THERMO FISHER SCIENTIFIC INC. 10-K

Item 8. Financial Statements and Supplementary Data INDEX OF CONSOLIDATED FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm (PCAOB ID 238 ) 30 Consolidated Balance Sheets as of December 31, 2024 and 2023 33 Consolidated Statements of Income for the years ended December 31, 2024, 2023 and 2022 34 Consolidated Statements of Comprehensive Income for the years ended December 31, 2024, 2023 and 2022 35 Consolidated Statements of Cash Flows for the years ended December 31, 2024, 2023 and 2022 36 Consolidated Statements of Redeemable Noncontrolling Interest and Equity for the years ended December 31 , 2024, 2023 and 2022 37 Notes to Consolidated Financial Statements Note 1. Nature of Operations and Summary of Significant Accounting Policies 38 Note 2. Supplemental Balance Sheet Information 45 Note 3. Debt and Other Financing Arrangements 47 Note 4. Fair Value Measurements 50 Note 5. Commitments and Contingencies 52 Note 6. Supplemental Income Statement Information 53 Note 7. Income Taxes 55 Note 8. Comprehensive Income/(Loss) and Shareholders' Equity 59 Note 9. Supplemental Cash Flow Information 59 Note 10. Derivatives 60 Note 11. Business Segment and Geographical Information 61 Note 12. Acquisitions 65 Note 13. Leases 66 Note 14. Pension and Other Postretirement Benefit Plans 67 Note 15. Stock-based Compensation Expense 72 29 Report of Independent Registered Public Accounting Firm To the Board of Directors and Shareholders of Thermo Fisher Scientific Inc. Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheets of Thermo Fisher Scientific Inc. and its subsidiaries (the "Company") as of December 31, 2024 and 2023, and the related consolidated statements of income, of comprehensive income, of redeemable noncontrolling interest and equity and of cash flows for each of the three years in the period ended December 31, 2024, including the related notes (collectively referred to as the "consolidated financial statements"). We also have audited the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO. Basis for Opinions The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Annual Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely 30 detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Critical Audit Matters The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Income taxes As described in Note 7 to the consolidated financial statements, the Company’s provision for income taxes for the year ended December 31, 2024 was $657 million. The Company has deferred tax liabilities, net, of $338 million (including a valuation allowance of $1,043 million) and unrecognized tax benefits of $525 million as of December 31, 2024. As disclosed by management, the Company operates in numerous countries under many legal forms and, as a result, is subject to the jurisdiction of numerous domestic and non-U.S. tax authorities, as well as to tax agreements and treaties among these governments. Determination of taxable income in any jurisdiction requires management to interpret the related tax laws and regulations and the use of estimates and assumptions regarding significant future events, such as the amount, timing and character of deductions, permissible revenue recognition methods under the tax law and the sources and character of income and tax credits. Management assesses income tax positions and records tax benefits for all years subject to examination based upon management’s evaluation of the facts, circumstances and information available at the reporting date. For those tax positions where it is more likely than not that a tax benefit will be sustained, management has recorded the largest amount of tax benefit with a greater than 50 percent likelihood of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. For those income tax positions where it is not more likely than not that a tax benefit will be sustained, no tax benefit has been recognized in the financial statements. Management estimates the degree to which tax assets will result in a benefit, after consideration of all positive and negative evidence, and provides a valuation allowance for tax assets that it believes will more likely than not go unused. In situations in which management has been able to determine that the Company’s deferred tax assets will be realized, that determination generally relies on future reversals of taxable temporary differences and expected future taxable income. If it becomes more likely than not that a tax asset will be used, management reverses the related valuation allowance. The principal considerations for our determination that performing procedures relating to income taxes is a critical audit matter are (i) the significant judgment by management when interpreting the numerous and complex tax laws and regulations as it relates to determining the provision for income taxes, deferred tax assets and liabilities, including the valuation allowance, and liabilities for unrecognized tax benefits, (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence related to the provision for income taxes, deferred tax assets and liabilities, including the valuation allowance, and liabilities for unrecognized tax benefits, and (iii) the audit effort involved the use of professionals with specialized skill and knowledge. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the provision for income taxes, deferred tax assets and liabilities, including the valuation allowance, and liabilities for unrecognized tax benefits. These procedures also included, among others (i) testing the accuracy of the provision for income taxes, including the rate reconciliation and permanent and temporary differences, (ii) evaluating whether the data utilized in the calculations of the provision for income taxes, deferred tax assets and liabilities, and liabilities for unrecognized tax benefits were appropriate and consistent with evidence obtained in other areas of the audit, (iii) evaluating management’s assessment of the realizability of deferred tax assets on a jurisdictional basis, (iv) evaluating the identification of liabilities for unrecognized tax benefits and the reasonableness of the more likely than not 31 determination in consideration of court decisions, legislative actions, statutes of limitations, and developments in tax examinations by jurisdiction, (v) testing the calculation of the liability for unrecognized tax benefits by jurisdiction, including estimates of the amount of income tax benefit expected to be sustained, and (vi) evaluating the adequacy of the Company’s disclosures. Professionals with specialized skill and knowledge were used to assist in evaluating the reasonableness of management’s judgments and estimates related to the application of foreign and domestic tax laws and regulations. /s/ PricewaterhouseCoopers LLP Boston, Massachusetts February 20, 2025 We have served as the Company’s auditor since 2002. 32 THERMO FISHER SCIENTIFIC INC. CONSOLIDATED BALANCE SHEETS December 31, December 31, (In millions except share and per share amounts) 2024 2023 Assets Current assets: Cash and cash equivalents $ 4,009 $ 8,077 Short-term investments 1,561 3 Accounts receivable, less allowances of $ 173 and $ 193 8,191 8,221 Inventories 4,978 5,088 Contract assets, net 1,435 1,443 Other current assets 1,964 1,757 Total current assets 22,137 24,589 Property, plant and equipment, net 9,306 9,448 Acquisition-related intangible assets, net 15,533 16,670 Other assets 4,492 3,999 Goodwill 45,853 44,020 Total assets $ 97,321 $ 98,726 Liabilities, redeemable noncontrolling interest and equity Current liabilities: Short-term obligations and current maturities of long-term obligations $ 2,214 $ 3,609 Accounts payable 3,079 2,872 Accrued payroll and employee benefits 1,988 1,596 Contract liabilities 2,852 2,689 Other accrued expenses 3,199 3,246 Total current liabilities 13,332 14,012 Deferred income taxes 1,268 1,922 Other long-term liabilities 3,989 4,642 Long-term obligations 29,061 31,308 Commitments and contingencies (Note 5) Redeemable noncontrolling interest 120 118 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; 443,841,240 and 442,188,634 shares issued 444 442 Capital in excess of par value 17,962 17,286 Retained earnings 53,102 47,364 Treasury stock at cost, 63,066,906 and 55,541,290 shares ( 19,226 ) ( 15,133 ) Accumulated other comprehensive income/(loss) ( 2,697 ) ( 3,224 ) Total Thermo Fisher Scientific Inc. shareholders’ equity 49,584 46,735 Noncontrolling interests ( 33 ) ( 11 ) Total equity 49,551 46,724 Total liabilities, redeemable noncontrolling interest and equity $ 97,321 $ 98,726 The accompanying notes are an integral part of these consolidated financial statements. 33 THERMO FISHER SCIENTIFIC INC. CONSOLIDATED STATEMENTS OF INCOME Year Ended December 31, December 31, December 31, (In millions except per share amounts) 2024 2023 2022 Revenues Product revenues $ 25,034 $ 25,243 $ 28,548 Service revenues 17,845 17,614 16,367 Total revenues 42,879 42,857 44,915 Costs and operating expenses: Cost of product revenues 12,523 13,168 14,247 Cost of service revenues 12,654 12,589 11,697 Selling, general and administrative expenses 8,595 8,445 8,993 Research and development expenses 1,390 1,337 1,471 Restructuring and other costs 379 459 114 Total costs and operating expenses 35,542 35,998 36,522 Operating income 7,337 6,859 8,393 Interest income 1,078 879 272 Interest expense ( 1,390 ) ( 1,375 ) ( 726 ) Other income/(expense) 12 ( 65 ) ( 104 ) Income before income taxes 7,037 6,298 7,835 Benefit from/(provision for) income taxes ( 657 ) ( 284 ) ( 703 ) Equity in earnings/(losses) of unconsolidated entities ( 42 ) ( 59 ) ( 172 ) Net income 6,338 5,955 6,960 Less: net income (losses) attributable to noncontrolling interests and redeemable noncontrolling interest 3 ( 40 ) 10 Net income attributable to Thermo Fisher Scientific Inc. $ 6,335 $ 5,995 $ 6,950 Earnings per share attributable to Thermo Fisher Scientific Inc. Basic $ 16.58 $ 15.52 $ 17.75 Diluted $ 16.53 $ 15.45 $ 17.63 Weighted average shares Basic 382 386 392 Diluted 383 388 394 The accompanying notes are an integral part of these consolidated financial statements. 34 THERMO FISHER SCIENTIFIC INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Year Ended December 31, December 31, December 31, (In millions) 2024 2023 2022 Comprehensive income Net income $ 6,338 $ 5,955 $ 6,960 Other comprehensive income/(loss): Currency translation adjustment: Currency translation adjustment (net of tax provision (benefit) of $ 317 , $( 134 ) and $ 173 ) 525 ( 69 ) ( 822 ) Unrealized gains and losses on hedging instruments: Reclassification adjustment for losses included in net income (net of tax benefit of $ 1 , $ 2 and $ 1 ) 3 5 2 Pension and other postretirement benefit liability adjustments: Pension and other postretirement benefit liability adjustments arising during the period (net of tax provision (benefit) of $ 2 , $( 22 ) and $ 9 ) ( 12 ) ( 69 ) 38 Amortization of net loss and prior service benefit included in net periodic pension cost (net of tax benefit of $ 1 , $ 1 and $ 3 ) 4 — 5 Total other comprehensive income/(loss) 520 ( 133 ) ( 777 ) Comprehensive income 6,858 5,822 6,183 Less: comprehensive income/(loss) attributable to noncontrolling interests and redeemable noncontrolling interest ( 4 ) ( 48 ) 3 Comprehensive income attributable to Thermo Fisher Scientific Inc. $ 6,862 $ 5,870 $ 6,180 The accompanying notes are an integral part of these consolidated financial statements. 35 THERMO FISHER SCIENTIFIC INC. CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended December 31, December 31, December 31, (In millions) 2024 2023 2022 Operating activities Net income $ 6,338 $ 5,955 $ 6,960 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation of property, plant and equipment 1,156 1,068 986 Amortization of acquisition-related intangible assets 1,952 2,338 2,395 Change in deferred income taxes ( 1,209 ) ( 1,300 ) ( 995 ) Stock-based compensation 301 278 307 Other net non-cash expenses 508 604 550 Changes in assets and liabilities, excluding the effects of acquisitions: Accounts receivable ( 171 ) ( 43 ) ( 430 ) Inventories ( 27 ) 598 ( 825 ) Contract assets/liabilities ( 162 ) 252 ( 354 ) Accounts payable 212 ( 500 ) 648 Contributions to retirement plans ( 45 ) ( 42 ) ( 41 ) Other ( 186 ) ( 802 ) ( 47 ) Net cash provided by operating activities 8,667 8,406 9,154 Investing activities Purchases of property, plant and equipment ( 1,400 ) ( 1,479 ) ( 2,243 ) Proceeds from sale of property, plant and equipment 57 87 24 Proceeds from cross-currency interest rate swap interest settlements 252 70 15 Acquisitions, net of cash acquired ( 3,132 ) ( 3,660 ) ( 39 ) Purchases of investments ( 3,396 ) ( 208 ) ( 52 ) Proceeds from sales and maturities of investments 1,770 15 116 Other investing activities, net 8 33 20 Net cash used in investing activities ( 5,841 ) ( 5,142 ) ( 2,159 ) Financing activities Net proceeds from issuance of debt 1,204 5,942 3,193 Repayment of debt ( 3,607 ) ( 5,782 ) ( 375 ) Proceeds from issuance of commercial paper — 1,620 1,526 Repayments of commercial paper — ( 1,935 ) ( 3,690 ) Purchases of company common stock ( 4,000 ) ( 3,000 ) ( 3,000 ) Dividends paid ( 583 ) ( 523 ) ( 455 ) Other financing activities, net 195 56 ( 9 ) Net cash used in financing activities ( 6,792 ) ( 3,622 ) ( 2,810 ) Exchange rate effect on cash ( 91 ) ( 82 ) ( 139 ) (Decrease) increase in cash, cash equivalents and restricted cash ( 4,057 ) ( 440 ) 4,046 Cash, cash equivalents and restricted cash at beginning of year 8,097 8,537 4,491 Cash, cash equivalents and restricted cash at end of year $ 4,040 $ 8,097 $ 8,537 The accompanying notes are an integral part of these consolidated financial statements. 36 THERMO FISHER SCIENTIFIC INC. 