Veralto Corp

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, 2024, included within the 2024 Annual Report on Form 10-K, and the unaudited financial statements and related Notes as of and for the three-month period ended April 4, 2025 included in this Quarterly Report on Form 10-Q (this “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, 2024, included within the 2024 Annual Report on Form 10-K, and the unaudited financial statements and related Notes as of and for the three and six-month periods ended July 4, 2025 included in this Quarterly Report on Form 10-Q (this “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 (“SEC”), 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, asset values, pricing, tax rates, tax provisions, cash flows, pension and benefit obligations and funding requirements, 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; growth, declines and other trends in markets we sell into, including the impact of changes to global trade policies, restrictions on imports, related countermeasures and reciprocal tariffs; future new or modified laws, regulations, accounting pronouncements 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 foreign currency exchange rates and fluctuations in those rates; 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 Veralto 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. 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 they believe to be appropriate. These forward-looking statements are subject to a number of risks and uncertainties, including but not limited to the risks and uncertainties set forth below and under “Item 1A. Risk Factors” in the 2024 Annual Report on Form 10-K.

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 (“SEC”), 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, asset values, pricing, tax rates, tax provisions, cash flows, pension and benefit obligations and funding requirements, 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; growth, declines and other trends in markets we sell into, including the impact of changes to global trade policies, restrictions on imports, related countermeasures and reciprocal tariffs; future new or modified laws, regulations, accounting pronouncements 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 foreign currency exchange rates and fluctuations in those rates; 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 Veralto 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. 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 they believe to be appropriate. These forward-looking statements are subject to a number of risks and uncertainties, including but not limited to the risks and uncertainties set forth below and under “Item 1A. Risk Factors” in the 2024 Annual Report on Form 10-K and any sub…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

Below is a summary of material risks and uncertainties we face, some of which we have experienced and any of which may occur in the future. These risks are discussed more fully in “Item 1A. Risk Factors” in the 2024 Annual Report on Form 10-K:

Current wording

Below is a summary of material risks and uncertainties we face, some of which we have experienced and any of which may occur in the future. These risks are discussed more fully in “Item 1A. Risk Factors” in the 2024 Annual Report on Form 10-K and any subsequent updates in “Item 1A. Risk Factors” within Quarterly Reports on Form 10-Q:

Previous wording

See “Item 1A. Risk Factors” in the 2024 Annual Report on Form 10-K for further discussion regarding reasons that actual results may differ materially from the results, developments and business decisions contemplated by our forward-looking statements. Forward-looking statements speak only as of the date of the report, document, press release, webcast, call, materials or other communication in which they are made. Except to the extent required by applicable law, we do not assume any obligation to update or revise any forward-looking statement, whether as a result of new information, future events and developments or otherwise.

Current wording

See “Item 1A. Risk Factors” in the 2024 Annual Report on Form 10-K and any subsequent updates in “Item 1A. Risk Factors” within Quarterly Reports on Form 10-Q for further discussion regarding reasons that actual results may differ materially from the results, developments and business decisions contemplated by our forward-looking statements. Forward-looking statements speak only as of the date of the report, document, press release, webcast, call, materials or other communication in which they are made. Except to the extent required by applicable law, we do not assume any obligation to update or revise any forward-looking statement, whether as a result of new information, future events and developments or otherwise.

Previous wording

Veralto operates through two segments – Water Quality (“WQ”) and Product Quality & Innovation (“PQI”). Our businesses within these segments have strong globally recognized brands as a result of our leadership in served markets over several decades. Our WQ segment provides innovative products and services that improve the quality and reliability of water with leading brands including Hach, Trojan Technologies and ChemTreat. Our PQI segment enables our customers to promote consumer trust in their products and help enable product innovation with leading brands including Videojet, Linx, Esko, X-Rite and Pantone. We believe our leading positions result from the strength of our commercial organizations, our legacy of innovation, and our close and long-term connectivity to our customers and knowledge of their workflows, underpinned by our culture of continuous improvement. This has resulted in a large installed base of instruments that drive ongoing consumables and software sales to support our customers. As a result, our business generates recurring sales which represented approximately 61% of total sales during thethree months ended April 4, 2025. Our business model also supports a strong margin profile with limited capital expenditure requirements and has generated attractive cash flows. We believe these attributes allow us to deliver financial performance that is resilient across economic cycles.

Current wording

Veralto operates through two segments – Water Quality (“WQ”) and Product Quality & Innovation (“PQI”). Our businesses within these segments have strong globally recognized brands as a result of our leadership in served markets over several decades. Our WQ segment provides innovative products and services that improve the quality and reliability of water with leading brands including Hach, Trojan Technologies and ChemTreat. Our PQI segment enables our customers to promote consumer trust in their products and help enable product innovation with leading brands including Videojet, Linx, Esko, X-Rite and Pantone. We believe our leading positions result from the strength of our commercial organizations, our legacy of innovation, and our close and long-term connectivity to our customers and knowledge of their workflows, underpinned by our culture of continuous improvement. This has resulted in a large installed base of instruments that drive ongoing consumables and software sales to support our customers. As a result, our business generates recurring sales which represented approximately 61% of total sales during thesix months ended July 4, 2025. Our business model also supports a strong margin profile with limited capital expenditure requirements and has generated attractive cash flows. We believe these attributes allow us to deliver financial performance that is resilient across economic cycles.

Previous wording

During thethree-month period ended April 4, 2025, overall revenues increased 6.9% and core sales increased 7.8% compared to the comparable period in 2024 with growth in both segments. Currency exchange rates decreased reported sales by 1.3% and acquisitions, net of divestitures increased reported sales by 0.4% during thethree-month period ended April 4, 2025 compared to the comparable period in 2024. For the definition of “core sales” refer to “—Results of Operations”below.

Current wording

During the three-month period ended July 4, 2025, overall revenues increased 6.4% and core sales increased 4.8% compared to the comparable period in 2024 with growth in both segments. Currency exchange rates and acquisitions, net of divestitures increased reported sales by 1.5% and 0.1%, respectively, during the three-month period ended July 4, 2025 compared to the comparable period in 2024. For the six-month period ended July 4, 2025, overall revenues increased 6.6% and core sales increased 6.3%, compared to the comparable period in 2024. Currency exchange rates and acquisitions, net of divestitures increased reported sales by 0.1% and 0.2%, respectively during the six-month period ended July 4, 2025 compared to the comparable period in 2024. For the definition of “core sales” refer to “—Results of Operations” below.

Previous wording

Geographically, the Company’s sales in the three-month period ended April 4, 2025 in developed markets increased year-over-year by 8.2%, driven by increased sales of 8.6% in North America, 7.5% in Western Europe, and 7.4% in other developed markets. Sales in high-growth markets increased 3.3% year-over-year. For the same period, core sales in developed markets increased 8.7% driven by increased core sales of 7.9% in North America and 10.8% in Western Europe. Core sales in high-growth markets increased 6.1% driven by high-single digit increases in Latin America and low-single digit increases in China.

Current wording

Geographically, the Company’s sales in the six-month period ended July 4, 2025 in developed markets increased year-over-year by 7.6%, driven by increased sales of 7.5% in North America, 8.3% in Western Europe, and 3.6% in other developed markets. Sales in high-growth markets increased 4.2% year-over-year. For the same period, core sales in developed markets increased 7.1% driven by increased core sales of 6.7% in North America and 8.5% in Western Europe. Core sales in high-growth markets increased 6.1% driven by high-single digit increases in Latin America.

Previous wording

The Company’s net earnings for the three-month period ended April 4, 2025 totaled $225 million, compared to $184 million for the three-month period ended March 29, 2024. The increase in net earnings was primarily driven by increased sales, resulting from higher volumes and positive pricing actions. Refer to “—Results of Operations” for further discussion of the year-over-year changes in net earnings for the three-month period ended April 4, 2025.

Current wording

The Company’s net earnings for the three and six-month periods ended July 4, 2025 totaled $222 million and $447 million, respectively, compared to $203 million and $387 million, respectively, for the three and six-month periods ended June 28, 2024. The increase in net earnings during the three and six-month periods ended July 4, 2025 as compared to the three and six-month periods ended June 28, 2024 was primarily driven by increased sales, resulting from higher volumes and positive pricing actions. Refer to “—Results of Operations” for further discussion of the year-over-year changes in net earnings for the three and six-month periods ended July 4, 2025.

Previous wording

Looking out over the balance of 2025, in our Water Quality Segment we continue to expect positive secular growth drivers across industrial markets particularly in North America, along with steady demand at municipalities. In our Product Quality and Innovation segment we expect to see steady demand in the consumer-packaged goods markets as the year progresses.

Current wording

Looking out over the balance of 2025, in our Water Quality Segment, we continue to expect positive secular growth drivers across municipal and industrial markets, particularly in North America. In our Product Quality & Innovation segment, we expect to see steady demand in the consumer-packaged goods markets as the year progresses.

Previous wording

The Company’s outlook for 2025 reflects its current assessment of the global macro-economic environment, including enacted tariffs and the Company’s actions to mitigate adverse financial impacts. The Company’s ability to meet its expectations are subject to numerous risks, including, but not limited to, those described in “Item 1A. Risk Factors” within the Company’s 2024 Annual Report on Form 10-K and any subsequent updates in Item “1A. Risk Factors” within Quarterly Reports on Form 10-Q.

Current wording

The Company’s outlook for 2025 reflects its current assessment of the global macro-economic environment, including enacted tariffs and the Company’s actions to mitigate adverse financial impacts, and fluctuations in currency exchange rates. The Company’s ability to meet its expectations are subject to numerous risks, including, but not limited to, those described in “Item 1A. Risk Factors” within the Company’s 2024 Annual Report on Form 10-K and any subsequent updates in “Item 1A. Risk Factors” within Quarterly Reports on Form 10-Q.

Previous wording

Total sales increased 6.9% during the three-month period ended April 4, 2025, compared to the comparable period in 2024, primarily as a result of core sales growth driven by the factors discussed below by segment.

Current wording

Total sales increased 6.4% and 6.6% during the three and six-month periods ended July 4, 2025, respectively, compared to the comparable periods in 2024, primarily as a result of core sales growth driven by the factors discussed below by segment.

Previous wording

Price increases contributed 1.3% to sales growth on a year-over-year basis during the three-month period ended April 4, 2025, and are reflected as a component of core sales growth above.

Current wording

Currency exchange rates and acquisitions, net of divestitures increased reported sales by 1.5% and 0.1%, respectively, during the three-month period ended July 4, 2025, compared to the comparable period in 2024. Currency exchange rates and acquisitions, net of divestitures increased reported sales by 0.1% and 0.2%, respectively, during the six-month period ended July 4, 2025, compared to the comparable period in 2024. Price increases contributed 1.7% and 1.5% to sales growth on a year-over-year basis during the three and six-month periods ended July 4, 2025, respectively, and are reflected as a component of core sales growth above.

Previous wording

Cost of sales increased by $28 million or 5.6% on a year-over-year basis during the three-month period ended April 4, 2025, as compared to the comparable period in 2024, driven primarily by higher year-over-year sales volumes and the impact of foreign currency exchange rates.

Current wording

Cost of sales increased by $35 million or 6.8% and by $63 million or 6.2% on a year-over-year basis during the three and six-month periods ended July 4, 2025, respectively, as compared to the comparable periods in 2024, driven primarily by higher year-over-year sales volumes.

Previous wording

Gross profit margins increased 40 basis points on a year-over-year basis for the three-month period ended April 4, 2025, as compared to the comparable period in 2024, driven by positive pricing actions and the net positive impact from the gross profit margin of recent acquisitions offset by the impacts from foreign currency exchange rates.

Current wording

Gross profit margins decreased 10 basis points on a year-over-year basis during the three-month period ended July 4, 2025 as compared to the comparable period in 2024, due primarily to incremental year-over-year labor costs and the impact of product mix. The gross profit margin decline was partially offset by positive pricing actions and higher volume, the impact of foreign currency exchange rates, and the net positive impact from the gross profit margin of recent acquisitions. Gross profit margins increased 20 basis points on a year-over-year basis during the six-month period ended July 4, 2025, as compared to the comparable period in 2024, driven by positive pricing actions and higher volume along with the net positive impact from the gross profit margin of recent acquisitions.

Previous wording

SG&A expenses as a percentage of sales decreased by 10 basis points during the three-month period ended April 4, 2025, as compared to the comparable period in 2024, driven by the increase in the Company’s sales exceeding the increase in the Company’s SG&A expenses.

Current wording

SG&A expenses as a percentage of sales increased by 10 basis points during the three-month period ended July 4, 2025 as compared to the comparable period in 2024, driven by the increase in the Company’s SG&A expenses exceeding the increase in the Company’s sales. SG&A expenses as a percentage of sales were flat during the six-month period ended July 4, 2025 as compared to the comparable period in 2024.

Previous wording

R&D expenses as a percentage of sales was flat during the three-month period ended April 4, 2025, as compared to the comparable period in 2024, and primarily consists of growth related R&D initiatives during each of the periods presented.

Current wording

R&D expenses as a percentage of sales increased by 20 basis points and were flat during the three and six-month periods ended July 4, 2025, respectively, as compared to the comparable periods in 2024. The increase in R&D expenses in the three-month period ended July 4, 2025 as compared to the comparable period in 2024 is primarily driven by growth related R&D initiatives.

Previous wording

•Costs incurred during the first quarter of 2025 related to certain strategic initiatives - 20 basis points

Current wording

•Costs incurred during the second quarter of 2025 related to certain strategic initiatives - 20 basis points

Previous wording

First quarter 2025 vs. first quarter 2024 operating profit margin comparisons were unfavorably impacted by:

Current wording

Second quarter 2025 vs. second quarter 2024 operating profit margin comparisons were favorably impacted by:

Previous wording

Total Water Quality segment sales increased 6.0% year-over-year during the three-month period ended April 4, 2025, as compared to the comparable period in 2024, primarily as a result of core sales growth driven by the factors discussed below. Geographically, sales growth was driven by North America, which saw increases of 7.8%, and Western Europe, which saw increases of 7.6% for the three-month period ended April 4, 2025, compared to the comparable period in 2024.

Current wording

Total Water Quality segment sales increased 6.2% and 6.1% year-over-year during the three and six-month periods ended July 4, 2025, respectively, as compared to the comparable periods in 2024, primarily as a result of core sales growth driven by the factors discussed below. Geographically, sales growth was driven by North America, which saw increases of 5.6% and 6.7%, and Western Europe, which saw increases of 12.9% and 10.3% for the three and six-month periods ended July 4, 2025, respectively, compared to the comparable periods in 2024.

Previous wording

Price increases in the segment contributed 1.0% to sales growth on a year-over-year basis during the three-month period ended April 4, 2025, and are reflected as a component of the change in core sales growth.

Current wording

Price increases in the segment contributed 1.4% and 1.2% to sales growth on a year-over-year basis during the three and six-month periods ended July 4, 2025, respectively, and are reflected as a component of the change in core sales growth.

Previous wording

Core sales in the Water Quality segment increased 7.4% year-over-year during the three-month period ended April 4, 2025. Geographically, core sales growth was driven by increases of 8.3% in North America and 11.3% in Western Europe during the three-month period ended April 4, 2025 compared to the comparable period in 2024. Core sales in high-growth markets also increased 3.3%, driven by high-single digit increases in Latin America offset by mid-single digit decreases in China.

Current wording

Core sales in the Water Quality segment increased 5.0% and 6.2% year-over-year during the three and six-month periods ended July 4, 2025, respectively. Geographically, core sales growth was driven by increases of 5.7% in North America and 11.4% in Western Europe during the three-month period ended July 4, 2025 compared to the comparable period in 2024. For the same period, core sales in high-growth markets increased 4.7%, driven by high-single digit increases in Latin America, partially offset by high-single digit decreases in China. Geographically, core sales growth was driven by increases of 7.0% in North America and 11.3% in Western Europe during the six-month period ended July 4, 2025 compared to the comparable period in 2024. For the same period, core sales in high-growth markets increased 4.0%, driven by high-single digit increases in Latin America, partially offset by high-single digit decreases in China.

Previous wording

Theincrease in core sales during the three-month period ended April 4, 2025 was driven by the chemical treatment solutions business and, to a lesser extent, the analytical instrumentation business. Core sales in the chemical treatment solutions business increased 11.1% year-over-year in the three-month period ended April 4, 2025, as a result of increased core sales across most major end-markets. Core sales in the analytical instrumentation business increased 5.9% year-over-year for the three-month period ended April 4, 2025 as a result of increased core sales across Western Europe and North America.

Current wording

The increase in core sales during the three and six-month periods ended July 4, 2025 was driven by the chemical treatment solutions business and, to a lesser extent, the analytical instrumentation business. Core sales in the chemical treatment solutions business increased 4.8% and 7.8% year-over-year in the three and six-month periods ended July 4, 2025, respectively, as a result of increased core sales across most major end-markets. Core sales in the analytical instrumentation business increased 4.4% and 5.1% year-over-year for the three and six-month periods ended July 4, 2025, respectively, as a result of increased core sales across Western Europe and North America.

Previous wording

Operating profit margins were 24.9% for the three-month period ended April 4, 2025 as compared to 24.2% for the three-month period ended March 29, 2024. The following factors impacted year-over-year operating profit margin comparisons:

Current wording

Operating profit margins were 25.6% for the three-month period ended July 4, 2025 as compared to 24.2% for the three-month period ended June 28, 2024. The following factors impacted year-over-year operating profit margin comparisons:

Previous wording

First quarter 2025 vs. first quarter 2024 operating profit margin comparisons were unfavorably impacted by:

Current wording

Second quarter 2025 vs. second quarter 2024 operating profit margin comparisons were favorably impacted by:

Previous wording

Total Product Quality & Innovation segment sales increased 8.3% year-over-year during the three-month period ended April 4, 2025, primarily as a result of changes in core sales driven by the factors discussed below.

Current wording

Total Product Quality & Innovation segment sales increased 6.8% and 7.5% year-over-year during the three and six-month periods ended July 4, 2025, respectively, primarily as a result of changes in core sales driven by the factors discussed below. Geographically, sales growth was driven by North America which saw increases of 8.2% and 9.5% and Western Europe which saw increases of 5.9% and 6.6% during the three and six-month periods ended July 4, 2025, respectively, compared to the comparable periods in 2024. Sales in high-growth markets increased 6.2% and 6.4% during the three and six-month periods ended July 4, 2025, respectively, compared to the comparable periods in 2024.

Previous wording

Price increases in the segment contributed 1.6% to sales growth on ayear-over-year basis during the three-month period ended April 4, 2025, and are reflected as a component of the change in core sales growth.

Current wording

Price increases in the segment contributed 2.2% and 1.9% to sales growth on a year-over-year basis during the three and six-month periods ended July 4, 2025, respectively, and are reflected as a component of the change in core sales growth.

Previous wording

From a product line perspective, core sales in the marking and coding business increased 8.3% year-over-year during the three-month period ended April 4, 2025, driven by higher demand across most major end-markets and geographies. Core sales in the packaging and color solutions business increased 8.3% year-over-year during the three-month period ended April 4, 2025, driven by continued demand for digital workflow solutions in most major end-markets.

Current wording

From a product line perspective, core sales in the marking and coding business increased 3.5% and 5.9% year-over-year during the three and six-month periods ended July 4, 2025, driven by higher demand across most major end-markets and geographies. Core sales in the packaging and color solutions business increased 7.0% and 7.6% year-over-year during the three and six-month periods ended July 4, 2025, respectively, driven by continued demand for digital workflow solutions in most major end-markets.

Previous wording

•The net dilutive impact in 2025 of acquisitions and dispositions - 70 basis points

Current wording

•The net dilutive impact in 2025 of acquisitions and dispositions - 50 basis points

Previous wording

•The net accretive impact in 2025 of 2024 product line dispositions - 10 basis points

Current wording

•The net dilutive impact in 2025 of acquisitions and dispositions - 60 basis points

Previous wording

Net interest expense of $27 million and $28 million was recorded for thethree-month periods ended April 4, 2025 and March 29, 2024, respectively, arising from our outstanding indebtedness, which was incurred in September 2023.

Current wording

Net interest expense of $28 million and $55 million was recorded for thethree and six-month periods ended July 4, 2025, respectively, compared to net interest expenseof $30 million and $58 million for the three and six-month periods ended June 28, 2024, respectively, arising from our outstanding indebtedness, which was incurred in September 2023.

Previous wording

Income tax expense and deferred tax assets and liabilities reflect management’s assessment of future taxes expected to be paid on items reflected in the Company’s Consolidated Condensed Financial Statements. The Company records the tax effect of discrete items and items that are reported net of their tax effects in the period in which they occur.

Current wording

Income tax expense and deferred tax assets and liabilities reflect management’s assessment of future taxes expected to be paid on items reflected in the Company’s Consolidated Condensed Financial Statements. The

Previous wording

The effective tax rate for the three-month period ended April 4, 2025 differs from the U.S. federal statutory rate of 21% principally due to the geographic mix of earnings described above, the unfavorable impact of a non-deductible loss on the sale of a product line of$2 million, and a net discrete benefit of $2 million related primarily to the impact of excess tax benefits from stock-based compensation. The net discrete items had no impact on the effective tax rate for thethree-month period ended April 4, 2025.

Current wording

The effective tax rate for the six-month period ended July 4, 2025 differs from the U.S. federal statutory rate of 21% principally due to the geographic mix of earnings described above, the unfavorable impact of a non-deductible loss on the sale of a product line of $2 million, and a net discrete benefit of $2 million related primarily to the impact of excess tax benefits from stock-based compensation, partially offset by the impact of uncertain tax positions. The net discrete benefit decreased the effective tax rate by 0.3% for the six-month period ended July 4, 2025.

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% principally due to the geographic mix of earnings described above, the unfavorable impact of a non-deductible loss on the sale of a product line of$3 million, and a net discrete benefit of $1 million related primarily to excess tax benefits from stock-based compensation. The net discrete benefits reduced the effective tax rate by 1.6% 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% principally due to the geographic mix of earnings described above, the unfavorable impact of a non-deductible loss on the sale of a product line of $3 million, and a net discrete expense of $4 million related primarily to the impact of uncertain tax positions, partially offset by excess tax benefits from stock-based compensation. The net discrete expense increased the effective tax rate by 1.3% for the six-month period ended June 28, 2024.

Previous wording

In 2025, compre hensive income increased $126 million for the three-month period ended April 4, 2025 as compared to the comparable period in 2024, primarily driven by gains from foreign currency translation adjustments and to a lesser extent higher net earnings during the three-month period ended March 29, 2024. The Company recorded foreign currency translation gains of $81 million, offset by an unrealized loss on net investment hedge of $22 million for the three-month period ended April 4, 2025. The foreign currency translation gains were driven by the weakening of the U.S. dollar against most major foreign currencies in the period, compared to losses of $36 million, offset by an unrealized gain on net investment hedge of $9 million for the three-month period ended March 29, 2024, primarily driven by the strengthening of the U.S. dollar against most major foreign currencies in the period. 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.

