Item 1. Financial Statements

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

						April 1,						December 31,
(In millions except share and per share amounts)						2023						2022
Assets
Current assets:
Cash and cash equivalents						$	3,482					$	8,524
Accounts receivable, less allowances of $190 and $189						7,922						8,115
Inventories						5,664						5,634
Contract assets, net						1,375						1,312
Other current assets						1,766						1,644
Total current assets						20,209						25,229
Property, plant and equipment, net						9,354						9,280
Acquisition-related intangible assets, net						17,972						17,442
Other assets						3,983						4,007
Goodwill						43,140						41,196
Total assets						$	94,658					$	97,154
Liabilities, redeemable noncontrolling interest and equity
Current liabilities:
Short-term obligations and current maturities of long-term obligations						$	6,122					$	5,579
Accounts payable						2,798						3,381
Accrued payroll and employee benefits						1,307						2,095
Contract liabilities						2,662						2,601
Other accrued expenses						2,995						3,354
Total current liabilities						15,884						17,010
Deferred income taxes						2,976						2,849
Other long-term liabilities						4,230						4,238
Long-term obligations						29,135						28,909
Redeemable noncontrolling interest						123						116
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; 441,166,292 and 440,668,112 shares issued						441						441
Capital in excess of par value						16,889						16,743
Retained earnings						43,064						41,910
Treasury stock at cost, 55,445,006 and 50,157,275 shares						(15,083)						(12,017)
Accumulated other comprehensive income/(loss)						(3,054)						(3,099)
Total Thermo Fisher Scientific Inc. shareholders’ equity						42,257						43,978
Noncontrolling interests						53						54
Total equity						42,310						44,032
Total liabilities, redeemable noncontrolling interest and equity						$	94,658					$	97,154

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

THERMO FISHER SCIENTIFIC INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

												Three months ended
																		April 1,						April 2,
(In millions except per share amounts)																		2023						2022
Revenues
Product revenues																		$	6,404					$	8,017
Service revenues																		4,306						3,801
Total revenues																		10,710						11,818
Costs and operating expenses:
Cost of product revenues																		3,337						3,555
Cost of service revenues																		3,233						2,799
Selling, general and administrative expenses																		2,119						2,277
Research and development expenses																		346						364
Restructuring and other costs																		112						2
Total costs and operating expenses																		9,147						8,997
Operating income																		1,563						2,821
Interest income																		146						18
Interest expense																		(300)						(136)
Other income/(expense)																		(46)						(163)
Income before income taxes																		1,363						2,540
Provision for income taxes																		(46)						(301)
Equity in earnings/(losses) of unconsolidated entities																		(25)						(19)
Net income																		1,292						2,220
Less: net income/(losses) attributable to noncontrolling interests and redeemable noncontrolling interest																		3						5
Net income attributable to Thermo Fisher Scientific Inc.																		$	1,289					$	2,215
Earnings per share attributable to Thermo Fisher Scientific Inc.
Basic																		$	3.34					$	5.66
Diluted																		$	3.32					$	5.61
Weighted average shares
Basic																		386						392
Diluted																		388						395

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

THERMO FISHER SCIENTIFIC INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

												Three months ended
																		April 1,						April 2,
(In millions)																		2023						2022
Comprehensive income
Net income																		$	1,292					$	2,220
Other comprehensive income/(loss):
Currency translation adjustment:
Currency translation adjustment (net of tax provision (benefit) of $(36) and $89)																		44						(23)
Unrealized gains and losses on hedging instruments:
Reclassification adjustment for losses included in net income (net of tax benefit of $1 and $0)																		3						1
Pension and other postretirement benefit liability adjustments:
Pension and other postretirement benefit liability adjustments arising during the period (net of tax (provision) benefit of $(1) and $(1))																		1						3
Amortization of net loss included in net periodic pension cost (net of tax benefit of $0 and $1)																		—						2
Total other comprehensive income/(loss)																		48						(17)
Comprehensive income																		1,340						2,203
Less: comprehensive income/(loss) attributable to noncontrolling interests and redeemable noncontrolling interest																		6						2
Comprehensive income attributable to Thermo Fisher Scientific Inc.																		$	1,334					$	2,201

