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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q

☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the Quarter Ended September 26, 2020 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)
Delaware04-2209186
(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 classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $1.00 par valueTMONew York Stock Exchange
Floating Rate Notes due 2020TMO /20ANew York Stock Exchange
2.150% Notes due 2022TMO 22ANew York Stock Exchange
0.750% Notes due 2024TMO 24ANew York Stock Exchange
0.125% Notes due 2025TMO 25BNew York Stock Exchange
2.000% Notes due 2025TMO 25New York Stock Exchange
1.400% Notes due 2026TMO 26ANew York Stock Exchange
1.450% Notes due 2027TMO 27New York Stock Exchange
1.750% Notes due 2027TMO 27BNew York Stock Exchange
0.500% Notes due 2028TMO 28ANew York Stock Exchange
1.375% Notes due 2028TMO 28New York Stock Exchange
1.950% Notes due 2029TMO 29New York Stock Exchange
0.875% Notes due 2031TMO 31New York Stock Exchange
2.375% Notes due 2032TMO 32New York Stock Exchange
2.875% Notes due 2037TMO 37New York Stock Exchange
1.500% Notes due 2039TMO 39New York Stock Exchange
1.875% Notes due 2049TMO 49New York Stock Exchange
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes ☒  No ☐
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months. Yes ☒  No ☐
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☒                                               Accelerated filer ☐                                       Non-accelerated filer ☐
Smaller reporting company ☐                                      Emerging growth company  ☐
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐  No ☒
As of September 26, 2020, the Registrant had 396,335,191 shares of Common Stock outstanding.



THERMO FISHER SCIENTIFIC INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 26, 2020
TABLE OF CONTENTS
Page
PART I
PART II

2

THERMO FISHER SCIENTIFIC INC.
PART I    FINANCIAL INFORMATION
Item 1.    Financial Statements
CONSOLIDATED BALANCE SHEET
(Unaudited)
 September 26,December 31,
(In millions except share and per share amounts)20202019
Assets
Current Assets:
Cash and cash equivalents
$7,540 $2,399 
Accounts receivable, less allowances of $117 and $102
5,186 4,349 
Inventories
3,829 3,370 
Contract assets, net
697 603 
Other current assets
982 1,172 
Total current assets
18,234 11,893 
Property, Plant and Equipment, Net
5,180 4,749 
Acquisition-related Intangible Assets, Net
12,870 14,014 
Other Assets
1,995 2,011 
Goodwill
25,782 25,714 
Total Assets
$64,061 $58,381 
Liabilities and Shareholders' Equity
Current Liabilities:
Short-term obligations and current maturities of long-term obligations
$2 $676 
Accounts payable
1,703 1,920 
Accrued payroll and employee benefits
1,538 1,010 
Contract liabilities
1,047 916 
Other accrued expenses
1,938 1,675 
Total current liabilities
6,228 6,197 
Deferred Income Taxes
1,528 2,192 
Other Long-term Liabilities
3,390 3,241 
Long-term Obligations
21,091 17,076 
Shareholders' Equity:
Preferred stock, $100 par value, 50,000 shares authorized; none issued
Common stock, $1 par value, 1,200,000,000 shares authorized; 436,746,267 and 434,416,804 shares issued
437 434 
Capital in excess of par value
15,467 15,064 
Retained earnings
25,705 22,092 
Treasury stock at cost, 40,411,076 and 35,676,421 shares
(6,815)(5,236)
Accumulated other comprehensive items
(2,970)(2,679)
Total shareholders' equity
31,824 29,675 
Total Liabilities and Shareholders' Equity
$64,061 $58,381 
The accompanying notes are an integral part of these consolidated financial statements.
3


THERMO FISHER SCIENTIFIC INC.
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
Three Months EndedNine Months Ended
September 26,September 28,September 26,September 28,
(In millions except per share amounts)2020201920202019
Revenues
Product revenues
$6,782 $4,798 $16,662 $14,345 
Service revenues
1,739 1,474 5,006 4,368 
Total revenues
8,521 6,272 21,668 18,713 
Costs and Operating Expenses:
Cost of product revenues
3,001 2,471 7,732 7,363 
Cost of service revenues
1,189 1,038 3,488 3,057 
Selling, general and administrative expenses
1,592 1,539 4,853 4,632 
Research and development expenses
296 247 805 741 
Restructuring and other costs (income), net
17 31 67 (442)
Total costs and operating expenses
6,095 5,326 16,945 15,351 
Operating Income
2,426 946 4,723 3,362 
Interest Income
9 52 53 179 
Interest Expense
(144)(164)(407)(534)
Other (Expense) Income, Net
(39)(12)(36)25 
Income Before Income Taxes
2,252 822 4,333 3,032 
Provision for Income Taxes
(319)(62)(456)(338)
Net Income
$1,933 $760 $3,877 $2,694 
Earnings per Share
Basic
$4.88 $1.89 $9.79 $6.73 
Diluted
$4.84 $1.88 $9.71 $6.68 
Weighted Average Shares
Basic
396 401 396 400 
Diluted
399 404 399 403 

