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Item 9A. Controls and Procedures

2022-02-24 compared with 2021-02-25 · 546 added, 564 removed, 1609 unchanged (41% of the section changed)

2 unchanged sentences

The company’s management, with the participation of the company’s chief executive officer and chief financial officer, has evaluated the effectiveness of the company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report.

Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Based on such evaluation, the company’s chief executive officer and chief financial officer concluded that, as of the end of such period, the company’s disclosure controls and procedures were effective at the reasonable assurance level.

THERMO FISHER SCIENTIFIC INC.

Changes in Internal Control over Financial Reporting

5 unchanged sentences

Based on this assessment, the company’s management concluded that, as of December 31, 2021, the company’s internal control over financial reporting was effective.

Management’s assessment of the effectiveness of the company’s internal control over financial reporting as of December 31, 2021, excluded PPD, Inc., Mesa Biotech, Inc.

and PeproTech, Inc., which were acquired by the company in 2021 in separate purchase business combinations.

These entities, whose total assets and total revenues were excluded from the company’s assessment, represented approximately 5% and 2%, respectively, of the related consolidated amounts as of and for the year ended December 31, 2021.

Based upon Securities and Exchange Commission staff guidance, companies are allowed to exclude certain acquisitions from their assessments of internal control over financial reporting during the first year of an acquisition while integrating the acquired companies.

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, 2021, as stated in their report that appears on page F-2 of this Annual Report on Form 10-K.

Other Information

On February 24, 2022, the company and Mark P.

Stevenson entered into a consulting agreement relating to ongoing services that Mr.

Stevenson will provide to the company following his last day as an employee on March 18, 2022.

Under the consulting agreement, which has a term ending March 1, 2023, Mr.

Stevenson will serve on the company’s Scientific Advisory Board and will also provide ongoing advice and services relating to COVID-19 research and products.

During the term of the consulting agreement, Mr.

Stevenson’s outstanding and unvested equity awards granted in fiscal year 2021 will continue to vest in accordance with their original terms based on his continued service to the company and, if he provides consulting services through March 1, 2023, his outstanding and unvested equity awards granted in fiscal year 2021 will vest to the same extent as if he had retired as an employee on March 1, 2023 and the post-termination exercise period of all of Mr.

Stevenson’s stock options, to the extent vested and exercisable on March 1, 2023, will be extended until the original maximum term of such stock options.

The agreement also contains provisions that restrict Mr.

Stevenson’s ability during the term of the consulting agreement, and (i) for a period of twelve months thereafter, to work for or provide consulting services to, any competitor of the company, and (ii) for a period of eighteen months thereafter, to solicit for hire employees or consultants of the company or to solicit customers or clients of the company.

The foregoing summary of the consulting agreement is subject to, and qualified in its entirety by, the full text of such agreement, which is filed as an exhibit to this Annual Report on Form 10-K.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

1 unchanged sentence

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 (2022 Definitive Proxy Statement) including under “Corporate governance—Board of directors—selection, skills and experience—Director nominee skills, experience, and background,” and “Corporate governance—Board of directors—selection, skills and experience—Nominees and incumbent directors,” 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 other information required by this Item will be contained in our 2021 Definitive Proxy Statement and is incorporated in this report by reference.

The other information required by this Item will be contained in our 2022 Definitive Proxy Statement including under “Corporate governance—Board practices, policies and processes —Corporate Governance Guidelines” and “Corporate Governance—Board leadership structure—Board committees,” and is incorporated in this report by reference.

Executive Compensation

The information required by this Item will be contained in our 2021 Definitive Proxy Statement and is incorporated in this report by reference.

The information required by this Item will be contained in our 2022 Definitive Proxy Statement including under “Corporate governance—Compensation of directors,” and “Executive compensation,” 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 2021 Definitive Proxy Statement and is incorporated in this report by reference.

The information required by this Item will be contained in our 2022 Definitive Proxy Statement including under “Information about stock ownership—Equity compensation plan information” and “Information about stock ownership—Security ownership of certain beneficial owners and management,” 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 2021 Definitive Proxy Statement and is incorporated in this report by reference.

The information required by this Item will be contained in our 2022 Definitive Proxy Statement including under “Corporate governance—Board practices, policies and processes—Related person transactions,” and “Corporate governance—Board leadership structure—How we assess director independence,” and is incorporated in this report by reference.

Principal Accountant Fees and Services

The information required by this Item will be contained in our 2021 Definitive Proxy Statement and is incorporated in this report by reference.

The information required by this Item will be contained in our 2022 Definitive Proxy Statement including under “Audit matters—Independent auditor fees” and “Audit matters—Audit Committee’s pre-approval policies and procedures,” and is incorporated in this report by reference.

THERMO FISHER SCIENTIFIC INC.

Exhibits and Financial Statement Schedules

6 unchanged sentences

Consolidated Statement of Cash Flows

Consolidated Statement of Shareholders’ Equity

Consolidated Statement of Redeemable Noncontrolling Interest and Equity

Notes to Consolidated Financial Statements

13 unchanged sentences

(Principal Financial Officer)

Hornstra James C.

/s/ Joseph R.

Holmes James C.

Vice President and Chief Accounting Officer Director

14 unchanged sentences

Exhibit Number Description of Exhibit

2.1 Agreement and Plan of Merger, dated as of April 15, 2021, by and among Thermo Fisher Scientific Inc., Powder Acquisition Corp.

and PPD, Inc.

(filed as Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed April 16, 2021 [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 year ended December 31, 2005 [File No.

4 unchanged sentences

1-8002] and incorporated in this document by reference).

3.4 Amended and Restated By-Laws of the Registrant, as amended and effective as of February 23, 2021 (filed as Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed February 24, 2021 [File No.

3.4 Amended and Restated By-Laws of the Registrant, as amended and effective as of July 8, 2021 (filed as Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed July 9, 2021 [File No.

1-8002] and incorporated in this document by reference).

8 unchanged sentences

1-8002] and incorporated in this document by reference).

4.4 Ninth Supplemental Indenture, dated as of July 21, 2015, among the Company, The Bank of New York Mellon Trust Company, N.A., as trustee, and The Bank of New York Mellon, London Branch, as paying agent (filed as Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed July 21, 2015 [File No.

1-8002] and incorporated in this document by reference).

4.4 Eleventh Supplemental Indenture, dated as of December 9, 2015, between the Company and The Bank of New York Mellon Trust Company, N.A.

1 unchanged sentence

1-8002] and incorporated in this document by reference).

4.6 Twelfth Supplemental Indenture, dated as of April 13, 2016, between the Company and The Bank of New York Mellon Trust Company, N.A.

(filed as Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed April 13, 2016 [File No.

1-8002] and incorporated in this document by reference).

4.5 Thirteenth Supplemental Indenture, dated as of September 12, 2016, between the Company and The Bank of New York Mellon Trust Company, N.A., as trustee (filed as Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed September 12, 2016 [File No.

1-8002] and incorporated in this document by reference).

4.8 Fourteenth Supplemental Indenture, dated as of September 19, 2016, between the Company and The Bank of New York Mellon Trust Company, N.A., as trustee (filed as Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed September 19, 2016 [File No.

1-8002] and incorporated in this document by reference).

4.6 Fifteenth Supplemental Indenture, dated as of March 16, 2017, between the Company and The Bank of New York Mellon Trust Company, N.A., as trustee (filed as Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed March 16, 2017 [File No.

4 unchanged sentences

1-8002] and incorporated in this document by reference).

4.12 Eighteenth Supplemental Indenture, dated as of September 30, 2019, between the Company, as issuer, and The Bank of New York Mellon Trust Company, N.A., as trustee (filed as Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed September 30, 2019 [File No.

4.9 Eighteenth Supplemental Indenture, dated as of September 30, 2019, between the Company , and The Bank of New York Mellon Trust Company, N.A., as trustee (filed as Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed September 30, 2019 [File No.

1-8002] and incorporated in this document by reference).

4.13 Nineteenth Supplemental Indenture, dated as of October 8, 2019, between the Company, as issuer, and the Bank of New York Mellon Trust Company, N.A., as trustee (filed as Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed October 8, 2019 [File No.

4.10 Nineteenth Supplemental Indenture, dated as of October 8, 2019, between the Company , and the Bank of New York Mellon Trust Company, N.A., as trustee (filed as Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed October 8, 2019 [File No.

1-8002] and incorporated in this document by reference).

4.14 Twentieth Supplemental Indenture, dated as of March 25, 2020 between the Company, as issuer, and The Bank of New York Mellon Trust Company, N.A., as trustee (filed as Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed March 26, 2020 [File No.

4.11 Twenty-First Supplemental Indenture, dated as of April 2, 2020, between the Company , and The Bank of New York Mellon Trust Company, N.A., as trustee (filed as Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed April 2, 2020 [File No.

1-8002] and incorporated in this document by reference).

4.15 Twenty-First Supplemental Indenture, dated as of April 2, 2020, between the Company, as issuer, and The Bank of New York Mellon Trust Company, N.A., as trustee (filed as Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed April 2, 2020 [File No.

4.12 Twenty-Second Supplemental Indenture, dated as of August 23, 2021, between the Company , and The Bank of New York Mellon Trust Company, N.A., as trustee (filed as Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed August 23, 2021 [File No.

1-8002] and incorporated in this document by reference).

4.13 Third Supplemental Indenture, dated as of October 18, 2021, among Thermo Fisher Scientific (Finance I) B.V.

(Thermo Fisher International) , as issuer, the Company, as guarantor, and The Bank of New York Mellon Trust Company, N.A., as trustee (filed as Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed October 18, 2021 [File No.

1-8002] and incorporated in this document by reference).

4.14 Twenty-Third Supplemental Indenture, dated as of October 22, 2021, between the Company , and The Bank of New York Mellon Trust Company, N.A., as trustee (filed as Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed October 22, 2021 [File No.

1-8002] and incorporated in this document by reference).

4.15 Indenture, dated as of August 9, 2016, among Thermo Fisher International, as issuer, the Company, as guarantor, and The Bank of New York Mellon Trust Company, N.A., as trustee (filed as Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed August 9, 2016 [File No.

1-8002] and incorporated in this document by reference).

THERMO FISHER SCIENTIFIC INC.

1 unchanged sentence

Exhibit Number Description of Exhibit

4.16 Description of the Registrant’s Securities (filed as Exhibit 4.16 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2019 [File No.

4.16 Fourth Supplemental Indenture, dated as of November 18, 2021, among Thermo Fisher Scientific (Finance I) B.V.

(Thermo Fisher International ) , as issuer, the Company, as guarantor, and The Bank of New York Mellon Trust Company, N.A., as trustee (filed as Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed August 9, 2016 [File No.

1-8002] and incorporated in this document by reference).

4.17 Description of the Registrant’s Securities

10.1 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.

Deferred Compensation Plan for Directors of the Registrant, as amended and restated effective November 10, 2006 (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).*

4 unchanged sentences

10.4 Summary of Thermo Fisher Scientific Inc.

Annual Director Compensation (filed as Exhibit 10.4 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2019 [File No.

Annual Non-Man a gement Director Compensation (filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed February 24, 2022 [File No.

1-8002] and incorporated in this document by reference).*

10.5 Summary of 2019 Annual Cash Incentive Plan Matters (set forth in Item 5.02 to the Registrant’s Current Report on Form 8-K filed February 28, 2019 [File No.1-8002] under the heading “Compensatory Arrangements of Certain Officers” and incorporated in this document by reference).*

10.6 Form of Noncompetition Agreement between the Registrant and certain key employees and executive officers (filed as Exhibit 10.25 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2009 [File No.

10.5 Summary of 20 21 Annual Cash Incentive Plan *

10.6 Form of Noncompetition Agreement between the Registrant and certain key employees and executive officers , effective as of January 1, 2009 (filed as Exhibit 10.25 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2009 [File No.

1-8002] and incorporated in this document by reference).*

11 unchanged sentences

1-8002] and incorporated in this document by reference).*

10.11 2009 Restatement of Executive Severance Agreement, between Marc Casper and the Registrant, dated November 21, 2009 (filed as Exhibit 10.5 to the Registrant’s Current Report on Form 8-K filed November 25, 2009 [File No.

10.11 2009 Restatement of Executive Severance Agreement, between Marc N .

Casper and the Registrant, dated November 21, 2009 (filed as Exhibit 10.5 to the Registrant’s Current Report on Form 8-K filed November 25, 2009 [File No.

1-8002] and incorporated in this document by reference).*

10.12 Executive Change In Control Retention Agreement, between Marc Casper and the Registrant, dated November 21, 2009 (filed as Exhibit 10.6 to the Registrant’s Current Report on Form 8-K filed November 25, 2009 [File No.

10.12 Executive Change In Control Retention Agreement, between Marc N.

Casper and the Registrant, dated November 21, 2009 (filed as Exhibit 10.6 to the Registrant’s Current Report on Form 8-K filed November 25, 2009 [File No.

1-8002] and incorporated in this document by reference).*

10.13 Noncompetition Agreement, between Marc Casper and the Registrant, dated November 21, 2009 (filed as Exhibit 10.7 to the Registrant’s Current Report on Form 8-K filed November 25, 2009 [File No.

10.13 Noncompetition Agreement, between Marc N.

Casper and the Registrant, dated November 21, 2009 (filed as Exhibit 10.7 to the Registrant’s Current Report on Form 8-K filed November 25, 2009 [File No.

1-8002] and incorporated in this document by reference).*

15 unchanged sentences

1-8002] and incorporated in this document by reference).*

10.18 Form of Executive Change in Control Retention Agreement for Officers (other than Marc Casper) (filed as Exhibit 10.2 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2018 [File No.

10.18 Form of Executive Change in Control Retention Agreement for Officers (other than Marc N.

Casper) (filed as Exhibit 10.2 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2018 [File No.

1-8002] and incorporated in this document by reference).*

4 unchanged sentences

Exhibit Number Description of Exhibit

10.20 Form of Thermo Fisher Scientific Inc.’s Performance Restricted Stock Unit Agreement (filed as Exhibit 10.4 to the Registrant’s Current Report on Form 8-K filed February 27, 2013 [File No.

1-8002] and incorporated in this document by reference).*

10.21 Form of Thermo Fisher Scientific Inc.’s Restricted Stock Unit Agreement (filed as Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed February 27, 2013 [File No.

10.20 Form of Thermo Fisher Scientific Inc.’s Performance Restricted Stock Unit Agreemen t effective February 26, 2013 (filed as Exhibit 10.4 to the Registrant’s Current Report on Form 8-K filed February 27, 2013 [File No.

1-8002] and incorporated in this document by reference).*

10.21 Form of Performance Restricted Stock Unit Agreement between Thermo Fisher Scientific Inc.

and Marc Casper (filed as Exhibit 10.3 to the Registrant’s Current Report on Form 8-K filed February 27, 2013 [File No.

1-8002] and incorporated in this document by reference).*

10.23 Form of Restricted Stock Unit Agreement between Thermo Fisher Scientific Inc.

and Marc Casper (filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed February 27, 2013 [File No.

Casper effective February 26, 2013 (filed as Exhibit 10.3 to the Registrant’s Current Report on Form 8-K filed February 27, 2013 [File No.

1-8002] and incorporated in this document by reference).*

10.24 Form of Stock Option Agreement between Thermo Fisher Scientific Inc.

and Marc Casper (filed as Exhibit 10.5 to the Registrant’s Current Report on Form 8-K filed February 27, 2013 [File No.

10.22 Form of Nonstatutory Stock Option Agreement between Thermo Fisher Scientific Inc.

Casper effective February 26, 2013 (filed as Exhibit 10.5 to the Registrant’s Current Report on Form 8-K filed February 27, 2013 [File No.

1-8002] and incorporated in this document by reference).*

6 unchanged sentences

000-25317] and incorporated in this document by reference).*

10.28 Noncompetition Agreement between the Registrant and Mark Stevenson, dated September 10, 2015 (filed as Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 26, 2015 [File No.

10.26 Noncompetition Agreement between the Registrant and Mark P.

Stevenson, dated September 10, 2015 (filed as Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 26, 2015 [File No.

1-8002] and incorporated in this document by reference).*

10.29 Form of Thermo Fisher Scientific Inc.’s Stock Option Agreement for Officers (filed as Exhibit 10.44 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2016 [File No.