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

THERMO FISHER SCIENTIFIC INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

						Three months ended
						April 1,						April 2,
(In millions)						2023						2022
Operating activities
Net income						$	1,292					$	2,220
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of property, plant and equipment						253						250
Amortization of acquisition-related intangible assets						606						609
Change in deferred income taxes						(146)						(339)
Loss on early extinguishment of debt						—						26
Stock-based compensation						76						78
Other non-cash expenses, net						181						233
Changes in assets and liabilities, excluding the effects of acquisitions						(1,533)						(875)
Net cash provided by operating activities						729						2,202
Investing activities
Acquisitions, net of cash acquired						(2,704)						(40)
Purchase of property, plant and equipment						(458)						(640)
Proceeds from sale of property, plant and equipment						6						2
Other investing activities, net						14						8
Net cash used in investing activities						(3,142)						(670)
Financing activities
Repayment of debt						—						(375)
Proceeds from issuance of commercial paper						1,027						626
Repayments of commercial paper						(523)						(1,259)
Purchases of company common stock						(3,000)						(2,000)
Dividends paid						(117)						(103)
Other financing activities, net						20						(34)
Net cash used in financing activities						(2,593)						(3,145)
Exchange rate effect on cash						(31)						(99)
Decrease in cash, cash equivalents and restricted cash						(5,037)						(1,712)
Cash, cash equivalents and restricted cash at beginning of period						8,537						4,491
Cash, cash equivalents and restricted cash at end of period						$	3,500					$	2,779

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

THERMO FISHER SCIENTIFIC INC.

CONDENSED CONSOLIDATED STATEMENTS OF REDEEMABLE NONCONTROLLING INTEREST AND EQUITY

(Unaudited)

						Redeemable Noncontrolling Interest									Common Stock												Capital in Excess of Par Value						Retained Earnings						Treasury Stock												Accumulated Other Comprehensive Items						Total Thermo Fisher Scientific Inc. Shareholders’ Equity						Noncontrolling Interests						Total Equity
(In millions)												Shares						Amount												Shares						Amount
															Three months ended April 1, 2023
Balance at December 31, 2022						$	116								441						$	441					$	16,743					$	41,910					50						$	(12,017)					$	(3,099)					$	43,978					$	54					$	44,032
Issuance of shares under employees' and directors' stock plans						—									—						—						70						—						—						(36)						—						34						—						34
Stock-based compensation						—									—						—						76						—						—						—						—						76						—						76
Purchases of company common stock						—									—						—						—						—						5						(3,000)						—						(3,000)						—						(3,000)
Dividends declared ($0.35 per share)						—									—						—						—						(135)						—						—						—						(135)						—						(135)
Net income/(loss)						4									—						—						—						1,289						—						—						—						1,289						(1)						1,288
Other comprehensive income/(loss)						3									—						—						—						—						—						—						45						45						—						45
Excise tax from stock repurchases						—									—						—						—						—						—						(30)						—						(30)						—						(30)
Balance at April 1, 2023						$	123								441						$	441					$	16,889					$	43,064					55						$	(15,083)					$	(3,054)					$	42,257					$	53					$	42,310
															Three months ended April 2, 2022
Balance at December 31, 2021						$	122								439						$	439					$	16,174					$	35,431					45						$	(8,922)					$	(2,329)					$	40,793					$	62					$	40,855
Issuance of shares under employees' and directors' stock plans						—									1						1						40						—						—						(39)						—						2						—						2
Stock-based compensation						—									—						—						78						—						—						—						—						78						—						78
Purchases of company common stock						—									—						—						—						—						3						(2,000)						—						(2,000)						—						(2,000)
Dividends declared ($0.30 per share)						—									—						—						—						(118)						—						—						—						(118)						—						(118)
Net income/(loss)						5									—						—						—						2,215						—						—						—						2,215						—						2,215
Other comprehensive income/(loss)						(11)									—						—						—						—						—						—						(14)						(14)						1						(13)
Contributions from (distributions to) noncontrolling interests						(3)									—						—						—						—						—						—						—						—						(1)						(1)
Balance at April 2, 2022						$	113								440						$	440					$	16,292					$	37,528					48						$	(10,961)					$	(2,343)					$	40,956					$	62					$	41,018

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

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1. Nature of Operations and Summary of Significant Accounting Policies

Nature of Operations

Thermo Fisher Scientific Inc. (the company or Thermo Fisher) enables customers to make the world healthier, cleaner and safer by helping them accelerate life sciences research, solve complex analytical challenges, increase laboratory productivity, and improve patient health through diagnostics and the development and manufacture of life-changing therapies. Markets served include pharmaceutical and biotech, academic and government, industrial and applied, as well as healthcare and diagnostics.

Interim Financial Statements

The interim condensed consolidated financial statements presented herein have been prepared by the company, are unaudited and, in the opinion of management, reflect all adjustments of a normal recurring nature necessary for a fair statement of the financial position at April 1, 2023, the results of operations for the three-month periods ended April 1, 2023 and April 2, 2022, and the cash flows for the three-month periods ended April 1, 2023 and April 2, 2022. Interim results are not necessarily indicative of results for a full year.

