financial projections and other forward-looking statements...
TRANSCRIPT
1
Please note that the following presentations contain financial projections and other forward-looking statements that are specific to the date of the presentations – May 22, 2013 – and should not be considered current after that date.
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May 22, 2013
2013 Analyst Meeting
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Various remarks that we may make in the following presentations about the company’s future expectations, plans and
prospects constitute forward-looking statements for purposes of the safe harbor provisions under The Private Securities
Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a
result of various important factors, including those discussed in our Form 10-Q for the quarter ended March 31, 2013, under the
caption “Risk Factors,” which is on file with the Securities and Exchange Commission and available in the “Investors” section of
our website under the heading “SEC Filings.” 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 internal 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; the effect of healthcare reform legislation; 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 the pending acquisition of Life Technologies
may not materialize as expected. 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, therefore, you should not rely on these forward-looking
statements as representing our views as of any date subsequent to today.
During these presentations, we will be referring to certain financial measures not prepared in accordance with generally
accepted accounting principles, or GAAP, including adjusted EPS, adjusted gross margin, adjusted operating margin, adjusted
ROIC, adjusted ROE and free cash flow. Definitions of these non-GAAP financial measures and, for historical periods, a
reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures is available in the appendix
to these presentations.
Please note that the attached presentations contain financial projections and other forward-looking statements that are specific to the date of the presentations – May 22, 2013 – and should not be considered current after such date.
Safe Harbor / Non-GAAP Measures
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Agenda
Marc Casper President and CEO
Intensely Focused on Our Customers to Drive Growth
Pete Wilver Chief Financial Officer
Creating Shareholder Value
Alan Malus President, Analytical Technologies
Innovating to Solve New Customer Challenges
Andy Thomson President, Specialty Diagnostics
Innovating to Improve Human Health and Drive Growth
Ed Pesicka President, Customer Channels
Partnering with Customers to Deliver a Unique Value Proposition
Syed Jafry President, Asia-Pacific
& Emerging Markets
Strengthening Our Global Presence to Accelerate Growth
Marc Casper Summary and Q&A
2013 Analyst Meeting May 22, 2013
Marc Casper President and Chief Executive Officer
Intensely Focused on Our Customers to Drive Growth
6
Industry-leading Brands
• 39,000 employees in 40 countries
• $13 billion in annual revenues
• Unparalleled commercial reach
• Ranked 220 on Fortune 500
Unmatched Depth • Innovative technologies
• Applications expertise
• Lab productivity partner
We Are the World Leader in Serving Science
Global Scale
7
Most comprehensive
technology portfolio for
both research and
applied markets
Premier supplier to
enable laboratory
productivity and
accelerate
innovation
Leading portfolio of
specialty diagnostic
tests to improve
patient care
Our Unique Scale and Depth of Capabilities
Analytical Technologies
Segment 31%
Specialty Diagnostics
Segment 23%
Laboratory Products and
Services Segment
46%
Revenue
Note: Revenue based on LTM through Q1 2013. Percentages shown are before inter-company eliminations.
8
Significant and Growing Addressable Markets
Analytical Technologies
Specialty Diagnostics
Laboratory Products and
Services
~$30B market
1 - 3% growth
~$33B market
4 - 6% growth
~$20B market
4 - 6% growth
Addressable Market
3-5% long-term growth
9
Strong Track Record of Financial Performance
Adjusted EPS ($)
2012 2007
$2.55
$4.94
Revenue ($B)
2012 2007
$9.4
$12.5
Adjusted Operating Income ($B)
2012 2007
$1.6
$2.4
2012 2007
8.0%
9.3%
Adjusted ROIC
10
Our Vision for 2020
Advancing our position as the industry leader
Strengthening our premier brands to be the most
powerful in our industry
Developing innovative technologies to profoundly
benefit life sciences, healthcare and the environment
Significantly increasing our presence in Asia-Pacific
and emerging markets
Being recognized as one of the world’s most admired companies
Delivering consistent and strong earnings growth
11
Our Complex World Creates New Challenges
Air Pollution Linked to 1.2 Million Premature
Deaths in China – New York Times
New Report Finds Worrisome
Levels of Arsenic in Rice – ABC News 783 Million People Do Not Have Access
to Safe, Clean Drinking Water – UNICEF
Killer E.coli Strain Described
as Deadliest Yet – Reuters
12
We Enable Our Customers to Make the World…
Cleaner
Healthier
Safer
13 Note: Revenue based on LTM through Q1 2013
Meeting Customer Needs in Today’s Environment
14
Our customers’ needs define our growth strategy
Technological
Innovation Value
Proposition
Emerging
Markets
15
Strengthening Our Innovation Pipeline
• Total R&D spend: $375M
• 3.0% of total revenue
• 5.4% of manufacturing revenue
• 3,000 scientists and engineers
• 2,800 patents granted globally
since 2007
• Product vitality index: 15%*
• Premier scientific advisory board
• Leaders in healthcare, science, academia
Facts:
2007 2012
$235M
$375M
* Percentage of product revenue from products launched in last two years
16
Strengthening Our Innovation Pipeline
Focus: Mass spectrometry: Orbitrap > Exactive > Q Exactive > New-generation Orbitrap
Building on industry-leading technology platforms
Portable analysis: TruDefender > TruScan > TruNarc > MicroPHAZIR
Microbial ID: Manual and automated ID / AST > Mass Spectrometry > Clinical Analyzer
Creating new growth opportunities outside the lab
Convergence of life science tools and diagnostics
17
Delivering a Unique Value Proposition
• >$3B in revenue serving
biopharma customers
• Driving productivity and
accelerating innovation
• Industry-leading customer channel
• Leading offering of scientific instruments,
reagents and lab supplies
• Technical collaboration
• Unity Lab Services
• Clinical trials supplies and logistics
• Bioprocess production capabilities
• Production supply chain expertise
• Portable instruments
• Companion diagnostics
Facts:
2007 2012
2007 2012
* EvaluatePharma, “Worldwide R&D Spend by Pharma & Biotech Companies (2004-2018)”
Biopharma Industry Growth*
Thermo Fisher Biopharma Growth
18
Delivering a Unique Value Proposition
• Applying the model to
additional customer sets
• Contract testing laboratories
• Medical device manufacturers
• Petrochemical companies
• Academic institutions
• Opportunity to continue
to gain share in biopharma
• Deep partnerships with
customers
• Problem-solver vs. vendor
• Emergence of new cell
therapies, biologics, vaccines
Focus:
19
Expanding Footprint in High-Growth Regions
Facts:
2007
10%
Europe North America
2012
21%
Europe North
America
India: Laboratory
chemicals China:
Established
commercial
presence
China: Opened
first factory
China:
Instruments Center
of Excellence
China: Suzhou
laboratory products
factory
Brazil:
commercial
expansion
Lithuania:
Biosciences
Center of
Excellence
Singapore:
Bioprocess
production Center
of Excellence
China: Tier two
commercial
expansion
India: Biopharma
services capability
China: R&D
capability
China:
second
demo center S. Korea:
Demo center
% Revenue from APAC and ROW*
* APAC and ROW does not include emerging markets in Eastern Europe
20
Expanding Footprint in High-Growth Regions
• Accelerating momentum
in China
• Strengthening capabilities:
manufacturing, R&D, commercial
• Further expansion into tier-two cities
• Vertical approach: healthcare &
diagnostics, environmental, food safety
• Ramping up commercially
in emerging markets
• South Korea, Russia, Brazil, India
• Further expansion in high-
growth markets
• e.g. Turkey
Focus:
2017 Goal
25 %
Europe
North America
APAC & ROW
Note: APAC and ROW does not include emerging markets in Eastern Europe
21
Built on a strong foundation of operational excellence and
effective capital deployment
Technological
Innovation Value
Proposition
Emerging
Markets
22
Operational Excellence is a Core Competency
Significant ongoing opportunity to drive margin expansion
Global Sourcing
Facility Rationalization
and Restructuring
Low-Cost-Region Manufacturing
PPI Business System
25% 10%
25% 40%
$250M Savings expected in 2013
23
Effective Capital Deployment Creates Shareholder Value
2010 - 2012 67%
33% Return of capital • Stock buybacks
• Dividends
Ahura Finnzymes Fermentas Dionex Doe & Ingalls One Lambda Phadia
Strategic acquisitions • Enhance our strategic position
• Expand our customer offering
• Create shareholder value
24
Strengthening Our Competitive Position
Historical Capability Strategic Acquisitions Competitive Advantage
Scale in high-growth high-margin specialty diagnostics markets
One Lambda: transplant diagnostic tests Phadia: allergy and autoimmunity tests
BRAHMS: novel biomarker assays
Specialty diagnostics
Built chromatography powerhouse while strengthening mass spectrometry leadership
Dionex: liquid and ion chromatography
Chromatography and mass spectrometry
Expanded offering for the molecular biology workflow
Fermentas: molecular and cell biology
Finnzymes: PCR reagents and
consumables
Bioscience reagents
Miniaturization of analytical instruments creates new growth markets
PicoSpin: benchtop NMR spectrometer
Polychromix: portable NIR
Ahura: portable optical analysis
Portable instruments
25
• A global leader in life sciences
• 2012 Revenue: $3.8 billion
• 10,000 Employees
• 50,000+ Products
Key product categories • Research consumables
• Genetic analysis
• Applied sciences
Attractive revenue profile*
Premier life sciences brands
Mix
Instruments 15%
Consumables & Services
85%
Regions
Americas 45%
Europe 31%
APAC 14%
Japan 10%
* Based on FY 2012 revenues
Acquisition of Life Technologies
26
Highly Complementary Offering and Capabilities
Technology and Innovation Leader Ultimate Customer Partner
Research
Production
Applied Markets
Specialty Diagnostics
Operational Excellence • World-class inventory and logistics
management
Deep Applications Expertise • >8,000 patents and licenses
• Industry’s largest R&D budget
Commercial Reach • Global key accounts and strategic
partnerships
• Unmatched customer channels in research
and healthcare
• Leading
e-commerce
capability
27 * Pro forma based on FY 2012 revenues of both companies. Percentages calculated before inter-company eliminations.
