tmok2007.htm
UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C.
20549
FORM
10-K
|
|
Annual
Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 for the fiscal year ended December 31, 2007
or
|
|
o
|
Transition
Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
|
Commission
file number 1-8002
THERMO
FISHER SCIENTIFIC INC.
(Exact
name of Registrant as specified in its charter)
|
Delaware
|
04-2209186
|
|
(State
of incorporation or organization)
|
(I.R.S.
Employer Identification No.)
|
|
|
|
|
81
Wyman Street, P.O. Box 9046
|
|
|
Waltham,
Massachusetts
|
02454-9046
|
|
(Address
of principal executive offices)
|
(Zip
Code)
|
Registrant’s
telephone number, including area code: (781) 622-1000
Securities
registered pursuant to Section 12(b) of the Act:
|
Title
of each class
|
|
Name
of each exchange on which registered
|
|
Common
Stock, $1.00 par value
|
|
New
York Stock Exchange
|
|
Preferred
Stock Purchase Rights
|
|
New
York Stock Exchange
|
Securities
registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if
the registrant is a well-known seasoned issuer, as defined in Rule 405 of the
Securities Act. Yes x No o
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or 15(d) of the Act. Yes o No x
Indicate by check mark
whether the Registrant (1) has filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months, and (2) has been subject to such filing requirements for the past 90
days. Yes x No o
Indicate by check mark if
disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not
contained herein, and will not be contained, to the best of the Registrant’s
knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. o
Indicate
by check mark whether the Registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated
filer x
Accelerated filer o
Non-accelerated filer o
Smaller reporting
company
o
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes o No x
As of
June 29, 2007, the aggregate market value of the voting stock held by
nonaffiliates of the Registrant was approximately $22,038,086,000 (based on the
last reported sale of common stock on the New York Stock Exchange Composite Tape
reporting system on June 29, 2007).
As of
February 1, 2008, the Registrant had 418,600,105 shares of Common Stock
outstanding.
DOCUMENTS
INCORPORATED BY REFERENCE
Sections
of Thermo Fisher’s definitive Proxy Statement for the 2008 Annual Meeting of
Shareholders are incorporated by reference into Parts II and III of this
report.
THERMO
FISHER SCIENTIFIC
ANNUAL
REPORT ON FORM 10-K
FOR
THE FISCAL YEAR ENDED DECEMBER 31, 2007
|
|
|
|
|
|
|
Page
|
|
|
PART
I
|
|
|
|
|
|
|
Item
1.
|
|
3
|
|
|
|
|
|
Item
1A.
|
|
24
|
|
|
|
|
|
Item
1B.
|
|
31
|
|
|
|
|
|
Item
2.
|
|
31
|
|
|
|
|
|
Item
3.
|
|
32
|
|
|
|
|
|
Item
4.
|
|
33
|
|
|
|
|
|
|
PART
II
|
|
|
|
|
|
|
Item
5.
|
|
33
|
|
|
|
|
|
Item
6.
|
|
34
|
|
|
|
|
|
Item
7.
|
|
35
|
|
|
|
|
|
Item
7A.
|
|
52
|
|
|
|
|
|
Item
8.
|
|
53
|
|
|
|
|
|
Item
9.
|
|
53
|
|
|
|
|
|
Item
9A.
|
|
53
|
|
|
|
|
|
Item
9B.
|
|
54
|
|
|
|
|
|
|
PART
III
|
|
|
|
|
|
|
Item
10.
|
|
54
|
|
|
|
|
|
Item
11.
|
|
54
|
|
|
|
|
|
Item
12.
|
|
55
|
|
|
|
|
|
Item
13.
|
|
55
|
|
|
|
|
|
Item
14.
|
|
55
|
|
|
|
|
|
PART
IV
|
|
|
|
|
|
Item
15.
|
|
55
|
General
Development of Business
Thermo Fisher Scientific Inc. (also
referred to in this document as “Thermo Fisher,” “we,” the “company,” or the
“registrant”) is the world leader in serving science. We enable our customers to
make the world healthier, cleaner and safer by providing analytical instruments,
equipment, reagents and consumables, software and services for research,
manufacturing, analysis, discovery and diagnostics.
In November 2006, Thermo Electron
Corporation (also referred to in this document as “Thermo,” which is the
predecessor to Thermo Fisher) merged with Fisher Scientific International Inc.
(also referred to in this document as “Fisher”) to create the world leader in
serving science. Thermo Fisher has 33,000 employees and serves more than 350,000
customers within pharmaceutical and biotech companies, hospitals and clinical
diagnostic labs, universities, research institutions and government agencies, as
well as environmental, industrial quality and process control
settings.
We serve our customers through two
principal brands, Thermo Scientific and Fisher Scientific:
|
|
•
|
Thermo
Scientific is our technology brand,
offering customers a complete range of high-end analytical instruments as
well as laboratory equipment, software, services, consumables and reagents
to enable integrated laboratory workflow solutions. Our growing portfolio
of products includes innovative technologies for mass spectrometry,
elemental analysis, molecular spectroscopy, sample preparation,
informatics, fine- and high-purity chemistry production, cell culture,
RNA-interference analysis, immunodiagnostic testing, microbiology, as well
as environmental monitoring and process
control.
|
|
|
•
|
Our
Fisher Scientific brand offers convenience, providing
a complete portfolio of laboratory equipment, chemicals, supplies and
services used in healthcare, scientific research, safety and education
markets. These products are offered through an extensive network of direct
sales professionals, industry-specific catalogs, e-commerce capabilities
and supply-chain management services. We also offer a range of biopharma
services for clinical trials management, biospecimen storage and
analytical testing.
|
In addition to the two
principal brands, we offer a number of specialty brands that cover a range
of consumable products primarily for the life and laboratory sciences
industry.
We are continuously advancing the
capabilities of our technologies, software and services, and leveraging our
7,500 sales and service professionals around the world to address our customers’
emerging needs. Our goal is to make our customers more productive, and to allow
them to solve their analytical challenges, from complex research and discovery
to routine testing.
Thermo Fisher is a Delaware corporation
and was incorporated in 1956. The company completed its initial public offering
in 1967 and was listed on the New York Stock Exchange in 1980.
Forward-looking
Statements
Forward-looking statements, within the
meaning of Section 21E of the Securities Exchange Act of 1934 (the Exchange
Act), are made throughout this Annual Report on Form 10-K. Any statements
contained herein that are not statements of historical fact may be deemed to be
forward-looking statements. Without limiting the foregoing, the words
“believes,” “anticipates,” “plans,” “expects,” “seeks,” “estimates,” and similar
expressions are intended to identify forward-looking statements. While the
company may elect to update forward-looking statements in the future, it
specifically disclaims any obligation to do so, even if the company’s estimates
change, and readers should not rely on those forward-looking statements as
representing the company’s views as of any date subsequent to the date of the
filing of this report.
A number of important factors could
cause the results of the company to differ materially from those indicated by
such forward-looking statements, including those detailed under the heading,
“Risk Factors” in Part I, Item 1A.
Business
Segments and Products
We report our business in two segments:
Analytical Technologies and Laboratory Products and Services. For financial
information about segments, including domestic and international operations and
export sales, see Note 3 to our Consolidated Financial Statements, which begin
on page F-1 of this report.
Analytical
Technologies Segment
We serve the pharmaceutical,
biotechnology, academic, government and other research and industrial markets,
as well as the clinical laboratory and healthcare industries, through our
Analytical Technologies segment. This segment has seven principal product
groupings – Scientific Instruments, Biosciences, Microbiology, Integrative
Technologies, Diagnostics, Environmental Instruments and Process Instruments –
and provides a broad range of instruments, bioscience reagents, diagnostic
assays, software and services to address various scientific challenges in
laboratories, manufacturing and the field.
|
|
•
|
Our
Scientific Instruments include analytical instrumentation that analyzes
prepared samples.
|
|
|
•
|
Our
Biosciences products include leading reagents, tools and services used in
life science research, drug discovery and biopharmaceutical
production.
|
|
|
•
|
Our
Microbiology products include high-quality reagents and diagnostic kits
used in the diagnosis of infectious disease or for testing for bacterial
contamination to assure the safety and quality of consumer products such
as food and pharmaceuticals.
|
|
|
•
|
Our
Integrative Technologies offerings include software interpretation tools
and development support for the data generated by the instruments as well
as laboratory automation equipment and
systems.
|
|
|
•
|
Our
Diagnostics products and services are used by healthcare and other
laboratories to prepare and analyze patient samples to detect and diagnose
diseases.
|
|
|
•
|
Our
Environmental Instruments include solutions and services for environmental
monitoring, safety and security.
|
|
|
•
|
Our
Process Instruments provide measurement solutions and services outside the
laboratory to enable process control and
optimization.
|
Scientific
Instruments
Our analytical instrumentation is used
primarily in laboratory and industrial settings and incorporates a range of
techniques, including mass spectrometry (MS), chromatography and optical
spectroscopy, and can be combined with a range of accessories, consumables,
software, spectral reference databases, services and support to provide a
complete solution to the customer. Mass spectrometry is a technique for
analyzing chemical compounds, individually or in complex mixtures, by forming
gas phase charged ions that are then analyzed according to mass-to-charge
ratios. In addition to molecular information, each discrete chemical compound
generates a fragmentation pattern that provides structurally diagnostic
information. Chromatography is a technique for separating, identifying and
quantifying individual chemical components of substances based on physical and
chemical characteristics specific to each component. Optical spectroscopy is a
technique for analyzing individual chemical components of substances based on
the absorption or emission of electromagnetic radiation of a specific wavelength
of light, for example, visible (light), ultraviolet or infra-red.
In life sciences markets, we offer a
line of mass spectrometers including ion traps, quadrupoles and other advanced
mass spectrometers, as well as liquid chromatographs (LCs) and columns, and
multi-instrument combinations of these products as integrated solutions (LC-MS).
These systems are tailored to meet the rigorous demands of lab professionals in
applications such as drug discovery, life science research and analytical
quantitation.
Ion Trap and Hybrid MS. The
company’s ion trap and hybrid mass spectrometry product lines feature tiered
portfolios to support a wide spectrum of analytical requirements. These
instruments support applications ranging from routine compound identification
and high performance liquid chromatography (HPLC) detection to sophisticated
research applications such as the analysis of low-abundance components in
complex biological matrices.
|
|
•
|
LTQ
FT ULTRATM –
Combines our most advanced ion trap and Fourier Transform (FT) Ion
Cyclotron Resonance (ICR) technologies into a single instrument with
superior analytical power and versatility. The system uniquely combines
high resolution, accurate mass determinations and MSn (mass
spectrometry to the nth power) for high-throughput analysis on a single
instrument.
|
|
|
•
|
LTQ
Orbitrap XLTM –
Combines our most advanced ion trap with our patented Orbitrap technology,
providing high resolution and accurate mass determinations over a broad
dynamic range for advanced proteomics and small molecule
research.
|
|
|
•
|
LTQ
Orbitrap DiscoveryTM –
Combines our most advanced ion trap with our patented Orbitrap technology,
providing excellent resolution and mass accuracy for general proteomics
and metabolism applications.
|
|
|
•
|
LTQ
XLTM –
Based on a 2-dimensional (2-D) linear ion trap design and incorporating
patented innovative technologies and ease-of-use features, this system is
primarily used for metabolic profiling and proteomics
research.
|
|
|
•
|
LXQTM –
Based on a 2-D linear ion trap design, this system provides
high-throughput performance for drug discovery, forensics and proteomics
applications.
|
|
|
•
|
LCQ FleetTM –
A robust, entry-level ion trap mass spectrometer for routine analysis of
complex samples.
|
Triple Quadrupole MS. The
company’s TSQ Quantum Series consists of an advanced portfolio of triple
quadrupole mass spectrometers with both liquid chromatography (LC) and gas
chromatography (GC) inlets.
|
|
•
|
TSQ
Quantum AccessTM –
A versatile, entry-level mass spectrometer that is used in environmental
and food safety laboratories.
|
|
|
•
|
TSQ
Quantum Discovery MAXTM –
This ultra-compact benchtop MS system incorporates innovative technology
for increased sensitivity, precision, ruggedness and reliability. It is
principally designed for high-productivity environments such as
environmental, clinical research and drug discovery laboratories. With the
Ion Max source, the TSQ Quantum Discovery MAX addresses the needs of these
laboratories for more rugged and dependable LC-MS/MS to enable
around-the-clock productivity.
|
|
|
•
|
TSQ
Quantum UltraTM –
An advanced instrument used primarily for bioanalytical studies. It
features the Ion Max source with interchangeable electrospray ionization
(ESI) and atmospheric pressure chemical ionization (APCI) probes for
increased robustness and
sensitivity.
|
|
|
•
|
TSQ
Quantum GCTM –
High performance GC-MS/MS system that provides high sensitivity and
selectivity for applications in environmental, food safety, pharmaceutical
and clinical research laboratories.
|
In addition, we supply a range of
sample preparation capabilities for mass spectrometry including advanced sample
extraction and liquid chromatography products, which are used with triple
quadrupole mass spectrometers in bioanalysis and drug discovery.
TM
Represents a trademark or service mark of Thermo Fisher Scientific Inc. or its
subsidiaries.
A significant and growing application
for our technologically advanced mass spectrometers is proteomics, the study of
proteins. Most drugs – about 90 percent – interact with proteins, so
multi-instrument systems that can rapidly identify and quantify proteins are of
increasing value to pharmaceutical and biotechnology customers. The combination
of ETD (Electron Transfer Dissociation) with our LTQ XL ion trap machine extends
the range of techniques for proteomics researchers and enables routine analysis
of protein modifications. We continue to introduce new systems that address the
breadth of primary analytical needs for high-throughput analysis including
bioanalysis and proteomics research, as well as for other growing life science
areas such as:
|
|
•
|
Biomarkers
– compounds that may be endogenous and signal the early onset of a
specific disease.
|
|
|
•
|
ADME/Tox
– Absorption, Distribution, Metabolism, Excretion and Toxicology studies
that are conducted for drug discovery in support of human clinical
trials.
|
|
|
•
|
Metabalomics
– measurement of the real biochemical status, dynamics, interactions and
regulation of whole systems or organisms at a molecular
level.
|
In addition, Thermo Fisher offers a
broad range of advanced magnetic sector instrumentation for high-resolution MS.
This range also covers organic MS, gas isotope ratio MS and thermal ionization
MS.
Liquid Chromatography. Our
HPLC systems, comprising the high speed Accela HPLC, Surveyor PlusTM and
SpectraSYSTEMTM, offer
high throughput and sensitivity. They are sold as stand-alone instrumentation
(HPLC) or as integrated systems with our mass spectrometers (LC-MS and
LC-MS/MS). The Surveyor MSQTM Plus is
a fast scanning single quadrupole LC-MS system used primarily in pharmaceutical
laboratories as a UHPLC detector, providing chromatographers the ability to run
routine HPLC applications more efficiently with real-time mass confirmation.
These products utilize our comprehensive line of HPLC columns, including
HYPERSILTM Gold,
HyPurityTM and
Aquasil columns.
In January 2007, we acquired
Spectronex, a European-based supplier of mass spectrometry, chromatography and
surface science instrumentation, as well as Flux Instruments, a manufacturer of
high performance liquid chromatography pumps. The Flux acquisition provided the
pump for the new Accela UHPLC as well as a unique design platform for future
HPLC development.
Beyond life sciences markets, our
chemical analysis instrumentation, including our gas chromatography, elemental
analysis and molecular spectroscopy instrumentation, uses various separation and
optical spectroscopy techniques to determine the elemental and molecular
composition of a wide range of complex liquids and solids.
Gas Chromatography. Gas
chromatography is a separation technique used to analyze complex samples in the
form of gases. Thermo Fisher’s high performance and reliable line of gas
chromatographs (GCs) includes our Trace GC Ultra, a versatile laboratory GC with
a full range of detectors, injectors, and valve systems; our FOCUS GC, which is
a single-channel GC; our Trace GCxGC for analysis of target compounds in complex
matrices; and autosamplers, including our TriPlusTM
Autosampler, that provide a robotic sampling solution to a GC
laboratory.
Our GC offering is also incorporated
into our GC mass spectrometry (GC-MS) product line, which pairs a mass
spectrometer detector with a GC front end. Our offering includes the DSQTM II, a
GC-MS product based on the platform of Thermo Fisher’s DSQ and PolarisQ GC-MS
systems. The DSQ II incorporates the new DynaMax XR ion detection system and the
DuraBriteTM ion
source. The PolarisQ Ion Trap MSn offers affordable tandem mass spectrometry at
the sensitivity of GC-specific detectors.
Elemental Analysis. Thermo
Fisher also offers a line of elemental analysis instrumentation used to analyze
elements in liquid and solid samples. Our range of combustion analyzer products,
including our M & S Series atomic absorption (AA) systems, the iCAP 6000
Series benchtop inductively coupled plasma (ICP) spectrometers, and X SERIES 2
and ELEMENT2 ICP mass spectrometry (ICP-MS) systems are used for elemental
analysis of liquid samples. Environmental, geochemical and clinical/toxicology
laboratories often utilize these techniques, as well as many other industrial
laboratories. In particular, our award winning iCAP 6000 Series ICP
spectrometer, sold into growth markets such as China, environmental protection
and materials and chemicals, is used in applications that support new
regulations (such as the European Waste Electrical and Electronic Equipment
(WEEE) Directive and the European Union Directive on Restriction of Certain
Hazardous Substances (RoHS)).
Thermo Fisher also provides a full
range of instrumentation for elemental analysis of solids, using both X-ray
fluorescence and optical emission (OE) techniques. Our arc spark product line
based on OE spectrometry is ideal for use in process/quality control for the
direct, elemental analysis of solid metals. Products include the ARL QUANTRIS
and ARL QuantoDesk CCD-based metals analyzers, ARL 3460 and ARL 4460 OE
spectrometers that can be fully automated for unattended operation.
Our benchtop and standalone X-ray
fluorescence (WDXRF/EDXRF) systems for analysis of conductive or non-conductive
solids and liquids are used in many industrial and research laboratories, for
monitoring of a few elements in oils, polymers, cement or quarry materials to
the full analysis of glasses, metals, ores, refractories and geological
materials. Additionally our UniQuant software package makes it possible to
analyze totally unknown samples in any form without the need for certified
standards. Our X-ray diffraction (XRD) equipment allows analysis of phases or
compounds in crystalline materials. Both XRF and XRD techniques are integrated
into our unique ARL 9900 X-ray Workstation to provide total analysis
capabilities to the cement, metals and mining industries.
Molecular Spectroscopy.
Thermo Fisher is also a leader in analytical instrumentation involving
spectroscopic analysis of molecular structures. The new Nicolet i10 Series
Fourier transform infrared (FT-IR) and Nicolet 700 Series research grade FT-IR
systems provide a complete analytical offering in FT-IR spectroscopy and
microscopy, from routine QA/QC applications to advanced research work across
many industries including polymer, pharmaceutical and forensic. We are also a
leader in the Raman and Near infrared markets with our new DXR Raman Series
offering research capabilities to the routine-user. In 2007, Thermo Fisher
expanded its line of visible and ultraviolet visible (UV-Vis) spectrophotometers
and microanalysis products with the acquisition of NanoDrop Technologies, Inc.,
a U.S.-based supplier of micro-UV-Vis spectrophotometry and fluorescence
scientific instruments. These products are used in life science, pharmaceutical
and material science analysis.
Customers for Thermo Fisher’s chemical
analysis instrumentation include environmental, pharmaceutical, polymer,
petrochemical, food, semiconductor, energy, coatings, geological, steel and
basic materials producers who frequently use these instruments for quality
assurance and quality control applications, primarily in a
laboratory.
Services. We have an
extensive service network to support our installed base of instruments across
the globe. In addition, we provide a broad range of services, including
multi-vendor laboratory instrument services, such as instrument qualifications;
preventive and corrective maintenance; validation, regulatory compliance
and metrology; as
well as instrument/equipment asset management services with solutions that
deliver instrument and equipment maintenance management, physical inventory
tracking and enterprise-wide maintenance reporting to help customers improve the
cost/performance of their instrumentation, equipment and
facilities.
Biosciences
Our broad range of Biosciences products
and services includes fine and high-purity chemistry products; proprietary
protein analysis; RNA interference (RNAi); PCR and QPCR reagents and related
products; high content screening (HCS) and analysis (HCA); nucleic acid
synthesis reagents; molecular biology reagents; cell-culture products and
sterile liquid-handling systems. These products are used across the general
chemistry and life sciences arenas primarily for scientific research and drug
discovery, as well as biopharmaceutical research and production. Our Biosciences
products are sold under proprietary product names such as Acros OrganicsTM,
MaybridgeTM,
HyCloneTM,
PierceTM,
DharmaconTM and
ABgeneTM.
Global
Chemicals
Our Global Chemicals products provide
solutions for chemistry-based applications to scientists involved in analysis,
research and development, and manufacturing. We offer reliable, industry leading
products and services through internal expertise and through partnerships with
leading providers of chemical technology. We deliver high quality,
customer-focused, optimized products and solutions through our extensive global
distribution network. Our broad product portfolio includes Acros Organics
chemicals, which are used in basic research applications to synthesize new and
interesting materials. These products are supplied in pre-pack and semi-bulk
quantities and are used across all types of chemistry. Our Fisher ChemicalTM
products help scientists purify, extract, separate, identify and/or manufacture
products. These products are used across a range of industries, including
pharmaceutical, biotechnology, electronic, and environmental. Our Fisher
BioReagentsTM
products are used in many different laboratory applications, from cell growth to
detailed protein analysis, to help scientists understand functions within living
organisms. We also provide bulk sizes of our various products when customers
scale-up from research to development. The primary markets served are
pharmaceutical, life sciences and high technology.
Life
Science Research (LSR)
Our Life Science Research products
provide innovative technologies and services globally for genomics and
proteomics applications. We serve the pharmaceutical and biotechnology
industries as well as diagnostics companies, clinical laboratories, colleges and
universities, government and industrial customers. Our offering includes a wide
range of proprietary protein-research and cell-culture products; nucleic-acid
technologies; reagents for high-content cellular screening; reliable,
high-quality RNA oligonucleotides; small-interfering RNA and related
RNA-interference products; and plastic consumables.
Our Genomics offering includes products
and services which use nucleic acids to modulate gene expression or to measure
changes in the cellular levels of specific nucleic acids. We provide synthesis
reagents such as phosphoramidites to manufacturers of research and large scale
synthetic nucleic acids and supply other molecular biology reagents to life
science research, agricultural, clinical and diagnostic providers. Scientists
use our PCR and QPCR reagents and PCR reaction plates and sealing products, sold
under the ABgene name, to amplify and measure nucleic acids with high precision
and sensitivity, enabling them to gain a better understanding of the control
mechanisms inside a cell. Used in the study of cancer, metabolic diseases, in
epidemiological studies and in agriculture research, our products enable
scientists to shorten the drug development process. Our RNA products and
services, sold under the Dharmacon name, are used by scientists conducting basic
research to understand the function of genes and their role in biological
processes and human disease. They are also used in drug discovery to identify
and validate drug targets. RNA interference products are an exciting class of
emerging therapeutic compounds. We provide technologies used in the development
of potential RNAi-based therapeutics.
Our Proteomics products, sold under the
Pierce, BioImageTM and CellomicsTM names, enable the effective and
efficient study of the biology of proteins, and offer unique cell-based assays
and services for high-content pathway analysis. Scientists use our Pierce
reagents and kits for protein purification, protein detection and quantitation, protein sample preparation, protein labeling, protein interaction, and related studies, providing new
capabilities and sensitive and accurate results more efficiently. We also
provide proteomics products to manufacturers for inclusion in products sold for
research or industrial uses. Cellomics HCS Reagent Kits and BioImage Assays are
powerful tools for cell-based screening and analysis of specific molecular
targets and biological parameters.
BioProcess
Production
Our BioProcess Production offerings
include cell-culture and bioprocessing products used in the production of animal
and human viral vaccines, monoclonal antibodies, skin replacement and
protein-based drugs. The product line is used in research and academic markets
for cellular interaction studies, toxicity testing, antiviral, and anticancer
studies. Our
HyClone
product offering includes leading cell-culture products (sera, classical media,
serum-free and protein-free media, and process liquids) and bioprocessing
systems for life science research and protein-based drug production. The line
includes flexible, single-use BioProcess ContainerTM
(BPCTM)
systems, which are sterile, disposable bags specifically designed for
transporting, mixing, dispensing, and storing sterile liquids and powders. The
HyClone Single-Use Bioreactor (SUB) portfolio offers a single-use alternative to
conventional stirred tank bioreactors currently used in animal cell culture. The
SUB emulates the scalability and operating parameters of the conventional
stirred tank bioreactors, yet is disposable. Under the TC TechTM name,
we also provide sterile fluid-handling bags used to transfer, transport and
store bioprocess liquids in the biopharmaceutical manufacturing process as well
as tubing, fittings, connectors and flexible single-use containers specifically
qualified for use in bioscience applications in the biopharmaceutical,
biotechnology and diagnostic industries. Products, including cell-culture media,
sera, process liquids and reagents, as well as single-use BioProcess Container
systems, are provided in a variety of sizes ranging from small volumes up to
tens of thousands of liters of specialized products in large vessels for
full-scale production.