The condensed consolidated balance sheet presented as of December 31, 2022 has been derived from the audited consolidated financial statements as of that date. The condensed consolidated financial statements and notes are presented as permitted by Form 10-Q and do not contain all information that is included in the annual financial statements and notes thereto of the company. The condensed consolidated financial statements and notes included in this report should be read in conjunction with the 2022 financial statements and notes included in the company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC). Certain reclassifications of prior year amounts have been made to conform to the current year presentation.

Note 1 to the consolidated financial statements for 2022 describes the significant accounting estimates and policies used in preparation of the consolidated financial statements. There have been no material changes in the company’s significant accounting policies during the three months ended April 1, 2023.

Inventories

The components of inventories are as follows:

(In millions)						April 1, 2023						December 31, 2022
Raw materials						$	2,416					$	2,405
Work in process						708						660
Finished goods						2,540						2,569
Inventories						$	5,664					$	5,634

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. The negative impacts associated with the ongoing COVID-19 global pandemic significantly lessened in 2022 and 2023. The extent and duration of negative impacts in the future, which may include inflationary pressures and supply chain disruptions, are uncertain and may require changes to estimates. Actual results could differ from those estimates.

Recent Accounting Pronouncements

In September 2022, the FASB issued new guidance to require entities to disclose information about supplier finance programs. Among other things, the new guidance requires expanded disclosure about key program terms, payment terms, and amounts outstanding for obligations under these programs for each period presented. The company adopted some aspects of this guidance in 2023 using a retrospective method and will adopt other aspects in 2024 using a prospective method. The adoption of this guidance did not have, and is not expected to have, a material impact on the company’s disclosures; however, the impact in future periods will be dependent on the extent of arrangements of this nature entered into by the company.

In November 2021, the FASB issued new guidance to require entities to disclose information about certain types of government assistance they receive, including cash grants and tax credits. Among other things, the new guidance requires expanded disclosure regarding the qualitative and quantitative characteristics of the nature, amount, timing, and significant terms and

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

conditions of transactions with a government arising from a grant or other forms of assistance accounted for under a contribution model. The company adopted this guidance in the fourth quarter of 2022 using a prospective method. The adoption of this guidance did not have a material impact on the company’s disclosures.

Note 2. Acquisitions

The company’s acquisitions have historically been made at prices above the determined fair value of the acquired identifiable net assets, resulting in goodwill, primarily due to expectations of the synergies that will be realized by combining the businesses and the benefits that will be gained from the assembled workforces. These synergies include the elimination of redundant facilities, functions and staffing; use of the company’s existing commercial infrastructure to expand sales of the acquired businesses’ products and services; and use of the commercial infrastructure of the acquired businesses to cost-effectively expand sales of company products and services.

Acquisitions have been accounted for using the acquisition method of accounting, and the acquired companies’ results have been included in the accompanying financial statements from their respective dates of acquisition.

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 expected to be tax deductible.

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

(In millions)						The Binding Site
Purchase price
Cash paid						$	2,416
Debt settled						307
Cash acquired						(19)
						$	2,704
Net assets acquired
Definite-lived intangible assets:
Customer relationships						$	868
Product technology						173
Tradenames						42
Goodwill						1,758
Net tangible assets						142
Deferred tax assets (liabilities)						(279)
						$	2,704

The weighted-average amortization period for definite-lived intangible assets acquired in 2023 are 18 years for customer relationships, 15 years for product technology and 15 years for tradenames. The weighted average amortization period for all definite-lived intangible assets acquired in 2023 is 17 years.

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

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 3. Revenues and Contract-related Balances

Disaggregated Revenues

Revenues by type are as follows:

												Three months ended
(In millions)																		April 1, 2023						April 2, 2022
Revenues
Consumables																		$	4,506					$	6,110
Instruments																		1,898						1,907
Services																		4,306						3,801
Consolidated revenues																		$	10,710					$	11,818

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

												Three months ended
(In millions)																		April 1, 2023						April 2, 2022
Revenues
North America																		$	5,778					$	6,323
Europe																		2,601						3,050
Asia-Pacific																		1,986						2,064
Other regions																		345						381
Consolidated revenues																		$	10,710					$	11,818

Each reportable segment earns revenues from consumables, instruments and services in North America, Europe, Asia-Pacific and other regions. See Note 4 for revenues by reportable segment and other geographic data.

