UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the Quarter Ended ~~September 26, 2020~~April 3, 2021 or

☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number 1-8002

THERMO FISHER SCIENTIFIC INC.

(Exact name of Registrant as specified in its charter)


Delaware			04-2209186
(State of incorporation)			(I.R.S. Employer Identification No.)

168 Third Avenue

Waltham, Massachusetts 02451

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (781) 622-1000

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $1.00 par value

TMO

~~New York Stock Exchange~~

~~Floating Rate Notes due 2020~~

~~TMO /20A~~

~~New York Stock Exchange~~

~~2.150% Notes due 2022~~

~~TMO 22A~~

New York Stock Exchange

0.750% Notes due 2024

TMO 24A

New York Stock Exchange

0.125% Notes due 2025

TMO 25B

New York Stock Exchange

2.000% Notes due 2025

TMO 25

New York Stock Exchange

1.400% Notes due 2026

TMO 26A

New York Stock Exchange

1.450% Notes due 2027

TMO 27

New York Stock Exchange

1.750% Notes due 2027

TMO 27B

New York Stock Exchange

0.500% Notes due 2028

TMO 28A

New York Stock Exchange

1.375% Notes due 2028

TMO 28

New York Stock Exchange

1.950% Notes due 2029

TMO 29

New York Stock Exchange

0.875% Notes due 2031

TMO 31

New York Stock Exchange

2.375% Notes due 2032

TMO 32

New York Stock Exchange

2.875% Notes due 2037

TMO 37

New York Stock Exchange

1.500% Notes due 2039

TMO 39

New York Stock Exchange

1.875% Notes due 2049

TMO 49

New York Stock Exchange

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months. Yes ☒ No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐

Smaller reporting company ☐ Emerging growth company ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~September 26, 2020,~~April 3, 2021, the Registrant had ~~396,335,191~~393,027,886 shares of Common Stock outstanding.

THERMO FISHER SCIENTIFIC INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED ~~SEPTEMBER 26, 2020~~APRIL 3, 2021

THERMO FISHER SCIENTIFIC INC.

PART I FINANCIAL INFORMATION

Item 1. Financial Statements

CONDENSED CONSOLIDATED BALANCE SHEET

(Unaudited)


		September 26,		December 31,			April 3,		December 31,
(In millions except share and per share amounts)	(In millions except share and per share amounts)	2020		2019		(In millions except share and per share amounts)	2021		2020

Assets	Assets					Assets
Current Assets:	Current Assets:					Current Assets:
Cash and cash equivalents	Cash and cash equivalents	$	7,540	$	2,399	Cash and cash equivalents	$	5,583	$	10,325
Accounts receivable, less allowances of $117 and $102		5,186		4,349
Accounts receivable, less allowances of $143 and $135						Accounts receivable, less allowances of $143 and $135	5,554		5,741
Inventories	Inventories	3,829		3,370		Inventories	4,342		4,029
Contract assets, net	Contract assets, net	697		603		Contract assets, net	783		731

Other current assets	Other current assets	982		1,172		Other current assets	1,423		1,131

Total current assets	Total current assets	18,234		11,893		Total current assets	17,685		21,957

Property, Plant and Equipment, Net	Property, Plant and Equipment, Net	5,180		4,749		Property, Plant and Equipment, Net	6,133		5,912
Acquisition-related Intangible Assets, Net	Acquisition-related Intangible Assets, Net	12,870		14,014		Acquisition-related Intangible Assets, Net	12,831		12,685
Other Assets	Other Assets	1,995		2,011		Other Assets	2,459		2,457
Goodwill	Goodwill	25,782		25,714		Goodwill	26,823		26,041

Total Assets	Total Assets	$	64,061	$	58,381	Total Assets	$	65,931	$	69,052

Liabilities and Shareholders' Equity	Liabilities and Shareholders' Equity					Liabilities and Shareholders' Equity
Current Liabilities:	Current Liabilities:					Current Liabilities:
Short-term obligations and current maturities of long-term obligations	Short-term obligations and current maturities of long-term obligations	$	2	$	676	Short-term obligations and current maturities of long-term obligations	$	4	$	2,628
Accounts payable	Accounts payable	1,703		1,920		Accounts payable	2,146		2,175
Accrued payroll and employee benefits	Accrued payroll and employee benefits	1,538		1,010		Accrued payroll and employee benefits	1,314		1,916
Contract liabilities	Contract liabilities	1,047		916		Contract liabilities	1,396		1,271
Other accrued expenses	Other accrued expenses	1,938		1,675		Other accrued expenses	2,135		2,314

Total current liabilities	Total current liabilities	6,228		6,197		Total current liabilities	6,995		10,304

Deferred Income Taxes	Deferred Income Taxes	1,528		2,192		Deferred Income Taxes	1,885		1,794
Other Long-term Liabilities	Other Long-term Liabilities	3,390		3,241		Other Long-term Liabilities	3,352		3,340
Long-term Obligations	Long-term Obligations	21,091		17,076		Long-term Obligations	18,641		19,107

Shareholders' Equity:	Shareholders' Equity:					Shareholders' Equity:
Preferred stock, $100 par value, 50,000 shares authorized; NaN issued	Preferred stock, $100 par value, 50,000 shares authorized; NaN issued					Preferred stock, $100 par value, 50,000 shares authorized; NaN issued	0		0
Common stock, $1 par value, 1,200,000,000 shares authorized; 436,746,267 and 434,416,804 shares issued		437		434
Common stock, $1 par value, 1,200,000,000 shares authorized; 437,622,084 and 437,088,297 shares issued						Common stock, $1 par value, 1,200,000,000 shares authorized; 437,622,084 and 437,088,297 shares issued	438		437
Capital in excess of par value	Capital in excess of par value	15,467		15,064		Capital in excess of par value	15,684		15,579
Retained earnings	Retained earnings	25,705		22,092		Retained earnings	30,350		28,116
Treasury stock at cost, 40,411,076 and 35,676,421 shares		(6,815)		(5,236)
Treasury stock at cost, 44,594,198 and 40,417,789 shares						Treasury stock at cost, 44,594,198 and 40,417,789 shares	(8,852)		(6,818)
Accumulated other comprehensive items	Accumulated other comprehensive items	(2,970)		(2,679)		Accumulated other comprehensive items	(2,562)		(2,807)

Total shareholders' equity	Total shareholders' equity	31,824		29,675		Total shareholders' equity	35,058		34,507

Total Liabilities and Shareholders' Equity	Total Liabilities and Shareholders' Equity	$	64,061	$	58,381	Total Liabilities and Shareholders' Equity	$	65,931	$	69,052

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

THERMO FISHER SCIENTIFIC INC.

CONDENSED CONSOLIDATED STATEMENT OF INCOME

(Unaudited)


		Three Months Ended				Nine Months Ended					Three Months Ended
		September 26,		September 28,		September 26,		September 28,				April 3,		March 28,
(In millions except per share amounts)	(In millions except per share amounts)	2020		2019		2020		2019		(In millions except per share amounts)		2021		2020

Revenues	Revenues									Revenues
Product revenues	Product revenues	$	6,782	$	4,798	$	16,662	$	14,345	Product revenues		$	7,856	$	4,630
Service revenues	Service revenues	1,739		1,474		5,006		4,368		Service revenues		2,050		1,600

Total revenues	Total revenues	8,521		6,272		21,668		18,713		Total revenues		9,906		6,230

Costs and Operating Expenses:	Costs and Operating Expenses:									Costs and Operating Expenses:
Cost of product revenues	Cost of product revenues	3,001		2,471		7,732		7,363		Cost of product revenues		3,327		2,340
Cost of service revenues	Cost of service revenues	1,189		1,038		3,488		3,057		Cost of service revenues		1,370		1,150
Selling, general and administrative expenses	Selling, general and administrative expenses	1,592		1,539		4,853		4,632		Selling, general and administrative expenses		1,826		1,551
Research and development expenses	Research and development expenses	296		247		805		741		Research and development expenses		320		245
Restructuring and other costs (income), net		17		31		67		(442)

Restructuring and other costs										Restructuring and other costs		14		38
Total costs and operating expenses	Total costs and operating expenses	6,095		5,326		16,945		15,351		Total costs and operating expenses		6,857		5,324

Operating Income	Operating Income	2,426		946		4,723		3,362		Operating Income		3,049		906
Interest Income	Interest Income	9		52		53		179		Interest Income		12		36
Interest Expense	Interest Expense	(144)		(164)		(407)		(534)		Interest Expense		(125)		(126)
Other (Expense) Income, Net		(39)		(12)		(36)		25

Other (Expense) Income										Other (Expense) Income		(183)		12
Income Before Income Taxes	Income Before Income Taxes	2,252		822		4,333		3,032		Income Before Income Taxes		2,753		828
Provision for Income Taxes	Provision for Income Taxes	(319)		(62)		(456)		(338)		Provision for Income Taxes		(416)		(40)

Net Income	Net Income	$	1,933	$	760	$	3,877	$	2,694	Net Income		$	2,337	$	788

Earnings per Share	Earnings per Share									Earnings per Share
Basic	Basic	$	4.88	$	1.89	$	9.79	$	6.73	Basic		$	5.93	$	1.99
Diluted	Diluted	$	4.84	$	1.88	$	9.71	$	6.68	Diluted		$	5.88	$	1.97

Weighted Average Shares	Weighted Average Shares									Weighted Average Shares
Basic	Basic	396		401		396		400		Basic		394		397
Diluted	Diluted	399		404		399		403		Diluted		397		400

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

THERMO FISHER SCIENTIFIC INC.

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(Unaudited)


		Three Months Ended				Nine Months Ended					Three Months Ended
		September 26,		September 28,		September 26,		September 28,				April 3,		March 28,
(In millions)	(In millions)	2020		2019		2020		2019		(In millions)		2021		2020

Comprehensive Income	Comprehensive Income									Comprehensive Income
Net Income	Net Income	$	1,933	$	760	$	3,877	$	2,694	Net Income		$	2,337	$	788

Other Comprehensive Items:	Other Comprehensive Items:									Other Comprehensive Items:
Currency translation adjustment:	Currency translation adjustment:									Currency translation adjustment:
Currency translation adjustment (net of tax (benefit) provision of $(76), $77, $(71) and $92)		10		(91)		(244)		(222)
Reclassification adjustment for losses included in net income		0		30		0		30
Currency translation adjustment (net of tax provision of $118 and $22)										Currency translation adjustment (net of tax provision of $118 and $22)		224		(357)

Unrealized gains and losses on hedging instruments:	Unrealized gains and losses on hedging instruments:									Unrealized gains and losses on hedging instruments:
Unrealized losses on hedging instruments (net of tax benefit of $0, $12, $20 and $12)		0		(38)		(65)		(38)
Reclassification adjustment for losses included in net income (net of tax benefit of $2, $1, $4 and $3)		6		2		10		7
Unrealized losses on hedging instruments (net of tax benefit of $0 and $19)										Unrealized losses on hedging instruments (net of tax benefit of $0 and $19)		0		(62)
Reclassification adjustment for losses included in net income (net of tax benefit of $4 and $1)										Reclassification adjustment for losses included in net income (net of tax benefit of $4 and $1)		13		1
Pension and other postretirement benefit liability adjustments:	Pension and other postretirement benefit liability adjustments:									Pension and other postretirement benefit liability adjustments:
Pension and other postretirement benefit liability adjustments arising during the period (net of tax benefit (provision) of $1, $(2), $2 and $2)		(4)		2		(5)		(9)
Amortization of net loss included in net periodic pension cost (net of tax benefit of $1, $0, $4 and $2)		7		3		13		8

Pension and other postretirement benefit liability adjustments arising during the period (net of tax benefit (provision) of $(2) and $(5))										Pension and other postretirement benefit liability adjustments arising during the period (net of tax benefit (provision) of $(2) and $(5))		6		5
Amortization of net loss included in net periodic pension cost (net of tax benefit of $1 and $1)										Amortization of net loss included in net periodic pension cost (net of tax benefit of $1 and $1)		2		4
Total other comprehensive items	Total other comprehensive items	19		(92)		(291)		(224)		Total other comprehensive items		245		(409)

Comprehensive Income	Comprehensive Income	$	1,952	$	668	$	3,586	$	2,470	Comprehensive Income		$	2,582	$	379

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

THERMO FISHER SCIENTIFIC INC.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited)


		Nine Months Ended					Three Months Ended
		September 26,		September 28,			April 3,		March 28,
(In millions)	(In millions)	2020		2019		(In millions)	2021		2020

Operating Activities	Operating Activities					Operating Activities
Net income	Net income	$	3,877	$	2,694	Net income	$	2,337	$	788

Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:					Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of property, plant and equipment	Depreciation of property, plant and equipment	467		416		Depreciation of property, plant and equipment	198		149
Amortization of acquisition-related intangible assets	Amortization of acquisition-related intangible assets	1,256		1,285		Amortization of acquisition-related intangible assets	423		425
Change in deferred income taxes	Change in deferred income taxes	(496)		(356)		Change in deferred income taxes	24		(41)
Gain on sales of businesses		0		(486)

Loss on early extinguishment of debt						Loss on early extinguishment of debt	197		0
Stock-based compensation	Stock-based compensation	145		138		Stock-based compensation	51		46
Other non-cash expenses, net	Other non-cash expenses, net	209		123		Other non-cash expenses, net	69		64
Changes in assets and liabilities, excluding the effects of acquisitions and disposition:
Accounts receivable		(858)		(321)
Inventories		(427)		(449)
Changes in assets and liabilities, excluding the effects of acquisitions						Changes in assets and liabilities, excluding the effects of acquisitions	(1,321)		(1,075)

Accounts payable		(220)		70

Contributions to retirement plans		(45)		(40)
Other		1,042		(14)

Net cash provided by operating activities	Net cash provided by operating activities	4,950		3,060		Net cash provided by operating activities	1,978		356

Investing Activities	Investing Activities					Investing Activities
Acquisitions, net of cash acquired	Acquisitions, net of cash acquired	(3)		(1,687)		Acquisitions, net of cash acquired	(1,343)		(4)
Proceeds from sale of business, net of cash divested		0		1,128

Purchase of property, plant and equipment	Purchase of property, plant and equipment	(888)		(637)		Purchase of property, plant and equipment	(628)		(253)
Proceeds from sale of property, plant and equipment	Proceeds from sale of property, plant and equipment	7		18		Proceeds from sale of property, plant and equipment	5		4
Other investing activities, net	Other investing activities, net	0		30		Other investing activities, net	(32)		(7)

Net cash used in investing activities	Net cash used in investing activities	(884)		(1,148)		Net cash used in investing activities	(1,998)		(260)

Financing Activities	Financing Activities					Financing Activities
Net proceeds from issuance of debt	Net proceeds from issuance of debt	3,464		0		Net proceeds from issuance of debt	0		2,185��
Repayment of debt	Repayment of debt	(712)		(1,702)		Repayment of debt	(2,804)		(1)
Proceeds from issuance of commercial paper	Proceeds from issuance of commercial paper	383		2,581		Proceeds from issuance of commercial paper	0		382
Repayments of commercial paper	Repayments of commercial paper	(387)		(2,578)		Repayments of commercial paper	0		(321)
Purchases of company common stock	Purchases of company common stock	(1,500)		(750)		Purchases of company common stock	(2,000)		(1,500)
Dividends paid	Dividends paid	(250)		(221)		Dividends paid	(87)		(76)

Net proceeds from issuance of company common stock under employee stock plans	Net proceeds from issuance of company common stock under employee stock plans	156		115		Net proceeds from issuance of company common stock under employee stock plans	20		48
Other financing activities, net	Other financing activities, net	(146)		(49)		Other financing activities, net	21		(98)

Net cash provided by (used in) financing activities		1,008		(2,604)
Net cash (used in) provided by financing activities						Net cash (used in) provided by financing activities	(4,850)		619

Exchange Rate Effect on Cash	Exchange Rate Effect on Cash	74		(120)		Exchange Rate Effect on Cash	137		(127)

Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash		5,148		(812)
(Decrease) Increase in Cash, Cash Equivalents and Restricted Cash						(Decrease) Increase in Cash, Cash Equivalents and Restricted Cash	(4,733)		588
Cash, Cash Equivalents and Restricted Cash at Beginning of Period	Cash, Cash Equivalents and Restricted Cash at Beginning of Period	2,422		2,117		Cash, Cash Equivalents and Restricted Cash at Beginning of Period	10,336		2,422

Cash, Cash Equivalents and Restricted Cash at End of Period	Cash, Cash Equivalents and Restricted Cash at End of Period	$	7,570	$	1,305	Cash, Cash Equivalents and Restricted Cash at End of Period	$	5,603	$	3,010

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

THERMO FISHER SCIENTIFIC INC.

