What changed in this filing

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Item 1. Financial Statements

2023-11-03 compared with 2023-08-04 · 137 added, 105 removed, 658 unchanged (27% of the section changed)

1 unchanged sentence

CONDENSED CONSOLIDATED BALANCE SHEETS

July 1, December 31,

September 30, December 31,

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

41 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

Three months ended Six months ended

July 1, July 2, July 1, July 2,

Three months ended Nine months ended

September 30, October 1, September 30, October 1,

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

15 unchanged sentences

Restructuring and other costs

183 24 295 26

Total costs and operating expenses

23 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three months ended Six months ended

July 1, July 2, July 1, July 2,

Three months ended Nine months ended

September 30, October 1, September 30, October 1,

(In millions) 2023 2022 2023 2022

6 unchanged sentences

Unrealized gains and losses on hedging instruments:

Reclassification adjustment for losses included in net income (net of tax benefit of $ 0 , $ 1 , $ 1 and $ 1 )

Reclassification adjustment for losses included in net income (net of tax (provision) benefit of $ 0 , $ 0 , $ 1 and $ 1 )

Pension and other postretirement benefit liability adjustments:

Pension and other postretirement benefit liability adjustments arising during the period (net of tax (provision) benefit of $( 1 ), $( 3 ), $( 1 ) and $( 6 ))

Amortization of net loss included in net periodic pension cost (net of tax benefit of $ 0 , $ 1 , $ 0 and $ 2 )

( 2 ) 2 ( 2 ) 4

Amortization of net loss included in net periodic pension cost (net of tax (provision) benefit of $( 1 ), $ 0 , $( 1 ) and $ 2 )

Total other comprehensive income/(loss) ( 109 ) ( 207 ) 62 ( 609 )

2 unchanged sentences

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

( 26 ) — ( 26 ) 2

Comprehensive income attributable to Thermo Fisher Scientific Inc.

3 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six months ended

July 1, July 2,

Nine months ended

September 30, October 1,

(In millions) 2023 2022

21 unchanged sentences

Financing activities

Net proceeds from issuance of debt

Repayment of debt

23 unchanged sentences

(In millions) Shares Amount Shares Amount

Three months ended July 1, 2023

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 September 30, 2023

Balance at July 1, 2023 $ 113 441 $ 441 $ 17,030 $ 44,289 55 $ ( 15,084 ) $ ( 2,924 ) $ 43,752 $ 50 $ 43,802

Issuance of shares under employees' and directors' stock plans

9 unchanged sentences

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

Excise tax from stock repurchases — — — — — — 1 — 1 — 1

Balance at September 30, 2023 $ 118 442 $ 442 $ 17,165 $ 45,869 56 $ ( 15,121 ) $ ( 3,027 ) $ 45,328 $ 18 $ 45,346

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

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

Issuance of shares under employees' and directors' stock plans

8 unchanged sentences

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

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

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

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

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 1, 2023

Nine months ended September 30, 2023

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

13 unchanged sentences

Excise tax from stock repurchases — — — — — — ( 29 ) — ( 29 ) — ( 29 )

Balance at July 1, 2023 $ 113 441 $ 441 $ 17,030 $ 44,289 55 $ ( 15,084 ) $ ( 2,924 ) $ 43,752 $ 50 $ 43,802

Six months ended July 2, 2022

Balance at September 30, 2023 $ 118 442 $ 442 $ 17,165 $ 45,869 56 $ ( 15,121 ) $ ( 3,027 ) $ 45,328 $ 18 $ 45,346

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

12 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

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

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

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 September 30, 2023, the results of operations for the three- and nine-month periods ended September 30, 2023 and October 1, 2022, and the cash flows for the nine-month periods ended September 30, 2023 and October 1, 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 six months ended July 1, 2023.

There have been no material changes in the company’s significant accounting policies during the nine months ended September 30, 2023.

The components of inventories are as follows:

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

(In millions) September 30, 2023 December 31, 2022

Raw materials $ 2,223 $ 2,405

26 unchanged sentences

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

On August 14, 2023, the company acquired, within the Laboratory Products and Biopharma Services segment, CorEvitas, LLC, a U.S.-based provider of regulatory-grade, real-world evidence for approved medical treatments and therapies.

The acquisition expands the segment’s portfolio with the addition of highly complementary real-world evidence solutions to enhance decision-making as well as the time and cost of drug development.