Remaining Performance Obligations

The aggregate amount of the transaction price allocated to the remaining performance obligations for all open customer contracts as of April 1, 2023 was $25.81 billion. The company will recognize revenues for these performance obligations as they are satisfied, approximately 57% of which is expected to occur within the next twelve months. Amounts expected to occur thereafter generally relate to contract manufacturing, clinical research and extended warranty service agreements, which typically have durations of three to five years.

Contract-related Balances

Noncurrent contract assets and noncurrent contract liabilities are included within other assets and other long-term liabilities in the accompanying balance sheet, respectively. Contract asset and liability balances are as follows:

(In millions)						April 1, 2023						December 31, 2022
Current contract assets, net						$	1,375					$	1,312
Noncurrent contract assets, net						8						7
Current contract liabilities						2,662						2,601
Noncurrent contract liabilities						1,172						1,179

In the three months ended April 1, 2023, the company recognized revenues of $1.30 billion that were included in the contract liabilities balance at December 31, 2022. In the three months ended April 2, 2022, the company recognized revenues of $1.28 billion that were included in the contract liabilities balance at December 31, 2021.

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 4. Business Segment and Geographical Information

Business Segment Information

												Three months ended
																		April 1,						April 2,
(In millions)																		2023						2022
Revenues
Life Sciences Solutions																		$	2,612					$	4,231
Analytical Instruments																		1,723						1,518
Specialty Diagnostics																		1,108						1,482
Laboratory Products and Biopharma Services																		5,763						5,442
Eliminations																		(496)						(855)
Consolidated revenues																		10,710						11,818
Segment Income
Life Sciences Solutions																		836						2,176
Analytical Instruments																		421						301
Specialty Diagnostics																		280						353
Laboratory Products and Biopharma Services																		793						620
Subtotal reportable segments																		2,330						3,450
Cost of revenues adjustments																		(41)						(11)
Selling, general and administrative expenses adjustments																		(8)						(7)
Restructuring and other costs																		(112)						(2)
Amortization of acquisition-related intangible assets																		(606)						(609)
Consolidated operating income																		1,563						2,821
Interest income																		146						18
Interest expense																		(300)						(136)
Other income/(expense)																		(46)						(163)
Consolidated income before taxes																		$	1,363					$	2,540

Cost of revenues adjustments included in the above table consist of charges for the sale of inventories revalued at the date of acquisition and inventory write-downs associated with large-scale abandonment of product lines. Selling, general and administrative expenses adjustments included in the above table consist of third-party transaction/integration costs related to recent acquisitions and charges/credits for changes in estimates of contingent acquisition consideration.

Geographical Information

Revenues by country based on customer location are as follows:

												Three months ended
(In millions)																		April 1, 2023						April 2, 2022
Revenues
United States																		$	5,587					$	6,097
China																		870						910
Other																		4,253						4,811
Consolidated revenues																		$	10,710					$	11,818

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 5. Income Taxes

The provision for income taxes in the accompanying statements of income differs from the provision calculated by applying the statutory federal income tax rate to income before provision for income taxes due to the following:

						Three months ended
(In millions)						April 1, 2023						April 2, 2022
Statutory federal income tax rate						21		%				21		%
Provision for income taxes at statutory rate						$	286					$	533
Increases (decreases) resulting from:
Foreign rate differential						(52)						(82)
Income tax credits						(83)						(64)
Global intangible low-taxed income						12						26
Foreign-derived intangible income						(23)						(37)
Excess tax benefits from stock options and restricted stock units						(27)						(18)
Provision for (reversal of) tax reserves, net						9						—
Intra-entity transfers						(144)						—
Valuation allowances						67						(87)
Withholding taxes						5						12
Tax return reassessments and settlements						(3)						(5)
State income taxes, net of federal tax						24						31
Other, net						(25)						(8)
Provision for income taxes						$	46					$	301

The company has operations and a taxable presence in approximately 70 countries outside the U.S. The company's effective income tax rate differs from the U.S. federal statutory rate each year due to certain operations that are subject to tax incentives, state and local taxes, and foreign taxes that are different than the U.S. federal statutory rate.