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

(Unaudited)


		Common Stock			Capital in Excess of Par Value				Retained Earnings				Treasury Stock						Accumulated Other Comprehensive Items				Total Shareholders' Equity					Common Stock				Capital in Excess of Par Value			Retained Earnings		Treasury Stock			Accumulated Other Comprehensive Items		Total Shareholders' Equity
(In millions)	(In millions)	Shares	Amount								Shares			Amount							(In millions)				Shares				Amount					Shares			Amount

		Three Months Ended September 26, 2020
Balance at June 27, 2020		436	$	436			$	15,334			$	23,860		40			$	(6,766)			$	(2,989)				$	29,875

																												Three Months Ended April 3, 2021
Balance at December 31, 2020																									Balance at December 31, 2020			437		$	437	$	15,579		$	28,116	40	$	(6,818)	$	(2,807)	$	34,507

Issuance of shares under employees' and directors' stock plans	Issuance of shares under employees' and directors' stock plans	1	1		81				—				0		(49)				—				33		Issuance of shares under employees' and directors' stock plans			1		1		54			—		1	(34)		—		21
Stock-based compensation																									Stock-based compensation			—		—		51			—		—	—		—		51
Purchases of company common stock																									Purchases of company common stock			—		—		—			—		4	(2,000)		—		(2,000)
Dividends declared ($0.26 per share)																									Dividends declared ($0.26 per share)			—		—		—			(103)		—	—		—		(103)
Net income																									Net income			—		—		—			2,337		—	—		—		2,337
Other comprehensive items																									Other comprehensive items			—		—		—			—		—	—		245		245
Balance at April 3, 2021																									Balance at April 3, 2021			438		$	438	$	15,684		$	30,350	45	$	(8,852)	$	(2,562)	$	35,058

																												Three Months Ended March 28, 2020
Balance at December 31, 2019																									Balance at December 31, 2019			434		$	434	$	15,064		$	22,092	36	$	(5,236)	$	(2,679)	$	29,675
Cumulative effect of accounting changes																									Cumulative effect of accounting changes			—		—		—			(1)		—	—		—		(1)
Issuance of shares under employees' and directors' stock plans																									Issuance of shares under employees' and directors' stock plans			1		1		76			—		0	(29)		—		48
Stock-based compensation	Stock-based compensation	—	—		52				—				—		—				—				52		Stock-based compensation			—		—		46			—		—	—		—		46

Purchases of company common stock																									Purchases of company common stock			—		—		—			—		4	(1,500)		—		(1,500)
Dividends declared ($0.22 per share)	Dividends declared ($0.22 per share)	—	—		—				(88)				—		—				—				(88)		Dividends declared ($0.22 per share)			—		—		—			(88)		—	—		—		(88)
Net income	Net income	—	—		—				1,933				—		—				—				1,933		Net income			—		—		—			788		—	—		—		788
Other comprehensive items	Other comprehensive items	—	—		—				—				—		—				19				19		Other comprehensive items			—		—		—			—		—	—		(409)		(409)

Balance at September 26, 2020		437	$	437	$	15,467			$	25,705			40		$	(6,815)			$	(2,970)			$	31,824

		Three Months Ended September 28, 2019
Balance at June 29, 2019		433	$	433	$	14,887			$	20,482			33		$	(4,443)			$	(2,630)			$	28,729
Issuance of shares under employees' and directors' stock plans		1	1		35				—				—		(43)				—				(7)

Stock-based compensation		—	—		42				—				—		—				—				42

Dividends declared ($0.19 per share)		—	—		—				(77)				—		—				—				(77)
Net income		—	—		—				760				—		—				—				760
Other comprehensive items		—	—		—				—				—		—				(92)				(92)

Balance at September 28, 2019		434	$	434	$	14,964			$	21,165			33		$	(4,486)			$	(2,722)			$	29,355

		Nine Months Ended September 26, 2020
Balance at December 31, 2019		434	$	434	$	15,064			$	22,092			36		$	(5,236)			$	(2,679)			$	29,675
Cumulative effect of accounting change		—	—		—				(1)				—		—				—				(1)
Issuance of shares under employees' and directors' stock plans		3	3		258				—				0		(79)				—				182

Stock-based compensation		—	—		145				—				—		—				—				145
Purchases of company common stock		—	—		—				—				4		(1,500)				—				(1,500)
Dividends declared ($0.66 per share)		—	—		—				(263)				—		—				—				(263)
Net income		—	—		—				3,877				—		—				—				3,877
Other comprehensive items		—	—		—				—				—		—				(291)				(291)

Balance at September 26, 2020		437	$	437	$	15,467			$	25,705			40		$	(6,815)			$	(2,970)			$	31,824

		Nine Months Ended September 28, 2019
Balance at December 31, 2018		432	$	432	$	14,621			$	18,696			29		$	(3,665)			$	(2,498)			$	27,586
Cumulative effect of accounting changes		—	—		—				4				—		—				—				4
Issuance of shares under employees' and directors' stock plans		2	2		205				—				1		(71)				—				136

Stock-based compensation		—	—		138				—				—		—				—				138
Purchases of company common stock		—	—		—				—				3		(750)				—				(750)
Dividends declared ($0.57 per share)		—	—		—				(229)				—		—				—				(229)
Net income		—	—		—				2,694				—		—				—				2,694
Other comprehensive items		—	—		—				—				—		—				(224)				(224)

Balance at September 28, 2019		434	$	434	$	14,964			$	21,165			33		$	(4,486)			$	(2,722)			$	29,355
Balance at March 28, 2020																									Balance at March 28, 2020			435		$	435	$	15,186		$	22,791	40	$	(6,765)	$	(3,088)	$	28,559

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, improve patient diagnostics ~~deliver medicines to market~~and therapies, and increase laboratory productivity. 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 ~~September 26, 2020,~~April 3, 2021, the results of operations for the ~~three- and nine-month~~three-month periods ended ~~September 26,~~April 3, 2021 and March 28, 2020, ~~and September 28, 2019,~~ and the cash flows for the ~~nine-month~~three-month periods ended ~~September 26, 2020~~April 3, 2021 and ~~September~~March 28, ~~2019.~~2020. Interim results are not necessarily indicative of results for a full year.

The condensed consolidated balance sheet presented as of December 31, ~~2019,~~2020, 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 ~~2019~~2020 financial statements and notes included in the company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC).

Note 1 to the consolidated financial statements for ~~2019~~2020 describes the significant accounting estimates and policies used in preparation of the consolidated financial statements. There have been no material changes in the company’s significant accounting policies during the ~~nine~~three months ended ~~September 26, 2020.~~

~~Contract-related Balances~~

Accounts receivable include amounts that have been billed and are currently due from customers. They are recorded at the invoiced amount and 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.

~~The changes in the allowance for doubtful accounts are as follows:~~

Nine Months Ended
September 26, September 28,
(In millions) 2020 2019
Balance at Beginning of Year $ 102 $ 117
Cumulative effect of accounting change 1 —
Provision charged to expense 39 19
Accounts written off (25) (26)
Acquisitions, currency translation and other — (4)
Balance at End of Period $ 117 $ 106

Contract assets include revenues recognized in advance of billings and 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

~~THERMO FISHER SCIENTIFIC INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

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

September 26, December 31,
(In millions) 2020 2019
Current Contract Assets, Net $ 697 $ 603
Noncurrent Contract Assets, Net 11 17
Current Contract Liabilities 1,047 916
Noncurrent Contract Liabilities 674 594

In the three and nine months ended September 26, 2020, the company recognized revenues of $142 million and $773 million, respectively, that were included in the contract liabilities balance at December 31, 2019.

~~Warranty Obligations~~

~~The liability for warranties is included in other accrued expenses in the accompanying balance sheet. The changes in the carrying amount of standard product warranty obligations are as follows:~~

Nine Months Ended
September 26, September 28,
(In millions) 2020 2019
Balance at Beginning of Year $ 93 $ 92
Provision charged to expense 74 80
Usage (76) (83)
Adjustments to previously provided warranties, net (2) (1)
Currency translation — (2)
Balance at End of Period $ 89 $ 86
April 3, 2021.

Inventories

The components of inventories are as follows:


		September 26,		December 31,			April 3,		December 31,
(In millions)	(In millions)	2020		2019		(In millions)	2021		2020

Raw Materials	Raw Materials	$	1,247	$	971	Raw Materials	$	1,491	$	1,305
Work in Process	Work in Process	558		517		Work in Process	602		540
Finished Goods	Finished Goods	2,024		1,882		Finished Goods	2,249		2,184

Inventories	Inventories	$	3,829	$	3,370	Inventories	$	4,342	$	4,029

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. Risks and uncertainties associated with the ongoing COVID-19 global pandemic ~~have and will continue to~~ materially adversely ~~affect~~affected certain of the company’s businesses in 2020, particularly in the Analytical Instruments segment and, to a lesser extent, in some businesses within the other three ~~segments, through at least the fourth quarter of 2020.~~segments. The extent and duration of ~~such~~negative impacts continuing into the remainder of 2021 are uncertain and may require changes to estimates. Actual results could differ from those estimates.

~~THERMO FISHER SCIENTIFIC INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

Recent Accounting Pronouncements

In January 2020, the FASB issued new guidance to clarify the interaction of the accounting for certain equity securities, equity method investments, and certain forward contracts and purchased options. Among other things, the new guidance clarifies that an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting for the purposes of applying measurement principles for certain equity securities immediately before applying or discontinuing the equity method. The company adopted this guidance in 2020 using a prospective method. The adoption of this guidance did not have a material impact on the company’s consolidated financial statements.

In December 2019, the FASB issued new guidance to simplify the accounting for income taxes. Among other things, the new guidance requires the effects of enacted changes in tax laws or rates to be reflected in the annual effective tax rate computation in the interim period that includes the enactment date. The company ~~expects to adopt~~adopted this guidance ~~when it is effective~~ in 2021 using a prospective method. The adoption of this guidance isdid not ~~expected to~~ have a material impact on the company’s consolidated financial

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

statements; however, the impact in future periods will be dependent on the extent of future events or conditions that would be affected such as enacted changes in tax laws or rates.

In August 2018, the FASB issued new guidance to modify the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. The company adopted the guidance in 2020 using a retrospective method. The adoption of this guidance did not have a material impact on the company’s disclosures.

In August 2018, the FASB issued new guidance to modify the disclosure requirements on fair value measurements. The company adopted the guidance in 2020 with some items requiring a prospective method and others requiring a retrospective method. The adoption of this guidance did not have a material impact on the company’s disclosures.

In June 2016, the FASB issued new guidance to require a financial asset measured at amortized cost basis, such as accounts receivable, to be presented at the net amount expected to be collected based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. During 2018 and 2019, the FASB issued additional guidance and clarification. The company adopted the guidance in 2020 using a modified retrospective method. The adoption of this guidance reduced accounts receivable and retained earnings by $1 million on January 1, 2020.

Note 2. Acquisitions ~~and Dispositions~~

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. 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 use of the commercial infrastructure of the acquired businesses to cost-effectively expand sales of company products.

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.~~

~~Terminated~~Proposed Acquisition

~~As previously announced, on March 3, 2020,~~On April 15, 2021, the company entered into a definitive agreement under which it will acquire PPD, Inc. for $47.50 per share for a total cash purchase ~~agreement~~price of $17.4 billion plus the assumption of approximately $3.5 billion of net debt. PPD provides a broad range of clinical research and specialized laboratory services to ~~acquire all~~enable customers to accelerate innovation and increase drug development productivity. Upon close of the transaction, PPD will become part of the Laboratory Products and Services Segment. The transaction, which is expected to be completed by the end of 2021, is subject to the satisfaction of customary closing conditions, including the receipt of applicable regulatory approvals. Shareholders holding in aggregate approximately 60% of the issued and outstanding shares of ~~QIAGEN N.V. (“QIAGEN”). Following a determination that the number~~common stock of ~~shares tendered by QIAGEN shareholders did not meet the minimum amount required for~~PPD have approved the transaction by written consent. No further action by other PPD shareholders is required to ~~proceed, on August 13, 2020,~~approve the transaction.

2021

On January 15, 2021, the company ~~delivered to QIAGEN a written notice terminating~~acquired, within the ~~purchase agreement in accordance with~~Laboratory Products and Services segment, the ~~terms~~Belgium-based European viral vector manufacturing business of ~~the agreement. In connection with the termination, QIAGEN paid to the company an expense reimbursement payment of $95~~Groupe Novasep SAS for approximately $834 million in net cash ~~which has been~~consideration. The European viral vector manufacturing business provides manufacturing services for vaccines and therapies to biotechnology companies and large biopharma customers. The acquisition expands the segment’s capabilities for cell and gene vaccines and therapies. The goodwill recorded as a ~~reduction~~result of ~~selling, general and administrative expenses.~~

~~Disposition~~the acquisition is not tax deductible.

On ~~June 28, 2019,~~February 25, 2021, the company ~~sold its Anatomical Pathology business~~acquired, within the Life Sciences Solutions segment, Mesa Biotech, Inc., a U.S.-based molecular diagnostic company, for approximately $406 million in net cash consideration and contingent consideration with an initial fair value of $65 million due upon the completion of certain milestones. Mesa Biotech has developed and commercialized a polymerase chain reaction (PCR) based rapid point-of-care testing platform available for detecting infectious diseases including COVID-19. The acquisition enables the company to ~~PHC Holdings Corporation for $1.13 billion, net~~accelerate the availability of ~~cash divested.~~reliable and accurate advanced molecular diagnostics at the point of care. The ~~business was part~~goodwill recorded as a result of the ~~Specialty Diagnostics segment. The sale~~acquisition is not tax deductible.

In addition, in the first three months of ~~this business resulted in a pre-tax gain of approximately $482 million in 2019, included in restructuring~~2021 the company acquired, within the Life Sciences Solutions segment, cell sorting technology assets and, ~~other costs (income), net. Revenues in 2019, through~~also within the ~~date of sale, of the business sold were approximately $115 million, net of retained sales through the company's healthcare market channel business.~~Life Sciences Solutions segment, an Ireland-based life sciences distributor.

109

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

The components of the purchase prices and the preliminary allocations to the net assets acquired for 2021 acquisitions are as follows:


(In millions)	European Viral Vector Business		Mesa Biotech		Other
Purchase Price
Cash paid	$	853	$	420	$	107

Fair value of contingent consideration	—		65		97

Cash acquired	(19)		(14)		(4)
	$	834	$	471	$	200

Net Assets Acquired
Current assets	$	40	$	54	$	8
Property, plant and equipment	39		2		1
Definite-lived intangible assets:
Customer relationships	311		—		3
Product technology	26		263		110
Tradenames	—		2		2


Goodwill	593		248		83
Other assets	19		3		1
Contract liabilities	(59)		—		(1)
Deferred tax liabilities	(82)		(68)		—
Other liabilities assumed	(53)		(33)		(7)
	$	834	$	471	$	200

The weighted-average amortization periods for definite-lived intangible assets acquired in 2021 are 14 years for customer relationships, 6 years for product technology and 3 years for tradenames. The weighted average amortization period for all definite-lived intangible assets acquired in 2021 is 9 years.

The preliminary allocations of the purchase price for the acquisitions of the European viral vector business and Mesa Biotech were based on estimates of the fair value of the net assets acquired and are subject to adjustment upon finalization, largely with respect to acquired intangible assets and deferred taxes. Measurements of these items inherently require significant estimates and assumptions.

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Note 3. Revenues and Contract-related Balances

Disaggregated Revenues

Revenues by type are as follows:


		Three Months Ended				Nine Months Ended					Three Months Ended
		September 26,		September 28,		September 26,		September 28,				April 3,		March 28,
(In millions)	(In millions)	2020		2019		2020		2019		(In millions)		2021		2020

Revenues	Revenues									Revenues
Consumables	Consumables	4,956		3,228		$	12,214	$	9,726	Consumables		$	5,964	$	3,379
Instruments	Instruments	1,826		1,570		4,448		4,619		Instruments		1,892		1,251
Services	Services	1,739		1,474		5,006		4,368		Services		2,050		1,600

Consolidated revenues	Consolidated revenues	$	8,521	$	6,272	$	21,668	$	18,713	Consolidated revenues		$	9,906	$	6,230

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

Three Months Ended Nine Months Ended
September 26, September 28, September 26, September 28,
(In millions) 2020 2019 2020 2019
Revenues (a)
North America $ 4,587 $ 3,220 $ 11,418 $ 9,509
Europe 2,032 1,514 5,464 4,569
Asia-Pacific 1,607 1,349 4,054 4,080
Other regions 295 189 732 555
Consolidated revenues $ 8,521 $ 6,272 $ 21,668 $ 18,713

~~(a)Revenues are attributed to regions based on customer location.~~


	Three Months Ended
		April 3,		March 28,
(In millions)		2021		2020
Revenues
North America		$	5,101	$	3,287
Europe		2,785		1,649
Asia-Pacific		1,709		1,118
Other regions		311		176
Consolidated revenues		$	9,906	$	6,230

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 ~~September 26, 2020~~April 3, 2021 was ~~$11.16~~$13.29 billion. The company will recognize revenues for these performance obligations as they are satisfied, approximately ~~72%~~74% of which is expected to occur within the next twelve months.

