THERMO FISHER SCIENTIFIC INC. 10-Q

Item 1. Financial Statements CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) June 29, December 31, (In millions except share and per share amounts) 2024 2023 Assets Current assets: Cash and cash equivalents $ 7,073 $ 8,077 Short-term investments 1,750 3 Accounts receivable, less allowances of $ 202 and $ 193 7,943 8,221 Inventories 5,198 5,088 Contract assets, net 1,487 1,443 Other current assets 2,025 1,757 Total current assets 25,476 24,589 Property, plant and equipment, net 9,282 9,448 Acquisition-related intangible assets, net 15,519 16,670 Other assets 4,377 3,999 Goodwill 43,843 44,020 Total assets $ 98,496 $ 98,726 Liabilities, redeemable noncontrolling interest and equity Current liabilities: Short-term obligations and current maturities of long-term obligations $ 5,121 $ 3,609 Accounts payable 2,547 2,872 Accrued payroll and employee benefits 1,495 1,596 Contract liabilities 2,591 2,689 Other accrued expenses 3,019 3,246 Total current liabilities 14,772 14,012 Deferred income taxes 1,516 1,922 Other long-term liabilities 4,391 4,642 Long-term obligations 30,284 31,308 Redeemable noncontrolling interest 115 118 Equity: Thermo Fisher Scientific Inc. shareholders’ equity: Preferred stock, $ 100 par value, 50,000 shares authorized; none issued — — Common stock, $ 1 par value, 1,200,000,000 shares authorized; 443,105,658 and 442,188,634 shares issued 443 442 Capital in excess of par value 17,649 17,286 Retained earnings 49,940 47,364 Treasury stock at cost, 61,110,092 and 55,541,290 shares ( 18,187 ) ( 15,133 ) Accumulated other comprehensive income/(loss) ( 2,413 ) ( 3,224 ) Total Thermo Fisher Scientific Inc. shareholders’ equity 47,432 46,735 Noncontrolling interests ( 12 ) ( 11 ) Total equity 47,419 46,724 Total liabilities, redeemable noncontrolling interest and equity $ 98,496 $ 98,726 The accompanying notes are an integral part of these condensed consolidated financial statements. 3 THERMO FISHER SCIENTIFIC INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Three months ended Six months ended June 29, July 1, June 29, July 1, (In millions except per share amounts) 2024 2023 2024 2023 Revenues Product revenues $ 6,163 $ 6,271 $ 12,118 $ 12,675 Service revenues 4,378 4,416 8,768 8,722 Total revenues 10,541 10,687 20,886 21,397 Costs and operating expenses: Cost of product revenues 3,080 3,278 6,019 6,615 Cost of service revenues 3,114 3,158 6,315 6,391 Selling, general and administrative expenses 2,111 2,145 4,293 4,264 Research and development expenses 339 345 670 691 Restructuring and other costs 77 183 106 295 Total costs and operating expenses 8,722 9,109 17,404 18,256 Operating income 1,820 1,578 3,483 3,141 Interest income 295 178 574 324 Interest expense ( 354 ) ( 326 ) ( 717 ) ( 626 ) Other income/(expense) 5 — 14 ( 46 ) Income before income taxes 1,765 1,430 3,354 2,793 Provision for income taxes ( 128 ) ( 52 ) ( 408 ) ( 98 ) Equity in earnings/(losses) of unconsolidated entities ( 84 ) ( 16 ) ( 61 ) ( 41 ) Net income 1,553 1,362 2,885 2,654 Less: net income/(losses) attributable to noncontrolling interests and redeemable noncontrolling interest 6 1 9 4 Net income attributable to Thermo Fisher Scientific Inc. $ 1,548 $ 1,361 $ 2,875 $ 2,650 Earnings per share attributable to Thermo Fisher Scientific Inc. Basic $ 4.05 $ 3.53 $ 7.53 $ 6.86 Diluted $ 4.04 $ 3.51 $ 7.50 $ 6.83 Weighted average shares Basic 382 386 382 386 Diluted 383 388 383 388 The accompanying notes are an integral part of these condensed consolidated financial statements. 4 THERMO FISHER SCIENTIFIC INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) Three months ended Six months ended June 29, July 1, June 29, July 1, (In millions) 2024 2023 2024 2023 Comprehensive income Net income $ 1,553 $ 1,362 $ 2,885 $ 2,654 Other comprehensive income/(loss): Currency translation adjustment: Currency translation adjustment (net of tax provision (benefit) of $ 88 , $ 0 , $ 255 and $( 36 )) 346 125 802 169 Unrealized gains/(losses) on available-for-sale debt securities Unrealized holding losses arising during the period (net of tax (provision) benefit of $ 0 , $ 0 , $ 0 and $ 0 ) — — ( 1 ) — Unrealized gains/(losses) on hedging instruments: Reclassification adjustment for losses included in net income (net of tax (provision) benefit of $ 0 , $ 0 , $ 0 and $ 1 ) 1 1 1 4 Pension and other postretirement benefit liability adjustments: Pension and other postretirement benefit liability adjustments arising during the period (net of tax (provision) benefit of $ 0 , $ 1 , $ 0 and $ 0 ) — ( 1 ) 1 — Amortization of net loss included in net periodic pension cost (net of tax (provision) benefit of $ 0 , $ 0 , $ 0 and $ 0 ) 1 ( 2 ) 1 ( 2 ) Total other comprehensive income/(loss) 348 123 805 171 Comprehensive income 1,901 1,485 3,689 2,825 Less: comprehensive income/(loss) attributable to noncontrolling interests and redeemable noncontrolling interest 3 ( 6 ) 3 — Comprehensive income attributable to Thermo Fisher Scientific Inc. $ 1,899 $ 1,491 $ 3,686 $ 2,825 The accompanying notes are an integral part of these condensed consolidated financial statements. 