Unrecognized Tax Benefits

As of April 1, 2023 the company had $0.56 billion of unrecognized tax benefits substantially all of which, if recognized, would reduce the effective tax rate. A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:

(In millions)						2023
Balance at beginning of year						$	572
Additions for tax positions of current year						4
Additions for tax positions of prior years						26
Reductions for tax positions of prior years						(27)
Settlements						(15)
Balance at end of period						$	560

Note 6. Earnings per Share

												Three months ended
																		April 1,						April 2,
(In millions except per share amounts)																		2023						2022
Net income attributable to Thermo Fisher Scientific Inc.																		$	1,289					$	2,215
Basic weighted average shares																		386						392
Plus effect of: stock options and restricted stock units																		2						3
Diluted weighted average shares																		388						395
Basic earnings per share																		$	3.34					$	5.66
Diluted earnings per share																		$	3.32					$	5.61
Antidilutive stock options excluded from diluted weighted average shares																		2						2

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 7. Debt and Other Financing Arrangements

						Effective interest rate at April 1,						April 1,						December 31,
(Dollars in millions)						2023						2023						2022
Commercial Paper						4.15		%				$	824					$	310
Floating Rate (SOFR + 0.35%) 1.5-Year Senior Notes, Due 4/18/2023												1,000						1,000
Floating Rate (SOFR + 0.39%) 2-Year Senior Notes, Due 10/18/2023												500						500
0.797% 2-Year Senior Notes, Due 10/18/2023						1.04		%				1,350						1,350
Floating Rate (EURIBOR + 0.20%) 2-Year Senior Notes, Due 11/18/2023 (euro-denominated)						2.74		%				1,842						1,819
0.000% 2-Year Senior Notes, Due 11/18/2023 (euro-denominated)						0.06		%				596						589
0.75% 8-Year Senior Notes, Due 9/12/2024 (euro-denominated)						0.93		%				1,084						1,071
Floating Rate (SOFR + 0.53%) 3-Year Senior Notes, Due 10/18/2024												500						500
1.215% 3-Year Senior Notes, Due 10/18/2024						1.42		%				2,500						2,500
0.125% 5.5-Year Senior Notes, Due 3/1/2025 (euro-denominated)						0.40		%				867						857
2.00% 10-Year Senior Notes, Due 4/15/2025 (euro-denominated)						2.10		%				694						686
0.853% 3-Year Senior Notes, Due 10/20/2025 (yen-denominated)						1.05		%				168						170
0.000% 4-Year Senior Notes, Due 11/18/2025 (euro-denominated)						0.15		%				596						589
3.20% 3-Year Senior Notes, Due 1/21/2026 (euro-denominated)						3.39		%				542						535
1.40% 8.5-Year Senior Notes, Due 1/23/2026 (euro-denominated)						1.53		%				759						749
1.45% 10-Year Senior Notes, Due 3/16/2027 (euro-denominated)						1.65		%				542						535
1.75% 7-Year Senior Notes, Due 4/15/2027 (euro-denominated)						1.96		%				650						642
1.054% 5-Year Senior Notes, Due 10/20/2027 (yen-denominated)						1.18		%				217						221
4.80% 5-Year Senior Notes, Due 11/21/2027						5.00		%				600						600
0.50% 8.5-Year Senior Notes, Due 3/1/2028 (euro-denominated)						0.77		%				867						857
1.375% 12-Year Senior Notes, Due 9/12/2028 (euro-denominated)						1.46		%				650						642
1.75% 7-Year Senior Notes, Due 10/15/2028						1.89		%				700						700
1.95% 12-Year Senior Notes, Due 7/24/2029 (euro-denominated)						2.08		%				759						749
2.60% 10-Year Senior Notes, Due 10/1/2029						2.74		%				900						900
1.279% 7-Year Senior Notes, Due 10/19/2029 (yen-denominated)						1.44		%				35						36
0.80% 9-Year Senior Notes, Due 10/18/2030 (euro-denominated)						0.88		%				1,897						1,873
0.875% 12-Year Senior Notes, Due 10/1/2031 (euro-denominated)						1.13		%				976						963
2.00% 10-Year Senior Notes, Due 10/15/2031						2.23		%				1,200						1,200
2.375% 12-Year Senior Notes, Due 4/15/2032 (euro-denominated)						2.54		%				650						642
1.49% 10-Year Senior Notes, Due 10/20/2032 (yen-denominated)						1.60		%				47						48
4.95% 10-Year Senior Notes, Due 11/21/2032						5.09		%				600						600
1.125% 12-Year Senior Notes, Due 10/18/2033 (euro-denominated)						1.20		%				1,626						1,606
3.65% 12-Year Senior Notes, Due 11/21/2034 (euro-denominated)						3.76		%				813						803
2.875% 20-Year Senior Notes, Due 7/24/2037 (euro-denominated)						2.94		%				759						749
1.50% 20-Year Senior Notes, Due 10/1/2039 (euro-denominated)						1.73		%				976						963
2.80% 20-Year Senior Notes, Due 10/15/2041						2.90		%				1,200						1,200
1.625% 20-Year Senior Notes, Due 10/18/2041 (euro-denominated)						1.77		%				1,355						1,339
2.069% 20-Year Senior Notes, Due 10/20/2042 (yen-denominated)						2.13		%				110						111
5.30% 30-Year Senior Notes, Due 2/1/2044						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		%				1,084						1,071
2.00% 30-Year Senior Notes, Due 10/18/2051 (euro-denominated)						2.07		%				813						803