Consumables 61%
Services 12%
Creating an Unrivaled Industry Leader
Since Announcement: Executive team site visits
Town Halls with Life
employees
Integration leaders and
teams selected for both
companies
Activities under way:
• Integration planning
• Financing
• Regulatory clearance
Confident in delivering
expected synergies
Analytical Technologies
24%
23%
Specialty Diagnostics
18%
Laboratory Products and
Services
35% Pro forma
Revenues
Expect to close transaction early in 2014
28
Advancing our position as the industry leader
Strengthening our premier brands
to be the most powerful in our industry
Developing innovative technologies to profoundly
benefit life sciences, healthcare and the environment
Significantly increasing our presence in Asia-Pacific
and emerging markets
Being recognized as one of the world’s most admired companies
Delivering consistent and strong earnings growth
On Track to Achieve Our Vision for 2020
29
• Focused on our customers • Creating shareholder value
On Track to Achieve Our Vision for 2020
2013 Analyst Meeting May 22, 2013
Pete Wilver Chief Financial Officer
Creating Shareholder Value
31
14% CAGR
Key Growth Drivers • New product launches
• Share gain initiatives
• Emerging market expansion
• Acquisition synergies
Key Drivers • Top-line pull through
• Successful productivity initiatives
• Implementation of tax planning
• Disciplined capital deployment
2007 – 2012: Creating Shareholder Value
2007 2012
$9.4B $12.5B
Revenue
2007 2012
$2.55
$4.94
Adjusted EPS
6% CAGR
32
Revenue Profile Positions Us for Growth
End Markets Products Geographies
56%
Consumables
30%
Instruments, Equipment &
Software
Services
14%
22%
Academic & Government
27%
Industrial & Applied
Healthcare & Diagnostics
26% 25%
Pharma & Biotech
Balanced and diverse customer base
Growing presence in emerging markets
Strong recurring revenue mix
Note: Revenue based on LTM through Q1 2013
17%
Asia- Pacific
4% ROW
54%
North America Europe
25%
33
Emerging Markets
16%
Developed Markets
84%
End Markets Products Geographies
56%
Consumables
30%
Instruments, Equipment &
Software
Services
14%
22%
Academic & Government
27%
Industrial & Applied
Healthcare & Diagnostics
26% 25%
Pharma & Biotech
Balanced and diverse customer base
Growing presence in emerging markets
Strong recurring revenue mix
Note: Revenue based on LTM through Q1 2013. Organic revenue growth in 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 2) Phadia from the beginning of the third quarter 2011.
12% organic growth in emerging markets in 2012
Growing Presence in Emerging Markets
34
Consistent Growth Across All Segments
Note: Segment revenue is shown before inter-company eliminations and therefore does not sum to total. Organic revenue growth in 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
2) Phadia from the beginning of the third quarter 2011.
2012 Actual Analytical
Technologies Specialty
Diagnostics
Laboratory Products &
Services Total
Revenue $4.02B $2.96B $6.05B $12.51B
Reported Growth 7% 20% 4% 8%
Organic Growth 5% 4% 4% 4%
Revenue in Emerging
Markets 28% 9% 11% 16%
Adj. Gross Margin % 50.9% 50.3% 33.8% 44.5%
R&D $228M $99M $50M $376M
Adj. Operating Margin % 18.6% 25.7% 14.4% 19.0%
35
2012 Actual Adjusted EPS Exceeded Guidance
Adjusted EPS growth of 19% exceeded May 2012 guidance
Inflation Below
the Line Net Price,
Volume & Mix 2012
Acquisitions Productivity FX 2012
Actual 2011
Actual Growth
Investments
$4.94
$4.16
($.29)
$.24
$.49
($.22)
$.05
($.12)
$.63
May 2012
Guidance ($.34) ($.15) $.18 $.57 -.63 $.42 -.48 ($.13) $4.71 - 4.83 ----
36
2013 Guidance
Expect to achieve 7 to 9% adjusted EPS growth
2013 Guidance
2012 Actual
YOY Increase
Revenue $12.84 - 13.00B $12.51B 3 - 4%
Organic Growth 1 - 3% 4%
Adj. Operating Margin 19.3 - 19.5% 19.0% 30 - 50 bps
Free Cash Flow $1.80 - 1.90B $1.77B 2 - 7%
Adj. EPS $5.27 - 5.39 $4.94 7 - 9%
Note: Organic revenue growth in 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 2) Phadia from the beginning of the third quarter 2011. Guidance excludes fees related
to the Life Technologies acquisition.
37
2013 Guidance: Key Assumptions
Revenue (3 - 4%) • 2013 organic growth expectations vs. 2012 reported
• Challenged academic and government markets due to sequestration
• Weak industrial markets due to macro environment
• Consistent biopharma market offset by strong comparisons
• Acquisitions add about 1.5% growth, impact of future acquisitions /divestitures excluded
• Slight FX revenue headwind of a little less than 0.5%
Adjusted operating margin expansion (30 - 50 bps): • Driven by PPI initiatives, global sourcing and $75M in restructuring actions
• Offset by Medical Device excise tax and pull-through on weaker Japanese Yen
Adjusted tax rate of 14.5 - 15.0% related to tax planning and R&D tax credit
Diluted share count of approximately 363 - 365M
Return of capital: • $90M completed in Q1; suspended buybacks due to Life Technologies transaction
• $220M of estimated dividend payments
38
Committed to Driving Revenue Growth
New Products
Share Gains
Emerging Markets Price Acquisition
Synergies
$12.51B
2012
$12.84 - 13.00B
2013 (G)
Expect to deliver 3 - 4% growth in 2013
(G) = Guidance (which excludes fees related to the Life Technologies acquisition )
39
Continuing Adjusted Operating Margin Expansion
2012
19.0%
2013 (G)
19.3 - 19.5%
Expect to achieve 30 - 50 bps of expansion in 2013
(G) = Guidance (which excludes fees related to the Life Technologies acquisition )
40
19.0% 19.3 - 19.5%
Productivity Drives Margin Expansion
+25 - 35 bps (55 - 65 bps)
(20 bps) (110 bps) (20 bps)
+190 - 210 bps +20 bps
Adjusted Operating Margin Bridge
* Guidance excludes fees related to the Life Technologies acquisition
Productivity Inflation Net Price,
Volume & Mix Growth
Investments FX 2013
Guidance* 2012
Actual Medical
Device Tax 2012
Acquisitions
41
Operational Excellence is a Core Competency
Significant ongoing opportunity to drive margin expansion
Global Sourcing
Facility Rationalization
and Restructuring
Low-Cost-Region Manufacturing
PPI Business System
25% 10%
25% 40%
$250M Savings expected in 2013
42
• PPI-Lean methods and tools
• Structured approach to
problem solving
• Engagement across the
entire organization
• Results immediately add
capacity, enable profitable growth
and improve cash flow
Targeting estimated savings of $100M in 2013
Our Practical Process Improvement Culture
Team Planning
Implementation
Results
43
Expanded in Lithuania
and China (Suzhou) in 2012
Annual goal: move $100M of production to low-cost regions
to deliver over $20M in annual savings
Proven Track Record of Manufacturing Productivity
• 125 global sites as of Q1 2013
• 70 consolidations since 2006
• Each consolidation saves an average of $2 - 3M
$20M of estimated savings in 2013
Revenue per manufacturing facility
2007 2012
$41M
$62M
2007
$200M
2012
$600M
Manufacturing revenue from low-cost regions
44
• Changing cost base to support revenue growth
• Geographical cost base has shifted over time
• Commercial resources targeted to support growth in emerging markets
Global SG&A Headcount in APAC and ROW
2007 2013 (E)
10% 22%
North America
and Europe
North America
and Europe
Re-deploying Resources to Support Growth
(E) = Estimate
2012
21%
North America
and Europe
45
($.33)
$.15
$.17 -.23
($.18)
$.51 -.57
($.08)
$.09
2013: Guiding to 7% to 9% Adjusted EPS Growth
$5.27 - 5.39
$4.94
Inflation Below
the Line Net Price,
Volume & Mix 2012
Acquisitions Productivity FX 2013
Guidance* 2012
Actual Growth
Investments
* Guidance excludes fees related to the Life Technologies acquisition
46
Generating Strong Free Cash Flow
2013 (G)
$1.80 - 1.90B
2012
$1.77B
2007
$1.29B
2012 free cash flow yield exceeded 7%
(G) = Guidance (which excludes fees related to the Life Technologies acquisition)
47
Deploying Capital to Create Shareholder Value
$11B Capital Deployment 2010 - Q1 2013
Free Cash Flow $4.6B
Net Debt $5.8B
Divestitures $0.8B
Cash Sources
Acquisitions $7.4B
Share Buybacks
$3.6B
Dividends $0.2B
Capital Deployed
Note: Leverage ratio = total debt divided by trailing 12 months adjusted EBITDA. Net debt includes other non-operating cash flow of $0.8B.
Capital Deployment
• Repurchased $3.55B of
stock since 2010
• Quarterly dividend of
$0.15 per share
• Feb 2012: Initiated dividend
• Nov 2012: Increased dividend 15%
Leverage
• Q1 2013
• Total debt: $7.1B • Leverage ratio: 2.7x
48
Capital Deployment Plan
2013 • Share buybacks suspended due to Life Technologies acquisition
• Dividend payments continue
• Incremental cash reduces equity component of Life Technologies financing
2014 • Post Life Technologies acquisition close – excess cash flow allocated
to debt repayment
• Initial leverage ratio post close expected to be 4.3 - 4.4x – approximately
$18B in total debt
2015 • Continue debt repayment until back to target leverage (2.5 - 3.0x) –
then expect to return to traditional capital deployment
Note: Leverage ratio = total debt divided by trailing 12 months pro forma adjusted EBITDA
49
Generating Steadily Improving Returns
Note: Adjusted ROIC is annual adjusted net income excluding net interest expense, net of tax benefit, divided by trailing five quarter average
invested capital. Adjusted ROE is annual adjusted net income excluding net interest expense, net of tax benefit, divided by trailing five quarter
average shareholders’ equity. (E) = Estimate.
Adjusted ROIC
2013 (E)
9.8 - 10.0%
2012
9.3%
2007
8.0%
Adjusted ROE
13.1 - 13.3%
2013 (E)
13.1%
2012
8.6%
2007
50
Compelling Long-Term Financial Profile
Thermo Fisher (Standalone)
Revenue Mid-single digit organic growth
Adjusted Operating Margin
50 - 100 basis points of
expansion annually
Adjusted EPS Low- to mid-teens annual
growth
Free Cash Flow Conversion of approximately
90% of adjusted net income
Note: References Life Technologies acquisition assumptions
Life Technologies (Deal model assumptions)
3% organic growth and $75M
in revenue synergies
$275M of adjusted operating
income synergies
• $250M from cost actions
• $25M from revenue activities
Adds $0.90 - $1.00 accretion
in first full year
• Adds ~$750M
• Expecting >$2.5B for the
combined company
2013 Analyst Meeting May 22, 2013
Innovating to Solve New Customer Challenges
Alan Malus President, Analytical Technologies
52
Chemical Analysis
Instruments 27%
Environmental and Process Instruments
5% Chromatography
and Mass Spectrometry
45%
Note: Revenue based on LTM through Q1 2013 and before inter-company eliminations
Biosciences
23%
• Industry-leading portfolio drives
innovation and productivity
in multiple end markets
• Thermo Scientific brand
recognized for cutting-
edge innovation
• Unique ability to
integrate software,
consumables,
instruments, services
• Growing local
presence in high-growth
emerging markets
Revenue
Analytical Technologies Segment
53
Mass Spectrometry Exactive Plus
Advanced screening for life science research
Liquid Chromatography UltiMate 3000 BioRs
Corrosion-resistant LC for tough bioanalytical fluids
Trace Elemental iCap 7000
Provides greater throughput in elemental analysis
Bulk Elemental iSpark
Optimizes metals production for greater productivity
Molecular Spectroscopy iS50
All-in-one FTIR platform for materials science
Software Chromeleon 7.2
Creates common data platform for select LC and MS
Bioprocess Production Aegis 5-14 Film
Increases biotherapeutic drug production yield
Consumables GlycanPac LC Columns
Unique LC columns enable glycan analysis
Expanding Industry-Leading Thermo Scientific Offering
54
Case Study: Game-Changing Innovation in Mass Spec
Industry-leading portfolio keeps getting stronger
2005 Replaced $100M FT market for high-end
research
2008 Displacing triple quads in $700M
market
2013 2011
Q Exactive taking share in QTOF market
Orbitrap cited 5x more often than QTOFs in industry
publications
55
ASMS 2013: Launching the Next Breakthroughs
• Extending leadership in high-end LC/MS • Next-generation Orbitrap technology
• Taking share in quantitative market • New triple quadrupole platform
• Turning data into knowledge • Powerful application software
Mass spec leadership drives
growth and share gain
56
Mass Spectrometry
Chromatography
Gold-Standard Software Turns Data into Knowledge
• Size and complexity of data
• Multiple platforms
• GMP compliance
• Integrating data
into information
Problem
• Chromeleon is the ONE platform
combining Chrom + MS instrument
control and data analysis
• Reduced training
• Faster results
• Multi-vendor
Solution
• Single validation
• Seamless LIMS
integration
120 min 150 min
30 60 Chromeleon
Standalone
Software
50 to 65% time
reduction per
sequence
57
Pharma & Biotech
Academic & Government
Healthcare & Diagnostics
Industrial & Applied
Innovation
Innovating to Solve New Customer Challenges
58
New Biotherapies Require Robust Analytical Tools
Glycan Information
Q Exactive
• Huge growth in protein-based
biotherapeutics
• Glycans (carbohydrates) attach
to proteins in 70% of biotherapeutics,
affecting biological activity and stability
• Critical need to understand the effect
of glycans on proteins
Problem • Thermo Fisher uniquely positioned
to provide complete workflow
• Unique column technology
• Bio-compatible UHPLC
platform
• Mass spectrometry
• Powerful analysis software
Solution Pharma
& Biotech Research
GlycanPac column
Glycosolated Protein
SimGlycan Software
Dionex UltiMate 3000 BioRS
Glycans
59
Ensuring Quality in High-Volume Bioprocess Production
• Contamination
• Production efficiency
• Compliance
Problem
• New Thermo Scientific Aegis 5-14 film
expands compatibility with various cell lines
• Cleanest leachables and extractables profile
in the industry today
• Superior application and validation packages
• Highest level of quality
Solution
Maximizing production yield and quality
Pharma & Biotech
Production
60
Stringent Regulations Demand Higher Sensitivity
• Ever-increasing number of contaminants
• Lower and lower detection limits
• Flexibility to meet regional requirements
Problem
• Thermo Scientific Pesticide Analyzer
System based on GC triple quad mass spec
• Extensive compound database and
easy-to-use tools
Solution
Industrial & Applied
61
Thermo Scientific iCAP Q ICP-MS
Increasing Need to Screen Food for Contaminants
• Metal impurities of regulatory concern
for potential health hazards
• Increased focus on inorganic arsenic
and other elements
• Government research needs for
potential legislative action
Problem
• Thermo Fisher uniquely positioned to
provide complete workflow
• iCAP Q ICP-MS for robust uptime,
sub-picogram detection capability
• Qtegra software for workflow, data
management, scalability, compliance
Solution
Academic & Government
Supporting research of The National Food Institute,
Technical University of Denmark
62
Bringing Advanced Analysis to the Point of Need
Problem • Sampling and lab testing of feed products
• Detection time and cost
• Quality of feed
• Inability to reject feedstock at time
of delivery
Industrial & Applied
microPHAZIR AG • On-demand onsite analysis • Portable near-infrared
spectroscopy
• Industry-leading calibrations
• Develop least-cost
formulations
Solution
• Corn • Soy Bean • Sunflower • Wheat • Whey • Corn Gluten
63
Innovating to Solve New Customer Challenges
• Strong track record of innovation and robust R&D pipeline
• Translating core technology platforms to new applications and markets
Differentiated technologies and capabilities drive growth
2013 Analyst Meeting May 22, 2013
Andy Thomson President, Specialty Diagnostics
Improving Human Health through Novel Diagnostics
65 Note: Revenue based on LTM pro forma through Q1 2013 and before inter-company eliminations.
Transplant Diagnostics equals LTM revenue through Q1 2013, which includes the partial period before Thermo Fisher ownership.
Anatomical Pathology
13%
Healthcare Market
Channel
25%
Clinical Assays
21% Immuno- Diagnostics
18%
Microbiology 17%
Transplant Diagnostics
6%
• Global leader in high-growth
in vitro specialty diagnostics
• Broad assay development
capabilities
• Leading the development
of novel biomarker tests
• Well-established relationships
with large IVD players
• Leading channel
to the clinical laboratory
• Driving convergence of life
science tools and diagnostics
Specialty Diagnostics Segment
66
Complementary
Acquisitions:
• Broadened assay
development capabilities
• Established global
reach to hospitals
• Provided critical mass
and anchored our positions
Strengthened Our Specialty Diagnostics Portfolio
67
2012 2017
$20B
$25B
Addressable Markets
• Aging populations increasing demand for healthcare
• Developing countries investing in healthcare infrastructure
• Need for convergence of life science tools and diagnostics
• Pharma R&D strategies driving companion diagnostics
• Heightened awareness of food supply vulnerabilities requiring increased testing
Strong Global Trends Drive New Diagnostic Tests
68
Innovating to improve human health
Integrating core platforms to create new markets
Strengthening our global position
Continuing to Innovate and Drive Future Growth
69
Earlier, less invasive diagnoses to reduce rate of organ rejections
* Lee PC, et al. “HLA-specific antibodies developed in the first year post-transplant are predictive of chronic rejection and
renal graft loss.” Transplantation 2009; 88(4): 568-574
Innovating in Transplant Diagnostics
C1qScreen
• Opportunity to significantly increase survival rates
• 10-year renal allograft survival is only 27%
in early antibody developers*
• Standard monitoring techniques are invasive
• Current tests fail to detect potential rejection
Unmet Clinical Need
C1qScreenTM is better at identifying patients at risk for: • Early acute and acute rejection
• Non-invasive procedure
• Enabling pre-emptive personalized treatment • Exclusively provided by Thermo Fisher Scientific
Our Solution
70
Single test, faster diagnoses for better patient outcomes
• Unique surface chemistry
• Biochip technology
• Cutting-edge molecular
allergology
• Less invasive procedure for
testing young children
• More efficient profiling tool
• Faster interpretation of results
• 150+ clinical labs in EU using
ImmunoCAP ISAC technology
ImmunoCAP ISAC In clinical use today Benefitting patients
Innovating in Immunodiagnostics
ImmunoCAP ISAC More patients have multiple, complex sensitivities
71
Results in minutes
Bioinformatics
Mass spectrometry
Microbiology
Faster results dramatically reduce the use of antibiotics
Results in 6-16 hours
Combining
leading-edge
Thermo Fisher
technologies
Controlling emerging antibiotic resistance is a priority
• 50% of antibiotic use unnecessary, increasing prevalence of resistant strains.
Antibiotic-resistant infections cost the U.S. system more than $20 billion annually*
• Faster and comprehensive identification and resistance results are required to reduce the inappropriate use of antibiotics
* Centers for Disease Control and Prevention, Infectious Diseases Society of America, The Alliance for the Prudent
Use of Antibiotics, and Cook County Hospital
Integrating Life Science Tools and Microbiology
Current Future
Healthcare Opportunity
72
Strongest position to capture this opportunity
Microbial identification expertise
Microbial resistance testing expertise
Mass spectrometry
Liquid chromatography
Automated clinical analyzer expertise
Regulatory expertise
Global healthcare commercial organization
Integrating Life Science Tools and Microbiology
73
Strengthening Our Commercial Position
Global expansion • China: Investing in commercial infrastructure and
local product development
Partnership expansion
• New PCT patents enabling renewal of long-term partnerships
• Expanding capabilities supporting companion diagnostics
Market expansion • Demonstrating clinical utility to drive rapid
market adoption
74
Trusted Co-Development Partner for Pharma
• 500+ scientists developing
new IVD assays
and technologies
• Largest technology base
in life science industry
• 500+ products on the
market with the appropriate
FDA clearances
• Proven track record across
range of diseases
• Supply chain reaching over
3000 clinical labs around
the world
Unmatched capability supporting companion diagnostics
SHORT TERM Assay Development
MID TERM Diagnostic Partnering
75
Specialty Diagnostics: An Incredibly Bright Future
We continue to build on our core strengths in life science
tools, assay development and channel management to:
• Expand in markets with attractive growth
• Innovate to improve human health
• Integrate life science tools with diagnostics
• Strengthen our global position
Delivering a Unique Customer Value Proposition
Ed Pesicka President, Customer Channels
2013 Analyst Meeting May 22, 2013
77
Laboratory Products and Services Segment
BioPharma Services
13%
Laboratory Products
29%
Research and Safety Market
Channels
58%
Note: Revenue based on LTM Q1 2013. Percentages calculated before inter-company eliminations.
• Industry-leading channel
for research customers
• Most comprehensive portfolio
of laboratory consumables
and equipment
• Leading outsourcing
capability for clinical trials
logistics supporting
biopharma productivity
and quality needs
Revenue
78
Unique Customer Value Proposition
79
Unique value proposition applies to multiple end markets
Serving Customers from Research to Production
80
• >$3B in revenue serving
biopharma customers
• Driving productivity and
accelerating innovation
• Industry-leading customer channel
• Leading offering of scientific instruments,
reagents and lab supplies
• Technical collaboration
• Unity Lab Services
• Clinical trials supplies and logistics
• Bioprocess production capabilities
• Production supply chain expertise
• Portable instruments
• Companion diagnostics
Facts:
2007 2012
2007 2012
* EvaluatePharma, “Worldwide R&D Spend by Pharma & Biotech Companies (2004-2018)”
Biopharma Industry Growth*
Thermo Fisher Biopharma Growth
Delivering a Unique Value Proposition
81
Partnering with Dana Farber
• Increase productivity “focus on research”
Customer Goal
• Simplified order process
• Easy access to the “right products”
• Applications expertise to solve scientific problems
• Specific service offerings to accelerate research
• R&D collaboration
Thermo Fisher Unique Value Proposition
82
Medical Research: Partnering with Dana Farber
video frame
John Willi Director of Sourcing
“We want to make
it easier for our
researchers to focus
on the science.”
83
Partnering with Eurofins
• Global scale and depth of capabilities
• Consistent offering and end-user support
• Collaborative product and assay development
• Ability to increase throughput
• Services offering to improve efficiency
Thermo Fisher Unique Value Proposition
• Consistent testing; increase organic growth
Customer Goal
84
Industrial / Applied: Partnering with Eurofins
Gilles Martin Founder
“We need to
standardize testing
globally to support
our growth.”
85
Delivering a Unique Customer Value Proposition
• Partnership model fully leverages our industry-leading
capabilities
• Applies to customer needs in multiple end markets
• Ability to develop unique solutions that enable customer
innovation and productivity
Syed Jafry President, Asia-Pacific
and Emerging Markets
Strengthening Our Global Presence to Accelerate Growth
2013 Analyst Meeting May 22, 2013
87
Emerging Markets: Accelerating Growth
Revenues: $2.1B Employees: 5,600
Note: Revenue based on LTM through Q1 2013
India 8%
S. Korea 7%
Brazil 4% Russia
5%
Eastern Europe
8%
Our Strategy
• Scaling our commercial teams
to drive growth
• Optimizing supply chain, service and
commercial operations to differentiate
the customer experience
• Continuing to invest in localized
technology development
• Expanding low-cost-region
manufacturing footprint
Represents 16% of total company revenue
Southeast Asia 11%
Other Emerging Markets
20%
China 37%
88
Bright Outlook Across a Number of Geographies
Driving significant organic revenue growth
Organic growth: 12%*
2012 2017 (E)
China
India
S. Korea
Brazil
Other EM
$3.4B
$2.0B
* Organic growth in 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 2) Phadia from the beginning of the third quarter 2011. (E)= Estimate.
89
A Three-Pronged Strategy for Growth
$900M combined revenue in 2012
Continuing to strengthen
market leadership
• China • India
$300M combined revenue in 2012
Translating success to
high-priority opportunities
• South Korea • Russia • Brazil
$800M combined revenue in 2012
Positioning for success in additional
emerging markets
• Southeast Asia • Eastern Europe • Middle East • Africa
90
• Strong focus on particulate
and mercury monitoring
• Water and soil pollution
at all-time high
Cleaner…
Why We’re Bullish About China
• Expenditures will double
in 3 years ($710B)
• Second largest market
in the world by 2015
• Largest vaccine producer
in the world (1B doses)
Healthier…
Safer… • CFDA level raised.
Enforcing stricter
regulations
91
Our Strategy for Success in China
Healthcare Pharma
Targeting vertical markets
Focus on customer needs in tier-two cities
Expanding in the region
Expanding China Technology Center Localizing R&D
Talent acquisition and training programs
Building world-class talent
Suzhou laboratory products Center of Excellence
Increasing manufacturing footprint
Increasing recognition in environmental and healthcare
Leveraging government relationships
Aligned with 5-year plan • Heavy investments in
healthcare capabilities
• Domestic demand generation,
urbanization
• Increased focus on innovation
and research
• Higher standards for
environmental pollution and
enforcement
92
China: Our Strategy is Working
2012 Progress
• Target markets / focused accounts
grew 30%+
• 36% of sales team in tier-two cities
• Field service reaches >450 engineers
• 20% improvement in customer
satisfaction and double-digit productivity
gains thru back office optimization
(E) = Estimate
Industrial and Other Environmental Food Safety BioPharma Healthcare
2012 growth > 20% $6B Served market
31%
15%
12%
25%
17%
2017 (E)
$1,500M
2012
$735M
46%
13% 8%
22%
11%
2010
$410M
51%
12% 9%
21%
7%
93
A Three-Pronged Strategy for Growth
$900M combined revenue in 2012
Continuing to strengthen
market leadership
• China • India
$300M combined revenue in 2012
Translating success to
high-priority opportunities
• South Korea • Russia • Brazil
$800M combined revenue in 2012
Positioning for success in additional
emerging markets
• Southeast Asia • Eastern Europe • Middle East • Africa
94
2010 2012 2017 (E)
$90M $150M
$240M
South Korea Growth Opportunities
Market Overview • 6 - 8% long-term market growth
• Aging population driving healthcare demand
• Significant investments in life sciences,
bioprocessing, pharma and academic
• $2.3B government funding for R&D in 2013
Our Strategic Focus • Increasing direct presence
• Establishing country-level support
infrastructure
• Built a demo center in Seoul to support
application development
• Resourcing vertical markets and
expanding focus accounts approach
$1.2B Served market
Note: GDP forecast from IMF (Oct 2012). (E) = Estimate
2012 growth > 15%
95
Russia Growth Opportunities
Market Overview • 7 - 9% long-term market growth
• $3.2B increase in 2013 healthcare spending
• GSK, Pfizer, Novartis and AZ pledge to
invest $1.7B in manufacturing and R&D
• Increasing investments in food inspection,
oil and gas, nuclear and mining industries
$0.7B Served market
2010 2012 2017 (E)
$50M $95M
$170M
Note: GDP forecast from IMF (Oct 2012). (E) = Estimate
Our Strategic Focus • Expanding commercial resources
• Strengthening relationships with global
pharma companies
• Resourcing vertical markets and
expanding focus accounts approach
• Leveraging manufacturing capability
to meet localization requirements
2012 growth > 30%
96
A Three-Pronged Strategy for Growth
$900M combined revenue in 2012
Continuing to strengthen
market leadership
• China • India
$300M combined revenue in 2012
Translating success to
high-priority opportunities
• South Korea • Russia • Brazil
$800M combined revenue in 2012
Positioning for success in additional
emerging markets
• Southeast Asia • Eastern Europe • Middle East • Africa
97
Capitalizing on Additional Growth Opportunities
Malaysia • Academic market expected to grow at 8.5%, healthcare at 7.5%
• Investments in new hospitals, blood banks and universities
Vietnam • Healthcare is a government priority
• 20% growth expected in pharma in 2013
• Significant investments in steel and chemicals operations
Indonesia • Mining industry expected to grow at 5% in 2013
• Increasing investments in university labs
Turkey • Government investing $290M in healthcare in 2013
• 20% growth expected in pharma in 2013
98
Building on Our Strong Momentum
• Effective strategy, executed well
• Experienced local leadership with deep market knowledge
• Significant contributor to company organic growth
New opportunities to strengthen our global presence
and accelerate growth
• Focused on our customers • Creating shareholder value
On Track to Achieve Our Vision for 2020
99
2013 Analyst Meeting May 22, 2013
Appendix
Executive Biographies
Marc N. Casper President and CEO Marc Casper was named President and Chief Executive Officer of Thermo Fisher Scientific in October 2009. Marc joined the company in 2001, when it was Thermo Electron, as President of the Life Sciences sector. He was named Senior Vice President in 2003, and in 2005 was given responsibility for all of the company’s operating units. After the merger creating Thermo Fisher Scientific in 2006, Marc was named President of Analytical Technologies, and in 2008 was named Chief Operating Officer. Prior to joining Thermo Fisher, Marc served as President, Chief Executive Officer and a director of Kendro Laboratory Products. Before Kendro, he worked for clinical diagnostics provider Dade Behring Inc., where he served as President – Americas. Marc began his career at Bain & Company as a strategy consultant and later joined Bain Capital.
Marc earned an MBA with high distinction from Harvard Business School and is a graduate of Wesleyan University, where he received a bachelor’s degree in economics. Marc serves on the Brigham & Women’s Hospital Board of Trustees, US-China Business Council and the Massachusetts Math & Science Initiative. He was previously a director of the Advisory Board Company and Zimmer Holdings.
Alan J. Malus Executive Vice President and President, Analytical Technologies Alan Malus was named Executive Vice President and President of Analytical Technologies in January 2012. Alan joined Fisher Scientific in 1998 and held several executive and general management positions serving the laboratory research and industrial markets. When Fisher Scientific merged with Thermo Electron in 2006, Alan became President of Thermo Fisher Scientific’s Customer Channels business. In 2008, he was named President of Laboratory Products, and also had responsibility for the Biosciences business. Earlier in his career, Alan held executive leadership positions in finance, sales, marketing and business development at Textron, Inc. He began his career at Ford Motor Company and spent eight years at Chrysler Corporation.
Alan received an MBA from the University of Pittsburgh and holds a bachelor's degree from the University of Michigan.
Peter M. Wilver Senior Vice President and Chief Financial Officer Pete joined the company in October 2000 as Vice President of Financial Operations, with responsibility for integrating company-wide financial operations and systems, and establishing a robust financial analysis and reporting process. He was named Chief Financial Officer for the company in October 2004. Before joining Thermo Fisher Scientific, Pete worked for General Electric, Grimes Aerospace Company and Honeywell International (formerly Allied Signal), where he most recently served as Vice President and Chief Financial Officer of the Electronic Materials Division.
Pete is a summa cum laude graduate of The Ohio State University, where he earned a bachelor's degree in business administration with a major in accounting. Pete is also a certified public accountant and serves on the board of Circor International, Inc.
Syed A. Jafry Senior Vice President and President, Asia-Pacific and Emerging Markets Syed Jafry joined the company in March 2005 as General Manager and Vice President of the Air Quality Instruments business. He was promoted to President of Thermo Fisher China in January 2008, based in Shanghai, and a year later became President of the Environmental Instruments business there. In October 2009, Syed was named Senior Vice President of Customer and Commercial Excellence and relocated back to Massachusetts. In 2010, Syed served as President of the company’s Asian operations and Senior Vice President of Customer Excellence. In January 2011, he was promoted to Senior Vice President and President for Asia-Pacific (APAC) and Emerging Markets.
Syed started his career at Glaxo Pharmaceuticals in London. He worked for 18 years at General Electric, where he held commercial, product management and general management roles in the U.S., the Netherlands, Switzerland and China. He holds a bachelor of science degree in mechanical engineering from Lahore University in Pakistan, a master’s degree in mechanical engineering from University of Massachusetts and a master’s certificate in marketing and management from Harvard University Extension School.
Edward A. Pesicka Senior Vice President and President, Customer Channels Ed joined the company in 2000 as Vice President, Controller, of Fisher Scientific’s U.S. research business. He also served as Vice President and General Manager of the U.S. research business and Vice President of Finance for U.S. Distribution Operations. At the time of the merger of Thermo Electron and Fisher Scientific in 2006, Ed was named president of Thermo Fisher’s Research Market Channel. In July 2008, he was named President of Customer Channels. Ed is also responsible for the BioPharma Services business and Corporate Accounts. Prior to joining the company, Ed served in several positions at TRW, Inc. from 1992 to 2000, including Director of Finance & IT, TRW Nelson Stud Welding Division; Manager of Finance, Occupant Restraint Systems Group; Supervisor of Consolidation and
Reporting; and international internal auditor. Ed began his career as an accountant for Coopers & Lybrand in Columbus, Ohio. Ed is a certified public accountant and has a bachelor’s degree from Muskingum College and an MBA from Case Western Reserve University.
Andrew J. Thomson Senior Vice President and President, Specialty Diagnostics Andy joined the company in 2009 as Vice President and General Manager, North America, for the Microbiology business. He was promoted to President of the Clinical Diagnostics business in October 2009, and was named Senior Vice President of Thermo Fisher Scientific and President of Specialty Diagnostics in February 2012. Prior to joining Thermo Fisher, Andy worked for 20 years in the diagnostics industry, including nine years with Dade Behring (now Siemens Diagnostics), where he served in various marketing roles and ultimately became Vice President of Marketing for North America. Andy then joined Roche Diagnostics, where he was Senior Vice President of Global Marketing for Centralized Diagnostics in Germany and later led all commercial activities for the Professional Diagnostics group in the U.S.
Andy holds an honors degree in economics from Queen’s University in Kingston, Canada.
Page
2.
4.
6.
7.
8.
9.
10.
11.
12. Fiscal Calendar (2012 - 2013)
May 22, 2013
Q1-2013
Thermo Fisher Scientific Reconciliation of GAAP to Non-GAAP Financials and other Financial Information
Free Cash Flow, Return on Invested Capital and Return on Equity (2007 - 2013)
Annual Reconciliation of GAAP to Adjusted P&L (2007 - 2012)
Quarterly Reconciliation of GAAP to Adjusted P&L (2012 - 2013)
Segment Data (2012 - 2013)
Balance Sheet and Leverage Ratios (2008 - 2013)
Debt (2011 - 2013)
Publicly Announced Acquisitions/Divestitures (2010 - 2012)
NEW: All prior period segment data has been adjusted to reflect the Q1 2013 transfer of product lines between segments. These transfers did not change our consolidated results.
Capital Deployment (2009 - 2013)
Use of Non-GAAP Financial Measures
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 togenerate cash for use in acquisitions and other investing and financing activities.
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 incomeand 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, taxprovisions/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 outsideof 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 discontinuedoperations 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 howmanagement 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 ournormal 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 theyare 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 assetsthat 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 bothacquisitive 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 enactedchanges 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, weexclude 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.
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 thatof 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 preparedin 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.
Page 1 of 12
(Dollars in millions except EPS)
GAAP Consolidated Revenues
Revenue GrowthAcquisitions net of DivestituresCurrency TranslationOrganic Revenue Growth
Pro Forma Revenue Growth (a)Acquisitions net of DivestituresCurrency TranslationPro Forma Organic Revenue Growth (a)
Emerging Markets Pro Forma Revenue Growth (a)Acquisitions net of DivestituresCurrency TranslationPro Forma Organic Emerging Markets Revenue Growth (a)
$ % $ % $ % $ % $ % $ %
GAAP Gross Margin 3,674.6 38.9% 4,053.7 40.0% 3,854.5 39.6% 4,261.5 41.0% 4,794.0 41.5% 5,295.5 42.3%Cost of Revenues Charges (b) 49.2 0.5% 1.5 0.0% 6.7 0.1% 13.2 0.1% 72.6 0.6% 55.6 0.4%Amortization of Acquisition-related Intangible Assets 118.1 1.3% 118.3 1.1% 118.8 1.2% 129.2 1.3% 175.9 1.5% 221.4 1.8%Adjusted Gross Margin 3,841.9 40.7% 4,173.5 41.1% 3,980.0 40.9% 4,403.9 42.4% 5,042.5 43.6% 5,572.5 44.5%
GAAP SG&A Expense 2,466.1 26.1% 2,599.7 25.6% 2,575.8 26.4% 2,728.8 26.3% 3,106.5 26.9% 3,354.9 26.8%
1%4%
2%-2%-4%
3%
-2%4%
10%
0%4%
9,442.7 12,509.9
1%
11%
10,143.7
-4% 7%
3% **
3%1%
2%
6%
7%1%2%
1%-1%
12% **
11%
Annual Reconciliation of GAAP to Adjusted P&L
2010
10,393.1
2009
9,741.0
2011
11,558.8
2007
7%
2008 2012
8%
3%
GAAP SG&A Expense , 66 6 % ,599 5 6% ,5 5 8 6 % , 8 8 6 3% 3, 06 5 6 9% 3,35 9 6 8%Selling, General and Administrative Costs (c) - 0.0% - 0.0% (1.5) 0.0% (3.0) 0.0% (61.5) -0.5% (12.5) -0.1%Amortization of Acquisition-related Intangible Assets (443.2) -4.7% (467.4) -4.6% (461.1) -4.7% (425.5) -4.2% (472.0) -4.1% (526.2) -4.2%Adjusted SG&A Expense 2,022.9 21.4% 2,132.3 21.0% 2,113.2 21.7% 2,300.3 22.1% 2,573.0 22.3% 2,816.2 22.5%
GAAP R&D Expense 236.6 2.5% 246.8 2.4% 243.5 2.5% 284.4 2.7% 340.2 2.9% 376.4 3.0%
GAAP Operating Income 929.7 9.8% 1,171.8 11.6% 976.3 10.0% 1,188.1 11.4% 1,250.8 10.8% 1,482.1 11.8%Cost of Revenues Charges (b) 49.2 0.5% 1.5 0.0% 6.7 0.1% 13.2 0.1% 72.6 0.6% 55.6 0.4%Selling, General and Administrative Costs (c) - 0.0% - 0.0% 1.5 0.0% 3.0 0.0% 61.5 0.5% 12.5 0.1%Restructuring and Other Costs (Income), Net (d) 42.2 0.5% 35.4 0.3% 58.9 0.6% 60.2 0.6% 96.5 0.9% 82.1 0.7%Amortization of Acquisition-related Intangible Assets 561.3 6.0% 585.7 5.8% 579.9 6.0% 554.7 5.4% 647.9 5.6% 747.6 6.0%Adjusted Operating Income 1,582.4 16.8% 1,794.4 17.7% 1,623.3 16.7% 1,819.2 17.5% 2,129.3 18.4% 2,379.9 19.0%
Add back Depreciation Expense 175.2 1.8% 179.0 1.8% 179.4 1.8% 185.0 1.8% 211.7 1.9% 236.1 1.9%Adjusted EBITDA 1,757.6 18.6% 1,973.4 19.5% 1,802.7 18.5% 2,004.2 19.3% 2,341.0 20.3% 2,616.0 20.9%
** Results do not sum due to rounding.
(a) Revenue growth for 2007 is calculated on a pro forma basis which includes the pre-merger results of Fisher from the beginning of 2006. 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.
(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; and in 2011 and 2012, a charge associated with product liability litigation.
(d) Restructuring and other costs 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 of pension plans, and the sale of businesses, product lines and property.
(Annual P&L Reconciliation continued on the next page)
Page 2 of 12
(Dollars in millions except EPS)
Annual Reconciliation of GAAP to Adjusted P&L
20102009 20112007 2008 2012$ % $ % $ % $ % $ % $ %
GAAP Tax Provision 75.9 9.3% 129.5 12.1% 46.7 5.5% 101.6 9.3% 109.4 9.7% 11.0 0.9%Tax Effect of Adjusted Items (f) 266.9 13.9% 243.4 10.0% 239.8 13.3% 242.6 10.4% 269.1 9.4% 351.7 15.8%Adjusted Tax Provision 342.8 23.2% 372.9 22.1% 286.5 18.8% 344.2 19.7% 378.5 19.1% 362.7 16.7%
GAAP Net Income 748.4 980.9 850.3 1,035.6 1,329.9 1,177.9Cost of Revenues Charges (b) 49.2 1.5 6.7 13.2 72.6 55.6Selling, General and Administrative Costs (c) 0.0 0.0 1.5 3.0 61.5 12.5Restructuring and Other Costs (Income), Net (d) 42.2 35.4 58.9 60.2 96.5 82.1Amortization of Acquisition-related Intangible Assets 561.3 585.7 579.9 554.7 647.9 747.6Gain/Loss on Extinguishment of Debt Facilities 0.0 0.0 15.1 16.8 0.0 0.5Other Income (e) 6.0 (3.2) 5.3 11.5 (31.8) 4.8Income Tax (Provision) Benefit (f) (266.9) (243.4) (239.8) (242.6) (269.1) (351.7)Income from Discontinued Operations, Net of Tax (8.3) (41.3) (43.2) (49.5) (306.5) 80.5Adjusted Net Income 1,131.9 1,315.6 1,234.7 1,402.9 1,601.0 1,809.8
GAAP Diluted EPS 1.69 2.25 2.01 2.53 3.46 3.21GAAP Diluted EPS Growth 104% 33% -11% 26% 37% -7%
Cost of Revenues Charges, Net of Tax (b) 0.07 0.00 0.01 0.02 0.13 0.11Selling, General and Administrative Costs, Net of Tax (c) 0.00 0.00 0.00 0.01 0.13 0.03Restructuring and Other Costs (Income), Net of Tax (d) 0.06 0.06 0.10 0.10 0.16 0.15Amortization of Acquisition-related Intangible Assets, Net of Tax 0.81 0.87 0.88 0.89 1.12 1.36Gain/Loss on Extinguishment of Debt Facilities, Net of Tax 0.00 0.00 0.02 0.03 0.00 0.00Other Income, Net of Tax (e) 0.01 0.00 0.01 0.01 (0.05) 0.00
( ) f (f) (0 0 ) (0 06) (0 01) (0 0 ) 0 01 (0 1 )Income Tax (Provision) Benefit (f) (0.07) (0.06) (0.01) (0.04) 0.01 (0.14)Income from Discontinued Operations, Net of Tax (0.02) (0.10) (0.10) (0.12) (0.80) 0.22Adjusted Diluted EPS 2.55 3.02 2.92 3.43 4.16 4.94
Adjusted Diluted EPS Growth 36% 18% -3% 17% 21% 19%
(d) Restructuring and other costs 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 of pension plans, and the sale of businesses, product lines and property.
(e) The excluded items from other income, net, represent amortization of acquisition-related intangible assets and restructuring charges of the company's equity investments; in 2007, 2008, and 2009 the loss from an other-than-temporary decline in fair market value of an investment; in 2007 and 2008, the currency transaction gain associated with an intercompany financing transaction; in 2010 and 2011, costs to obtain short-term financing commitments related to acquisitions; and in 2011, a gain on sale of an equity investment accounted for under the cost method.
(f) 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.
(a) Revenue growth for 2007 is calculated on a pro forma basis which includes the pre-merger results of Fisher from the beginning of 2006. 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.
(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; and in 2011 and 2012, a charge associated with product liability litigation.
Page 3 of 12
(Dollars in millions except EPS)
RevenueAnalytical Technologies SegmentSpecialty Diagnostics SegmentLaboratory Products and Services SegmentEliminationsTotal Revenue
Reported Revenue GrowthAcquisitions net of DivestituresCurrency TranslationOrganic Revenue Growth
Pro Forma Revenue Growth**Acquisitions net of DivestituresCurrency TranslationPro Forma Organic Revenue Growth**
$ % $ % $ % $ % $ %
GAAP Cost of Goods Sold 1,767.1 57.8% 1,786.8 57.5% 1,787.3 57.9% 1,873.2 57.5% 1,855.2 58.1%Cost of Revenues Charges (a) (26.6) -0.9% (12.8) -0.4% (3.1) -0.1% (13.1) -0.4% (13.2) -0.4%Amortization of Acquisition-related Intangible Assets (55.2) -1.8% (53.6) -1.8% (55.0) -1.8% (57.6) -1.8% (56.1) -1.7%Adjusted Cost of Goods Sold 1,685.3 55.1% 1,720.4 55.3% 1,729.2 56.0% 1,802.5 55.3% 1,785.9 56.0%
GAAP Gross Margin 1,289.7 42.2% 1,321.3 42.5% 1,298.4 42.1% 1,386.1 42.5% 1,336.3 41.9%Cost of Revenues Charges (a) 26.6 0.9% 12.8 0.4% 3.1 0.1% 13.1 0.4% 13.2 0.4%Amortization of Acquisition-related Intangible Assets 55.2 1.8% 53.6 1.8% 55.0 1.8% 57.6 1.8% 56.1 1.7%Adjusted Gross Margin 1,371.5 44.9% 1,387.7 44.7% 1,356.5 44.0% 1,456.8 44.7% 1,405.6 44.0%
Quarterly Reconciliation of GAAP to Adjusted P&L
1,535.0(131.2)
972.4
2%
1,079.0
1,544.3
Q3-12
731.9
(136.2)
4%-3%
3,056.8
14%
3,108.1
9%
-1% 4% ***
1%-3%
3,085.7
Q1-12
980.0731.9
1,475.8(130.9)
791.81,516.6(128.1)
4% *** 4% ***
3%1%
-1%
4%1%
Q2-12
1%
Q4-12
3,259.3
6%
986.5706.7
1,526.3(133.8)
5%
Q1-13
3,191.5
4%3%-1%
977.8805.6
3% ***
GAAP SG&A Expense 824.3 27.0% 835.0 26.9% 839.0 27.2% 856.6 26.3% 829.5 26.0%Selling, General and Administrative Costs, Net (b) 7.7 0.2% (1.8) -0.1% (19.0) -0.7% 0.6 0.0% (1.3) -0.1%Amortization of Acquisition-related Intangible Assets (128.7) -4.2% (129.8) -4.2% (131.2) -4.2% (136.5) -4.2% (135.9) -4.2%Adjusted SG&A Expense 703.3 23.0% 703.4 22.6% 688.8 22.3% 720.7 22.1% 692.3 21.7%
GAAP R&D Expense 91.7 3.0% 94.2 3.0% 92.0 3.0% 98.5 3.0% 98.2 3.1%Amortization of Acquisition-related Intangible Assets - 0.0% - 0.0% - 0.0% - 0.0% - 0.0%Adjusted R&D Expense 91.7 3.0% 94.2 3.0% 92.0 3.0% 98.5 3.0% 98.2 3.1%
GAAP Operating Income 361.5 11.8% 367.8 11.8% 352.2 11.4% 400.6 12.3% 387.1 12.1%Cost of Revenues Charges (a) 26.6 0.9% 12.8 0.4% 3.1 0.1% 13.1 0.4% 13.2 0.4%Selling, General and Administrative Costs (b) (7.7) -0.2% 1.8 0.1% 19.0 0.7% (0.6) 0.0% 1.3 0.1%Restructuring and Other Costs (Income), Net (c) 12.2 0.4% 24.3 0.8% 15.2 0.5% 30.4 0.9% 21.5 0.7%Amortization of Acquisition-related Intangible Assets 183.9 6.0% 183.4 5.9% 186.2 6.0% 194.1 6.0% 192.0 6.0%Adjusted Operating Income 576.5 18.9% 590.1 19.0% 575.7 18.7% 637.6 19.6% 615.1 19.3%
Add back Depreciation Expense 58.6 1.9% 58.2 1.9% 59.0 1.9% 60.3 1.8% 59.0 1.8%Adjusted EBITDA 635.1 20.8% 648.3 20.9% 634.7 20.6% 697.9 21.4% 674.1 21.1%
(Quarterly P&L Reconciliation continued on the next page)
*** Results do not sum due to rounding.
(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.
(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 Q1 2012, a gain from settlement with a product liability insurer and in Q3 2012, a charge associated with product liability litigation.
(c) Restructuring and other costs 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 of pension plans, and the sale of businesses, product lines and property.
** Pro forma results include 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.
Page 4 of 12
(Dollars in millions except EPS)
Quarterly Reconciliation of GAAP to Adjusted P&L
Q3-12Q1-12 Q2-12 Q4-12 Q1-13$ % $ % $ % $ % $ %
GAAP Tax Provision 30.3 9.7% 26.0 8.2% (3.0) -1.0% (42.3) -12.3% 2.1 0.6%Tax Effect of Adjusted Items (e) 62.6 7.9% 67.3 9.0% 91.4 17.9% 130.4 27.5% 63.3 11.1%Adjusted Tax Provision 92.9 17.6% 93.3 17.2% 88.4 16.9% 88.1 15.2% 65.4 11.7%
GAAP Net Income 277.3 233.8 290.4 376.4 336.2Cost of Revenues Charges (a) 26.6 12.8 3.1 13.1 13.2Selling, General and Administrative Costs (b) (7.7) 1.8 19.0 (0.6) 1.3Restructuring and Other Costs (Income), Net (c) 12.2 24.3 15.2 30.4 21.5Amortization of Acquisition-related Intangible Assets, Net of Tax 183.9 183.4 186.2 194.1 192.0Gain/Loss on Extinguishment of Debt Facilities 0.5 0.0 0.0 0.0 0.0Other Income (d) 0.7 2.0 1.7 0.4 (9.8)Income Tax (Provision) Benefit (e) (62.6) (67.3) (91.4) (130.4) (63.3)Income from Discontinued Operations, Net of Tax 3.5 58.6 9.0 9.4 4.6Adjusted Net Income 434.4 449.4 433.2 492.8 495.7
GAAP Diluted EPS 0.75 0.63 0.79 1.04 0.93GAAP Diluted EPS Growth 17% -54% 14% 35% 24%
Cost of Revenues Charges, Net of Tax (a) 0.05 0.03 0.00 0.02 0.03Selling, General and Administrative Costs, Net of Tax (b) (0.01) 0.00 0.04 0.00 0.00Restructuring and Other Costs (Income), Net of Tax (c) 0.02 0.05 0.03 0.05 0.04Amortization of Acquisition-related Intangible Assets, Net of Tax 0.34 0.34 0.31 0.37 0.38Gain/Loss on Extinguishment of Debt Facilities, Net of Tax 0.00 0.00 0.00 0.00 0.00Other Income, Net of Tax (d) 0.00 0.00 0.00 0.00 (0.02)Income Tax (Provision) Benefit (e) 0.01 0.01 0.00 (0.15) 0.00Income from Discontinued Operations, Net of Tax 0.01 0.16 0.02 0.03 0.01Adjusted Diluted EPS 1.17 1.22 1.19 1.36 1.37
Adjusted Diluted EPS Growth 27% 23% 11% 14% 17%
Reconciliation of Free Cash FlowGAAP Net Cash Provided by Operating Activities 392.0 507.5 479.9 660.1 298.3Net Cash (Provided by) Used in Discontinued Operations 5.9 3.3 12.0 7.2 0.8Purchases of Property, Plant, and Equipment (69.2) (65.5) (76.0) (104.4) (66.0)Proceeds from Sale of Property, Plant and Equipment 4.0 3.7 3.9 1.2 3.0Free Cash Flow 332.7 449.0 419.8 564.1 236.1
Book to Bill Ratio 1.02 1.00 1.00 1.01 1.01
(d) The excluded items from other income, net, represent amortization of acquisition-related intangible assets and restructuring charges of the company's equity investments; and in Q1 2013, realized gains on available-for-sale investments irrevocably contributed to the company's U.K. pension plans.
(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.
(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.
(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 Q1 2012, a gain from settlement with a product liability insurer and in Q3 2012, a charge associated with product liability litigation.
(c) Restructuring and other costs 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 of pension plans, and the sale of businesses, product lines and property.
Page 5 of 12
(Dollars in millions) 2007 2008 2009 2010 2011 2012 Q1 13
Reconciliation of Free Cash FlowGAAP Net Cash Provided by Operating Activities 1,483.5 1,420.2 1,659.2 1,497.8 1,691.0 2,039.5 298.3Net Cash Provided by Discontinued Operations (45.3) (44.1) (61.8) (47.7) (14.4) 28.4 0.8Purchases of Property, Plant, and Equipment (168.5) (248.7) (197.5) (245.4) (260.9) (315.1) (66.0)Proceeds from Sale of Property, Plant and Equipment 18.9 15.3 13.3 10.2 8.2 12.8 3.0Free Cash Flow 1,288.6 1,142.7 1,413.2 1,214.9 1,423.9 1,765.6 236.1
GAAP Return on Invested Capital (ROIC) 4.9% 6.3% 5.6% 6.5% 7.1% 5.5% 5.7%Cost of Revenues Charges (a) 0.3% 0.0% 0.0% 0.1% 0.4% 0.3% 0.2%Selling, General and Administrative Costs (b) 0.0% 0.0% 0.0% 0.0% 0.3% 0.1% 0.1%Restructuring and Other Costs (Income), Net (c) 0.3% 0.2% 0.4% 0.4% 0.5% 0.4% 0.4%Amortization of Acquisition-related Intangible Assets 3.7% 3.8% 3.8% 3.5% 3.5% 3.5% 3.5%Gain/Loss on Extinguishment of Debt Facilities 0.0% 0.0% 0.1% 0.1% 0.0% 0.0% 0.0%Net Interest Expense 0.7% 0.7% 0.7% 0.4% 0.7% 0.8% 0.9%Other Income (d) 0.0% 0.0% 0.0% 0.1% -0.2% 0.0% 0.0%Income Tax (Provision) Benefit (e) -1.9% -1.7% -1.7% -1.6% -1.4% -1.7% -1.6%Income from Discontinued Operations, Net of Tax 0.0% -0.2% -0.2% -0.2% -1.7% 0.4% 0.4%Adjusted ROIC 8.0% 9.1% 8.7% 9.3% 9.2% 9.3% 9.6%
GAAP Return on Equity (ROE) 5.2% 6.6% 5.6% 6.7% 8.7% 7.7% 8.0%Cost of Revenues Charges (a) 0.3% 0.0% 0.0% 0.1% 0.5% 0.4% 0.3%Selling, General and Administrative Costs (b) 0.0% 0.0% 0.0% 0.0% 0.4% 0.1% 0.1%
Free Cash Flow, Return on Invested Capital and Return on Equity
Restructuring and Other Costs (Income), Net (c) 0.3% 0.2% 0.4% 0.4% 0.7% 0.6% 0.6%Amortization of Acquisition-related Intangible Assets 3.9% 3.9% 3.8% 3.6% 4.2% 4.9% 4.9%Gain/Loss on Extinguishment of Debt Facilities 0.0% 0.0% 0.1% 0.1% 0.0% 0.0% 0.0%Net Interest Expense 0.7% 0.6% 0.6% 0.5% 0.7% 1.2% 1.3%Other Income (d) 0.0% 0.0% 0.0% 0.1% -0.2% 0.0% 0.0%Income Tax (Provision) Benefit (e) -1.8% -1.6% -1.5% -1.6% -1.8% -2.3% -2.3%Income from Discontinued Operations, Net of Tax 0.0% -0.2% -0.2% -0.3% -2.0% 0.5% 0.5%Adjusted ROE 8.6% 9.5% 8.8% 9.6% 11.2% 13.1% 13.4%
(d) The excluded items from other income, net, represent amortization of acquisition-related intangible assets and restructuring charges of the company's equity investments; in 2007, 2008, and 2009 the loss from an other-than-temporary decline in fair market value of an investment; in 2007 and 2008, the currency transaction gain associated with an intercompany financing transaction; in 2010 and 2011, costs to obtain short-term financing commitments related to acquisitions; and in 2011, a gain on sale of an equity investment accounted for under the cost method.(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.
(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.(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; and in 2011 and 2012, a charge associated with product liability litigation.(c) Restructuring and other costs 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 of pension plans, and the sale of businesses, product lines and property.
Page 6 of 12
(Dollars in millions) Q1-12 Q2-12 Q3-12 Q4-12 2012 Q1-13
Analytical Technologies SegmentRevenues 980.0 972.4 986.5 1,079.0 4,017.9 977.8Total Revenue Growth 1% 2% 0%Acquisitions net of Divestitures 0% 0% 0%Currency Translation -3% -1% -1%Organic Revenue Growth 4% 3% 1%
Pro Forma Revenue Growth* 6% 1% 3%Acquisitions net of Divestitures 0% 0% 0%Currency Translation -1% -3% -2%Pro Forma Organic Revenue Growth* 7% 5% † 5%
GAAP Gross Margin 48.9%Cost of Revenues Charges (a) 0.0%Amortization of Acquisition-related Intangible Assets 2.0%Adjusted Gross Margin 50.9%
Operating Income 178.8 169.0 186.1 215.2 749.1 176.1Operating Income Margin 18.2% 17.4% 18.9% 19.9% 18.6% 18.0%Operating Income Margin Expansion +1.9 pts +0.4 pts -0.5 pts -1.0 pts +0.0 pts -0.2 pts
Specialty Diagnostics SegmentRevenues 731.9 731.9 706.7 791.8 2,962.3 805.6Total Revenue Growth 12% 10%Acquisitions net of Divestitures 7% 7%Currency Translation -1% -1%Organic Revenue Growth 6% 4%
Pro Forma Revenue Growth** 1% 1% 2% 4%Acquisitions net of Divestitures 1% 2% 1% 3%Currency Translation -1% -4% -4% -2%Pro Forma Organic Revenue Growth** 1% 3% 5% 4% †
Segment Data
Pro Forma Organic Revenue Growth 1% 3% 5% 4% †
GAAP Gross Margin 44.9%Cost of Revenues Charges (a) 1.7%Amortization of Acquisition-related Intangible Assets 3.7%Adjusted Gross Margin 50.3%
Operating Income 186.9 199.3 170.0 205.0 761.2 221.7Operating Income Margin 25.5% 27.2% 24.1% 25.9% 25.7% 27.5%Operating Income Margin Expansion +0.8 pts +3.4 pts -0.3 pts +1.9 pts +1.5 pts +2.0 pts
Laboratory Products & Services SegmentRevenues 1,475.8 1,535.0 1,526.3 1,516.6 6,053.7 1,544.3Total Revenue Growth 4% 2% 5% 4% 4% 5%Acquisitions net of Divestitures 0% 1% 2% 2% 1% 2%Currency Translation -1% -3% -2% 0% -1% 0%Organic Revenue Growth 4% † 4% 5% 3% † 4% 3%
GAAP Gross Margin 33.2%Cost of Revenues Charges (a) 0.0%Amortization of Acquisition-related Intangible Assets 0.6%Adjusted Gross Margin 33.8%
Operating Income 210.8 221.8 219.6 217.4 869.6 217.3Operating Income Margin 14.3% 14.4% 14.4% 14.3% 14.4% 14.1%Operating Income Margin Expansion -0.1 pts -0.2 pts +0.2 pts +0.2 pts +0.1 pts -0.2 pts
† Results do not sum due to rounding.
* Pro forma results include the pre-acquisition results of Dionex from the beginning of the second quarter 2011 and for the comparable prior year quarters.** Pro forma results include the pre-acquisition results of Phadia from the beginning of the third quarter 2011 and for the comparable prior year quarters.
(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.
Page 7 of 12
(Dollars in millions)12/31/2008 12/31/2009 12/31/2010 12/31/2011 12/31/2012 3/30/2013
AssetsCurrent Assets: Cash and cash equivalents 1,280.5 1,564.1 917.1 1,016.3 851.0 1,004.1 Short-term investments 7.5 7.1 8.9 4.3 4.3 4.2 Accounts receivable, net 1,422.0 1,345.6 1,434.4 1,763.7 1,804.9 1,904.5 Inventories 1,151.0 1,113.0 1,153.0 1,330.1 1,443.3 1,474.6 Other current assets 484.9 501.1 621.6 707.5 731.3 748.7
Total Current Assets 4,345.9 4,530.9 4,135.0 4,821.9 4,834.8 5,136.1
Property, Plant and Equipment, Net 1,193.7 1,252.5 1,319.9 1,611.3 1,726.4 1,685.8Acquisition-related Intangible Assets 6,261.5 6,192.4 5,913.7 7,815.9 7,804.5 7,560.9Other Assets 901.6 957.0 999.9 611.3 604.4 583.8Goodwill 8,387.3 8,692.2 8,980.9 11,973.3 12,474.5 12,444.1
21,090.0 21,625.0 21,349.4 26,833.7 27,444.6 27,410.7
Liabilities and Shareholders' EquityCurrent Liabilities: Short-term obligations and current maturities of long-term obligations 14.8 117.5 105.8 1,272.8 93.1 394.0 Accounts payable 523.9 518.6 532.5 612.3 641.4 660.6 Other current liabilities 1,001.5 1,003.2 1,071.5 1,228.0 1,358.8 1,248.2
Total Current Liabilities 1,540.2 1,639.3 1,709.8 3,113.1 2,093.3 2,302.8
Balance Sheet and Leverage Ratios
Other Long-term Liabilities 2,596.0 2,488.9 2,247.3 2,927.3 2,855.4 2,784.0Long-term Obligations 2,003.1 2,064.0 2,031.3 5,755.2 7,031.2 6,724.4
Incremental Convertible Debt Obligation 24.2 1.9 0.0 0.0 0.0 0.0
Total Shareholders' Equity 14,926.5 15,430.9 15,361.0 15,038.1 15,464.7 15,599.5
21,090.0 21,625.0 21,349.4 26,833.7 27,444.6 27,410.7
Leverage RatiosTotal Debt / TTM EBITDA 1.0X 1.3X 1.1X 3.3X 2.9X 2.8XEffect of Adjusted Items 0.0X -0.1X 0.0X -0.3X -0.2X -0.1X
Total Debt / Adjusted TTM EBITDA(a) 1.0X 1.2X 1.1X 3.0X 2.7X 2.7X
Net Debt(b) / TTM EBITDA 0.4X 0.4X 0.6X 2.8X 2.5X 2.4XEffect of Adjusted Items 0.0X -0.1X 0.0X -0.2X -0.1X -0.1X
Net Debt(b) / Adjusted TTM EBITDA(a) 0.4X 0.3X 0.6X 2.6X 2.4X 2.3X
(b) Net debt is short-term and long-term debt less cash and short-term investments.