10.27 Form of Thermo Fisher Scientific Inc.’s Nonstatutory Stock Option Agreement for Officers (filed as Exhibit 10.44 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2016 [File No.

1-8002] and incorporated in this document by reference).*

9 unchanged sentences

1-8002] and incorporated in this document by reference).*

10.33 Credit Agreement, dated December 4, 2020, among Thermo Fisher Scientific Inc., certain Subsidiaries of Thermo Fisher Scientific Inc.

from time to time party thereto, Bank of America, N.A., as Administrative Agent and each lender from time to time party there to (filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed December 4, 2020 [File No.

10.31 Credit Agreement, dated January 7, 2022 , among Thermo Fisher Scientific Inc., certain Subsidiaries of Thermo Fisher Scientific Inc.

from time to time party thereto, Bank of America, N.A., as Administrative Agent and each lender from time to time party thereto (filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed January 7, 2022 [File No.

1-8002] and incorporated in this document by reference).

1 unchanged sentence

1-8002] and incorporated in this document by reference).*

10.35 Form of Performance Restricted Stock Unit Agreement for Marc Casper effective February 26, 2019 (filed as Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 30, 2019 [File No.

10.33 Form of Performance Restricted Stock Unit Agreement for Marc N.

Casper effective February 26, 2019 (filed as Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 30, 2019 [File No.

1-8002] and incorporated in this document by reference).*

12 unchanged sentences

1-8002] and incorporated in this document by reference).*

THERMO FISHER SCIENTIFIC INC.

EXHIBIT INDEX

Exhibit Number Description of Exhibit

10.38 Form of Noncompetition Agreement between the Registrant and certain key employees and executive officers (filed as Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 29, 2019 [File No.

1-8002] and incorporated in this document by reference).*

10.41 Form of Thermo Fisher Scientific Inc.’s Performance Restricted Stock Unit Agreement (filed as Exhibit 10.45 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2019 [File No.

10.39 Form of Thermo Fisher Scientific Inc.’s Performance Restricted Stock Unit Agreeme nt effecti ve as of February 25, 2020 (filed as Exhibit 10.45 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2019 [File No.

1-8002] and incorporated in this document by reference).*

10.42 Form of Thermo Fisher Scientific Inc.’s Restricted Stock Unit Agreement (filed as Exhibit 10.46 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2019 [File No.

10.40 Form of Thermo Fisher Scientific Inc.’s Restricted Stock Unit Agreement effective as of February 25, 2020 (filed as Exhibit 10.46 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2019 [File No.

1-8002] and incorporated in this document by reference).*

10.43 Form of Thermo Fisher Scientific Inc.’s Stock Option Agreement for Officers (filed as Exhibit 10.47 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2019 [File No.

THERMO FISHER SCIENTIFIC INC.

EXHIBIT INDEX

Exhibit Number Description of Exhibit

10.41 Form of Thermo Fisher Scientific Inc.’s Nonstatutory Stock Option Agreement for Office rs effective as of February 25, 2020 (filed as Exhibit 10.47 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2019 [File No.

1-8002] and incorporated in this document by reference).*

10.42 Form of Performance Restricted Stock Unit Agreement between Thermo Fisher Scientific Inc.

and Marc Casper (filed as Exhibit 10.48 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2019 [File No.

Caspe r effective as of February 25, 2020 (filed as Exhibit 10.48 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2019 [File No.

1-8002] and incorporated in this document by reference).*

10.43 Form of Restricted Stock Unit Agreement between Thermo Fisher Scientific Inc.

and Marc Casper (filed as Exhibit 10.49 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2019 [File No.

Caspe r effective as of February 25, 2020 (filed as Exhibit 10.49 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2019 [File No.

1-8002] and incorporated in this document by reference).*

10.46 Form of Stock Option Agreement between Thermo Fisher Scientific Inc.

and Marc Casper (filed as Exhibit 10.50 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2019 [File No.

10.44 Form of Nonstatu tory Stock Option Agreement between Thermo Fisher Scientific Inc.

Caspe r effective as of February 25, 2020 (filed as Exhibit 10.50 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2019 [File No.

1-8002] and incorporated in this document by reference).*

10.45 Form of Restricted Stock Unit Agreement between Thermo Fisher Scientific Inc.

and Marc Casper *

Casper (filed as Exhibit 10.47 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2020 [File No.

1-8002] and incorporated in this document by reference).*

10.46 Form of Performance Restricted Stock Unit Agreement between Thermo Fisher Scientific Inc.

and Marc Casper *

10.49 Form of Thermo Fisher Scientific Inc.’s Performance Restricted Stock Unit Agreement *

Casper (filed as Exhibit 10.48 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2020 [File No.

1-8002] and incorporated in this document by reference).*

10.47 Form of Thermo Fisher Scientific Inc.’s Performance Restricted Stock Unit Agreement (filed as Exhibit 10.49 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2020 [File No.

1-8002] and incorporated in this document by reference).*

10.48 PPD, Inc.

2020 Omnibus Incentive Plan (filed as Exhibit 10.38 to PPD Inc.’s Form S-1/A filed January 27, 2020 [File No.

333-235860] and incorporated in this document by reference).*

10.49 Consulting Agreement between the Registrant and Mark P.

Stevenson, dated February 2 4 , 2022 *

21 Subsidiaries of the Registrant .

22 Subsidiary Issuer of Guaranteed Securities .

23.1 Consent of PricewaterhouseCoopers LLP, an Independent Registered Public Accounting Firm.

17 unchanged sentences

The following Consolidated Financial Statements of the Registrant and its subsidiaries are required to be included in Item 15:

Report of Independent Registered Public Accounting Firm F-2

Report of Independent Registered Public Accounting Firm (PCAOB ID 238 )

Consolidated Balance Sheet as of December 31, 2021 and 2020 F- 6

2 unchanged sentences

Consolidated Statement of Cash Flows for the years ended December 31, 2021, 2020 and 2019 F- 9

Consolidated Statement of Shareholders’ Equity for the years ended December 31, 2020, 2019 and 2018 F- 10

Consolidated Statement of Redeemable Noncontrolling Interest and Equity for the years ended December 31, 2021, 2020 and 2019

Notes to Consolidated Financial Statements F- 11

3 unchanged sentences

We have audited the accompanying consolidated balance sheet of Thermo Fisher Scientific Inc.

and its subsidiaries (the “Company”) as of December 31, 2020 and 2019, and the related consolidated statements of income, of comprehensive income, of shareholders' equity and of cash flows for each of the three years in the period ended December 31, 2020, including the related notes (collectively referred to as the “consolidated financial statements”).

and its subsidiaries (the “Company”) as of December 31, 2021 and 2020, and the related consolidated statements of income, of comprehensive income, of redeemable noncontrolling interest and equity and of cash flows for each of the three years in the period ended December 31, 2021, including the related notes (collectively referred to as the “consolidated financial statements”).

We also have audited the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

12 unchanged sentences

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of

internal control based on the assessed risk.

Our audits also included evaluating the accounting principles used and

significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

Our audits also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audits provide a reasonable basis for our opinions.

As described in Management’s Annual Report on Internal Control Over Financial Reporting, management has excluded PPD, Inc., Mesa Biotech, Inc.

and PeproTech, Inc.

from its assessment of internal control over financial reporting as of December 31, 2021 because they were acquired by the Company in purchase business combinations during 2021.

We have also excluded PPD, Inc., Mesa Biotech, Inc.

and PeproTech, Inc.

from our audit of internal control over financial reporting.

PPD, Inc., Mesa Biotech, Inc.

and PeproTech, Inc.

are wholly-owned subsidiaries whose total assets and total revenues excluded from management’s assessment and our audit of internal control over financial reporting collectively represent approximately 5% and 2%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2021.

Definition and Limitations of Internal Control over Financial Reporting

8 unchanged sentences

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Goodwill impairment assessment

As described in Note 1 to the consolidated financial statements, the Company’s consolidated goodwill balance was $26,041 million as of December 31, 2020.

Management assesses goodwill for impairment at the reporting unit level annually and whenever events occur or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying amount.

Management estimates the fair values of its reporting units by using forecasts of discounted future cash flows and peer market multiples.

The Company would record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value (limited to the amount of goodwill).

As disclosed by management, estimates of discounted future cash flows require management to make assumptions related to revenue and operating income growth rates, discount rates and other factors.

Management also considers peer revenues and earnings trading multiples from companies that have operational and financial characteristics that are similar to the respective reporting units and estimates weighted average costs of capital.

The principal considerations for our determination that performing procedures relating to the goodwill impairment assessment is a critical audit matter are (i) the significant judgment by management when estimating the fair value of the reporting units, (ii) a high degree of auditor judgment and effort in performing procedures to evaluate management’s significant assumptions related to discount rates and peer market multiples, and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to the goodwill impairment assessment, including controls over the valuation of the Company’s reporting units.

These procedures also included, among others, testing management’s process for developing the fair value estimates;

evaluating the appropriateness of the discounted cash flow and market models;

testing the completeness, accuracy, and relevance of underlying data used in the models;

and evaluating the significant assumptions used by management related to the discount rates, the terminal growth rates and peer market multiples.

Evaluating management’s assumptions related to the terminal growth rates involved evaluating whether the assumptions used were reasonable considering the consistency with external market data.

Evaluating management’s assumptions related to the peer market multiples involved evaluating the population of peer companies used in the analyses and testing selected market data used by management to determine the multiples by comparison to publicly available information.

Professionals with specialized skill and knowledge were used to assist in the evaluation of the Company’s discounted cash flow models and the discount rate assumptions.

As described in Notes 1 and 8 to the consolidated financial statements, the Company’s total income tax expense for the period ended December 31, 2020 was $850 million.

The Company has deferred income tax liabilities, net, of $1,105 million (including a valuation allowance of $933 million) and unrecognized income tax benefits of $1,091 million as of December 31, 2020.

As described in Note 8 to the consolidated financial statements, the Company’s provision for income taxes for the year ended December 31, 2021 was $1,109 million.

The Company has

deferred tax liabilities, net, of $2,829 million (including a valuation allowance of $968 million) and unrecognized tax benefits of $1,124 million as of December 31, 2021.

As disclosed by management, 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.

1 unchanged sentence

Determination of taxable income in any jurisdiction requires management to interpret the related tax laws and regulations and to use 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.

Management assesses income tax positions and records tax benefits for all years subject to examination based upon evaluation of the facts, circumstances and information available at the reporting date.

Management 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, management 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.

3 unchanged sentences

If it becomes more likely than not that a tax asset will be used, management reverses the related valuation allowance.

The principal considerations for our determination that performing procedures relating to income taxes is a critical audit matter are (i) the significant judgment by management when determining the provision for income taxes, deferred tax assets and liabilities, and liabilities for unrecognized tax benefits due to numerous and complex tax laws, the frequency of tax filings, as well as judgments regarding the realizability of deferred tax assets, (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence related to the provision for income taxes, deferred tax assets and liabilities, and liabilities for unrecognized tax benefits, and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

The principal considerations for our determination that performing procedures relating to income taxes is a critical audit matter are (i) the significant judgment by management when interpreting the numerous and complex tax laws and regulations as it relates to determining the provision for income taxes, deferred tax assets and liabilities, including the valuation allowance, and liabilities for unrecognized tax benefits, (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence related to the provision for income taxes, deferred tax assets and liabilities, including the valuation allowance, and liabilities for unrecognized tax benefits, and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to the provision for income

taxes, deferred tax assets and liabilities, and liabilities for unrecognized tax benefits, including controls over the realizability of deferred tax assets.

These procedures also included, among others, (i) testing the accuracy of the income tax provision, including the rate reconciliation and permanent and temporary differences, (ii) evaluating whether the data utilized in the calculation of the provision for income taxes was appropriate and consistent with evidence obtained in other areas of the audit, (iii) evaluating management’s assessment of the realizability of deferred tax assets on a jurisdictional basis, (iv) evaluating the identification of reserves for unrecognized tax benefits and the reasonableness of the “more likely than not” determination in consideration of jurisdictions, court decisions, legislative actions, statutes of limitations, and developments in tax examinations, (v) testing the calculation of the liability for unrecognized tax benefits by jurisdiction, including estimates of the amount of tax benefit expected to be sustained, and (vi) evaluating the adequacy of the Company’s disclosures.

These procedures included testing the effectiveness of controls relating to the provision for income taxes, deferred tax assets and liabilities, including the valuation allowance, and liabilities for unrecognized tax benefits.

These procedures also included, among others (i) testing the accuracy of the provision for income taxes, including the rate reconciliation and permanent and temporary differences, (ii) evaluating whether the data utilized in the calculations of the provision for income taxes, deferred tax assets and liabilities, and liabilities for unrecognized tax benefits were appropriate and consistent with evidence obtained in other areas of the audit, (iii) evaluating management’s assessment of the realizability of deferred tax assets on a jurisdictional basis, (iv) evaluating the identification of liabilities for unrecognized tax benefits and the reasonableness of the more likely than not determination in consideration of court decisions, legislative actions, statutes of limitations, and developments in tax examinations by jurisdiction, (v) testing the calculation of the liability for unrecognized tax benefits by jurisdiction, including estimates of the amount of income tax benefit expected to be sustained, and (vi) evaluating the adequacy of the Company’s disclosures.

Professionals with specialized skill and knowledge were used to assist in evaluating the reasonableness of management’s judgments and estimates related to the application of foreign and domestic tax laws and regulations.

Acquisition of PPD, Inc.

- Valuation of Customer Relationships Intangible Assets

As described in Note 2 to the consolidated financial statements, on December 8, 2021, the Company acquired PPD, Inc.

for $15.99 billion in net cash consideration and $43 million of equity awards exchanged, which resulted in $6,264 million of customer relationships intangible assets being recorded.

As disclosed by management, assumptions and estimates are used in determining the fair value of the customer relationships intangible assets acquired in a business combination.

Management estimates the fair value of acquisition-related customer relationships intangible assets principally based on projections of cash flows that will arise from the customer relationships of PPD, Inc., which include estimates of customer attrition rates.

The projected cash flows are discounted to determine the present value of the assets at the date of the acquisition.

The principal considerations for our determination that performing procedures relating to the valuation of the acquired customer relationships intangible assets from the acquisition of PPD, Inc.

is a critical audit matter are (i) the significant judgment by management when determining the fair value of the acquired customer relationships intangible assets, (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to projections of cash flows and discount rates, and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to the acquisition accounting, including controls over management’s valuation of the customer relationships intangible assets.

These procedures also included, among others (i) reading the purchase agreement, (ii) testing management’s process for determining the fair values of the acquired customer relationships intangible assets, (iii) evaluating the appropriateness of the valuation methodology utilizing discounted projected cash flows, (iv) testing the completeness and accuracy of the underlying data used in the discounted projected cash flows, and (v) evaluating the reasonableness of the significant assumptions used by management related to projections of cash flows and discount rates.

Evaluating management’s significant assumption related to projections of cash flows involved evaluating whether the significant assumption used by management was reasonable considering (i) the current and past performance of PPD, Inc., (ii) the consistency with external market and industry data, and (iii) whether the significant assumption was consistent with evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the valuation methodology utilizing discounted projected cash flows and (ii) the reasonableness of the discount rate significant assumption.

