What changed in this filing

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Item 1. Financial Statements

2023-07-26 compared with 2023-04-26 · 173 added, 71 removed, 395 unchanged (38% of the section changed)

3 unchanged sentences

($ in millions, except share and per share amounts)

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Current assets:

Cash and equivalents $ 712.8 $ 709.2

Trade accounts receivable less allowance for doubtful accounts of $ 41.2 at March 31, 2023 and $ 43.9 at December 31, 2022

Trade accounts receivable less allowance for doubtful accounts of $ 40.4 at June 30, 2023 and $ 43.9 at December 31, 2022

Finished goods 231.2 215.3

4 unchanged sentences

Total current assets 2,474.6 2,477.0

Property, plant and equipment, net of accumulated depreciation of $ 772.7 at March 31, 2023 and $ 754.5 at December 31, 2022

Property, plant and equipment, net of accumulated depreciation of $ 789.2 at June 30, 2023 and $ 754.5 at December 31, 2022

Other assets 474.3 455.8

13 unchanged sentences

$ 0.01 par value, 2.0 billion shares authorized;

362.2 million issued and 353.5 million outstanding at March 31, 2023;

362.7 million issued and 351.9 million outstanding at June 30, 2023;

361.5 million issued and 352.9 million outstanding at December 31, 2022

11 unchanged sentences

($ and shares in millions, except per share amounts)

Three Months Ended

March 31, 2023 April 1, 2022

Three Months Ended Six Months Ended

June 30, 2023 July 1, 2022 June 30, 2023 July 1, 2022

Sales of products and software $ 1,290.8 $ 1,229.4 $ 2,527.4 $ 2,382.1

8 unchanged sentences

Research and development expenses ( 100.1 ) ( 100.1 ) ( 200.2 ) ( 199.2 )

Russia exit and wind down costs — ( 16.2 ) — ( 16.2 )

Operating profit 291.3 232.3 531.7 444.6

15 unchanged sentences

($ in millions)

Three Months Ended

March 31, 2023 April 1, 2022

Three Months Ended Six Months Ended

June 30, 2023 July 1, 2022 June 30, 2023 July 1, 2022

Net earnings $ 209.0 $ 173.0 $ 382.6 $ 338.1

20 unchanged sentences

Balance, March 31, 2023 353.5 $ 3.6 $ 3,730.5 $ ( 442.9 ) $ 6,891.0 $ ( 312.3 ) $ 5.8

Net earnings for the period — — — — 209.0 $ — $ —

Dividends to common shareholders — — — — ( 24.6 ) — —

Other comprehensive income (loss) — — — — — ( 7.6 ) —

Common stock-based award activity 0.5 — 52.3 — — — —

Common stock repurchases ( 2.0 ) — — ( 129.1 ) — — —

Shares withheld for taxes ( 0.1 ) — ( 4.1 ) — — — —

Change in noncontrolling interests — — — — — — 0.2

Balance, June 30, 2023 351.9 $ 3.6 $ 3,778.7 $ ( 572.0 ) $ 7,075.4 $ ( 319.9 ) $ 6.0

Common Stock Additional Paid-In Capital Treasury Shares Retained Earnings Accumulated

13 unchanged sentences

Balance, April 1, 2022 358.4 $ 3.6 $ 3,619.1 $ ( 63.8 ) $ 6,226.4 $ ( 223.9 ) $ 5.3

Net earnings for the period — — — — 173.0 — —

Dividends to common shareholders — — — — ( 24.9 ) — —

Other comprehensive income — — — — — ( 118.2 ) —

Common stock-based award activity 0.2 — 32.7 — — — —

Common stock repurchases ( 3.0 ) — — ( 179.1 ) — — —

Shares withheld for taxes — — ( 0.6 ) — — — —

Change in noncontrolling interests — — — — — — ( 0.2 )

Balance, July 1, 2022 355.6 $ 3.6 $ 3,651.2 $ ( 242.9 ) $ 6,374.5 $ ( 342.1 ) $ 5.1

See the accompanying Notes to Consolidated Condensed Financial Statements.

