Veralto Corp

NOTE 1. GENERAL

Veralto Corporation’s (“Veralto” or the “Company”) unifying purpose is Safeguarding the World’s Most Vital Resources TM. Its diverse group of leading operating companies provides essential technology solutions that monitor, enhance and protect key resources around the globe. The Company is committed to the advancement of public health and safety and believes it is positioned to support its customers as they address large global challenges including environmental resource sustainability, water scarcity, management of severe weather events, food and pharmaceutical security, and the impact of an aging workforce. Through its core offerings in water analytics, water treatment, marking and coding and packaging and color, customers look to the Company’s solutions to help ensure the safety, quality, efficiency and reliability of their products, processes and people globally. The Company operates throughtwo segments – Water Quality (“WQ”) and Product Quality & Innovation (“PQI”). The businesses within these segments have strong globally recognized brands as a result of our leadership in served markets over several decades. The WQ segment provides innovative products and services that improve the quality and reliability of water with leading brands including Hach, Trojan Technologies and ChemTreat. The 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

Basis of Presentation—Veralto prepared the unaudited Consolidated Condensed Financial Statements included herein in accordance with accounting principles generally accepted in the United States (“GAAP”) and the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) applicable for interim periods. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations; however, the Company believes the disclosures are adequate to make the information presented not misleading. The Consolidated Condensed Financial Statements included herein should be read in conjunction with the audited annual Consolidated Financial Statements as of and for the year ended December 31, 2025 and the Notes thereto included within the 2025 Annual Report on Form 10-K.

In the opinion of the Company, the accompanying financial statements contain all adjustments necessary to fairly present the financial position of the Company as of October 2, 2026 and December 31, 2025, and its results of operations for the three and nine-month periods ended October 2, 2026 and October 3, 2025 and its cash flows for each of the nine-month periods then ended.

There have been no changes to the Company’s significant accounting policies described within the 2025 Annual Report on Form 10-K that have a material impact on the Company’s Consolidated Condensed Financial Statements and the related Notes.

Recent Accounting Pronouncements—In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2024-03, Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures. The ASU requires entities to provide disaggregated disclosures of certain categories of expenses on an annual and interim basis including purchases of inventory, employee compensation, depreciation and intangible asset amortization for each income statement line item that contains those expenses. This ASU is effective for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027 with early adoption permitted. The adoption of the standard will not impact the Company’s consolidated financial statements. Upon adoption, for the year ending December 31, 2027, the Company will update the applicable interim and annual disclosures to align with the new standard.

Cash and Cash Equivalents—The Company considers all highly liquid investments with a maturity of three months or less at the date of purchase to be cash equivalents.

Operating Leases—As of October 2, 2026 and December 31, 2025, operating lease right-of-use assets where the Company was the lessee were $186 million and $195 million, respectively, and are included within other long-term assets in the accompanying Consolidated Condensed Balance Sheets. The associated operating lease liabilities were $196 million and $206 million as of October 2, 2026 and December 31, 2025, respectively, and are included in accrued expenses and other liabilities and other long-term liabilities in the accompanying Consolidated Condensed Balance Sheets.

Prepaid Expenses and Other Current Assets—Prepaid expenses and other current assets primarily result from advance payments to vendors for goods and services and are capitalized until the related goods are received or services are performed. Included in the Company’s prepaid expenses and other current assets are prepaid expenses of $180 million and $141 million as of October 2, 2026 and December 31, 2025, respectively.

Derivative Financial Instruments—The Company is neither a dealer nor a trader in derivative instruments. The Company has generally accepted the exposure to transactional exchange rate movements without using derivative instruments to manage this risk, although the Company from time to time partially hedges its net investments in foreign operations against adverse movements in exchange rates through foreign currency denominated debt and cross-currency swaps. When utilized, the derivative instruments are recorded on the Consolidated Condensed Balance Sheets as either an asset or liability measured at fair value. To the extent the derivative instrument qualifies as an effective hedge, changes in fair value are recognized in accumulated other comprehensive income (loss) in stockholders’ equity. Changes in the value of the foreign currency denominated debt and cross-currency swaps designated as hedges of the Company’s net investment in foreign operations based on spot rates are recognized in accumulated other comprehensive income (loss) in stockholders’ equity and offset changes in the value of the Company’s foreign currency denominated operations. Refer to Notes 8 and 10 for additional information.

