THERMO FISHER SCIENTIFIC INC.

Note 5. Commitments and Contingencies

Purchase Obligations

The company has entered into unconditional purchase obligations, in the ordinary course of business, that include agreements to purchase goods, services or fixed assets and to pay royalties that are enforceable and legally binding and that specify all significant terms including: fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. Purchase obligations exclude agreements that are cancelable at any time without penalty. The aggregate amount of the company’s unconditional purchase obligations totaled $1.98 billion at December 31, 2025, the majority of which are expected to be settled during 2026.

Letters of Credit, Guarantees and Other Commitments

Outstanding letters of credit and bank guarantees totaled $379 million at December 31, 2025. Substantially all of these letters of credit and guarantees expire through 2039.

Outstanding surety bonds and other guarantees totaled $175 million at December 31, 2025. The expiration of these bonds and guarantees ranges through 2030.

The letters of credit, bank guarantees and surety bonds principally secure performance obligations, and allow the holder to draw funds up to the face amount of the letter of credit, bank guarantee or surety bond if the applicable business unit does not perform as contractually required.

The company has funding commitments totaling $162 million at December 31, 2025, related to investments.

The company is a guarantor of pension plan obligations of a divested business. The purchaser of the divested business has agreed to pay for the pension benefits; however, the company was required to guarantee payment of these pension benefits should the purchaser fail to do so. The amount of the guarantee at December 31, 2025 was $24 million.

In connection with the sale of businesses of the company, the buyers have assumed certain contractual obligations of such businesses and have agreed to indemnify the company with respect to those assumed liabilities. In the event a third-party to a transferred contract does not recognize the transfer of obligations or a buyer defaults on its obligations under the transferred contract, the company could be liable to the third-party for such obligations. However, in such event, the company would be entitled to seek indemnification from the buyer.

Indemnifications

In conjunction with certain transactions, primarily divestitures, the company has agreed to indemnify the other parties with respect to certain liabilities related to the businesses that were sold or leased properties that were abandoned (e.g., retention of certain environmental, tax, employee and product liabilities). The scope and duration of such indemnity obligations vary from transaction to transaction. Where probable, an obligation for such indemnifications is recorded as a liability. Generally, a maximum obligation cannot be reasonably estimated. Other than obligations recorded as liabilities at the time of divestiture, historically the company has not made significant payments for these indemnifications.

In connection with the company’s efforts to reduce the number of facilities that it occupies, the company has vacated some of its leased facilities or sublet them to third parties. When the company sublets a facility to a third-party, it remains the primary obligor under the master lease agreement with the owner of the facility. As a result, if a third-party vacates the sublet facility, the company would be obligated to make lease or other payments under the master lease agreement. The company believes that the financial risk of default by sublessors is individually and in the aggregate not material to the company’s financial position or results of operations.

In connection with the sale of products in the ordinary course of business, the company often makes representations affirming, among other things, that its products do not infringe on the intellectual property rights of others and agrees to indemnify customers against third-party claims for such infringement. The company has not been required to make material payments under such provisions.

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 December 31, 2025, the company’s total environmental liability was approximately $86 million. 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 below, 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. The range of probable loss for product liability, workers compensation and other personal injury matters of the company’s continuing operations at December 31, 2025, was approximately $218 million to $376 million. The company’s accrual for these matters totaled $223 million at December 31, 2025. The accrual includes estimated defense costs and is gross of estimated amounts due from insurers of $81 million at December 31, 2025 that are included in other assets in the accompanying balance sheet. In addition, as of December 31, 2025, the company had a product liability accrual of $19 million relating to divested businesses.

Although the company believes that the amounts accrued and estimated 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.

Note 6. Supplemental Income Statement Information

Disaggregated Revenues

Revenues by type are as follows:

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

Each reportable segment earns revenues from consumables, instruments and services in North America, Europe, Asia-Pacific and other regions. See Note 11 for revenues by reportable segment and other geographic data.

Revenues by business are as follows:

Restructuring and Other Costs

Restructuring and other costs in 2025 primarily included continuing charges for headcount reductions and facility consolidations in an effort to streamline operations, net charges for disposition of a consolidated joint venture, impairments of long-lived assets, and, to a lesser extent, net charges for pre-acquisition litigation and other matters. In 2025, severance actions associated with facility consolidations and cost reduction measures affected approximately 5% of the company’s workforce.

Restructuring and other costs in 2024 primarily included continuing charges for headcount reductions and facility consolidations in an effort to streamline operations, impairment of long-lived assets, and, to a lesser extent, net charges for pre-acquisition litigation and other matters. In 2024, severance actions associated with facility consolidations and cost reduction measures affected approximately 2% of the company’s workforce.

Restructuring and other costs in 2023 primarily included continuing charges for headcount reductions and facility consolidations in an effort to streamline operations, impairment of long-lived assets, and, to a lesser extent, net charges for pre-acquisition litigation and other matters. In 2023, severance actions associated with facility consolidations and cost reduction measures affected approximately 5% of the company’s workforce.

As of February 26, 2026, the company has identified restructuring actions, primarily in the Laboratory Products and Biopharma Services, Life Sciences Solutions, and Analytical Instruments segments, that it expects will result in additional charges of approximately $250 million, primarily in 2026, and expects to identify additional actions in future periods.

Restructuring and other costs by segment are as follows:

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

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

(b)Excludes $264 million of charges, principally $126 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 $19 million of net charges for pre-acquisition litigation and other matters in the Laboratory Products and Biopharma Services segment.

(c)Excludes $93 million of charges in the Laboratory Products and Biopharma Services segment for impairments of a disposal group that was held for sale beginning in the third quarter of 2023. The loss attributable to Thermo Fisher Scientific Inc. was reduced by $46 million attributable to a noncontrolling interest.

(d)Excludes $282 million of net charges, principally $211 million of charges for impairment of long-lived assets in the Laboratory Products and Biopharma Services and Life Sciences Solutions segments.

(e)Excludes $41 million of charges in the Laboratory Products and Biopharma Services segment for impairment of a disposal group that was held for sale beginning in the third quarter of 2023. The loss attributable to Thermo Fisher Scientific Inc. was reduced by $19 million attributable to a noncontrolling interest.

(f)Excludes $165 million of net charges, principally $94 million of charges for impairments of long-lived assets in the Life Sciences Solutions and Laboratory Products and Biopharma Services segments, as well as $51 million of net charges for disposition of a consolidated joint venture.

The company expects to pay accrued restructuring costs primarily through 2026.

Earnings per Share

The company’s earnings per share are as follows:

Other Income/(Expense)

In all periods, 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, which is included in operating expenses on the accompanying statements of income. In 2025, 2024, and 2023 other income/(expense) includes $13 million, $21 million, and $(46) million of net gains/(losses) on investments, respectively. In 2025, other income/(expense) includes $7 million of settlement charges for pension plans (Note 14).

Foreign Currency Transactions

The aggregate foreign currency transaction gains/(losses) included in the accompanying statements of income were $(130) million, $0 million and $(67) million in 2025, 2024 and 2023, respectively.

Note 7. Income Taxes

The components of income before provision for income taxes are as follows:

The components of the provision for income taxes are as follows:

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 income taxes due to the following:

(a)State taxes in California, Massachusetts, Illinois, and Pennsylvania comprise the majority of the tax effect in this category.

Under previous tax disclosure guidance, 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 income taxes due to the following:

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, nondeductible interest in certain foreign jurisdictions, and foreign taxes that are different than the U.S. federal statutory rate.

During 2025, the company recorded tax benefits of $269 million and $153 million for domestication transactions and capital losses generated as part of intra-entity transactions, respectively, as well as $93 million of tax benefits related to tax return reassessments associated with the company’s foreign-derived intangible income. The company also recorded net tax benefits of $157 million, primarily in jurisdictions where the deferred tax assets are now expected to be realized due to forecasted income.

During 2024, the company recorded a tax reserve and associated interest of $240 million related to the settlement of international tax audits for tax years 2009 through 2016, which were settled in 2024. The company also recorded tax benefits of $459 million, primarily in jurisdictions where the deferred tax assets are now expected to be realized due to forecasted income. The benefits were partially offset by tax provisions primarily associated with disallowed interest expense and net operating loss carryforwards that are not expected to be realized.

During 2023, the company released valuation allowances of $32 million in jurisdictions where the deferred tax assets are now expected to be realized. In 2023, the company also recorded a tax benefit of $127 million for U.S. tax credits and the revaluation of net operating loss carryforwards due to higher tax rates as a result of its tax return resubmissions, a $91 million tax benefit, net of related tax expenses, from a foreign exchange loss on an intercompany debt refinancing transaction, and $233 million of tax benefits resulting from intra-entity transactions.

Net deferred tax asset/(liability) in the accompanying balance sheets consists of the following:

Prior to 2025, certain of the company’s non-U.S. attributes were determined to have a remote possibility of realization and therefore were not reported in the table above. In connection with the Organization for Economic Cooperation and Development global minimum tax initiative, Pillar Two, any existing deferred taxes not disclosed in the company’s 2025 financial statements will not be available in the future to reduce tax otherwise due under Pillar Two. Accordingly, beginning in 2025, the company is disclosing in the above table the tax effects of these non-US attributes offset with a full valuation allowance.

The company estimates the degree to which tax assets, losses and credit carryforwards will result in a benefit based on expected profitability by tax jurisdiction and provides a valuation allowance for tax assets and loss and credit carryforwards that it believes will more likely than not expire unutilized. At December 31, 2025, all of the company’s valuation allowance relates to deferred tax assets, primarily net operating losses and disallowed interest expense carryforward, for which any subsequently recognized tax benefits will reduce income tax expense.

The changes in the valuation allowance are as follows:

At December 31, 2025, the company had net federal, state and non-U.S. net operating loss carryforwards of $317 million, $72 million and $2.20 billion, respectively. Use of the carryforwards is limited based on the future income of certain subsidiaries. Of the federal net operating loss carryforwards, $38 million expire in the years 2026 through 2037, and the remainder do not expire. Of the state net operating loss carryforwards, $56 million expire in the years 2026 through 2044, and the remainder do not expire. Of the net non-U.S. net operating loss carryforwards, $1.04 billion expire in the years 2028 through 2045, and the remainder do not expire.

At December 31, 2025, the company had foreign tax credit carryforwards of $554 million and deferred interest carryforwards of $3.36 billion. The foreign tax credit carryforwards will expire in the years 2026 through 2034. Of the deferred interest carryforwards, $301 million expire in the years 2026 through 2035 and the remainder do not expire.

A provision has not been made for certain U.S. state income taxes or additional non-U.S. taxes that would be due when cash is repatriated to the U.S. as the company’s undistributed foreign earnings are intended to be reinvested outside of the U.S. indefinitely. The determination of the amount of the unrecognized deferred tax liability related to the undistributed foreign earnings is not practicable due to the uncertainty in the manner in which these earnings will be distributed. The company’s intent is to only make distributions from non-U.S. subsidiaries in the future when they can be made at no net tax cost.

Unrecognized Tax Benefits

As of December 31, 2025, the company had $0.42 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:

Substantially all of the unrecognized tax benefits are classified as long-term liabilities.

During 2025, the company’s tax benefits decreased by $103 million as a result of uncertain tax positions relating to foreign tax positions, which included $72 million of reserve and associated interest from the settlement of international tax audits and decreased $3 million relating to U.S. federal and state tax positions.

During 2024, the company’s unrecognized tax benefits decreased by $99 million as a result of uncertain tax positions relating to foreign tax positions which included $240 million of reserve and associated interest from the settlement of international tax audits for tax years 2009 through 2016 and increased $84 million relating to U.S. federal and state tax positions.

During 2023, the company’s unrecognized tax benefits decreased by $12 million as a result of uncertain tax positions relating to foreign tax positions and decreased $19 million relating to U.S. federal and state tax positions.

The company classified interest and penalties related to unrecognized tax benefits as income tax expense. The total amount of interest and penalties related to uncertain tax positions and recognized in the balance sheet as of December 31, 2025 and 2024 was $39 million and $75 million, respectively.

The company conducts business globally and, as a result, Thermo Fisher or one or more of its subsidiaries files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. In the normal course of business, the company is subject to examination by taxing authorities throughout the world, including such major jurisdictions as Australia, Canada, China, Denmark, Finland, France, Germany, Japan, Singapore, Sweden, the United Kingdom and the United States. With few exceptions, the company is no longer subject to U.S. state and local or non-U.S. income tax examinations for years before 2012 and no longer subject to U.S. federal income tax examinations for years before 2019.

On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was enacted. The OBBBA includes a broad range of provisions, such as the permanent extension of certain otherwise expiring provisions, modifications to the international tax framework and the reinstatement of favorable tax treatment for certain business provisions. While most of the changes made by the OBBBA are effective in future tax years, some of its provisions are effective in 2025. There was no material impact on the company’s effective tax rate. We will continue to monitor and assess the impact of OBBBA on our consolidated financial statements.

Note 8. Comprehensive Income/(Loss) and Shareholders' Equity

Comprehensive Income/(Loss)

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

Shareholders’ Equity

At December 31, 2025, the company had reserved 36 million unissued shares of its common stock for possible issuance under stock-based compensation plans.

Early in the first quarter of 2026, the company repurchased $3.00 billion of the company's common stock (4.9 million shares).

Note 9. Supplemental Cash Flow Information

Supplemental cash flow information is as follows:

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

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

Note 10. Derivatives

Derivative Contracts

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

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

The following table provides information on the company’s derivative positions subject to master netting arrangements, presented on a net basis, had the company elected to offset the asset and liability balances of its positions in the consolidated balance sheets:

See Note 1 and Note 3 for additional information on the company’s risk management objectives and strategies.

Note 11. Business Segment and Geographical Information

The company’s financial performance is reported infour segments. A description of each segment follows.

Life Sciences Solutions: provides an extensive portfolio of reagents, instruments and consumables used in biological and medical research, discovery and production of new drugs and vaccines as well as diagnosis of disease. These products and services are used by customers in pharmaceutical, biotechnology, agricultural, clinical, healthcare, academic, and government markets.

Analytical Instruments: provides a broad offering of instruments and the supporting consumables, software and services that are used for a range of applications in the laboratory and in the field. These products and services are used by customers in pharmaceutical, biotechnology, academic, government, environmental and other research and industrial markets, as well as the clinical laboratory.

Specialty Diagnostics: offers a wide range of diagnostic test kits, reagents, culture media, instruments and associated products to serve customers in healthcare, clinical, pharmaceutical, industrial, and food safety laboratories. Our healthcare products are used to increase the speed and accuracy of diagnoses, which improves patient care in a more cost-efficient manner.

Laboratory Products and Biopharma Services: offers virtually everything needed for the laboratory. Our unique combination of self-manufactured and sourced products and extensive service offering enables our customers to focus on their core activities and helps them to be more innovative, productive and cost-efficient. The segment also includes a comprehensive offering of outsourced services used by the pharmaceutical and biotech industries for drug development, clinical research, clinical trials services and commercial drug manufacturing.

The company’s management evaluates segment operating performance based on operating income before certain charges/credits to cost of revenues and selling, general and administrative expenses, restructuring and other costs, and amortization of acquisition-related intangible assets. The company uses this measure because it helps management understand and evaluate the segments’ core operating results and facilitates comparison of performance for determining compensation.

The company's chairman, president and chief executive officer is its chief operating decision maker (CODM). The CODM uses total revenues and segment income predominantly in the strategic plan, annual operating plan and quarterly business review processes. During these processes, the CODM considers budget-to-actual variances to evaluate both internal (e.g., changes in selling prices, strategic growth investments, productivity, business mix, newly acquired/divested businesses, etc.) and external (e.g., inflation, foreign currency, etc.) events and conditions.

The company generally accounts for intersegment revenues at current market prices.

Other segment items included in the below tables consist of stock-based compensation and other incentive compensation expenses, allocations of corporate and certain overhead expenses, as well as elimination of intersegment and intrasegment profits, all of which are included in the company's measurement of segment income, but not regularly provided to the CODM at the segment level. Cost of revenues adjustments consist of charges for the sale of inventories revalued at the date of acquisition, inventory write-downs associated with large-scale abandonments of product lines, and accelerated depreciation on fixed assets to estimated salvage value in connection with the consolidation of operations. Selling, general and administrative adjustments consist of certain transaction-related third-party costs (including reimbursement thereof), charges/credits for changes in estimates of contingent acquisition consideration, and charges related to product liability litigation. Restructuring and other costs include charges arising from headcount reductions and facility consolidations such as severance and abandoned lease expense and gains and losses on the sale of real estate and product lines, as well as impacts of pre-acquisition matters, net charges for significant litigation-related matters, and certain other gains and losses that are either isolated or cannot be expected to occur again with any predictability (Note 6).

Prior period segment expense amounts have been recast to reflect the method for allocating expenses to segments in the current period.

Segment assets included in the below tables consist of third-party accounts receivable and inventories, which are regularly provided to the CODM.

Geographical revenues are attributed to countries based on customer location. Long-lived assets by geographical location includes property, plant and equipment, net, and operating lease ROU assets.

Business Segment Information

Geographical Information

Note 12. Acquisitions

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. Acquisition transaction costs are recorded in selling, general and administrative expenses as incurred.

Pending Acquisition

The company has entered into an agreement to acquire Clario Holdings, Inc. for approximately $8.875 billion in cash at the closing of the transaction, with an additional $125 million in deferred consideration and up to $400 million in contingent consideration to be payable following the closing. Clario is a leading provider of endpoint data solutions for clinical trials. The transaction, which is expected to be completed by the middle of 2026, is subject to customary closing conditions and regulatory approvals. Upon completion, Clario will become part of the Laboratory Products and Biopharma Services segment.

On September 1, 2025, the company acquired, within the Life Sciences Solutions segment, our filtration and separation business, a leading provider of purification and filtration technologies used in the production of biologics as well as in medical technologies and industrial applications, from Solventum Corporation. The business strengthens the segment’s bioproduction offerings with advanced filtration technologies that improve quality and efficiency across upstream and downstream workflows. In addition, its industrial filtration and membrane solutions will expand our reach into industries including battery, semiconductor and medical device manufacturing. The goodwill recorded as a result of this business combination is not expected to be tax deductible.

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

The preliminary allocation of the purchase price for the acquisition of Solventum’s Filtration and Separation business is based on the estimates of the fair value of the purchase price and net assets acquired and is subject to adjustment upon finalization, largely with respect to acquired intangible assets, real and personal property, inventory and the related deferred taxes. Measurements of these items inherently require significant estimates and assumptions.

In addition, in 2025, the company acquired within the Laboratory Products and Biopharma Services segment, a sterile fill finishing and packaging facility to meet the growing demand from pharma and biotech customers for U.S. manufacturing capacity.

The weighted-average amortization periods for definite-lived intangible assets acquired in 2025 are 18 years for customer relationships,19 years for product technology, and 15 years for trade names. The weighted-average amortization period for all definite-lived intangible assets acquired in 2025 is 18 years.

On July 10, 2024, the company acquired, within the Life Sciences Solutions segment, Olink Holding AB (publ), a Swedish-based provider of next-generation proteomics solutions. The acquisition enhances the segment’s capabilities in the high-growth proteomics market with the addition of highly differentiated solutions. It also complements the existing life sciences and mass spectrometry offerings, accelerating protein biomarker discovery and providing strong synergy opportunities. 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:

The weighted-average amortization periods for definite-lived intangible assets acquired in 2024 are 19 years for customer relationships,15 years for product technology, and 15 years for trade names. The weighted-average amortization period for definite-lived intangible assets acquired in 2024 is 18 years.

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.

On August 14, 2023, the company acquired, within the Laboratory Products and Biopharma Services segment, CorEvitas, LLC, a U.S.-based provider of regulatory-grade, real-world evidence for approved medical treatments and therapies. The acquisition expands the segment’s portfolio with the addition of highly complementary real-world evidence solutions to enhance decision-making as well as the time and cost of drug development. 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 addition, in 2023, the company acquired, within the Analytical Instruments segment, a U.S.-based developer of Raman-based spectroscopy solutions for in-line measurement.

The weighted-average amortization periods for definite-lived intangible assets acquired in 2023 are 18 years for customer relationships,14 years for product technology,15 years for trade names, and 13 years for backlog. The weighted-average amortization period for definite-lived intangible assets acquired in 2023 is 17 years.

Note 13. Leases

As a lessee, the company leases certain logistics, office, and manufacturing facilities, as well as vehicles, copiers, and other equipment. These operating leases generally have remaining lease terms between 1 month and 30 years, and some include options to extend (generally for 1 to 10 years) or have options to terminate the arrangement within 1 year.

The company has guaranteed the residual value ofthree leased operating facilities with lease terms ending in 2028, 2029, and 2030. The company has agreed with the lessor to comply with certain financial covenants consistent with its other debt arrangements (Note 3). The aggregate maximum guarantee under these three lease arrangements is $147 million. Operating lease ROU assets and lease liabilities for these lease arrangements are recorded on the consolidated balance sheet as of December 31, 2025, but exclude any amounts for residual value guarantees.

As a lessee, the consolidated financial statements include the following relating to operating leases:

Lease costs arising from finance leases, short-term leases, and sublease income are not material. See Note 3 for additional information relating to finance leases.

As of December 31, 2025, future payments of operating lease liabilities are as follows:

As a lessor, operating leases, sales-type leases and direct financing leases are not material.

Note 14. Pension and Other Postretirement Benefit Plans

401(k) Savings Plan and Other Defined Contribution Plans

The company’s 401(k) savings and other defined contribution plans cover the majority of the company’s eligible U.S. and certain non-U.S. employees. Contributions to the plans are made by both employees and the company. Company contributions are based on the level of employee contributions and formulas determined by the company. In 2025, 2024, and 2023, the company charged to expense $472 million, $443 million, and $468 million, respectively, related to its defined contribution plans.

Defined Benefit Pension Plans

Employees of a number of the company’s non-U.S. and certain U.S. subsidiaries participate in defined benefit pension plans covering substantially all full-time employees at those subsidiaries. Some of the plans are unfunded, as permitted under the plans and applicable laws. The company also maintains postretirement healthcare programs at several acquired businesses where certain employees are eligible to participate. The liabilities and costs associated with the company’s postretirement healthcare programs are generally funded on a self-insured and insured-premium basis and are not material for any period presented.

Contributions to the plans included in the following table are estimated at between $45 million and $50 million for 2026.

The following table provides a reconciliation of benefit obligations and plan assets of the company’s domestic and non-U.S. pension plans:

Actuarial (gains)/losses experienced in 2025 for domestic pension plans were driven by differences between actual and expected returns on plan assets for certain portions of plan benefits indexed to asset returns, as well as decreases in the weighted average discount rates used to determine the projected benefit obligation when compared to 2024. For non-U.S. pension plans, actuarial (gains)/losses experienced in 2025 were primarily driven by increases in the weighted average discount rates used to determine the projected benefit obligation when compared to 2024.

Actuarial (gains)/losses experienced in 2024 for both domestic and non-U.S. pension plans were primarily driven by increases in the weighted average discount rates used to determine the projected benefit obligation when compared to 2023.

The actuarial assumptions used to compute the funded status for the plans are based upon information available as of December 31, 2025 and 2024 and are as follows:

The actuarial assumptions used to compute the net periodic pension benefit cost/(income) are based upon information available as of the beginning of the year, as presented in the following table:

The projected benefit obligation and fair value of plan assets for the company’s qualified and non-qualified pension plans with projected benefit obligations in excess of plan assets are as follows:

The accumulated benefit obligation and fair value of plan assets for the company's qualified and non-qualified pension plans with accumulated benefit obligations in excess of plan assets are as follows:

The measurement date used to determine benefit information is December 31 for all plan assets and benefit obligations.

The net periodic pension benefit cost/(income) includes the following components:

Expected benefit payments are estimated using the same assumptions used in determining the company’s benefit obligation at December 31, 2025. Benefit payments will depend on future employment and compensation levels, average years employed and average life spans, among other factors, and changes in any of these factors could significantly affect these estimated future benefit payments. Estimated future benefit payments during the next five years and in the aggregate for the five fiscal years thereafter, are as follows:

Domestic Pension Plan Assets

The company’s overall objective is to manage the assets in a liability framework where investments are selected that are expected to have similar changes in fair value as the related liabilities will have upon changes in interest rates. The company invests in a portfolio of both return-seeking and liability-hedging assets, primarily through the use of institutional collective funds, to achieve long-term growth and to insulate the funded position from interest rate volatility. The strategic asset allocation uses a combination of risk controlled and index strategies in fixed income and global equities. The target allocations for the investments are approximately 10% to funds investing in U.S. equities, approximately 10% to funds investing in international equities and approximately 80% to funds investing in fixed income securities. The portfolio maintains enough liquidity at all times to meet the near-term benefit payments.