2 unchanged sentences

($ in millions)

Three Months Ended

March 31, 2023 April 1, 2022

Six Months Ended

June 30, 2023 July 1, 2022

Cash flows from operating activities:

4 unchanged sentences

Stock-based compensation expense 55.7 45.0

Russia exit and wind down costs — 9.2

Change in trade accounts receivable, net 26.0 ( 37.7 )

6 unchanged sentences

Payments for additions to property, plant and equipment ( 45.8 ) ( 37.1 )

Proceeds from sale of property 4.9 —

Cash paid for acquisitions, net of cash received — ( 1.6 )

2 unchanged sentences

Net proceeds from (repayments of) commercial paper borrowings ( 268.6 ) 481.3

Proceeds from borrowings (maturities greater than 90 days), net of issuance costs — 397.0

Payment of 0.875 % convertible senior notes due 2022

22 unchanged sentences

In our opinion, the accompanying financial statements contain all adjustments, which consist of only normal, recurring accruals necessary to fairly present our financial position, results of operations, comprehensive income, stockholders’ equity, and cash flows for the periods presented.

The results of operations for the three months ended March 31, 2023, are not necessarily indicative of the results for the full year.

The results of operations for the three and six months ended June 30, 2023, are not necessarily indicative of the results for the full year.

Russia Ukraine Conflict

In February 2022, Russian forces invaded Ukraine (“Russia Ukraine Conflict”) resulting in broad economic sanctions being imposed on Russia.

In the second quarter of 2022, the Company exited business operations in Russia, other than for ASP’s sterilization products, which are exempt from international sanctions as humanitarian products.

In the three and six-month periods ended July 1, 2022, the Company recorded pre-tax charges of $ 16.2 million primarily relating to the write-off of net assets, the write-off of the cumulative translation adjustment in earnings for legal entities deemed substantially liquidated, and to record provisions for employee severance and legal contingencies.

These costs are identified as the “Russia exit and wind down costs” in the Condensed Consolidated Statements of Earnings.

The exit activities were completed in 2022 and we did not incur additional charges in 2023.

Accumulated Other Comprehensive Loss

2 unchanged sentences

During the second quarter of 2022, our ¥ 14.4 billion Yen-denominated term loan and our € 275 million Euro-denominated term loan were designated as net investment hedges of our investment in applicable foreign operations.

During the three month period ended March 31, 2023, we recognized after-tax foreign currency transaction losses of $ 1.7 million on the debt that was deferred in the foreign currency translation component of Accumulated other comprehensive income (loss) (“AOCI”) as an offset to the foreign currency translation adjustments on our investments in foreign subsidiaries.

We recognized after-tax foreign currency transaction gains of $ 5.1 million and $ 3.6 million, respectively, during the three-month periods ended June 30, 2023 and July 1, 2022, and gains of $ 3.4 million and $ 3.6 million, respectively, during the six-month periods ended June 30, 2023 and July 1, 2022, on the debt that was deferred in the foreign currency translation component of Accumulated other comprehensive income (loss) (“AOCI”) as an offset to the foreign currency translation adjustments on our investments in foreign subsidiaries.

Any amounts deferred in AOCI will remain until the hedged investment is sold or substantially liquidated.

We recorded no ineffectiveness from our net investment hedges during the three month period ended March 31, 2023.

We recorded no ineffectiveness from our net investment hedges during the three and six-month periods ended June 30, 2023 and July 1, 2022.

The changes in AOCI by component are summarized below ($ in millions):

adjustments Pension & post-retirement plan benefit adjustments (a)

For the Three Months Ended March 31, 2023:

Balance, December 31, 2022 $ ( 301.4 ) $ ( 24.3 ) $ ( 325.7 )

For the Three Months Ended June 30, 2023:

Balance, March 31, 2023 $ ( 288.0 ) $ ( 24.3 ) $ ( 312.3 )

Other comprehensive income (loss) before reclassifications, net of income taxes ( 7.4 ) — ( 7.4 )

4 unchanged sentences

Net current period other comprehensive income (loss), net of income taxes ( 7.4 ) ( 0.2 ) ( 7.6 )

Balance, March 31, 2023 $ ( 288.0 ) $ ( 24.3 ) $ ( 312.3 )

For the Three Months Ended April 1, 2022:

Balance, December 31, 2021 $ ( 122.7 ) $ ( 62.3 ) $ ( 185.0 )

Balance, June 30, 2023 $ ( 295.4 ) $ ( 24.5 ) $ ( 319.9 )

For the Three Months Ended July 1, 2022:

Balance, April 1, 2022 $ ( 162.1 ) $ ( 61.8 ) $ ( 223.9 )

Other comprehensive income (loss) before reclassifications, net of income taxes ( 121.3 ) — ( 121.3 )

4 unchanged sentences

Net current period other comprehensive income (loss), net of income taxes ( 118.6 ) 0.4 ( 118.2 )

Balance, April 1, 2022 $ ( 162.1 ) $ ( 61.8 ) $ ( 223.9 )

Balance, July 1, 2022 $ ( 280.7 ) $ ( 61.4 ) $ ( 342.1 )

adjustments Pension & post-retirement plan benefit adjustments (a)

For the Six Months Ended June 30, 2023:

Balance, December 31, 2022 $ ( 301.4 ) $ ( 24.3 ) $ ( 325.7 )

Other comprehensive income (loss) before reclassifications, net of income taxes 6.0 — 6.0

Amounts reclassified from accumulated other comprehensive income (loss):

Increase (decrease) — ( 0.4 ) (b)

Income tax impact — 0.2 0.2

Amounts reclassified from accumulated other comprehensive income (loss), net of income taxes — ( 0.2 ) ( 0.2 )

Net current period other comprehensive income (loss) 6.0 ( 0.2 ) 5.8

Balance, June 30, 2023 $ ( 295.4 ) $ ( 24.5 ) $ ( 319.9 )

For the Six Months Ended July 1, 2022:

Balance, December 31, 2021 $ ( 122.7 ) $ ( 62.3 ) $ ( 185.0 )

Other comprehensive income (loss) before reclassifications, net of income taxes ( 160.7 ) — ( 160.7 )

Amounts reclassified from accumulated other comprehensive income (loss):

Increase (decrease) 2.7 1.1 (b)

Income tax impact — ( 0.2 ) ( 0.2 )

Amounts reclassified from accumulated other comprehensive income (loss), net of income taxes 2.7 0.9 3.6

Net current period other comprehensive income (loss) ( 158.0 ) 0.9 ( 157.1 )

Balance, July 1, 2022 $ ( 280.7 ) $ ( 61.4 ) $ ( 342.1 )

(a) Includes balances relating to defined benefit plans, supplemental executive retirement plans, and other postretirement employee benefit plans.

1 unchanged sentence

Allowances for Doubtful Accounts

All trade accounts and unbilled receivables are reported in the Consolidated Condensed Balance Sheet adjusted for any write-offs and net of allowances for credit losses.

All trade accounts and unbilled receivables are reported in the Consolidated Condensed Balance Sheets adjusted for any write-offs and net of allowances for credit losses.

The allowances for credit losses represent management’s best estimate of the credit losses expected from our unbilled and trade accounts receivable portfolios over the life of the underlying assets.

Additions to the allowances are charged to current period earnings, amounts determined to be uncollectible are charged directly against the allowances, while amounts recovered on previously written-off accounts increase the allowances.

During the three month period ending March 31, 2023, the activity was immaterial.

During the three and six-month periods ending June 30, 2023 and July 1, 2022, the activity was immaterial.

Restructuring

We initiated a discrete plan in the first quarter of 2023 focused on improvements in our operational efficiency, which is expected to be completed by December 31, 2023.

The nature of these activities were broadly consistent throughout our segments and consist of targeted workforce reductions and facility consolidations or closures in response to overall macroeconomic and other external conditions.

We initiated a discrete plan in the first quarter of 2023 that is expected to be completed by December 31, 2023.

The nature of these activities were broadly consistent throughout our segments and consist primarily of targeted workforce reductions in response to overall macroeconomic and other external conditions.

We incurred these costs to position ourselves to provide superior products and services to customers in a cost-efficient manner, while taking into consideration the impact of broad economic uncertainties.

The total restructuring charges we expect to recognize under this discrete plan are approximately $ 25 to $ 30 million, with charges of $ 17.6 million incurred in the first quarter, which primarily related to employee severance.

These charges are included in Cost of Sales and Selling, general, and administrative expenses in the Consolidated Condensed Statement of

Accrued restructuring costs were $ 13.4 million as of March 31, 2023 and were included within Accrued expenses and other current liabilities in the Consolidated Condensed Balance Sheets.

During the three and six-month periods ended June 30, 2023, we incurred charges of $ 10.7 million and $ 28.3 million, respectively.

These charges are included in Cost of sales and Selling, general, and administrative expenses in the Consolidated Condensed Statements of Earnings.

Accrued restructuring costs were $ 14.2 million as of June 30, 2023 and are included within Accrued expenses and other current liabilities in the Consolidated Condensed Balance Sheets.

restructuring charges we expect to recognize during the year ending December 31, 2023 under this discrete plan are approximately $ 30 to $ 35 million.

Convertible Senior Notes

11 unchanged sentences

The following is a roll forward of our carrying value of goodwill by segment ($ in millions):

Intelligent Operating Solutions Precision Technologies Advanced Healthcare Solutions Total Goodwill

Balance, Intelligent Operating Solutions Precision Technologies Advanced Healthcare Solutions Total Goodwill

Balance, December 31, 2022 $ 4,074.4 $ 1,810.2 $ 3,163.9 $ 9,048.5

Foreign currency translation and other 13.5 ( 5.1 ) ( 5.0 ) 3.4

Balance, March 31, 2023 $ 4,081.0 $ 1,811.6 $ 3,164.5 $ 9,057.1

Balance, June 30, 2023 $ 4,087.9 $ 1,805.1 $ 3,158.9 $ 9,051.9

FAIR VALUE MEASUREMENTS

11 unchanged sentences

(Level 3) Total

March 31, 2023

June 30, 2023

Deferred compensation liabilities $ — $ 37.5 $ — $ 37.5

9 unchanged sentences

However, these assets are required to be assessed for impairment whenever events or circumstances indicate that their carrying value may not be fully recoverable, and at least annually for goodwill and indefinite-lived intangible assets.

We evaluated events or circumstances that may indicate the carrying value of our non-financial assets may not be fully recoverable during the three month period ended March 31, 2023, and recorded no impairments.

We evaluated events or circumstances that may indicate the carrying value of our non-financial assets may not be fully recoverable during the three and six-month periods ended June 30, 2023, and recorded no material impairments.

Fair Value of Financial Instruments

The carrying amount and fair value of financial instruments are as follows ($ in millions):

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Carrying Amount Fair Value Carrying Amount Fair Value

1 unchanged sentence

Long-term debt, net of current maturities 1,978.2 1,824.4 2,251.6 2,078.1

As of March 31, 2023 and December 31, 2022, the current portion of long-term debt and long-term debt, net of current maturities were categorized as Level 1.

As of June 30, 2023 and December 31, 2022, the current portion of long-term debt and long-term debt, net of current maturities were categorized as Level 1.

The fair values of long-term borrowings were based on quoted market prices.

2 unchanged sentences

The components of our debt were as follows ($ in millions):

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

dollar-denominated commercial paper $ 135.0 $ 405.0

15 unchanged sentences

Interest expense on commercial paper is paid at maturity and is generally based on our credit ratings at the time of issuance and prevailing short-term interest rates.

The details of our outstanding Commercial Paper Programs as of March 31, 2023 were as follows ($ in millions):

Carrying value Annual effective rate Weighted average maturity (in days)

The details of our outstanding Commercial Paper Programs as of June 30, 2023 were as follows ($ in millions):

Carrying value (a)

Annual effective rate Weighted average maturity (in days)

dollar-denominated commercial paper $ 134.8 5.39 % 17

(a) Net of unamortized debt discount.

Credit support for the Commercial Paper Programs is provided by a five-year $ 2.0 billion senior unsecured revolving credit facility that expires on October 18, 2027 (the “Revolving Credit Facility”) which, to the extent not otherwise providing credit support for our commercial paper programs, can also be used for working capital and other general corporate purposes.

As of March 31, 2023, no borrowings were outstanding under the Revolving Credit Facility.

