Fisher Scientific's First-Quarter Revenues Up 35 Percent; Company Rep

Fisher Scientific's First-Quarter Revenues Up 35 Percent; Company Reports Record Sales and Earnings; Reaffirms 2005 EPS Guidance of $3.45 to $3.60

    Business Editors/Health/Medical Writers

    HAMPTON, N.H.--(BUSINESS WIRE)--May 9, 2005--Fisher Scientific International Inc. (NYSE: FSH), a world leader in serving science, today reported record sales and earnings for the first quarter ended March 31, 2005, reflecting strong sales of its scientific products and services and increased demand from healthcare customers.
    "Fisher had a strong quarter with sales increasing 35 percent and earnings reaching a new high," said Paul M. Montrone, chairman and chief executive officer. "Our largest business segment posted solid results and we also achieved outstanding growth in our healthcare business. Our integration of Apogent Technologies is going very well and we're pleased that its businesses are making positive contributions to our performance."

    First-Quarter Reported Results

    Sales for the first quarter increased 35 percent to $1,351.2 million compared with $1,003.1 million in the first quarter of 2004. Excluding the effect of foreign exchange, first-quarter sales totaled $1,337.2 million, a 33 percent increase over the same quarter in 2004, with approximately 3 points of this increase from organic growth. First-quarter net income increased to $77.0 million, or 61 cents per diluted share, compared with net income of $34.6 million, or 51 cents per diluted share, in the first quarter of 2004. Net income for the first quarter includes $23.5 million, net of tax ($36.3 million pre-tax) of nonrecurring costs and special items, which are excluded from the pro forma results discussed below.
    Cash from operations for the quarter ended March 31, 2005, totaled $71.2 million, reflecting integration costs related to the Apogent merger and increased investment in working capital. Capital expenditures were $28.0 million, primarily related to investments in the company's biosciences business and the integration of manufacturing operations.

    Pro Forma Financial Results

    The following discussion excludes nonrecurring costs and special items in 2004 and 2005. In the attached supplementary information tables, these items are reconciled to the most directly comparable financial measures computed in accordance with accounting principles generally accepted in the United States (GAAP).
    Operating income for the first quarter increased 125 percent to $172.6 million compared with $76.8 million in the same quarter of 2004.
    First-quarter net income increased 144 percent to $100.5 million compared with net income of $41.2 million in the corresponding period of 2004, reflecting an improvement in operating income partially offset by an increase in interest expense. Diluted earnings per share (EPS) grew 33 percent to 80 cents in the first quarter from 60 cents in the first quarter of 2004.

    Business-Segment Results

    First-quarter sales of scientific products and services reached $983.8 million, a 33 percent increase compared with the prior-year period. Excluding the effect of foreign exchange, sales of scientific products and services in the first quarter totaled $970.7 million, a 31 percent increase compared with the same period in 2004, with approximately 2 points of this increase from organic growth. Strong sales to biotechnology and industrial customers combined with solid revenue from pharmaceutical customers drove growth in this segment. Sales growth was partially offset by the timing of government orders for safety products and a modest decline in European sales. Operating income nearly doubled to $129.4 million from $66.6 million in the corresponding period of 2004.
    Sales of healthcare products and services totaled $336.7 million in the first quarter, compared with $227.5 million in the prior year's quarter. Excluding the effect of foreign exchange, sales of healthcare products and services totaled $335.8 million in the first quarter, an increase of 48 percent compared with the prior year's quarter, with approximately 5 points of this increase from organic growth. The organic growth rate reflects the positive effects of a strong flu season. Operating income increased fourfold to $43.0 million in the first quarter compared with $10.4 million in the same period in 2004.
    First-quarter sales in the laboratory-workstations segment increased to $46.3 million from $38.4 million in the prior year. Operating income also increased to $0.2 million in the first quarter from an operating loss of $0.2 million in the corresponding period of the prior year. Order activity in the laboratory-workstations segment improved slightly with backlog at approximately $136 million at the end of the first quarter, compared with $114 million at the end of the corresponding period of 2004.