Contract-related Balances

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


	April 3,		December 31,
(In millions)	2021		2020
Current Contract Assets, Net	$	783	$	731
Noncurrent Contract Assets, Net	10		11
Current Contract Liabilities	1,396		1,271
Noncurrent Contract Liabilities	760		763

In the three months ended April 3, 2021, the company recognized revenues of $566 million that were included in the contract liabilities balance at December 31, 2020. In the three months ended March 28, 2020, the company recognized revenues of $405 million that were included in the contract liabilities balance at December 31, 2019.

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Note 4. Business Segment and Geographical Information

Business Segment Information

Three Months Ended Nine Months Ended
September 26, September 28, September 26, September 28,
(In millions) 2020 2019 2020 2019
Revenues
Life Sciences Solutions $ 3,424 $ 1,701 $ 7,800 $ 5,018
Analytical Instruments 1,336 1,358 3,488 4,004
Specialty Diagnostics 1,430 879 3,376 2,779
Laboratory Products and Services 3,112 2,619 8,629 7,765
Eliminations (781) (285) (1,625) (853)
Consolidated revenues 8,521 6,272 21,668 18,713
Segment Income (a)
Life Sciences Solutions 1,879 586 3,788 1,756
Analytical Instruments 171 311 477 879
Specialty Diagnostics 398 223 848 707
Laboratory Products and Services 355 303 931 933
Subtotal reportable segments (a) 2,803 1,423 6,044 4,275
Cost of revenues charges, net (1) (5) (5) (16)
Selling, general and administrative credits (charges), net 55 (7) 7 (54)
Restructuring and other (costs) income, net (17) (31) (67) 442
Amortization of acquisition-related intangible assets (414) (434) (1,256) (1,285)
Consolidated operating income 2,426 946 4,723 3,362
Interest income (b) 9 52 53 179
Interest expense (b) (144) (164) (407) (534)
Other (expense) income, net (b) (39) (12) (36) 25
Income before income taxes $ 2,252 $ 822 $ 4,333 $ 3,032

~~(a)~~Represents operating income before certain charges to cost of revenues and selling, general and administrative expenses; restructuring and other costs/income, net; and amortization of acquisition-related intangibles.

~~(b)The company does not allocate interest or other expense/income, net to its segments.~~


	Three Months Ended
		April 3,		March 28,
(In millions)		2021		2020
Revenues
Life Sciences Solutions		$	4,203	$	1,774
Analytical Instruments		1,387		1,101
Specialty Diagnostics		1,615		958
Laboratory Products and Services		3,597		2,730
Eliminations		(896)		(333)
Consolidated revenues		9,906		6,230

Segment Income
Life Sciences Solutions		2,279		675
Analytical Instruments		272		171
Specialty Diagnostics		428		236
Laboratory Products and Services		531		295
Subtotal reportable segments		3,510		1,377
Cost of revenues charges		(8)		(2)
Selling, general and administrative charges		(16)		(6)
Restructuring and other costs		(14)		(38)
Amortization of acquisition-related intangible assets		(423)		(425)
Consolidated operating income		3,049		906
Interest income		12		36
Interest expense		(125)		(126)
Other (expense) income		(183)		12
Income before income taxes		$	2,753	$	828

Geographical Information


		Three Months Ended				Nine Months Ended					Three Months Ended
		September 26,		September 28,		September 26,		September 28,				April 3,		March 28,
(In millions)	(In millions)	2020		2019		2020		2019		(In millions)		2021		2020

Revenues (c)
Revenues (a)										Revenues (a)
United States	United States	$	4,428	$	3,096	$	10,981	$	9,117	United States		$	4,892	$	3,139
China	China	828		694		1,886		2,072		China		775		464
Other	Other	3,265		2,482		8,801		7,524		Other		4,239		2,627

Consolidated revenues	Consolidated revenues	$	8,521	$	6,272	$	21,668	$	18,713	Consolidated revenues		$	9,906	$	6,230

~~(c)~~(a) Revenues are attributed to countries based on customer location.

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Note 5. Income Taxes

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


		Nine Months Ended							Three Months Ended
		September 26,			September 28,				April 3,			March 28,
(In millions)	(In millions)	2020			2019			(In millions)	2021			2020

Statutory Federal Income Tax Rate	Statutory Federal Income Tax Rate	21		%	21		%	Statutory Federal Income Tax Rate	21		%	21		%

Provision for Income Taxes at Statutory Rate	Provision for Income Taxes at Statutory Rate	$	910		$	637		Provision for Income Taxes at Statutory Rate	$	578		$	174

Increases (Decreases) Resulting From:	Increases (Decreases) Resulting From:							Increases (Decreases) Resulting From:
Foreign rate differential	Foreign rate differential	(132)			(172)			Foreign rate differential	(55)			(88)
Foreign exchange loss on inter-company debt refinancing		—			(62)
Income tax credits	Income tax credits	(333)			(242)			Income tax credits	(89)			(26)
Global intangible low-taxed income	Global intangible low-taxed income	210			160			Global intangible low-taxed income	20			20
Foreign-derived intangible income	Foreign-derived intangible income	(53)			(68)			Foreign-derived intangible income	(60)			(17)
Excess tax benefits from stock options and restricted stock units								Excess tax benefits from stock options and restricted stock units	(28)			(28)

Excess tax benefits from stock options and restricted stock units		(94)			(68)
Basis difference on disposal of business		—			72

State income taxes, net of federal tax								State income taxes, net of federal tax	49			9
Other, net	Other, net	(52)			81			Other, net	1			(4)

Provision for Income Taxes	Provision for Income Taxes	$	456		$	338		Provision for Income Taxes	$	416		$	40

The company has operations and a taxable presence in approximately 50 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.

~~In the second quarter of 2020, the company implemented foreign tax credit planning in Sweden which resulted in $96 million of foreign tax credits, with no related incremental U.S. income tax expense.~~

Unrecognized Tax Benefits

As of ~~September 26, 2020,~~April 3, 2021, the company had ~~$1.51~~$1.11 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)	~~2020~~2021

Balance at Beginning of Year	$	~~1,552~~1,091


Additions for tax positions of current year	68
Additions for tax positions of prior years	15

~~Reductions for tax positions of prior years~~	~~(38)~~

~~Settlements~~	~~(7)~~

Balance at End of Period	$	~~1,513~~1,114

~~THERMO FISHER SCIENTIFIC INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

Note 6. Earnings per Share

Three Months Ended Nine Months Ended
September 26, September 28, September 26, September 28,
(In millions except per share amounts) 2020 2019 2020 2019
Net Income $ 1,933 $ 760 $ 3,877 $ 2,694
Basic Weighted Average Shares 396 401 396 400
Plus Effect of: Stock options and restricted units 3 3 3 3
Diluted Weighted Average Shares 399 404 399 403
Basic Earnings per Share $ 4.88 $ 1.89 $ 9.79 $ 6.73
Diluted Earnings per Share $ 4.84 $ 1.88 $ 9.71 $ 6.68
Antidilutive Stock Options Excluded from Diluted Weighted Average Shares 0 1 1 1


	Three Months Ended
		April 3,		March 28,
(In millions except per share amounts)		2021		2020
Net Income		$	2,337	$	788

Basic Weighted Average Shares		394		397
Plus Effect of: Stock options and restricted stock units		3		3
Diluted Weighted Average Shares		397		400

Basic Earnings per Share		$	5.93	$	1.99
Diluted Earnings per Share		$	5.88	$	1.97

Antidilutive Stock Options Excluded from Diluted Weighted Average Shares		1		1

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Note 7. Debt and Other Financing Arrangements


		Effective Interest Rate at September 26,		September 26,		December 31,			Effective Interest Rate at April 3,		April 3,		December 31,
(Dollars in millions)	(Dollars in millions)	2020		2020		2019		(Dollars in millions)	2021		2021		2020

Floating Rate 2-Year Senior Notes, Due 8/7/2020 (euro-denominated)				$	—	$	673
2.15% 7-Year Senior Notes, Due 7/21/2022 (euro-denominated)	2.15% 7-Year Senior Notes, Due 7/21/2022 (euro-denominated)	2.28	%	582		561		2.15% 7-Year Senior Notes, Due 7/21/2022 (euro-denominated)			$	—	$	611
3.00% 7-Year Senior Notes, Due 4/15/2023	3.00% 7-Year Senior Notes, Due 4/15/2023	1.73	%	1,000		1,000		3.00% 7-Year Senior Notes, Due 4/15/2023			—		1,000
4.15% 10-Year Senior Notes, Due 2/1/2024	4.15% 10-Year Senior Notes, Due 2/1/2024	4.16	%	1,000		1,000		4.15% 10-Year Senior Notes, Due 2/1/2024			—		1,000
0.75% 8-Year Senior Notes, Due 9/12/2024 (euro-denominated)	0.75% 8-Year Senior Notes, Due 9/12/2024 (euro-denominated)	0.94	%	1,163		1,121		0.75% 8-Year Senior Notes, Due 9/12/2024 (euro-denominated)	0.95	%	1,176		1,222
0.125% 5.5-Year Senior Notes, Due 3/1/2025 (euro-denominated)	0.125% 5.5-Year Senior Notes, Due 3/1/2025 (euro-denominated)	0.41	%	930		897		0.125% 5.5-Year Senior Notes, Due 3/1/2025 (euro-denominated)	0.42	%	940		977
4.133% 5-Year Senior Notes, Due 3/25/2025	4.133% 5-Year Senior Notes, Due 3/25/2025	4.32	%	1,100		—		4.133% 5-Year Senior Notes, Due 3/25/2025	4.32	%	1,100		1,100
2.00% 10-Year Senior Notes, Due 4/15/2025 (euro-denominated)	2.00% 10-Year Senior Notes, Due 4/15/2025 (euro-denominated)	2.10	%	744		717		2.00% 10-Year Senior Notes, Due 4/15/2025 (euro-denominated)	2.10	%	752		782
3.65% 10-Year Senior Notes, Due 12/15/2025	3.65% 10-Year Senior Notes, Due 12/15/2025	3.77	%	350		350		3.65% 10-Year Senior Notes, Due 12/15/2025	3.77	%	350		350
1.40% 8.5-Year Senior Notes, Due 1/23/2026 (euro-denominated)	1.40% 8.5-Year Senior Notes, Due 1/23/2026 (euro-denominated)	1.53	%	814		785		1.40% 8.5-Year Senior Notes, Due 1/23/2026 (euro-denominated)	1.53	%	823		855
2.95% 10-Year Senior Notes, Due 9/19/2026	2.95% 10-Year Senior Notes, Due 9/19/2026	3.19	%	1,200		1,200		2.95% 10-Year Senior Notes, Due 9/19/2026	3.19	%	1,200		1,200
1.45% 10-Year Senior Notes, Due 3/16/2027 (euro-denominated)	1.45% 10-Year Senior Notes, Due 3/16/2027 (euro-denominated)	1.66	%	582		561		1.45% 10-Year Senior Notes, Due 3/16/2027 (euro-denominated)	1.67	%	589		611
1.75% 7-Year Senior Notes, Due 4/15/2027 (euro-denominated)	1.75% 7-Year Senior Notes, Due 4/15/2027 (euro-denominated)	1.97	%	698		—		1.75% 7-Year Senior Notes, Due 4/15/2027 (euro-denominated)	1.98	%	706		733
3.20% 10-Year Senior Notes, Due 8/15/2027	3.20% 10-Year Senior Notes, Due 8/15/2027	3.39	%	750		750		3.20% 10-Year Senior Notes, Due 8/15/2027	3.39	%	750		750
0.50% 8.5-Year Senior Notes, Due 3/1/2028 (euro-denominated)	0.50% 8.5-Year Senior Notes, Due 3/1/2028 (euro-denominated)	0.78	%	930		897		0.50% 8.5-Year Senior Notes, Due 3/1/2028 (euro-denominated)	0.78	%	940		977
1.375% 12-Year Senior Notes, Due 9/12/2028 (euro-denominated)	1.375% 12-Year Senior Notes, Due 9/12/2028 (euro-denominated)	1.46	%	698		673		1.375% 12-Year Senior Notes, Due 9/12/2028 (euro-denominated)	1.46	%	706		733
1.95% 12-Year Senior Notes, Due 7/24/2029 (euro-denominated)	1.95% 12-Year Senior Notes, Due 7/24/2029 (euro-denominated)	2.08	%	814		785		1.95% 12-Year Senior Notes, Due 7/24/2029 (euro-denominated)	2.08	%	823		855
2.60% 10-Year Senior Notes, Due 10/1/2029	2.60% 10-Year Senior Notes, Due 10/1/2029	2.74	%	900		900		2.60% 10-Year Senior Notes, Due 10/1/2029	2.74	%	900		900
4.497% 10-Year Senior Notes, Due 3/25/2030	4.497% 10-Year Senior Notes, Due 3/25/2030	5.31	%	1,100		—		4.497% 10-Year Senior Notes, Due 3/25/2030	5.31	%	1,100		1,100
0.875% 12-Year Senior Notes, Due 10/1/2031 (euro-denominated)	0.875% 12-Year Senior Notes, Due 10/1/2031 (euro-denominated)	1.14	%	1,047		1,009		0.875% 12-Year Senior Notes, Due 10/1/2031 (euro-denominated)	1.14	%	1,058		1,099
2.375% 12-Year Senior Notes, Due 4/15/2032 (euro-denominated)	2.375% 12-Year Senior Notes, Due 4/15/2032 (euro-denominated)	2.55	%	698		—		2.375% 12-Year Senior Notes, Due 4/15/2032 (euro-denominated)	2.56	%	706		733
2.875% 20-Year Senior Notes, Due 7/24/2037 (euro-denominated)	2.875% 20-Year Senior Notes, Due 7/24/2037 (euro-denominated)	2.94	%	814		785		2.875% 20-Year Senior Notes, Due 7/24/2037 (euro-denominated)	2.94	%	823		855
1.50% 20-Year Senior Notes, Due 10/1/2039 (euro-denominated)	1.50% 20-Year Senior Notes, Due 10/1/2039 (euro-denominated)	1.73	%	1,047		1,009		1.50% 20-Year Senior Notes, Due 10/1/2039 (euro-denominated)	1.73	%	1,058		1,099
5.30% 30-Year Senior Notes, Due 2/1/2044	5.30% 30-Year Senior Notes, Due 2/1/2044	5.37	%	400		400		5.30% 30-Year Senior Notes, Due 2/1/2044	5.37	%	400		400
4.10% 30-Year Senior Notes, Due 8/15/2047	4.10% 30-Year Senior Notes, Due 8/15/2047	4.23	%	750		750		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)	1.875% 30-Year Senior Notes, Due 10/1/2049 (euro-denominated)	1.99	%	1,163		1,121		1.875% 30-Year Senior Notes, Due 10/1/2049 (euro-denominated)	1.99	%	1,176		1,222
Other	Other			8		16		Other			17		12

Total Borrowings at Par Value	Total Borrowings at Par Value			21,282		17,960		Total Borrowings at Par Value			18,843		21,926
Fair Value Hedge Accounting Adjustments	Fair Value Hedge Accounting Adjustments			30		(13)		Fair Value Hedge Accounting Adjustments			—		25
Unamortized Discount, Net				(101)		(94)
Unamortized Discount								Unamortized Discount			(93)		(102)
Unamortized Debt Issuance Costs	Unamortized Debt Issuance Costs			(118)		(101)		Unamortized Debt Issuance Costs			(105)		(114)

Total Borrowings at Carrying Value	Total Borrowings at Carrying Value			21,093		17,752		Total Borrowings at Carrying Value			18,645		21,735
Less: Short-term Obligations and Current Maturities	Less: Short-term Obligations and Current Maturities			2		676		Less: Short-term Obligations and Current Maturities			4		2,628

Long-term Obligations	Long-term Obligations			$	21,091	$	17,076	Long-term Obligations			$	18,641	$	19,107

The effective interest rates for the fixed-rate debt include the stated interest on the notes, the accretion of any discount or amortization of any premium, the amortization of any debt issuance costs and, if applicable, adjustments related to hedging.

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

In connection with the ~~termination of the~~ agreement to acquire ~~QIAGEN~~PPD (Note 2), the company ~~terminated the bridge and term loan commitments which had been available~~obtained, but does not currently expect to ~~fund the acquisition.~~utilize, up to $9.5 billion of committed financing. The company ~~had a~~intends to finance the purchase price with cash ~~outlay~~on hand and the net proceeds from issuance of ~~$51 million in 2020 associated with obtaining~~debt. The company is currently evaluating future debt financings and the ~~bridge~~timing of such transactions is subject to market and ~~term loan commitments included in~~ other financing activities, net, in the accompanying statement of cash flows. In 2020, other expense, net includes $81 million of costs for the terminated QIAGEN acquisition, primarily for loan commitment fees and entering into hedging contracts.conditions.

