What changed in this filing

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Item 1. Financial Statements

2022-05-06 compared with 2021-11-04 · 179 added, 368 removed, 476 unchanged (53% of the section changed)

1 unchanged sentence

CONDENSED CONSOLIDATED BALANCE SHEET

October 2, December 31,

April 2, December 31,

(In millions except share and per share amounts) 2022 2021

1 unchanged sentence

Cash and cash equivalents $ 2,752 $ 4,477

$ 12,027 $ 10,325

Accounts receivable, less allowances of $ 170 and $ 150

Inventories 5,483 5,051

Contract assets, net 1,064 968

1 unchanged sentence

Total current assets 18,776 20,113

24,724 21,957

Property, plant and equipment, net 8,448 8,333

Acquisition-related intangible assets, net 19,378 20,113

11,927 12,685

26,909 26,041

$ 73,600 $ 69,052

Liabilities and Shareholders' Equity

Other assets 4,424 4,640

Goodwill 41,721 41,924

Total assets $ 92,747 $ 95,123

Liabilities, redeemable noncontrolling interest and equity

Current liabilities:

8 unchanged sentences

Long-term obligations 31,389 32,333

21,688 19,107

Redeemable noncontrolling interest 113 122

Thermo Fisher Scientific Inc.

shareholders’ equity:

3 unchanged sentences

Capital in excess of par value 16,292 16,174

15,960 15,579

Retained earnings 37,528 35,431

33,876 28,116

Treasury stock at cost, 48,068,820 and 44,720,112 shares

1 unchanged sentence

Accumulated other comprehensive items ( 2,343 ) ( 2,329 )

( 2,654 ) ( 2,807 )

Total shareholders' equity

38,710 34,507

Total Liabilities and Shareholders' Equity

$ 73,600 $ 69,052

Total Thermo Fisher Scientific Inc.

shareholders’ equity 40,956 40,793

Noncontrolling interests 62 62

Total equity 41,018 40,855

Total liabilities, redeemable noncontrolling interest and equity $ 92,747 $ 95,123

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

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENT OF INCOME

Three Months Ended Nine Months Ended

October 2, September 26, October 2, September 26,

Three months ended

April 2, April 3,

(In millions except per share amounts) 2022 2021

2 unchanged sentences

Service revenues

1,970 1,739 6,079 5,006

Total revenues

9,330 8,521 28,509 21,668

Costs and operating expenses:

Cost of product revenues

3,298 3,001 9,977 7,732

Cost of service revenues

1,381 1,189 4,148 3,488

Selling, general and administrative expenses

2,004 1,592 5,729 4,853

Research and development expenses

351 296 1,014 805

Restructuring and other costs

Total costs and operating expenses

7,052 6,095 21,019 16,945

Operating income 2,821 3,049

2,278 2,426 7,490 4,723

Interest income 18 12

Interest expense ( 136 ) ( 125 )

( 128 ) ( 144 ) ( 375 ) ( 407 )

Other income/(expense)

1 unchanged sentence

Income before income taxes

2,173 2,252 6,973 4,333

Provision for income taxes

( 301 ) ( 416 )

$ 1,902 $ 1,933 $ 6,067 $ 3,877

Earnings per Share

$ 4.83 $ 4.88 $ 15.41 $ 9.79

Equity in earnings/(losses) of unconsolidated entities ( 19 ) —

Net income 2,220 2,337

net income attributable to noncontrolling interests and redeemable noncontrolling interest 5 —

Net income attributable to Thermo Fisher Scientific Inc.

$ 2,215 $ 2,337

Earnings per share attributable to Thermo Fisher Scientific Inc.

Basic $ 5.66 $ 5.93

Diluted $ 5.61 $ 5.88

Weighted average shares

394 396 394 396

397 399 397 399

Basic 392 394

Diluted 395 397

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

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Three Months Ended Nine Months Ended

October 2, September 26, October 2, September 26,

Three months ended

April 2, April 3,

(In millions) 2022 2021

Comprehensive income

$ 1,902 $ 1,933 $ 6,067 $ 3,877

Net income $ 2,220 $ 2,337

Other comprehensive items:

1 unchanged sentence

Currency translation adjustment (net of tax provision (benefit) of $ 89 and $ 118 )

( 32 ) 10 121 ( 244 )

Unrealized gains and losses on hedging instruments:

Unrealized losses on hedging instruments (net of tax benefit of $ 0 , $ 0 , $ 0 and $ 20 )

Reclassification adjustment for losses included in net income (net of tax benefit of $ 0 and $ 4 )

1 unchanged sentence

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

3 ( 4 ) 7 ( 5 )

Amortization of net loss included in net periodic pension cost (net of tax benefit of $ 1 and $ 1 )

Total other comprehensive items

( 24 ) 19 153 ( 291 )

Comprehensive income

comprehensive income/(loss) attributable to noncontrolling interests and redeemable noncontrolling interest

Comprehensive income attributable to Thermo Fisher Scientific Inc.