As of June 30, 2023, no borrowings were outstanding under the Revolving Credit Facility.

We classified our borrowings outstanding under the Commercial Paper Programs as Long-term debt in the accompanying Consolidated Condensed Balance Sheets as we had the intent and ability, as supported by availability under the Revolving Credit Facility, to refinance these borrowings for at least one year from the balance sheet date.

3 unchanged sentences

Service sales include revenues from extended warranties, post-contract customer support (“PCS”), maintenance contracts or services, contract labor to perform ongoing service at a customer location, services related to previously sold products, and software implementation services.

Contract Assets — In certain circumstances, we record contract assets which include unbilled amounts typically resulting from sales under contracts when revenue recognized exceeds the amount billed to the customer, and right to payment is not only subject to the passage of time.

Contract assets were $ 96 million as of March 31, 2023 and $ 82 million as of December 31, 2022.

subject to the passage of time.

Contract assets were $ 97 million as of June 30, 2023 and $ 82 million as of December 31, 2022.

Contract assets are recorded in Prepaid expenses and other current assets in our Consolidated Condensed Balance Sheets.

Contract Costs — We incur and capitalize incremental costs to obtain certain contracts, typically sales-related commissions where the amortization period is greater than one year and costs associated with assets used by our customers in certain service arrangements.

As of March 31, 2023 and December 31, 2022, we had $ 44 million and $ 42 million, respectively, in net revenue-related contract costs primarily related to certain software contracts.

As of June 30, 2023 and December 31, 2022, we had $ 48 million and $ 42 million, respectively, in net revenue-related contract costs primarily related to certain software contracts.

Revenue-related contract costs are recorded in the Prepaid expenses and other current assets and Other assets line items in our Consolidated Condensed Balance Sheets.

4 unchanged sentences

Our contract liabilities consisted of the following ($ in millions):

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Deferred revenue - current $ 495.4 $ 509.6

1 unchanged sentence

Total contract liabilities $ 536.9 $ 547.6

During the three month period ended March 31, 2023, we recognized revenue related to our contract liabilities at December 31, 2022 of $ 175 million.

The change in our contract liabilities from December 31, 2022 to March 31, 2023 was primarily due to the timing of billings and recognition as revenue of subscription-based software contracts, PCS and extended warranty services.

During the three and six-month periods ended June 30, 2023, we recognized revenue related to our contract liabilities at December 31, 2022 of $ 113 million and $ 288 million.

The change in our contract liabilities from December 31, 2022 to June 30, 2023 was primarily due to the timing of billings and revenue recognized for subscription-based software contracts, PCS and extended warranty services.

Remaining Performance Obligations — Our remaining performance obligations represent the transaction price of firm, non-cancelable orders and the average contract value for software contracts, for which work has not been performed.

1 unchanged sentence

The aggregate remaining performance obligations attributable to each of our segments is as follows ($ in millions):

March 31, 2023

June 30, 2023

Intelligent Operating Solutions $ 565.8

5 unchanged sentences

We disaggregate revenue from contracts with customers by sales of products and software and services, geographic location, and end market for each of our segments, as we believe it best depicts how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors.

Disaggregation of revenue for the three month periods ended March 31, 2023 is presented as follows ($ in millions):

Disaggregation of revenue for the three-month period ended June 30, 2023 is presented as follows ($ in millions):

Total Intelligent Operating Solutions Precision Technologies Advanced Healthcare Solutions

5 unchanged sentences

All other (each country individually less than 5 % of total sales)

519.7 232.5 170.1 117.1

Total $ 1,526.4 $ 653.1 $ 537.4 $ 335.9

13 unchanged sentences

(a) Direct sales by end market include sales made through third-party distributors where we have visibility into the end customer.

Disaggregation of revenue for the three month periods ended April 1, 2022 is presented as follows ($ in millions):

Disaggregation of revenue for the three-month period ended July 1, 2022 is presented as follows ($ in millions):

Total Intelligent Operating Solutions Precision Technologies Advanced Healthcare Solutions

5 unchanged sentences

All other (each country individually less than 5 % of total sales)

501.6 232.9 147.9 120.8

Total $ 1,463.3 $ 630.1 $ 499.1 $ 334.1

13 unchanged sentences

(a) Direct sales by end market include sales made through third-party distributors where we have visibility into the end customer.

