What changed in this filing

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Item 1. Financial Statements

2023-05-05 compared with 2022-11-04 · 156 added, 233 removed, 533 unchanged (42% of the section changed)

Financial Statements

CONDENSED CONSOLIDATED BALANCE SHEET

October 1, December 31,

CONDENSED CONSOLIDATED BALANCE SHEETS

April 1, December 31,

(In millions except share and per share amounts) 2023 2022

32 unchanged sentences

( 15,083 ) ( 12,017 )

Accumulated other comprehensive items ( 2,928 ) ( 2,329 )

Accumulated other comprehensive income/(loss) ( 3,054 ) ( 3,099 )

Total Thermo Fisher Scientific Inc.

5 unchanged sentences

THERMO FISHER SCIENTIFIC INC.

CONDENSED CONSOLIDATED STATEMENT OF INCOME

Three months ended Nine months ended

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

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

Three months ended

April 1, April 2,

(In millions except per share amounts) 2023 2022

2 unchanged sentences

Service revenues

4,094 1,970 11,862 6,079

Total revenues

2 unchanged sentences

Cost of product revenues

3,494 3,298 10,565 9,977

Cost of service revenues

2,881 1,381 8,535 4,148

Selling, general and administrative expenses

2,208 2,004 6,694 5,729

Research and development expenses

351 351 1,080 1,014

Restructuring and other costs

Total costs and operating expenses

8,967 7,052 26,933 21,019

Operating income 1,563 2,821

4 unchanged sentences

Income before income taxes

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

Provision for income taxes

2 unchanged sentences

Net income 1,292 2,220

net income attributable to noncontrolling interests and redeemable noncontrolling interest 3 1 12 2

net income/(losses) attributable to noncontrolling interests and redeemable noncontrolling interest 3 5

Net income attributable to Thermo Fisher Scientific Inc.

8 unchanged sentences

THERMO FISHER SCIENTIFIC INC.

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Three months ended Nine months ended

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

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three months ended

April 1, April 2,

(In millions) 2023 2022

1 unchanged sentence

Net income $ 1,292 $ 2,220

Other comprehensive items:

Other comprehensive income/(loss):

Currency translation adjustment:

Currency translation adjustment (net of tax provision (benefit) of $( 36 ) and $ 89 )

( 216 ) ( 32 ) ( 632 ) 121

Unrealized gains and losses on hedging instruments:

3 unchanged sentences

Amortization of net loss included in net periodic pension cost (net of tax benefit of $ 0 and $ 1 )

Total other comprehensive items

( 207 ) ( 24 ) ( 609 ) 153

Total other comprehensive income/(loss) 48 ( 17 )

Comprehensive income

1,291 1,879 4,777 6,222

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

3 unchanged sentences

THERMO FISHER SCIENTIFIC INC.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

Nine months ended

October 1, October 2,

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three months ended

April 1, April 2,

(In millions) 2023 2022

21 unchanged sentences

Financing activities

Net proceeds from issuance of debt

Repayment of debt

( 375 ) ( 2,803 )

Proceeds from issuance of commercial paper

Repayments of commercial paper

( 523 ) ( 1,259 )

Purchases of company common stock

2 unchanged sentences

( 117 ) ( 103 )

Net proceeds from issuance of company common stock under employee stock plans

Other financing activities, net

( 86 ) ( 14 )

Net cash used in financing activities

1 unchanged sentence

Exchange rate effect on cash ( 31 ) ( 99 )

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

Decrease in cash, cash equivalents and restricted cash

( 5,037 ) ( 1,712 )

4 unchanged sentences

THERMO FISHER SCIENTIFIC INC.

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 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

— — — 52 — — ( 47 ) — 5 — 5

Stock-based compensation

— — — 77 — — — — 77 — 77

Dividends declared ($ 0.30 per share)

— — — — ( 117 ) — — — ( 117 ) — ( 117 )

5 — — — 1,495 — — — 1,495 ( 2 ) 1,493

Other comprehensive items

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

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

Issuance of shares under employees' and directors' stock plans

— 1 1 83 — — ( 55 ) — 29 — 29

Stock-based compensation

— — — 51 — — — — 51 — 51

Dividends declared ($ 0.26 per share)

— — — — ( 102 ) — — — ( 102 ) — ( 102 )

— — — — 1,902 — — — 1,902 1 1,903

Other comprehensive items

— — — — — — — ( 24 ) ( 24 ) — ( 24 )

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

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.

THERMO FISHER SCIENTIFIC INC.