$ 2,201 $ 2,582

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

Nine Months Ended

October 2, September 26,

Three months ended

April 2, April 3,

(In millions) 2022 2021

5 unchanged sentences

Change in deferred income taxes

( 455 ) ( 496 )

Loss on early extinguishment of debt 26 197

13 unchanged sentences

Financing activities

Net proceeds from issuance of debt

Repayment of debt

8 unchanged sentences

Other financing activities, net

( 10 ) ( 146 )

Net cash (used in) provided by financing activities

Net cash used in financing activities

( 3,145 ) ( 4,850 )

Exchange rate effect on cash ( 99 ) 137

Increase in Cash, Cash Equivalents and Restricted Cash

Decrease in cash, cash equivalents and restricted cash

( 1,712 ) ( 4,733 )

Cash, cash equivalents and restricted cash at beginning of period

3 unchanged sentences

THERMO FISHER SCIENTIFIC INC.

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

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

CONDENSED 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

Three Months Ended October 2, 2021

Balance at July 3, 2021 438 $ 438 $ 15,826 $ 32,076 45 $ ( 8,856 ) $ ( 2,630 ) $ 36,854

Issuance of shares under employees' and directors' stock plans

1 1 83 — — ( 55 ) — 29

Stock-based compensation

— — 51 — — — — 51

Dividends declared ($ 0.26 per share)

— — — ( 102 ) — — — ( 102 )

— — — 1,902 — — — 1,902

Other comprehensive items

— — — — — — ( 24 ) ( 24 )

Balance at October 2, 2021 439 $ 439 $ 15,960 $ 33,876 45 $ ( 8,911 ) $ ( 2,654 ) $ 38,710

Three Months Ended September 26, 2020

Balance at June 27, 2020 436 $ 436 $ 15,334 $ 23,860 40 $ ( 6,766 ) $ ( 2,989 ) $ 29,875

Issuance of shares under employees' and directors' stock plans

1 1 81 — — ( 49 ) — 33

Stock-based compensation

— — 52 — — — — 52

Dividends declared ($ 0.22 per share)

— — — ( 88 ) — — — ( 88 )

— — — 1,933 — — — 1,933

Other comprehensive items

— — — — — — 19 19

Balance at September 26, 2020 437 $ 437 $ 15,467 $ 25,705 40 $ ( 6,815 ) $ ( 2,970 ) $ 31,824

Nine Months Ended October 2, 2021

Three months ended April 2, 2022

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

10 unchanged sentences

( 11 ) — — — — — — ( 14 ) ( 14 ) 1 ( 13 )

Balance at October 2, 2021 439 $ 439 $ 15,960 $ 33,876 45 $ ( 8,911 ) $ ( 2,654 ) $ 38,710

Nine Months Ended September 26, 2020

Contributions from (distributions to) noncontrolling interest ( 3 ) — — — — — — — — ( 1 ) ( 1 )

Balance at April 2, 2022 $ 113 440 $ 440 $ 16,292 $ 37,528 48 $ ( 10,961 ) $ ( 2,343 ) $ 40,956 $ 62 $ 41,018

Three months ended April 3, 2021

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

9 unchanged sentences

— — — — — — — 245 245 — 245

Balance at September 26, 2020 437 $ 437 $ 15,467 $ 25,705 40 $ ( 6,815 ) $ ( 2,970 ) $ 31,824

Balance at April 3, 2021 $ — 438 $ 438 $ 15,684 $ 30,350 45 $ ( 8,852 ) $ ( 2,562 ) $ 35,058 $ 10 $ 35,068

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

4 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 and therapies, 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 health through diagnostics and the development and manufacture of life-changing therapies, and increase laboratory productivity.

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

Interim Financial Statements

The interim condensed consolidated financial statements presented herein have been prepared by the company, are unaudited and, in the opinion of management, reflect all adjustments of a normal recurring nature necessary for a fair statement of the financial position at October 2, 2021, the results of operations for the three- and nine-month periods ended October 2, 2021 and September 26, 2020, and the cash flows for the nine-month periods ended October 2, 2021 and September 26, 2020.