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

(In millions) The Binding Site CorEvitas

Purchase price

$ 2,412 $ 730

Cash acquired

$ 2,699 $ 910

Net assets acquired

4 unchanged sentences

Deferred tax assets (liabilities)

( 279 ) ( 68 )

$ 2,699 $ 910

In addition, in 2023, the company acquired, within the Analytical Instruments segment, a U.S.-based developer of Raman-based spectroscopy solutions for in-line measurement.

The weighted-average amortization period for definite-lived intangible assets acquired in 2023 are 18 years for customer relationships, 14 years for product technology and 15 years for tradenames.

The weighted-average amortization period for definite-lived intangible assets acquired in 2023 are 18 years for customer relationships, 14 years for product technology, 15 years for tradenames, and 13 years for backlog.

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

Pending Acquisition

The company has entered into an agreement to acquire CorEvitas, LLC for approximately $ 0.91 billion in cash.

CorEvitas provides regulatory-grade, real-world evidence for approved medical treatments and therapies.

The transaction, which is expected to be completed by the end of 2023, is subject to customary closing conditions, including regulatory approvals.

Upon completion, CorEvitas will become part of the Laboratory Products and Biopharma Services segment.

Proposed Acquisition

On October 17, 2023, the company entered into a purchase agreement to acquire all of the issued and outstanding shares of Olink Holding AB (publ) at a price of $ 26.00 per share, or approximately $ 3.1 billion.

Olink is a leading provider of next-generation proteomics solutions that will expand the company’s capabilities in this field.

The company has commenced a tender offer to acquire all of the American Depositary Shares and common shares of Olink.

The transaction is expected to close by mid-year 2024, subject to the satisfaction of customary closing conditions including receipt of applicable regulatory approvals, and completion of the tender offer.

Upon completion, Olink will become part of the Life Sciences Solutions segment.

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

THERMO FISHER SCIENTIFIC INC.

3 unchanged sentences

Revenues by type are as follows:

Three months ended Six months ended

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

Three months ended Nine months ended

(In millions) September 30, 2023 October 1, 2022 September 30, 2023 October 1, 2022

$ 4,289 $ 4,651 $ 13,228 $ 15,754

3 unchanged sentences

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

Three months ended Six months ended

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

Three months ended Nine months ended

(In millions) September 30, 2023 October 1, 2022 September 30, 2023 October 1, 2022

North America

8 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 July 1, 2023 was $ 25.39 billion.

The aggregate amount of the transaction price allocated to the remaining performance obligations for all open customer contracts as of September 30, 2023 was $ 26.81 billion.

The company will recognize revenues for these performance obligations as they are satisfied, approximately 53 % of which is expected to occur within the next twelve months .

3 unchanged sentences

Contract asset and liability balances are as follows:

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

(In millions) September 30, 2023 December 31, 2022

Current contract assets, net $ 1,465 $ 1,312

2 unchanged sentences

Noncurrent contract liabilities 1,348 1,179

In the three and six months ended July 1, 2023, the company recognized revenues of $ 0.68 billion and $ 1.98 billion, respectively, that were included in the contract liabilities balance at December 31, 2022.

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 nine months ended September 30, 2023, the company recognized revenues of $ 0.35 billion and $ 2.32 billion, respectively, that were included in the contract liabilities balance at December 31, 2022.

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.

Noncurrent contract liabilities increased during 2023 primarily due to rights to advanced payments from a customer.

THERMO FISHER SCIENTIFIC INC.

2 unchanged sentences

Business Segment Information

Three months ended Six months ended

July 1, July 2, July 1, July 2,

Three months ended Nine months ended

September 30, October 1, September 30, October 1,

(In millions) 2023 2022 2023 2022

38 unchanged sentences

Cost of revenues adjustments included in the above table consist of charges for the sale of inventories revalued at the date of acquisition, inventory write-downs associated with large-scale abandonment of product lines, and accelerated depreciation on manufacturing assets to be abandoned due to facility consolidations.

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.

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

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

Three months ended Nine months ended

(In millions) September 30, 2023 October 1, 2022 September 30, 2023 October 1, 2022

United States

1 unchanged sentence

5,084 4,890 15,363 15,735

4,300 4,123 8,553 8,934

Consolidated revenues

3 unchanged sentences

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:

Six months ended

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

Nine months ended

(In millions) September 30, 2023 October 1, 2022

Statutory federal income tax rate

Provision for income taxes at statutory rate

$ 957 $ 1,272

Increases (decreases) resulting from:

15 unchanged sentences

Tax return reassessments and settlements

( 63 ) ( 94 )

State income taxes, net of federal tax

1 unchanged sentence

Provision for income taxes

During the third quarter of 2023, the company released a valuation allowance of $ 183 million in jurisdictions where the deferred tax assets are now expected to be realized.

