What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-05-01 compared with 2024-10-30 · 152 added, 225 removed, 226 unchanged (63% of the section changed)

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general economic and capital markets conditions, including expected impact of inflation or interest rate changes;

impact of geopolitical developments and events, including the anticipated impact of the Ukraine/Russia conflict, conflict in the Middle East, and other hostilities;

impact of geopolitical events and other hostilities;

the timing of any of the foregoing;

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Risk Related to Our Business Operations

• Conditions in the global economy, the markets we serve, and the financial markets and banking systems may adversely affect our business and financial statements.

• If we cannot adjust our manufacturing capacity, supply chain management or the purchases required for our manufacturing activities to reflect changes in market conditions, customer demand and supply chain or transportation disruptions, our profitability may suffer.

• Conditions in the global economy, the markets we serve, and the financial markets may adversely affect our business and financial results.

profitability may suffer.

In addition, our reliance upon sole or limited sources of supply for certain materials, components, and services could cause production interruptions, delays and inefficiencies.

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• Our growth depends in part on the timely development and commercialization and customer acceptance of new and enhanced products and services based on technological innovation.

• If we are unable to recruit and retain key employees, our business may be harmed.

• Significant disruptions in, or breaches in security of, our information technology systems have adversely affected, and in the future could adversely affect, our business.

• Defects and unanticipated use or inadequate disclosure with respect to our products (including software) or services could adversely affect our business, reputation, and financial statements.

• Adverse changes in our relationships with, or the financial condition, performance, purchasing patterns, or inventory levels of, key distributors and other channel partners could adversely affect our financial statements.

• Our ability to attract, develop, and retain senior leaders and other key employees is critical to our success.

• Disruptions in, or breaches in security of, our information technology systems have adversely affected, and in the future could adversely affect, our business.

• Defects and unanticipated use or inadequate disclosure with respect to our products (including software) or services could adversely affect our business, reputation, and financial results.

• Our restructuring activities could have long-term adverse effects on our business.

• Work stoppages, works council campaigns, and other labor disputes could adversely impact our productivity, economic conditions, and results of operations.

• Work stoppages, works council campaigns, and other labor disputes could adversely impact our productivity and results of operations.

• If we suffer loss to our facilities, supply chains, distribution systems, or information technology systems due to catastrophe or other events, our operations could be seriously harmed.

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• Third parties may claim that we are infringing or misappropriating their intellectual property rights and we could suffer significant litigation expenses, losses, or licensing expenses or be prevented from selling products or services.

• We are subject to a variety of litigation and other legal and regulatory proceedings in the course of our business that could adversely affect our financial statements.

• Future pandemics and epidemics, and any corresponding constraints on supply chain, labor force, and the operations of our customers, suppliers, and vendors could have an adverse impact on our business and results of operations.

• We are subject to a variety of litigation and other legal and regulatory proceedings in the course of our business that could adversely affect our financial results.

• Climate change, or legal or regulatory measures to address climate change, may negatively affect us.

• We use artificial intelligence in our business, and challenges with properly managing its use could result in reputational harm, competitive harm, and legal liability, and adversely affect our results of operations.

• We may use artificial intelligence in our business and in our products, and challenges with properly managing its use could result in reputational harm, competitive harm, and legal liability, and adversely affect our results of operations.

Risk Related to our International Operations

• International economic, political, legal, compliance, and business factors could negatively affect our financial statements.

• Trade relations between China and the United States could have a material adverse effect on our business and financial statements.

• Foreign currency exchange rates, including the volatility thereof, may adversely affect our financial statements.

• International economic, political, legal, trade policies, compliance, and business factors could negatively affect our financial results.

• Trade relations between the United States and other countries, including imposition of new or increased tariffs and related uncertainty thereof, could have a material adverse effect on our business and financial results.

• Foreign currency exchange rates, including the volatility thereof, may adversely affect our financial results.

Risk Related to Our Acquisitions, Investments, and Dispositions

• Our plans to separate into two independent, publicly traded companies may not be completed on the currently contemplated timeline or at all and may not achieve the intended benefits, including the anticipated tax treatment.

• Any inability to consummate acquisitions at our anticipated rate and at appropriate prices could negatively impact our growth rate and stock price.

• Our acquisition of businesses, joint ventures, and strategic relationships could negatively impact our financial statements.

• Any inability to consummate acquisitions at our anticipated rate and at appropriate prices, and to make appropriate investments that support our long-term strategy, could negatively impact our growth rate and stock price.

• Our acquisition of businesses, investments, joint ventures, and other strategic relationships could negatively impact our financial results.

• The indemnification provisions of acquisition agreements by which we have acquired companies may not fully protect us and as a result we may face unexpected liabilities.

• Divestitures or other dispositions could negatively impact our business, and contingent liabilities from businesses that we have sold could adversely affect our financial statements.

• Divestitures or other dispositions could negatively impact our business, and contingent liabilities from businesses that we have sold could adversely affect our financial results.

• Potential indemnification liabilities to Vontier Corporation (“Vontier”) pursuant to the separation agreement could materially and adversely affect our businesses, financial condition, results of operations, and cash flows.

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• Changes in industry standards and governmental regulations may reduce demand for our products or services or increase our expenses.

• Our reputation, ability to do business, and financial statements may be impaired by improper conduct by any of our employees, agents, or business partners.

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

• Our reputation, ability to do business, and financial results may be impaired by improper conduct by any of our employees, agents, or business partners.

• Our businesses are subject to extensive regulation, including healthcare regulations;

existing or future failures to comply with those regulations could adversely affect our financial statements and reputation.

failure to comply with those regulations could adversely affect our financial results and our business, including our reputation.

Risk Related to Our Tax and Accounting Matters

• Changes in our effective tax rates or exposure to additional income tax liabilities or assessments could affect our profitability.

• Changes in our effective tax rates or exposure to additional tax liabilities or assessments could affect our profitability.

In addition, audits by tax authorities could result in additional tax payments for prior periods.

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See “Item 1A.

Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 for further discussion regarding reasons that actual results may differ materially from the results, developments, and business decisions contemplated by our forward-looking statements.

Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 and in this Quarterly Report 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 (or such earlier date as may be specified in such statement).

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In January 2024, we realigned Invetech from the AHS segment to the PT segment (the “Segment Realignment”) based on our strategic decision to divest the equipment design and manufacturing businesses of Invetech, while retaining the motion solution businesses (the “Motion Solution Business”) that are more closely aligned with the PT segment than the AHS segment.

Prior period segment amounts below have been recast to conform to the revised segment presentation.

In June 2024, we divested and transferred ownership of Invetech, excluding the Motion Solution Business, to its management team (the “Invetech Divestiture”).