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

4

THERMO FISHER SCIENTIFIC INC.
 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(Unaudited)
 Three Months EndedNine Months Ended
 September 26,September 28,September 26,September 28,
(In millions)2020201920202019
Comprehensive Income
Net Income
$1,933 $760 $3,877 $2,694 
Other Comprehensive Items:
Currency translation adjustment:
Currency translation adjustment (net of tax (benefit) provision of $(76), $77, $(71) and $92)
10 (91)(244)(222)
Reclassification adjustment for losses included in net income
— 30 — 30 
Unrealized gains and losses on hedging instruments:
Unrealized losses on hedging instruments (net of tax benefit of $0, $12, $20 and $12)
— (38)(65)(38)
Reclassification adjustment for losses included in net income (net of tax benefit of $2, $1, $4 and $3)
6 2 10 7 
Pension and other postretirement benefit liability adjustments:
Pension and other postretirement benefit liability adjustments arising during the period (net of tax benefit (provision) of $1, $(2), $2 and $2)
(4)2 (5)(9)
Amortization of net loss included in net periodic pension cost (net of tax benefit of $1, $0, $4 and $2)
7 3 13 8 
Total other comprehensive items
19 (92)(291)(224)
Comprehensive Income
$1,952 $668 $3,586 $2,470 

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

5

THERMO FISHER SCIENTIFIC INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
 Nine Months Ended
 September 26,September 28,
(In millions)20202019
Operating Activities
Net income
$3,877 $2,694 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of property, plant and equipment
467 416 
Amortization of acquisition-related intangible assets
1,256 1,285 
Change in deferred income taxes
(496)(356)
Gain on sales of businesses
— (486)
Stock-based compensation
145 138 
Other non-cash expenses, net
209 123 
Changes in assets and liabilities, excluding the effects of acquisitions and disposition:
Accounts receivable
(858)(321)
Inventories
(427)(449)
Accounts payable
(220)70 
Contributions to retirement plans
(45)(40)
Other
1,042 (14)
Net cash provided by operating activities
4,950 3,060 
Investing Activities
  
Acquisitions, net of cash acquired
(3)(1,687)
Proceeds from sale of business, net of cash divested
— 1,128 
Purchase of property, plant and equipment
(888)(637)
Proceeds from sale of property, plant and equipment
7 18 
Other investing activities, net
— 30 
Net cash used in investing activities
(884)(1,148)
Financing Activities
Net proceeds from issuance of debt
3,464 — 
Repayment of debt
(712)(1,702)
Proceeds from issuance of commercial paper
383 2,581 
Repayments of commercial paper
(387)(2,578)
Purchases of company common stock
(1,500)(750)
Dividends paid
(250)(221)
Net proceeds from issuance of company common stock under employee stock plans
156 115 
Other financing activities, net
(146)(49)
Net cash provided by (used in) financing activities
1,008 (2,604)
Exchange Rate Effect on Cash
74 (120)
Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash
5,148 (812)
Cash, Cash Equivalents and Restricted Cash at Beginning of Period
2,422 2,117 
Cash, Cash Equivalents and Restricted Cash at End of Period
$7,570 $1,305 
The accompanying notes are an integral part of these consolidated financial statements.
6