/s/ PricewaterhouseCoopers LLP

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Cash and cash equivalents $ 4,477 $ 10,325

$ 10,325 $ 2,399

Accounts receivable, less allowances of $ 150 and $ 135

Inventories 5,051 4,029

Contract assets, net 968 731

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Acquisition-related intangible assets, net 20,113 12,685

12,685 14,014

26,041 25,714

Other assets 4,640 2,457

Goodwill 41,924 26,041

$ 95,123 $ 69,052

Liabilities and Shareholders' Equity

Liabilities, redeemable noncontrolling interest and equity

Current liabilities:

Short-term obligations and current maturities of long-term obligations $ 2,537 $ 2,628

$ 2,628 $ 676

Accounts payable 2,867 2,175

3 unchanged sentences

Total current liabilities

13,436 10,304

Deferred income taxes 3,837 1,794

1 unchanged sentence

Long-term obligations 32,333 19,107

19,107 17,076

Commitments and contingencies (Note 12)

Redeemable noncontrolling interest 122 —

Thermo Fisher Scientific Inc.

shareholders’ equity:

3 unchanged sentences

Capital in excess of par value 16,174 15,579

15,579 15,064

Retained earnings 35,431 28,116

28,116 22,092

Treasury stock at cost, 44,720,112 and 40,417,789 shares

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Accumulated other comprehensive items ( 2,329 ) ( 2,807 )

( 2,807 ) ( 2,679 )

Total shareholders' equity

Total Thermo Fisher Scientific Inc.

shareholders’ equity 40,793 34,507

Noncontrolling interests 62 10

40,855 34,517

Total Liabilities and Shareholders' Equity

Total liabilities, redeemable noncontrolling interest and equity

$ 95,123 $ 69,052

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1,406 1,181 1,003

Restructuring and other costs (income), net

Restructuring and other costs (income)

197 99 ( 413 )

2 unchanged sentences

Operating income 10,028 7,794 4,594

7,794 4,594 3,783

Interest income 43 65 224

Interest expense ( 536 ) ( 553 ) ( 676 )

( 553 ) ( 676 ) ( 667 )

Other (Expense) Income, Net

Other income/(expense)

( 694 ) ( 76 ) ( 70 )

3 unchanged sentences

( 1,109 ) ( 850 ) ( 374 )

Equity in (losses) earnings of unconsolidated entities ( 4 ) ( 3 ) —

Net income 7,728 6,377 3,698

net income attributable to noncontrolling interests and redeemable noncontrolling interest 3 2 2

Net income attributable to Thermo Fisher Scientific Inc.

$ 7,725 $ 6,375 $ 3,696

Earnings per Share

Earnings per share attributable to Thermo Fisher Scientific Inc.

$ 19.62 $ 16.09 $ 9.24

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Currency translation adjustment:

Currency translation adjustment (net of tax (benefit) provision of $( 221 ), $ 25 and $ 84 )

Currency translation adjustment (net of tax provision (benefit) of $ 231 , $( 221 ) and $ 25 )

373 ( 118 ) ( 106 )

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Pension and other postretirement benefit liability adjustments:

Pension and other postretirement benefit liability adjustments arising during the period (net of tax (benefit) provision of $( 1 ), $( 31 ) and $ 2 )

Pension and other postretirement benefit liability adjustments arising during the period (net of tax provision (benefit) of $ 11 , $( 1 ) and $( 31 ))

36 ( 8 ) ( 93 )

4 unchanged sentences

8,206 6,249 3,518

comprehensive income attributable to noncontrolling interests and redeemable noncontrolling interest

Comprehensive income attributable to Thermo Fisher Scientific Inc.

$ 8,204 $ 6,247 $ 3,515

The accompanying notes are an integral part of these consolidated financial statements.

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Loss on early extinguishment of debt 767 — 184

Other non-cash expenses, net

Other non-cash expenses

Changes in assets and liabilities, excluding the effects of acquisitions and disposition:

5 unchanged sentences

( 34 ) ( 96 ) ( 50 )

1,452 ( 198 ) 12

Other ( 724 ) 1,452 ( 198 )

Net cash provided by operating activities

31 unchanged sentences

194 176 ( 63 )

Increase in Cash, Cash Equivalents and Restricted Cash

(Decrease) increase in cash, cash equivalents and restricted cash

( 5,845 ) 7,914 305

5 unchanged sentences

THERMO FISHER SCIENTIFIC INC.

CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

Common Stock Capital in Excess of Par Value Retained Earnings Treasury Stock Accumulated Other Comprehensive Items Total Shareholders' Equity

CONSOLIDATED STATEMENT OF REDEEMABLE NONCONTROLLING INTEREST AND EQUITY

Redeemable Noncontrolling Interest Common Stock Capital in Excess of Par Value Retained Earnings Treasury Stock Accumulated Other Comprehensive Items Total

Thermo Fisher Scientific Inc.

Shareholders’ Equity Noncontrolling Interests Total Equity

(In millions) Shares Amount Shares Amount

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— — — — — — — ( 181 ) ( 181 ) 1 ( 180 )

— — 27 — — — — 27

Contributions from (distributions to) noncontrolling interests — — — — — — — — — ( 2 ) ( 2 )

Balance at December 31, 2019 — 434 434 15,064 22,092 36 ( 5,236 ) ( 2,679 ) 29,675 9 29,684

12 unchanged sentences

— — — — — — — ( 128 ) ( 128 ) — ( 128 )

Contributions from (distributions to) noncontrolling interests — — — — — — — — — ( 1 ) ( 1 )

Balance at December 31, 2020 — 437 437 15,579 28,116 40 ( 6,818 ) ( 2,807 ) 34,507 10 34,517

Cumulative effect of accounting change

— — — ( 1 ) — — — ( 1 )

Issuance of shares under employees' and directors' stock plans

6 unchanged sentences

— — — — ( 410 ) — — — ( 410 ) — ( 410 )

Recognition upon acquisition 122 — — — — — — — — — —

1 — — — 7,725 — — — 7,725 2 7,727

1 unchanged sentence

( 1 ) — — — — — — 478 478 — 478

Contributions from (distributions to) noncontrolling interests — — — — — — — — — 50 50

— — — 41 — — — — 41 — 41

Balance at December 31, 2021 $ 122 439 $ 439 $ 16,174 $ 35,431 45 $ ( 8,922 ) $ ( 2,329 ) $ 40,793 $ 62 $ 40,855

5 unchanged sentences

Thermo Fisher Scientific Inc.

(the company or Thermo Fisher) enables customers to make the world healthier, cleaner and safer by helping them accelerate life sciences research, solve complex analytical challenges, improve patient diagnostics, deliver medicines to market and increase laboratory productivity.

(the company or Thermo Fisher) enables customers to make the world healthier, cleaner and safer by helping them accelerate life sciences research, solve complex analytical challenges, improve patient diagnostics and therapies, and increase laboratory productivity.

Markets served include pharmaceutical and biotech, academic and government, industrial and applied, as well as healthcare and diagnostics.

2 unchanged sentences

All material intercompany accounts and transactions have been eliminated.

The company accounts for investments in businesses using the equity method when it has the ability to exercise significant influence but not control (generally between 20% and 50% ownership) and is not the primary beneficiary.

At December 31, 2021 and 2020, the company had such investments with carrying amounts of $ 576 million and $ 32 million, respectively.

The company has elected the fair value option of accounting for certain of its investments with readily determinable fair values that would otherwise be accounted for under the equity method.

At December 31, 2021, the fair value of such investments was $ 217 million.

Redeemable Noncontrolling Interest

The company owns 60 % of its consolidated subsidiary PPD-SNBL K.K.

The 40 % ownership interest held by a third party is classified as a redeemable noncontrolling interest on the consolidated balance sheet due to certain put options under which the third party may require the company to purchase the remaining ownership interest at its pre-acquisition fair value.

Certain reclassifications of prior year amounts have been made to conform to the current year presentation.

2 unchanged sentences

Instruments revenues typically consist of longer-lived assets that, for the substantial majority of sales, are recognized at a point in time in a manner similar to consumables.

Service revenues (clinical trial logistics, pharmaceutical development and manufacturing services, asset management, diagnostic testing, training, service contracts, and field services including related time and materials) are recognized over time as customers receive and consume the benefits of such services.

Service revenues (primarily clinical research, pharmaceutical, and instrument and enterprise services) are recognized over time as customers receive and consume the benefits of such services.

For revenues recognized over time, the company generally uses costs accumulated relative to total estimated costs to measure progress as this method approximates satisfaction of the performance obligation.

2 unchanged sentences

The company immediately expenses contract costs that would otherwise be capitalized and amortized over a period of less than one year.

Changes to the scope of services contracts generally also include changes in the transaction price.

Typically, these contract modifications are not distinct from existing services provided under the contract, and result in cumulative adjustments to revenue on the modification date.

Payments from customers for most instruments and consumables are typically due in a fixed number of days after shipment or delivery of the product.

Service arrangements commonly call for payments in advance of performing the work (e.g.

extended service contracts), upon completion of the service (e.g.

pharmaceutical development and manufacturing) or a mix of both.

Service arrangements commonly call for payments in advance of performing the work (e.g., extended service contracts), upon completion of the service (e.g., pharmaceutical services) or a mix of both.

Some arrangements include variable amounts of consideration that arise from discounts, rebates, and other programs and practices.

In such arrangements, the company estimates the amount by which to reduce the stated contract amount to reflect the transaction price.

The company records reimbursement for third-party pass-through and out-of-pocket costs as revenues and the related expenses as costs of revenues.

Contract-related Balances

Accounts receivable include amounts that have been billed and are currently due from customers.

They are recorded at the invoiced amount and do not bear interest.

The company maintains allowances for doubtful accounts for estimates of expected losses resulting from the inability of its customers to pay amounts due.

Accounts receivable include unconditional rights to consideration from customers, which generally represent billings that do not bear interest.

The company maintains allowances for doubtful accounts for estimates of expected losses resulting from

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

the inability of its customers to pay amounts due.

The allowance for doubtful accounts is the company’s best estimate of the amount of probable credit losses in existing accounts receivable.

3 unchanged sentences

The company does not have any off-balance-sheet credit exposure related to customers.

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The changes in the allowance for doubtful accounts are as follows:

Year Ended December 31,

(In millions) 2020 2019 2018

Balance at Beginning of Year

$ 102 $ 117 $ 109

Cumulative effect of accounting change

Provision charged to expense

Accounts written off

( 34 ) ( 32 ) ( 12 )

Acquisitions, currency translation and other

Balance at End of Year

$ 135 $ 102 $ 117

Contract assets include revenues recognized in advance of billings and are recorded net of estimated losses resulting from the inability to invoice customers, which is primarily due to risk associated with the company’s performance.

Contract assets include revenues recognized in advance of billings where the company’s right to bill includes something other than the passage of time.

Such amounts are recorded net of estimated losses resulting from the inability to invoice customers, which is primarily due to risk associated with the company’s performance.

Contract assets are classified as current or noncurrent based on the amount of time expected to lapse until the company's right to consideration becomes unconditional.

Noncurrent contract assets are included within other assets in the accompanying balance sheet.

Contract liabilities include billings in excess of revenues recognized, such as those resulting from customer advances and deposits and unearned revenues on service contracts.

Contract liabilities are classified as current or noncurrent based on the periods over which remaining performance obligations are expected to be transferred to customers.

Noncurrent contract liabilities are included within other long-term liabilities in the accompanying balance sheet.

Contract assets and liabilities are presented on a net basis in the consolidated balance sheet if they arise from different performance obligations in the same contract.

Contract asset and liability balances are as follows:

December 31, December 31,

(In millions) 2020 2019

Current Contract Assets, Net $ 731 $ 603

Noncurrent Contract Assets, Net 11 17

Current Contract Liabilities 1,271 916

Noncurrent Contract Liabilities 763 594

Substantially all of the current contract liabilities balance at December 31, 2019 and 2018 was recognized in revenues during 2020 and 2019, respectively.

Warranty Obligations

The company provides for the estimated cost of standard product warranties, primarily from historical information, in cost of product revenues at the time product revenues are recognized.

While the company engages in extensive product quality programs and processes, including actively monitoring and evaluating the quality of its component supplies, the company’s warranty obligation is affected by product failure rates, utilization levels, material usage, service delivery costs incurred in correcting a product failure and supplier warranties on parts delivered to the company.

Should actual product failure rates, utilization levels, material usage, service delivery costs or supplier warranties on parts differ from the company’s estimates, revisions to the estimated warranty liability would be required.

The liability for warranties is included in other accrued expenses in the accompanying balance sheet.

1 unchanged sentence

Costs of service contracts are recognized as incurred.

The changes in the carrying amount of standard product warranty obligations are as follows:

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, December 31,

(In millions) 2020 2019

Balance at Beginning of Year

Provision charged to expense

( 108 ) ( 112 )

Adjustments to previously provided warranties, net

Currency translation

Balance at End of Year

Operating leases that have commenced are included in other assets, other accrued expenses and other long-term liabilities in the consolidated balance sheet.

Classification of operating lease liabilities as either current or noncurrent is based on the expected timing of payments due under the company’s obligations.

Finance leases that have commenced are included in property, plant and equipment, net, current maturities of long-term obligations and long-term obligations in the consolidated balance sheet.

Classification of lease liabilities as either current or noncurrent is based on the expected timing of payments due under the company’s obligations.

Right-of-use (ROU) assets represent the company’s right to use an underlying asset for the lease term and lease liabilities represent the company’s obligation to make lease payments arising from the lease.

Operating lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term.

Lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term.

Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheet.

The company recognizes lease expense for these leases on a straight-line basis over the lease term.

Because most of the company’s leases do not provide an implicit rate, the company estimates incremental borrowing rates based on the information available at the commencement date in determining the present value of lease payments.

The company recognizes operating lease expense on a straight-line basis over the lease term.

Finance lease expense includes depreciation, which is recognized on a straight-line basis over the expected life of the leased asset, and an immaterial amount of interest expense.

Because most of the company’s leases do not provide an implicit interest rate, the company estimates incremental borrowing rates based on the information available at the commencement date in determining the present value of lease payments.

The company uses the implicit rate when readily determinable.

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In certain circumstances, employee termination benefits may meet more than one of the characteristics listed above and therefore, may have individual elements that are subject to different accounting models.

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

From time to time when executing a restructuring or exit plan, the company also incurs costs other than termination benefits, such as lease termination costs, that are not associated with or will not be incurred to generate revenues.

2 unchanged sentences

The company recognizes deferred income taxes based on the expected future tax consequences of differences between the financial statement basis and the tax basis of assets and liabilities, calculated using enacted tax rates in effect for the year in which the differences are expected to be reflected in the tax return.

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

A valuation allowance is provided for tax assets that will more likely than not go unused.

The financial statements reflect expected future tax consequences of uncertain tax positions that the company has taken or expects to take on a tax return presuming the taxing authorities’ full knowledge of the positions and all relevant facts, but without discounting for the time value of money.

Earnings per Share

Basic earnings per share has been computed by dividing net income by the weighted average number of shares outstanding during the year.

Except where the result would be antidilutive to net income, diluted earnings per share has been computed using the treasury stock method for outstanding stock options and restricted units.

Basic earnings per share has been computed by dividing net income attributable to Thermo Fisher Scientific Inc.

by the weighted average number of shares outstanding during the year.

Except where the result would be antidilutive to net income attributable to Thermo Fisher Scientific Inc., diluted earnings per share has been computed using the treasury stock method for outstanding stock options and restricted units.

Cash and Cash Equivalents

1 unchanged sentence

These investments are carried at cost, which approximates market value.

Inventories are valued at the lower of cost or net realizable value, cost being determined principally by the first-in, first-out (FIFO) method with certain of the company’s businesses utilizing the last-in, first-out (LIFO) method.

Inventories are valued at the lower of cost or net realizable value, cost being determined by the first-in, first-out (FIFO) method.

As discussed below, prior to the third quarter of 2021 certain of the company's businesses utilized the last-in, first-out (LIFO) method.

The company periodically reviews quantities of inventories on hand and compares these amounts to the expected use of each product or product line.

In addition, the company has certain inventory that is subject to fluctuating market pricing.

The company assesses the carrying value of this inventory based on a lower of cost or net realizable value analysis.

The company records a charge to cost of sales for the amount required to reduce the carrying value of inventory to net realizable value.

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Inventories $ 5,051 $ 4,029

The value of inventories maintained using the LIFO method was $ 274 million and $ 268 million at December 31, 2020 and 2019, respectively, which was below estimated replacement cost by $ 49 million and $ 39 million, respectively.

Reductions to cost of revenues as a result of the liquidation of LIFO inventories were nominal during the three years ended December 31, 2020.

Prior to the third quarter of 2021, certain of the company’s businesses utilized the LIFO method of accounting for inventories.

During the third quarter of 2021, these businesses, which comprised approximately 5 % of consolidated inventories, changed from the LIFO method to the FIFO method.

The company believes this change is preferable as it will provide a consistent, uniform costing method for all inventories across the company, better reflect the current value of inventories, and improve comparability with peers.

Prior financial statements have not been retrospectively adjusted due to immateriality.

The cumulative pre-tax effect of this change in accounting principle of $ 33 million was recorded as an increase to inventories and a decrease to cost of product revenues in the third quarter of 2021.

This change was recorded in the Laboratory Products and Biopharma Services ($ 20 million) and Specialty Diagnostics ($ 13 million) segments.

The value of inventories maintained using the LIFO method was $ 274 million at December 31, 2020, which was below estimated replacement cost by $ 49 million.