Our effective tax rates for the three month period ended March 31, 2023 was 15.7 %, as compared to 13.5 %, for the three month period ended April 1, 2022.

The year-over-year increase in the effective tax rate for the three month period ended March 31, 2023 as compared to the three month period ended April 1, 2022 was primarily due to uncertain tax position reserves released during the three month period ending April 1, 2022.

Our effective tax rates for the three month periods ended March 31, 2023 and April 1, 2022, differ from the U.S.

Disaggregation of revenue for the six-month period ended June 30, 2023 is presented as follows ($ in millions):

Total Intelligent Operating Solutions Precision Technologies Advanced Healthcare Solutions

Sales of products and software $ 2,527.4 $ 1,083.8 $ 941.3 $ 502.3

Sales of services 459.7 201.4 111.6 146.7

Total $ 2,987.1 $ 1,285.2 $ 1,052.9 $ 649.0

United States $ 1,599.3 $ 702.1 $ 524.5 $ 372.7

China 360.3 123.5 186.3 50.5

All other (each country individually less than 5 % of total sales)

1,027.5 459.6 342.1 225.8

Total $ 2,987.1 $ 1,285.2 $ 1,052.9 $ 649.0

Direct sales:

Healthcare $ 699.0 $ 22.5 $ 69.8 $ 606.7

Industrial & Manufacturing 711.0 460.9 236.0 14.1

Utilities & Power 203.5 93.6 109.9 —

Government 244.0 139.0 87.9 17.1

Communications, Electronics & Semiconductor 203.3 48.9 153.0 1.4

Aerospace & Defense 143.9 0.3 143.6 —

Oil & Gas 141.9 133.5 8.4 —

Retail & Consumer 167.3 124.4 42.9 —

Other 351.7 195.1 156.6 —

Total direct sales 2,865.6 1,218.2 1,008.1 639.3

Distributors 121.5 67.0 44.8 9.7

Total $ 2,987.1 $ 1,285.2 $ 1,052.9 $ 649.0

(a) Direct sales by end market include sales made through third-party distributors where we have visibility into the end customer.

Disaggregation of revenue for the six-month period ended July 1, 2022 is presented as follows ($ in millions):

Total Intelligent Operating Solutions Precision Technologies Advanced Healthcare Solutions

Sales of products and software $ 2,382.1 $ 1,034.7 $ 855.3 $ 492.1

Sales of services 457.7 183.0 106.2 168.5

Total $ 2,839.8 $ 1,217.7 $ 961.5 $ 660.6

United States $ 1,518.9 $ 663.0 $ 483.6 $ 372.3

China 328.1 104.0 170.9 53.2

All other (each country individually less than 5 % of total sales)

992.8 450.7 307.0 235.1

Total $ 2,839.8 $ 1,217.7 $ 961.5 $ 660.6

Direct sales:

Healthcare $ 723.1 $ 23.5 $ 78.4 $ 621.2

Industrial & Manufacturing 663.8 438.5 211.4 13.9

Utilities & Power 180.3 90.9 89.4 —

Government 215.8 112.1 86.1 17.6

Communications, Electronics & Semiconductor 189.9 50.1 138.8 1.0

Aerospace & Defense 120.1 0.3 119.8 —

Oil & Gas 133.4 128.1 5.3 —

Retail & Consumer 165.6 124.3 41.3 —

Other 312.4 177.6 134.7 0.1

Total direct sales 2,704.4 1,145.4 905.2 653.8

Distributors 135.4 72.3 56.3 6.8

Total $ 2,839.8 $ 1,217.7 $ 961.5 $ 660.6

(a) Direct sales by end market include sales made through third-party distributors where we have visibility into the end customer.

Our effective tax rates for the three and six-month period ended June 30, 2023 were 16.5 % and 16.1 %, respectively, as compared to 16.9 % and 15.3 %, respectively, for the three and six-month period ended July 1, 2022.

The decrease in the effective tax rate for the three-month period ended June 30, 2023 as compared to the three-month period ended July 1, 2022 was primarily due to effect of Russia exit and wind down costs for which no tax benefit was recognized during the three-month period ending July 1, 2022.

The increase in the effective tax rate for the six-month period ended June 30, 2023 as compared to the six-month period ended July 1, 2022 was primarily due to uncertain tax position reserves released during the six-month period ending July 1, 2022.

Our effective tax rates for the three and six-month periods ended June 30, 2023, differ from the U.S.

federal statutory rate of 21% due primarily to the impact of credits and deductions provided by law and changes in our uncertain tax position reserves.

On August 16, 2022, the U.S.

enacted the Inflation Reduction Act of 2022, which, among other provisions, implements a 15% corporate alternative minimum tax on book income on corporations whose average annual adjusted financial statement income during the most recently-completed three-year period exceeds $1.0 billion.

This provision is effective for tax years beginning after December 31, 2022.

Based upon our analysis of the Inflation Reduction Act of 2022 and subsequently released guidance, we believe that the corporate alternative minimum tax will not have a material impact on our financial statements in 2023 .

enacted the Inflation Reduction Act of 2022, which, among other provisions implements a 15% corporate alternative minimum tax.

Based upon our current analysis of the Inflation Reduction Act of 2022 and subsequently released guidance, we believe the 15% corporate minimum tax will not have a material impact on our financial statements during 2023.

STOCK-BASED COMPENSATION

The 2016 Stock Incentive Plan (the “Stock Plan”), provides for the grant of stock appreciation rights, restricted stock units, and performance stock units (collectively, “Stock Awards”), stock options, or any other stock-based award.

As of March 31, 2023, approximately 14 million shares of our common stock were available for subsequent issuance under the Stock Plan.

As of June 30, 2023, approximately 14 million shares of our common stock were available for subsequent issuance under the Stock Plan.

For a full description of our Stock Plan refer to Note 17 of our 2022 Annual Report on Form 10-K.

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The following summarizes the components of our stock-based compensation expense under the Stock Plan ($ in millions):

Three Months Ended

March 31, 2023 April 1, 2022

Three Months Ended Six Months Ended

June 30, 2023 July 1, 2022 June 30, 2023 July 1, 2022

Stock Awards:

10 unchanged sentences

Total stock-based compensation expense, net of income taxes $ 25.0 $ 20.7 $ 47.9 $ 37.9

The following summarizes the unrecognized compensation cost for the Stock Plan awards as of March 31, 2023.

The following summarizes the unrecognized compensation cost for the Stock Plan awards as of June 30, 2023.

This compensation cost is expected to be recognized over a weighted average period of approximately two years , representing the remaining service period related to the awards.

10 unchanged sentences

The accrued warranty liability is reviewed on a quarterly basis and may be adjusted as additional information regarding expected warranty costs becomes known.

During the three month period ending March 31, 2023, warranty related activity was immaterial.

Operating lease cost for the three month periods ended March 31, 2023 and April 1, 2022 was $ 12 million and $ 15 million, respectively.

During the three month periods ended March 31, 2023 and April 1, 2022, cash paid for operating leases included in operating cash flows was $ 12 million and $ 14 million, respectively.

Right-of-use (“ROU”) assets obtained in exchange for operating lease obligations were $ 4 million and $ 2 million during the three month periods ended March 31, 2023 and April 1, 2022, respectively.

Operating lease ROU assets were $ 155 million and $ 162 million as of March 31, 2023 and December 31, 2022, respectively.

Operating lease liabilities were $ 162 million and $ 169 million as of March 31, 2023 and December 31, 2022, respectively.

During the six-month periods ending June 30, 2023 and July 1, 2022, warranty related activity was immaterial.

Operating lease cost for the three-month periods ended June 30, 2023 and July 1, 2022 was $ 12 million and $ 14 million, respectively.

Operating lease costs for the six-month periods ended June 30, 2023 and July 1, 2022 was $ 24 million and $ 29 million, respectively.

During the six-month periods ended June 30, 2023 and July 1, 2022, cash paid for operating leases included in operating cash flows was $ 24 million and $ 26 million, respectively.

Right-of-use (“ROU”) assets obtained in exchange for operating lease obligations were $ 18 million and $ 6 million during the six-month periods ended June 30, 2023 and July 1, 2022, respectively.

