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 April 3, 2021 or

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

Commission File Number 1-8002

THERMO FISHER SCIENTIFIC INC.

(Exact name of Registrant as specified in its charter)

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

168 Third Avenue

Waltham, Massachusetts 02451

(Address of principal executive offices) (Zip Code)

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

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $1.00 par value	TMO	New York Stock Exchange
0.750% Notes due 2024	TMO 24A	New York Stock Exchange
0.125% Notes due 2025	TMO 25B	New York Stock Exchange
2.000% Notes due 2025	TMO 25	New York Stock Exchange
1.400% Notes due 2026	TMO 26A	New York Stock Exchange
1.450% Notes due 2027	TMO 27	New York Stock Exchange
1.750% Notes due 2027	TMO 27B	New York Stock Exchange
0.500% Notes due 2028	TMO 28A	New York Stock Exchange
1.375% Notes due 2028	TMO 28	New York Stock Exchange
1.950% Notes due 2029	TMO 29	New York Stock Exchange
0.875% Notes due 2031	TMO 31	New York Stock Exchange
2.375% Notes due 2032	TMO 32	New York Stock Exchange
2.875% Notes due 2037	TMO 37	New York Stock Exchange
1.500% Notes due 2039	TMO 39	New York Stock Exchange
1.875% Notes due 2049	TMO 49	New York Stock Exchange

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

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

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

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

Smaller reporting company ☐                                      Emerging growth company  ☐

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

As of April 3, 2021, the Registrant had 393,027,886 shares of Common Stock outstanding.

THERMO FISHER SCIENTIFIC INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED APRIL 3, 2021

TABLE OF CONTENTS
		Page
PART I
Item 1.	Financial Statements (Unaudited)	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	28
Item 4.	Controls and Procedures	28
PART II
Item 1.	Legal Proceedings	28
Item 1A.	Risk Factors	29
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30
Item 6.	Exhibits	31

2

THERMO FISHER SCIENTIFIC INC.

PART I    FINANCIAL INFORMATION

Item 1.    Financial Statements

CONDENSED CONSOLIDATED BALANCE SHEET

(Unaudited)

	April 3,		December 31,
(In millions except share and per share amounts)	2021		2020
Assets
Current Assets:
Cash and cash equivalents	$	5,583	$	10,325
Accounts receivable, less allowances of $143 and $135	5,554		5,741
Inventories	4,342		4,029
Contract assets, net	783		731
Other current assets	1,423		1,131
Total current assets	17,685		21,957
Property, Plant and Equipment, Net	6,133		5,912
Acquisition-related Intangible Assets, Net	12,831		12,685
Other Assets	2,459		2,457
Goodwill	26,823		26,041
Total Assets	$	65,931	$	69,052
Liabilities and Shareholders' Equity
Current Liabilities:
Short-term obligations and current maturities of long-term obligations	$	4	$	2,628
Accounts payable	2,146		2,175
Accrued payroll and employee benefits	1,314		1,916
Contract liabilities	1,396		1,271
Other accrued expenses	2,135		2,314
Total current liabilities	6,995		10,304
Deferred Income Taxes	1,885		1,794
Other Long-term Liabilities	3,352		3,340
Long-term Obligations	18,641		19,107
Shareholders' Equity:
Preferred stock, $100 par value, 50,000 shares authorized; none issued
Common stock, $1 par value, 1,200,000,000 shares authorized; 437,622,084 and 437,088,297 shares issued	438		437
Capital in excess of par value	15,684		15,579
Retained earnings	30,350		28,116
Treasury stock at cost, 44,594,198 and 40,417,789 shares	(8,852)		(6,818)
Accumulated other comprehensive items	(2,562)		(2,807)
Total shareholders' equity	35,058		34,507
Total Liabilities and Shareholders' Equity	$	65,931	$	69,052

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

3

THERMO FISHER SCIENTIFIC INC.