CONDENSED CONSOLIDATED STATEMENT OF REDEEMABLE NONCONTROLLING INTEREST AND EQUITY (Continued)

CONDENSED CONSOLIDATED STATEMENTS 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

2 unchanged sentences

(In millions) Shares Amount Shares Amount

Nine months ended October 1, 2022

Three months ended April 1, 2023

Balance at December 31, 2022 $ 116 441 $ 441 $ 16,743 $ 41,910 50 $ ( 12,017 ) $ ( 3,099 ) $ 43,978 $ 54 $ 44,032

7 unchanged sentences

— — — — ( 135 ) — — — ( 135 ) — ( 135 )

Net income/(loss)

4 — — — 1,289 — — — 1,289 ( 1 ) 1,288

Other comprehensive items

Other comprehensive income/(loss)

3 — — — — — — 45 45 — 45

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

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

Excise tax from stock repurchases — — — — — — ( 30 ) — ( 30 ) — ( 30 )

Balance at April 1, 2023 $ 123 441 $ 441 $ 16,889 $ 43,064 55 $ ( 15,083 ) $ ( 3,054 ) $ 42,257 $ 53 $ 42,310

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

7 unchanged sentences

— — — — ( 118 ) — — — ( 118 ) — ( 118 )

Net income/(loss)

5 — — — 2,215 — — — 2,215 — 2,215

Other comprehensive items

Other comprehensive income/(loss)

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

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

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

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

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 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.

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 1, 2023, the results of operations for the three-month periods ended April 1, 2023 and April 2, 2022, and the cash flows for the three-month periods ended April 1, 2023 and April 2, 2022.

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

4 unchanged sentences

Note 1 to the consolidated financial statements for 2022 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 1, 2022.

There have been no material changes in the company’s significant accounting policies during the three months ended April 1, 2023.

The components of inventories are as follows:

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

(In millions) April 1, 2023 December 31, 2022

Raw materials $ 2,416 $ 2,405

8 unchanged sentences

Actual results could differ from those estimates.

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Recent Accounting Pronouncements

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

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

The company will adopt this guidance in 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.

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;

The company adopted some aspects of this guidance in 2023 using a retrospective method and will adopt other aspects in 2024 using a prospective method.

The adoption of this guidance did not have, and 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.

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

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

conditions of transactions with a government arising from a grant or other forms of assistance accounted for under a contribution model.

The company adopted this guidance in the fourth quarter of 2022 using a prospective method.

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

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 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.

On January 3, 2023, the company acquired, within the Specialty Diagnostics segment, The Binding Site Group, a U.K.-based provider of specialty diagnostic assays and instruments to improve the diagnosis and management of blood cancers and immune system disorders.

The acquisition expands the segment’s portfolio with the addition of pioneering innovation in diagnostics and monitoring for multiple myeloma.

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

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

(In millions) The Binding Site

Purchase price

Cash acquired

Net assets acquired

Definite-lived intangible assets:

Customer relationships

Product technology

Net tangible assets

Deferred tax assets (liabilities)

The weighted-average amortization period for definite-lived intangible assets acquired in 2023 are 18 years for customer relationships, 15 years for product technology and 15 years for tradenames.

The weighted average amortization period for all definite-lived intangible assets acquired in 2023 is 17 years.

The preliminary allocation of the purchase price for the acquisition of The Binding Site is based on estimates of the fair value of the net assets acquired and is subject to adjustment upon finalization, largely with respect to acquired intangible assets and the related deferred taxes.

Measurements of these items inherently require significant estimates and assumptions.

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)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Revenues and Contract-related Balances

1 unchanged sentence

Revenues by type are as follows:

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

1,932 1,816 5,849 5,550

Three months ended

(In millions) April 1, 2023 April 2, 2022

$ 4,506 $ 6,110

1 unchanged sentence

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

Three months ended Nine months ended

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

Three months ended

(In millions) April 1, 2023 April 2, 2022

North America

$ 5,778 $ 6,323

2,406 2,557 8,007 8,037

1,971 1,836 6,077 5,294

Other regions

338 275 1,064 886

Consolidated revenues $ 10,710 $ 11,818

2 unchanged sentences

Remaining Performance Obligations

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 aggregate amount of the transaction price allocated to the remaining performance obligations for all open customer contracts as of April 1, 2023 was $ 25.81 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 .

3 unchanged sentences

Contract asset and liability balances are as follows:

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

(In millions) April 1, 2023 December 31, 2022

Current contract assets, net $ 1,375 $ 1,312

2 unchanged sentences

Noncurrent contract liabilities 1,172 1,179

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.