Reductions to cost of revenues as a result of the liquidation of LIFO inventories were nominal during 2019, 2020 and the first half of 2021.

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Property, Plant and Equipment

9 unchanged sentences

(In millions) 2021 2020

Land $ 431 $ 410

Buildings and improvements 2,575 2,192

3 unchanged sentences

Property, plant and equipment, net $ 8,333 $ 5,912

$ 5,912 $ 4,749

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Acquisition-related Intangible Assets

Acquisition-related intangible assets include the costs of acquired customer relationships, product technology, tradenames and other specifically identifiable intangible assets, and are being amortized using the straight-line method over their estimated useful lives, which range from 2 to 20 years.

Acquisition-related intangible assets include the costs of acquired customer relationships, product technology, tradenames, backlog and other specifically identifiable intangible assets, and are being amortized using the straight-line method over their estimated useful lives, which range up to 20 years.

The company reviews these intangible assets for impairment when indication of potential impairment exists, such as a significant reduction in cash flows associated with the assets.

When impairment indicators exist, the company determines whether the carrying value of its intangible assets exceeds the related undiscounted cash flows.

In these situations, the carrying value is written down to fair value.

In addition, the company has tradenames and in-process research and development that have indefinite lives and which are not amortized.

The company reviews intangible assets for impairment when indication of potential impairment exists, such as a significant reduction in cash flows associated with the assets.

Intangible assets with indefinite lives are reviewed for impairment annually or whenever events or changes in circumstances indicate they may be impaired.

The company may perform an optional qualitative assessment.

If the company determines that the fair value of the indefinite-lived intangible asset is more likely than not greater than its carrying amount, no additional testing is necessary.

If not, or if the company bypasses the optional qualitative assessment, it writes the carrying value down to the fair value, if applicable.

Acquisition-related intangible assets are as follows:

11 unchanged sentences

1,235 N/A 1,235 1,235 N/A 1,235

In-process research and development

— N/A — 16 N/A 16

1,235 N/A 1,235 1,251 N/A 1,251

Acquisition-related intangible assets

$ 32,860 $ ( 12,747 ) $ 20,113 $ 24,564 $ ( 11,879 ) $ 12,685

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The estimated future amortization expense of acquisition-related intangible assets with definite lives is as follows:

2 unchanged sentences

Estimated future amortization expense of definite-lived intangible assets $ 18,878

Other assets in the accompanying balance sheet include operating lease right-of-use assets, deferred tax assets, pension assets, cash surrender value of life insurance, insurance recovery receivables related to product liability matters, investments, certain intangible assets and other assets.

At December 31, 2020 and 2019, the company had $ 43 million and $ 52 million, respectively, of intangible assets not derived from acquisitions, net of accumulated amortization, which are being amortized using the straight-line method over their estimated useful lives, which range from 2 to 20 years.

Equity investments that do not have readily determinable fair values are measured at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investments of the same issuer.

Other assets in the accompanying balance sheet include operating lease right-of-use assets, investments, deferred tax assets, pension assets, cash surrender value of life insurance, insurance recovery receivables related to product liability matters, certain intangible assets and other assets.

At December 31, 2021 and 2020, the company had $ 33 million and $ 43 million, respectively, of intangible assets not derived from acquisitions, net of accumulated amortization, which are being amortized using the straight-line method over their estimated useful lives, which range up to 20 years.

Equity investments that do not have readily determinable fair values and are not eligible for the net asset value (NAV) practical expedient are measured at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investments of the same issuer.

The company performs qualitative assessments to identify impairments of these investments.

At December 31, 2020 and 2019, the company had such investments with carrying amounts of $ 28 million and $ 34 million, respectively, which are included in other assets.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

At December 31, 2021 and 2020, the company had such investments with carrying amounts of $ 22 million and $ 28 million, respectively, and investments measured at NAV of $ 16 million and $ 0 million , respectively, which are included in other assets.

The company assesses goodwill for impairment at the reporting unit level annually and whenever events occur or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount.

11 unchanged sentences

Diagnostics Laboratory

Services Total

Biopharma Services Total

Balance at December 31, 2019

$ 8,544 $ 4,928 $ 3,184 $ 9,058 $ 25,714

— 9 — 938 947

Finalization of purchase price allocations for 2018 acquisitions

( 2 ) — — — ( 2 )

Sale of a business

— — ( 478 ) — ( 478 )

Currency translation

11 151 186 ( 56 ) 292

1 7 ( 1 ) ( 5 ) 2

Balance at December 31, 2020

8,590 5,079 3,370 9,002 26,041

1,560 56 8 14,400 16,024

Currency translation

2 unchanged sentences

$ 10,143 $ 5,043 $ 3,277 $ 23,461 $ 41,924

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Loss Contingencies

2 unchanged sentences

Additionally, the company records receivables from third-party insurers up to the amount of the loss when recovery has been determined to be probable.

Liabilities acquired in acquisitions have been recorded at fair value and, as such, were discounted to present value at the dates of acquisition.

Certain liabilities acquired in acquisitions have been recorded at readily determinable fair values and, as such, were discounted to present value at the dates of acquisition.

Currency Translation

10 unchanged sentences

Derivatives that are not designated as hedges are recorded at fair value through earnings.

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The company uses short-term forward and option currency exchange contracts primarily to hedge certain balance sheet and operational exposures resulting from changes in currency exchange rates, predominantly intercompany loans and cash balances that are denominated in currencies other than the functional currencies of the respective operations.

The currency-exchange contracts principally hedge transactions denominated in Swiss franc, euro, British pounds sterling, Canadian dollars, Hong Kong dollars, Japanese yen and Czech koruna.

The currency-exchange contracts principally hedge transactions denominated in euro, Swiss franc, British pounds sterling, Canadian dollars, Czech koruna, Japanese yen and Hong Kong dollars.

The company does not hold or engage in transactions involving derivative instruments for purposes other than risk management.

5 unchanged sentences

The company uses foreign currency-denominated debt and cross-currency interest rate swaps to partially hedge its net investments in foreign operations against adverse movements in exchange rates.

The majority of the company’s euro-denominated senior notes and certain of its cross-currency interest rate swaps have been designated as, and are effective as, economic hedges of part of the net investment in a foreign operation.

A portion of the company’s euro-denominated senior notes and its cross-currency interest rate swaps have been designated as, and are effective as, economic hedges of part of the net investment in a foreign operation.

Accordingly, foreign currency transaction gains or losses due to spot rate fluctuations on the euro-denominated debt instruments and contract fair value changes on the cross-currency interest rate swaps, excluding interest accruals, are included in currency translation adjustment within other comprehensive items and shareholders’ equity.

3 unchanged sentences

Risks and uncertainties associated with the ongoing COVID-19 global pandemic materially adversely affected certain of the company’s businesses in 2020, particularly in the Analytical Instruments segment and, to a lesser extent, some businesses within the other three segments.

The extent and duration of negative impacts continuing into 2021 are uncertain and may require changes to estimates.

The negative impacts significantly lessened in 2021.

The extent and duration of negative impacts in the future, which

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

may include inflationary pressures and supply chain disruptions, are uncertain and may require changes to estimates.

Actual results could differ from those estimates.

Recent Accounting Pronouncements

In November 2021, the FASB issued new guidance to require entities to disclose information about certain types of government assistance they receive, including cash grants and tax credits.

Among other things, the new guidance requires expanded disclosure regarding the qualitative and quantitative characteristics of the nature, amount, timing, and significant terms and conditions of transactions with a government arising from a grant or other forms of assistance accounted for under a contribution model.

The company will adopt this guidance in 2022 using a prospective method.

The adoption of this guidance is not expected to have a material impact on the company’s disclosures;

however, the impact will be dependent on the extent of transactions of this nature entered into by the company in periods subsequent to the date of adoption.

In October 2021, the FASB amended guidance to recognize and measure contract assets and contract liabilities acquired in a business combination.

Generally, this new guidance will result in the company recognizing contract assets and contract liabilities at the same amounts recorded by the acquiree.

The company adopted this guidance in the fourth quarter of 2021 retrospectively to all business combinations completed in the first three quarters of 2021 and prospectively to all future business combinations.

The adoption of this guidance did not have a material impact on the company’s consolidated financial statements for acquisitions that closed in 2021;

however, the impact in future periods will be dependent on the contract assets and contract liabilities acquired in future business combinations.

In July 2021, the FASB amended guidance to require lessors to classify leases as operating leases if they have certain variable lease payment structures and would have selling losses if they were classified as sales-type or direct financing leases.

The company adopted the guidance in the third quarter of 2021 using a prospective method.

The adoption of this guidance did not have a material impact on the company’s consolidated financial statements.

In January 2020, the FASB issued new guidance to clarify the interaction of the accounting for certain equity securities, equity method investments, and certain forward contracts and purchased options.

4 unchanged sentences

Among other things, the new guidance requires the effects of enacted changes in tax laws or rates to be reflected in the annual effective tax rate computation in the interim period that includes the enactment date.

The company expects to adopt this guidance when it is effective in 2021 using a prospective method.

The adoption of this guidance is not expected to have a material impact on the company’s consolidated financial statements;

The company adopted this guidance in 2021 using a prospective method.

The adoption of this guidance did not have a material impact on the company’s consolidated financial statements;

however, the impact in future periods will be dependent on the extent of future events or conditions that would be affected such as enacted changes in tax laws or rates.

5 unchanged sentences

The adoption of this guidance did not have a material impact on the company’s disclosures.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In February 2018, the FASB issued new guidance to allow reclassifications from accumulated other comprehensive items (AOCI) to retained earnings for certain tax effects on items within AOCI resulting from the Tax Cuts and Jobs Act of 2017 (the Tax Act).

The company adopted this guidance in January 2018 and recorded the reclassifications in the period of adoption.

The adoption of this guidance increased retained earnings and reduced accumulated other comprehensive items by $ 87 million and $ 89 million, respectively, on January 1, 2018.

This guidance only relates to the effects of the Tax Act.

For all other tax law changes that have occurred or may occur in the future, the company reclassifies the tax effects to the consolidated statement of income on an item-by-item basis when the pre-tax item in AOCI is reclassified to income.

In December 2017, the SEC staff issued guidance to address the application of accounting guidance in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Act enacted on December 22, 2017.

The company reported provisional amounts in its 2017 financial statements for certain income tax effects of the Tax Act for which a reasonable estimate could be determined.

Adjustments to provisional amounts identified during the measurement period, which ended December 22, 2018, are included as adjustments to Provision for Income Taxes in 2018.

In August 2017, the FASB issued new guidance to simplify the application of hedge accounting guidance.

Among other things, the new guidance will permit more hedging strategies to qualify for hedge accounting, allow for additional time to perform an initial assessment of a hedge’s effectiveness, and permit a qualitative effectiveness test for certain hedges after initial qualification.

The company adopted this guidance in January 2018.

The adoption of this guidance increased retained earnings by $ 3 million on January 1, 2018.

In October 2016, the FASB issued new guidance eliminating the deferral of the tax effects of intra-entity asset transfers.

The impact of this guidance in future periods will be dependent on the extent of future asset transfers which usually occur in connection with planning around acquisitions and other business structuring activities.

The adoption of this guidance reduced retained earnings by $ 20 million on January 1, 2018.

In June 2016, the FASB issued new guidance to require a financial asset measured at amortized cost basis, such as accounts receivable, to be presented at the net amount expected to be collected based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount.

8 unchanged sentences

Comparative periods have not been restated.

As permitted upon transition, the company did not reassess whether any expired or existing contracts were or contained embedded leases, the lease classification for any expired or existing leases, initial direct costs for any leases, or whether land easements met the definition of a lease if they were not accounted for as leases under the prior guidance.

The adoption of this guidance increased retained earnings by $ 4 million on January 1, 2019.

In January 2016, the FASB issued new guidance which affects the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments.

This guidance requires equity investments to be measured at fair value with subsequent changes recognized in net income, except for those accounted for under the equity method or requiring consolidation.

The guidance also changes the accounting for investments without a readily determinable fair value and that do not qualify for the practical expedient permitted by the guidance to estimate fair value.

The adoption of this guidance reduced retained earnings and increased accumulated other comprehensive items by $ 1 million on January 1, 2018.

In May 2014, the FASB issued new revenue recognition guidance which provides a single comprehensive model for entities to use in accounting for revenues arising from contracts with customers and supersedes most previous revenue recognition guidance.

The new standard also requires significantly expanded disclosures regarding the qualitative and quantitative information of an entity's nature, amount, timing, and uncertainty of revenues and cash flows arising from contracts with customers.

During 2016 and 2017, the FASB issued additional guidance and clarification, including the elimination of certain SEC Staff Guidance.

The guidance is effective for the company in 2018.

The company elected to adopt this guidance through application of the modified retrospective method by applying it to contracts that were not completed as of December 31, 2017 (in addition to new contracts in 2018 and thereafter).

The adoption of this guidance increased retained earnings by $ 49 million on January 1, 2018.

As permitted upon transition, the company did not reassess whether any expired or

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Acquisitions and Dispositions

The company’s acquisitions have historically been made at prices above the determined fair value of the acquired identifiable net assets, resulting in goodwill, primarily due to expectations of the synergies that will be realized by combining the businesses.

existing contracts were or contained embedded leases, the lease classification for any expired or existing leases, initial direct costs for any leases, or whether land easements met the definition of a lease if they were not accounted for as leases under the prior guidance.

The adoption of this guidance increased retained earnings by $ 4 million on January 1, 2019.

Acquisitions and Disposition

These synergies include the elimination of redundant facilities, functions and staffing;

3 unchanged sentences

Acquisition transaction costs are recorded in selling, general and administrative expenses as incurred.

In 2020, the company acquired, within the Life Sciences Solutions segment, a U.S.-based provider of a spectral dye platform for high-resolution biology applications which will extend the company’s existing tools for protein and cell analysis applications, for a total purchase price of $ 63 million including the fair value of contingent consideration.

On April 30, 2019, the company acquired, within the Laboratory Products and Services segment, Brammer Bio for approximately $ 1.67 billion in cash.

Brammer Bio is a leading viral vector contract development and manufacturing organization for gene and cell therapies.

The acquisition expanded the segment’s contract manufacturing capabilities.

The purchase price exceeded the fair value of the identifiable net assets and, accordingly, $ 938 million was allocated to goodwill, $ 405 million of which is tax deductible.

In addition, in 2019 the company acquired, within the Analytical Instruments segment, a Slovakia-based provider of mass spectrometry software used for identification of compounds, and, within the Laboratory Products and Services segment, an active pharmaceutical ingredient manufacturing facility in Cork, Ireland, for an aggregate purchase price of $ 169 million.

On January 15, 2021, the company acquired, within the Laboratory Products and Biopharma Services segment, the Belgium-based European viral vector manufacturing business of Groupe Novasep SAS for $ 830 million in net cash consideration.

The European viral vector manufacturing business provides manufacturing services for vaccines and therapies to biotechnology companies and large biopharma customers.

The acquisition expands the segment’s capabilities for cell and gene vaccines and therapies.

The goodwill recorded as a result of this business combination is not tax deductible.

On February 25, 2021, the company acquired, within the Life Sciences Solutions segment, Mesa Biotech, Inc., a U.S.-based molecular diagnostic company, for $ 407 million in net cash consideration and contingent consideration with an initial fair value of $ 65 million due upon the completion of certain milestones.

Mesa Biotech has developed and commercialized a polymerase chain reaction (PCR) based rapid point-of-care testing platform available for detecting infectious diseases including COVID-19.

The acquisition enables the company to accelerate the availability of reliable and accurate advanced molecular diagnostics at the point of care.

The goodwill recorded as a result of this business combination is not tax deductible.

On September 30, 2021, the company assumed operating responsibility, within the Laboratory Products and Biopharma Services segment, of a new state-of-the-art biologics manufacturing facility in Lengnau, Switzerland from CSL Limited to perform pharma services for CSL with capacity to serve other customers as well.

The company expects to make fixed lease payments aggregating to $ 555 million (excluding renewals) from 2021 to 2041, with additional amounts dependent on the extent of revenues from customers of the facility other than CSL.

The goodwill recorded as a result of this business combination is not tax deductible.

On December 8, 2021, the company acquired, within the Laboratory Products and Biopharma Services segment, PPD, Inc., a U.S.-based global provider of clinical research services to the pharma and biotech industry, for $ 15.99 billion in net cash consideration and $ 43 million of equity awards exchanged.

The addition of PPD’s clinical research services enhances our offering to biotech and pharma customers by enabling them to accelerate innovation and increase their productivity within the drug development process.

The goodwill recorded as a result of this business combination is not tax deductible.

On December 30, 2021, the company acquired, within the Life Sciences Solutions segment, PeproTech, Inc., a U.S.

based developer and manufacturer of recombinant proteins, for $ 1.86 billion in net cash consideration.

PeproTech provides bioscience reagents known as recombinant proteins, including cytokines and growth factors.

The acquisition expands the segment’s bioscience offerings.

The goodwill recorded as a result of this business combination is not tax deductible.

In addition, in 2021, the company acquired, within the Life Sciences Solutions segment, cell sorting technology assets, an Ireland-based life sciences distributor and a developer of a digital PCR platform;

within the Analytical Instruments segment, a Belgium-based developer of micro-chip based technology for liquid chromatography columns;

and within the Specialty Diagnostics segment, a transplant diagnostics information system provider.

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The components of the purchase price and net assets acquired for 2021 acquisitions are as follows:

(In millions) Brammer Bio Other Total

(In millions) PPD PeproTech European Viral Vector Business Mesa Biotech Lengnau biologics manufacturing facility Other

Purchase price

$ 17,237 $ 1,947 $ 848 $ 421 $ 17 $ 298

Fair value of equity awards exchanged

Fair value of contingent consideration

— — — 65 1 117

Cash acquired

5 unchanged sentences

Property, plant and equipment

562 18 59 2 92 2

Definite-lived intangible assets:

Customer relationships

6,264 514 302 — — 2

Product technology

— 282 25 279 — 224

603 — — 2 — 2

Backlog 1,060 — — — — —

13,781 1,190 600 237 18 198

1,108 11 3 3 376 2

Contract liabilities ( 1,570 ) — ( 59 ) — — ( 1 )

Deferred tax liabilities

Deferred tax assets (liabilities)

( 1,803 ) ( 193 ) ( 80 ) ( 72 ) — ( 28 )

Finance lease liabilities

( 86 ) — ( 24 ) — ( 82 ) —

( 4,299 ) — — — — —

Other liabilities assumed

( 1,972 ) ( 21 ) ( 35 ) ( 33 ) ( 386 ) ( 11 )

Redeemable noncontrolling interest ( 122 ) — — — — —

$ 16,036 $ 1,864 $ 830 $ 472 $ 18 $ 402

The weighted-average amortization periods for definite-lived intangible assets acquired in 2019 are 14 years for customer relationships, 13 years for product technology and 2 years for tradenames.

The weighted-average amortization periods for definite-lived intangible assets acquired in 2021 are 17 years for customer relationships, 11 years for product technology, 7 years for tradenames and 3 years for backlog.

The weighted average amortization period for all definite-lived intangible assets acquired in 2021 is 14 years.

The preliminary allocations of the purchase price for the acquisitions of the Lengnau biologics manufacturing facility, PPD and PeproTech were based on estimates of the fair value of the net assets acquired and are subject to adjustment upon finalization, largely with respect to acquired intangible assets, lease assets and liabilities, and the related deferred taxes.

Measurements of these items inherently require significant estimates and assumptions.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

On October 25, 2018, the company acquired, within the Life Sciences Solutions segment, Becton Dickinson and Company's Advanced Bioprocessing business for $ 477 million in cash.

This North America-based business adds complementary cell culture products that expanded the segment’s bioproduction offerings to help customers increase yield during production of biologic drugs.

The purchase price exceeded the fair value of the identifiable net assets and, accordingly, $ 146 million was allocated to goodwill, all of which is tax deductible.

In 2018, the company acquired, within the Life Sciences Solutions segment, a North America-based provider of a rapid DNA platform for use in forensics and law enforcement applications, for an aggregate purchase price of $ 65 million.

Unaudited Pro Forma Information

The following unaudited pro forma information provides the effect of the company's 2021 acquisition of PPD as if the acquisition had occurred on January 1, 2020:

December 31, December 31,

(In millions) 2021 2020

Revenues $ 44,886 $ 36,887

Net income attributable to Thermo Fisher Scientific Inc.

$ 7,369 $ 5,361

The historical consolidated financial information of the company and PPD has been adjusted in the pro forma information to give effect to pro forma events that are directly attributable to the acquisitions and related financing arrangements and are factually supportable.

To reflect the acquisition of PPD as if it had occurred on January 1, 2020, the unaudited pro forma results include adjustments to reflect, among other things, the incremental intangible asset amortization to be incurred based on the preliminary values of each identifiable intangible asset and the interest expense from debt financings obtained to partially fund the cash consideration transferred.

Pro forma adjustments were tax effected at the company's historical statutory rates in effect for the respective periods.

The unaudited pro forma amounts are not necessarily indicative of the combined results of operations that would have been realized had the acquisitions and related financings occurred on the aforementioned dates, nor are they meant to be indicative of any anticipated combined results of operations that the company will experience after the transaction.

In addition, the amounts do not include any adjustments for actions that may be taken following the completion of the transaction, such as expected cost savings, operating synergies, or revenue enhancements that may be realized subsequent to the transaction.

Pro forma net income attributable to Thermo Fisher Scientific Inc.

for the year ended December 31, 2021, excludes $ 312 million of transaction costs, initial restructuring costs, and debt extinguishment costs directly attributable to the PPD acquisition that were included in the determination of net income attributable to Thermo Fisher Scientific Inc.

for that period.

These items have reduced pro forma net income attributable to Thermo Fisher Scientific Inc.

for the year ended December 31, 2020, by $ 197 million.

The company’s results would not have been materially different from its pro forma results had the company’s other 2021 acquisitions occurred at the beginning of 2020.

PPD’s revenues and losses attributable to Thermo Fisher Scientific Inc.

in 2021, subsequent to the acquisition date, were $ 378 million and $( 60 ) million, respectively.

The loss includes non-recurring transaction and compensation costs.

On April 30, 2019, the company acquired, within the Laboratory Products and Biopharma Services segment, Brammer Bio for approximately $ 1.67 billion in cash.

Brammer Bio is a leading viral vector contract development and manufacturing organization for gene and cell therapies.

The acquisition expanded the segment’s contract manufacturing capabilities.

The purchase price exceeded the fair value of the identifiable net assets and, accordingly, $ 938 million was allocated to goodwill, $ 405 million of which is tax deductible.

In addition, in 2019 the company acquired, within the Analytical Instruments segment, a Slovakia-based provider of mass spectrometry software used for identification of compounds, and, within the Laboratory Products and Biopharma Services segment, an active pharmaceutical ingredient manufacturing facility in Cork, Ireland, for an aggregate purchase price of $ 169 million.

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The components of the purchase price and net assets acquired for 2019 acquisitions are as follows:

(In millions) Advanced Bioprocessing business Other Total

(In millions) Brammer Bio Other

Purchase price

$ 1,710 $ 169

Fair value of contingent consideration

Cash acquired

$ 1,674 $ 169

$ 477 $ 65 $ 542

Net assets acquired

Current assets

$ 53 $ 4 $ 57

Property, plant and equipment

2 unchanged sentences

Product technology

Indefinite-lived intangible assets:

In-process research and development

Contract liabilities ( 110 ) —

Deferred tax liabilities

8 unchanged sentences

The sale of this business resulted in a pre-tax gain of approximately $ 478 million, included in restructuring and other (income) costs, net.

Revenues in 2019, through the date of sale, and the full year 2018 of the business sold were approximately $ 115 million and $ 238 million, respectively, net of retained sales through the company's healthcare market and research and safety market channel businesses.

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Revenues in 2019, through the date of sale, of the business sold were approximately $ 115 million, net of retained sales through the company's healthcare market and research and safety market channels.

Revenues and Contract-related Balances

Disaggregated Revenues

6 unchanged sentences

$ 39,211 $ 32,218 $ 25,542

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Revenues by geographic region based on customer location are as follows:

13 unchanged sentences

The company will recognize revenues for these performance obligations as they are satisfied, approximately 59 % of which is expected to occur within the next twelve months .

Amounts expected to occur thereafter generally relate to contract manufacturing, clinical research and extended warranty service agreements, which typically have durations of three to five years.

Contract-related Balances

Noncurrent contract assets are included within other assets in the accompanying balance sheet.

Noncurrent contract liabilities are included within other long-term liabilities in the accompanying balance sheet.

Contract asset and liability balances are as follows:

December 31, December 31,

(In millions) 2021 2020

Current contract assets, net $ 968 $ 731

Noncurrent contract assets, net 9 11

Current contract liabilities 2,655 1,271

Noncurrent contract liabilities 1,238 763

Substantially all of the current contract liabilities balance at December 31, 2020 and 2019 was recognized in revenues during 2021 and 2020, respectively.

Business Segment and Geographical Information

10 unchanged sentences

These products are used by customers in healthcare, clinical, pharmaceutical, industrial and food safety laboratories.

Laboratory Products and Services:

Laboratory Products and Biopharma Services (formerly known as Laboratory Products and Services):

provides virtually everything needed for the laboratory, including a combination of self-manufactured and sourced products for customers in research, academic, government, industrial and healthcare settings.

The segment also includes a comprehensive offering of outsourced services used by the pharmaceutical and biotech industries for drug development, clinical trials logistics and commercial drug manufacturing.

The company’s management evaluates segment operating performance based on operating income before certain charges/credits to cost of revenues and selling, general and administrative expenses, principally associated with acquisition accounting;

restructuring and other costs/income including costs arising from facility consolidations such as severance and abandoned lease

The segment also includes a comprehensive offering of

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

expense and gains and losses from the sale of real estate and product lines as well as from significant litigation-related matters;

outsourced services used by the pharmaceutical and biotech industries for drug development, clinical trials logistics, clinical research services and commercial drug manufacturing.

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 as well as from significant litigation-related matters;

and amortization of acquisition-related intangible assets.

8 unchanged sentences

5,659 5,343 3,718

Laboratory Products and Services

Laboratory Products and Biopharma Services

14,862 12,245 10,599

9 unchanged sentences

1,280 1,368 930

Laboratory Products and Services

Laboratory Products and Biopharma Services

1,844 1,271 1,324

1 unchanged sentence

12,138 9,556 5,973

Cost of revenues charges, net

Cost of revenues charges

( 8 ) ( 6 ) ( 17 )

Selling, general and administrative credits (charges), net

Selling, general and administrative (charges) credits

( 144 ) 10 ( 62 )

Restructuring and other (costs) income, net

Restructuring and other (costs) income

( 197 ) ( 99 ) 413

5 unchanged sentences

Interest expense ( 536 ) ( 553 ) ( 676 )

Other (expense) income, net

Other income/(expense)

( 694 ) ( 76 ) ( 70 )

5 unchanged sentences

Specialty Diagnostics

Laboratory Products and Services

Laboratory Products and Biopharma Services

Consolidated depreciation

$ 831 $ 658 $ 564

Cost of revenues charges included in the above table consist of charges for the sale of inventories revalued at the date of acquisition and accelerated depreciation on fixed assets to estimated disposal value in connection with the consolidation of operations.

Selling, general and administrative charges/credits included in the above table consist of third-party transaction/integration costs (including reimbursement thereof) related to recent/terminated acquisitions, charges/credits for changes in estimates of contingent acquisition consideration, and charges/credits related to product liability litigation.

THERMO FISHER SCIENTIFIC INC.

7 unchanged sentences

6,010 6,534 5,867

Laboratory Products and Services

Laboratory Products and Biopharma Services

52,639 22,711 21,761

8 unchanged sentences

Specialty Diagnostics

Laboratory Products and Services

Laboratory Products and Biopharma Services

1,327 772 554

Corporate/other

17 unchanged sentences

(b) Revenues are attributed to countries based on customer location.

Other Expense/Income, Net

In all periods, other expense/income, net includes currency transaction gains and losses on monetary assets and liabilities and net periodic pension benefit cost/income, excluding the service cost component which is included in operating expenses on the accompanying statement of income.

In 2020, other expense, net includes $ 81 million of financing costs for a terminated acquisition, primarily for loan commitment fees and entering into hedging contracts, offset in part by $ 10 million of net gains on investments.

Other Income/(Expense)

In all periods, other income/(expense) includes currency transaction gains and losses on non-operating monetary assets and liabilities and net periodic pension benefit cost/income, excluding the service cost component which is included in operating expenses on the accompanying statement of income.

In 2021, other income/(expense) includes $ 767 million of losses on the early extinguishment of debt (Note 10), $ 36 million of financing costs associated with obtaining bridge financing commitments in connection with the agreement to acquire PPD (Note 2), offset in part by $ 66 million of net gains on investments.

The company had a cash outlay of $ 36 million in 2021 associated with obtaining the bridge financing commitments, included in other financing activities, net, in the accompanying statement of cash flows.

In 2020, other income/(expense) includes $ 81 million of financing costs for a terminated acquisition, primarily for loan commitment fees and entering into hedging contracts and $ 42 million reclassified from accumulated other comprehensive items related to a hedge arrangement (Note 14), offset in part by $ 10 million of net gains on investments.

The company had a cash outlay of $ 51 million in 2020 associated with obtaining the loan commitments included in other financing activities, net, in the accompanying statement of cash flows.

In 2019, other expense, net includes $ 184 million of losses on the early extinguishment of debt (Note 10), offset in part by $ 44 million of net gains on investments.

The investment gains include a $ 28 million gain on the sale of a joint venture for net proceeds of $ 42 million.

In 2018, other expense, net includes $ 15 million of net losses on investments.

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In 2019, other income/(expense) includes $ 184 million of losses on the early extinguishment of debt (Note 10), offset in part by $ 44 million of net gains on investments.

The investment gains include a $ 28 million gain on the sale of a joint venture for net proceeds of $ 42 million.

Stock-based Compensation Expense

38 unchanged sentences

Outstanding at December 31, 2020

Issued in connection with an acquisition

( 1.4 ) 183.63

20 unchanged sentences

Unvested at December 31, 2020

Issued in connection with an acquisition

( 0.5 ) 295.70

25 unchanged sentences

The company also maintains postretirement healthcare programs at several acquired businesses where certain employees are eligible to participate.

The costs of the postretirement healthcare programs are generally funded on a self-insured and insured-premium basis.

The liabilities and costs associated with the company’s postretirement healthcare programs are generally funded on a self-insured and insured-premium basis and are not material for any period presented.

The company recognizes the funded status of defined benefit pension and other postretirement benefit plans as an asset or liability.

10 unchanged sentences

The following table provides a reconciliation of benefit obligations and plan assets of the company’s domestic and non-U.S.

pension plans and postretirement benefit plans:

pension plans:

Domestic pension

benefits Non-U.S.

Benefits Postretirement

(In millions) 2021 2020 2021 2020

2 unchanged sentences

$ 1,302 $ 1,302 $ 1,486 $ 1,303

— — — ( 23 ) — —

Service costs

— — 24 23 1 1

Interest costs

— — ( 7 ) ( 38 )

— — ( 38 ) ( 34 ) — —

Plan participants' contributions

4 unchanged sentences

Currency translation and other

— — ( 54 ) 81

Benefit obligation at end of year

3 unchanged sentences

$ 1,267 $ 1,201 $ 1,160 $ 986

— — — ( 15 ) — —

Acquisitions — — 158 —

Actual return on plan assets

138 183 92 60 2 2

Employer contribution

— — ( 7 ) ( 38 )

— — ( 38 ) ( 34 ) — —

Plan participants' contributions

24 unchanged sentences

$ 157 $ 142 $ 164 $ 240

For both domestic and non-U.S.

pension plans, actuarial losses experienced in 2020 and 2019 were principally driven by decreases in the weighted average discount rates that were used to determine the projected benefit obligation.

For domestic pension plans, the 2020 actuarial losses were partially offset by gains recognized due to the adoption of an updated mortality assumption.

For domestic pension plans, actuarial losses experienced in 2021 were driven by differences between actual and expected returns on plan assets for certain portions of plan benefits indexed to asset returns, which were partially offset by actuarial gains due to increases in the weighted average discount rates used to determine the projected benefit obligation differences.

pension plans, actuarial gains experienced in 2021 were principally driven by increases in the weighted average discount rates used to determine the projected benefit obligation.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For both domestic and non-U.S.

pension plans, actuarial losses experienced in 2020 were principally driven by decreases in the weighted average discount rates used to determine the projected benefit obligation.

For domestic pension plans, the 2020 actuarial losses were partially offset by gains recognized due to the adoption of an updated mortality assumption.

The actuarial assumptions used to compute the funded status for the plans are based upon information available as of December 31, 2021 and 2020 and are as follows:

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benefits Non-U.S.

Benefits Postretirement

2021 2020 2021 2020

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Interest crediting rate for cash balance plans

2.16 % 3.02 % 1.25 % 1.00 % N/A N/A

Average rate of increase in employee compensation

N/A N/A 2.30 % 2.27 % N/A N/A

Initial healthcare cost trend rate

2.58 % 2.16 % 1.25 % 1.25 %

Ultimate healthcare cost trend rate

4.39 % 4.48 %

The ultimate healthcare cost trend rates for the postretirement benefit plans are expected to be reached between 2021 and 2040 .

Average rate of increase in employee compensation

N/A N/A 2.73 % 2.30 %

The actuarial assumptions used to compute the net periodic pension benefit cost (income) are based upon information available as of the beginning of the year, as presented in the following table:

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The expected rate of compensation increase reflects the long-term average rate of salary increases and is based on historic salary increase experience and management’s expectations of future salary increases.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The projected benefit obligation and fair value of plan assets for the company’s qualified and non-qualified pension plans with projected benefit obligations in excess of plan assets are as follows:

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Fair value of plan assets

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The accumulated benefit obligation and fair value of plan assets for the company's qualified and non-qualified pension plans with accumulated benefit obligations in excess of plan assets are as follows:

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Components of net benefit cost (income)

Service cost-benefits earned

$ — $ — $ — $ 27 $ 24 $ 23

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Amortization of actuarial net loss

7 6 2 12 10 6

Amortization of prior service benefit

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$ ( 10 ) $ ( 6 ) $ ( 8 ) $ 31 $ 40 $ 26

The net periodic postretirement benefit cost was not material in 2020, 2019 and 2018.

Expected benefit payments are estimated using the same assumptions used in determining the company’s benefit obligation at December 31, 2021.

3 unchanged sentences

benefits Non-U.S.

Benefits Post-

Expected benefit payments

1 unchanged sentence

2027-2031 368 307

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Domestic Pension Plan Assets

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Several of the plans have contracts with insurance companies whereby the market risks of the benefit obligations are borne by the insurance companies.

When assets are held directly in investments, generally the objective is to invest in a portfolio of diversified assets with a variety of fund managers.

The investments may include equity funds, fixed income funds, hedge funds, multi-asset funds, alternative investments and derivative funds with the target asset allocations ranging from approximately 5 % - 25 % for equity funds, 40 % - 90 % for fixed income funds, 0 % - 10 % for hedge funds, 0 % - 5 % for multi-asset funds, 0 % to 5 % for alternative investments and 0 % - 20 % for funds holding derivatives.

The derivatives held by the funds are primarily interest rate swaps intended to match the movements in the plan liabilities as well as equity futures in a synthetic equity fund which provide targeted exposure to equity markets without the fund holding individual equity positions.

When assets are held directly in investments, generally the objective is to invest in a portfolio of

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

diversified assets with a variety of fund managers.

The investments may include equity funds, fixed income funds, hedge funds, multi-asset funds, alternative investments and derivative funds with the target asset allocations ranging from approximately 0 % - 25 % for equity funds, 40 % - 90 % for fixed income funds, 0 % - 35 % for multi-asset funds, and 0 % - 30 % for funds holding derivatives.

The derivatives held by the funds are primarily interest rate swaps intended to match the movements in the plan liabilities.

Each plan maintains enough liquidity at all times to meet the near-term benefit payments.

The fair values of the company’s plan assets at December 31, 2021 and 2020, by asset category are as follows:

December 31, Quoted Prices

December 31, Quoted

markets Significant

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, Quoted Prices

December 31, Quoted

markets Significant

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Total domestic pension plans $ 1,267 $ — $ — $ — $ 1,267

$ 1,201 $ — $ — $ — $ 1,201

pension plan assets

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pension plans $ 1,160 $ 7 $ 262 $ — $ 891

$ 986 $ 9 $ 237 $ — $ 740

(a) Investments measured at the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy.

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Income before income taxes

$ 8,841 $ 7,230 $ 4,072

THERMO FISHER SCIENTIFIC INC.

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Federal $ 446 $ 521 $ 267

1,148 423 544

State 160 175 62

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Intra-entity transfers

( 284 ) — ( 79 )

Foreign exchange loss on inter-company debt refinancing

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Valuation allowance

379 ( 4 ) 260

Transition tax and other impacts of U.S.

Withholding taxes

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federal statutory rate.

During 2021, the company recorded a $ 188 million income tax benefit related to the deferred tax implications of an intra-entity transfer of assets.

Also in 2021, the company recorded a $ 96 million income tax benefit related to a capital loss resulting from certain intra-entity transactions.

During 2020, the company settled an IRS audit relating to the 2014, 2015, and 2016 tax years.

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The company recorded $ 53 million of charges for expired tax credits and other related components of the settlement.

The company recorded a

The company recorded a charge of $ 156 million to establish a valuation allowance against certain U.S.

foreign tax credits which the company believes will more likely than not expire unutilized.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

charge of $ 156 million to establish a valuation allowance against certain U.S.

foreign tax credits which the company believes will more likely than not expire unutilized.

Tax Cuts and Jobs Act of 2017

On December 22, 2017, the Tax Cuts and Jobs Act of 2017 was enacted.

The Tax Act includes significant changes to existing U.S.

tax laws that affect the company, including a reduction of the U.S.

corporate income tax rate beginning in 2018 and creation of a territorial tax system with a one-time transition tax on deemed repatriated earnings and profits of foreign subsidiaries (transition tax).

The company recognized a net charge for certain aspects of the Tax Act in its 2017 financial statements for which the accounting was provisional, but a reasonable estimate could be determined.

During 2018, the company completed its accounting for the income tax effects of the Tax Act and recognized net adjustments (detailed below) to the provisional amounts, totaling a net charge of $ 68 million, as a component of income tax expense.

The transition tax is based on the company's total post-1986 earnings and profits, the tax on which was previously deferred from U.S.

income taxes under U.S.

The company recorded a provisional amount for the transition tax liability for each of the foreign subsidiaries at December 31, 2017.

After further analysis of new U.S.

Treasury guidance, available tax accounting methods and elections, legislative updates, regulations, earnings and profits computations and foreign taxes, the company finalized the calculations of the transition tax liability during 2018.

The increase in the liability for the transition tax in 2018 consisted of an incremental provision of $ 117 million offset in part by a $ 49 million reduction of related unrecognized tax benefits established in 2017.

During 2019, the company recorded a net tax provision of $ 1 million to adjust the impacts of U.S.

tax reform based on final regulations issued by the U.S.

Treasury in 2019.

The income tax provision consists of an incremental charge of $ 8 million offset by a $ 7 million reduction of related unrecognized tax benefits.

The Tax Act included a provision for global intangible low-taxed income.

The company has adopted a policy to account for this provision as a period cost.

Other Tax Impacts

In 2020, the company recorded a $ 263 million income tax benefit related to a domestication transaction involving the transfer of certain non-U.S.

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Also in 2019, the company recorded a $ 79 million benefit related to the deferred tax implications of intra-entity transactions which included a tax benefit to release a valuation allowance against net operating losses previously determined to be unrealizable.

In 2018, the provision for income taxes also included a $ 71 million charge to establish a valuation allowance against net operating losses that will not be utilized as a result of the 2019 sale of the Anatomical Pathology business (Note 2).

The foreign tax credits discussed below are the result of foreign earnings and profits remitted or deemed remitted to the U.S.

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In 2021, 2020 and 2019, the company's tax provision was reduced by $ 124 million, $ 114 million and $ 80 million, respectively, of such benefits.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Net deferred tax asset (liability) in the accompanying balance sheet consists of the following:

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Deferred interest 295 227

Other capitalized costs

Unrealized losses on hedging instruments

Deferred tax assets (liabilities), net before valuation allowance

Unrealized (gains) losses on hedging instruments

Deferred tax liabilities, net before valuation allowance

( 1,861 ) ( 172 )

Valuation allowance

Deferred tax assets (liabilities), net

Deferred tax liabilities, net

$ ( 2,829 ) $ ( 1,105 )

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At December 31, 2021, all of the company’s valuation allowance relates to deferred tax assets, primarily net operating losses and disallowed interest expense carryforward, for which any subsequently recognized tax benefits will reduce income tax expense.

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The changes in the valuation allowance are as follows:

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(In millions) 2021 2020 2019

Balance at Beginning of Year

Beginning balance

$ 933 $ 408 $ 471

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( 19 ) 11 ( 3 )

Balance at End of Year $ 933 $ 408 $ 471

At December 31, 2020, the company had federal, state and non-U.S.

net operating loss carryforwards of $ 383 million, $ 1.69 billion and $ 5.75 billion, respectively.

Ending balance $ 968 $ 933 $ 408

At December 31, 2021, the company had net federal, state and non-U.S.

net operating loss carryforwards of $ 72 million, $ 88 million and $ 1.18 billion, respectively.

Use of the carryforwards is limited based on the future income of certain subsidiaries.

The federal and state net operating loss carryforwards expire in the years 2022 through 2041.

Of the non-U.S.

net operating loss carryforwards, $ 1.62 billion expire in the years 2025 through 2040, and the remainder do not expire.

Of the net non-U.S.

net operating loss carryforwards, $ 419 million expire in the years 2025 through 2041, and the remainder do not expire.

At December 31, 2021, the company had foreign tax credit carryforwards of $ 610 million and deferred interest carryforwards of $ 295 million.

The foreign tax credit carryforwards will expire in the years 2022 through 2030 while deferred interest carryforwards do not expire.

As a result of the Tax Act, U.S.

federal taxes have been recorded on $ 24 billion of undistributed foreign earnings as of December 31, 2021.

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subsidiaries in the future when they can be made at no net tax cost.

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Unrecognized Tax Benefits

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(In millions) 2021 2020 2019

Balance at Beginning of Year

Beginning balance

$ 1,091 $ 1,552 $ 1,442

Reductions due to acquisitions

Additions due to acquisitions

Additions for tax positions of current year

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( 53 ) ( 173 ) ( 5 )

Balance at End of Year

Ending balance

$ 1,124 $ 1,091 $ 1,552

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The company does not expect its unrecognized tax benefits to change significantly over the next twelve months.

During 2021, the company’s unrecognized tax benefits increased by $ 80 million as a result of uncertain tax positions relating to foreign tax positions and decreased $ 75 million relating to U.S.

federal and state tax positions.

The company also assumed $ 26 million of uncertain tax benefits as part of the acquisition of PPD.

During 2020, the company’s unrecognized tax benefits decreased $ 51 million as a result of uncertain tax positions relating to foreign tax positions and $ 410 million relating to U.S.

2 unchanged sentences

federal and state tax positions.

During 2018, the company's unrecognized tax benefits increased $ 85 million as a result of uncertain tax positions relating to foreign tax positions and $ 45 million relating to U.S.

federal and state tax positions.

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The company classified interest and penalties related to unrecognized tax benefits as income tax expense.

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(In millions except per share amounts) 2021 2020 2019

Net income attributable to Thermo Fisher Scientific Inc.

$ 7,725 $ 6,375 $ 3,696

1 unchanged sentence

Plus effect of:

Stock options and restricted units

stock options and restricted stock units

Diluted weighted average shares

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Antidilutive stock options excluded from diluted weighted average shares

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Debt and Other Financing Arrangements

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(Dollars in millions) 2021 2021 2020

Floating Rate 2 -Year Senior Notes, Due 8/7/2020 (euro-denominated)

Commercial Paper 0.01 % $ 2,522 $ —

2.15 % 7 -Year Senior Notes, Due 7/21/2022 (euro-denominated)

3.00 % 7 -Year Senior Notes, Due 4/15/2023

Floating Rate (SOFR + 0.35 %) 1.5 -Year Senior Notes, Due 4/18/2023

Floating Rate (SOFR + 0.39 %) 2 -Year Senior Notes, Due 10/18/2023

0.797 % 2 -Year Senior Notes, Due 10/18/2023

1.03 % 1,350 —

Floating Rate (EURIBOR + 0.20 %) 2 -Year Senior Notes Due 11/18/2023 (euro-denominated)

0.00 % 1,933 —

0.000 % 2 -Year Senior Notes Due 11/18/2023 (euro-denominated)

4.15 % 10 -Year Senior Notes, Due 2/1/2024

0.75 % 8 -Year Senior Notes, Due 9/12/2024 (euro-denominated)

0.94 % 1,137 1,222

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1.42 % 2,500 —

Floating Rate (SOFR + 0.53 %) 3 -Year Senior Notes, Due 10/18/2024

0.125 % 5.5 -Year Senior Notes, Due 3/1/2025 (euro-denominated)

0.41 % 910 977

4.133 % 5 -Year Senior Notes, Due 3/25/2025

2.00 % 10 -Year Senior Notes, Due 4/15/2025 (euro-denominated)

2.10 % 728 782

0.000 % 4 -Year Senior Notes Due 11/18/2025 (euro-denominated)

3.65 % 10 -Year Senior Notes, Due 12/15/2025

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2.95 % 10 -Year Senior Notes, Due 9/19/2026

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Effective interest rate at December 31, December 31, December 31,

(Dollars in millions) 2021 2021 2020

1.45 % 10 -Year Senior Notes, Due 3/16/2027 (euro-denominated)

1.66 % 568 611

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3.20 % 10 -Year Senior Notes, Due 8/15/2027

3.19 % 1,200 1,200

0.50 % 8.5 -Year Senior Notes, Due 3/1/2028 (euro-denominated)

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1.375 % 12 -Year Senior Notes, Due 9/12/2028 (euro-denominated)

3.20 % 10 -Year Senior Notes, Due 8/15/2027

1.46 % 682 733

1.750 % 7 -Year Senior Notes, Due 10/15/2028

1.95 % 12 -Year Senior Notes, Due 7/24/2029 (euro-denominated)

2.08 % 796 855

2.60 % 10 -Year Senior Notes, Due 10/1/2029

2.74 % 900 900

4.497 % 10 -Year Senior Notes, Due 3/25/2030

0.80 % 9 -Year Senior Notes, Due 10/18/2030 (euro-denominated)

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2.23 % 1,200 —

4.497 % 10 -Year Senior Notes, Due 3/25/2030

2.375 % 12 -Year Senior Notes, Due 4/15/2032 (euro-denominated)

2.55 % 682 733

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2.875 % 20 -Year Senior Notes, Due 7/24/2037 (euro-denominated)

2.94 % 796 855

1.50 % 20 -Year Senior Notes, Due 10/1/2039 (euro-denominated)

1.73 % 1,023 1,099

2.80 % 20 -Year Senior Notes, Due 10/15/2041

2.90 % 1,200 —

1.625 % 20 -Year Senior Notes, Due 10/18/2041 (euro-denominated)

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1.98 % 1,137 1,222

2.00 % 30 -Year Senior Notes, Due 10/18/2051 (euro-denominated)

Total borrowings at par value

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34,670 21,728

Finance lease liabilities

Short-term obligations and current maturities

Long-term obligations $ 32,333 $ 19,107

$ 19,107 $ 17,076

The effective interest rates for the fixed-rate debt include the stated interest on the notes, the accretion of any discount or amortization of any premium, the amortization of any debt issuance costs and, if applicable, adjustments related to hedging.

See Note 14 for fair value information pertaining to the company’s long-term obligations.

SOFR - Secured Overnight Financing Rate

EURIBOR - Euro Interbank Offered Rate

The effective interest rates for the fixed-rate debt include the stated interest on the notes, the accretion of any discount and the amortization of any debt issuance costs.

See Note 14 for fair value information pertaining to the company’s long-term borrowings.

THERMO FISHER SCIENTIFIC INC.

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As of December 31, 2021, the annual repayment requirements for debt obligations are as follows:

(In millions)

(In millions) Borrowings Finance Lease Liabilities

2022 $ 2,522 $ 15

2023 5,396 12

2024 4,138 12

2025 2,610 12

2027 and thereafter 19,508 137

$ 34,971 $ 200

In addition to available borrowings under the company’s revolving credit agreements, discussed below, the company had unused lines of credit of $ 78 million as of December 31, 2021.

