DANAHER CORP DE

Previous wording

You should read this discussion along with the Company’s MD&A and audited financial statements and Notes thereto as of and for the year ended December 31, 2023, included in the Company’s 2023 Annual Report and the Company’s Consolidated Condensed Financial Statements and related Notes as of and for the three-month period ended March 29, 2024 included in this Quarterly Report on Form 10-Q (“Report”).

Current wording

You should read this discussion along with the Company’s MD&A and audited financial statements and Notes thereto as of and for the year ended December 31, 2023, included in the Company’s 2023 Annual Report and the Company’s Consolidated Condensed Financial Statements and related Notes as of and for the three and six-month periods ended June 28, 2024 included in this Quarterly Report on Form 10-Q (“Report”).

Previous wording

Certain statements included or incorporated by reference in this Report, in other documents we file with or furnish to the Securities and Exchange Commission, in our press releases, webcasts, conference calls, materials delivered to shareholders and other communications, are “forward-looking statements” within the meaning of the U.S. federal securities laws. All statements other than historical factual information are forward-looking statements, including without limitation statements regarding: projections of revenue, expenses, profit, profit margins, pricing, tax rates, tax provisions, cash flows, pension and benefit obligations and funding requirements, asset values, our liquidity position or other projected financial measures; management’s plans and strategies for future operations, including statements relating to anticipated operating performance, customer demand, cost reductions, restructuring activities, new product and service developments, competitive strengths or market position, acquisitions and the integration thereof, divestitures, spin-offs, split-offs, initial public offerings, other securities offerings, or other distributions, strategic opportunities, stock repurchases, dividends and executive compensation and potential executive stock sales or purchases; growth, declines and other trends in markets we sell into; new or modified laws, regulations and accounting pronouncements; future regulatory approvals and the timing and conditionality thereof; outstanding claims, legal proceedings, tax audits and assessments and other contingent liabilities; future currency exchange rates and fluctuations in those rates; the potential or anticipated direct or indirect impact of public health crises, climate change, military conflicts or other man-made or natural disasters on our business, results of operations and/or financial condition; general economic and capital markets conditions; the anticipated timing of any of the foregoing; assumptions underlying any of the foregoing; and any other statements that address events or developments that Danaher intends or believes will or may occur in the future. Terminology such as “believe,” “anticipate,” “should,” “could,” “intend,” “will,” “plan,” “expect,” “estimate,” “project,” “target,” “may,” “possible,” “potential,” “forecast” and “positioned” and similar references to future periods are intended to identify forward-looking statements, although not all forward-looking statements are accompanied by such words.

Current wording

Certain statements included or incorporated by reference in this Report, in other documents we file with or furnish to the Securities and Exchange Commission, in our press releases, webcasts, conference calls, materials delivered to shareholders and other communications, are “forward-looking statements” within the meaning of the U.S. federal securities laws. All statements other than historical factual information are forward-looking statements, including without limitation statements regarding: projections of revenue, expenses, profit, profit margins, pricing, tax rates, tax provisions, cash flows, pension and benefit obligations and funding requirements, asset values, our liquidity position or other projected financial measures; management’s plans and strategies for future operations, including statements relating to anticipated operating performance, customer demand, cost reductions, restructuring activities, new product and service developments, competitive strengths or market position, acquisitions and the integration thereof, divestitures, spin-offs, split-offs, initial public offerings, other securities offerings, or other distributions, strategic opportunities, stock repurchases, dividends and executive compensation and potential executive stock sales or purchases; growth, declines and other trends in markets we sell into; new or modified laws, regulations and accounting pronouncements; future laws, regulations or public policy changes; regulatory approvals and the timing and conditionality thereof; outstanding claims, legal proceedings, tax audits and assessments and other contingent liabilities; future currency exchange rates and fluctuations in those rates; the potential or anticipated direct or indirect impact of public health crises, climate change, military conflicts or other man-made or natural disasters on our business, results of operations and/or financial condition; general economic and capital markets conditions; the anticipated timing of any of the foregoing; assumptions underlying any of the foregoing; and any other statements that address events or developments that Danaher intends or believes will or may occur in the future. Terminology such as “believe,” “anticipate,” “should,” “could,” “intend,” “will,” “plan,” “expect,” “estimate,” “project,” “target,” “may,” “possible,” “potential,” “forecast” and “positioned” and similar references to future periods are intended to identify forward-looking statements, although not all forward-looking statements are accompanied by such words.

Previous wording

Forward-looking statements are based on assumptions and assessments made by our management in light of their experience and perceptions of historical trends, current conditions, expected future developments and other factors. Forward-looking statements are not guarantees of future performance and actual results may differ materially from the results, developments and business decisions contemplated by our forward-looking statements. Accordingly, you should not place undue reliance on any such forward-looking statements. Important factors that in some cases have affected us in the past and that in the future could cause actual results to differ materially from those envisaged in the forward-looking statements include the following:

Current wording

Forward-looking statements are based on assumptions and assessments made by our management in light of their experience and perceptions of historical trends, current conditions, expected future developments and other factors. Forward-looking statements are not guarantees of future performance and actual results may differ materially from the results, developments and business decisions contemplated by our forward-looking statements. Accordingly, you should not place undue reliance on any such forward-looking statements. Important factors that in the future could cause actual results to differ materially from those envisaged in the forward-looking statements, and that in some cases have affected us in the past, include the following:

Previous wording

•Economic, political, geopolitical, legal, compliance, social and business factors (including the impact of military conflicts), both in the U.S. and outside the U.S., can negatively affect our business and financial statements.

Current wording

•Economic, political, geopolitical, legal, compliance, social and business factors (including the impact of military conflicts), both in the United States (“U.S.”) and outside the U.S., can negatively affect our business and financial statements. For example, elections in the U.S. and other countries may result in significant political shifts and/or disruptions, including changes in the regulatory environment, and recent Supreme Court decisions in the U.S. may also result in regulatory uncertainty.

Previous wording

•Climate change, legal or regulatory measures to address climate change and any inability to address stakeholder expectations with respect to climate change, may negatively affect us.

Current wording

•Climate change, legal or regulatory measures to address climate change and any inability to address regulatory requirements or stakeholder expectations with respect to climate change, may negatively affect us.

Previous wording

•With respect to the regulated medical devices we offer, product introductions or modifications may require regulatory clearance or authorizations and we could be required to recall or cease marketing such products; off-label marketing could result in penalties; and clinical trials may have results that are unexpected or are perceived unfavorably by the market, all of which could adversely affect our business and financial statements.

Current wording

•With respect to the regulated medical devices we offer, product introductions or modifications can require regulatory clearance or authorizations and we can be required to recall or cease marketing such products; off-label marketing can result in penalties; and clinical trials can have results that are unexpected or are perceived unfavorably by the market, all of which can adversely affect our business and financial statements.

Previous wording

•Our operations, products and services also expose us to the risk of environmental, health and safety liabilities, costs and violations that could adversely affect our business and financial statements.

Current wording

•Our operations, products and services also expose us to the risk of environmental, health and safety liabilities, costs and violations that can adversely affect our business and financial statements.

Previous wording

During the first quarter of 2024, the Company’s overall revenues decreased 2.5% compared to the comparable period of 2023. Core sales decreased 4.0% in the first quarter of 2024 compared to the comparable prior year period due primarily to lower core sales in the Biotechnology segment, partially offset by increases in demand for certain products and services in the diagnostics business. The impact of currency translation decreased reported sales 0.5% in the first quarter of 2024 compared to the comparable prior year period and the impact of acquisitions increased reported sales 2.0%. Price increases contributed 1.5% to sales growth on a year-over-year basis during the three-month period ended March 29, 2024 and are reflected as a component of core sales decline above. For the definitions of “core sales” and “acquisitions” refer to “—Results of Operations” below.

Current wording

During the second quarter of 2024, the Company’s overall revenues decreased 3.0% compared to the comparable period of 2023. Core sales decreased 3.5% in the second quarter of 2024 compared to the comparable prior year period due primarily to lower core sales in the Biotechnology segment, and to a lesser extent in the Life Sciences segment, partially offset by increases in demand for certain products and services in the Diagnostics segment. The impact of currency translation decreased reported sales 1.5% in the second quarter of 2024 compared to the comparable prior year period and the impact of acquisitions increased reported sales 2.0%. For the six-month period ended June 28, 2024, overall revenues decreased 2.5% and core sales decreased 3.5% compared to the comparable prior year period primarily due to lower core sales in the Biotechnology segment, and to a lesser extent in the Life Sciences segment, partially offset by increases in demand for certain products and services in the Diagnostics segment. The impact of currency translation decreased reported sales 1.0% and the impact of acquisitions increased reported sales 2.0% in the six-month period compared to the comparable prior year period. Price increases contributed 1.0% and 1.5%, respectively, to sales growth on a year-over-year basis during the three and six-month periods ended June 28, 2024 and are reflected as a component of core sales decline above. For the definitions of “core sales” and “acquisitions” refer to “—Results of Operations” below.

Previous wording

Geographically, the Company’s sales in the three-month period ended March 29, 2024 in developed markets increased year-over-year by 1% driven primarily by increased sales in North America, mostly offset by decreased sales in Western Europe. For the same period, core sales in developed markets declined slightly, with the decline primarily attributable to Western Europe, partially offset by increased core sales in North America. The decline in core sales was primarily driven by reduced demand in the Biotechnology segment, partially offset by increased demand for molecular and clinical diagnostic testing. For the same period, sales in high-growth markets decreased year-over-year by 12% due primarily to high-teens core revenue declines in China. For the same period, core sales in high-growth markets decreased at a low-double digit rate, with the decline primarily attributable to the same geographic factor. The decline in core sales was primarily driven by declines in the Biotechnology segment due to weakness in the funding environment and lower underlying activity levels. High-growth markets represented approximately 27% of the Company’s total sales in the first quarter of 2024. For additional information regarding the Company’s sales by geographical region during the three-month periods ended March 29, 2024 and March 31, 2023, refer to Note 5 to the accompanying Consolidated Condensed Financial Statements.

Current wording

Geographically, the Company’s sales in the three-month period ended June 28, 2024 in developed markets decreased year-over-year by 1% and core sales in the developed markets decreased at a low-single digit rate driven primarily by decreased sales in Western Europe, partially offset by increased sales in North America. The decline in core sales in developed markets was primarily driven by reduced demand in the Biotechnology and Life Sciences segments, partially offset by increased demand in the Diagnostics segment. For the same period, sales in high-growth markets decreased year-over-year by 8% and core sales in high-growth markets decreased at a high-single digit rate, due primarily to high-teens core revenue declines in China. The decline in core sales in high-growth markets was primarily driven by declines in the Life Sciences and Biotechnology segments primarily due to weakness in the funding environment and lower underlying activity levels. High-growth markets represented approximately 30% of the Company’s total sales in the second quarter of 2024. For additional information regarding the Company’s sales by geographical region during the three and six-month periods ended June 28, 2024 and June 30, 2023, refer to Note 5 to the accompanying Consolidated Condensed Financial Statements.

Previous wording

The Company’s net earnings from continuing operations for the three-month period ended March 29, 2024 totaled approximately $1.1 billion or $1.45 per diluted common share from continuing operations compared to approximately $1.2 billion or $1.65 per diluted common share from continuing operations for the three-month period ended March 31, 2023. Net earnings attributable to common stockholders for the three-month period ended March 29, 2024 totaled approximately $1.1 billion or $1.45 per diluted common share compared to approximately $1.4 billion or $1.94 per diluted common sharefor thethree-month period ended March 31, 2023. Decreased core sales in the 2024 period drove the year-over-year decline in net earnings from continuing operations and diluted net earnings per common share from continuing operations for the three-month period ended March 29, 2024. In addition to the above factors, lower earnings from discontinued operations contributed to the lower net earnings of $1.1 billion in the 2024 period compared to the net earnings of $1.5 billion in the 2023 period.

Current wording

The Company’s net earnings from continuing operations for the three and six-month periods ended June 28, 2024 totaled $907 million and approximately $2.0 billion or $1.22 and $2.68 per diluted common share from continuing operations, respectively, compared to $920 million and approximately $2.2 billion or $1.24 and $2.89 per diluted common share from continuing operations, respectively, for the three and six-month periods ended June 30, 2023. Net earnings attributable to common stockholders for the three and six-month periods ended June 28, 2024 totaled $907 million and approximately $2.0 billion or $1.22 and $2.68 per diluted common share, respectively, compared to approximately $1.1 billion and $2.5 billion or $1.49 and $3.42 per diluted common share, respectively, for the three and six-month periods ended June 30, 2023. Decreased core sales and increased other expenses in the 2024 period drove the year-over-year decline in net earnings from continuing operations and diluted net earnings per common share from continuing operations for the three and six-month periods ended June 28, 2024. In addition to the above factors, lower earnings from discontinued operations contributed to the lower net earnings in both the three and six-month periods ended June 28, 2024.

Previous wording

Currency exchange rates decreased reported sales by approximately 0.5% for the three-month period ended March 29, 2024 compared to the comparable period of 2023, primarily due to the exchange rates of the U.S. dollar compared to the euro and other major currencies in 2024. Strengthening of the U.S. dollar against other major currencies compared to the exchange rates in effect as of March 29, 2024 would adversely impact the Company’s sales and results of operations on an overall basis, and any weakening of the U.S. dollar against other major currencies compared to the exchange rates in effect as of March 29, 2024 would positively impact the Company’s sales and results of operations for the remainder of the year.

Current wording

Currency exchange rates decreased reported sales by approximately 1.5% and 1.0% for the three and six-month periods ended June 28, 2024, respectively, compared to the comparable periods of 2023, primarily due to the exchange rates of the U.S. dollar compared to the euro and other major currencies in 2024. Strengthening of the U.S. dollar against other major currencies compared to the exchange rates in effect as of June 28, 2024 would adversely impact the Company’s sales and results of operations on an overall basis, and any weakening of the U.S. dollar against other major currencies compared to the exchange rates in effect as of June 28, 2024 would positively impact the Company’s sales and results of operations for the remainder of the year.

Previous wording

In this report, references to the non-GAAP measures of core sales (also referred to as core revenues or sales/revenues from existing businesses) refer to sales calculated according to U.S. GAAP, but excluding:

Current wording

In this report, references to the non-GAAP measure of core sales (also referred to as core revenues or sales/revenues from existing businesses) refer to sales calculated according to U.S. GAAP, but excluding:

Previous wording

•First quarter 2024 acquisition-related fair value adjustment to inventory related to the acquisition of Abcam - 140 basis points

Current wording

•First half of 2024 acquisition-related fair value adjustment to inventory related to the acquisition of Abcam plc (“Abcam”) - 20 basis points

Previous wording

Depreciation and amortization of intangible assets as a percentage of sales increased during the three-month period ended March 29, 2024 as compared to the comparable period of 2023, primarily as a result of the decrease in sales.

Current wording

Amortization of intangible assets as a percentage of sales increased during both the three and six-month periods ended June 28, 2024 as compared to the comparable periods of 2023, primarily as a result of the decrease in sales.

Previous wording

Total segment sales increased 2.0% during the three-month period, primarily as a result of the impact of acquisitions, partially offset by decreased segment core sales, particularly as a result of demand weakness from pharmaceutical and biopharmaceutical customers, and to a lesser extent the impact of currency translation. Geographically, overall segment core sales decreased in the three-month period in China and Western Europe, partially offset by increases in North America. The decrease in core sales in the first quarter of 2024 was driven by the flow cytometry and lab automation solutions business, the mass spectrometry business and the industrial filtration business, partially offset by increased core sales in the genomics medicine business. The core sales declines in the three-month period in the flow cytometry and lab automation solutions business and the mass spectrometry business were led by declines in China due to a difficult prior year comparison and lower demand in the first quarter of 2024, while the declines in the industrial filtration business were led by declines in the microelectronics, food and beverage, and energy end-markets, partially offset by increased demand in aerospace. The low-single digit core sales growth in the genomic medicines business was led by increased core sales of plasmids and proteins, partially offset by lower demand for next generation sequencing and gene writing and editing solutions.

Current wording

Total segment sales decreased 1.5% during the three-month period ended June 28, 2024, primarily as a result of decreased segment core sales, and to a lesser extent the impact of currency exchange rates, partially offset by acquisitions. Total segment sales increased 0.5% during the six-month period, primarily as a result of acquisitions, largely offset by decreased segment core sales, and to a lesser extent the impact of currency exchange rates. Core sales decreased in the three and six-month periods across most major geographic regions, led by China. The core sales decline in the mass spectrometry, flow cytometry and lab automation solutions and microscopy businesses in both periods was primarily the result of demand weakness in equipment, in most major end-markets, partially offset by increased demand for consumables and service. Core sales also declined in the three-month period in the genomics consumables business led by lower core sales in the plasmids, proteins and next-generation sequencing product lines, partially offset by increased demand in the gene writing and editing product line. The core sales decline in the genomics consumables business during the six-month period was driven by lower demand in next-generation sequencing, partially offset by higher demand for plasmids and proteins.

Previous wording

Operating profit margins decreased 530 basis points during the three-month period ended March 29, 2024 as compared to the comparable period of 2023. The following factors unfavorably impacted year-over-year operating profit margin:

Current wording

Operating profit margins decreased 570 basis points during the three-month period ended June 28, 2024 as compared to the comparable period of 2023. The following factors unfavorably impacted year-over-year operating profit margin:

Previous wording

Operating profit margins decreased 290 basis points from 25.5% during the three-month period ended March 31, 2023 to 22.6% for the three-month period ended March 29, 2024. The following factors unfavorably impacted year-over-year operating profit margins:

Current wording

Operating profit margins decreased 560 basis points during the six-month period ended June 28, 2024 as compared to the comparable period of 2023. The following factors unfavorably impacted year-over-year operating profit margin:

Previous wording

•First quarter 2024 acquisition-related fair value adjustment to inventory related to the acquisition of Abcam -40 basis points

Current wording

•First half of 2024 acquisition-related fair value adjustment to inventory related to the acquisition of Abcam - 70 basis points

Previous wording

Depreciation and amortization of intangible assets increased as a percentage of sales during the three-month period ended March 29, 2024, primarily due to the acquisition of Abcam.

Current wording

Depreciation and amortization of intangible assets increased as a percentage of sales during both the three and six-month periods ended June 28, 2024, primarily due to the acquisition of Abcam.

Previous wording

Price increases in the segment contributed 0.5% to sales growth on a year-over-year basis during the three-month period ended March 29, 2024 and are reflected as a component of core sales growth.

Current wording

Price increases in the segment did not have a significant impact on sales growth on a year-over-year basis during the three-month period but contributed 0.5% to sales growth during the six-month period ended June 28, 2024 and are reflected as a component of core sales growth.

Previous wording

Total segment sales increased 6.5% during the three-month period, primarily as a result of increased core sales resulting from the factors discussed below, particularly higher year-over-year core sales of molecular diagnostics tests, partially offset by the impact of changes in currency exchange rates. Overall segment core sales growth was driven primarily by North America, partially offset by lower year-over-year demand in Western Europe. During the three-month period, core sales in the molecular diagnostics business grew on a year-over-year basis as the business experienced increased sales of both respiratory and non-respiratory disease tests. Core sales in the segment’s clinical diagnostics businesses also grew on a year-over-year basis in the three-month period, led by the clinical lab business in North America and the high-growth markets, and to a lesser extent, the pathology and acute care businesses.

Current wording

Total segment sales increased 1.5% and 4.0%, respectively, during the three and six-month periods, primarily as a result of increased core sales resulting from the factors discussed below. Changes in currency exchange rates negatively impacted sales in both periods. Overall segment core sales growth in both periods was driven primarily by North America, partially offset by lower year-over-year demand in the high-growth markets. During both the three and six-month periods, core sales in the segment’s clinical diagnostics businesses grew on a year-over-year basis led by the clinical lab business, primarily in North America and the high-growth markets, and to a lesser extent, by the pathology and acute care businesses. Core sales in the molecular diagnostics business declined slightly during the three-month period as lower year-over-year demand in Western Europe and the high-growth markets offset increased core sales of both respiratory and non-respiratory disease tests in North America. For the six-month period, core sales in the molecular diagnostics business grew on a year-over-year basis, led by North America, as the business experienced increased sales of both respiratory and non-respiratory disease tests.

Previous wording

Operating profit margins increased 430 basis points during the three-month period ended March 29, 2024 as compared to the comparable period of 2023. Year-over-year operating profit margin was favorably impacted by higher first quarter 2024 core sales, the impact of product mix and increased leverage in the Company’s operational and administrative cost structure.

Current wording

Operating profit margin increased 560 basis points during the three-month period ended June 28, 2024 as compared to the comparable period of 2023. Year-over-year operating profit margin was favorably impacted by higher second quarter 2024 core sales, improvements in the Company’s operational and administrative cost structure and the impact of product mix.

Previous wording

Operating profit margins decreased 1,070 basis points during the three-month period ended March 29, 2024 as compared to the comparable period of 2023. Year-over-year operating profit margin was unfavorably impacted by lower first quarter 2024 core sales, the impact of product mix and reduced leverage in the Company’s operational and administrative cost structure.

Current wording

Operating profit margin increased 510 basis points during the six-month period ended June 28, 2024 as compared to the comparable period of 2023. Year-over-year operating profit margin was favorably impacted by higher first half of 2024 core sales, improvements in the Company’s operational and administrative cost structure and the impact of product mix.

Previous wording

Depreciation and amortization of intangible assets as a percentage of sales decreased slightly during the three-month period ended March 29, 2024, primarily as a result of the increase in sales.

Current wording

Amortization of intangible assets as a percentage of sales decreased slightly during both the three and six-month periods ended June 28, 2024, primarily as a result of the increase in sales.

Previous wording

Cost of sales increased year-over-year during the three-month period ended March 29, 2024 as compared to the comparable period in 2023, primarily due to the impact of a recently acquired business, including an acquisition-related charge associated with the fair value adjustment to inventory recorded in connection with the acquisition of Abcam which increased cost of sales by $25 million in the first quarter of 2024, partially offset by the impact of lower year-over-year sales volumes.

Current wording

Cost of sales decreased year-over-year during both the three and six-month periods ended June 28, 2024 as compared to the comparable periods in 2023, primarily due to the impact of lower year-over-year sales volumes and $87 million of charges incurred in the second quarter of 2023 related to inventory, partially offset by the impact of recently acquired businesses. Additionally, an acquisition-related charge associated with the fair value adjustment to inventory recorded in connection with the acquisition of Abcam increased cost of sales by $25 million in the six-month period ended June 28, 2024.

Previous wording

SG&A expenses as a percentage of sales increased for the three-month period ended March 29, 2024 as compared to the comparable period in 2023, primarily driven by the impact of a recently acquired business, including the associated amortization expense. Additionally, the increase in SG&A as a percentage of sales was driven by the impact of decreased leverage of the Company’s general and administrative cost base, including amortization expense, resulting from lower 2024 sales.

Current wording

SG&A expenses as a percentage of sales increased during both the three and six-month periods ended June 28, 2024 as compared to the comparable periods in 2023, primarily driven by the impact of the acquisition of Abcam, including the associated amortization expense. To a lesser extent, the increase in SG&A as a percentage of sales was driven by decreased leverage of the Company’s general and administrative cost base, including amortization expense, resulting from lower 2024 sales.

Previous wording

R&D expenses (consisting principally of internal and contract engineering personnel costs) as a percentage of sales was flat during the three-month period ended March 29, 2024 as compared to the comparable period of 2023.

Current wording

R&D expenses (consisting principally of internal and contract engineering personnel costs) as a percentage of sales increased during both the three and six-month periods ended June 28, 2024 as compared to the comparable periods of 2023 as a result of increased spending on R&D activities and the impact of lower year-over-year sales.

Previous wording

For a description of the Company’s other income (expense), net during the three-month periods ended March 29, 2024 and March 31, 2023, refer to Note 8 to the accompanying Consolidated Condensed Financial Statements.

Current wording

For a description of the Company’s other income (expense), net during the three and six-month periods ended June 28, 2024 and June 30, 2023, refer to Note 8 to the accompanying Consolidated Condensed Financial Statements.

Previous wording

The effective tax rate for the three-month period ended March 29, 2024 differs from the U.S. federal statutory rate of 21.0% principally due to the impact of the Company’s global operations, research tax credits, foreign-derived intangible income and aggregate net discrete benefits of $36 million related primarily to excess tax benefits from stock-based compensation, release of reserves for uncertain tax positions due to the expiration of statutes of limitation and changes in estimates associated with prior period uncertain tax positions. The aggregate net discrete benefits reduced the effective tax rate by 2.8% for the three-month period ended March 29, 2024.

Current wording

The effective tax rate for the six-month period ended June 28, 2024 differs from the U.S. federal statutory rate of 21.0% principally due to the impact of the Company’s global operations, research tax credits, foreign-derived intangible income and aggregate net discrete benefits of $45 million related primarily to excess tax benefits from stock-based compensation, release of reserves for uncertain tax positions due to the expiration of statutes of limitation and changes in estimates associated with prior period uncertain tax positions. The aggregate net discrete benefits reduced the effective tax rate by 1.9% for the six-month period ended June 28, 2024.

Previous wording

The effective tax rate for the three-month period ended March 31, 2023 differs from the U.S. federal statutory rate of 21.0% principally due to the impact of its global operations, research tax credits and foreign-derived intangible income. The effective tax rate was not impacted by discrete taxes as the discrete benefits, related primarily to excess tax benefits from stock-based compensation and the release of reserves for uncertain tax positions due to the expiration of statutes of limitation, were offset by tax costs related to the separation of the Environmental & Applied Solutions business and changes in estimates associated with prior period uncertain tax positions.

Current wording

The effective tax rate for the six-month period ended June 30, 2023 differs from the U.S. federal statutory rate of 21.0% principally due to the impact of its global operations, research tax credits and foreign-derived intangible income, partially offset by net discrete tax charges of $19 million. Net discrete tax charges related primarily to tax costs related to the separation of the Environmental & Applied Solutions business, tax costs related to legal and operational actions taken to realign certain businesses and changes in estimates associated with prior period uncertain tax positions, partially offset by excess tax benefits from stock-based compensation and interest on prior year tax refunds. The net discrete charges increased the effective tax rate by 0.7% for the six-month period ended June 30, 2023.

Previous wording

Comprehensive income decreased approximately $1.5 billion for the three-month period ended March 29, 2024 as compared to the comparable period of 2023. For the three-month period ended March 29, 2024, the decrease in comprehensive income was primarily driven by increased losses from foreign currency translation adjustments and by lower net earnings. The Company recorded foreign currency translation losses of $948 million for the three-month period ended March 29, 2024 compared to gains of $25 million for the three-month period ended March 31, 2023. The foreign currency translation losses in the three-month period ended March 29, 2024 were primarily driven by the change in the exchange rates between the U.S. dollar and the Swedish krona. Foreign currency translation adjustments reflect the gain or loss resulting from the impact of the change in currency exchange rates on the Company’s foreign operations as they are translated to the Company’s reporting currency, the U.S. dollar. The Company recorded losses of $50 million from cash flow hedge adjustments related to the Company’s cross-currency swap derivative contracts for the three-month period ended March 29, 2024, as compared to gains of $81 million for the comparable period of 2023.

Current wording

Comprehensive income increased $764 million for the three-month period ended June 28, 2024 and decreased $700 million for the six-month period ended June 28, 2024, as compared to the comparable periods of 2023. For the three-month period ended June 28, 2024, the increase in comprehensive income was primarily driven by increased gains from foreign currency translation adjustments, partially offset by lower net earnings. For the six-month period ended June 28, 2024, the decrease in comprehensive income was primarily driven by lower net earnings and increased losses from foreign currency translation adjustments. The Company recorded foreign currency translation gains of $121 million for the three-month period ended June 28, 2024 compared to losses of $704 million for the three-month period ended June 30, 2023. The Company recorded foreign currency translation losses of $827 million and $679 million for the six-month periods ended June 28, 2024 and June 30, 2023, respectively. The foreign currency translation gains in the three-month period ended June 28, 2024 and losses in the six-month period ended June 28, 2024 were primarily driven by the change in the exchange rates between the U.S. dollar and the Swedish krona and the euro. Foreign currency translation adjustments reflect the gain or loss resulting from the impact of the change in currency exchange rates on the Company’s foreign operations as they are translated to the Company’s reporting currency, the U.S. dollar. The Company recorded gains of $30 million and losses of $20 million from cash flow hedge adjustments related to the Company’s cross-currency swap derivative contracts for the three and six-month periods ended June 28, 2024, respectively, as compared to losses of $106 million and $25 million for the comparable periods of 2023.

Previous wording

Management assesses the Company’s liquidity in terms of its ability to generate cash to fund its operating, investing and financing activities. The Company continues to generate substantial cash from operating activities and believes that its operating cash flow, cash on hand and other sources of liquidity will be sufficient to allow it to continue investing in existing businesses (including capital expenditures), consummating strategic acquisitions and investments, paying interest and servicing debt, paying dividends and funding restructuring activities, as well as to repurchase common stock if deemed appropriate and manage its capital structure on a short-term and long-term basis.

Current wording

Management assesses the Company’s liquidity in terms of its ability to generate cash to fund its operating, investing and financing activities. The Company continues to generate substantial cash from operating activities and believes that its operating cash flow, cash on hand and other sources of liquidity will be sufficient to allow it to continue investing in existing businesses (including capital expenditures), consummating strategic acquisitions and investments, paying interest and servicing debt, paying dividends and funding restructuring activities, as well as to repurchase common stock when deemed appropriate and manage its capital structure on a short-term and long-term basis.

Previous wording

•Operating cash flows from continuing operations decreased $67 million, or 4%, during the three-month period ended March 29, 2024 as compared to the comparable period of 2023, due to lower net earnings (after excluding charges for depreciation, amortization (including intangible assets and inventory step-up), stock compensation and unrealized investment gains/losses) in the 2024 period compared to the 2023 period and higher cash used in aggregate for accounts receivables, inventories, trade accounts payable and prepaid and accrued expenses, including deferred taxes, in the 2024 period compared to the 2023 period.

Current wording

•Operating cash flows from continuing operations decreased $296 million, or 9%, during the six-month period ended June 28, 2024 as compared to the comparable period of 2023, due to higher cash used in aggregate for accounts receivables, inventories, trade accounts payable and prepaid and accrued expenses, including deferred taxes, in the 2024 period compared to the 2023 period, partially offset by higher net earnings (after excluding charges for depreciation, amortization (including intangible assets and inventory step-up), stock compensation and unrealized investment gains/losses) in the 2024 period compared to the 2023 period.

Previous wording

•Net cash used in investing activities for continuing operations in the 2024 period consisted primarily of capital expenditures and investments and increased year-over-year largely as a result of higher cash paid for operating-type lease (“OTL”) placements and investments in the 2024 period compared to the 2023 period.

Current wording

•Net cash used in investing activities for continuing operations in the 2024 period consisted primarily of cash paid for capital expenditures and investments and decreased year-over-year as a result of lower cash paid for capital expenditures and investments in the 2024 period compared to the 2023 period.

Previous wording

•As of March 29, 2024, the Company held approximately $7.0 billion of cash and cash equivalents.

Current wording

•As of June 28, 2024, the Company held approximately $2.4 billion of cash and cash equivalents.

Previous wording

Operating cash flows from continuing operations were approximately $1.7 billion for the first three months of 2024, a decrease of $67 million, or 4%, as compared to the comparable period of 2023. The year-over-year change in operating cash flows from 2023 to 2024 was primarily attributable to the following factors:

Current wording

Operating cash flows from continuing operations were approximately $3.2 billion for the first six months of 2024, a decrease of $296 million, or 9%, as compared to the comparable period of 2023. The year-over-year change in operating cash flows from 2023 to 2024 was primarily attributable to the following factors:

Previous wording

•2024 operating cash flows reflected a decrease of approximately $152 million in net earnings from continuing operations for the first three months of 2024 as compared to the comparable period in 2023.

Current wording

•2024 operating cash flows reflected a decrease of approximately $165 million in net earnings from continuing operations for the first six months of 2024 as compared to the comparable period in 2023.

Previous wording

•Net earnings from continuing operations for the first three months of 2024 also included $125 million higher noncash charges for depreciation, intangible asset amortization, amortization of an acquisition-related inventory step-up and unrealized investment gains/losses as compared to the comparable period of 2023, net of a decrease in stock compensation expense in the 2024 period compared to the 2023 period. Depreciation expense relates to the Company’s manufacturing and operating facilities as well as instrumentation leased to customers under OTL arrangements. Depreciation, amortization and stock compensation are noncash expenses that decrease earnings without a corresponding impact to operating cash flows. Unrealized investment gains/losses impact net earnings without immediately impacting cash flows as the cash flow impact from investments occurs when the invested capital is returned to the Company.

Current wording

•Net earnings from continuing operations for the first six months of 2024 also included $198 million higher noncash charges for depreciation, intangible asset amortization, amortization of an acquisition-related inventory step-up and unrealized investment gains/losses as compared to the comparable period of 2023, net of a decrease in stock compensation expense in the 2024 period compared to the 2023 period. Depreciation expense relates to the Company’s manufacturing and operating facilities as well as instrumentation leased to customers under OTL arrangements. Depreciation, amortization and stock compensation are noncash expenses that decrease earnings without a corresponding impact to operating cash flows. Unrealized investment gains/losses impact net earnings without immediately impacting cash flows as the cash flow impact from investments occurs when the invested capital is returned to the Company.

Previous wording

•The aggregate of trade accounts receivable, inventories and trade accounts payable provided $324 million in operating cash flows during the first three months of 2024, compared to approximately $180 million of operating cash flows provided in the comparable period of 2023. The amount of cash flow generated from or used by the aggregate of trade accounts receivable, inventories and trade accounts payable depends upon how effectively the Company manages the cash conversion cycle, which effectively represents the number of days that elapse from the day it pays for the purchase of raw materials and components to the collection of cash from its customers and can be significantly impacted by the timing of collections and payments in a period.

Current wording

•The aggregate of trade accounts receivable, inventories and trade accounts payable provided $334 million in operating cash flows during the first six months of 2024, compared to $295 million of operating cash flows provided in the comparable period of 2023. The amount of cash flow generated from or used by the aggregate of trade accounts receivable, inventories and trade accounts payable depends upon how effectively the Company manages the cash conversion cycle, which effectively represents the number of days that elapse from the day it pays for the purchase of raw materials and components to the collection of cash from its customers and can be significantly impacted by the timing of collections and payments in a period.

Previous wording

•The aggregate of prepaid expenses and other assets, deferred income taxes and accrued expenses and other liabilities used $381 million of operating cash flows during the first three months of 2024, compared to $197 million of operating cash flows used in the comparable period of 2023. The timing of cash payments for various employee-related liabilities, realized investment returns, customer funding and changes in accrued expenses drove the majority of this change.

Current wording

•The aggregate of prepaid expenses and other assets, deferred income taxes and accrued expenses and other liabilities used $607 million of operating cash flows during the first six months of 2024, compared to $239 million of operating cash flows used in the comparable period of 2023. The timing of income tax refunds and payments, the timing of cash payments for customer funding, various employee-related liabilities, realized investment returns, and changes in accrued expenses drove the majority of this change.