The interim condensed consolidated financial statements presented herein have been prepared by the company, are unaudited and, in the opinion of management, reflect all adjustments of a normal recurring nature necessary for a fair statement of the financial position at April 2, 2022, the results of operations for the three-month periods ended April 2, 2022 and April 3, 2021, and the cash flows for the three-month periods ended April 2, 2022 and April 3, 2021.

Interim results are not necessarily indicative of results for a full year.

4 unchanged sentences

Note 1 to the consolidated financial statements for 2021 describes the significant accounting estimates and policies used in preparation of the consolidated financial statements.

There have been no material changes in the company’s significant accounting policies during the nine months ended October 2, 2021.

There have been no material changes in the company’s significant accounting policies during the three months ended April 2, 2022.

The components of inventories are as follows:

October 2, December 31,

April 2, December 31,

(In millions) 2022 2021

3 unchanged sentences

Inventories $ 5,483 $ 5,051

Prior to the third quarter of 2021, certain of the company’s businesses utilized the last-in, first-out (LIFO) method of accounting for inventories.

During the third quarter of 2021, these businesses, which comprise approximately 5 % of consolidated inventories, changed from the LIFO method to the first-in, first-out (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 Services ($ 20 million) and Specialty Diagnostics ($ 13 million) segments.

Use of Estimates

1 unchanged sentence

The company’s estimates include, among others, asset reserve requirements as well as the amounts of future cash flows associated with certain assets and businesses that are used in assessing the risk of impairment.

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

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The negative impacts have significantly lessened so far in 2021.

The negative impacts associated with the ongoing COVID-19 global pandemic significantly lessened in 2021 and 2022.

The extent and duration of negative impacts in the future, which may include inflationary pressures and supply chain disruptions, are uncertain and may require changes to estimates.

1 unchanged sentence

Recent Accounting Pronouncements

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 will adopt 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 will not have a material impact on the company’s consolidated financial statements for prior acquisitions;

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 December 2019, the FASB issued new guidance to simplify the accounting for income taxes.

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 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.

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 the fourth quarter of 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 in future periods will be dependent on the extent of transactions of this nature entered into by the company subsequent to the date of adoption.

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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 and the benefits that will be gained from the assembled workforce.

3 unchanged sentences

Acquisitions have been accounted for using the acquisition method of accounting, and the acquired companies’ results have been included in the accompanying financial statements from their respective dates of acquisition.

Pending Acquisition

On April 15, 2021, the company entered into a definitive agreement under which it will acquire PPD, Inc.

for $ 47.50 per share for a total cash purchase price of $ 17.4 billion plus the assumption of approximately $ 3.5 billion of net debt.

PPD provides a broad range of clinical research and specialized laboratory services to enable customers to accelerate innovation and increase drug development productivity.

Upon close of the transaction, PPD will become part of the Laboratory Products and Services Segment.

Shareholders holding in aggregate approximately 60 % of the issued and outstanding shares of common stock of PPD on April 15, 2021, have approved the transaction by written consent.

No further action by other PPD shareholders is required to approve the transaction.

On July 16, 2021, the company and PPD each received a request for additional information and documentary materials (collectively, the “Second Request”) from the U.S.

Federal Trade Commission (FTC), in connection with the FTC’s review of the proposed merger.

The effect of the Second Request is to extend the waiting period imposed under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), until the 30th day after substantial compliance by the company and PPD with the Second Request, unless the waiting period is terminated earlier by the FTC.

As of October 22, 2021, both the company and PPD had certified substantial compliance with the Second Request.

The transaction remains subject to the satisfaction of customary closing conditions, including termination of the HSR Act waiting period and receipt of applicable regulatory approvals outside the U.S.

Subject to the satisfaction of the required closing conditions, we continue to expect the merger to be completed by the end of 2021.

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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 $ 834 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 $ 409 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 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.

In addition, in the first nine months of 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 and, within the Analytical Instruments segment, a Belgium-based developer of micro-chip based technology for liquid chromatography columns.

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

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

Purchase Price

$ 853 $ 423 $ — $ 287

Fair value of contingent consideration

Purchase price payable

Cash acquired

( 19 ) ( 14 ) — ( 11 )

$ 834 $ 474 $ 18 $ 389

Net Assets Acquired

Current assets

$ 39 $ 54 $ — $ 10

Property, plant and equipment

Definite-lived intangible assets:

Customer relationships

Product technology

603 239 18 190

Contract liabilities ( 59 ) — — ( 1 )

Deferred tax liabilities

( 80 ) ( 72 ) — ( 28 )

Finance lease liabilities

( 24 ) ( 1 ) ( 82 ) —

Other liabilities assumed

( 35 ) ( 33 ) ( 371 ) ( 10 )

$ 834 $ 474 $ 18 $ 389

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The weighted-average amortization periods for definite-lived intangible assets acquired in 2021 are 14 years for customer relationships, 7 years for product technology and 3 years for tradenames.