As a result of the divestiture, in the nine-month period ended September 27, 2024, we recorded a net realized loss of $25.6 million, which is identified as “Loss from divestiture” in the Consolidated Condensed Statements of Earnings.

The divested businesses accounted for less than 1.0% of total revenue and less than 1.0% of total assets for the fiscal year ended December 31, 2023.

The Invetech Divestiture did not represent a strategic shift with a major effect on the Company’s operations and financial results, and therefore the divested businesses are not reported as discontinued operations.

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

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Our AHS segment supplies critical workflow solutions enabling healthcare providers to deliver exceptional patient care more efficiently.

Our offerings include instrument sterilization solutions, instrument tracking, biomedical test tools, radiation

detection and safety monitoring, and end-to-end clinical productivity software and solutions.

Our offerings include instrument sterilization solutions, instrument tracking, biomedical test tools, radiation detection and safety monitoring, and end-to-end clinical productivity software and solutions.

Our healthcare offerings help ensure critical safety standards are met, instruments and operating rooms are working at peak performance, and complex procedures are followed accurately in these mission-critical healthcare environments.

Non-GAAP Measures

In this report, references to sales from existing businesses (“core revenue”) refer to sales from operations calculated according to generally accepted accounting principles in the United States (“GAAP”) but excluding (1) the impact from acquired and divested businesses and (2) the impact of currency translation.

References to sales attributable to acquisitions or acquired businesses refer to GAAP sales from acquired businesses recorded prior to the first anniversary of the acquisition, less the amount of sales attributable to certain businesses or product lines that have been divested, or, at the time of reporting, are pending divestiture, but are not, and will not be, considered discontinued operations prior to the first anniversary of the divestiture.

The portion of sales attributable to the impact of currency translation is calculated as the difference between (a) the period-to-period change in sales (excluding sales impact from acquired businesses) and (b) the period-to-period change in sales (excluding sales impact from acquired businesses) after applying the current period foreign exchange rates to the prior year period.

Sales from existing businesses should be considered in addition to, and not as a replacement for or superior to, sales, and may not be comparable to similarly titled measures reported by other companies.

Core revenue should be considered in addition to, and not as a replacement for or superior to, sales, and may not be comparable to similarly titled measures reported by other companies.

Management believes that reporting the non-GAAP financial measure of core revenue provides useful information to investors by helping identify underlying growth trends in our business and facilitating comparisons of our sales performance with our performance in prior and future periods and to our peers.

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References to sales volume from existing businesses refer to the impact of both price and unit sales.

Pending Separation Into Two Independent, Publicly Traded Companies

On September 4, 2024, we announced our intention to separate into two independent, publicly traded companies (the “Separation”).

The Separation will create (i) a technology solutions company, retaining the Fortive name, with a portfolio of the brands currently operating under Fortive’s IOS and AHS business segments, focused on resilient, high-quality recurring growth by delivering productivity, safety, and reliability value to customers, and (ii) a global industrial company (“NewCo”) consisting of our brands currently operating under the PT segment with a focus on powerful secular growth trends by leveraging mission critical technologies in test and measurement, specialty sensors, and aerospace and defense subsystems.

The Separation is expected to be structured in a tax-free manner for Fortive shareholders.

The Company is targeting to complete the Separation by the fourth quarter of 2025, subject to the satisfaction of certain conditions, including, among others, final approval of Fortive’s Board of Directors, satisfactory completion of financing, receipt of a favorable opinion of legal counsel and/or a private letter ruling from the U.S.

Update on Pending Separation of the Precision Technologies Segment

On September 4, 2024, we announced our intention to separate our PT segment business into an independent publicly-traded company (the “Separation”), which has been incorporated under the name Ralliant Corporation.

The Separation will create (i) a technology solutions company, retaining the Fortive name, with a portfolio of the brands currently operating under Fortive’s IOS and AHS business segments, focused on resilient, high-quality recurring growth by delivering productivity and safety to customers, and (ii) a global technology company consisting of our brands currently operating under the PT segment with a focus on precision instruments and highly engineered products essential for breakthrough innovation and aligned to powerful secular trends.

The Separation is intended to qualify as a tax-free spin-off to Fortive shareholders for U.S.

federal income tax purposes.

The Company is currently targeting completion of the Separation by the end of the second quarter of 2025, subject to the satisfaction of certain conditions, including, among others, final approval of Fortive’s Board of Directors, or a delegated committee thereof, satisfactory completion of financing, receipt of a favorable opinion of legal counsel and/or a private letter ruling from the U.S.

Internal Revenue Service with respect to the tax treatment of the transaction for U.S.

federal income tax purposes, the effectiveness of a Form 10 registration statement filed with the SEC, and other regulatory approvals.

All assets, liabilities, revenues and expenses of NewCo are included in the consolidated results of the Company in the accompanying consolidated condensed financial statements.

All assets, liabilities, revenues and expenses of Ralliant are included in the consolidated results of the Company in the accompanying consolidated condensed financial statements.

Fortive anticipates that Ralliant’s Form 10 registration statement will be filed publicly with the SEC in early May 2025.

On January 3, 2024, we acquired EA Elektro-Automatik Holding GmbH (“EA”), a leading supplier of high-power electronic test solutions for energy storage, mobility, hydrogen, and renewable energy applications.

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We also anticipate future tax benefits as a result of the transaction.

Other Matters

We initiated a discrete restructuring plan in the first quarter of 2023 that was completed during the fourth quarter of 2023.

The nature of these activities were broadly consistent throughout our segments and consisted 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.

During the three and nine-month periods ended September 29, 2023, we incurred charges of $0.9 million and $29.2 million, respectively.

Business Performance and Outlook

Business Performance for the Period Ended September 27, 2024

During the three and nine-month periods ended September 27, 2024 (the “quarter” or the “third quarter” and “year-to-date period,” respectively), our sales increased by 2.7% and 2.9%, respectively.

The year-over-year increase in sales in the third quarter was primarily driven by a 1.1% increase in our core revenue and a 1.6% increase from acquisitions, net of divestitures.

Core revenue growth in the third quarter included favorable pricing of 2.9%, partially offset by volume decline of 1.8%.

Year-over-year increases in the year-to-date period were consistent with those in the third quarter, and were driven by a 1.2% increase in our core revenue and a 2.3% increase from acquisitions, net of divestitures, partially offset by a decline of 0.6% due to unfavorable currency translation.

Core revenue growth during the year-to-date period included favorable pricing of 2.6%, partially offset by volume decline of 1.4%.

Geographically, in the third quarter, year-over-year core revenue in developed markets increased slightly, driven by low single-digit growth in North America, partially offset by a low single-digit decline in Western Europe.

Core revenue in high growth markets was up low single-digits year-over-year in the third quarter, driven by high-teens growth in Latin America, partially offset by a slight decline in Asia where China declined by high single-digits.

Geographically, in the year-to-date period, year-over-year core revenue in developed markets increased slightly, driven by a low single-digit growth in North America, partially offset by a slight decline in Western Europe.

Core revenue in high growth markets increased year-over-year in the year-to-date period by low single-digits, driven by high-teens growth in Latin America, partially offset by a low single-digit decline in Asia where China declined by mid-single-digits.

We anticipate revenue growth to be approximately 3% for the fourth quarter of 2024 and the full year.

We anticipate core revenue growth to be approximately 1% for the fourth quarter and the full year.

We expect foreign exchange rates to remain volatile throughout the year, which could continue to impact our financial results.

Additionally, our financial outlook is subject to various assumptions and risks, including but not limited to, ongoing geopolitical developments and events, including the U.S.

presidential and other elections, macroeconomic conditions in the United States, China and other critical regions, impact from our pending separation into two independent publicly traded companies, and the the impact of inflationary dynamics on our expenses or our ability to realize price increases in our sales, interest rates, market conditions in key product segments, and elective surgery rates.

We will continue to deploy FBS to actively manage these challenges and utilize pricing and other countermeasures to offset the aforementioned dynamics.

We continue to monitor these conditions which may continue to impact our business, as well as potential adverse global economic trends and sentiments, monetary and fiscal policies, international trade and relations between the U.S., China and other nations, and investment and taxation policy initiatives being considered in the United States and by the Organization for Economic Co-operation and Development (“OECD”), including the potential impact of the Pillar Two initiative.

In addition, we expect to execute a discrete restructuring plan related to the Separation beginning in the fourth quarter of 2024.

Business Performance for the Period Ended March 28, 2025

During the three-month period ended March 28, 2025 (the “quarter” or the “first quarter” and “year-to-date period,” respectively), our sales decreased by 3.3%, primarily driven by a 1.7% decrease in our core revenue and a 1.2% decrease from unfavorable foreign currency exchange rates.

Core revenue growth in the first quarter included favorable pricing of 1.9%, offset by volume declines of 3.6%.

Geographically, in the first quarter, core revenue in developed markets decreased low single-digits, driven by low single-digit growth in North America, offset by a high-teens decline in Western Europe.

Core revenue in high growth markets decreased low single-digits in the first quarter, where we had high single-digit growth in Latin America, offset by a high single-digit decline in China.

In 2025, the U.S.

government began imposing tariffs on products from all countries and additional individualized reciprocal tariffs on certain countries.

In response, China, in particular, and other countries have announced retaliatory tariffs against certain imports from the United States.

These changes to trade policies, retaliatory measures, and prolonged uncertainty in trade relationships negatively impact operations and financial results, including potential impairment of certain intangible assets, through resulting supply chain disruptions, delayed shipments, and increased operational complexities and costs.

We continue to evaluate what impact these tariffs may have on our financial results, as the application and imposition of these tariffs remains unpredictable.

For additional discussion of risks related to tariffs and trade relations, please refer to the risk factor, “Trade relations between the United States and other countries, including the imposition of new or increased tariffs and related uncertainty thereof, could have a material adverse effect on our business and financial results” in Part II, Item 1A.

Risk Factors of this Quarterly Report on Form 10-Q.

We also expect foreign exchange rates to remain volatile throughout the year, which could continue to impact our financial results.

Additionally, our financial outlook is subject to various assumptions and risks, including but not limited to, ongoing geopolitical developments and events, global uncertainties related to governmental policies toward international trade, monetary and fiscal policies, including the current uncertainty about the future relationship between the United States and other regions with respect to tariffs as mentioned above, trade policies, treaties, government regulations and sanctions, increased economic nationalism, macroeconomic conditions in the United States, China, and other critical regions, impact from our pending separation into two independent publicly traded companies, and the impact of inflationary dynamics on our expenses or our ability to realize price increases and/or competitiveness in our sales, interest rates, market conditions in key product segments, and elective surgery rates.

We continue to deploy the Fortive Business System (“FBS”), including tools and processes to leverage existing sourcing strategies and optimize production and logistics to actively manage these challenges and utilize pricing, cost and productivity actions and other countermeasures designed to offset the aforementioned dynamics.

We continue to monitor these conditions and potential adverse global economic trends and sentiments, monetary and fiscal policies, international trade policies and relations between the U.S., China and other nations, and investment and taxation policy initiatives being considered in the United States and by the Organization for Economic Co-operation and Development (“OECD”), including incremental impacts of the Pillar Two initiative.

RESULTS OF OPERATIONS

The following table summarizes total aggregate year-over-year sales growth and the components thereof for the third quarter as compared to the comparable period of 2023:

The following table summarizes total aggregate year-over-year sales growth and the components thereof for the first quarter as compared to the comparable period of 2024:

Components of Sales Growth

% Change Three Months Ended September 27, 2024 vs.

Comparable 2023 Period

% Change Nine Months Ended September 27, 2024 vs.

% Change Three Months Ended March 28, 2025 vs.

Comparable 2024 Period

Total revenue growth (GAAP) (3.3) %

Core (Non-GAAP)

Acquisitions and divestitures (Non-GAAP) 1.6 % 2.3 %

Currency exchange rates (Non-GAAP) — % (0.6) %

Excluding impact of:

Acquisitions and divestitures 0.4 %

Currency exchange rates 1.2 %

Core revenue growth (Non-GAAP)

Operating Profit Margins

Operating profit margin was 19.3% for the third quarter, representing a decrease of 20 basis points as compared to 19.5% in the comparable period of 2023.

Year-over-year changes in operating profit margin were comprised of the following:

• Year-over-year increase in price from existing businesses, volume gains in AHS, and gains from productivity measures, partially offset by a volume decline in certain businesses and end markets within our IOS and PT segments, and higher employee compensation — favorable 70 basis points

• The year-over-year effect of amortization from existing businesses and impairment of intangible assets incurred in 2023 — favorable 25 basis points

• The year-over-year net effect of acquisition and divestiture-related transaction costs incurred in the third quarter of 2024 — unfavorable 10 basis points

• The year-over-year net effect of acquired and divested businesses, including amortization, and acquisition-related fair value adjustments — unfavorable 110 basis points

• The year-over-year effect of costs relating to the discrete restructuring plan initiated and completed in 2023 — favorable 5 basis points

Operating profit margin was 19.5% for the year-to-date period, yielding an increase of 110 basis points as compared to 18.4% in the comparable period of 2023.

Operating profit margin was 15.8% for the first quarter, representing a decrease of 400 basis points as compared to 19.8% in the comparable period of 2024.