5 THERMO FISHER SCIENTIFIC INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Six months ended June 29, July 1, (In millions) 2024 2023 Operating activities Net income $ 2,885 $ 2,654 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation of property, plant and equipment 562 523 Amortization of acquisition-related intangible assets 1,065 1,191 Change in deferred income taxes ( 607 ) ( 328 ) Stock-based compensation 154 150 Other non-cash expenses, net 157 330 Changes in assets and liabilities, excluding the effects of acquisitions ( 1,003 ) ( 2,251 ) Net cash provided by operating activities 3,211 2,269 Investing activities Purchases of property, plant and equipment ( 648 ) ( 742 ) Proceeds from sale of property, plant and equipment 20 10 Proceeds from cross-currency interest rate swap interest settlements 111 35 Acquisitions, net of cash acquired — ( 2,751 ) Purchases of investments ( 1,778 ) ( 188 ) Other investing activities, net 12 51 Net cash used in investing activities ( 2,283 ) ( 3,585 ) Financing activities Net proceeds from issuance of debt 1,204 — Repayment of debt — ( 1,000 ) Proceeds from issuance of commercial paper — 1,620 Repayments of commercial paper — ( 1,441 ) Purchases of company common stock ( 3,000 ) ( 3,000 ) Dividends paid ( 284 ) ( 252 ) Other financing activities, net 145 24 Net cash used in financing activities ( 1,936 ) ( 4,049 ) Exchange rate effect on cash 7 ( 19 ) Decrease in cash, cash equivalents and restricted cash ( 1,000 ) ( 5,384 ) Cash, cash equivalents and restricted cash at beginning of period 8,097 8,537 Cash, cash equivalents and restricted cash at end of period $ 7,097 $ 3,153 The accompanying notes are an integral part of these condensed consolidated financial statements. 6 THERMO FISHER SCIENTIFIC INC. CONDENSED CONSOLIDATED STATEMENTS OF REDEEMABLE NONCONTROLLING INTEREST AND EQUITY (Unaudited) 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 June 29, 2024 Balance at March 30, 2024 $ 119 443 $ 443 $ 17,482 $ 48,542 61 $ ( 18,186 ) $ ( 2,764 ) $ 45,516 $ ( 12 ) $ 45,504 Issuance of shares under employees' and directors' stock plans — — — 83 — — ( 2 ) — 81 — 81 Stock-based compensation — — — 84 — — — — 84 — 84 Dividends declared ($ 0.39 per share) — — — — ( 149 ) — — — ( 149 ) — ( 149 ) Net income/(loss) 6 — — — 1,548 — — — 1,548 — 1,548 Other comprehensive items ( 3 ) — — — — — — 351 351 — 351 Contributions from (distributions to) noncontrolling interests ( 7 ) — — — — — — — — — — Excise tax from stock repurchases — — — — — — 1 — 1 — 1 Balance at June 29, 2024 $ 115 443 $ 443 $ 17,649 $ 49,940 61 $ ( 18,187 ) $ ( 2,413 ) $ 47,432 $ ( 12 ) $ 47,419 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 Issuance of shares under employees' and directors' stock plans — — — 67 — — ( 2 ) — 65 — 65 Stock-based compensation — — — 74 — — — — 74 — 74 Dividends declared ($ 0.35 per share) — — — — ( 136 ) — — — ( 136 ) — ( 136 ) Net income/(loss) 4 — — — 1,361 — — — 1,361 ( 3 ) 1,358 Other comprehensive items ( 7 ) — — — — — — 130 130 — 130 Contributions from (distributions to) noncontrolling interests ( 7 ) — — — — — — — — — — Excise tax from stock repurchases — — — — — — 1 — 1 — 1 Balance at July 1, 2023 $ 113 441 $ 441 $ 17,030 $ 44,289 55 $ ( 15,084 ) $ ( 2,924 ) $ 43,752 $ 50 $ 43,802 The accompanying notes are an integral part of these condensed consolidated financial statements. 7 THERMO FISHER SCIENTIFIC INC. CONDENSED CONSOLIDATED STATEMENTS OF REDEEMABLE NONCONTROLLING INTEREST AND EQUITY (Continued) (Unaudited) 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 Six months ended June 29, 2024 Balance at December 31, 2023 $ 118 442 $ 442 $ 17,286 $ 47,364 56 $ ( 15,133 ) $ ( 3,224 ) $ 46,735 $ ( 11 ) $ 46,724 Issuance of shares under stock plans — 1 1 209 — — ( 26 ) — 184 — 184 Stock-based compensation — — — 154 — — — — 154 — 154 Purchases of company common stock — — — — — 6 ( 3,000 ) — ( 3,000 ) — ( 3,000 ) Dividends declared ($ 0.78 per share) — — — — ( 298 ) — — — ( 298 ) — ( 298 ) Net income/(loss) 10 — — — 2,875 — — — 2,875 ( 1 ) 2,874 Other comprehensive items ( 6 ) — — — — — — 811 811 — 811 Contributions from (distributions to) noncontrolling interest ( 7 ) — — — — — — — — ( 1 ) ( 1 ) Excise tax from stock repurchases — — — — — — ( 28 ) — ( 28 ) — ( 28 ) Balance at June 29, 2024 $ 115 443 $ 443 $ 17,649 $ 49,940 61 $ ( 18,187 ) $ ( 2,413 ) $ 47,432 $ ( 12 ) $ 47,419 Six months ended July 1, 2023 Balance at December 31, 2022 $ 116 441 $ 441 $ 16,743 $ 41,910 50 $ ( 12,017 ) $ ( 3,099 ) $ 43,978 $ 54 $ 44,032 Issuance of shares under stock plans — — — 137 — — ( 38 ) — 99 — 99 Stock-based compensation — — — 150 — — — — 150 — 150 Purchases of company common stock — — — — — 5 ( 3,000 ) — ( 3,000 ) — ( 3,000 ) Dividends declared ($ 0.70 per share) — — — — ( 271 ) — — — ( 271 ) — ( 271 ) Net income/(loss) 8 — — — 2,650 — — — 2,650 ( 4 ) 2,646 Other comprehensive items ( 4 ) — — — — — — 175 175 — 175 Contributions from (distributions to) noncontrolling interest ( 7 ) — — — — — — — — — — 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 The accompanying notes are an integral part of these condensed consolidated financial statements. 