Reported revenues increased 1% to a record $2.65 billion in the fourth quarter of 2008, against $2.62 billion in the 2007 quarter. The quarterly revenue growth reflects the negative impact of currency translation, which lowered revenues by 4%, offset by the positive effect of acquisitions, net of divestitures, which increased revenues by 1%. GAAP diluted earnings per share (EPS) were $0.68 in 2008, versus $0.54 in the year-ago period. GAAP operating income for the 2008 quarter was $322.5 million, against $285.0 million in 2007, and GAAP operating margin was 12.2%, against 10.9% a year ago.
Adjusted EPS grew 16% to $0.88 in the fourth quarter of 2008, versus $0.76 in the 2007 quarter. Adjusted operating income for the 2008 quarter up 9% versus 2007 results, and adjusted operating margin expanded 140 basis points to 18.6%, against adjusted operating margin of 17.2% in the 2007 period.
Currency translation increased revenues by 1%, and acquisitions, net of divestitures, increased revenues by 2%. GAAP diluted EPS was $2.29 in 2008, versus $1.72 in 2007. GAAP operating income in 2008 was $1.23 billion, against $974.4 million a year ago, and GAAP operating margin was 11.7% in 2008, against 10.0% in 2007. Full-year adjusted EPS grew 19% to $3.16 in 2008, versus $2.65 in 2007. Adjusted operating income for 2008 increased 14% over 2007 results, and adjusted operating margin expanded 100 basis points to 17.8%, against adjusted operating margin of 16.8% in 2007.
Adjusted EPS, adjusted operating income, adjusted operating margin and free cash flow are non-GAAP measures that exclude certain items detailed later in this press release under the heading “Use of Non-GAAP Financial Measures.”
Full-Year Highlights
Adjusted EPS rose 19%
Adjusted operating income increased 14%
Adjusted operating margin expanded 100 basis points
Generated $1.2 billion of free cash flow
Leveraged about $250 million in R&D spending to launch innovative new products
Continued significant investment in Asia to expand offerings for analytical, environmental and biopharma markets
Completed strategic acquisitions that added about $120 million in annualized revenues
“We are pleased to report very solid financial results for both the fourth quarter and the full year in spite of the economic headwinds that continue to put pressure on capital spending in some of our end markets,” said Marijn E. Dekkers, president and chief executive officer of Thermo Fisher Scientific. “Our performance is largely the result of our favorable product mix, with two-thirds of our revenues coming from recurring sales of consumables and services that tend to hold up better in an uncertain environment. I also applaud the tremendous effort of our employees – their intensity in achieving our goals allowed us to deliver a strong 2008 across the board. We finished the year with 8% revenue growth, for record top-line results. At the same time, we were able to expand adjusted operating margins by 100 basis points, which led to 19% growth in our adjusted EPS. In addition, we strengthened our balance sheet and generated $1.2 billion of free cash flow for the year.”
Dekkers added, “Looking to 2009, the economic climate will likely continue to restrain capital budgets, especially through the first half of the year. Based on that assumption, and a negative impact of about 4% from foreign exchange, we expect to achieve 2009 revenues of $10.0 to $10.3 billion, or a 2 to 5% decline against 2008.
“We expect adjusted EPS for 2009 to be in the range of $3.00 to $3.30. This factors in a $.15 foreign exchange headwind and a $.03 reduction resulting from non-cash interest expense associated with the new convertible debt accounting rule that takes effect in the first quarter. Our 2009 adjusted EPS estimate would lead to a growth range of negative 4% to positive 5% versus 2008 after applying a $.03 reduction to 2008 for the new accounting rule. Our estimates for 2009 reflect our continued investment in opportunities that will drive growth and position us to emerge from this recession an even stronger industry leader.”