Year-over-year changes in operating profit margin were comprised of the following:

• Year-over-year increase in price from existing businesses, volume growth in IOS and AHS, and gains from productivity measures were partially offset by a volume decline in certain businesses and end markets within our PT segment, higher employee compensation and investment in growth initiatives.

Additionally, there were unfavorable foreign exchange rates — favorable 80 basis points

• The year-over-year effect of amortization from existing businesses, and impairment of intangible assets incurred in 2023 — favorable 25 basis points

• The year-over-year net effect of acquisition and divestiture-related transaction costs incurred in the year-to-date period — unfavorable 70 basis points

• The year-over-year net effect of acquired and divested businesses, including amortization and acquisition-related fair value adjustments — unfavorable 130 basis points

• The year-over-year effect of costs relating to the discrete restructuring plan initiated and completed in 2023 — favorable 65 basis points

• The year-over-year effect of the gain on sale of land and certain office buildings in the PT segment in the first quarter of 2024 — favorable 140 basis points

• The year-over-year effect of the gain on sale of land and certain office buildings in the PT segment in the first quarter of 2024 — unfavorable 415 basis points

• Year-over-year increase in price, volume gains in IOS and AHS, and gains from productivity measures through our FBS initiatives, offset by volume declines in certain businesses and end markets within our PT segment, higher employee compensation and the impact from unfavorable foreign currency exchange rates — unfavorable 20 basis points

• The year-over-year effect of amortization from existing businesses — unfavorable 10 basis points

• The year-over-year net effect of costs related to the Separation during 2025 and acquisition and divestiture-related transaction costs incurred in 2024 — favorable 15 basis points

• The year-over-year net effect of acquired and divested businesses, including amortization, and acquisition-related fair value adjustments — favorable 55 basis points

• The year-over-year effect of costs relating to discrete restructuring plans — unfavorable 25 basis points

Business Segments

Sales by business segment for each of the periods indicated were as follows ($ in millions):

Three Months Ended Nine Months Ended

September 27, 2024 September 29, 2023 September 27, 2024 September 29, 2023

Three Months Ended

March 28, 2025 March 29, 2024

Intelligent Operating Solutions $ 671.4 $ 665.7

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Intelligent Operating Solutions Selected Financial Data

Three Months Ended Nine Months Ended

($ in millions) September 27, 2024 September 29, 2023 September 27, 2024 September 29, 2023

Three Months Ended

($ in millions) March 28, 2025 March 29, 2024

Sales $ 671.4 $ 665.7

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Components of Sales Growth

% Change Three Months Ended September 27, 2024 vs.

Comparable 2023 Period

% Change Nine Months Ended September 27, 2024 vs.

% Change Three Months Ended March 28, 2025 vs.

Comparable 2024 Period

Total revenue growth (GAAP) 0.9 %

Core (Non-GAAP)

Acquisitions and divestiture (Non-GAAP) 0.8 % 1.1 %

Currency exchange rates (Non-GAAP) 0.3 % (0.3) %

The sales growth in the third quarter and year-to-date period was driven primarily by favorable pricing across the segment and increased volume in our gas detection products, as well as software and service offerings, including software as a service (“SaaS”), partially offset by volume decline in test and measurement instrumentation.

The acquisitions in 2023 also contributed 0.8% and 1.1% to revenue growth during the third quarter and year-to-date period, respectively.

Geographically, core revenue in developed markets increased in the third quarter by low single-digits, driven by a low single-digit growth in North America, partially offset by a low single-digit decline in Western Europe.

Core revenue in high growth markets increased in the third quarter by low single-digits, driven by high-teens growth in Latin America, partially offset by a a mid-single-digit decline in China.

Geographically, core revenue in developed markets increased in the year-to-date period by low single-digits, driven by a low single-digit growth in North America and Western Europe.

Core revenue in high growth markets in the year-to-date period increased by mid-single-digits, driven by high-teens growth in Latin America and a low single-digit growth in Asia.

Year-over-year price increases in our IOS segment contributed 2.6% to sales growth during both the third quarter and year-to-date period, and is reflected as a component of the change in core revenue.

Operating profit margin increased 110 basis points during the third quarter as compared to the comparable period of 2023.

Excluding impact of:

Currency exchange rates 1.1 %

Core revenue growth (Non-GAAP)

Our sales growth in the first quarter was driven by favorable pricing across the segment and an increase in volume in our test and measurement instrumentation and gas detection products, partially offset by a decline in certain product lines in our facilities and asset lifecycle offerings, as well as unfavorable foreign currency exchange rates.

Geographically, core revenue in developed markets increased in the first quarter by mid-single-digits, driven by high single-digit growth in North America, partially offset by a high single-digit decline in Western Europe.

Core revenue in high growth markets decreased in the first quarter by low single-digits, driven primarily by a low double-digit decline in China, offset by high single-digit growth in India.

Year-over-year price increases in our IOS segment contributed 1.7% to sales growth during the first quarter and is reflected as a component of the change in core revenue.

Operating profit margin increased 120 basis points during the first quarter as compared to the comparable period of 2024.

Year-over-year changes in operating profit margin were comprised of the following:

• Year-over-year increase in price from existing businesses, and higher sales volume from gas detection products, as well as software and service offerings, offset by decline in sales volume from test and measurement instrumentation, and higher employee compensation — favorable 35 basis points

• Year-over-year increase in price, a net increase in sales volume across the segment, and efficiency gains achieved through FBS measures, partially offset by higher employee compensation and the impact of unfavorable foreign currency exchange rates — favorable 150 basis points

• The year-over-year effect of amortization from existing businesses — favorable 20 basis points

• The year-over-year net effect of acquisition-related transaction costs incurred in the third quarter of 2023 — favorable 25 basis points

• The year-over-year net effect of acquired business, including amortization — relatively flat

• The year-over-year effect of costs relating to the discrete restructuring plan initiated and completed in 2023 — favorable 20 basis points

Operating profit margin increased 180 basis points during the year-to-date period, as compared to the comparable period of 2023.

Year-over-year changes in operating profit margin comparisons were comprised of the following:

• Year-over-year increase from favorable pricing and higher sales volume from existing businesses, partially offset by higher employee compensation and customer acquisition and marketing costs to support growth initiatives — favorable 70 basis points

• The year-over-year effect of amortization from existing businesses, and impairment of intangible assets incurred in 2023 — favorable 45 basis points

• The year-over-year net effect of acquisition-related transaction costs incurred in the year-to-date period — relatively flat

• The year-over-year net effect of acquired business, including amortization, and acquisition-related fair value adjustments — unfavorable 25 basis points

• The year-over-year effect of costs relating to the discrete restructuring plan initiated and completed in 2023 — favorable 90 basis points

• The year-over-year effect of costs relating to discrete restructuring plans — unfavorable 50 basis points

PRECISION TECHNOLOGIES

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Precision Technologies Selected Financial Data

Three Months Ended Nine Months Ended

($ in millions) September 27, 2024 September 29, 2023 September 27, 2024 September 29, 2023

Three Months Ended

($ in millions) March 28, 2025 March 29, 2024

Sales $ 500.6 $ 559.0

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C omponents of Sales Growth

% Change Three Months Ended September 27, 2024 vs.

Comparable 2023 Period

% Change Nine Months Ended September 27, 2024 vs.

% Change Three Months Ended March 28, 2025 vs.

Comparable 2024 period

Total revenue growth (GAAP) (10.5) %

Core (Non-GAAP)

(3.7) % (4.0) %

Acquisitions and divestiture (Non-GAAP)

Currency exchange rates (Non-GAAP) 0.1 % (0.5) %

The sales results for both the third quarter and year-to-date periods were impacted by price increases across the segment and volume increases in energetic materials, offset by volume reductions in test and measurement and certain sensing technology products.

The acquisition of EA, partially offset by the Invetech Divestiture, contributed 3.3% and 5.0% to revenue growth during the third quarter and year-to-date period, respectively.

Geographically, core revenue in developed markets decreased by mid-single-digits in the third quarter, driven by a mid-single-digit decline in North America and Western Europe.

Core revenue in high growth markets increased by low single-digits in the third quarter, driven by low-twenties growth in Latin America, partially offset by a low single-digit decline in Asia.

Geographically, core revenue in developed markets decreased by mid-single-digits in the year-to-date period, driven by a low single-digit decline in North America, a high single-digit decline in Western Europe, and a low double-digit decline in Japan.

Core revenue in high growth markets decreased by low single-digits in the year-to-date period, driven by a low double-digit growth in Latin America, offset by a mid-single-digit decline in Asia, where China decreased by low double-digits.

Year-over-year price increases in our PT segment contributed 2.9% and 2.2% to sales growth for the third quarter and year-to-date period, respectively, and is reflected as a component of the change in core revenue.

Operating profit margin decreased 340 basis points for the third quarter as compared to the comparable period of 2023.

Excluding impact of:

Acquisitions and divestitures 1.0 %

Currency exchange rates 1.1 %

Core revenue growth (Non-GAAP) (8.4) %

The sales results for the first quarter were impacted by price increases across the segment and volume increases in utility sensing and solutions,which were more than offset by volume reductions in test and measurement, energetic materials, and industrial sensing products.

Additionally, there was an unfavorable impact from foreign currency exchange rates and the Invetech Divestiture.

Geographically, core revenue in developed markets decreased by low double-digits in the first quarter, driven by a mid-thirties decline in Western Europe and a mid-single-digit decline in North America.

Core revenue in high growth markets decreased by low single-digits in the first quarter, driven by a high single-digit decline in China, partially offset by low thirties growth in Latin America.

Year-over-year price increases in our PT segment contributed 1.8% to sales results for the first quarter and is reflected as a component of the change in core revenue.

Operating profit margin decreased 930 basis points for the first quarter as compared to the comparable period of 2024.

Year-over-year changes in operating profit margin were comprised of the following:

• Year-over-year increase in price from existing businesses and gains from productivity measures, offset by net volume reductions in the segment — favorable 5 basis points

• The year-over-year effect of amortization from existing businesses — favorable 5 basis points

• The year-over-year net effect of acquisition and divestiture-related transaction costs, which were incurred in the third quarter of 2024, primarily related to the EA acquisition — unfavorable 35 basis points

• The year-over-year net effect of acquired and divested businesses, including amortization, and acquisition-related fair value adjustments — unfavorable 315 basis points

Operating profit margin decreased 100 basis points during the year-to-date period as compared to the comparable period of 2023.

Year-over-year changes in operating profit margins were comprised of the following:

• Year-over-year increase in price from existing businesses and gains from productivity measures were offset by net volume reduction in the segment and unfavorable changes in foreign currency exchange rates — unfavorable 10 basis points

• The year-over-year effect of amortization from existing businesses — relatively flat

• The year-over-year net effect of acquisition and divestiture-related transaction costs incurred in the year-to-date period primarily related to the EA acquisition — unfavorable 180 basis points

• The year-over-year net effect of acquired and divested businesses, including amortization, and acquisition-related fair value adjustments — unfavorable 325 basis points

• The year-over-year effect of costs relating to the discrete restructuring plan initiated and completed in 2023 — favorable 35 basis points

• The year-over-year effect of the gain on sale of land and certain office buildings in the first quarter of 2024 — favorable 380 basis points

• The year-over-year effect of the gain on sale of land and certain office buildings in the PT segment in the first quarter of 2024 — unfavorable 1,130 basis points

• Year-over-year increase in price, more than offset by net volume reductions, higher compensation costs and the impact of unfavorable foreign currency exchange rates — unfavorable 375 basis points

• The year-over-year effect of amortization from existing businesses — unfavorable 30 basis points

• The year-over-year net effect of acquisition and divestiture-related transaction costs incurred in 2024, primarily related to the EA acquisition — favorable 465 basis points

• The year-over-year net effect of acquired and divested businesses, including amortization, and acquisition-related fair value adjustments — favorable 150 basis points

• The year-over-year effect of costs relating to discrete restructuring plans — unfavorable 10 basis points

ADVANCED HEALTHCARE SOLUTIONS

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Advanced Healthcare Solutions Financial Data

Three Months Ended Nine Months Ended

($ in millions) September 27, 2024 September 29, 2023 September 27, 2024 September 29, 2023

Three Months Ended

($ in millions) March 28, 2025 March 29, 2024

Sales $ 302.2 $ 299.8

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Components of Sales Growth

% Change Three Months Ended September 27, 2024 vs.

Comparable 2023 period

% Change Nine Months Ended September 27, 2024 vs.

% Change Three Months Ended March 28, 2025 vs.

Comparable 2024 Period

Total revenue growth (GAAP) 0.8 %

Core (Non-GAAP)

Currency exchange rates (Non-GAAP) (0.9) % (1.3) %

The sales results for both the third quarter and year-to-date period were driven by growth in our existing businesses due to price increases across the segment and volume increases in our sterilization and dosimetry products.

Geographically, core revenue in developed markets increased by low double-digits in the third quarter, driven by a low double-digit growth in North America and a high single-digit growth in Western Europe.

In high growth markets, core revenue increased by mid-single-digits in the third quarter, driven by mid-teens growth in Latin America.

Geographically, core revenue in developed markets increased by mid-single-digits in the year-to-date period, driven by a mid-single-digit growth in North America and a high single-digit growth in Western Europe.

Core revenue in high growth markets increased by high single-digits in the year-to-date period, driven by low-twenties growth in Latin America and a low single-digit growth in Asia.

Year-over-year price increases in our AHS segment contributed 3.6% and 3.3% to sales growth during the third quarter and year-to-date period, respectively, and is reflected as a component of the change in core revenue.

Operating profit margin increased 430 basis points during the third quarter, as compared to the comparable period of 2023.

Year-over-year changes in operating profit margin were comprised of the following:

• Year-over-year increases due to favorable price and higher volume from existing businesses and gains from productivity measures, partially offset by higher employee compensation — favorable 310 basis points

• The year-over-year effect of amortization from existing businesses — favorable 120 basis points

Operating profit margin increased 420 basis points during the year-to-date period as compared to the comparable period of 2023.

Excluding impact of:

Currency exchange rates 1.7 %

Core revenue growth (Non-GAAP)

The sales results for the first quarter were driven by price increases across the segment and volume increases in dosimetry services, and software products, all partially offset by a decline in biomedical test tools and unfavorable foreign currency exchange rates.

Geographically, core revenue in developed markets increased by mid-single-digits in the first quarter, driven by mid-single-digit growth in North America and a low single-digit decline in Western Europe.

In high growth markets, core revenue decreased slightly in the first quarter, driven by mid-single-digit growth in Latin America, partially offset by a mid-single-digit decline in China.

Year-over-year price increases in our AHS segment contributed 2.3% to sales growth during the first quarter and is reflected as a component of the change in core revenue.

Operating profit margin decreased 50 basis points during the first quarter, as compared to the comparable period of 2024.

Year-over-year changes in operating profit margin were comprised of the following:

• Year-over-year increase due to favorable pricing and higher volume from existing businesses, and gains from productivity measures, partially offset by higher employee compensation, and unfavorable changes in foreign currency exchange rates — favorable 260 basis points

• Year-over-year increases due to favorable price and gains from productivity measures through our FBS initiatives, offset by higher employee compensation and the impact of foreign currency exchange rate — unfavorable 70 basis points

• The year-over-year effect of amortization from existing businesses — favorable 20 basis points

• The year-over-year effect of costs relating to the discrete restructuring plan initiated and completed in 2023 — favorable 80 basis points

COST OF SALES AND GROSS PROFIT

Three Months Ended Nine Months Ended

($ in millions) September 27, 2024 September 29, 2023 September 27, 2024 September 29, 2023

Three Months Ended

($ in millions) March 28, 2025 March 29, 2024

Sales $ 1,474.2 $ 1,524.5

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Gross profit margin 59.8 % 59.3 %

The year-over-year increase in gross profit during the third quarter was primarily due to contributions from our acquired businesses, favorable pricing from existing businesses, increased volume from the AHS segment, gains from productivity measures and FBS initiatives, partially offset by net volume reductions in the IOS and PT segments, and higher employee compensation.

The year-over-year increase in gross profit during the year-to-date period was primarily due to contributions from our acquired businesses, favorable pricing from existing businesses, increased volume from the IOS and AHS segments, gains from productivity measures and FBS initiatives, partially offset by net volume reductions in the PT segment, higher employee compensation, and unfavorable changes in foreign currency exchange rates.

The year-over-year decrease in gross profit during the first quarter was a result of favorable pricing from existing businesses and increased volume in IOS, partially offset by net volume reduction in the PT segment, higher employee compensation, and unfavorable foreign currency exchange rates.

OPERATING EXPENSES

Three Months Ended Nine Months Ended

Three Months Ended

($ in millions)

September 27, 2024 September 29, 2023 September 27, 2024 September 29, 2023

March 28, 2025 March 29, 2024

Sales $ 1,474.2 $ 1,524.5

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R&D as a % of sales 7.1 % 6.8 %

The year-over-year increase in SG&A during the third quarter and year-to-date period was due to higher intangible amortization, incremental operating costs from recent acquisitions and higher employee compensation, partially offset by productivity measures.

In addition, there were higher transaction expenses from our EA acquisition during the year-to-date period.

R&D, consisting principally of internal and contract engineering personnel costs, increased during the third quarter and year-to-date period, as compared to the comparable period of 2023 due to the incremental costs from our recent acquisitions and ongoing investments in innovation.

The year-over-year decrease in SG&A during the first quarter was due to lower year-over-year transaction expenses related to our EA acquisition in 2024 offset by separation costs in 2025, and benefits from productivity measures through our FBS initiatives, partially offset by higher employee compensation.

R&D, consisting principally of internal and contract engineering personnel costs, increased slightly during the first quarter as compared to the comparable period of 2024 due to ongoing investments in innovation.

NON-OPERATING INCOME (EXPENSE), NET

Interest costs

Net interest expense for the third quarter and year-to-date period was $37.0 million and $119.7 million as compared to $29.8 million and $95.0 million in the comparable periods in 2023.

The year-over-year increase in net interest expense was primarily due to higher overall debt balances.

Net interest expense for the first quarter was $32.0 million as compared to $44.0 million in the comparable periods in 2024.

The year-over-year decrease in net interest expense was primarily due to overall debt mix consisting of lower fixed rate debt instruments, and lower interest rate on floating rate debt instruments.

For discussion of our outstanding indebtedness, refer to Note 5 to the consolidated condensed financial statements.

Loss from divestiture

During the year-to-date period, we recognized a net realized loss of $25.6 million related to the Invetech Divestiture.

For further discussion of this transaction, refer to Note 1 to the consolidated condensed financial statements.

Other non-operating expense, net

Other non-operating expense for the third quarter and year-to-date period was $26.3 million and $59.3 million, respectively, as compared to $4.2 million and $14.5 million, respectively, in the comparable period in 2023.

The year-over-year increase as compared to the comparable periods in 2023 was due to a loss from our equity investments.

The year-over-year increase during the year-to-date period also included a charitable contribution made in the first quarter of 2024.

For further discussion of the charitable contribution and loss from equity investment, refer to Note 1 and Note 4 to the consolidated condensed financial statements, respectively.

Our effective tax rates for the three and nine-month periods ended September 27, 2024 were 4.6% and 10.2%, respectively, as compared to 15.2% and 15.8%, respectively, for the three and nine-month periods ended September 29, 2023.

The decrease in the effective tax rate for the three-month period ended September 27, 2024 as compared to the three-month period ended September 29, 2023 was primarily related to changes in applicable statutory tax rates, resulting in a benefit in the three-month period ended September 27, 2024.

The decrease in the effective tax rate for the nine-month period ended September 27, 2024 as compared to the nine-month period ended September 29, 2023 was primarily related to cash repatriation resulting in a discrete tax credit, changes in applicable statutory tax rates, and changes in valuation allowances in the nine-month period ended September 27, 2024.

Our effective tax rates for the three and nine-month periods ended September 27, 2024, differ from the U.S.

Other non-operating expense for the first quarter was $0.2 million, as compared to $24.2 million in the comparable period in 2024.

The year-over-year decrease was due to a charitable contribution made in the first quarter of 2024.

For further discussion of the charitable contribution, refer to Note 1 to the consolidated condensed financial statements.

Our effective tax rate for the three-month period ended March 28, 2025 was 14.6% as compared to 11.4%, for the three-month period ended March 29, 2024.

The increase in the effective tax rate for the three-month period ended March 28, 2025 as compared to the three-month period ended March 29, 2024 was primarily related to a discrete tax credit in the comparable prior year period from cash repatriation.

Our effective tax rate for the three-month period ended March 28, 2025, differs from the U.S.

federal statutory rate of 21% due primarily to the impact of credits and deductions provided by law, including those associated with state income taxes, and changes in our uncertain tax position reserves.

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COMPREHENSIVE INCOME

Comprehensive income increased by $139 million during the third quarter as compared to the comparable period in 2023 due to favorable changes in foreign currency translation of $135 million and an increase in net income.

Comprehensive income increased by $56 million during the year-to-date period as compared to the comparable period in 2023 due primarily to favorable changes in foreign currency translation adjustments of $32 million and an increase in net income.

Comprehensive income increased by $111 million during the first quarter as compared to the comparable period in 2024 due primarily to favorable changes in foreign currency translation adjustments of $147 million, partially offset by a $36 million decrease in net income.

LIQUIDITY AND CAPITAL RESOURCES

We assess our liquidity in terms of our ability to generate cash to fund our operating, investing, and financing activities.

We generate substantial cash from operating activities and believe that our operating cash flow and other sources of liquidity, which consist of available cash, our revolving credit facility, and access to commercial paper, bank loans, and capital markets, will be sufficient to allow us to continue funding and investing in our existing businesses, consummate strategic acquisitions, execute strategic separations, repurchase common stocks on the open market or in privately negotiated transactions, make interest and principal payments on our outstanding indebtedness, fulfill our contractual obligations, and manage our capital structure on a short and long-term basis.

We generate substantial cash from operating activities and believe that our operating cash flow and other sources of liquidity, which consist of available cash, our revolving credit facility, and access to commercial paper, bank loans, and capital markets, will be sufficient to allow us to continue funding and investing in our existing businesses, consummate strategic acquisitions, execute strategic separations, repurchase common stock on the open market or in privately negotiated transactions, make interest and principal payments on our outstanding indebtedness, fulfill our contractual obligations, and manage our capital structure on a short and long-term basis.

We have generally satisfied any short-term liquidity needs that are not met through operating cash flows and available cash through issuances of commercial paper under our U.S.

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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 the commercial paper programs, can also be used for working capital and other general corporate purposes.

As of September 27, 2024, no borrowings were outstanding under the Revolving Credit Facility.

As of March 28, 2025, no borrowings were outstanding under the Revolving Credit Facility.

The availability of the Revolving Credit Facility as a standby liquidity facility to repay maturing commercial paper is an important factor in maintaining the existing credit ratings of the Commercial Paper Programs when we have outstanding borrowings.

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On June 7, 2023, we filed with the SEC an “automatic shelf” registration statement (the “Shelf Registration Statement”).

Under the Shelf Registration Statement, we may from time to time sell shares of common stock, preferred stock, debt securities, depositary shares, purchase contracts, purchase units, warrants and subscription rights in one or more offerings.

For example, in February 2024, we completed our offering of €500 million aggregate principal amount of our 3.7% Euro-denominated senior unsecured notes due 2026 (the “2026 Notes”) and €700 million aggregate principal amount of our 3.7% Euro-denominated senior unsecured notes due 2029 (the “2029 Notes”) under the Shelf Registration Statement.

Under the Shelf Registration Statement, we may from time to time sell shares of common stock, preferred stock, debt securities, depository shares, purchase contracts, purchase units, warrants and subscription rights in one or more offerings.

We continue to monitor the financial markets, the stability of U.S.

and international banks and general global economic conditions.

In addition, our access to the capital markets and other financing sources are impacted by any change in our credit rating.

In addition, our access to the capital markets and other financing sources is impacted by any change in our credit rating.

If changes in financial markets or other areas of the economy or downgrade in our credit rating adversely affect our access to the capital markets and other financing sources, we would expect to rely on a combination of available cash and existing available capacity under our credit facilities to provide short-term funding.

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Following is an overview of our cash flows and liquidity ($ in millions):

Nine Months Ended

September 27, 2024 September 29, 2023

Three Months Ended

March 28, 2025 March 29, 2024

Net cash provided by operating activities $ 241.7 $ 256.7

Cash paid for acquisitions, net of cash received $ (1,721.8) $ (57.7)

Payments for additions to property, plant and equipment (83.4) (73.7)

Purchases of property, plant and equipment $ (26.7) $ (26.4)

Proceeds from sale of property 1.7 10.8

Cash infusion into divestiture (14.0) —

Cash paid for acquisitions, net of cash received — (1,721.8)

All other investing activities (1.2) —

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Net proceeds from (repayments of) commercial paper borrowings $ 80.7 $ (426.8)

Proceeds from borrowings (maturities greater than 90 days), net of issuance costs 1,733.5 —

Repayment of borrowings (maturities greater than 90 days) (1,000.0) (250.0)

Repurchase of common shares (202.6) —

Payment of dividends (27.2) (28.1)

Proceeds from borrowings (maturities greater than 90 days), net of issuance costs — 1,736.4

Repayment of borrowings (maturities greater than 90 days) — (1,000.0)

All other financing activities 8.1 25.4

Net cash used in financing activities

Net cash provided by (used in) financing activities

$ (141.0) $ 306.9

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Cash flows from operating activities can fluctuate significantly from period-to-period as working capital needs and the timing of payments for income taxes, interest, pension funding, and other items impact reported cash flows.

Operating cash flows were $1.02 billion during the year-to-date period, representing an increase of $118 million, or 13.0%, as compared to the comparable period of 2023.

Operating cash flows were $242 million during the year-to-date period, representing a decrease of $15 million when compared to the comparable period of 2024.

The year-over-year change in operating cash flows was primarily attributable to the following factors:

• Year-over-year increases of $76 million in Operating cash flows from net earnings, net of non-cash items (Amortization, Depreciation, Stock-based compensation, Gain on sale of property, Loss from divestiture, and Loss from equity investments).

• The aggregate changes in trade accounts receivable, inventories, and trade accounts payable generated $80 million of cash during the year-to-date period as compared to using $42 million in the comparable period of 2023.

• Year-over-year increase of $24 million in Operating cash flows from net earnings, net of non-cash items (Amortization, Depreciation, Stock-based compensation, and Gain on sale of property).

