What changed in this filing

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Item 1. Financial Statements

2023-08-09 compared with 2023-05-04 · 249 added, 151 removed, 401 unchanged (50% of the section changed)

3 unchanged sentences

(In millions, except par value)

April 2, 2023 January 1, 2023

July 2, 2023 January 1, 2023

Current assets:

30 unchanged sentences

5.0 shares authorized;

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

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

Common stock, $ 0.001 par value per share;

126.2 shares authorized;

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

66.8 and 66.4 shares issued and outstanding at July 2, 2023 and January 1, 2023, respectively

Additional paid-in capital 2,825.2 2,804.3

5 unchanged sentences

QUIDELORTHO CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

CONSOLIDATED STATEMENTS OF (LOSS) INCOME

(In millions, except per share data)

Three Months Ended

April 2, 2023 April 3, 2022

Three Months Ended Six Months Ended

July 2, 2023 July 3, 2022 July 2, 2023 July 3, 2022

Total revenues $ 665.1 $ 613.4 $ 1,511.2 $ 1,615.7

5 unchanged sentences

Other operating expenses 5.8 4.0 9.6 4.0

Operating income 99.6 620.7

Operating (loss) income ( 26.9 ) 79.7 72.7 700.4

Interest expense, net 36.5 10.3 73.2 11.3

Other expense (income), net 2.9 ( 0.9 )

Income before provision for income taxes 60.0 620.6

Provision for income taxes 11.2 140.7

Net income $ 48.8 $ 479.9

Basic earnings per share $ 0.73 $ 11.46

Diluted earnings per share $ 0.73 $ 11.31

Loss on extinguishment of debt — 24.0 — 24.0

Other expense, net 1.0 2.5 3.9 1.6

(Loss) income before income taxes ( 64.4 ) 42.9 ( 4.4 ) 663.5

(Benefit from) provision for income taxes ( 11.2 ) 23.6 — 164.3

Net (loss) income $ ( 53.2 ) $ 19.3 $ ( 4.4 ) $ 499.2

Basic (loss) earnings per share $ ( 0.80 ) $ 0.37 $ ( 0.07 ) $ 10.62

Diluted (loss) earnings per share $ ( 0.80 ) $ 0.36 $ ( 0.07 ) $ 10.47

Weighted-average shares outstanding - basic 66.8 52.2 66.7 47.0

2 unchanged sentences

QUIDELORTHO CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(In millions)

Three Months Ended

April 2, 2023 April 3, 2022

Net income $ 48.8 $ 479.9

Three Months Ended Six Months Ended

July 2, 2023 July 3, 2022 July 2, 2023 July 3, 2022

Net (loss) income $ ( 53.2 ) $ 19.3 $ ( 4.4 ) $ 499.2

Other comprehensive income (loss)

Changes in cumulative translation adjustment, net of tax 7.4 ( 66.1 ) 38.1 ( 66.0 )

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

Changes in unrealized (losses) gains from investments, net of tax ( 0.1 ) ( 0.2 ) 0.1 ( 0.6 )

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

Net unrealized gains on derivative instruments 40.0 4.4 23.1 4.6

Reclassification of net realized (gains) losses on derivative instruments included in net (loss) income ( 4.3 ) 1.0 ( 10.0 ) 0.9

Total change in unrealized gains from cash flow hedges, net of tax 35.7 5.4 13.1 5.5

Comprehensive (loss) income $ ( 10.2 ) $ ( 41.6 ) $ 46.9 $ 438.1

See accompanying notes.

15 unchanged sentences

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 0.2 — 5.5 — — 5.5

Stock-based compensation expense — — 13.7 — — 13.7

Tax withholdings related to vesting of stock-based awards — — ( 3.0 ) — — ( 3.0 )

Other comprehensive income, net of tax — — — 43.0 — 43.0

Net loss — — — — ( 53.2 ) ( 53.2 )

Balance at July 2, 2023 66.8 $ 0.1 $ 2,825.2 $ ( 16.3 ) $ 2,193.5 $ 5,002.5

Common Stock Additional

11 unchanged sentences

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

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

See accompanying notes.

2 unchanged sentences

(In millions)

Three Months Ended

April 2, 2023 April 3, 2022

Six Months Ended

July 2, 2023 July 3, 2022

OPERATING ACTIVITIES

Net income $ 48.8 $ 479.9

Adjustments to reconcile net income to net cash provided by operating activities:

Net (loss) income $ ( 4.4 ) $ 499.2

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

Depreciation and amortization 228.7 62.8

1 unchanged sentence

Net change in operating lease right-of-use assets and liabilities 0.2 9.9

Payment of accreted interest on contingent and deferred consideration ( 9.7 ) ( 10.4 )

Loss on extinguishment of debt — 24.0

Other non-cash, net ( 0.7 ) 13.7

10 unchanged sentences

Acquisitions of property, plant, equipment and intangibles ( 117.3 ) ( 48.7 )

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

Proceeds from government assistance allocated to fixed assets 2.8 10.4

4 unchanged sentences

Proceeds from issuance of common stock 7.3 4.4

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

Proceeds from long-term borrowings, net of debt issuance costs — 2,734.8

Payments on long-term borrowings and extinguishment costs ( 123.8 ) ( 2,284.4 )

Payments of tax withholdings related to vesting of stock-based awards ( 12.5 ) ( 7.5 )

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

Principal payments of acquisition contingent consideration — ( 4.2 )

Principal payments of deferred consideration ( 30.3 ) ( 33.4 )

Net cash (used for) provided by financing activities ( 159.3 ) 409.7

Effect of exchange rates on cash ( 2.1 ) ( 2.4 )

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

Net decrease in cash, cash equivalents and restricted cash ( 114.3 ) ( 422.2 )

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

2 unchanged sentences

Purchase of property, equipment and intangibles by incurring current liabilities $ 18.6 $ 2.8

Capital expenditures to be reimbursed under a government contract $ — $ 1.4

Transfer of instrument inventories to fixed assets $ 67.3 $ 12.1

9 unchanged sentences

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

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

The information at July 2, 2023, and for the three and six months ended July 2, 2023 and July 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.

2 unchanged sentences

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.

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

The three and six months ended July 2, 2023 and July 3, 2022 each included 13 and 26 weeks, respectively.

Use of Estimates

1 unchanged sentence

Actual results could differ from those estimates.

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, and the combination of Selling, marketing and administrative expense.

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

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.

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

Business Combination

2 unchanged sentences

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

The Combinations have been accounted for as a business combination using the acquisition method of accounting in conformity with Accounting Standards Codification (“ASC”) Topic 805, Business Combinations, with Quidel considered the accounting and the legal acquirer.

The Combinations enhance the Company’s revenue profile and expand the Company’s geographic footprint and product diversity.

1 unchanged sentence

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

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 .

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 Combinations have been accounted for as a business combination, which requires that assets acquired and liabilities assumed be recognized at their fair value as of the date of the consummation of the Combinations, with Quidel considered the accounting and the legal acquirer.

The assessment of the fair value of assets acquired and liabilities assumed was finalized in the second quarter of 2023.

Measurement period adjustments decreased goodwill by $ 23.9 million in the six months ended July 2, 2023, reflecting (i) an increase of $ 22.3 million to deferred tax liability, (ii) an increase of $ 2.9 million to income tax payable and (iii) a decrease of $ 1.3 million in deferred tax asset.

The related impact to net earnings that would have been recognized in previous periods if the adjustments were recognized as of the date of the consummation of the Combinations is immaterial to the Company’s consolidated financial statements.

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 Six Months Ended

(In millions) July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021

Pro forma total revenues $ 898.5 $ 669.1 $ 2,400.9 $ 1,551.2

Pro forma net income (loss) 22.3 ( 13.0 ) 500.8 116.7

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 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;

• decreases in interest expense 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 loss on extinguishment of debt from Ortho’s results in fiscal year 2021 and the reclassification of loss on extinguishment of debt in fiscal years 2021 and 2022;

• the reclassification of expense related to the accelerated vesting of certain stock awards of Ortho’s former chief executive officer;

• tax impacts related to the above adjustments.

Computation of Earnings Per Share

Basic earnings per share (“EPS”) is computed by dividing net income by the weighted-average number of shares of common stock outstanding.

Basic earnings per share (“EPS”) is computed by dividing net income (loss) by the weighted-average number of shares of common stock outstanding.

Diluted EPS is computed based on the sum of the weighted-average number of shares of common stock and potentially dilutive shares of common stock outstanding during the period.

Potentially dilutive shares of common stock consist of shares issuable from stock options, unvested RSUs and restricted stock.

Potentially dilutive shares of common stock consist of shares issuable from stock options and unvested restricted stock units (“RSUs”).

Potentially dilutive shares of common stock from outstanding stock options and unvested RSUs are determined using the average share price for each period under the treasury stock method.

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

Three Months Ended

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

Three Months Ended Six Months Ended

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

Basic weighted-average shares of common stock outstanding 66.8 52.2 66.7 47.0

Dilutive potential shares issuable from stock options and unvested RSUs 0.5 0.5

Dilutive potential shares issuable from stock options and RSUs (1)

Diluted weighted-average shares of common stock outstanding 66.8 52.9 66.7 47.7

Potentially dilutive shares excluded from calculation due to anti-dilutive effect 1.5 0.4

Potentially dilutive shares excluded from the calculation above represent stock options when the combined exercise price and unrecognized stock-based compensation are greater than the average market price for the Company’s common stock because their effect is anti-dilutive.

(1) In the three and six months ended July 2, 2023, all potential shares of common stock issuable for stock options and RSUs were excluded from the dilutive calculations above because the effect of including them would have been anti-dilutive.

The dilutive effect of potential shares of common stock issuable for stock options and RSUs on the weighted-average number of shares of common stock outstanding would have been as follows:

Three Months Ended Six Months Ended

(In millions) July 2, 2023 July 2, 2023

Basic weighted-average shares of common stock outstanding 66.8 66.7

Dilutive potential shares issuable from stock options and RSUs 0.4 0.5

Diluted weighted-average shares of common stock outstanding 67.2 67.2

Stock options and RSUs where the combined exercise price and unrecognized stock-based compensation was greater than the average market price for the Company’s common stock were not included in the computations of diluted weighted-average

shares because the effect would have been anti-dilutive.

These stock options and RSUs represented 1.2 million and 1.1 million shares of common stock for the three and six months ended July 2, 2023, respectively, and 1.0 million and 0.9 million shares of common stock for the three and six months ended July 3, 2022, respectively.

Contract Balances

2 unchanged sentences

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 balance of contract assets recorded in the Company’s unaudited Consolidated Balance Sheets as of July 2, 2023 and January 1, 2023 was $ 59.3 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;

• a customer supply agreement under which the difference between the timing of invoicing and revenue recognition resulted in a contract asset of $ 5.7 million and $ 6.8 million as of July 2, 2023 and January 1, 2023, respectively;

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

2 unchanged sentences

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 $ 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 balance of the contract asset related to these arrangements was $ 44.7 million and $ 38.5 million as of July 2, 2023 and January 1, 2023, respectively;

• one of the Company’s contract manufacturing agreements that recognizes revenue as the products are manufactured resulted in a contract asset of $ 8.9 million and $ 4.3 million as of July 2, 2023 and January 1, 2023, respectively.

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 months ended April 2, 2023.

No credit losses related to contract assets were recognized during the three and six months ended July 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”).

1 unchanged sentence

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 $ 61.9 million as of April 2, 2023 and $ 76.4 million as of January 1, 2023.

The balance of the Company’s current deferred revenue was $ 41.2 million as of July 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 $ 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.

The balance of the deferred revenue included in long-term liabilities was $ 13.5 million and $ 9.4 million as of July 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 and six months ended July 2, 2023 was $ 19.5 million and $ 68.5 million, respectively.

Joint Business with Grifols

2 unchanged sentences

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 $ 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’s portion of the pre-tax net profit shared under the Joint Business was $ 6.1 million and $ 29.7 million during the three and six months ended July 2, 2023, respectively, and $ 5.6 million during the three and six months ended July 3, 2022.

This included the Company’s portion of the pre-tax net profit of $ 5.5 million and $ 6.7 million during the three and six months ended July 2, 2023, respectively, and $ 3.6 million during the three and six months ended July 3, 2022, 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 $ 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.

The Company’s portion of the pre-tax net profit also included revenue from collaboration and royalty agreements of $ 0.6 million and $ 23.0 million during the three and six months ended July 2, 2023, respectively, and $ 2.0 million during the three and six months ended July 3, 2022, which is presented on a net basis within Total revenues.

Disaggregation of Revenue

The following table summarizes Total revenues by business unit:

Three Months Ended

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

Three Months Ended Six Months Ended

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

Labs $ 361.4 $ 157.4 $ 732.1 $ 170.7

4 unchanged sentences

Concentration of Revenue and Credit Risk

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

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.

For the six months ended July 2, 2023, no customers individually accounted for more than 10% of Total revenues.

For the six months ended July 3, 2022, one customer and one distributor represented 37 % and 11 %, respectively, of Total revenues.

As of July 2, 2023, customers with a balance due in excess of 10% of Accounts receivable, net totaled $ 30.7 million.

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.

Revenue related to our respiratory products accounted for 13 % and 23 % of Total revenues for the three and six months ended July 2, 2023, respectively, and 54 % and 78 % for the three and six months ended July 3, 2022, respectively.

Segment and Geographic Information

Total revenues by reportable segment are as follows:

Three Months Ended

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

Three Months Ended Six Months Ended

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

North America $ 378.8 $ 438.2 $ 961.6 $ 1,399.7

3 unchanged sentences

Total revenues $ 665.1 $ 613.4 $ 1,511.2 $ 1,615.7

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

In the fourth quarter of 2022, the Company revised the internal allocation of certain global costs primarily between the North America segment and Corporate to better align costs that impact the Company as a whole.

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 (Loss) income before income taxes for the three and six months ended July 2, 2023 and July 3, 2022:

Three Months Ended Six Months Ended

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

North America $ 176.3 $ 239.2 $ 454.7 $ 952.6

EMEA 5.3 12.7 12.5 16.2

China 30.2 35.4 58.7 39.2

3 unchanged sentences

( 134.8 ) ( 93.9 ) ( 225.4 ) ( 183.2 )

Interest expense, net ( 36.5 ) ( 10.3 ) ( 73.2 ) ( 11.3 )

Depreciation and amortization ( 114.5 ) ( 47.5 ) ( 228.7 ) ( 62.8 )

Acquisition and integration costs ( 24.2 ) ( 80.2 ) ( 53.9 ) ( 83.2 )

Interest expense, net ( 36.7 ) ( 1.0 )

Amortization of deferred cloud computing implementation costs ( 1.5 ) ( 1.3 ) ( 3.1 ) ( 2.3 )

Employee compensation charges and other costs ( 1.5 ) —

Impairment of long-lived assets ( 0.5 ) —

EU medical device regulation transition costs (2)

Tax indemnification expense ( 0.3 ) —

Income before provision for income taxes $ 60.0 $ 620.6

( 0.7 ) ( 0.4 ) ( 1.5 ) ( 0.4 )

Impairment of long-lived assets ( 0.5 ) — ( 1.0 ) —

Loss on investments ( 0.2 ) ( 0.8 ) ( 0.2 ) ( 0.8 )

Tax indemnification income 0.4 — 0.1 —

Loss on extinguishment of debt — ( 24.0 ) — ( 24.0 )

Unwind inventory fair value adjustment — ( 11.2 ) — ( 11.2 )

Employee compensation charges and other costs — ( 0.5 ) ( 1.5 ) ( 0.5 )

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

Derivative mark-to-market gain — 1.0 — 1.0

(Loss) income before income taxes $ ( 64.4 ) $ 42.9 $ ( 4.4 ) $ 663.5

(1) Primarily consists of costs related to executive and staff functions, including certain finance, human resources, manufacturing and information technology (“IT”) functions, which benefit the Company as a whole.

6 unchanged sentences

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 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.

For the three months ended July 2, 2023, the Company recognized an income tax benefit of $ 11.2 million in relation to loss before income taxes of $ 64.4 million, resulting in an effective benefit tax rate of 17.4 %.

For the three months ended July 3, 2022, the Company recognized a provision for income taxes of $ 23.6 million in relation to income before income taxes of $ 42.9 million, resulting in an effective tax rate of 55.0 %.

For the three months ended July 2, 2023, the effective tax rate for the period differs from the U.S.

federal statutory rate primarily due 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.

statutory rate, operating losses in certain subsidiaries not being benefited due to the establishment of valuation allowances, R&D credits and foreign tax credits, partially offset by foreign exchange losses and Global Intangible Low-Tax Income.

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

For the six months ended July 2, 2023, the recognized amount of income tax benefit was not material in relation to loss before income taxes of $ 4.4 million, resulting in an effective benefit tax rate of 0.7 %.

For the six months ended July 3, 2022, the Company recognized a provision for income taxes of $ 164.3 million in relation to income before income taxes of $ 663.5 million, resulting in an effective tax rate of 24.8 %.

For the six months ended July 2, 2023, the effective tax rate for the period differs from the U.S.

federal statutory rate primarily due to net operating losses in certain subsidiaries not being benefited due to the establishment of valuation allowances and Global Intangible Low-Tax Income, partially offset by U.S.

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

statutory rate, R&D credit, Foreign Tax Credits and foreign exchange losses.

For the six months ended July 3, 2022, the effective tax rate was primarily impacted by incomes taxes owed in the U.S.

The balance of unrecognized tax benefits at July 2, 2023, not including interest and penalties, was $ 38.8 million, of which $ 27.6 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.

At July 2, 2023, the Company had approximately $ 8.1 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 $ 14.3 million.

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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.

The indemnification receivable from Johnson & Johnson totaled $ 16.4 million and $ 16.8 million as of July 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 Sheets.

The Company recorded $ 0.3 million and $ 0.7 million of interest and penalties during the three and six months ended July 2, 2023, respectively, and $ 0.1 million during the three and six months ended July 3, 2022.

Balance Sheet Account Details

Cash, Cash Equivalents and Restricted Cash

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

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

Cash and cash equivalents $ 178.6 $ 292.9

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The following table is a summary of marketable securities:

April 2, 2023 January 1, 2023

July 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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Corporate asset-backed securities, non-current 5.8 ( 0.1 ) 5.7 7.9 ( 0.1 ) 7.8

Agency bonds 1.6 ( 0.1 ) 1.5 — — —

Agency bonds, non-current 1.5 — 1.5 — — —

Total marketable securities $ 70.3 $ ( 0.5 ) $ 69.8 $ 73.8 $ ( 0.7 ) $ 73.1

Accounts Receivable, Net

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

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

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

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

Accounts receivable $ 317.9 $ 543.0

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Inventories consisted of the following:

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

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

Raw materials $ 203.2 $ 185.2

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Total inventories $ 583.6 $ 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.

(1) Includes adjustment of approximately $ 39 million in the six months ended July 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.

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist of the following:

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

Prepaid expenses and other current assets consisted of the following:

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

Prepaid expenses $ 95.9 $ 96.7

Income taxes and other tax receivables 81.5 38.6

Contract assets 59.3 49.6

Other receivables 39.1 44.3

Income taxes and other tax receivables 48.4 38.6

Derivatives 16.6 22.0

1 unchanged sentence

Total prepaid expenses and other current assets $ 295.5 $ 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:

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Foreign currency translation 0.3 10.2 ( 5.7 ) 13.2 18.0

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

Balance at July 2, 2023 $ 1,534.6 $ 364.7 $ 111.1 $ 460.5 $ 2,470.9

Other Current Liabilities

Other current liabilities consist of the following:

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

Other current liabilities consisted of the following:

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

Deferred revenue $ 41.2 $ 76.4

Accrued commissions and rebates 51.3 55.1

Deferred consideration 39.8 39.3

Accrued other taxes payable 34.0 9.3

Operating lease liabilities 26.3 24.4

Derivatives 10.5 19.7

Accrued other taxes payable 16.5 9.3

Deferred consideration — 39.3

Other 109.8 101.2

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The components of borrowings were as follows:

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

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

Term Loan $ 2,523.8 $ 2,646.9

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Long-term borrowings $ 2,308.5 $ 2,430.8

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.

“Revolving Credit Facility” and with the Term Loan, the “Financing”).

As of July 2, 2023 and January 1, 2023, there were no amounts outstanding under the Revolving Credit Facility.

As of July 2, 2023, letters of credit issued under the Revolving Credit Facility totaled $ 12.9 million, which reduced the available amount under the Revolving Credit Facility to $ 787.1 million.

During the six months ended July 2, 2023, the Company made $ 123.1 million in payments on the Term Loan, including a voluntary prepayment of $ 20.0 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 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

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

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

Three Months Ended Six Months Ended

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

Term Loan $ 44.2 $ 8.4 $ 85.1 $ 8.4

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Stock-based compensation expense was as follows:

Three Months Ended

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

Three Months Ended Six Months Ended

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

Cost of sales $ 1.1 $ 0.6 $ 2.1 $ 1.3

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Selling, marketing and administrative

10.0 8.0 17.2 13.3

Acquisition and integration costs 4.6 6.0 9.1 6.3

Total stock-based compensation expense $ 17.0 $ 15.9 $ 31.0 $ 23.3

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.

The table above includes compensation expense related to liability-classified awards of $ 2.8 million and $ 5.8 million for the three and six months ended July 2, 2023, respectively, and $ 10.9 million for the three and six months ended July 3, 2022, 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.

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 Company granted 253 thousand stock options during the six months ended July 2, 2023.

As of July 2, 2023, total unrecognized compensation expense related to stock options was approximately $ 25.4 million and the related weighted-average period over which it is expected to be recognized is approximately 2.0 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

Six Months Ended

July 2, 2023 July 3, 2022

Risk-free interest rate 3.52 % 1.99 %

3 unchanged sentences

Weighted-average grant date fair value $ 48.17 $ 50.86

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.

In January 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 $ 3.1 million and $ 5.1 million of stock-based compensation expense recognized during the three and six months ended July 2, 2023, respectively.

The total unrecognized expense relating to unvested shares for these stock options as of July 2, 2023 was $ 6.0 million and will be recognized through December 31, 2023.

The Company granted 576 thousand RSUs during the six months ended July 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 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.

The weighted-average fair value of RSUs granted during the six months ended July 2, 2023 and July 3, 2022 was $ 87.59 and $ 98.38 , respectively.

The total amount of unrecognized compensation expense related to non-vested RSUs as of July 2, 2023 was approximately $ 89.5 million, which is expected to be recognized over a weighted-average period of approximately 2.4 years.

Commitments and Contingencies

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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.

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

However, the resolution of, or increase in any accruals for, one or more matters may have a material adverse effect on the Company’s results of operations and cash flows.

1 unchanged sentence

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:

April 2, 2023 January 1, 2023

July 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 $ — $ 10.5 $ 0.1 $ 10.6 $ — $ 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 months ended April 2, 2023 and fiscal year 2022.

There were no transfers of assets or liabilities into or out of Level 3 of the fair value hierarchy during the three and six months ended July 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.

2 unchanged sentences

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 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 $ 2,562.9 million at April 2, 2023, compared to the carrying amount, excluding debt issuance costs, of $ 2,595.3 million.

The estimated fair value of the Company’s borrowings under the Term Loan was $ 2,476.4 million at July 2, 2023, compared to the carrying amount, excluding debt issuance costs, of $ 2,523.8 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.

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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.

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 $ 29.4 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:

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

Notional Amount

1 unchanged sentence

Description Hedge Designation Effective Date Expiration Date

$ 500.0 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

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

$ 397.2 Pay 3.765 % fixed, receive floating rate

(1-month USD-SOFR)

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

$ 144.4 Pay 3.7725 % fixed, receive floating rate (1-month USD-SOFR)

$ 144.4 Pay 3.7725 % fixed, receive floating rate

(1-month USD-SOFR)

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

$ 216.7 Pay 3.7675 % fixed, receive floating rate (1-month USD-SOFR)

$ 216.7 Pay 3.7675 % fixed, receive floating rate

(1-month USD-SOFR)

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

$ 288.9 Pay 3.7575 % fixed, receive floating rate (1-month USD-SOFR)

$ 288.9 Pay 3.7575 % fixed, receive floating rate

(1-month USD-SOFR)

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

$ 252.8 Pay 3.7725 % fixed, receive floating rate (1-month USD-SOFR)

$ 252.8 Pay 3.7725 % fixed, receive floating rate

(1-month USD-SOFR)

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

7 unchanged sentences

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 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 pre-tax unrealized loss of $ 5.4 million within OCI as of July 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 expense (income), net.

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

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

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

Description Notional Amount

2 unchanged sentences

Foreign currency forward contracts $ 589.9 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 months ended April 2, 2023:

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 six months ended July 2, 2023:

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 July 2, 2023

Foreign currency forward contracts (sales) $ ( 0.4 ) Total revenues $ 1.8

1 unchanged sentence

Interest rate derivatives $ ( 47.0 ) Interest expense, net $ ( 7.4 )

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

Six Months Ended July 2, 2023

Foreign currency forward contracts (sales) $ 1.7 Total revenues $ 0.9

Foreign currency forward contracts (purchases) $ ( 2.1 ) Cost of sales, excluding amortization of intangibles $ 1.7

Interest rate derivatives $ ( 26.1 ) Interest expense, net $ ( 12.6 )

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

Fair value gains on foreign currency forward contracts, as determined using Level 2 inputs, that do not qualify for hedge accounting treatment are recorded in Other expense, net and were $ 3.2 million and $ 0.5 million for the three and six months ended July 2, 2023, respectively.

Fair value gains and losses that do not qualify for hedge accounting treatment were not material for the three and six months ended July 3, 2022.

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

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

Designated cash flow hedges

1 unchanged sentence

Prepaid expenses and other current assets $ 9.4 $ 15.9

Other assets $ 16.0 $ —

Other liabilities $ — $ 2.1

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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.

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”).

2 unchanged sentences

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:

The balance of Accumulated Other Comprehensive Loss, net of tax, was as follows for the three and six months ended July 2, 2023 and July 3, 2022:

Three Months Ended July 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 April 2, 2023 $ 0.7 $ ( 21.1 ) $ ( 0.3 ) $ ( 38.6 ) $ ( 59.3 )

Current period deferrals (1)

— 40.0 ( 0.1 ) 7.4 47.3

Amounts reclassified to net income — ( 4.3 ) — — ( 4.3 )

Net change — 35.7 ( 0.1 ) 7.4 43.0

Balance at July 2, 2023 $ 0.7 $ 14.6 $ ( 0.4 ) $ ( 31.2 ) $ ( 16.3 )

Six Months Ended July 2, 2023

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 )

3 unchanged sentences

Net change — 13.1 0.1 38.1 51.3

Balance at July 2, 2023 $ 0.7 $ 14.6 $ ( 0.4 ) $ ( 31.2 ) $ ( 16.3 )

Three Months Ended July 3, 2022

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

Balance at April 3, 2022 $ 0.1 $ ( 0.5 ) $ 0.6 $ 0.2

(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.

Current period deferrals (2)

4.4 ( 0.2 ) ( 66.1 ) ( 61.9 )

Amounts reclassified to net income 1.0 — — 1.0

Net change 5.4 ( 0.2 ) ( 66.1 ) ( 60.9 )

Balance at July 3, 2022 $ 5.5 $ ( 0.7 ) $ ( 65.5 ) $ ( 60.7 )

Six Months Ended July 3, 2022

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

Balance at January 2, 2022 $ — $ ( 0.1 ) $ 0.5 $ 0.4

Current period deferrals (2)

4.6 ( 0.6 ) ( 66.0 ) ( 62.0 )

Amounts reclassified to net income 0.9 — — 0.9

Net change 5.5 ( 0.6 ) ( 66.0 ) ( 61.1 )

Balance at July 3, 2022 $ 5.5 $ ( 0.7 ) $ ( 65.5 ) $ ( 60.7 )

(1) Includes tax impact of $ 9.5 million and $ 3.4 million related to cash flow hedges for the three and six months ended July 2, 2023, respectively.

(2) Tax impact related to cash flow hedges for the three and six months ended July 3, 2022 was 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