Non-U.S. Pension Plan Assets

The company maintains specific plan assets for many of the individual pension plans outside the U.S. The investment strategy of each plan has been uniquely established based on the country specific standards and characteristics of the plans. Several of the plans have contracts with insurance companies whereby the market risks of the benefit obligations are borne by the insurance companies. When assets are held directly in investments, generally the objective is to invest in a portfolio of diversified assets with a variety of fund managers. The investments may include equity funds, fixed income funds, hedge funds, multi-asset funds, alternative investments, real estate funds and derivative funds with the target asset allocations ranging from approximately 0% -10% for equity funds,30% -75% for fixed income funds,0% -45% for multi-asset funds,0% -4% for alternative investments,0% -2% for real estate funds and 0% -35% for funds holding derivatives. The derivatives held by the funds are primarily interest rate swaps intended to match the movements in the plan liabilities. Each plan maintains enough liquidity at all times to meet the near-term benefit payments.

The fair values of the company’s plan assets at December 31, 2025 and 2024, by asset category are as follows:

The tables above present the fair value of the company’s plan assets in accordance with the fair value hierarchy (Note 1). Certain investments that are measured at fair value using the net asset value per share practical expedient have not been classified in the fair value hierarchy. The fair value amounts of these investments presented in the above tables are intended to permit reconciliation of the fair value hierarchy to the amounts presented for the total pension plan assets. These investments were also redeemable at the balance sheet date or within limited time restrictions.

Note 15. Stock-based Compensation Expense

The company has stock-based compensation plans for its key employees, directors and others. These plans permit the grant of a variety of stock and stock-based awards, including restricted stock units, stock options, or performance-based shares, as determined by the compensation committee of the company’s Board of Directors or, for certain non-officer grants, by the company’s employee equity committee, which consists of its chief executive officer. The company generally issues new shares of its common stock to satisfy option exercises and restricted unit vesting. Grants of stock options and restricted units generally provide that in the event of both a change in control of the company and a qualifying termination of an option or unit holder’s employment, all options and service-based restricted unit awards held by the recipient become immediately vested (unless an employment or other agreement with the employee provides for different treatment).

Stock Options

The weighted average assumptions used in the Black-Scholes option pricing model are as follows:

The total intrinsic value of options exercised during the same periods was $247 million, $395 million and $320 million, respectively. The intrinsic value is the difference between the market value of the shares on the exercise date and the exercise price of the option.

A summary of the company’s option activity for the year ended December 31, 2025 is presented below:

As of December 31, 2025, there was $180 million of total unrecognized compensation cost related to unvested stock options granted. The cost is expected to be recognized through 2029 with a weighted average amortization period of 2.2 years.

Restricted Share/Unit Awards

A summary of the company’s restricted unit activity for the year ended December 31, 2025 is presented below:

The weighted average per share grant-date fair values of restricted units granted during 2024 and 2023 were $556.83 and $545.73, respectively. The total fair value of shares vested during 2025, 2024 and 2023 was $178 million, $165 million and $207 million, respectively.

As of December 31, 2025, there was $278 million of total unrecognized compensation cost related to unvested restricted stock unit awards. The cost is expected to be recognized through 2030 with a weighted average amortization period of 2.4 years.

Employee Stock Purchase Plans

Qualifying employees are eligible to participate in an employee stock purchase plan sponsored by the company. Shares may be purchased under the program at 95% of the fair market value at the end of the purchase period and the shares purchased are not subject to a holding period. Shares are purchased through payroll deductions of up to 10% of each participating employee’s qualifying gross wages. The company issued 0.2 million,0.1 million and 0.1 million shares, respectively, of its common stock in 2025, 2024 and 2023 under the employee stock purchase plan.