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 and six-month periods ended June 28, 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 nine-month periods ended September 27, 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 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.

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,” “assume,” “continue,” “should,” “could,” “intend,” “will,” “plan,” “aim,” “expect,” “estimate,” “project,” “target,” “can,” “may,” “possible,” “potential,” “upcoming,” “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

•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.

Current 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. 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

•Any inability to consummate acquisitions at our historical rate and appropriate prices, and to make appropriate investments that support our long-term strategy, could negatively impact our business. Our acquisition of businesses, investments, joint ventures and other strategic relationships could also negatively impact our business and financial statements and our indemnification rights may not fully protect us from liabilities related thereto.

Current wording

•Any inability to consummate acquisitions at our historical rate and appropriate prices, realize the economic benefits of consummated acquisitions or to make appropriate investments that support our long-term strategy, could negatively impact our business. Our acquisition of businesses, investments, joint ventures and other strategic relationships could also negatively impact our business and financial statements and our indemnification rights may not fully protect us from liabilities related thereto.

Previous 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.

Current wording

•Climate change, legal or regulatory measures to address climate change and other sustainability topics and any inability to address regulatory requirements or stakeholder expectations with respect to climate change and other sustainability topics, may negatively affect our business and financial statements.

Previous wording

•Our success depends on our ability to recruit, retain and motivate talented employees representing diverse backgrounds, experiences and skill sets.

Current wording

•Our success depends on our ability to recruit, retain and motivate talented employees representing diverse backgrounds, experiences and skill sets, particularly in the areas of science, technology and management.

Previous wording

•Our businesses are subject to extensive regulation (including those applicable to the healthcare industry). Failure to comply with those regulations (including by our employees, agents or business partners) or significant developments or changes in U.S. laws or policies can adversely affect our business and financial statements.

Current wording

•Our businesses are subject to extensive regulation (including those applicable to the healthcare industry). Failure to comply with those regulations (including by our employees, agents or business partners) or significant developments or changes in U.S. or non-U.S. laws or policies can adversely affect our business and financial statements.

Previous 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.

Current wording

•With respect to the regulated medical devices we offer, product introductions or modifications can require regulatory clearance or authorizations; we can be required to recall or cease marketing our 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 can adversely affect our business and financial statements.

Current wording

•Our operations, products and services 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 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.

Current wording

During the third quarter of 2024, the Company’s overall revenues increased 3.0% compared to the comparable period of 2023. Core sales increased 0.5% in the third quarter of 2024 compared to the comparable prior year period due primarily to higher core sales in the Diagnostics segment, partially offset by core sales declines in the Life Sciences segment. The impact of acquisitions increased reported sales 2.5% and foreign currency had no impact on reported sales. For the nine-month period ended September 27, 2024, overall revenues decreased 1.0% and core sales decreased 2.0% compared to the comparable prior year period primarily due to core sales declines in the Biotechnology segment, and to a lesser extent in the Life Sciences segment, partially offset by higher core sales 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 nine-month period compared to the comparable prior year period. Price increases contributed 1.0% to sales growth on a year-over-year basis during both the three and nine-month periods ended September 27, 2024 and are reflected as a component of core sales 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 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.

Current wording

Geographically, the Company’s sales in the three-month period ended September 27, 2024 in developed markets increased year-over-year by 5% and core sales in developed markets increased at a low-single digit rate. Core sales grew at a low-single digit rate in North America and a mid-single digit rate in Western Europe. The increase in core sales in developed markets was primarily driven by increased demand in the Diagnostics and Biotechnology segments, partially offset by core sales declines in the Life Sciences segment. For the same period, sales in high-growth markets decreased year-over-year by 2% and core sales in high-growth markets decreased at a mid-single digit rate, due primarily to a high-single digit decline in core revenue in China. The decline in core sales in high-growth markets was primarily driven by lower demand across all segments, due to weakness in the funding environment and generally lower underlying activity levels. High-growth markets represented approximately 30% of the Company’s total sales in the third quarter of 2024. For additional information regarding the Company’s sales by geographical region during the three and nine-month periods ended September 27, 2024 and September 29, 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 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.

Current wording

The Company’s net earnings from continuing operations for the three and nine-month periods ended September 27, 2024 totaled $818 million and approximately $2.8 billion or $1.12 and $3.80 per diluted common share from continuing operations, respectively, compared to $940 million and approximately $3.1 billion or $1.26 and $4.15 per diluted common share from continuing operations, respectively, for the three and nine-month periods ended September 29, 2023. Net earnings attributable to common stockholders for the three and nine-month periods ended September 27, 2024 were the same as set forth above, and for the three and nine-month periods ended September 29, 2023 were approximately $1.1 billion and $3.7 billion or $1.51 and $4.94 per diluted common share. 2024 intangible asset impairments and increased 2024 operating expenses, net of increased other income, 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 nine-month periods ended September 27, 2024. In addition to the above factors, lower year-over-year earnings from discontinued operations contributed to lower net earnings attributable to common stockholders in both the three and nine-month periods ended September 27, 2024.

Previous 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.

Current wording

Currency exchange rates had no impact for the three-month period ended September 27, 2024 and decreased reported sales by approximately 1.0% for the nine-month period ended September 27, 2024 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 September 27, 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 September 27, 2024 would positively impact the Company’s sales and results of operations for the remainder of the year.

Previous wording

Core sales (decline) growth should be considered in addition to, and not as a replacement for or superior to, sales, and may not be comparable to similarly titled measures reported by other companies. Management believes that reporting this non-GAAP financial measure provides useful information to investors by helping identify underlying growth trends in Danaher’s business and facilitating comparisons of Danaher’s revenue performance with its performance in prior and future periods and to Danaher’s peers. Management also uses this non-GAAP financial measure to measure the Company’s operating and financial performance and uses core sales growth as one of the performance measures in the Company’s executive short-term cash incentive compensation program. The Company excludes the effect of currency translation from this measure because currency translation is not under management’s control, is subject to volatility and can obscure underlying business trends, and excludes the effect of acquisitions and divestiture-related items because the nature, size, timing and number of acquisitions and divestitures can vary dramatically from period-to-period and between the Company and its peers and can also obscure underlying business trends and make comparisons of long-term performance difficult.

Current wording

Core sales growth (decline) should be considered in addition to, and not as a replacement for or superior to, sales, and may not be comparable to similarly titled measures reported by other companies. Management believes that reporting this non-GAAP financial measure provides useful information to investors by helping identify underlying growth trends in Danaher’s business and facilitating comparisons of Danaher’s revenue performance with its performance in prior and future periods and to Danaher’s peers. Management also uses this non-GAAP financial measure to measure the Company’s operating and financial performance and uses core sales growth as one of the performance measures in the Company’s executive short-term cash incentive compensation program. The Company excludes the effect of currency translation from this measure because currency translation is not under management’s control, is subject to volatility and can obscure underlying business trends. The Company excludes the effect of acquisitions and divestiture-related items because the nature, size, timing and number of acquisitions and divestitures can vary dramatically from period-to-period and between the Company and its peers and can also obscure underlying business trends and make comparisons of long-term performance difficult.

Previous wording

Operating profit margins increased 60 basis points from 19.7% during the three-month period ended June 30, 2023 to 20.3% for the three-month period ended June 28, 2024.

Current wording

Operating profit margins decreased 460 basis points from 21.1% during the three-month period ended September 29, 2023 to 16.5% for the three-month period ended September 27, 2024.

Previous wording

Operating profit margins decreased 110 basis points from 22.6% during the six-month period ended June 30, 2023 to 21.5% for the six-month period ended June 28, 2024.

Current wording

Operating profit margins decreased 230 basis points from 22.1% during the nine-month period ended September 29, 2023 to 19.8% for the nine-month period ended September 27, 2024. The following factors unfavorably impacted year-over-year operating profit margin:

Previous wording

•Second quarter 2023 impairment charges related to technology and other assets in the Biotechnology segment - 70 basis points

Current wording

•First nine months of 2024 impairment charge referenced above related to a trade name in the Life Sciences segment net of impairment charges related to technology and other assets in the Biotechnology segment during the first nine months of 2023 - 115 basis points

Previous wording

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

Current wording

•First nine months of 2024 acquisition-related fair value adjustment to inventory related to the acquisition of Abcam plc - 15 basis points

Previous wording

•Lower first half of 2024 core sales and the impact of product mix, partially offset by improvements in the Company’s operational and administrative cost structure and 2023 inventory write-offs - 45 basis points

Current wording

•Lower first nine months of 2024 core sales and the impact of product mix, partially offset by improvements in the Company’s operational and administrative cost structure and 2023 inventory write-offs - 5 basis points

Previous wording

Price increases in the segment contributed 2.5% to sales growth on a year-over-year basis during both the three and six-month periods ended June 28, 2024 and are reflected as a component of core sales decline above.

Current wording

Price increases in the segment contributed 3.0% and 2.5% to sales growth on a year-over-year basis during the three and nine-month periods ended September 27, 2024, respectively, and are reflected as a component of core sales above.

Previous 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.

Current wording

Amortization of intangible assets as a percentage of sales increased during both the three and nine-month periods ended September 27, 2024 as compared to the comparable periods of 2023, primarily as a result of the decrease in sales.

Previous wording

Price increases in the segment 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.

Current wording

Price increases in the segment contributed 1.0% to sales growth on a year-over-year basis during both the three and nine-month periods ended September 27, 2024 and are reflected as a component of core sales above.

Previous 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.

Current wording

Total segment sales increased 4.5% and 1.5%, respectively, during the three and nine-month periods ended September 27, 2024, primarily as a result of acquisitions, partially offset by decreased segment core sales and to a lesser extent the impact of currency exchange rates. Core sales decreased in the three and nine-month periods, led by China and Western Europe. The year-over-year core sales decline in the mass spectrometry, flow cytometry and lab automation solutions and microscopy businesses in both periods was primarily the result of weaker demand for equipment in most major end-markets, partially offset by increased demand for consumables and service in both periods. Core sales increased year-over-year in the industrial filtration business in the three-month period primarily driven by microelectronic and aerospace customers, partially offset by lower demand from food and beverage customers. For the nine-month period, core sales in the industrial filtration business decreased, driven by decreased core sales from food and beverage and microelectronics customers, partially offset by increased core sales from aerospace customers. Core sales also declined year-over-year in the three and nine-month periods in the genomics consumables business led by lower core sales in the gene reading and proteins product lines, partially offset by increased core sales in the plasmids product line.

Previous wording

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

Current wording

•First nine months of 2024 acquisition-related fair value adjustment to inventory related to the acquisition of Abcam - 45 basis points

Previous 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.

Current wording

Depreciation and amortization of intangible assets increased as a percentage of sales during both the three and nine-month periods ended September 27, 2024, primarily as a result of recent acquisitions.

Previous 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.

Current wording

Price increases in the segment did not have a significant impact on sales growth on a year-over-year basis during either the three or nine-month periods ended September 27, 2024.

Previous 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.

Current wording

Total segment sales increased 5.0% and 4.0%, respectively, during the three and nine-month periods, primarily as a result of increased core sales resulting from the factors discussed below. Changes in currency exchange rates did not have a significant impact on sales during the three-month period but negatively impacted sales year-over-year during the nine-month period. 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 nine-month periods, core sales in the molecular diagnostics business grew on a year-over-year basis during both the three and nine-month periods primarily driven by increased sales of both respiratory and non-respiratory disease tests in North America. The Company believes that third quarter demand for respiratory tests was driven in part by customers purchasing in preparation for the upcoming respiratory season. In the segment’s clinical diagnostics businesses core sales during both the three and nine-month periods grew on a year-over-year basis led by the clinical lab business, and to a lesser extent by the acute care business.

Previous 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.

Current wording

Operating profit margin increased 210 basis points during the three-month period ended September 27, 2024 as compared to the comparable period of 2023. Year-over-year operating profit margin was favorably impacted by higher third quarter 2024 core sales and improvements in the segment’s operational and administrative cost structure.

Previous 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.

Current wording

Operating profit margin increased 410 basis points during the nine-month period ended September 27, 2024 as compared to the comparable period of 2023. Year-over-year operating profit margin was favorably impacted by higher 2024 core sales and improvements in the segment’s operational and administrative cost structure and the impact of product mix.

Previous 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.

Current wording

Amortization of intangible assets as a percentage of sales decreased slightly during both the three and nine-month periods ended September 27, 2024, primarily as a result of the increase in sales.

Previous 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.

Current wording

Cost of sales increased year-over-year during the three-month period ended September 27, 2024 and decreased year-over-year during the nine-month period ended September 27, 2024 as compared to the comparable periods in 2023. The increase during the three-month period was primarily due to higher year-over-year sales volumes and to a lesser extent, the impact of recently acquired businesses. Lower year-over-year sales volumes primarily drove the decreased cost of sales during the nine-month period. Also contributing to the decrease in the nine-month period was $87 million of charges incurred in the second quarter of 2023 related to inventory, partially offset by a $25 million acquisition-related charge associated with the fair value adjustment to inventory recorded in connection with the acquisition of Abcam in the first nine months of 2024.

Previous wording

Year-over-year gross profit margin increased during both the three and six-month periods ended June 28, 2024 as compared to the comparable period in 2023. These increases were due primarily to inventory charges incurred in the second quarter of 2023 and the positive impact from the gross profit margin of Abcam, net of the impact of product mix and an acquisition-related charge recorded in the first half of 2024 referenced above.

Current wording

Year-over-year gross profit margin increased during both the three and nine-month periods ended September 27, 2024 as compared to the comparable periods in 2023. In the three-month period, the increase was due to higher core sales and the positive impact from the gross profit margin of recent acquisitions, net of the negative impact of product mix. In the nine-month period, the increase was due to inventory charges incurred in the first nine months of 2023 and the positive impact from the gross profit margin of recent acquisitions, net of the negative impact of product mix and an acquisition-related charge recorded in the first nine months of 2024 referenced above.

Previous 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.

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 nine-month periods ended September 27, 2024 as compared to the comparable periods of 2023 primarily as a result of increased spending on R&D activities, including the impact of recent acquisitions.

Previous 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.

Current wording

For a description of the Company’s other income (expense), net during the three and nine-month periods ended September 27, 2024 and September 29, 2023, refer to Note 8 to the accompanying Consolidated Condensed Financial Statements.

Previous wording

Interest income of $39 million and $99 million for the three and six-month periods ended June 28, 2024, respectively, was $20 million lower and $8 million lower than the comparable periods of 2023, due primarily to lower average cash balances in 2024 as a result of share repurchases and acquisitions.

Current wording

Interest income of $4 million and $103 million for the three and nine-month periods ended September 27, 2024, respectively, was $75 million lower and $83 million lower than the comparable periods of 2023, due primarily to lower average cash balances in 2024 as a result of share repurchases and acquisitions.

Previous wording

The Company operates globally, including in certain jurisdictions with lower tax rates than the U.S. federal statutory rate. Therefore, the impact of operating in such jurisdictions contributes to a lower effective tax rate compared to the U.S. federal statutory tax rate.

Current wording

The Company operates globally, including in certain jurisdictions with lower tax rates than the U.S. federal statutory rate. Therefore, the impact of operating in such jurisdictions contributes to a lower effective tax rate compared to the U.S. federal statutory tax rate. For each period presented, the effective tax rate 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 or charges.

Previous 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.

Current wording

For the nine-month period ended September 27, 2024, aggregate net discrete tax benefits of $45 million, which reduced the effective tax rate by 1.4%, 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 effective tax rate for this period also included the tax effect from the intangible asset impairment referenced above, which reduced the effective tax rate by 0.5%.

Previous 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.

Current wording

For the nine-month period ended September 29, 2023, net discrete tax charges of $24 million, which increased the effective tax rate by 0.6%, 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.

Previous wording

The Company and its subsidiaries are routinely examined by various domestic and international taxing authorities. The U.S. Internal Revenue Service (“IRS”) has completed the examinations of substantially all of the Company’s federal income tax returns through 2015 and is currently examining certain of the Company’s federal income tax returns for 2016 through 2022. In addition, the Company has subsidiaries in Canada, China, Denmark, France, Germany, India, Italy, Switzerland, the United Kingdom and various other countries, states and provinces that are currently under audit for years ranging from 2004 through 2023.

Current wording

The Company and its subsidiaries are routinely examined by various domestic and international taxing authorities. The IRS has completed the examinations of substantially all of the Company’s federal income tax returns through 2015 and is currently examining certain of the Company’s federal income tax returns for 2016 through 2022. In addition, the Company has subsidiaries in Canada, China, Denmark, France, Germany, India, Italy, Switzerland, the United Kingdom and various other countries, states and provinces that are currently under audit for years ranging from 2004 through 2023.

Previous 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.

Current wording

Comprehensive income increased during both the three and nine-month periods ended September 27, 2024 by approximately $1.4 billion and $653 million, respectively, as compared to the comparable periods of 2023. For the three and nine-month periods ended September 27, 2024, the increase in comprehensive income was primarily driven by increased gains from foreign currency translation adjustments, partially offset by lower net earnings. The Company recorded foreign currency translation gains of approximately $1.2 billion for the three-month period ended September 27, 2024 compared to losses of $303 million for the three-month period ended September 29, 2023. The Company recorded foreign currency translation gains of $389 million compared to losses of $982 million for the nine-month periods ended September 27, 2024 and September 29, 2023, respectively. The foreign currency translation gains in the three-month period ended September 27, 2024 were primarily driven by the change in the exchange rates between the U.S. dollar, the Swedish krona, the British pound and the euro. Foreign currency translation gains in the nine-month period ended September 27, 2024 were primarily driven by the change in the exchange rates between the U.S. dollar and the British pound. 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 $63 million and $43 million from cash flow hedge adjustments related to the Company’s cross-currency swap derivative contracts for the three and nine-month periods ended September 27, 2024, respectively, as compared to losses of $81 million and $106 million for the comparable periods of 2023.