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 Thermo Fisher Scientific Inc. Shareholders’ Equity Noncontrolling Interests Total Equity (In millions) Shares Amount Shares Amount Balance at December 31, 2021 $ 122 439 $ 439 $ 16,174 $ 35,431 45 $ ( 8,922 ) $ ( 2,329 ) $ 40,793 $ 62 $ 40,855 Issuance of shares under stock plans — 2 2 262 — — ( 95 ) — 169 — 169 Stock-based compensation — — — 307 — — — — 307 — 307 Purchases of company common stock — — — — — 5 ( 3,000 ) — ( 3,000 ) — ( 3,000 ) Dividends declared ($ 1.20 per share) — — — — ( 471 ) — — — ( 471 ) — ( 471 ) Net income/(loss) 15 — — — 6,950 — — — 6,950 ( 5 ) 6,945 Other comprehensive income/(loss) ( 6 ) — — — — — — ( 770 ) ( 770 ) ( 1 ) ( 771 ) Contributions from (distributions to) noncontrolling interests ( 15 ) — — — — — — — — ( 2 ) ( 2 ) 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 — 1 1 265 — 1 ( 88 ) — 178 — 178 Stock-based compensation — — — 278 — — — — 278 — 278 Purchases of company common stock — — — — — 5 ( 3,000 ) — ( 3,000 ) — ( 3,000 ) Dividends declared ($ 1.40 per share) — — — — ( 541 ) — — — ( 541 ) — ( 541 ) Net income/(loss) 19 — — — 5,995 — — — 5,995 ( 59 ) 5,936 Other comprehensive income/(loss) ( 3 ) — — — — — — ( 125 ) ( 125 ) ( 5 ) ( 130 ) Contributions from (distributions to) noncontrolling interests ( 14 ) — — — — — — — — ( 1 ) ( 1 ) Excise tax from stock repurchases — — — — — — ( 28 ) — ( 28 ) — ( 28 ) 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 — 2 2 376 — — ( 67 ) — 310 — 310 Stock-based compensation — — — 301 — — — — 301 — 301 Purchases of company common stock — — — — — 7 ( 4,000 ) — ( 4,000 ) — ( 4,000 ) Dividends declared ($ 1.56 per share) — — — — ( 596 ) — — — ( 596 ) — ( 596 ) Net income/(loss) 23 — — — 6,335 — — — 6,335 ( 20 ) 6,315 Other comprehensive income/(loss) ( 6 ) — — — — — — 527 527 — 527 Contributions from (distributions to) noncontrolling interests ( 14 ) — — — — — — — — ( 1 ) ( 1 ) Excise tax from stock repurchases — — — — — — ( 26 ) — ( 26 ) — ( 26 ) Balance at December 31, 2024 $ 120 444 $ 444 $ 17,962 $ 53,102 63 $ ( 19,226 ) $ ( 2,697 ) $ 49,584 $ ( 33 ) $ 49,551 The accompanying notes are an integral part of these consolidated financial statements. 37 THERMO FISHER SCIENTIFIC INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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. Principles of Consolidation The accompanying financial statements include the accounts of the company and its wholly and majority-owned subsidiaries. All material intercompany accounts and transactions have been eliminated. Redeemable Noncontrolling Interest The company owns 60 % of its consolidated subsidiary PPD-SNBL K.K. The 40 % ownership interest held by a third party is classified as a redeemable noncontrolling interest on the consolidated balance sheet due to certain put options under which the third party may require the company to purchase the remaining ownership interest at a premium upon the occurrence of certain events. Presentation Certain reclassifications of prior year amounts have been made to conform to the current year presentation. Amounts and percentages reported within these 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. 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. Cash and Cash Equivalents Cash equivalents consists principally of money market funds and other marketable securities purchased with a remaining maturity of three months or less. These investments are carried at cost, which approximates market value (see Note 4). Inventories Inventories are valued at the lower of cost or net realizable value, cost being determined by the first-in, first-out (FIFO) method. The company periodically reviews quantities of inventories on hand and compares these amounts to the expected use of each product or product line. In addition, the company has certain inventory that is subject to fluctuating market pricing. The company records a charge to cost of sales for the amount required to reduce the carrying value of inventory to net realizable value. Costs associated with the procurement of inventories, such as inbound freight charges, purchasing and receiving costs, and internal transfer costs, are included in cost of revenues in the accompanying statement of income. Contract-related Balances Accounts receivable include unconditional rights to consideration from customers, which generally represent billings that do not bear interest. The company maintains allowances for doubtful accounts for estimates of expected losses resulting from the inability of its customers to pay amounts due. The allowance for doubtful accounts is the company’s best estimate of the amount of probable credit losses in existing accounts receivable. The company determines the allowance based on history of similarly aged receivables, the creditworthiness of the customer, reasons for delinquency, current economic conditions, expectations associated with future events and circumstances where reasonable and supportable forecasts are available and any other information that is relevant to the judgment. Receivables from academic and government customers as well as large, well-capitalized commercial customers have historically experienced less collectability risk. Account balances are charged off against the allowance when the company believes it is probable the receivable will not be recovered. The company does not have any off-balance-sheet credit exposure related to customers. 38 THERMO FISHER SCIENTIFIC INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Contract assets include revenues recognized in advance of billings where the company’s right to bill includes something other than the passage of time. Such amounts are recorded net of estimated losses resulting from the inability to invoice customers, which is primarily due to risk associated with the company’s performance. Contract assets are classified as current or noncurrent based on the amount of time expected to lapse until the company's right to consideration becomes unconditional. Contract liabilities include billings in excess of revenues recognized, such as those resulting from customer advances and deposits and unearned revenues on service contracts. Contract liabilities are classified as current or noncurrent based on the periods over which remaining performance obligations are expected to be transferred to customers. Contract assets and liabilities are presented on a net basis in the consolidated balance sheet if they arise from different performance obligations in the same contract. Noncurrent contract assets and noncurrent contract liabilities are included within other assets and other long-term liabilities in the accompanying balance sheet, respectively (see Note 2). Property, Plant and Equipment Property, plant and equipment are recorded at cost. The costs of additions and improvements are capitalized, while maintenance and repairs are charged to expense as incurred. The company generally provides for depreciation and amortization using the straight-line method over the estimated useful lives of the property as follows: buildings and improvements, 25 to 40 years; machinery and equipment (including software), 3 to 10 years; and leasehold improvements, the shorter of the term of the lease or the life of the asset. When assets are retired or otherwise disposed of, the assets and related accumulated depreciation are eliminated from the accounts and the resulting gain or loss is reflected in the accompanying statement of income. Acquisition-related Intangible Assets Acquisition-related intangible assets include the costs of acquired customer relationships, product technology, tradenames, backlog and other specifically identifiable intangible assets, and are being amortized using the straight-line method over their estimated useful lives, which range up to 20 years. The company reviews these intangible assets for impairment when indication of potential impairment exists, such as a significant reduction in cash flows associated with the assets. When impairment indicators exist, the company determines whether the carrying value of its intangible assets exceeds the related undiscounted cash flows. In these situations, the carrying value is written down to fair value. In addition, the company has tradenames that have indefinite lives and which are not amortized. Intangible assets with indefinite lives are reviewed for impairment annually or whenever events or changes in circumstances indicate they may be impaired. The company may perform an optional qualitative assessment. If the company determines that the fair value of the indefinite-lived intangible asset is more likely than not greater than its carrying amount, no additional testing is necessary. If not, or if the company bypasses the optional qualitative assessment, it writes the carrying value down to the fair value, if applicable. Investments Investments include marketable securities, such as marketable equity securities, available for sale debt securities, and bank time deposits with maturities greater than three months, equity method investments, and non-marketable equity investments. The company classifies investments as current or noncurrent based on the nature of the securities and their availability for use in current operations. Noncurrent investments are included in other assets. Marketable securities are stated at fair value with all realized and unrealized gains and losses on investments in marketable equity securities and realized gains and losses on available-for-sale debt securities recognized in other income/(expense). The company accounts for investments in businesses using the equity method when it has the ability to exercise significant influence but not control (generally between 20% and 50% ownership), is not the primary beneficiary and has not elected the fair value option. The company has elected the fair value option of accounting for certain of its investments with readily determinable fair values that would otherwise be accounted for under the equity method (see Note 2). The company’s share of gains and losses in, and impairments of, equity method investments are recorded in equity in earnings (losses) of unconsolidated entities. Equity investments that do not have readily determinable fair values and are not eligible for the net asset value (NAV) practical expedient are measured at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investments of the same issuer. The company performs qualitative assessments to identify impairments of these investments. All gains and losses on non-equity method investments are recognized in other income/(expense). Other Assets Other assets in the accompanying balance sheet include operating lease right-of-use assets, investments, deferred tax assets, pension assets, insurance recovery receivables related to product liability matters, certain intangible assets and other assets. 39 THERMO FISHER SCIENTIFIC INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Goodwill The company assesses goodwill for impairment at the reporting unit level annually and whenever events occur or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. Such events or circumstances generally include the occurrence of operating losses or a significant decline in earnings associated with one or more of the company’s reporting units. The company is permitted to first assess qualitative factors to determine whether the quantitative goodwill impairment test is necessary. If the qualitative assessment results in a determination that the fair value of a reporting unit is more likely than not less than its carrying amount, the company performs a quantitative goodwill impairment test. The company may bypass the qualitative assessment for the reporting unit in any period and proceed directly to the quantitative goodwill impairment test. The company estimates the fair value of its reporting units by using forecasts of discounted future cash flows and peer market multiples. The company would record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value (limited to the amount of goodwill). The company determined that no impairments existed in 2024, 2023 or 2022. Fair Value Measurements Assets and liabilities carried at fair value are classified and disclosed in one of the following three categories: Level 1: Quoted market prices in active markets for identical assets or liabilities that the company has the ability to access. Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data such as quoted prices, interest rates and yield curves. Level 3: Inputs are unobservable data points that are not corroborated by market data. 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. The company determines the fair value of its equity method and non-marketable equity investments that are not eligible for the NAV practical expedient by considering factors such as financial position, operating results and cash flows of the investee; recent transactions in the same or similar securities; significant recent events affecting the investee; the price paid by Thermo Fisher; among others. Loss Contingencies Accruals are recorded for various contingencies, including legal proceedings, environmental, workers’ compensation, product, general and auto liabilities, self-insurance and other claims that arise in the normal course of business. The accruals are based on management’s judgment, historical claims experience, the probability of losses and, where applicable, the consideration of opinions of internal and/or external legal counsel and actuarial estimates. Additionally, the company records receivables from third-party insurers up to the amount of the loss when recovery has been determined to be probable. The company records accruals for environmental remediation liabilities, based on current interpretations of environmental laws and regulations, when it is probable that a liability has been incurred and the amount of such liability can be reasonably estimated. The company calculates estimates based upon several factors, including input from environmental specialists and management’s knowledge of and experience with these environmental matters. The company includes in these estimates potential costs for investigation, remediation and operation and maintenance of cleanup sites. The company determines the probability and range of possible loss for its litigation and other contingencies based on the current status of each of these matters. A liability is recorded in the financial statements if it is believed to be probable that a loss has been incurred and the amount of the loss can be reasonably estimated. The company establishes a liability that is an estimate of amounts expected to be paid in the future for events that have already occurred. The company accrues the most likely amount or at least the minimum of the range of probable loss when a range of probable loss can be estimated. The accrued liabilities are based on management’s judgment as to the probability of losses for asserted and unasserted claims and, where applicable, actuarially determined estimates. Accrual estimates are adjusted as additional information becomes known or payments are made. The amount of ultimate loss may differ from these estimates. Warranty Obligations The company provides for the estimated cost of standard product warranties, primarily from historical information, in cost of product revenues at the time product revenues are recognized. The liability for warranties is included in other accrued expenses in the accompanying balance sheet. Extended warranty agreements are considered service contracts, which are discussed above. Costs of service contracts are recognized as incurred. 