1514

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Credit Facilities

The company has a revolving credit facility ~~as amended,~~ (the Facility) with a bank group that provides for up to ~~$2.5~~$3.00 billion of unsecured multi-currency revolving credit. The Facility expires ~~in July 2022.~~on December 4, 2025. The revolving credit agreement calls for interest at either a LIBOR-based rate (or LIBOR successor rate), 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 ~~Leverage Ratio (net debt-to-Consolidated EBITDA) and 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 maximum Consolidated Leverage Ratio of 5.0:1.0, with such ratio stepping down to 4.0 to 1.0 for the two consecutive fiscal quarters starting on the last day of the first fiscal quarter of 2022 and then stepping down to 3.5 to 1.0 for each fiscal quarter ending thereafter. The company has also agreed that so long as any lender has any commitment under the Facility or 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 Interest Coverage Ratio of ~~3.0:~~3.5:1.0 as of the last day of any fiscal quarter. As of ~~September 26, 2020,~~April 3, 2021, 0 borrowings were outstanding under the Facility, although available capacity was reduced by approximately ~~$66~~$31 million as a result of 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 ~~September 26, 2020,~~April 3, 2021, there were no0 outstanding borrowings under these programs.

Senior Notes

Interest is payable annually on the euro-denominated senior notes and semi-annually on all other senior notes. Each of the notes may be redeemed at a redemption price of 100% of the principal amount plus a specified make-whole premium and 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.

~~Interest Rate Swap Arrangements and related Cross-currency Interest Rate Swap Arrangements~~

The company ~~has entered into LIBOR-based interest rate swap arrangements~~was in compliance with ~~various banks. The aggregate amounts~~all covenants at April 3, 2021.

In the first quarter of 2021, the company redeemed some of its existing senior notes. In connection with these redemptions, the company incurred $197 million of losses on the early extinguishment of debt included in Other (Expense) Income on the accompanying statement of income. Upon redemption of the ~~swaps are equal to the principal amount of the~~senior notes, ~~and the payment dates of the swaps coincide with the interest payment dates of the note. The swap contracts provide for~~ the company terminated the related fixed to ~~pay a variable interest~~floating rate ~~and receive a fixed rate. The variable interest rates reset monthly. The swaps have been accounted for as fair value hedges of the notes. See Note 10 for additional information on the~~ interest rate swap arrangements and ~~related cross-currency interest rate swap arrangements. The following table summarizes~~received $22 million, included in other financing activities, net, in the ~~outstanding interest rate swap arrangements on the company's senior notes at September 26, 2020:~~

Aggregate Notional Amount Pay Rate as of
(Dollars in millions) Pay Rate September 26,
2020 Receive Rate
3.00% Senior Notes due 2023 (a) 1,000 1-month LIBOR + 1.7640% 1.9164 % 3.00 %

~~(a) The payments on $900 million notional value~~accompanying statement of ~~these interest rate swaps are offset in part by cross-currency interest rate swaps which effectively reduced the pay rate as of September 26, 2020 from 1.92% to a weighted average of 1.13%.~~

The company has entered into $900 million notional value of cross-currency interest rate swaps, which effectively convert a portion of the semi-annual payments related to the variable rate, U.S. dollar denominated, LIBOR-based interest rate swaps to payments on variable rate, euro denominated, EURIBOR-based cross-currency interest rate swaps.

~~THERMO FISHER SCIENTIFIC INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

cash flows.

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. ~~The company records~~At April 3, 2021, there have been no material changes to the 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 includespending environmental-related matters disclosed in ~~these estimates potential costs for investigation, remediation and operation and maintenance of cleanup sites. At September 26, 2020,~~ the company’s ~~total environmental liability was approximately $70 million.~~2020 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 or cash flows.

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Litigation and Related Contingencies

~~There are~~The company is involved in various ~~lawsuits~~disputes, governmental and/or regulatory inspections, inquiries, investigations and ~~claims pending against~~proceedings, and litigation matters that arise from time to time in the ~~company including~~ordinary course of business. The disputes and litigation matters ~~involving~~include product liability, intellectual property, employment and commercial issues. The company determines the probability and range of possible loss 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. 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 or~~ in the company's ~~2019~~2020 financial statements and notes included in the company's Annual Report on Form 10-K, ~~filed with the SEC,~~ 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

~~For~~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 3, 2021, there have been no material changes to the accruals for pending product liability, workers compensation, and other personal injury matters disclosed in the ~~company accrues~~company’s 2020 financial statements and notes included in the most likely amount or at least the minimum of the range of possible loss when a range of possible loss can be estimated. The company records estimated amounts due from insurers related to certain product liabilities as an asset.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, ~~materially.~~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 CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

~~Intellectual Property Matters~~

On June 3, 2013, Unisone Strategic IP filed a complaint against Life Technologies, a subsidiary of the company, in the United States District Court for the Southern District of California alleging patent infringement by Life Technologies’ supply chain management system software, which operates with product “supply centers” installed at customer sites. Plaintiff sought damages for alleged willful infringement, attorneys’ fees, costs, and injunctive relief. On September 30, 2020, this matter was settled by payment of a nominal amount by the company.

Strategic Partnership and Long-term Lease

In May 2020, the company entered a strategic partnership with CSL Limited (CSL). Through a long-term lease agreement with CSL, the company will operate a new state-of-the-art biologics manufacturing facility in Lengnau, Switzerland, when construction is completed in ~~mid-2021,~~the second half of 2021, to perform pharma services for CSL with capacity to serve other customers as well. The company made an initial lease payment of $50 million in the second quarter of 2020 (included within other assets in the accompanying balance sheet) and expects to make additional fixed lease payments aggregating to $555 million (excluding renewals) from 2021 to 2041, with additional amounts dependent on the extent of revenues from customers of the facility other than CSL.

~~Loss on Supply Agreement~~

The Analytical Instruments segment recorded a charge to cost of product revenues for $108 million in the third quarter of 2020 related to an existing supply contract for components of electron microscopy instruments. The agreement requires the company to make future minimum purchases through 2025. The company has developed and launched an alternative product beginning in 2020 and based on the expected demand for the internally developed product vs. the third-party product, the company does not expect to use all of the product it will be required to buy, resulting in a loss on the purchase commitment.

Note 9. Comprehensive Income

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


(In millions)	(In millions)	Currency Translation Adjustment		Unrealized Losses on Hedging Instruments		Pension and Other Postretirement Benefit Liability Adjustment		Total		(In millions)	Currency Translation Adjustment		Unrealized Losses on Hedging Instruments		Pension and Other Postretirement Benefit Liability Adjustment		Total

Balance at December 31, 2019		$	(2,320)	$	(71)	$	(288)	$	(2,679)
Balance at December 31, 2020										Balance at December 31, 2020	$	(2,438)	$	(91)	$	(278)	$	(2,807)
Other comprehensive items before reclassifications	Other comprehensive items before reclassifications	(244)		(65)		(5)		(314)		Other comprehensive items before reclassifications	224		—		6		230
Amounts reclassified from accumulated other comprehensive items	Amounts reclassified from accumulated other comprehensive items	0		10		13		23		Amounts reclassified from accumulated other comprehensive items	—		13		2		15

Net other comprehensive items	Net other comprehensive items	(244)		(55)		8		(291)		Net other comprehensive items	224		13		8		245

Balance at September 26, 2020		$	(2,564)	$	(126)	$	(280)	$	(2,970)
Balance at April 3, 2021										Balance at April 3, 2021	$	(2,214)	$	(78)	$	(270)	$	(2,562)

1816

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

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

Fair Value Measurements

The following tables present information about the company’s financial assets and liabilities measured at fair value on a recurring basis as of ~~September 26, 2020~~April 3, 2021 and December 31, ~~2019:~~2020:


		September 26,		Quoted Prices in Active Markets		Significant Other Observable Inputs		Significant Unobservable Inputs			April 3,		Quoted Prices in Active Markets		Significant Other Observable Inputs		Significant Unobservable Inputs
(In millions)	(In millions)	2020		(Level 1)		(Level 2)		(Level 3)		(In millions)	2021		(Level 1)		(Level 2)		(Level 3)

Assets	Assets									Assets
Cash equivalents	Cash equivalents	$	6,021	$	6,021	$	—	$	—	Cash equivalents	$	3,957	$	3,957	$	—	$	—

Investments in common stock, mutual funds and other similar instruments	Investments in common stock, mutual funds and other similar instruments	22		22		—		—		Investments in common stock, mutual funds and other similar instruments	22		22		—		—
Warrants	Warrants	9		—		9		—		Warrants	19		—		19		—
Insurance contracts	Insurance contracts	140		—		140		—		Insurance contracts	159		—		159		—
Derivative contracts	Derivative contracts	49		—		49		—		Derivative contracts	121		—		121		—

Total Assets	Total Assets	$	6,241	$	6,043	$	198	$	—	Total Assets	$	4,278	$	3,979	$	299	$	—

Liabilities	Liabilities									Liabilities
Derivative contracts	Derivative contracts	$	68	$	—	$	68	$	—	Derivative contracts	$	11	$	—	$	11	$	—
Contingent consideration	Contingent consideration	44		—		—		44		Contingent consideration	227		—		—		227

Total Liabilities	Total Liabilities	$	112	$	—	$	68	$	44	Total Liabilities	$	238	$	—	$	11	$	227


		December 31,		Quoted Prices in Active Markets		Significant Other Observable Inputs		Significant Unobservable Inputs			December 31,		Quoted Prices in Active Markets		Significant Other Observable Inputs		Significant Unobservable Inputs
(In millions)	(In millions)	2019		(Level 1)		(Level 2)		(Level 3)		(In millions)	2020		(Level 1)		(Level 2)		(Level 3)

Assets	Assets									Assets
Cash equivalents	Cash equivalents	$	1,280	$	1,280	$	—	$	—	Cash equivalents	$	8,971	$	8,971	$	—	$	—

Investments in common stock, mutual funds and other similar instruments	Investments in common stock, mutual funds and other similar instruments	19		19		—		—		Investments in common stock, mutual funds and other similar instruments	21		21		—		—
Warrants	Warrants	6		—		6		—		Warrants	7		—		7		—
Insurance contracts	Insurance contracts	131		—		131		—		Insurance contracts	157		—		157		—
Derivative contracts	Derivative contracts	37		—		37		—		Derivative contracts	28		—		28		—

Total Assets	Total Assets	$	1,473	$	1,299	$	174	$	—	Total Assets	$	9,184	$	8,992	$	192	$	—

Liabilities	Liabilities									Liabilities
Derivative contracts	Derivative contracts	$	24	$	—	$	24	$	—	Derivative contracts	$	132	$	—	$	132	$	—
Contingent consideration	Contingent consideration	55		—		—		55		Contingent consideration	70		—		—		70

Total Liabilities	Total Liabilities	$	79	$	—	$	24	$	55	Total Liabilities	$	202	$	—	$	132	$	70

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 ~~determines~~initially measures the fair value of acquisition-related contingent consideration based on ~~the probability-weighted~~amounts expected to be transferred (probability-weighted) discounted ~~cash flows associated with such future payments.~~to present value. Changes to the

~~THERMO FISHER SCIENTIFIC INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

fair value of contingent consideration are recorded in selling, general and administrative expense. The following table provides

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

a rollforward of the fair value, as determined by level 3 inputs (such as likelihood of achieving production or revenue milestones), of the contingent consideration.


		Three Months Ended				Nine Months Ended					Three Months Ended
		September 26,		September 28,		September 26,		September 28,				April 3,		March 28,
(In millions)	(In millions)	2020		2019		2020		2019		(In millions)		2021		2020

Contingent Consideration	Contingent Consideration									Contingent Consideration
Beginning Balance	Beginning Balance	$	53	$	58	$	55	$	37	Beginning Balance		$	70	$	55
Acquisitions (including assumed balances)	Acquisitions (including assumed balances)	—		—		—		24		Acquisitions (including assumed balances)		162		—
Payments	Payments	(1)		(3)		(3)		(3)		Payments		(7)		(1)
Change in fair value included in earnings		(8)		—		(8)		(3)

Changes in fair value included in earnings										Changes in fair value included in earnings		2		—
Ending Balance	Ending Balance	$	44	$	55	$	44	$	55	Ending Balance		$	227	$	54

Derivative Contracts

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


		September 26,		December 31,			April 3,		December 31,
(In millions)	(In millions)	2020		2019		(In millions)	2021		2020

Notional Amount	Notional Amount					Notional Amount
Interest rate swaps - fair value hedges (described in Note 7)		$	1,000	$	1,000
Interest rate swaps - fair value hedges						Interest rate swaps - fair value hedges	$	—	$	1,000

Cross-currency interest rate swaps - designated as net investment hedges	Cross-currency interest rate swaps - designated as net investment hedges	900		900		Cross-currency interest rate swaps - designated as net investment hedges	900		900
Cross-currency interest rate swaps		1,000		—

Currency exchange contracts	Currency exchange contracts	3,893		2,846		Currency exchange contracts	4,517		5,206

While certain derivatives are subject to netting arrangements with counterparties, the company does not offset derivative assets and liabilities within the ~~consolidated~~ balance sheet. The following tables present the fair value of derivative instruments in the ~~consolidated~~accompanying balance sheet and statement of income.


		Fair Value – Assets				Fair Value – Liabilities					Fair Value – Assets				Fair Value – Liabilities
		September 26,		December 31,		September 26,		December 31,			April 3,		December 31,		April 3,		December 31,
(In millions)	(In millions)	2020		2019		2020		2019		(In millions)	2021		2020		2021		2020

Derivatives Designated as Hedging Instruments	Derivatives Designated as Hedging Instruments									Derivatives Designated as Hedging Instruments
Interest rate swaps (a)	Interest rate swaps (a)	$	30	$	—	$	—	$	13	Interest rate swaps (a)	$	—	$	25	$	—	$	—
Cross-currency interest rate swaps (a)	Cross-currency interest rate swaps (a)	9		33		5		—		Cross-currency interest rate swaps (a)	2		—		9		46
Derivatives Not Designated as Hedging Instruments	Derivatives Not Designated as Hedging Instruments									Derivatives Not Designated as Hedging Instruments
Currency exchange contracts (b)	Currency exchange contracts (b)	10		4		54		11		Currency exchange contracts (b)	119		3		2		86
Cross-currency interest rate swaps (a)		—		—		9		—

Total Derivatives	Total Derivatives	$	49	$	37	$	68	$	24	Total Derivatives	$	121	$	28	$	11	$	132

(a) The fair values of the interest rate swaps and cross-currency interest rate swaps are included in the ~~consolidated~~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 ~~consolidated~~accompanying balance sheet under the captions other current assets or other accrued expenses.

~~THERMO FISHER SCIENTIFIC INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

The following amounts related to cumulative basis adjustments for fair value hedges were included in the ~~consolidated~~accompanying balance sheet under the caption long-term obligations:


		Carrying Amount of the Hedged Liability				Cumulative Amount of Fair Value Hedging Adjustment - Increase (Decrease) Included in Carrying Amount of Liability					Carrying Amount of the Hedged Liability				Cumulative Amount of Fair Value Hedging Adjustment - Increase (Decrease) Included in Carrying Amount of Liability
		September 26,		December 31,		September 26,		December 31,			April 3,		December 31,		April 3,		December 31,
(In millions)	(In millions)	2020		2019		2020		2019		(In millions)	2021		2020		2021		2020

Long-term Obligations	Long-term Obligations	$	1,024	$	980	$	30	$	(13)	Long-term Obligations	$	—	$	1,020	$	—	$	25

Gain (Loss) Recognized
Three Months Ended Nine Months Ended
September 26, September 28, September 26, September 28,
(In millions) 2020 2019 2020 2019
Fair Value Hedging Relationships
Interest rate swaps
Hedged long-term obligations - included in other expense, net $ — $ (14) $ (43) $ (95)
Derivatives designated as hedging instruments - included in other expense, net — 15 43 98
Derivatives Designated as Cash Flow Hedges
Interest rate swaps
Included in unrealized losses on hedging instruments within other comprehensive items — (50) (85) (50)
Amount reclassified from accumulated other comprehensive items to other expense, net (8) (3) (14) (10)
Financial Instruments Designated as Net Investment Hedges
Foreign currency-denominated debt
Included in currency translation adjustment within other comprehensive items (295) 261 (276) 320
Cross-currency interest rate swaps
Included in currency translation adjustment within other comprehensive items (30) 72 (30) 79
Included in other expense, net 2 13 9 41
Derivatives Not Designated as Hedging Instruments
Currency exchange contracts
Included in cost of product revenues (2) 1 (2) —
Included in other expense, net 51 43 7 49
Cross-currency interest rate swaps
Included in other expense, net 1 — (9) —

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)


		Gain (Loss) Recognized
	Three Months Ended
		April 3,		March 28,
(In millions)		2021		2020
Fair Value Hedging Relationships
Interest rate swaps
Hedged long-term obligations - included in other income (expense)		$	25	$	(36)
Derivatives designated as hedging instruments - included in other income (expense)		(3)		36
Derivatives Designated as Cash Flow Hedges
Interest rate swaps
Included in unrealized losses on hedging instruments within other comprehensive items		—		(81)
Amount reclassified from accumulated other comprehensive items to other expense		(17)		(2)
Financial Instruments Designated as Net Investment Hedges
Foreign currency-denominated debt
Included in currency translation adjustment within other comprehensive items		466		83
Cross-currency interest rate swaps
Included in currency translation adjustment within other comprehensive items		38		9
Included in other income (expense)		2		5
Derivatives Not Designated as Hedging Instruments
Currency exchange contracts
Included in cost of product revenues		12		3
Included in other income (expense)		183		40
Cross-currency interest rate swaps
Included in other income (expense)		—		(10)

Gains and losses recognized on currency exchange contracts and the interest rate swaps designated as fair value hedges are included in the ~~consolidated~~accompanying statement of income together with the corresponding, offsetting losses and gains on the underlying hedged transactions.