Microbiology
Our Microbiology offerings include
high-quality microbiology laboratory products, including dehydrated and prepared
culture media, collection and transport systems, diagnostic and rapid direct
specimen tests, quality-control products and associated products for the
microbiology laboratory. Our Microbiology products are sold under the OxoidTM and
RemelTM
specialty brands. Our products focus on aiding customers in the diagnosis of
infectious disease, implementing effective infection control programs or in
detecting microbial contamination of their products or manufacturing
facilities.
These products are used by
microbiologists worldwide to grow and identify bacteria and to detect viruses
and parasites. Within the clinical field, these products are used to facilitate
a rapid and accurate diagnosis of infectious disease, to determine appropriate
antimicrobial therapy and to aid in the implementation of infection control
programs. Key clinical customers include hospitals, public health and reference
laboratories, clinics and physician offices. Within the food and pharmaceutical
industries, our products are used to assure the safety and quality of consumer
products by monitoring production environments, raw materials and end products
for bacterial contamination. Industrial customers are comprised of quality
control and quality assurance functions within food, beverage, personal care,
pharmaceutical and biotech companies.
Integrative
Technologies
Our Integrative Technologies offerings
provide integrated solutions for customers in regulated and unregulated
industries such as pharmaceuticals, biotechnology, petrochemicals, chemicals,
and food and beverage utilizing our broad capabilities in laboratory equipment,
instrumentation, consumables, reagents and software. Our products include
laboratory information management systems (LIMS), chromatography data systems
(CDS), database analytical tools, automation systems, microplate instrumentation
and automated cellular imaging systems. To support our global installations, we
provide implementation, validation, training, maintenance and support from our
large global services network.
Informatics
Thermo Fisher develops and provides
LIMS solutions that provide application-specific, purpose-built functionality in
software targeted for certain industries. These industries include
pharmaceutical, petrochemical, chemical, food and beverage, metals and mining,
environmental and water/wastewater, as well as government and academia. Thermo
Fisher is a leader in developing commercial-off-the-shelf (COTS) solutions
designed for specific industry applications. Providing basic requirements as
standard functionality reduces risk for our customers and eases implementation,
validation and training, while lowering total cost of ownership. More recently,
we have focused our design and development on open standards.
Moving to
an open, service-oriented computing architecture based on Microsoft® .NET
creates more interoperability so our systems can enable end-to-end process
workflows. Our flagship LIMS, called SampleManager, moved to the .NET platform,
incorporated Service-Oriented Architecture, enhanced Web interfacing, and added
support for the Microsoft® SQL
Server 2005 database in addition to Oracle’s database option. Our DarwinTM LIMS is
also based on .NET. Other products within the portfolio will be moved to .NET,
migrating away from proprietary programming languages while continuing to
support existing customers’ use of such programming.
Our portfolio includes
SampleManagerTM LIMS,
an enterprise solution used in laboratories at leading companies in the
pharmaceutical, oil and gas, environmental, chemical and food and beverage
industries; WatsonTM LIMS,
for pharmaceutical bioanalytical laboratories; GalileoTM LIMS,
designed specifically for ADME and in-vitro testing in early drug discovery and
development; NautilusTM LIMS,
used in a range of industrial applications and increasingly by biotechnology
laboratories because of its configurability, patented workflows and
plate-handling capabilities; and Darwin LIMS for pharmaceutical manufacturing
R&D and QA/QC. In addition, we market the Atlas CDSTM, a
multi-industry enterprise-class system that is tightly integrated with our LIMS
solutions for greater accuracy and consistent reporting of shared data, as well
as increased productivity.
We also provide a global services
network of experienced consultants who provide a broad range of services focused
on the successful implementation of our customers’ projects. These services
include project planning, management of user workshops, defining business
requirements, milestone delivery, systems integration, workflow modeling and
validation consultancy.
Laboratory
Automation Solutions
Thermo Fisher is a leading innovator of
automation systems that provide solutions for the drug discovery market. With
core competencies in integration, applications and innovation, we work closely
with customers to develop both turnkey products and tailored systems for
genomic/proteomic, biochemical/cell based assays and drug discovery
applications. Our key technologies include automated storage, integration
platforms, robotics and software. Advanced automated storage systems offer both
low- and high-volume capacities with full environmental control. Our integration
platforms range from stand-alone plate stackers and movers to highly flexible
robotic solutions that incorporate advanced analytical equipment and software
for experiment design, control and analysis. Precise and reliable motion control
is achieved through state-of-the-art robotics that improve throughput and
walk-away time. The company’s software platforms schedule and control all
robotics and third-party instrumentation. These software platforms integrate
with LIMS and other informatics systems to enable efficient workflow and data
management. Our automated platforms incorporate all instrument core functions
such as readers, imagers, liquid handlers, bulk dispensers, incubators,
microplate stackers, and automated storage products.
Cellular
Imaging and Analysis
Thermo Fisher is a leading provider of
complete systems for high-content screening (HCS) and analysis (HCA) used by
drug discovery and systems-biology researchers. Our CellomicsTM
platform includes automated imaging instrumentation (ArrayScanTM VTM HCS
Reader and the cellWoRxTM High
Content Cell Analysis System), BioApplication image analysis software and High
Content Informatics (HCiTM), fully
integrated to improve the quality and productivity of cell-based assays. Our
proprietary platforms are in use at multiple sites within the top 15
pharmaceutical companies, as well as at leading biotechnology companies and
academic centers throughout the world. These products enable customers to
develop new and effective therapies to treat, cure and prevent diseases and are
utilized by scientists in drug discovery companies and basic research
institutions to look at how drug candidates and targets of interest affect live
cells. For drug discovery companies, these experiments enable scientists to
determine the best drug candidates and to ultimately shorten the drug discovery
process. For basic research scientists, these experiments enable scientists to
explore all aspects of cell biology in a fast, quantitative fashion. These
technologies are used in a range of drug discovery and in therapeutic areas such
as neurobiology, toxicology, cancer biology and cell biology.
Microplate
Instruments
Thermo Fisher offers a wide variety of
different microplate instruments for drug discovery, assay development, ELISA
and applied testing markets. Our portfolio includes different microplate
detection, bulk reagent dispensing, magnetic particle and microplate washer and
incubation instruments. The wide range of microplate detection systems include
the MultiskanTM
photometers, the FluoroskanTM
fluorometers, and the LuminoskanTM
luminometer. The Varioskan FlashTM and
AppliskanTM
multimode readers offer high performance for the most reliable assay data. The
Varioskan FlashTM
spectral scanning multimode reader is designed for analyzing and optimization of
assays, such as binding assays, ADMETox, molecular biology assays, enzyme
kinetic studies, ion-channel and cell signaling assays. Our Multidrop CombiTM is a
leading bulk reagent dispenser offering superior levels of flexibility and
performance to meet the requirements of reagent dispensing in pharmaceutical and
biotechnology laboratories. Our KingFisherTM
magnetic particle processors use a patented method to purify proteins, nucleic
acids and cells in a convenient, rapid and reproducible manner. The
KingFisherTM system
consists of instruments, specially designed plastics and software to provide a
total purification solution for customer applications.
Diagnostics
Our Diagnostics products and services
are used by the diagnostics community, including healthcare laboratories in
hospitals, academic and research institutes, to prepare and analyze patient
samples such as blood, urine, body fluids or tissue sections, to detect and
diagnose diseases, such as cancer.
Clinical
Diagnostics
Our clinical diagnostics products
include a broad offering of liquid, ready-to-use and lyophilized
immunodiagnostics reagent kits, calibrators, controls and calibration
verification fluids. In particular, we provide products used for drugs-of-abuse
testing; therapeutic drug monitoring, including immunosuppressant drug testing;
thyroid hormone testing; serum toxicology; clinical chemistry; immunology;
hematology; coagulation; glucose tolerance testing; monitoring and toxicology.
Many of these products are sold under their industry-recognized brand names such
as: CEDIATM,
DRITM,
CASCOTM,
MASTM,
QMSTM and
Duke ScientificTM. In
many instances, we will work with customers or partners to develop new products
and applications for their instrument platforms. We have developed one of the
broadest menus for drugs-of-abuse immunoassays, including those for newer drugs
such as Oxycodone, Heroin Metabolite and Buprenorphine. We also offer a complete
line of Immunosuppressant Drug immunoassays that can be used on a variety of
clinical chemistry analyzers. Our clinical chemistry and automation systems
include analyzers and reagents to analyze and measure routine blood and urine
chemistry, such as glucose and cholesterol; and advanced testing for specific
proteins, therapeutic drug monitoring and drugs-of-abuse. Our diagnostic test
range currently covers approximately 80 different validated methods. We also
provide pre- and post-analytical automation for preparation of blood specimens
before and after analysis. In other analytical laboratory fields, our reagents
and automated photometric analyzers are used for colorimetric and enzymatic
analysis and quality control in food and beverage, wine and pharmaceutical
production. In addition to our own sales channels, our clinical chemistry and
automation systems are distributed by some of the leading diagnostic
manufacturers, such as Siemens Medical Solutions Diagnostics and Ortho-Clinical
Diagnostics (OCD).
Anatomical
Pathology
We provide a broad portfolio of
products for use primarily in immunochemistry, histology, cytology and
hematology applications. These products include consumables for specimen
collection, tissue processing, embedding and staining, such as reagents, stains,
slides, cover glass, microarray substrates, detection kits and antibodies. We
also provide a range of instruments including Lab Vision 360, an autostaining
immunohistochemistry slide staining system; and the HMS760X, a robot stainer
used in slide staining of histology and cytological specimens; along with other
equipment such as tissue processors for preparation of tissue samples;
microtomes and cryostats for sectioning of processed tissues;
embedding
centers, slide stainers to highlight abnormal cells for microscopic examination
and diagnosis; coverslippers, such as the Microm CTM6, which places glass
slipcovers on slides at a high capacity of approximately 450 slides per hour;
and cassette and slide labelers for identifying specimens. The Shandon
CytospinTM 4
Cytocentrifuge uses low-speed centrifugation technology to concentrate and
deposit a thin layer of cells onto a microscope slide to ensure better cell
capture and better preservation of cell morphology. The Shandon ExcelsiorTM
provides a fully automatic solution for tissue processing and reagent
storage/handling. For efficient handling and accurate identification of
histology and cytology specimens, we offer a comprehensive line of cassette and
slide labelers, including the Shandon Laser MicroWriterTM
developed specifically for anatomical pathology. The Laser MicroWriter prints 1D
and 2D barcodes, text, logos and graphics in 26 different fonts at a speed of 1
to 2 seconds per slide and is designed to handle high-volume workloads in
clinical or research laboratories. Other histology products include the Shandon
FinesseTM + line
of microtomes for paraffin or resin sectioning, the Shandon CryotomeTM Series
of cryostats for frozen sections and the Shandon VaristainTM line of
slide stainers for cell morphology highlights.
Slide/Specialty
Glass
Thermo Fisher manufactures flat-sheet
glass to produce medical disposable products such as microscope slides, plates,
cover glass and microarray substrates serving the medical, diagnostics and
scientific communities.
Other
Diagnostics
We also provide diagnostic testing
services for certain neurological, renal and endocrine disorders to physicians,
hospital laboratories and reference laboratories under our Athena Diagnostics
brand.
Environmental
Instruments
Our environmental analysis
instrumentation offers innovative technologies for complying with government
regulations and industry safety standards, or responding to a hazardous material
situation, including air and water quality monitoring, gas and particulate
detection, and radiation detection and analysis. Our instruments include
portable and fixed instrumentation used to help our customers protect people and
the environment, with particular focus on environmental compliance, product
quality, worker safety and security. Key end markets include fossil fuel and
nuclear-powered electric generation facilities, federal and state agencies such
as the Environmental Protection Agency (EPA), first responders such as the New
York Police Department, national laboratories such as Los Alamos, general
commercial and academic laboratories, transportation security for sites such as
ports and airports, and other industrial markets such as pulp and paper and
petrochemical. Our instrumentation is used in three primary applications: air
quality monitoring and gas detection, water quality and aqueous solutions
analysis, and radiation measurement and protection.
Air
Quality Monitoring and Gas Detection
We are a leader in air quality
instruments for ambient air and continuous emissions monitoring. Primary markets
and customers include environmental regulatory agencies, emissions generating
industries such as power generation and pulp and paper, first responders and
industrial customers with Occupational Safety and Health Administration-related
gas detection requirements. Our instruments employ a variety of leading
analytical techniques, such as chemiluminescence, which uses the light emission
from chemical reactions to detect common air pollutants such as nitrogen dioxide
at the parts-per-trillion level. The iSeriesTM family
of analyzers uses various optical detection technologies to monitor
parts-per-billion levels of regulated pollutants, such as ground level ozone and
sulfur dioxide. The TEOMTM series
of continuous particulate monitors utilizes a patented measurement technology to
detect airborne particulate matter with high sensitivity in a brief time period.
This monitoring capability allows the U.S. EPA and worldwide monitoring networks
to provide the public with Web-based access to the concentration levels of the
particulate matter of most concern to people susceptible to respiratory
conditions (such as the elderly and young children). Further, state and federal
environmental agencies, as well as environmental compliance officers at
facilities that release emissions into the air, use our stack gas monitoring
systems to
ensure
that governmentally mandated standards are being met. The introduction of our
Mercury FreedomTM System
for the continuous monitoring of total gaseous mercury emissions from coal fired
power plants enables the U.S. power generation industry to monitor the
measurement of mercury. Our industrial hygiene products measure toxic gases such
as carbon monoxide and hydrogen sulfide, and hazardous chemicals such as
benzene. The instruments range from handheld monitors used at hazardous waste
sites for remediation activities, to general-purpose portable products for
personnel-exposure monitoring, to sophisticated fixed systems in industrial
facilities for early warning of unsafe combustible and toxic gas concentrations.
In addition to these core applications, our product portfolio includes
particulate monitoring instruments and leak-detection monitors.
Water
Quality and Aqueous Solutions Analysis
Our water analysis products are
recognized as high-quality meters, electrodes and solutions for the measurement
of pH, ions, conductivity and dissolved oxygen. Marketed under the OrionTM and
EutechTM product
names, our products are sold across a broad range of industries for a variety of
laboratory, field and process applications. Based on electrochemical sensing
technology, these products are used wherever the quality of water and
water-based products is critical. Primary applications include quality
assurance, environmental testing and regulatory compliance in end markets such
as general laboratories, life science, water and wastewater, food and beverage,
chemical, pharmaceutical and power generation.
Radiation
Measurement and Protection
Our radiation measurement and
protection instruments are used to monitor, detect and identify specific forms
of radiation in nuclear power, environmental, industrial, medical and security
applications. For example, power- generation facilities distribute our Mark
IITM
electronic pocket calculator-sized personal dosimeters to employees who work in
areas that may expose them to radiation to capture the legal dose of record to
which they are exposed on a daily basis. In addition, our customers use
contamination monitors, such as our PCM2TM, in
at-risk locations around their facilities to monitor radiation. A variety of our
detectors are used to monitor radiation levels and dosage using gross gamma
detection technologies. Our product portfolio includes handheld survey meters
and vehicle and pedestrian portals used to stop illicit transport of radioactive
material. Environmental and contamination monitors are used by nuclear power
plants to ensure worker safety.
Our security instruments and systems
include a comprehensive range of stationary and portable instruments used for
chemical and radiation detection. These instruments are based upon analytical
technologies used in our core markets that we have refined for the specific
needs of the security market, including key customers like the Department of
Homeland Security, the Department of Defense, the Department of Energy and first
responders. Our instruments, including the new handheld RadEyeTM
personal radiation detector (PRD) and PackEyeTM
backpack style device for discreet, rapid detection of gamma-emitting
radioactive sources in large areas, are used for the detection and prevention of
terrorist acts at airports, embassies, cargo facilities, border crossings and
other high-threat locations, as well as at major events such as the Olympics.
For example, Thermo Fisher provides the latest generation of radiation detection
systems, known as Advanced Spectroscopic Portals (ASPs), to the U.S. Department
of Homeland Security’s Domestic Nuclear Detection Office (DNDO). Deployment of
these systems at port and border locations globally is designed to detect and
deter the importation of illicit nuclear devices or radiological materials. The
ASPs are designed to allow Customs and other agencies to instantly detect and
identify sources of radiation to a specific energy fingerprint, thus increasing
the probability of deterring a threat, without a slowdown in
commerce.
Process
Instruments
Our Process Instruments products
include online instrumentation solutions and services that provide regulatory
inspection; quality control; package integrity; process measurements; precise
temperature control; physical, elemental and compositional analysis; surface and
thickness measurements; remote communications; and flow and blend optimization.
We serve a wide variety of global industries including oil and gas,
petrochemical, pharmaceutical, food and beverage, consumer products, power
generation, metal, cement, minerals and mining, semiconductor and polymer. Our
products are typically used in mission-critical manufacturing applications that
require high levels of reliability and robustness. Our Process Instruments
include six principal product lines: compliance testing, material
characterization, materials and minerals, portable elemental analysis, process
systems, and weighing and inspection.
Compliance
Testing
Through our compliance testing product
lines we provide simulation and verification equipment for electronic components
and systems under the KeyTek brand based on pulsed EMI (Electromagnetic
Interference) technology. This business provides electronic components and
systems-testing solutions for original equipment manufacturers (OEMs) and
independent testing labs. Our products and solutions are capable of testing EMC
(Electromagnetic Compatibility) and ESD (Electrostatic Discharge) at the systems
and discrete package levels to assist our customers in complying with various
industry standards.
In 2007, we acquired Oryx Instruments,
a manufacturer of ESD, latch-up and TLP (Transmission Line Pulse) test systems
for the worldwide semiconductor market. This acquisition enhanced our range of
test systems.
Material
Characterization
Our materials characterization product
lines include instruments that help our customers analyze materials for
viscosity, surface tension and thermal properties. For instance, our Thermo
Scientific Haake-MARSTM and
Thermo Scientific Haake-POLYLABTM
products accurately and flexibly measure a wide range of rheological properties
in the lab and in process applications. These measurement platforms use open
standards and have the ability to connect to a range of sensors and systems. Our
extruders and blenders meet R&D, small-scale production, quality control and
pharmaceutical needs.
Materials
and Minerals
Our materials and minerals product line
includes online bulk material analysis systems, such as the Thermo Scientific CB
OmniTM and
Thermo Scientific CQMTM
products for the coal, cement, minerals and other bulk material handling
markets. These products employ proprietary, ultrahigh-speed, non-invasive
measurement technologies that use neutron activation and measurement of gamma
rays to analyze, in real time, the physical and chemical properties of raw
material streams. This eliminates the need for off-line sampling, and enables
real-time online optimization, for instance, allowing the customer to optimally
blend raw materials to control sulfur and ash in coal fired utilities. Our
gauging products are used online to measure the total thickness, basis weight
and coating thickness of flat-sheet materials, such as metal strip, plastics,
foil, rubber, glass, paper and other web-type products. Our gauging line uses
ionizing and non-ionizing technologies, including our proprietary non-ionizing
technology called FSIRTM, to
perform high-speed, real-time, non-invasive measurements. We also provide
process control instruments that monitor nuclear flux inside a reactor helping
our nuclear power customers operate their plants in a safe and optimal
manner.
Portable
Elemental Analysis
Our line of products also include the
Thermo Scientific Niton portable XRF analyzers. These portable elemental
analyzers are state-of-the-art handheld instruments offering high-performance
analysis of metal alloys for positive material identification, scrap metal
recycling, quality assurance/quality control (QA/QC) and precious metals
analysis, as well as analysis of soils and sediments, environmental monitoring,
lead screening in consumer products, lead in paint assessment, geochemical
mapping and coatings/plating analysis. The NITON XL3 product platform is
designed for the rapid on-site testing of metals for numerous industrial
applications, including mining, coatings, precious metals and powder
samples.
Process
Systems
Our process systems products help oil
and gas, refining, steel and other customers optimize their processes. These
instruments provide measurements that help improve efficiency, provide process
and quality control, maintain regulatory compliance and increase worker safety.
For instance, our gas flow computers support custody transfer applications in
the production and transmission of natural gas; our Thermo Scientific
KRILPROTM nuclear
interface level gauge is used in extremely harsh coker applications for
petroleum refining;
our
Thermo Scientific MOLATM
analyzer helps our customers measure moisture in extreme applications like coke
used in metal foundries, and our Thermo Scientific PrimaTM line of
process mass spectrometers helps our customers detect minute constituents in
process gases. These systems provide real-time direct and remote data
collection, analysis and local control functions using a variety of
technologies, including radiation, radar, ultrasonic and vibration measurement
principles, gas chromatography and mass spectrometry. Our Thermo Scientific
SOLATM line of
products, based on pulsed UV fluorescence technology, is an online sulfur
analyzer used by refiners to bring clean fuels to consumers. We have extended
the applications for SOLA to include online sulfur detection in the
petrochemical environment, including flare gas composition and catalyst
protection.
Weighing
and Inspection
Our weighing and inspection products
serve the food and beverage, pharmaceutical packaging and bulk material handling
industries. For the food and beverage and pharmaceutical markets, we provide
solutions to help our customers attain safety and quality standards. Based on a
variety of technologies, such as X-ray imaging and ultratrace chemical
detection, our products are used to inspect packaged goods for physical
contaminants, validate fill quantities, or check for missing or broken parts.
For example, our Thermo Scientific APEXTM line of
metal detectors uses non-invasive, high-speed, flux technology to inspect
packaged products; our Thermo Scientific VersaWeigh™ line of checkweighers is
used to weigh packages on high-speed packaging lines; our Thermo Scientific
InScanTM line
uses X-ray imaging to enable our customers to inspect canned or bottled
beverages at very high speeds; and the Thermo Scientific PureAquaTM line
provides online-sniffing technology to inspect recycled bottles for traces of
contaminants before refilling. We also provide bulk material handling products
such as belt scales, flow meters, safety switches and detectors to enable
solids-flow-monitoring, level measurements, personnel safety, and spillage
prevention for a wide variety of processing applications in the food, minerals,
coal, cement and other bulk solids handling markets.
Laboratory
Products and Services Segment
Through our Laboratory Products and
Services segment, we offer a combination of products and services that allows
our customers to engage in their core business functions of research,
development, manufacturing, clinical diagnosis and drug discovery more
accurately, rapidly and cost effectively. We serve the pharmaceutical,
biotechnology, academic, government and other research and industrial markets,
as well as the clinical laboratory and healthcare industries. This segment has
six principal product groupings – Laboratory Equipment, Laboratory Consumables,
Research Market, Healthcare Market, Safety Market and BioPharma Services – and
provides products and integrated solutions for various scientific challenges
that support many facets of life science research, clinical diagnosis and
workplace safety. Specifically, our Laboratory Equipment products consist
primarily of sample preparation, controlled environment storage and handling
equipment as well as laboratory workstations; our Laboratory Consumables include
consumables, tubes and containers for sample preparation, analysis and sample
storage. Our Research Market offers a wide variety of proprietary and
third-party chemicals, instruments and apparatus, liquid handling pumps and
devices, capital equipment and consumables; our Healthcare Market offers
proprietary and third-party analytical equipment, diagnostic tools and reagents
and consumables; our Safety Market offers proprietary and third-party workplace
and first responder equipment, protective gear and apparel; and our BioPharma
Services offerings include packaging, warehousing and distribution services,
labeling, pharmaceutical and biospecimen storage, and analytical laboratory
services primarily in the area of drug discovery and pharmaceutical clinical
trials.
In the Research Market, the Fisher
Scientific catalog has been published for nearly 100 years and is an
internationally recognized scientific supply resource. In the Research,
Healthcare and Safety Markets, we publish more than 3 million copies of our
various catalogs each year in eight different languages. Our e-commerce product
references are showcased by our website, www.fishersci.com, which is
a leading e-commerce site supporting the scientific research community. The
website contains product content for more than 320,000 products. We maintain an
international network of warehouses in our primary markets through which we
maintain inventory and coordinate product delivery. With specialized
product vaults and temperature controlled storage capacity, we are able to
handle the complete range of products we offer to our customers. Our
transportation capabilities include our
dedicated
fleet of delivery vehicles as well as parcel shipping capabilities that are
closely integrated with our third-party parcel carriers. Throughout the
product delivery process, we provide our customers with convenient access to
comprehensive electronic systems allowing for automated catalog search, product
order and invoicing and payment capabilities.
We deliver our products through
third-party carriers and our dedicated fleet of delivery vehicles. Third-party
carriers include United Parcel Service (UPS), Federal Express, DHL and other
carriers, including national and regional trucking firms, overnight carrier
services and the U.S. Postal Service.
Laboratory
Equipment
Our Laboratory Equipment products and
integrated solutions are used primarily by pharmaceutical companies for drug
discovery and development, and by biotechnology companies and universities for
life science research to advance the prevention and cure of diseases and enhance
the quality of life.
We provide a broad range of equipment
that is used for the preparation and preservation of chemical and biological
samples, primarily for pharmaceutical, academic, clinical and government
customers. Products include incubators that are used in biological experiments
to allow growth of cells and organisms in optimal conditions of temperature,
carbon dioxide and humidity. These are sold under various product line names
including FormaTM and
HeraeusTM.