NOTE 2. ACQUISITIONS

The Company continually evaluates potential acquisitions that either strategically fit with the Company’s existing portfolio or expand the Company’s portfolio into a new and attractive business area. The Company has completed a number of acquisitions that have been accounted for as purchases and have resulted in the recognition of goodwill in the Company’s financial statements. This goodwill arises because the purchase prices for these businesses exceed the fair value of acquired identifiable net assets due to the purchase prices reflecting a number of factors including the future earnings and cash flow potential of these businesses, the multiple to earnings, cash flow and other factors at which similar businesses have been purchased by other acquirers, the competitive nature of the processes by which the Company acquired the businesses, the avoidance of the time and costs which would be required (and the associated risks that would be encountered) to enhance the Company’s existing product offerings to key target markets and enter into new and profitable businesses and the complementary strategic fit and resulting synergies these businesses bring to existing operations.

The Company makes an initial allocation of the purchase price at the date of acquisition based upon its understanding of the fair value of the acquired assets and assumed liabilities. The Company obtains the information used for the purchase price allocation during due diligence and through other sources. In the months after closing, as the Company obtains additional information about the acquired assets and liabilities, including through tangible and intangible asset appraisals, and learns more about the newly acquired business, it is able to refine the estimates of fair value and more accurately allocate the purchase price. The fair values of acquired intangibles are determined based on estimates and assumptions that are deemed reasonable by the Company. Significant assumptions include the discount rates and certain assumptions that form the basis of the forecasted results of the acquired business including earnings before interest, taxes, depreciation and amortization (“EBITDA”), revenue, revenue growth rates, royalty rates and technology obsolescence rates. These assumptions are forward looking and could be affected by future economic and market conditions. The Company engages third-party valuation specialists who review the Company’s critical assumptions and calculations of the fair value of acquired intangible assets in connection with significant acquisitions. Only facts and circumstances that existed as of the acquisition date are considered for subsequent adjustment. The Company will make appropriate adjustments to the purchase price allocation prior to completion of the one-year measurement period, as required.

The following briefly describes the Company’s acquisition activity for the nine-month period ended October 2, 2026.

On January 22, 2026, the Company completed the acquisition of 100% of the outstanding shares of In-Situ, Inc. (“In-Situ”), a global leader in environmental water measurement and monitoring solutions with a leading portfolio of water quality sondes, water quality sensors and data management solutions that help customers monitor and measure the quality or quantity of surface and groundwater. The total purchase price was cash consideration of approximately $426 million, net of cash acquired. In-Situ is included in the Water Quality segment. The Company completed the In-Situ acquisition using cash on hand. The Company preliminarily recorded approximately $223 million of goodwill related to the In-Situ acquisition. The full amount of goodwill is non-deductible for tax purposes.

Prior to the acquisition, the Company held a minority ownership interest in In-Situ that was accounted for using a measurement alternative that measures the securities at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer. The acquisition was accounted for as a step acquisition, which required remeasurement of the Company’s pre-existing equity interest in In-Situ immediately prior to the completion of the acquisition to its estimated fair value. The remeasurement resulted in a pre-tax gain of approximately $7 million, which was recorded in other income (expense), net in the Consolidated Condensed Statements of Earnings.