The company ~~also~~ uses foreign currency-denominated debt and cross-currency interest rate swaps to partially hedge its net investments in foreign operations against adverse movements in exchange rates. The majority of the company’s euro-denominated senior notes and ~~certain of~~ 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 contract fair value changes on the cross-currency

~~THERMO FISHER SCIENTIFIC INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

interest rate swaps, excluding interest accruals, are included in currency translation adjustment within other comprehensive items and shareholders’ equity.

The company also had $1 billion notional value of cross currency swaps which the company terminated in October 2020. These swaps were entered into in anticipation of using U.S. dollars to partially finance the euro purchase price of the terminated QIAGEN acquisition (Note 2). Gains and losses associated with these swaps were recorded in other expense, net.

See Note 1 to the consolidated financial statements for ~~2019~~2020 included in the company's Annual Report on Form 10-K and Note 7 herein for additional information on the company's risk management objectives and strategies.

~~Cash Flow Hedge Arrangements~~

In March 2020, the company entered into interest rate swap arrangements to mitigate the risk of interest rates rising prior to completion of future debt offerings. Based on the company's conclusion that the debt offerings are probable, the swaps hedge the cash flow risk for each of the interest payments on the planned fixed-rate debt issues. One of these hedges was terminated in March 2020, in connection with the debt offering completed in that month. The remaining hedges were terminated in July 2020. The aggregate fair value of the terminated hedges, net of tax, has been classified as a reduction to accumulated other comprehensive items and will be amortized to interest expense over the term of the related debt issuances. The company had cash outlays aggregating $85 million in 2020 associated with termination of the arrangements, included in other financing activities, net, in the accompanying statement of cash flows.

Fair Value of Other Financial Instruments

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


		September 26, 2020				December 31, 2019					April 3, 2021				December 31, 2020
		Carrying		Fair		Carrying		Fair			Carrying		Fair		Carrying		Fair
(In millions)	(In millions)	Value		Value		Value		Value		(In millions)	Value		Value		Value		Value

Debt Obligations:
Senior notes	Senior notes	$	21,085	$	23,415	$	17,736	$	18,650	Senior notes	$	18,628	$	20,530	$	21,723	$	24,653

Other	Other	8		8		16		16		Other	17		17		12		12
											$	18,645	$	20,547	$	21,735	$	24,665
		$	21,093	$	23,423	$	17,752	$	18,666

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

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Note 11. Supplemental Cash Flow Information

Nine Months Ended
September 26, September 28,
(In millions) 2020 2019
Non-cash Investing and Financing Activities
Declared but unpaid dividends $ 88 $ 77
Issuance of stock upon vesting of restricted stock units 209 179

~~THERMO FISHER SCIENTIFIC INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~


	Three Months Ended
	April 3,		March 28,
(In millions)	2021		2020
Non-cash Investing and Financing Activities
Acquired but unpaid property, plant and equipment	$	181	$	83
Fair value of acquisition contingent consideration	162		—
Declared but unpaid dividends	104		88
Issuance of stock upon vesting of restricted stock units	88		73

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


		September 26,		December 31,			April 3,		December 31,
(In millions)	(In millions)	2020		2019		(In millions)	2021		2020

Cash and Cash Equivalents	Cash and Cash Equivalents	$	7,540	$	2,399	Cash and Cash Equivalents	$	5,583	$	10,325
Restricted Cash Included in Other Current Assets	Restricted Cash Included in Other Current Assets	29		21		Restricted Cash Included in Other Current Assets	19		10
Restricted Cash Included in Other Assets	Restricted Cash Included in Other Assets	1		2		Restricted Cash Included in Other Assets	1		1

Cash, Cash Equivalents and Restricted Cash	Cash, Cash Equivalents and Restricted Cash	$	7,570	$	2,422	Cash, Cash Equivalents and Restricted Cash	$	5,603	$	10,336

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

Note 12. Restructuring and Other Costs ~~(Income), Net~~

In the first ~~nine~~three months of ~~2020~~2021 the company recorded restructuring and other costs primarily associated with charges for compensation contractually due to employees of acquired businesses at the date of acquisition, third-party transaction/integration costs ~~(including reimbursement thereof)~~ related to ~~recent/terminated~~recent acquisitions, ~~continuing~~and charges for ~~headcount reductions and facility consolidations in an effort to streamline operations, and, to a lesser extent, impairment~~the sale of ~~acquired technology in development and non-cash charges for writedowns~~inventories revalued at the date of ~~fixed assets to estimated disposal value in connection with the consolidation of commercial production operations in the U.S.~~acquisition. In the first ~~nine~~three months of ~~2020,~~2021, severance actions associated with facility consolidations and cost reduction measures affected less than 1%0.1% of the company’s workforce.

As of ~~October 30, 2020,~~May 7, 2021, the company has identified restructuring actions that will result in additional charges of approximately ~~$45~~$40 million, primarily in ~~2020 and~~ 2021, and expects to identify additional actions during ~~2020~~2021 which will be recorded when specified criteria are met, such as communication of benefit arrangements or when the costs have been incurred.

During the ~~third quarter~~first three months of ~~2020,~~2021, the company recorded net restructuring and other costs (income) by segment as follows:

(In millions) Cost of
Revenues Selling,
General and
Administrative
Expenses Restructuring
and Other
Costs, Net Total
Life Sciences Solutions $ — $ (8) $ 10 $ 2
Analytical Instruments — — 3 3
Specialty Diagnostics — (50) 2 (48)
Laboratory Products and Services 1 — 1 2
Corporate — 3 1 4
$ 1 $ (55) $ 17 $ (37)

~~During the first nine months of 2020, the company recorded net restructuring and other costs (income) by segment as follows:~~


(In millions)	(In millions)	Cost of Revenues		Selling, General and Administrative Expenses		Restructuring and Other Costs, Net		Total		(In millions)	Cost of Revenues		Selling, General and Administrative Expenses		Restructuring and Other Costs		Total

Life Sciences Solutions	Life Sciences Solutions	$	—	$	(8)	$	11	$	3	Life Sciences Solutions	$	8	$	10	$	13	$	31
Analytical Instruments	Analytical Instruments	—		—		22		22		Analytical Instruments	—		—		3		3
Specialty Diagnostics	Specialty Diagnostics	—		(4)		8		4		Specialty Diagnostics	—		(2)		—		(2)
Laboratory Products and Services	Laboratory Products and Services	5		2		20		27		Laboratory Products and Services	—		8		(3)		5
Corporate	Corporate	—		3		6		9		Corporate	—		—		1		1
											$	8	$	16	$	14	$	38
		$	5	$	(7)	$	67	$	65

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

The principal components of net restructuring and other costs (income) by segment are as follows:

Life Sciences Solutions

In the first ~~nine~~three months of ~~2020,~~2021, the Life Sciences Solutions segment recorded ~~$3 million of net restructuring and other charges. The segment recorded $11~~$13 million of restructuring and other costs, ~~net,~~ primarily charges for ~~impairment~~compensation contractually due to employees of acquired ~~technology in development.~~businesses at the date of acquisition. The segment recorded $10 million of charges to selling, general, and administrative expense, principally third-party transaction costs related to recent acquisitions. The segment also recorded $8 million of ~~credits~~charges to ~~selling, general,~~cost of revenues for the sale of inventories revalued at the date of acquisition.

Laboratory Products and ~~administrative expense for changes in estimates of contingent acquisition consideration.~~

~~Analytical Instruments~~Services

In the first ~~nine~~three months of ~~2020,~~2021, the ~~Analytical Instruments~~Laboratory Products and Services segment recorded ~~$22~~$5 million of net restructuring and other charges, primarily for ~~employee severance associated with headcount reductions in Europe, China, and the U.S., and,~~third-party transaction/integration costs related to ~~a lesser extent, abandoned facility costs.~~

~~Specialty Diagnostics~~

In the first nine months of 2020, the Specialty Diagnostics segment recorded $4 million of net restructuring and other charges, principally charges for third-party transaction costs (including reimbursement thereof) for a terminated acquisition.

~~Laboratory Products and Services~~

In the first nine months of 2020, the Laboratory Products and Services segment recorded $27 million of net restructuring and other charges, primarily for employee severance at businesses streamlining operations and for writedowns of fixed assets to estimated disposal value in connection with the consolidation of commercial production operations in the U.S.

~~Corporate~~

In the first nine months of 2020, the company recorded $9 million of net restructuring and other costs for severance at its corporate operations and, to a lesser extent, charges to selling, general, and administrative expense for product liability litigation.recent acquisitions.

The following table summarizes the changes in the company’s accrued restructuring balance. Other amounts reported as restructuring and other costs ~~net,~~ 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, ~~2019~~2020	$	34 21
Net restructuring charges incurred in 2021 (b)	3
Payments	(9)

~~Net restructuring charges incurred in 2020 (b)~~	43
~~Payments~~	~~(46)~~
~~Currency translation~~	1
Balance at ~~September 26, 2020~~April 3, 2021	$	3215

(a)The movements in the restructuring liability principally consist of severance and other costs such as relocation and moving expenses associated with facility consolidations, as well as employee retention costs which are accrued ratably over the period through which employees must work to qualify for a payment.

(b)Excludes ~~$24~~$11 million of net charges, principally for ~~impairment~~compensation contractually due and paid to employees of acquired ~~technology in development, fixed asset writedowns and costs associated with environmental remediation~~businesses at ~~abandoned / previously owned facilities.~~the date of acquisition.

The company expects to pay accrued restructuring costs primarily through 2021.

2421

THERMO FISHER SCIENTIFIC INC.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-looking statements, within the meaning of Section 21E of the Securities Exchange Act of 1934 are made throughout this Management’s Discussion and Analysis of Financial Condition and Results of Operations. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements, including without limitation statements regarding: projections of revenues, expenses, earnings, margins, tax rates, tax provisions, cash flows, pension and benefit obligations and funding requirements, our liquidity position; cost reductions, restructuring activities, new product and service developments, competitive strengths or market position, acquisitions or divestitures; growth, declines and other trends in markets we sell into; new or modified laws, regulations and accounting pronouncements; outstanding claims, legal proceedings, tax audits and assessments and other contingent liabilities; foreign currency exchange rates and fluctuations in those rates; general economic and capital markets conditions; the timing of any of the foregoing; assumptions underlying any of the foregoing; the expected impact of the COVID-19 pandemic on the company’s business; and any other statements that address events or developments that Thermo Fisher intends or believes will or may occur in the future. Without limiting the foregoing, the words “believes,” “anticipates,” “plans,” “expects,” “seeks,” “estimates,” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements are accompanied by such words. While the company may elect to update forward-looking statements in the future, it specifically disclaims any obligation to do so, even if the company’s estimates change, and readers should not rely on those forward-looking statements as representing the company’s views as of any date subsequent to the date of the filing of this Quarterly Report.

Important factors that could cause actual results to differ materially from those indicated by such forward-looking statements are set forth under the caption “Risk Factors” in the company’s Annual Report on Form 10-K for the year ended December 31, ~~2019 (which is on file with the SEC), as updated i) by the company’s~~ ~~Quarterly Report on Form 10-Q~~ ~~for the quarter ended June 27,~~ 2020 (which is on file with the SEC)~~, and ii)~~ as updated under the heading “Risk Factors” in Part II, Item 1A of this report on Form 10-Q. Important factors that could cause actual results to differ materially from those indicated by forward-looking statements include risks and uncertainties relating to: the duration and severity of the COVID-19 pandemic; the need to develop new products and adapt to significant technological change; implementation of strategies for improving growth; general economic conditions and related uncertainties, dependence on customers' capital spending policies and government funding policies; the effect of economic and political conditions and exchange rate fluctuations on international operations; use and protection of intellectual property; the effect of changes in governmental regulations; any natural disaster, public health crisis or other catastrophic event; and the effect of laws and regulations governing government contracts, as well as the possibility that expected benefits related to recent or pending acquisitions, including our pending acquisition of PPD, Inc., may not materialize as expected.

Overview

The company develops, manufactures and sells a broad range of products that are sold worldwide. The company expands the product lines and services it offers by developing and commercializing its own technologies and by making strategic acquisitions of complementary businesses. The company’s operations fall into four segments (Note 4): Life Sciences Solutions, Analytical Instruments, Specialty Diagnostics and Laboratory Products and Services.

The company ~~has~~ mobilized in early 2020 to support the ~~global novel strain of coronavirus (COVID-19)~~COVID-19 pandemic response with products and services that help analyze, diagnose and protect from the virus. However, ~~as the pandemic spread from China to countries worldwide,~~ the company saw a significant reduction in customer activity in several businesses by late March ~~and continuing into the fourth quarter of~~ 2020 that ~~will~~ materially adversely ~~affect~~affected primarily the 2020 results of the Analytical Instruments segment and, to a lesser extent, some businesses within the company’s other three ~~segments, at least through the fourth quarter of 2020.~~segments. The extent and duration of the negative impacts continuing into the remainder of 2021 are uncertain and dependent in part on ~~customers continuing~~the success of global efforts to ~~return to work~~control the pandemic and economic activity ramping up. The company believes the impacted businesses’ long-term prospects remain excellent given the company’s attractive markets served, its industry-leading position and proven growth strategy. Several of the company’s businesses have had a significant increase in revenues due to sales of product and services addressing diagnosis and treatment of COVID-19, including test kits and, to a lesser extent, products and services for therapy and vaccine development and manufacturing. While these positive impacts are expected to continue ~~into the fourth quarter of 2020,~~through 2021, the duration and extent of future revenues from such sales are uncertain and dependent primarily on customer testing as well as therapy and vaccine demand.

Sales in the first quarter of 2021 were $9.91 billion, an increase of $3.68 billion from the first quarter of 2020. Excluding the effects of currency translation and acquisitions, revenues increased $3.31 billion (53%).

In the first quarter of 2021, total company operating income and operating income margin were $3.05 billion and 30.8%, respectively, compared with $0.91 billion and 14.5%, respectively, in 2020.

2522

THERMO FISHER SCIENTIFIC INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

Overview (continued)

~~Recent Acquisitions~~Net income increased to $2.34 billion in the first quarter of 2021 from $0.79 billion in the first quarter of 2020, primarily due to an increase in operating income, offset in part by an increase in the income tax provision and ~~Divestitures~~$197 million of losses on the early extinguishment of debt.

~~The~~During the first three months of 2021, the company’s ~~strategy is to augment internal growth at existing businesses~~cash flow from operations totaled $1.98 billion compared with ~~complementary acquisitions. The company’s principal recent acquisitions and divestitures are described below.~~$0.36 billion for 2020.

On ~~April 30, 2019,~~January 15, 2021, the company acquired, within the Laboratory Products and Services segment, ~~Brammer Bio~~the Belgium-based European viral vector manufacturing business of Groupe Novasep SAS for approximately ~~$1.67 billion~~$834 million in ~~cash. Brammer Bio is a leading~~net cash consideration. The European viral vector ~~contract development~~manufacturing business provides manufacturing services for vaccines and ~~manufacturing organization for gene~~therapies to biotechnology companies and ~~cell therapies.~~large biopharma customers. The acquisition expands the segment’s ~~contract manufacturing capabilities. Brammer Bio reported revenues~~capabilities for cell and gene vaccines and therapies.

On February 25, 2021, the company acquired, within the Life Sciences Solutions segment, Mesa Biotech, Inc., a U.S.-based molecular diagnostic company, for approximately $406 million in net cash consideration and contingent consideration with an initial fair value of $65 million due upon the completion of certain milestones. Mesa Biotech has developed and commercialized a PCR based rapid point-of-care testing platform available for detecting infectious diseases including COVID-19. The acquisition enables the company to accelerate the availability of reliable and accurate advanced molecular diagnostics at the point of care.

On April 15, 2021, the company entered into a definitive agreement under which it will acquire PPD, Inc. for $47.50 per share for a total cash purchase price of $17.4 billion plus the assumption of approximately ~~$140 million in 2018.~~

~~On June 28, 2019,~~$3.5 billion of net debt. PPD provides a broad range of clinical research and specialized laboratory services to enable customers to accelerate innovation and increase drug development productivity. In 2020, PPD generated revenue of $4.7 billion.. Upon close of the ~~company sold its Anatomical Pathology business to PHC Holdings Corporation for $1.13 billion, net of cash divested. The business was~~transaction, PPD will become part of the ~~Specialty Diagnostics segment. Revenues~~Laboratory Products and Services Segment. The transaction, which is expected to be completed by the end of 2021, is subject to the satisfaction of customary closing conditions, including the receipt of applicable regulatory approvals. Shareholders holding in ~~2019, through~~aggregate approximately 60% of the ~~date~~issued and outstanding shares of ~~sale,~~common stock of PPD have approved the transaction by written consent. No further action by other PPD shareholders is required to approve the transaction. The company intends to finance the purchase price with cash on hand and the ~~full year 2018~~net proceeds from issuance of debt. The company is currently evaluating future debt financings and the ~~business sold were approximately $115 million and $238 million, respectively, net~~timing of ~~retained sales through the company's healthcare~~such transactions is subject to market and ~~research and safety market channel businesses.~~other conditions. The company also has available, but it does not currently expect to utilize, up to $9.5 billion of committed bridge financing.

~~Overview~~Critical Accounting Policies and Estimates

Management’s Discussion and Analysis and Note 1 to the Consolidated Financial Statements of the company’s Annual Report on Form 10-K for 2020, describe the significant accounting estimates and policies used in preparation of the consolidated financial statements. There have been no significant changes in the company's critical accounting policies during the first three months of 2021.

Results of Operations

First Quarter 2021 Compared With First Quarter 2020


	Three Months Ended
(In millions)	April 3, 2021		March 28, 2020		Total Change		Currency Translation		Acquisitions/ Divestitures		Operations
Revenues
Life Sciences Solutions	$	4,203	$	1,774	$	2,429	$	101	$	32	$	2,296
Analytical Instruments	1,387		1,101		286		46		—		240
Specialty Diagnostics	1,615		958		657		32		—		625
Laboratory Products and Services	3,597		2,730		867		92		76		699
Eliminations	(896)		(333)		(563)		(8)		—		(555)
Consolidated Revenues	$	9,906	$	6,230	$	3,676	$	263	$	108	$	3,305

THERMO FISHER SCIENTIFIC INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

Results of Operations ~~and Liquidity~~(continued)

Three Months Ended Nine Months Ended
September 26, September 28, September 26, September 28,
(Dollars in millions) 2020 2019 2020 2019
Revenues
Life Sciences Solutions $ 3,424 40.2 % $ 1,701 27.1 % $ 7,800 36.0 % $ 5,018 26.8 %
Analytical Instruments 1,336 15.7 % 1,358 21.7 % 3,488 16.1 % 4,004 21.4 %
Specialty Diagnostics 1,430 16.8 % 879 14.0 % 3,376 15.6 % 2,779 14.9 %
Laboratory Products and Services 3,112 36.5 % 2,619 41.8 % 8,629 39.8 % 7,765 41.5 %
Eliminations (781) (9.2) % (285) (4.6) % (1,625) (7.5) % (853) (4.6) %
$ 8,521 100 % $ 6,272 100 % $ 21,668 100 % $ 18,713 100 %

Sales in the ~~third~~first quarter of ~~2020 were $8.52 billion, an increase of $2.25~~2021 increased $3.68 billion from ~~2019. The favorable effects of currency translation resulted in an increase in revenues of $80 million in~~ the ~~third~~first quarter of 2020. ~~Sales increased $32 million due to an acquisition.~~ Aside from the effects of currency translation and acquisitions, revenues increased ~~$2.14~~$3.31 billion ~~(34%~~(53%) primarily due to increased ~~demand~~demand. The first quarter of 2021 had three extra selling days in the quarter compared to the ~~2019~~2020 quarter. The company's fourth quarter of 2021 will have four fewer selling days than the corresponding 2020 quarter. Sales of products that address COVID-19 testing and treatment increased $2.68 billion to $2.85 billion in the first quarter of 2021. Sales were particularly strong in diagnostic and healthcare markets, primarily due to demand for products supporting customers diagnosing the COVID-19 virus, as well as to customers in pharma and biotech markets where demand was strong for products and services and pandemic-related demand for ~~therapies~~vaccines and ~~vaccines~~therapies also contributed to growth. Sales to academic and government customers ~~grew modestly. Sales to~~and customers in industrial markets ~~decreased~~were strong primarily due to ~~lower demand from weakened economic conditions related to COVID-19.~~robust customer activity. Sales growth was strong in each of the company’s primary geographic areas during the ~~third~~first quarter of ~~2020.~~2021.

In the ~~third~~first quarter of ~~2020,~~2021, total company operating income and operating income margin were ~~$2.43~~$3.05 billion and ~~28.5%~~30.8%, respectively, compared with ~~$0.95~~$0.91 billion and ~~15.1%~~14.5%, respectively, in ~~2019.~~2020. The increase in operating income was primarily due to profit on higher sales and, to a lesser extent, sales mix, offset in part by strategic growth investments in ~~2020.~~2021 to support the company’s near and long-term growth. The company’s references to strategic growth investments generally refer to targeted spending for enhancing commercial capabilities, including expansion of geographic sales reach and e-commerce platforms, marketing initiatives, expanded service and operational infrastructure, focused research and development projects and other expenditures to enhance the customer experience, as well as incentive compensation and recognition for employees. The company’s references throughout this discussion to productivity improvements generally refer to improved cost efficiencies from its Practical Process Improvement (PPI) business system including reduced costs resulting from global sourcing initiatives, a lower cost structure following restructuring actions, including headcount reductions and consolidation of facilities, and low cost region manufacturing. Productivity improvements are calculated net of inflationary cost increases.

~~The company's effective tax rate was 14.2% for~~In the ~~third~~first quarter of ~~2020. The company expects its effective tax rate for all of 2020 will be between 10% and 12% based on currently forecasted rates of profitability in the countries in which~~2021, the company ~~conducts business~~recorded restructuring and ~~expected generation~~other costs of ~~foreign tax credits. Due primarily to the non-deductibility of intangible asset amortization for tax purposes, the company’s cash payments for income taxes are higher than its income tax expense for~~

~~THERMO FISHER SCIENTIFIC INC.~~

~~MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION~~

~~AND RESULTS OF OPERATIONS~~

~~Overview of Results of Operations and Liquidity (continued)~~

~~financial reporting purposes and are expected to total $1.20 to $1.23 billion in 2020.~~$38 million. In the ~~third quarter of 2019, the company’s effective tax rate was 7.6%.~~

Net income increased to $1.93 billion in the third quarter of 2020 from $0.76 billion in the third quarter of 2019, primarily due to the increase in operating income in the 2020 period (discussed above), offset in part by the increase in the income tax provision.

~~During the~~ first nine months of 2020, the company’s cash flow from operations totaled $4.95 billion compared with $3.06 billion for 2019. The increase primarily resulted from higher cash provided by income and, to a lesser extent, lower investment in working capital in 2020.

As of September 26, 2020, the company’s short-term debt totaled $2 million. The company has a revolving credit facility with a bank group that provides up to $2.5 billion of unsecured multi-currency revolving credit (Note 7). If the company borrows under this facility, it intends to leave undrawn an amount equivalent to outstanding commercial paper to provide a source of funds in the event that commercial paper markets are not available. As of September 26, 2020, no borrowings were outstanding under the company’s revolving credit facility, although available capacity was reduced by approximately $66 million as a result of outstanding letters of credit.

The company believes that its existing cash and cash equivalents of $7.54 billion as of September 26, 2020 and its future cash flow from operations together with available borrowing capacity under its revolving credit agreement will be sufficient to meet the cash requirements of its existing businesses for the foreseeable future, including at least the next 24 months.

~~Critical Accounting Policies and Estimates~~

The company’s discussion and analysis of its financial condition and results of operations is based upon its financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent liabilities. On an on-going basis, management evaluates its estimates, including those related to intangible assets and goodwill, income taxes and contingencies and litigation. Management believes the most complex and sensitive judgments, because of their significance to the consolidated financial statements, result primarily from the need to make estimates about the effects of matters that are inherently uncertain. Management bases its estimates on historical experience, current market and economic conditions and other assumptions that management believes are reasonable. The results of these estimates form the basis for judgments about the carrying value of assets and liabilities where the values are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Management’s Discussion and Analysis and Note 1 to the Consolidated Financial Statements of the company’s Form 10-K for 2019, describe the significant accounting estimates and policies used in preparation of the consolidated financial statements. There have been no significant changes in the company's critical accounting policies during the first nine months of 2020.

~~THERMO FISHER SCIENTIFIC INC.~~

~~MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION~~

~~AND RESULTS OF OPERATIONS~~

~~Results of Operations~~

~~Third Quarter 2020 Compared With Third Quarter 2019~~

Three Months Ended
(In millions) September 26,
2020 September 28,
2019 Total
Change Currency
Translation Acquisitions/ Divestitures Operations
Revenues
Life Sciences Solutions $ 3,424 $ 1,701 $ 1,723 $ 20 $ — $ 1,703
Analytical Instruments 1,336 1,358 (22) 19 — (41)
Specialty Diagnostics 1,430 879 551 10 — 541
Laboratory Products and Services 3,112 2,619 493 33 32 428
Eliminations (781) (285) (496) (2) — (494)
Consolidated Revenues $ 8,521 $ 6,272 $ 2,249 $ 80 $ 32 $ 2,137

Sales in the third quarter of 2020 were $8.52 billion, an increase of $2.25 billion from the third quarter of 2019. The favorable effects of currency translation resulted in an increase in revenues of $80 million in 2020. Sales increased $32 million due to an acquisition. Aside from the effects of currency translation and acquisitions, revenues increased $2.14 billion (34%) primarily due to increased demand in the quarter compared to the 2019 quarter. Sales were particularly strong in diagnostic and healthcare markets, primarily due to demand for products supporting customers diagnosing the COVID-19 virus, as well as to customers in pharma and biotech markets where demand was strong for products and services and pandemic-related demand for therapies and vaccines also contributed to growth. Sales to academic and government customers grew modestly. Sales to customers in industrial markets decreased primarily due to lower demand from weakened economic conditions related to COVID-19. Sales growth was strong in each of the company’s primary geographic areas during the third quarter of 2020.

In the third quarter of 2020, total company operating income and operating income margin were $2.43 billion and 28.5%, respectively, compared with $0.95 billion and 15.1%, respectively, in 2019. The increase in operating income was primarily due to profit on higher sales and, to a lesser extent, sales mix, offset in part by strategic growth investments in 2020.

~~In the third~~ quarter of 2020, the company recorded restructuring and other ~~income, net,~~costs of $37 million, including $55 million of net credits to selling, general and administrative expenses, principally third-party transaction and integration-related costs (including reimbursement thereof) for recent and terminated acquisitions and changes in estimates of contingent acquisition consideration. In addition, the company recorded $17 million of restructuring and other charges, net, for impairment of acquired technology in development, and, to a lesser extent, employee severance and other costs associated with facility consolidations/abandonments in efforts to streamline operations.$46 million. See Note 12 for restructuring charges expected in future periods.

In the third quarter of 2019, the company recorded restructuring and other costs, net, of $43 million, including $19 million of net charges associated with sales of businesses in prior periods, including post-closing adjustments. The company recorded $5 million of charges to cost of revenues for the sale of inventories revalued at the date of acquisition. The company also recorded $7 million of charges to selling, general and administrative expenses, principally transaction and integration-related costs for recent acquisitions. In addition, the company recorded $12 million of cash restructuring charges, primarily for employee severance and abandoned facilities costs associated with the closure and consolidation of facilities in the U.S. and Europe.

Segment Results

~~The~~Note 4 to the Consolidated Financial Statements of the company’s ~~management evaluates~~Annual Report on Form 10-K for 2020, describes the company’s measurement of segment ~~operating performance using operating income before certain charges/credits~~income. There have been no significant changes in measurement methods used to cost of revenues and selling, general and administrative expenses, principally associated with acquisition-related activities; restructuring and other costs/income including costs arising from facility consolidations such as severance and abandoned lease expense and gains and losses from the sale of real estate and product lines; 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 facilitate comparison of performance for determining compensation (Note 4). Accordingly, the followingdetermine segment ~~data is reported on this basis.~~income.

THERMO FISHER SCIENTIFIC INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

Results of Operations (continued)


		Three Months Ended									Three Months Ended
		September 26,			September 28,						April 3,			March 28,
(Dollars in millions)	(Dollars in millions)	2020			2019			Change		(Dollars in millions)	2021			2020			Change

Revenues	Revenues									Revenues
Life Sciences Solutions	Life Sciences Solutions	$	3,424		$	1,701		101	%	Life Sciences Solutions	$	4,203		$	1,774		137	%
Analytical Instruments	Analytical Instruments	1,336			1,358			(2)	%	Analytical Instruments	1,387			1,101			26	%
Specialty Diagnostics	Specialty Diagnostics	1,430			879			63	%	Specialty Diagnostics	1,615			958			69	%
Laboratory Products and Services	Laboratory Products and Services	3,112			2,619			19	%	Laboratory Products and Services	3,597			2,730			32	%
Eliminations	Eliminations	(781)			(285)			174	%	Eliminations	(896)			(333)			169	%

Consolidated Revenues	Consolidated Revenues	$	8,521		$	6,272		36	%	Consolidated Revenues	$	9,906		$	6,230		59	%

Segment Income	Segment Income									Segment Income
Life Sciences Solutions	Life Sciences Solutions	$	1,879		$	586		221	%	Life Sciences Solutions	$	2,279		$	675		238	%
Analytical Instruments	Analytical Instruments	171			311			(45)	%	Analytical Instruments	272			171			59	%
Specialty Diagnostics	Specialty Diagnostics	398			223			78	%	Specialty Diagnostics	428			236			81	%
Laboratory Products and Services	Laboratory Products and Services	355			303			17	%	Laboratory Products and Services	531			295			80	%

Subtotal Reportable Segments	Subtotal Reportable Segments	2,803			1,423			97	%	Subtotal Reportable Segments	3,510			1,377			155	%

Cost of Revenues Charges, Net		(1)			(5)
Selling, General and Administrative (Credits) Charges, Net		55			(7)
Restructuring and Other Costs, Net		(17)			(31)
Cost of Revenues Charges										Cost of Revenues Charges	(8)			(2)
Selling, General and Administrative Charges										Selling, General and Administrative Charges	(16)			(6)
Restructuring and Other Costs										Restructuring and Other Costs	(14)			(38)
Amortization of Acquisition-related Intangible Assets	Amortization of Acquisition-related Intangible Assets	(414)			(434)					Amortization of Acquisition-related Intangible Assets	(423)			(425)

Consolidated Operating Income	Consolidated Operating Income	$	2,426		$	946		156	%	Consolidated Operating Income	$	3,049		$	906		237	%

Reportable Segments Income Margin	Reportable Segments Income Margin	32.9		%	22.7		%			Reportable Segments Income Margin	35.4		%	22.1		%

Consolidated Operating Income Margin	Consolidated Operating Income Margin	28.5		%	15.1		%			Consolidated Operating Income Margin	30.8		%	14.5		%

Income from the company’s reportable segments increased ~~97%~~155% to ~~$2.80~~$3.51 billion in the ~~third~~first quarter of ~~2020~~2021 due primarily to profit on higher sales and, to a lesser extent, sales mix, offset in part by strategic growth investments.

Life Sciences Solutions


		Three Months Ended									Three Months Ended
		September 26,			September 28,						April 3,			March 28,
(Dollars in millions)	(Dollars in millions)	2020			2019			Change		(Dollars in millions)	2021			2020			Change

Revenues	Revenues	$	3,424		$	1,701		101	%	Revenues	$	4,203		$	1,774		137	%

Operating Income Margin	Operating Income Margin	54.9		%	34.5		%	20.4 pt		Operating Income Margin	54.2		%	38.0		%	16.2 pt

Sales in the Life Sciences Solutions segment increased ~~$1.72 billion to $3.42~~$2.43 billion in the ~~third~~first quarter of ~~2020.~~2021. Sales increased ~~$1.70~~$2.30 billion ~~(100%~~(129%) due to higher revenues at existing ~~businesses.~~businesses and $32 million due to acquisitions. The favorable effects of currency translation resulted in an increase in revenues of ~~$20~~$101 million. The increase in revenues at existing businesses was primarily driven by demand for testing to diagnose COVID-19 with higher sales of genetic sciences products and, to a lesser extent, ~~bioscience~~biosciences products. Sales also grew due to higher demand for bioproduction products.

~~Operating~~The increase in operating income margin ~~was 54.9% in~~for the ~~third quarter of 2020 compared to 34.5% in the third quarter of 2019. The increase~~segment resulted primarily from profit on higher sales and, to a lesser extent, sales mix, offset in part by strategic growth investments.

2925

THERMO FISHER SCIENTIFIC INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

Results of Operations (continued)

Analytical Instruments


		Three Months Ended									Three Months Ended
		September 26,			September 28,						April 3,			March 28,
(Dollars in millions)	(Dollars in millions)	2020			2019			Change		(Dollars in millions)	2021			2020			Change

Revenues	Revenues	$	1,336		$	1,358		(2)	%	Revenues	$	1,387		$	1,101		26	%

Operating Income Margin	Operating Income Margin	12.8		%	23.0		%	-10.2 pt		Operating Income Margin	19.6		%	15.5		%	4.1 pt

Sales in the Analytical Instruments segment ~~decreased $22~~increased $286 million ~~to $1.34 billion~~ in the ~~third~~first quarter of 2020. Sales decreased $41 million (-3%) due to lower revenues at existing businesses. The favorable effects of currency translation resulted in an increase in revenues of $19 million. The decrease in revenues at existing businesses was primarily the result of weakened economic conditions due to COVID-19 and lower sales to academic customers due to pandemic-related conditions. The contraction in sales to these customers improved significantly from the decrease reported in the second quarter of 2020.

