What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-11-04 compared with 2022-08-05 · 144 added, 117 removed, 622 unchanged (30% of the section changed)

1 unchanged sentence

CONDENSED CONSOLIDATED BALANCE SHEET

July 2, December 31,

October 1, December 31,

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

41 unchanged sentences

CONDENSED CONSOLIDATED STATEMENT OF INCOME

Three months ended Six months ended

July 2, July 3, July 2, July 3,

Three months ended Nine months ended

October 1, October 2, October 1, October 2,

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

15 unchanged sentences

Restructuring and other costs

24 119 26 133

Total costs and operating expenses

23 unchanged sentences

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Three months ended Six months ended

July 2, July 3, July 2, July 3,

Three months ended Nine months ended

October 1, October 2, October 1, October 2,

(In millions) 2022 2021 2022 2021

20 unchanged sentences

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

Six months ended

July 2, July 3,

Nine months ended

October 1, October 2,

(In millions) 2022 2021

21 unchanged sentences

Financing activities

Net proceeds from issuance of debt

Repayment of debt

8 unchanged sentences

Other financing activities, net

( 86 ) ( 14 )

Net cash used in financing activities

1 unchanged sentence

Exchange rate effect on cash ( 389 ) ( 17 )

Decrease in cash, cash equivalents and restricted cash

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

( 1,557 ) 1,712

9 unchanged sentences

(In millions) Shares Amount Shares Amount

Three months ended July 2, 2022

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 October 1, 2022

Balance at July 2, 2022 $ 117 440 $ 440 $ 16,467 $ 39,074 48 $ ( 10,964 ) $ ( 2,724 ) $ 42,293 $ 61 $ 42,354

Issuance of shares under employees' and directors' stock plans

7 unchanged sentences

( 3 ) — — — — — — ( 204 ) ( 204 ) — ( 204 )

Contributions from (distributions to) noncontrolling interests ( 4 ) — — — — — — — — — —

Balance at October 1, 2022 $ 119 440 $ 440 $ 16,596 $ 40,452 48 $ ( 11,011 ) $ ( 2,928 ) $ 43,549 $ 59 $ 43,608

Three months ended October 2, 2021

Balance at July 3, 2021 $ — 438 $ 438 $ 15,826 $ 32,076 45 $ ( 8,856 ) $ ( 2,630 ) $ 36,854 $ 47 $ 36,901

Three months ended July 3, 2021

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

Issuance of shares under employees' and directors' stock plans

8 unchanged sentences

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

Balance at July 3, 2021 $ — 438 $ 438 $ 15,826 $ 32,076 45 $ ( 8,856 ) $ ( 2,630 ) $ 36,854 $ 47 $ 36,901

Balance at October 2, 2021 $ — 439 $ 439 $ 15,960 $ 33,876 45 $ ( 8,911 ) $ ( 2,654 ) $ 38,710 $ 47 $ 38,757

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

5 unchanged sentences

(In millions) Shares Amount Shares Amount

Six months ended July 2, 2022

Nine months ended October 1, 2022

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

11 unchanged sentences

Contributions from (distributions to) noncontrolling interests ( 7 ) — — — — — — — — ( 1 ) ( 1 )

Balance at July 2, 2022 $ 117 440 $ 440 $ 16,467 $ 39,074 48 $ ( 10,964 ) $ ( 2,724 ) $ 42,293 $ 61 $ 42,354

Six months ended July 3, 2021

Balance at October 1, 2022 $ 119 440 $ 440 $ 16,596 $ 40,452 48 $ ( 11,011 ) $ ( 2,928 ) $ 43,549 $ 59 $ 43,608

Nine months ended October 2, 2021

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

11 unchanged sentences

Contributions from (distributions to) noncontrolling interests — — — — — — — — — 35 35

Balance at July 3, 2021 $ — 438 $ 438 $ 15,826 $ 32,076 45 $ ( 8,856 ) $ ( 2,630 ) $ 36,854 $ 47 $ 36,901

Balance at October 2, 2021 $ — 439 $ 439 $ 15,960 $ 33,876 45 $ ( 8,911 ) $ ( 2,654 ) $ 38,710 $ 47 $ 38,757

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

7 unchanged sentences

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 July 2, 2022, the results of operations for the three- and six-month periods ended July 2, 2022 and July 3, 2021, and the cash flows for the six-month periods ended July 2, 2022 and July 3, 2021.