We also offer a wide range of
centrifuges, which are used to separate biological matrices and inorganic
materials. Our microcentrifuges are primarily used for the purification of
nucleic acids in the molecular biology laboratory, our general use benchtop
centrifuges are suitable for processing clinical samples such as blood and
urine, and our floor models are used for large volume blood processing or in
laboratories with high-throughput needs. Our super-speed and ultra-speed models
are used for applications such as protein purification. Our centrifuges are sold
under various product line names including SorvallTM,
IECTM and
Heraeus.
We have a broad range of water
purification products and technologies that serve the pharmaceutical, academic,
industrial research and clinical testing markets. The different technologies
(distillation, reverse osmosis, deionization, ultrafiltration, membrane
filtration and the use of UV) allow for the systems to accept various incoming
water qualities from around the world and deliver a range of water qualities for
a wide variety of laboratory applications. These applications range from Type II
water typically used to feed water baths or glassware washers to distilled water
to Type I (extremely high-purity water), for use in hydrating reagents and
buffers. In addition, for the most sensitive techniques requiring pyrogen-free,
free of trace metals or low Total Organic Carbon (TOC) we offer integrated
specialty treatments. These are sold under the product line name of
BarnsteadTM.
Our shakers, stirrers and stirring
hotplates, water baths and dry blocks, ovens, furnaces, heating mantles, tapes,
mats and temperature monitoring devices, including thermometers, are offered in
a range of sizes, temperatures and configurations for life science, analytical
chemistry and quality control applications where temperature uniformity and
control are critical. These are sold under various product line names including
Barnstead, PrecisionTM,
Heraeus, Blue MTM and
VariomagTM.
We offer thermal cyclers for the
amplification of nucleic acids by polymerase chain reaction (PCR) or reverse
transcriptase-PCR (RT-PCR). These are sold under the product line name of
HybaidTM.
Our centrifugal vacuum concentrators
assist researchers in evaporating organic solvents, acids and buffers from their
samples and have a wide range of applications in the preparation of
deoxyribonucleic acid (DNA), oligomers, plasmid preparation and the purification
of pharmaceutical compounds. Our freeze dryers are used to lyophilize drugs,
plants or tissues for long-term room temperature or refrigerated storage often
retaining biological activity and the original cellular structure upon
re-hydration. These products are sold under the SavantTM and
JouanTM product
line names.
We are leaders in cold temperature
storage equipment, ranging from laboratory refrigerators and freezers to
ultralow temperature freezers and cryopreservation storage tanks, which are used
primarily for storing samples in a cold environment to protect from degradation.
These systems may be customized to accommodate specific equipment, allowing
reactions (such as chromatography) to be run under low-temperature conditions.
These products are sold under various product line names including Forma,
RevcoTM,
HarrisTM,
JewettTM,
Barnstead, Heraeus and Jouan.
Our biological safety cabinets enable
technicians to handle samples without risk to themselves or their environment
and without risk of cross-contamination of samples. Equipped with filtered air
ventilation, controlled laminar flow and an ultraviolet source, biological
safety cabinets can be used for tissue culture, IVF, infectious samples,
forensic analysis or bioterrorism research. These products are sold under
various product line names including Forma and Heraeus.
We provide a range of steam sterilizers
for sterilizing biological samples and laboratory tools that are primarily used
by pharmaceutical, clinical and academic customers. These products are sold
under the Forma product line name.
Through our control technologies
product line we are a leading manufacturer of precision temperature control
products for global industrial and laboratory markets. The temperature-control
product line includes the NESLABTM and
HAAKETM lines
of heated/refrigerated circulating baths, immersion coolers and re-circulating
chillers. Customers use these products to control highly critical manufacturing
processes, such as semiconductor manufacturing operations or
pharmaceutical-grade extrusion lines.
We also manufacture private label and
OEM versions of certain of our product lines.
We are a major supplier of laboratory
workstations and fume hoods for either new construction or laboratory
renovation. Our product offerings include steel, wood and plastic laminate
casework systems, adaptable furniture systems, chemical ventilation fume hoods
and chemical storage cabinets and various other laboratory fixtures and
accessories. Laboratory workstation products are sold under the names of Fisher
HamiltonTM,
HorizonTM,
ConceptTM,
SafeAireTM and
PioneerTM.
We supply internet, phone and field
technical support and service for laboratory equipment including installation,
maintenance, repair and training on a worldwide basis via a network of internal
phone support technicians and field-based service technicians as well as
third-party service providers.
Laboratory
Consumables
We manufacture and sell glass and plastics
consumables and certain related equipment to entities conducting scientific
research, including drug discovery and drug development, quality and process
control, clinical and basic research and development.
We are a leading supplier of sample
tubes, containers and vessels, in a variety of plastics and glass and in a wide
range of volumes for all types of life science, analytical and clinical
analysis. Included in this offering are microwell plates ranging from a single
well to 1,536 wells for applications ranging from tissue culture to primary and
secondary screening in drug discovery. The geometry of the wells, the type of
plastic resin, the surface treatments or filtration membrane in the devices vary
to serve a number of applications for maximizing cell growth, sample
concentration within the well or reduce background fluorescence or non-specific
binding. These products are sold under various brand names including
NalgeneTM,
NuncTM,
MBPTM,
Capitol VialTM and
SamcoTM.
Accurate measurement and dispensing of
samples and reagents is critical in a variety of industrial, academic,
government, and clinical laboratories. We have a wide variety of single and
multiple channel pipetting tools from manual to highly automated, covering a
wide volume range. The ergonomics of these devices are important to the comfort
of researchers handling numerous samples and pipetting steps on a daily basis.
Due to sample cross-contamination concerns, the tips of the pipettes are
disposable and a separate tip is used for each sample. These products are sold
under various brands and product line names including FinnpipetteTM,
MatrixTM, MBP
and QSPTM.
We have tubes specific to
centrifugation in various sizes to fit the volume and centrifugal speed
requirements of the sample. In addition, we are the leaders in sample storage
vials and organization systems for ultralow temperature and cryogenic storage,
offering specific products for low protein binding (CryobankTM) and
low DNA binding (Bank itTM). These
products are sold under various brands including Nalgene, Nunc and
Matrix.
We are the leading provider of tissue
culture filtration and growth vessels. Our products are used by researchers for
growth of tissue culture and can be scaled up to biomanufacturing of vaccines or
monoclonal antibodies using Cell Factory products. The sterility of samples and
growth media is critical to the viability of the cells. These products are sold
under various brands including Nalgene and Nunc.
Research
Market
Our Research Market offerings include a
wide range of products and services from a single source designed to allow our
customers to engage more accurately and efficiently in laboratory research and
development throughout the world. Our customers represent all industries
requiring any level of laboratory research, including but not limited to the
pharmaceutical, biotech, food and agriculture, government, academic and
manufacturing industries.
Our products include all forms of
laboratory products, ranging from capital equipment and instruments to chemicals
to consumable products. We offer a mix of products that are manufactured by
Thermo Fisher, that are manufactured by third parties for us on a private-label
basis, and that are manufactured by third parties under their brand but offered
for sale exclusively through us. We also offer a broad range of third-party
products representing leading industry brand names on a non-exclusive
basis.
Our biennial catalog consists of more
than 40,000 products. Beyond our catalog, we offer our customers access to more
than 650,000 products. Our e-commerce website, www.fishersci.com, has been an
industry-leading online ordering and reference tool since its inception in the
1990s.
In addition to our broad product
offering, we offer a variety of specialized services to our customers through
our Managed Services team. Services provided to customers include dedicated
logistics personnel who manage inventory and provide desktop delivery,
coordinate instrument calibration and service, facilitate glass washing, provide
on-site customer service and deliver other services that allow our customers to
focus on their core research activities.
Healthcare
Market
Our Healthcare Market offerings include
a broad array of consumables, diagnostic kits and reagents, equipment,
instruments, solutions and services for hospitals, clinical laboratories,
reference laboratories, physicians’ offices and other clinical testing
facilities. These products are manufactured by Thermo Fisher and third
parties.
Healthcare Market products and
solutions focus on the collection, transportation and analysis of biological
samples. Major product lines include anatomical pathology, molecular diagnostic
and cardiac risk management solutions, along with blood collection devices,
consumable vials and transportation devices, as well as an extensive portfolio
of rapid diagnostic testing devices for drugs-of-abuse testing and diagnosis and
monitoring of cancer, endocrine function and cardiovascular, gastrointestinal,
nervous system, respiratory and sexually transmitted diseases. The Healthcare
Market core product offering also includes high-end diagnostic instruments and
equipment together with the reagents used in those instruments and equipment to
perform diagnostic tests. Sales in the healthcare market are fueled by the
administration and evaluation of diagnostic tests. We believe that the aging
population, as well as the increased demand for the development of new specialty
diagnostic tests, will result in increased market growth.
In addition to our broad product
offering, we offer a variety of specialized services to our customers through
our Managed Services team. Services provided to customers include dedicated
logistics personnel that manage inventory, provide on-site customer service, and
deliver other services that allow our customers to focus on their core
responsibilities.
Safety
Market
Through our Safety Market we supply
safety-related products to various industries including laboratory research,
industrial manufacturing, healthcare, universities, food/agriculture,
environmental and petrochemical as well as government and municipal agencies,
fire departments and military units. Products offered to these markets include:
cleanroom and controlled-environment supplies; personal protective equipment
such as respirators, clothing, gloves, hardhats, hearing protection and eyewear;
fall protection harnesses and restraints; self-contained breathing apparatus;
specialized firefighting and military equipment and supplies; environmental
monitoring and sampling equipment; and first responder supplies and equipment
such as decontamination tents, bio-isolation systems, chemical protective suits
and emergency response trailers. We offer products mainly manufactured by third
parties as well as those manufactured by Thermo Fisher.
We also provide access to a broad
offering of training, equipment servicing and on-site inventory management
support through our dedicated safety sales professionals, equipment service
employees and on-site customer support teams. Our goal is to provide a total
solution of products, training and support to our customers.
BioPharma
Services
Our BioPharma Services offerings
include global services for pharmaceutical and biotechnology companies engaged
in clinical trials, including specialized packaging, over-encapsulation,
multi-lingual and specialized labeling and distribution for phase I through
phase IV clinical trials, analytical testing, biological-specimen
management, as well as specialty pharmaceutical logistics and clinical
supply-chain management. Thermo Fisher’s biorepository business provides
temperature-controlled repository services for pharmaceutical, biotechnology,
university, government, clinical and blood-processing customers. Our
biorepository services business stores millions of pharmacological and
biospecimen samples at commercial sites in the United States and the United
Kingdom. Additional services include inventory management, validation, business
continuity, and repository management and transportation capabilities resulting
in a complete cold chain sample management solution.
Services are offered throughout the
world, with operations in the United States, United Kingdom, Switzerland and
Singapore. Expansion of our activities is under way into India, Latin America
and China. Most services are offered under the Fisher Clinical ServicesTM, Fisher
Bioservices™, Lancaster LaboratoriesTM or
Priority Solutions™ brands.
On October 3, 2007, the company’s
Laboratory Products and Services segment acquired Priority Solutions
International, a leading U.S.-based third-party logistics provider to the
pharmaceutical and healthcare industries. The acquisition broadened the
segment’s clinical trials management services offerings.
Sales
and Marketing
We market and sell our products and
services through a direct sales force, customer-service professionals,
electronic commerce, third-party distributors and various catalogs.
We have approximately 7,500 sales and
service professionals including over 1,000 highly trained technical specialists
who enable us to better meet the needs of our more technical end-users. We also
provide customers with an efficient ordering system, product standardization and
other supply-chain-management services to reduce procurement costs.
New
Products and Research and Development
Our business includes the development
and introduction of new products and may include entry into new business
segments. We are not currently committed to any new products that require the
investment of a material amount of our funds, nor do we have any definitive
plans to enter new businesses that would require such an
investment.
During 2007, 2006 and 2005, we spent
$239 million, $170 million and $153 million, respectively, on research and
development, excluding a charge in 2006 of $15 million for in-process research
and development at the date of the merger with Fisher.
Raw
Materials
Our management team believes that we
have a readily available supply of raw materials for all of our significant
products from various sources. We do not anticipate any difficulties obtaining
the raw materials essential to our business. Raw-material and fuel prices are
subject to fluctuations due to market conditions. We employ many strategies,
including the use of alternative materials and the use of derivative
instruments, to mitigate the effect of these fluctuations on our
results.
Patents,
Licenses and Trademarks
Patents are important in both segments
of our business. No particular patent, or related group of patents, is so
important, however, that its loss would significantly affect our operations as a
whole. Where appropriate, we seek patent protection for inventions and
developments made by our personnel and incorporated into our products or
otherwise falling within our fields of interest. Patent rights resulting from
work sponsored by outside parties do not always accrue exclusively to the
company and may be limited by agreements or contracts.
We protect some of our technology as
trade secrets and, where appropriate, we use trademarks or register trademarks
used in connection with products. We also enter into license agreements with
others to grant and/or receive rights to patents and know-how.
Seasonal
Influences
Revenues in the fourth calendar quarter
are historically stronger than in the other quarters due to capital spending
patterns of industrial, pharmaceutical and government customers.
Working
Capital Requirements
There are no special inventory
requirements or credit terms extended to customers that would have a material
adverse effect on our working capital.
Dependency
on a Single Customer
There is no single customer the loss of
which would have a material adverse effect on our business. No customer
accounted for more than 10% of our total revenues in any of the past three
years.
Backlog
Our backlog of firm orders at year-end
2007 and 2006 was as follows:
|
(In
millions)
|
|
2007
|
|
2006
|
|
|
|
|
|
|
|
|
|
Analytical
Technologies
|
|
$ |
805.0 |
|
$ |
717.6 |
|
|
Laboratory
Products and Services
|
|
|
476.0 |
|
|
365.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
1,281.0 |
|
$ |
1,083.4 |
|
We believe that virtually all of our
backlog at the end of 2007 will be filled during 2008. The increase in backlog
in 2007 is principally due to increased demand.
Government
Contracts
Although the company transacts business
with various government agencies, no government contract is of such magnitude
that a renegotiation of profits or termination of the contract at the election
of the government agency would have a material adverse effect on the company’s
financial results.
Competition
General
The company encounters aggressive and
able competition in virtually all of the markets we serve. Because of the
diversity of our products and services, we face many different types of
competitors and competition. Our competitors include a broad range of
manufacturers and third-party distributors. In general, competitive climates in
the markets we serve are characterized by changing technology and customer
demands that require continuing research and development. Our success in these
markets primarily depends on the following factors:
|
|
•
|
technical
performance and advances in technology that result in new products and
improved price/performance ratios;
|
|
|
•
|
product
differentiation, availability and
reliability;
|
|
|
•
|
our
broad product offering;
|
|
|
•
|
our
reputation among customers as a quality provider of products and
services;
|
|
|
•
|
customer
service and support;
|
|
|
•
|
active
research and application-development programs;
and
|
|
|
•
|
relative
prices of our products and
services.
|
Environmental
Matters
We are subject to various laws and
governmental regulations concerning environmental matters and employee safety
and health in the United States and other countries. U.S. federal
environmental legislation that affects us includes the Toxic Substances Control
Act, the Resource Conservation and Recovery Act, the Clean Air Act, the Clean
Water Act, the Safe Drinking Water Act, and the Comprehensive Environmental
Response Compensation and Liability Act (CERCLA). We are also subject to
regulation by the Occupational Safety and Health Administration (OSHA)
concerning employee safety and health matters. The United States Environmental
Protection Agency (EPA), OSHA, and other federal agencies have the authority to
promulgate regulations that have an effect on our operations.
In addition to these federal
activities, various states have been delegated certain authority under the
aforementioned federal statutes as well as having authority over these matters
under state laws. Many state and local governments have adopted environmental
and employee safety and health laws and regulations, some of which are similar
to federal requirements.
A number of our operations involve the
handling, manufacturing, use or sale of substances that are or could be
classified as toxic or hazardous materials within the meaning of applicable
laws. Consequently, some risk of environmental harm is inherent in our
operations and products, as it is with other companies engaged in similar
businesses.
Our expenses for environmental
requirements are incurred generally for ongoing compliance and historical
remediation matters. Based on current information, we believe that these
compliance costs are not material. For historical remediation obligations, our
expenditures relate primarily to the cost of permitting, installing, and
operating and maintaining groundwater-treatment systems and other remedial
measures.
Our Fair Lawn and Somerville, New
Jersey, facilities are the subject of administrative consent orders issued by
the New Jersey Department of Environmental Protection in 1984. Our Rockford,
Illinois, facility is subject to a Resource Conservation and Recovery Act (RCRA)
corrective action program administered by the Illinois Environmental Protection
Agency. We are required to maintain groundwater-remediation activities at these
sites. As the owner of the Fair Lawn facility, we are listed as a potentially
responsible party for remediation within an area called the Fair Lawn Wellfields
Superfund Site. This site was listed in 1983 on the National Priority List under
CERCLA. Both New Jersey sites are also the subjects of CERCLA National Resources
Damages claims.
We record accruals for environmental
liabilities based on current interpretations of environmental laws and
regulations when it is probable that a liability has been incurred and the
amount of such liability can be reasonably estimated. We calculate estimates
based upon several factors, including reports prepared by environmental
specialists and management’s knowledge and experience with these environmental
matters. We include in these estimates potential costs for investigation,
remediation and operation and maintenance of cleanup sites. Accrued liabilities
for environmental matters totaled $23 million at December 31, 2007 and were not
material prior to the merger with Fisher. The liability for environmental
matters associated with Fisher was recorded at the date of merger at its fair
value and as such was discounted to its net present value.
These environmental liabilities do not
include third-party recoveries to which we may be entitled. We believe that our
accrual is adequate for the environmental liabilities we currently expect to
incur. As a result, we believe that our ultimate liability with respect to
environmental matters will not have a material adverse effect on our financial
position, results of operations or cash flows. However, we may be subject to
additional remedial or compliance costs due to future events, such as changes in
existing laws and regulations, changes in agency direction or enforcement
policies, developments in remediation technologies, changes in the conduct of
our operations, and the effect of changes in accounting rules, which could have
a material adverse effect on our financial position, results of operations or
cash flows.
Regulatory
Affairs
Our operations, and some of the
products we offer, are subject to a number of complex and stringent laws and
regulations governing the production, handling, transportation and distribution
of chemicals, drugs and other similar products, including the operating and
security standards of the United States Drug Enforcement Administration, the
Bureau of Alcohol, Tobacco, Firearms and Explosives, the Food and Drug
Administration, and various state boards of pharmacy as well as comparable state
and foreign agencies. As Thermo Fisher’s businesses also include export and
import activities, we are subject to pertinent laws enforced by the
U.S. Departments of Commerce, State and Treasury. In addition, our
logistics activities must comply with the rules and regulations of the
Department of Transportation, the Federal Aviation Administration and similar
foreign agencies. While we believe we are in compliance in all material respects
with such laws and regulations, any noncompliance could result in substantial
fines or otherwise restrict our ability to provide competitive distribution
services and thereby have an adverse effect on our financial condition. To date,
none has had a material impact on our operations.
We are subject to laws and regulations
governing government contracts, and failure to address these laws and
regulations or comply with government contracts could harm our business by
leading to a reduction in revenue associated with these customers. We have
agreements relating to the sale of our products to government entities and, as a
result, we are subject to various statutes and regulations that apply to
companies doing business with the government. We are also subject to
investigation for compliance with the regulations governing government
contracts. A failure to comply with these regulations could result in suspension
of these contracts, criminal, civil and administrative penalties or
debarment.
Number
of Employees
As of December 31, 2007, we had
approximately 33,000 employees.
Financial
Information About Geographic Areas
Financial information about geographic
areas is summarized in Note 3 to our Consolidated Financial Statements, which
begin on page F-1 of this report.
Available
Information
The company files annual, quarterly and
current reports, proxy statements and other documents with the Securities and
Exchange Commission (SEC) under the Exchange Act. The public may read and copy
any materials that we file with the SEC at the SEC’s Public Reference Room at
100 F Street NE, Washington, D.C. 20549. The public may obtain information on
the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
Also, the SEC maintains a website that contains reports, proxy and information
statements and other information that issuers, including the company, file
electronically with the SEC. The public can obtain any documents that we file
with the SEC at www.sec.gov. We also make available free of charge on or through
our own website at www.thermofisher.com our Annual Report on Form 10-K,
Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and, if applicable,
amendments to those reports filed or furnished pursuant to Section 13(a) of the
Exchange Act as soon as reasonably practicable after we electronically file such
material with, or furnish it to, the SEC. In addition, paper copies of these
documents may be obtained free of charge by writing to the company care of its
Investor Relations Department at our principal executive office located at 81
Wyman Street, Waltham, Massachusetts 02451.
Executive
Officers of the Registrant
|
Name
|
|
Age
|
|
Present
Title (Fiscal Year First Became Executive Officer)
|
|
|
|
|
|
|
|
Marijn
E. Dekkers
|
|
50
|
|
President
and Chief Executive Officer (2000)
|
|
Marc
N. Casper
|
|
39
|
|
Executive
Vice President (2001)
|
|
Guy
Broadbent
|
|
44
|
|
Senior
Vice President (2001)
|
|
Seth
H. Hoogasian
|
|
53
|
|
Senior
Vice President, General Counsel and Secretary (2001)
|
|
Alan
J. Malus
|
|
48
|
|
Senior
Vice President (2006)
|
|
Alexander
G. Stachtiaris
|
|
43
|
|
Senior
Vice President, Global Business Services (2008)
|
|
Stephen
G. Sheehan
|
|
52
|
|
Senior
Vice President, Human Resources (2003)
|
|
Fredric
T. Walder
|
|
50
|
|
Senior
Vice President, Commercial Excellence (2006)
|
|
Peter
M. Wilver
|
|
48
|
|
Senior
Vice President and Chief Financial Officer (2003)
|
|
Peter
E. Hornstra
|
|
48
|
|
Vice
President and Chief Accounting Officer
(2001)
|
Mr. Dekkers was appointed Chief
Executive Officer in November 2002 and President in July 2000. He was Chief
Operating Officer from July 2000 to November 2002.
Mr. Casper was appointed Executive Vice
President in November 2006. He was Senior Vice President from December 2003 to
November 2006. He was President, Life and Laboratory Sciences from December 2001
to March 2005. He was Vice President of Thermo from December 2001 to December
2003.
Mr. Broadbent was appointed Senior Vice
President in November 2006. He was President, Laboratory Equipment from November
2004 to November 2006, and Vice President of Thermo from January 2001 to
November 2004. He was President, Spectra-Physics Division from December 2003 to
July 2004 and was President, Optical Technologies from October 2000 to December
2003.
Mr. Hoogasian was appointed Senior Vice
President in November 2006, Secretary in 2001 and General Counsel in 1992. He
was Vice President from 1996 to November 2006.
Mr. Malus was appointed
Senior Vice President in November 2006. Prior to Thermo’s merger with Fisher,
Mr. Malus was group president of distribution and services for Fisher, where he
focused on growing the company’s customer channel businesses serving research,
healthcare, education and safety markets. Mr. Malus joined Fisher in 1998 and
has served in a variety of management roles.
Mr. Stachtiaris was appointed
Senior Vice President, Global Business Services in February 2008. He was Senior
Vice President of Finance and Business Operations for the company’s
customer channel business from November 2006 to February 2008. Prior to Thermo’s
merger with Fisher, Mr. Stachtiaris was vice president of finance and corporate
controller for Fisher from February 2004 to November 2006. Prior to joining
Fisher, he was the senior vice president of finance for the pharmaceutical
distribution business of Cardinal Health from April 2000 to February
2004.
Mr. Sheehan was appointed Senior Vice
President, Human Resources in November 2006. He was Vice President, Human
Resources from August 2001 to November 2006.
Mr. Walder was appointed
Senior Vice President, Customer Excellence in May 2007. He was Senior Vice President,
Commercial Excellence from November 2006 to May 2007, President, Environmental
Instruments from April to November 2006, and President, Scientific Instruments
from December 2002 to April 2006. Mr. Walder joined Thermo in 1992 and has
served in a variety of management roles.
Mr. Wilver was appointed Senior Vice
President in November 2006 and Chief Financial Officer in October 2004. He was
Vice President from October 2004 to November 2006, and Vice President, Financial
Operations from October 2000 to October 2004.
Mr. Hornstra was appointed Vice
President in February 2007 and Chief Accounting Officer in January 2001. He was
Corporate Controller from January 1996 to February 2007.
Set forth below are the risks that we
believe are material to our investors. This section contains forward-looking
statements. You should refer to the explanation of the qualifications and
limitations on forward-looking statements beginning on page 3.
We must develop new products, adapt
to rapid and significant technological change and respond to introductions of
new products in order to remain competitive. Our growth strategy includes
significant investment in and expenditures for product development. We sell our
products in several industries that are characterized by rapid and significant
technological changes, frequent new product and service introductions and
enhancements and evolving industry standards. Without the timely introduction of
new products, services and enhancements, our products and services will likely
become technologically obsolete over time, in which case our revenue and
operating results would suffer.