    Additional Items

--	On Feb. 25, Fisher acquired privately held Gotesborg Termometerfabrik AB (GTF) for approximately $6 million in cash. Based in Sweden, GTF is a leading Swedish distributor of consumable lab supplies, chemicals, and equipment for life sciences with annual revenues of approximately $15 million.
--	On April 5, Fisher Scientific completed its sale of Atos Medical AB, a manufacturer of ear, nose and throat medical devices with revenues of $35 million, to Nordic Capital for $110 million in cash. This business is reflected as a discontinued operation in the accompanying financial tables.
--	On April 14, Fisher commenced a cash tender offer for all $304 million principal amount of its outstanding 8 1/8 percent senior subordinated notes due 2012. The tender expires on May 11. As of April 27, $289.7 million, or 95 percent, had been tendered pursuant to an early-settlement option.
--	On March 15, Fisher's board of directors authorized a $300 million share-repurchase program. This two-year program authorizes management, at its discretion, to repurchase shares from time to time on the open market or in privately negotiated transactions, subject to market conditions and other factors.
--	Earlier today, the company filed a shelf-registration statement that allows Fisher to issue up to $1 billion in debt and equity securities. This shelf-registration statement replaces the existing shelf-registration statement that was filed on Sept. 3, 2003.

    Company Outlook

    For 2005, Fisher is confirming its previously issued full-year adjusted EPS guidance of $3.45 to $3.60, which includes approximately 25 cents of intangible amortization expense. Guidance for the year excludes stock-based compensation expense.
    Fisher continues to expect full-year revenue growth, excluding foreign-exchange effects, of approximately 20.0 percent to 22.0 percent and adjusted operating margins of 13.3 percent to 13.5 percent.

    The company's outlook for 2005 by segment follows:

Segment Revenue Growth Rate Operating Margin ------- ------------------- ---------------- (excluding foreign exchange)

Scientific products and services 21.0% to 24.0% 13.7% to 14.0%

Healthcare products and services 20.0% to 23.0% 13.0% to 13.3%

Lab workstations 4.0% to 7.0% 1.0% to 2.0%

Consolidated 20.0% to 22.0% 13.3% to 13.5%

    Fisher's guidance assumes a 30 percent tax rate and an estimated diluted share count of 127 million, which includes the effect of outstanding convertible notes based on the treasury-stock method. The company's guidance continues to include Apogent integration savings of $55 million, which, on a quarterly basis, will increase throughout the year, with roughly $20 million to be realized in the first half of the year.
    The company's adjusted earnings guidance and adjusted operating margins above exclude one-time costs for the Apogent transaction of approximately $60 million ($38.5 million, net of tax) related to inventory step-up amounts, restructuring and other integration costs. These one-time costs include cash charges of approximately $40 million. The adjusted earnings guidance also excludes approximately $32 million ($20.5 million, net of tax) of cash charges related to the tender for the 8 1/8 percent notes.
    Fisher continues to expect 2005 operating cash flow in the range of $540 million to $570 million. The company confirmed its guidance for capital expenditures of approximately $155 million in 2005, which include facility expansions related to the integration of manufacturing operations and the transfer of production to lower-cost facilities. Free cash flow, defined as operating cash flow less capital expenditures, is projected to be in the range of $385 million to $415 million.
    Fisher Scientific expects second-quarter adjusted EPS to be in the range of 85 cents to 88 cents.

    Upcoming Presentations

    Fisher Scientific will present at the following conferences:

--	Robert W. Baird & Company Growth Stock Conference, May 12, 9:40 a.m. CDT (10:40 a.m. EDT) at The Four Seasons Hotel in Chicago. A webcast of Fisher's presentation (slides and audio) will be available through the company's Web site, www.fisherscientific.com. The webcast will be listen-only and will be archived on the Web site until June 3.
--	Banc of America Securities Healthcare Conference, May 17, 8:40 a.m. PDT (11:40 a.m., EDT) at the Four Seasons Hotel in Las Vegas. A webcast of Fisher's presentation (slides and audio) will be available through the company's Web site. The webcast will be listen-only and will be archived on the Web site until June 3.
--	Goldman Sachs Annual Global Healthcare Conference, June 15, at the Ritz-Carlton Laguna Niguel Hotel in Dana Point, Calif. Fisher's presentation time and information concerning the webcast will be announced at a later date.

    Conference Call Scheduled

    Fisher will host a teleconference to discuss its first-quarter financial results and 2005 guidance on Tuesday, May 10, at 10 a.m. EDT. Interested parties who would like to participate may call 800-299-8538 (title: Fisher Scientific Earnings Call - no access code needed). International callers should dial (+1) 617-786-2902. Following the call, an audio replay will be available for 10 days.
    Callers from the United States should dial 888-286-8010. International callers should dial (+1) 617-801-6888. The conference replay code is 65070001.
    The conference call will also be webcast on Fisher's Web site. The webcast may be accessed on the Investor Relations Info page and will be archived until June 9.

    Fisher Scientific: A World Leader in Serving Science

    Fisher Scientific International Inc. (NYSE: FSH) is a leading provider of products and services to the scientific community. Fisher facilitates discovery by supplying researchers and clinicians in labs around the world with the tools they need. We serve pharmaceutical and biotech companies; colleges and universities; medical-research institutions; hospitals; reference, quality-control, process-control and R&D labs in various industries; as well as government agencies. From biochemicals, cell-culture media and proprietary RNAi technology to rapid-diagnostic tests, safety products and other consumable supplies, Fisher provides more than 600,000 products and services. This broad offering, combined with Fisher's globally integrated supply chain and unmatched sales and marketing presence, helps make our 350,000 customers more efficient and effective at what they do.
    Founded in 1902, Fisher Scientific is a FORTUNE 500 company and is a component of the S&P 500 Index. Fisher has approximately 17,500 employees worldwide, and our annual revenues are expected to exceed $5.5 billion in 2005. Fisher Scientific is a company committed to high standards and delivering on our promises -- to customers, shareholders and employees alike. Additional information about Fisher is available on the company's Web site at www.fisherscientific.com.