The weighted average amortization period for all definite-lived intangible assets acquired in 2021 is 9 years.

The allocation of the purchase price for the Lengnau biologics manufacturing facility is preliminary, principally with respect to lease assets and liabilities as well as deferred taxes.

In 2022, the company acquired, within the Analytical Instruments segment, a U.S.-based developer of Fourier-transform infrared gas analysis technologies.

The preliminary allocations of the purchase price for the acquisitions of the Lengnau biologics manufacturing facility, PPD, Inc.

and PeproTech, Inc.

were based on estimates of the fair values 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.

During the first quarter of 2022, the company adjusted the preliminary allocations of PPD and PeproTech, which among others increased goodwill by $ 59 million, decreased definite-lived intangible assets by $ 43 million, decreased equity method investments by $ 23 million and decreased the fair value of assumed contingent consideration by $ 18 million.

The adjustment to amortization expense recorded during the first quarter of 2022 was not material.

Revenues and Contract-related Balances

1 unchanged sentence

Revenues by type are as follows:

Three Months Ended Nine Months Ended

October 2, September 26, October 2, September 26,

Three months ended

April 2, April 3,

(In millions) 2022 2021

$ 6,110 $ 5,964

1,816 1,826 5,550 4,448

1,970 1,739 6,079 5,006

Consolidated revenues $ 11,818 $ 9,906

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

Three Months Ended Nine Months Ended

October 2, September 26, October 2, September 26,

Three months ended

April 2, April 3,

(In millions) 2022 2021

1 unchanged sentence

$ 6,323 $ 5,101

2,557 2,032 8,037 5,464

1,836 1,607 5,294 4,054

Other regions

275 295 886 732

Consolidated revenues $ 11,818 $ 9,906

1 unchanged sentence

See Note 4 for revenues by reportable segment and other geographic data.

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Remaining Performance Obligations

The aggregate amount of the transaction price allocated to the remaining performance obligations for all open customer contracts as of October 2, 2021 was $ 14.49 billion.

The aggregate amount of the transaction price allocated to the remaining performance obligations for all open customer contracts as of April 2, 2022 was $ 28.84 billion.

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

2 unchanged sentences

Contract asset and liability balances are as follows:

October 2, December 31,

April 2, December 31,

(In millions) 2022 2021

3 unchanged sentences

Noncurrent contract liabilities 1,294 1,238

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In the three and nine months ended October 2, 2021, the company recognized revenues of $ 173 million and $ 1.10 billion, respectively, that were included in the contract liabilities balance at December 31, 2020.

In the three and nine months ended September 26, 2020, the company recognized revenues of $ 142 million and $ 773 million, respectively, that were included in the contract liabilities balance at December 31, 2019.

In the three months ended April 2, 2022, the company recognized revenues of $ 1.28 billion, that were included in the contract liabilities balance at December 31, 2021.

In the three months ended April 3, 2021, the company recognized revenues of $ 566 million that were included in the contract liabilities balance at December 31, 2020.

Business Segment and Geographical Information

Business Segment Information

Three Months Ended Nine Months Ended

October 2, September 26, October 2, September 26,

Three months ended

April 2, April 3,

(In millions) 2022 2021

2 unchanged sentences

Analytical Instruments

1,476 1,336 4,344 3,488

Specialty Diagnostics

1,362 1,430 4,212 3,376

Laboratory Products and Services

3,487 3,112 10,667 8,629

Laboratory Products and Biopharma Services

( 855 ) ( 896 )

Consolidated revenues

9,330 8,521 28,509 21,668

Segment Income

Life Sciences Solutions

1,821 1,879 5,818 3,788

Analytical Instruments

264 171 816 477

Specialty Diagnostics

310 398 983 848

Laboratory Products and Services

383 355 1,360 931

Laboratory Products and Biopharma Services

Subtotal reportable segments

2,778 2,803 8,977 6,044

Cost of revenues charges

— ( 1 ) ( 8 ) ( 5 )

Selling, general and administrative (charges) credits

( 59 ) 55 ( 33 ) 7

Cost of revenues adjustments

Selling, general and administrative expenses adjustments

Restructuring and other costs

( 18 ) ( 17 ) ( 151 ) ( 67 )

Amortization of acquisition-related intangible assets

1 unchanged sentence

Consolidated operating income

2,278 2,426 7,490 4,723

Interest income 18 12

4 unchanged sentences

$ 2,540 $ 2,753

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Cost of revenues adjustments included in the above table consist of charges for the sale of inventories revalued at the date of acquisition.