THERMO FISHER SCIENTIFIC INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(Unaudited)
 Common StockCapital in Excess of Par ValueRetained EarningsTreasury StockAccumulated Other Comprehensive ItemsTotal Shareholders' Equity
(In millions)SharesAmountSharesAmount
Three Months Ended September 26, 2020
Balance at June 27, 2020436 $436 $15,334 $23,860 40 $(6,766)$(2,989)$29,875 
Issuance of shares under employees' and directors' stock plans
1 1 81 — — (49)— 33 
Stock-based compensation
— — 52 — — — — 52 
Dividends declared ($0.22 per share)
— — — (88)— — — (88)
Net income
— — — 1,933 — — — 1,933 
Other comprehensive items
— — — — — — 19 19 
Balance at September 26, 2020437 $437 $15,467 $25,705 40 $(6,815)$(2,970)$31,824 
Three Months Ended September 28, 2019
Balance at June 29, 2019433 $433 $14,887 $20,482 33 $(4,443)$(2,630)$28,729 
Issuance of shares under employees' and directors' stock plans
1 1 35 — — (43)— (7)
Stock-based compensation
— — 42 — — — — 42 
Dividends declared ($0.19 per share)
— — — (77)— — — (77)
Net income
— — — 760 — — — 760 
Other comprehensive items
— — — — — — (92)(92)
Balance at September 28, 2019434 $434 $14,964 $21,165 33 $(4,486)$(2,722)$29,355 
Nine Months Ended September 26, 2020
Balance at December 31, 2019434 $434 $15,064 $22,092 36 $(5,236)$(2,679)$29,675 
Cumulative effect of accounting change
— — — (1)— — — (1)
Issuance of shares under employees' and directors' stock plans
3 3 258 — — (79)— 182 
Stock-based compensation
— — 145 — — — — 145 
Purchases of company common stock
— — — — 4 (1,500)— (1,500)
Dividends declared ($0.66 per share)
— — — (263)— — — (263)
Net income
— — — 3,877 — — — 3,877 
Other comprehensive items
— — — — — — (291)(291)
Balance at September 26, 2020437 $437 $15,467 $25,705 40 $(6,815)$(2,970)$31,824 
Nine Months Ended September 28, 2019
Balance at December 31, 2018432 $432 $14,621 $18,696 29 $(3,665)$(2,498)$27,586 
Cumulative effect of accounting changes
— — — 4 — — — 4 
Issuance of shares under employees' and directors' stock plans
2 2 205 — 1 (71)— 136 
Stock-based compensation
— — 138 — — — — 138 
Purchases of company common stock
— — — — 3 (750)— (750)
Dividends declared ($0.57 per share)
— — — (229)— — — (229)
Net income
— — — 2,694 — — — 2,694 
Other comprehensive items
— — — — — — (224)(224)
Balance at September 28, 2019434 $434 $14,964 $21,165 33 $(4,486)$(2,722)$29,355 

The accompanying notes are an integral part of these consolidated financial statements.
7

THERMO FISHER SCIENTIFIC INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 1.    Nature of Operations and Summary of Significant Accounting Policies
Nature of Operations
Thermo Fisher Scientific Inc. (the company or Thermo Fisher) enables customers to make the world healthier, cleaner and safer by helping them accelerate life sciences research, solve complex analytical challenges, improve patient diagnostics, deliver medicines to market and increase laboratory productivity. Markets served include pharmaceutical and biotech, academic and government, industrial and applied, as well as healthcare and diagnostics.
Interim Financial Statements
The interim consolidated financial statements presented herein have been prepared by the company, are unaudited and, in the opinion of management, reflect all adjustments of a normal recurring nature necessary for a fair statement of the financial position at September 26, 2020, the results of operations for the three- and nine-month periods ended September 26, 2020 and September 28, 2019, and the cash flows for the nine-month periods ended September 26, 2020 and September 28, 2019. Interim results are not necessarily indicative of results for a full year.
The consolidated balance sheet presented as of December 31, 2019, has been derived from the audited consolidated financial statements as of that date. The 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 consolidated financial statements and notes included in this report should be read in conjunction with the 2019 financial statements and notes included in the company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC).
Note 1 to the consolidated financial statements for 2019 describes the significant accounting estimates and policies used in preparation of the consolidated financial statements. There have been no material changes in the company’s significant accounting policies during the nine months ended September 26, 2020.
Contract-related Balances
Accounts receivable include amounts that have been billed and are currently due from customers. They are recorded at the invoiced amount and do not bear interest. The company maintains allowances for doubtful accounts for estimates of expected losses resulting from the inability of its customers to pay amounts due. The allowance for doubtful accounts is the company’s best estimate of the amount of probable credit losses in existing accounts receivable. The company determines the allowance based on history of similarly aged receivables, the creditworthiness of the customer, reasons for delinquency, current economic conditions, expectations associated with future events and circumstances where reasonable and supportable forecasts are available and any other information that is relevant to the judgment. Receivables from academic and government customers as well as large, well-capitalized commercial customers have historically experienced less collectability risk. Account balances are charged off against the allowance when the company believes it is probable the receivable will not be recovered. The company does not have any off-balance-sheet credit exposure related to customers.
The changes in the allowance for doubtful accounts are as follows:
Nine Months Ended
September 26,September 28,
(In millions)20202019
Balance at Beginning of Year$102 $117 
Cumulative effect of accounting change1 — 
Provision charged to expense39 19 
Accounts written off(25)(26)
Acquisitions, currency translation and other— (4)
Balance at End of Period$117 $106 
Contract assets include revenues recognized in advance of billings and are recorded net of estimated losses resulting from the inability to invoice customers, which is primarily due to risk associated with the company’s performance. Contract assets are classified as current or noncurrent based on the amount of time expected to lapse until the company's right to consideration
8