1 unchanged sentence

Credit Facilities

The company has a revolving credit facility (the Facility) with a bank group that provides for up to $ 3.00 billion of unsecured multi-currency revolving credit.

The Facility expires on December 4, 2025.

The revolving credit agreement calls for interest at either a LIBOR-based rate (or LIBOR successor rate), a EURIBOR-based rate (for funds drawn in euro) or a rate based on the prime lending rate of the agent bank, at the company’s option.

On January 7, 2022, the company entered into a new revolving credit facility (the Facility) with a bank group that provides for up to $ 5.00 billion of unsecured multi-currency revolving credit The Facility replaces the company’s $ 3.00 billion credit facility which was in place at December 31, 2021 (the prior credit facility).

The Facility expires on January 7, 2027.

The revolving credit agreement calls for interest at either a Term SOFR, a EURIBOR-based rate (for funds drawn in euro) or a rate based on the prime lending rate of the agent bank, at the company’s option.

The agreement contains affirmative, negative and financial covenants, and events of default customary for facilities of this type.

1 unchanged sentence

Specifically, the company has agreed that, so long as any lender has any commitment under the Facility, any letter of credit is outstanding under the Facility, or any loan or other obligation is outstanding under the Facility, it will maintain a minimum Consolidated Interest Coverage Ratio of 3.5 :1.0 as of the last day of any fiscal quarter.

As of December 31, 2020, no borrowings were outstanding under the Facility, although available capacity was reduced by approximately $ 31 million as a result of outstanding letters of credit.

As of December 31, 2021, no borrowings were outstanding under the prior credit facility, although available capacity was reduced by approximately $ 4 million as a result of outstanding letters of credit.

Commercial Paper Programs

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Under both programs, the CP Notes are issued at a discount from par (or premium to par, in the case of negative interest rates), or, alternatively, are sold at par and bear varying interest rates on a fixed or floating basis.

As of December 31, 2020, there were no outstanding borrowings under these programs.

Interest is payable annually on the euro-denominated senior notes and semi-annually on all other senior notes.

Each of the notes may be redeemed at a redemption price of 100% of the principal amount plus a specified make-whole premium and accrued interest.

As of December 31, 2021, there were $ 2.52 billion outstanding borrowings under these programs.

Interest is payable quarterly on the floating rate senior notes, annually on the euro-denominated fixed rate senior notes and semi-annually on all other senior notes.

Each of the fixed rate senior notes may be redeemed at a redemption price of 100% of the principal amount plus a specified make-whole premium and accrued interest.

Except for the euro-denominated floating rate senior notes, which may not be redeemed early, the floating rate senior notes may be redeemed in whole or in part on or after their applicable call dates at a redemption price of 100% of the principal amount plus accrued interest.

The company is subject to certain affirmative and negative covenants under the indentures governing the senior notes, the most restrictive of which limits the ability of the company to pledge principal properties as security under borrowing arrangements.

The company was in compliance with all covenants at December 31, 2021.

The company intends to allocate an amount equal to the net proceeds from the 0.000% senior notes due 2025 to finance or refinance, in whole or in part, certain green or social eligible projects.

Pending allocation to green or social eligible projects, such net proceeds may be temporarily invested in cash, cash equivalents, short-term investments, or used to repay other borrowings.

In 2021, the company redeemed some of its existing senior notes.

In connection with these redemptions, the company incurred $ 767 million of losses on the early extinguishment of debt included in other income/(expense) on the accompanying

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

statement of income.

Upon redemption of the senior notes, the company terminated the related fixed to floating rate interest rate swap arrangements and received $ 22 million, included in other financing activities, net, in the accompanying statement of cash flows.

In 2019, the company refinanced certain of its debt by issuing new senior notes and using the proceeds to redeem some of its existing senior notes.

In connection with these redemptions, the company incurred $ 184 million of losses on the early extinguishment of debt included in Other Expense, Net on the accompanying statement of income.

In connection with these redemptions, the company incurred $ 184 million of losses on the early extinguishment of debt included in other income/(expense) on the accompanying statement of income.

Upon redemption of the senior notes, the company terminated the related fixed to floating rate interest rate swap arrangements and paid $ 17 million, included in other financing activities, net, in the accompanying statement of cash flows.

The company also terminated related cross-currency interest rate swap arrangements and received $ 44 million, included in other investing activities, net, in the accompanying statement of cash flows.

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Interest Rate Swap Arrangements

The company has entered into LIBOR-based interest rate swap arrangements with various banks.

The aggregate amounts of the swaps are equal to the principal amount of the notes and the payment dates of the swaps coincide with the interest payment dates of the note.

The swap contracts provide for the company to pay a variable interest rate and receive a fixed rate.

The variable interest rates reset monthly.

The swaps have been accounted for as fair value hedges of the notes.

See Note 14 for additional information on the interest rate swap arrangements and related cross-currency interest rate swap arrangements.

The following table summarizes the outstanding interest rate swap arrangements on the company's senior notes at December 31, 2020:

Aggregate Notional Amount Pay Rate as of

(Dollars in millions) Pay Rate December 31,

2020 Receive Rate

3.00% Senior Notes due 2023 (a) $ 1,000 1-month LIBOR + 1.7640 %

1.9226 % 3.00 %

(a) The payments on $ 900 million notional value of these interest rate swaps are offset in part by cross-currency interest rate swaps which effectively reduced the pay rate as of December 31, 2020 from 1.92 % to a weighted average of 1.05 %.

The company has entered into $ 900 million notional value of cross-currency interest rate swaps, which effectively convert a portion of the semi-annual payments related to the variable rate, U.S.

dollar denominated, LIBOR-based interest rate swaps to payments on variable rate, euro denominated, EURIBOR-based cross-currency interest rate swaps.

Debt Redemptions

In December 2020, the company gave notice of its intention to redeem the following senior notes in January 2021:

Principal Value

(In millions) Redeemed

2.15 % 7 -Year Senior Notes, Due 7/21/2022 (euro-denominated)

3.00 % 7 -Year Senior Notes, Due 4/15/2023

4.15 % 10 -Year Senior Notes, Due 2/1/2024

The redemptions were completed on January 15, 2021.

In connection with the redemptions, the company received $ 22 million upon the termination of the fixed to floating rate swap arrangements on the redeemed senior notes.

The company incurred approximately $ 197 million of losses on the early extinguishment of debt in January 2021 due to these redemptions.

In February 2022, the company redeemed all of its 3.650% Senior Notes due 2025.

In connection with the redemption the company incurred approximately $ 26 million of losses on the early extinguishment of debt in the first quarter of 2022.

Thermo Fisher Scientific (Finance I) B.V.

(Thermo Fisher International), a wholly-owned finance subsidiary of the company, issued each of the Floating Rate Senior Notes due 2023, the 0.00% Senior Notes due 2023, the 0.00% Senior Notes due 2025, the 0.80% Senior Notes due 2030, the 1.125% Senior Notes due 2033, the 1.625% Senior Notes due 2041, and the 2.00% Senior Notes due 2051 included in the table above (collectively, the “Euronotes”) in registered public offerings.

The company has fully and unconditionally guaranteed all of Thermo Fisher International’s obligations under the Euronotes and all of Thermo Fisher International’s other debt securities, and no other subsidiary of the company will guarantee these obligations.

Thermo Fisher International is a “finance subsidiary” as defined in Rule 13-01(a)(4)(vi) of the Exchange Act, with no assets or operations other than those related to the issuance, administration and repayment of the Euronotes and other debt securities issued by Thermo Fisher International from time to time.

The financial condition, results of operations and cash flows of Thermo Fisher International are consolidated in the financial statements of the company.

As a lessee, the company leases certain logistics, office, and manufacturing facilities, as well as vehicles, copiers, and other equipment.

These operating leases generally have remaining lease terms between 1 month and 30 years, and some include options to extend (generally for 1 to 10 years) or have options to terminate the arrangement within 1 year.

The company’s finance leases are not material.

The company has guaranteed the residual value of three leased operating facilities with lease terms ending in 2023, 2024 and 2025.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As a lessee, the consolidated financial statements include the following:

As a lessee, the consolidated financial statements include the following relating to operating leases:

(In millions) 2021 2020 2019

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Operating lease costs

$ 254 $ 224 $ 208

Variable lease costs

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Weighted average at end of year

Remaining operating lease term 6.3 years 6.2 years

Remaining operating lease term 9.9 years 6.3 years 6.2 years

Discount rate 2.6 % 3.4 % 4.0 %

2 unchanged sentences

Lease costs arising from finance leases, short-term leases, and sublease income are not material.

See Note 10 for additional information relating to finance leases.

As of December 31, 2021, future payments of operating lease liabilities are as follows:

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As a lessor, operating leases, sales-type leases and direct financing leases are not material.

Under previous lease accounting guidance, net income includes expense from operating leases of $ 211 million in 2018.

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Commitments and Contingencies

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The aggregate amount of the company’s unconditional purchase obligations totaled $ 2.51 billion at December 31, 2021 and the majority of these obligations are expected to be settled during 2022.

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Analytical Instruments segment recorded a charge to cost of product revenues for $ 108 million in 2020 related to an existing supply contract for components of electron microscopy instruments.

The agreement requires the company to make future minimum purchases through 2025.

The company has developed and launched an alternative product beginning in 2020 and based on the expected demand for the internally developed product vs.

The company developed and launched an alternative product beginning in 2020 and based on the expected demand for the internally developed product vs.

the third-party product, the company does not expect to use all of the product it will be required to buy, resulting in a loss on the purchase commitment.

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The company is currently involved in various stages of investigation and remediation related to environmental matters.

The company cannot predict all potential costs related to environmental remediation matters and the possible impact on future

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

operations given the uncertainties regarding the extent of the required cleanup, the complexity and interpretation of applicable laws and regulations, the varying costs of alternative cleanup methods and the extent of the company’s responsibility.

The company cannot predict all potential costs related to environmental remediation matters and the possible impact on future operations given the uncertainties regarding the extent of the required cleanup, the complexity and interpretation of applicable laws and regulations, the varying costs of alternative cleanup methods and the extent of the company’s responsibility.

Expenses for environmental remediation matters related to the costs of installing, operating and maintaining groundwater-treatment systems and other remedial activities related to historical environmental contamination at the company’s domestic and international facilities were not material in any period presented.

1 unchanged sentence

The company calculates estimates based upon several factors, including input from environmental specialists and management’s knowledge of and experience with these environmental matters.

The company includes in these estimates potential costs for investigation, remediation and operation and maintenance of cleanup sites.

The company includes in these estimates potential costs for investigation, remediation and operation and

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

maintenance of cleanup sites.

At December 31, 2021, the company’s total environmental liability was approximately $ 65 million.

14 unchanged sentences

Product Liability, Workers Compensation and Other Personal Injury Matters

The company is involved in various proceedings and litigation that arise from time to time in connection with product liability, workers compensation and other personal injury matters.

The range of probable loss for product liability, workers compensation and other personal injury matters of the company’s continuing operations at December 31, 2021, was approximately $ 216 million to $ 375 million on an undiscounted basis.

4 unchanged sentences

In addition to the above accrual, as of December 31, 2021, the company had a product liability accrual of $ 11 million (undiscounted) relating to divested businesses.

Although the company believes that the amounts accrued and estimated recoveries are probable and appropriate based on available information, including actuarial studies of loss estimates, the process of estimating losses and insurance recoveries involves a considerable degree of judgment by management and the ultimate amounts could vary materially.

Insurance contracts do not relieve the company of its primary obligation with respect to any losses incurred.

3 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Comprehensive Income and Shareholder's Equity

Comprehensive Income and Shareholders' Equity

Comprehensive Income (Loss)

9 unchanged sentences

Other comprehensive items before reclassifications

( 118 ) ( 65 ) ( 8 ) ( 191 )

Amounts reclassified from accumulated other comprehensive items

4 unchanged sentences

At December 31, 2021, the company had reserved 23 million unissued shares of its common stock for possible issuance under stock-based compensation plans.

Early in the first quarter of 2022, the company repurchased $ 2.00 billion of the company's common stock ( 3.3 million shares).

Fair Value Measurements and Fair Value of Financial Instruments

1 unchanged sentence

The company uses the market approach technique to value its financial instruments and there were no changes in valuation techniques during 2021.

The company’s financial assets and liabilities carried at fair value are primarily comprised of insurance contracts, investments in derivative contracts, mutual funds holding publicly traded securities and other investments in unit trusts held as assets to satisfy outstanding deferred compensation and retirement liabilities;

The company’s financial assets and liabilities carried at fair value are primarily comprised of investments in publicly traded securities, insurance contracts, investments in derivative contracts, mutual funds holding publicly traded securities and other investments in unit trusts held as assets to satisfy outstanding deferred compensation and retirement liabilities;

and acquisition-related contingent consideration.

3 unchanged sentences

Inputs are unobservable data points that are not corroborated by market data.

The following tables present information about the company’s financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2020 and December 31, 2019:

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following tables present information about the company’s financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2021 and December 31, 2020:

December 31, Quoted

4 unchanged sentences

$ 2,210 $ 2,210 $ — $ —

Investments in common stock, mutual funds and other similar instruments

Insurance contracts

12 unchanged sentences

$ 8,971 $ 8,971 $ — $ —

Investments in common stock, mutual funds and other similar instruments

Insurance contracts

9 unchanged sentences

The fair value of derivative contracts is the estimated amount that the company would receive/pay upon liquidation of the contracts, taking into account the change in interest rates and currency exchange rates.

The company determines the fair value of acquisition-related contingent consideration based on the probability-weighted discounted cash flows associated with such future payments.

The company initially measures the fair value of acquisition-related contingent consideration based on amounts expected to be transferred (probability-weighted) discounted to present value.

Changes to the fair value of contingent consideration are recorded in selling, general and administrative expense.

The following table provides a rollforward of the fair value, as determined by level 3 inputs, of the contingent consideration.

The following table provides a rollforward of the fair value, as determined by level 3 inputs (such as likelihood of achieving production or revenue milestones, as well as changes in the fair values of the investments underlying a

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

recapitalization investment portfolio), of the contingent consideration.

(In millions) 2021 2020

Contingent consideration

Balance at Beginning of Year

Beginning balance

Acquisitions (including assumed balances)

( 109 ) ( 4 )

Changes in fair value included in earnings

Balance at End of Year

Ending balance

Derivative Contracts

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Notional amount

Interest rate swaps - fair value hedges (described in Note 10)

$ 1,000 $ 1,000

Interest rate swaps - fair value hedges $ — $ 1,000

Cross-currency interest rate swaps - designated as net investment hedges

Currency exchange contracts

While certain derivatives are subject to netting arrangements with counterparties, the company does not offset derivative assets and liabilities within the consolidated balance sheet.

The following tables present the fair value of derivative instruments in the consolidated balance sheet and statement of income.

While certain derivatives are subject to netting arrangements with counterparties, the company does not offset derivative assets and liabilities within the balance sheet.

The following tables present the fair value of derivative instruments in the accompanying balance sheet and statement of income.

Fair value – assets Fair value – liabilities

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$ 36 $ 28 $ 1 $ 132

(a) The fair values of the interest rate swaps and cross-currency interest rate swaps are included in the consolidated balance sheet under the caption other assets or other long-term liabilities.

(b) The fair value of the currency exchange contracts is included in the consolidated balance sheet under the captions other current assets or other accrued expenses.

The following amounts related to cumulative basis adjustments for fair value hedges were included in the consolidated balance sheet under the caption long-term obligations:

(a) The fair values of the interest rate swaps and cross-currency interest rate swaps are included in the accompanying balance sheet under the caption other assets or other long-term liabilities.

(b) The fair value of the currency exchange contracts is included in the accompanying balance sheet under the captions other current assets or other accrued expenses.