Selling, general and administrative expenses adjustments included in the above table consist of third-party transaction/integration costs related to recent acquisitions, and charges/credits for changes in estimates of contingent acquisition consideration.

Geographical Information

Three Months Ended Nine Months Ended

October 2, September 26, October 2, September 26,

Revenues by country based on customer location are as follows:

Three months ended

April 2, April 3,

(In millions) 2022 2021

1 unchanged sentence

$ 6,097 $ 4,892

885 828 2,454 1,886

3,950 3,265 12,313 8,801

Consolidated revenues

$ 11,818 $ 9,906

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

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The provision for income taxes in the accompanying statement of income differs from the provision calculated by applying the statutory federal income tax rate to income before provision for income taxes due to the following:

Nine Months Ended

October 2, September 26,

Three months ended

April 2, April 3,

(In millions) 2022 2021

1 unchanged sentence

Provision for income taxes at statutory rate

$ 1,464 $ 910

Increases (decreases) resulting from:

8 unchanged sentences

( 18 ) ( 28 )

Intra-entity transfers

Valuation allowance

Withholding taxes

State income taxes, net of federal tax

( 13 ) ( 16 )

Provision for income taxes

4 unchanged sentences

Unrecognized Tax Benefits

As of October 2, 2021, the company had $ 1.12 billion of unrecognized tax benefits substantially all of which, if recognized, would reduce the effective tax rate.

A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:

(In millions) 2021

Balance at Beginning of Year

Additions for tax positions of current year

Additions for tax positions of prior years

Reductions for tax positions of prior years

Balance at End of Period

As of April 2, 2022 and December 31, 2021, the company had $ 1.12 billion of unrecognized tax benefits substantially all of which, if recognized, would reduce the effective tax rate.

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Earnings per Share

Three Months Ended Nine Months Ended

October 2, September 26, October 2, September 26,

Three months ended

April 2, April 3,

(In millions except per share amounts) 2022 2021

Net income attributable to Thermo Fisher Scientific Inc.

$ 2,215 $ 2,337

Basic weighted average shares 392 394

394 396 394 396

Plus effect of:

1 unchanged sentence

Diluted weighted average shares 395 397

397 399 397 399

Basic earnings per share $ 5.66 $ 5.93

$ 4.83 $ 4.88 $ 15.41 $ 9.79

Diluted earnings per share $ 5.61 $ 5.88

$ 4.79 $ 4.84 $ 15.29 $ 9.71

Antidilutive stock options excluded from diluted weighted average shares

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Debt and Other Financing Arrangements

Effective Interest Rate at October 2, October 2, December 31,

Effective interest rate at April 2, April 2, December 31,

(Dollars in millions) 2022 2022 2021

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

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

Commercial Paper 0.16 % $ 1,852 $ 2,522

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

1.04 % 1,350 1,350

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

0.00 % 1,877 1,933

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

4 unchanged sentences

1.42 % 2,500 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 % 883 910

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

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

2.10 % 707 728

2 unchanged sentences

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

3.19 % 1,200 1,200

1.40 % 8.5 -Year Senior Notes, Due 1/23/2026 (euro-denominated)

2 unchanged sentences

1.65 % 552 568

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

1.75 % 7 -Year Senior Notes, Due 4/15/2027 (euro-denominated)

1.97 % 663 682

4 unchanged sentences

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

1.89 % 700 700

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

2 unchanged sentences

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)

0.89 % 1,933 1,990

9 unchanged sentences

2.94 % 773 796

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

1.73 % 994 1,023

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

2.90 % 1,200 1,200

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Effective interest rate at April 2, April 2, December 31,

(Dollars in millions) 2022 2022 2021

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

1.77 % 1,380 1,421

5.30 % 30 -Year Senior Notes, Due 2/1/2044

4 unchanged sentences

1.98 % 1,104 1,137

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

2.07 % 828 853

Total borrowings at par value

33,345 34,971

Fair Value Hedge Accounting Adjustments

Unamortized discount

7 unchanged sentences

Long-term obligations $ 31,389 $ 32,333

$ 21,688 $ 19,107

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.