In the first nine months of 2023 the company also recorded a tax benefit of $ 91 million, net of related tax expenses, from a foreign exchange loss on an intercompany debt refinancing transaction, as well as a $ 144 million tax benefit resulting from a capital loss generated as part of an intra-entity transaction.

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 1, 2023 the company had $ 0.56 billion of unrecognized tax benefits substantially all of which, if recognized, would reduce the effective tax rate.

As of September 30, 2023 the company had $ 0.55 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

Earnings per Share

Three months ended Six months ended

July 1, July 2, July 1, July 2,

Three months ended Nine months ended

September 30, October 1, September 30, October 1,

(In millions except per share amounts) 2023 2022 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 July 1, July 1, December 31,

Effective interest rate at September 30, September 30, December 31,

(Dollars in millions) 2023 2023 2022

25 unchanged sentences

1.52 % 740 749

4.953 % 3 -Year Senior Notes, Due 8/10/2026

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

8 unchanged sentences

0.76 % 846 857

0.77 % 5 -Year Senior Notes, Due 9/6/2028 (yen-denominated)

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

7 unchanged sentences

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

4.977 % 7 -Year Senior Notes, Due 8/10/2030

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

0.88 % 1,850 1,873

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Effective interest rate at September 30, September 30, December 31,

(Dollars in millions) 2023 2023 2022

0.875 % 12 -Year Senior Notes, Due 10/1/2031 (euro-denominated)

7 unchanged sentences

5.09 % 600 600

5.086 % 10 -Year Senior Notes, Due 8/10/2033

5.20 % 1,000 —

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

2 unchanged sentences

3.76 % 793 803

1.50 % 12 -Year Senior Notes, due 9/6/2035 (yen-denominated)

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

9 unchanged sentences

5.404 % 20 -Year Senior Notes, due 8/10/2043

2.02 % 20 -Year Senior Notes, due 9/6/2043 (yen-denominated)

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

5.37 % 400 400

3 unchanged sentences

1.98 % 1,057 1,071

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

(Dollars in millions) 2023 2023 2022

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

24 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 July 1, 2023, no borrowings were outstanding under the Facility, although available capacity was reduced by immaterial outstanding letters of credit.

As of September 30, 2023, no borrowings were outstanding under the Facility, although available capacity was reduced by immaterial outstanding letters of credit.

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Commercial Paper Programs

7 unchanged sentences

Each of the U.S.

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

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

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

The company was in compliance with all covenants at July 1, 2023.

dollar and euro-denominated fixed rate senior notes and yen-denominated private placement notes may be redeemed at a redemption price of 100 % of the principal amount plus a specified make-whole premium and accrued interest, together with swap breakage costs payable to holders of yen-denominated private placement notes who have entered into cross-currency swap agreements.

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

The company was in compliance with all covenants at September 30, 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 statements of income.

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Thermo Fisher Scientific (Finance I) B.V.

8 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 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.

At September 30, 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.

3 unchanged sentences

Due to the inherent uncertainties associated with pending litigation or claims, the company cannot predict the outcome, nor, with respect to certain pending litigation or claims where no liability has been accrued, make a meaningful estimate of the reasonably possible loss or range of loss that could result from an unfavorable outcome.

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.

The company has no material accruals for pending litigation or claims for

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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 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.

1 unchanged sentence

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 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.

At September 30, 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.

2 unchanged sentences

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

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Comprehensive Income/(Loss)

Comprehensive Income (Loss)

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

7 unchanged sentences

Amounts reclassified from accumulated other comprehensive income/(loss)

Net other comprehensive income/(loss)

10 5 ( 2 ) 13

Balance at July 1, 2023 $ ( 2,707 ) $ ( 29 ) $ ( 188 ) $ ( 2,924 )

Net other comprehensive income/(loss)

Balance at September 30, 2023 $ ( 2,813 ) $ ( 28 ) $ ( 186 ) $ ( 3,027 )

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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 1, Quoted

September 30, Quoted

markets Significant

3 unchanged sentences

$ 2,662 $ 2,662 $ — $ —

Bank time deposits 6 6 — —

Insurance contracts

6 unchanged sentences

$ 234 $ — $ 153 $ 81

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

December 31, Quoted

17 unchanged sentences

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

In the six months ended July 1, 2023, the company recorded $ 44 million, of net losses on investments, which are included in other income/(expense) in the accompanying statements of income.