8 THERMO FISHER SCIENTIFIC INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note 1. Nature of Operations and Summary of Significant Accounting Policies Nature of Operations Thermo Fisher Scientific Inc. (the company or Thermo Fisher) enables customers to make the world healthier, cleaner and safer by helping them accelerate life sciences research, solve complex analytical challenges, increase laboratory productivity, and improve patient health through diagnostics and the development and manufacture of life-changing therapies. Markets served include pharmaceutical and biotech, academic and government, industrial and applied, as well as healthcare and diagnostics. Interim Financial Statements The interim condensed consolidated financial statements presented herein have been prepared by the company, are unaudited and, in the opinion of management, reflect all adjustments of a normal recurring nature necessary for a fair statement of the financial position at June 29, 2024, the results of operations for the three- and six-month periods ended June 29, 2024 and July 1, 2023, and the cash flows for the six-month periods ended June 29, 2024 and July 1, 2023. Interim results are not necessarily indicative of results for a full year. The condensed consolidated balance sheet presented as of December 31, 2023 has been derived from the audited consolidated financial statements as of that date. The condensed consolidated financial statements and notes are presented as permitted by Form 10-Q and do not contain all information that is included in the annual financial statements and notes thereto of the company. The condensed consolidated financial statements and notes included in this report should be read in conjunction with the 2023 financial statements and notes included in the company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC). Certain reclassifications of prior year amounts have been made to conform to the current year presentation. Note 1 to the consolidated financial statements for 2023 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 June 29, 2024. Amounts and percentages reported within these condensed consolidated financial statements are presented and calculated based on underlying unrounded amounts. As a result, the sum of components may not equal corresponding totals due to rounding. Inventories The components of inventories are as follows: (In millions) June 29, 2024 December 31, 2023 Raw materials $ 1,974 $ 2,057 Work in process 825 705 Finished goods 2,399 2,326 Inventories $ 5,198 $ 5,088 Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The company’s estimates include, among others, asset reserve requirements as well as the amounts of future cash flows associated with certain assets and businesses that are used in assessing the risk of impairment. Actual results could differ from those estimates. Recent Accounting Pronouncements The following table provides a description of recent accounting pronouncements adopted and those standards not yet adopted with potential for a material impact on the company's financial statements or disclosures. 9 THERMO FISHER SCIENTIFIC INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Standard Description Required adoption timing and approach Impact of adoption or other significant matters Standards recently adopted ASU No. 2022-04, Liabilities-Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations New guidance 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 supplier finance programs for each period presented. Some aspects adopted in 2023 using a retrospective method and will adopt other aspects in 2024 annual report using a prospective method Not material Standards not yet adopted ASU No. 2023-07, Segment Reporting (Topic 280): Improving Reportable Segment Disclosures Among other things, new guidance to disclose significant segment expenses and other items by reportable segment as well as information about the chief operating decision maker. 2024 annual report and interim periods thereafter using a retrospective method Will increase disclosures in Note 4 ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures Among other things, new guidance to disclose additional information about the tax rate reconciliation and income taxes paid. 2025 annual report and interim periods thereafter using a prospective or retrospective method Will increase disclosures in Note 5 Note 2. Acquisitions 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. These synergies include the elimination of redundant facilities, functions and staffing; use of the company’s existing commercial infrastructure to expand sales of the acquired businesses’ products and services; and use of the commercial infrastructure of the acquired businesses to cost-effectively expand sales of company products and services. 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. 2024 On July 10, 2024, the company acquired, within the Life Sciences Solutions segment, Olink Holding AB (publ), a Swedish-based provider of next-generation proteomics solutions. The acquisition enhances the segment’s capabilities in the high-growth proteomics market with the addition of highly differentiated solutions. It also complements the existing life sciences and mass spectrometry offerings, accelerating protein biomarker discovery and providing strong synergy opportunities. The goodwill recorded as a result of this business combination is not expected to be tax deductible. The components of the preliminary purchase price and net assets acquired are as follows: (In billions) Olink Purchase price Cash paid $ 3.19 Fair value of noncontrolling interest 0.06 Cash acquired ( 0.04 ) $ 3.21 Net assets acquired Definite-lived intangible assets $ 0.99 Goodwill 2.28 Net tangible assets 0.13 Deferred tax assets (liabilities) ( 0.19 ) $ 3.21 The weighted-average amortization period for definite-lived intangible assets is 18 years. 10 THERMO FISHER SCIENTIFIC INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) The preliminary allocation of the purchase price for the acquisition of Olink is based on the 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. 