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

						Effective interest rate at April 1,						April 1,						December 31,
(Dollars in millions)						2023						2023						2022
2.382% 30-Year Senior Notes, Due 10/18/2052 (yen-denominated)						2.43		%				251						254
Other												78						79
Total borrowings at par value												35,327						34,561
Unamortized discount												(112)						(112)
Unamortized debt issuance costs												(164)						(171)
Total borrowings at carrying value												35,051						34,278
Finance lease liabilities												206						210
Less: Short-term obligations and current maturities												6,122						5,579
Long-term obligations												$	29,135					$	28,909

SOFR - Secured Overnight Financing Rate

EURIBOR - Euro Interbank Offered Rate

The effective interest rates for the fixed-rate debt include the stated interest on the notes, the accretion of any discounts/premiums and the amortization of any debt issuance costs.

See Note 10 for fair value information pertaining to the company’s long-term borrowings.

Credit Facilities

The company has a revolving credit facility (the Facility) with a bank group that provides for up to $5.00 billion of unsecured multi-currency revolving credit. The Facility expires on January 7, 2027. The revolving credit agreement calls for interest at either a Term SOFR, a 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 April 1, 2023, 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. As of April 1, 2023, there were $0.82 billion of outstanding borrowings under these programs.

Senior Notes

Interest is payable quarterly on the floating rate senior notes, annually on the euro-denominated fixed rate senior notes and semi-annually on all other senior notes. Each of the fixed rate senior notes may be redeemed at a redemption price of 100% of the principal amount plus a specified make-whole premium and accrued interest. Except for the euro-denominated floating rate senior notes, which may not be redeemed early, the floating rate senior notes may be redeemed in whole or in part on or after their applicable call dates at a redemption price of 100% of the principal amount plus accrued interest. The company is subject to certain affirmative and negative covenants under the indentures governing the senior notes, the most restrictive of which limits the ability of the company to pledge principal properties as security under borrowing arrangements. The company was in compliance with all covenants at April 1, 2023.

In the first quarter of 2022, the company redeemed all of its 3.650% Senior Notes due 2025. In connection with the redemption, the company incurred $26 million of losses on the early extinguishment of debt included in other income/(expense) on the accompanying statements of income.

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Thermo Fisher Scientific (Finance I) B.V. (Thermo Fisher International), a wholly-owned finance subsidiary of the company, issued each of the Floating Rate Senior Notes due 2023, the 0.00% Senior Notes due 2023, 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 included in the table above (collectively, the “Euronotes”) in registered public offerings. The company has fully and unconditionally guaranteed all of Thermo Fisher International’s obligations under the Euronotes and all of Thermo Fisher International’s other debt securities, and no other subsidiary of the company will guarantee these obligations. Thermo Fisher International is a “finance subsidiary” as defined in Rule 13-01(a)(4)(vi) of the Exchange Act, with no assets or operations other than those related to the issuance, administration and repayment of the Euronotes and other debt securities issued by Thermo Fisher International from time to time. The financial condition, results of operations and cash flows of Thermo Fisher International are consolidated in the financial statements of the company.

Note 8. Commitments and Contingencies

Environmental Matters

The company is currently involved in various stages of investigation and remediation related to environmental matters. The company cannot predict all potential costs related to environmental remediation matters and the possible impact on future operations given the uncertainties regarding the extent of the required cleanup, the complexity and interpretation of applicable laws and regulations, the varying costs of alternative cleanup methods and the extent of the company’s responsibility. Expenses for environmental remediation matters related to the costs of installing, operating and maintaining groundwater-treatment systems and other remedial activities related to historical environmental contamination at the company’s domestic and international facilities were not material in any period presented. At April 1, 2023, there have been no material changes to the accruals for pending environmental-related matters disclosed in the company’s 2022 financial statements and notes included in the company’s Annual Report on Form 10-K. While management believes the accruals for environmental remediation are adequate based on current estimates of remediation costs, the company may be subject to additional remedial or compliance costs due to future events such as changes in existing laws and regulations, changes in agency direction or enforcement policies, developments in remediation technologies or changes in the conduct of the company’s operations, which could have a material adverse effect on the company’s financial position, results of operations and cash flows.