In the three months ended April 1, 2023, the company recognized revenues of $ 1.30 billion that were included in the contract liabilities balance at December 31, 2022.

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.

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Business Segment and Geographical Information

Business Segment Information

Three months ended Nine months ended

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

Three months ended

April 1, April 2,

(In millions) 2023 2022

2 unchanged sentences

Analytical Instruments

1,621 1,476 4,746 4,344

Specialty Diagnostics

1,065 1,362 3,648 4,212

Laboratory Products and Biopharma Services

( 496 ) ( 855 )

( 556 ) ( 716 ) ( 1,978 ) ( 2,195 )

Consolidated revenues

2 unchanged sentences

Life Sciences Solutions

1,039 1,821 4,542 5,818

Analytical Instruments

386 264 1,031 816

Specialty Diagnostics

220 310 816 983

Laboratory Products and Biopharma Services

725 383 2,036 1,360

Subtotal reportable segments

2,370 2,778 8,425 8,977

Cost of revenues adjustments

1 unchanged sentence

Selling, general and administrative expenses adjustments

( 11 ) ( 59 ) 10 ( 33 )

Restructuring and other costs

3 unchanged sentences

Consolidated operating income

1,710 2,278 6,532 7,490

Interest income 146 18

4 unchanged sentences

$ 1,363 $ 2,540

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.

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

Revenues by country based on customer location are as follows:

Three months ended Nine months ended

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

Three months ended

(In millions) April 1, 2023 April 2, 2022

United States

$ 5,587 $ 6,097

954 885 2,865 2,454

3,936 3,950 12,870 12,313

Consolidated revenues

1 unchanged sentence

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

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

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The provision for income taxes in the accompanying statements 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:

Three months ended

(In millions) April 1, 2023 April 2, 2022

Statutory federal income tax rate

Provision for income taxes at statutory rate

$ 1,272 $ 1,466

Increases (decreases) resulting from:

10 unchanged sentences

Intra-entity transfers

( 18 ) ( 258 )

Valuation allowances

2 unchanged sentences

State income taxes, net of federal tax

( 66 ) ( 35 )

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 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.

As of April 1, 2023 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:

4 unchanged sentences

Reductions for tax positions of prior years

Closure of tax years

Balance at end of period

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Earnings per Share

Three months ended Nine months ended

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

Three months ended

April 1, April 2,

(In millions except per share amounts) 2023 2022

8 unchanged sentences

Antidilutive stock options excluded from diluted weighted average shares

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Debt and Other Financing Arrangements

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

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

(Dollars in millions) 2023 2023 2022

10 unchanged sentences

0.93 % 1,084 1,071

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

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

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)

2 unchanged sentences

2.10 % 694 686

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

1.05 % 168 170

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

0.15 % 596 589

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

3.20 % 3 -Year Senior Notes, Due 1/21/2026 (euro-denominated)

6 unchanged sentences

1.96 % 650 642

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

1.18 % 217 221

4.80 % 5 -Year Senior Notes, Due 11/21/2027

5.00 % 600 600

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

0.77 % 867 857

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

1.46 % 650 642

1.75 % 7 -Year Senior Notes, Due 10/15/2028

4 unchanged sentences

2.74 % 900 900

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

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

6 unchanged sentences

2.54 % 650 642

1.49 % 10 -Year Senior Notes, Due 10/20/2032 (yen-denominated)

4.95 % 10 -Year Senior Notes, Due 11/21/2032

5.09 % 600 600

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

2 unchanged sentences

3.76 % 813 803

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

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

2.94 % 759 749

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

1.73 % 976 963

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

2 unchanged sentences

1.77 % 1,355 1,339

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

2.13 % 110 111

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

6 unchanged sentences

2.07 % 813 803

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

(Dollars in millions) 2023 2023 2022

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

2.43 % 251 254

Total borrowings at par value

20 unchanged sentences

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.

As of April 1, 2023, 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 October 1, 2022, there were no outstanding borrowings under these programs.

As of April 1, 2023, there were $ 0.82 billion of 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

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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.

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 April 1, 2023.

In the first quarter of 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 included in other income/(expense) on the accompanying statement of income.

In connection with the redemption, the company incurred $ 26 million of losses on the early extinguishment of debt included in other income/(expense) on the accompanying statements of income.

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Thermo Fisher Scientific (Finance I) B.V.

3 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 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.

At April 1, 2023, there have been no material changes to the accruals for pending environmental-related matters disclosed in the company’s 2022 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 2022 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

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.