THERMO FISHER SCIENTIFIC INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
becomes unconditional. Noncurrent contract assets are included within other assets in the accompanying balance sheet. Noncurrent contract liabilities are included within other long-term liabilities in the accompanying balance sheet. Contract assets and liabilities are presented on a net basis in the consolidated balance sheet if they arise from different performance obligations in the same contract. Contract asset and liability balances are as follows:
September 26,December 31,
(In millions)20202019
Current Contract Assets, Net$697 $603 
Noncurrent Contract Assets, Net11 17 
Current Contract Liabilities1,047 916 
Noncurrent Contract Liabilities674 594 
In the three and nine months ended September 26, 2020, the company recognized revenues of $142 million and $773 million, respectively, that were included in the contract liabilities balance at December 31, 2019.
Warranty Obligations
The liability for warranties is included in other accrued expenses in the accompanying balance sheet. The changes in the carrying amount of standard product warranty obligations are as follows:
 Nine Months Ended
 September 26,September 28,
(In millions)20202019
Balance at Beginning of Year
$93 $92 
Provision charged to expense
74 80 
Usage
(76)(83)
Adjustments to previously provided warranties, net
(2)(1)
Currency translation
— (2)
Balance at End of Period
$89 $86 
Inventories
The components of inventories are as follows:
September 26,December 31,
(In millions)20202019
Raw Materials$1,247 $971 
Work in Process558 517 
Finished Goods2,024 1,882 
Inventories$3,829 $3,370 
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
The company’s estimates include, among others, asset reserve requirements as well as the amounts of future cash flows associated with certain assets and businesses that are used in assessing the risk of impairment. Risks and uncertainties associated with the ongoing COVID-19 global pandemic have and will continue to materially adversely affect certain of the company’s businesses, particularly in the Analytical Instruments segment and, to a lesser extent, in some businesses within the other three segments, through at least the fourth quarter of 2020. The extent and duration of such impacts are uncertain and may require changes to estimates. Actual results could differ from those estimates.
9

THERMO FISHER SCIENTIFIC INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
Recent Accounting Pronouncements
In January 2020, the FASB issued new guidance to clarify the interaction of the accounting for certain equity securities, equity method investments, and certain forward contracts and purchased options. Among other things, the new guidance clarifies that an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting for the purposes of applying measurement principles for certain equity securities immediately before applying or discontinuing the equity method. The company adopted this guidance in 2020 using a prospective method. The adoption of this guidance did not have a material impact on the company’s consolidated financial statements.
In December 2019, the FASB issued new guidance to simplify the accounting for income taxes. Among other things, the new guidance requires the effects of enacted changes in tax laws or rates to be reflected in the annual effective tax rate computation in the interim period that includes the enactment date. The company expects to adopt this guidance when it is effective in 2021 using a prospective method. The adoption of this guidance is not expected to have a material impact on the company’s consolidated financial statements; however, the impact in future periods will be dependent on the extent of future events or conditions that would be affected such as enacted changes in tax laws or rates.
In August 2018, the FASB issued new guidance to modify the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. The company adopted the guidance in 2020 using a retrospective method. The adoption of this guidance did not have a material impact on the company’s disclosures.
In August 2018, the FASB issued new guidance to modify the disclosure requirements on fair value measurements. The company adopted the guidance in 2020 with some items requiring a prospective method and others requiring a retrospective method. The adoption of this guidance did not have a material impact on the company’s disclosures.
In June 2016, the FASB issued new guidance to require a financial asset measured at amortized cost basis, such as accounts receivable, to be presented at the net amount expected to be collected based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. During 2018 and 2019, the FASB issued additional guidance and clarification. The company adopted the guidance in 2020 using a modified retrospective method. The adoption of this guidance reduced accounts receivable and retained earnings by $1 million on January 1, 2020.

Note 2.    Acquisitions and Dispositions
The company’s acquisitions have historically been made at prices above the determined fair value of the acquired identifiable net assets, resulting in goodwill, primarily due to expectations of the synergies that will be realized by combining the businesses. These synergies include the elimination of redundant facilities, functions and staffing; use of the company’s existing commercial infrastructure to expand sales of the acquired businesses’ products; and use of the commercial infrastructure of the acquired businesses to cost-effectively expand sales of company products.
Acquisitions have been accounted for using the acquisition method of accounting, and the acquired companies’ results have been included in the accompanying financial statements from their respective dates of acquisition. Acquisition transaction costs are recorded in selling, general and administrative expenses as incurred.
Terminated Acquisition
As previously announced, on March 3, 2020, the company entered into a purchase agreement to acquire all of the issued and outstanding shares of QIAGEN N.V. (“QIAGEN”). Following a determination that the number of shares tendered by QIAGEN shareholders did not meet the minimum amount required for the transaction to proceed, on August 13, 2020, the company delivered to QIAGEN a written notice terminating the purchase agreement in accordance with the terms of the agreement. In connection with the termination, QIAGEN paid to the company an expense reimbursement payment of $95 million in cash which has been recorded as a reduction of selling, general and administrative expenses.
Disposition
On June 28, 2019, the company sold its Anatomical Pathology business to PHC Holdings Corporation for $1.13 billion, net of cash divested. The business was part of the Specialty Diagnostics segment. The sale of this business resulted in a pre-tax gain of approximately $482 million in 2019, included in restructuring and other costs (income), net. Revenues in 2019, through the date of sale, of the business sold were approximately $115 million, net of retained sales through the company's healthcare market channel business.
10

THERMO FISHER SCIENTIFIC INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

Note 3.    Revenues
Disaggregated Revenues
Revenues by type are as follows:
Three Months Ended Nine Months Ended
September 26,September 28,September 26,September 28,
(In millions)2020201920202019
Revenues
Consumables
4,956 3,228 $12,214 $9,726 
Instruments
1,826 1,570 4,448 4,619 
Services
1,739 1,474 5,006 4,368 
Consolidated revenues$8,521 $6,272 $21,668 $18,713 
Revenues by geographic region are as follows:
Three Months EndedNine Months Ended
September 26,September 28,September 26,September 28,
(In millions)2020201920202019
Revenues (a)
North America
$4,587 $3,220 $11,418 $9,509 
Europe
2,032 1,514 5,464 4,569 
Asia-Pacific
1,607 1,349 4,054 4,080 
Other regions
295 189 732 555 
Consolidated revenues$8,521 $6,272 $21,668 $18,713 
(a)Revenues are attributed to regions based on customer location.
Each reportable segment earns revenues from consumables, instruments and services in North America, Europe, Asia-Pacific and other regions. See Note 4 for revenues by reportable segment and other geographic data.
Remaining Performance Obligations
The aggregate amount of the transaction price allocated to the remaining performance obligations for all open customer contracts as of September 26, 2020 was $11.16 billion. The company will recognize revenues for these performance obligations as they are satisfied, approximately 72% of which is expected to occur within the next twelve months.

11

THERMO FISHER SCIENTIFIC INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
Note 4.    Business Segment and Geographical Information
Business Segment Information
Three Months EndedNine Months Ended
September 26,September 28,September 26,September 28,
(In millions)2020201920202019
Revenues
Life Sciences Solutions
$3,424 $1,701 $7,800 $5,018 
Analytical Instruments
1,336 1,358 3,488 4,004 
Specialty Diagnostics
1,430 879 3,376 2,779 
Laboratory Products and Services
3,112 2,619 8,629 7,765 
Eliminations
(781)(285)(1,625)(853)
Consolidated revenues
8,521 6,272 21,668 18,713 
Segment Income (a)
Life Sciences Solutions
1,879 586 3,788 1,756 
Analytical Instruments
171 311 477 879 
Specialty Diagnostics
398 223 848 707 
Laboratory Products and Services
355 303 931 933 
Subtotal reportable segments (a)
2,803 1,423 6,044 4,275