Current wording

In 2025, compre hensive income increased $166 million for the three-month period ended July 4, 2025 as compared to the comparable period in 2024, primarily driven by gains from foreign currency translation adjustments and to a lesser extent higher net earnings during the three-month period ended July 4, 2025. Comprehensive income increased $292 million for the six-month period ended July 4, 2025 as compared to the comparable period in 2024, primarily driven by gains from foreign currency translation adjustments and to a lesser extent net earnings during the six-month period ended July 4, 2025. The Company recorded foreign currency translation gain of $153 million, offset by an unrealized loss on net investment hedge of $32 million for the three-month period ended July 4, 2025. The foreign currency translation gains were driven by the weakening of the U.S. dollar against most major foreign currencies in the period, compared to losses of $29 million, offset by an unrealized gain on net investment hedge of $3 million for the three-month period ended June 28, 2024. The foreign currency translation losses during the three-month period ended June 28, 2024 were primarily driven by the strengthening of the U.S. dollar against most major foreign currencies in the period. The Company recorded foreign currency translation gain of $234 million, offset by an unrealized loss on net investment hedge of $54 million for the six-month period ended July 4, 2025. The foreign currency translation gains were driven by the weakening of the U.S. dollar against most major foreign currencies in the period, compared to losses of $65 million, offset by an unrealized gain on net investment hedge of $12 million for the six-month period ended June 28, 2024. The foreign currency translation losses during the six-month period ended June 28, 2024 were primarily driven by the strengthening of the U.S. dollar against most major foreign currencies in the period. 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.

Previous wording

•Operating cash flows increased $42 million, or 37%, during thethree-month period ended April 4, 2025 as compared to the comparable period in 2024, primarily driven by higher net income and changes in net working capital.

Current wording

•Operating cash flows increased $130 million, or 36%, during the six-month period ended July 4, 2025 as compared to the comparable period in 2024, primarily driven by higher net income, partially offset by changes in net working capital.

Previous wording

•Net cash used in investing activities decreased $12 million for thethree-month period ended April 4, 2025 as compared to the comparable period in 2024, primarily driven by a $14 million increase in cash received from other investing activities, offset by a $2 million increase in capital expenditures. Other investing activities is comprised of immaterial acquisition and disposition activity.

Current wording

•Net cash used in investing activities increased $17 million for the six-month period ended July 4, 2025 as compared to the comparable period in 2024, primarily driven by a $10 million increase in cash used in other investing activities and a $7 million increase in capital expenditures. Other investing activities is comprised of immaterial acquisition and disposition activity.

Previous wording

•Net cash used in financing activities increased $6 million for thethree-month period ended April 4, 2025 as compared to the comparable period in 2024 primarily driven by the payment of dividends.

Current wording

•Net cash used in financing activities increased $8 million for the six-month period ended July 4, 2025 as compared to the comparable period in 2024 primarily driven by the payment of dividends.

Previous wording

Aggregate cash payments for dividends on Company common stock during thethree-month period ended April 4, 2025 were $27 million.

Current wording

Aggregate cash payments for dividends on Company common stock during the six-month period ended July 4, 2025 were $54 million.

Previous wording

In the first quarter of 2025, the Company declared a regular quarterly dividend of $0.11 per share of Company common stock payable on April 30, 2025 to holders of record as of March 31, 2025.

Current wording

In the second quarter of 2025, the Company declared a regular quarterly dividend of $0.11 per share of Company common stock payable on July 31, 2025 to holders of record as of June 30, 2025.

Previous wording

As of April 4, 2025, the Company held approximately $1.2 billion of cash and cash equivalents that were on deposit with financial institutions or invested in highly liquid investment-grade debt instruments with a maturity of 90 days or less. Of the cash and cash equivalents, appro ximately$357 million was held within the United States and approximately$882 million was held outside of the United States. The Company will continue to have cash requirements to support general corporate purposes, which may include working capital needs, capital expenditures, acquisitions and investments, paying interest and servicing debt, paying taxes and any related interest or penalties, funding its restructuring activities and pension plans as required, paying dividends to shareholders, repurchasing shares of the Company’s common stock and supporting other business needs.

Current wording

As of July 4, 2025, the Company held approximately $1.6 billion of cash and cash equivalents that were on deposit with financial institutions or invested in highly liquid investment-grade debt instruments with a maturity of 90 days or less. Of the cash and cash equivalents, appro ximately$676 million was held within the United States and approximately$883 million was held outside of the United States. The Company will continue to have cash requirements to support general corporate purposes, which may include working capital needs, capital expenditures, acquisitions and investments, paying interest and servicing debt, paying taxes and any related interest or penalties, funding its restructuring activities and pension plans as required, paying dividends to shareholders, repurchasing shares of the Company’s common stock and supporting other business needs.