Development of our products requires
significant investment; our products and technologies could become uncompetitive
or obsolete. Our customers use many of our products to develop, test and
manufacture their own products. As a result, we must anticipate industry trends
and develop products in advance of the commercialization of our customers’
products. If we fail to adequately predict our customers’ needs and future
activities, we may invest heavily in research and development of products and
services that do not lead to significant revenue.
Many of our existing products and those
under development are technologically innovative and require significant
planning, design, development and testing at the technological, product and
manufacturing-process levels. These activities require us to make significant
investments.
Risk
Factors (continued)
Products in our markets undergo rapid
and significant technological change because of quickly changing industry
standards and the introduction of new products and technologies that make
existing products and technologies uncompetitive or obsolete. Our competitors
may adapt more quickly to new technologies and changes in customers’
requirements than we can. The products that we are currently developing, or
those we will develop in the future, may not be technologically feasible or
accepted by the marketplace, and our products or technologies could become
uncompetitive or obsolete.
It may be difficult for us to
implement our strategies for improving internal growth. Some of the
markets in which we compete have been flat or declining over the past several
years. To address this issue, we are pursuing a number of strategies to improve
our internal growth, including:
|
|
•
|
finding
new markets for our products;
|
|
|
•
|
developing
new applications for our
technologies;
|
|
|
•
|
combining
sales and marketing operations in appropriate markets to compete more
effectively;
|
|
|
•
|
allocating
research and development funding to products with higher growth
prospects;
|
|
|
•
|
continuing
key customer initiatives;
|
|
|
•
|
expanding
our service offerings;
|
|
|
•
|
strengthening
our presence in selected geographic markets;
and
|
|
|
•
|
continuing
the development of commercial tools and infrastructure to increase and
support cross-selling opportunities of products and services to take
advantage of our breadth in product
offerings.
|
We may not be able to successfully
implement these strategies, and these strategies may not result in the growth of
our business.
The company may be unable to integrate
successfully the legacy businesses of Thermo Electron Corporation and Fisher
Scientific International Inc. and may be unable to realize the anticipated
benefits of the merger.
The merger involved the combination of
two companies which previously operated as independent public companies. The
company is required to devote significant management attention and resources to
integrating its business practices and operations. Potential difficulties the
company may encounter in the integration process include the
following:
|
|
•
|
if
we are unable to successfully combine the businesses of Thermo and Fisher
in a manner that permits the company to achieve the cost savings and
operating synergies anticipated to result from the merger, such
anticipated benefits of the merger may not be realized fully or at all or
may take longer to realize than
expected;
|
|
|
•
|
lost
sales and customers as a result of certain customers of either of the two
former companies deciding not to do business with the
company;
|
|
|
•
|
complexities
associated with managing the combined
businesses;
|
Risk
Factors (continued)
|
|
•
|
integrating
personnel from diverse corporate cultures while maintaining focus on
providing consistent, high quality products and customer
service;
|
|
|
•
|
potential
unknown liabilities and unforeseen increased expenses or delays associated
with the merger; and
|
|
|
•
|
inability
to successfully execute a branding campaign for the combined
company.
|
In addition, it is possible that the
integration process could result in the loss of key employees, the disruption or
interruption of, or the loss of momentum in, the company’s ongoing businesses or
inconsistencies in standards, controls, procedures and policies, any of which
could adversely affect our ability to maintain relationships with customers and
employees or our ability to achieve the anticipated benefits of the merger, or
could reduce our earnings or otherwise adversely affect the business and
financial results of the company.
Our inability to protect our
intellectual property could have a material adverse effect on our business. In
addition, third parties may claim that we infringe their intellectual property,
and we could suffer significant litigation or licensing expense as a
result. We place considerable emphasis on obtaining patent and trade
secret protection for significant new technologies, products and processes
because of the length of time and expense associated with bringing new products
through the development process and into the marketplace. Our success depends in
part on our ability to develop patentable products and obtain and enforce patent
protection for our products both in the United States and in other countries. We
own numerous U.S. and foreign patents, and we intend to file additional
applications, as appropriate, for patents covering our products. Patents may not
be issued for any pending or future patent applications owned by or licensed to
us, and the claims allowed under any issued patents may not be sufficiently
broad to protect our technology. Any issued patents owned by or licensed to us
may be challenged, invalidated or circumvented, and the rights under these
patents may not provide us with competitive advantages. In addition, competitors
may design around our technology or develop competing technologies. Intellectual
property rights may also be unavailable or limited in some foreign countries,
which could make it easier for competitors to capture increased market position.
We could incur substantial costs to defend ourselves in suits brought against us
or in suits in which we may assert our patent rights against others. An
unfavorable outcome of any such litigation could materially adversely affect our
business and results of operations.
We also rely on trade secrets and
proprietary know-how with which we seek to protect our products, in part, by
confidentiality agreements with our collaborators, employees and consultants.
These agreements may be breached and we may not have adequate remedies for any
breach. In addition, our trade secrets may otherwise become known or be
independently developed by our competitors.
Third parties may assert claims against
us to the effect that we are infringing on their intellectual property rights.
For example, in September 2004 Applied Biosystems/MDS Scientific Instruments and
related parties brought a lawsuit against us alleging our mass spectrometer
systems infringe a patent held by the plaintiffs. We could incur substantial
costs and diversion of management resources in defending these claims, which
could have a material adverse effect on our business, financial condition and
results of operations. In addition, parties making these claims could secure a
judgment awarding substantial damages, as well as injunctive or other equitable
relief, which could effectively block our ability to make, use, sell,
distribute, or market our products and services in the United States or abroad.
In the event that a claim relating to intellectual property is asserted against
us, or third parties not affiliated with us hold pending or issued patents that
relate to our products or technology, we may seek licenses to such intellectual
property or challenge those patents. However, we may be unable to obtain these
licenses on commercially reasonable terms, if at all, and our challenge of the
patents may be unsuccessful. Our failure to obtain the necessary licenses or
other rights could prevent the sale, manufacture, or distribution of our
products and, therefore, could have a material adverse effect on our business,
financial condition and results of operations.
Risk
Factors (continued)
Demand for most of our products
depends on capital spending policies of our customers and on government funding
policies. Our customers include pharmaceutical and chemical companies,
laboratories, universities, healthcare providers, government agencies and public
and private research institutions. Many factors, including public policy
spending priorities, available resources and product and economic cycles, have a
significant effect on the capital spending policies of these entities. These
policies in turn can have a significant effect on the demand for our
products.
Our results could be impacted if we
are unable to realize potential future benefits from new productivity
initiatives. We continue to pursue practical process improvement (PPI)
programs and other cost saving initiatives at our locations which are designed
to further enhance our productivity, efficiency and customer satisfaction. While
we anticipate continued benefits from these initiatives, future benefits are
expected to be fewer and smaller in size and may be more difficult to
achieve.
Our business is impacted by general
economic conditions and related uncertainties affecting markets in which we
operate. Adverse economic conditions could adversely impact our business in 2008
and beyond, resulting in:
|
|
•
|
reduced
demand for some of our products;
|
|
|
•
|
increased
rate of order cancellations or
delays;
|
|
|
•
|
increased
risk of excess and obsolete
inventories;
|
|
|
•
|
increased
pressure on the prices for our products and services;
and
|
|
|
•
|
greater
difficulty in collecting accounts
receivable.
|
Changes in governmental regulations
may reduce demand for our products or increase our expenses. We compete
in many markets in which we and our customers must comply with federal, state,
local and international regulations, such as environmental, health and safety
and food and drug regulations. We develop, configure and market our products to
meet customer needs created by those regulations. Any significant change in
regulations could reduce demand for our products or increase our expenses. For
example, many of our instruments are marketed to the pharmaceutical industry for
use in discovering and developing drugs. Changes in the U.S. Food and Drug
Administration’s regulation of the drug discovery and development process could
have an adverse effect on the demand for these products.
If any of our security products fail
to detect explosives or radiation, we could be exposed to product liability and
related claims for which we may not have adequate insurance coverage. The
products sold by our environmental instruments business include a comprehensive
range of fixed and portable instruments used for chemical, radiation and trace
explosives detection. These products are used in airports, embassies, cargo
facilities, border crossings and other high-threat facilities for the detection
and prevention of terrorist acts. If any of these products were to malfunction,
it is possible that explosive or radioactive material could pass through the
product undetected, which could lead to product liability claims. There are also
many other factors beyond our control that could lead to liability claims, such
as the reliability and competence of the customers’ operators and the training
of such operators. Any such product liability claims brought against us could be
significant and any adverse determination may result in liabilities in excess of
our insurance coverage. Although we carry product liability insurance, we cannot
be certain that our current insurance will be sufficient to cover these claims
or that it can be maintained on acceptable terms, if at all.
Our inability to successfully
identify and complete acquisitions or successfully integrate any new or previous
acquisitions could have a material adverse effect on our business. Our
business strategy includes the acquisition of technologies and businesses that
complement or augment our existing products and services. Promising
acquisitions
Risk
Factors (continued)
are
difficult to identify and complete for a number of reasons, including
competition among prospective buyers and the need for regulatory, including
antitrust, approvals. We may not be able to identify and successfully complete
transactions. Any acquisition we may complete may be made at a substantial
premium over the fair value of the net assets of the acquired company. Further,
we may not be able to integrate any acquired businesses successfully into our
existing businesses, make such businesses profitable, or realize anticipated
cost savings or synergies, if any, from these acquisitions, which could
adversely affect our business.
Moreover, we have acquired many
companies and businesses. As a result of these acquisitions, we recorded
significant goodwill and indefinite-lived intangible assets on our balance
sheet, which amount to approximately $8.71 billion and $1.33 billion,
respectively, as of December 31, 2007. We assess the realizability of the
goodwill and indefinite-lived intangible assets annually as well as whenever
events or changes in circumstances indicate that these assets may be impaired.
These events or circumstances generally include operating losses or a
significant decline in earnings associated with the acquired business or asset.
Our ability to realize the value of the goodwill and indefinite-lived intangible
assets will depend on the future cash flows of these businesses. These cash
flows in turn depend in part on how well we have integrated these businesses. If
we are not able to realize the value of the goodwill and indefinite-lived
intangible assets, we may be required to incur material charges relating to the
impairment of those assets.
Our growth strategy to acquire new
businesses may not be successful and the integration of future acquisitions may
be difficult and disruptive to our ongoing operations.
We have retained contingent
liabilities from businesses that we have sold. From 1997 through 2004, we
divested over 60 businesses with aggregate annual revenues in excess of $2
billion. As part of these transactions, we retained responsibility for some of
the contingent liabilities related to these businesses, such as lawsuits,
product liability and environmental claims and potential claims by buyers that
representations and warranties we made about the businesses were inaccurate. The
resolution of these contingencies has not had a material adverse effect on our
results of operations or financial condition; however, we can not be certain
that this favorable pattern will continue.
As a multinational corporation, we
are exposed to fluctuations in currency exchange rates, which could adversely
affect our cash flows and results of operations. International revenues
account for a substantial portion of our revenues, and we intend to continue
expanding our presence in international markets. In 2007, our international
revenues from continuing operations, including export revenues from the United
States, accounted for approximately 35% of our total revenues. The exposure to
fluctuations in currency exchange rates takes on different forms. International
revenues are subject to the risk that fluctuations in exchange rates could
adversely affect product demand and the profitability in U.S. dollars of
products and services provided by us in international markets, where payment for
our products and services is made in the local currency. As a multinational
corporation, our businesses occasionally invoice third-party customers in
currencies other than the one in which they primarily do business (the
“functional currency”). Movements in the invoiced currency relative to the
functional currency could adversely impact our cash flows and our results of
operations. In addition, reported sales made in non-U.S. currencies by our
international businesses, when translated into U.S. dollars for financial
reporting purposes, fluctuate due to exchange rate movement. Should our
international sales grow, exposure to fluctuations in currency exchange rates
could have a larger effect on our financial results. In 2007, currency
translation had a favorable effect on revenues of our continuing operations of
$241 million due to a weakening of the U.S. dollar relative to other currencies
in which the company sells products and services.
We are subject to laws and
regulations governing government contracts, and failure to address these laws
and regulations or comply with government contracts could harm our business by
leading to a reduction in revenue associated with these customers. We
have agreements relating to the sale of our products to government entities and,
as a result, we are subject to various statutes and regulations that apply to
companies doing business with the government. The laws governing government
contracts differ from the laws governing
Risk
Factors (continued)
private
contracts and government contracts may contain pricing terms and conditions that
are not applicable to private contracts. We are also subject to investigation
for compliance with the regulations governing government contracts. A failure to
comply with these regulations could result in suspension of these contracts,
criminal, civil and administrative penalties or debarment.
Because we compete directly with
certain of our largest customers and product suppliers, our results of
operations could be adversely affected in the short term if these customers or
suppliers abruptly discontinue or significantly modify their relationship with
us.
Our largest customer in the laboratory
consumables business and our largest customer in the diagnostics business are
also significant competitors. Our business may be harmed in the short term if
our competitive relationship in the marketplace with these customers results in
a discontinuation of their purchases from us. In addition, we manufacture
products that compete directly with products that we source from third-party
suppliers. We also source competitive products from multiple suppliers. Our
business could be adversely affected in the short term if any of our large
third-party suppliers abruptly discontinues selling products to us.
Because we rely heavily on
third-party package-delivery services, a significant disruption in these
services or significant increases in prices may disrupt our ability to ship
products, increase our costs and lower our profitability.
We ship a significant portion of our
products to our customers through independent package delivery companies, such
as UPS and Federal Express in the U.S. and DHL in Europe. We also maintain a
small fleet of vehicles dedicated to the delivery of our products and ship our
products through other carriers, including national and regional trucking firms,
overnight carrier services and the U.S. Postal Service. If UPS or another
third-party package-delivery provider experiences a major work stoppage,
preventing our products from being delivered in a timely fashion or causing us
to incur additional shipping costs we could not pass on to our customers, our
costs could increase and our relationships with certain of our customers could
be adversely affected. In addition, if UPS or our other third-party
package-delivery providers increase prices, and we are not able to find
comparable alternatives or make adjustments in our delivery network, our
profitability could be adversely affected.
We are subject to regulation by various
federal, state and foreign agencies that require us to comply with a wide
variety of regulations, including those regarding the manufacture of products,
the shipping of our products and environmental matters.
Some of our operations are subject to
regulation by the U.S. Food and Drug Administration and similar international
agencies. These regulations govern a wide variety of product activities, from
design and development to labeling, manufacturing, promotion, sales and
distribution. If we fail to comply with the U.S. Food and Drug Administration’s
regulations or those of similar international agencies, we may have to recall
products and cease their manufacture and distribution, which would increase our
costs and reduce our revenues.
We are subject to federal, state, local
and international laws and regulations that govern the handling, transportation,
manufacture, use or sale of substances that are or could be classified as toxic
or hazardous substances. Some risk of environmental damage is inherent in our
operations and the products we manufacture, sell or distribute. This requires us
to devote significant resources to maintain compliance with applicable
environmental laws and regulations, including the establishment of reserves to
address potential environmental costs, and manage environmental
risks.
We rely heavily on manufacturing
operations to produce the products we sell, and our business could be adversely
affected by disruptions of our manufacturing operations.
Risk
Factors (continued)
We rely upon our manufacturing
operations to produce many of the products we sell. Any significant disruption
of those operations for any reason, such as strikes or other labor unrest, power
interruptions, fire, earthquakes, or other events beyond our control could
adversely affect our sales and customer relationships and therefore adversely
affect our business. Although most of our raw materials are available from a
number of potential suppliers, our operations also depend upon our ability to
obtain raw materials at reasonable prices. If we are unable to obtain the
materials we need at a reasonable price, we may not be able to produce certain
of our products or we may not be able to produce certain of these products at a
marketable price, which could have an adverse effect on our results of
operations.
We may be unable to adjust to rapid
changes in the healthcare industry, some of which could adversely affect our
business.
The healthcare industry has undergone
significant changes in an effort to reduce costs. These changes
include:
|
|
•
|
development
of large and sophisticated groups purchasing medical and surgical
supplies;
|
|
|
•
|
wider
implementation of managed care;
|
|
|
•
|
legislative
healthcare reform;
|
|
|
•
|
consolidation
of pharmaceutical companies;
|
|
|
•
|
increased
outsourcing of certain activities, including to low-cost offshore
locations; and
|
|
|
•
|
consolidation
of distributors of pharmaceutical, medical and surgical
supplies.
|
We expect the healthcare industry to
continue to change significantly in the future. Some of these potential changes,
such as a reduction in governmental support of healthcare services or adverse
changes in legislation or regulations governing the delivery or pricing of
healthcare services or mandated benefits, may cause healthcare-industry
participants to purchase fewer of our products and services or to reduce the
prices they are willing to pay for our products or services.
We may incur unexpected costs from
increases in fuel and raw material prices, which could reduce our earnings and
cash flow.
Our primary commodity exposures are for
fuel, petroleum-based resins, steel and serum. While we may seek to minimize the
impact of price increases through higher prices to customers and various
cost-saving measures, our earnings and cash flows could be adversely affected in
the event these measures are insufficient to cover our costs.
Unforeseen problems with the
implementation and maintenance of our information systems at certain of our
sites could interfere with our operations. As a part of the effort to
upgrade our current information systems, we are implementing new enterprise
resource planning software and other software applications to manage certain of
our business operations. As we implement and add functionality, problems could
arise that we have not foreseen. Such problems could adversely impact our
ability to do the following in a timely manner: provide quotes, take customer
orders, ship products, provide services and support to our customers, bill and
track our customers, fulfill contractual obligations and otherwise run our
business. In addition, if our new systems fail to provide accurate and increased
visibility into pricing and cost structures, it may be difficult to improve or
maximize our profit margins. As a result, our results of operations and cash
flows could be adversely affected.
Risk
Factors (continued)
Our debt may adversely affect our cash
flow and may restrict our investment opportunities or limit our
activities.
As of December 31, 2007, we had
approximately $2.20 billion in outstanding indebtedness. In addition, we had the
ability to incur an additional $955 million of indebtedness under our revolving
credit facility. We may also obtain additional long-term debt and lines of
credit to meet future financing needs, which would have the effect of increasing
our total leverage.
Our leverage could have negative
consequences, including increasing our vulnerability to adverse economic and
industry conditions, limiting our ability to obtain additional financing and
limiting our ability to acquire new products and technologies through strategic
acquisitions.
Our ability to satisfy our obligations
depends on our future operating performance and on economic, financial,
competitive and other factors beyond our control. Our business may not generate
sufficient cash flow to meet these obligations. If we are unable to service our
debt or obtain additional financing, we may be forced to delay strategic
acquisitions, capital expenditures or research and development expenditures. We
may not be able to obtain additional financing on terms acceptable to us or at
all.
Additionally, the agreements governing
our debt require that we maintain certain financial ratios, and contain
affirmative and negative covenants that restrict our activities by, among other
limitations, limiting our ability to incur additional indebtedness, make
investments, create liens, sell assets and enter into transactions with
affiliates. The covenants in our revolving credit facility include a
debt-to-EBITDA ratio. Specifically, the company has agreed that, so long as any
lender has any commitment under the facility, or any loan or other obligation is
outstanding under the facility, or any letter of credit is outstanding under the
facility, it will not permit (as the following terms are defined in the
facility) the Consolidated Leverage Ratio (the ratio of consolidated
Indebtedness to Consolidated EBITDA) as at the last day of any fiscal quarter to
be greater than 3.0 to 1.0.
Our ability to comply with these
financial restrictions and covenants is dependent on our future performance,
which is subject to prevailing economic conditions and other factors, including
factors that are beyond our control such as foreign exchange rates and interest
rates. Our failure to comply with any of these restrictions or covenants may
result in an event of default under the applicable debt instrument, which could
permit acceleration of the debt under that instrument and require us to prepay
that debt before its scheduled due date. Also, an acceleration of the debt under
one of our debt instruments would trigger an event
of default under other of our debt instruments.
|
|
Unresolved
Staff Comments
|
Not applicable.
The location and general character of
our principal properties by segment as of December 31, 2007, are as
follows:
Analytical
Technologies
We own approximately 3.7 million square
feet of office, engineering, laboratory and production space, principally in New
Jersey, Wisconsin, Virginia and California within the U.S., and in Germany,
England and Switzerland. We lease approximately 3.9 million square feet of
office, engineering, laboratory and production space, principally in
Massachusetts, California and Texas within the U.S., and in England, China,
Finland, Germany and Australia, under various leases that expire between 2008
and 2022.
Laboratory
Products and Services
We own approximately 6.6 million square
feet of office, engineering, laboratory and production space, principally in
Wisconsin, New York, Pennsylvania, Illinois and North Carolina within the U.S.,
and in England Germany, Canada, Denmark and France. We lease approximately 4.5
million square feet of office, engineering, laboratory and production space,
principally in Pennsylvania, California, Illinois, Maryland and Georgia within
the U.S. and in France, Germany and England, under various leases that expire
between 2008 and 2039.
Corporate
Headquarters
We own approximately 81,000 square feet
of office space in Massachusetts. We also own approximately 100,000 square feet
of office space in New Hampshire which was the former corporate headquarters of
Fisher.
We believe that all of the facilities
that we are currently utilizing are in good condition and are suitable and
adequate to meet our current needs. If we are unable to renew any of the leases
that are due to expire in 2008 or 2009, we believe that suitable replacement
properties are available on commercially reasonable terms.
On September 3, 2004, Applera
Corporation, MDS Inc. and Applied Biosystems/MDS Scientific Instruments filed a
complaint against the company in U.S. District Court for the District of
Delaware, Civil Action No. 04-1230-GMS. These plaintiffs allege that the
company’s mass spectrometer systems, including its triple quadrupole and certain
of its ion trap systems, infringe U.S. patent number 4,963,736 entitled “Mass
Spectrometer and Method and Improved Ion Transmission.” The plaintiffs seek
damages, including treble damages for alleged willful infringement, attorneys’
fees, prejudgment interest and injunctive relief. An unfavorable outcome could
have a material adverse impact on the company’s financial position, results of
operations and cash flows.
On December 8, 2004 and February 23,
2005, the company asserted in two lawsuits in the same Delaware court, that one
or more of the plaintiffs in the above action infringe two patents of the
company (U.S. patent number 5,385,654 entitled “Controlled Temperature Anion
Separation by Capillary Electrophoresis” and U.S. patent number 6,528,784
entitled “Mass Spectrometer System Including a Double Ion Guide Interface and
Method of Operation”). The lawsuits brought by the company seek relief
similar to that being sought by the plaintiffs.
Our business involves a risk of product
liability and other claims in the ordinary course of business. We are a party to
various lawsuits and legal proceedings, including consolidated multi-party
product liability actions for products we may have distributed or manufactured.
These matters have arisen in the ordinary course and conduct of our business, as
well as through acquisitions. We believe that some of the costs incurred in
defending and ultimately disposing of many of these claims for personal injury
and other matters may be covered in part by insurance policies maintained by
certain insurance carriers or subject to indemnification by our suppliers or
purchasers. Management, after review and consideration with counsel, considers
that any ultimate liability with respect to these matters should not have a
material adverse effect on our results of operations, financial position or cash
flows. While liabilities arising from potential future claims could become
material, we currently believe, on the basis of our claims history and related
factors, that such potential future claims are not likely to have a material
impact on our business, financial condition and results of operations. Actual
costs incurred will depend on the solvency of our insurance carriers, the degree
of coverage with respect to any particular claim, our success in litigating
these claims and the solvency of third parties who may be jointly and severally
liable. See “Item 1 — Business — Environmental Matters,” for
legal proceedings involving certain environmental matters.
We are subject to the jurisdiction of
various regulatory agencies including, among others, the U.S. Food and Drug
Administration and the Agency for International Development. Various
governmental agencies conduct investigations from time to time to examine
matters relating to our operations. Some operations involve and have involved
the handling,
manufacture,
use or sale of substances that are classified as toxic or hazardous substances
within the meaning of applicable environmental laws. Consequently, some risk of
environmental and other damage is inherent in particular operations and products
as it is with other companies engaged in similar businesses, and we cannot
assure that material damage will not occur or be discovered or that the damage
will not be determined to be material in the future.
|
|
Submission
of Matters to a Vote of Security
Holders
|
No matters were submitted to a vote of
security holders, whether through the solicitation of proxies or otherwise,
during our 2007 fourth fiscal quarter.
PART
II
|
|
Market
for the Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
|
Market
Price of Common Stock
Our common stock is traded on the New
York Stock Exchange under the symbol TMO. The following table sets forth the
high and low sale prices of the company’s common stock for 2007 and 2006, as
reported in the consolidated transaction reporting system.
|
|
2007
|
|
2006
|
|
|
|
High
|
|
|
Low
|
|
High
|
|
|
Low
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First
Quarter
|
$ |
49.90 |
|
|
$ |
43.60 |
|
$ |
37.50 |
|
|
$ |
29.95 |
|
|
Second
Quarter
|
|
55.25 |
|
|
|
46.10 |
|
|
41.85 |
|
|
|
33.85 |
|
|
Third
Quarter
|
|
58.75 |
|
|
|
48.71 |
|
|
40.54 |
|
|
|
34.50 |
|
|
Fourth
Quarter
|
|
62.02 |
|
|
|
56.07 |
|
|
46.34 |
|
|
|
38.57 |
|
Holders
of Common Stock
As of February 1, 2008, the company had
8,149 holders of record of its common stock. This does not include holdings in
street or nominee names.