40 THERMO FISHER SCIENTIFIC INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Foreign Currency Translation All assets and liabilities of the company’s subsidiaries operating in non-U.S. dollar currencies are translated at period-end exchange rates. Resulting translation adjustments are reflected in the “accumulated other comprehensive items” component of shareholders’ equity. Revenues and expenses are translated at average exchange rates for the period. Revenue Recognition Consumables revenues consist of single-use products and are recognized at a point in time following the transfer of control of such products to the customer, which generally occurs upon shipment. Instruments revenues typically consist of longer-lived assets that, for the substantial majority of sales, are recognized at a point in time in a manner similar to consumables. Service revenues (primarily clinical research, pharmaceutical, and instrument and enterprise services) are recognized over time as customers receive and consume the benefits of such services. For revenues recognized over time, the company generally uses costs accumulated relative to total estimated costs to measure progress as this method approximates satisfaction of the performance obligation. For contracts that contain multiple performance obligations, the company allocates the consideration to which it expects to be entitled (i.e., the transaction price) to each performance obligation based on relative standalone selling prices and recognizes the related revenues when or as control of each individual performance obligation is transferred to customers. The company exercises judgment in determining the timing of revenue by analyzing the point in time or the period over which the customer has the ability to direct the use of and obtain substantially all of the remaining benefits of the asset. The company immediately expenses contract costs that would otherwise be capitalized and amortized over a period of less than one year. Changes to the scope of services contracts generally also include changes in the transaction price. Typically, these contract modifications are not distinct from existing services provided under the contract, and result in cumulative adjustments to revenue on the modification date. However, some modifications are distinct from existing services provided under the contract and recognized prospectively. Payments from customers for most instruments and consumables are typically due in a fixed number of days after shipment or delivery of the product. Service arrangements commonly call for payments in advance of performing the work (e.g., extended service contracts), upon completion of the service (e.g., pharmaceutical services) or a mix of both. Some arrangements include variable amounts of consideration that arise from discounts, rebates, and other programs and practices. In such arrangements, the company estimates the amount by which to reduce the stated contract amount to reflect the transaction price. The company records reimbursement for third-party pass-through and out-of-pocket costs as revenues and the related expenses as costs of revenues. Research and Development The company conducts research and development activities to increase its depth of capabilities in technologies, software and services. Research and development costs include employee compensation and benefits, consultants, facilities related costs, material costs, depreciation and travel. Research and development costs are expensed as incurred. Restructuring Costs Accounting for the timing and amount of termination benefits provided by the company to employees is determined based on whether: (a) the company has a substantive plan to provide such benefits, (b) the company has a written employment contract with the affected employees that includes a provision for such benefits, (c) the termination benefits are due to the occurrence of an event specified in an existing plan or agreement, or (d) the termination benefits are a one-time benefit. In certain circumstances, employee termination benefits may meet more than one of the characteristics listed above and therefore, may have individual elements that are subject to different accounting models. From time to time when executing a restructuring or exit plan, the company also incurs costs other than termination benefits, such as lease termination costs, that are not associated with or will not be incurred to provide economic benefits to the company. These include costs that represent amounts under contractual obligations that exist prior to the restructuring plan communication date and will either continue after the restructuring plan is completed with no economic benefit or result in a penalty to cancel a contractual obligation. Such costs are recognized when incurred, which generally occurs at the contract termination or over the period from when a plan to abandon a leased facility is approved through the cease-use date but charges may continue over the remainder of the original contractual period. Earnings per Share Basic earnings per share has been computed by dividing net income attributable to Thermo Fisher Scientific Inc. by the weighted average number of shares outstanding during the year. Except where the result would be antidilutive to net income 41 THERMO FISHER SCIENTIFIC INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) attributable to Thermo Fisher Scientific Inc., diluted earnings per share has been computed using the treasury stock method for outstanding stock options and restricted units (see Note 6). Income Taxes The company recognizes deferred income taxes based on the expected future tax consequences of differences between the financial statement basis and the tax basis of assets and liabilities, calculated using enacted tax rates in effect for the year in which the differences are expected to be reflected in the tax return. A valuation allowance is provided for tax assets that will more likely than not go unused. The financial statements reflect expected future tax consequences of uncertain tax positions that the company has taken or expects to take on a tax return presuming the taxing authorities’ full knowledge of the positions and all relevant facts, but without discounting for the time value of money (see Note 7). Derivative Contracts The company is exposed to certain risks relating to its ongoing business operations including changes to interest rates and currency exchange rates. The company uses derivative instruments primarily to manage currency exchange and interest rate risks. The company recognizes derivative instruments as either assets or liabilities and measures those instruments at fair value. If a derivative is a hedge, depending on the nature of the hedge, changes in the fair value of the derivative are either offset against the change in fair value of the hedged item through earnings or recognized in other comprehensive items until the hedged item is recognized in earnings. Derivatives that are not designated as hedges are recorded at fair value through earnings. The company uses short-term forward and option currency exchange contracts primarily to hedge certain balance sheet and operational exposures resulting from changes in currency exchange rates, predominantly intercompany loans and cash balances that are denominated in currencies other than the functional currencies of the respective operations. The currency-exchange contracts principally hedge transactions denominated in euro, Canadian dollars, British pounds sterling, Swedish krona, Singapore dollars, Hong Kong dollars and Swiss franc. The company does not hold or engage in transactions involving derivative instruments for purposes other than risk management. Cash flow hedges . For derivative instruments that are designated and qualify as a cash flow hedge, the gain or loss on the derivative is reported as a component of other comprehensive items and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings and is presented in the same income statement line item as the earnings effect of the hedged item. Fair value hedges. For derivative instruments that are designated and qualify as a fair value hedge, the gain or loss on the derivative, as well as the offsetting loss or gain on the hedged item attributable to the hedged risk, are recognized in earnings. Net investment hedges. 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. The fair value of the cross-currency interest rate swaps is included in the accompanying balance sheets under the caption other assets or other long-term liabilities. The fair value of the currency exchange contracts is included in the accompanying balance sheets under the captions other current assets or other accrued expenses. Leases Operating leases that have commenced are included in other assets, other accrued expenses and other long-term liabilities in the consolidated balance sheet. Finance leases that have commenced are included in property, plant and equipment, net, current maturities of long-term obligations and long-term obligations in the consolidated balance sheet. Classification of lease liabilities as either current or noncurrent is based on the expected timing of payments due under the company’s obligations. Right-of-use (ROU) assets represent the company’s right to use an underlying asset for the lease term and lease liabilities represent the company’s obligation to make lease payments arising from the lease. Lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheet. The company recognizes operating lease 42 THERMO FISHER SCIENTIFIC INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) expense on a straight-line basis over the lease term. Finance lease expense includes depreciation, which is recognized on a straight-line basis over the expected life of the leased asset, and an immaterial amount of interest expense. Because most of the company’s leases do not provide an implicit interest rate, the company estimates incremental borrowing rates based on the information available at the commencement date in determining the present value of lease payments. The company uses the implicit rate when readily determinable. Lease terms include the effect of options to extend or terminate the lease when it is reasonably certain that the company will exercise that option. As a lessee, the company accounts for the lease and non-lease components as a single lease component (see Note 13). Pension and Other Postretirement Benefit Plans The company recognizes the funded status of defined benefit pension and other postretirement benefit plans as an asset or liability. This amount is defined as the difference between the fair value of plan assets and the benefit obligation. The company is required to recognize as a component of other comprehensive items, net of tax, the actuarial gains/losses and prior service costs/credits that arise but were not previously required to be recognized as components of net periodic benefit cost/(income). Other comprehensive items is adjusted as these amounts are later recognized in income as components of net periodic benefit cost/(income). When a company with a pension plan is acquired, any excess of projected benefit obligation over the plan assets is recognized as a liability and any excess of plan assets over the projected benefit obligation is recognized as an asset. The recognition of a new liability or a new asset results in the elimination of (a) previously existing unrecognized net gain or loss and (b) unrecognized prior service cost or credits. The company funds annually, at a minimum, the statutorily required minimum amount as actuarially determined. The discount rate used to determine projected benefit obligations and net periodic pension benefit cost/(income) reflects the rate the company would have to pay to purchase high-quality investments that would provide cash sufficient to settle its current pension obligations. The discount rate is determined based on a range of factors, including the rates of return on high-quality, fixed-income corporate bonds and the related expected duration of the obligations or, in certain instances, the company has used a hypothetical portfolio of high quality instruments with maturities that mirror the benefit obligation in order to accurately estimate the discount rate relevant to a particular plan. The company utilizes a full yield curve approach in the estimation of these components by applying the specific spot-rates along the yield curve used in the determination of the benefit obligation to the relevant projected cash flows. The expected long-term rate of return on plan assets used to determine net periodic pension benefit cost/(income) reflects the average rate of earnings expected on the funds invested, or to be invested, to provide for the benefits included in the projected benefit obligations. In determining the expected long-term rate of return on plan assets, the company considers the relative weighting of plan assets, the historical performance of total plan assets and individual asset classes and economic and other indicators of future performance. In addition, the company may consult with and consider the opinions of financial and other professionals in developing appropriate return benchmarks. Asset management objectives include maintaining an adequate level of diversification