Operating lease ROU assets were $ 158 million and $ 162 million as of June 30, 2023 and December 31, 2022, respectively.

Operating lease liabilities were $ 166 million and $ 169 million as of June 30, 2023 and December 31, 2022, respectively.

Operating lease ROU assets and operating lease liabilities are reported on the Consolidated Condensed Balance Sheets within Other assets, Accrued expenses and Other current liabilities and Other long-term liabilities, respectively.

2 unchanged sentences

Diluted EPS is similarly calculated, except that the calculation includes the dilutive effect of the assumed conversion of 0.875 % Convertible Notes and associated issuance of shares under the if-converted method, while outstanding in 2022, and the assumed issuance of shares under stock-based compensation plans under the treasury stock method, except where the inclusion of such shares would have an anti-dilutive impact.

Anti-dilutive options excluded from the diluted EPS calculation for the three month periods ended March 31, 2023 and April 1, 2022 were 2.9 million and 3.1 million, respectively.

Anti-dilutive options excluded from the diluted EPS calculation for both the three and six-month periods ended June 30, 2023 were 2.7 million, and were 7.7 million and 7.5 million for the three and six-month periods ended July 1, 2022, respectively.

Information related to the calculation of net earnings per share of common stock is summarized as follows ($ and shares in millions, except per share amounts):

Three Months Ended

March 31, 2023 April 1, 2022

Three Months Ended Six Months Ended

June 30, 2023 July 1, 2022 June 30, 2023 July 1, 2022

Net earnings $ 209.0 $ 173.0 $ 382.6 $ 338.1

12 unchanged sentences

First quarter $ 0.07 $ 24.7

Second quarter 0.07 24.6

Total $ 0.14 $ 49.3

First quarter $ 0.07 $ 25.1

Second quarter 0.07 24.9

Total $ 0.14 $ 50.0

4 unchanged sentences

The repurchase program may be suspended or discontinued at any time by the Board of Directors.

During the three month period ended March 31, 2023, the Company made no repurchases under the plan.

During the three month period ended April 1, 2022, the Company purchased 1 million shares of its common stock at an average share price of $ 63.74 .

As of March 31, 2023, there were 13 million shares remaining for repurchase under the program.

During the three and six-month periods ended June 30, 2023, the Company purchased 2 million shares of its common stock at an average price of $ 64.54 .

During the three and six-month periods ended July 1, 2022, the Company purchased 3 million and 4 million shares of its common stock at an average share price of $ 59.71 and $ 60.71 , respectively.

As of June 30, 2023, there were 11 million shares remaining for repurchase under the program.

SEGMENT INFORMATION

2 unchanged sentences

Our Intelligent Operating Solutions segment provides advanced instrumentation, software and services to tens of thousands of customers enabling their mission-critical workflows.

These offerings include electrical test & measurement, facility and asset

lifecycle software applications, connected worker safety and compliance solutions across a range of vertical end markets, including manufacturing, process industries, healthcare, utilities and power, communications and electronics, among others.

These offerings include electrical test & measurement, facility and asset lifecycle software applications, connected worker safety and compliance solutions across a range of vertical end markets, including manufacturing, process industries, healthcare, utilities and power, communications and electronics, among others.

Our Precision Technologies segment helps solve tough technical challenges to speed breakthroughs in a wide range of applications, from food and beverage production and manufacturing to next-generation electric vehicles and clean energy, as our customers seek new test solutions to enable the electrification and connectivity of everything.

4 unchanged sentences

Our segment results are as follows ($ in millions):

Three Months Ended

March 31, 2023 April 1, 2022

Three Months Ended Six Months Ended

June 30, 2023 July 1, 2022 June 30, 2023 July 1, 2022

Intelligent Operating Solutions $ 653.1 $ 630.1 $ 1,285.2 $ 1,217.7

7 unchanged sentences

Other ( 32.6 ) ( 24.8 ) ( 64.7 ) ( 48.9 )

Russia exit and wind down costs — ( 16.2 ) — ( 16.2 )

Total Operating Profit 291.3 232.3 531.7 444.6

3 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements