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~~quarterly period ended July ~~2, 2022~~1, 2023 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

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

3.200% Notes due 2026

TMO 26B

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

3.650% Notes due 2034

TMO 34

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 (or for such shorter period that the registrant was required to file such reports), 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 (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). 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 ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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 July ~~2, 2022,~~1, 2023, the Registrant had ~~391,788,962~~385,949,773 shares of Common Stock outstanding.

THERMO FISHER SCIENTIFIC INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED JULY ~~2, 2022~~1, 2023


TABLE OF CONTENTS
		Page
PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements ~~(Unaudited)~~	3

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2122

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30

Item 4.	Controls and Procedures	30

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	31

Item 1A.	Risk Factors	31

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31

Item 5.	Other Information	31

Item 6.	Exhibits	31

THERMO FISHER SCIENTIFIC INC.

PART I FINANCIAL INFORMATION

Item 1. Financial Statements

CONDENSED CONSOLIDATED BALANCE ~~SHEET~~SHEETS

(Unaudited)


		July 2,		December 31,			July 1,		December 31,
(In millions except share and per share amounts)	(In millions except share and per share amounts)	2022		2021		(In millions except share and per share amounts)	2023		2022
Assets	Assets					Assets
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	1,888	$	4,477	Cash and cash equivalents	$	3,133	$	8,524
Accounts receivable, less allowances of $177 and $150		7,745		7,977
Accounts receivable, less allowances of $180 and $189						Accounts receivable, less allowances of $180 and $189	8,019		8,115
Inventories	Inventories	5,668		5,051		Inventories	5,655		5,634
Contract assets, net	Contract assets, net	1,147		968		Contract assets, net	1,467		1,312

Other current assets	Other current assets	1,652		1,640		Other current assets	1,721		1,644
Total current assets	Total current assets	18,100		20,113		Total current assets	19,995		25,229
Property, plant and equipment, net	Property, plant and equipment, net	8,529		8,333		Property, plant and equipment, net	9,292		9,280
Acquisition-related intangible assets, net	Acquisition-related intangible assets, net	18,578		20,113		Acquisition-related intangible assets, net	17,437		17,442
Other assets	Other assets	4,306		4,640		Other assets	4,108		4,007
Goodwill	Goodwill	41,066		41,924		Goodwill	43,273		41,196
Total assets	Total assets	$	90,579	$	95,123	Total assets	$	94,105	$	97,154

Liabilities, redeemable noncontrolling interest and equity	Liabilities, redeemable noncontrolling interest and equity					Liabilities, redeemable noncontrolling interest and 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	$	1,010	$	2,537	Short-term obligations and current maturities of long-term obligations	$	4,814	$	5,579
Accounts payable	Accounts payable	2,586		2,867		Accounts payable	2,423		3,381
Accrued payroll and employee benefits	Accrued payroll and employee benefits	1,722		2,427		Accrued payroll and employee benefits	1,310		2,095
Contract liabilities	Contract liabilities	2,722		2,655		Contract liabilities	2,590		2,601
Other accrued expenses	Other accrued expenses	2,957		2,950		Other accrued expenses	2,975		3,354
Total current liabilities	Total current liabilities	10,997		13,436		Total current liabilities	14,112		17,010
Deferred income taxes	Deferred income taxes	3,327		3,837		Deferred income taxes	2,842		2,849
Other long-term liabilities	Other long-term liabilities	4,534		4,540		Other long-term liabilities	4,042		4,238
Long-term obligations	Long-term obligations	29,250		32,333		Long-term obligations	29,194		28,909
Redeemable noncontrolling interest	Redeemable noncontrolling interest	117		122		Redeemable noncontrolling interest	113		116
Equity:	Equity:					Equity:
Thermo Fisher Scientific Inc. shareholders’ equity:	Thermo Fisher Scientific Inc. shareholders’ equity:					Thermo Fisher Scientific Inc. shareholders’ equity:
Preferred stock, $100 par value, 50,000 shares authorized; none issued	Preferred stock, $100 par value, 50,000 shares authorized; none issued	—		—		Preferred stock, $100 par value, 50,000 shares authorized; none issued	—		—
Common stock, $1 par value, 1,200,000,000 shares authorized; 439,863,357 and 439,154,741 shares issued		440		439
Common stock, $1 par value, 1,200,000,000 shares authorized; 441,398,059 and 440,668,112 shares issued						Common stock, $1 par value, 1,200,000,000 shares authorized; 441,398,059 and 440,668,112 shares issued	441		441
Capital in excess of par value	Capital in excess of par value	16,467		16,174		Capital in excess of par value	17,030		16,743
Retained earnings	Retained earnings	39,074		35,431		Retained earnings	44,289		41,910
Treasury stock at cost, 48,074,395 and 44,720,112 shares		(10,964)		(8,922)
Accumulated other comprehensive items		(2,724)		(2,329)
Treasury stock at cost, 55,448,286 and 50,157,275 shares						Treasury stock at cost, 55,448,286 and 50,157,275 shares	(15,084)		(12,017)
Accumulated other comprehensive income/(loss)						Accumulated other comprehensive income/(loss)	(2,924)		(3,099)
Total Thermo Fisher Scientific Inc. shareholders’ equity	Total Thermo Fisher Scientific Inc. shareholders’ equity	42,293		40,793		Total Thermo Fisher Scientific Inc. shareholders’ equity	43,752		43,978
Noncontrolling interests	Noncontrolling interests	61		62		Noncontrolling interests	50		54
Total equity	Total equity	42,354		40,855		Total equity	43,802		44,032
Total liabilities, redeemable noncontrolling interest and equity	Total liabilities, redeemable noncontrolling interest and equity	$	90,579	$	95,123	Total liabilities, redeemable noncontrolling interest and equity	$	94,105	$	97,154

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

THERMO FISHER SCIENTIFIC INC.

CONDENSED CONSOLIDATED ~~STATEMENT~~STATEMENTS OF INCOME

(Unaudited)


		Three months ended				Six months ended					Three months ended				Six months ended
		July 2,		July 3,		July 2,		July 3,			July 1,		July 2,		July 1,		July 2,
(In millions except per share amounts)	(In millions except per share amounts)	2022		2021		2022		2021		(In millions except per share amounts)	2023		2022		2023		2022
Revenues	Revenues									Revenues
Product revenues	Product revenues	$	7,003	$	7,214	$	15,020	$	15,070	Product revenues	$	6,271	$	7,003	$	12,675	$	15,020
Service revenues	Service revenues	3,967		2,059		7,768		4,109		Service revenues	4,416		3,967		8,722		7,768
Total revenues	Total revenues	10,970		9,273		22,788		19,179		Total revenues	10,687		10,970		21,397		22,788

Costs and operating expenses:	Costs and operating expenses:									Costs and operating expenses:
Cost of product revenues	Cost of product revenues	3,516		3,352		7,071		6,679		Cost of product revenues	3,278		3,516		6,615		7,071
Cost of service revenues	Cost of service revenues	2,855		1,397		5,654		2,767		Cost of service revenues	3,158		2,855		6,391		5,654
Selling, general and administrative expenses	Selling, general and administrative expenses	2,209		1,899		4,486		3,725		Selling, general and administrative expenses	2,145		2,209		4,264		4,486
Research and development expenses	Research and development expenses	365		343		729		663		Research and development expenses	345		365		691		729
Restructuring and other costs	Restructuring and other costs	24		119		26		133		Restructuring and other costs	183		24		295		26
Total costs and operating expenses	Total costs and operating expenses	8,969		7,110		17,966		13,967		Total costs and operating expenses	9,109		8,969		18,256		17,966
Operating income	Operating income	2,001		2,163		4,822		5,212		Operating income	1,578		2,001		3,141		4,822
Interest income	Interest income	36		11		54		23		Interest income	178		36		324		54
Interest expense	Interest expense	(148)		(122)		(284)		(247)		Interest expense	(326)		(148)		(626)		(284)
Other income/(expense)	Other income/(expense)	28		(3)		(135)		(186)		Other income/(expense)	—		28		(46)		(135)
Income before income taxes	Income before income taxes	1,917		2,049		4,457		4,802		Income before income taxes	1,430		1,917		2,793		4,457
Provision for income taxes	Provision for income taxes	(198)		(219)		(499)		(635)		Provision for income taxes	(52)		(198)		(98)		(499)
Equity in earnings/(losses) of unconsolidated entities	Equity in earnings/(losses) of unconsolidated entities	(51)		(1)		(70)		(1)		Equity in earnings/(losses) of unconsolidated entities	(16)		(51)		(41)		(70)
Net income	Net income	1,668		1,829		3,888		4,166		Net income	1,362		1,668		2,654		3,888
Less: net income attributable to noncontrolling interests and redeemable noncontrolling interest		4		1		9		1
Less: net income/(losses) attributable to noncontrolling interests and redeemable noncontrolling interest										Less: net income/(losses) attributable to noncontrolling interests and redeemable noncontrolling interest	1		4		4		9
Net income attributable to Thermo Fisher Scientific Inc.	Net income attributable to Thermo Fisher Scientific Inc.	$	1,664	$	1,828	$	3,879	$	4,165	Net income attributable to Thermo Fisher Scientific Inc.	$	1,361	$	1,664	$	2,650	$	3,879

Earnings per share attributable to Thermo Fisher Scientific Inc.	Earnings per share attributable to Thermo Fisher Scientific Inc.									Earnings per share attributable to Thermo Fisher Scientific Inc.
Basic	Basic	$	4.25	$	4.65	$	9.90	$	10.58	Basic	$	3.53	$	4.25	$	6.86	$	9.90
Diluted	Diluted	$	4.22	$	4.61	$	9.83	$	10.50	Diluted	$	3.51	$	4.22	$	6.83	$	9.83

Weighted average shares	Weighted average shares									Weighted average shares
Basic	Basic	392		393		392		394		Basic	386		392		386		392
Diluted	Diluted	394		396		394		397		Diluted	388		394		388		394

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

THERMO FISHER SCIENTIFIC INC.

CONDENSED CONSOLIDATED ~~STATEMENT~~STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)
Three months ended Six months ended
July 2, July 3, July 2, July 3,
(In millions) 2022 2021 2022 2021
Comprehensive income
Net income $ 1,668 $ 1,829 $ 3,888 $ 4,166
Other comprehensive items:
Currency translation adjustment:
Currency translation adjustment (net of tax provision (benefit) of $173, $(23), $262 and $95) (386) (71) (416) 153
Unrealized gains and losses on hedging instruments:
Reclassification adjustment for losses included in net income (net of tax benefit of $1, $1, $1 and $5) — 1 1 14
Pension and other postretirement benefit liability adjustments:
Pension and other postretirement benefit liability adjustments arising during the period (net of tax (provision) benefit of $(2), $0, $(3) and $(2)) 6 (2) 9 4
Amortization of net loss included in net periodic pension cost (net of tax benefit of $1, $1, $2 and $2) 2 4 4 6
Total other comprehensive items (378) (68) (402) 177
Comprehensive income 1,290 1,761 3,486 4,343
Less: comprehensive income/(loss) attributable to noncontrolling interests and redeemable noncontrolling interest 7 1 2 1
Comprehensive income attributable to Thermo Fisher Scientific Inc. $ 1,283 $ 1,760 $ 3,484 $ 4,342


	Three months ended				Six months ended
	July 1,		July 2,		July 1,		July 2,
(In millions)	2023		2022		2023		2022
Comprehensive income
Net income	$	1,362	$	1,668	$	2,654	$	3,888
Other comprehensive income/(loss):
Currency translation adjustment:
Currency translation adjustment (net of tax provision (benefit) of $0, $173, $(36) and $262)	125		(386)		169		(416)

Unrealized gains and losses on hedging instruments:

Reclassification adjustment for losses included in net income (net of tax benefit of $0, $1, $1 and $1)	1		—		4		1
Pension and other postretirement benefit liability adjustments:
Pension and other postretirement benefit liability adjustments arising during the period (net of tax (provision) benefit of $1, $(2), $0 and $(3))	(1)		6		—		9
Amortization of net loss included in net periodic pension cost (net of tax benefit of $0, $1, $0 and $2)	(2)		2		(2)		4
Total other comprehensive income/(loss)	123		(378)		171		(402)
Comprehensive income	1,485		1,290		2,825		3,486
Less: comprehensive income/(loss) attributable to noncontrolling interests and redeemable noncontrolling interest	(6)		7		—		2
Comprehensive income attributable to Thermo Fisher Scientific Inc.	$	1,491	$	1,283	$	2,825	$	3,484

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

THERMO FISHER SCIENTIFIC INC.

CONDENSED CONSOLIDATED ~~STATEMENT~~STATEMENTS OF CASH FLOWS

(Unaudited)


		Six months ended					Six months ended
		July 2,		July 3,			July 1,		July 2,
(In millions)	(In millions)	2022		2021		(In millions)	2023		2022
Operating activities	Operating activities					Operating activities
Net income	Net income	$	3,888	$	4,166	Net income	$	2,654	$	3,888
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	486		409		Depreciation of property, plant and equipment	523		486
Amortization of acquisition-related intangible assets	Amortization of acquisition-related intangible assets	1,209		872		Amortization of acquisition-related intangible assets	1,191		1,209
Change in deferred income taxes	Change in deferred income taxes	(601)		(307)		Change in deferred income taxes	(328)		(601)

Loss on early extinguishment of debt	Loss on early extinguishment of debt	26		197		Loss on early extinguishment of debt	—		26
Stock-based compensation	Stock-based compensation	155		102		Stock-based compensation	150		155
Other non-cash expenses, net	Other non-cash expenses, net	291		213		Other non-cash expenses, net	330		291
Changes in assets and liabilities, excluding the effects of acquisitions	Changes in assets and liabilities, excluding the effects of acquisitions	(1,724)		(1,447)		Changes in assets and liabilities, excluding the effects of acquisitions	(2,251)		(1,724)
Net cash provided by operating activities	Net cash provided by operating activities	3,730		4,205		Net cash provided by operating activities	2,269		3,730

Investing activities	Investing activities					Investing activities
Acquisitions, net of cash acquired	Acquisitions, net of cash acquired	(40)		(1,425)		Acquisitions, net of cash acquired	(2,751)		(40)

Purchase of property, plant and equipment	Purchase of property, plant and equipment	(1,146)		(1,168)		Purchase of property, plant and equipment	(742)		(1,146)
Proceeds from sale of property, plant and equipment	Proceeds from sale of property, plant and equipment	14		5		Proceeds from sale of property, plant and equipment	10		14
Other investing activities, net	Other investing activities, net	83		(36)		Other investing activities, net	(102)		83
Net cash used in investing activities	Net cash used in investing activities	(1,089)		(2,624)		Net cash used in investing activities	(3,585)		(1,089)

Financing activities	Financing activities					Financing activities

Repayment of debt	Repayment of debt	(375)		(2,803)		Repayment of debt	(1,000)		(375)
Proceeds from issuance of commercial paper	Proceeds from issuance of commercial paper	1,032		—		Proceeds from issuance of commercial paper	1,620		1,032
Repayments of commercial paper	Repayments of commercial paper	(3,490)		—		Repayments of commercial paper	(1,441)		(3,490)
Purchases of company common stock	Purchases of company common stock	(2,000)		(2,000)		Purchases of company common stock	(3,000)		(2,000)
Dividends paid	Dividends paid	(220)		(190)		Dividends paid	(252)		(220)
Net proceeds from issuance of company common stock under employee stock plans		51		72

Other financing activities, net	Other financing activities, net	(48)		(5)		Other financing activities, net	24		3
Net cash used in financing activities	Net cash used in financing activities	(5,050)		(4,926)		Net cash used in financing activities	(4,049)		(5,050)

Exchange rate effect on cash	Exchange rate effect on cash	(177)		44		Exchange rate effect on cash	(19)		(177)
Decrease in cash, cash equivalents and restricted cash	Decrease in cash, cash equivalents and restricted cash	(2,586)		(3,301)		Decrease in cash, cash equivalents and restricted cash	(5,384)		(2,586)
Cash, cash equivalents and restricted cash at beginning of period	Cash, cash equivalents and restricted cash at beginning of period	4,491		10,336		Cash, cash equivalents and restricted cash at beginning of period	8,537		4,491
Cash, cash equivalents and restricted cash at end of period	Cash, cash equivalents and restricted cash at end of period	$	1,905	$	7,035	Cash, cash equivalents and restricted cash at end of period	$	3,153	$	1,905

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

THERMO FISHER SCIENTIFIC INC.

CONDENSED CONSOLIDATED STATEMENT OF REDEEMABLE NONCONTROLLING INTEREST AND EQUITY

(Unaudited)

Redeemable Noncontrolling Interest Common Stock Capital in Excess of Par Value Retained Earnings Treasury Stock Accumulated Other Comprehensive Items Total
Thermo Fisher Scientific Inc. Shareholders’ Equity Noncontrolling Interests Total Equity
(In millions) Shares Amount Shares Amount
Three months ended July 2, 2022
Balance at April 2, 2022 $ 113 440 $ 440 $ 16,292 $ 37,528 48 $ (10,961) $ (2,343) $ 40,956 $ 62 $ 41,018
Issuance of shares under employees' and directors' stock plans — — — 98 — — (3) — 95 — 95
Stock-based compensation — — — 77 — — — — 77 — 77
Dividends declared ($0.30 per share) — — — — (118) — — — (118) — (118)
Net income 4 — — — 1,664 — — — 1,664 — 1,664
Other comprehensive items 4 — — — — — — (381) (381) (1) (382)
Contributions from (distributions to) noncontrolling interests (4) — — — — — — — — — —
Balance at July 2, 2022 $ 117 440 $ 440 $ 16,467 $ 39,074 48 $ (10,964) $ (2,724) $ 42,293 $ 61 $ 42,354
Three months ended July 3, 2021
Balance at April 3, 2021 $ — 438 $ 438 $ 15,684 $ 30,350 45 $ (8,852) $ (2,562) $ 35,058 $ 10 $ 35,068
Issuance of shares under employees' and directors' stock plans — — — 91 — — (4) — 87 — 87
Stock-based compensation — — — 51 — — — — 51 — 51
Dividends declared ($0.26 per share) — — — — (102) — — — (102) — (102)
Net income — — — — 1,828 — — — 1,828 1 1,829
Other comprehensive items — — — — — — — (68) (68) — (68)
Contributions from (distributions to) noncontrolling interests — — — — — — — — — 36 36
Balance at July 3, 2021 $ — 438 $ 438 $ 15,826 $ 32,076 45 $ (8,856) $ (2,630) $ 36,854 $ 47 $ 36,901


	Redeemable Noncontrolling Interest		Common Stock			Capital in Excess of Par Value		Retained Earnings		Treasury Stock			Accumulated Other Comprehensive Items		Total Thermo Fisher Scientific Inc. Shareholders’ Equity		Noncontrolling Interests		Total Equity
(In millions)			Shares	Amount						Shares	Amount

			Three months ended July 1, 2023
Balance at April 1, 2023	$	123	441	$	441	$	16,889	$	43,064	55	$	(15,083)	$	(3,054)	$	42,257	$	53	$	42,310
Issuance of shares under employees' and directors' stock plans	—		—	—		67		—		—	(2)		—		65		—		65
Stock-based compensation	—		—	—		74		—		—	—		—		74		—		74

Dividends declared ($0.35 per share)	—		—	—		—		(136)		—	—		—		(136)		—		(136)
Net income/(loss)	4		—	—		—		1,361		—	—		—		1,361		(3)		1,358
Other comprehensive items	(7)		—	—		—		—		—	—		130		130		—		130
Contributions from (distributions to) noncontrolling interests	(7)		—	—		—		—		—	—		—		—		—		—
Excise tax from stock repurchases	—		—	—		—		—		—	1		—		1		—		1
Balance at July 1, 2023	$	113	441	$	441	$	17,030	$	44,289	55	$	(15,084)	$	(2,924)	$	43,752	$	50	$	43,802

			Three months ended July 2, 2022
Balance at April 2, 2022	$	113	440	$	440	$	16,292	$	37,528	48	$	(10,961)	$	(2,343)	$	40,956	$	62	$	41,018

Issuance of shares under employees' and directors' stock plans	—		—	—		98		—		—	(3)		—		95		—		95
Stock-based compensation	—		—	—		77		—		—	—		—		77		—		77

Dividends declared ($0.30 per share)	—		—	—		—		(118)		—	—		—		(118)		—		(118)
Net income/(loss)	4		—	—		—		1,664		—	—		—		1,664		—		1,664
Other comprehensive items	4		—	—		—		—		—	—		(381)		(381)		(1)		(382)
Contributions from (distributions to) noncontrolling interests	(4)		—	—		—		—		—	—		—		—		—		—
Balance at July 2, 2022	$	117	440	$	440	$	16,467	$	39,074	48	$	(10,964)	$	(2,724)	$	42,293	$	61	$	42,354

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

THERMO FISHER SCIENTIFIC INC.

CONDENSED CONSOLIDATED STATEMENT OF REDEEMABLE NONCONTROLLING INTEREST AND EQUITY (Continued)

(Unaudited)

Redeemable Noncontrolling Interest Common Stock Capital in Excess of Par Value Retained Earnings Treasury Stock Accumulated Other Comprehensive Items Total
Thermo Fisher Scientific Inc. Shareholders’ Equity Noncontrolling Interests Total Equity
(In millions) Shares Amount Shares Amount
Six months ended July 2, 2022
Balance at December 31, 2021 $ 122 439 $ 439 $ 16,174 $ 35,431 45 $ (8,922) $ (2,329) $ 40,793 $ 62 $ 40,855
Issuance of shares under employees' and directors' stock plans — 1 1 138 — — (42) — 97 — 97
Stock-based compensation — — — 155 — — — — 155 — 155
Purchases of company common stock — — — — — 3 (2,000) — (2,000) — (2,000)
Dividends declared ($0.60 per share) — — — — (236) — — — (236) — (236)
Net income 9 — — — 3,879 — — — 3,879 — 3,879
Other comprehensive items (7) — — — — — — (395) (395) — (395)
Contributions from (distributions to) noncontrolling interests (7) — — — — — — — — (1) (1)
Balance at July 2, 2022 $ 117 440 $ 440 $ 16,467 $ 39,074 48 $ (10,964) $ (2,724) $ 42,293 $ 61 $ 42,354
Six months ended July 3, 2021
Balance at December 31, 2020 $ — 437 $ 437 $ 15,579 $ 28,116 40 $ (6,818) $ (2,807) $ 34,507 $ 10 $ 34,517
Issuance of shares under employees' and directors' stock plans — 1 1 145 — 1 (38) — 108 — 108
Stock-based compensation — — — 102 — — — — 102 — 102
Purchases of company common stock — — — — — 4 (2,000) — (2,000) — (2,000)
Dividends declared ($0.52 per share) — — — — (205) — — — (205) — (205)
Net income — — — — 4,165 — — — 4,165 1 4,166
Other comprehensive items — — — — — — — 177 177 — 177
Contributions from (distributions to) noncontrolling interests — — — — — — — — — 36 36
Balance at July 3, 2021 $ — 438 $ 438 $ 15,826 $ 32,076 45 $ (8,856) $ (2,630) $ 36,854 $ 47 $ 36,901


	Redeemable Noncontrolling Interest		Common Stock			Capital in Excess of Par Value		Retained Earnings		Treasury Stock			Accumulated Other Comprehensive Items		Total Thermo Fisher Scientific Inc. Shareholders’ Equity		Noncontrolling Interests		Total Equity
(In millions)			Shares	Amount						Shares	Amount
























			Six months ended July 1, 2023
Balance at December 31, 2022	$	116	441	$	441	$	16,743	$	41,910	50	$	(12,017)	$	(3,099)	$	43,978	$	54	$	44,032

Issuance of shares under employees' and directors' stock plans	—		—	—		137		—		—	(38)		—		99		—		99
Stock-based compensation	—		—	—		150		—		—	—		—		150		—		150
Purchases of company common stock	—		—	—		—		—		5	(3,000)		—		(3,000)		—		(3,000)
Dividends declared ($0.70 per share)	—		—	—		—		(271)		—	—		—		(271)		—		(271)

Net income/(loss)	8		—	—		—		2,650		—	—		—		2,650		(4)		2,646
Other comprehensive income/(loss)	(4)		—	—		—		—		—	—		175		175		—		175
Contributions from (distributions to) noncontrolling interests	(7)		—	—		—		—		—	—		—		—		—		—
Excise tax from stock repurchases	—		—	—		—		—		—	(29)		—		(29)		—		(29)

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

			Six months ended July 2, 2022
Balance at December 31, 2021	$	122	439	$	439	$	16,174	$	35,431	45	$	(8,922)	$	(2,329)	$	40,793	$	62	$	40,855

Issuance of shares under employees' and directors' stock plans	—		1	1		138		—		—	(42)		—		97		—		97
Stock-based compensation	—		—	—		155		—		—	—		—		155		—		155
Purchases of company common stock	—		—	—		—		—		3	(2,000)		—		(2,000)		—		(2,000)
Dividends declared ($0.60 per share)	—		—	—		—		(236)		—	—		—		(236)		—		(236)
Net income/(loss)	9		—	—		—		3,879		—	—		—		3,879		—		3,879
Other comprehensive income/(loss)	(7)		—	—		—		—		—	—		(395)		(395)		—		(395)
Contributions from (distributions to) noncontrolling interests	(7)		—	—		—		—		—	—		—		—		(1)		(1)
Balance at July 2, 2022	$	117	440	$	440	$	16,467	$	39,074	48	$	(10,964)	$	(2,724)	$	42,293	$	61	$	42,354

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

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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

Nature of Operations

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

Interim Financial Statements

The interim condensed consolidated financial statements presented herein have been prepared by the company, are unaudited and, in the opinion of management, reflect all adjustments of a normal recurring nature necessary for a fair statement of the financial position at July ~~2, 2022,~~1, 2023, the results of operations for the three- and six-month periods ended July ~~2, 2022~~1, 2023 and July ~~3, 2021,~~2, 2022, and the cash flows for the six-month periods ended July ~~2, 2022~~1, 2023 and July ~~3, 2021.~~2, 2022. Interim results are not necessarily indicative of results for a full year.

The condensed consolidated balance sheet presented as of December 31, ~~2021,~~2022 has been derived from the audited consolidated financial statements as of that date. The condensed consolidated financial statements and notes are presented as permitted by Form 10-Q and do not contain all information that is included in the annual financial statements and notes thereto of the company. The condensed consolidated financial statements and notes included in this report should be read in conjunction with the ~~2021~~2022 financial statements and notes included in the company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC). Certain reclassifications of prior year amounts have been made to conform to the current year presentation.

Note 1 to the consolidated financial statements for ~~2021~~2022 describes the significant accounting estimates and policies used in preparation of the consolidated financial statements. There have been no material changes in the company’s significant accounting policies during the six months ended July ~~2, 2022.~~1, 2023.

Inventories

The components of inventories are as follows:


		July 2,		December 31,
(In millions)	(In millions)	2022		2021		(In millions)	July 1, 2023		December 31, 2022
Raw materials	Raw materials	$	2,335	$	1,922	Raw materials	$	2,368	$	2,405
Work in process	Work in process	699		676		Work in process	760		660
Finished goods	Finished goods	2,634		2,453		Finished goods	2,527		2,569
Inventories	Inventories	$	5,668	$	5,051	Inventories	$	5,655	$	5,634

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

The company’s estimates include, among others, asset reserve requirements as well as the amounts of future cash flows associated with certain assets and businesses that are used in assessing the risk of impairment. The negative impacts associated with the ongoing COVID-19 global pandemic significantly lessened in 2021 and 2022. The extent and duration of negative impacts in the future, which may include inflationary pressures and supply chain disruptions, are uncertain and may require changes to estimates. Actual results could differ from those estimates.

Recent Accounting Pronouncements

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

In November 2021, the FASB issued new guidance to require entities to disclose information about certain types of government assistance they receive, including cash grants and tax credits. Among other things, the new guidance requires expanded disclosure regarding the qualitative and quantitative characteristics of the nature, amount, timing, and significant terms and conditions of transactions with a government arising from a grant or other forms of assistance accounted for under a contribution model. The company ~~will adopt~~adopted this guidance in the fourth quarter of 2022 using a prospective method. The adoption of this guidance isdid not ~~expected to~~ have a material impact on the company’s ~~disclosures; however, the impact in future periods will be dependent on the extent of transactions of this nature entered into by the company.~~disclosures.

THERMO FISHER SCIENTIFIC INC.

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

(Unaudited)

Note 2. Acquisitions

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

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

~~2022~~2023

On January 3, 2023, the company acquired, within the Specialty Diagnostics segment, The Binding Site Group, a U.K.-based provider of specialty diagnostic assays and instruments to improve the diagnosis and management of blood cancers and immune system disorders. The acquisition expands the segment’s portfolio with the addition of pioneering innovation in diagnostics and monitoring for multiple myeloma. The goodwill recorded as a result of this business combination is not tax deductible.

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


(In millions)	The Binding Site
Purchase price
Cash paid	$	2,412
Debt settled	307


Cash acquired	(20)
	$	2,699

Net assets acquired


Definite-lived intangible assets:
Customer relationships	$	868
Product technology	172
Tradenames	42



Goodwill	1,755
Net tangible assets	141

Deferred tax assets (liabilities)	(279)




	$	2,699

In ~~2022,~~addition, in 2023, the company acquired, within the Analytical Instruments segment, a U.S.-based developer of ~~Fourier-transform infrared gas analysis technologies.~~

~~2021~~Raman-based spectroscopy solutions for in-line measurement.

The ~~preliminary allocations of the purchase price~~weighted-average amortization period for the acquisitions of the Lengnau biologics manufacturing facility, PPD, Inc. and PeproTech, Inc. were based on estimates of the fair values of the net assets acquired and are subject to adjustment upon finalization, largely with respect to acquired intangible assets, lease assets and liabilities, and the related deferred taxes. Measurements of these items inherently require significant estimates and assumptions. During the first six months of 2022, the company adjusted the preliminary allocations of PPD and PeproTech, which among others increased goodwill ($95 million) and other liabilities assumed ($22 million), and decreased definite-lived intangible assets ~~($43 million), other current~~acquired in 2023 are 18 years for customer relationships, 14 years for product technology and 15 years for tradenames. The weighted average amortization period for all definite-lived intangible assets ~~($34 million), contract liabilities ($29 million), equity method investments ($23 million),~~acquired in 2023 is 17 years.

Pending Acquisition

The company has entered into an agreement to acquire CorEvitas, LLC for approximately $0.91 billion in cash. CorEvitas provides regulatory-grade, real-world evidence for approved medical treatments and therapies. The transaction, which is expected to be completed by the ~~fair value~~end of ~~assumed contingent consideration ($18 million). The adjustment~~2023, is subject to ~~amortization expense recorded during~~customary closing conditions, including regulatory approvals. Upon completion, CorEvitas will become part of the ~~first six months of 2022 was not material.~~Laboratory Products and Biopharma Services segment.

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 3. Revenues and Contract-related Balances

Disaggregated Revenues

Revenues by type are as follows:


		Three months ended				Six months ended					Three months ended				Six months ended
		July 2,		July 3,		July 2,		July 3,
(In millions)	(In millions)	2022		2021		2022		2021		(In millions)	July 1, 2023		July 2, 2022		July 1, 2023		July 2, 2022
Revenues	Revenues									Revenues
Consumables	Consumables	$	4,993	$	5,372	$	11,103	$	11,336	Consumables	$	4,433	$	4,993	$	8,939	$	11,103
Instruments	Instruments	2,010		1,842		3,917		3,734		Instruments	1,838		2,010		3,736		3,917
Services	Services	3,967		2,059		7,768		4,109		Services	4,416		3,967		8,722		7,768
Consolidated revenues	Consolidated revenues	$	10,970	$	9,273	$	22,788	$	19,179	Consolidated revenues	$	10,687	$	10,970	$	21,397	$	22,788

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


											Three months ended				Six months ended
		Three months ended				Six months ended
		July 2,		July 3,		July 2,		July 3,
(In millions)	(In millions)	2022		2021		2022		2021		(In millions)	July 1, 2023		July 2, 2022		July 1, 2023		July 2, 2022
Revenues	Revenues									Revenues
North America	North America	$	6,032	$	4,529	$	12,355	$	9,630	North America	$	5,714	$	6,032	$	11,492	$	12,355
Europe	Europe	2,551		2,695		5,601		5,480		Europe	2,654		2,551		5,255		5,601
Asia-Pacific	Asia-Pacific	2,042		1,749		4,106		3,458		Asia-Pacific	1,902		2,042		3,888		4,106
Other regions	Other regions	345		300		726		611		Other regions	417		345		762		726
Consolidated revenues	Consolidated revenues	$	10,970	$	9,273	$	22,788	$	19,179	Consolidated revenues	$	10,687	$	10,970	$	21,397	$	22,788

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.

~~THERMO FISHER SCIENTIFIC INC.~~

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

~~(Unaudited)~~

Remaining Performance Obligations

The aggregate amount of the transaction price allocated to the remaining performance obligations for all open customer contracts as of July ~~2, 2022~~1, 2023 was ~~$27.70~~$25.39 billion. The company will recognize revenues for these performance obligations as they are satisfied, approximately ~~58%~~56% of which is expected to occur within the next twelve months. Amounts expected to occur thereafter generally relate to contract manufacturing, clinical research and extended warranty service agreements, which typically have durations of three to five years.

Contract-related Balances

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


		July 2,		December 31,
(In millions)	(In millions)	2022		2021		(In millions)	July 1, 2023		December 31, 2022
Current contract assets, net	Current contract assets, net	$	1,147	$	968	Current contract assets, net	$	1,467	$	1,312
Noncurrent contract assets, net	Noncurrent contract assets, net	10		9		Noncurrent contract assets, net	6		7
Current contract liabilities	Current contract liabilities	2,722		2,655		Current contract liabilities	2,590		2,601
Noncurrent contract liabilities	Noncurrent contract liabilities	1,237		1,238		Noncurrent contract liabilities	1,098		1,179

In the three and six months ended July 1, 2023, the company recognized revenues of $0.68 billion and $1.98 billion, respectively, that were included in the contract liabilities balance at December 31, 2022. In the three and six months ended July 2, 2022, the company recognized revenues of $0.71 billion and $1.99 billion, respectively, that were included in the contract liabilities balance at December 31, 2021. In the three and six months ended July 3, 2021, the company recognized revenues of $0.37 billion and $0.93 billion, respectively, that were included in the contract liabilities balance at December 31, 2020.

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 4. Business Segment and Geographical Information

Business Segment Information
Three months ended Six months ended
July 2, July 3, July 2, July 3,
(In millions) 2022 2021 2022 2021
Revenues
Life Sciences Solutions $ 3,292 $ 3,557 $ 7,523 $ 7,760
Analytical Instruments 1,607 1,481 3,125 2,868
Specialty Diagnostics 1,101 1,235 2,583 2,850
Laboratory Products and Biopharma Services 5,537 3,583 10,979 7,180
Eliminations (567) (583) (1,422) (1,479)
Consolidated revenues 10,970 9,273 22,788 19,179
Segment Income
Life Sciences Solutions 1,327 1,718 3,503 3,997
Analytical Instruments 344 280 645 552
Specialty Diagnostics 243 245 596 673
Laboratory Products and Biopharma Services 691 446 1,311 977
Subtotal reportable segments 2,605 2,689 6,055 6,199
Cost of revenues adjustments (8) — (19) (8)
Selling, general and administrative expenses adjustments 28 42 21 26
Restructuring and other costs (24) (119) (26) (133)
Amortization of acquisition-related intangible assets (600) (449) (1,209) (872)
Consolidated operating income 2,001 2,163 4,822 5,212
Interest income 36 11 54 23
Interest expense (148) (122) (284) (247)
Other income/(expense) 28 (3) (135) (186)
Income before income taxes $ 1,917 $ 2,049 $ 4,457 $ 4,802

~~THERMO FISHER SCIENTIFIC INC.~~

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

~~(Unaudited)~~


	Three months ended				Six months ended
	July 1,		July 2,		July 1,		July 2,
(In millions)	2023		2022		2023		2022
Revenues
Life Sciences Solutions	$	2,463	$	3,292	$	5,075	$	7,523
Analytical Instruments	1,749		1,607		3,472		3,125
Specialty Diagnostics	1,109		1,101		2,217		2,583
Laboratory Products and Biopharma Services	5,831		5,537		11,594		10,979
Eliminations	(465)		(567)		(961)		(1,422)
Consolidated revenues	10,687		10,970		21,397		22,788

Segment Income
Life Sciences Solutions	817		1,327		1,653		3,503
Analytical Instruments	432		344		853		645
Specialty Diagnostics	297		243		577		596
Laboratory Products and Biopharma Services	824		691		1,617		1,311
Subtotal reportable segments	2,370		2,605		4,700		6,055
Cost of revenues adjustments	(18)		(8)		(59)		(19)
Selling, general and administrative expenses adjustments	(6)		28		(14)		21
Restructuring and other costs	(183)		(24)		(295)		(26)
Amortization of acquisition-related intangible assets	(585)		(600)		(1,191)		(1,209)
Consolidated operating income	1,578		2,001		3,141		4,822
Interest income	178		36		324		54
Interest expense	(326)		(148)		(626)		(284)
Other income/(expense)	—		28		(46)		(135)
Consolidated income before taxes	$	1,430	$	1,917	$	2,793	$	4,457

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

Geographical Information

Revenues by country based on customer location are as follows:


											Three months ended				Six months ended
		Three months ended				Six months ended
		July 2,		July 3,		July 2,		July 3,
(In millions)	(In millions)	2022		2021		2022		2021		(In millions)	July 1, 2023		July 2, 2022		July 1, 2023		July 2, 2022
Revenues	Revenues									Revenues
United States	United States	$	5,846	$	4,355	$	11,943	$	9,247	United States	$	5,531	$	5,846	$	11,118	$	11,943
China	China	1,001		794		1,911		1,569		China	856		1,001		1,726		1,911
Other	Other	4,123		4,124		8,934		8,363		Other	4,300		4,123		8,553		8,934
Consolidated revenues	Consolidated revenues	$	10,970	$	9,273	$	22,788	$	19,179	Consolidated revenues	$	10,687	$	10,970	$	21,397	$	22,788

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 5. Income Taxes

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


									Six months ended
		Six months ended
		July 2,			July 3,
(In millions)	(In millions)	2022			2021			(In millions)	July 1, 2023			July 2, 2022
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	$	936		$	1,008		Provision for income taxes at statutory rate	$	587		$	936
Increases (decreases) resulting from:	Increases (decreases) resulting from:							Increases (decreases) resulting from:
Foreign rate differential	Foreign rate differential	(138)			(73)			Foreign rate differential	(125)			(138)
Income tax credits	Income tax credits	(117)			(173)			Income tax credits	(136)			(117)
Global intangible low-taxed income	Global intangible low-taxed income	46			50			Global intangible low-taxed income	46			46
Foreign-derived intangible income	Foreign-derived intangible income	(71)			(89)			Foreign-derived intangible income	(55)			(71)
Excess tax benefits from stock options and restricted stock units	Excess tax benefits from stock options and restricted stock units	(31)			(47)			Excess tax benefits from stock options and restricted stock units	(37)			(31)

Provision for (reversal of) tax reserves, net								Provision for (reversal of) tax reserves, net	8			13
Intra-entity transfers	Intra-entity transfers	(18)			(162)			Intra-entity transfers	(144)			(18)

Valuation allowances		(175)			29
Foreign exchange loss on inter-company debt refinancing								Foreign exchange loss on inter-company debt refinancing	(112)			—
Provision for (reversal of) valuation allowances, net								Provision for (reversal of) valuation allowances, net	66			(175)
Withholding taxes	Withholding taxes	33			28			Withholding taxes	12			33

Tax return reassessments and settlements								Tax return reassessments and settlements	(38)			(4)
State income taxes, net of federal tax	State income taxes, net of federal tax	67			78			State income taxes, net of federal tax	53			67
Other, net	Other, net	(33)			(14)			Other, net	(27)			(42)
Provision for income taxes	Provision for income taxes	$	499		$	635		Provision for income taxes	$	98		$	499

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

Unrecognized Tax Benefits

As of July ~~2, 2022~~1, 2023 the company had ~~$1.10~~$0.56 billion of unrecognized tax benefits substantially all of which, if recognized, would reduce the effective tax rate. A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:


(In millions)	~~2022~~2023
Balance at beginning of year	$	~~1,124~~572


Additions for tax positions of current year	13 4
Additions for tax positions of prior years	26
Reductions for tax positions of prior years	(27)




~~Closure of tax years~~	~~(2)~~
Settlements	~~(32)~~(18)
Balance at end of period	$	~~1,103~~557

~~THERMO FISHER SCIENTIFIC INC.~~

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

~~(Unaudited)~~

Note 6. Earnings per Share


											Three months ended				Six months ended
		Three months ended				Six months ended					July 1,		July 2,		July 1,		July 2,
		July 2,		July 3,		July 2,		July 3,
(In millions except per share amounts)	(In millions except per share amounts)	2022		2021		2022		2021		(In millions except per share amounts)	2023		2022		2023		2022
Net income attributable to Thermo Fisher Scientific Inc.	Net income attributable to Thermo Fisher Scientific Inc.	$	1,664	$	1,828	$	3,879	$	4,165	Net income attributable to Thermo Fisher Scientific Inc.	$	1,361	$	1,664	$	2,650	$	3,879

Basic weighted average shares	Basic weighted average shares	392		393		392		394		Basic weighted average shares	386		392		386		392
Plus effect of: stock options and restricted stock units	Plus effect of: stock options and restricted stock units	2		3		2		3		Plus effect of: stock options and restricted stock units	2		2		2		2
Diluted weighted average shares	Diluted weighted average shares	394		396		394		397		Diluted weighted average shares	388		394		388		394

Basic earnings per share	Basic earnings per share	$	4.25	$	4.65	$	9.90	$	10.58	Basic earnings per share	$	3.53	$	4.25	$	6.86	$	9.90
Diluted earnings per share	Diluted earnings per share	$	4.22	$	4.61	$	9.83	$	10.50	Diluted earnings per share	$	3.51	$	4.22	$	6.83	$	9.83

Antidilutive stock options excluded from diluted weighted average shares	Antidilutive stock options excluded from diluted weighted average shares	2		1		2		1		Antidilutive stock options excluded from diluted weighted average shares	2		2		2		2

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 7. Debt and Other Financing Arrangements


		Effective interest rate at July 2,		July 2,		December 31,			Effective interest rate at July 1,		July 1,		December 31,
(Dollars in millions)	(Dollars in millions)	2022		2022		2021		(Dollars in millions)	2023		2023		2022
Commercial Paper	Commercial Paper			$	—	$	2,522	Commercial Paper	5.59	%	$	500	$	310

Floating Rate (SOFR + 0.35%) 1.5-Year Senior Notes, Due 4/18/2023	Floating Rate (SOFR + 0.35%) 1.5-Year Senior Notes, Due 4/18/2023			1,000		1,000		Floating Rate (SOFR + 0.35%) 1.5-Year Senior Notes, Due 4/18/2023			—		1,000
Floating Rate (SOFR + 0.39%) 2-Year Senior Notes, Due 10/18/2023	Floating Rate (SOFR + 0.39%) 2-Year Senior Notes, Due 10/18/2023			500		500		Floating Rate (SOFR + 0.39%) 2-Year Senior Notes, Due 10/18/2023			500		500
0.797% 2-Year Senior Notes, Due 10/18/2023	0.797% 2-Year Senior Notes, Due 10/18/2023	1.04	%	1,350		1,350		0.797% 2-Year Senior Notes, Due 10/18/2023	1.03	%	1,350		1,350
Floating Rate (EURIBOR + 0.20%) 2-Year Senior Notes Due 11/18/2023 (euro-denominated)		0.00	%	1,770		1,933
0.000% 2-Year Senior Notes Due 11/18/2023 (euro-denominated)		0.06	%	573		625
Floating Rate (EURIBOR + 0.20%) 2-Year Senior Notes, Due 11/18/2023 (euro-denominated)								Floating Rate (EURIBOR + 0.20%) 2-Year Senior Notes, Due 11/18/2023 (euro-denominated)	3.41	%	1,854		1,819
0.000% 2-Year Senior Notes, Due 11/18/2023 (euro-denominated)								0.000% 2-Year Senior Notes, Due 11/18/2023 (euro-denominated)	0.06	%	600		589
0.75% 8-Year Senior Notes, Due 9/12/2024 (euro-denominated)	0.75% 8-Year Senior Notes, Due 9/12/2024 (euro-denominated)	0.93	%	1,041		1,137		0.75% 8-Year Senior Notes, Due 9/12/2024 (euro-denominated)	0.93	%	1,091		1,071
Floating Rate (SOFR + 0.53%) 3-Year Senior Notes, Due 10/18/2024								Floating Rate (SOFR + 0.53%) 3-Year Senior Notes, Due 10/18/2024			500		500
1.215% 3-Year Senior Notes, Due 10/18/2024	1.215% 3-Year Senior Notes, Due 10/18/2024	1.42	%	2,500		2,500		1.215% 3-Year Senior Notes, Due 10/18/2024	1.42	%	2,500		2,500
Floating Rate (SOFR + 0.53%) 3-Year Senior Notes, Due 10/18/2024				500		500
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)	0.40	%	833		910		0.125% 5.5-Year Senior Notes, Due 3/1/2025 (euro-denominated)	0.41	%	873		857
2.00% 10-Year Senior Notes, Due 4/15/2025 (euro-denominated)	2.00% 10-Year Senior Notes, Due 4/15/2025 (euro-denominated)	2.09	%	666		728		2.00% 10-Year Senior Notes, Due 4/15/2025 (euro-denominated)	2.10	%	698		686
0.853% 3-Year Senior Notes, Due 10/20/2025 (yen-denominated)								0.853% 3-Year Senior Notes, Due 10/20/2025 (yen-denominated)	1.05	%	155		170
0.000% 4-Year Senior Notes, Due 11/18/2025 (euro-denominated)	0.000% 4-Year Senior Notes, Due 11/18/2025 (euro-denominated)	0.15	%	573		625		0.000% 4-Year Senior Notes, Due 11/18/2025 (euro-denominated)	0.15	%	600		589
3.65% 10-Year Senior Notes, Due 12/15/2025				—		350
3.20% 3-Year Senior Notes, Due 1/21/2026 (euro-denominated)								3.20% 3-Year Senior Notes, Due 1/21/2026 (euro-denominated)	3.39	%	545		535
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)	1.52	%	729		796		1.40% 8.5-Year Senior Notes, Due 1/23/2026 (euro-denominated)	1.53	%	764		749
1.45% 10-Year Senior Notes, Due 3/16/2027 (euro-denominated)	1.45% 10-Year Senior Notes, Due 3/16/2027 (euro-denominated)	1.65	%	521		568		1.45% 10-Year Senior Notes, Due 3/16/2027 (euro-denominated)	1.65	%	545		535
1.75% 7-Year Senior Notes, Due 4/15/2027 (euro-denominated)	1.75% 7-Year Senior Notes, Due 4/15/2027 (euro-denominated)	1.96	%	625		682		1.75% 7-Year Senior Notes, Due 4/15/2027 (euro-denominated)	1.96	%	654		642
1.054% 5-Year Senior Notes, Due 10/20/2027 (yen-denominated)								1.054% 5-Year Senior Notes, Due 10/20/2027 (yen-denominated)	1.18	%	200		221
4.80% 5-Year Senior Notes, Due 11/21/2027								4.80% 5-Year Senior Notes, Due 11/21/2027	5.00	%	600		600
0.50% 8.5-Year Senior Notes, Due 3/1/2028 (euro-denominated)	0.50% 8.5-Year Senior Notes, Due 3/1/2028 (euro-denominated)	0.76	%	833		910		0.50% 8.5-Year Senior Notes, Due 3/1/2028 (euro-denominated)	0.77	%	873		857
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	%	625		682		1.375% 12-Year Senior Notes, Due 9/12/2028 (euro-denominated)	1.46	%	654		642
1.750% 7-Year Senior Notes, Due 10/15/2028		1.89	%	700		700
1.75% 7-Year Senior Notes, Due 10/15/2028								1.75% 7-Year Senior Notes, Due 10/15/2028	1.89	%	700		700
1.95% 12-Year Senior Notes, Due 7/24/2029 (euro-denominated)	1.95% 12-Year Senior Notes, Due 7/24/2029 (euro-denominated)	2.07	%	729		796		1.95% 12-Year Senior Notes, Due 7/24/2029 (euro-denominated)	2.08	%	764		749
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
1.279% 7-Year Senior Notes, Due 10/19/2029 (yen-denominated)								1.279% 7-Year Senior Notes, Due 10/19/2029 (yen-denominated)	1.44	%	33		36
0.80% 9-Year Senior Notes, Due 10/18/2030 (euro-denominated)	0.80% 9-Year Senior Notes, Due 10/18/2030 (euro-denominated)	0.88	%	1,822		1,990		0.80% 9-Year Senior Notes, Due 10/18/2030 (euro-denominated)	0.88	%	1,909		1,873
0.875% 12-Year Senior Notes, Due 10/1/2031 (euro-denominated)	0.875% 12-Year Senior Notes, Due 10/1/2031 (euro-denominated)	1.13	%	937		1,023		0.875% 12-Year Senior Notes, Due 10/1/2031 (euro-denominated)	1.13	%	982		963
2.00% 10-Year Senior Notes, Due 10/15/2031	2.00% 10-Year Senior Notes, Due 10/15/2031	2.23	%	1,200		1,200		2.00% 10-Year Senior Notes, Due 10/15/2031	2.23	%	1,200		1,200
2.375% 12-Year Senior Notes, Due 4/15/2032 (euro-denominated)	2.375% 12-Year Senior Notes, Due 4/15/2032 (euro-denominated)	2.54	%	625		682		2.375% 12-Year Senior Notes, Due 4/15/2032 (euro-denominated)	2.55	%	654		642
1.49% 10-Year Senior Notes, Due 10/20/2032 (yen-denominated)								1.49% 10-Year Senior Notes, Due 10/20/2032 (yen-denominated)	1.60	%	44		48
4.95% 10-Year Senior Notes, Due 11/21/2032								4.95% 10-Year Senior Notes, Due 11/21/2032	5.09	%	600		600
1.125% 12-Year Senior Notes, Due 10/18/2033 (euro-denominated)	1.125% 12-Year Senior Notes, Due 10/18/2033 (euro-denominated)	1.20	%	1,562		1,706		1.125% 12-Year Senior Notes, Due 10/18/2033 (euro-denominated)	1.20	%	1,636		1,606
3.65% 12-Year Senior Notes, Due 11/21/2034 (euro-denominated)								3.65% 12-Year Senior Notes, Due 11/21/2034 (euro-denominated)	3.76	%	818		803
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	%	729		796		2.875% 20-Year Senior Notes, Due 7/24/2037 (euro-denominated)	2.94	%	764		749
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	%	937		1,023		1.50% 20-Year Senior Notes, Due 10/1/2039 (euro-denominated)	1.73	%	982		963
2.80% 20-Year Senior Notes, Due 10/15/2041	2.80% 20-Year Senior Notes, Due 10/15/2041	2.90	%	1,200		1,200		2.80% 20-Year Senior Notes, Due 10/15/2041	2.90	%	1,200		1,200
1.625% 20-Year Senior Notes, Due 10/18/2041 (euro-denominated)								1.625% 20-Year Senior Notes, Due 10/18/2041 (euro-denominated)	1.77	%	1,364		1,339
2.069% 20-Year Senior Notes, Due 10/20/2042 (yen-denominated)								2.069% 20-Year Senior Notes, Due 10/20/2042 (yen-denominated)	2.13	%	101		111
5.30% 30-Year Senior Notes, Due 2/1/2044								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
1.875% 30-Year Senior Notes, Due 10/1/2049 (euro-denominated)								1.875% 30-Year Senior Notes, Due 10/1/2049 (euro-denominated)	1.98	%	1,091		1,071

1314

THERMO FISHER SCIENTIFIC INC.

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

(Unaudited)


		Effective interest rate at July 2,		July 2,		December 31,			Effective interest rate at July 1,		July 1,		December 31,
(Dollars in millions)	(Dollars in millions)	2022		2022		2021		(Dollars in millions)	2023		2023		2022
1.625% 20-Year Senior Notes, Due 10/18/2041 (euro-denominated)		1.76	%	1,302		1,421
5.30% 30-Year Senior Notes, Due 2/1/2044		5.37	%	400		400
4.10% 30-Year Senior Notes, Due 8/15/2047		4.23	%	750		750
1.875% 30-Year Senior Notes, Due 10/1/2049 (euro-denominated)		1.98	%	1,041		1,137
2.00% 30-Year Senior Notes, Due 10/18/2051 (euro-denominated)	2.00% 30-Year Senior Notes, Due 10/18/2051 (euro-denominated)	2.06	%	781		853		2.00% 30-Year Senior Notes, Due 10/18/2051 (euro-denominated)	2.07	%	818		803
2.382% 30-Year Senior Notes, Due 10/18/2052 (yen-denominated)								2.382% 30-Year Senior Notes, Due 10/18/2052 (yen-denominated)	2.43	%	231		254
Other	Other			74		76		Other			76		79
Total borrowings at par value	Total borrowings at par value			30,328		34,971		Total borrowings at par value			34,073		34,561

Unamortized discount	Unamortized discount			(107)		(117)		Unamortized discount			(112)		(112)
Unamortized debt issuance costs	Unamortized debt issuance costs			(161)		(184)		Unamortized debt issuance costs			(155)		(171)
Total borrowings at carrying value	Total borrowings at carrying value			30,060		34,670		Total borrowings at carrying value			33,806		34,278
Finance lease liabilities	Finance lease liabilities			200		200		Finance lease liabilities			202		210
Less: Short-term obligations and current maturities	Less: Short-term obligations and current maturities			1,010		2,537		Less: Short-term obligations and current maturities			4,814		5,579
Long-term obligations	Long-term obligations			$	29,250	$	32,333	Long-term obligations			$	29,194	$	28,909

SOFR - Secured Overnight Financing Rate

EURIBOR - Euro Interbank Offered Rate

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

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

Credit Facilities

The company has a revolving credit facility (the Facility) with a bank group that provides for up to $5.00 billion of unsecured multi-currency revolving credit. The Facility expires on January 7, 2027. The revolving credit agreement calls for interest at either a Term SOFR, a EURIBOR-based rate (for funds drawn in euro) or a rate based on the prime lending rate of the agent bank, at the company’s option. The agreement contains affirmative, negative and financial covenants, and events of default customary for facilities of this type. The covenants in the Facility include a Consolidated Net Interest Coverage Ratio (Consolidated EBITDA to Consolidated Net Interest Expense), as such terms are defined in the Facility. Specifically, the company has agreed that, so long as any lender has any commitment under the Facility, any letter of credit is outstanding under the Facility, or any loan or other obligation is outstanding under the Facility, it will maintain a minimum Consolidated Net Interest Coverage Ratio of 3.5:1.0 as of the last day of any fiscal quarter. As of July ~~2, 2022,~~1, 2023, no borrowings were outstanding under the Facility, although available capacity was reduced by immaterial outstanding letters of credit.

Commercial Paper Programs

The company has commercial paper programs pursuant to which it may issue and sell unsecured, short-term promissory notes (CP Notes). Under the U.S. program, a) maturities may not exceed 397 days from the date of issue and b) the CP Notes are issued on a private placement basis under customary terms in the commercial paper market and are not redeemable prior to maturity nor subject to voluntary prepayment. Under the euro program, maturities may not exceed 183 days and may be denominated in euro, U.S. dollars, Japanese yen, British pounds sterling, Swiss franc, Canadian dollars or other currencies. Under both programs, the CP Notes are issued at a discount from par (or premium to par, in the case of negative interest rates), or, alternatively, are sold at par and bear varying interest rates on a fixed or floating basis. ~~As of July 2, 2022, there were no outstanding borrowings under these programs.~~

Senior Notes

Interest is payable quarterly on the floating rate senior notes, annually on the euro-denominated fixed rate senior notes and semi-annually on all other senior notes. Each of the U.S. dollar and euro-denominated fixed rate senior notes may be redeemed at a redemption price of 100% of the principal amount plus a specified make-whole premium and accrued interest. Except for the euro-denominated floating rate senior notes, which may not be redeemed early, the floating rate senior notes may be redeemed in whole or in part on or after their applicable call dates at a redemption price of 100% of the principal amount plus accrued interest. The company is subject to certain affirmative and negative covenants under the indentures governing the senior notes, the most restrictive of which

~~THERMO FISHER SCIENTIFIC INC.~~

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

~~(Unaudited)~~

limits the ability of the company to pledge principal properties as security under borrowing arrangements. The company was in compliance with all covenants at July ~~2, 2022.~~1, 2023.

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

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Thermo Fisher Scientific (Finance I) B.V. (Thermo Fisher International), a wholly-owned finance subsidiary of the company, issued each of the Floating Rate Senior Notes due 2023, the 0.00% Senior Notes due 2023, the 0.00% Senior Notes due 2025, the 0.80% Senior Notes due 2030, the 1.125% Senior Notes due 2033, the 1.625% Senior Notes due 2041, and the 2.00% Senior Notes due 2051 included in the table above (collectively, the “Euronotes”) in registered public offerings. The company has fully and unconditionally guaranteed all of Thermo Fisher International’s obligations under the Euronotes and all of Thermo Fisher International’s other debt securities, and no other subsidiary of the company will guarantee these obligations. Thermo Fisher International is a “finance subsidiary” as defined in Rule 13-01(a)(4)(vi) of the Exchange Act, with no assets or operations other than those related to the issuance, administration and repayment of the Euronotes and other debt securities issued by Thermo Fisher International from time to time. The financial condition, results of operations and cash flows of Thermo Fisher International are consolidated in the financial statements of the company.

Note 8. Commitments and Contingencies

Environmental Matters

The company is currently involved in various stages of investigation and remediation related to environmental matters. The company cannot predict all potential costs related to environmental remediation matters and the possible impact on future operations given the uncertainties regarding the extent of the required cleanup, the complexity and interpretation of applicable laws and regulations, the varying costs of alternative cleanup methods and the extent of the company’s responsibility. Expenses for environmental remediation matters related to the costs of installing, operating and maintaining groundwater-treatment systems and other remedial activities related to historical environmental contamination at the company’s domestic and international facilities were not material in any period presented. At July ~~2, 2022,~~1, 2023, there have been no material changes to the accruals for pending environmental-related matters disclosed in the company’s ~~2021~~2022 financial statements and notes included in the company’s Annual Report on Form 10-K. While management believes the accruals for environmental remediation are adequate based on current estimates of remediation costs, the company may be subject to additional remedial or compliance costs due to future events such as changes in existing laws and regulations, changes in agency direction or enforcement policies, developments in remediation technologies or changes in the conduct of the company’s operations, which could have a material adverse effect on the company’s financial position, results of operations and cash flows.

Litigation and Related Contingencies

The company is involved in various disputes, governmental and/or regulatory inspections, inquiries, investigations and proceedings, and litigation matters that arise from time to time in the ordinary course of business. The disputes and litigation matters include product liability, intellectual property, employment and commercial issues. Due to the inherent uncertainties associated with pending litigation or claims, the company cannot predict the outcome, nor, with respect to certain pending litigation or claims where no liability has been accrued, make a meaningful estimate of the reasonably possible loss or range of loss that could result from an unfavorable outcome. The company has no material accruals for pending litigation or claims for which accrual amounts are not disclosed in the company’s ~~2021~~2022 financial statements and notes included in the company’s Annual Report on Form 10-K, nor are material losses deemed probable for such matters. It is reasonably possible, however, that an unfavorable outcome that exceeds the company’s current accrual estimate, if any, for one or more ~~of the~~such matters ~~described below~~ could have a material adverse effect on the company’s results of operations, financial position and cash flows.

Product Liability, Workers Compensation and Other Personal Injury Matters

The company is involved in various proceedings and litigation that arise from time to time in connection with product liability, workers compensation and other personal injury matters. At July ~~2, 2022,~~1, 2023, there have been no material changes to the accruals for pending product liability, workers compensation, and other personal injury matters disclosed in the company’s ~~2021~~2022 financial statements and notes included in the company’s Annual Report on Form 10-K. Although the company believes that the amounts accrued and estimated insurance recoveries are probable and appropriate based on available information, including actuarial studies of loss estimates, the process of estimating losses and insurance recoveries involves a considerable degree of judgment by management and the ultimate amounts could vary, which could have a material adverse effect on the company’s results of operations, financial position, and cash flows. Insurance contracts do not relieve the company of its primary obligation with respect to any losses incurred. The collectability of amounts due from its insurers is subject to the

~~THERMO FISHER SCIENTIFIC INC.~~

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

~~(Unaudited)~~

solvency and willingness of the insurer to pay, as well as the legal sufficiency of the insurance claims. Management monitors the payment history as well as the financial condition and ratings of its insurers on an ongoing basis.

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 9. Comprehensive ~~Income~~Income/(Loss)

Changes in each component of accumulated other comprehensive ~~items,~~income/(loss), net of tax, are as follows:
(In millions) Currency
translation
adjustment Unrealized
losses on
hedging
instruments Pension and
other
postretirement
benefit
liability
adjustment Total
Balance at December 31, 2021 $ (2,065) $ (35) $ (229) $ (2,329)
Other comprehensive items before reclassifications (416) — 9 (407)
Amounts reclassified from accumulated other comprehensive items 7 1 4 12
Net other comprehensive items (409) 1 13 (395)
Balance at July 2, 2022 $ (2,474) $ (34) $ (216) $ (2,724)


(In millions)	Currency translation adjustment		Unrealized losses on hedging instruments		Pension and other postretirement benefit liability adjustment		Total
Balance at December 31, 2022	$	(2,880)	$	(33)	$	(186)	$	(3,099)
Other comprehensive income/(loss) before reclassifications	169		—		—		169
Amounts reclassified from accumulated other comprehensive income/(loss)	4		4		(2)		6
Net other comprehensive income/(loss)	173		4		(2)		175
Balance at July 1, 2023	$	(2,707)	$	(29)	$	(188)	$	(2,924)

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:


		July 2,		Quoted prices in active markets		Significant other observable inputs		Significant unobservable inputs			July 1,		Quoted prices in active markets		Significant other observable inputs		Significant unobservable inputs
(In millions)	(In millions)	2022		(Level 1)		(Level 2)		(Level 3)		(In millions)	2023		(Level 1)		(Level 2)		(Level 3)
Assets	Assets									Assets
Cash equivalents	Cash equivalents	$	173	$	173	$	—	$	—	Cash equivalents	$	810	$	810	$	—	$	—
Investments	Investments	64		64		—		—		Investments	23		23		—		—
Warrants	Warrants	13		—		13		—		Warrants	11		—		11		—
Insurance contracts	Insurance contracts	153		—		153		—		Insurance contracts	192		—		192		—
Derivative contracts	Derivative contracts	103		—		103		—		Derivative contracts	7		—		7		—
Total assets	Total assets	$	506	$	237	$	269	$	—	Total assets	$	1,043	$	833	$	210	$	—

Liabilities	Liabilities									Liabilities
Derivative contracts	Derivative contracts	$	1	$	—	$	1	$	—	Derivative contracts	$	16	$	—	$	16	$	—
Contingent consideration	Contingent consideration	216		—		—		216		Contingent consideration	90		—		—		90
Total liabilities	Total liabilities	$	217	$	—	$	1	$	216	Total liabilities	$	106	$	—	$	16	$	90

1617

THERMO FISHER SCIENTIFIC INC.

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

(Unaudited)


		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)	2021		(Level 1)		(Level 2)		(Level 3)		(In millions)	2022		(Level 1)		(Level 2)		(Level 3)
Assets	Assets									Assets
Cash equivalents	Cash equivalents	$	2,210	$	2,210	$	—	$	—	Cash equivalents	$	5,804	$	5,804	$	—	$	—
Investments	Investments	298		298		—		—		Investments	25		25		—		—
Warrants	Warrants	15		—		15		—		Warrants	12		—		12		—
Insurance contracts	Insurance contracts	181		—		181		—		Insurance contracts	162		—		162		—
Derivative contracts	Derivative contracts	36		—		36		—		Derivative contracts	79		—		79		—
Total assets	Total assets	$	2,740	$	2,508	$	232	$	—	Total assets	$	6,082	$	5,829	$	253	$	—

Liabilities	Liabilities									Liabilities
Derivative contracts	Derivative contracts	$	1	$	—	$	1	$	—	Derivative contracts	$	101	$	—	$	101	$	—
Contingent consideration	Contingent consideration	317		—		—		317		Contingent consideration	174		—		—		174
Total liabilities	Total liabilities	$	318	$	—	$	1	$	317	Total liabilities	$	275	$	—	$	101	$	174

The company uses the Black-Scholes model to value its warrants. The company determines the fair value of its insurance contracts by obtaining the cash surrender value of the contracts from the issuer. The fair value of derivative contracts is the estimated amount that the company would receive/pay upon liquidation of the contracts, taking into account the change in interest rates and currency exchange rates. The company initially measures the fair value of acquisition-related contingent consideration based on amounts expected to be transferred (probability-weighted) discounted to present value. Changes to the fair value of contingent consideration are recorded in selling, general and administrative expense.

In the six months ended July 1, 2023, the company recorded $44 million, of net losses on investments, which are included in other income/(expense) in the accompanying statements of income. In the three and six months ended July 2, 2022, the company recorded $17 million and $(122) million, respectively, of net gains (losses) on investments, which are included in other income/(expense) in the accompanying statement of income. In the three and six months ended July 3, 2021, the company recorded $1 million and $2 million, respectively, of net losses on investments which are included in other income/(expense) in the accompanying statementstatements of income.

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


		Three months ended				Six months ended					Three months ended				Six months ended
		July 2,		July 3,		July 2,		July 3,			July 1,		July 2,		July 1,		July 2,
(In millions)	(In millions)	2022		2021		2022		2021		(In millions)	2023		2022		2023		2022
Contingent consideration	Contingent consideration									Contingent consideration
Beginning balance	Beginning balance	$	261	$	227	$	317	$	70	Beginning balance	$	136	$	261	$	174	$	317
Acquisitions (including assumed balances)	Acquisitions (including assumed balances)	—		17		(18)		179		Acquisitions (including assumed balances)	1		—		1		(18)
Payments	Payments	(2)		(35)		(32)		(42)		Payments	(43)		(2)		(58)		(32)
Changes in fair value included in earnings	Changes in fair value included in earnings	(43)		(60)		(51)		(58)		Changes in fair value included in earnings	(4)		(43)		(27)		(51)
Ending balance	Ending balance	$	216	$	149	$	216	$	149	Ending balance	$	90	$	216	$	90	$	216

Derivative Contracts

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


		July 2,		December 31,
(In millions)	(In millions)	2022		2021		(In millions)	July 1, 2023		December 31, 2022
Notional amount	Notional amount					Notional amount

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	$	2,200	$	2,100

Currency exchange contracts	Currency exchange contracts	1,571		2,149		Currency exchange contracts	1,500		2,434

1718

THERMO FISHER SCIENTIFIC INC.

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

(Unaudited)

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


		Fair value – assets				Fair value – liabilities					Fair value – assets				Fair value – liabilities
		July 2,		December 31,		July 2,		December 31,			July 1,		December 31,		July 1,		December 31,
(In millions)	(In millions)	2022		2021		2022		2021		(In millions)	2023		2022		2023		2022
Derivatives designated as hedging instruments	Derivatives designated as hedging instruments									Derivatives designated as hedging instruments

Cross-currency interest rate swaps (a)	Cross-currency interest rate swaps (a)	$	98	$	25	$	—	$	—	Cross-currency interest rate swaps (a)	$	6	$	77	$	15	$	85
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)	5		11		1		1		Currency exchange contracts (b)	1		2		1		16

Total derivatives	Total derivatives	$	103	$	36	$	1	$	1	Total derivatives	$	7	$	79	$	16	$	101

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

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


		Gain (loss) recognized									Gain (loss) recognized
		Three months ended				Six months ended					Three months ended				Six months ended
		July 2,		July 3,		July 2,		July 3,			July 1,		July 2,		July 1,		July 2,
(In millions)	(In millions)	2022		2021		2022		2021		(In millions)	2023		2022		2023		2022
Fair value hedging relationships
Interest rate swaps
Hedged long-term obligations - included in other income/(expense)		$	—	$	—	$	—	$	25
Derivatives designated as hedging instruments - included in other income/(expense)		—		—		—		(3)

Derivatives designated as cash flow hedges	Derivatives designated as cash flow hedges									Derivatives designated as cash flow hedges
Interest rate swaps	Interest rate swaps									Interest rate swaps

Amount reclassified from accumulated other comprehensive items to other income/(expense)	Amount reclassified from accumulated other comprehensive items to other income/(expense)	(1)		(2)		(2)		(19)		Amount reclassified from accumulated other comprehensive items to other income/(expense)	$	(1)	$	(1)	$	(5)	$	(2)
Financial instruments designated as net investment hedges	Financial instruments designated as net investment hedges									Financial instruments designated as net investment hedges
Foreign currency-denominated debt and other payables	Foreign currency-denominated debt and other payables									Foreign currency-denominated debt and other payables
Included in currency translation adjustment within other comprehensive items	Included in currency translation adjustment within other comprehensive items	671		(90)		1,033		376		Included in currency translation adjustment within other comprehensive items	(62)		671		(206)		1,033
Cross-currency interest rate swaps	Cross-currency interest rate swaps									Cross-currency interest rate swaps
Included in currency translation adjustment within other comprehensive items	Included in currency translation adjustment within other comprehensive items	51		(6)		74		32		Included in currency translation adjustment within other comprehensive items	59		51		50		74
Included in other income/(expense)	Included in other income/(expense)	4		2		6		4		Included in other income/(expense)	16		4		33		6
Derivatives not designated as hedging instruments	Derivatives not designated as hedging instruments									Derivatives not designated as hedging instruments
Currency exchange contracts	Currency exchange contracts									Currency exchange contracts
Included in cost of product revenues	Included in cost of product revenues	21		(11)		12		1		Included in cost of product revenues	—		21		(3)		12
Included in other income/(expense)	Included in other income/(expense)	13		(28)		12		155		Included in other income/(expense)	(25)		13		(2)		12

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

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

~~THERMO FISHER SCIENTIFIC INC.~~

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

~~(Unaudited)~~

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

See Note 1 to the consolidated financial statements for ~~2021~~2022 included in the company’s Annual Report on Form 10-K for additional information on the company’s risk management objectives and strategies.

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Fair Value of Other Financial Instruments

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


		July 2, 2022				December 31, 2021					July 1, 2023				December 31, 2022
		Carrying		Fair		Carrying		Fair			Carrying		Fair		Carrying		Fair
(In millions)	(In millions)	value		value		value		value		(In millions)	value		value		value		value
Senior notes	Senior notes	$	29,986	$	27,265	$	32,072	$	33,449	Senior notes	$	33,230	$	29,536	$	33,889	$	29,901

Commercial paper	Commercial paper	—		—		2,522		2,522		Commercial paper	500		500		310		310
Other	Other	74		74		76		76		Other	76		76		79		79
		$	30,060	$	27,339	$	34,670	$	36,047		$	33,806	$	30,112	$	34,278	$	30,290

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

Note 11. Supplemental Cash Flow Information


							Six months ended
		Six months ended
		July 2,		July 3,
(In millions)	(In millions)	2022		2021		(In millions)	July 1, 2023		July 2, 2022
Non-cash investing and financing activities	Non-cash investing and financing activities					Non-cash investing and financing activities
Acquired but unpaid property, plant and equipment	Acquired but unpaid property, plant and equipment	$	234	$	225	Acquired but unpaid property, plant and equipment	$	231	$	234

Fair value of acquisition contingent consideration		—		179

Declared but unpaid dividends	Declared but unpaid dividends	119		104		Declared but unpaid dividends	137		119
Issuance of stock upon vesting of restricted stock units	Issuance of stock upon vesting of restricted stock units	107		97		Issuance of stock upon vesting of restricted stock units	97		107
Excise tax from stock repurchases						Excise tax from stock repurchases	29		—

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


		July 2,		December 31,
(In millions)	(In millions)	2022		2021		(In millions)	July 1, 2023		December 31, 2022
Cash and cash equivalents	Cash and cash equivalents	$	1,888	$	4,477	Cash and cash equivalents	$	3,133	$	8,524
Restricted cash included in other current assets	Restricted cash included in other current assets	16		13		Restricted cash included in other current assets	13		12
Restricted cash included in other assets	Restricted cash included in other assets	1		1		Restricted cash included in other assets	7		1
Cash, cash equivalents and restricted cash	Cash, cash equivalents and restricted cash	$	1,905	$	4,491	Cash, cash equivalents and restricted cash	$	3,153	$	8,537

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

~~THERMO FISHER SCIENTIFIC INC.~~

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

~~(Unaudited)~~

Note 12. Restructuring and Other Costs

In the first six months of ~~2022,~~2023, restructuring and other costs primarily included continuing charges for headcount reductions and facility consolidations in an effort to streamline ~~operations.~~operations, impairment of long-lived assets, and, to a lesser extent, net charges for pre-acquisition litigation and other matters. In ~~2022,~~2023, severance actions associated with facility consolidations and cost reduction measures affected ~~less than 0.5%~~approximately 3% of the company’s workforce.

As of August ~~5, 2022,~~4, 2023, the company has identified restructuring actions that will result in additional charges of approximately ~~$20~~$85 million, primarily in ~~2022,~~2023, and expects to identify additional actions in future periods which will be recorded when specified criteria are met, such as communication of benefit arrangements or when the costs have been incurred.

Restructuring and other costs by segment are as follows:


								Three months ended		Six months ended
		Three months ended		Six months ended
		July 2,			July 2,
(In millions)	(In millions)	2022			2022		(In millions)	July 1, 2023		July 1, 2023
Life Sciences Solutions	Life Sciences Solutions	$	5		$	6	Life Sciences Solutions	$	20	$	80
Analytical Instruments	Analytical Instruments	2			4		Analytical Instruments	23		23
Specialty Diagnostics	Specialty Diagnostics	2			3		Specialty Diagnostics	2		10
Laboratory Products and Biopharma Services	Laboratory Products and Biopharma Services	15			13		Laboratory Products and Biopharma Services	133		176
Corporate							Corporate	5		6
								$	183	$	295
		$	24		$	26

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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


(In millions)	Total (a)
Balance at December 31, ~~2021~~2022	$	1741
Net restructuring charges incurred in ~~2022~~2023 (b)	22137
Payments	~~(24)~~(80)

Balance at July ~~2, 2022~~1, 2023	$	1598

(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.~~consolidations.

(b)Excludes $4$158 million of net ~~non-cash charges.~~charges, principally $99 million of charges for impairment of long-lived assets in the Laboratory Products and Biopharma Services and Life Sciences Solutions segments, $26 million of contract termination costs associated with facility closures in the Laboratory Products and Biopharma Services segment, and, to a lesser extent, $18 million of net charges for pre-acquisition litigation and other matters.

The company expects to pay accrued restructuring costs primarily through ~~2022.~~2023.

2021

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 (the Exchange Act), 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, and 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;~~pandemic; 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 report.

A number of important factors could cause the results of the company to differ materially from those indicated by such forward-looking statements, including those detailed under the caption “Risk Factors” in the company’s Annual Report on Form 10-K for the year ended December 31, ~~2021~~2022 (which is on file with the SEC). 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 may not materialize as expected.

The company refers to various amounts or measures not prepared in accordance with generally accepted accounting principles (non-GAAP measures). These non-GAAP measures are further described and reconciled to their most directly comparable amount or measure under the section “Non-GAAP Measures” later in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Overview

Thermo Fisher Scientific Inc. enables customers to make the world healthier, cleaner and safer by helping them accelerate life sciences research, solve complex analytical challenges, increase laboratory productivity, and improve patient health through diagnostics and the development and manufacture of life-changing therapies. Markets served include pharmaceutical and biotech, academic and government, industrial and applied, as well as healthcare and diagnostics. The ~~company��s~~company’s operations fall into four segments (Note 4): Life Sciences Solutions, Analytical Instruments, Specialty Diagnostics and Laboratory Products and Biopharma Services.

Consolidated Results


	Three months ended								Six months ended
	July 1,			July 2,					July 1,			July 2,
(Dollars in millions except per share amounts)	2023			2022			Change		2023			2022			Change
Revenues	$	10,687		$	10,970		(3)	%	$	21,397		$	22,788		(6)	%
GAAP operating income	1,578			2,001			(21)	%	3,141			4,822			(35)	%
GAAP operating income margin	14.8		%	18.2		%	(3.4)	pt	14.7		%	21.2		%	(6.5)	pt
Adjusted operating income (non-GAAP measure)	2,370			2,605			(9)	%	4,700			6,055			(22)	%
Adjusted operating income margin (non-GAAP measure)	22.2		%	23.7		%	(1.5)	pt	22.0		%	26.6		%	(4.6)	pt
GAAP diluted earnings per share attributable to Thermo Fisher Scientific Inc.	3.51			4.22			(17)	%	6.83			9.83			(31)	%
Adjusted earnings per share (non-GAAP measure)	5.15			5.51			(7)	%	10.18			12.76			(20)	%

THERMO FISHER SCIENTIFIC INC.

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

~~AND RESULTS OF OPERATIONS~~

~~Overview (continued)~~

~~Financial Highlights~~

Three months ended Six months ended
July 2, July 3, July 2, July 3,
(Dollars in millions except per share amounts) 2022 2021 Change 2022 2021 Change
Revenues $ 10,970 $ 9,273 18 % $ 22,788 $ 19,179 19 %
GAAP operating income 2,001 2,163 (7) % 4,822 5,212 (7) %
GAAP operating income margin 18.2 % 23.3 % (5.1) pt 21.2 % 27.2 % (6.0) pt
Adjusted operating income (non-GAAP measure)
2,605 2,689 (3) % 6,055 6,199 (2) %
Adjusted operating income margin (non-GAAP measure)
23.7 % 29.0 % (5.3) pt 26.6 % 32.3 % (5.7) pt
GAAP diluted earnings per share attributable to Thermo Fisher Scientific Inc. 4.22 4.61 (8) % 9.83 10.50 (6) %
Adjusted earnings per share (non-GAAP measure)
5.51 5.60 (2) % 12.76 12.81 — %

Organic Revenue Growth


		Three months ended		Six months ended			Three months ended		Six months ended
		July 2, 2022		July 2, 2022			July 1, 2023		July 1, 2023
Revenue growth	Revenue growth	18	%	19	%	Revenue growth	(3)	%	(6)	%
Impact of acquisitions	Impact of acquisitions	19	%	19	%	Impact of acquisitions	1	%	1	%
Impact of currency translation	Impact of currency translation	(4)	%	(3)	%	Impact of currency translation	0	%	(1)	%
Organic revenue growth* (non-GAAP measure)	Organic revenue growth* (non-GAAP measure)	3	%	3	%	Organic revenue growth* (non-GAAP measure)	(3)	%	(6)	%

* Results may not sum due to rounding

Since 2020, the Life Sciences Solutions and Specialty Diagnostics segments as well as the laboratory products business have supported COVID-19 diagnostic testing, scaling and evolving their molecular diagnostics solutions and plastic consumables businesses to respond to the ~~ongoing~~ COVID-19 pandemic. The biosciences and bioproduction businesses have expanded their capacity to meet the needs of pharma and biotech customers as they have expanded their own production volumes to meet global vaccine manufacturing requirements. Additionally, our pharma services business has provided our pharma and biotech customers with the services they needed to develop and produce vaccines and therapies globally. ~~While these~~These positive impacts are expected to continue ~~through 2022, the duration and extent of future revenues from such sales are uncertain and dependent primarily on~~at much lower levels in 2023 as customer testing as well as therapy and vaccine ~~demand.~~demand declines. Sales of products related to COVID-19 testing were ~~$0.63~~$0.08 billion and ~~$1.42~~$0.63 billion in the second quarter of ~~2022~~2023 and ~~2021,~~2022, respectively, and ~~$2.31~~$0.22 billion and ~~$3.87~~$2.31 billion in the first six months of ~~2022~~2023 and ~~2021,~~2022, respectively.

During the second quarter of 2023, growth was flat from pharma and ~~first six months of 2022,~~biotech customers driven by lower demand associated with COVID-19 vaccine and therapies, the impact on customers from ~~biotech~~a more challenging macroeconomic environment and ~~pharma customers was~~the slow economic recovery in China. We saw very strong ~~driven by our unique value proposition and trusted partner status. We saw~~ growth inacross the academic and government market ~~as we remain well positioned to meet~~with great customer ~~needs.~~adoption of our high-impact innovation. The industrial and applied market ~~was~~grew slightly, driven by continued strong ~~led by robust~~ demand ~~from~~for our analytical instruments serving our semiconductor and materials ~~sciences customers.~~science customers, partially offset by the impact of a slow economic recovery in China. The diagnostics and healthcare market declined due to decreased demand for COVID-19 testing products. During the second quarter of 2023, sales growth in North America and Asia Pacific declined, while Europe grew slightly. Sales growth in all regions was impacted by decreased demand in 2023 for COVID-19 related products and the impact on customers from a more challenging macroeconomic environment. Asia Pacific was impacted by the slow economic recovery in China. Contributions to organic revenue during the second quarter of 2023 from the Laboratory Products and Biopharma Services and Analytical Instruments segments were more than offset by declines in the Life Sciences Solutions and Specialty Diagnostics segments.

During the first six months of ~~2022, sales growth~~2023, we saw good demand from pharma and biotech customers driven by our trusted partner status, partially offset by the impact on customers from a more challenging macroeconomic environment. We saw broad based strength across the academic and government market. The industrial and applied market was strong, indriven by continued strong demand for our analytical instruments serving our semiconductor and materials science customers. The diagnostics and healthcare market declined due to decreased demand for COVID-19 testing products. During the ~~Asia Pacific region, particularly China, and in North America. Sales declined in Europe during the second quarter and~~ first six months of ~~2022~~2023, sales growth in all major regions declined due to ~~lower~~decreased demand for COVID-19 ~~testing demand.~~ related products. Contributions to organic revenue during the first six months of 2023 from the Laboratory Products and Biopharma Services and Analytical Instruments segments were more than offset by declines in the Life Sciences Solutions and Specialty Diagnostics segments.

The company continues to execute its proven growth strategy which consists of three pillars:

•~~Developing high-impact, innovative new products,~~High-impact innovation,

•~~Leveraging our scale in high-growth and emerging markets,~~Our trusted partner status with customers, and

•~~Delivering a unique value proposition to our customers.~~Our unparalleled commercial engine.

GAAP operating income margin and adjusted operating income margin decreased in the second quarter and first six months of ~~2022~~2023 due primarily to ~~the expected impact of incorporating recent acquisitions,~~ lower COVID-19 ~~testing volumes, and~~related revenue, strategic growth ~~investments.~~investments and effects of currency translation. This was partially offset by strong productivity improvements and strong pricing realization across all segments to address higher inflation. GAAP operating income margin in ~~2022~~the second quarter and first six months of 2023 was also impacted by ~~higher amortization expense as a result~~restructuring and other charges incurred for headcount reductions and facility consolidations in an effort to streamline operations and limit the impact of ~~2021 acquisitions. In the second quarter of 2021, GAAP operating income margin was impacted by an impairment of acquired technology.~~

~~THERMO FISHER SCIENTIFIC INC.~~

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

~~AND RESULTS OF OPERATIONS~~

~~Overview (continued)~~

expected lower revenue (Note 9).

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, 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 implementing continuous improvement methodologies, global sourcing

THERMO FISHER SCIENTIFIC INC.

initiatives, a lower cost structure following restructuring actions including headcount reductions and consolidation of facilities, and low cost region manufacturing.

Notable Recent Acquisitions

On January ~~15, 2021,~~3, 2023, the company acquired, within the ~~Laboratory Products~~Specialty Diagnostics segment, The Binding Site Group, a U.K.-based provider of specialty diagnostic assays and ~~Biopharma Services segment,~~instruments to improve the ~~Belgium-based European viral vector manufacturing business~~diagnosis and management of ~~Groupe Novasep SAS for $0.83 billion in net cash consideration. The European viral vector manufacturing business provides manufacturing services for vaccines~~blood cancers and ~~therapies to biotechnology companies and large biopharma customers.~~immune system disorders. The acquisition expands the segment’s ~~capabilities for cell and gene vaccines and therapies.~~

~~On February 25, 2021,~~portfolio with the company acquired, within the Life Sciences Solutions segment, Mesa Biotech, Inc., a U.S.-based molecular diagnostic company, for $0.41 billion in net cash consideration and contingent consideration with an initial fair value of $0.06 billion 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 September 30, 2021, the company assumed operating responsibility, within the Laboratory Products and Biopharma Services segment, of a new state-of-the-art biologics manufacturing facility in Lengnau, Switzerland from CSL Limited to perform pharma services for CSL with capacity to serve other customers as well. The company expects to make fixed lease payments aggregating to $0.56 billion (excluding renewals) from 2021 to 2041, with additional amounts dependent on the extent of revenues from customers of the facility other than CSL.

On December 8, 2021, the company acquired, within the Laboratory Products and Biopharma Services segment, PPD, Inc., a U.S.-based global provider of clinical research services to the pharma and biotech industry, for $15.99 billion in net cash consideration and $0.04 billion of equity awards exchanged. The addition of ~~PPD’s clinical research services enhances our offering to biotech~~pioneering innovation in diagnostics and ~~pharma customers by enabling them to accelerate innovation and increase their productivity within the drug development process. In 2020, PPD generated revenues of $4.68 billion.~~

~~On December 30, 2021, the company acquired, within the Life Sciences Solutions segment, PeproTech, Inc., a U.S. based developer and manufacturer of recombinant proteins,~~monitoring for $1.86 billion in net cash consideration. PeproTech provides bioscience reagents known as recombinant proteins, including cytokines and growth factors. The acquisition expands the segment’s bioscience offerings.multiple myeloma.

Segment Results ~~of Operations~~

The company’s management evaluates segment operating performance using operating income before certain charges/credits as defined in Note 4 to the Consolidated Financial Statements of the company’s Annual Report on Form 10-K for ~~2021.~~2022. Accordingly, the following segment data are reported on this basis.


		Three months ended				Six months ended					Three months ended				Six months ended
		July 2,		July 3,		July 2,		July 3,			July 1,		July 2,		July 1,		July 2,
(Dollars in millions)	(Dollars in millions)	2022		2021		2022		2021		(Dollars in millions)	2023		2022		2023		2022
Revenues	Revenues									Revenues
Life Sciences Solutions	Life Sciences Solutions	$	3,292	$	3,557	$	7,523	$	7,760	Life Sciences Solutions	$	2,463	$	3,292	$	5,075	$	7,523
Analytical Instruments	Analytical Instruments	1,607		1,481		3,125		2,868		Analytical Instruments	1,749		1,607		3,472		3,125
Specialty Diagnostics	Specialty Diagnostics	1,101		1,235		2,583		2,850		Specialty Diagnostics	1,109		1,101		2,217		2,583
Laboratory Products and Biopharma Services	Laboratory Products and Biopharma Services	5,537		3,583		10,979		7,180		Laboratory Products and Biopharma Services	5,831		5,537		11,594		10,979
Eliminations	Eliminations	(567)		(583)		(1,422)		(1,479)		Eliminations	(465)		(567)		(961)		(1,422)
Consolidated revenues	Consolidated revenues	$	10,970	$	9,273	$	22,788	$	19,179	Consolidated revenues	$	10,687	$	10,970	$	21,397	$	22,788

~~THERMO FISHER SCIENTIFIC INC.~~

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

~~AND RESULTS OF OPERATIONS~~

~~Results of Operations (continued)~~

Life Sciences Solutions


		Three months ended												Organic* (non-GAAP measure)			Three months ended												Organic* (non-GAAP measure)
(Dollars in millions)	(Dollars in millions)	July 2, 2022			July 3, 2021			Total Change		Currency Translation		Acquisitions/ Divestitures				(Dollars in millions)	July 1, 2023			July 2, 2022			Total Change		Currency Translation		Acquisitions/ Divestitures
Revenues	Revenues	$	3,292		$	3,557		(7)	%	(3)	%	1	%	(5)	%	Revenues	$	2,463		$	3,292		(25)	%	0	%	0	%	(25)	%
Segment income	Segment income	1,327			1,718			(23)	%							Segment income	817			1,327			(38)	%
Segment income margin	Segment income margin	40.3		%	48.3		%	-8.0 pt								Segment income margin	33.2		%	40.3		%	-7.1 pt

The decrease in organic revenues in the second quarter of ~~2022~~2023 was primarily due to ~~lower revenue in the genetic sciences business, driven by~~ moderation in ~~testing demand~~COVID-19 related revenue and, to ~~diagnose COVID-19, partially offset by strong growth in~~a lesser extent, the ~~bioproduction business.~~impact on customers from a more challenging macroeconomic environment. The decrease in segment income margin resulted primarily from ~~unfavorable~~significantly lower COVID-19 related revenue and business ~~mix and strategic growth investments,~~mix. These decreases were partially offset by very strong productivity improvements.


		Six months ended												Organic* (non-GAAP measure)			Six months ended												Organic* (non-GAAP measure)
(Dollars in millions)	(Dollars in millions)	July 2, 2022			July 3, 2021			Total Change		Currency Translation		Acquisitions/ Divestitures				(Dollars in millions)	July 1, 2023			July 2, 2022			Total Change		Currency Translation		Acquisitions/ Divestitures
Revenues	Revenues	$	7,523		$	7,760		(3)	%	(2)	%	2	%	(3)	%	Revenues	$	5,075		$	7,523		(33)	%	(1)	%	0	%	(31)	%
Segment income	Segment income	$	3,503		$	3,997		(12)	%							Segment income	1,653			3,503			(53)	%
Segment income margin	Segment income margin	46.6		%	51.5		%	-4.9 pt								Segment income margin	32.6		%	46.6		%	-14.0 pt

The decrease in organic revenues in the first six months of ~~2022~~2023 was ~~driven by a combination of~~primarily due to moderation in ~~testing demand~~COVID-19 related revenue and, to ~~diagnose COVID-19 with lower sales of genetic sciences products, largely offset by strong demand in~~a lesser extent, the ~~bioproduction and biosciences businesses.~~impact on customers from a more challenging macroeconomic environment. The decrease in segment income margin resulted primarily from significantly lower COVID-19 related revenue and business mix, ~~and strategic growth investments,~~ partially offset by very strong productivity improvements.

~~Analytical Instruments~~

Three months ended
Organic* (non-GAAP measure)
(Dollars in millions) July 2,
2022 July 3,
2021 Total
Change Currency
Translation Acquisitions/ Divestitures
Revenues $ 1,607 $ 1,481 9 % (4) % — % 13 %
Segment income 344 280 23 %
Segment income margin 21.4 % 18.9 % 2.5 pt

The increase in organic revenues in the second quarter of 2022 was due to increased demand in the electron microscopy and chromatography and mass spectrometry businesses. The increase in segment income margin resulted primarily from strong volume pull through and productivity improvements, offset in part by strategic growth investments.

Six months ended
Organic* (non-GAAP measure)
(Dollars in millions) July 2,
2022 July 3,
2021 Total
Change Currency
Translation Acquisitions/ Divestitures
Revenues $ 3,125 $ 2,868 9 % (3) % — % 12 %
Segment income 645 552 17 %
Segment income margin 20.6 % 19.3 % 1.3 pt

The increase in organic revenues in the first six months of 2022 was due to increased demand in the electron microscopy and chromatography and mass spectrometry businesses. The increase in segment income margin resulted primarily from strong volume pull through, productivity improvements and business mix, offset in part by strategic growth investments.

THERMO FISHER SCIENTIFIC INC.

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

~~AND RESULTS OF OPERATIONS~~Analytical Instruments

~~Results~~


	Three months ended												Organic* (non-GAAP measure)
(Dollars in millions)	July 1, 2023			July 2, 2022			Total Change		Currency Translation		Acquisitions/ Divestitures
Revenues	$	1,749		$	1,607		9	%	(1)	%	0	%	10	%
Segment income	432			344			26	%
Segment income margin	24.7		%	21.4		%	3.3 pt

The increase in organic revenues in the second quarter of ~~Operations (continued)~~2023 was driven by increased demand across each of the segment’s businesses, with particular strength in the electron microscopy business. The increase in segment income margin resulted primarily from very strong productivity improvements, strong volume and business mix, offset in part by strategic growth investments and effects of currency translation.


	Six months ended												Organic* (non-GAAP measure)
(Dollars in millions)	July 1, 2023			July 2, 2022			Total Change		Currency Translation		Acquisitions/ Divestitures
Revenues	$	3,472		$	3,125		11	%	(2)	%	0	%	13	%
Segment income	853			645			32	%
Segment income margin	24.6		%	20.6		%	4.0 pt

The increase in organic revenues in the first six months of 2023 was due to increased demand across all the segment’s businesses, with particular strength in the chromatography and mass spectrometry and electron microscopy businesses. The increase in segment income margin resulted primarily from strong volume, business mix, and very strong productivity improvements, offset in part by strategic growth investments and effects of currency translation.

Specialty Diagnostics


		Three months ended												Organic* (non-GAAP measure)			Three months ended												Organic* (non-GAAP measure)
(Dollars in millions)	(Dollars in millions)	July 2, 2022			July 3, 2021			Total Change		Currency Translation		Acquisitions/ Divestitures				(Dollars in millions)	July 1, 2023			July 2, 2022			Total Change		Currency Translation		Acquisitions/ Divestitures
Revenues	Revenues	$	1,101		$	1,235		(11)	%	(3)	%	—	%	(8)	%	Revenues	$	1,109		$	1,101		1	%	0	%	6	%	(5)	%
Segment income	Segment income	243			245			(1)	%							Segment income	297			243			22	%
Segment income margin	Segment income margin	22.1		%	19.9		%	2.2 pt								Segment income margin	26.7		%	22.1		%	4.6 pt

The decrease in organic revenues in the second quarter of ~~2022~~2023 was due to decreased demand, primarily driven by products addressing diagnosis of COVID-19, offset in part by underlying growth in the microbiology, immunodiagnostics and transplant diagnostics businesses. The impact of lower COVID-19 testing volume on segment income margin was more than offset by business mix and very strong productivity improvements.


	Six months ended												Organic* (non-GAAP measure)
(Dollars in millions)	July 1, 2023			July 2, 2022			Total Change		Currency Translation		Acquisitions/ Divestitures
Revenues	$	2,217		$	2,583		(14)	%	(1)	%	5	%	(18)	%
Segment income	577			596			(3)	%
Segment income margin	26.0		%	23.1		%	2.9 pt

The decrease in organic revenues in the first six months of 2023 was due to decreased demand, primarily driven by products addressing diagnosis of COVID-19, partially offset by underlying growth in the immunodiagnostics and ~~microbiology businesses, as well as our healthcare market channel.~~transplant diagnostics businesses. The impact of lower COVID-19 testing volume on segment income margin was more than offset by ~~strong productivity improvements and positive business mix.~~

Six months ended
Organic* (non-GAAP measure)
(Dollars in millions) July 2,
2022 July 3,
2021 Total
Change Currency
Translation Acquisitions/ Divestitures
Revenues $ 2,583 $ 2,850 (9) % (2) % — % (7) %
Segment income 596 673 (11) %
Segment income margin 23.1 % 23.6 % -0.5 pt

The decrease in organic revenues in the first six months of 2022 was due to decreased demand, primarily driven by products addressing diagnosis of COVID-19, partially offset by growth in the immunodiagnostics and transplant diagnostics businesses. The decrease in segment income margin was primarily due to lower COVID-19 testing volume, largely offset by productivity improvements.

~~Laboratory Products and BiopharmaServices~~

Three months ended
Organic* (non-GAAP measure)
(Dollars in millions) July 2,
2022 July 3,
2021 Total
Change Currency
Translation Acquisitions/ Divestitures
Revenues $ 5,537 $ 3,583 55 % (4) % 48 % 10 %
Segment income 691 446 55 %
Segment income margin 12.5 % 12.4 % 0.1 pt

The increase in organic revenues in the second quarter of 2022 was primarily due to higher sales across each of the segment’s businesses, with particular strength in the research and safety market channel and pharma services business and, to a lesser extent, the laboratory products business. The acquisition of PPD, the company’s clinical research business, contributed $1.72 billion of revenue during the second quarter. The increase in segment income margin was primarily due to strong productivity and the benefit of recent acquisitions, largely offset by strategic growth investments and unfavorable business mix.

Six months ended
Organic* (non-GAAP measure)
(Dollars in millions) July 2,
2022 July 3,
2021 Total
Change Currency
Translation Acquisitions/ Divestitures
Revenues $ 10,979 $ 7,180 53 % (3) % 48 % 8 %
Segment income 1,311 977 34 %
Segment income margin 11.9 % 13.6 % -1.7 pt

The increase in organic revenues in the first six months of 2022 was primarily due to higher sales across each of the segment’s businesses, with particular strength in the research and safety market channel and pharma services business and, to a lesser extent, the laboratory products business. The acquisition of PPD, the company’s clinical research business, contributed $3.38 billion of revenue during the first six months of 2022. The decrease in segment income margin was primarily due to business mix and ~~strategic growth investments, offset in part by the benefit of recent acquisitions.~~

* Results may not sum due to roundingvery strong productivity improvements.

THERMO FISHER SCIENTIFIC INC.

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

~~AND RESULTS OF OPERATIONS~~Laboratory Products and BiopharmaServices


	Three months ended												Organic* (non-GAAP measure)
(Dollars in millions)	July 1, 2023			July 2, 2022			Total Change		Currency Translation		Acquisitions/ Divestitures
Revenues	$	5,831		$	5,537		5	%	0	%	0	%	5	%
Segment income	824			691			19	%
Segment income margin	14.1		%	12.5		%	1.6 pt

The increase in organic revenues in the second quarter of 2023 was primarily due to higher sales in the clinical research and pharma services businesses. The increase in segment income margin was primarily due to very strong productivity improvements, partially offset by effects of currency translation and strategic growth investments.


	Six months ended												Organic* (non-GAAP measure)
(Dollars in millions)	July 1, 2023			July 2, 2022			Total Change		Currency Translation		Acquisitions/ Divestitures
Revenues	$	11,594		$	10,979		6	%	(1)	%	0	%	6	%
Segment income	1,617			1,311			23	%
Segment income margin	14.0		%	11.9		%	2.1 pt

The increase in organic revenues in the first six months of 2023 was primarily due to higher sales in the pharma services and clinical research businesses. The increase in segment income margin was primarily due to very strong productivity improvements.

* Results ~~of Operations (continued)~~may not sum due to rounding

Non-operating Items


		Three months ended						Six months ended							Three months ended						Six months ended
		July 2,			July 3,			July 2,			July 3,				July 1,			July 2,			July 1,			July 2,
(Dollars in millions)		2022			2021			2022			2021
(Dollars and shares in millions)														(Dollars and shares in millions)	2023			2022			2023			2022
Net interest expense	Net interest expense	$	112		$	111		$	230		$	224		Net interest expense	$	148		$	112		$	302		$	230
GAAP other income/(expense)	GAAP other income/(expense)	28			(3)			(135)			(186)			GAAP other income/(expense)	—			28			(46)			(135)
Adjusted other income/(expense) (non-GAAP measure)	Adjusted other income/(expense) (non-GAAP measure)	10			5			14			19			Adjusted other income/(expense) (non-GAAP measure)	(1)			10			(1)			14
GAAP tax rate	GAAP tax rate	10.4		%	10.7		%	11.2		%	13.2		%	GAAP tax rate	3.6		%	10.4		%	3.5		%	11.2		%
Adjusted tax rate (non-GAAP measure)	Adjusted tax rate (non-GAAP measure)	13.0		%	14.0		%	13.6		%	15.1		%	Adjusted tax rate (non-GAAP measure)	10.0		%	13.0		%	10.0		%	13.6		%
Weighted average diluted shares														Weighted average diluted shares	388			394			388			394

Net interest expense (interest expense less interest income) increased due primarily to the ~~increase in debt to finance~~company’s capital deployment initiatives, which included financing stock buybacks and the acquisition of ~~PPD and for general corporate purposes, largely offset by lower average interest rates.~~The Binding Site Group (Note 2). See additional discussion under the caption “Liquidity and Capital Resources” below.

GAAP other income/(expense) and adjusted other income/(expense) includes currency transaction gains, losses on non-operating monetary assets and liabilities, and net periodic pension benefit cost/income, excluding the service cost component. GAAP other income/(expense) in the first six months of 2023 also includes $43 million of net losses on investments. GAAP other income/(expense) in the second quarter and first six months of 2022 also includes $18 million and $(123) million, respectively, of net ~~gains and $123 million of net losses~~gains/(losses) on ~~investments, respectively. In~~investments. GAAP other income/expense in the first six months of 2022 ~~and 2021 GAAP other income/(expense)~~ also includes $26 million ~~and $197 million, respectively,~~ of losses on the early extinguishment of debt (Note 7).

The company’s GAAP and adjusted tax rates decreased in ~~2022~~2023 compared to ~~2021~~2022 primarily due to tax planning initiatives, including a tax benefit of $91 million, net of related tax expenses, from a foreign exchange loss on an intercompany debt refinancing transaction in the second quarter of 2023, as well as a $144 million tax benefit resulting from a capital loss generated in the first quarter of 2023 as part of an intra-entity transaction. The GAAP and adjusted tax rates in 2023 were also impacted, to a lesser extent, by a decrease in pre-tax earnings compared to 2022. The company’s GAAP and adjusted tax rates in 2022 were impacted by releases of valuation allowances of $88 million and $175 million ~~for~~in the ~~three~~second quarter and first six months ~~ended July 2,~~of 2022, respectively, in jurisdictions where the deferred tax assets are now expected to be realized. The company’s 2022 GAAP tax rate was also impacted by changes in tax rates and higher amortization expense as a result of 2021 acquisitions. In the second quarter of 2021 the company recorded a $162 million income tax benefit on an intra-entity transfer of fixed assets.

The effective tax rates in both ~~2022~~2023 and ~~2021~~2022 were also affected by relatively significant earnings in lower tax jurisdictions. 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 approximately ~~$1.35~~$1.40 billion in ~~2022.~~2023.

THERMO FISHER SCIENTIFIC INC.

The company expects its GAAP effective tax rate in ~~2022~~2023 will be between ~~10%~~5% and ~~12%~~7% based on currently forecasted rates of profitability in the countries in which the company conducts business and expected generation of foreign tax credits. The effective tax rate can vary significantly from period to period as a result of discrete income tax factors and events. The company expects its adjusted tax rate will be ~~between 13% and 13.5%~~approximately 10% in ~~2022.~~2023.

The company has operations and a taxable presence in approximately 70 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.

Weighted average diluted shares decreased in 2023 compared to 2022 due to share repurchases, net of option dilution.

Liquidity and Capital Resources

The company’s proven growth strategy has enabled it to generate free cash flow as well as access the capital markets. The company deploys its capital primarily via mergers and acquisitions and secondarily via share buybacks and dividends.


		July 2,		December 31,
(In millions)	(In millions)	2022		2021		(In millions)	July 1, 2023		December 31, 2022
Cash and cash equivalents	Cash and cash equivalents	$	1,888	$	4,477	Cash and cash equivalents	$	3,133	$	8,524
Total debt	Total debt	30,260		34,870		Total debt	34,008		34,488

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, capacity expansion, and repayment of third-party foreign debt by foreign subsidiaries. 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

~~THERMO FISHER SCIENTIFIC INC.~~

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

~~AND RESULTS OF OPERATIONS~~

~~Liquidity and Capital Resources (continued)~~

cost arising from the 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 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.

As of July ~~2, 2022,~~1, 2023, the company’s short-term debt totaled ~~$1.01~~$4.81 billion. The company has a revolving credit facility with a bank group that provides up to $5.00 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 July ~~2, 2022,~~1, 2023, no borrowings were outstanding under the company’s revolving credit facility, although available capacity was reduced by immaterial outstanding letters of credit.


							Six months ended
		Six months ended
		July 2,		July 3,
(In millions)	(In millions)	2022		2021		(In millions)	July 1, 2023		July 2, 2022
Net cash provided by operating activities	Net cash provided by operating activities	$	3,730	$	4,205	Net cash provided by operating activities	$	2,269	$	3,730
Net cash used in investing activities	Net cash used in investing activities	(1,089)		(2,624)		Net cash used in investing activities	(3,585)		(1,089)
Net cash used in financing activities	Net cash used in financing activities	(5,050)		(4,926)		Net cash used in financing activities	(4,049)		(5,050)
Free cash flow (non-GAAP measure)	Free cash flow (non-GAAP measure)	2,598		3,042		Free cash flow (non-GAAP measure)	1,537		2,598

Operating Activities

During the first six months of 2023, cash provided by income was offset in part by investments in working capital. Changes in other assets and other liabilities used cash of $1.50 billion primarily due to the timing of payments for compensation and income taxes. A decrease in accounts payable used cash of $0.87 billion. Cash payments for income taxes were $0.78 billion during the first six months of 2023.

During the first six months of 2022, cash provided by income was offset in part by investments in working capital. An increase in inventories used cash of $0.87 billion, primarily to support growth in sales. Changes in other assets and other liabilities used cash of $0.74 billion primarily due to the timing of payments for compensation. Cash payments for income taxes were $0.83 billion during the first six months of 2022.

THERMO FISHER SCIENTIFIC INC.

Investing Activities

During the first six months of ~~2021, cash provided by income was offset in part by investments in working capital. A decrease in accounts receivable provided $0.25 billion of cash. An increase in inventories~~2023, acquisitions used cash of ~~$0.62~~$2.75 billion. The company’s investing activities also included purchases of $0.74 billion ~~primarily to support growth in sales. Changes in other assets~~of property, plant and ~~other liabilities used cash of $1.06 billion primarily due to the timing of payments~~equipment for ~~compensation~~capacity and ~~income taxes. Cash payments for income taxes were $1.27 billion during the first six months of 2021.~~

~~Investing Activities~~capability investments.

During the first six months of 2022, acquisitions used cash of $0.04 billion. The company’s investing activities also included ~~the purchase~~purchases of $1.15 billion of property, plant and equipment for capacity and capability investments.

The company expects that for all of 2023, expenditures for property, plant and equipment, net of disposals, will be approximately $1.7 billion.

Financing Activities

During the first six months of ~~2021, acquisitions~~2023, repayment of senior notes used cash of ~~$1.43~~$1.00 billion. The company’s ~~investing~~financing activities also included the ~~purchase~~repurchase of ~~$1.17~~$3.00 billion of ~~property, plant~~the company’s common stock (5.2 million shares) and ~~equipment~~the payment of $0.25 billion in cash dividends. On November 10, 2022, the Board of Directors authorized the repurchase of up to $4.00 billion of the company’s common stock. All of the shares of common stock repurchased by the company during the first quarter of 2023 were under this program. At August 4, 2023, authorization remained for ~~capacity and capability investments.~~

~~Financing Activities~~$1.00 billion of future repurchases of the company’s common stock.

During the first six months of 2022, repayment of senior notes and net commercial paper activity used cash of $0.38 billion and $2.46 billion, respectively. The company’s financing activities also included the repurchase of $2.00 billion of the company’s common stock (3.3 million shares) and the payment of $0.22 billion in cash dividends. On September 23, 2021, the Board of Directors authorized the repurchase of up to $3.00 billion of the company’s common stock. At August 5, 2022, authorization remained for $1.00 billion of future repurchases of the company’s common stock.

During the first six months of 2021 repayment of senior notes used cash of $2.80 billion. The company’s financing activities also included the repurchase of $2.00 billion of the company’s common stock (4.1 million shares) and the payment of $0.19 billion in cash dividends.

The company’s commitments for purchases of property, plant and equipment, contractual obligations and other commercial commitments did not change materially ~~between December 31, 2021 and~~subsequent to July ~~2, 2022. The company expects that~~1, 2023, except for ~~all of 2022, expenditures for property, plant and equipment, net of disposals, will be between $2.5 and $2.7 billion.~~the agreement to acquire CorEvitas, LLC.

~~THERMO FISHER SCIENTIFIC INC.~~

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

~~AND RESULTS OF OPERATIONS~~

Non-GAAP Measures

In addition to the financial measures prepared in accordance with generally accepted accounting principles (GAAP), we use certain non-GAAP financial measures such as organic revenue growth, which is reported revenue growth, excluding the impacts of revenues from acquired/divested businesses and the effects of currency translation. We report organic revenue growth because Thermo Fisher management believes that in order to understand the company’s short-term and long-term financial trends, investors may wish to consider the impact of acquisitions/divestitures and foreign currency translation on revenues. Thermo Fisher management uses organic revenue growth to forecast and evaluate the operational performance of the company as well as to compare revenues of current periods to prior periods.

We report adjusted operating income, adjusted operating income margin, adjusted other income/(expense), adjusted tax rate, and adjusted EPS. We believe that the use of these non-GAAP financial measures, in addition to GAAP financial measures, helps investors to gain a better understanding of our core operating results and future prospects, consistent with how management measures and forecasts the company’s core operating performance, especially when comparing such results to previous periods, forecasts, and to the performance of our competitors. Such measures are also used by management in their financial and operating decision-making and for compensation purposes. To calculate these measures we exclude, as applicable:

•Certain acquisition-related costs, including charges for the sale of inventories revalued at the date of acquisition, significant transaction/acquisition-related costs, including changes in estimates of contingent acquisition-related consideration, and other costs associated with obtaining short-term financing commitments for pending/recent acquisitions. We exclude these costs because we do not believe they are indicative of our normal operating costs.

•Costs/income associated with restructuring activities and large-scale abandonments of product lines, such as reducing overhead and consolidating facilities. We exclude these costs because we believe that the costs related to restructuring activities and large-scale abandonment of product lines are not indicative of our normal operating costs.

•Equity in earnings/losses of unconsolidated entities; impairments of long-lived assets; and certain other gains and losses that are either isolated or cannot be expected to occur again with any predictability, including gains/losses on investments, the sale of businesses, product lines, and real estate, significant litigation-related matters, curtailments/settlements of pension plans, and the early retirement of debt. We exclude these items because they are outside of our normal operations and/or, in certain cases, are difficult to forecast accurately for future periods.

•The expense associated with the amortization of acquisition-related intangible assets because a significant portion of the purchase price for acquisitions may be allocated to intangible assets that have lives of up to 20 years. Exclusion of the amortization expense allows comparisons of operating results that are consistent over time for both our newly acquired and long-held businesses and with both acquisitive and non-acquisitive peer companies.

THERMO FISHER SCIENTIFIC INC.

•The tax impacts of the above items and the impact of significant tax audits or events (such as changes in deferred taxes from enacted tax rate/law changes), the latter of which we exclude because they are outside of our normal operations and difficult to forecast accurately for future periods.

We report free cash flow, which is operating cash flow excluding net capital expenditures, to provide a view of the continuing operations’ ability to generate cash for use in acquisitions and other investing and financing activities. The company also uses this measure as an indication of the strength of the company. Free cash flow is not a measure of cash available for discretionary expenditures since we have certain non-discretionary obligations such as debt service that are not deducted from the measure.

The non-GAAP financial measures of ~~Thermo Fisher Scientific’s~~the company’s results of operations and cash flows included in this Form 10-Q are not meant to be considered superior to or a substitute for ~~Thermo Fisher Scientific’s~~the company’s results of operations prepared in accordance with GAAP. Reconciliations of such non-GAAP financial measures to the most directly comparable GAAP financial measures are set forth within the “Overview” and “Results of Operations” sections and below.

~~THERMO FISHER SCIENTIFIC INC.~~

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

~~AND RESULTS OF OPERATIONS~~

~~Non-GAAP Measures (Continued)~~


		Three months ended						Six months ended							Three months ended						Six months ended
		July 2,			July 3,			July 2,			July 3,				July 1,			July 2,			July 1,			July 2,
(Dollars in millions except per share amounts)	(Dollars in millions except per share amounts)	2022			2021			2022			2021			(Dollars in millions except per share amounts)	2023			2022			2023			2022

Reconciliation of adjusted operating income	Reconciliation of adjusted operating income													Reconciliation of adjusted operating income
GAAP operating income	GAAP operating income	$	2,001		$	2,163		$	4,822		$	5,212		GAAP operating income	$	1,578		$	2,001		$	3,141		$	4,822
Cost of revenues adjustments (a)	Cost of revenues adjustments (a)	8			—			19			8			Cost of revenues adjustments (a)	18			8			59			19
Selling, general and administrative expenses adjustments (b)	Selling, general and administrative expenses adjustments (b)	(28)			(42)			(21)			(26)			Selling, general and administrative expenses adjustments (b)	6			(28)			14			(21)
Restructuring and other costs (c)	Restructuring and other costs (c)	24			119			26			133			Restructuring and other costs (c)	183			24			295			26
Amortization of acquisition-related intangible assets	Amortization of acquisition-related intangible assets	600			449			1,209			872			Amortization of acquisition-related intangible assets	585			600			1,191			1,209
Adjusted operating income (non-GAAP measure)	Adjusted operating income (non-GAAP measure)	$	2,605		$	2,689		$	6,055		$	6,199		Adjusted operating income (non-GAAP measure)	$	2,370		$	2,605		$	4,700		$	6,055

Reconciliation of adjusted operating income margin	Reconciliation of adjusted operating income margin													Reconciliation of adjusted operating income margin
GAAP operating income margin	GAAP operating income margin	18.2		%	23.3		%	21.2		%	27.2		%	GAAP operating income margin	14.8		%	18.2		%	14.7		%	21.2		%
Cost of revenues adjustments (a)	Cost of revenues adjustments (a)	0.1		%	0.0		%	0.1		%	0.0		%	Cost of revenues adjustments (a)	0.2		%	0.1		%	0.3		%	0.1		%
Selling, general and administrative expenses adjustments (b)	Selling, general and administrative expenses adjustments (b)	(0.3)		%	(0.4)		%	(0.1)		%	(0.1)		%	Selling, general and administrative expenses adjustments (b)	0.1		%	(0.3)		%	0.1		%	(0.1)		%
Restructuring and other costs (c)	Restructuring and other costs (c)	0.2		%	1.3		%	0.1		%	0.7		%	Restructuring and other costs (c)	1.7		%	0.2		%	1.4		%	0.1		%
Amortization of acquisition-related intangible assets	Amortization of acquisition-related intangible assets	5.5		%	4.8		%	5.3		%	4.5		%	Amortization of acquisition-related intangible assets	5.4		%	5.5		%	5.5		%	5.3		%
Adjusted operating income margin (non-GAAP measure)	Adjusted operating income margin (non-GAAP measure)	23.7		%	29.0		%	26.6		%	32.3		%	Adjusted operating income margin (non-GAAP measure)	22.2		%	23.7		%	22.0		%	26.6		%

Reconciliation of adjusted other income/(expense)	Reconciliation of adjusted other income/(expense)													Reconciliation of adjusted other income/(expense)
GAAP other income/(expense)	GAAP other income/(expense)	$	28		$	(3)		$	(135)		$	(186)		GAAP other income/(expense)	$	—		$	28		$	(46)		$	(135)
Adjustments (d)	Adjustments (d)	(18)			8			149			205			Adjustments (d)	(1)			(18)			45			149
Adjusted other income/(expense) (non-GAAP measure)	Adjusted other income/(expense) (non-GAAP measure)	$	10		$	5		$	14		$	19		Adjusted other income/(expense) (non-GAAP measure)	$	(1)		$	10		$	(1)		$	14

Reconciliation of adjusted tax rate	Reconciliation of adjusted tax rate													Reconciliation of adjusted tax rate
GAAP tax rate	GAAP tax rate	10.4		%	10.7		%	11.2		%	13.2		%	GAAP tax rate	3.6		%	10.4		%	3.5		%	11.2		%
Adjustments (e)	Adjustments (e)	2.6		%	3.3		%	2.4		%	1.9		%	Adjustments (e)	6.4		%	2.6		%	6.5		%	2.4		%
Adjusted tax rate (non-GAAP measure)	Adjusted tax rate (non-GAAP measure)	13.0		%	14.0		%	13.6		%	15.1		%	Adjusted tax rate (non-GAAP measure)	10.0		%	13.0		%	10.0		%	13.6		%

Reconciliation of adjusted earnings per share	Reconciliation of adjusted earnings per share													Reconciliation of adjusted earnings per share
GAAP diluted earnings per share (EPS) attributable to Thermo Fisher Scientific Inc.	GAAP diluted earnings per share (EPS) attributable to Thermo Fisher Scientific Inc.	$	4.22		$	4.61		$	9.83		$	10.50		GAAP diluted earnings per share (EPS) attributable to Thermo Fisher Scientific Inc.	$	3.51		$	4.22		$	6.83		$	9.83
Cost of revenues adjustments (a)	Cost of revenues adjustments (a)	0.02			—			0.05			0.02			Cost of revenues adjustments (a)	0.05			0.02			0.15			0.05
Selling, general and administrative expenses adjustments (b)	Selling, general and administrative expenses adjustments (b)	(0.07)			(0.10)			(0.05)			(0.07)			Selling, general and administrative expenses adjustments (b)	0.01			(0.07)			0.03			(0.05)
Restructuring and other costs (c)	Restructuring and other costs (c)	0.06			0.30			0.06			0.34			Restructuring and other costs (c)	0.47			0.06			0.76			0.06
Amortization of acquisition-related intangible assets	Amortization of acquisition-related intangible assets	1.52			1.13			3.06			2.20			Amortization of acquisition-related intangible assets	1.51			1.52			3.07			3.06
Other income/expense adjustments (d)	Other income/expense adjustments (d)	(0.05)			0.02			0.38			0.51			Other income/expense adjustments (d)	—			(0.05)			0.11			0.38
Provision for income taxes adjustments (e)	Provision for income taxes adjustments (e)	(0.32)			(0.36)			(0.75)			(0.69)			Provision for income taxes adjustments (e)	(0.44)			(0.32)			(0.88)			(0.75)
Equity in earnings/losses of unconsolidated entities	Equity in earnings/losses of unconsolidated entities	0.13			—			0.18			—			Equity in earnings/losses of unconsolidated entities	0.04			0.13			0.11			0.18
Adjusted EPS (non-GAAP measure)	Adjusted EPS (non-GAAP measure)	$	5.51		$	5.60		$	12.76		$	12.81		Adjusted EPS (non-GAAP measure)	$	5.15		$	5.51		$	10.18		$	12.76

Reconciliation of free cash flow
GAAP net cash provided by operating activities		$	1,528		$	2,227		$	3,730		$	4,205
Purchases of property, plant and equipment		(506)			(540)			(1,146)			(1,168)
Proceeds from sale of property, plant and equipment		12			—			14			5
Free cash flow (non-GAAP measure)		$	1,034		$	1,687		$	2,598		$	3,042

THERMO FISHER SCIENTIFIC INC.

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

~~AND RESULTS OF OPERATIONS~~


	Three months ended				Six months ended
	July 1,		July 2,		July 1,		July 2,
(Dollars in millions except per share amounts)	2023		2022		2023		2022

Reconciliation of free cash flow
GAAP net cash provided by operating activities	$	1,540	$	1,528	$	2,269	$	3,730
Purchases of property, plant and equipment	(284)		(506)		(742)		(1,146)
Proceeds from sale of property, plant and equipment	4		12		10		14
Free cash flow (non-GAAP measure)	$	1,260	$	1,034	$	1,537	$	2,598

~~Non-GAAP Measures (Continued)~~

(a) Adjusted results in 2023 and in 2022 exclude charges for the sale of inventories revalued at the date of acquisition. Adjusted results in the second quarter and first six months of 2023 also exclude $2 million and $33 million, respectively, of inventory write-downs associated with large-scale abandonment of product lines. Adjusted results in the second quarter of 2023 also excludes $5 million of accelerated depreciation on manufacturing assets to be abandoned due to facility consolidations.


~~(a) Adjusted results exclude charges for the sale of inventories revalued at the date of acquisition.~~
(b) Adjusted results exclude certain third-party expenses, principally transaction/integration costs related to recent acquisitions and charges/credits for changes in estimates of contingent acquisition consideration.
(c) Adjusted results exclude restructuring and other costs consisting principally of severance, abandoned facility and other expenses of headcount reductions within several businesses and real estate consolidations. Adjusted results in Q1 2021 and Q2 2021 also exclude $13 million of charges for compensation due to employees at recently acquired businesses at the date of acquisition and $110 million of charges for impairment of acquired technology, respectively.
(d) Adjusted results exclude net gains/losses on investments and losses on the early extinguishment of debt. Adjusted results in Q2 2021 also exclude amortization of bridge loan commitment fees related to a pending acquisition.
~~(e) Adjusted provision for income taxes in 2022 and 2021 excludes incremental tax impacts for the pre-tax reconciling items and incremental tax impacts as a result of tax rate/law changes.~~

(b) Adjusted results in 2023 and 2022 exclude certain third-party expenses, principally transaction/integration costs related to recent acquisitions and charges/credits for changes in estimates of contingent acquisition consideration.

(c) Adjusted results in 2023 and 2022 exclude restructuring and other costs consisting principally of severance, impairments of long-lived assets, abandoned facility and other expenses of headcount reductions and real estate consolidations. Adjusted results in the second quarter of 2023 also exclude $26 million of contract termination costs associated with facility closures. Adjusted results in the first six months of 2023 also exclude $18 million of net charges for pre-acquisition litigation and other matters.

(d) Adjusted results in 2023 and 2022 exclude net gains/losses on investments. Adjusted results in 2022 also exclude $26 million of losses on the early extinguishment of debt.

(e) Adjusted provision for income taxes in 2023 and 2022 excludes incremental tax impacts for the reconciling items between GAAP and adjusted net income, incremental tax impacts as a result of tax rate/law changes and the tax impacts from audit settlements.

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 ~~2021~~2022 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 six months of ~~2022.~~2023.

Recent Accounting Pronouncements

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

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, ~~2021.~~

2022.

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. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. 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 July ~~2, 2022,~~1, 2023, 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~~Note 8 to our Condensed Consolidated Financial Statements – under the heading “Commitments and Contingencies.”

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, ~~2021~~2022 under the caption “Risk Factors,” which is on file with the SEC.

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

Issuer Purchases of Equity Securities

There was no share repurchase activity for the company's second quarter of ~~2022.~~2023. On ~~September 23, 2021,~~November 10, 2022, the Board of Directors authorized the repurchase of up to ~~$3.00~~$4.00 billion of the company’s common stock. At July ~~2, 2022,~~1, 2023, $1.00 billion was available for future repurchases of the company’s common stock under this authorization.

Item 5. Other Information

Director and Officer Trading Arrangements

None of our directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement (as defined in Item 408(c) of Regulation S-K) during the quarterly period covered by this report.

Item 6. Exhibits


Exhibit Number						Description of Exhibit
10.1						Form of Thermo Fisher Scientific Inc.’s Restricted Stock Unit Agreement for Directors.*
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.
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.
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.

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:	August ~~5, 2022~~4, 2023	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