THERMO FISHER SCIENTIFIC Forward-looking statements, within the meaning of Section 21E of the Securities Exchange Act of 1934 are made throughout this Management's Discussion and Analysis of Financial Condition and Results of Operations. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements, including without limitation statements regarding: projections of revenues, expenses, earnings, margins, tax rates, tax provisions, cash flows, pension and benefit obligations and funding requirements, our liquidity position; cost reductions, restructuring activities, new product and service developments, competitive strengths or market position, acquisitions or divestitures; growth, declines and other trends in markets we sell into; new or modified laws, regulations and accounting pronouncements; outstanding claims, legal proceedings, tax audits and assessments and other contingent liabilities; foreign currency exchange rates and fluctuations in those rates; general economic and capital markets conditions; the timing of any of the foregoing; assumptions underlying any of the foregoing; any potential impact of the COVID-19 pandemic on the company's business; and any other statements that address events or developments thatThermo Fisher intends or believes will or may occur in the future. Without limiting the foregoing, the words "believes," "anticipates," "plans," "expects," "seeks," "estimates," and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements are accompanied by such words. While the company may elect to update forward-looking statements in the future, it specifically disclaims any obligation to do so, even if the company's estimates change, and readers should not rely on those forward-looking statements as representing the company's views as of any date subsequent to the date of the filing of this Quarterly Report. Important factors that could cause actual results to differ materially from those indicated by such forward-looking statements are set forth under the caption "Risk Factors" in the company's Annual Report on Form 10-K for the year endedDecember 31, 2020 (which is on file with theSEC ) as updated under the heading "Risk Factors" in Part II, Item 1A of this report on Form 10-Q. Important factors that could cause actual results to differ materially from those indicated by forward-looking statements include risks and uncertainties relating to: the duration and severity of the COVID-19 pandemic; the need to develop new products and adapt to significant technological change; implementation of strategies for improving growth; general economic conditions and related uncertainties, dependence on customers' capital spending policies and government funding policies; the effect of economic and political conditions and exchange rate fluctuations on international operations; use and protection of intellectual property; the effect of changes in governmental regulations; any natural disaster, public health crisis or other catastrophic event; and the effect of laws and regulations governing government contracts, as well as the possibility that expected benefits related to recent or pending acquisitions, including our pending acquisition of PPD, Inc., may not materialize as expected.
Overview
The company develops, manufactures and sells a broad range of products that are sold worldwide. The company expands the product lines and services it offers by developing and commercializing its own technologies and by making strategic acquisitions of complementary businesses. The company's operations fall into four segments (Note 4): Life Sciences Solutions, Analytical Instruments,Specialty Diagnostics and Laboratory Products and Services. The company mobilized in early 2020 to support the COVID-19 pandemic response with products and services that help analyze, diagnose and protect from the virus. However, the company saw a significant reduction in customer activity in several businesses by lateMarch 2020 that materially adversely affected primarily the 2020 results of the Analytical Instruments segment and, to a lesser extent, some businesses within the company's other three segments. The negative impact has significantly lessened so far in 2021, but could worsen later in the year dependent on the success of global efforts to control the pandemic and economic activity ramping up. The company believes the impacted businesses' long-term prospects remain excellent given the company's attractive markets served, its industry-leading position and proven growth strategy. Several of the company's businesses have had a significant increase in revenues due to sales of products and services addressing diagnosis and treatment of COVID-19, including test kits and, to a lesser extent, products and services for therapy and vaccine development and manufacturing. While these positive impacts are expected to continue through 2021, the duration and extent of future revenues from such sales are uncertain and dependent primarily on customer testing as well as therapy and vaccine demand. Sales in the second quarter of 2021 were$9.27 billion , an increase of$2.36 billion from the second quarter of 2020. Excluding the effects of currency translation and acquisitions, revenues increased$1.92 billion (28%). In the second quarter of 2021, total company operating income and operating income margin were$2.16 billion and 23.3%, respectively, compared with$1.39 billion and 20.1%, respectively, in 2020. 24 --------------------------------------------------------------------------------THERMO FISHER SCIENTIFIC INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Overview (continued) Net income increased to$1.83 billion in the second quarter of 2021 from$1.16 billion in the second quarter of 2020, primarily due to an increase in operating income, offset in part by an increase in the income tax provision. During the first six months of 2021, the company's cash flow from operations totaled$4.21 billion compared with$2.24 billion for 2020. OnJanuary 15, 2021 , the company acquired, within the Laboratory Products and Services segment, theBelgium -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. OnFebruary 25, 2021 , the company acquired, within the Life Sciences Solutions segment,Mesa Biotech, Inc. , aU.S. -based molecular diagnostic company, for approximately$406 million in net cash consideration and contingent consideration with an initial fair value of$65 million due upon the completion of certain milestones. Mesa Biotech has developed and commercialized a PCR based rapid point-of-care testing platform available for detecting infectious diseases including COVID-19. The acquisition enables the company to accelerate the availability of reliable and accurate advanced molecular diagnostics at the point of care. OnApril 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. In 2020, PPD generated revenue of$4.7 billion . Upon close of the transaction, PPD will become part of the Laboratory Products and Services Segment. Shareholders holding in aggregate approximately 60% of the issued and outstanding shares of common stock of PPD onApril 15, 2021 , have approved the transaction by written consent. No further action by other PPD shareholders is required to approve the transaction. The transaction is subject to the satisfaction of customary closing conditions, including the receipt of applicable regulatory approvals. OnJuly 16, 2021 , the company and PPD each received a request for additional information and documentary materials from theFTC , in connection with theFTC's review of the proposed merger. The effect of the Second Request is to extend the waiting period imposed under the HSR Act until the 30th day after substantial compliance by the company and PPD with the Second Request, unless the waiting period is terminated earlier by theFTC . Subject to the satisfaction of the required closing conditions, we continue to expect the merger to be completed by the end of 2021. 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. The company also has available, but it does not currently expect to utilize, up to$6.5 billion of committed bridge financing. Critical Accounting Policies and Estimates Management's Discussion and Analysis and Note 1 to the Consolidated Financial Statements of the company's Annual Report on Form 10-K for 2020, describe the significant accounting estimates and policies used in preparation of the consolidated financial statements. There have been no significant changes in the company's critical accounting policies during the first six months of 2021. 25 --------------------------------------------------------------------------------THERMO FISHER SCIENTIFIC INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations Second Quarter 2021 Compared With Second Quarter 2020 Three Months Ended July 3, June 27, Total Currency Acquisitions/ (In millions) 2021 2020 Change Translation Divestitures Operations Revenues Life Sciences Solutions$ 3,557 $ 2,602 $ 955 $ 139 $ 64$ 752 Analytical Instruments 1,481 1,051 430 51 - 379 Specialty Diagnostics 1,235 988 247 37 - 210 Laboratory Products and Services 3,583 2,787 796 107 53 636 Eliminations (583) (511) (72) (11) - (61) Consolidated Revenues$ 9,273 $ 6,917 $ 2,356 $ 323 $ 117$ 1,916 Sales in the second quarter of 2021 increased$2.36 billion from the second quarter of 2020. Aside from the effects of currency translation and acquisitions, revenues increased$1.92 billion (28%) primarily due to increased demand. Sales of products that address COVID-19 testing and treatment increased$0.58 billion to$1.87 billion in the second quarter of 2021. Conditions were very robust in each of the company's end markets during the second quarter of 2021 driven by three factors: strong fundamentals in the life sciences, strong economic activity globally and the role the industry is playing in the pandemic response. Sales were particularly strong to academic and government, as well as industrial and applied customers, which were most affected in the second quarter of 2020 due to business disruptions related to the pandemic. Sales to customers in pharma and biotech markets were very strong driven by underlying market dynamics and the company's role in supporting customers across a wide range of therapeutic areas. Sales to customers in diagnostics and healthcare markets were strong as customer demand for non-COVID-19 response products and services was approaching pre-pandemic levels. Sales growth was strong in each of the company's primary geographic areas during the second quarter of 2021. In the second quarter of 2021, total company operating income and operating income margin were$2.16 billion and 23.3%, respectively, compared with$1.39 billion and 20.1%, respectively, in 2020. The increase in operating income was primarily due to profit on higher sales and, to a lesser extent, favorable foreign currency exchange and sales mix, offset in part by strategic growth investments in 2021 to support the company's near and long-term growth. The company's references to strategic growth investments generally refer to targeted spending for enhancing commercial capabilities, including expansion of geographic sales reach and e-commerce platforms, marketing initiatives, expanded service and operational infrastructure, research and development projects and other expenditures to enhance the customer experience, as well as incentive compensation and recognition for employees. The company's references throughout this discussion to productivity improvements generally refer to improved cost efficiencies from its Practical Process Improvement (PPI) business system including reduced costs resulting from implementing continuous improvement methodologies, global sourcing initiatives, a lower cost structure following restructuring actions, including headcount reductions and consolidation of facilities, and low cost region manufacturing. Productivity improvements are calculated net of inflationary cost increases. In the second quarter of 2021, the company recorded restructuring and other costs of$77 million . In the second quarter of 2020, the company recorded restructuring and other costs of$56 million . See Note 12 for restructuring charges expected in future periods. Segment Results Note 4 to the Consolidated Financial Statements of the company's Annual Report on Form 10-K for 2020, describes the company's measurement of segment income. There have been no significant changes in measurement methods used to determine segment income. 26 --------------------------------------------------------------------------------THERMO FISHER SCIENTIFIC INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations (continued)
Three Months Ended
July 3, June 27,
(Dollars in millions) 2021 2020 Change
Revenues
Life Sciences Solutions $ 3,557 $ 2,602 37 %
Analytical Instruments 1,481 1,051 41 %
Specialty Diagnostics 1,235 988 25 %
Laboratory Products and Services 3,583 2,787 29 %
Eliminations (583) (511) 14 %
Consolidated Revenues $ 9,273 $ 6,917 34 %
Segment Income
Life Sciences Solutions $ 1,718 $ 1,234 39 %
Analytical Instruments 280 135 107 %
Specialty Diagnostics 245 214 14 %
Laboratory Products and Services 446 281 59 %
Subtotal Reportable Segments 2,689 1,864 44 %
Cost of Revenues Charges - (2)
Selling, General and Administrative (Credits) Charges 42 (42)
Restructuring and Other Costs (119)
(12)
Amortization of Acquisition-related Intangible Assets (449)
(417)
Consolidated Operating Income$ 2,163
Reportable Segments Income Margin 29.0 % 27.0 % Consolidated Operating Income Margin 23.3 %
20.1 %
Income from the company's reportable segments increased 44% to$2.69 billion in the second quarter of 2021 due primarily to profit on higher sales and, to a lesser extent, favorable foreign currency exchange and sales mix, offset in part by strategic growth investments. Life Sciences Solutions Three Months Ended July 3, June 27, (Dollars in millions) 2021 2020 Change Revenues$ 3,557 $ 2,602 37 % Operating Income Margin 48.3 % 47.4 % 0.9 pt Sales in the Life Sciences Solutions segment increased$955 million in the second quarter of 2021. Sales increased$752 million (29%) due to higher revenues at existing businesses and$64 million due to acquisitions. The favorable effects of currency translation resulted in an increase in revenues of$139 million . The increase in revenues at existing businesses was primarily driven by demand for biosciences products and bioproduction products. The increase in operating income margin for the segment resulted primarily from profit on higher sales and, to a lesser extent, sales mix, offset in part by strategic growth investments. 27 --------------------------------------------------------------------------------THERMO FISHER SCIENTIFIC INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations (continued) Analytical Instruments Three Months Ended July 3, June 27, (Dollars in millions) 2021 2020 Change Revenues$ 1,481 $ 1,051 41 % Operating Income Margin 18.9 % 12.9 % 6.0 pt Sales in the Analytical Instruments segment increased$430 million in the second quarter of 2021. Sales increased$379 million (36%) due to higher revenues at existing businesses. The favorable effects of currency translation resulted in an increase in revenues of$51 million . The increase in revenues at existing businesses was due to increased demand for products sold by each of the segment's primary businesses with particular strength in chromatography and mass spectrometry instruments as well as materials and structural analysis instruments. The increase in operating income margin for the segment was primarily due to profit on higher sales and, to a lesser extent, productivity improvements, offset in part by strategic growth investments and, to a lesser extent, sales mix.Specialty Diagnostics Three Months Ended July 3, June 27, (Dollars in millions) 2021 2020 Change Revenues$ 1,235 $ 988 25 % Operating Income Margin 19.9 % 21.6 % -1.7 pt Sales in theSpecialty Diagnostics segment increased$247 million in the second quarter of 2021. Sales increased$210 million (21%) due to higher revenues at existing businesses. The favorable effects of currency translation resulted in an increase in revenues of$37 million . The increase in revenues at existing businesses was due to higher demand in each of the segment's primary businesses with particular strength in sales of immunodiagnostics products and products sold through the segment's healthcare market channel business. The decrease in operating income margin for the segment was primarily due to inflationary cost increases, net of productivity improvements, and strategic growth investments, offset in part by profit on higher sales and sales mix. Laboratory Products and Services Three Months Ended July 3, June 27, (Dollars in millions) 2021 2020 Change Revenues$ 3,583 $ 2,787 29 % Operating Income Margin 12.4 % 10.1 % 2.3 pt Sales in the Laboratory Products and Services segment increased$796 million in the second quarter of 2021. Sales increased$636 million (23%) due to higher revenues at existing businesses and$53 million due to an acquisition. The favorable effects of currency translation resulted in an increase in revenues of$107 million . The increase in revenues at existing businesses was primarily due to increased demand in each of the segment's principal businesses with particular strength in products sold through its research and safety market channel business. The increase in operating income margin for the segment was primarily due to profit on higher sales and sales mix, offset in part by strategic growth investments. Other Expense The company reported other expense of$5 million in the second quarter of 2021 compared to other expense of$9 million in the second quarter of 2020. In 2021, other expense includes$6 million for amortization of bridge loan commitment fees related to the pending acquisition of PPD. In 2020, other expense includes$27 million of costs for a subsequently terminated acquisition, primarily for amortization of bridge loan commitment fees and entering into currency hedging contracts. 28 --------------------------------------------------------------------------------THERMO FISHER SCIENTIFIC INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations (continued) Provision for Income Taxes The company's effective tax rate was 10.7% for the second quarter of 2021. During the quarter, the company recorded a$162 million income tax benefit on an intra-entity transfer of assets. The company expects its effective tax rate for all of 2021 will be between 11% and 13% based on currently forecasted rates of profitability in the countries in which the company conducts business and expected generation of foreign tax credits. Due primarily to the non-deductibility of intangible asset amortization for tax purposes, the company's cash payments for income taxes are higher than its income tax expense for financial reporting purposes and are expected to total approximately$1.7 billion in 2021. In the second quarter of 2020, the company's effective tax rate was 7.8%. In 2020, the company implemented foreign tax credit planning inSweden which resulted in$96 million of foreign tax credits, with no related incrementalU.S. income tax expense. The company has operations and a taxable presence in approximately 50 countries outside theU.S. Some of these countries have lower tax rates than theU.S. The company's ability to obtain a benefit from lower tax rates outside theU.S. is dependent on its relative levels of income in countries outside theU.S. and on the statutory tax rates in those countries. Based on the dispersion of the company's non-U.S. income tax provision among many countries, the company believes that a change in the statutory tax rate in any individual country is not likely to materially affect the company's income tax provision or net income, aside from any resulting one-time adjustment to the company's deferred tax balances to reflect a new rate.
First Six Months of 2021 Compared With First Six Months of 2020
Six Months Ended
July 3, June 27, Total Currency Acquisitions/
(In millions) 2021 2020 Change Translation Divestitures Operations
Revenues
Life Sciences Solutions $ 7,760 $ 4,376 $ 3,384 $ 241 $ 96 $ 3,047
Analytical Instruments 2,868 2,152 716 96 - 620
Specialty Diagnostics 2,850 1,946 904 69 - 835
Laboratory Products and
Services 7,180 5,517 1,663 199 130 1,334
Eliminations (1,479) (844) (635) (19) - (616)
Consolidated Revenues
$ 586 $ 226$ 5,220 Sales in the first six months of 2021 increased$6.03 billion from the first six months of 2020. Aside from the effects of currency translation and acquisitions, revenues increased$5.22 billion (40%) primarily due to increased demand. The first quarter of 2021 had three extra selling days compared to the first quarter of 2020. The company's fourth quarter of 2021 will have four fewer selling days than the corresponding 2020 quarter. Sales of products that address COVID-19 testing and treatment increased$3.26 billion to$4.72 billion in the first six months of 2021. Sales to customers in each of the company's primary end markets grew with particular strength in the diagnostics and healthcare industry. Sales growth was strong in each of the company's primary geographic areas. In the first six months of 2021, total company operating income and operating income margin were$5.21 billion and 27.2%, respectively, compared with$2.30 billion and 17.5%, respectively, in the first six months of 2020. The increase in operating income was primarily due to profit on higher sales and, to a lesser extent, sales mix, offset in part by strategic growth investments. In the first six months of 2021, the company recorded restructuring and other costs of$115 million (Note 12). In the first six months of 2020, the company recorded restructuring and other costs of$102 million . 29 --------------------------------------------------------------------------------THERMO FISHER SCIENTIFIC INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations (continued) Segment Results Six Months Ended July 3, June 27, (Dollars in millions) 2021 2020 Change Revenues Life Sciences Solutions$ 7,760 $ 4,376 77 % Analytical Instruments 2,868 2,152 33 % Specialty Diagnostics 2,850 1,946 46 % Laboratory Products and Services 7,180 5,517 30 % Eliminations (1,479) (844) 75 % Consolidated Revenues$ 19,179 $ 13,147 46 % Segment Income Life Sciences Solutions$ 3,997 $ 1,909 109 % Analytical Instruments 552 306 80 % Specialty Diagnostics 673 450 50 % Laboratory Products and Services 977 576 70 % Subtotal Reportable Segments 6,199 3,241 91 % Cost of Revenues Charges (8) (4) Selling, General and Administrative Charges 26
(48)
Restructuring and Other Costs (133)
(50)
Amortization of Acquisition-related Intangible Assets (872)
(842)
Consolidated Operating Income$ 5,212
Reportable Segments Income Margin 32.3 % 24.7 % Consolidated Operating Income Margin 27.2 %
17.5 %
Income from the company's reportable segments increased 91% to$6.20 billion in the first six months of 2021 due primarily to profit on higher sales and, to a lesser extent, sales mix, offset in part by strategic growth investments. Life Sciences Solutions Six Months Ended July 3, June 27, (Dollars in millions) 2021 2020 Change Revenues$ 7,760 $ 4,376 77 % Operating Income Margin 51.5 % 43.6 % 7.9 pt Sales in the Life Sciences Solutions segment increased$3.38 billion in the first six months of 2021. Sales increased$3.05 billion (70%) due to higher revenues at existing businesses and$96 million due to acquisitions. The favorable effects of currency translation resulted in an increase in revenues of$241 million . The increase in revenues at existing businesses was driven by a combination of increased demand for testing to diagnose COVID-19 with higher sales of genetic sciences products and biosciences products and strong demand in each of the segment's businesses. The increase in operating income margin for the segment resulted primarily from profit on higher sales and, to a lesser extent, sales mix, offset in part by strategic growth investments. 30 --------------------------------------------------------------------------------THERMO FISHER SCIENTIFIC INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations (continued) Analytical Instruments Six Months Ended July 3, June 27, (Dollars in millions) 2021 2020 Change Revenues$ 2,868 $ 2,152 33 % Operating Income Margin 19.3 % 14.2 % 5.1 pt Sales in the Analytical Instruments segment increased$716 million in the first six months of 2021. Sales increased$620 million (29%) due to higher revenues at existing businesses. The favorable effects of currency translation resulted in an increase in revenues of$96 million . The increase in revenues at existing businesses was due to increased demand for products sold by each of the segment's primary businesses with particular strength in chromatography and mass spectrometry instruments as well as materials and structural analysis instruments. The increase in operating income margin for the segment was primarily due to profit on higher sales and, to a lesser extent, productivity improvements, offset in part by strategic growth investments and sales mix.Specialty Diagnostics Six Months Ended July 3, June 27, (Dollars in millions) 2021 2020 Change Revenues$ 2,850 $ 1,946 46 % Operating Income Margin 23.6 % 23.1 % 0.5 pt Sales in theSpecialty Diagnostics segment increased$904 million in the first six months of 2021. Sales increased$835 million (43%) due to higher revenues at existing businesses. The favorable effects of currency translation resulted in an increase in revenues of$69 million . The increase in revenues at existing businesses was due to higher demand primarily driven by products addressing treatment of COVID-19, with particular strength in sales of products sold through the segment's healthcare market channel business, and to a lesser extent, microbiology products. The increase in operating income margin for the segment was primarily due to profit on higher sales, offset in part by inflationary cost increases, net of productivity improvements and sales mix. Laboratory Products and Services Six Months Ended July 3, June 27, (Dollars in millions) 2021 2020 Change Revenues$ 7,180 $ 5,517 30 % Operating Income Margin 13.6 % 10.4 % 3.2 pt Sales in the Laboratory Products and Services segment increased$1.66 billion to$7.18 billion in 2021. Sales increased$1.33 billion (24%) due to higher revenues at existing businesses and$130 million due to an acquisition. The favorable effects of currency translation resulted in an increase in revenues of$199 million . The increase in revenues at existing businesses was primarily due to increased demand in each of the segment's principal businesses with particular strength in products sold through its research and safety market channel business and, to a lesser extent, its laboratory products business. The increase in operating income margin for the segment was primarily due to profit on higher sales and, to a lesser extent, acquisitions, offset in part by strategic growth investments. Other Income/Expense The company reported other (expense) income of$(188) million and$3 million in the first six months of 2021 and 2020, respectively. In 2021, other expense includes$197 million of losses on the early extinguishment of debt and$6 million for amortization of bridge loan commitment fees related to the pending acquisition of PPD. In 2020, other income was reduced by 31 --------------------------------------------------------------------------------THERMO FISHER SCIENTIFIC INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations (continued)$44 million of costs for a subsequently terminated acquisition, primarily for entering into currency hedging contracts and amortization of loan commitment fees. Provision for Income Taxes The company recorded a$635 million provision for income taxes in the first six months of 2021. During the second quarter of 2021, the company recorded a$162 million income tax benefit on an intra-entity transfer of assets. The company recorded a$137 million provision for income taxes in the first six months of 2020. In the second quarter of 2020, the company implemented foreign tax credit planning inSweden which resulted in$96 million of foreign tax credits, with no related incrementalU.S. income tax expense.
Recent Accounting Pronouncements A description of recently issued accounting standards is included under the heading "Recent Accounting Pronouncements" in Note 1.
Liquidity and Capital Resources Consolidated working capital (current assets less current liabilities) was$12.34 billion atJuly 3, 2021 , compared with$11.65 billion atDecember 31, 2020 . Included in working capital were cash and cash equivalents of$7.02 billion atJuly 3, 2021 and$10.33 billion atDecember 31, 2020 . First Six Months of 2021 Cash provided by operating activities during the first six months of 2021 was$4.21 billion . Cash provided by income was offset in part by investments in working capital. A decrease in accounts receivable provided$249 million of cash. An increase in inventories used cash of$621 million , primarily to support growth in sales. Changes in other assets and other liabilities used cash of$1.06 billion primarily due to the timing of payments for compensation and income taxes. Cash payments for income taxes increased to$1.27 billion during the first six months of 2021, compared with$320 million in the first six months of 2020. During the first six months of 2021, the company's investing activities used$2.62 billion of cash. Acquisitions used cash of$1.43 billion . The company's investing activities also included the purchase of$1.17 billion of property, plant and equipment for capacity and capability investments. The company's financing activities used$4.93 billion of cash during the first six months of 2021. Repayment of senior notes used cash of$2.81 billion . The company's financing activities also included the repurchase of$2.00 billion of the company's common stock and the payment of$190 million in cash dividends. OnNovember 5, 2020 , the Board of Directors replaced the existing authorization to repurchase the company's common stock with a new authorization to repurchase up to$2.50 billion of the company's common stock. AtAugust 6, 2021 , authorization remained for$500 million of future repurchases of the company's common stock. The company's commitments for purchases of property, plant and equipment, contractual obligations and other commercial commitments did not change materially betweenDecember 31, 2020 andJuly 3, 2021 except for the agreement to acquire PPD, discussed in Note 2. The company expects that for all of 2021, expenditures for property, plant and equipment, net of disposals, will be between$2.5 and$2.7 billion . As ofJuly 3, 2021 , the company's short-term debt totaled$4 million . The company has a revolving credit facility with a bank group that provides up to$3.00 billion of unsecured multi-currency revolving credit (Note 7). If the company borrows under this facility, it intends to leave undrawn an amount equivalent to outstanding commercial paper to provide a source of funds in the event that commercial paper markets are not available. As ofJuly 3, 2021 , no borrowings were outstanding under the company's revolving credit facility, although available capacity was reduced by approximately$4 million as a result of outstanding letters of credit. Approximately half of the company's cash balances and cash flows from operations are from outside theU.S. The company uses its non-U.S. cash for needs outside of theU.S. including acquisitions and repayment of acquisition-related intercompany debt to theU.S. In addition, the company also transfers cash to theU.S. using non-taxable returns of capital as well as dividends where the relatedU.S. dividend received deduction or foreign tax credit equals any tax cost arising from the dividends. As a result of using such means of transferring cash to theU.S. , the company does not expect any material adverse liquidity effects from its significant non-U.S. cash balances for the foreseeable future. 32 --------------------------------------------------------------------------------THERMO FISHER SCIENTIFIC INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Liquidity and Capital Resources (continued) The company believes that its existing cash and cash equivalents and its future cash flow from operations together with available borrowing capacity under its revolving credit agreement and bridge loan agreement will be sufficient to meet the cash requirements of its existing businesses for the foreseeable future, including at least the next 24 months and to fund the pending PPD acquisition. First Six Months of 2020 Cash provided by operating activities was$2.24 billion during the first six months of 2020. Cash provided by income was offset in part by investments in working capital. Increases in accounts receivable and inventories used cash of$195 million and$309 million , respectively, primarily to support growth in sales. Changes in other assets and other liabilities provided cash of$303 million primarily due to the timing of payments for compensation and income taxes. Cash payments for income taxes totaled$320 million . During the first six months of 2020, the company's investing activities used$519 million of cash, principally for the purchase of property, plant and equipment. The company's financing activities provided$1.80 billion of cash during the first six months of 2020. Issuance of senior notes provided cash of$3.46 billion . The company's financing activities also included the repurchase of$1.50 billion of the company's common stock and the payment of$163 million in cash dividends.
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