The following amounts related to cumulative basis adjustments for fair value hedges were included in the accompanying balance sheet under the caption long-term obligations:

Carrying amount of the hedged liability Cumulative amount of fair value hedging adjustment - increase (decrease) included in carrying amount of liability

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Interest rate swaps

Hedged long-term obligations - included in other expense, net

Hedged long-term obligations - included in other income/(expense)

$ 25 $ ( 38 )

Derivatives designated as hedging instruments - included in other expense, net

Derivatives designated as hedging instruments - included in other income/(expense)

Derivatives designated as cash flow hedges

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Included in unrealized losses on hedging instruments within other comprehensive items

( 85 ) ( 50 )

Amount reclassified from accumulated other comprehensive items to other expense, net

Amount reclassified from accumulated other comprehensive items to other income/(expense)

( 73 ) ( 59 )

4 unchanged sentences

Included in currency translation adjustment within other comprehensive items

Included in other expense, net

Included in other income/(expense)

Derivatives not designated as hedging instruments

1 unchanged sentence

Included in cost of product revenues

Included in other expense, net

Included in other income/(expense)

Cross-currency interest rate swaps

Included in other expense, net

Gains and losses recognized on currency exchange contracts and the interest rate swaps designated as fair value hedges are included in the consolidated statement of income together with the corresponding, offsetting losses and gains on the underlying hedged transactions.

Included in other income/(expense)

Gains and losses recognized on currency exchange contracts and the interest rate swaps designated as fair value hedges are included in the accompanying statement of income together with the corresponding, offsetting losses and gains on the underlying hedged transactions.

The company uses foreign currency-denominated debt and cross-currency interest rate swaps to partially hedge its net investments in foreign operations against adverse movements in exchange rates.

In early 2020, the company entered into cross currency swaps in anticipation of using U.S.

dollars to partially finance the euro purchase price of a then pending acquisition.

The swaps were terminated later in the year in connection with the termination of the acquisition agreement.

Gains and losses associated with these swaps were recorded in other expense, net.

The company had a cash outflow of $ 9 million associated with the termination of the swaps, included in other investing activities, net, in the accompany statement of cash flows.

See Note 1 and Note 10 for additional information on the company's risk management objectives and strategies.

4 unchanged sentences

The company had cash outlays aggregating $ 85 million and $ 50 million in 2020 and 2019, respectively, associated with termination of the arrangements, included in other financing activities, net, in the accompanying statement of cash flows.

In late 2020, the company determined that the previously anticipated debt offerings were probable of not occurring and reclassified $ 42 million from accumulated other comprehensive items to other expense, net.

During 2021, in connection with the extinguishment of debt (Note 10), the company reclassified $ 65 million from accumulated other comprehensive items to other income/(expense).

THERMO FISHER SCIENTIFIC INC.

1 unchanged sentence

Fair Value of Other Financial Instruments

The carrying value and fair value of the company’s debt obligations are as follows:

The carrying value and fair value of the company’s debt instruments are as follows:

December 31, 2021 December 31, 2020

1 unchanged sentence

(In millions) value value value value

Debt Obligations:

$ 32,072 $ 33,449 $ 21,723 $ 24,653

Commercial paper

2,522 2,522 — —

The fair value of debt obligations was determined based on quoted market prices and on borrowing rates available to the company at the respective period ends which represent level 2 measurements.

$ 34,670 $ 36,047 $ 21,728 $ 24,658

The fair value of debt instruments was determined based on quoted market prices and on borrowing rates available to the company at the respective period ends which represent level 2 measurements.

Supplemental Cash Flow Information

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Acquired but unpaid property, plant and equipment

Fair value of equity awards exchanged 43 — —

Fair value of acquisition contingent consideration 183 — —

Finance lease ROU assets obtained in exchange for new finance lease liabilities 15 5 1

Declared but unpaid dividends

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Restructuring and Other Costs (Income), Net

Restructuring and Other Costs (Income)

Restructuring and other costs in 2021 primarily included charges for impairments of an acquired technology asset and a tradename asset, and, to a lesser extent, compensation due to employees at acquired businesses on the date of acquisition.

In 2021, severance actions associated with facility consolidations and cost reduction measures affected less than 1 % of the company’s workforce.

Restructuring and other costs in 2020 primarily included continuing charges for headcount reductions and facility consolidations in an effort to streamline operations, including the closure and consolidation of operations within several facilities in the U.S.

and Europe, and charges for the write-off of acquired technology.

Restructuring and other costs in 2020 also included transaction/integration costs (including reimbursement thereof) related to recent/terminated acquisitions.

In 2020, severance actions associated with facility consolidations and cost reduction measures affected approximately 1 % of the company’s workforce.

Restructuring and other costs (income), net, in 2019 primarily included the gain on the sale of the company’s Anatomical Pathology business, and, to a lesser extent, transaction/integration costs related to acquisitions and a divestiture;

sales of inventory revalued at the date of acquisition;

and continuing charges for headcount reductions and facility consolidations in an effort to streamline operations, including the closure and consolidation of operations within several facilities in the U.S.

In 2019, severance actions associated with facility consolidations and cost reduction measures affected approximately 1 % of the company’s workforce.

Restructuring and other costs in 2018 included continuing charges for headcount reductions and facility consolidations in an effort to streamline operations, including the closure and consolidation of operations within several facilities in the U.S.

third-party transaction/integration costs primarily related to recent acquisitions;

sales of inventories revalued at the date of acquisition;

and environmental remediation charges.

These charges were partially offset by gains on sales of real estate and favorable results of litigation.

Restructuring and other costs (income) in 2019 primarily included the gain on the sale of the company’s Anatomical Pathology business, and, to a lesser extent, continuing charges for headcount reductions and facility consolidations in an effort to streamline operations, including the closure and consolidation of operations within several facilities in the U.S.

In 2019, severance actions associated with facility consolidations and cost reduction measures affected approximately 1 % of the company’s workforce.

As of February 24, 2021, the company has identified restructuring actions that will result in additional charges of approximately $ 50 million, primarily in 2021, and expects to identify additional actions during 2021 which will be recorded when specified criteria are met, such as communication of benefit arrangements or when the costs have been incurred.

During 2020, the company recorded net restructuring and other costs (income) by segment as follows:

(In millions) Cost of

Revenues Selling,

Administrative

Expenses Restructuring

Costs, Net Total

Life Sciences Solutions

$ — $ ( 8 ) $ 34 $ 26

Analytical Instruments

Specialty Diagnostics

— ( 12 ) 9 ( 3 )

Laboratory Products and Services

$ 6 $ ( 10 ) $ 99 $ 95

The principal components of net restructuring and other costs (income) by segment are as follows:

Life Sciences Solutions

In 2020, the Life Sciences Solutions segment recorded $ 26 million of net restructuring and other charges.

The segment recorded $ 34 million of restructuring and other costs, net, primarily charges for the write-off of acquired technology.

The segment also recorded $ 8 million of credits to selling, general, and administrative expense for changes in estimates of contingent acquisition consideration.

Analytical Instruments

In 2020, the Analytical Instruments segment recorded $ 26 million of net restructuring and other charges, primarily for employee severance associated with headcount reductions in Europe, China, and the U.S., and, to a lesser extent, abandoned facility costs.

Specialty Diagnostics

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In 2020, the Specialty Diagnostics segment recorded $ 3 million of net restructuring and other income, principally for third-party transaction costs (including reimbursement thereof) for a terminated acquisition, partially offset by charges for employee severance and environmental remediation at previously owned facilities.

Laboratory Products and Services

In 2020, the Laboratory Products and Services segment recorded $ 34 million of net restructuring and other charges, primarily for employee severance at businesses streamlining operations, write-downs of fixed assets to estimated disposal value in connection with the consolidation of commercial production operations in the U.S, and, to a lesser extent, transaction/acquisition related costs for a pending acquisition.

In 2020, the company recorded $ 12 million of net restructuring and other costs primarily for severance at its corporate operations, and charges to selling, general, and administrative expense for product liability litigation.

During 2019, the company recorded net restructuring and other costs by segment as follows:

(In millions) Cost of

Revenues Selling,

Administrative

Expenses Restructuring

Costs (Income), Net Total

Life Sciences Solutions

$ 16 $ — $ 24 $ 40

Analytical Instruments

Specialty Diagnostics

— 4 ( 471 ) ( 467 )

Laboratory Products and Services

$ 17 $ 62 $ ( 413 ) $ ( 334 )

The principal components of net restructuring and other costs by segment are as follows:

Life Sciences Solutions

In 2019, the Life Sciences Solutions segment recorded $ 40 million of net restructuring and other charges, including $ 16 million of charges to cost of revenues for the sales of inventory revalued at the date of acquisition.

The segment also recorded $ 24 million of net restructuring and other charges for severance and other costs associated with facility consolidations in the U.S and Europe, the impairment of acquired technology in development, and pre-acquisition litigation-related matters.

Analytical Instruments

In 2019, the Analytical Instruments segment recorded $ 38 million of net restructuring and other charges, including $ 24 million of charges to selling, general, and administrative expense, principally third-party transaction costs for a terminated acquisition.

The segment also recorded $ 14 million of restructuring and other costs, primarily for employee severance and other costs associated with facility consolidations in the U.S.

Specialty Diagnostics

In 2019, the Specialty Diagnostics segment recorded $ 467 million of net restructuring and other income, primarily a gain on the divestiture of its Anatomical Pathology business (Note 2).

The segment also recorded $ 4 million of charges to selling, general, and administrative expense, principally third-party transaction costs in connection with the sale of the Anatomical Pathology business.

Laboratory Products and Services

In 2019, the Laboratory Products and Services segment recorded $ 53 million of net restructuring and other charges.

The segment recorded $ 35 million of charges to selling, general, and administrative expenses, principally third-party transaction/integration costs for recently completed acquisitions.

The segment also recorded $ 17 million of restructuring and other costs, primarily charges for severance at businesses streamlining operations and employee compensation due at Brammer Bio on the date of acquisition.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

During 2018, the company recorded net restructuring and other costs by segment as follows:

(In millions) Cost of

Revenues Selling,

Administrative

Expenses Restructuring

Costs, Net Total

As of February 24, 2022, the company has identified restructuring actions that will result in additional charges of approximately $ 20 million, primarily in 2022, and expects to identify additional actions in future periods which will be recorded when specified criteria are met, such as communication of benefit arrangements or when the costs have been incurred.

Restructuring and other costs (income) by segment are as follows:

(In millions) 2021 2020 2019

Life Sciences Solutions

2 unchanged sentences

Specialty Diagnostics

Laboratory Products and Services

— ( 10 ) 9 ( 1 )

Laboratory Products and Biopharma Services

$ 197 $ 99 $ ( 413 )

The principal components of net restructuring and other costs by segment are as follows:

Life Sciences Solutions

In 2018, the Life Sciences Solutions segment recorded $ 1 million of net restructuring and other income.

The segment recorded charges to cost of revenues of $ 4 million for the sales of inventory revalued at the date of acquisition, as well as $ 12 million of charges to selling, general, and administrative expenses, primarily third-party transaction/integration costs related to recent acquisitions.

The segment also recorded $ 17 million of net restructuring and other income, principally for a $ 46 million net gain on the resolution of litigation, partially offset by charges for severance other costs associated with facility consolidations in the U.S.

Analytical Instruments

In 2018, the Analytical Instruments segment recorded $ 39 million of net restructuring and other charges.

The segment recorded net charges to cost of revenues of $ 3 million for the sales of inventory revalued at the date of acquisition;

$ 8 million of net charges to selling, general, and administrative expense, principally third-party transaction costs for a pending acquisition;

and $ 28 million of restructuring and other costs, primarily for employee severance and other costs associated with facility consolidations in the U.S.

and Europe, as well as abandoned facilities costs associated with the remediation and closure of a manufacturing facility in the U.S.

Specialty Diagnostics

In 2018, the Specialty Diagnostics segment recorded $ 2 million of net restructuring and other charges, including $ 3 million of net charges to selling, general, and administrative expense, principally third-party transaction costs in connection with the planned sale of the Anatomical Pathology business.

The segment also recorded $ 1 million of net restructuring and other income, including a $ 6 million gain on the sale of real estate, mostly offset by cash charges for severance and other costs associated with facility consolidations in the U.S.

Laboratory Products and Services

In 2018, the Laboratory Products and Services segment recorded $ 52 million of net restructuring and other charges.

The segment recorded charges to cost of revenues of $ 5 million, principally for the sales of inventory revalued at the date of acquisition, and $ 16 million of charges to selling, general, and administrative expenses for third-party transaction/integration costs related to the acquisition of Patheon.

The segment also recorded $ 31 million of restructuring and other costs, primarily charges for environmental remediation associated with a Superfund site in the U.S., employee severance, and, to a lesser extent, hurricane response costs.

The following table summarizes the changes in the company’s accrued restructuring balance.

Other amounts reported as restructuring and other costs, net, in the accompanying statement of income have been summarized in the notes to the table.

Other amounts reported as restructuring and other costs in the accompanying statement of income have been summarized in the notes to the table.

Accrued restructuring costs are included in other accrued expenses in the accompanying balance sheet.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In millions) Total (a)

Balance at December 31, 2018 $ 80

Net restructuring charges incurred in 2018 (b)

Cumulative effect of accounting change (b) ( 28 )

Net restructuring charges incurred in 2019 (c)

Currency translation

Balance at December 31, 2019 34

Cumulative effect of accounting change (c)

Net restructuring charges incurred in 2020 (d)

2 unchanged sentences

Net restructuring charges incurred in 2021 (e)

Currency translation and other

Currency translation

Balance at December 31, 2021 $ 17

(a) The movements in the restructuring liability principally consist of severance and other costs such as relocation and moving expenses associated with facility consolidations, as well as employee retention costs which are accrued ratably over the period through which employees must work to qualify for a payment.

and in 2018, abandoned facility costs associated with facility consolidations in the U.S.

(b) Excludes $ 38 million of income, net, associated with litigation-related matters, gains on sales of real estate, charges for environmental remediation, and hurricane response costs.

(d) Excludes $ 482 million of net gain on the sale of businesses, and $ 17 million of other restructuring charges, net, primarily for the write-off of acquired technology, pre-acquisition litigation-related matters, and compensation due to employees on the date of acquisition.

(e) Excludes $ 48 million of other restructuring charges, net, primarily for the write-off of acquired technology, fixed asset writedowns, and costs associated with environmental remediation at abandoned/previously owned facilities .

(b) Impact of adopting new lease accounting guidance on January 1, 2019.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(c) Excludes $ 465 million of net charges, principally $ 482 million of net gain on the sale of businesses recorded in the Specialty Diagnostics segment, partially offset by $ 17 million of other restructuring charges, net, across the company’s segments primarily for the write-off of acquired technology, pre-acquisition litigation-related matters, and compensation due to employees at businesses at the date of acquisition.

(d) Excludes $ 48 million of charges, principally $ 32 million for impairment of acquired technology in the Life Sciences Solutions segment resulting from a reduction in expected cash flows and, to a lesser extent, charges across the company’s segments for fixed asset writedowns and costs associated with environmental remediation at abandoned/previously owned facilities.

(e) Excludes $ 160 million of charges, principally $ 122 million for impairments of an acquired technology asset and a tradename asset in the Life Sciences Solutions and Laboratory Products and Biopharma Services segment, principally resulting from a reduction in expected cash flows, and $ 35 million of charges for compensation contractually due to employees of acquired businesses at the date of acquisition in the Life Sciences Solutions and Laboratory Products and Biopharma Services segments.

The company expects to pay accrued restructuring costs primarily through 2022 .

Subsequent Events

On January 15, 2021, the company acquired, within the Laboratory Products and Services segment, the Belgium-based European viral vector manufacturing business of Groupe Novasep SAS for approximately $ 853 million in cash.

The European viral vector manufacturing business provides contract manufacturing services for vaccines and therapies to biotechnology companies and large biopharma customers.

The acquisition expands the segment’s capabilities for cell and gene vaccines and therapies.

The initial purchase price allocation for the acquisition is expected to be completed by the end of the first quarter of 2021.

On January 15, 2021, the company entered into a definitive agreement to acquire Mesa Biotech, Inc., a U.S.-based molecular diagnostic company, for approximately $ 450 million in cash and up to an additional $ 100 million in cash upon the completion of certain milestones following the close of the transaction.

Mesa Biotech has developed and commercialized a PCR-based rapid point-of-care testing platform available for detecting infectious diseases including SARS-CoV-2, Influenza A and B, respiratory syncytial virus and Strep A.

The acquisition will enable the company to accelerate the availability of reliable and accurate advanced molecular diagnostics at the point of care.

The transaction is expected to be completed in the first quarter of 2021, subject to customary closing conditions.

Upon completion, the business will become part of the Life Sciences Solutions segment.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures