TMO Thermo Fisher Scientific, Inc.

Management Discussion

• * Currency Translation/Other for the Laboratory Products and Services segment includes a reduction of revenue of $35 million for the impact of a change in the method of reporting certain intersegment sales with no impact on consolidated results.
• Sales in the third quarter of 2019 were $6.27 billion, an increase of $352 million from the third quarter of 2018. Sales increased $27 million due to acquisitions, net of a divestiture. The unfavorable effects of currency translation resulted in a decrease in revenues of $83 million in 2019. Aside from the effects of acquisitions/divestitures and currency translation, revenues increased $408 million (7%) primarily due to increased demand in the quarter compared to the 2018 quarter. Sales to customers in each of the company's primary end markets grew except for sales to industrial customers which were flat. Sales to customers in the biotech and pharmaceutical industry remained particularly strong. Sales growth was strong in Europe, Asia and North America.
• In the third quarter of 2019, total company operating income and operating income margin were $946 million and 15.1%, respectively, compared with $912 million and 15.4%, respectively, in 2018. The increase in operating income was primarily due to profit on higher sales and, to a lesser extent, productivity improvements, net of inflationary cost increases. These increases were offset in part by strategic growth investments, reversal of a litigation accrual in the 2018 period and, to a lesser extent, unfavorable sales mix.