The following summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition for the individually significant acquisition of In-Situ during the nine-month period ended October 2, 2026:

On April 7, 2026, the Company completed the acquisition of 100% of the outstanding shares of GlobalVision for approximately CAD $270 million ($195 million), net of cash acquired. GlobalVision leverages its core proprietary deterministic technology with AI-augmented functionality to help pharmaceutical and consumer-packaged goods customers accelerate their speed to market and meet critical quality and packaging compliance regulations, verifying that packaging content remains accurate and compliant at every critical hand-off. GlobalVision has been integrated into the Product Quality & Innovation segment. The Company completed the GlobalVision acquisition using cash on hand. The Company preliminarily recorded approximately $134 million of goodwill related to the GlobalVision acquisition. The full amount of goodwill will be non-deductible for tax purposes.

During 2026, the Company acquired an additional business for total consideration of approximately $63 million in cash, net of cash acquired. The business will be integrated into the Water Quality segment. The Company recorded an aggregate of approximately $52 million of goodwill related to the acquisition of this business, which will be non-deductible for tax purposes.

The weighted-average amortization periods for definite-lived intangible assets acquired during the nine-month period ended October 2, 2026 are 11 years for customer relationships,10 years for developed technology, and 15 years for trade names. The weighted-average amortization period for definite-lived intangible assets acquired in aggregate during the nine-month period ended October 2, 2026 is 11 years.

Transaction-related costs for the 2026 acquisitions were $1 million and $9 million for the three and nine-month periods ended October 2, 2026, respectively.

Pro Forma Financial Information

Pro forma financial information for the 2026 acquisitions has not been presented because the acquisitions were not material, individually or in the aggregate, to the Company’s Consolidated Condensed Statements of Earnings.

NOTE 3. NET EARNINGS PER COMMON SHARE

Basic net earnings per common share (“EPS”) is calculated by dividing net earnings by the weighted average number of shares of common stock outstanding for the applicable period. Diluted EPS is computed based on the weighted average number of shares of common stock outstanding increased by the number of additional shares that would have been outstanding had the potentially dilutive shares of common stock been issued and reduced by the number of shares the Company could have repurchased with the proceeds from the issuance of the potentially dilutive shares.

Information related to the calculation of net earnings per common share for the three and nine-month periods ended October 2, 2026 and October 3, 2025 is summarized as follows:

NOTE 4. REVENUE

The following tables present the Company’s revenues disaggregated by geographical region and revenue type for the three and nine-month periods ended October 2, 2026 and October 3, 2025. Sales taxes and other usage-based taxes collected from customers are excluded from revenue.

(a)The Company defines North America as the United States and Canada.

(b) The Company defines high-growth markets as developing markets of the world which include Asia (with the exception of Japan, Australia and New Zealand), Latin America (including Mexico), the Middle East, Eastern Europe and Africa. The Company defines developed markets as all markets of the world that are not high-growth markets.

The Company sells equipment to customers as well as consumables and services, some of which customers purchase on a recurring basis. Consumables sold for use with the equipment sold by the Company are typically critical to the use of the equipment and are typically used on a one-time or limited basis, requiring frequent replacement in the customer’s operating cycle. Examples of these consumables include chemistries for water testing instruments and cartridges for marking and coding equipment. Additionally, some of the Company’s consumables are used on a stand-alone basis, such as water treatment solutions. The Company separates its goods and services between those typically sold to a customer on a recurring basis and those typically sold to a customer on a nonrecurring basis. Recurring revenue includes revenue from consumables, services, spare parts and operating-type leases (“OTLs”). Nonrecurring revenue includes sales of equipment and sales-type leases (“STLs”). OTLs and STLs are included in the above revenue amounts. For the three-month periods ended October 2, 2026 and October 3, 2025, lease revenue was $32 million and $26 million, respectively. For the nine-month periods ended October 2, 2026 and October 3, 2025, lease revenue was $78 million and $69 million, respectively. Service and software revenue was immaterial for all periods presented. Software revenues for point-in-time licenses are nonrecurring while revenues for Software as a Service and over time licenses are recurring.

