What changed in this filing

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Item 1. Financial Statements

2023-05-04 compared with 2022-11-04 · 189 added, 412 removed, 363 unchanged (62% of the section changed)

3 unchanged sentences

(In millions, except par value)

October 2, 2022 January 2, 2022

April 2, 2023 January 1, 2023

Current assets:

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5.0 shares authorized;

none issued or outstanding at October 2, 2022 and January 2, 2022

none issued or outstanding at April 2, 2023 and January 1, 2023

Common stock, $ 0.001 par value per share;

126.2 and 97.5 shares authorized;

66.0 and 41.7 shares issued and outstanding at October 2, 2022 and January 2, 2022, respectively

126.2 shares authorized;

66.6 and 66.4 shares issued and outstanding at April 2, 2023 and January 1, 2023, respectively

Additional paid-in capital 2,809.0 2,804.3

Accumulated other comprehensive (loss) income ( 144.5 ) 0.4

Accumulated other comprehensive loss ( 59.3 ) ( 67.6 )

Retained earnings 2,246.7 2,197.9

5 unchanged sentences

(In millions, except per share data)

Three Months Ended Nine Months Ended

October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021

Three Months Ended

April 2, 2023 April 3, 2022

Total revenues $ 846.1 $ 1,002.3

7 unchanged sentences

Interest expense, net 36.7 1.0

Loss on extinguishment of debt — — 24.0 —

Other income, net ( 4.2 ) ( 1.0 ) ( 2.6 ) ( 0.4 )

Other expense (income), net 2.9 ( 0.9 )

Income before provision for income taxes 60.0 620.6

7 unchanged sentences

QUIDELORTHO CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)

Three Months Ended Nine Months Ended

October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021

Three Months Ended

April 2, 2023 April 3, 2022

Net income $ 48.8 $ 479.9

Other comprehensive (loss) income

Other comprehensive income (loss)

Changes in cumulative translation adjustment, net of tax 30.7 0.2

Changes in unrealized losses from investments, net of tax — — ( 0.6 ) —

Changes in unrealized gains (losses) from cash flow hedges, net of tax:

Net unrealized gains on derivative instruments 9.3 — 13.9 0.1

Reclassification of net realized (gains) losses on derivative instruments included in net income ( 0.2 ) 0.4 0.7 2.3

Total change in unrealized gains (losses) from cash flow hedges, net of tax 9.1 0.4 14.6 2.4

Comprehensive (loss) income $ ( 64.6 ) $ 215.6 $ 373.5 $ 414.2

Changes in unrealized gains (losses) from investments, net of tax 0.2 ( 0.4 )

Changes in unrealized (losses) gains from cash flow hedges, net of tax:

Net unrealized (losses) gains on derivative instruments ( 16.9 ) 0.1

Reclassification of net realized gains on derivative instruments included in net income ( 5.7 ) —

Total change in unrealized (losses) gains from cash flow hedges, net of tax ( 22.6 ) 0.1

Comprehensive income $ 57.1 $ 479.8

See accompanying notes.

5 unchanged sentences

comprehensive

income (loss) Retained

(loss) income Retained

earnings Total

4 unchanged sentences

Tax withholdings related to vesting of stock-based awards ( 0.1 ) — ( 9.5 ) — — ( 9.5 )

Other comprehensive loss, net of tax — — — ( 0.2 ) — ( 0.2 )

Other comprehensive income, net of tax — — — 8.3 — 8.3

Net income — — — — 48.8 48.8

Balance at April 2, 2023 66.6 $ 0.1 $ 2,809.0 $ ( 59.3 ) $ 2,246.7 $ 4,996.5

Issuance of common stock under equity compensation plans 0.1 — 0.8 — — 0.8

Stock-based compensation expense — — 14.7 — — 14.7

Issuance of shares in connection with the Combinations 25.1 — 2,495.4 — — 2,495.4

Issuance of equity replacement awards in connection with the Combinations — — 36.1 — — 36.1

Tax withholdings related to vesting of stock-based awards — — ( 0.7 ) — — ( 0.7 )

Other comprehensive loss, net of tax — — — ( 60.9 ) — ( 60.9 )

Net income — — — — 19.3 19.3

Balance at July 3, 2022 67.0 $ — 2,831.9 ( 60.7 ) 2,148.4 4,919.6

Issuance of common stock under equity compensation and benefit plans — — 2.6 — — 2.6

Stock-based compensation expense — — 12.6 — — 12.6

Tax withholdings related to vesting of stock-based awards — — ( 0.6 ) — — ( 0.6 )

Repurchases of common stock ( 1.0 ) — ( 74.3 ) — — ( 74.3 )

Other comprehensive loss, net of tax — — — ( 83.8 ) — ( 83.8 )

Net income — — — — 19.2 19.2

Balance at October 2, 2022 66.0 $ — $ 2,772.2 $ ( 144.5 ) $ 2,167.6 $ 4,795.3

Common Stock Additional

8 unchanged sentences

Tax withholdings related to vesting of stock-based awards ( 0.1 ) — ( 6.8 ) — — ( 6.8 )

Other comprehensive income, net of tax — — — 0.5 — 0.5

Net income — — — — 178.1 178.1

Balance at April 4, 2021 42.5 — 366.5 0.1 1,123.1 1,489.7

Issuance of common stock under equity compensation plans 0.1 — 0.5 — — 0.5

Stock-based compensation expense — — 5.8 — — 5.8

Tax withholdings related to vesting of stock-based awards — — ( 1.5 ) — — ( 1.5 )

Repurchases of common stock ( 1.0 ) — ( 103.4 ) — — ( 103.4 )

Other comprehensive income, net of tax — — — 0.9 — 0.9

Net income — — — — 19.1 19.1

Balance at July 4, 2021 41.6 — 267.9 1.0 1,142.2 1,411.1

Issuance of common stock under equity compensation and benefit plans — — 2.4 — — 2.4

Stock-based compensation expense — — 5.6 — — 5.6

Tax withholdings related to vesting of stock-based awards — — ( 0.6 ) — — ( 0.6 )

Repurchases of common stock — — — — — —

Other comprehensive loss, net of tax — — — ( 0.2 ) — ( 0.2 )

Net income — — — — 479.9 479.9

Balance at October 3, 2021 41.6 $ — $ 275.3 $ 0.8 $ 1,357.9 $ 1,634.0

Balance at April 3, 2022 41.8 $ — $ 285.6 $ 0.2 $ 2,129.1 $ 2,414.9

See accompanying notes.

2 unchanged sentences

(In millions)

Nine Months Ended

October 2, 2022 October 3, 2021

Three Months Ended

April 2, 2023 April 3, 2022

OPERATING ACTIVITIES:

4 unchanged sentences

Net change in operating lease right-of-use assets and liabilities 0.1 9.4

Payment of accreted interest on contingent and deferred consideration ( 10.4 ) ( 8.2 )

Loss on extinguishment of debt 24.0 —

Unwind inventory fair value adjustment 46.6 —

Other non-cash, net 0.4 2.5

9 unchanged sentences

INVESTING ACTIVITIES

Acquisitions of property, equipment, investments and intangibles ( 79.2 ) ( 260.4 )

Acquisition of businesses, net of cash and restricted cash acquired ( 1,511.4 ) —

Acquisitions of property, plant, equipment and intangibles ( 66.0 ) ( 22.5 )

Proceeds from government assistance allocated to fixed assets 0.3 —

4 unchanged sentences

Proceeds from issuance of common stock 1.8 3.5

Proceeds from long-term borrowings, net of debt issuance costs 2,734.5 —

Payments on long-term borrowings and extinguishment costs ( 2,336.1 ) ( 0.2 )

Payments on long-term borrowings ( 51.9 ) ( 0.1 )

Payments of tax withholdings related to vesting of stock-based awards ( 9.5 ) ( 6.8 )

Repurchases of common stock ( 74.3 ) ( 103.5 )

Principal payments of acquisition contingent consideration ( 4.2 ) ( 4.7 )

Principal payments of deferred consideration ( 33.4 ) ( 35.1 )

Net cash provided by (used for) financing activities 283.7 ( 172.2 )

Net cash used for financing activities ( 59.6 ) ( 3.4 )

Effect of exchange rates on cash 0.6 ( 0.1 )

Net (decrease) increase in cash, cash equivalents and restricted cash ( 589.6 ) 88.5

Net increase in cash, cash equivalents and restricted cash 61.0 472.7

Cash, cash equivalents and restricted cash at beginning of period 293.9 802.8

Cash, cash equivalents and restricted cash at end of period $ 354.9 $ 1,275.5

SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING TRANSACTIONS:

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

Purchase of property, equipment and intangibles by incurring current liabilities $ 19.8 $ 13.7

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Basis of Presentation and Summary of Significant Accounting Policies

Organization and Business

On May 27, 2022, pursuant to a Business Combination Agreement entered into as of December 22, 2021 (the “BCA”), by and among Quidel Corporation (“Quidel”), Ortho Clinical Diagnostics Holdings plc (“Ortho”), QuidelOrtho ™ Corporation (formerly, Coronado Topco, Inc.) (“QuidelOrtho” and collectively with its subsidiaries, the “Company”), Orca Holdco, Inc., Laguna Merger Sub, Inc.

Merger Sub”), and Orca Holdco 2, Inc., Quidel and Ortho consummated a business combination (the “Combinations”) by way of (i) a scheme of arrangement undertaken by Ortho under Part 26 of the U.K.