Dividend
Policy
The company has never paid cash
dividends and does not expect to pay cash dividends in the foreseeable future.
Payment of dividends is at the discretion of the company’s Board of Directors
and will depend upon, among other factors, the company’s earnings, capital
requirements and financial condition.
Issuer
Purchases of Equity Securities
A summary of the share repurchase
activity for the company’s fourth quarter of 2007 follows:
|
Period
|
|
Total
Number
of
Shares
Purchased
|
|
Average
Price
Paid
per
Share
|
|
Total
Number of
Shares
Purchased
as
Part
of Publicly
Announced
Plans
or
Programs
(1)
|
|
Maximum
Dollar
Amount of
Shares
That May
Yet
Be Purchased
Under
the
Plans
or
Programs
(1)
(in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September
30 – November 3
|
|
|
841,200 |
|
$ |
56.79 |
|
|
841,200 |
|
$ |
412.0 |
|
|
November
4 – December 2
|
|
|
4,542,800 |
|
|
56.85 |
|
|
4,542,800 |
|
|
153.7 |
|
|
December
3 – December 31
|
|
|
906,692 |
|
|
56.92 |
|
|
906,692 |
|
|
102.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Fourth
Quarter
|
|
|
6,290,692 |
|
$ |
56.85 |
|
|
6,290,692 |
|
$ |
102.0 |
|
|
(1)
|
In
February 2007, the company announced a repurchase program authorizing the
purchase of up to $300 million of the company’s common stock in the open
market or in negotiated transactions. On August 9, 2007, the company
increased the existing authorization for the purchase of up to an
additional $700 million of the company’s common stock in the open market
or in negotiated transactions, which expires August 8, 2008. All of the
shares of common stock repurchased by the company during the fourth
quarter of 2007 were purchased under this
program.
|
|
(In
millions except per share amounts)
|
|
2007
(a)
|
|
2006
(b)
|
|
2005
(c)
|
|
2004
(d)
|
|
2003
(e)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statement
of Income Data
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$ |
9,746.4 |
|
$ |
3,791.6 |
|
$ |
2,633.0 |
|
$ |
2,206.0 |
|
$ |
1,899.4 |
|
|
Operating
Income
|
|
|
974.4 |
|
|
242.0 |
|
|
263.5 |
|
|
237.5 |
|
|
187.4 |
|
|
Income
from Continuing Operations
|
|
|
779.6 |
|
|
166.3 |
|
|
198.3 |
|
|
218.4 |
|
|
175.2 |
|
|
Net
Income
|
|
|
761.1 |
|
|
168.9 |
|
|
223.2 |
|
|
361.8 |
|
|
200.0 |
|
|
Earnings
per Share from Continuing Operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
1.85 |
|
|
.85 |
|
|
1.23 |
|
|
1.34 |
|
|
1.08 |
|
|
Diluted
|
|
|
1.76 |
|
|
.82 |
|
|
1.21 |
|
|
1.31 |
|
|
1.05 |
|
|
Earnings
per Share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
1.81 |
|
|
.86 |
|
|
1.38 |
|
|
2.22 |
|
|
1.23 |
|
|
Diluted
|
|
|
1.72 |
|
|
.84 |
|
|
1.36 |
|
|
2.17 |
|
|
1.20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
Sheet Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Working
Capital
|
|
$ |
1,763.7 |
|
$ |
1,507.2 |
|
$ |
562.2 |
|
$ |
890.9 |
|
$ |
710.5 |
|
|
Total
Assets
|
|
|
21,207.4 |
|
|
21,262.2 |
|
|
4,251.6 |
|
|
3,576.7 |
|
|
3,389.3 |
|
|
Long-term
Obligations
|
|
|
2,045.9 |
|
|
2,180.7 |
|
|
468.6 |
|
|
226.1 |
|
|
229.5 |
|
|
Shareholders’
Equity
|
|
|
14,488.3 |
|
|
13,911.8 |
|
|
2,793.3 |
|
|
2,665.6 |
|
|
2,381.7 |
|
The caption “restructuring and other
costs” in the notes below includes amounts charged to cost of revenues,
primarily for the sale of inventories revalued at the date of
acquisition.
|
(a)
|
Reflects
a $91.4 million pre-tax charge for restructuring and other costs; an
after-tax loss of $18.5 million related to the company’s discontinued
operations; and the repurchase of $898.0 million of the company’s common
stock.
|
|
(b)
|
Reflects
completion of the merger with Fisher on November 9, 2006, including
issuance of common stock. Also reflects a $123.3 million pre-tax charge
for restructuring and other costs; a charge of $36.7 million for
acceleration of vesting of stock-based compensation as a result of the
Fisher merger; and after-tax income of $2.6 million related to the
company’s discontinued operations.
|
|
(c)
|
Reflects
a $30.3 million pre-tax charge for restructuring and other costs; $27.6
million of pre-tax net gains from the sale of shares of Thoratec
Corporation and Newport Corporation; and after-tax income of $24.9 million
related to the company’s discontinued operations. Also reflects use of
cash and debt for acquisitions, principally the Kendro Laboratory Products
division of SPX Corporation.
|
|
(d)
|
Reflects
a $19.2 million pre-tax charge for restructuring and other costs; $9.6
million of pre-tax gains from the sale of shares of Thoratec; $33.8
million of tax benefits recorded on completion of tax audits; after-tax
income of $143.5 million related to the company’s discontinued operations;
and the repurchase of $231.5 million of the company’s common
stock.
|
|
(e)
|
Reflects
a $45.3 million pre-tax charge for restructuring and other costs; $16.3
million of pre-tax gains from the sale of shares of Thoratec; $13.7
million of pre-tax gains from the sale of shares of FLIR Systems, Inc. and
after-tax income of $24.8 million related to the company’s discontinued
operations.
|
|
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
Reference is made throughout this
Management’s Discussion and Analysis of Financial Condition and Results of
Operations to Notes to Consolidated Financial Statements, which begin on page
F-1 of this report.
Thermo Electron Corporation and
Fisher Scientific International Inc. completed a merger of the two companies on
November 9, 2006 in a tax-free, stock-for-stock exchange. The Fisher businesses
are a leading provider of products and services to the scientific research
community and clinical laboratories. The Fisher businesses provide a suite of
products and services to customers worldwide from biochemicals, cell-culture
media and proprietary RNAi technology to rapid-diagnostic tests, safety products
and other consumable supplies. Fisher had revenues of $5.4 billion in 2005.
Fisher’s results are included in the accompanying financial statements from
November 9, 2006. Following the merger, the company was renamed Thermo Fisher
Scientific Inc. To assist in year over year comparisons, certain information in
the following discussion of the company’s results of operations has been
presented on a pro forma basis, as if the two companies had been combined from
the beginning of 2006.
Overview
of Results of Operations and Liquidity
The company develops, manufactures and
sells a broad range of products that are sold worldwide. The company expands the
product lines and services it offers by developing and commercializing its own
core technologies and by making strategic acquisitions of complementary
businesses. Following the merger with Fisher, the company’s continuing
operations fall into two principal business segments: Analytical Technologies
and Laboratory Products and Services. Revenues in the fourth quarter are
historically stronger than in other quarters due to capital
spending patterns of industrial, pharmaceutical and government
customers.
| (Dollars
in millions) |
|
2007
|
|
2006
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Analytical
Technologies
|
|
$ |
4,256.0 |
|
|
43.7% |
|
$ |
2,425.8 |
|
|
64.0% |
|
|
Laboratory Products
and Services
|
|
|
5,842.2 |
|
|
59.9% |
|
|
1,406.6 |
|
|
37.1% |
|
|
Eliminations
|
|
|
(351.8 |
) |
|
(3.6)% |
|
|
(40.8 |
) |
|
(1.1)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
9,746.4 |
|
|
100% |
|
$ |
3,791.6 |
|
|
100% |
|
Sales
in 2007 were $9.75 billion, an increase of $5.95 billion from 2006. Sales
increased principally due to the merger with Fisher as well as other
acquisitions and, to a lesser extent, increased demand and the favorable effect
of currency translation. If the merger with Fisher had occurred on January 1,
2006, revenues would have increased $876 million (10%), over pro forma 2006
revenues. Aside from the effects of acquisitions and divestitures made by both
companies and currency translation (discussed in total and by segment below),
revenues increased over pro forma 2006 revenues by $507 million due to higher
revenues at existing businesses as a result of increased demand, discussed
below, and, to a lesser extent, price increases.
The company’s strategy is
to augment internal growth at existing businesses with complementary
acquisitions such as those completed in 2007 and 2006. In addition to the merger
with Fisher, the principal acquisitions included La-Pha-Pack, a
manufacturer and provider of chromatography consumables and related accessories
in December 2007; Priority Solutions International, a third-party provider to
the pharmaceutical and healthcare industries in October 2007; NanoDrop
Technologies, Inc., a supplier of UV-Vis spectrophotometry and fluorescence
scientific instruments in October 2007; Qualigens Fine Chemicals, a chemical
manufacturer and supplier in September 2007 and Cohesive Technologies Inc., a
provider of advanced sample extraction and liquid chromatography products in
December 2006.
In 2007, the company’s operating income
and operating income margin were $974 million and 10.0%, respectively, compared
with $242 million and 6.4%, respectively, in 2006. (Operating income margin is
operating income divided by revenues.) The increase in operating income was due
to the Fisher merger and, to a lesser extent, higher profitability at existing
businesses resulting from incremental revenues, price increases and productivity
improvements and $125 million of pre-tax charges in 2006 associated with the
Fisher merger, described below. These increases were offset in part by $400
million of higher amortization expense as a result of acquisition-related
intangible assets from the Fisher merger and other acquisitions.
The company’s effective tax rate was
11.5% and 20.6% in 2007 and 2006, respectively. The tax provision in 2007 was
favorably affected by a one-time benefit of enacted reductions in tax rates in
the United Kingdom, Denmark, Canada and Germany on the company’s deferred tax
balances. This benefit totaled $32 million. In addition to the impact of this
item, the decrease in the effective tax rate in 2007, compared with 2006, was
primarily due to geographic changes in profits, in particular lower income in
the United States due to charges and amortization associated with the Fisher
merger, together with the impact of an increased U.S. tax credit for foreign
taxes, an enhanced tax credit for qualifying U.S. research costs and growth in
lower tax regions such as Asia.
Income from continuing operations
increased to $780 million in 2007 from $166 million in 2006, primarily due to
the items discussed above that increased operating income in 2007 and the
one-time tax benefit discussed above, offset in part by higher interest expense,
primarily associated with debt assumed in the Fisher merger.
During 2007, the company’s cash flow
from operations totaled $1.48 billion, compared with $406 million for 2006. The
increase resulted from cash flow from the Fisher businesses and, to a lesser
extent, improved cash flow at existing businesses. Cash flow from operations in
2007 and 2006 were net of $78 million and $157 million, respectively, in
merger-related operating cash outflows, including severance and retirement
benefits as well as transaction costs incurred by Fisher that were paid
subsequent to November 9, 2006.
As of December 31, 2007, the company’s
outstanding debt totaled $2.20 billion, of which 93% is due in 2010 and
thereafter. The company expects that its existing cash and short-term
investments of $639 million as of December 31, 2007, and the company’s future
cash flow from operations together with available unsecured borrowing capacity
of up to $955 million under its existing 5-year revolving credit agreement are
sufficient to meet the working capital requirements of its existing businesses
for the foreseeable future, including at least the next 24 months.
Critical
Accounting Policies and Estimates
The company’s discussion and
analysis of its financial condition and results of operations is based upon its
financial statements, which have been prepared in accordance with accounting
principles generally accepted in the United States of America. The preparation
of these financial statements requires the company to make estimates and
judgments that affect the reported amounts of assets, liabilities, revenue and
expenses and related disclosure of contingent liabilities. On an on-going basis,
the company evaluates its estimates, including those related to equity
investments, bad debts, sales returns, inventories, business combinations,
intangible assets, warranty obligations, income taxes, pension costs,
contingencies and litigation, stock-based compensation, restructuring and sale
of businesses. The company bases its estimates on historical experience, current
market and economic conditions and other assumptions that management believes
are reasonable. The results of these estimates form the basis for judgments
about the carrying value of assets and liabilities where the values are not
readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions.
The company believes the following
represent its critical accounting policies and estimates used in the preparation
of its financial statements:
|
|
The
company maintains allowances for doubtful accounts for estimated losses
resulting from the inability of its customers to pay amounts due. Such
allowances totaled $49 million at December 31, 2007. The company estimates
the amount of customer receivables that are uncollectible based on the age
of the receivable, the creditworthiness of the customer and any other
information that is relevant to the judgment. If the financial condition
of the company’s customers were to deteriorate, reducing their ability to
make payments, additional allowances would be
required.
|
|
|
The
company writes down its inventories for estimated obsolescence for
differences between the cost and estimated net realizable value taking
into consideration usage in the preceding 12 months, expected demand and
any other information that is relevant to the judgment. If ultimate usage
or demand varies significantly from expected usage or demand, additional
writedowns may be required.
|
|
|
(c)
|
Intangible Assets and
Goodwill
|
|
|
The
company uses assumptions and estimates in determining the fair value of
assets acquired and liabilities assumed in a business combination. A
significant portion of the purchase price in many of the company’s
acquisitions is assigned to intangible assets that require that use of
significant judgment in determining (i) fair value; and (ii) whether such
intangibles are amortizable or non-amortizable and, if the former, the
period and the method by which the intangible asset will be amortized. The
company estimates the fair value of acquisition-related intangible assets
principally based on projections of cash flows that will arise from
identifiable intangible assets of acquired businesses. The projected cash
flows are discounted to determine the present value of the assets at the
dates of acquisition. Amortizable intangible assets totaled $5.83 billion
at December 31, 2007. The company reviews other intangible assets for
impairment when indication of potential impairment exists, such as a
significant reduction in
|
|
|
cash
flows associated with the assets. Actual cash flows arising from a
particular intangible asset could vary from projected cash flows which
could imply different carrying values from those established at the dates
of acquisition and which could result in impairment of such
asset.
|
|
|
The
company evaluates goodwill and indefinite-lived intangible assets for
impairment annually and when events occur or circumstances change that may
reduce the value of the asset below its carrying amount using forecasts of
discounted future cash flows. Events or circumstances that might require
an interim evaluation include unexpected adverse business conditions,
economic factors, unanticipated technological changes or competitive
activities, loss of key personnel and acts by governments and courts.
Goodwill and indefinite-lived intangible assets totaled $8.71 billion and
$1.33 billion, respectively, at December 31, 2007. Estimates of future
cash flows require assumptions related to revenue and operating income
growth, asset-related expenditures, working capital levels and other
factors. Different assumptions from those made in the company’s analysis
could materially affect projected cash flows and the company’s evaluation
of goodwill and indefinite-lived intangible assets for impairment. Should
the fair value of the company’s goodwill or indefinite-lived intangible
assets decline because of reduced operating performance, market declines,
or other indicators of impairment, or as a result of changes in the
discount rate, charges for impairment may be
necessary.
|
|
|
(d)
|
Other Long-Lived
Assets
|
|
|
The
company reviews other long-lived assets for impairment when indication of
potential impairment exists, such as a significant reduction in cash flows
associated with the assets. Other long-lived assets totaled $1.67 billion
at December 31, 2007, including $1.27 billion of fixed assets. In testing
a long-lived asset for impairment, assumptions are made concerning
projected cash flows associated with the asset. Estimates of future cash
flows require assumptions related to revenue and operating income growth
and asset-related expenditures associated with the asset being reviewed
for impairment. Should future cash flows decline significantly from
estimated amounts, charges for impairment of other long-lived assets may
be necessary.
|
|
|
In
instances where the company sells equipment with a related installation
obligation, the company generally recognizes revenue related to the
equipment when title passes. The company recognizes revenue related to the
installation when it performs the installation. The allocation of revenue
between the equipment and the installation is based on relative fair value
at the time of sale. Should the fair value of either the equipment or the
installation change, the company’s revenue recognition would be affected.
If fair value is not available for any undelivered element, revenue for
all elements is deferred until delivery is
completed.
|
|
|
In
instances where the company sells equipment with customer-specified
acceptance criteria, the company must assess whether it can demonstrate
adherence to the acceptance criteria prior to the customer’s acceptance
testing to determine the timing of revenue recognition. If the nature of
customer-specified acceptance criteria were to change or grow in
complexity such that the company could not demonstrate adherence, the
company would be required to defer additional revenues upon shipment of
its products until completion of customer acceptance
testing.
|
|
|
The
company’s software license agreements generally include multiple products
and services, or “elements.” The company recognizes software license
revenue based on the residual method after all elements have either been
delivered or vendor specific objective evidence (VSOE) of fair value
exists for any undelivered elements. In the event
|
|
|
VSOE
is not available for any undelivered element, revenue for all elements is
deferred until delivery is completed. Revenues from software maintenance
and support contracts are recognized on a straight-line basis over the
term of the contract. VSOE of fair value of software maintenance and
support is determined based on the price charged for the maintenance and
support when sold separately. Revenues from training and consulting
services are recognized as services are performed, based on VSOE, which is
determined by reference to the price customers pay when the services are
sold separately.
|
|
|
The
company records reductions to revenue for estimated product returns by
customers. Should a greater or lesser number of products be returned,
additional adjustments to revenue may be
required.
|
|
|
At
the time the company recognizes revenue, it provides for the estimated
cost of product warranties based primarily on historical experience and
knowledge of any specific warranty problems that indicate projected
warranty costs may vary from historical patterns. The liability for
warranty obligations of the company’s continuing operations totaled $51
million at December 31, 2007. Should product failure rates or the actual
cost of correcting product failures vary from estimates, revisions to the
estimated warranty liability would be
necessary.
|
|
|
In
the ordinary course of business there is inherent uncertainty in
quantifying the company’s income tax positions. The company assesses
income tax positions and records tax benefits for all years subject to
examination based upon management’s evaluation of the facts, circumstances
and information available at the reporting date. For those tax positions
where it is more likely than not that a tax benefit will be sustained, the
company has recorded the largest amount of tax benefit with a greater than
50 percent likelihood of being realized upon ultimate settlement with a
taxing authority that has full knowledge of all relevant information. For
those income tax positions where it is not more likely than not that a tax
benefit will be sustained, no tax benefit has been recognized in the
financial statements. Where applicable, associated interest expense has
also been recognized.
|
|
|
The
company operates in numerous countries under many legal forms and, as a
result, is subject to the jurisdiction of numerous domestic and non-U.S.
tax authorities, as well as to tax agreements and treaties among these
governments. Determination of taxable income in any jurisdiction requires
the interpretation of the related tax laws and regulations and the use of
estimates and assumptions regarding significant future events, such as the
amount, timing and character of deductions, permissible revenue
recognition methods under the tax law and the sources and character of
income and tax credits. Changes in tax laws, regulations, agreements and
treaties, currency exchange restrictions or the company’s level of
operations or profitability in each taxing jurisdiction could have an
impact upon the amount of current and deferred tax balances and hence the
company’s net income.
|
|
|
The
company estimates the degree to which tax assets and loss carryforwards
will result in a benefit based on expected profitability by tax
jurisdiction, and provides a valuation allowance for tax assets and loss
carryforwards that it believes will more likely than not go unused. If it
becomes more likely than not that a tax asset or loss carryforward will be
used, the company reverses the related valuation allowance with an offset
generally to goodwill as most of the tax attributes arose from
acquisitions. The company’s tax valuation allowance totaled $197 million
at December 31, 2007. Should the company’s actual future taxable income by
tax jurisdiction vary from estimates, additional allowances or reversals
thereof may be necessary. The company provides a liability for future
income tax payments in the worldwide tax
jurisdictions
|
|
|
in
which it operates. Accrued income taxes totaled $64 million at December
31, 2007. Should tax return positions that the company expects are
sustainable not be sustained upon audit, the company could be required to
record an incremental tax provision for such taxes. Should previously
unrecognized tax benefits ultimately be sustained, a reduction in the
company’s tax provision or goodwill would
result.
|
|
|
(h)
|
Contingencies and
Litigation
|
|
|
The
company records accruals for various contingencies, including legal
proceedings, environmental, workers’ compensation, product, general and
auto liabilities, self-insurance and other claims that arise in the normal
course of business. The accruals are based on management’s judgment,
historical claims experience, the probability of losses and, where
applicable, the consideration of opinions of internal and or external
legal counsel and actuarial estimates. Reserves of Fisher as of the merger
date, including environmental reserves, were initially recorded at their
fair value and as such were discounted to their net present value.
Additionally, we record receivables from third-party insurers when
recovery has been determined to be
probable.
|
|
|
(i)
|
Pension and Other Retiree
Benefits
|
|
|
Several
of the company’s U.S. and non-U.S. subsidiaries sponsor defined benefit
pension and other retiree benefit plans. The cost and obligations of these
arrangements are calculated using many assumptions to estimate the
benefits that the employee earns while working, the amount of which cannot
be completely determined until the benefit payments cease. Major
assumptions used in the accounting for these employee benefit plans
include the discount rate, expected return on plan assets and rate of
increase in employee compensation levels. Assumptions are determined based
on company data and appropriate market indicators in consultation with
third-party actuaries, and are evaluated each year as of the plans’
measurement date. Net periodic pension costs for the company’s pension and
other postretirement benefit plans totaled $19 million in 2007 and the
company’s unfunded benefit obligation totaled $170 million at year-end
2007. Should any of these assumptions change, they would have an effect on
net periodic pension costs and the unfunded benefit obligation. For
example, a 10% decrease in the discount rate would result in an annual
increase in pension and other postretirement benefit expense of
approximately $2 million and an increase in the benefit obligation of
approximately $97 million.
|
|
|
(j)
|
Stock-based
Compensation
|
|
|
The
fair value of each stock option granted by the company is
estimated using the Black-Scholes option pricing model. Use of a valuation
model requires management to make certain assumptions with respect to
selected model inputs. Management estimates expected volatility
based on the historical volatility of the company’s stock.
The expected lives of grants through 2007 were estimated using the
simplified method for “plain vanilla” options as permitted by SAB 107.
Thereafter, historical data on exercise patterns will become the basis for
determining the expected life of an option. The risk-free interest rate is
based on U.S. Treasury zero-coupon issues with a remaining term which
approximates the expected life assumed at the date of grant. Changes
in these input variables would affect the amount of expense
associated with stock-based compensation. The compensation
expense recognized for all stock-based awards is net of estimated
forfeitures. The company estimates forfeiture rates based
on historical analysis of option forfeitures. If actual
forfeitures should vary from estimated forfeitures, adjustments to
compensation expense may be
required.
|
|
|
The
company records restructuring charges for the cost of vacating facilities
based on future lease obligations and expected sub-rental income. The
company’s accrued restructuring costs for abandoned facilities in
continuing operations totaled $5 million at December 31, 2007. Should
actual cash flows associated with sub-rental income from vacated
facilities vary from estimated amounts, adjustments may be
required.
|
|
|
The
company estimates the expected proceeds from any assets held for sale and,
when necessary, records losses to reduce the carrying value of these
assets to estimated realizable value. Should the actual or estimated
proceeds, which would include post-closing purchase price adjustments,
vary from current estimates, results could differ from expected
amounts.
|
Results
of Operations
2007
Compared With 2006
Continuing
Operations
Sales in 2007 were $9.75 billion, an
increase of $5.95 billion from 2006. Sales increased principally due to the
merger with Fisher as well as other acquisitions and, to a lesser extent,
increased demand and the favorable effect of currency translation. If the merger
with Fisher had occurred on January 1, 2006, revenues would have increased $876
million (10%) over pro forma 2006 revenues, including increases of a) $128
million due to acquisitions made by the combined companies, net of divestitures,
b) $241 million due to the favorable effect of currency translation and c) $507
million due to higher revenues at existing businesses as a result of increased
demand and, to a lesser extent, price increases. Growth was particularly strong
in Asia and, to a lesser extent, North America and more moderate in
Europe.
In 2007, operating income and operating
income margin were $974 million and 10.0%, respectively, compared with $242
million and 6.4%, respectively, in 2006. The increase in operating income was
due to the inclusion of the Fisher businesses for a full year in 2007, $125
million of pre-tax charges associated with the Fisher merger incurred in 2006
and, to a lesser extent, higher profitability at existing businesses resulting
from incremental revenues, price increases and productivity improvements. These
increases were offset in part by $400 million of higher amortization expense as
a result of acquisition-related intangible assets from the Fisher merger and
other acquisitions.
Restructuring and other costs were
recorded during 2007 and 2006. Restructuring costs in 2007 primarily include
merger-related exit costs at existing businesses. The cost of actions at Fisher
businesses has been charged to the cost of the acquisition, while the cost of
actions at existing businesses being integrated with Fisher is charged to
restructuring expense. In 2007, the company recorded restructuring and other
costs, net, of $91 million, including $49 million of charges to cost of
revenues, substantially all related to the sale of inventories revalued at the
date of acquisition (principally Fisher). The company incurred $40 million of
cash costs, primarily for severance, abandoned facilities and relocation
expenses at businesses that have been consolidated. The company also recorded $2
million of loss on sale of a small business unit (Note 15). In 2006, the
company recorded restructuring and other costs, net, of $123 million, including
$78 million of charges to cost of revenues, primarily for the sale of
inventories revalued at the date of acquisition (principally Fisher) and $30
million of cash costs, primarily for severance, abandoned facilities and
relocation expenses at businesses that have been consolidated. In addition, the
company recorded a charge of $15 million for in-process research and development
at Fisher on the merger date. The company has substantially finalized its plan
for restructuring actions at Fisher or within existing businesses with which
Fisher is being integrated. Such actions have included rationalization of
product lines, consolidation of facilities and reductions in staffing
levels.
In October 2007, the company decided to
undertake closure of a Laboratory Products and Services segment manufacturing
facility in France. The operations of the factory will be consolidated with
those of existing factories in a phased plan through mid-2009. The company
recorded $11 million of charges associated with this action in 2007. The company
estimates additional future charges for retention, real estate abandonment,
moving costs and accelerated depreciation on assets to be abandoned as a result
of this action will total $7 to $9 million, including cash costs of $6 to $8
million, which will be recorded between the first quarter of 2008 and mid-2009,
when the facility ceases remaining operations. Also, the company has identified
other actions totaling $4 million that will be undertaken in 2008. The
restructuring actions initiated in 2007 resulted in annual cost savings
beginning in the second half of 2007 and early 2008 of approximately $11
million, principally in the Analytical Technologies segment.
Segment
Results
|
(Dollars
in millions)
|
|
2007
|
|
|
2006
|
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
Analytical
Technologies
|
|
$ |
4,256.0 |
|
|
$ |
2,425.8 |
|
|
|
75% |
|
|
Laboratory Products and
Services
|
|
|
5,842.2 |
|
|
|
1,406.6 |
|
|
|
315% |
|
|
Eliminations
|
|
|
(351.8 |
) |
|
|
(40.8 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
Revenues
|
|
$ |
9,746.4 |
|
|
$ |
3,791.6 |
|
|
|
157% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Analytical
Technologies
|
|
$ |
843.1 |
|
|
$ |
383.7 |
|
|
|
120% |
|
|
Laboratory Products and
Services
|
|
|
793.8 |
|
|
|
189.2 |
|
|
|
320% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal Reportable
Segments
|
|
|
1,636.9 |
|
|
|
572.9 |
|
|
|
186% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of Revenues
Charges
|
|
|
(49.2 |
) |
|
|
(77.7 |
) |
|
|
|
|
|
Restructuring and Other Costs,
Net
|
|
|
(42.2 |
) |
|
|
(45.7 |
) |
|
|
|
|
|
Amortization of
Acquisition-related Intangible Assets
|
|
|
(571.1 |
) |
|
|
(170.8 |
) |
|
|
|
|
|
Stock-based Compensation
Acceleration Charge
|
|
|
— |
|
|
|
(36.7 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Operating
Income
|
|
$ |
974.4 |
|
|
$ |
242.0 |
|
|
|
303% |
|
The company’s management evaluates
segment operating performance using operating income before certain charges to
cost of revenues, principally associated with acquisition accounting;
restructuring and other costs/income including costs arising from facility
consolidations such as severance and abandoned lease expense and gains and
losses from the sale of real estate and product lines; amortization of
acquisition-related intangible assets; and charges for the acceleration of
stock-based compensation following the merger with Fisher. The company uses this
measure because it helps management understand and evaluate the segments’ core
operating results and facilitates comparison of performance for determining
compensation (Note 3).
Analytical
Technologies
|
(Dollars
in millions)
|
|
2007
|
|
2006
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$ |
4,256.0 |
|
$ |
2,425.8 |
|
|
75% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Income Margin
|
|
|
19.8% |
|
|
15.8% |
|
4.0 pts.
|
|
Sales in the Analytical Technologies
segment increased $1.83 billion to $4.26 billion in 2007 primarily due to the
merger with Fisher and other acquisitions and, to a lesser extent, increased
revenues at existing businesses and favorable currency translation. Had the
Fisher merger occurred on January 1, 2006, revenues would have increased $514
million (14%) over pro forma 2006 revenues, including increases of a) $99
million due to acquisitions made by the combined companies, net of divestitures,
b) $136 million due to the favorable effect of currency translation and c) $279
million due to increased revenue at existing businesses as a result of increased
demand and, to a lesser extent, higher prices. The increase in demand was from
life science and industrial customers due in part to strong market response to
new products. Growth was particularly strong in sales of mass spectrometry and
spectroscopy instruments as well as environmental monitoring equipment and, to a
lesser extent, process instruments and diagnostic tools.
Operating income margin was 19.8% in
2007 and 15.8% in 2006. The increase resulted from profit on incremental
revenues and, to a lesser extent, price increases and productivity improvements,
including cost-reduction measures following restructuring actions. Had the
merger with Fisher occurred on January 1, 2006, operating income margin would
have been 17.2% in 2006.
Laboratory
Products and Services
|
(Dollars
in millions)
|
|
2007
|
|
2006
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$ |
5,842.2 |
|
$ |
1,406.6 |
|
|
315% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Income Margin
|
|
|
13.6% |
|
|
13.5% |
|
0.1 pts.
|
|
Sales in the Laboratory Products and
Services segment increased $4.44 billion to $5.84 billion in 2007, primarily due
to the merger with Fisher and other acquisitions. Had the Fisher merger occurred
on January 1, 2006, revenues would have increased $405 million (7%) over pro
forma 2006 revenues, including increases of a) $30 million due to acquisitions
made by the combined companies, net of divestitures, b) $106 million due to the
favorable effect of currency translation and c) $269 million due to increased
revenue at existing businesses as a result of increased demand and, to a lesser
extent, higher prices. Sales made through the segment’s research market channel,
which includes the Fisher catalog, and revenues from the company’s biopharma
outsourcing offerings were strong.
Operating income margin increased to
13.6% in 2007 from 13.5% in 2006, primarily due to the price increases and
productivity improvements, including restructuring actions, offset in part by
inclusion of Fisher revenues, which have a slightly lower operating margin than
the company’s legacy laboratory equipment business. Had the merger with Fisher
occurred on January 1, 2006, operating income margin would have been 12.2% in
2006.
Other
Expense, Net
The company reported other expense,
net, of $93 million and $33 million in 2007 and 2006, respectively (Note 4).
Other expense, net, includes interest income, interest expense, gain on
investments, net, equity in earnings of unconsolidated subsidiaries and other
items, net. Interest income increased to $47 million in 2007 from $16 million in
the same period of 2006, primarily due to higher invested cash balances from
operating cash flow and, to a lesser extent, increased market interest rates.
Interest expense increased to $140 million in 2007 from $52 million in 2006,
primarily as a result of debt assumed in the merger with Fisher. In August 2007,
the FASB issued proposed guidance on accounting for convertible debt instruments
that, if enacted, would increase the company’s reported interest expense in a
manner that reflects interest rates of similar non-convertible debt. The change
would not affect the company’s cash interest payments. There can be no assurance
at this time, however, as to the content of any final FASB rules on this
topic.
Provision
for Income Taxes
The company’s effective tax rate was
11.5% and 20.6% in 2007 and 2006, respectively. The tax provision in 2007 was
favorably affected by a one-time benefit of $32 million, discussed below. In
addition to the impact of this item, the decrease in the effective tax rate in
2007 compared with 2006 was primarily due to geographic changes in profits, in
particular lower income in the United States due to charges and amortization
associated with the Fisher merger, together with the impact of an increased U.S.
tax credit for foreign taxes, an enhanced tax credit for qualifying U.S.
research costs, growth in lower tax regions such as Asia and, to a lesser
extent, a tax gain in excess of the related book gain on the sale of a product
line in 2006.
In 2007, the United Kingdom enacted new
tax legislation that will become effective on April 1, 2008, lowering its
corporate tax rate. Denmark, Canada and Germany also enacted new tax
legislation, with various effective dates, that will reduce the corporate tax
rate. As a result of these changes in tax rates, the deferred tax balances of
all the company’s entities in these countries have been adjusted to reflect the
new tax rates in 2007.
Contingent
Liabilities
At year-end 2007, the company was
contingently liable with respect to certain legal proceedings and related
matters. See “Litigation and Related Contingencies” in Note 11. An unfavorable
outcome in one or more of the matters described therein could materially affect
the company’s financial position as well as its results of operations and cash
flows.
Recent
Accounting Pronouncements
In September 2006, the FASB issued
SFAS No. 157, “Fair Value Measurements.” SFAS No. 157 defines fair value,
establishes a framework for measuring fair value and expands disclosures about
fair value measurements. This statement applies to other accounting
pronouncements that require or permit fair value measurements. This statement
does not require any new fair value measurements. SFAS No. 157 is effective for
the company’s monetary assets and liabilities in 2008 and for other assets and
liabilities in 2009. The company does not expect a material effect on its
monetary assets and liabilities from adopting SFAS No. 157 and is currently
evaluating the potential impact on its nonmonetary assets and liabilities of
adopting SFAS No. 157.
In February 2007, the FASB issued SFAS
No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities
- including an Amendment of FASB Statement No. 115.” SFAS No. 159 permits
entities to measure eligible financial assets, financial liabilities and certain
other assets and liabilities at fair value on an instrument-by-instrument
basis. The fair value measurement election is irrevocable once made and
subsequent changes in fair value must be recorded in earnings. The effect
of adoption will be reported as a cumulative-effect adjustment to beginning
retained earnings. SFAS No. 159 is effective for the company beginning January
1, 2008. The company does not expect a material effect from adoption of this
standard.
In December 2007, the FASB issued SFAS
No. 141R, “Business Combinations.” SFAS No. 141R, among other aspects, requires
the acquiring entity in a business combination to recognize all (and only) the
assets acquired and liabilities assumed in the transaction; establishes the
acquisition-date fair value as the measurement objective for all assets acquired
and liabilities assumed; and requires the acquirer to disclose certain
information to enable users to understand the nature and financial effect of the
business combination. The statement requires that cash outflows such as
transaction costs and post-acquisition restructuring be charged to expense
instead of capitalized as a cost of the acquisition. Contingent purchase price
will be recorded at its initial fair value and then re-measured as time passes
through adjustments to net income. SFAS No. 141R is effective for the company in
2009. The company is currently evaluating the impact of adoption.
In December 2007, the FASB issued SFAS
No. 160, “Noncontrolling Interests in Consolidated Financial Statements.” SFAS
No. 160 will change the accounting for minority interests, which will be
reclassified as noncontrolling interests and classified as a component of
equity. SFAS No. 160 is effective for the company in 2009. The company does not
expect a material effect from adoption of this standard.
Discontinued
Operations
Subsequent to the 2006 acquisition of
GV Instruments Limited (GVI), the UK Office of Fair Trading (OFT) commenced an
investigation of the transaction to determine whether it qualified for
consideration under the UK Enterprise Act. On December 15, 2006, the OFT
referred the transaction to the UK Competition Commission for further
investigation under the Enterprise Act to determine whether the transaction had
resulted in, or may be expected to result in, a substantial lessening of
competition within any market in the UK for goods or services, particularly gas
isotope ratio mass spectrometers (Gas IRMS), thermal ionization mass
spectrometers (TIMS) and multicollector inductively coupled plasma mass
spectrometers. The Competition Commission published its final report on May 30,
2007, concluding that the company’s acquisition of GVI would lead to a
substantial lessening of competition in the UK in the markets for Gas IRMS and
TIMS products. The Competition Commission has further concluded that a
divestiture remedy was appropriate and has therefore required the company to
divest of either GVI as a whole, or its Gas IRMS and TIMS assets (which together
comprise the majority of the business), to purchasers approved by the
Competition Commission. As a result of this divestiture requirement the company
recorded after-tax impairment charges in 2007 totaling $29 million. The loss
primarily represents non-cash charges to reduce the carrying value of the
business to estimated disposal value. Due to the immateriality of the operating
results of this business relative to consolidated results, the company has not
reclassified the historical results and accounts of this business to
discontinued operations. In February 2008, the company completed the sale of
GVI’s two principal product lines that required divestiture.
Aside from the impairment loss related
to the divestiture of GVI, the company had after-tax gains of $10 million in
2007 from discontinued operations, primarily from the receipt of additional
proceeds from the sale of a business in 2000 and a revision to the company’s
estimate of loss from litigation related to a divested business.
The company had after-tax gains of $2
million in 2006 from the disposal of discontinued operations. The gains
represent additional proceeds from the sale of several businesses prior to 2004,
net of a charge for the settlement of an indemnification claim that arose from a
divested business.
2006
Compared With 2005
Continuing
Operations
Sales in 2006 were $3.79 billion, an
increase of $1.16 billion (44%) from 2005. Sales increased $978 million due to
acquisitions (principally Fisher), net of divestitures. The favorable effects of
currency translation resulted in an increase in revenues of $18 million in 2006.
Aside from the effect of acquisitions, net of divestitures, and currency
translation, revenues increased $163 million (6%) primarily due to increased
demand and, to a lesser extent, price increases, as described by segment below.
Growth was strong in Asia and Europe and moderate in North America.
In 2006, operating income and operating
income margin were $242 million and 6.4%, respectively, compared with $263
million and 10.0%, respectively, in 2005. The decrease in operating income and
operating income margin was due to $125 million of pre-tax charges associated
with the Fisher merger and $93 million of higher amortization expense,
principally due to the Fisher merger. The $125 million of charges includes $73
million of charges to cost of revenues for the sale of inventories revalued at
the date of the merger, $37 million of accelerated stock-based compensation due
to a change in control occurring at the merger date and $15 million of
in-process research and development at Fisher on the date of the merger. The
unfavorable effect of these items was offset in part by the inclusion of
Fisher’s results from November 9, 2006, through the end of the year and higher
profitability at existing businesses due to increased revenue, productivity
improvements, including lower costs following restructuring actions and, to a
lesser extent, price increases.
In 2006, the company recorded
restructuring and other costs, net, of $123 million, including $78 million of
charges to cost of revenues consisting of $75 million for the sale of
inventories revalued at the date of acquisition (principally Fisher) and $3
million for accelerated depreciation on fixed assets being abandoned due to
facility consolidations. The company incurred $30 million of cash costs,
primarily for severance, abandoned facilities and relocation expenses at
businesses that have been consolidated. As discussed above, the company recorded
a charge of $15 million for in-process research and development at Fisher on the
merger date. In 2005, the company recorded restructuring and other costs, net,
of $30 million, including charges to cost of revenues of $13 million, primarily
for the sale of inventories revalued at the date of acquisition. The company
incurred $23 million of cash costs, primarily for severance, abandoned
facilities and relocation expenses in connection with the integration of Kendro
with existing businesses. In addition, the company recorded a gain of $8
million, primarily from the sale of six abandoned buildings and a charge of $2
million, principally for the writedown of a building held for sale.
Segment
Results
|
(Dollars
in millions)
|
|
2006
|
|
|
2005
|
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
Analytical
Technologies
|
|
$ |
2,425.8 |
|
|
$ |
2,006.7 |
|
|
|
21% |
|
|
Laboratory Products and
Services
|
|
|
1,406.6 |
|
|
|
626.3 |
|
|
|
125% |
|
|
Eliminations
|
|
|
(40.8 |
) |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
Revenues
|
|
$ |
3,791.6 |
|
|
$ |
2,633.0 |
|
|
|
44% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Analytical
Technologies
|
|
$ |
383.7 |
|
|
$ |
284.7 |
|
|
|
35% |
|
|
Laboratory Products and
Services
|
|
|
189.2 |
|
|
|
86.6 |
|
|
|
119% |
|
|
Other
|
|
|
— |
|
|
|
0.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal Reportable
Segments
|
|
|
572.9 |
|
|
|
371.4 |
|
|
|
54% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of Revenues
Charges
|
|
|
(77.7 |
) |
|
|
(13.4 |
) |
|
|
|
|
|
Restructuring and Other Costs,
Net
|
|
|
(45.7 |
) |
|
|
(16.9 |
) |
|
|
|
|
|
Amortization of
Acquisition-related Intangible Assets
|
|
|
(170.8 |
) |
|
|
(77.6 |
) |
|
|
|
|
|
Stock-based Compensation
Acceleration Charge
|
|
|
(36.7 |
) |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Operating
Income
|
|
$ |
242.0 |
|
|
$ |
263.5 |
|
|
|
(8)% |
|
Analytical
Technologies
|
(Dollars
in millions)
|
|
2006
|
|
2005
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$ |
2,425.8 |
|
$ |
2,006.7 |
|
|
21% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Income Margin
|
|
|
15.8% |
|
|
14.2% |
|
1.6 pts.
|
|
Sales in the Analytical Technologies
segment increased $419 million to $2.43 billion in 2006. Sales increased $249
million due to the Fisher merger and other acquisitions, net of divestitures.
The favorable effects of currency translation resulted in an increase in
revenues of $10 million in 2006. In addition to the changes in revenue resulting
from acquisitions, divestitures and currency translation, revenues increased
$160 million (8%) due to higher broad-based demand from life science and
industrial customers combined with strong market
response
to new products and, to a lesser extent, price increases. Growth was
particularly strong in sales of mass spectrometry and spectroscopy instruments
and, to a lesser extent, anatomical pathology products and equipment sold in
commodity markets such as steel, petroleum and cement.
Operating income margin was 15.8% in
2006 and 14.2% in 2005. The increase resulted from profit on incremental
revenues and, to a lesser extent, price increases and productivity improvements,
including cost-reduction measures following restructuring actions. Had stock
option compensation been recorded as expense in 2005, the operating income
margin in 2005 would have been 13.4%.
Laboratory
Products and Services
|
(Dollars
in millions)
|
|
2006
|
|
2005
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$ |
1,406.6 |
|
$ |
626.3 |
|
|
125% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Income Margin
|
|
|
13.5% |
|
|
13.8% |
|
(0.3) pts.
|
|
Sales in the Laboratory Products and
Services segment increased $780 million to $1.41 billion in 2006. Sales
increased $769 million due to the Fisher merger and other acquisitions, net of
divestitures. The favorable effects of currency translation resulted in an
increase in revenues of $8 million in 2006. In addition to the changes in
revenue resulting from acquisitions, divestitures and currency translation,
revenues increased $3 million due to an increase in demand for laboratory
equipment.
Operating income margin decreased to
13.5% in 2006 from 13.8% in 2005, primarily due to the inclusion of stock option
compensation in 2006 following adoption of SFAS No. 123R, offset in part by
price increases and productivity improvements, including restructuring actions.
Had stock option compensation been recorded as expense in 2005, the operating
income margin in 2005 would have been 13.1%.
Other
Income (Expense), Net
The company reported other expense,
net, of $33 million in 2006 and other income, net, of $22 million in 2005 (Note
4). Interest income increased to $16 million in 2006 from $12 million in 2005,
primarily due to higher invested cash balances from operating cash flow and, to
a lesser extent, increased market interest rates, offset in part by cash used to
fund acquisitions. Interest expense increased to $52 million in 2006 from $27
million in 2005, as a result of debt assumed in the merger with Fisher and, to a
lesser extent, a full year of debt used to partially fund the Kendro acquisition
and higher rates associated with the company’s variable-rate debt.
During 2006 and 2005, the company had
gains on investments, net, of $1 million and $35 million, respectively. The
gains included $29 million in 2005 from the sale of shares of Thoratec
Corporation and a loss of $1 million in 2005 from the sale of shares of Newport
Corporation, in addition to other gains from the company’s investment portfolio
activity. The company obtained common shares of Thoratec as part of the sale of
Thermo Cardiosystems Inc. in 2001 and obtained the shares of Newport as part of
the sale of Spectra-Physics in 2004. Following the sale of shares in 2005, the
company no longer owns shares of Thoratec or Newport. Other income in 2006 and
2005 also includes net currency transaction gains and equity in earnings of
unconsolidated subsidiaries.
Provision
for Income Taxes
The company’s effective tax rate was
20.6% and 30.6% in 2006 and 2005, respectively. The decrease in the effective
tax rate in 2006, compared with 2005, was primarily due to geographic changes in
profits, in particular lower income in the United States due to charges
associated with the Fisher merger, partially offset by non-deductible merger
related costs. The provision for income taxes in 2005 includes $4 million for
the estimated effect of a tax audit of prior years in a non-U.S. country. The
effect of this charge increased the effective tax rate in 2005 by 1.5 percentage
points.
Discontinued
Operations
The company’s discontinued operations
reported after-tax income of $0.5 million in 2006, representing the results of
two small Fisher businesses held for sale.
The company had after-tax gains of $2
million in 2006 and $25 million in 2005 from the disposal of discontinued
operations. The 2006 gains represent additional proceeds from the sale of
several businesses prior to 2004, net of a charge for the settlement of an
indemnification claim that arose from a divested business.
An after-tax gain of $17 million arose
from the September 2005 sale of the company’s point of care and rapid
diagnostics business for $53 million in cash. Revenues and pre-tax loss of the
divested business totaled $30 million and $1 million, respectively, in 2004 and
revenues and pre-tax income totaled $27 million and $1 million, respectively, in
2005 through the date of sale. Due to the immateriality of the operating results
of this business relative to consolidated results, the company has not
reclassified the historical results and accounts of this business to
discontinued operations. In addition to the sale of this business, the company
had after-tax gains aggregating $8 million in 2005 representing additional
proceeds from the sale of businesses divested prior to 2004, including the sale
of abandoned real estate and post-closing adjustments, and the settlement of
litigation and an arbitration award related to divested businesses.
Liquidity
and Capital Resources
Consolidated working capital was
$1.76 billion at December 31, 2007, compared with $1.51 billion at December 31,
2006. The increase was primarily due to a reduction in short-term borrowings.
Included in working capital were cash, cash equivalents and short-term
available-for-sale investments of $639 million at December 31, 2007, compared
with $691 million at December 31, 2006.
2007
Cash provided by operating activities
was $1.48 billion during 2007. Cash payments for income taxes, net of refunds,
totaled $125 million in 2007. The company did not make significant U.S.
estimated tax payments in 2007, primarily due to tax deductions for
merger-related stock-based compensation and net operating loss carryforwards.
The company expects to make tax payments of approximately $325 to $375 million
in 2008. The company made $78 million of merger related payments in 2007, which
reduced operating cash. Payments for restructuring actions of the company’s
continuing operations, principally severance, lease costs and other expenses of
real estate consolidation, used cash of $40 million during 2007.
In connection with restructuring
actions undertaken by continuing operations, the company had accrued $19 million
for restructuring costs at December 31, 2007. The company expects to pay
approximately $14 million of this amount for severance, retention and other
costs, primarily through 2009. The balance of $5 million will be paid for lease
obligations over the remaining terms of the leases, with approximately 23% to be
paid through 2008 and the remainder through 2013. In addition, at December 31,
2007, the company had accrued $10 million for acquisition expenses. Accrued
acquisition expenses included $4 million of severance and relocation
obligations, which the company expects to pay primarily during 2008. The
remaining balance primarily represents abandoned-facility payments that will be
paid over the remaining terms of the leases through 2010.
During 2007, the primary investing
activities of the company’s continuing operations, excluding available-for-sale
investment activities, were acquisitions and the purchase of property, plant and
equipment. The company expended $497 million on acquisitions and $176 million
for purchases of property, plant and equipment. The company collected a note
receivable from Newport Corporation totaling $48 million and had proceeds from
the sale of property, plant and equipment of $19 million, principally real
estate. The company’s discontinued operations provided cash of $31 million from
investing activities, principally the sale of Genevac Limited.
The company’s financing activities used
$929 million of cash during 2007, principally for the repayment of $464 million
of short-term debt and the repurchase of $898 million of the company’s common
stock, offset in part by proceeds of stock option exercises. The company had
proceeds of $345 million from the exercise of employee stock options and $97
million of tax benefits from the exercise of stock options. In February 2007,
the Board of Directors authorized the repurchase of up to $300 million of the
company’s common stock through February 28, 2008. On August 9, 2007, the Board
of Directors authorized the repurchase of an additional $700 million of the
company’s common stock through August 8, 2008. At December 31, 2007, $102
million was available for future repurchases of the company’s common stock under
the August 8, 2008 Board authorization.
The company has no material commitments
for purchases of property, plant and equipment and expects that for all of 2008,
such expenditures will approximate $230 to $250 million.
The company believes that its existing
resources, including cash and investments, future cash flow from operations and
available borrowings under its existing revolving credit facilities, are
sufficient to meet the working capital requirements of its existing businesses
for the foreseeable future, including at least the next 24 months.
2006
Cash provided by operating activities
was $406 million during 2006, including $407 million provided by continuing
operations. A reduction in current liabilities used cash of $80 million,
primarily as a result of merger-related payments made following completion of
the transaction totaling $157 million, including executive severance and
retirement benefits, and transaction costs incurred by Fisher, offset in part by
an increase in other accrued expenses. Cash of $32 million was provided by
collections on accounts receivable. Payments for restructuring actions of the
company’s continuing operations, principally severance, lease costs and other
expenses of real estate consolidation, used cash of $30 million during
2006.
During 2006, the primary investing
activities of the company’s continuing operations, excluding available-for-sale
investment activities, included acquisitions, the purchase of property, plant
and equipment and the sale of product lines. Cash acquired in the merger with
Fisher totaled $360 million, net of transaction costs. The company expended $132
million on acquisitions and $77 million for purchases of property, plant and
equipment. The company partially liquidated assets totaling $40 million in a
Fisher retirement trust to fund payments that were due to former Fisher
executives following the merger. The company had proceeds from the sale of
product lines of $9 million. Investing activities of the company’s discontinued
operations provided $5 million of cash during 2006, primarily additional
proceeds from a business divested prior to 2004.
The company’s financing activities used
$260 million of cash during 2006, principally for the repurchase of $300 million
of the company’s common stock and the repayment of $335 million of debt, offset
in part by short-term borrowing and proceeds of stock option exercises. The
company increased short-term borrowings by $177 million in 2006. The company had
proceeds of $180 million from the exercise of employee stock options and $17
million of tax benefits from the exercise of stock options.
2005
Cash provided by operating activities
was $271 million during 2005, including $273 million provided by continuing
operations and $2 million used by discontinued operations. Cash of $42 million
was provided by an increase in other current liabilities, primarily accrued
payroll and benefits due to the timing of payments, and deferred revenue,
pending completion of obligations to customers. Income tax payments of
approximately $13 million arose from taxes on gains on the sale of investments.
The company contributed $11 million of funding to a U.K. pension plan in June
2005. Payments for restructuring actions of the company’s continuing operations,
principally severance, lease costs and other expenses of real estate
consolidation, used cash of $20 million in 2005.
During 2005, the primary investing
activities of the company’s continuing operations, excluding available-for-sale
investment activities, included acquisitions and the purchase and sale of
property, plant and equipment. The company expended $933 million, net of cash
acquired, for the acquisitions of Niton, R&P, Kendro and Ionalytics
(Note 2). The company expended $44 million for the purchases of property,
plant and equipment and had proceeds from the sale of property, principally
abandoned real estate, of $16 million. Investing activities of the company’s
discontinued operations provided $66 million of cash in 2005, primarily from the
sale of its point of care and rapid diagnostics business in September 2005 and
the sale of a building of a previously divested business in August
2005.
The company’s financing activities
provided $391 million of cash during 2005, principally from the issuance of $250
million senior notes due in 2015 and a net increase in short-term borrowings of
$119 million. The company received net proceeds of $27 million from the exercise
of employee stock options during 2005.
The company repaid in full $570 million
of borrowings under its bridge loan with cash and proceeds of new debt issuances
described below. In May 2005, the company issued $250 million aggregate
principal amount of 5% senior notes (the Notes) due 2015, with an effective
interest rate of 5.27% after including the impact of an interest rate swap
arrangement. Under the Notes’ Indenture, the company is subject to certain
affirmative and negative covenants.
Also in May 2005, the company entered
into an arrangement that provides the company an uncommitted line of credit of
up to $250 million through a series of short-term money market loans funded on
an ongoing basis in the secondary market. Such money market loans have maturity
periods of overnight to 364 days and bear varying rates of interest based on the
maturity date and market rate at the time of issuance. In May 2005, the company
borrowed $250 million through three short-term loans under the money market
arrangement with maturities of one week to three months. As of December 31,
2005, the company had repaid the borrowings under this arrangement.
In June 2005, the company entered
into a five-year revolving credit facility with a bank group that provided up to
175 million euros. The facility carried interest at a Euribor rate plus 35 basis
points. As of December 31, 2005, the company had outstanding borrowings under
this facility of 105 million euros ($124 million) in two tranches with
maturities in January 2006 and with a weighted average interest rate of 2.47%.
The facility was terminated in 2006.
Off-Balance
Sheet Arrangements
The company did not use special purpose
entities or other off-balance-sheet financing arrangements in 2005 - 2007 except
for letters of credit, bank guarantees, surety bonds and other guarantees
disclosed in the table below. Of the amounts disclosed in the table below for
letters of credit, bank guarantees, surety bonds and other guarantees, $12
million relates to guarantees of the performance of third parties, principally
in connection with businesses that were sold. The balance relates to guarantees
of the company’s own performance, primarily in the ordinary course of
business.
Contractual
Obligations and Other Commercial Commitments
The table below summarizes, by period
due or expiration of commitment, the company’s contractual obligations and other
commercial commitments as of December 31, 2007.
|
|
|
Payments
Due by Period or Expiration of Commitment
|
|
|
(In
millions)
|
|
2008
|
|
|
2009
and
2010
|
|
|
2011
and
2012
|
|
|
2013
and
Thereafter
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contractual
Obligations and Other Commercial Commitments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt principal, including short term debt (a)
|
|
$ |
147.8 |
|
|
$ |
2.5 |
|
|
$ |
0.6 |
|
|
$ |
2,036.3 |
|
|
$ |
2,187.2 |
|
|
Interest (b)
|
|
|
103.1 |
|
|
|
189.4 |
|
|
|
188.9 |
|
|
|
609.9 |
|
|
|
1,091.3 |
|
|
Capital lease obligations
|
|
|
1.5 |
|
|
|
3.0 |
|
|
|
2.9 |
|
|
|
0.6 |
|
|
|
8.0 |
|
|
Operating lease obligations
|
|
|
91.3 |
|
|
|
135.0 |
|
|
|
82.8 |
|
|
|
83.1 |
|
|
|
392.2 |
|
|
Unconditional purchase obligations (c)
|
|
|
137.4 |
|
|
|
13.3 |
|
|
|
0.9 |
|
|
|
— |
|
|
|
151.6 |
|
|
Letters of credit and bank guarantees
|
|
|
89.8 |
|
|
|
7.9 |
|
|
|
0.3 |
|
|
|
0.5 |
|
|
|
98.5 |
|
|
Surety bonds and other guarantees
|
|
|
19.2 |
|
|
|
2.0 |
|
|
|
8.5 |
|
|
|
— |
|
|
|
29.7 |
|
|
Pension obligations on balance sheet
|
|
|
33.3 |
|
|
|
46.2 |
|
|
|
50.6 |
|
|
|
64.8 |
|
|
|
194.9 |
|
|
Asset retirement obligations
|
|
|
5.9 |
|
|
|
4.5 |
|
|
|
4.6 |
|
|
|
16.3 |
|
|
|
31.3 |
|
|
Other (d)
|
|
|
11.0 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
11.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
640.3 |
|
|
$ |
403.8 |
|
|
$ |
340.1 |
|
|
$ |
2,811.5 |
|
|
$ |
4,195.7 |
|
|
(a)
|
Amounts
represent the expected cash payments for debt and do not include any
deferred issuance costs.
|
|
(b)
|
For
the purpose of this calculation, amounts assume interest rates on floating
rate obligations remain unchanged from levels at December 31, 2007,
throughout the life of the
obligation.
|
|
(c)
|
Unconditional
purchase obligations include agreements to purchase goods or services that
are enforceable and legally binding and that specify all significant
terms, including: fixed or minimum quantities to be purchased; fixed,
minimum or variable price provisions; and the approximate timing of the
transaction. Purchase obligations exclude agreements that are cancelable
at any time without penalty.
|
|
(d)
|
Obligation
represents funding commitments pursuant to investments held by the
company.
|
Reserves for unrecognized tax benefits
of $79 million have not been included in the above table due to the inability to
predict the timing of tax audit resolutions.
The company has no material commitments
for purchases of property, plant and equipment but expects that for 2008, such
expenditures for its existing business will approximate $230 to $250
million.
In disposing of assets or businesses,
the company often provides representations, warranties and/or indemnities to
cover various risks including, for example, unknown damage to the assets,
environmental risks involved in the sale of real estate, liability to
investigate and remediate environmental contamination at waste facilities, and
unidentified tax liabilities and legal fees related to periods prior to the
disposition. The company does not have the ability to estimate the potential
liability from such indemnities because they relate to unknown conditions.
However, the company has no reason to believe that these uncertainties would
have a material adverse effect on its financial position, annual results of
operations or cash flows.
The company has recorded liabilities
for known indemnifications included as part of environmental liabilities. See
Item 1. Business – Environmental Matters for a discussion of these
liabilities.
|
|
Quantitative
and Qualitative Disclosures About Market
Risk
|
The company is exposed to market risk
from changes in interest rates, currency exchange rates and equity prices, which
could affect its future results of operations and financial condition. The
company manages its exposure to these risks through its regular operating and
financing activities. Additionally, the company uses short-term forward
contracts to manage certain exposures to currencies. The company enters into
forward currency-exchange contracts to hedge firm purchase and sale commitments
denominated in currencies other than its subsidiaries’ local currencies. The
company does not engage in extensive currency hedging activities; however, the
purpose of the company’s currency hedging activities is to protect the company’s
local currency cash flows related to these commitments from fluctuations in
currency exchange rates. The company’s forward currency-exchange contracts
principally hedge transactions denominated in euros, U.S. dollars, British
pounds sterling, Canadian dollars and Australian dollars. Income and losses
arising from forward contracts are recognized as offsets to losses and income
resulting from the underlying exposure being hedged. The company does not enter
into speculative currency agreements.
Interest
Rates
Certain of the company’s short-term
available-for-sale investments and long-term obligations are sensitive to
changes in interest rates. Interest rate changes would result in a change in the
fair value of these financial instruments due to the difference between the
market interest rate and the rate at the date of purchase or issuance of the
financial instrument. A 10% decrease in year-end 2007 and 2006 market interest
rates would result in a net negative impact to the company of $181 million and
$84 million, respectively, on the net fair value of its interest-sensitive
financial instruments.
In addition, interest rate changes
would result in a change in the company’s interest expense due to variable-rate
debt instruments. A 100-basis-point increase in 90-day LIBOR at December 31,
2007 and 2006, would increase the company’s annual pre-tax interest expense by
$4.7 million and $9 million, respectively.
Currency
Exchange Rates
The company views its investment in
international subsidiaries with a functional currency other than the company’s
reporting currency as permanent. The company’s investment in international
subsidiaries is sensitive to fluctuations in currency exchange rates. The
functional currencies of the company’s international subsidiaries are
principally denominated in euros, British pounds sterling and Japanese yen. The
effect of a change in currency exchange rates on the company’s net investment in
international subsidiaries is reflected in the “accumulated other comprehensive
items” component of shareholders’ equity. A 10% depreciation in year-end 2007
and 2006 functional currencies, relative to the U.S. dollar, would result in a
reduction of shareholders’ equity of $297 million and $324 million,
respectively.
The fair value of forward
currency-exchange contracts is sensitive to changes in currency exchange rates.
The fair value of forward currency-exchange contracts is the estimated amount
that the company would pay or receive upon termination of the contract, taking
into account the change in currency exchange rates. A 10% appreciation in
year-end 2007 and 2006 currency exchange rates related to the company’s
contracts would result in an increase in the unrealized loss on forward
currency-exchange contracts of $22 million and $7 million, respectively. The
unrealized gains or losses on forward currency-exchange contracts resulting from
changes in currency exchange rates are expected to approximately offset losses
or gains on the exposures being hedged.
Certain of the company’s cash and cash
equivalents are denominated in currencies other than the functional currency of
the depositor and are sensitive to changes in currency exchange rates. A 10%
depreciation in the related year-end 2007 and 2006 currency exchange rates
applied to such cash balances would result in a negative impact of $26 million
and $5 million, respectively, on the company’s net income.
Equity
Prices
The company’s available-for-sale
investment portfolio includes equity securities that are sensitive to
fluctuations in price. In addition, the company’s convertible obligations are
sensitive to fluctuations in the price of the company’s common stock. Changes in
equity prices would result in changes in the fair value of the company’s
available-for-sale investments and convertible obligations due to the difference
between the current market price and the market price at the date of purchase or
issuance of the financial instrument. A 10% increase in year-end 2007 and 2006
market equity prices would reduce the fair value of the company’s convertible
obligations by $184 million and $128 million, respectively.
|
|
Financial
Statements and Supplementary Data
|
This data is submitted as a separate
section to this report. See Item 15 “Exhibits and Financial Statement
Schedules.”
|
|
Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure
|
Not applicable.
Management’s
Evaluation of Disclosure Controls and Procedures
The company’s management, with the
participation of the company’s chief executive officer and chief financial
officer, evaluated the effectiveness of the company’s disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of
December 31, 2007. Based on this evaluation, the company’s chief executive
officer and chief financial officer concluded that, as of December 31, 2007, the
company’s disclosure controls and procedures were effective in providing
reasonable assurance that information required to be disclosed by the company in
the reports that it files or submits under the Exchange Act is recorded,
processed, summarized, reported and accumulated and communicated to the
company’s management, including its chief executive officer and chief financial
officer, as appropriate to allow timely decisions regarding required
disclosure.
Management’s
Annual Report on Internal Control Over Financial Reporting
The company’s management, including the
company’s chief executive officer and chief financial officer, is responsible
for establishing and maintaining adequate internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
company. Internal control over financial reporting is a process designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. The company’s management
conducted an assessment of the effectiveness of the company’s internal control
over financial reporting as of December 31, 2007 based on criteria established
in “Internal Control - Integrated Framework” issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). Based on this
assessment, the company’s management concluded that, as of December 31, 2007,
the company’s internal control over financial reporting was
effective.
The company’s independent registered
public accounting firm, PricewaterhouseCoopers LLP, has audited the
effectiveness of the company’s internal control over financial reporting as of
December 31, 2007, as stated in their report that appears on page F-2 of this
Annual Report on Form 10-K.
Changes
in Internal Control over Financial Reporting
There have been no changes in the
company’s internal control over financial reporting (as defined in Exchange Act
Rules 13a-15(f) and 15d-15(f)) during the fiscal quarter ended December 31,
2007, that have materially affected or are reasonably likely to materially
affect the company’s internal control over financial reporting.
Not applicable.
PART
III
|
|
Directors,
Executive Officers and Corporate
Governance
|
The information with respect to
directors required by this Item will be contained in our definitive proxy
statement to be filed with the SEC not later than 120 days after the close of
business of the fiscal year (2008 Definitive Proxy Statement) and is
incorporated in this report by reference.
The information with respect to
executive officers required by this Item is included in Item 1 of Part I of this
report.
The information with respect to Section
16(a) beneficial ownership reporting compliance required by this Item will be
contained in our 2008 Definitive Proxy Statement and is incorporated in this
report by reference.
The information with respect to audit
committee financial expert and identification of the audit committee of the
Board of Directors required by this Item will be contained in our 2008
Definitive Proxy Statement and is incorporated in this report by reference.
Copies of the audit committee charter, as well as the charters for the
compensation committee and nominating and corporate governance committee, are
available on our website at www.thermofisher.com. Paper copies of these
documents may be obtained free of charge by writing to the company care of its
Investor Relations Department at our principal executive office located at 81
Wyman Street, Waltham, Massachusetts 02451.
The company has adopted a code of
ethics that applies to its principal executive officer, principal financial
officer, principal accounting officer or controller, or persons performing
similar functions. This code of ethics is incorporated in our code of business
conduct and ethics that applies to all of our officers, directors and employees.
A copy of our code of business conduct and ethics is available on our website at
www.thermofisher.com. We intend to satisfy the SEC’s disclosure requirements
regarding amendments to, or waivers of, the code of business conduct and ethics
by posting such information on our website. A paper copy of our code of business
conduct and ethics may be obtained free of charge by writing to the company care
of its Investor Relations Department at our principal executive
office.
In addition, the Board of Directors has
adopted corporate governance guidelines of the company. A copy of the company’s
corporate governance guidelines are available on the company’s website at
www.thermofisher.com. Paper copies of the corporate governance guidelines may be
obtained free of charge by writing to the company care of its Investor Relations
Department at our principal executive office.
The information required by this Item
will be contained in our 2008 Definitive Proxy Statement and is incorporated in
this report by reference.
|
|
Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
|
The information required by this Item
will be contained in our 2008 Definitive Proxy Statement and is incorporated in
this report by reference.
|
|
Certain
Relationships and Related Transactions and Director
Independence
|
The information required by this Item
will be contained in our 2008 Definitive Proxy Statement and is incorporated in
this report by reference.
|
|
Principal
Accountant Fees and Services
|
The information required by this Item
will be contained in our 2008 Definitive Proxy Statement and is incorporated in
this report by reference.
PART
IV
|
|
Exhibits
and Financial Statement Schedules
|
|
(a)
|
The
following documents are filed as part of this
report:
|
|
|
(1)
|
Consolidated
Financial Statements (see Index on page F-1 of this
report):
|
Report of Independent Registered Public Accounting Firm
Consolidated Statement of Income
Consolidated Balance Sheet
Consolidated Statement of Cash Flows
Consolidated Statement of Comprehensive Income and Shareholders’
Equity
Notes to Consolidated Financial Statements
|
|
(2)
|
Consolidated
Financial Statement Schedule (see Index on page F-1 of this
report):
|
Schedule II: Valuation and Qualifying Accounts
All other schedules are omitted because they are not applicable or not required,
or because the required information is included either in the consolidated
financial
statements or in the notes thereto.
See the Exhibit Index on page
57.
Pursuant to the requirements of Section
13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly
caused this Report to be signed on its behalf by the undersigned, thereunto duly
authorized.
|
Date: February
29, 2008
|
THERMO
FISHER SCIENTIFIC INC.
|
|
|
|
|
|
By: /s/ Marijn E.
Dekkers
|
|
|
Marijn
E. Dekkers
|
|
|
President
and Chief Executive Officer
|
Pursuant to the requirements of the
Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities indicated,
as of February 29, 2008.
|
Signature
|
Title |
|
|
|
|
By: /s/ Marijn E.
Dekkers
Marijn
E. Dekkers
|
President,
Chief Executive Officer and Director
(Principal
Executive Officer)
|
|
|
|
|
By: /s/ Jim P.
Manzi
Jim
P. Manzi
|
Chairman
of the Board and Director |
|
|
|
|
By: /s/ Peter M.
Wilver
Peter
M. Wilver
|
Senior
Vice President and Chief Financial Officer
(Principal
Financial Officer)
|
|
|
|
|
By: /s/ Peter E.
Hornstra
Peter
E. Hornstra
|
Vice
President and Chief Accounting Officer
(Principal
Accounting Officer)
|
|
|
|
|
By: /s/ Michael A.
Bell
Michael
A. Bell
|
Director |
|
|
|
|
By: /s/ Stephen P.
Kaufman
Stephen
P. Kaufman
|
Director |
|
|
|
|
By: /s/ Bruce L.
Koepfgen
Bruce
L. Koepfgen
|
Director |
|
|
|
|
By: /s/ Peter J.
Manning
Peter
J. Manning
|
Director |
|
|
|
|
By: /s/ Michael E.
Porter
Michael
E. Porter
|
Director |
|
|
|
|
By: /s/ Scott M.
Sperling
Scott
M. Sperling
|
Director |
|
|
|
|
By: /s/ Elaine S.
Ullian
Elaine
S. Ullian
|
Director |
|
Exhibit
Number
|
|
Description
of Exhibit
|
|
2.1
|
|
Agreement
and Plan of Merger by and among Thermo Electron Corporation, Trumpet
Merger Corporation and Fisher Scientific International Inc., dated as of
May 7, 2006 (filed as Exhibit 2.1 to the Registrant’s Current Report on
Form 8-K filed May 11, 2006 [file No. 1-8002] and incorporated in this
document by reference).
|
|
|
|
|
|
3.1
|
|
Amended
and Restated Certificate of Incorporation of the Registrant (filed as
Exhibit 3.1. to the Registrant’s Annual Report on Form 10-K for the fiscal
year ended December 31, 2005 [File No. 1-8002] and incorporated in this
document by reference).
|
|
|
|
|
|
3.2
|
|
Amendment
to Thermo Fisher Scientific Inc.’s Third Amended and Restated Certificate
of Incorporation (filed as Exhibit 3.1 to the Registrant’s Current Report
on Form 8-K filed November 14, 2006 [file No. 1-8002] and incorporated in
this document by reference).
|
|
|
|
|
|
3.3
|
|
Bylaws
of the Company, as amended and effective as of November 15,
2007.
|
|
|
|
|
|
|
|
The Registrant agrees,
pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K, to furnish to the
Commission upon request, a copy of each instrument with respect to
long-term debt of the Registrant or its consolidated
subsidiaries.
|
|
|
|
|
|
4.1
|
|
Rights
Agreement, dated as of September 15, 2005, by and between Thermo Electron
Corporation and American Stock Transfer & Trust Company, as Rights
Agent, which includes as Exhibit A, the Terms of Series B Junior
Participating Preferred Stock, and as Exhibit B, the Form of Rights
Certificate (filed as Exhibit 4.1 to the Registrant’s Current Report on
Form 8-K filed September 16, 2005 [File No. 1-8002] and incorporated in
this document by reference).
|
|
|
|
|
|
4.2
|
|
Amendment
No. 1 to the Rights Agreement, dated as of May 7, 2006, between Thermo
Electron Corporation and American Stock Transfer & Trust Company, as
rights agent (filed as Exhibit 1.1 to the Registrant’s Registration
Statement on Form 8-A/A filed May 12, 2006 [File No. 1-8002] and
incorporated in this document by reference).
|
|
|
|
|
|
10.1
|
|
Revolving
Credit Facility Letters from Barclays Bank PLC in favor of the Registrant
and its subsidiaries (filed as Exhibit 10.8 to the Registrant’s Annual
Report on Form 10-K for the fiscal year ended January 3, 1998 [File No.
1-8002] and incorporated in this document by
reference).
|
|
|
|
|
|
10.2
|
|
Thermo
Fisher Scientific Inc. Deferred Compensation Plan for Directors of the
Registrant, as amended and restated on September 12, 2007 (filed as
Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q for the
quarter ended September 29, 2007 [File No. 1-8002] and incorporated
in this document by reference).
|
|
|
|
|
|
10.3
|
|
Thermo
Fisher Scientific Inc. Directors Stock Option Plan, as amended and
restated as of November 9, 2006 (filed as Exhibit 10.21 to the
Registrant’s Current Report on Form 8-K filed November 14, 2006 [File No.
1-8002] and incorporated in this document by
reference).
|
|
|
|
|
|
10.4
|
|
Thermo
Electron Corporation 2003 Annual Incentive Award Plan, effective May 14,
2003 (filed as Appendix B to the Registrant’s Definitive Proxy on Schedule
14A for the 2003 Annual Shareholders Meeting [File No. 1-8002] and
incorporated in this document by
reference).
|
|
Exhibit
Number
|
|
Description
of Exhibit
|
|
10.5
|
|
Thermo
Fisher Scientific Equity Incentive Plan, as amended and restated as of
November 9, 2006 (filed as Exhibit 10.5 to the Registrant’s Annual Report
on Form 10-K for the fiscal year ended December 31, 2006 [File No. 1-8002]
and incorporated in this document by reference).
|
|
|
|
|
|
10.6
|
|
Thermo
Fisher Scientific 2001 Equity Incentive Plan, as amended and restated as
of November 9, 2006 (filed as Exhibit 10.6 to the Registrant’s Annual
Report on Form 10-K for the fiscal year ended December 31, 2006 [File No.
1-8002] and incorporated in this document by
reference).
|
|
|
|
|
|
10.7
|
|
Thermo
Fisher Scientific Employees’ Equity Incentive Plan, as amended and
restated as of November 9, 2006 (filed as Exhibit 10.7 to the Registrant’s
Annual Report on Form 10-K for the fiscal year ended December 31, 2006
[File No. 1-8002] and incorporated in this document by
reference).
|
|
|
|
|
|
10.8
|
|
Thermo
Electron Corporation Deferred Compensation Plan, effective November 1,
2001 (filed as Exhibit 10.13 to the Registrant’s Annual Report on Form
10-K for the fiscal year ended December 29, 2001 [File No. 1-8002] and
incorporated in this document by reference).
|
|
|
|
|
|
|
|
Each of
the plans listed in Exhibits 10.9 to 10.16 originally
provided for the grant of options to acquire the shares of the
Registrant’s formerly majority-owned subsidiaries. In connection with the
reorganization of the Registrant commenced in 1999, all of the
Registrant’s formerly majority-owned subsidiaries were taken private and
as a result, these plans were frozen and all of the options originally
granted under the plans ultimately became options to purchase shares of
Common Stock of the Registrant.
|
|
|
|
|
|
10.9
|
|
Amended
and Restated Thermo Information Solutions Inc. Equity Incentive Plan
(filed as Exhibit 10.13 to the Registrant’s Annual Report on Form 10-K for
the fiscal year ended December 28, 2002 [File No. 1-8002] and incorporated
in this document by reference). (Thermo Information Solutions merged with
Thermo Coleman Corporation on September 17, 1999, and Thermo Coleman
merged with Thermo Electron on October 15, 1999.)
|
|
|
|
|
|
10.10
|
|
Equity
Incentive Plan of Thermo Sentron Inc. (filed as Exhibit 10.7 to Thermo
Sentron’s Registration Statement on Form S-1 [Reg. No. 333-806] and
incorporated in this document by reference). (Thermo Sentron merged with
Thermedics Inc. on April 4, 2000, and Thermedics merged with Thermo
Electron on June 30, 2000.)
|
|
|
|
|
|
10.11
|
|
Equity
Incentive Plan of Thermedics Detection Inc. (filed as Exhibit 10.7 to
Thermedics Detection’s Registration Statement on Form S-1 [File No.
333-19199] and incorporated in this document by reference). (Thermedics
Detection merged with Thermedics on April 12, 2000, and Thermedics merged
with Thermo Electron on June 30, 2000.)
|
|
|
|
|
|
10.12
|
|
Amended
and Restated Equity Incentive Plan of Metrika Systems Corporation (filed
as Exhibit 10.3 to the Quarterly Report on Form 10-Q of Metrika for the
quarter ended July 3, 1999 [File No. 1-13085] and incorporated in this
document by reference). (Metrika merged with Thermo Instrument on May 3,
2000, and Thermo Instrument merged with Thermo Electron on June 30,
2000.)
|
|
Exhibit
Number
|
|
Description
of Exhibit
|
|
10.13
|
|
Amended
and Restated Equity Incentive Plan of Thermo Optek Corporation (filed as
Exhibit 10.2 to the Quarterly Report on Form 10-Q of Thermo Optek for the
quarter ended July 3, 1999 [File No. 1-11757] and incorporated in this
document by reference). Thermo Optek merged with Thermo Instrument on May
11, 2000, and Thermo Instrument merged with Thermo Electron on June 30,
2000.)
|
|
|
|
|
|
10.14
|
|
Amended
and Restated Equity Incentive Plan of Thermo Instrument Systems Inc.
(filed as Exhibit 10.6 to the Quarterly Report on Form 10-Q of Thermo
Instrument for the quarter ended July 3, 1999 [File No. 1-9786] and
incorporated in this document by reference). (Thermo Instrument merged
with Thermo Electron on June 30, 2000.)
|
|
|
|
|
|
10.15
|
|
Amended
and Restated Equity Incentive Plan of Trex Medical Corporation (filed as
Exhibit 10.2 to the Quarterly Report on Form 10-Q of Trex Medical for the
quarter ended July 3, 1999 [File No. 1-11827] and incorporated in this
document by reference). (Trex Medical merged with Thermo Electron on
November 29, 2000.)
|
|
|
|
|
|
10.16
|
|
2000
Spectra-Physics Lasers, Inc. Stock Incentive Plan (filed as Exhibit 10.1
to Spectra-Physics’ Quarterly Report on Form 10-Q for the quarter ended
September 30, 2000 [File No. 000-23461] and incorporated in this
document by reference). (Spectra-Physics merged with Thermo Electron on
February 25, 2002.)
|
|
|
|
|
|
10.17
|
|
Description
of Amendments to Certain Stock Option Plans made in February 2002 (filed
as Exhibit 10.31 to the Registrant’s Annual Report on Form 10-K for the
fiscal year ended December 29, 2001 [File No. 1-8002] and incorporated in
this document by reference).
|
|
|
|
|
|
10.18
|
|
Form
of Amended and Restated Indemnification Agreement between the Registrant
and its directors and officers (filed as Exhibit 10.2 to the Registrant’s
Registration Statement on Form S-4 [Reg. No. 333-90661] and incorporated
in this document by reference).
|
|
|
|
|
|
10.19
|
|
Amended
and Restated Employment Agreement between the Registrant and Marijn
Dekkers (filed as Exhibit 99.1 to the Registrant’s Current Report on Form
8-K dated December 12, 2002 [File No. 1-8002] and incorporated in this
document by reference).
|
|
|
|
|
|
10.20
|
|
Executive
Registry Program at the Massachusetts General Hospital (filed as Exhibit
10.74 to the Registrant’s Annual Report on Form 10-K for the fiscal year
ended December 28, 2002 [File No. 1-8002] and incorporated in this
document by reference).
|
|
|
|
|
|
10.21
|
|
Form
of Executive Change in Control Retention Agreement dated November 19,
2003, between the Registrant and its executive officers (other than Marijn
Dekkers) and certain other key employees (filed as Exhibit 10.65 to the
Registrant’s Annual Report on Form 10-K for the fiscal year ended December
31, 2003 [File No. 1-8002] and incorporated in this document by
reference).
|
|
|
|
|
|
10.22
|
|
Form
of Amendment to Executive Change in Control Retention Agreement dated
November 9, 2006 between the Registrant and certain key employees and
executive officers who signed original agreements prior to November 9,
2006 (filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K
filed November 14, 2006 [File No. 1-8002] and incorporated in this
document by reference).
|
|
Exhibit
Number
|
|
Description
of Exhibit
|
|
10.23
|
|
Form
of Executive Change in Control Retention Agreement dated November 9, 2006
between the Registrant and certain persons who became executives on or
after November 9, 2006 (filed as Exhibit 10.3 to the Registrant’s Current
Report on Form 8-K filed November 14, 2006 [File No. 1-8002] and
incorporated in this document by reference).
|
|
|
|
|
|
10.24
|
|
Form
of Executive Severance Agreement dated November 19, 2003, between the
Registrant and its executive officers (other than Marijn Dekkers) and
certain other key employees (filed as Exhibit 10.66 to the Registrant’s
Annual Report on Form 10-K for the fiscal year ended December 31, 2003
[File No. 1-8002] and incorporated in this document by
reference).
|
|
|
|
|
|
10.25
|
|
Amendment
No. 1 to Executive Severance Agreement with Marc Casper, dated as of
November 9, 2006 (filed as Exhibit 10.7 to the Registrant’s Current Report
on Form 8-K filed November 14, 2006 [File No. 1-8002] and incorporated in
this document by reference).
|
|
|
|
|
|
10.26
|
|
Amendment
No. 1 to Executive Severance Agreement with Guy Broadbent, dated as of
November 9, 2006 (filed as Exhibit 10.8 to the Registrant’s Current Report
on Form 8-K filed November 14, 2006 [File No. 1-8002] and incorporated in
this document by reference).
|
|
|
|
|
|
10.27
|
|
Stock
Option Agreement dated December 12, 2003, by and between the Registrant
and Jim Manzi (filed as Exhibit 10.72 to the Registrant’s Annual Report on
Form 10-K for the fiscal year ended December 31, 2003 [File No. 1-8002]
and incorporated in this document by reference).
|
|
|
|
|
|
10.28
|
|
Letter
Agreement dated February 11, 2004, between the Registrant and Marijn
Dekkers (filed as Exhibit 10.74 to the Registrant’s Annual Report on Form
10-K for the fiscal year ended December 31, 2003 [File No. 1-8002] and
incorporated in this document by reference).
|
|
|
|
|
|
10.29
|
|
Credit
Agreement dated August 29, 2006, among the Company, as borrower, Bank of
America, N.A., as administrative agent and swing line lender, Bank of
America, N.A. and Barclays Bank PLC, as L/C issuers, the several banks and
other financial institutions or entities from time to time parties
thereto, as lenders, Banc of America Securities LLC and Barclays Capital,
as joint lead arrangers and joint book managers, Barclays Bank PLC, as
syndication agent, and ABN AMRO Bank, N.V., Deutsche Bank Securities,
Inc., and JP Morgan Chase Bank, N.A., as documentation agents (filed as
Exhibit 99.1 to the Registrant’s Current Report on Form 8-K filed
September 1, 2006 [File No. 1-8002] and incorporated in this document by
reference).
|
|
|
|
|
|
10.30
|
|
Letter
Agreement dated February 25, 2005, between the Registrant and Marijn
Dekkers (filed as Exhibit 10.60 to the Registrant’s Annual Report on Form
10-K for the fiscal year ended December 31, 2004 [File No. 1-8002] and
incorporated in this document by reference).
|
|
|
|
|
|
10.31
|
|
Form
of Thermo Electron Corporation Stock Option Agreement for use in
connection with the grant of stock options under certain of the
Registrant’s equity incentive plans to officers and directors of the
Registrant (filed as Exhibit 99.1 to the Registrant’s Current Report on
Form 8-K filed March 2, 2005 [File No. 1-8002] and incorporated herein by
reference).
|
|
|
|
|
|
10.32
|
|
Form
of Thermo Electron Corporation Stock Option Agreement for use in
connection with the grant of stock options under the company’s 2005 Stock
Incentive Plan to officers and directors (other than Marijn Dekkers)
(filed as Exhibit 99.1 to the company’s Current Report on Form 8-K filed
May 23, 2005 [File No. 1-8002] and incorporated in this document by
reference).
|
|
Exhibit
Number
|
|
Description
of Exhibit
|
|
10.33
|
|
Form
of Thermo Fisher Scientific Inc. Stock Option Agreement for use in
connection with the grant of stock options under the Registrant’s equity
plans, as amended and restated on November 9, 2006 to officers and
directors of the Registrant (other than Marijn Dekkers, Marc Casper and
Guy Broadbent) (filed as Exhibit 10.12 to the Registrant’s Current Report
on Form 8-K filed November 14, 2006 [File No. 1-8002] and incorporated in
this document by reference).
|
|
|
|
|
|
10.34
|
|
Form
of Thermo Electron Corporation Stock Option Agreement for use in
connection with the grant of stock options under the Registrant’s equity
incentive plans to Marijn Dekkers (filed as Exhibit 99.2 to the
Registrant’s Current Report on Form 8-K filed March 2, 2005 [File No.
1-8002] and incorporated in this document by
reference).
|
|
|
|
|
|
10.35
|
|
Form
of Thermo Fisher Scientific Inc. Stock Option Agreement for use in
connection with the grant of stock options under the Registrant’s 2005
Stock Incentive Plan, as amended and restated on November 9, 2006 to
Marijn Dekkers (filed as Exhibit 10.13 to the Registrant’s Current Report
on Form 8-K filed November 14, 2006 [File No. 1-8002] and incorporated in
this document by reference).
|
|
|
|
|
|
10.36
|
|
Stock
Option Agreement dated November 9, 2006 with Marc Casper (filed as Exhibit
10.14 to the Registrant’s Current Report on Form 8-K filed November 14,
2006 [File No. 1-8002] and incorporated in this document by
reference).
|
|
|
|
|
|
10.37
|
|
Stock
Option Agreement dated November 9, 2006 with Guy Broadbent (filed as
Exhibit 10.15 to the Registrant’s Current Report on Form 8-K filed
November 14, 2006 [File No. 1-8002] and incorporated in this document by
reference).
|
|
|
|
|
|
10.38
|
|
Form
of Thermo Electron Corporation Restricted Stock Agreement for use in
connection with the grant of restricted stock under the Registrant’s
equity incentive plans to Marijn Dekkers (filed as Exhibit 99.3 to the
Registrant’s Current Report on Form 8-K filed March 2, 2005 [File No.
1-8002] and incorporated in this document by
reference).
|
|
|
|
|
|
10.39
|
|
Form
of Thermo Fisher Scientific Inc.’s Restricted Stock Agreement for use in
connection with the grant of restricted stock under the Registrant’s 2005
Stock Incentive Plan, as amended and restated on November 9, 2006 to
Marijn Dekkers (filed as Exhibit 10.17 to the Registrant’s Current Report
on Form 8-K filed November 14, 2006 [File No. 1-8002] and incorporated in
this document by reference).
|
|
|
|
|
|
10.40
|
|
Form
of Thermo Fisher Scientific Inc.’s Restricted Stock Agreement for use in
connection with the grant of restricted stock under the Registrant’s 2005
Stock Incentive Plan, as amended and restated on November 9, 2006 to
officers of the Registrant (other than Marijn Dekkers, Marc Casper and Guy
Broadbent) (filed as Exhibit 10.16 to the Registrant’s Current Report on
Form 8-K filed November 14, 2006 [File No. 1-8002] and incorporated in
this document by reference).
|
|
|
|
|
|
10.41
|
|
Restricted
Stock Agreement dated February 27, 2006, by and between the Registrant and
Guy Broadbent (filed as Exhibit 10.54 to the Registrant’s Annual Report on
Form 10-K for the fiscal year ended December 31, 2005 [File No. 1-8002]
and incorporated in this document by reference).
|
|
|
|
|
|
10.42
|
|
Restricted
Stock Agreement dated November 9, 2006 with Marc Casper (filed as Exhibit
10.18 to the Registrant’s Current Report on Form 8-K filed November 14,
2006 [File No. 1-8002] and incorporated in this document by
reference).
|
|
Exhibit
Number
|
|
Description
of Exhibit
|
|
10.43
|
|
Restricted
Stock Agreement dated November 9, 2006 with Guy Broadbent (filed as
Exhibit 10.19 to the Registrant’s Current Report on Form 8-K filed
November 14, 2006 [File No. 1-8002] and incorporated in this document by
reference).
|
|
|
|
|
|
10.44
|
|
Form
of Thermo Fisher Scientific Inc.’s Performance Restricted Stock Agreement
for use in connection with the grant of performance restricted stock under
the Registrant’s 2005 Stock Incentive Plan, as amended and restated on
November 9, 2006 to the officers of the Registrant (filed as Exhibit 10.20
to the Registrant’s Current Report on Form 8-K filed November 14, 2006
[File No. 1-8002] and incorporated in this document by
reference).
|
|
|
|
|
|
10.45
|
|
Summary
of Thermo Fisher Scientific Inc. Annual Director Compensation (filed as
Exhibit 10.22 to the Registrant’s Current Report on Form 8-K filed
November 14, 2006 [File No. 1-8002] and incorporated in this document by
reference).
|
|
|
|
|
|
10.46
|
|
Thermo
Fisher Scientific Inc. 2005 Stock Incentive Plan, as amended and restated
on November 9, 2006 (filed as Exhibit 10.9 to the Registrant’s Current
Report on Form 8-K filed November 14, 2006 [File No. 1-8002] and
incorporated in this document by reference).
|
|
|
|
|
|
10.47
|
|
Fisher
Scientific International Inc. 2005 Equity and Incentive Plan, as amended
for awards granted on or after November 9, 2006 (filed as Exhibit 10.10 to
the Registrant’s Current Report on Form 8-K filed November 14, 2006 [File
No. 1-8002] and incorporated in this document by
reference).
|
|
|
|
|
|
10.48
|
|
Letter
Agreement dated November 17, 2005 between the Registrant and Marijn
Dekkers (filed as Exhibit 10.50 to the Registrant’s Annual Report on Form
10-K for the fiscal year ended December 31, 2006 [file No. 1-8002] and
incorporated in this document by reference).
|
|
|
|
|
|
10.49
|
|
Letter
Agreement dated February 27, 2006, between the Registrant and Marijn
Dekkers filed as Exhibit 10.51 to the Registrant’s Annual Report on Form
10-K for the fiscal year ended December 31, 2006 [file No. 1-8002] and
incorporated in this document by reference).
|
|
|
|
|
|
10.50
|
|
Summary
of Annual Incentive Program of Thermo Electron Corporation (filed as
Exhibit 10.66 to the Registrant’s Annual Report on Form 10-K for the
fiscal year ended December 31, 2004 [File No. 1-8002] and incorporated in
this document by reference).
|
|
|
|
|
|
10.51
|
|
Summary
of 2007 Annual Cash Incentive Plan Matters (set forth in Item 5.02 to the
Registrant’s Current Report on Form 8-K filed March 1, 2007 [File No.
1-8002] in the first two paragraphs under heading “2007 Executive
Compensation Matters” and incorporated herein by
reference).
|
|
|
|
|
|
10.52
|
|
Marijn
Dekkers Waiver Letter, dated as of May 7, 2006 (filed as Exhibit 10.1 to
the company’s Current Report on Form 8-K filed May 11, 2006 [file No.
1-8002] and incorporated in this document by
reference).
|
|
|
|
|
|
10.53
|
|
Form
of Noncompetition Agreement between the Registrant and certain key
employees and executive officers (filed as Exhibit 10.4 to the
Registrant’s Current Report on Form 8-K filed November 14, 2006 [file No.
1-8002] and incorporated in this document by
reference).
|
|
Exhibit
Number
|
|
Description
of Exhibit
|
|
10.54
|
|
Noncompetition
Agreement between the Registrant and Marc Casper, dated as of November 9,
2006 (filed as Exhibit 10.5 to the Registrant’s Current Report on Form 8-K
filed November 14, 2006 [file No. 1-8002] and incorporated in this
document by reference).
|
|
|
|
|
|
10.55
|
|
Noncompetition
Agreement between the Registrant and Guy Broadbent, dated as of November
9, 2006 (filed as Exhibit 10.6 to the Registrant’s Current Report on Form
8-K filed November 14, 2006 [file No. 1-8002] and incorporated in this
document by reference).
|
|
|
|
|
|
10.56
|
|
Fisher
Scientific International Inc. Deferred Compensation Plan for Non-Employee
Directors (filed as Exhibit 10.11 to Fisher Scientific International
Inc.’s Annual Report on Form 10-K for the year ended December 31,
1992, filed March 24, 1993 [file No. 1-10920] and incorporated in
this document by reference).
|
|
|
|
|
|
10.57
|
|
First
Amendment to the Fisher Scientific International Inc. Deferred
Compensation Plan for Non-Employee Directors (filed as Exhibit 10.01 to
Fisher Scientific International Inc.’s Current Report on Form 8-K filed
March 7, 2006 [file No. 1-10920] and incorporated in this document by
reference).
|
|
|
|
|
|
10.58
|
|
Retirement
Plan for Non-Employee Directors of Fisher Scientific International Inc.
(filed as Exhibit 10.12 to Fisher Scientific International Inc.’s Annual
Report on Form 10-K for the year ended December 31, 1992, filed
March 24, 1993 [file No. 1-10920] and incorporated in this document
by reference).
|
|
|
|
|
|
10.59
|
|
First
Amendment to the Fisher Scientific International Inc. Retirement Plan for
Non-Employee Directors (filed as Exhibit 10.04 to Fisher Scientific
International Inc.’s Quarterly Report on Form 10-Q filed May 10,
2005 [file No. 1-10920] and incorporated in this document by
reference).
|
|
|
|
|
|
10.60
|
|
Amendment
to Retirement Plan for Non-Employee Directors of Fisher Scientific
International Inc. (filed as Exhibit 10.02 to Fisher Scientific
International Inc.’s Current Report on Form 8-K filed March 7, 2006 [file
No. 1-10920] and incorporated in this document by
reference).
|
|
|
|
|
|
10.61
|
|
Fisher
Scientific International Inc. 2001 Equity and Incentive Plan, effective as
of May 16, 2001 (filed as Annex I to Fisher Scientific International
Inc.’s definitive proxy statement filed April 12, 2001 [file No.
1-10920] and incorporated in this document by
reference).
|
|
|
|
|
|
10.62
|
|
Form
of Fisher Scientific International Inc. Non-Qualified Stock Option Award
Agreement (Management Options — Fisher Scientific International Inc.
2001 Equity and Incentive Plan) (filed as Exhibit 10.1 to Fisher
Scientific International Inc.’s Quarterly Report on Form 10-Q filed
November 9, 2004 [file No. 1-10920] and incorporated in this document
by reference).
|
|
|
|
|
|
10.63
|
|
Form
of Fisher Scientific International Inc. Non-Qualified Stock Option Award
Agreement (Management Options – Fisher Scientific International Inc. 2003
Equity and Incentive Plan) (filed as Exhibit 10.2 to Fisher Scientific
International Inc.’s Quarterly Report on Form 10-Q filed November 9, 2004
[file No. 1-10920] and incorporated in this document by
reference).
|
|
|
|
|
|
10.64
|
|
Form
of Non-Qualified Stock Option Agreement pursuant to the Fisher Scientific
International Inc. 2001 Equity and Incentive Plan and 2003 Equity and
Incentive Plan (filed as Exhibit 10.1 to Fisher Scientific International
Inc.’s Current Report on Form 8-K filed March 9, 2005 [file No.
1-10920] and incorporated in this document by
reference).
|
|
Exhibit
Number
|
|
Description
of Exhibit
|
|
10.65
|
|
Fisher
Scientific International Inc. 2005 Equity and Incentive Plan, effective as
of May 6, 2005 (filed as Exhibit A to Fisher Scientific International
Inc.’s definitive proxy statement filed April 4, 2005 [file No.
1-10920] and incorporated in this document by
reference).
|
|
|
|
|
|
10.66
|
|
Form
of 2005 Equity and Incentive Plan Non-Qualified Stock Option Award
Agreement (filed as Exhibit 10.01 to Fisher Scientific International
Inc.’s Current Report on Form 8-K filed June 10, 2005 [file No.
1-10920] and incorporated in this document by
reference).
|
|
|
|
|
|
10.67
|
|
Form
of Performance Based Restricted Stock Unit Agreement (filed as Exhibit
10.01 to Fisher Scientific International Inc.’s Current Report on
Form 8-K filed December 19, 2005 [file No. 1-10920] and
incorporated in this document by reference).
|
|
|
|
|
|
10.68
|
|
Description
of Amendments made in November 2006 to certain Fisher Scientific
International Inc. Restricted Stock Unit Awards (filed as Exhibit 10.81 to
the Registrant’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2006 [File No. 1-8002] and incorporated in this document
by reference).
|
|
|
|
|
|
10.69
|
|
Thermo
Fisher Scientific Inc. 2005 Deferred Compensation Plan, dated October 22,
2007, for amounts deferred after December 31, 2004 (filed as Exhibit 10.1
to the Registrant’s Quarterly Report on form 10-Q for the quarter ended
September 29, 2007 [File No. 1-8002] and incorporated in this document by
reference).
|
|
|
|
|
|
10.70
|
|
Executive
Change in Control Retention Agreement dated as of November 9, 2006,
between the Registrant and Alex Stachtiaris.
|
|
|
|
|
|
10.71
|
|
Fisher
Scientific International Inc. Severance Plan for Key
Employees.
|
|
|
|
|
|
10.72
|
|
Notice
of Participation in the Fisher Scientific International Inc. Severance
Plan for Key Employees (Alex Stachtiaris).
|
|
|
|
|
|
10.73
|
|
Notice
of Participation in the Fisher Scientific International Inc. Severance
Plan for Key Employees (Alan Malus).
|
|
|
|
|
|
10.74
|
|
Letter
Agreement with Alan Malus dated November 9, 2006.
|
|
|
|
|
|
10.75
|
|
Description
of Amendments to certain Stock Option Plans made in February
2008.
|
|
|
|
|
|
10.76
|
|
Amendment
dated February 27, 2008 to Thermo Fisher Scientific Equity Incentive Plan,
as amended and restated as of November 9, 2006.
|
|
|
|
|
|
10.77
|
|
Amendment
dated February 27, 2008 to Thermo Fisher Scientific Employees Equity
Incentive Plan, as amended and restated as of November 9,
2006.
|
|
|
|
|
|
10.78
|
|
Amendment
dated February 27, 2008 to Thermo Fisher Scientific Inc. Directors Stock
Option Plan, as amended and restated as of November 9,
2006.
|
|
10.79
|
|
Amendment
dated February 27, 2008 to Thermo Fisher Scientific Inc. 2005 Stock
Incentive Plan, as amended and restated on November 9,
2006.
|
|
Exhibit
Number
|
|
Description
of Exhibit
|
|
10.80
|
|
Amendment
dated February 27, 2008 to Fisher Scientific International Inc. 2005
Equity and Incentive Plan, as amended and restated on November 9,
2006.
|
|
|
|
|
|
10.81
|
|
Amendment
dated February 27, 2008 to Thermo Fisher Scientific Inc. 2001 Equity
Incentive Plan, as amended and restated on November 9,
2006.
|
|
|
|
|
|
21
|
|
Subsidiaries
of the Registrant.
|
|
|
|
|
|
23.1
|
|
Consent
of PricewaterhouseCoopers LLP.
|
|
|
|
|
|
31.1
|
|
Certification
of Chief Executive Officer required by Exchange Act Rules 13a-14(a) and
15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|
|
|
|
|
|
31.2
|
|
Certification
of Chief Financial Officer required by Exchange Act Rules 13a-14(a) and
15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|
|
|
|
|
|
32.1
|
|
Certification
of Chief Executive Officer required by Exchange Act Rules 13a-14(b) and
15d-14(b), as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.*
|
|
|
|
|
|
32.2
|
|
Certification
of Chief Financial Officer required by Exchange Act Rules 13a-14(b) and
15d-14(b), as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.*
|
_______________________
*Certification
is not deemed “filed” for purposes of Section 18 of the Exchange Act or
otherwise subject to the liability of that section. Such certification is
not deemed to be
incorporated by reference into any filing under the Securities Act or the
Exchange Act except to the extent that the registrant specifically incorporates
it by reference.
THERMO
FISHER SCIENTIFIC INC.
ANNUAL
REPORT ON FORM 10-K
The following Consolidated Financial Statements of the Registrant and its
subsidiaries are required to be included in Item 15:
|
|
Page
|
|
|
|
|
Report
of Independent Registered Public Accounting Firm
|
F-2
|
|
|
|
|
Consolidated
Statement of Income for the years ended December 31, 2007, 2006 and
2005
|
F-3
|
|
|
|
|
|