Operating income margin was 12.8% in the third quarter of 2020 compared to 23.0% in the third quarter of 2019. The decrease was primarily due to a $108 million charge related to a long-term supply contract (discussed in Note 8) and, to a lesser extent, sales mix and strategic growth investments, offset in part by productivity improvements.

~~Specialty Diagnostics~~

Three Months Ended
September 26, September 28,
(Dollars in millions) 2020 2019 Change
Revenues $ 1,430 $ 879 63 %
Operating Income Margin 27.9 % 25.3 % 2.6 pt

~~Sales in the Specialty Diagnostics segment increased $551 million to $1.43 billion in the third quarter of 2020.~~2021. Sales increased ~~$541~~$240 million ~~(62%~~(22%) due to higher revenues at existing businesses. The favorable effects of currency translation resulted in an increase in revenues of ~~$10~~$46 million. The increase in revenues at existing businesses was due to increased demand for products sold by each of the segment’s primary businesses with particular strength in chromatography and mass spectrometry instruments.

The increase in operating income margin for the segment was primarily due to profit on higher sales and, to a lesser extent, productivity improvements, offset in part by sales mix and strategic growth investments.

Specialty Diagnostics


	Three Months Ended
	April 3,			March 28,
(Dollars in millions)	2021			2020			Change
Revenues	$	1,615		$	958		69	%

Operating Income Margin	26.5		%	24.7		%	1.8 pt

Sales in the Specialty Diagnostics segment increased $657 million in the first quarter of 2021. Sales increased $625 million (65%) due to higher revenues at existing businesses. The favorable effects of currency translation resulted in an increase in revenues of $32 million. The increase in revenues at existing businesses was due to higher demand primarily driven by products addressing treatment of COVID-19, with particular strength in sales of products sold through the segment's healthcare market channel business, and to a lesser extent, microbiology and clinical diagnostics products.

~~Operating~~The increase in operating income margin ~~was 27.9% in~~for the ~~third quarter of 2020 and 25.3% in the third quarter of 2019. The increase~~segment was primarily due to profit on higher sales, offset in part by sales mix and, to a lesser extent, strategic growth investments.

Laboratory Products and Services


		Three Months Ended									Three Months Ended
		September 26,			September 28,						April 3,			March 28,
(Dollars in millions)	(Dollars in millions)	2020			2019			Change		(Dollars in millions)	2021			2020			Change

Revenues	Revenues	$	3,112		$	2,619		19	%	Revenues	$	3,597		$	2,730		32	%

Operating Income Margin	Operating Income Margin	11.4		%	11.6		%	-0.2 pt		Operating Income Margin	14.8		%	10.8		%	4.0 pt

Sales in the Laboratory Products and Services segment increased ~~$493~~$867 million ~~to $3.11 billion~~ in the ~~third~~first quarter of ~~2020.~~2021. Sales increased ~~$428~~$699 million ~~(16%~~(26%) due to higher revenues at existing businesses and ~~$32~~$76 million due to an acquisition. The favorable effects of currency translation resulted in an increase in revenues of ~~$33~~$92 million. The increase in revenues at existing businesses was primarily due to increased ~~sales~~demand in each of the ~~segment's research and safety market channel business, pharma services business and laboratory products business.~~segment’s principal businesses.

~~Operating~~The increase in operating income margin ~~was 11.4% in~~for the ~~third quarter of 2020 and 11.6% in the third quarter of 2019. The decrease~~segment was primarily due to ~~sales mix and strategic growth investments, offset in part by~~ profit on higher sales and, to a lesser extent, productivity ~~improvements.~~improvements, offset in part by strategic growth investments and, to a lesser extent, sales mix.

Other Income/Expense

The company reported other expense of $183 million in the first quarter of 2021 compared to other income of $12 million in the first quarter of 2020. In 2021, other expense includes $197 million of losses on the early extinguishment of debt.

Provision for Income Taxes

The company's effective tax rate was 15.1% for the first quarter of 2021. The company expects its effective tax rate for all of 2021 will be between 11% and 13% based on currently forecasted rates of profitability in the countries in which the company

3026

THERMO FISHER SCIENTIFIC INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

Results of Operations (continued)

~~Other Expense, Net~~

The company reported other expense, net of $39 million in the third quarter of 2020 compared to $12 million in the third quarter of 2019. In 2020, other expense, net includes $37 million of costs for the terminated QIAGEN acquisition, primarily for amortization of loan commitment fees. In 2019, other expense, net includes $42 million of losses on the early extinguishment of debt.

~~Provision for Income Taxes~~

The company's effective tax rate was 14.2% for the third quarter of 2020. The company expects its effective tax rate for all of 2020 will be between 10% and 12% based on currently forecasted rates of profitability in the countries in which the company conducts business and expected generation of foreign tax credits. Due primarily to the non-deductibility of intangible asset amortization for tax purposes, the company’s cash payments for income taxes are higher than its income tax expense for financial reporting purposes and are expected to total ~~$1.20 to $1.23~~approximately $1.5 billion in ~~2020.~~2021. In the ~~third~~first quarter of ~~2019,~~2020, the company’s effective tax rate was ~~7.6%~~4.8%.

The company has operations and a taxable presence in approximately 50 countries outside the U.S. Some of these countries have lower tax rates than the U.S. The company’s ability to obtain a benefit from lower tax rates outside the U.S. is dependent on its relative levels of income in countries outside the U.S. and on the statutory tax rates in those countries. Based on the dispersion of the company’s non-U.S. income tax provision among many countries, the company believes that a change in the statutory tax rate in any individual country is not likely to materially affect the company’s income tax provision or net income, aside from any resulting one-time adjustment to the company’s deferred tax balances to reflect a new rate.

~~THERMO FISHER SCIENTIFIC INC.~~

~~MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION~~

~~AND RESULTS OF OPERATIONS~~

~~Results of Operations (continued)~~

~~First Nine Months of 2020 Compared With First Nine Months of 2019~~

Nine Months Ended
(In millions) September 26,
2020 September 28,
2019 Total
Change Currency
Translation Acquisitions/ Divestitures Operations
Revenues
Life Sciences Solutions $ 7,800 $ 5,018 $ 2,782 $ (44) $ — $ 2,826
Analytical Instruments 3,488 4,004 (516) (5) — (511)
Specialty Diagnostics 3,376 2,779 597 (6) (121) 724
Laboratory Products and Services 8,629 7,765 864 (14) 179 699
Eliminations (1,625) (853) (772) 2 15 (789)
Consolidated Revenues $ 21,668 $ 18,713 $ 2,955 $ (67) $ 73 $ 2,949

Sales in the first nine months of 2020 were $21.67 billion, an increase of $2.96 billion from the first nine months of 2019. Sales increased $73 million due to acquisitions, net of a divestiture. The unfavorable effects of currency translation resulted in a decrease in revenues of $67 million in 2020. Aside from the effects of currency translation and acquisitions/divestiture, revenues increased $2.95 billion (16%) primarily due to increased demand. Sales were particularly strong in diagnostic and healthcare markets, primarily due to demand for products supporting customers diagnosing the COVID-19 virus, as well as to customers in pharma and biotech markets where demand was strong for products and services and pandemic-related demand for therapies and vaccines also contributed to growth. Sales to academic and government customers decreased due primarily to closure of academic labs during the global pandemic. Sales to customers in industrial markets decreased primarily due to lower demand from weakened economic conditions related to COVID-19. Sales growth was particularly strong in North America and Europe while sales grew modestly in the Asia-Pacific region.

In the first nine months of 2020, total company operating income and operating income margin were $4.72 billion and 21.8%, respectively, compared with $3.36 billion and 18.0%, respectively, in the first nine months of 2019. The increase in operating income was primarily due to profit on higher sales and, to a lesser extent, sales mix, offset in part by the gain on the sale of the Anatomical Pathology business included in the 2019 period and, to a lesser extent, strategic growth investments in 2020.

In the first nine months of 2020, the company recorded restructuring and other costs, net, of $65 million (Note 12). The company recorded $5 million of charges to cost of revenues for accelerated depreciation on fixed assets to be disposed of in connection with the consolidation of commercial production operations in the U.S., as well as charges to conform the accounting policies of a recently acquired business with the company’s accounting policies. The company recorded $7 million of net credits to selling, general and administrative expenses, principally transaction and integration-related costs (and reimbursement thereof) for recent and terminated acquisitions, as well as income for changes in estimates of contingent acquisition consideration. In addition, the company recorded $43 million of cash restructuring charges, net, primarily for employee severance and abandoned facilities costs associated with the closure and consolidation of facilities in Europe, and the U.S. The company also recorded $24 million of charges for impairment of acquired technology in development, writedowns of fixed assets to estimated disposal value in connection with the consolidation of commercial production operations in the U.S. and, to a lesser extent, environmental remediation charges for abandoned and previously owned facilities.

In the first nine months of 2019, the company recorded restructuring and other income, net, of $372 million, including $482 million of net gains on the sale of businesses, principally the Anatomical Pathology business. The company also recorded $16 million of charges to cost of revenues for the sale of inventories revalued at the date of acquisition, and $54 million of net charges to selling, general and administrative expenses, principally transaction and integration-related costs related to acquisitions and a divestiture. In addition, the company recorded $33 million of cash restructuring charges, net, primarily for employee severance and abandoned facilities costs associated with the closure and consolidation of facilities in the U.S. and Europe.

~~THERMO FISHER SCIENTIFIC INC.~~

~~MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION~~

~~AND RESULTS OF OPERATIONS~~

~~Results of Operations (continued)~~

~~Segment Results~~

Nine Months Ended
September 26, September 28,
(Dollars in millions) 2020 2019 Change
Revenues
Life Sciences Solutions $ 7,800 $ 5,018 55 %
Analytical Instruments 3,488 4,004 (13) %
Specialty Diagnostics 3,376 2,779 21 %
Laboratory Products and Services 8,629 7,765 11 %
Eliminations (1,625) (853) 91 %
Consolidated Revenues $ 21,668 $ 18,713 16 %
Segment Income
Life Sciences Solutions $ 3,788 $ 1,756 116 %
Analytical Instruments 477 879 (46) %
Specialty Diagnostics 848 707 20 %
Laboratory Products and Services 931 933 — %
Subtotal Reportable Segments 6,044 4,275 41 %
Cost of Revenues Charges (5) (16)
Selling, General and Administrative Charges, Net 7 (54)
Restructuring and Other Income (Costs), Net (67) 442
Amortization of Acquisition-related Intangible Assets (1,256) (1,285)
Consolidated Operating Income $ 4,723 $ 3,362 40 %
Reportable Segments Income Margin 27.9 % 22.8 %
Consolidated Operating Income Margin 21.8 % 18.0 %

Income from the company’s reportable segments increased 41% to $6.04 billion in the first nine months of 2020 due primarily to profit on higher sales and, to a lesser extent, sales mix, offset in part by strategic growth investments.

~~Life Sciences Solutions~~

Nine Months Ended
September 26, September 28,
(Dollars in millions) 2020 2019 Change
Revenues $ 7,800 $ 5,018 55 %
Operating Income Margin 48.6 % 35.0 % 13.6 pt

Sales in the Life Sciences Solutions segment increased $2.78 billion to $7.80 billion in the first nine months of 2020. Sales increased $2.83 billion (56%) due to higher revenues at existing businesses. The unfavorable effects of currency translation resulted in a decrease in revenues of $44 million. The increase in revenues at existing businesses was primarily driven by

~~THERMO FISHER SCIENTIFIC INC.~~

~~MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION~~

~~AND RESULTS OF OPERATIONS~~

~~Results of Operations (continued)~~

~~demand for testing to diagnose COVID-19 with higher sales of genetic sciences products and, to a lesser extent, bioscience products. Sales also grew due to higher demand for bioproduction products.~~

Operating income margin was 48.6% in the first nine months of 2020 compared to 35.0% in the first nine months of 2019. The increase resulted primarily from profit on higher sales and, to a lesser extent, sales mix, offset in part by strategic growth investments.

~~Analytical Instruments~~

Nine Months Ended
September 26, September 28,
(Dollars in millions) 2020 2019 Change
Revenues $ 3,488 $ 4,004 (13) %
Operating Income Margin 13.7 % 22.0 % -8.3 pt

Sales in the Analytical Instruments segment decreased $516 million to $3.49 billion in the first nine months of 2020. Sales decreased $511 million (-13%) due to lower revenues at existing businesses. The unfavorable effects of currency translation resulted in a decrease in revenues of $5 million. The decrease in revenues at existing businesses was primarily the result of reduced demand from industrial customers following business slowing and closures due to COVID-19 and lower sales to academic customers due to pandemic-related closures.

Operating income margin was 13.7% in the first nine months of 2020 compared to 22.0% in the first nine months of 2019. The decrease was primarily due to the decrease in sales, a $108 million charge related to a long-term supply contract (discussed in Note 8), sales mix and, to a lesser extent, strategic growth investments, offset in part by productivity improvements.

~~Specialty Diagnostics~~

Nine Months Ended
September 26, September 28,
(Dollars in millions) 2020 2019 Change
Revenues $ 3,376 $ 2,779 21 %
Operating Income Margin 25.1 % 25.5 % -0.4 pt

Sales in the Specialty Diagnostics segment increased $597 million to $3.38 billion in the first nine months of 2020. Sales increased $724 million (26%) due to higher revenues at existing businesses. The unfavorable effects of currency translation resulted in a decrease in revenues of $6 million and the divestiture of the Anatomical Pathology business decreased revenues by $121 million. The increase in revenues at existing businesses was due to higher demand primarily driven by products addressing treatment of COVID-19, with particular strength in sales of products sold through the segment's healthcare market channel business, and to a lesser extent, microbiology and clinical diagnostics products.

Operating income margin was 25.1% in the first nine months of 2020 compared to 25.5% in the first nine months of 2019. The decrease was primarily due to sales mix and, to a lesser extent, strategic growth investments, offset in part by profit on higher sales.

~~THERMO FISHER SCIENTIFIC INC.~~

~~MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION~~

~~AND RESULTS OF OPERATIONS~~

~~Results of Operations (continued)~~

~~Laboratory Products and Services~~

Nine Months Ended
September 26, September 28,
(Dollars in millions) 2020 2019 Change
Revenues $ 8,629 $ 7,765 11 %
Operating Income Margin 10.8 % 12.0 % -1.2 pt

Sales in the Laboratory Products and Services segment increased $864 million to $8.63 billion in 2020. Sales increased $699 million (9%) due to higher revenues at existing businesses and $179 million due to acquisitions. The unfavorable effects of currency translation resulted in a decrease in revenues of $14 million. The increase in revenues at existing businesses was primarily due to increased demand for products sold through its research and safety market channel business and, to a lesser extent, service offerings of the segment's pharma services business.

Operating income margin was 10.8% in the first nine months of 2020 compared to 12.0% in the first nine months of 2019. The decrease was primarily due to sales mix and strategic growth investments, offset in part by profit on higher sales and, to a lesser extent, productivity improvements.

~~Other Income/Expense, Net~~

The company reported other (expense) income, net of $(36) million and $25 million in the first nine months of 2020 and 2019, respectively. In 2020, other expense, net includes $81 million of costs for the terminated QIAGEN acquisition, primarily for amortization of loan commitment fees and entering into currency hedging contracts. In 2019, the company recorded $42 million of losses on the early extinguishment of debt.

~~Provision for Income Taxes~~

The company recorded a $456 million provision for income taxes in the first nine months of 2020. In the second quarter of 2020, the company implemented foreign tax credit planning in Sweden which resulted in $96 million of foreign tax credits, with no related incremental U.S. income tax expense. The company recorded a $338 million provision for income taxes in the first nine months of 2019 including $191 million related to the gain on the sale of the Anatomical Pathology business. In addition, in 2019, the company recorded a $62 million income tax benefit related to a foreign exchange loss for tax purposes on certain intercompany financing arrangements and implemented foreign tax credit planning in Sweden which resulted in $75 million of foreign tax credits, with no related incremental U.S. income tax expense.

Recent Accounting Pronouncements

A description of recently issued accounting standards is included under the heading “Recent Accounting Pronouncements” in Note 1.