CONDENSED CONSOLIDATED STATEMENT OF INCOME

(Unaudited)

	Three Months Ended
	April 3,		March 28,
(In millions except per share amounts)	2021		2020
Revenues
Product revenues	$	7,856	$	4,630
Service revenues	2,050		1,600
Total revenues	9,906		6,230
Costs and Operating Expenses:
Cost of product revenues	3,327		2,340
Cost of service revenues	1,370		1,150
Selling, general and administrative expenses	1,826		1,551
Research and development expenses	320		245
Restructuring and other costs	14		38
Total costs and operating expenses	6,857		5,324
Operating Income	3,049		906
Interest Income	12		36
Interest Expense	(125)		(126)
Other (Expense) Income	(183)		12
Income Before Income Taxes	2,753		828
Provision for Income Taxes	(416)		(40)
Net Income	$	2,337	$	788
Earnings per Share
Basic	$	5.93	$	1.99
Diluted	$	5.88	$	1.97
Weighted Average Shares
Basic	394		397
Diluted	397		400

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

4

THERMO FISHER SCIENTIFIC INC.

 CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(Unaudited)

	Three Months Ended
	April 3,		March 28,
(In millions)	2021		2020
Comprehensive Income
Net Income	$	2,337	$	788
Other Comprehensive Items:
Currency translation adjustment:
Currency translation adjustment (net of tax provision of $118 and $22)	224		(357)
Unrealized gains and losses on hedging instruments:
Unrealized losses on hedging instruments (net of tax benefit of $0 and $19)	—		(62)
Reclassification adjustment for losses included in net income (net of tax benefit of $4 and $1)	13		1
Pension and other postretirement benefit liability adjustments:
Pension and other postretirement benefit liability adjustments arising during the period (net of tax benefit (provision) of $(2) and $(5))	6		5
Amortization of net loss included in net periodic pension cost (net of tax benefit of $1 and $1)	2		4
Total other comprehensive items	245		(409)
Comprehensive Income	$	2,582	$	379

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

5

THERMO FISHER SCIENTIFIC INC.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited)

	Three Months Ended
	April 3,		March 28,
(In millions)	2021		2020
Operating Activities
Net income	$	2,337	$	788
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of property, plant and equipment	198		149
Amortization of acquisition-related intangible assets	423		425
Change in deferred income taxes	24		(41)
Loss on early extinguishment of debt	197		—
Stock-based compensation	51		46
Other non-cash expenses, net	69		64
Changes in assets and liabilities, excluding the effects of acquisitions	(1,321)		(1,075)
Net cash provided by operating activities	1,978		356
Investing Activities
Acquisitions, net of cash acquired	(1,343)		(4)
Purchase of property, plant and equipment	(628)		(253)
Proceeds from sale of property, plant and equipment	5		4
Other investing activities, net	(32)		(7)
Net cash used in investing activities	(1,998)		(260)
Financing Activities
Net proceeds from issuance of debt	—		2,185
Repayment of debt	(2,804)		(1)
Proceeds from issuance of commercial paper	—		382
Repayments of commercial paper	—		(321)
Purchases of company common stock	(2,000)		(1,500)
Dividends paid	(87)		(76)
Net proceeds from issuance of company common stock under employee stock plans	20		48
Other financing activities, net	21		(98)
Net cash (used in) provided by financing activities	(4,850)		619
Exchange Rate Effect on Cash	137		(127)
(Decrease) Increase in Cash, Cash Equivalents and Restricted Cash	(4,733)		588
Cash, Cash Equivalents and Restricted Cash at Beginning of Period	10,336		2,422
Cash, Cash Equivalents and Restricted Cash at End of Period	$	5,603	$	3,010

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

6

THERMO FISHER SCIENTIFIC INC.

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

(Unaudited)

	Common Stock			Capital in Excess of Par Value		Retained Earnings		Treasury Stock			Accumulated Other Comprehensive Items		Total Shareholders' Equity
(In millions)	Shares	Amount						Shares	Amount
	Three Months Ended April 3, 2021
Balance at December 31, 2020	437	$	437	$	15,579	$	28,116	40	$	(6,818)	$	(2,807)	$	34,507
Issuance of shares under employees' and directors' stock plans	1	1		54		—		1	(34)		—		21
Stock-based compensation	—	—		51		—		—	—		—		51
Purchases of company common stock	—	—		—		—		4	(2,000)		—		(2,000)
Dividends declared ($0.26 per share)	—	—		—		(103)		—	—		—		(103)
Net income	—	—		—		2,337		—	—		—		2,337
Other comprehensive items	—	—		—		—		—	—		245		245
Balance at April 3, 2021	438	$	438	$	15,684	$	30,350	45	$	(8,852)	$	(2,562)	$	35,058
	Three Months Ended March 28, 2020
Balance at December 31, 2019	434	$	434	$	15,064	$	22,092	36	$	(5,236)	$	(2,679)	$	29,675
Cumulative effect of accounting changes	—	—		—		(1)		—	—		—		(1)
Issuance of shares under employees' and directors' stock plans	1	1		76		—		—	(29)		—		48
Stock-based compensation	—	—		46		—		—	—		—		46
Purchases of company common stock	—	—		—		—		4	(1,500)		—		(1,500)
Dividends declared ($0.22 per share)	—	—		—		(88)		—	—		—		(88)
Net income	—	—		—		788		—	—		—		788
Other comprehensive items	—	—		—		—		—	—		(409)		(409)
Balance at March 28, 2020	435	$	435	$	15,186	$	22,791	40	$	(6,765)	$	(3,088)	$	28,559

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

7

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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

Nature of Operations

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

Interim Financial Statements

The interim condensed consolidated financial statements presented herein have been prepared by the company, are unaudited and, in the opinion of management, reflect all adjustments of a normal recurring nature necessary for a fair statement of the financial position at April 3, 2021, the results of operations for the three-month periods ended April 3, 2021 and March 28, 2020, and the cash flows for the three-month periods ended April 3, 2021 and March 28, 2020. Interim results are not necessarily indicative of results for a full year.

The condensed consolidated balance sheet presented as of December 31, 2020, has been derived from the audited consolidated financial statements as of that date. The condensed consolidated financial statements and notes are presented as permitted by Form 10-Q and do not contain all information that is included in the annual financial statements and notes thereto of the company. The condensed consolidated financial statements and notes included in this report should be read in conjunction with the 2020 financial statements and notes included in the company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC).

Note 1 to the consolidated financial statements for 2020 describes the significant accounting estimates and policies used in preparation of the consolidated financial statements. There have been no material changes in the company’s significant accounting policies during the three months ended April 3, 2021.

Inventories

The components of inventories are as follows:

	April 3,		December 31,
(In millions)	2021		2020
Raw Materials	$	1,491	$	1,305
Work in Process	602		540
Finished Goods	2,249		2,184
Inventories	$	4,342	$	4,029

Use of Estimates

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

The company’s estimates include, among others, asset reserve requirements as well as the amounts of future cash flows associated with certain assets and businesses that are used in assessing the risk of impairment. Risks and uncertainties associated with the ongoing COVID-19 global pandemic materially adversely affected certain of the company’s businesses in 2020, particularly in the Analytical Instruments segment and, to a lesser extent, some businesses within the other three segments. The extent and duration of negative impacts continuing into the remainder of 2021 are uncertain and may require changes to estimates. Actual results could differ from those estimates.

Recent Accounting Pronouncements

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 adopted this guidance in 2021 using a prospective method. The adoption of this guidance did not have a material impact on the company’s consolidated financial

8

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

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

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. 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.

Proposed Acquisition

On April 15, 2021, the company entered into a definitive agreement under which it will acquire PPD, Inc. for $47.50 per share for a total cash purchase price of $17.4 billion plus the assumption of approximately $3.5 billion of net debt. PPD provides a broad range of clinical research and specialized laboratory services to enable customers to accelerate innovation and increase drug development productivity. Upon close of the transaction, PPD will become part of the Laboratory Products and Services Segment. The transaction, which is expected to be completed by the end of 2021, is subject to the satisfaction of customary closing conditions, including the receipt of applicable regulatory approvals. Shareholders holding in aggregate approximately 60% of the issued and outstanding shares of common stock of PPD have approved the transaction by written consent. No further action by other PPD shareholders is required to approve the transaction.

2021

On January 15, 2021, the company acquired, within the Laboratory Products and Services segment, the Belgium-based European viral vector manufacturing business of Groupe Novasep SAS for approximately $834 million in net cash consideration. The European viral vector manufacturing business provides manufacturing services for vaccines and therapies to biotechnology companies and large biopharma customers. The acquisition expands the segment’s capabilities for cell and gene vaccines and therapies. The goodwill recorded as a result of the acquisition is not tax deductible.

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

In addition, in the first three months of 2021 the company acquired, within the Life Sciences Solutions segment, cell sorting technology assets and, also within the Life Sciences Solutions segment, an Ireland-based life sciences distributor.

9

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

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

(In millions)	European Viral Vector Business		Mesa Biotech		Other
Purchase Price
Cash paid	$	853	$	420	$	107
Fair value of contingent consideration	—		65		97
Cash acquired	(19)		(14)		(4)
	$	834	$	471	$	200
Net Assets Acquired
Current assets	$	40	$	54	$	8
Property, plant and equipment	39		2		1
Definite-lived intangible assets:
Customer relationships	311		—		3
Product technology	26		263		110
Tradenames	—		2		2
Goodwill	593		248		83
Other assets	19		3		1
Contract liabilities	(59)		—		(1)
Deferred tax liabilities	(82)		(68)		—
Other liabilities assumed	(53)		(33)		(7)
	$	834	$	471	$	200

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

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

10

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Note 3.    Revenues and Contract-related Balances

Disaggregated Revenues

Revenues by type are as follows:

	Three Months Ended
	April 3,		March 28,
(In millions)	2021		2020
Revenues
Consumables	$	5,964	$	3,379
Instruments	1,892		1,251
Services	2,050		1,600
Consolidated revenues	$	9,906	$	6,230

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

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

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

Remaining Performance Obligations

The aggregate amount of the transaction price allocated to the remaining performance obligations for all open customer contracts as of April 3, 2021 was $13.29 billion. The company will recognize revenues for these performance obligations as they are satisfied, approximately 74% of which is expected to occur within the next twelve months.

Contract-related Balances

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

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

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

11

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Note 4.    Business Segment and Geographical Information

Business Segment Information

	Three Months Ended
	April 3,		March 28,
(In millions)	2021		2020
Revenues
Life Sciences Solutions	$	4,203	$	1,774
Analytical Instruments	1,387		1,101
Specialty Diagnostics	1,615		958
Laboratory Products and Services	3,597		2,730
Eliminations	(896)		(333)
Consolidated revenues	9,906		6,230
Segment Income
Life Sciences Solutions	2,279		675
Analytical Instruments	272		171
Specialty Diagnostics	428		236
Laboratory Products and Services	531		295
Subtotal reportable segments	3,510		1,377
Cost of revenues charges	(8)		(2)
Selling, general and administrative charges	(16)		(6)
Restructuring and other costs	(14)		(38)
Amortization of acquisition-related intangible assets	(423)		(425)
Consolidated operating income	3,049		906
Interest income	12		36
Interest expense	(125)		(126)
Other (expense) income	(183)		12
Income before income taxes	$	2,753	$	828

Geographical Information

	Three Months Ended
	April 3,		March 28,
(In millions)	2021		2020
Revenues (a)
United States	$	4,892	$	3,139
China	775		464
Other	4,239		2,627
Consolidated revenues	$	9,906	$	6,230

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

12

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Note 5.    Income Taxes

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

	Three Months Ended
	April 3,			March 28,
(In millions)	2021			2020
Statutory Federal Income Tax Rate	21		%	21		%
Provision for Income Taxes at Statutory Rate	$	578		$	174
Increases (Decreases) Resulting From:
Foreign rate differential	(55)			(88)
Income tax credits	(89)			(26)
Global intangible low-taxed income	20			20
Foreign-derived intangible income	(60)			(17)
Excess tax benefits from stock options and restricted stock units	(28)			(28)
State income taxes, net of federal tax	49			9
Other, net	1			(4)
Provision for Income Taxes	$	416		$	40

The company has operations and a taxable presence in approximately 50 countries outside the U.S. The company's effective income tax rate differs from the U.S. federal statutory rate each year due to certain operations that are subject to tax incentives, state and local taxes, and foreign taxes that are different than the U.S. federal statutory rate.

Unrecognized Tax Benefits

As of April 3, 2021, the company had $1.11 billion of unrecognized tax benefits substantially all of which, if recognized, would reduce the effective tax rate.

A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:

(In millions)	2021
Balance at Beginning of Year	$	1,091
Additions for tax positions of current year	8
Additions for tax positions of prior years	15
Balance at End of Period	$	1,114

Note 6.    Earnings per Share

	Three Months Ended
	April 3,		March 28,
(In millions except per share amounts)	2021		2020
Net Income	$	2,337	$	788
Basic Weighted Average Shares	394		397
Plus Effect of: Stock options and restricted stock units	3		3
Diluted Weighted Average Shares	397		400
Basic Earnings per Share	$	5.93	$	1.99
Diluted Earnings per Share	$	5.88	$	1.97
Antidilutive Stock Options Excluded from Diluted Weighted Average Shares	1		1

13

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Note 7.    Debt and Other Financing Arrangements

	Effective Interest Rate at April 3,		April 3,		December 31,
(Dollars in millions)	2021		2021		2020
2.15% 7-Year Senior Notes, Due 7/21/2022 (euro-denominated)			$	—	$	611
3.00% 7-Year Senior Notes, Due 4/15/2023			—		1,000
4.15% 10-Year Senior Notes, Due 2/1/2024			—		1,000
0.75% 8-Year Senior Notes, Due 9/12/2024 (euro-denominated)	0.95	%	1,176		1,222
0.125% 5.5-Year Senior Notes, Due 3/1/2025 (euro-denominated)	0.42	%	940		977
4.133% 5-Year Senior Notes, Due 3/25/2025	4.32	%	1,100		1,100
2.00% 10-Year Senior Notes, Due 4/15/2025 (euro-denominated)	2.10	%	752		782
3.65% 10-Year Senior Notes, Due 12/15/2025	3.77	%	350		350
1.40% 8.5-Year Senior Notes, Due 1/23/2026 (euro-denominated)	1.53	%	823		855
2.95% 10-Year Senior Notes, Due 9/19/2026	3.19	%	1,200		1,200
1.45% 10-Year Senior Notes, Due 3/16/2027 (euro-denominated)	1.67	%	589		611
1.75% 7-Year Senior Notes, Due 4/15/2027 (euro-denominated)	1.98	%	706		733
3.20% 10-Year Senior Notes, Due 8/15/2027	3.39	%	750		750
0.50% 8.5-Year Senior Notes, Due 3/1/2028 (euro-denominated)	0.78	%	940		977
1.375% 12-Year Senior Notes, Due 9/12/2028 (euro-denominated)	1.46	%	706		733
1.95% 12-Year Senior Notes, Due 7/24/2029 (euro-denominated)	2.08	%	823		855
2.60% 10-Year Senior Notes, Due 10/1/2029	2.74	%	900		900
4.497% 10-Year Senior Notes, Due 3/25/2030	5.31	%	1,100		1,100
0.875% 12-Year Senior Notes, Due 10/1/2031 (euro-denominated)	1.14	%	1,058		1,099
2.375% 12-Year Senior Notes, Due 4/15/2032 (euro-denominated)	2.56	%	706		733
2.875% 20-Year Senior Notes, Due 7/24/2037 (euro-denominated)	2.94	%	823		855
1.50% 20-Year Senior Notes, Due 10/1/2039 (euro-denominated)	1.73	%	1,058		1,099
5.30% 30-Year Senior Notes, Due 2/1/2044	5.37	%	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)	1.99	%	1,176		1,222
Other			17		12
Total Borrowings at Par Value			18,843		21,926
Fair Value Hedge Accounting Adjustments			—		25
Unamortized Discount			(93)		(102)
Unamortized Debt Issuance Costs			(105)		(114)
Total Borrowings at Carrying Value			18,645		21,735
Less: Short-term Obligations and Current Maturities			4		2,628
Long-term Obligations			$	18,641	$	19,107

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

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

In connection with the agreement to acquire PPD (Note 2), the company obtained, but does not currently expect to utilize, up to $9.5 billion of committed financing. The company intends to finance the purchase price with cash on hand and the net proceeds from issuance of debt. The company is currently evaluating future debt financings and the timing of such transactions is subject to market and other conditions.