(a) Adjusted EBITDA equals adjusted operating income excluding depreciation.
Page 8 of 12
(Dollars in millions) MaturityDate 12/31/2011 12/31/2012 3/30/2013
Short-term
TMO 2.15% Senior Notes (a) 12/28/2012 354 0 0
TMO 2.05% Senior Notes (a) 2/21/2014 0 0 302
Commercial Paper 900 50 50
Other 19 43 42
Total Short-term 1,273 93 394
Long-term
TMO 2.05% Senior Notes (a) 2/21/2014 306 303 0
TMO 3.25% Senior Notes (a) 11/20/2014 419 413 411
TMO 3.20% Senior Notes (a) 5/1/2015 474 467 465
TMO 5% Senior Notes 6/1/2015 250 250 250
Debt
TMO 3.20% Senior Notes 3/1/2016 900 900 900
TMO 2.25% Senior Notes 8/15/2016 998 999 999
TMO 1.85% Senior Notes 1/15/2018 0 500 500
TMO 4.70% Senior Notes 5/1/2020 300 300 300
TMO 4.50% Senior Notes 3/1/2021 994 994 994
TMO 3.60% Senior Notes 8/15/2021 1,098 1,098 1,098
TMO 3.15% Senior Notes 1/15/2023 0 796 796
Other 16 11 11
Total Long-term 5,755 7,031 6,724
Total Debt 7,028 7,124 7,118
Total Cash and Short-term Investments 1,021 855 1,008
Net Debt(b) 6,007 6,269 6,110
(b) Net debt is short-term and long-term debt less cash and short-term investments.
(a) Previously, fixed rate interest had been swapped to variable rate. In August 2011, the company terminated its fixed to floating rate swap arrangements.
Page 9 of 12
Revenue (a)
($ millions)
2012
September 13 One Lambda Acquisition SDS $182
July 24 Princeton Security Technologies, Inc Acquisition ATS $5
May 1 Doe & Ingalls Acquisition LPS $110
2011
August 23 Phadia Acquisition SDS $525 (€367)(b)
July 18 TREK Diagnostic Systems Acquisition SDS $34
May 18 Sterilin Acquisition LPS $35
May 13 Dionex Acquisition ATS $460
Transaction Date Entity Acquisition or
Divestiture Business Description Segment
Global leader in allergy and autoimmunity clinical diagnostics
Global provider of microbiology solutions
Manufacturer and supplier of single-use plastic products
Manufacturer of liquid and ion chromatography systems
Premium provider of specialty production chemicals and customized supply-chain services
Manufacturer and supplier of radioactive isotope identifiers, x-ray and gamma-ray detectors and spectroscopy systems
2010 - 2012 Publicly Announced Acquisitions/Divestitures
Global leader in transplant diagnostics
May 13 Dionex Acquisition ATS $460
April 4 Athena Diagnostics Divestiture SDS $110
April 4 Lancaster Labs Divestiture LPS $115
2010
December 24 Lomb Scientific Acquisition ATS & LPS $34 (AUD $34)(b)
July 16 Fermentas Acquisition ATS $55 (CAD $57)(b)
April 15 Proxeon Acquisition ATS $10
March 5 Finnzymes Acquisition ATS $20
February 26 Ahura Scientific Acquisition ATS $45
(a) Approximate revenue from prior full year reporting period as of the announcement date (b) Approximate US Dollar value based on exchange rate at the time of acquisition announcement
Lab chemicals provider in Australia and New Zealand
Molecular & cell biology products for genomics research
Liquid chromatography products for proteomics workflow
PCR reagents and consumables
Portable optical analysis instruments
Contract lab providing comprehensive analytical services
Manufacturer of liquid and ion chromatography systems
Reference lab for diagnostic testing of neurological diseases
Page 10 of 12
2009 2010 2011 2012 Q1 2013
10.5 20.7 24.5 20.8 1.3
$39.62 $48.94 $54.68 $55.18 $69.89
$415 $1,013 $1,337 $1,150 $90
Capital Deployment
Remaining Authorization (in millions) as of 3/30/2013: $910
Share Buybacks
Total Number of Shares Purchased (millions)
Average Price Paid per Share
Total Spend ($ millions)
Q1 2012 Q2 2012 Q3 2012 Q4 2012 2012 Q1 2013
$0.13 $0.13 $0.13 $0.15 $0.54 $0.15 Amount per Share(1)
Dividends
(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.
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Fi
FIRST QUARTER THIRD QUARTERMonth S M T W T F S Week Month S M T W T F S Week Month S M T W T F S Week Month S M T W T F S Week
1 2 3 4 5 6 7 1 1 2 3 4 5 6 7 27 1 2 3 4 5 1 30 1 2 3 4 5 6 27
JAN 8 9 10 11 12 13 14 2 JULY 8 9 10 11 12 13 14 28 JAN 6 7 8 9 10 11 12 2 JULY 7 8 9 10 11 12 13 28
5 Weeks 15 16 17 18 19 20 21 3 5 Weeks 15 16 17 18 19 20 21 29 5 Weeks 13 14 15 16 17 18 19 3 5 Weeks 14 15 16 17 18 19 20 29
22 23 24 25 26 27 28 4 22 23 24 25 26 27 28 30 20 21 22 23 24 25 26 4 21 22 23 24 25 26 27 30
29 30 31 1 2 3 4 5 29 30 31 1 2 3 4 31 27 28 29 30 31 1 2 5 28 29 30 31 1 2 3 31
5 6 7 8 9 10 11 6 5 6 7 8 9 10 11 32 3 4 5 6 7 8 9 6 4 5 6 7 8 9 10 32
FEB 12 13 14 15 16 17 18 7 AUG 12 13 14 15 16 17 18 33 FEB 10 11 12 13 14 15 16 7 AUG 11 12 13 14 15 16 17 33
4 Weeks 19 20 21 22 23 24 25 8 4 Weeks 19 20 21 22 23 24 25 34 4 Weeks 17 18 19 20 21 22 23 8 4 Weeks 18 19 20 21 22 23 24 34
26 27 28 29 1 2 3 9 26 27 28 29 30 31 1 35 24 25 26 27 28 1 2 9 25 26 27 28 29 30 31 35
4 5 6 7 8 9 10 10 2 3 4 5 6 7 8 36 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 36
MARCH 11 12 13 14 15 16 17 11 SEPT 9 10 11 12 13 14 15 37 MARCH 10 11 12 13 14 15 16 11 SEPT 8 9 10 11 12 13 14 37
4 Weeks 18 19 20 21 22 23 24 12 4 Weeks 16 17 18 19 20 21 22 38 4 Weeks 17 18 19 20 21 22 23 12 4 Weeks 15 16 17 18 19 20 21 38
25 26 27 28 29 30 31 13 23 24 25 26 27 28 29 39 24 25 26 27 28 29 30 13 22 23 24 25 26 27 28 39
SECOND QUARTER FOURTH QUARTER SECOND QUARTER FOURTH QUARTER
1 2 3 4 5 6 7 14 30 1 2 3 4 5 6 40 31 1 2 3 4 5 6 14 29 30 1 2 3 4 5 40
APRIL 8 9 10 11 12 13 14 15 OCT 7 8 9 10 11 12 13 41 APRIL 7 8 9 10 11 12 13 15 OCT 6 7 8 9 10 11 12 41
2013 FISCAL CALENDAR2012 FISCAL CALENDAR
Fiscal Calendar
FIRST QUARTER THIRD QUARTER
5 Weeks 15 16 17 18 19 20 21 16 5 Weeks 14 15 16 17 18 19 20 42 5 Weeks 14 15 16 17 18 19 20 16 5 Weeks 13 14 15 16 17 18 19 42
22 23 24 25 26 27 28 17 21 22 23 24 25 26 27 43 21 22 23 24 25 26 27 17 20 21 22 23 24 25 26 43
29 30 1 2 3 4 5 18 28 29 30 31 1 2 3 44 28 29 30 1 2 3 4 18 27 28 29 30 31 1 2 44
6 7 8 9 10 11 12 19 4 5 6 7 8 9 10 45 5 6 7 8 9 10 11 19 3 4 5 6 7 8 9 45
MAY 13 14 15 16 17 18 19 20 NOV 11 12 13 14 15 16 17 46 MAY 12 13 14 15 16 17 18 20 NOV 10 11 12 13 14 15 16 46
4 Weeks 20 21 22 23 24 25 26 21 4 Weeks 18 19 20 21 22 23 24 47 4 Weeks 19 20 21 22 23 24 25 21 4 Weeks 17 18 19 20 21 22 23 47
27 28 29 30 31 1 2 22 25 26 27 28 29 30 1 48 26 27 28 29 30 31 1 22 24 25 26 27 28 29 30 48
3 4 5 6 7 8 9 23 2 3 4 5 6 7 8 49 2 3 4 5 6 7 8 23 1 2 3 4 5 6 7 49
JUNE 10 11 12 13 14 15 16 24 DEC 9 10 11 12 13 14 15 50 JUNE 9 10 11 12 13 14 15 24 DEC 8 9 10 11 12 13 14 50
4 Weeks 17 18 19 20 21 22 23 25 4 Weeks 16 17 18 19 20 21 22 51 4 Weeks 16 17 18 19 20 21 22 25 4 Weeks 15 16 17 18 19 20 21 51
24 25 26 27 28 29 30 26 23 24 25 26 27 28 29 52 23 24 25 26 27 28 29 26 22 23 24 25 26 27 28 52
30 31 29 30 31
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