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 discounts/premiums and the amortization of any debt issuance costs.

See Note 10 for fair value information pertaining to the company’s long-term borrowings.

In connection with the agreement to acquire PPD (Note 2), the company had a cash outlay of $ 35 million in 2021 associated with obtaining bridge financing commitments, included in other financing activities, net, in the accompanying statement of cash flows.

The bridge commitments were terminated in October 2021 upon the issuances of senior notes.

The company intends to finance the purchase price with cash on hand and the net proceeds from issuances of debt, including the

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

senior notes issued in October 2021.

The company is currently evaluating a future debt offering and the timing of such transaction is subject to market and other conditions.

Credit Facilities

The company has a 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 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.

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 October 2, 2021, no borrowings were outstanding under the Facility, although available capacity was reduced by approximately $ 4 million as a result of outstanding letters of credit.

As of April 2, 2022, no borrowings were outstanding under the Facility, although available capacity was reduced by approximately $ 4 million as a result of outstanding letters of credit.

Commercial Paper Programs

5 unchanged sentences

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 October 2, 2021, 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.

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 October 2, 2021.

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

In connection with these redemptions, the company incurred $ 197 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 received $ 22 million, included in other financing activities, net, in the accompanying statement of cash flows.

October 2021 Debt Issuances

Early in the fourth quarter, the company issued the following senior notes:

(In millions) Principal Value Issued

Floating Rate 18 -Month Senior Notes, Due 4/18/2023

Floating Rate 2 -Year Senior Notes, Due 10/18/2023

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

Floating Rate 3 -Year Senior Notes, Due 10/18/2024

1.215 % 3 -Year Senior Notes, Due 10/18/2024

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

1.125 % 12 -Year Senior Notes, Due 10/18/2033 (euro-denominated)

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

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

As of April 2, 2022, outstanding borrowings under these programs were $ 1.85 billion.

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

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

limits the ability of the company to pledge principal properties as security under borrowing arrangements.

The company was in compliance with all covenants at April 2, 2022.

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

In connection with the redemption, the company incurred $ 26 million of losses on the early extinguishment of debt.

Thermo Fisher Scientific (Finance I) B.V.

(Thermo Fisher International), a wholly-owned finance subsidiary of the company, issued 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 a registered public offering.

(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.

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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.

At October 2, 2021, there have been no material changes to the accruals for pending environmental-related matters disclosed in the company’s 2020 financial statements and notes included in the company’s Annual Report on Form 10-K.

While management believes the accruals for environmental remediation are adequate based on current estimates of remediation costs, the company may be subject to additional remedial or compliance costs due to future events such as changes in existing laws and regulations, changes in agency direction or enforcement policies, developments in remediation technologies or changes in the conduct of the company’s operations, which could have a material adverse effect on the company’s financial position, results of operations or cash flows.

At April 2, 2022, there have been no material changes to the accruals for pending environmental-related matters disclosed in the company’s 2021 financial statements and notes included in the company’s Annual Report on Form 10-K.

Litigation and Related Contingencies

6 unchanged sentences

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.

At October 2, 2021, there have been no material changes to the accruals for pending product liability, workers compensation, and other personal injury matters disclosed in the company’s 2020 financial statements and notes included in the company’s Annual Report on Form 10-K.

At April 2, 2022, there have been no material changes to the accruals for pending product liability, workers compensation, and other personal injury matters disclosed in the company’s 2021 financial statements and notes included in the company’s Annual Report on Form 10-K.

Although the company believes that the amounts accrued and estimated insurance 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, which could have a material adverse effect on the company’s results of operations, financial position, and cash flows.

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

The collectability of amounts due from its insurers is subject to the solvency and willingness of the insurer to pay, as well as the legal sufficiency of the insurance claims.

Management monitors the payment history as well as the financial condition and ratings of its insurers on an ongoing basis.

The collectability of amounts due from its insurers is subject to the

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Loss on Supply Agreement

In the third quarter of 2020, the Analytical Instruments segment recorded a charge to cost of product revenues for $ 108 million 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 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.

Comprehensive Income

solvency and willingness of the insurer to pay, as well as the legal sufficiency of the insurance claims.

Management monitors the payment history as well as the financial condition and ratings of its insurers on an ongoing basis.

Comprehensive Income and Shareholders' Equity

Changes in each component of accumulated other comprehensive items, net of tax, are as follows:

6 unchanged sentences

Other comprehensive items before reclassifications

( 20 ) — 3 ( 17 )

Amounts reclassified from accumulated other comprehensive items

1 unchanged sentence

( 20 ) 1 5 ( 14 )

Balance at October 2, 2021 $ ( 2,317 ) $ ( 75 ) $ ( 262 ) $ ( 2,654 )

Balance at April 2, 2022 $ ( 2,085 ) $ ( 34 ) $ ( 224 ) $ ( 2,343 )

Fair Value Measurements and Fair Value of Financial Instruments

Fair Value Measurements

The following tables present information about the company’s financial assets and liabilities measured at fair value on a recurring basis as of October 2, 2021 and December 31, 2020:

October 2, Quoted

The following tables present information about the company’s financial assets and liabilities measured at fair value on a recurring basis:

April 2, Quoted

markets Significant

3 unchanged sentences

$ 833 $ 833 $ — $ —

Investments in common stock, mutual funds and other similar instruments

Insurance contracts

14 unchanged sentences

$ 2,210 $ 2,210 $ — $ —

Investments in common stock, mutual funds and other similar instruments

Insurance contracts

11 unchanged sentences

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 (such as likelihood of achieving production or revenue milestones), of the contingent consideration.

Three Months Ended Nine Months Ended

October 2, September 26, October 2, September 26,

In the first quarter of 2022 and 2021 the company recorded $ 139 million and $ 1 million, respectively, of net losses on investments which are included in other income/(expense) in the accompanying statement of income.

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 recapitalization investment portfolio), of the contingent consideration.

Three months ended

April 2, April 3,

(In millions) 2022 2021

1 unchanged sentence

Beginning balance $ 317 $ 70

$ 149 $ 53 $ 70 $ 55

Acquisitions (including assumed balances) ( 18 ) 162

( 1 ) ( 1 ) ( 43 ) ( 3 )

Payments ( 30 ) ( 7 )

Changes in fair value included in earnings ( 8 ) 2

23 ( 8 ) ( 35 ) ( 8 )

Ending balance $ 261 $ 227

$ 171 $ 44 $ 171 $ 44

Derivative Contracts

The following table provides the aggregate notional value of outstanding derivative contracts.

October 2, December 31,

April 2, December 31,

(In millions) 2022 2021

Notional amount

Interest rate swaps - fair value hedges

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 balance sheet.

The following tables present the fair value of derivative instruments in the

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

accompanying 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

October 2, December 31, October 2, December 31,

April 2, December 31, April 2, December 31,

(In millions) 2022 2021 2022 2021

Derivatives designated as hedging instruments

Interest rate swaps (a)

$ — $ 25 $ — $ —

Cross-currency interest rate swaps (a)

$ 49 $ 25 $ — $ —

Derivatives not designated as hedging instruments

1 unchanged sentence

Total derivatives $ 55 $ 36 $ 2 $ 1

$ 75 $ 28 $ 4 $ 132

(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.

(a) The fair value of the cross-currency interest rate swaps is 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

October 2, December 31, October 2, December 31,

(In millions) 2021 2020 2021 2020

Long-term Obligations $ — $ 1,020 $ — $ 25

Gain (loss) recognized

Three Months Ended Nine Months Ended

October 2, September 26, October 2, September 26,

Three months ended

April 2, April 3,

(In millions) 2022 2021

2 unchanged sentences

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

$ — $ — $ 25 $ ( 43 )

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

1 unchanged sentence

Interest rate swaps

Included in unrealized losses on hedging instruments within other comprehensive items

Amount reclassified from accumulated other comprehensive items to other expense

( 2 ) ( 8 ) ( 21 ) ( 14 )

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

Financial instruments designated as net investment hedges

1 unchanged sentence

Included in currency translation adjustment within other comprehensive items

297 ( 295 ) 673 ( 276 )

Cross-currency interest rate swaps

Included in currency translation adjustment within other comprehensive items

20 ( 30 ) 52 ( 30 )

Included in other income/(expense)

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Gain (Loss) Recognized

Three Months Ended Nine Months Ended

October 2, September 26, October 2, September 26,

(In millions) 2021 2020 2021 2020

Derivatives not designated as hedging instruments

1 unchanged sentence

Included in cost of product revenues

7 ( 2 ) 8 ( 2 )

Included in other income/(expense)

( 8 ) 51 147 7

Cross-currency interest rate swaps

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.

The majority 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.

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.

See Note 1 to the consolidated financial statements for 2021 included in the company’s Annual Report on Form 10-K for additional information on the company’s risk management objectives and strategies.