It is reasonably possible, however, that an unfavorable outcome that exceeds the company’s current accrual estimate, if any, for one or more such matters 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 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.

At April 1, 2023, 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 2022 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.

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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

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Comprehensive Income/(Loss)

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

Comprehensive Income/(Loss)

Changes in each component of accumulated other comprehensive income/(loss), net of tax, are as follows:

(In millions) Currency

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Balance at December 31, 2022 $ ( 2,880 ) $ ( 33 ) $ ( 186 ) $ ( 3,099 )

Other comprehensive items before reclassifications

( 632 ) — 13 ( 619 )

Amounts reclassified from accumulated other comprehensive items

Net other comprehensive items

( 622 ) 2 21 ( 599 )

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).

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Other comprehensive income/(loss) before reclassifications

Amounts reclassified from accumulated other comprehensive income/(loss)

Net other comprehensive income/(loss)

Balance at April 1, 2023 $ ( 2,839 ) $ ( 30 ) $ ( 185 ) $ ( 3,054 )

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:

October 1, Quoted

April 1, Quoted

markets Significant

11 unchanged sentences

$ 216 $ — $ 80 $ 136

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

December 31, Quoted

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

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)

In the first three months ended April 1, 2023 and April 2, 2022, the company recorded $ 44 million and $ 139 million, respectively, of net losses on investments, which are included in other income/(expense) in the accompanying statements 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 Nine months ended

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

Three months ended

April 1, April 2,

(In millions) 2023 2022

7 unchanged sentences

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

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

(In millions) April 1, 2023 December 31, 2022

Notional amount

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

$ 1,950 $ 2,100

Currency exchange contracts

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

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

Fair value – assets Fair value – liabilities

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

April 1, December 31, April 1, December 31,

(In millions) 2023 2022 2023 2022

8 unchanged sentences

Gain (loss) recognized

Three months ended Nine months ended

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

Three months ended

April 1, April 2,

(In millions) 2023 2022

Fair value hedging relationships

Interest rate swaps

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

$ — $ — $ — $ 25

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

Derivatives designated as cash flow hedges

2 unchanged sentences

$ ( 4 ) $ ( 1 )

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

1 unchanged sentence

Included in currency translation adjustment within other comprehensive items

658 297 1,691 673

Cross-currency interest rate swaps

5 unchanged sentences

Included in other income/(expense)

20 ( 8 ) 32 147

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.

Gains and losses recognized on currency exchange contracts are included in the accompanying statements of income together with the corresponding, offsetting losses and gains on the underlying hedged transactions.

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

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See Note 1 to the consolidated financial statements for 2022 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

Fair Value of Other Financial Instruments

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

October 1, 2022 December 31, 2021

April 1, 2023 December 31, 2022

Carrying Fair Carrying Fair

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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

Nine months ended

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

Three months ended

(In millions) April 1, 2023 April 2, 2022

Non-cash investing and financing activities

Acquired but unpaid property, plant and equipment

Fair value of acquisition contingent consideration

Declared but unpaid dividends

Issuance of stock upon vesting of restricted stock units

Excise tax from stock repurchases

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

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

(In millions) April 1, 2023 December 31, 2022

Cash and cash equivalents $ 3,482 $ 8,524

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Cash, cash equivalents and restricted cash $ 3,500 $ 8,537

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

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

Restructuring and Other Costs

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.

In the first three months of 2023, restructuring and other costs primarily included impairment of long-lived assets, net charges for pre-acquisition litigation and other matters, and continuing charges for headcount reductions and facility consolidations in an effort to streamline operations.

In 2023, severance actions associated with facility consolidations and cost reduction measures affected less than 2 % of the company’s workforce.

As of May 5, 2023, the company has identified restructuring actions that will result in additional charges of approximately $ 125 million, primarily in 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 Nine months ended

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

Three months ended

(In millions) April 1, 2023

Life Sciences Solutions

2 unchanged sentences

Laboratory Products and Biopharma Services

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.

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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 statements of income have been summarized in the notes to the table.

(In millions) Total (a)

1 unchanged sentence

Net restructuring charges incurred in 2023 (b)

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

Balance at April 1, 2023 $ 55

(a) The movements in the restructuring liability principally consist of severance and other costs associated with facility consolidations.

(b) Excludes $ 62 million of net charges, principally $ 38 million of charges for impairment of long-lived assets in the Life Sciences Solutions and Laboratory Products and Biopharma Services segments, and, to a lesser extent, $ 18 million of net charges for pre-acquisition litigation and other matters.

The company expects to pay accrued restructuring costs primarily through 2023.

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