 Life Technologies Acquisition LSS $3,872
2013
2012
September 13 One Lambda Acquisition SDS $182
July 24
Princeton Security
Technologies, Inc
Acquisition AIS $5
May 1 Doe & Ingalls Acquisition LPS $110
Transaction
Closing Date
Entity
Acquisition or
Divestiture
Business Description
Principal
Segment
2012 - 2015 Publicly Announced Acquisitions/Divestitures
Provider of customized single-use systems and process
equipment for bioprocess production
(a) Approximate revenue from prior full year reporting period as of the announcement date
Premium provider of specialty production chemicals and
customized supply-chain services
Sera and media, gene modulation and magnetic beads
businesses formerly in the Analytical Technologies Segment
Global leader in life sciences
There were no publicly announced acquisitions or divestitures that closed in 2013.
Global leader in transplant diagnostics
Manufacturer and supplier of radioactive isotope identifiers, x-ray
and gamma-ray detectors and spectroscopy systems
Customer channel business providing fluid handling, test and
measurement, and electrochemistry products and services
14. Page 11 of 12
2012 2013 2014 Q1 2015
20.8 1.3 0.0 3.9
$55.18 $69.89 $0.00 $127.66
$1,150 $90 $0 $500
2012 2013 2014 Q1 2015
$0.39 $0.60 $0.60 $0.15
Capital Deployment
Total Number of Shares Purchased
(millions)
Average Price Paid per Share
Total Spend ($ millions)
Dividends Paid
(1)
On February 29, 2012, the company initiated a quarterly dividend of $0.13 per share. On November 8, 2012, the company increased the dividend to $0.15 per
share. Future declarations of dividends are subject to board approval and may be adjusted as business needs or market conditions change.
Share Buybacks
Amount per Share(1)
Remaining Authorization (in millions) as of 3/28/2015: $410