• The aggregate changes in accounts receivable, inventories, and trade accounts payable generated $1 million of cash during the year-to-date period as compared to generating $52 million in the comparable period of 2024.

The amount of cash flow generated from or used by the aggregate of trade accounts receivable, inventories, and trade accounts payable depends upon how effectively we manage the cash conversion cycle, which generally represents the number of days that elapse from the day we pay for the purchase of raw materials and components to the collection of cash from our customers, and can be significantly impacted by the timing of collections and payments in a period.

• The aggregate changes in prepaid expenses, other assets, accrued expenses, and other liabilities used $171 million of cash in the year-to-date period as compared to using $91 million of cash in the comparable period of 2023.

The year-over-year changes were driven by timing differences related to contract assets, contract liabilities, and payments of income taxes, interest, and prior year restructuring.

• The aggregate changes in prepaid expenses and other assets, and accrued expenses and other liabilities used $94 million of cash in the year-to-date period as compared to using $105 million of cash in the comparable period of 2024.

The year-over-year changes were driven by timing differences related to contract assets, contract liabilities, and payments of employee compensation, income taxes and interest.

Investing Activities

Cash outflows from investing activities increased by $1.68 billion during the year-to-date period, as compared to the comparable period of 2023 with the increase primarily due to cash used for acquisitions, net of cash acquired, totaling $1.72 billion in 2024 and a year-over-year increase in capital expenditures of approximately $10 million, and the cash infusion into the Invetech Divestiture entity totaling $14 million, partially offset by the year-over-year increase in proceeds from sale of property of approximately $14 million.

Capital expenditures are made primarily for increasing production capacity, replacing aged equipment, supporting product development initiatives for hardware and software offerings, improving information technology systems, and purchasing

equipment that is used in revenue arrangements with customers.

For the current year, we expect capital spending to be approximately $100-$120 million, although actual expenditures will ultimately depend on business conditions.

Cash outflows from investing activities declined $1.71 billion when compared with the prior year, which had outflows related to acquisitions, net of cash acquired, partially offset by proceeds from the sale of property.

For the current year, we expect capital spending to be between approximately $120-$140 million, though actual expenditures will ultimately depend on business conditions.

Financing Activities and Indebtedness

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In the year-to-date period, financing activities used cash of $141 million, reflecting the following transactions:

• On January 2, 2024, we drew down an additional $450 million of the Delayed-Draw Term Loan due 2024 as part of the funding for the acquisition of EA.

• On February 13, 2024, we completed the sale of our registered offering of the 2026 Notes and the 2029 Notes, yielding net proceeds of approximately $1.3 billion.

• On February 13 2024, we repaid $1.0 billion in outstanding principal of the Delayed-Draw Term Loan due 2024, using net proceeds from the 2026 Notes and 2029 Notes.

• We repaid $571 million in net commercial paper repayments under the U.S.

dollar-denominated commercial paper program.

• We incurred $81 million in net commercial paper borrowings.

• We repurchased 2.5 million shares of our common stock for approximately $203 million, under our share repurchase program.

• We made dividend payments to common shareholders totaling $27 million.

In the comparable 2023 period, financing activities used cash of $766 million, reflecting the following transaction:

• On August 24, 2023, we repaid $250 million in outstanding principal of the Delayed-Draw Term Loan due 2023.

• We repaid $253 million in net commercial paper borrowings under the U.S.

dollar-denominated commercial paper program.

• We repurchased 3 million shares of our common stock for approximately $208 million under our share repurchase program.

In the comparable 2024 period, financing activities generated cash of $307 million, reflecting the following transaction:

• We repaid $427 million in net commercial paper borrowings.

• On January 2, 2024, we drew down $450 million from the $1.3 billion Delayed-Draw Term Loan due 2024 as part of the funding for the acquisition of EA.

• On February 13, 2024, we completed the sale of our registered offering of the 2026 Notes and the 2029 Notes, yielding net proceeds of approximately $1.3 billion.

• On February 13 2024, we repaid $1.0 billion in outstanding principal of the Delayed-Draw Term Loan due 2024, using net proceeds from the 2026 Notes and 2029 Notes.

• We made dividend payments to common shareholders totaling $28 million.

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Cash and Cash Requirements

As of September 27, 2024, we held approximately $811 million of cash and equivalents that were invested in highly liquid investment-grade instruments with a maturity of 90 days or less, of which approximately 91% was held outside of the United States.

As of March 28, 2025, we held approximately $892 million of cash and equivalents that were invested in highly liquid investment-grade instruments with a maturity of 90 days or less, of which approximately 87% was held outside of the United States.

We have cash requirements to support working capital needs, capital expenditures and acquisitions, pay interest and service debt, pay taxes and any related interest or penalties, fund our pension plans as required, pay dividends to shareholders, and support other business needs or objectives.

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The amount of foreign remittance taxes that may be applicable to such earnings is not readily determinable given local law restrictions that may apply to a portion of such earnings, unknown changes in foreign tax law that may occur during the applicable restriction periods caused by applicable local corporate law for cash repatriation, and the various tax planning alternatives we could employ if we repatriated these earnings.

As of September 27, 2024, we expect to have sufficient liquidity to satisfy our cash needs for the foreseeable future.

As of March 28, 2025, we expect to have sufficient liquidity to satisfy our cash needs for the foreseeable future.

CRITICAL ACCOUNTING ESTIMATES

There were no material changes during the three and nine-month periods ended September 27, 2024 to the items we disclosed as our critical accounting estimates in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2023 Annual Report on Form 10-K, except as noted below.

Our business acquisitions, including EA, typically result in the recognition of goodwill, customer relationships, developed technology, and other intangible assets, which affect the amount of future period amortization expense and possible impairment charges that we may incur.

The fair value of acquired intangible assets are determined using information available near the acquisition date based on estimates and assumptions that are deemed reasonable by us.

Significant assumptions include the discount rates and certain assumptions that form the basis of the forecasted cash flows of the acquired business including earnings before interest, taxes, depreciation and amortization (“EBITDA”), revenue, revenue growth rates, royalty rates, customer attrition rates, and technology obsolescence rates.

These assumptions are forward looking and could be affected by future economic and market conditions.

We engage third-party valuation specialists who review our critical assumptions and calculations of the fair value of acquired intangible assets in connection with material acquisitions.

In connection with the EA acquisition in the first quarter of 2024, we recorded approximately $1.17 billion of goodwill and approximately $681 million of intangible assets.

Refer to Note 2 for additional information of the EA acquisition.

There were no material changes during the three-month periods ended March 28, 2025 to the items we disclosed as our critical accounting estimates in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2024 Annual Report on Form 10-K.

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 2. Management’s Discussion and Analysis