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 statements of income.

In the three and nine months ended September 30, 2023, the company recorded $ 11 million and $( 33 ) million, respectively, of net gains/(losses) on investments, which are included in other income/(expense) in the accompanying statements 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 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 Six months ended

July 1, July 2, July 1, July 2,

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Three months ended Nine months ended

September 30, October 1, September 30, October 1,

(In millions) 2023 2022 2023 2022

7 unchanged sentences

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

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

(In millions) September 30, 2023 December 31, 2022

Notional amount

2 unchanged sentences

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.

1 unchanged sentence

Fair value – assets Fair value – liabilities

July 1, December 31, July 1, December 31,

September 30, December 31, September 30, December 31,

(In millions) 2023 2022 2023 2022

8 unchanged sentences

Gain (loss) recognized

Three months ended Six months ended

July 1, July 2, July 1, July 2,

Three months ended Nine months ended

September 30, October 1, September 30, October 1,

(In millions) 2023 2022 2023 2022

1 unchanged sentence

Interest rate swaps

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

Amount reclassified from accumulated other comprehensive items to interest expense

$ ( 1 ) $ ( 1 ) $ ( 6 ) $ ( 3 )

5 unchanged sentences

Included in currency translation adjustment within other comprehensive items

Included in other income/(expense)

( 56 ) 46 ( 6 ) 120

Included in interest expense

Derivatives not designated as hedging instruments

1 unchanged sentence

Included in cost of product revenues

— 21 ( 3 ) 12

Included in other income/(expense)

( 6 ) 20 ( 8 ) 32

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

3 unchanged sentences

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:

July 1, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Carrying Fair Carrying Fair

3 unchanged sentences

$ 35,084 $ 30,776 $ 34,278 $ 30,290

$ 33,806 $ 30,112 $ 34,278 $ 30,290

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.

The fair value of debt instruments, excluding private placement notes, 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.

The fair value of private placement notes was determined based on internally developed pricing models and unobservable inputs, which represent level 3 measurements.

Supplemental Cash Flow Information

Six months ended

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

Nine months ended

(In millions) September 30, 2023 October 1, 2022

Non-cash investing and financing activities

4 unchanged sentences

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

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

(In millions) September 30, 2023 December 31, 2022

Cash and cash equivalents $ 6,151 $ 8,524

3 unchanged sentences

Amounts included in restricted cash primarily 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

Restructuring and Other Costs

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

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

In 2023, severance actions associated with facility consolidations and cost reduction measures affected approximately 4 % of the company’s workforce.

As of August 4, 2023, the company has identified restructuring actions that will result in additional charges of approximately $ 85 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.

As of November 3, 2023, the company has identified restructuring actions that will result in additional charges of approximately $ 65 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 Six months ended

(In millions) July 1, 2023 July 1, 2023

Three months ended Nine months ended

(In millions) September 30, 2023 September 30, 2023

Life Sciences Solutions

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Laboratory Products and Biopharma Services

THERMO FISHER SCIENTIFIC INC.

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.

2 unchanged sentences

Balance at December 31, 2022 $ 41

Net restructuring charges incurred in 2023 (b)

Balance at July 1, 2023 $ 98

Net restructuring charges incurred in 2023 (b) (c)

Currency translation

Balance at September 30, 2023 $ 73

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

(b) Excludes $ 158 million of net charges, principally $ 99 million of charges for impairment of long-lived assets in the Laboratory Products and Biopharma Services and Life Sciences Solutions segments, $ 26 million of contract termination costs associated with facility closures in the Laboratory Products and Biopharma Services segment, and, to a lesser extent, $ 18 million of net charges for pre-acquisition litigation and other matters.

(b) Excludes $ 165 million of net charges, principally $ 127 million of charges for impairment of long-lived assets in the Laboratory Products and Biopharma Services and Life Sciences Solutions segments, $ 26 million of contract termination costs associated with facility closures in the Laboratory Products and Biopharma Services segment, $ 18 million of net charges for pre-acquisition litigation and other matters.

(c) Excludes $ 39 million of charges for impairment of a disposal group that was held for sale beginning in the third quarter of 2023.

The loss attributable to Thermo Fisher Scientific Inc.

was reduced by $ 19 million attributable to a noncontrolling interest.

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

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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