to reduce interest rate and market risk and providing adequate liquidity to meet immediate and future benefit payment requirements. The expected rate of compensation increase used to determine net periodic pension benefit cost/(income) reflects the long-term average rate of salary increases and is based on historic salary increase experience and management’s expectations of future salary increases (see Note 14). Stock-based Compensation Expense Compensation cost is based on the grant-date fair value and is recognized ratably over the requisite vesting period or to the date based on qualifying retirement eligibility, if earlier, and is primarily included in selling, general and administrative expenses. The company’s practice is to grant stock options at fair market value. Options vest over 3 - 5 years with terms of 7 - 10 years, assuming continued employment with certain exceptions. Vesting of the option awards is contingent upon meeting certain service conditions. The fair value of most option grants is estimated using the Black-Scholes option pricing model. For option grants that require the achievement of both service and market conditions, a lattice model is used to estimate fair value. The fair value is then amortized on a straight-line basis over the requisite service periods of the awards, which is generally the vesting period. Use of a valuation model requires management to make certain assumptions with respect to selected model inputs. Expected volatility is calculated based on the historical volatility of the company’s stock. Historical data on exercise patterns is the basis for estimating the expected life of an option. The risk-free interest rate is based on U.S. Treasury zero-coupon issues with a remaining term which approximates the expected life assumed at the date of grant. The expected annual dividend rate is 43 THERMO FISHER SCIENTIFIC INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) calculated by dividing the company’s annual dividend, based on the most recent quarterly dividend rate, by the closing stock price on the grant date. The compensation expense recognized for all stock-based awards is net of estimated forfeitures. Forfeitures are estimated based on an analysis of actual option forfeitures. Awards of restricted units convert into an equivalent number of shares of common stock. The awards generally vest over 3 - 4 years, assuming continued employment, with some exceptions. Vesting of the awards is contingent upon meeting certain service conditions and may also be contingent upon meeting certain performance and/or market conditions. The fair market value of the award at the time of the grant is amortized to expense over the requisite service period of the award, which is generally the vesting period. Recipients of restricted units have no voting rights but are entitled to accrue dividend equivalents. The fair value of service- and performance-based restricted unit awards is determined based on the number of units granted and the market value of the company’s shares on the grant date. For awards with market-based vesting conditions, the company uses a lattice model to estimate the grant-date fair value of the award (see Note 15). Government Assistance From time to time, the company receives assistance from various governmental agencies generally in the form of cash or non-income tax credits. These programs help offset the costs of certain research and development activities, facility construction and expansion efforts, or hiring objectives. When the company believes that it is probable that it will meet the conditions tied to the assistance, it offsets the associated expense in the consolidated income statement. Such amounts were not material to the consolidated financial statements as of and for the years ended December 31, 2024, 2023 and 2022. 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. Standard Description Effective date for Thermo Fisher and adoption approach Impact of adoption or other significant matters Standards recently adopted ASU No. 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance New guidance 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. Fourth quarter of 2022 using a prospective method Not material 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 other aspects adopted in 2024 using a prospective method Not material 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 Increased disclosures in Note 11 Standards not yet adopted 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 7 ASU No. 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses New guidance to disclose specified information about certain costs and expenses. 2027 annual report and interim periods thereafter using a prospective or retrospective method Will increase disclosures in Note 6 44 THERMO FISHER SCIENTIFIC INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 2. Supplemental Balance Sheet Information Inventories The components of inventories are as follows: (In millions) December 31, 2024 December 31, 2023 Raw materials $ 1,803 $ 2,057 Work in process 755 705 Finished goods 2,420 2,326 Inventories $ 4,978 $ 5,088 Contract-related Balances Contract asset and liability balances are as follows: (In millions) December 31, 2024 December 31, 2023 Current contract assets, net $ 1,435 $ 1,443 Noncurrent contract assets, net 6 4 Current contract liabilities 2,852 2,689 Noncurrent contract liabilities 1,138 1,499 Substantially all of the current contract liabilities balance at December 31, 2023 and 2022 was recognized in revenues during 2024 and 2023, respectively. Noncurrent contract liabilities decreased during 2024 primarily due to a customer contract modification. Remaining Performance Obligations The aggregate amount of the transaction price allocated to the remaining performance obligations for all open customer contracts as of December 31, 2024 was $ 24.61 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 . 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 . Property, Plant and Equipment Property, plant and equipment consists of the following: (In millions) December 31, 2024 December 31, 2023 Land $ 439 $ 458 Buildings and improvements 3,728 3,593 Machinery, equipment and leasehold improvements 9,858 9,235 Construction in progress 2,034 2,238 Property, plant and equipment, at cost 16,059 15,524 Less: Accumulated depreciation and amortization 6,753 6,076 Property, plant and equipment, net $ 9,306 $ 9,448 45 THERMO FISHER SCIENTIFIC INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Acquisition-related Intangible Assets Acquisition-related intangible assets are as follows: Balance at December 31, 2024 Balance at December 31, 2023 (In millions) Gross Accumulated Amortization Net Gross Accumulated Amortization Net Definite lived: Customer relationships $ 22,644 $ ( 10,047 ) $ 12,596 $ 22,762 $ ( 9,410 ) $ 13,352 Product technology 5,557 ( 4,423 ) 1,134 5,894 ( 4,591 ) 1,303 Tradenames 1,706 ( 1,180 ) 527 1,634 ( 1,079 ) 555 Backlog 1,084 ( 1,043 ) 41 1,084 ( 859 ) 225 30,991 ( 16,693 ) 14,298 31,374 ( 15,939 ) 15,435 Indefinite lived: Tradenames 1,235 N/A 1,235 1,235 N/A 1,235 Acquisition-related intangible assets $ 32,226 $ ( 16,693 ) $ 15,533 $ 32,609 $ ( 15,939 ) $ 16,670 The estimated future amortization expense of acquisition-related intangible assets with definite lives as of December 31, 2024 is as follows: (In millions) 2025 $ 1,665 2026 1,496 2027 1,467 2028 1,436 2029 1,324 2030 and thereafter 6,911 Estimated future amortization expense of definite-lived intangible assets $ 14,298 At December 31, 2024 and 2023, the company had $ 34 million and $ 37 million, respectively, of intangible assets not derived from acquisitions, net of accumulated amortization, which are being amortized using the straight-line method over their estimated useful lives, which range up to 20 years. Other Assets At December 31, 2024 and 2023, the company had equity method investments with carrying amounts of $ 357 million and $ 489 million, respectively. At December 31, 2024 and 2023, the fair value of investments for which the company has elected the fair value option was $ 0 million and $ 5 million, respectively. At December 31, 2024 and 2023, the company’s equity investments that do not have readily determinable fair values and are not eligible for the NAV practical expedient investments had carrying amounts of $ 41 million and $ 12 million, respectively. Investments measured at NAV were $ 40 million and $ 28 million at December 31, 2024 and 2023, respectively. 46 THERMO FISHER SCIENTIFIC INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Goodwill The changes in the carrying amount of goodwill by segment are as follows: (In millions) Life Sciences Solutions Analytical Instruments Specialty Diagnostics Laboratory Products and Biopharma Services Total Balance at December 31, 2022 $ 10,146 $ 4,965 $ 3,091 $ 22,994 $ 41,196 Acquisitions — 31 1,741 627 2,399 Currency translation 5 55 91 274 425 Balance at December 31, 2023 10,151 5,051 4,923 23,895 44,020 Acquisitions 2,302 — — — 2,302 Currency translation ( 117 ) ( 92 ) ( 139 ) ( 122 ) ( 470 ) Balance at December 31, 2024 $ 12,336 $ 4,959 $ 4,784 $ 23,773 $ 45,853 Note 3. Debt and Other Financing Arrangements The company’s debt and other financing arrangements are as follows: Effective interest rate at December 31, December 31, December 31, (Dollars in millions) 2024 2024 2023 0.75 % 8 -Year Senior Notes, Due 9/12/2024 (euro-denominated) $ — $ 1,104 1.215 % 3 -Year Senior Notes, Due 10/18/2024 — 2,500 0.125 % 5.5 -Year Senior Notes, Due 3/1/2025 (euro-denominated) 0.40 % 828 883 2.00 % 10 -Year Senior Notes, Due 4/15/2025 (euro-denominated) 2.07 % 663 706 0.853 % 3 -Year Senior Notes, Due 10/20/2025 (Japanese yen-denominated) 1.05 % 142 158 0.000 % 4 -Year Senior Notes Due 11/18/2025 (euro-denominated) 0.14 % 569 607 3.20 % 3 -Year Senior Notes, Due 1/21/2026 (euro-denominated) 3.38 % 518 552 1.40 % 8.5 -Year Senior Notes, Due 1/23/2026 (euro-denominated) 1.52 % 725 773 4.953 % 3 -Year Senior Notes, Due 8/10/2026 5.18 % 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) 1.64 % 518 552 1.75 % 7 -Year Senior Notes, Due 4/15/2027 (euro-denominated) 1.96 % 621 662 1.054 % 5 -Year Senior Notes, Due 10/20/2027 (Japanese yen-denominated) 1.18 % 184 205 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 % 828 883 1.6525 % 4 -Year Senior Notes, Due 3/7/2028 (Swiss franc-denominated) 1.79 % 364 — 0.77 % 5 -Year Senior Notes, Due 9/6/2028 (Japanese yen-denominated) 0.90 % 184 206 1.375 % 12 -Year Senior Notes, Due 9/12/2028 (euro-denominated) 1.46 % 621 662 1.750 % 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 % 725 773 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 % 30 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 % 1,812 1,932 0.875 % 12 -Year Senior Notes, Due 10/1/2031 (euro-denominated) 1.13 % 932 993 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 % 457 — 2.375 % 12 -Year Senior Notes, Due 4/15/2032 (euro-denominated) 2.54 % 621 662 47 THERMO FISHER SCIENTIFIC INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Effective interest rate at December 31, December 31, December 31, (Dollars in millions) 2024 2024 2023 1.49 % 10 -Year Senior Notes, Due 10/20/2032 (Japanese yen-denominated) 1.60 % 40 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 % 1,553 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 % 777 828 1.50 % 12 -Year Senior Notes, Due 9/6/2035 (Japanese yen-denominated) 1.58 % 137 152 2.0375 % 12 -Year Senior Notes, Due 3/7/2036 (Swiss franc-denominated) 2.10 % 358 — 2.875 % 20 -Year Senior Notes, Due 7/24/2037 (euro-denominated) 2.94 % 725 773 1.50 % 20 -Year Senior Notes, Due 10/1/2039 (euro-denominated) 1.73 % 932 993 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) 1.76 % 1,294 1,380 2.069 % 20 -Year Senior Notes, Due 10/20/2042 (Japanese yen-denominated) 2.13 % 93 104 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 % 184 206 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 % 1,035 1,104 2.00 % 30 -Year Senior Notes, Due 10/18/2051 (euro-denominated) 2.06 % 777 828 2.382 % 30 -Year Senior Notes, Due 10/18/2052 (Japanese yen-denominated) 2.43 % 212 236 Other 73 77 Total borrowings at par value 31,332 35,028 Unamortized discount ( 95 ) ( 113 ) Unamortized debt issuance costs ( 164 ) ( 188 ) Total borrowings at carrying value 31,072 34,727 Finance lease liabilities 202 190 Less: Short-term obligations and current maturities 2,214 3,609 Long-term obligations $ 29,061 $ 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 4 for fair value information pertaining to the company’s long-term borrowings. As of December 31, 2024, the annual repayment requirements for debt obligations are as follows: (In millions) Borrowings Finance Lease Liabilities 2025 $ 2,202 $ 12 2026 2,843 12 2027 1,923 10 2028 2,726 9 2029 2,655 8 2030 and thereafter 18,983 151 $ 31,332 $ 202 48 THERMO FISHER SCIENTIFIC INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) In addition to available borrowings under the company’s revolving credit agreements, discussed below, the company had unused lines of credit of $ 65 million as of December 31, 2024. These unused lines of credit generally provide for short-term unsecured borrowings at various interest rates. 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 December 31, 2024, no borrowings were outstanding under the Facility, although available capacity was reduced by immaterial outstanding letters of credit. 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, 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 related to its senior notes at December 31, 2024. In 2022 the company completed the full allocation of an amount equal to the net proceeds from the 0.000 % senior notes due 2025 to finance or refinance, in whole or in part, certain COVID-19 response projects. In 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. 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 December 31, 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. 49 THERMO FISHER SCIENTIFIC INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) January 2025 Debt Issuances In the first quarter of 2025 the company issued the following senior notes: (In millions) Principal Value Issued 0.790 % 3 -Year Senior Notes, Due January 6, 2028 (Swiss franc-denominated) Fr. 88 1.120 % 5 -Year Senior Notes, Due January 6, 2030 (Swiss franc-denominated) Fr. 234 1.520 % 12 -Year Senior Notes, Due January 6, 2037 (Swiss franc-denominated) Fr. 311 1.490 % 20 -Year Senior Notes, Due January 6, 2045 (Swiss franc-denominated) Fr. 185 1.470 % 25 -Year Senior Notes, Due January 6, 2050 (Swiss franc-denominated) Fr. 327 Note 4. Fair Value Measurements Fair Value Measurements The company uses the market approach technique to value its financial instruments and there were no changes in valuation techniques during 2024. The company’s financial assets and liabilities carried at fair value are primarily comprised of investments in bank time deposits, publicly traded securities, insurance contracts, investments in derivative contracts, mutual funds holding publicly traded securities and other investments in unit trusts held as assets to satisfy outstanding deferred compensation and retirement liabilities; and acquisition-related contingent consideration. The following tables present information about the company’s financial assets and liabilities measured at fair value on a recurring basis: December 31, Quoted prices in active markets Significant other observable inputs Significant unobservable inputs (In millions) 2024 (Level 1) (Level 2) (Level 3) Assets Cash equivalents $ 1,103 $ 1,103 $ — $ — Bank time deposits 1,560 1,560 — — Investments 39 18 — 21 Insurance contracts 240 — 240 — Derivative contracts 460 — 460 — Total assets $ 3,401 $ 2,680 $ 700 $ 21 Liabilities Derivative contracts $ 59 $ — $ 59 $ — Contingent consideration 13 — — 13 Total liabilities $ 72 $ — $ 59 $ 13 50 THERMO FISHER SCIENTIFIC INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 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 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. (In millions) 2024 2023 Contingent consideration Beginning balance $ 87 $ 174 Acquisitions (including assumed balances) — 1 Payments ( 2 ) ( 63 ) Changes in fair value included in earnings ( 73 ) ( 25 ) Ending balance $ 13 $ 87 The following table provides a rollforward of investments classified as level 3: (In millions) 2024 Investments Beginning balance $ — Purchases 21 Ending balance $ 21 Fair Value of Other Financial Instruments The carrying value and fair value of the company’s debt instruments are as follows: December 31, 2024 December 31, 2023 Carrying Fair Carrying Fair (In millions) value value value value Senior notes $ 30,999 $ 28,454 $ 34,650 $ 32,191 Other 73 73 77 77 $ 31,072 $ 28,527 $ 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. 51 THERMO FISHER SCIENTIFIC INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 5. Commitments and Contingencies Purchase Obligations The company has entered into unconditional purchase obligations, in the ordinary course of business, that include agreements to purchase goods, services or fixed assets and to pay royalties that are enforceable and legally binding and that specify all significant terms including: fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. Purchase obligations exclude agreements that are cancelable at any time without penalty. The aggregate amount of the company’s unconditional purchase obligations totaled $ 2.20 billion at December 31, 2024, the majority of which are expected to be settled during 2025. Letters of Credit, Guarantees and Other Commitments Outstanding letters of credit and bank guarantees totaled $ 335 million at December 31, 2024. Substantially all of these letters of credit and guarantees expire before 2040. Outstanding surety bonds and other guarantees totaled $ 123 million at December 31, 2024. The expiration of these bonds and guarantees ranges through 2028. The letters of credit, bank guarantees and surety bonds principally secure performance obligations, and allow the holder to draw funds up to the face amount of the letter of credit, bank guarantee or surety bond if the applicable business unit does not perform as contractually required. The company has funding commitments totaling $ 182 million at December 31, 2024, related to investments. The company is a guarantor of pension plan obligations of a divested business. The purchaser of the divested business has agreed to pay for the pension benefits; however, the company was required to guarantee payment of these pension benefits should the purchaser fail to do so. The amount of the guarantee at December 31, 2024 was $ 25 million. In connection with the sale of businesses of the company, the buyers have assumed certain contractual obligations of such businesses and have agreed to indemnify the company with respect to those assumed liabilities. In the event a third-party to a transferred contract does not recognize the transfer of obligations or a buyer defaults on its obligations under the transferred contract, the company could be liable to the third-party for such obligations. However, in such event, the company would be entitled to seek indemnification from the buyer. Indemnifications In conjunction with certain transactions, primarily divestitures, the company has agreed to indemnify the other parties with respect to certain liabilities related to the businesses that were sold or leased properties that were abandoned (e.g., retention of certain environmental, tax, employee and product liabilities). The scope and duration of such indemnity obligations vary from transaction to transaction. Where probable, an obligation for such indemnifications is recorded as a liability. Generally, a maximum obligation cannot be reasonably estimated. Other than obligations recorded as liabilities at the time of divestiture, historically the company has not made significant payments for these indemnifications. In connection with the company’s efforts to reduce the number of facilities that it occupies, the company has vacated some of its leased facilities or sublet them to third parties. When the company sublets a facility to a third-party, it remains the primary obligor under the master lease agreement with the owner of the facility. As a result, if a third-party vacates the sublet facility, the company would be obligated to make lease or other payments under the master lease agreement. The company believes that the financial risk of default by sublessors is individually and in the aggregate not material to the company’s financial position or results of operations. In connection with the sale of products in the ordinary course of business, the company often makes representations affirming, among other things, that its products do not infringe on the intellectual property rights of others and agrees to indemnify customers against third-party claims for such infringement. The company has not been required to make material payments under such provisions. 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 December 31, 2024 , the company’s total environmental 52 THERMO FISHER SCIENTIFIC INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) liability was approximately $ 81 million. 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 below, nor are material losses deemed probable for such matters. It is reasonably possible, however, that an unfavorable outcome that exceeds the company’s current accrual estimate, if any, for one or more of the matters described below could have a material adverse effect on the company’s results of operations, financial position and cash flows. 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. The range of probable loss for product liability, workers compensation and other personal injury matters of the company’s continuing operations at December 31, 2024, was approximately $ 224 million to $ 381 million. The company’s accrual for these matters totaled $ 225 million at December 31, 2024. The accrual includes estimated defense costs and is gross of estimated amounts due from insurers of $ 83 million at December 31, 2024 that are included in other assets in the accompanying balance sheet. In addition, as of December 31, 2024, the company had a product liability accrual of $ 21 million relating to divested businesses. Although the company believes that the amounts accrued and estimated 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 6. Supplemental Income Statement Information Disaggregated Revenues Revenues by type are as follows: (In millions) 2024 2023 2022 Revenues Consumables $ 17,587 $ 17,597 $ 20,624 Instruments 7,446 7,646 7,924 Services 17,845 17,614 16,367 Consolidated revenues $ 42,879 $ 42,857 $ 44,915 Revenues by geographic region based on customer location are as follows: (In millions) 2024 2023 2022 Revenues North America $ 22,504 $ 22,764 $ 24,594 Europe 10,857 10,741 10,762 Asia-Pacific 7,956 7,873 8,115 Other regions 1,561 1,479 1,444 Consolidated revenues $ 42,879 $ 42,857 $ 44,915 53 THERMO FISHER SCIENTIFIC INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Each reportable segment earns revenues from consumables, instruments and services in North America, Europe, Asia-Pacific and other regions. See Note 11 for revenues by reportable segment and other geographic data. Restructuring and Other Costs Restructuring and other costs in 2024 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 2 % of the company’s workforce. Restructuring and other costs in 2023 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 5 % of the company’s workforce. Restructuring and other costs in 2022 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 less than 2 % of the company’s workforce. As of February 20, 2025, the company has identified restructuring actions, primarily in the Laboratory Products and Biopharma Services segment, that it expects will result in additional charges of approximately $ 200 million, primarily in 2025, and expects to identify additional actions in future periods. Restructuring and other costs by segment are as follows: (In millions) 2024 2023 2022 Life Sciences Solutions $ 69 $ 105 $ 30 Analytical Instruments 4 33 1 Specialty Diagnostics 17 11 68 Laboratory Products and Biopharma Services 280 295 12 Corporate 9 15 3 $ 379 $ 459 $ 114 The following table summarizes the changes in the company’s accrued restructuring balance. Other amounts reported as restructuring and other costs in the accompanying statement of income have been summarized in the notes to the table. Accrued restructuring costs are included in other accrued expenses in the accompanying balance sheet. (In millions) Total (a) Balance at December 31, 2021 $ 17 Net restructuring charges incurred in 2022 (b) 68 Payments ( 44 ) Balance at December 31, 2022 41 Net restructuring charges incurred in 2023 (c) (d) 194 Payments ( 175 ) Balance at December 31, 2023 60 Net restructuring charges incurred in 2024 (e) (f) 97 Payments ( 105 ) Currency translation ( 2 ) Balance at December 31, 2024 $ 50 (a) The movements in the restructuring liability principally consist of severance and other costs associated with facility consolidations. (b) Excludes $ 46 million of charges, primarily charges for impairment of long-lived assets in the Specialty Diagnostic segment. (c) Excludes $ 264 million of net charges, principally $ 126 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 $ 19 million of net charges for pre-acquisition litigation and other matters in the Laboratory Products and Biopharma Services segment. (d) Excludes $ 93 million of charges in the Laboratory Products and Biopharma Services segment for impairments 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 $ 46 million attributable to a noncontrolling interest. 54 THERMO FISHER SCIENTIFIC INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (e) Excludes $ 282 million of net charges, principally $ 211 million of charges for impairment of long-lived assets in the Laboratory Products and Biopharma Services and Life Sciences Solutions segments. (f) Excludes $ 41 million of charges in the Laboratory Products and Biopharma Services segment for impairments 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 2025. Earnings per Share The company’s earnings per share are as follows: (In millions except per share amounts) 2024 2023 2022 Net income attributable to Thermo Fisher Scientific Inc. $ 6,335 $ 5,995 $ 6,950 Basic weighted average shares 382 386 392 Plus effect of: stock options and restricted stock units 1 2 2 Diluted weighted average shares 383 388 394 Basic earnings per share $ 16.58 $ 15.52 $ 17.75 Diluted earnings per share $ 16.53 $ 15.45 $ 17.63 Antidilutive stock options excluded from diluted weighted average shares 2 2 2 Other Income/(Expense) In all periods, other income/(expense) includes currency transaction gains/losses on non-operating monetary assets and liabilities and net periodic pension benefit cost/(income), excluding the service cost component, which is included in operating expenses on the accompanying statements of income. In 2024, 2023, and 2022 other income/(expense) includes $ 21 million, $( 46 ) million, and $( 161 ) million of net gains/(losses) on investments, respectively. In 2022 other income/(expense) includes $ 67 million of net gains on derivative instruments to address certain foreign currency risks, and $ 26 million of losses on the early extinguishment of debt (Note 3). Foreign Currency Transactions Foreign currency transaction gains/(losses) included in the accompanying statements of income were $ 0 million, $( 67 ) million and $ 62 million in 2024, 2023 and 2022, respectively. Note 7. Income Taxes The components of income before provision for income taxes are as follows: (In millions) 2024 2023 2022 U.S. $ 2,226 $ 2,431 $ 3,859 Non-U.S. 4,812 3,867 3,976 Income before income taxes $ 7,037 $ 6,298 $ 7,835 55 THERMO FISHER SCIENTIFIC INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The components of the provision for income taxes are as follows: (In millions) 2024 2023 2022 Current income tax provision Federal $ 561 $ 228 $ 813 Non-U.S. 1,175 1,206 633 State 130 150 254 1,866 1,584 1,700 Deferred income tax provision/(benefit) Federal $ ( 1,026 ) $ ( 551 ) $ ( 611 ) Non-U.S. ( 72 ) ( 647 ) ( 314 ) State ( 111 ) ( 102 ) ( 72 ) ( 1,209 ) ( 1,300 ) ( 997 ) Provision for/(benefit from) income taxes $ 657 $ 284 $ 703 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 income taxes due to the following: (In millions) 2024 2023 2022 Statutory federal income tax rate 21 % 21 % 21 % Provision for income taxes at statutory rate $ 1,478 $ 1,323 $ 1,645 Increases (decreases) resulting from: Foreign rate differential ( 131 ) ( 223 ) ( 329 ) Income tax credits ( 333 ) ( 276 ) ( 202 ) Global intangible low-taxed income 57 113 96 Foreign-derived intangible income ( 133 ) ( 108 ) ( 149 ) Excess tax benefits from stock options and restricted stock units ( 67 ) ( 69 ) ( 80 ) Provision for (reversal of) tax reserves, net 218 13 ( 544 ) Intra-entity transfers ( 106 ) ( 233 ) ( 18 ) Foreign exchange loss on inter-company debt refinancing — ( 112 ) — Provision for (reversal of) valuation allowances, net ( 229 ) ( 32 ) 344 Withholding taxes 74 33 84 Tax return reassessments and settlements ( 192 ) ( 187 ) ( 210 ) State income taxes, net of federal tax 66 70 111 Other, net ( 45 ) ( 28 ) ( 45 ) Provision for/(benefit from) income taxes $ 657 $ 284 $ 703 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, non-deductible interest in certain foreign jurisdictions, and foreign taxes that are different than the U.S. federal statutory rate. During 2024, the company recorded a tax reserve and associated interest of $ 240 million related to the settlement of international tax audits for tax years 2009 through 2016, which were settled in 2024. The company also recorded tax benefits of $ 459 million, primarily in jurisdictions where the deferred tax assets are now expected to be realized due to forecasted income. The benefits were partially offset by tax provisions primarily associated with disallowed interest expense and net operating loss carryforwards that are not expected to be realized. During 2023, the company released valuation allowances of $ 32 million in jurisdictions where the deferred tax assets are now expected to be realized. In 2023 the company also recorded a tax benefit of $ 127 million for U.S. tax credits and the revaluation of net operating loss carryforwards due to higher tax rates as a result of its tax return resubmissions, a $ 91 million tax benefit, net of related tax expenses, from a foreign exchange loss on an intercompany debt refinancing transaction, and $ 233 million of tax benefits resulting from intra-entity transactions. 56 THERMO FISHER SCIENTIFIC INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) During 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 generally receives a tax deduction upon the exercise of non-qualified stock options by employees, or the vesting of restricted stock units held by employees, for the difference between the exercise price and the market price of the underlying common stock on the date of exercise. The company uses the incremental tax benefit approach for utilization of tax attributes. These excess tax benefits reduce the tax provision. In 2024, 2023 and 2022, the company's tax provision was reduced by $ 67 million, $ 69 million and $ 80 million, respectively, of such benefits. Net deferred tax asset/(liability) in the accompanying balance sheet consists of the following: (In millions) 2024 2023 Deferred tax asset/(liability) Depreciation and amortization $ ( 4,133 ) $ ( 4,286 ) Net operating loss and credit carryforwards 2,915 2,385 Reserves and accruals 161 157 Accrued compensation 318 299 Inventory basis difference 309 275 Deferred interest 534 753 Research and development and other capitalized costs 536 380 Unrealized (gains) losses on hedging instruments ( 363 ) ( 66 ) Contract liabilities 280 130 Other, net 147 199 Deferred tax assets/(liabilities), net before valuation allowance 705 226 Less: Valuation allowance 1,043 1,317 Deferred tax assets/(liabilities), net $ ( 338 ) $ ( 1,091 ) The company estimates the degree to which tax assets, losses and credit carryforwards will result in a benefit based on expected profitability by tax jurisdiction and provides a valuation allowance for tax assets and loss and credit carryforwards that it believes will more likely than not expire unutilized. At December 31, 2024, all of the company’s valuation allowance relates to deferred tax assets, primarily net operating losses and disallowed interest expense carryforward, for which any subsequently recognized tax benefits will reduce income tax expense. The changes in the valuation allowance are as follows: Year Ended December 31, (In millions) 2024 2023 2022 Beginning balance $ 1,317 $ 1,322 $ 968 Additions/(reductions) recognized in income tax provision, net ( 229 ) ( 32 ) 344 Additions due to acquisitions — 4 14 Currency translation and other ( 46 ) 23 ( 4 ) Ending balance $ 1,043 $ 1,317 $ 1,322 At December 31, 2024, the company had net federal, state and non-U.S. net operating loss carryforwards of $ 109 million, $ 63 million and $ 1.54 billion, respectively. Use of the carryforwards is limited based on the future income of certain subsidiaries. Of the federal net operating loss carryforwards, $ 43 million expire in the years 2025 through 2037, and the remainder do not expire. Of the state net operating loss carryforwards, $ 54 million expire in the years 2025 through 2043, and the remainder do not expire. Of the net non-U.S. net operating loss carryforwards, $ 574 million expire in the years 2027 through 2044, and the remainder do not expire. At December 31, 2024, the company had foreign tax credit carryforwards of $ 729 million and deferred interest carryforwards of $ 534 million. The foreign tax credit carryforwards will expire in the years 2025 through 2034. Of the deferred interest carryforwards, $ 201 million expire in the years 2025 through 2034 and the remainder do not expire. 57 THERMO FISHER SCIENTIFIC INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) U.S. federal taxes have been recorded on approximately $ 40 billion of undistributed foreign earnings as of December 31, 2024. A provision has not been made for certain U.S. state income taxes or additional non-U.S. taxes that would be due when cash is repatriated to the U.S. as the company’s undistributed foreign earnings are intended to be reinvested outside of the U.S. indefinitely. The determination of the amount of the unrecognized deferred tax liability related to the undistributed foreign earnings is not practicable due to the uncertainty in the manner in which these earnings will be distributed. The company’s intent is to only make distributions from non-U.S. subsidiaries in the future when they can be made at no net tax cost. Unrecognized Tax Benefits As of December 31, 2024, the company had $ 0.52 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 2023 2022 Beginning balance $ 540 $ 572 $ 1,124 Additions due to acquisitions 19 — 15 Additions for tax positions of current year 91 4 104 Additions for tax positions of prior years 244 34 24 Reductions for tax positions of prior years ( 182 ) ( 43 ) ( 659 ) Closure of tax years — ( 6 ) ( 4 ) Settlements ( 187 ) ( 21 ) ( 32 ) Ending balance $ 525 $ 540 $ 572 Substantially all of the unrecognized tax benefits are classified as long-term liabilities. The company does not expect its unrecognized tax benefits to change significantly over the next twelve months. During 2024, the company’s unrecognized tax benefits decreased by $ 99 million as a result of uncertain tax positions relating to foreign tax positions which included $ 240 million of reserve and associated interest from the settlement of international tax audits for tax years 2009 through 2016 and increased $ 84 million relating to U.S. federal and state tax positions. During 2023, the company’s unrecognized tax benefits decreased by $ 12 million as a result of uncertain tax positions relating to foreign tax positions and decreased $ 19 million relating to U.S. federal and state tax positions. During 2022, the company’s unrecognized tax benefits increased by $ 143 million as a result of uncertain tax positions relating to foreign tax positions and decreased $ 610 million relating to U.S. federal and state tax positions which included $ 658 million from the settlement of the IRS audit of the 2017 and 2018 tax years. The company also assumed $ 15 million of uncertain tax benefits as part of the acquisition of PPD. The company classified interest and penalties related to unrecognized tax benefits as income tax expense. The total amount of interest and penalties related to uncertain tax positions and recognized in the balance sheet as of December 31, 2024 and 2023 was $ 75 million and $ 95 million, respectively. The company conducts business globally and, as a result, Thermo Fisher or one or more of its subsidiaries files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. In the normal course of business, the company is subject to examination by taxing authorities throughout the world, including such major jurisdictions as Australia, Canada, China, Denmark, Finland, France, Germany, Japan, Singapore, Sweden, the United Kingdom and the United States. With few exceptions, the company is no longer subject to U.S. state and local or non-U.S. income tax examinations for years before 2012 and no longer subject to U.S. federal income tax examinations for years before 2019. 58 THERMO FISHER SCIENTIFIC INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 8. Comprehensive Income/(Loss) and Shareholders' Equity Comprehensive Income (Loss) Changes in each component of accumulated other comprehensive items, net of tax are as follows: (In millions) Currency translation adjustment Unrealized gains/(losses) on hedging instruments Pension and other postretirement benefit liability adjustment Total Balance at December 31, 2023 $ ( 2,941 ) $ ( 28 ) $ ( 255 ) $ ( 3,224 ) Other comprehensive income/(loss) before reclassifications 525 — ( 12 ) 513 Amounts reclassified from accumulated other comprehensive income/(loss) 7 3 4 14 Net other comprehensive income/(loss) 532 3 ( 8 ) 527 Balance at December 31, 2024 $ ( 2,409 ) $ ( 25 ) $ ( 263 ) $ ( 2,697 ) Shareholders’ Equity At December 31, 2024, the company had reserved 37 million unissued shares of its common stock for possible issuance under stock-based compensation plans. Early in the first quarter of 2025, the company repurchased $ 2.00 billion of the company's common stock ( 3.6 million shares). Note 9. Supplemental Cash Flow Information Supplemental cash flow information is as follows: (In millions) 2024 2023 2022 Cash paid for: Interest $ 1,570 $ 1,385 $ 667 Income taxes 1,834 1,482 1,234 Non-cash investing and financing activities Acquired but unpaid property, plant and equipment 303 296 393 Finance lease ROU assets obtained in exchange for new finance lease liabilities — 2 33 Declared but unpaid dividends 150 137 119 Issuance of stock upon vesting of restricted stock units 186 234 241 Excise tax from stock repurchases 26 28 — Cash, cash equivalents and restricted cash is included in the consolidated balance sheet as follows: December 31, December 31, (In millions) 2024 2023 Cash and cash equivalents $ 4,009 $ 8,077 Restricted cash included in other current assets 10 6 Restricted cash included in other assets 21 14 Cash, cash equivalents and restricted cash $ 4,040 $ 8,097 Amounts included in restricted cash primarily represent funds held as collateral for bank guarantees, pension related deposits, and incoming cash in China awaiting government administrative clearance. 59 THERMO FISHER SCIENTIFIC INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 10. Derivatives Derivative Contracts The following table provides the aggregate notional value of outstanding derivative contracts. December 31, December 31, (In millions) 2024 2023 Notional amount 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 1,588 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 December 31, December 31, December 31, December 31, (In millions) 2024 2023 2024 2023 Derivatives designated as hedging instruments Cross-currency interest rate swaps $ 458 $ 5 $ 57 $ 287 Derivatives not designated as hedging instruments Currency exchange contracts 2 3 2 3 Total derivatives $ 460 $ 8 $ 59 $ 290 Gain/(loss) recognized (In millions) 2024 2023 2022 Fair value hedging relationships Cross-currency interest rate swaps Hedged long-term obligations - included in other income/(expense) $ — $ — $ 77 Derivatives designated as hedging instruments - included in other income/(expense) — — ( 81 ) Derivatives designated as cash flow hedges Interest rate swaps Amount reclassified from accumulated other comprehensive items to interest expense ( 3 ) ( 4 ) — Amount reclassified from accumulated other comprehensive items to other income/(loss) — ( 3 ) ( 3 ) Financial instruments designated as net investment hedges Foreign currency-denominated debt and other payables Included in currency translation adjustment within other comprehensive income/(loss) 686 ( 356 ) 695 Cross-currency interest rate swaps Included in currency translation adjustment within other comprehensive income/(loss) 682 ( 222 ) 52 Included in interest expense 267 120 19 Derivatives not designated as hedging instruments Currency exchange contracts Included in cost of product revenues 21 1 6 Included in other income/(expense) ( 16 ) ( 29 ) 102 60 THERMO FISHER SCIENTIFIC INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Gains and losses recognized on currency exchange contracts and the interest rate swaps designated as fair value hedges 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 and Note 3 for additional information on the company’s risk management objectives and strategies. Note 11. Business Segment and Geographical Information The company’s financial performance is reported in four segments. A description of each segment follows. Life Sciences Solutions: provides an extensive portfolio of reagents, instruments and consumables used in biological and medical research, discovery and production of new drugs and vaccines as well as diagnosis of infection and disease. These products and services are used by customers in pharmaceutical, biotechnology, agricultural, clinical, healthcare, academic, and government markets. Analytical Instruments: provides a broad offering of instruments and the supporting consumables, software and services that are used for a range of applications in the laboratory and in the field. These products and services are used by customers in pharmaceutical, biotechnology, academic, government, environmental and other research and industrial markets, as well as the clinical laboratory. Specialty Diagnostics: offers a wide range of diagnostic test kits, reagents, culture media, instruments and associated products to serve customers in healthcare, clinical, pharmaceutical, industrial, and food safety laboratories. Our healthcare products are used to increase the speed and accuracy of diagnoses, which improves patient care in a more cost-efficient manner. Laboratory Products and Biopharma Services: offers virtually everything needed for the laboratory. Our unique combination of self-manufactured and sourced products and extensive service offering enables our customers to focus on their core activities and helps them to be more innovative, productive and cost-efficient. The segment also includes a comprehensive offering of outsourced services used by the pharmaceutical and biotech industries for drug development, clinical research, clinical trials services and commercial drug manufacturing. The company’s management evaluates segment operating performance based on operating income before certain charges/credits to cost of revenues and selling, general and administrative expenses, restructuring and other costs, and amortization of acquisition-related intangible assets. The company uses this measure because it helps management understand and evaluate the segments’ core operating results and facilitates comparison of performance for determining compensation. The company's president, chairman and chief executive officer is its chief operating decision maker (CODM). The CODM uses total revenues and segment income predominantly in the strategic plan, annual operating plan and quarterly business review processes. During these processes, the CODM considers budget-to-actual variances to evaluate both internal (e.g., changes in selling prices, strategic growth investments, productivity, business mix, newly acquired/divested businesses, etc.) and external (e.g., inflation, foreign currency, etc.) events and conditions. The company generally accounts for intersegment revenues at current market prices. Other segment items included in the below tables consist of stock-based compensation and other incentive compensation expenses, allocations of corporate expenses and certain overhead expenses as well as elimination of intersegment and intrasegment profits, all of which are included in the company's measurement of segment income, but not regularly provided to the CODM at the segment level. Cost of revenues adjustments consist of charges for the sale of inventories revalued at the date of acquisition, inventory write-downs associated with large-scale abandonments of product lines, and accelerated depreciation on fixed assets to estimated salvage value in connection with the consolidation of operations. Selling, general and administrative adjustments consist of significant transaction/integration costs (including reimbursement thereof) related to recent/terminated acquisitions, charges/credits for changes in estimates of contingent acquisition consideration, and charges related to product liability litigation. Restructuring and other costs include charges arising from headcount reductions and facility consolidations such as severance and abandoned lease expense and gains and losses on the sale of real estate and 61 THERMO FISHER SCIENTIFIC INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) product lines, as well as impacts of pre-acquisition matters and net charges for significant litigation-related matters (Note 6). Segment assets included in the below tables consist of third-party accounts receivable and inventories, which are regularly provided to the CODM. Geographical revenues are attributed to countries based on customer location. Long-lived assets by geographical location includes property, plant and equipment, net, and operating lease ROU assets. Business Segment Information 2024 (In millions) Life Sciences Solutions Analytical Instruments Specialty Diagnostics Laboratory Products and Biopharma Services Total Revenues Revenues from external customers $ 8,160 $ 7,267 $ 4,449 $ 23,002 $ 42,879 Intersegment revenues 1,471 196 63 155 1,885 9,631 7,463 4,512 23,157 44,764 Elimination of intersegment revenues ( 1,885 ) Consolidated revenues $ 42,879 Segment Income Cost of revenues 3,559 3,535 2,605 18,074 Selling, general, and administrative expenses 1,799 1,251 741 2,378 Research and development expenses 551 554 176 73 Other segment items 219 167 ( 168 ) ( 459 ) Segment income 3,503 1,955 1,159 3,090 9,707 Unallocated amounts Cost of revenues adjustments ( 47 ) Selling, general and administrative expenses adjustments 8 Restructuring and other costs ( 379 ) Amortization of acquisition-related intangible assets ( 1,952 ) Interest income 1,078 Interest expense ( 1,390 ) Other income/(expense) 12 Consolidated income before income taxes $ 7,037 (In millions) Unallocated amounts Life Sciences Solutions Analytical Instruments Specialty Diagnostics Laboratory Products and Biopharma Services Consolidated Segment assets $ 84,031 $ 2,982 $ 2,944 $ 1,218 $ 6,145 $ 97,321 Purchases of property, plant and equipment 85 123 95 125 971 1,400 Depreciation of property, plant and equipment — 230 103 104 721 1,156 62 THERMO FISHER SCIENTIFIC INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 2023 (In millions) Life Sciences Solutions Analytical Instruments Specialty Diagnostics Laboratory Products and Biopharma Services Total Revenues Revenues from external customers $ 8,545 $ 7,101 $ 4,324 $ 22,888 $ 42,857 Intersegment revenues 1,432 163 82 154 1,829 9,977 7,263 4,405 23,041 44,686 Elimination of intersegment revenues ( 1,829 ) Consolidated revenues $ 42,857 Segment Income Cost of revenues 4,072 3,468 2,592 18,033 Selling, general, and administrative expenses 1,791 1,252 724 2,304 Research and development expenses 558 528 156 68 Other segment items 136 107 ( 191 ) ( 722 ) Segment income 3,420 1,908 1,124 3,358 9,810 Unallocated amounts Cost of revenues adjustments ( 95 ) Selling, general and administrative expenses adjustments ( 59 ) Restructuring and other costs ( 459 ) Amortization of acquisition-related intangible assets ( 2,338 ) Interest income 879 Interest expense ( 1,375 ) Other income/(expense) ( 65 ) Consolidated income before income taxes $ 6,298 (In millions) Unallocated amounts Life Sciences Solutions Analytical Instruments Specialty Diagnostics Laboratory Products and Biopharma Services Consolidated Segment assets $ 85,314 $ 3,186 $ 2,726 $ 1,150 $ 6,350 $ 98,726 Purchases of property, plant and equipment 80 178 87 121 1,013 1,479 Depreciation of property, plant and equipment — 220 93 86 669 1,068 63 THERMO FISHER SCIENTIFIC INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 2022 (In millions) Life Sciences Solutions Analytical Instruments Specialty Diagnostics Laboratory Products and Biopharma Services Total Revenues Revenues from external customers $ 11,565 $ 6,441 $ 4,604 $ 22,304 $ 44,915 Intersegment revenues 1,967 182 158 207 2,515 13,532 6,624 4,763 22,511 47,430 Elimination of intersegment revenues ( 2,515 ) Consolidated revenues $ 44,915 Segment Income Cost of revenues 4,973 3,194 3,095 17,830 Selling, general, and administrative expenses 2,027 1,235 605 2,347 Research and development expenses 680 508 147 85 Other segment items 270 180 ( 108 ) ( 623 ) Segment income 5,582 1,507 1,024 2,872 10,985 Unallocated amounts Cost of revenues adjustments ( 46 ) Selling, general and administrative expenses adjustments ( 37 ) Restructuring and other costs ( 114 ) Amortization of acquisition-related intangible assets ( 2,395 ) Interest income 272 Interest expense ( 726 ) Other income/(expense) ( 104 ) Consolidated income before income taxes $ 7,835 (In millions) Unallocated amounts Life Sciences Solutions Analytical Instruments Specialty Diagnostics Laboratory Products and Biopharma Services Consolidated Segment assets $ 83,340 $ 3,845 $ 2,465 $ 1,076 $ 6,428 $ 97,154 Purchases of property, plant and equipment 98 490 140 112 1,403 2,243 Depreciation of property, plant and equipment — 214 83 75 614 986 Geographical Information (In millions) 2024 2023 2022 Revenues United States $ 21,755 $ 22,013 $ 23,820 Other 21,124 20,844 21,095 Consolidated revenues $ 42,879 $ 42,857 $ 44,915 Long-lived Assets United States $ 6,245 $ 6,352 $ 6,308 Other 4,550 4,652 4,565 Consolidated long-lived assets $ 10,795 $ 11,004 $ 10,873 64 THERMO FISHER SCIENTIFIC INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 12. 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. Acquisition transaction costs are recorded in selling, general and administrative expenses as incurred. 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 tax deductible. The components of the purchase price and net assets acquired are as follows: (In millions) Olink Purchase price Cash paid $ 3,215 Purchase price payable 28 Cash acquired ( 97 ) $ 3,146 Net assets acquired Definite-lived intangible assets Customer relationships $ 708 Product technology 207 Tradenames 97 Goodwill 2,302 Net tangible assets 8 Deferred tax assets (liabilities) ( 176 ) $ 3,146 The weighted-average amortization periods for definite-lived intangible assets acquired in 2024 are 19 years for customer relationships, 15 years for product technology, and 15 years for tradenames. The weighted-average amortization period for definite-lived intangible assets acquired in 2024 is 18 years. 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. 65 THERMO FISHER SCIENTIFIC INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 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 definite-lived intangible assets acquired in 2023 is 17 years. 2022 In 2022, the company acquired, within the Analytical Instruments segment, a U.S.-based developer of Fourier-transform infrared gas analysis technologies. Note 13. Leases As a lessee, the company leases certain logistics, office, and manufacturing facilities, as well as vehicles, copiers, and other equipment. These operating leases generally have remaining lease terms between 1 month and 30 years, and some include options to extend (generally for 1 to 10 years) or have options to terminate the arrangement within 1 year. The company has guaranteed the residual value of three leased operating facilities with lease terms ending in 2025, and 2028, and 2029. The company has agreed with the lessor to comply with certain financial covenants consistent with its other debt arrangements (Note 3). The aggregate maximum guarantee under these three lease arrangements is $ 147 million. Operating lease ROU assets and lease liabilities for these lease arrangements are recorded on the consolidated balance sheet as of December 31, 2024, but exclude any amounts for residual value guarantees. 66 THERMO FISHER SCIENTIFIC INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) As a lessee, the consolidated financial statements include the following relating to operating leases: (Dollars in millions) 2024 2023 2022 Statement of income Operating lease costs $ 353 $ 355 $ 351 Variable lease costs 115 115 109 Statement of cash flows Cash used in operating activities for payments of amounts included in the measurement of operating lease liabilities $ 327 $ 410 $ 289 Operating lease ROU assets obtained in exchange for new operating lease liabilities 262 234 430 Balance sheet ROU assets - included in other assets $ 1,489 $ 1,556 Operating lease liabilities - included in other accrued expenses 261 263 Operating lease liabilities - included in other long-term liabilities 1,239 1,244 Weighted average at end of year Remaining operating lease term 8.6 years 9.2 years Discount rate 4.6 % 4.0 % Lease costs arising from finance leases, short-term leases, and sublease income are not material. See Note 3 for additional information relating to finance leases. As of December 31, 2024, future payments of operating lease liabilities are as follows: (In millions) 2025 $ 320 2026 277 2027 235 2028 167 2029 136 2030 and thereafter 723 Total lease payments 1,858 Less: imputed interest 357 Total operating lease liability $ 1,501 As a lessor, operating leases, sales-type leases and direct financing leases are not material. Note 14. Pension and Other Postretirement Benefit Plans 401(k) Savings Plan and Other Defined Contribution Plans The company’s 401(k) savings and other defined contribution plans cover the majority of the company’s eligible U.S. and certain non-U.S. employees. Contributions to the plans are made by both employees and the company. Company contributions are based on the level of employee contributions and formulas determined by the company. In 2024, 2023 and 2022, the company charged to expense $ 443 million, $ 468 million and $ 402 million, respectively, related to its defined contribution plans. Defined Benefit Pension Plans Employees of a number of the company’s non-U.S. and certain U.S. subsidiaries participate in defined benefit pension plans covering substantially all full-time employees at those subsidiaries. Some of the plans are unfunded, as permitted under the plans and applicable laws. The company also maintains postretirement healthcare programs at several acquired businesses where certain employees are eligible to participate. The liabilities and costs associated with the company’s postretirement healthcare programs are generally funded on a self-insured and insured-premium basis and are not material for any period presented. 