What changed in this filing

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Item 1. Financial Statements

2023-11-02 compared with 2023-08-09 · 188 added, 152 removed, 498 unchanged (41% of the section changed)

3 unchanged sentences

(In millions, except par value)

July 2, 2023 January 1, 2023

October 1, 2023 January 1, 2023

Current assets:

30 unchanged sentences

5.0 shares authorized;

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

none issued or outstanding at October 1, 2023 and January 1, 2023

Common stock, $ 0.001 par value per share;

126.2 shares authorized;

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

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

Additional paid-in capital 2,839.0 2,804.3

7 unchanged sentences

(In millions, except per share data)

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

October 1, 2023 October 2, 2022 October 1, 2023 October 2, 2022

Total revenues $ 744.0 $ 783.8 $ 2,255.2 $ 2,399.5

5 unchanged sentences

Other operating expenses 7.4 4.0 17.0 8.0

Operating (loss) income ( 26.9 ) 79.7 72.7 700.4

Operating income 26.3 56.8 99.0 757.2

Interest expense, net 37.7 29.7 110.9 41.0

Loss on extinguishment of debt — — — 24.0

Other expense, net 1.0 2.5 3.9 1.6

Other expense (income), net 4.1 ( 4.2 ) 8.0 ( 2.6 )

(Loss) income before income taxes ( 15.5 ) 31.3 ( 19.9 ) 694.8

9 unchanged sentences

(In millions)

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

October 1, 2023 October 2, 2022 October 1, 2023 October 2, 2022

Net (loss) income $ ( 12.7 ) $ 19.2 $ ( 17.1 ) $ 518.4

Other comprehensive income (loss)

Other comprehensive (loss) income

Changes in cumulative translation adjustment, net of tax ( 55.3 ) ( 92.9 ) ( 17.2 ) ( 158.9 )

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

Changes in unrealized gains (losses) from investments, net of tax 0.2 — 0.3 ( 0.6 )

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

26 unchanged sentences

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

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

Stock-based compensation expense — — 13.5 — — 13.5

Tax withholdings related to vesting of stock-based awards — — ( 0.5 ) — — ( 0.5 )

Other comprehensive loss, net of tax — — — ( 36.9 ) — ( 36.9 )

Net loss — — — — ( 12.7 ) ( 12.7 )

Balance at October 1, 2023 66.8 $ 0.1 $ 2,839.0 $ ( 53.2 ) $ 2,180.8 $ 4,966.7

Common Stock Additional

19 unchanged sentences

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

See accompanying notes.

2 unchanged sentences

(In millions)

Six Months Ended

July 2, 2023 July 3, 2022

Nine Months Ended

October 1, 2023 October 2, 2022

OPERATING ACTIVITIES

6 unchanged sentences

Loss on extinguishment of debt — 24.0

Unwind inventory fair value adjustment — 46.6

Other non-cash, net ( 4.9 ) ( 3.7 )

9 unchanged sentences

INVESTING ACTIVITIES

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

Acquisitions of property, plant, equipment, investments and intangibles ( 160.7 ) ( 79.2 )

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

5 unchanged sentences

Proceeds from issuance of common stock 8.1 5.2

Short-term borrowings, net 2.9 —

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

1 unchanged sentence

Payments of tax withholdings related to vesting of stock-based awards ( 13.0 ) ( 8.0 )

Repurchases of common stock — ( 74.3 )

Principal payments of acquisition contingent consideration — ( 4.2 )

19 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 July 2, 2023, and for the three and six months ended July 2, 2023 and July 3, 2022, is unaudited.

The information at October 1, 2023, and for the three and nine months ended October 1, 2023 and October 2, 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 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.

For 2023 and 2022, the Company’s third quarter ended on October 1, 2023 and October 2, 2022, respectively.

The three and nine months ended October 1, 2023 and October 2, 2022 each included 13 and 39 weeks, respectively.

Use of Estimates

1 unchanged sentence

Actual results could differ from those estimates.

Significant Accounting Policies

During the nine months ended October 1, 2023, there have been no changes to the Company’s significant accounting policies as described in the Company’s 2022 Annual Report on Form 1 0-K, except for the following policy, which was the result of a change in accounting estimates:

Revenue Recognition

The Company generates a portion of its revenue from sales of the QuickVue At-Home OTC COVID-19 tests to retail customers.

The Company estimates the transaction price for revenue from sales to retail customers based on historical experience and current trends to evaluate when uncertainties related to right of return provisions are resolved.

In prior periods, due to a lack of history on which to base an estimate of products to be returned from retailers, the Company established a reserve based on an estimate of total inventory remaining at our retailers that was subject to return.

During the three months ended October 1, 2023, the Company concluded that it had developed sufficient historical experience regarding the pattern in customer returns to be able to estimate the amount of consideration to which we expect to be entitled, excluding consideration for the products expected to be returned.

Amounts received or receivable that are expected to be returned are recognized as a refund liability, which is included in Other current liabilities.

The refund liability is estimated utilizing historical sale and return rates over the period during which customers have a right of return, taking into account available information on competitive products and contract changes.

The refund liability is remeasured at each reporting period to reflect changes in assumptions about expected returns.

Revenue from sales to retail customers amounted to approximately 3 % of Total revenues for the nine months ended October 1, 2023.

This change in estimate did not have a material impact on the Company’s Consolidated Financial Statements.

Recent Accounting Pronouncements

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.

There have been no accounting pronouncements issued or adopted during the nine months ended October 1, 2023 that are expected to have a material impact on the Company’s Consolidated Financial Statements.

Business Combination

8 unchanged sentences

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.

Measurement period adjustments in fiscal year 2023 decreased goodwill by $ 23.9 million, reflecting (i) a decrease of $ 22.3 million to deferred tax liability, (ii) a decrease 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

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 income (loss) 22.3 ( 13.0 ) 500.8 116.7

Pro forma net 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.

8 unchanged sentences

Computation of Earnings Per Share

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

Basic earnings per share (“EPS”) is computed by dividing Net (loss) income 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.

2 unchanged sentences

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

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

(In millions) October 1, 2023 October 2, 2022 October 1, 2023 October 2, 2022

Basic weighted-average shares of common stock outstanding 66.9 66.9 66.8 53.6

1 unchanged sentence

Diluted weighted-average shares of common stock outstanding 66.9 67.5 66.8 54.2

(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.

(1) In the three and nine months ended October 1, 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

Three Months Ended Nine Months Ended

(In millions) October 1, 2023 October 1, 2023

Basic weighted-average shares of common stock outstanding 66.9 66.8

1 unchanged sentence

Diluted weighted-average shares of common stock outstanding 67.3 67.3

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.

These stock options and RSUs represented 1.7 million and 1.6 million shares of common stock for the three and nine months ended October 1, 2023, respectively, and 1.0 million shares of common stock for each of the three and nine months ended October 2, 2022.

Contract Balances

1 unchanged sentence

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 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 July 2, 2023 and January 1, 2023 was $ 59.3 million and $ 49.6 million, respectively.

Contract assets are included within Prepaid expenses and other current assets in the Company’s 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 Consolidated Balance Sheets as of October 1, 2023 and January 1, 2023 was $ 53.5 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 $ 5.7 million and $ 6.8 million as of July 2, 2023 and January 1, 2023, respectively;

• a customer supply agreement under which the difference between the timing of invoicing and revenue recognition resulted in a contract asset of $ 3.8 million and $ 6.8 million as of October 1, 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 $ 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 balance of the contract asset related to these arrangements was $ 42.4 million and $ 38.5 million as of October 1, 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 $ 7.3 million and $ 4.3 million as of October 1, 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 and six months ended July 2, 2023.

No credit losses related to contract assets were recognized during the three and nine months ended October 1, 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 $ 41.2 million as of July 2, 2023 and $ 76.4 million as of January 1, 2023.

The balance of the Company’s current deferred revenue was $ 34.6 million as

of October 1, 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 $ 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.

The balance of the deferred revenue included in long-term liabilities was $ 13.5 million and $ 9.4 million as of October 1, 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 nine months ended October 1, 2023 was $ 2.4 million and $ 70.9 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 $ 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 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.

The Company’s portion of the pre-tax net profit shared under the Joint Business was $ 8.9 million and $ 38.6 million during the three and nine months ended October 1, 2023, respectively, and $ 7.9 million and $ 13.5 million during the three and nine months ended October 2, 2022, respectively.

These amounts included the Company’s portion of the pre-tax net profit of $ 7.3 million and $ 14.0 million during the three and nine months ended October 1, 2023, respectively, and $ 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 also included revenue from collaboration and royalty agreements of $ 1.6 million and $ 24.6 million during the three and nine months ended October 1, 2023, respectively, and $ 2.7 million and $ 4.7 million during the three and nine months ended October 2, 2022, respectively, 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 Six Months Ended

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

Three Months Ended Nine Months Ended

(In millions) October 1, 2023 October 2, 2022 October 1, 2023 October 2, 2022

Labs $ 341.4 $ 334.8 $ 1,073.5 $ 505.5

4 unchanged sentences

Concentration of Revenue and Credit Risk

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.

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.

For the nine months ended October 1, 2023, no customers individually accounted for more than 10% of Total revenues.

For the nine months ended October 2, 2022, one customer and one distributor represented 27 % and 10 %, respectively, of Total revenues.

As of October 1, 2023 and January 1, 2023, customers with a balance due in excess of 10% of Accounts receivable, net totaled $ 99.4 million and $ 161.9 million, respectively.