    Forward-looking Statements

    This announcement includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All such statements are based on current expectations and projections about future events. No assurances can be given that Fisher Scientific's assumptions and expectations will prove to have been correct, and actual results could vary materially from these assumptions and expectations. Important factors that could cause actual results to differ materially from the results predicted include challenges presented by our acquisitions; economic and political risks related to our international operations; changes in the healthcare industry; the impact of government regulation; dependence on our customers' research and development efforts; and changes or disruptions in our relationships with our customers, suppliers and key employees, together with other potential risks and uncertainties, all of which are detailed under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Fisher Scientific's annual reports on Form 10-K and its other filings with the Securities and Exchange Commission. Copies of such reports are available on Fisher Scientific's Web site at www.fisherscientific.com and on the SEC's Web site at www.sec.gov. Fisher Scientific undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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Table 1 Fisher Scientific International Inc. Statement of Operations (in millions, except per share data) (unaudited) Three Months Ended March 31, ------------------- 2005 2004 --------- --------- Sales $1,351.2 $1,003.1 Cost of sales 901.8 732.5 Selling, general and administrative expense 305.3 204.0 Restructuring expense 8.3 - --------- --------- Operating income 135.8 66.6 Interest expense 30.6 22.0 Other income (1.0) (0.6) --------- --------- Income before income taxes 106.2 45.2 Income tax provision 30.1 12.4 --------- --------- Income from continuing operations 76.1 32.8 Income from discontinued operations, net of tax of $0.2 and $0.0, respectively (a) 0.9 1.8 --------- --------- Net income $77.0 $34.6 ========= ========= Basic net income per common share: Income from continuing operations $0.63 $0.51 Income from discontinued operations (a) 0.01 0.03 --------- --------- Net income $0.64 $0.54 ========= ========= Diluted net income per common share: Income from continuing operations $0.60 $0.48 Income from discontinued operations (a) 0.01 0.03 --------- --------- Net income $0.61 $0.51 ========= ========= Weighted average common shares outstanding: Basic 119.6 63.6 ========= ========= Diluted 126.0 68.4 ========= ========= (a) Atos Medical AB was sold on April 5, 2005 and is reflected as a discontinued operation. Table 2 Fisher Scientific International Inc. Segment Results (in millions) (unaudited) Three Months Ended March 31, ----------------------------- Growth 2005 Rate 2004 --------- --------- --------- Revenue ------- Scientific Products and Services $983.8 32.6% $742.0 Healthcare Products and Services (a) 336.7 48.0% 227.5 Laboratory Workstations 46.3 20.6% 38.4 Eliminations (15.6) (4.8) --------- --------- Total $1,351.2 34.7% $1,003.1 ========= ========= Three Months Ended March 31, --------------------------------------- Operating Operating 2005 Margin 2004 Margin --------- --------- --------- --------- Operating Income ---------------- Scientific Products and Services $129.4 13.2% $66.6 9.0% Healthcare Products and Services (a) 43.0 12.8% 10.4 4.6% Laboratory Workstations 0.2 0.4% (0.2) -0.5% Eliminations - - --------- --------- Segment sub-total 172.6 12.8% 76.8 7.7% --------- --------- Restructuring expense (8.3) - Acquisition and integration costs (11.4) - Inventory step-up (17.1) (10.2) --------- --------- Operating income $135.8 10.1% $66.6 6.6% ========= ========= (a) Excludes the operating results of Atos Medical AB, which was sold on April 5, 2005 and is reflected as a discontinued operation. Table 3 Fisher Scientific International Inc. Condensed Balance Sheet (in millions) March 31, December 31, 2005 2004 ------------ ------------ (unaudited) ASSETS Current assets: Cash and cash equivalents $237.3 $162.5 Accounts receivable, net 697.3 632.8 Inventories 600.2 622.4 Assets held for sale (a) 95.7 94.6 Other current assets 269.0 264.5 ------------ ------------ Total current assets 1,899.5 1,776.8 Property, plant and equipment 767.8 785.4 Goodwill and other assets 5,492.6 5,528.0 ------------ ------------ Total assets $8,159.9 $8,090.2 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Short-term debt $57.7 $39.4 Accounts payable 468.6 468.4 Liabilities held for sale (a) 8.6 8.3 Accrued and other current liabilities 436.1 453.7 ------------ ------------ Total current liabilities 971.0 969.8 Long-term debt 2,285.5 2,309.2 Other liabilities 943.1 941.2 ------------ ------------ Total liabilities 4,199.6 4,220.2 ------------ ------------ Stockholders' equity 3,960.3 3,870.0 ------------ ------------ Total liabilities and stockholders' equity $8,159.9 $8,090.2 ============ ============ (a) Atos Medical AB was sold on April 5, 2005 and is reflected as a discontinued operation. Table 4 Fisher Scientific International Inc. Condensed Statement of Cash Flows (in millions) (unaudited) Three Months Ended March 31, ------------------- 2005 2004 --------- --------- Cash flows from operating activities: Net income $77.0 $34.6 Depreciation and amortization 47.8 24.1 Other adjustments to reconcile net income to cash provided by operating activities 24.0 3.6 Changes in working capital and other assets and liabilities (77.6) 3.7 --------- --------- Cash provided by operating activities 71.2 66.0 --------- --------- Cash flows from investing activities: Capital expenditures (28.0) (13.1) Acquisitions (6.7) (331.2) Other investing activity 4.7 (4.1) --------- --------- Cash used in investing activities (30.0) (348.4) --------- --------- Cash flows from financing activities: 36.8 255.5 --------- --------- Effect of exchange rate changes on cash (3.2) (0.5) --------- --------- Net change in cash and cash equivalents 74.8 (27.4) Cash and cash equivalents - beginning of period 162.5 83.8 --------- --------- Cash and cash equivalents - end of period $237.3 $56.4 ========= ========= Table 5 Fisher Scientific International Inc. Statement of Operations Supplemental Information (in millions, except per share data) (unaudited) Three Months Ended ------------------------------------------------------- March 31, 2005 March 31, 2004 --------------------------- --------------------------- As Adjust- As As Adjust- As Reported ments Adjusted Reported ments Adjusted ------------------------------------------------------- Sales $1,351.2 $- $1,351.2 $1,003.1 $- $1,003.1 Cost of sales 901.8 (20.3) 881.5 732.5 (10.2) 722.3 Selling, general and administrative expense 305.3 (8.2) 297.1 204.0 - 204.0 Restructuring expense 8.3 (8.3) - - - - --------- ------- --------- --------- ------- --------- Operating income 135.8 36.8 172.6 66.6 10.2 76.8 Interest expense 30.6 - 30.6 22.0 - 22.0 Other (income) expense, net (1.0) 0.5 (0.5) (0.6) - (0.6) --------- ------- --------- --------- ------- --------- Income before income taxes 106.2 36.3 142.5 45.2 10.2 55.4 Income tax provision 30.1 12.8 42.9 12.4 3.6 16.0 --------- ------- --------- --------- ------- --------- Income from continuing operations 76.1 23.5 99.6 32.8 6.6 39.4 Income from discontinued operations (a) 0.9 - 0.9 1.8 - 1.8 --------- ------- --------- --------- ------- --------- Net income $77.0 $23.5 $100.5 $34.6 $6.6 $41.2 ========= ======= ========= ========= ======= ========= Diluted net income per common share $0.61 $0.19 $0.80 $0.51 $0.09 $0.60 ========= ======= ========= ========= ======= ========= Diluted weighted average common shares outstanding 126.0 126.0 68.4 68.4 ========= ========= ========= ========= (a) Atos Medical AB was sold on April 5, 2005 and is reflected as a discontinued operation. Table 5A Fisher Scientific International Inc. Statement of Operations Supplemental Information - Adjustments (in millions) (unaudited) Three Months Ended March 31, 2005 Cost of SG&A Restructuring Operating Other Pro Forma Adjustment Sales Expense Expense Income Income -------------------- ------- ------- ------------- --------- ------ (1)Acquisition and integration costs $(20.3) $(8.2) $- $28.5 $0.5 (2)Restructuring expense - - (8.3) 8.3 - ------- ------- ------------- --------- ------ $(20.3) $(8.2) $(8.3) $36.8 $0.5 ======= ======= ============= ========= ====== Income from Income Before Income Tax Continuing Net Pro Forma Adjustment Income Taxes Provision Operations Income --------------------- ------------- ---------- ------------ ------- (1)Acquisition and integration costs $28.0 $10.0 $18.0 $18.0 (2)Restructuring expense 8.3 2.8 5.5 5.5 ------------- ---------- ------------ ------- $36.3 $12.8 $23.5 $23.5 ============= ========== ============ ======= Three Months Ended March 31, 2004 Cost of SG&A Restructuring Operating Other Pro Forma Adjustment Sales Expense Expense Income Income -------------------- ------- ------- ------------- --------- ------ (1)Acquisition and integration costs $(10.2) $- $- $10.2 $- ------- ------- ------------- --------- ------ $(10.2) $- $- $10.2 $- ======= ======= ============= ========= ====== Income from Income Before Income Tax Continuing Net Pro Forma Adjustment Income Taxes Provision Operations Income --------------------- ------------- ---------- ------------ ------- (1)Acquisition and integration costs $10.2 $3.6 $6.6 $6.6 ------------- ---------- ------------ ------- $10.2 $3.6 $6.6 $6.6 ============= ========== ============ ======= (1) Represents planned inventory step-up ($17.1 and $10.2 in 2005 and 2004, respectively), integration costs ($11.4 and $0.0 in 2005 and 2004, respectively), and other nonrecurring income ($0.5 and $0.0 in 2005 and 2004, respectively). (2) Represents integration related costs.

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CONTACT: Fisher Scientific International Inc. Media Contact: Gia L. Oei, 603-929-2489 Gia.Oei@fishersci.com or Investor Contacts: Carolyn Miller, 603-929-2381 Carolyn.Miller@fishersci.com or Chet Mehta, 603-929-2260 Chet.Mehta@fishersci.com

KEYWORD: NEW HAMPSHIRE INDUSTRY KEYWORD: PHARMACEUTICAL MEDICAL DEVICES BIOTECHNOLOGY EARNINGS CONFERENCE CALLS SOURCE: Fisher Scientific International Inc.

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