Companies Act 2006 (the “Ortho Scheme”), pursuant to which each issued and outstanding share of Ortho was acquired by a nominee of QuidelOrtho, such that Ortho became a wholly owned subsidiary of QuidelOrtho, and (ii) a merger of U.S.

Merger Sub with and into Quidel, with Quidel surviving the merger as a wholly owned subsidiary of QuidelOrtho.

The High Court of Justice of England and Wales (the “Court”) sanctioned the Ortho Scheme on May 26, 2022 and a sealed order of the Court was delivered to the Registrar of Companies at Companies House on May 27, 2022, satisfying the final condition to closing.

The results of operations of Ortho have been included in the Company’s unaudited Consolidated Financial Statements from the date of acquisition.

See Note 2 for further information regarding the Combinations.

The Company’s mission is to develop and manufacture accurate and affordable diagnostic testing technologies across the continuum of healthcare testing needs to create better patient outcomes.

The Company’s expertise in clinical chemistry, immunoassay and molecular testing helps clinicians and patients make better informed decisions across the globe.

The Company’s global infrastructure and commercial reach support its customers across more than 130 countries and territories with quality diagnostics, a broad test portfolio and market leading service.

Basis of Presentation

The accompanying unaudited Consolidated Financial Statements of the Company h ave been prepared in accordance with generally accepted accounting principles in the U.S.

(“GAAP”) for interim financial information and with the general instructions to Form 10-Q and Article 10 of Regulation S-X.

Accordingly, certain footnotes or other financial information required by GAAP have been condensed or omitted.

The accompanying unaudited Consolidated Financial Statements of QuidelOrtho Corporation and its subsidiaries (the “Company” or “QuidelOrtho”) have been prepared in accordance with generally accepted accounting principles in the U.S.

(“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X.

Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements.

In the opinion of management, all adjustments considered necessary for a fair presentation (consisting of normal recurring accruals) have been included.

The information at October 2, 2022, and for the three and nine months ended October 2, 2022 and October 3, 2021, is unaudited.

For further information, refer to the Consolidated Financial Statements and notes thereto for the year ended January 2, 2022 included in Quidel’s 2021 Annual Report on Form 10-K.

The information at April 2, 2023, and for the three months ended April 2, 2023 and April 3, 2022, is unaudited.

For further information, refer to the Company’s Consolidated Financial Statements and notes thereto for the fiscal year ended January 1, 2023 included in QuidelOrtho’s 2022 Annual Report on Form 10-K.

Operating results for any quarter are historically seasonal in nature and are not necessarily indicative of the results expected for the full year.

The Company follows the concept of a fiscal year that ends on the Sunday nearest to the end of the month of December, and fiscal quarters that end on the Sunday nearest to the end of the months of March, June and September.

For 2022 and 2021, the Company’s fiscal year will end or has ended on January 1, 2023 and January 2, 2022, respectively.

For 2022 and 2021, the Company’s third quarter ended on October 2, 2022 and October 3, 2021, respectively.

The three and nine-month periods ended October 2, 2022 and October 3, 2021 each included 13 and 26 weeks, respectively.

For 2023 and 2022, the Company’s fiscal year will end or has ended on December 31 , 2023 and January 1, 2023, respectively.

For 2023 and 2022, the Company’s first quarter ended on April 2, 2023 and April 3, 2022, respectively.

The three months ended April 2, 2023 and April 3, 2022 each included 13 weeks.

Use of Estimates

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Reclassifications

Certain prior period amounts were reclassified to conform to the current period presentation, including the separate presentation of Amortization of intangible assets and Interest expense, net, the combination of Selling, marketing and administrative expense, and reclassification of Other current liabilities and Other liabilities, which did not change the reported amounts of Total current liabilities or Total liabilities.

Cost of sales, excluding amortization of intangibles for the three and nine months ended October 3, 2021 excludes $ 1.9 million and $ 5.5 million, respectively, of intangibles amortization expense, formerly included in Cost of sales, which has been reclassified to Amortization of intangible assets.

Selling, marketing and administrative expense for the three and nine months ended October 3, 2021 excludes $ 5.0 million and $ 15.0 million, respectively, of intangibles amortization expense, formerly included in Sales and marketing expense, which has been reclassified to Amortization of intangible assets.

Cost of sales, excluding amortization of intangibles for the three months ended April 3, 2022 excludes $ 2.0 million of intangibles amortization expense, formerly included in Cost of sales, which has been reclassified to Amortization of intangible assets.

Selling, marketing and administrative expense for the three months ended April 3, 2022 excludes $ 5.1 million of intangibles amortization expense, formerly included in Sales and marketing expense, which has been reclassified to Amortization of intangible assets.

The reclassifications did not have an impact on net assets, Operating income, Net income, Basic or Diluted earnings per share, or cash flows.

Recent Accounting Pronouncements

In October 2021, the Financial Accounting Standards Board issued guidance which was codified in Accounting Standards Update 2021-08, Business Combinations (Topic 805) Accounting for Contract Assets and Contract Liabilities from Contracts with Customers .

Under the new guidance, an acquirer is required to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606, Revenue from Contracts with Customers .

For public business entities, this guidance is effective for fiscal years beginning after December 15, 2022, with early adoption permitted.

The Company early adopted the guidance during the first quarter of 2022 with no material impact to the Company’s unaudited Consolidated Financial Statements.

Significant Accounting Policies

During the nine months ended October 2, 2022, there have been no changes to the Company’s significant accounting policies as described in Quidel’s 2021 Annual Report on Form 10-K, except for the addition of certain policies related to the Combinations, which are discussed below.

Business Combinations

The cost of an acquired business is assigned to the tangible and identifiable intangible assets acquired and liabilities assumed on the basis of the estimated fair values at the date of acquisition.

We assess fair value, which is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, using a variety of methods including, but not limited to, an income approach and a market approach, such as the estimation of future cash flows of the acquired business and current selling prices of similar assets.

Fair value of the assets acquired and liabilities assumed, including intangible assets, in-process research and development (“IPR&D”), and contingent payments, are measured based on the assumptions and estimations with regards to variable factors such as the amount and timing of future cash flows for the asset or liability being measured, appropriate risk-adjusted discount rates, nonperformance risk, or other factors that market participants would consider.

Upon acquisition, we determine the estimated economic lives of the acquired intangible assets for amortization purposes, which are based on the underlying expected cash flows of such assets.

When applicable, adjustments to inventory are based on the fair market value of inventory and amortized into income based on the period in which the underlying inventory is sold.

Goodwill is an asset representing the future economic benefits arising from other assets acquired in a business combination that is not individually identified and separately recognized.

Actual results may vary from projected results and assumptions used in the fair value assessments.

Defined Benefit Plans and Other Post-Employment Benefits

In connection with the Combinations, the Company assumed Ortho’s defined benefit plans in certain countries and a retiree healthcare reimbursement plan for certain U.S.

Defined benefit plans specify an amount of pension benefit that an employee will receive on retirement, usually dependent on factors such as age, years of service and compensation.

The net obligation with respect to defined benefit plans is calculated separately for each plan by estimating the amount of the future benefits that employees have earned in return for their service in the current and prior periods.

These benefits are then discounted to determine the present value of the obligations and are then adjusted for the impact of any unamortized prior service costs.

The net obligation is then determined with reference to the fair value of the plan assets (if any).

The discount rate used is the yield on bonds that are denominated in the currency in which the benefits will be paid and that have maturity dates approximating the terms of the obligations.

The calculations are performed by qualified actuaries using the projected unit credit method.

Government Assistance

In connection with the Combinations, the Company acquired a previously established agreement between Ortho and the Biomedical Advanced Research and Development Authority (“BARDA”), a division of the U.S.

Department of Health and Human Services, which provided funding for Ortho to build manufacturing space and production support equipment to increase COVID-19 assay production capacity, as well as to build a manufacturing facility to produce certain analyzers needed to support COVID-19 testing.

Amounts received from BARDA under this grant are recorded as a reduction to the carrying value of the related assets.

A portion of the grant is for purposes of reimbursement of certain general and administrative expenses related to the project, which will not be capitalized as part of the equipment constructed in connection with the project and will be recorded as a reduction to the related expense.

The Company received $ 15.8 million during the nine months ended October 2, 2022, which was recorded as a reduction to the carrying value of the related assets.

There have been no accounting pronouncements issued or adopted during the three months ended April 2, 2023 that are expected to have a material impact on the Company’s financial statements.

Business Combination

On May 27, 2022, pursuant to the BCA, Quidel and Ortho consummated the Combinations and each of Quidel and Ortho became a wholly owned subsidiary of QuidelOrtho.

On May 27, 2022, pursuant to a Business Combination Agreement entered into as of December 22, 2021 (the “BCA”), by and among Quidel Corporation (“Quidel”), Ortho Clinical Diagnostics Holdings plc (“Ortho”), QuidelOrtho (formerly Coronado Topco, Inc.), Orca Holdco, Inc., Laguna Merger Sub, Inc.

and Orca Holdco 2, Inc., Quidel and Ortho consummated a business combination (the “Combinations”) and each of Quidel and Ortho became a wholly owned subsidiary of QuidelOrtho.

As a result of the Combinations, QuidelOrtho became the successor issuer to Quidel.

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Former Ortho shareholders received $ 7.14 in cash and 0.1055 shares of QuidelOrtho common stock for each Ortho ordinary share.

The total purchase consideration was calculated as follows (in millions, except value per share data and Ortho Exchange Ratio):

Total Ortho shares subject to exchange 237.487

Ortho Exchange Ratio 0.1055

QuidelOrtho shares issued 25.055

Value per Quidel share as of May 26, 2022 $ 99.60

Fair value of stock consideration $ 2,495.5

Fair value of replacement equity awards (1) 47.9

Cash consideration (2) 1,747.7

Total purchase consideration $ 4,291.1

(1) Represents the fair value of replacement stock options (which include options with time-based, performance-based, and both performance- and market-based vesting conditions), restricted stock units (“RSUs”) and restricted stock outstanding as of May 27, 2022 that are attributable to service prior to the Combinations.

The terms of the replacement awards are substantially similar to the former Ortho equity awards for which they were exchanged.

The portion of the fair value of the replacement equity awards attributable to service after the Combinations is $ 46.6 million and will be recognized as compensation expense based on the vesting terms of the replacement equity awards.

(2) Represents cash consideration of $ 7.14 per share paid to Ortho shareholders and holders of vested Ortho stock options on the closing date of the Combinations for 237.5 million outstanding Ortho shares and 7.3 million vested Ortho stock options.

The Company funded the cash portion of the purchase price with cash on its balance sheet and a portion of the Term Loan (as defined in Note 8) proceeds from the Financing (as defined in Note 8).

See Note 8 for further information regarding the Company’s debt.

The components of the preliminary purchase price allocation on the closing date of the Combinations are as follows:

(In millions) Amounts Recognized as of Acquisition Date

(as previously reported) Measurement Period Adjustments Amounts Recognized as of Acquisition Date

(as adjusted)

Cash and cash equivalents $ 234.5 $ — $ 234.5

Accounts receivable 240.6 — 240.6

Inventories 386.8 — 386.8

Property, plant and equipment 767.5 157.8 925.3

Goodwill 2,291.3 ( 190.7 ) 2,100.6

Intangible assets 3,133.0 95.0 3,228.0

Prepaid expenses and other assets 287.9 4.4 292.3

Total assets 7,341.6 66.5 7,408.1

Accounts payable ( 135.0 ) — ( 135.0 )

Accrued payroll and related expenses ( 80.7 ) ( 0.4 ) ( 81.1 )

Long-term borrowings, including current portion (1)

( 2,268.4 ) — ( 2,268.4 )

Deferred tax liability ( 215.4 ) ( 62.8 ) ( 278.2 )

Other current and non-current liabilities ( 351.0 ) ( 3.3 ) ( 354.3 )

Total liabilities ( 3,050.5 ) ( 66.5 ) ( 3,117.0 )

Total purchase consideration $ 4,291.1 $ — $ 4,291.1

(1) Immediately following the closing of the Combinations, the Company repaid long-term borrowings assumed, which consisted of $ 1,608.4 million aggregate principal amount related to Ortho’s Dollar Term Loan and Euro Term Loan Facilities, $ 240.0 million aggregate principal amount of 7.375 % Senior Notes due 2025 and $ 405.0 million aggregate principal amount of 7.250 % Senior Notes due 2028.

The 7.375 % and 7.250 % Senior Notes were fully discharged following the Combinations.

The Company recorded a $ 23.5 million loss on extinguishment in connection with the Combinations, representing the difference between the reacquisition value, inclusive of $ 35.9 million of redemption premium, and the net carrying value of the extinguished debt.

The fair value estimates for the assets acquired and liabilities assumed were based on preliminary calculations, and the Company’s estimates and assumptions are subject to change, including the valuation of inventory, property, plant and equipment, intangible assets, income taxes and legal contingencies, among other items, to reflect any additional information related to facts and circumstances that existed as of the closing date of the Combinations that, if known, would have affected the measurement of the amounts recognized as of that date.

The Company is continuing to obtain and evaluate information relevant to the estimated future cash flows to value certain intangible assets, as well as replacement costs and relevant market transaction information to value acquired plant, property, and equipment.

As a result, the preliminary related amounts presented above may change due to further measurement period adjustments.

The Company expects to finalize the valuation as soon as practicable, but no later than one year after the closing date of the Combinations.

The measurement period adjustments in the three months ended October 2, 2022 primarily resulted from completing preliminary valuations of real estate and personal property, revised future cash flow estimates for certain intangible assets and income tax liabilities.

The related impact to net earnings that would have been recognized in previous periods if the adjustments were recognized as of the acquisition date is immaterial to the unaudited Consolidated Financial Statements.

Inventories acquired included raw materials, work in progress and finished goods.

Inventories were recorded at their estimated fair values.

Inventories were valued at the estimated selling price less the estimated costs to be incurred to complete and sell the inventories, the associated margins on these activities and holding costs.

A preliminary step-up in the value of inventory of $ 64.1 million was recorded in connection with the Combinations.

The step-up value is being recorded in Cost of sales, excluding amortization of intangibles in the Consolidated Statements of Income as the inventory is sold to customers, and is expected to be fully recognized by the end of 2022.

In the three and nine months ended October 2, 2022, $ 35.4 million and $ 46.6 million, respectively, of the fair value step-up of inventory was recognized in the unaudited Consolidated Statements of Income.

Goodwill represents the excess of the total purchase consideration over the estimated fair value of the net assets acquired, and is primarily attributable to synergies which are expected to expand the Company’s revenue profile and product diversity, as well as Ortho’s assembled workforce.

Goodwill is not deductible for tax purposes.

The preliminary assignment of goodwill by reportable segment as of the closing date of the Combinations is as follows (in millions):

North America $ 1,170.2

The following table sets forth the amounts assigned to the identifiable intangible assets acquired (in millions, except years):

Intangible Asset Amortization Period Fair Value of Assets Acquired

Customer relationships 20 years $ 1,775.0

Developed technology 15 years 903.0

Trademarks 15 years 373.0

In-process research and development Not amortized 177.0

The fair value of customer relationships and in-process research and development (“IPR&D”) was estimated using the Multi-Period Excess Earnings Method, which is a form of the income approach.

Significant assumptions include:

(i) the estimated annual net cash flows, which are a function of expected earnings attributable to the asset, contributory asset charges and the applicable tax rate, and (ii) the discount rate.

The fair value of developed technology and trademarks was estimated using the Relief from Royalty Method, which is another form of the income approach.

Significant assumptions include:

(i) the estimated annual net cash flows, which are a function of expected earnings attributable to the asset, the probability of use of the asset, the royalty rate and the applicable tax rate, and (ii) the discount rate.

Intangible assets are amortized on a straight-line basis over the amortization periods noted above, which reflects the estimated useful life of the underlying assets.

The amortization of IPR&D will begin at the related product launch and will be tested annually for potential impairment.

For the three and nine months ended October 2, 2022, the Company incurred $ 1.1 million and $ 47.0 million, respectively, of transaction costs related to the Combinations, which primarily consisted of financial advisory, legal, accounting and valuation-related expenses.

These expenses were recorded in Acquisition and integration costs in the unaudited Consolidated Statements of Income.

The following unaudited supplemental pro forma financial information shows the combined results of operations of the Company as if the Combinations had occurred on January 4, 2021, the beginning of the periods presented:

Three Months Ended Nine Months Ended

(In millions) October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021

Pro forma total revenues $ 783.8 $ 1,032.3 $ 3,184.7 $ 2,583.5

Pro forma net (loss) income 50.2 225.2 549.5 340.2

This unaudited supplemental pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved had the Combinations been completed at the beginning of fiscal year 2021.

In addition, the unaudited supplemental pro forma financial information is not a projection of the Company’s future results of operations, nor does it reflect the expected realization of any synergies or cost savings associated with the Combinations.

The unaudited supplemental pro forma financial information includes adjustments for:

• Incremental intangible assets amortization expense to be incurred of $ 17.5 million, $ 10.2 million and $ 30.1 million in the nine months ended October 2, 2022 and the three and nine months ended October 3, 2021, respectively, based on the preliminary fair values of the identifiable intangible assets acquired;

• Incremental cost of sales related to the fair value step-up of inventory which is reflected by an adjustment to decrease expense by $ 35.4 million and $ 46.6 million in the three and nine months ended October 2, 2022, respectively, and an adjustment to increase expense by $ 64.1 million in the nine months ended October 3, 2021;

• Decreases in interest expense of $ 11.2 million, $ 7.5 million and $ 28.1 million in the nine months ended October 2, 2022 and the three and nine months ended October 3, 2021, respectively, associated with the issuance of debt to finance the Combinations and to repay Ortho’s then-outstanding indebtedness, including the net impact of the removal of the amortization of the discount on Ortho’s indebtedness and the change in amortization of deferred financing fees;

• The removal of $ 50.3 million of loss on extinguishment of debt from Ortho’s financial results for the nine months ended October 3, 2021 and the reclassification of $ 24.0 million of loss on extinguishment of debt incurred during the nine months ended October 2, 2022 to the nine months ended October 3, 2021;

• The reclassification of $ 12.8 million of expense related to the accelerated vesting of certain stock awards of Ortho’s former Chief Executive Officer from the nine months ended October 2, 2022 to the nine months ended October 3, 2021;

• Tax impacts related to the above adjustments.

From the closing date of the Combinations through October 2, 2022, the acquired results of operations of Ortho contributed total revenues of $ 700.4 million and net loss of $ 63.6 million to the Company’s consolidated results, which included amortization of acquired intangible assets of $ 57.7 million and recognition in Cost of sales, excluding amortization of intangibles of the fair value step-up of inventory of $ 46.6 million.

The Company funded

the cash portion of the purchase price with cash on its balance sheet and a portion of the Term Loan proceeds from the Financing (each as defined in Note 8).

The purchase price allocation is preliminary and subject to change for income tax matters.

The amounts recognized will be finalized as the information necessary to complete the analysis is obtained, but no later than one year after the closing date of the Combinations.

Measurement period adjustments decreased goodwill by $ 2.8 million in the three months ended April 2, 2023 due to a purchase price allocation increase of $ 3.0 million to income taxes payable and a decrease of $ 0.2 million to deferred tax liabilities .

Computation of Earnings Per Share

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The following table presents the calculation of the weighted-average shares used in computing basic and diluted EPS:

Three Months Ended Nine Months Ended

(In millions) October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021

Three Months Ended

(In millions) April 2, 2023 April 3, 2022

Basic weighted-average shares of common stock outstanding 66.6 41.9

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The Company records an asset when revenue is recognized prior to invoicing a customer (a “contract asset”).

Contract assets are included within Prepaid expenses and other current assets or Other assets in the Company’s unaudited Consolidated Balance Sheets and are transferred to accounts receivable when the right to payment becomes unconditional.

The balance of contract assets recorded in the Company’s unaudited Consolidated Balance Sheets as of October 2, 2022 was $ 54.6 million and was included in Prepaid expenses and other current assets.

The contract asset balance as of October 2, 2022 consists of the following components, all of which relate to agreements acquired by the Company in connection with the Combinations;

therefore, no balance existed at January 2, 2022:

• a customer supply agreement under which the difference between the timing of invoicing and revenue recognition resulted in a contract asset of $ 8.5 million;

Contract assets are included within Prepaid expenses and other current assets in the Company’s unaudited Consolidated Balance Sheets and are transferred to accounts receivable when the right to payment becomes unconditional.

The balance of contract assets recorded in the Company’s unaudited Consolidated Balance Sheets as of April 2, 2023 and January 1, 2023 was $ 53.4 million and $ 49.6 million, respectively.

The contract asset balance consisted of the following components, all of which related to agreements acquired by the Company in connection with the Combinations:

• a customer supply agreement under which the difference between the timing of invoicing and revenue recognition resulted in a contract asset of $ 4.3 million and $ 6.8 million, respectively, as of April 2, 2023 and January 1, 2023;

• contractual arrangements with certain customers under which the Company invoices the customers based on reportable results generated by its reagents;

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The Company records the revenue upon shipment and an associated contract asset, and relieves the contract asset upon completion of the invoicing.

The balance of the contract asset related to these arrangements was $ 41.5 million as of October 2, 2022 and was recorded in Prepaid expenses and other current assets;

• one of the Company’s contract manufacturing agreements that recognizes revenue as the products are manufactured.

The balance of the contract asset related to this arrangement was $ 4.6 million as of October 2, 2022.

The balance of the contract asset related to these arrangements was $ 40.8 million and $ 38.5 million, respectively, as of April 2, 2023 and January 1, 2023;

• one of the Company’s contract manufacturing agreements that recognizes revenue as the products are manufactured resulted in a contract asset of $ 8.3 million and $ 4.3 million, respectively, as of April 2, 2023 and January 1, 2023.

The Company reviews contract assets for expected credit losses resulting from the collectability of customer accounts.

Expected losses are established based on historical losses, customer mix and credit policies, current economic conditions in customers’ country or industry, and expectations associated with reasonable and supportable forecasts.

No credit losses related to contract assets were recognized during the three and nine months ended October 2, 2022.

No credit losses related to contract assets were recognized during the three months ended April 2, 2023.

The Company recognizes a contract liability when a customer pays an invoice prior to the Company transferring control of the goods or services (“contract liabilities”).

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The Company classifies deferred revenue as current or non-current based on the timing of the transfer of control or performance of the service.

The balance of the Company’s current deferred revenue was $ 32.5 million as of October 2, 2022, and $ 1.9 million as of January 2, 2022.

The balance of the Company’s current deferred revenue was $ 61.9 million as of April 2, 2023 and $ 76.4 million as of January 1, 2023.

The Company has one arrangement with a customer where the revenue is expected to be recognized beyond one year.

The balance of the deferred revenue included in long-term liabilities was $ 9.7 million as of October 2, 2022 and was included in Other liabilities in the unaudited Consolidated Balance Sheets.

Grifols / Novartis Vaccines and Diagnostics, Inc.

The balance of the deferred revenue included in long-term liabilities was $ 12.7 million and $ 9.4 million as of April 2, 2023 and January 1, 2023, respectively, and was included in Other liabilities in the Consolidated Balance Sheets.

The amount of deferred revenue as of January 1, 2023 that was recorded in Total revenues during the three months ended April 2, 2023 was $ 50.8 million.

Joint Business with Grifols

In connection with the Combinations, the Company acquired the ongoing collaboration arrangement (the “Joint Business”) between Ortho and Grifols Diagnostic Solutions, Inc.

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The governance of the Joint Business is shared through a supervisory board made up of equal representation by Ortho and Grifols, which is responsible for all significant decisions relating to the Joint Business that are not exclusively assigned to either Ortho or Grifols, as defined in the Joint Business agreement.

The Company’s portion of the pre-tax net profit shared under the Joint Business was $ 7.9 million and $ 13.5 million during the three and nine months ended October 2, 2022, respectively.

This included the Company’s portion of the pre-tax net profit of $ 5.2 million and $ 8.8 million during the three and nine months ended October 2, 2022, respectively, on sales transactions with third parties where the Company is the principal.

The Company’s portion of the pre-tax net profit shared under the Joint Business was $ 23.6 million during the three months ended April 2, 2023.

This included the Company’s portion of the pre-tax net profit of $ 1.2 million during the three months ended April 2, 2023 on sales transactions with third parties where the Company is the principal.

The Company recognized revenues, cost of sales, excluding amortization of intangibles, and operating expenses, on a gross basis on these sales transactions in their respective lines in the unaudited Consolidated Statements of Income.

The Company’s portion of the pre-tax net profit also included revenue of $ 2.7 million and $ 4.7 million from collaboration and royalty agreements during the three and nine months ended October 2, 2022, respectively, which is presented on a net basis within Total revenues.

The Company’s portion of the pre-tax net profit also included revenue of $ 22.4 million from collaboration and royalty agreements during the three months ended April 2, 2023, which is presented on a net basis within Total revenues.

Disaggregation of Revenue

Following the Combinations, the Company generates product revenue in the following business units:

• Labs—Focused on (i) clinical chemistry laboratory instruments and tests, which measure target chemicals in bodily fluids for the evaluation of health and the clinical management of patients, (ii) immunoassay laboratory instruments and tests, which measure proteins as they act as antigens in the spread of disease, antibodies in the immune response spurred by disease, or markers of proper organ function and health, (iii) testing to detect and monitor disease progression across a broad spectrum of therapeutic areas, (iv) other product revenues primarily from contract manufacturing, (v) specialized diagnostic solutions and (vi) collaboration and license agreements pursuant to which the Company derives collaboration and royalty revenues.

• Transfusion Medicine—Focused on (i) immunohematology instruments and tests used for blood typing to help ensure patient-donor compatibility in blood transfusions and (ii) donor screening instruments and tests used for blood and plasma screening for infectious diseases for customers primarily in the U.S.

• Point-of-Care—Focused on tests to provide rapid results across a broad continuum of point-of-care settings, including tests for professional healthcare providers and tests that can be taken at home.

Includes (i) tests for a range of benchtop analyzers and (ii) tests that can be visually read.

• Molecular Diagnostics—Includes (i) Polymerase Chain Reaction (“PCR”) thermocyclers with reduced process time and ready-to-use reagent configurations and (ii) analyzer and amplification systems with the ability to run multiple assays at one time.

The following table summarizes Total revenues by business unit for the three and nine months ended October 2, 2022 and October 3, 2021:

Three Months Ended Nine Months Ended

(In millions) October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021

The following table summarizes Total revenues by business unit:

Three Months Ended

(In millions) April 2, 2023 April 3, 2022

Labs $ 370.7 $ 13.3

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The Company had sales to individual customers in excess of 10% of Total revenues as follows:

Nine Months Ended

October 2, 2022 October 3, 2021

As of October 2, 2022 and January 2, 2022, customers with balances due in excess of 10% of Accounts receivable, net totaled $ 162.9 million and $ 267.3 million, respectively.

For the nine months ended October 2, 2022 and October 3, 2021, sales of COVID-19 products accounted for 54 % and 71 % of Total revenues, respectively.

For the nine months ended October 2, 2022 and October 3, 2021, sales of influenza products accounted for 7 % and 3 % of Total revenues, respectively.

Three Months Ended

April 2, 2023 April 3, 2022

As of April 2, 2023, no customers had a balance due in excess of 10% of Accounts receivable, net.

As of January 1, 2023, customers with balances due in excess of 10% of Accounts receivable, net totaled $ 161.9 million.

For the three months ended April 2, 2023 and April 3, 2022, sales of COVID-19 products accounted for 26 % and 83 % of Total revenues, respectively.

Segment and Geographic Information

In connection with the Combinations, the manner in which the chief operating decision maker (“CODM”) reviews the Company’s performance and allocates resources changed, resulting in three geographically-based reportable segments:

North America;

Europe, the Middle East and Africa (“EMEA”);

Although all three segments are engaged in the marketing, distribution and sale of diagnostic instruments and assays for hospitals, retailers, distributors, laboratories and/or blood and plasma centers worldwide, each region is managed separately to better align with the market dynamics of the specific geographic region.