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 1, 2022, the results of operations for the three- and nine-month periods ended October 1, 2022 and October 2, 2021, and the cash flows for the nine-month periods ended October 1, 2022 and October 2, 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 six months ended July 2, 2022.

There have been no material changes in the company’s significant accounting policies during the nine months ended October 1, 2022.

The components of inventories are as follows:

July 2, December 31,

(In millions) 2022 2021

(In millions) October 1, 2022 December 31, 2021

Raw materials $ 2,405 $ 1,922

8 unchanged sentences

Actual results could differ from those estimates.

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Recent Accounting Pronouncements

4 unchanged sentences

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

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In September 2022, the FASB issued new guidance to require entities to disclose information about supplier finance programs.

Among other things, the new guidance requires expanded disclosure about key program terms, payment terms, and amounts outstanding for obligations under these programs for each period presented.

The company will adopt some aspects of this guidance in 2023 using a retrospective method and other aspects in 2024 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 arrangements of this nature entered into by the company.

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 workforces.

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

The company has entered into an agreement to acquire The Binding Site Group for £ 2.25 billion, payable as € 2.59 billion in cash.

The Binding Site Group provides specialty diagnostic assays and instruments to improve the diagnosis and management of blood cancers and immune system disorders.

The transaction is subject to customary closing conditions, including regulatory approvals.

Upon completion, The Binding Site Group will become part of the Specialty Diagnostics segment.

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.

The preliminary allocations of the purchase price for the acquisitions of PPD, Inc.

and PeproTech, Inc.

1 unchanged sentence

Measurements of these items inherently require significant estimates and assumptions.

During the first six months of 2022, the company adjusted the preliminary allocations of PPD and PeproTech, which among others increased goodwill ($ 95 million) and other liabilities assumed ($ 22 million), and decreased definite-lived intangible assets ($ 43 million), other current assets ($ 34 million), contract liabilities ($ 29 million), equity method investments ($ 23 million), and the fair value of assumed contingent consideration ($ 18 million).

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

During the first nine months of 2022, the company adjusted the preliminary allocations of PPD and PeproTech, which among others increased goodwill ($ 122 million) and other liabilities assumed ($ 35 million), and decreased definite-lived intangible assets ($ 43 million), property, plant and equipment ($ 39 million), other current assets ($ 38 million), contract liabilities ($ 29 million), equity method investments ($ 23 million), and the fair value of assumed contingent consideration ($ 18 million).

The adjustments to depreciation and amortization expenses recorded during the first nine months of 2022 were not material.

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Revenues and Contract-related Balances

1 unchanged sentence

Revenues by type are as follows:

Three months ended Six months ended

July 2, July 3, July 2, July 3,

(In millions) 2022 2021 2022 2021

Three months ended Nine months ended

(In millions) October 1, 2022 October 2, 2021 October 1, 2022 October 2, 2021

$ 4,651 $ 5,544 $ 15,754 $ 16,880

3 unchanged sentences

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

Three months ended Six months ended

July 2, July 3, July 2, July 3,

(In millions) 2022 2021 2022 2021

Three months ended Nine months ended

(In millions) October 1, 2022 October 2, 2021 October 1, 2022 October 2, 2021

North America

7 unchanged sentences

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 July 2, 2022 was $ 27.70 billion.

The aggregate amount of the transaction price allocated to the remaining performance obligations for all open customer contracts as of October 1, 2022 was $ 26.61 billion.

The company will recognize revenues for these performance obligations as they are satisfied, approximately 57 % of which is expected to occur within the next twelve months .

1 unchanged sentence

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.

Noncurrent contract assets and noncurrent contract liabilities are included within other assets and other long-term liabilities in the accompanying balance sheet, respectively.

Contract asset and liability balances are as follows:

July 2, December 31,

(In millions) 2022 2021

(In millions) October 1, 2022 December 31, 2021

Current contract assets, net $ 1,248 $ 968

2 unchanged sentences

Noncurrent contract liabilities 1,200 1,238

In the three and six months ended July 2, 2022, the company recognized revenues of $ 0.71 billion and $ 1.99 billion, respectively, that were included in the contract liabilities balance at December 31, 2021.

In the three and six months ended July 3, 2021, the company recognized revenues of $ 0.37 billion and $ 0.93 billion, respectively, that were included in the contract liabilities balance at December 31, 2020.

In the three and nine months ended October 1, 2022, the company recognized revenues of $ 0.34 billion and $ 2.33 billion, respectively, that were included in the contract liabilities balance at December 31, 2021.

In the three and nine months ended October 2, 2021, the company recognized revenues of $ 0.17 billion and $ 1.10 billion, respectively, that were included in the contract liabilities balance at December 31, 2020.

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Business Segment and Geographical Information

Business Segment Information

Three months ended Six months ended

July 2, July 3, July 2, July 3,

Three months ended Nine months ended

October 1, October 2, October 1, October 2,

(In millions) 2022 2021 2022 2021

24 unchanged sentences

Selling, general and administrative expenses adjustments

( 11 ) ( 59 ) 10 ( 33 )

Restructuring and other costs

8 unchanged sentences

( 4 ) 18 ( 139 ) ( 168 )

Income before income taxes

Consolidated income before taxes

$ 1,601 $ 2,177 $ 6,058 $ 6,979

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.

Cost of revenues adjustments included in the above table consist of charges for the sale of inventories revalued at the date of acquisition and inventory write-downs associated with large-scale abandonments of product lines.

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

Geographical Information

Revenues by country based on customer location are as follows:

Three months ended Six months ended

July 2, July 3, July 2, July 3,

(In millions) 2022 2021 2022 2021

Three months ended Nine months ended

(In millions) October 1, 2022 October 2, 2021 October 1, 2022 October 2, 2021

United States

4 unchanged sentences

$ 10,677 $ 9,330 $ 33,465 $ 28,509

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:

Six months ended

July 2, July 3,

(In millions) 2022 2021

Nine months ended

(In millions) October 1, 2022 October 2, 2021

Statutory federal income tax rate

11 unchanged sentences

( 63 ) ( 96 )

Provision for (reversal of) tax reserves, net

Intra-entity transfers

2 unchanged sentences

Withholding taxes

Tax return reassessments and settlements

State income taxes, net of federal tax

1 unchanged sentence

Provision for income taxes

During the third quarter of 2022, the company settled an IRS audit relating to the 2017 and 2018 tax years.

The company recorded a $ 208 million net tax benefit primarily from this settlement and related impacts, which resulted in a decrease in the company’s unrecognized tax benefits of $ 658 million.

The company recorded $ 49 million of charges for expired tax credits and other related components of the settlement.

The company recorded a charge of $ 395 million to establish a valuation allowance against certain U.S.

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

The company also recorded $ 101 million of additional net unrecognized tax benefit liabilities related to other tax audits.

The company has operations and a taxable presence in approximately 70 countries outside the U.S.

3 unchanged sentences

Unrecognized Tax Benefits

As of July 2, 2022 the company had $ 1.10 billion of unrecognized tax benefits substantially all of which, if recognized, would reduce the effective tax rate.