Remaining performance obligations related to Topic 606, Revenue from Contracts with Customers, represent the aggregate transaction price allocated to performance obligations with an original contract term greater than one year which are fully or partially unsatisfied at the end of the period. As of October 2, 2026, the aggregate amount of the transaction price allocated to remaining performance obligations was $340 million. The Company expects to recognize revenue on approximately 42% of the remaining performance obligations over the next 12 months,34% over the subsequent 12 months, and the remainder recognized thereafter.

The Company often receives cash payments from customers in advance of the Company’s performance, resulting in contract liabilities that are classified as either current or long-term in the Consolidated Condensed Balance Sheets based on the timing of when the Company expects to recognize revenue. As of October 2, 2026 and December 31, 2025, contract liabilities were$308 million and$287 million, respectively, and are included within accrued expenses and other liabilities and other long-term liabilities in the accompanying Consolidated Condensed Balance Sheets. Revenue recognized during thenine-month periods ended October 2, 2026 and October 3, 2025 that was included in the opening contract liability balance was$215 million and$166 million, respectively.

NOTE 5. SEGMENT INFORMATION

The Company operates and reports its results intwo separate business segments consisting of the Water Quality and Product Quality & Innovation segments.

The Company’s Water Quality segment provides proprietary precision instrumentation, consumables, software, services and advanced water treatment technologies to help measure, analyze and treat the world’s water in municipal, industrial, commercial, residential, research and natural resource applications.

The Company’s Product Quality & Innovation segment provides equipment, consumables, software and services for various marking and coding, traceability, printing, packaging design and quality management, packaging converting and color and appearance management applications for consumer-packaged goods and industrial products.

Resources are allocated and performance is assessed by the President & Chief Executive Officer (CEO), whom the Company has determined to be the Chief Operating Decision Maker (“CODM”). The CODM evaluates the performance of its segments and allocates resources to them based on operating profit. The CODM also compares actual results to expectations in assessing performance of the segments. Operating profit represents total revenues less operating expenses, excluding nonoperating income and expense and income taxes. Operating profit amounts in the Other segment consist of unallocated corporate costs and other costs not considered part of management’s evaluation of reportable segment operating performance.

The identifiable assets by segment are those used in each segment’s operations. Intersegment amounts are not significant and are eliminated to arrive at combined totals.

Detailed segment data for the three and nine-month periods ended October 2, 2026 and October 3, 2025 is as follows:

Identifiable assets by segment as of October 2, 2026 and December 31, 2025 are as follows:

Reconciliations of total segment sales to total segment operating profit and of total segment operating profit to total consolidated earnings before income taxes, for the three and nine-month periods ended October 2, 2026 and October 3, 2025 are as follows:

NOTE 6. INCOME TAXES

The following table summarizes the Company’s effective tax rate:

The Company operates globally, including in certain jurisdictions with higher statutory tax rates than the United States (“U.S.”). Therefore, based on earnings mix, the impact of operating in such jurisdictions may contribute to a higher effective tax rate compared to the U.S. federal statutory tax rate.

The effective tax rate for the three-month period ended October 2, 2026 differs from the U.S. federal statutory rate of 21% principally due to the geographic mix of earnings described above, the favorable impact of tax law changes under the One Big Beautiful Bill Act (“OBBBA”), a net discrete benefit of $47 million related primarily to the impact of restructuring costs and a reduction of tax the indemnification related to the separation of the Company from Danaher Corporation (“Danaher”) on September 30, 2023 (the “Separation”). The net discrete benefit decreased the effective tax rate by 17.1% for the three-month period ended October 2, 2026.

The effective tax rate for the nine-month period ended October 2, 2026 differs from the U.S. federal statutory rate of 21% principally due to the geographic mix of earnings described above, the favorable impact of tax law changes under the OBBBA, a net discrete benefit of $57 million related primarily to the impact of restructuring costs and a reduction of tax the indemnification related to the Separation from Danaher. The net discrete benefit decreased the effective tax rate by 6.5% for the nine-month period ended October 2, 2026.