Litigation and Related Contingencies

The company is involved in various disputes, governmental and/or regulatory inspections, inquiries, investigations and proceedings, and litigation matters that arise from time to time in the ordinary course of business. The disputes and litigation matters include product liability, intellectual property, employment and commercial issues. Due to the inherent uncertainties associated with pending litigation or claims, the company cannot predict the outcome, nor, with respect to certain pending litigation or claims where no liability has been accrued, make a meaningful estimate of the reasonably possible loss or range of loss that could result from an unfavorable outcome. The company has no material accruals for pending litigation or claims for which accrual amounts are not disclosed in the company’s 2022 financial statements and notes included in the company’s Annual Report on Form 10-K, nor are material losses deemed probable for such matters. It is reasonably possible, however, that an unfavorable outcome that exceeds the company’s current accrual estimate, if any, for one or more such matters could have a material adverse effect on the company’s results of operations, financial position and cash flows.

Product Liability, Workers Compensation and Other Personal Injury Matters

The company is involved in various proceedings and litigation that arise from time to time in connection with product liability, workers compensation and other personal injury matters. At April 1, 2023, there have been no material changes to the accruals for pending product liability, workers compensation, and other personal injury matters disclosed in the company’s 2022 financial statements and notes included in the company’s Annual Report on Form 10-K. Although the company believes that the amounts accrued and estimated insurance recoveries are probable and appropriate based on available information, including actuarial studies of loss estimates, the process of estimating losses and insurance recoveries involves a considerable degree of judgment by management and the ultimate amounts could vary, which could have a material adverse effect on the company’s results of operations, financial position, and cash flows. 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.

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 9. Comprehensive Income/(Loss)

Comprehensive Income/(Loss)

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

(In millions)						Currency translation adjustment						Unrealized losses on hedging instruments						Pension and other postretirement benefit liability adjustment						Total
Balance at December 31, 2022						$	(2,880)					$	(33)					$	(186)					$	(3,099)
Other comprehensive income/(loss) before reclassifications						44						—						1						45
Amounts reclassified from accumulated other comprehensive income/(loss)						(3)						3						—						—
Net other comprehensive income/(loss)						41						3						1						45
Balance at April 1, 2023						$	(2,839)					$	(30)					$	(185)					$	(3,054)

Note 10. Fair Value Measurements and Fair Value of Financial Instruments

Fair Value Measurements

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

						April 1,						Quoted prices in active markets						Significant other observable inputs						Significant unobservable inputs
(In millions)						2023						(Level 1)						(Level 2)						(Level 3)
Assets
Cash equivalents						$	891					$	891					$	—					$	—
Investments						21						21						—						—
Warrants						11						—						11						—
Insurance contracts						169						—						169						—
Derivative contracts						51						—						51						—
Total assets						$	1,143					$	912					$	231					$	—
Liabilities
Derivative contracts						$	80					$	—					$	80					$	—
Contingent consideration						136						—						—						136
Total liabilities						$	216					$	—					$	80					$	136

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

						December 31,						Quoted prices in active markets						Significant other observable inputs						Significant unobservable inputs
(In millions)						2022						(Level 1)						(Level 2)						(Level 3)
Assets
Cash equivalents						$	5,804					$	5,804					$	—					$	—
Investments						25						25						—						—
Warrants						12						—						12						—
Insurance contracts						162						—						162						—
Derivative contracts						79						—						79						—
Total assets						$	6,082					$	5,829					$	253					$	—
Liabilities
Derivative contracts						$	101					$	—					$	101					$	—
Contingent consideration						174						—						—						174
Total liabilities						$	275					$	—					$	101					$	174

The company uses the Black-Scholes model to value its warrants. 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 value of contingent consideration are recorded in selling, general and administrative expense.

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

The following table provides a rollforward of the fair value, as determined by level 3 inputs (such as likelihood of achieving production or revenue milestones, as well as changes in the fair values of the investments underlying a recapitalization investment portfolio), of the contingent consideration.

												Three months ended
																		April 1,						April 2,
(In millions)																		2023						2022
Contingent consideration
Beginning balance																		$	174					$	317
Acquisitions (including assumed balances)																		—						(18)
Payments																		(15)						(30)
Changes in fair value included in earnings																		(23)						(8)
Ending balance																		$	136					$	261

Derivative Contracts

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

(In millions)						April 1, 2023						December 31, 2022
Notional amount
Cross-currency interest rate swaps - designated as net investment hedges						$	1,950					$	2,100
Currency exchange contracts						1,293						2,434

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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
						April 1,						December 31,						April 1,						December 31,
(In millions)						2023						2022						2023						2022
Derivatives designated as hedging instruments
Cross-currency interest rate swaps (a)						$	50					$	77					$	79					$	85
Derivatives not designated as hedging instruments
Currency exchange contracts (b)						1						2						1						16
Total derivatives						$	51					$	79					$	80					$	101

(a) The fair value of the cross-currency interest rate swaps is included in the accompanying balance sheet under the caption other assets or other long-term liabilities.