As of October 1, 2022 the company had $ 0.56 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:

2 unchanged sentences

Additions for tax positions of current year

Additions for tax positions of prior years

Reductions for tax positions of prior years

Closure of tax years

3 unchanged sentences

Earnings per Share

Three months ended Six months ended

July 2, July 3, July 2, July 3,

Three months ended Nine months ended

October 1, October 2, October 1, October 2,

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

9 unchanged sentences

Debt and Other Financing Arrangements

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

Effective interest rate at October 1, October 1, December 31,

(Dollars in millions) 2022 2022 2021

48 unchanged sentences

2.94 % 686 796

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Effective interest rate at October 1, October 1, December 31,

(Dollars in millions) 2022 2022 2021

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

2 unchanged sentences

2.90 % 1,200 1,200

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

(Dollars in millions) 2022 2022 2021

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

29 unchanged sentences

The covenants in the Facility include a Consolidated Net Interest Coverage Ratio (Consolidated EBITDA to Consolidated Net Interest Expense), as such terms are defined in the Facility.

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 July 2, 2022, no borrowings were outstanding under the Facility, although available capacity was reduced by immaterial outstanding letters of credit.

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 Net Interest Coverage Ratio of 3.5 :1.0 as of the last day of any fiscal quarter.

As of October 1, 2022, no borrowings were outstanding under the Facility, although available capacity was reduced by immaterial 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 July 2, 2022, there were no outstanding borrowings under these programs.

As of October 1, 2022, there were no 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.

1 unchanged sentence

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

The company is subject

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 July 2, 2022.

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 1, 2022.

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

5 unchanged sentences

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

October 2022 Debt Issuances

In the fourth quarter of 2022, the company issued the following senior notes:

(In millions) Principal Value Issued

0.853 % 3 -Year Senior Notes, Due 10/20/2025 (yen-denominated)

1.054 % 5 -Year Senior Notes, Due 10/20/2027 (yen-denominated)

1.279 % 7 -Year Senior Notes, Due 10/19/2029 (yen-denominated)

1.490 % 10 -Year Senior Notes, Due 10/20/2032 (yen-denominated)

2.069 % 20 -Year Senior Notes, Due 10/20/2042 (yen-denominated)

2.382 % 30 -Year Senior Notes, Due 10/18/2052 (yen-denominated)

Commitments and Contingencies

3 unchanged sentences

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 July 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.

At October 1, 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.

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 and cash flows.

4 unchanged sentences

The company has no material accruals for pending litigation or claims for which accrual amounts are not disclosed in the company’s 2021 financial statements and notes included in the company’s Annual Report on Form 10-K, nor are material losses deemed probable for such matters.

It is reasonably possible, however, that an unfavorable outcome that exceeds the company’s current accrual estimate, if any, for one or more of the matters described below could have a material adverse effect on the company’s results of operations, financial position and cash flows.

It is reasonably possible, however, that

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

an unfavorable outcome that exceeds the company’s current accrual estimate, if any, for one or more of the matters described below could have a material adverse effect on the company’s results of operations, financial position and cash flows.

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.

At July 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.

At October 1, 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

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

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.

Comprehensive Income

Comprehensive Income and Shareholders' Equity

Comprehensive Income (Loss)

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

10 unchanged sentences

( 622 ) 2 21 ( 599 )

Balance at July 2, 2022 $ ( 2,474 ) $ ( 34 ) $ ( 216 ) $ ( 2,724 )

Balance at October 1, 2022 $ ( 2,687 ) $ ( 33 ) $ ( 208 ) $ ( 2,928 )

Shareholders’ Equity

In the fourth quarter of 2022, the company repurchased $ 1.00 billion of the company’s common stock ( 2.0 million shares).

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Fair Value Measurements and Fair Value of Financial Instruments

1 unchanged sentence

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

July 2, Quoted

October 1, Quoted

markets Significant

11 unchanged sentences

$ 170 $ — $ 2 $ 168

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, Quoted

17 unchanged sentences

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

In the three and six months ended July 2, 2022, the company recorded $ 17 million and $( 122 ) million, respectively, of net gains (losses) on investments which are included in other income/(expense) in the accompanying statement of income.

In the three and six months ended July 3, 2021, the company recorded $ 1 million and $ 2 million, respectively, of net losses on investments which are included in other income/(expense) in the accompanying statement of income.

In the three and nine months ended October 1, 2022, the company recorded $ 13 million and $ 136 million, respectively, of net losses on investments which are included in other income/(expense) in the accompanying statement of income.

In the three and nine months ended October 2, 2021, the company recorded $ 25 million and $ 23 million, respectively, of net gains on investments which are included in other income/(expense) in the accompanying statement of income.

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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 Six months ended

July 2, July 3, July 2, July 3,

Three months ended Nine months ended

October 1, October 2, October 1, October 2,

(In millions) 2022 2021 2022 2021

7 unchanged sentences

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

July 2, December 31,

(In millions) 2022 2021

(In millions) October 1, 2022 December 31, 2021

Notional amount

1 unchanged sentence

Currency exchange contracts

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

1 unchanged sentence

Fair value – assets Fair value – liabilities

July 2, December 31, July 2, December 31,

October 1, December 31, October 1, December 31,

(In millions) 2022 2021 2022 2021

8 unchanged sentences

Gain (loss) recognized

Three months ended Six months ended

July 2, July 3, July 2, July 3,

Three months ended Nine months ended

October 1, October 2, October 1, October 2,

(In millions) 2022 2021 2022 2021

8 unchanged sentences

( 1 ) ( 2 ) ( 3 ) ( 21 )

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Gain (loss) recognized

Three months ended Nine months ended

October 1, October 2, October 1, October 2,

(In millions) 2022 2021 2022 2021

Financial instruments designated as net investment hedges

4 unchanged sentences

Included in currency translation adjustment within other comprehensive items

51 ( 6 ) 74 32

Included in other income/(expense)

2 unchanged sentences

Included in cost of product revenues

21 ( 11 ) 12 1

Included in other income/(expense)

3 unchanged sentences

A portion of the company’s euro-denominated senior notes, certain foreign-denominated payables, 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.

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

swaps, excluding interest accruals, are included in currency translation adjustment within other comprehensive items and shareholders’ equity.

Accordingly, foreign currency transaction gains or losses due to spot rate fluctuations on the euro-denominated debt instruments and certain foreign-denominated payables, 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.

1 unchanged sentence

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

July 2, 2022 December 31, 2021

October 1, 2022 December 31, 2021

Carrying Fair Carrying Fair

5 unchanged sentences

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.

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Supplemental Cash Flow Information

Six months ended

July 2, July 3,

(In millions) 2022 2021

Nine months ended

(In millions) October 1, 2022 October 2, 2021

Non-cash investing and financing activities

4 unchanged sentences

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

July 2, December 31,

(In millions) 2022 2021

(In millions) October 1, 2022 December 31, 2021

Cash and cash equivalents $ 2,919 $ 4,477

3 unchanged sentences

Amounts included in restricted cash represent funds held as collateral for bank guarantees and incoming cash in China awaiting government administrative clearance.

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Restructuring and Other Costs

In the first six 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 0.5 % of the company’s workforce.

As of August 5, 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.

In the first nine months of 2022, restructuring and other costs primarily included impairment of long-lived assets and 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 approximately 0.5 % of the company’s workforce.

As of November 4, 2022, the company has identified restructuring actions that will result in additional charges of approximately $ 85 million, primarily in 2022 and 2023, 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 by segment are as follows:

Three months ended Six months ended

July 2, July 2,

(In millions) 2022 2022

Three months ended Nine months ended

(In millions) October 1, 2022 October 1, 2022

Life Sciences Solutions

2 unchanged sentences

Laboratory Products and Biopharma Services

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

The following table summarizes the changes in the company’s accrued restructuring balance, which is included in other accrued expenses in the accompanying balance sheet.

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.

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In millions) Total (a)

1 unchanged sentence

Net restructuring charges incurred in 2022 (b)

Balance at July 2, 2022 $ 15

Currency translation

Balance at October 1, 2022 $ 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.

(b) Excludes $ 4 million of net non-cash charges.

(b) Excludes $ 28 million of net non-cash charges, primarily charges for impairment of long-lived assets.

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