2023 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 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 tax deductible. The components of the purchase price and net assets acquired are as follows: (In millions) The Binding Site CorEvitas Purchase price Cash paid $ 2,412 $ 730 Debt settled 307 184 Cash acquired ( 20 ) ( 4 ) $ 2,699 $ 910 Net assets acquired Definite-lived intangible assets: Customer relationships $ 868 $ 260 Product technology 162 47 Tradenames 42 — Backlog — 46 Goodwill 1,741 627 Net tangible assets 174 ( 2 ) Deferred tax assets (liabilities) ( 288 ) ( 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 periods 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. Note 3. Revenues and Contract-related Balances Disaggregated Revenues Revenues by type are as follows: Three months ended Six months ended (In millions) June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023 Revenues Consumables $ 4,363 $ 4,433 $ 8,690 $ 8,939 Instruments 1,800 1,838 3,428 3,736 Services 4,378 4,416 8,768 8,722 Consolidated revenues $ 10,541 $ 10,687 $ 20,886 $ 21,397 11 THERMO FISHER SCIENTIFIC INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Revenues by geographic region based on customer location are as follows: Three months ended Six months ended (In millions) June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023 Revenues North America $ 5,529 $ 5,714 $ 11,048 $ 11,492 Europe 2,663 2,654 5,282 5,255 Asia-Pacific 1,971 1,902 3,831 3,888 Other regions 379 417 725 762 Consolidated revenues $ 10,541 $ 10,687 $ 20,886 $ 21,397 Each reportable segment earns revenues from consumables, instruments and services in North America, Europe, Asia-Pacific and other regions. See Note 4 for revenues by reportable segment and other geographic data. Remaining Performance Obligations The aggregate amount of the transaction price allocated to the remaining performance obligations for all open customer contracts as of June 29, 2024 was $ 25.93 billion. The company will recognize revenues for these performance obligations as they are satisfied, approximately 52 % of which is expected to occur within the next twelve months . Amounts expected to occur thereafter generally relate to contract manufacturing, clinical research and extended warranty service agreements, which typically have durations of three to five years . Contract-related Balances Noncurrent contract assets 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: (In millions) June 29, 2024 December 31, 2023 Current contract assets, net $ 1,487 $ 1,443 Noncurrent contract assets, net 7 4 Current contract liabilities 2,591 2,689 Noncurrent contract liabilities 1,455 1,499 In the three and six months ended June 29, 2024, the company recognized revenues of $ 0.67 billion and $ 2.00 billion, respectively, that were included in the contract liabilities balance at December 31, 2023. 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. 12 THERMO FISHER SCIENTIFIC INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note 4. Business Segment and Geographical Information Business Segment Information Three months ended Six months ended June 29, July 1, June 29, July 1, (In millions) 2024 2023 2024 2023 Revenues Life Sciences Solutions $ 2,355 $ 2,463 $ 4,640 $ 5,075 Analytical Instruments 1,782 1,749 3,469 3,472 Specialty Diagnostics 1,117 1,109 2,227 2,217 Laboratory Products and Biopharma Services 5,758 5,831 11,480 11,594 Eliminations ( 470 ) ( 465 ) ( 930 ) ( 961 ) Consolidated revenues 10,541 10,687 20,886 21,397 Segment Income Life Sciences Solutions 865 817 1,705 1,653 Analytical Instruments 439 432 838 853 Specialty Diagnostics 299 297 593 577 Laboratory Products and Biopharma Services 745 824 1,489 1,617 Subtotal reportable segments 2,347 2,370 4,625 4,700 Cost of revenues adjustments ( 1 ) ( 18 ) ( 17 ) ( 59 ) Selling, general and administrative expenses adjustments 64 ( 6 ) 45 ( 14 ) Restructuring and other costs ( 77 ) ( 183 ) ( 106 ) ( 295 ) Amortization of acquisition-related intangible assets ( 513 ) ( 585 ) ( 1,065 ) ( 1,191 ) Consolidated operating income 1,820 1,578 3,483 3,141 Interest income 295 178 574 324 Interest expense ( 354 ) ( 326 ) ( 717 ) ( 626 ) Other income/(expense) 5 — 14 ( 46 ) Consolidated income before taxes $ 1,765 $ 1,430 $ 3,354 $ 2,793 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. Geographical Information Revenues by country based on customer location are as follows: Three months ended Six months ended (In millions) June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023 Revenues United States $ 5,347 $ 5,531 $ 10,669 $ 11,118 Other 5,194 5,156 10,217 10,279 Consolidated revenues $ 10,541 $ 10,687 $ 20,886 $ 21,397 13 THERMO FISHER SCIENTIFIC INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note 5. Income Taxes 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) June 29, 2024 July 1, 2023 Statutory federal income tax rate 21 % 21 % Provision for income taxes at statutory rate $ 704 $ 587 Increases (decreases) resulting from: Foreign rate differential ( 76 ) ( 125 ) Income tax credits ( 141 ) ( 136 ) Global intangible low-taxed income 25 46 Foreign-derived intangible income ( 47 ) ( 55 ) Excess tax benefits from stock options and restricted stock units ( 45 ) ( 37 ) Provision for (reversal of) tax reserves, net 195 8 Intra-entity transfers ( 102 ) ( 144 ) Foreign exchange loss on inter-company debt refinancing — ( 112 ) Provision for (reversal of) valuation allowances, net ( 67 ) 66 Withholding taxes 9 12 Tax return reassessments and settlements ( 35 ) ( 38 ) State income taxes, net of federal tax 39 53 Equity method investments ( 45 ) ( 6 ) Other, net ( 4 ) ( 21 ) Provision for income taxes $ 408 $ 98 During the first quarter of 2024, the company recorded a tax reserve and associated interest of $ 240 million related to the potential settlement of international tax audits for tax years 2009 through 2016. During the second quarter of 2024, the company recorded a benefit of $ 183 million, primarily in jurisdictions where the deferred tax assets are now expected to be realized due to forecasted income. The company has operations and a taxable presence in approximately 70 countries outside the U.S. The company's effective income tax rate differs from the U.S. federal statutory rate each year due to certain operations that are subject to tax incentives, state and local taxes, and foreign taxes that are different than the U.S. federal statutory rate. Unrecognized Tax Benefits As of June 29, 2024 the company had $ 0.70 billion of unrecognized tax benefits substantially all of which, if recognized, would reduce the effective tax rate. A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows: (In millions) 2024 Balance at beginning of year $ 540 Additions for tax positions of current year 9 Additions for tax positions of prior years 199 Reductions for tax positions of prior years ( 46 ) Balance at end of period $ 702 14 THERMO FISHER SCIENTIFIC INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note 6. Earnings per Share Three months ended Six months ended June 29, July 1, June 29, July 1, (In millions except per share amounts) 2024 2023 2024 2023 Net income attributable to Thermo Fisher Scientific Inc. $ 1,548 $ 1,361 $ 2,875 $ 2,650 Basic weighted average shares 382 386 382 386 Plus effect of: stock options and restricted stock units 1 2 1 2 Diluted weighted average shares 383 388 383 388 Basic earnings per share $ 4.05 $ 3.53 $ 7.53 $ 6.86 Diluted earnings per share $ 4.04 $ 3.51 $ 7.50 $ 6.83 Antidilutive stock options excluded from diluted weighted average shares 2 2 2 2 Note 7. Debt and Other Financing Arrangements Effective interest rate at June 29, June 29, December 31, (Dollars in millions) 2024 2024 2023 0.75 % 8 -Year Senior Notes, Due 9/12/2024 (euro-denominated) 0.92 % 1,071 1,104 1.215 % 3 -Year Senior Notes, Due 10/18/2024 1.42 % 2,500 2,500 0.125 % 5.5 -Year Senior Notes, Due 3/1/2025 (euro-denominated) 0.40 % 857 883 2.00 % 10 -Year Senior Notes, Due 4/15/2025 (euro-denominated) 2.09 % 686 706 0.853 % 3 -Year Senior Notes, Due 10/20/2025 (Japanese yen-denominated) 1.05 % 139 158 0.000 % 4 -Year Senior Notes, Due 11/18/2025 (euro-denominated) 0.15 % 589 607 3.20 % 3 -Year Senior Notes, Due 1/21/2026 (euro-denominated) 3.38 % 536 552 1.40 % 8.5 -Year Senior Notes, Due 1/23/2026 (euro-denominated) 1.52 % 750 773 4.953 % 3 -Year Senior Notes, Due 8/10/2026 5.19 % 600 600 5.000 % 3 -Year Senior Notes, Due 12/5/2026 5.26 % 1,000 1,000 1.45 % 10 -Year Senior Notes, Due 3/16/2027 (euro-denominated) 1.65 % 536 552 1.75 % 7 -Year Senior Notes, Due 4/15/2027 (euro-denominated) 1.96 % 643 662 1.054 % 5 -Year Senior Notes, Due 10/20/2027 (Japanese yen-denominated) 1.18 % 180 205 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) 0.76 % 857 883 1.6525 % 4 -Year Senior Notes, Due 3/7/2028 (Swiss franc-denominated) 1.80 % 367 — 0.77 % 5 -Year Senior Notes, Due 9/6/2028 (Japanese yen-denominated) 0.90 % 180 206 1.375 % 12 -Year Senior Notes, Due 9/12/2028 (euro-denominated) 1.46 % 643 662 1.75 % 7 -Year Senior Notes, Due 10/15/2028 1.89 % 700 700 5.000 % 5 -Year Senior Notes, Due 1/31/2029 5.24 % 1,000 1,000 1.95 % 12 -Year Senior Notes, Due 7/24/2029 (euro-denominated) 2.07 % 750 773 2.60 % 10 -Year Senior Notes, Due 10/1/2029 2.74 % 900 900 1.279 % 7 -Year Senior Notes, Due 10/19/2029 (Japanese yen-denominated) 1.44 % 29 33 4.977 % 7 -Year Senior Notes, Due 8/10/2030 5.12 % 750 750 0.80 % 9 -Year Senior Notes, Due 10/18/2030 (euro-denominated) 0.88 % 1,875 1,932 0.875 % 12 -Year Senior Notes, Due 10/1/2031 (euro-denominated) 1.13 % 964 993 2.00 % 10 -Year Senior Notes, Due 10/15/2031 2.23 % 1,200 1,200 1.8401 % 8 -Year Senior Notes, Due 3/8/2032 (Swiss franc-denominated) 1.92 % 462 — 15 THERMO FISHER SCIENTIFIC INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Effective interest rate at June 29, June 29, December 31, (Dollars in millions) 2024 2024 2023 2.375 % 12 -Year Senior Notes, Due 4/15/2032 (euro-denominated) 2.54 % 643 662 1.49 % 10 -Year Senior Notes, Due 10/20/2032 (Japanese yen-denominated) 1.60 % 39 45 4.95 % 10 -Year Senior Notes, Due 11/21/2032 5.09 % 600 600 5.086 % 10 -Year Senior Notes, Due 8/10/2033 5.20 % 1,000 1,000 1.125 % 12 -Year Senior Notes, Due 10/18/2033 (euro-denominated) 1.20 % 1,607 1,656 5.200 % 10 -Year Senior Notes, Due 1/31/2034 5.34 % 500 500 3.65 % 12 -Year Senior Notes, Due 11/21/2034 (euro-denominated) 3.76 % 803 828 1.50 % 12 -Year Senior Notes, Due 9/6/2035 (Japanese yen-denominated) 1.58 % 134 152 2.0375 % 12 -Year Senior Notes, Due 3/7/2036 (Swiss franc-denominated) 2.10 % 362 — 2.875 % 20 -Year Senior Notes, Due 7/24/2037 (euro-denominated) 2.94 % 750 773 1.50 % 20 -Year Senior Notes, Due 10/1/2039 (euro-denominated) 1.73 % 964 993 2.80 % 20 -Year Senior Notes, Due 10/15/2041 2.90 % 1,200 1,200 1.625 % 20 -Year Senior Notes, Due 10/18/2041 (euro-denominated) 1.77 % 1,339 1,380 2.069 % 20 -Year Senior Notes, Due 10/20/2042 (Japanese yen-denominated) 2.13 % 91 104 5.404 % 20 -Year Senior Notes, Due 8/10/2043 5.50 % 600 600 2.02 % 20 -Year Senior Notes, Due 9/6/2043 (Japanese yen-denominated) 2.06 % 180 206 5.30 % 30 -Year Senior Notes, Due 2/1/2044 5.37 % 400 400 4.10 % 30 -Year Senior Notes, Due 8/15/2047 4.23 % 750 750 1.875 % 30 -Year Senior Notes, Due 10/1/2049 (euro-denominated) 1.98 % 1,071 1,104 2.00 % 30 -Year Senior Notes, Due 10/18/2051 (euro-denominated) 2.06 % 803 828 2.382 % 30 -Year Senior Notes, Due 10/18/2052 (Japanese yen-denominated) 2.43 % 207 236 Other 74 77 Total borrowings at par value 35,481 35,028 Unamortized discount ( 104 ) ( 113 ) Unamortized debt issuance costs ( 179 ) ( 188 ) Total borrowings at carrying value 35,197 34,727 Finance lease liabilities 207 190 Less: Short-term obligations and current maturities 5,121 3,609 Long-term obligations $ 30,284 $ 31,308 The effective interest rates for the fixed-rate debt include the stated interest on the notes, the accretion of any discounts/premiums and the amortization of any debt issuance costs. See Note 10 for fair value information pertaining to the company’s long-term borrowings. Credit Facilities The company has a revolving credit facility (the Facility) with a bank group that provides for up to $ 5.00 billion of unsecured multi-currency revolving credit. The Facility expires on January 7, 2027. The revolving credit agreement calls for interest at either a Term Secured Overnight Financing Rate (SOFR), a Euro Interbank Offered Rate (EURIBOR)-based rate (for funds drawn in euro), or a rate based on the prime lending rate of the agent bank, at the company’s option. The agreement contains affirmative, negative and financial covenants, and events of default customary for facilities of this type. 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 Net Interest Coverage Ratio of 3.5 :1.0 as of the last day of any fiscal quarter. As of June 29, 2024, no borrowings were outstanding under the Facility, although available capacity was reduced by immaterial outstanding letters of credit. 16 THERMO FISHER SCIENTIFIC INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Commercial Paper Programs The company has commercial paper programs pursuant to which it may issue and sell unsecured, short-term promissory notes (CP Notes). Under the U.S. program, a) maturities may not exceed 397 days from the date of issue and b) the CP Notes are issued on a private placement basis under customary terms in the commercial paper market and are not redeemable prior to maturity nor subject to voluntary prepayment. Under the euro program, maturities may not exceed 183 days and may be denominated in euro, U.S. dollars, Japanese yen, British pounds sterling, Swiss franc, Canadian dollars or other currencies. 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. Senior Notes Interest is payable annually on the euro and Swiss franc-denominated fixed rate senior notes and semi-annually on all other senior notes. Each of the U.S. dollar and euro-denominated fixed rate senior notes and Japanese 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 Japanese 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 related to its senior notes at June 29, 2024. Thermo Fisher Scientific (Finance I) B.V. (Thermo Fisher International), a wholly-owned finance subsidiary of the company, issued each of the following notes outstanding as of June 29, 2024, included in the table above (collectively, the “Euronotes”) in registered public offerings: the 0.00 % Senior Notes due 2025, the 0.80 % Senior Notes due 2030, the 1.125 % Senior Notes due 2033, the 1.625 % Senior Notes due 2041, and the 2.00 % Senior Notes due 2051. The company has fully and unconditionally guaranteed all of Thermo Fisher International’s obligations under the Euronotes and all of Thermo Fisher International’s other debt securities, and no other subsidiary of the company will guarantee these obligations. Thermo Fisher International is a “finance subsidiary” as defined in Rule 13-01(a)(4)(vi) of the Exchange Act, with no assets or operations other than those related to the issuance, administration and repayment of the Euronotes and other debt securities issued by Thermo Fisher International from time to time. The financial condition, results of operations and cash flows of Thermo Fisher International are consolidated in the financial statements of the company. Note 8. Commitments and Contingencies Environmental Matters The company is currently involved in various stages of investigation and remediation related to environmental matters. The company cannot predict all potential costs related to environmental remediation matters and the possible impact on future operations given the uncertainties regarding the extent of the required cleanup, the complexity and interpretation of applicable laws and regulations, the varying costs of alternative cleanup methods and the extent of the company’s responsibility. Expenses for environmental remediation matters related to the costs of installing, operating and maintaining groundwater-treatment systems and other remedial activities related to historical environmental contamination at the company’s domestic and international facilities were not material in any period presented. At June 29, 2024, there have been no material changes to the accruals for pending environmental-related matters disclosed in the company’s 2023 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. Litigation and Related Contingencies The company is involved in various disputes, governmental and/or regulatory inspections, inquiries, investigations and proceedings, and litigation matters that arise from time to time in the ordinary course of business. The disputes and litigation matters include product liability, intellectual property, employment and commercial issues. 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 2023 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 17 THERMO FISHER SCIENTIFIC INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 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 June 29, 2024, 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 2023 financial statements and notes included in the company’s Annual Report on Form 10-K. Although the company believes that the amounts accrued and estimated insurance recoveries are probable and appropriate based on available information, including actuarial studies of loss estimates, the process of estimating losses and insurance recoveries involves a considerable degree of judgment by management and the ultimate amounts could vary, which could have a material adverse effect on the company’s results of operations, financial position, and cash flows. Insurance contracts do not relieve the company of its primary obligation with respect to any losses incurred. The collectability of amounts due from its insurers is subject to the solvency and willingness of the insurer to pay, as well as the legal sufficiency of the insurance claims. Management monitors the payment history as well as the financial condition and ratings of its insurers on an ongoing basis. Note 9. Comprehensive Income/(Loss) and Shareholders' Equity Comprehensive Income/(Loss) Changes in each component of accumulated other comprehensive income/(loss), net of tax, are as follows: (In millions) Currency translation adjustment Unrealized gains/(losses) on available-for-sale debt securities Unrealized gains/(losses) on hedging instruments Pension and other postretirement benefit liability adjustment Total Three months ended June 29, 2024 Balance at March 30, 2024 $ ( 2,482 ) $ ( 1 ) $ ( 27 ) $ ( 254 ) $ ( 2,764 ) Other comprehensive income/(loss) before reclassifications 346 — — — 347 Amounts reclassified from accumulated other comprehensive income/(loss) 3 — 1 1 5 Net other comprehensive income/(loss) 349 — 1 1 351 Balance at June 29, 2024 $ ( 2,133 ) $ ( 1 ) $ ( 26 ) $ ( 253 ) $ ( 2,413 ) Six months ended June 29, 2024 Balance at December 31, 2023 $ ( 2,941 ) $ — $ ( 28 ) $ ( 255 ) $ ( 3,224 ) Other comprehensive income/(loss) before reclassifications 802 ( 1 ) — 1 802 Amounts reclassified from accumulated other comprehensive income/(loss) 6 — 1 1 9 Net other comprehensive income/(loss) 808 ( 1 ) 1 2 811 Balance at June 29, 2024 $ ( 2,133 ) $ ( 1 ) $ ( 26 ) $ ( 253 ) $ ( 2,413 ) 18 THERMO FISHER SCIENTIFIC INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note 10. Fair Value Measurements and Fair Value of Financial Instruments Fair Value Measurements The following tables present information about the company’s financial assets and liabilities measured at fair value on a recurring basis: June 29, Quoted prices in active markets Significant other observable inputs Significant unobservable inputs (In millions) 2024 (Level 1) (Level 2) (Level 3) Assets Cash equivalents $ 3,937 $ 3,937 $ — $ — Bank time deposits 1,750 1,750 — — Investments 19 19 — — Insurance contracts 229 — 229 — Derivative contracts 479 — 479 — Total assets $ 6,414 $ 5,706 $ 708 $ — Liabilities Derivative contracts $ 23 $ — $ 23 $ — Contingent consideration 12 — — 12 Total liabilities $ 35 $ — $ 23 $ 12 December 31, Quoted prices in active markets Significant other observable inputs Significant unobservable inputs (In millions) 2023 (Level 1) (Level 2) (Level 3) Assets Cash equivalents $ 5,021 $ 5,021 $ — $ — Bank time deposits 3 3 — — Investments 20 20 — — Insurance contracts 210 — 210 — Derivative contracts 8 — 8 — Total assets $ 5,262 $ 5,044 $ 218 $ — Liabilities Derivative contracts $ 290 $ — $ 290 $ — Contingent consideration 87 — — 87 Total liabilities $ 377 $ — $ 290 $ 87 The company determines the fair value of its insurance contracts by obtaining the cash surrender value of the contracts from the issuer. The fair value of derivative contracts is the estimated amount that the company would receive/pay upon liquidation of the contracts, taking into account the change in interest rates and currency exchange rates. The company initially measures the fair value of acquisition-related contingent consideration based on amounts expected to be transferred (probability-weighted) discounted to present value. Changes to the fair values of contingent consideration are recorded in selling, general and administrative expense. In the six-month periods ended June 29, 2024 and July 1, 2023 the company recorded $ 10 million and $( 44 ) million, respectively, of net gains/(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. 19 THERMO FISHER SCIENTIFIC INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Three months ended Six months ended June 29, July 1, June 29, July 1, (In millions) 2024 2023 2024 2023 Contingent consideration Beginning balance $ 83 $ 136 $ 87 $ 174 Acquisitions (including assumed balances) — 1 — 1 Payments — ( 43 ) ( 2 ) ( 58 ) Changes in fair value included in earnings ( 72 ) ( 4 ) ( 74 ) ( 27 ) Ending balance $ 12 $ 90 $ 12 $ 90 Derivative Contracts The following table provides the aggregate notional value of outstanding derivative contracts. (In millions) June 29, 2024 December 31, 2023 Cross-currency interest rate swaps designated as net investment hedge - euro $ 1,000 $ 1,000 Cross-currency interest rate swaps designated as net investment hedge - Japanese yen 4,650 4,650 Cross-currency interest rate swaps designated as net investment hedge - Swiss franc 2,500 2,500 Currency exchange contracts 1,216 1,567 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 sheets and statements of income. Fair value – assets Fair value – liabilities June 29, December 31, June 29, December 31, (In millions) 2024 2023 2024 2023 Derivatives designated as hedging instruments Cross-currency interest rate swaps (a) $ 478 $ 5 $ 22 $ 287 Derivatives not designated as hedging instruments Currency exchange contracts (b) 1 3 1 3 Total derivatives $ 479 $ 8 $ 23 $ 290 (a) The fair value of the cross-currency interest rate swaps is included in the accompanying balance sheet under the caption other assets or other long-term liabilities. (b) The fair value of the currency exchange contracts is included in the accompanying balance sheet under the captions other current assets or other accrued expenses. Gain (loss) recognized Three months ended Six months ended June 29, July 1, June 29, July 1, (In millions) 2024 2023 2024 2023 Derivatives designated as cash flow hedges Interest rate swaps Amount reclassified from accumulated other comprehensive items to interest expense $ ( 1 ) $ — $ ( 2 ) $ — Amount reclassified from accumulated other comprehensive items to other income/(expense) — ( 1 ) — ( 5 ) Financial instruments designated as net investment hedges Foreign currency-denominated debt and other payables Included in currency translation adjustment within other comprehensive items 85 ( 62 ) 361 ( 206 ) Cross-currency interest rate swaps Included in currency translation adjustment within other comprehensive items 293 59 736 50 Included in interest expense 68 16 134 33 20 THERMO FISHER SCIENTIFIC INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Gain (loss) recognized Three months ended Six months ended June 29, July 1, June 29, July 1, (In millions) 2024 2023 2024 2023 Derivatives not designated as hedging instruments Currency exchange contracts Included in cost of product revenues 4 — 7 ( 3 ) Included in other income/(expense) ( 4 ) ( 25 ) ( 10 ) ( 2 ) 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 currency-denominated payables, and cross-currency interest rate swaps to partially hedge its net investments in foreign operations against adverse movements in exchange rates. A portion of the company’s euro-denominated senior notes, certain foreign currency-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. Accordingly, foreign currency transaction gains or losses due to spot rate fluctuations on the euro-denominated debt instruments and certain foreign currency-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 2023 included in the company’s Annual Report on Form 10-K for additional information on the company’s risk management objectives and strategies. Fair Value of Other Financial Instruments The carrying value and fair value of the company’s debt instruments are as follows: June 29, 2024 December 31, 2023 Carrying Fair Carrying Fair (In millions) value value value value Senior notes $ 35,123 $ 31,983 $ 34,650 $ 32,191 Other 74 74 77 77 $ 35,197 $ 32,057 $ 34,727 $ 32,268 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. Note 11. Supplemental Cash Flow Information Six months ended (In millions) June 29, 2024 July 1, 2023 Non-cash investing and financing activities Acquired but unpaid property, plant and equipment $ 166 $ 231 Declared but unpaid dividends 151 137 Issuance of stock upon vesting of restricted stock units 71 97 Excise tax from stock repurchases 28 29 Cash, cash equivalents and restricted cash is included in the accompanying balance sheet as follows: (In millions) June 29, 2024 December 31, 2023 Cash and cash equivalents $ 7,073 $ 8,077 Restricted cash included in other current assets 11 6 Restricted cash included in other assets 14 14 Cash, cash equivalents and restricted cash $ 7,097 $ 8,097 Amounts included in restricted cash primarily represent funds held as collateral for bank guarantees and incoming cash in China awaiting government administrative clearance. 21 THERMO FISHER SCIENTIFIC INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note 12. Restructuring and Other Costs In the first six months of 2024, 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 2024, severance actions associated with facility consolidations and cost reduction measures affected approximately 1 % of the company’s workforce. As of August 2, 2024, the company has identified restructuring actions that will result in additional charges of approximately $ 80 million, primarily in 2024, 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) June 29, 2024 June 29, 2024 Life Sciences Solutions $ 14 $ 16 Analytical Instruments 3 10 Specialty Diagnostics — 5 Laboratory Products and Biopharma Services 57 71 Corporate 3 4 $ 77 $ 106 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) Balance at December 31, 2023 $ 60 Net restructuring charges incurred in 2024 (b) 51 Payments ( 60 ) Currency translation ( 2 ) Balance at June 29, 2024 $ 49 (a) The movements in the restructuring liability principally consist of severance and other costs associated with facility consolidations. (b) Excludes $ 55 million of net charges, principally $ 47 million of charges for impairment of long-lived assets in the Laboratory Products and Biopharma Services and Life Sciences Solutions segments. The company expects to pay accrued restructuring costs primarily through 2024. 22 THERMO FISHER SCIENTIFIC INC.