The effective tax rate for the three-month period ended October 3, 2025 differs from the U.S. federal statutory rate of 21% principally due to the geographic mix of earnings described above and a net discrete provision of $1 million related primarily to the impact of uncertain tax positions, partially offset by the impact of a German tax rate change on deferred taxes. The net discrete provision increased the effective tax rate by 0.3% for the three-month period ended October 3, 2025.

The effective tax rate for the nine-month period ended October 3, 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 $1 million related primarily to the impact of a German tax rate change on deferred taxes, partially offset by the impact of uncertain tax positions. The net discrete benefit decreased the effective tax rate by 0.1% for the nine-month period ended October 3, 2025.

For a description of the Company’s significant tax matters, reference is made to the financial statements as of and for the year ended December 31, 2025 and Note 6 to the financial statements included within the 2025 Annual Report on Form 10-K.

NOTE 7. GOODWILL AND OTHER INTANGIBLE ASSETS

The following is a rollforward of the Company’s goodwill:

The carrying value of goodwill by segment is summarized as follows:

The Company has not identified any goodwill impairment indicators in the three and nine-month periods ended October 2, 2026.

The Company reviews identified intangible assets for impairment whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable. The Company has not identified any impairment triggers in the three and nine-month periods ended October 2, 2026.

NOTE 8. FAIR VALUE MEASUREMENTS

Accounting standards define fair value based on an exit price model, establish a framework for measuring fair value for assets and liabilities required to be carried at fair value and provide for certain disclosures related to the valuation methods used within the valuation hierarchy as established within the accounting standards. This hierarchy prioritizes the inputs into three broad levels as follows.

•Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.

•Level 2 inputs are quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets in markets that are not active, or other observable characteristics for the asset or liability, including interest rates, yield curves and credit risks, or inputs that are derived principally from, or corroborated by, observable market data through correlation.

•Level 3 inputs are unobservable inputs based on the Company’s assumptions. A financial asset’s or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

A summary of financial assets and liabilities that are measured at fair value on a recurring basis is as follows:

Certain management employees participate in the Company’s nonqualified deferred compensation programs, which permit such employees to defer a portion of their compensation, on a pretax basis, until after their termination of employment. All amounts deferred under such plans are unfunded, unsecured obligations and are presented as a component of the compensation and benefits accrual included in other long-term liabilities in the accompanying Consolidated Condensed Balance Sheets. Participants may choose among alternative earnings rates for the amounts they defer, which are primarily based on investment options within the defined contribution plans for the benefit of U.S. employees (“401(k) Programs”) (except that the earnings rates for amounts contributed unilaterally by the Company are entirely based on changes in the value of the Company’s common stock). Changes in the deferred compensation liability under these programs are recognized based on changes in the fair value of the participants’ accounts, which are based on the applicable earnings rates.

The cross-currency swap derivative contracts are classified as Level 2 in the fair value hierarchy as they are measured using the income approach with the relevant interest rates and current currency exchange rates and forward curves as inputs. Refer to Note 10 for additional information.

Fair Value of Financial Instruments

The carrying amounts and fair values of the Company’s financial instruments were as follows:

As of October 2, 2026 and December 31, 2025, short and long-term borrowings were categorized as Level 1. The fair value of long-term borrowings was based on quoted market prices. The difference between the fair value and the carrying amounts of long-term borrowings is attributable to changes in market interest rates and/or the Company’s credit ratings subsequent to the incurrence of the borrowing. The fair values of borrowings with original maturities of one year or less, as well as cash and cash equivalents, trade accounts receivable, net and trade accounts payable, generally approximate their carrying amounts due to the short-term maturities of these instruments.

NOTE 9. FINANCING

As of October 2, 2026, the Company was in compliance with all of its debt covenants. The components of the Company’s debt were as follows:

Unamortized debt discounts and debt issuance costs totaled $18 million and $14 million as of October 2, 2026 and December 31, 2025, respectively. Debt discounts and issuance costs are presented as a reduction of debt in the Consolidated Condensed Balance Sheets and are amortized as a component of interest expense over the term of the related debt. Refer to Note 12 of the 2025 Annual Report on Form 10-K for a description of the Company’s debt financing.

Commercial Paper Program

The Company satisfies short-term liquidity needs not met through operating cash flow and available cash primarily through issuances of commercial paper under its commercial paper program. Credit support for the commercial paper program is provided by the Company's $1.5 billion unsecured revolving credit facility (the “Credit Facility”).

During the three months ended October 2, 2026, the Company issued $250 million of commercial paper at an interest rate of 4.30%. The Company recorded $1 million of debt discounts related to the issuance. As of October 2, 2026, the remaining maturity was approximately 31 days. The commercial paper was issued in order to fund the acquisition of Cleanwater1 during the fourth quarter of 2026; refer to Note 14 for additional information related to the Company’s acquisition of Cleanwater1.

Senior Unsecured Notes

On June 1, 2026, the Company completed an underwritten offering of $725 million aggregate principal amount of senior unsecured notes with a maturity date on January 15, 2032 (the “2032 Notes”).

Interest payments on the 2032 Notes are due semi-annually until maturity, with the first interest payment due in January 2027. In the event of a change in control, each holder of the notes may require the Company to repurchase some or all of its notes at a repurchase price equal to 101% of the aggregate principal amount of the notes repurchased, plus any accrued and unpaid interest. The indentures contain certain covenants that limit the ability of the Company to, among other things, (i) incur certain debt secured by liens, (ii) engage in sale and leaseback transactions and (iii) consolidate with, sell, lease, convey or otherwise transfer all or substantially all of its assets to, or merge with or into, any other person or entity. All the covenants are subject to a number of limitations and qualifications. The indentures do not require any financial covenants.

The Company recorded $6 million of debt discounts and debt issuance costs related to the 2032 Notes.

The net proceeds from the issuance have been and will be used for general corporate purposes, which may include, without limitation, refinancing of outstanding indebtedness, working capital, capital expenditures and satisfaction of other obligations.

Other

The Company’s minimum principal payments for the next five years are as follows ($ in millions):

Long-Term Debt Repayments

On August 18, 2026, the Company repaid the $700 million aggregate principal amount of the 2026 Notes using available cash and proceeds from the issuance of the 2032 Notes.

NOTE 10. DERIVATIVES AND HEDGING TRANSACTIONS

On July 29, 2025, the Company entered into cross-currency swap derivative contracts with a total notional amount of $410 million to partially hedge its net investments in non-U.S. operations against adverse movements in exchange rates between the U.S. dollar and the Euro and Swiss franc. These contracts are agreements to exchange fixed-rate payments in one currency for fixed-rate payments in another currency and effectively convert U.S. dollar-denominated bonds to obligations denominated in the hedged currency. These contracts also reduce the interest rate from the stated interest rates on the U.S. dollar-denominated debt to the interest rates of the swaps. The changes in the spot rate of these instruments are recorded in accumulated other comprehensive income (loss) (“OCI”) in stockholders’ equity, partially offsetting the foreign currency translation adjustment of the Company’s related net investment that is also recorded in accumulated OCI. The interest income or expense from these swaps is recorded in interest expense in the accompanying Consolidated Condensed Statements of Earnings consistent with the classification of interest expense attributable to the underlying debt. These instruments mature in September 2030 and September 2033.

In September 2023, the Company issued €500 million of foreign currency denominated long-term debt that is designated as a partial hedge of its net investment in foreign operations against adverse movements in exchange rates between the U.S. dollar and the euro. This foreign currency denominated long-term debt issuance is designated and qualifies as a nonderivative hedging instrument. Accordingly, the foreign currency translation of this debt instrument is recorded in accumulated OCI, offsetting the foreign currency translation adjustment of the Company’s related net investment that is also recorded in accumulated OCI. This instrument matures in September 2031.

The following table summarizes the notional values as of October 2, 2026 and October 3, 2025 and pretax impact of changes in the fair values of instruments designated as net investment hedges in accumulated OCI for the three and nine-month periods ended October 2, 2026 and October 3, 2025:

Gains or losses related to the net investment hedges are classified as net investment hedges adjustments in the schedule of changes in OCI in Note 12, as these items are attributable to the Company’s hedge of its net investment in foreign operations.

The Company did not reclassify any other deferred gains or losses related to the net investment hedges from accumulated other comprehensive income (loss) to earnings during the three and nine-month periods ended October 2, 2026 and October 3, 2025. In addition, the Company did not have any ineffectiveness related to the net investment hedges during the three and nine-month periods ended October 2, 2026 and October 3, 2025, and should they arise, any ineffective portions of the hedges would be reclassified from accumulated OCI into earnings during the period of change. The cash inflows and outflows associated with the Company’s derivative contracts designated as net investment hedges are classified in all other investing activities in the accompanying Consolidated Condensed Statements of Cash Flows, except for cash flows from the periodic interest settlements on the cross-currency swaps which are reported as cash flows from operating activities in the Consolidated Condensed Statements of Cash Flows.

The Company’s derivative instruments, as well as its nonderivative debt instrument designated and qualifying as a net investment hedge, were classified in the Company’s Consolidated Condensed Balance Sheets as follows:

Amounts related to the Company’s derivatives expected to be reclassified from accumulated OCI to net earnings during the next 12 months, if interest rates and foreign exchange rates remain unchanged, were not significant.

NOTE 11. COMMITMENTS AND CONTINGENCIES

The Company reviews the adequacy of its legal reserves on a quarterly basis and establishes reserves for loss contingencies that are both probable and reasonably estimable. For a further description of the Company’s litigation and contingencies, refer to Note 16 of the Company’s financial statements as of and for the year ended December 31, 2025 included within the 2025 Annual Report on Form 10-K.

The Company generally accrues estimated warranty costs at the time of sale. In general, manufactured products are warranted against defects in material and workmanship when properly used for their intended purpose, installed correctly and appropriately maintained. Warranty periods depend on the nature of the product and range from the date of such sale up totwenty years. The amount of the accrued warranty liability is determined based on historical information such as past experience, product failure rates or number of units repaired, estimated cost of material and labor and in certain instances estimated property damage. As of October 2, 2026 and December 31, 2025, the Company had accrued warranty liabilities of $27 million and $30 million, respectively.

NOTE 12. STOCKHOLDERS' EQUITY AND STOCK-BASED COMPENSATION

Share Repurchase Program

On November 25, 2025, the Company announced that its Board of Directors approved a share repurchase program (the “Repurchase Program”) authorizing the repurchase of up to $750 million of the Company’s common stock from time to time on the open market (including through the use of trading plans intended to satisfy the affirmative defense conditions of Rule 10b5-1 under the Securities Exchange Act of 1934, as amended), in privately negotiated transactions or by other methods, at the Company’s discretion. As of October 2, 2026, $227 million of the Company’s common stock repurchase authorization remained available under the Repurchase Program. The program does not obligate the Company to acquire any particular amount of its common stock, has no expiration date, and will continue until otherwise suspended or terminated at any time for any reason. The timing and amount of any shares repurchased under the Repurchase Program will be determined by members of the Company’s management based on its evaluation of market, business conditions, and other factors. Refer to Part II - Item 2 for additional information.

During the three and nine-month periods ended October 2, 2026, the Company repurchased approximately 1 million shares of its common stock for approximately $89 million and 6 million shares of its common stock for approximately $523 million, including related transaction costs, respectively, as part of the Repurchase Program. The Company’s common stock repurchases in excess of issuances are subject to a 1% excise tax enacted by the Inflation Reduction Act. Any excise tax incurred is recorded as part of the cost basis of the shares acquired within repurchase of common stock in the Consolidated Condensed Statements of Stockholders' Equity. The excise tax is paid annually and will be recorded within payments for repurchase of common stock in the Consolidated Condensed Statements of Cash Flows.