14

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Credit Facilities

The company has a revolving credit facility (the Facility) with a bank group that provides for up to $3.00 billion of unsecured multi-currency revolving credit. The Facility expires on December 4, 2025. The revolving credit agreement calls for interest at either a LIBOR-based rate (or LIBOR successor rate), a EURIBOR-based rate (for funds drawn in euro) or a rate based on the prime lending rate of the agent bank, at the company’s option. The agreement contains affirmative, negative and financial covenants, and events of default customary for facilities of this type. The covenants in the Facility include a Consolidated 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 Interest Coverage Ratio of 3.5:1.0 as of the last day of any fiscal quarter. As of April 3, 2021, no borrowings were outstanding under the Facility, although available capacity was reduced by approximately $31 million as a result of outstanding letters of credit.

Commercial Paper Programs

The company has commercial paper programs pursuant to which it may issue and sell unsecured, short-term promissory notes (CP Notes). Under the U.S. program, a) maturities may not exceed 397 days from the date of issue and b) the CP Notes are issued on a private placement basis under customary terms in the commercial paper market and are not redeemable prior to maturity nor subject to voluntary prepayment. Under the euro program, maturities may not exceed 183 days and may be denominated in euro, U.S. dollars, Japanese yen, British pounds sterling, Swiss franc, Canadian dollars or other currencies. Under both programs, the CP Notes are issued at a discount from par (or premium to par, in the case of negative interest rates), or, alternatively, are sold at par and bear varying interest rates on a fixed or floating basis. As of April 3, 2021, there were no outstanding borrowings under these programs.

Senior Notes

Interest is payable annually on the euro-denominated senior notes and semi-annually on all other senior notes. Each of the notes may be redeemed at a redemption price of 100% of the principal amount plus a specified make-whole premium and accrued interest. The company is subject to certain affirmative and negative covenants under the indentures governing the senior notes, the most restrictive of which limits the ability of the company to pledge principal properties as security under borrowing arrangements. The company was in compliance with all covenants at April 3, 2021.

In the first quarter of 2021, the company redeemed some of its existing senior notes. In connection with these redemptions, the company incurred $197 million of losses on the early extinguishment of debt included in Other (Expense) Income on the accompanying statement of income. Upon redemption of the senior notes, the company terminated the related fixed to floating rate interest rate swap arrangements and received $22 million, included in other financing activities, net, in the accompanying statement of cash flows.

Note 8.    Commitments and Contingencies

Environmental Matters

The company is currently involved in various stages of investigation and remediation related to environmental matters. The company cannot predict all potential costs related to environmental remediation matters and the possible impact on future operations given the uncertainties regarding the extent of the required cleanup, the complexity and interpretation of applicable laws and regulations, the varying costs of alternative cleanup methods and the extent of the company’s responsibility. Expenses for environmental remediation matters related to the costs of installing, operating and maintaining groundwater-treatment systems and other remedial activities related to historical environmental contamination at the company’s domestic and international facilities were not material in any period presented. At April 3, 2021, there have been no material changes to the accruals for pending environmental-related matters disclosed in the company’s 2020 financial statements and notes included in the company’s Annual Report on Form 10-K. While management believes the accruals for environmental remediation are adequate based on current estimates of remediation costs, the company may be subject to additional remedial or compliance costs due to future events such as changes in existing laws and regulations, changes in agency direction or enforcement policies, developments in remediation technologies or changes in the conduct of the company’s operations, which could have a material adverse effect on the company’s financial position, results of operations or cash flows.

15

THERMO FISHER SCIENTIFIC INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

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 2020 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 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 April 3, 2021, there have been no material changes to the accruals for pending product liability, workers compensation, and other personal injury matters disclosed in the company’s 2020 financial statements and notes included in the company’s Annual Report on Form 10-K. Although the company believes that the amounts accrued and estimated insurance recoveries are probable and appropriate based on available information, including actuarial studies of loss estimates, the process of estimating losses and insurance recoveries involves a considerable degree of judgment by management and the ultimate amounts could vary, which could have a material adverse effect on the company’s results of operations, financial position, and cash flows. Insurance contracts do not relieve the company of its primary obligation with respect to any losses incurred. The collectability of amounts due from its insurers is subject to the solvency and willingness of the insurer to pay, as well as the legal sufficiency of the insurance claims. Management monitors the payment history as well as the financial condition and ratings of its insurers on an ongoing basis.

Strategic Partnership and Long-term Lease

In May 2020, the company entered a strategi