(b) The fair value of the currency exchange contracts is included in the accompanying balance sheet under the captions other current assets or other accrued expenses.

																		Gain (loss) recognized
												Three months ended
																		April 1,						April 2,
(In millions)																		2023						2022
Derivatives designated as cash flow hedges
Interest rate swaps
Amount reclassified from accumulated other comprehensive items to other income/(expense)																		$	(4)					$	(1)
Financial instruments designated as net investment hedges
Foreign currency-denominated debt and other payables
Included in currency translation adjustment within other comprehensive items																		(144)						362
Cross-currency interest rate swaps
Included in currency translation adjustment within other comprehensive items																		(9)						23
Included in other income/(expense)																		17						2
Derivatives not designated as hedging instruments
Currency exchange contracts
Included in cost of product revenues																		(3)						(9)
Included in other income/(expense)																		23						(1)

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

The company uses foreign currency-denominated debt, certain foreign-denominated payables, and cross-currency interest rate swaps to partially hedge its net investments in foreign operations against adverse movements in exchange rates. A portion of the company’s euro-denominated senior notes, certain foreign-denominated payables, and its cross-currency interest rate swaps have been designated as, and are effective as, economic hedges of part of the net investment in a foreign operation. Accordingly, foreign currency transaction gains or losses due to spot rate fluctuations on the euro-denominated debt instruments and certain foreign-denominated payables, and contract fair value changes on the cross-currency interest rate swaps, excluding interest accruals, are included in currency translation adjustment within other comprehensive items and shareholders’ equity.

See Note 1 to the consolidated financial statements for 2022 included in the company’s Annual Report on Form 10-K for additional information on the company’s risk management objectives and strategies.

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Fair Value of Other Financial Instruments

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

						April 1, 2023												December 31, 2022
						Carrying						Fair						Carrying						Fair
(In millions)						value						value						value						value
Senior notes						$	34,149					$	30,738					$	33,889					$	29,901
Commercial paper						824						824						310						310
Other						78						78						79						79
						$	35,051					$	31,640					$	34,278					$	30,290

The fair value of debt instruments was determined based on quoted market prices and on borrowing rates available to the company at the respective period ends, which represent level 2 measurements.

Note 11. Supplemental Cash Flow Information

						Three months ended
(In millions)						April 1, 2023						April 2, 2022
Non-cash investing and financing activities
Acquired but unpaid property, plant and equipment						$	242					$	208
Declared but unpaid dividends						137						119
Issuance of stock upon vesting of restricted stock units						91						99
Excise tax from stock repurchases						30						—

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

(In millions)						April 1, 2023						December 31, 2022
Cash and cash equivalents						$	3,482					$	8,524
Restricted cash included in other current assets						11						12
Restricted cash included in other assets						7						1
Cash, cash equivalents and restricted cash						$	3,500					$	8,537

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

Note 12. Restructuring and Other Costs

In the first three months of 2023, restructuring and other costs primarily included impairment of long-lived assets, net charges for pre-acquisition litigation and other matters, and continuing charges for headcount reductions and facility consolidations in an effort to streamline operations. In 2023, severance actions associated with facility consolidations and cost reduction measures affected less than 2% of the company’s workforce.

As of May 5, 2023, the company has identified restructuring actions that will result in additional charges of approximately $125 million, primarily in 2023, and expects to identify additional actions in future periods which will be recorded when specified criteria are met, such as communication of benefit arrangements or when the costs have been incurred.

Restructuring and other costs by segment are as follows:

																		Three months ended
(In millions)																		April 1, 2023
Life Sciences Solutions																		$	60
Analytical Instruments																		—
Specialty Diagnostics																		8
Laboratory Products and Biopharma Services																		43
Corporate																		1
																		$	112

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following table summarizes the changes in the company’s accrued restructuring balance, which is included in other accrued expenses in the accompanying balance sheet. Other amounts reported as restructuring and other costs in the accompanying statements of income have been summarized in the notes to the table.

(In millions)																								Total (a)
Balance at December 31, 2022																								$	41
Net restructuring charges incurred in 2023 (b)																								50
Payments																								(36)
Balance at April 1, 2023																								$	55

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

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

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

THERMO FISHER SCIENTIFIC INC.