~~Contingent Liabilities~~

The company is contingently liable with respect to certain legal proceedings and related matters. An unfavorable outcome that differs materially from current accrual estimates, if any, for one or more of the matters described under the heading “~~Product Liability, Workers Compensation and Other Personal Injury Matters” in Note 8 could have a material adverse effect on the company’s financial position as well as its results of operations and cash flows.~~

Liquidity and Capital Resources

Consolidated working capital (current assets less current liabilities) was ~~$12.01~~$10.69 billion at ~~September 26, 2020,~~April 3, 2021, compared with ~~$5.70~~$11.65 billion at December 31, ~~2019.~~2020. Included in working capital were cash and cash equivalents of ~~$7.54~~$5.58 billion at ~~September 26, 2020~~April 3, 2021 and ~~$2.40~~$10.33 billion at December 31, ~~2019. The increase in cash was due in part to the issuance of long-term senior notes in March and April~~ 2020.

~~THERMO FISHER SCIENTIFIC INC.~~

~~MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION~~

~~AND RESULTS OF OPERATIONS~~

~~Liquidity and Capital Resources (continued)~~

First ~~Nine~~Three Months of ~~2020~~2021

Cash provided by operating activities ~~was $4.95 billion~~ during the first ~~nine~~three months of ~~2020.~~2021 was $1.98 billion. Cash provided by income was offset in part by investments in working capital. ~~Increases~~A decrease in accounts receivable ~~and~~provided $149 million of cash. An increase in inventories used cash of ~~$858~~$352 million, ~~and $427 million, respectively,~~ primarily to support growth in sales. Changes in other assets and other liabilities ~~provided~~used cash of ~~$1.04~~$1.20 billion primarily due to the timing of payments for ~~compensation and income taxes.~~compensation. Cash payments for income taxes increased to ~~$656~~$542 million during the first ~~nine~~three months of ~~2020,~~2021, compared with ~~$589~~$100 million in the first nine months of 2019. The company made cash contributions to its pension and postretirement benefit plans totaling $45 million during the first nine months of 2020. Payments for restructuring actions, principally severance costs and expenses of real estate consolidation, used cash of $46 million during the first ninethree months of 2020.

During the first ~~nine~~three months of ~~2020,~~2021, the company’s investing activities used ~~$884 million~~$2.00 billion of cash. Acquisitions used cash ~~principally for~~of $1.34 billion. The company's investing activities also included the purchase of $628 million of property, plant and ~~equipment.~~equipment for capacity and capability investments.

The company’s financing activities ~~provided $1.01~~used $4.85 billion of cash during the first ~~nine~~three months of ~~2020. Issuance of senior notes provided cash of $3.46 billion.~~2021. Repayment of senior notes used cash of ~~$712 million.~~$2.80 billion. The company’s financing activities also included the repurchase of ~~$1.50~~$2.00 billion of the company's common stock and the payment of ~~$250~~$87 million in cash ~~dividends, offset in part by $156 million of net proceeds from employee stock option exercises.~~dividends. On November ~~8, 2019,~~5, 2020, the Board of Directors ~~authorized~~replaced the existing authorization to repurchase ofthe company’s common stock with a new authorization to repurchase up to $2.50 billion of the company’s common stock. At ~~October 30, 2020,~~May 7, 2021, authorization remained for ~~$1.00 billion~~$500 million of future repurchases of the company’s common stock.

The company's commitments for purchases of property, plant and equipment, contractual obligations and other commercial commitments did not change materially between December 31, ~~2019~~2020 and ~~September 26, 2020~~April 3, 2021 except for the ~~long-term lease with CSL Limited~~agreement to acquire PPD, discussed in Note 8.2. The company expects that for all of ~~2020,~~2021, expenditures for property, plant and equipment, net of disposals, will be ~~approximately $1.5~~between $2.5 and $2.7 billion.

As of ~~September 26, 2020,~~April 3, 2021, the company’s short-term debt totaled $2$4 million. The company has a revolving credit facility with a bank group that provides up to ~~$2.5~~$3.00 billion of unsecured multi-currency revolving credit (Note 7). If the company borrows under this facility, it intends to leave undrawn an amount equivalent to outstanding commercial paper to provide a source of funds in the event that commercial paper markets are not available. As of ~~September 26, 2020,~~April 3, 2021, no borrowings were outstanding under the company’s revolving credit facility, although available capacity was reduced by approximately ~~$66~~$31 million as a result of outstanding letters of credit.

Approximately half of the company’s cash balances and cash flows from operations are from outside the U.S. The company uses its non-U.S. cash for needs outside of the U.S. including acquisitions and repayment of acquisition-related intercompany debt to the U.S. In addition, the company also transfers cash to the U.S. using non-taxable returns of capital as well as dividends where the related U.S. dividend received deduction or foreign tax credit equals any tax cost arising from the

THERMO FISHER SCIENTIFIC INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

Liquidity and Capital Resources (continued)

dividends. As a result of using such means of transferring cash to the U.S., the company does not expect any material adverse liquidity effects from its significant non-U.S. cash balances for the foreseeable future.

The company believes that its existing cash and cash equivalents ~~of $7.54 billion as of September 26, 2020~~ and its future cash flow from operations together with available borrowing capacity under its revolving credit agreement and bridge loan agreement will be sufficient to meet the cash requirements of its existing businesses for the foreseeable future, including at least the next 24 ~~months.~~months and to fund the pending PPD acquisition.

First ~~Nine~~Three Months of ~~2019~~2020

Cash provided by operating activities was ~~$3.06 billion~~$356 million during the first ~~nine~~three months of ~~2019.~~2020. Cash provided by income was offset in part by investments in working capital. Increases in accounts receivable and inventories used cash of ~~$321~~$218 million and ~~$449~~$141 million, respectively, primarily to support growth in sales. Changes in other assets and other liabilities used cash of ~~$14~~$443 million primarily due to the timing of customer billings. Cash payments for income taxes totaled ~~$589~~$100 million. The company made cash contributions to its pension and postretirement benefit plans totaling $40 million during the first nine months of 2019. Payments for restructuring actions, principally severance costs and expenses of real estate consolidation, used cash of $45 million during the first nine months of 2019.

During the first ~~nine~~three months of ~~2019,~~2020, the company’s investing activities used ~~$1.15 billion~~$260 million of ~~cash. Acquisitions used~~ cash, ~~of $1.69 billion. Proceeds from the sale of the Anatomical Pathology business provided $1.13 billion. The company's investing activities also included~~principally for the purchase ~~of $637 million~~ of property, plant and equipment.

The company’s financing activities ~~used $2.60 billion~~provided $619 million of cash during the first ~~nine~~three months of ~~2019. Repayment~~2020. Issuance of senior notes ~~used cash of $1.70 billion. A net increase in commercial paper obligations~~ provided cash of ~~$3 million.~~$2.19 billion. The company’s

~~THERMO FISHER SCIENTIFIC INC.~~

~~MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION~~

~~AND RESULTS OF OPERATIONS~~

~~Liquidity and Capital Resources (continued)~~

financing activities also included the repurchase of ~~$750 million~~$1.50 billion of the company’s common stock and the payment of ~~$221~~$76 million in cash ~~dividends, offset in part by $115 million of net proceeds from employee stock option exercises.~~dividends.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The company's exposure to market risk from changes in interest rates and currency exchange rates has not changed materially from its exposure discussed in the company’s Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020.

Item 4. Controls and Procedures

Management’s Evaluation of Disclosure Controls and Procedures

The company’s management, with the participation of the company’s chief executive officer and chief financial officer, has evaluated the effectiveness of the company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on such evaluation, the company’s chief executive officer and chief financial officer concluded that, as of the end of such period, the company’s disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There have been no changes in the company’s internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) during the fiscal quarter ended ~~September 26, 2020,~~April 3, 2021, that have materially affected or are reasonably likely to materially affect the company’s internal control over financial reporting.

~~THERMO FISHER SCIENTIFIC INC.~~

PART II OTHER INFORMATION

Item 1. Legal Proceedings

There are various lawsuits and claims against the company involving product liability, intellectual property, employment and commercial issues. See “Note 8 to our Condensed Consolidated Financial Statements – Commitments and ~~Contingencies.~~Contingencies.”

THERMO FISHER SCIENTIFIC INC.

Item 1A. Risk Factors

The risks that we believe are material to our investors are discussed in the company’s Annual Report on Form 10-K for the year ended December 31, ~~2019, as updated by our~~ ~~Quarterly Report on Form 10-Q~~ ~~for the quarter ended June 27,~~ 2020 under the caption “Risk Factors,” which ~~are~~is on file with the SEC. Except as set forth herein, there have been no material changes during the three months ended ~~September 26, 2020~~April 3, 2021 to our previously reported Risk Factors.

Risks Relating to Our Proposed Acquisition of PPD

Regulatory approvals necessary for our acquisition of PPD may not be received, may take longer than expected or may impose conditions that are not presently anticipated or that could have an adverse effect on the combined company following the PPD acquisition. Before the PPD acquisition may be completed, we must obtain certain required regulatory approvals, waivers or consents. These regulators may impose conditions on the completion of the transaction. Such conditions could have the effect of delaying or preventing completion of the transaction, causing us to incur additional costs or limiting the revenues of the combined company following the transaction, any of which might have an adverse effect on the combined company following the transaction. Additionally, any delay in closing may adversely affect the business of PPD and therefore the combined company following the transaction, including an adverse effect on PPD’s ability to retain employees during the pendency of the transaction or on PPD’s relationships with its vendors, customers and other parties if such vendors, customers or other parties attempt to negotiate changes in existing business relationships, consider entering into business relationships with parties other than PPD or delay or defer decisions concerning their business with PPD during the pendency of the transaction.

Combining PPD with us may be more difficult, costly or time consuming than expected and the anticipated benefits and cost savings of the transaction may not be fully realized. The success of the PPD acquisition, including the realization of anticipated benefits and cost savings, will depend, in part, on our ability to successfully combine our and PPD’s businesses. The integration may be more difficult, costly or time consuming than expected. It is possible that the integration process could result in the loss of key employees or the disruption of each company’s ongoing businesses or that the alignment of standards, controls, procedures and policies may adversely affect the combined company’s ability to maintain relationships with clients, customers, suppliers and employees or to fully achieve the anticipated benefits and cost savings of the transaction. The loss of key employees could adversely affect our ability to successfully conduct our business in the markets in which PPD now operates, which could have an adverse effect on our financial results. Other potential difficulties of combining our and PPD’s businesses include unanticipated issues in integrating logistics, information communications and other systems.

If we experience difficulties with the integration process, the anticipated benefits of the PPD acquisition may not be realized fully or at all, or may take longer to realize than expected. Integration efforts between the two companies may also divert management attention and resources. These integration matters could have an adverse effect on each of us and PPD during this transition period and for an undetermined period after completion of the PPD acquisition on the combined company.

Risks Relating to Financial Profile

We have outstanding debt, and our debt will increase as a result of additional debt we expect to incur to finance the PPD acquisition. Our existing and future indebtedness may restrict our investment opportunities or limit our activities and negatively impact our credit ratings. As ~~discussed~~of April 3, 2021, we had approximately $18.65 billion in ~~Note 2,~~outstanding indebtedness. In addition, we have availability to borrow under a revolving credit facility that provides for up to $3.00 billion of unsecured multi-currency revolving credit. We expect to incur additional indebtedness to fund a portion of the purchase price of the PPD acquisition. We may also obtain additional long-term debt and lines of credit to meet future financing needs, which would have the effect of increasing our total leverage.

Our leverage could have negative consequences, including increasing our vulnerability to adverse economic and industry conditions, limiting our ability to obtain additional financing and limiting our ability to acquire new products and technologies through strategic acquisitions.

Our ability to make scheduled payments, refinance our obligations or obtain additional financing will depend on our future operating performance and on economic, financial, competitive and other factors beyond our control. Our business may not generate sufficient cash flow to meet our obligations. If we are unable to service our debt, refinance our existing debt or obtain additional financing, we may be forced to delay strategic acquisitions, capital expenditures or research and development expenditures.

Additionally, the agreements governing our debt require that we maintain certain financial ratios, and contain affirmative and negative covenants that restrict our activities by, among other limitations, limiting our ability to incur additional indebtedness, merge or consolidate with other entities, make investments, create liens, sell assets and enter into transactions with affiliates. The covenants in the Facility include a Consolidated Net Interest Coverage Ratio (Consolidated EBITDA to

THERMO FISHER SCIENTIFIC INC.

Risk Factors (continued)

Consolidated Net Interest Expense), as such terms are defined in the Facility. Specifically, the company has ~~terminated~~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 Interest Coverage Ratio of 3.5:1.0 as of the last day of any fiscal quarter.

Our ability to comply with these financial restrictions and covenants is dependent on our future performance, which is subject to prevailing economic conditions and other factors, including factors that are beyond our control such as the impact of public health epidemics/pandemics like COVID-19, foreign exchange rates and interest rates. Our failure to comply with any of these restrictions or covenants may result in an event of default under the applicable debt instrument, which could permit acceleration of the debt under that instrument and require us to prepay that debt before its ~~agreement to acquire QIAGEN, therefore~~scheduled due date. Also, an acceleration of the ~~risks associated with the then pending acquisition~~debt under certain of ~~QIAGEN included in the company’s Quarterly Report on Form 10-Q for the quarter ended June 27, 2020 are no longer material risks to the company’s operations.~~our debt instruments would trigger an event of default under other of our debt instruments.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

~~There was no~~A summary of the share repurchase activity for the company's ~~third~~first quarter of ~~2020.~~2021 follows:



Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)	Maximum Dollar Amount of Shares That May Yet Be Purchased Under the Plans or Programs (1) (in millions)
Fiscal January (Jan. 1 - Feb. 6)	2,999,334	$	500.11	2,999,334	$	1,000
Fiscal February (Feb. 7 - Mar. 6)	—	$	—	—	1,000
Fiscal March (Mar. 7 - Apr. 3)	1,101,277	$	454.02	1,101,277	500
Total First Quarter	4,100,611	$	487.73	4,100,611	$	500

(1) On November ~~8, 2019,~~5, 2020, the Board of Directors ~~authorized~~replaced the existing authorization to repurchase ofthe company’s common stock with a new authorization to repurchase up to $2.50 billion of the company’s common stock. ~~At September 26, 2020, $1.00 billion was available for future repurchases~~All of the ~~company’s~~shares of common stock repurchased by the company during the first quarter of 2021 were purchased under this ~~authorization.~~program.

THERMO FISHER SCIENTIFIC INC.

Item 6. Exhibits


~~See Exhibit Index on page~~ 40.

~~SIGNATURES~~

~~Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.~~


~~Date:~~	~~October 30, 2020~~	~~THERMO FISHER SCIENTIFIC INC.~~



		~~/s/ Stephen Williamson~~
		~~Stephen Williamson~~
		~~Senior Vice President and Chief Financial Officer~~



		~~/s/ Peter E. Hornstra~~
		~~Peter E. Hornstra~~
		~~Vice President and Chief Accounting Officer~~

~~THERMO FISHER SCIENTIFIC INC.~~

~~EXHIBIT INDEX~~


Exhibit Number						Description of Exhibit
2.1						Agreement and Plan of Merger, dated as of April 15, 2021, by and among Thermo Fisher Scientific Inc., Powder Acquisition Corp. and PPD, Inc. (filed as Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed April 16, 2021 [File No. 1-8002] and incorporated in this document by reference).
31.1						Certification of Chief Executive Officer required by Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of ~~2002~~.2002.
31.2						Certification of Chief Financial Officer required by Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of ~~2002~~.2002.
32.1						Certification of Chief Executive Officer required by Exchange Act Rules 13a-14(b) and 15d-14(b), as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**
32.2						Certification of Chief Financial Officer required by Exchange Act Rules 13a-14(b) and 15d-14(b), as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**
101.INS						XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH						XBRL Taxonomy Extension Schema Document.
101.CAL						XBRL Taxonomy Calculation Linkbase Document.
101.DEF						XBRL Taxonomy Definition Linkbase Document.
101.LAB						XBRL Taxonomy Label Linkbase Document.
101.PRE						XBRL Taxonomy Presentation Linkbase Document.
104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
						The Registrant agrees, pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K, to furnish to the Commission, upon request, a copy of each instrument with respect to long-term debt of the Registrant or its consolidated subsidiaries.

_______________________

* Indicates management contract or compensatory plan, contract or arrangement.

** Certification is not deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section. Such certification is not deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act except to the extent that the registrant specifically incorporates it by reference.

4031

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


Date:	May 7, 2021	THERMO FISHER SCIENTIFIC INC.



		/s/ Stephen Williamson
		Stephen Williamson
		Senior Vice President and Chief Financial Officer



		/s/ Joseph R. Holmes
		Joseph R. Holmes
		Vice President and Chief Accounting Officer


	Three Months Ended
(In millions)	September 26, 2020		September 28, 2019		Total Change		Currency Translation		Acquisitions/ Divestitures		Operations

Revenues
Life Sciences Solutions	$	3,424	$	1,701	$	1,723	$	20	$	—	$	1,703
Analytical Instruments	1,336		1,358		(22)		19		—		(41)
Specialty Diagnostics	1,430		879		551		10		—		541
Laboratory Products and Services	3,112		2,619		493		33		32		428
Eliminations	(781)		(285)		(496)		(2)		—		(494)

Consolidated Revenues	$	8,521	$	6,272	$	2,249	$	80	$	32	$	2,137