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Fair Value of Other Financial Instruments

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

October 2, 2021 December 31, 2020

April 2, 2022 December 31, 2021

Carrying Fair Carrying Fair

1 unchanged sentence

$ 31,132 $ 30,324 $ 32,072 $ 33,449

Commercial paper

1,852 1,852 2,522 2,522

$ 33,060 $ 32,252 $ 34,670 $ 36,047

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

Nine Months Ended

October 2, September 26,

Three months ended

April 2, April 3,

(In millions) 2022 2021

4 unchanged sentences

Issuance of stock upon vesting of restricted stock units

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Cash, cash equivalents and restricted cash is included in the accompanying balance sheet as follows:

October 2, December 31,

April 2, December 31,

(In millions) 2022 2021

5 unchanged sentences

Restructuring and Other Costs

In the first nine months of 2021 the company recorded restructuring and other costs primarily associated with charges for impairment of acquired technology and third-party transaction/integration costs related to recent acquisitions, partially offset by credits for changes in estimates of contingent acquisition consideration.

In the first nine months of 2021, severance actions associated with facility consolidations and cost reduction measures affected less than 1 % of the company’s workforce.

As of November 4, 2021, the company has identified restructuring actions that will result in additional charges of approximately $ 25 million, primarily in 2021 and 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.

During the third quarter of 2021, the company recorded net restructuring and other costs (income) by segment as follows:

(In millions) Cost of

Revenues Selling,

Administrative

Expenses Restructuring

Life Sciences Solutions

$ — $ 23 $ ( 3 ) $ 20

Analytical Instruments

Specialty Diagnostics

Laboratory Products and Services

— 26 ( 3 ) 23

$ — $ 59 $ 18 $ 77

During the first nine months of 2021, the company recorded net restructuring and other costs (income) by segment as follows:

(In millions) Cost of

Revenues Selling,

Administrative

Expenses Restructuring

Life Sciences Solutions

$ 8 $ ( 24 ) $ 125 $ 109

Analytical Instruments

Specialty Diagnostics

— ( 2 ) 17 15

Laboratory Products and Services

— 49 ( 5 ) 44

$ 8 $ 33 $ 151 $ 192

The principal components of net restructuring and other costs (income) by segment are as follows:

Life Sciences Solutions

In the first nine months of 2021, the Life Sciences Solutions segment recorded $ 125 million of restructuring and other costs, primarily charges of $ 110 million for impairment of acquired technology resulting from a reduction in expected cash

In the first three months of 2022, restructuring and other costs primarily included continuing charges for headcount reductions and facility consolidations in an effort to streamline operations.

In 2022, severance actions associated with facility consolidations and cost reduction measures affected less than 0.1 % of the company’s workforce.

As of May 6, 2022, the company has identified restructuring actions that will result in additional charges of approximately $ 15 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.

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

flows, and compensation contractually due to employees of acquired businesses at the date of acquisition.

The segment recorded $ 24 million of net credits to selling, general, and administrative expense, principally for changes in estimates of contingent acquisition consideration, partially offset by third-party transaction costs related to recent acquisitions.

The segment also recorded $ 8 million of charges to cost of revenues for the sale of inventories revalued at the date of acquisition.

Restructuring and other costs by segment are as follows:

Three months ended

(In millions) 2022

Life Sciences Solutions

Analytical Instruments

Specialty Diagnostics

In the first nine months of 2021, the Specialty Diagnostics segment recorded $ 17 million of net restructuring and other charges, primarily for severance and write-downs of fixed assets to estimated disposal value in connection with the discontinuation of a product line in Europe.

Laboratory Products and Services

In the first nine months of 2021, the Laboratory Products and Services segment recorded $ 44 million of net restructuring and other charges, primarily for third-party transaction/integration costs related to recent acquisitions.

In the first nine months of 2021, the company recorded $ 18 million of net restructuring and other charges, primarily for product liability litigation and pre-acquisition related matters.

Laboratory Products and Biopharma Services

The following table summarizes the changes in the company’s accrued restructuring balance.

4 unchanged sentences

Net restructuring charges incurred in 2022 (b)

Currency translation

Balance at October 2, 2021 $ 12

Balance at April 2, 2022 $ 12

(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.

(b) Excludes $ 128 million of net charges, principally for impairment of acquired technology, compensation contractually due and paid to employees of acquired businesses at the date of acquisition, fixed asset write-downs, and charges associated with pre-acquisition related matters.

(b) Excludes $ 4 million of net gains.

The company expects to pay accrued restructuring costs primarily through 2022 .

1 unchanged sentence

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-Q

Item 1. Financial Statements