67 THERMO FISHER SCIENTIFIC INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Contributions to the plans included in the following table are estimated at between $ 40 million and $ 50 million for 2025. The following table provides a reconciliation of benefit obligations and plan assets of the company’s domestic and non-U.S. pension plans: Domestic pension benefits Non-U.S. pension benefits (In millions) 2024 2023 2024 2023 Accumulated benefit obligation $ 937 $ 1,005 $ 1,079 $ 1,166 Change in projected benefit obligations Projected benefit obligation at beginning of year $ 1,005 $ 995 $ 1,221 $ 1,069 Acquisitions — — — 15 Service costs — — 28 26 Interest costs 46 47 40 42 Settlements — — ( 29 ) ( 37 ) Plan participants' contributions — — 10 9 Actuarial (gains)/losses ( 32 ) 42 ( 59 ) 65 Benefits paid ( 81 ) ( 79 ) ( 26 ) ( 25 ) Currency translation and other — — ( 49 ) 57 Projected benefit obligation at end of year $ 937 $ 1,005 $ 1,135 $ 1,221 Change in fair value of plan assets Fair value of plan assets at beginning of year $ 947 $ 937 $ 944 $ 868 Acquisitions — — — 15 Actual return on plan assets 22 84 ( 37 ) 29 Employer contributions 7 5 37 36 Settlements — — ( 29 ) ( 37 ) Plan participants' contributions — — 10 9 Benefits paid ( 81 ) ( 79 ) ( 26 ) ( 25 ) Currency translation and other — — ( 32 ) 49 Fair value of plan assets at end of year $ 895 $ 947 $ 867 $ 944 Funded status $ ( 43 ) $ ( 58 ) $ ( 268 ) $ ( 277 ) Amounts recognized in balance sheet Noncurrent assets $ 5 $ — $ 57 $ 65 Current liability ( 5 ) ( 6 ) ( 12 ) ( 11 ) Noncurrent liabilities ( 42 ) ( 52 ) ( 313 ) ( 331 ) Net amount recognized $ ( 43 ) $ ( 58 ) $ ( 268 ) $ ( 277 ) Amounts recognized in accumulated other comprehensive items Net actuarial loss/(gain) $ 218 $ 217 $ 156 $ 151 Prior service (credits)/cost — — ( 7 ) ( 5 ) Net amount recognized $ 218 $ 217 $ 149 $ 146 Actuarial (gains)/losses experienced in 2024 for both domestic and non-U.S. pension plans were primarily driven by increases in the weighted average discount rates used to determine the projected benefit obligation when compared to 2023. For domestic pension plans, actuarial (gains)/losses experienced in 2023 were driven by decreases in the weighted average discount rates used to determine the projected benefit obligation, as well as differences between actual and expected returns on plan assets for certain portions of plan benefits indexed to asset returns. For non-U.S. pension plans, actuarial (gains)/losses experienced in 2023 were principally driven by decreases in the weighted average discount rates used to determine the projected benefit obligation. 68 THERMO FISHER SCIENTIFIC INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The actuarial assumptions used to compute the funded status for the plans are based upon information available as of December 31, 2024 and 2023 and are as follows: Domestic pension benefits Non-U.S. pension benefits 2024 2023 2024 2023 Weighted average assumptions used to determine projected benefit obligations Discount rate for determining benefit obligation 5.48 % 4.82 % 3.74 % 3.47 % Interest crediting rate for cash balance plans 5.39 % 4.76 % 2.28 % 2.06 % Average rate of increase in employee compensation N/A N/A 2.58 % 2.64 % The actuarial assumptions used to compute the net periodic pension benefit cost/(income) are based upon information available as of the beginning of the year, as presented in the following table: Domestic pension benefits Non-U.S. pension benefits 2024 2023 2022 2024 2023 2022 Weighted average assumptions used to determine net benefit cost/(income) Discount rate - service cost N/A N/A N/A 3.00 % 3.62 % 1.00 % Discount rate - interest cost 4.82 % 5.01 % 2.70 % 3.48 % 3.95 % 1.36 % Interest crediting rate for cash balance plans 4.76 % 4.96 % 2.58 % 2.06 % 2.19 % 1.25 % Average rate of increase in employee compensation N/A N/A N/A 2.64 % 2.77 % 2.73 % Expected long-term rate of return on assets 6.00 % 6.25 % 4.75 % 4.28 % 4.33 % 2.33 % The projected benefit obligation and fair value of plan assets for the company’s qualified and non-qualified pension plans with projected benefit obligations in excess of plan assets are as follows: Pension plans (In millions) 2024 2023 Pension plans with projected benefit obligations in excess of plan assets Projected benefit obligation $ 727 $ 1,752 Fair value of plan assets 376 1,352 The accumulated benefit obligation and fair value of plan assets for the company's qualified and non-qualified pension plans with accumulated benefit obligations in excess of plan assets are as follows: Pension plans (In millions) 2024 2023 Pension plans with accumulated benefit obligations in excess of plan assets Accumulated benefit obligation $ 671 $ 1,695 Fair value of plan assets 376 1,349 The measurement date used to determine benefit information is December 31 for all plan assets and benefit obligations. 69 THERMO FISHER SCIENTIFIC INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The net periodic pension benefit cost/(income) includes the following components: Domestic pension benefits Non-U.S. pension benefits (In millions) 2024 2023 2022 2024 2023 2022 Components of net benefit cost/(income) Service cost $ — $ — $ — $ 28 $ 26 $ 34 Interest cost on benefit obligation 46 47 27 40 42 20 Expected return on plan assets ( 56 ) ( 59 ) ( 45 ) ( 36 ) ( 37 ) ( 26 ) Amortization of actuarial net loss — — 4 4 2 7 Amortization of prior service cost/(benefit) — — — ( 1 ) ( 1 ) ( 1 ) Settlement/curtailment loss/(gain) — — — 2 1 ( 2 ) Net periodic benefit cost/(income) $ ( 10 ) $ ( 12 ) $ ( 14 ) $ 38 $ 33 $ 32 Expected benefit payments are estimated using the same assumptions used in determining the company’s benefit obligation at December 31, 2024. Benefit payments will depend on future employment and compensation levels, average years employed and average life spans, among other factors, and changes in any of these factors could significantly affect these estimated future benefit payments. Estimated future benefit payments during the next five years and in the aggregate for the five fiscal years thereafter, are as follows: (In millions) Domestic pension benefits Non-U.S. pension benefits Expected benefit payments 2025 $ 82 $ 54 2026 81 57 2027 81 58 2028 80 62 2029 79 66 2030-2034 373 405 Domestic Pension Plan Assets The company’s overall objective is to manage the assets in a liability framework where investments are selected that are expected to have similar changes in fair value as the related liabilities will have upon changes in interest rates. The company invests in a portfolio of both return-seeking and liability-hedging assets, primarily through the use of institutional collective funds, to achieve long-term growth and to insulate the funded position from interest rate volatility. The strategic asset allocation uses a combination of risk controlled and index strategies in fixed income and global equities. The target allocations for the investments are approximately 10 % to funds investing in U.S. equities, approximately 10 % to funds investing in international equities and approximately 80 % to funds investing in fixed income securities. The portfolio maintains enough liquidity at all times to meet the near-term benefit payments. Non-U.S. Pension Plan Assets The company maintains specific plan assets for many of the individual pension plans outside the U.S. The investment strategy of each plan has been uniquely established based on the country specific standards and characteristics of the plans. Several of the plans have contracts with insurance companies whereby the market risks of the benefit obligations are borne by the insurance companies. When assets are held directly in investments, generally the objective is to invest in a portfolio of diversified assets with a variety of fund managers. The investments may include equity funds, fixed income funds, hedge funds, multi-asset funds, alternative investments, real estate funds and derivative funds with the target asset allocations ranging from approximately 0 % - 25 % for equity funds, 30 % - 90 % for fixed income funds, 0 % - 40 % for multi-asset funds, 0 % - 4 % for alternative investments, 0 % - 4 % for real estate funds and 0 % - 45 % for funds holding derivatives. The derivatives held by the funds are primarily interest rate swaps intended to match the movements in the plan liabilities. Each plan maintains enough liquidity at all times to meet the near-term benefit payments. 70 THERMO FISHER SCIENTIFIC INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The fair values of the company’s plan assets at December 31, 2024 and 2023, by asset category are as follows: December 31, Quoted prices in active markets Significant other observable inputs Significant unobservable inputs Not subject to leveling (a) (In millions) 2024 (Level 1) (Level 2) (Level 3) Domestic pension plan assets U.S. equity funds $ 91 $ — $ — $ — $ 91 International equity funds 89 — — — 89 Fixed income funds 692 — — — 692 Money market funds 23 — — — 23 Total domestic pension plans $ 895 $ — $ — $ — $ 895 Non-U.S. pension plan assets Equity funds $ 7 $ — $ — $ — $ 7 Fixed income funds 288 7 — — 281 Multi-asset funds 69 — — — 69 Derivative funds 169 — — — 169 Insurance contracts 325 — 325 — — Cash / money market funds 9 4 — — 5 Total non-U.S. pension plans $ 867 $ 10 $ 325 $ — $ 532 (a) Investments measured at the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. December 31, Quoted prices in active markets Significant other observable inputs Significant unobservable inputs Not subject to leveling (a) (In millions) 2023 (Level 1) (Level 2) (Level 3) Domestic pension plan assets U.S. equity funds $ 93 $ — $ — $ — $ 93 International equity funds 93 — — — 93 Fixed income funds 739 — — — 739 Money market funds 22 — — — 22 Total domestic pension plans $ 947 $ — $ — $ — $ 947 Non-U.S. pension plan assets Equity funds $ 7 $ — $ — $ — $ 7 Fixed income funds 346 9 — — 337 Multi-asset funds 66 — — — 66 Derivative funds 184 — — — 184 Alternative investments 1 — — — 1 Insurance contracts 333 — 333 — — Real estate funds 1 — — — 1 Cash / money market funds 6 4 — — 2 Total non-U.S. pension plans $ 944 $ 13 $ 333 $ — $ 598 (a) Investments measured at the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The tables above present the fair value of the company’s plan assets in accordance with the fair value hierarchy (Note 1). Certain investments that are measured at fair value using the net asset value per share practical expedient have not been classified in the fair value hierarchy. The fair value amounts of these investments presented in the above tables are intended to permit reconciliation of the fair value hierarchy to the amounts presented for the total pension plan assets. These investments were also redeemable at the balance sheet date or within limited time restrictions. 71 THERMO FISHER SCIENTIFIC INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 15. Stock-based Compensation Expense The company has stock-based compensation plans for its key employees, directors and others. These plans permit the grant of a variety of stock and stock-based awards, including restricted stock units, stock options or performance-based shares, as determined by the compensation committee of the company’s Board of Directors or, for certain non-officer grants, by the company’s employee equity committee, which consists of its chief executive officer. The company generally issues new shares of its common stock to satisfy option exercises and restricted unit vesting. Grants of stock options and restricted units generally provide that in the event of both a change in control of the company and a qualifying termination of an option or unit holder’s employment, all options and service-based restricted unit awards held by the recipient become immediately vested (unless an employment or other agreement with the employee provides for different treatment). Stock Options The weighted average assumptions used in the Black-Scholes option pricing model are as follows: 2024 2023 2022 Expected stock price volatility 25 % 25 % 26 % Risk free interest rate 4.3 % 4.2 % 2.0 % Expected life of options (years) 5.0 4.7 4.7 Expected annual dividend 0.3 % 0.3 % 0.2 % Weighted average per share grant-date fair values of options granted $ 166.92 $ 159.32 $ 135.07 The total intrinsic value of options exercised during the same periods was $ 395 million, $ 320 million and $ 336 million, respectively. The intrinsic value is the difference between the market value of the shares on the exercise date and the exercise price of the option. A summary of the company’s option activity for the year ended December 31, 2024 is presented below: Shares (in millions) Weighted average exercise price Weighted average remaining contractual term (in years) Aggregate intrinsic value (in millions) Outstanding at December 31, 2023 5.0 $ 401.30 Granted 1.0 554.31 Exercised ( 1.2 ) 260.55 Canceled/expired ( 0.2 ) 559.45 Outstanding at December 31, 2024 4.5 $ 465.80 4.3 $ 358 Vested and unvested expected to vest at December 31, 2024 4.4 $ 462.90 4.2 $ 358 Exercisable at December 31, 2024 2.6 $ 403.06 2.9 $ 350 As of December 31, 2024, there was $ 176 million of total unrecognized compensation cost related to unvested stock options granted. The cost is expected to be recognized through 2028 with a weighted average amortization period of 2.1 years. Restricted Share/Unit Awards A summary of the company’s restricted unit activity for the year ended December 31, 2024 is presented below: Units (in millions) Weighted average grant-date fair value Unvested at December 31, 2023 0.6 $ 533.65 Granted 0.4 556.83 Performance adjustments ( 0.1 ) 558.66 Vested ( 0.3 ) 524.55 Forfeited ( 0.1 ) 539.83 Unvested at December 31, 2024 0.6 $ 551.81 72 THERMO FISHER SCIENTIFIC INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The weighted average per share grant-date fair values of restricted units granted during 2023 and 2022 were $ 545.73 and $ 520.83 , respectively. The total fair value of shares vested during 2024, 2023 and 2022 was $ 165 million, $ 207 million and $ 163 million, respectively. As of December 31, 2024, there was $ 225 million of total unrecognized compensation cost related to unvested restricted stock unit awards. The cost is expected to be recognized through 2028 with a weighted average amortization period of 1.9 years. Employee Stock Purchase Plans Qualifying employees are eligible to participate in an employee stock purchase plan sponsored by the company. Shares may be purchased under the program at 95 % of the fair market value at the end of the purchase period and the shares purchased are not subject to a holding period. Shares are purchased through payroll deductions of up to 10 % of each participating employee’s qualifying gross wages. The company issued 0.1 million, 0.1 million and 0.2 million shares, respectively, of its common stock in 2024, 2023 and 2022 under the employee stock purchase plan. 73 THERMO FISHER SCIENTIFIC INC. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Not applicable.