Latin America, Japan and Asia Pacific are immaterial operating segments that are not considered reportable segments and are included in “Other.” Previously, the Company operated as a single reportable segment.

Prior periods have been revised to align with the current period presentation.

Total revenues by reportable segment are as follows:

Three Months Ended Nine Months Ended

(In millions) October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021

Three Months Ended

(In millions) April 2, 2023 April 3, 2022

North America $ 582.8 $ 961.5

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Total revenues $ 846.1 $ 1,002.3

Beginning in the second quarter of 2022, in connection with the Combinations, the basis by which the Company measures segment profit or loss changed to Adjusted EBITDA in order to manage the Company’s business to better align with the market dynamics of the specific geographic regions in which the Company operates.

Prior periods have been revised to align with the current period presentation.

The following table sets forth Adjusted EBITDA by segment and the reconciliations to Income before provision for income taxes for the three and nine months ended October 2, 2022 and October 3, 2021:

Three Months Ended Nine Months Ended

(In millions) October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021

The following table sets forth Adjusted EBITDA by segment and the reconciliations to Income before provision for income taxes for the three months ended April 2, 2023 and April 3, 2022:

Three Months Ended

(In millions) April 2, 2023 April 3, 2022

North America $ 278.4 $ 713.4

EMEA 17.2 4.5 33.5 22.8

China 28.5 3.8

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Depreciation and amortization ( 114.2 ) ( 15.3 )

Interest expense, net ( 29.7 ) ( 1.3 ) ( 41.0 ) ( 4.7 )

Acquisition and integration costs ( 29.7 ) ( 3.0 )

Loss on extinguishment of debt — — ( 24.0 ) —

Unwind inventory fair value adjustment ( 35.4 ) — ( 46.6 ) —

Amortization of deferred cloud computing

implementation costs ( 1.6 ) ( 1.0 ) ( 3.9 ) ( 2.9 )

Derivative mark-to-market gain 3.4 — 4.4 —

Gain (loss) on investments — 1.2 ( 0.8 ) 1.2

Interest expense, net ( 36.7 ) ( 1.0 )

Amortization of deferred cloud computing implementation costs ( 1.6 ) ( 1.0 )

Employee compensation charges and other costs ( 1.5 ) —

Impairment of long-lived assets ( 0.5 ) —

EU medical device regulation transition costs (2)

( 0.6 ) — ( 1.0 ) —

Tax indemnification income 0.3 — 0.3 —

Change in fair value of acquisition contingencies — — ( 0.1 ) ( 0.1 )

Tax indemnification expense ( 0.3 ) —

Income before provision for income taxes $ 60.0 $ 620.6

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(2) Represents incremental consulting costs and research and development (“R&D”) manufacturing site costs to align compliance of Ortho’s existing, on-market products that were previously registered under the European In Vitro Diagnostics Directive regulatory framework with the requirements under the EU’s In Vitro Diagnostic Regulation, which generally apply from May 2022 onwards.

The CODM does not review capital expenditures, total depreciation and amortization or assets by segment, and therefore this information has been excluded as it does not comprise part of management’s key performance metrics.

The chief operating decision maker does not review capital expenditures, total depreciation and amortization or assets by segment, and therefore this information has been excluded as it does not comprise part of management’s key performance metrics.

The Company calculates its interim income tax provision in accordance with ASC 270, Interim Reporting , and ASC 740, Accounting for Income Taxes .

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The tax effects for other items that are excluded from ordinary income are discretely calculated and recognized in the period in which they occur.

For the three months ended October 2, 2022 and October 3, 2021, the Company recognized a Provision for income taxes of $ 12.1 million and $ 65.8 million, respectively, in relation to Income before provision for income taxes of $ 31.3 million and $ 281.5 million, respectively, resulting in effective tax rates of 39 % and 23 %, respectively.

As compared to the federal statutory rate of 21%, the effective tax rates in both periods were impacted primarily by income taxes owed in certain U.S.

For the three months ended October 2, 2022, the effective tax rate was also impacted by operating losses in certain subsidiaries not being benefited due to the establishment of valuation allowances.

For the three months ended October 3, 2021, the effective tax rate was impacted primarily by income taxes owed in U.S.

states, partially offset by benefits from the discrete impact of excess tax deductions from stock-based compensation, which were immaterial to the effective tax rate in the three months ended October 2, 2022.

For the nine months ended October 2, 2022 and October 3, 2021, the Company recognized a Provision for income taxes of $ 176.4 million and $ 112.1 million, respectively, in relation to Income before provision for income taxes of $ 694.8 million and $ 525.0 million, respectively, resulting in effective tax rates of 25 % and 21 %, respectively.

As compared to the federal statutory rate of 21%, the effective tax rates in both periods were impacted primarily by income taxes owed in certain U.S.

For the nine months ended October 3, 2021, the effective tax rate was partially offset by benefits from the discrete impact of excess tax deductions from stock-based compensation, which were immaterial to the effective tax rate in the nine months ended October 2, 2022.

For the three months ended April 2, 2023 and April 3, 2022, the Company recognized a Provision for income taxes of $ 11.2 million and $ 140.7 million, respectively, in relation to Income before provision for income taxes of $ 60.0 million and $ 620.6 million, respectively, resulting in effective tax rates of 18.7 % and 22.7 %, respectively.

For the three months ended April 2, 2023, the effective tax rate was impacted by income tax benefits related to non-U.S.

earnings being taxed at rates that are different than the U.S.

statutory rate, R&D credits, foreign tax credits, and foreign exchange losses, partially offset by income taxes owed in U.S.

states and Global Intangible Low-Tax Income.

For the three months ended April 3, 2022, the effective tax rate was impacted primarily by income taxes owed in U.S.

The balance of unrecognized tax benefits at April 2, 2023, not including interest and penalties, was $ 39.9 million, of which $ 28.2 million could affect the effective income tax rate in future periods, if recognized.

The Company also recognizes interest and penalties related to unrecognized tax benefits in tax expense.

At April 2, 2023, the Company had approximately $ 8.2 million of interest and penalties accrued related to unrecognized tax benefits.

The Company estimates that within the next 12 months, its uncertain tax positions, excluding interest, will decrease by $ 2.0 million.

The Company is subject to periodic audits by domestic and foreign tax authorities.

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The Company believes that it has appropriate support for the income tax positions taken on its tax returns and that its accruals for tax liabilities are adequate for all open years based on an assessment of many factors, including past experience and interpretations of tax laws applied to the facts of each matter.

The balance of unrecognized tax benefits at October 2, 2022, not including interest and penalties, was $ 45.2 million, of which $ 32.9 million could affect the effective income tax rate in future periods, if recognized.

The Company also recognizes interest and penalties related to unrecognized tax benefits in tax expense.

At October 2, 2022, the Company had approximately $ 8.8 million of interest and penalties accrued related to unrecognized tax benefits.

The Company estimates that within the next 12 months, its uncertain tax positions, excluding interest, will decrease by $ 3.0 million.

Indemnification Assets

On January 16, 2014, Ortho entered into a stock and asset purchase agreement of (i) certain assets and liabilities and (ii) all of the equity interests and substantially all of the assets and liabilities of certain entities, which, together with their subsidiaries, comprised the Ortho business from Johnson & Johnson.

The agreement generally provided that Johnson & Johnson retained all income tax liabilities accrued as of the date of the acquisition, including reserves for unrecognized tax benefits.

The indemnification receivable from Johnson & Johnson totaled $ 16.2 million and $ 16.8 million as of April 2, 2023 and January 1, 2023, respectively, and is included as a component of Prepaid expenses and other current assets and Other assets on the Consolidated Balance Sheet.

The Company recorded $ 0.3 million of interest and penalties during the three months ended April 2, 2023.

Balance Sheet Account Details

Cash, Cash Equivalents and Restricted Cash

(In millions) October 2, 2022 January 2, 2022

(In millions) April 2, 2023 January 1, 2023

Cash and cash equivalents $ 353.9 $ 292.9

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The following table is a summary of marketable securities:

October 2, 2022 January 2, 2022

April 2, 2023 January 1, 2023

(In millions) Amortized Cost Gross Unrealized Losses Fair Value Amortized Cost Gross Unrealized Losses Fair Value

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government securities — — — 2.0 — 2.0

Agency bonds 1.0 — 1.0 1.0 — 1.0

Sovereign government bonds 2.0 — 2.0 1.9 — 1.9

Foreign and other 0.5 — 0.5 0.5 — 0.5

Total marketable securities, current 43.0 ( 0.2 ) 42.8 52.6 ( 0.5 ) 52.1

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Corporate asset-backed securities, non-current 8.8 ( 0.1 ) 8.7 7.9 ( 0.1 ) 7.8

Foreign and other 1.9 — 1.9 — — —

Agency bonds 1.6 ( 0.1 ) 1.5 — — —

Total marketable securities $ 77.0 $ ( 0.4 ) $ 76.6 $ 73.8 $ ( 0.7 ) $ 73.1

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Accounts receivables primarily consist of trade accounts receivables with maturities of one year or less and are presented net of reserves:

(In millions) October 2, 2022 January 2, 2022

(In millions) April 2, 2023 January 1, 2023

Accounts receivable $ 356.2 $ 543.0

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Inventories consisted of the following:

(In millions) October 2, 2022 January 2, 2022

(In millions) April 2, 2023 January 1, 2023

Raw materials $ 198.6 $ 185.2

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Total inventories (1)

$ 568.0 $ 563.0

Inventories $ 528.6 $ 524.1

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Total inventories $ 568.0 $ 563.0

(1) Includes adjustment of approximately $ 39 million in the three months ended April 2, 2023 due to changes in estimates to decrease inventory obsolescence reserves from the prior period.

(2) Other assets includes inventory expected to remain on hand beyond one year.

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Prepaid expenses and other current assets consist of the following:

(In millions) October 2, 2022 January 2, 2022

Other receivables $ 37.2 $ 15.8

Contract assets 54.6 —

(In millions) April 2, 2023 January 1, 2023

Prepaid expenses $ 101.0 $ 96.7

Contract assets 53.4 49.6

Other receivables (1)

Income taxes and other tax receivables 48.4 38.6

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Total prepaid expenses and other current assets $ 298.8 $ 252.1

(1) Includes a settlement award of approximately $ 41 million from a third party related to one of the Company’s collaboration agreements, of which approximately $ 20 million is due to the Company’s collaboration partner and is included within Accounts payable as of April 2, 2023.

Changes in goodwill were as follows:

(In millions) North America EMEA China Other Total

Balance at January 1, 2023 $ 1,547.7 $ 358.6 $ 118.1 $ 452.4 $ 2,476.8

Purchase accounting adjustments ( 1.6 ) ( 0.4 ) ( 0.2 ) ( 0.6 ) ( 2.8 )

Foreign currency translation — 5.7 0.5 11.1 17.3

Balance at April 2, 2023 $ 1,546.1 $ 363.9 $ 118.4 $ 462.9 $ 2,491.3

Other Current Liabilities

Other current liabilities consist of the following:

(In millions) October 2, 2022 January 2, 2022

(In millions) April 2, 2023 January 1, 2023

Deferred revenue $ 61.9 $ 76.4

Accrued commissions and rebates 57.6 55.1

Deferred consideration 39.8 39.3

Deferred revenue 32.5 1.9

Operating lease liabilities 26.1 24.4

Accrued other taxes payable 14.7 10.2

Derivatives 17.9 19.7

Contingent consideration 0.1 6.0

Payables under transition services agreements — 10.9

Accrued other taxes payable 16.5 9.3

Other 114.2 101.2

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The components of borrowings were as follows:

(In millions) October 2, 2022 January 2, 2022

(In millions) April 2, 2023 January 1, 2023

Term Loan $ 2,595.3 $ 2,646.9

Revolving Credit Facility — —

Financing lease obligation 0.7 0.8

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Long-term borrowings $ 2,379.6 $ 2,430.8

On May 27, 2022, the Company entered into a credit agreement (the “Credit Agreement”) by and among the Company, as borrower, Bank of America, N.A., as administrative agent and swing line lender (“Bank of America”), and the other lenders and L/C issuers party thereto (together with Bank of America, the “Lenders”).

Pursuant to the Credit Agreement and in connection with the consummation of the Combinations, the Lenders provided the Company with a $ 2,750.0 million senior secured term loan facility (the “Term Loan”) and a $ 750.0 million revolving credit facility (the “Revolving Credit Facility” and with the Term Loan, the “Financing”).

Effective August 4, 2022, pursuant to the Increase Joinder No.

1 to the Credit Agreement, the Revolving Credit Facility increased by $ 50.0 million to $ 800.0 million.

The Financing is guaranteed by certain material domestic subsidiaries of the Company (the “Guarantors”) and is secured by liens on substantially all of the assets of the Company and the Guarantors, excluding real property and certain other types of excluded assets.

Loans under the Credit Agreement will bear interest at a rate per annum equal to the Term SOFR or Base Rate plus the Applicable Rate (each as defined in the Credit Agreement).

As of October 2, 2022, letters of credit issued under the Revolving Credit Facility totaled $ 18.2 million, which reduced the available amount under the Revolving Credit Facility to $ 781.8 million.

In connection with the Credit Agreement, the Company incurred $ 15.4 million of debt issuance costs, of which $ 11.9 million was related to the Term Loan and $ 3.5 million was related to the Revolving Credit Facility.

Debt issuance costs related to the issuance of the Term Loan were recorded as a reduction of the principal amount of the borrowings and are amortized using the effective interest method as a component of Interest expense, net over the life of the Term Loan.

Debt issuance costs related to the Revolving Credit Facility were recorded as Other assets and are amortized on a straight-line basis over the term of the Revolving Credit Facility.

The Term Loan is subject to quarterly amortization of the principal amount on the last business day of each fiscal quarter of the Company (commencing on September 30, 2022) in such amounts as are set forth in the Credit Agreement.

The Term Loan and the Revolving Credit Facility will mature on May 27, 2027.

The Company must prepay loans outstanding under the Credit Agreement in an amount equal to the Net Cash Proceeds (as defined in the Credit Agreement) from (i) certain property dispositions and (ii) the receipt of certain other amounts not in the ordinary course of business, such as certain insurance proceeds and condemnation awards, in each case, if not reinvested within a specified time period as contemplated in the Credit Agreement.

The credit agreement, dated May 27, 2022, by and among the Company, as borrower, Bank of America, N.A., as administrative agent and swing line lender, and the other lenders and L/C issuers party thereto (the “Credit Agreement”) consists of a $ 2,750.0 million senior secured term loan facility (the “Term Loan”) and an $ 800.0 million revolving credit facility (the “Revolving Credit Facility” and with the Term Loan, the “Financing”).

As of April 2, 2023, letters of credit issued under the Revolving Credit Facility totaled $ 13.0 million, which reduced the available amount under the Revolving Credit Facility to $ 787.0 million.

The Credit Agreement contains affirmative and negative covenants that are customary for credit agreements of this nature.

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and (ii) a minimum Consolidated Interest Coverage Ratio (as defined in the Credit Agreement) of 3.00 to 1.00 as of the end of any fiscal quarter for the most recently completed four fiscal quarters.

The Company was in compliance with the financial covenants as of October 2, 2022.

The Credit Agreement was entered into in connection with the Combinations in order to fund a portion of the cash portion of the purchase price as well as to repay substantially all of Ortho’s then-outstanding indebtedness.

See Note 2 for more information regarding the Combinations.

In connection with the closing of the Combinations, Quidel terminated its previous $ 175.0 million revolving credit facility and related credit agreement on May 27, 2022, which did not have an outstanding balance.

The following table provides the detailed amounts within Interest expense, net for the three and nine months ended October 2, 2022 and October 3, 2021:

Three Months Ended Nine Months Ended

(In millions) October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021

The Company was in compliance with the financial covenants as of April 2, 2023.

The following table provides the detailed amounts within Interest expense, net for the three months ended April 2, 2023 and April 3, 2022.

Three Months Ended

(In millions) April 2, 2023 April 3, 2022

Term Loan $ 40.9 $ —

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Interest expense, net $ 36.7 $ 1.0

Stockholders’ Equity

Issuances of Common Stock

A summary of the status of stock option activity for the nine months ended October 2, 2022 is as follows:

(In millions, except price data)

Shares Weighted-Average

Exercise Price

Outstanding at January 2, 2022 0.7 $ 62.71

Granted 0.2 100.45

Stock options assumed in the Combinations 1.2 96.10

Exercised ( 0.1 ) 41.39

Outstanding at October 2, 2022 2.0 $ 86.17

A summary of the status of RSU activity for the nine months ended October 2, 2022 is as follows:

(In millions, except price data)

Shares Weighted-Average

Non-vested January 2, 2022 0.6 $ 95.81

Granted 0.7 97.52

Vested ( 0.2 ) 85.18

Forfeited ( 0.1 ) 104.18

Non-vested at October 2, 2022 1.0 $ 99.02

Stock-based Compensation

The expense related to the Company’s stock-based compensation plans included in the accompanying unaudited Consolidated Statements of Income was as follows:

Three Months Ended Nine Months Ended

(In millions) October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021

Stock-based compensation expense was as follows:

Three Months Ended

(In millions) April 2, 2023 April 3, 2022

Cost of sales $ 1.0 $ 0.6

Research and development 1.3 1.1

Sales, marketing and administrative 7.2 4.7 20.5 13.3

Selling, marketing and administrative

Acquisition and integration costs 4.5 0.4

Total stock-based compensation expense $ 14.0 $ 7.4

The table above includes $ 3.0 million and $ 13.9 million of compensation expense related to liability-classified awards for the three and nine months ended October 2, 2022, respectively, which have been or are expected to be settled in cash.

The table above includes $ 3.0 million of compensation expense related to liability-classified awards for the three months ended April 2, 2023, which has been or is expected to be settled in cash.

These awards represent the $ 7.14 per share cash settled portion of the replacement awards issued in connection with the Combinations.

As of October 2, 2022, total unrecognized compensation expense was $ 105.8 million, which is expected to be recognized over a weighted-average period of approximately 2.6 years.

The estimated fair value of each stock option was determined on the date of grant using the Black-Scholes option valuation model with the following weighted-average assumptions for the option grants, including grants related to options assumed in the Combinations presented separately:

Nine Months Ended

May 27, 2022 (1) October 2, 2022 October 3, 2021

The Company granted 83 thousand stock options during the three months ended April 2, 2023.

As of April 2, 2023, total unrecognized compensation expense related to stock options was approximately $ 22.6 million and the related weighted-average period over which it is expected to be recognized is approximately 1.9 years.

The maximum contractual term of the Company’s stock options is ten years .

The estimated fair value of each stock option was determined on the date of grant using the Black-Scholes option valuation model with the following weighted-average assumptions for the option grants:

Three Months Ended

April 2, 2023 April 3, 2022

Risk-free interest rate 3.63 % 1.63 %

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Weighted-average grant date fair value $ 47.83 $ 51.79

(1) The replacement stock options granted to Ortho option holders on the closing date of the Combinations were issued consistent with the vesting conditions of the replaced award.

The fair value on the closing date of the Combinations attributed to post-combination service, adjusted for estimated forfeitures, is recognized as expensed on a straight-line basis over the remaining vesting period.

The fair value of the replacement stock options were valued utilizing the Black-Scholes option valuation model.

During the three months ended April 2, 2023, the Compensation Committee of the Company’s Board of Directors approved a modification to the vesting terms of certain stock options that were previously granted by Ortho to certain Ortho employees, such that the stock options will vest on December 31, 2023.

The modification resulted in an additional $ 2.0 million of stock-based compensation expense recognized during the three months ended April 2, 2023.

The total unrecognized expense relating to unvested shares for these stock options as of April 2, 2023 was $ 9.2 million and will be recognized through December 31, 2023.

The Company granted 177 thousand RSUs during the three months ended April 2, 2023.

The fair value of RSUs is determined based on the closing market price of the Company’s common stock on the grant date.

The weighted-average fair value of RSUs granted during the nine months ended October 2, 2022 and October 3, 2021 was $ 97.52 and $ 200.05 , respectively.

The weighted-average fair value of RSUs granted during the three months ended April 2, 2023 and April 3, 2022 was $ 86.70 and $ 103.60 , respectively.

The total amount of unrecognized compensation expense related to non-vested RSUs as of April 2, 2023 was approximately $ 66.0 million, which is expected to be recognized over a weighted-average period of approximately 2.3 years.

Commitments and Contingencies

From time to time, the Company is involved in litigation and other legal proceedings, including matters related to product liability claims, commercial disputes and intellectual property claims, as well as regulatory, employment, and other claims related to our business.

The Company accrues for legal claims when, and to the extent that, amounts associated with the claims become probable and are reasonably estimable.

3 unchanged sentences

The actual costs of resolving legal claims may be substantially higher or lower than the amounts accrued for those claims.

For those matters as to which we are not able to estimate a possible loss or range of loss, we are not able to determine whether the loss will have a material adverse effect on our business, financial condition or results of operations or liquidity.

For those matters as to which the Company is not able to estimate a possible loss or range of loss, the Company is not able to determine whether the loss will have a material adverse effect on its business, financial condition, results of operations or liquidity.

Management believes that all such current legal actions, in the aggregate, will not have a material adverse effect on the Company.

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The following table presents the Company’s hierarchy for its assets and liabilities measured at fair value on a recurring basis as of the following periods:

October 2, 2022 January 2, 2022

April 2, 2023 January 1, 2023

(In millions) Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total

7 unchanged sentences

Total liabilities measured at fair value $ — $ 82.8 $ 0.1 $ 82.9 $ — $ 61.1 $ 0.1 $ 61.2

There were no transfers of assets or liabilities into or out of Level 3 of the fair value hierarchy during the three and nine months ended October 2, 2022 and the year ended January 2, 2022.

There were no transfers of assets or liabilities into or out of Level 3 of the fair value hierarchy during the three months ended April 2, 2023 and fiscal year 2022.

Cash equivalents consist of funds held in money market accounts that are valued using quoted prices in active markets for identical instruments and highly liquid corporate debt securities with maturities within three months from purchase.

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Observable inputs include broker quotes, daily market foreign currency rates and forward pricing curves .

In connection with the acquisition of the B-type Natriuretic Peptide (“BNP”) assay business run on Beckman Coulter analyzers (“BNP Business”) from Alere Inc., the Company will pay annual installments of up to $ 48.0 million each year through April 2023.

The fair value of the payments treated as deferred consideration i s calculated based on the net present value of cash payments using an estimated borrowing rate based on a quoted price for a similar liability.

The fair value of the payments treated as contingent consideration is calculated using a discounted probability weighted valuation model.

Discount rates used in such calculations are significant assumptions that are not observed in the market and, therefore, the resulting fair value represents a Level 3 measurement.

Changes in estimated fair value of contingent consideration liabilities from January 2, 2022 through October 2, 2022 were as follows:

(In millions) Contingent Consideration

(Level 3 Measurement)

Balance at January 2, 2022 $ 6.1

Cash payments ( 6.0 )

Balance at October 2, 2022 $ 0.1

In connection with the acquisition of the B-type Natriuretic Peptide (“BNP”) assay business run on Beckman Coulter analyzers (“BNP Business”) from Alere Inc., the Company paid its last annual installment of $ 40.0 million subsequent to April 2, 2023.

The fair value of the payment was treated as deferred consideration and wa s calculated based on the net present value of the cash payment using an estimated borrowing rate based on a quoted price for a similar liability.

Financial Instruments Not Measured at Fair Value

The estimated fair value of the Company’s borrowings under the Term Loan was $ 2,681.6 million at October 2, 2022, compared to the carrying amount, excluding debt issuance costs, of $ 2,698.4 million.

The estimate of fair value is generally based upon the quoted market prices for similar issuances of long-term debt with the same maturities, which is classified as a Level 2 input.

The estimated fair value of the Company’s borrowings under the Term Loan was $ 2,562.9 million at April 2, 2023, compared to the carrying amount, excluding debt issuance costs, of $ 2,595.3 million.

The estimate of fair value is generally based on the quoted market prices for similar issuances of long-term debt with the same maturities, which is classified as a Level 2 input.

Derivative Instruments and Hedging Activities

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See Note 8 for additional information on the currently outstanding components of the Revolving Credit Facility and Term Loan.

The Company entered into interest rate cap and swap agreements to hedge the related risk of the variability to the Company’s cash flows due to the rates specified for these credit facilities.

The Company designates certain interest rate derivative instruments as cash flow hedges, including the outstanding interest rate swap.

The Company records gains and losses due to changes in fair value of the derivatives within Other comprehensive (loss) income (“OCI”) and reclassifies these amounts to Interest expense, net in the same period or periods for which the underlying hedged transaction affects earnings.

In the event the Company determines the hedged transaction is no longer probable to occur or concludes the hedge relationship is no longer effective, the hedge is prospectively de-designated.

The pre-tax unrealized gain of $ 10.4 million within OCI as of October 2, 2022 is expected to be reclassified to earnings in the next 12 months.

The following table summarizes the Company’s interest rate derivative agreements as of October 2, 2022:

Instrument Notional Amount (1)

The Company entered into interest rate swap agreements to hedge the related risk of the variability to the Company’s cash flows due to the rates specified for these credit facilities.

The Company designates its interest rate swaps as cash flow hedges.

The Company records gains and losses due to changes in fair value of the derivatives within Other comprehensive income (loss) (“OCI”) and reclassifies these amounts to Interest expense, net in the same period or periods for which the underlying hedged transaction affects earnings.

In the event the

Company determines the hedged transaction is no longer probable to occur or concludes the hedge relationship is no longer effective, the hedge is prospectively de-designated.

Pre-tax unrealized gains of $ 20.0 million are expected to be reclassified from OCI to earnings in the next 12 months.

The following table summarizes the Company’s interest rate derivative agreements as of April 2, 2023, all of which were interest rate swaps:

Notional Amount

(In millions) (1)

Description Hedge Designation Effective Date Expiration Date

Interest rate cap $ 1,000.0 Interest rate cap amount

Non-designated May 29, 2022 December 31, 2023

Interest rate swap $ 1,000.0 Pay 1.58 % fixed, receive floating rate (1-month USD-SOFR)

$ 500.0 Pay 1.58 % fixed, receive floating rate (1-month USD-SOFR)

Designated cash flow hedge May 29, 2022 December 31, 2023

(1) The notional value of these instruments is expected to be $ 500.0 million in 2023.

Subsequent to October 2, 2022, the Company entered into interest rate swap contracts, commencing on December 30, 2022, with a total notional value of $ 1.3 billion through December 29, 2023 and $ 1.8 billion subsequently, to hedge future interest

rate exposures on variable rate debt, including the Revolving Credit Facility and Term Loan.

The following table summarizes these interest rate derivative agreements:

Notional Amount

(In millions) Description Hedge Designation Effective Date Expiration Date

$ 397.2 Pay 3.765 % fixed, receive floating rate (1-month USD-SOFR)

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Designated cash flow hedge December 30, 2022 May 27, 2027

Additionally, subsequent to October 2, 2022, the Company amended the termination date for the interest rate cap to December 30, 2022.

(1) The notional value of interest rate swap contracts with an effective date of December 30, 2022, is expected to increase to $ 1.8 billion on December 29, 2023.

Currency Hedging Instruments

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The Company uses foreign currency forward contracts and may use option contracts and cross currency swaps to manage its currency risk exposures.

The Company’s foreign currency forward contracts are denominated primarily in Australian Dollar, Brazilian Real, British Pound, Canadian Dollar, Chilean Peso, Chinese Yuan/Renminbi, Colombian Peso, Euro, Indian Rupee, Japanese Yen, Mexican Peso, Philippine Peso, Singapore Dollar, Swiss Franc and the Thai Baht.

The Company’s foreign currency forward contracts are denominated primarily in Australian Dollar, Brazilian Real, British Pound, Canadian Dollar, Chilean Peso, Chinese Yuan/Renminbi, Euro, Indian Rupee, Japanese Yen, Mexican Peso, Swiss Franc and the Thai Baht.

The Company designates certain foreign currency forward contracts as cash flow hedges.

The Company records gains and losses due to changes in fair value of the derivatives within OCI and reclassifies these amounts to Cost of sales, excluding amortization of intangibles in the same period or periods for which the underlying hedged transaction affects earnings.

The Company records gains and losses due to changes in fair value of the derivatives within OCI and reclassifies these amounts to Total revenues and Cost of sales, excluding amortization of intangibles in the same period or periods for which the underlying hedged transaction affects earnings.

In the event the Company determines the hedged transaction is no longer probable to occur or concludes the hedge relationship is no longer effective, the hedge is prospectively de-designated.

The pre-tax unrealized income of $ 4.6 million within OCI as of October 2, 2022 is expected to be reclassified to earnings in the next 12 months.

The pre-tax unrealized loss of $ 10.5 million within OCI as of April 2, 2023 is expected to be reclassified to earnings in the next 12 months.

The Company also enters into foreign currency forward contracts that are not part of designated hedging relationships and which are intended to mitigate exchange rate risk of monetary assets and liabilities and related forecasted transactions.

The Company records these non-designated derivatives at mark-to-market with gains and losses recognized in earnings within Other income, net.

The following table provides details of the currency hedging instruments outstanding as of October 2, 2022:

The Company records these non-designated derivatives at mark-to-market with gains and losses recognized in earnings within Other expense (income), net.

The following table provides details of the currency hedging instruments outstanding as of April 2, 2023:

Description Notional Amount

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Foreign currency forward contracts $ 636.8 Non-designated

The following table summarizes pre-tax gains and losses from designated derivative and non-derivative instruments within accumulated other comprehensive (loss) income (“AOCI”) for the three and nine months ended October 2, 2022:

Designated Hedging Instruments

(In millions) Amount of Loss (Gain) Recognized in OCI on Hedges Location of Amounts Reclassified From AOCI Into Income Amount of Loss (Gain) Reclassified From AOCI Into Income

Three Months Ended October 2, 2022

Foreign currency forward contracts (sales) $ 2.1 Total revenues $ ( 0.9 )

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Interest rate derivatives $ 20.9 Interest expense, net $ ( 5.2 )

Nine Months Ended October 2, 2022

Foreign currency forward contracts (sales) $ ( 5.0 ) Total revenues $ ( 0.9 )

Foreign currency forward contracts (purchases) ( 0.8 ) Cost of sales, excluding amortization of intangibles ( 0.1 )

Interest rate derivatives ( 11.0 ) Interest expense, net 1.7

Gains and losses from designated derivative and non-derivative instruments within AOCI for the three and nine months ended October 3, 2021 were not material.

The following table summarizes the fair value of designated and non-designated hedging instruments recognized within the Consolidated Balance Sheets as of October 2, 2022 and January 2, 2022:

(In millions) October 2, 2022 January 2, 2022

Gains and losses from designated derivative and non-derivative instruments within AOCI for the three months ended April 3, 2022 were not material.

The following table summarizes the fair value of designated and non-designated hedging instruments recognized within the unaudited Consolidated Balance Sheets as of April 2, 2023 and January 1, 2023:

(In millions) April 2, 2023 January 1, 2023

Designated cash flow hedges

Interest rate derivatives:

Other assets $ 18.4 $ —

Prepaid expenses and other current assets $ 11.8 $ 15.9

Other liabilities $ 25.1 $ 2.1

Foreign currency forward contracts:

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Non-designated hedging instruments

Interest rate derivatives:

Other assets 3.2 —

Foreign currency forward contracts:

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Quotient Limited

As a result of the consummation of the Combinations, the Company acquired Ortho’s Letter Agreement (the “Letter Agreement”), entered into in September 2020, with Quotient Limited (“Quotient”), in which Ortho partnered with Quotient to commercialize, when approved, the next generation product in immunohematology (“IH”), a transfusion diagnostic patient IH microarray intended for use with Quotient’s MosaiQ instruments (the “IH3 Microarray”) that enables a high level of multiplexing and addresses the ultra-high throughput market.

Under the Letter Agreement, Ortho will have the right to distribute, market and sell the IH3 Microarrays in the European Economic Area, the U.K.

and Switzerland (collectively, the “European Territory”) and the U.S., solely for use in testing the immunohematological profile of the blood of medical patients in the course of their care or treatment.

Quotient retains the right to distribute, market and sell the IH3 Microarrays for use in blood donor testing worldwide and in the patient testing market outside of the European Territory and the U.S.

Ortho’s rights with respect to the IH3 Microarray are exclusive so long as Ortho satisfies its obligation to meet annual minimum purchase volume requirements in each territory.

Under the Letter Agreement, Ortho also has the non-exclusive right to sell and distribute MosaiQ instruments in the U.S.

and the European Territory for use in testing the immunohematological profile of blood of medical patients in the course of their care or treatment.

Under the Letter Agreement, Ortho is also required to purchase the IH3 Microarrays, and the instruments, controls and reagents required for their use, only from Quotient at specified prices.

Ortho is also required to make milestone payments to Quotient as specified milestones and benchmarks are achieved.

Ortho will be obligated to pay up to $ 60 million in milestone payments to Quotient upon its achievement of certain regulatory milestones and the achievement by Ortho of commercial sales benchmarks related to MosaiQ , including a milestone payment of up to $ 25 million upon the achievement by Ortho of certain cumulative gross revenue hurdl es.

The Company did not make such payments during the three and nine months ended October 2, 2022 and does not anticipate making any such payments for the remainder of fiscal year 2022.

Due to the Company’s equity method investment held in Quotient, the Company concluded that Quotient is a related party of the Company.

Under a separate supply agreement between Ortho and Quotient, which was also acquired by the Company as a result of the consummation of the Combinations, the Company purchased inventories from a subsidiary of Quotient amounting to $ 4.6 million and $ 6.7 million during the three and nine months ended October 2, 2022, respectively.

As of October 2, 2022, Accounts payable included amounts related to purchases from the Quotient subsidiary of $ 2.7 million.

Accumulated Other Comprehensive (Loss) Income

The balance of AOCI, net of tax, was as follows for the three and nine months ended October 2, 2022:

Three Months Ended October 2, 2022 Nine Months Ended October 2, 2022

(In millions) Cash Flow Hedges Available-for-Sale Investments Unrealized Foreign Currency Translation Adjustments Accumulated Other Comprehensive Income (Loss) Cash Flow Hedges Available-for-Sale Investments Unrealized Foreign Currency Translation Adjustments Accumulated Other Comprehensive Income (Loss)

Beginning balance $ 5.5 $ ( 0.7 ) $ ( 65.5 ) $ ( 60.7 ) $ — $ ( 0.1 ) $ 0.5 $ 0.4

Current period

deferrals 9.3 — ( 92.9 ) ( 83.6 ) 13.9 ( 0.6 ) ( 158.9 ) ( 145.6 )

Amounts reclassified

to net income ( 0.2 ) — — ( 0.2 ) 0.7 — — 0.7

As a result of the consummation of the Combinations, the Company acquired Ortho’s Letter Agreement (the “Letter Agreement”), entered into in September 2020 with Quotient Limited (“Quotient”), in which Ortho partnered with Quotient to commercialize, when approved, Quotient’s next generation product in immunohematology, a transfusion diagnostic patient immunohematology microarray intended for use with Quotient’s MosaiQ ® instruments.

Under the Letter Agreement, the Company was required to make certain milestone payments to Quotient as specified milestones and benchmarks were achieved.

Quotient subsequently revised its business strategy to pause development and commercialization of its MosaiQ testing solutions in immunohematology and infectious disease immunoassay screening.

On January 10, 2023, Quotient filed a voluntary petition for relief under chapter 11 of title 11 of the United States Code in the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Proceeding”).

Following the completion of the Bankruptcy Proceeding, the Company’s equity interests in Quotient were canceled for no consideration.

Quotient is no longer considered a related party of the Company.

Accumulated Other Comprehensive Loss

The balance of Accumulated Other Comprehensive Loss, net of tax, was as follows for the three months ended April 2, 2023:

(In millions) Pension and Other Post-

employment Benefits Cash Flow Hedges Available-for-Sale Investments Unrealized Foreign Currency Translation Adjustments Accumulated Other Comprehensive (Loss) Income

Balance at January 1, 2023 $ 0.7 $ 1.5 $ ( 0.5 ) $ ( 69.3 ) $ ( 67.6 )

Current period deferrals (1)

— ( 16.9 ) 0.2 30.7 14.0

Amounts reclassified to net income — ( 5.7 ) — — ( 5.7 )

Net change — ( 22.6 ) 0.2 30.7 8.3

Ending balance $ 14.6 $ ( 0.7 ) $ ( 158.4 ) $ ( 144.5 ) $ 14.6 $ ( 0.7 ) $ ( 158.4 ) $ ( 144.5 )

Amounts related to the prior year periods were not material for the three and nine months ended October 3, 2021.

Balance at April 2, 2023 $ 0.7 $ ( 21.1 ) $ ( 0.3 ) $ ( 38.6 ) $ ( 59.3 )

(1) Includes tax impact of $ 6.1 million related to cash flow hedges for the three months ended April 2, 2023.

Amounts related to the three months ended April 3, 2022 were not material.

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