Stock-Based Compensation

For a description of the stock-based compensation programs in which certain employees of the Company participate, reference is made to Note 17 of the Company’s financial statements as of and for the year ended December 31, 2025 included within the 2025 Annual Report on Form 10-K.

The Company’s stock-based compensation expense for the three-month periods ended October 2, 2026 and October 3, 2025 was $21 million in both periods. The Company’s stock-based compensation expense for the nine-month periods ended October 2, 2026 and October 3, 2025 was $61 million in both periods.

Stock-based compensation has been recognized as a component of selling, general and administrative expenses in the accompanying Consolidated Condensed Statements of Earnings. As of October 2, 2026, $50 million of total unrecognized compensation cost related to RSUs and PSUs is expected to be recognized over a weighted average period of approximatelytwo years. As of October 2, 2026, $38 million of total unrecognized compensation cost related to stock options is expected to be recognized over a weighted average period of approximatelytwo years. Future compensation amounts will be adjusted for any changes in estimated forfeitures.

Accumulated Other Comprehensive Income (Loss)

Accumulated other comprehensive income (loss) refers to certain gains and losses that under GAAP are included in comprehensive income (loss) but are excluded from net earnings as these amounts are initially recorded as an adjustment to stockholders’ equity. Foreign currency translation adjustments are generally not adjusted for income taxes as they relate to indefinite investments in non-U.S. subsidiaries. Net investment hedge adjustments reflect the gains or losses on the foreign currency denominated long-term debt issuance designated as a nonderivative hedging instrument, as well as the Company’s cross-currency swap derivatives designated as net investment hedges, net of any income tax impacts. Pension and postretirement plan benefit adjustments relate to unrecognized prior service credits and actuarial losses.

The changes in accumulated other comprehensive income (loss) by component are summarized below:

NOTE 13. RESTRUCTURING

2026 Cost Optimization Program

In April 2026, the Company announced a restructuring program (the “2026 Cost Optimization Program”) to simplify business processes and streamline our organization, optimize our cost structure, and strengthen our competitive positioning to better serve our customers.

The plan consists of (i) workforce reductions across our business and functions, (ii) site consolidations, and (iii) functional transformation initiatives.

The 2026 Cost Optimization Program will impact corporate functions and both business segments and is expected to be substantially completed by the end of 2028.

The Company expects to incur total restructuring charges in connection with the 2026 Cost Optimization Program ranging from approximately $85 million to $105 million, with $20 million to $27 million expected to be incurred by the Water Quality segment and $60 million to $68 million expected to be incurred by the Product Quality & Innovation segment.

The following table presents the components of restructuring and transformation-related expenses which are included in the Cost of sales and Selling, general and administrative expenses line items in the Consolidated Condensed Statements of Earnings:

The following table summarizes the activities related to the 2026 Cost Optimization Program, which are included in the Accrued expenses and other liabilities and Other long-term liabilities line items in the Consolidated Condensed Balance Sheets:

NOTE 14. SUBSEQUENT EVENTS

Acquisition of Cleanwater1

On October 5, 2026, the Company completed the acquisition of Cleanwater1 for $465 million, subject to customary post-closing adjustments. The acquisition was funded through the issuance of commercial paper and available cash on hand. Cleanwater1 is a leading provider of on-site hypochlorite disinfection, solids management and odor control technologies with an installed base of approximately 25,000 units across municipal drinking water, wastewater and industrial applications. As a trusted industry leader with deep application expertise, Cleanwater1's technologies are essential to customers' daily water treatment operations, helping customers enhance operational efficiency, safety and regulatory compliance. Cleanwater1 will be integrated into the Water Quality segment.

The initial accounting for the Cleanwater1 acquisition is incomplete as a result of the timing of the acquisition. Accordingly, it is impracticable for the Company to make certain business combination disclosures in this report such as the estimated fair values of assets and liabilities acquired and the amount of goodwill.