Revenue related to our respiratory products accounted for 25 % and 24 % of Total revenues for the three and nine months ended October 1, 2023, respectively, and 30 % and 63 % for the three and nine months ended October 2, 2022, respectively.

Segment and Geographic Information

Total revenues by reportable segment are as follows:

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

(In millions) October 1, 2023 October 2, 2022 October 1, 2023 October 2, 2022

North America $ 465.2 $ 517.6 $ 1,426.8 $ 1,917.3

4 unchanged sentences

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

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 nine months ended October 1, 2023 and October 2, 2022:

Three Months Ended Nine Months Ended

(In millions) October 1, 2023 October 2, 2022 October 1, 2023 October 2, 2022

North America $ 253.4 $ 293.5 $ 708.1 $ 1,246.1

9 unchanged sentences

Amortization of deferred cloud computing implementation costs

EU medical device regulation transition costs (2)

( 2.8 ) ( 1.6 ) ( 5.9 ) ( 3.9 )

1 unchanged sentence

Loss on investments ( 1.0 ) — ( 1.2 ) ( 0.8 )

Tax indemnification income 0.4 — 0.1 —

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

EU medical device regulation transition costs (2)

( 0.4 ) ( 0.6 ) ( 1.9 ) ( 1.0 )

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

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

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

Employee compensation charges — ( 1.0 ) — ( 1.5 )

Loss on extinguishment of debt — — — ( 24.0 )

Derivative mark-to-market gain — 3.4 — 4.4

Tax indemnification income 0.1 0.3 0.2 0.3

Other adjustments ( 1.1 ) ( 0.3 ) ( 2.6 ) ( 0.4 )

(Loss) income before income taxes $ ( 15.5 ) $ 31.3 $ ( 19.9 ) $ 694.8

2 unchanged sentences

The Company’s corporate function also includes debt and stock-based compensation associated with all employee stock-based awards.

(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.

(2) Represents incremental consulting costs and research and development (“R&D”) manufacturing site costs to align compliance of the Company’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 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.

2 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 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.

For the three months ended October 1, 2023, the Company recognized an income tax benefit of $ 2.8 million in relation to loss before income taxes of $ 15.5 million, resulting in an effective benefit tax rate of 18.1 %.

For the three months ended October 2, 2022, the Company recognized a provision for income taxes of $ 12.1 million in relation to income before income taxes of $ 31.3 million, resulting in an effective tax rate of 38.7 %.

For the three months ended October 1, 2023, the effective tax rate differed from the U.S.

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

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

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.

statutory rate, R&D credits, foreign tax credits and foreign exchange losses.

For the three months ended October 2, 2022, the effective tax rate was impacted primarily by income taxes owed in certain U.S.

For the nine months ended October 1, 2023, the Company recognized an income tax benefit of $ 2.8 million in relation to loss before income taxes of $ 19.9 million, resulting in an effective benefit tax rate of 14.1 %.

For the nine months ended October 2, 2022, the Company recognized a provision for income taxes of $ 176.4 million in relation to income before income taxes of $ 694.8 million, resulting in an effective tax rate of 25.4 %.

For the nine months ended October 1, 2023, the effective tax rate differed from the 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.

statutory rate, R&D credits, foreign tax credits and foreign exchange losses.

For the nine months ended October 2, 2022, the effective tax rate was primarily impacted by incomes taxes owed in certain U.S.

The balance of unrecognized tax benefits at October 1, 2023, not including interest and penalties, was $ 38.7 million, of which $ 27.5 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 July 2, 2023, the Company had approximately $ 8.1 million of interest and penalties accrued related to unrecognized tax benefits.

At October 1, 2023, the Company had approximately $ 8.5 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 $ 14.2 million.

6 unchanged sentences

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 $ 16.4 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.

The indemnification receivable from Johnson & Johnson totaled $ 16.4 million and $ 16.8 million as of October 1, 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 $ 1.0 million of interest and penalties during the three and nine months ended October 1, 2023, respectively, and $ 0.3 million and $ 0.4 million during the three and nine months ended October 2, 2022, respectively.

Balance Sheet Account Details

Cash, Cash Equivalents and Restricted Cash

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

(In millions) October 1, 2023 January 1, 2023

Cash and cash equivalents $ 149.3 $ 292.9

3 unchanged sentences

The following table is a summary of marketable securities:

July 2, 2023 January 1, 2023

October 1, 2023 January 1, 2023

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

12 unchanged sentences

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

(In millions) October 1, 2023 January 1, 2023

Accounts receivable $ 419.1 $ 543.0

4 unchanged sentences

Inventories consisted of the following:

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

(In millions) October 1, 2023 January 1, 2023

Raw materials $ 197.9 $ 185.2

6 unchanged sentences

Total inventories $ 598.1 $ 563.0

(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.

(1) Includes adjustment of approximately $ 39 million in the nine months ended October 1, 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.

1 unchanged sentence

Prepaid expenses and other current assets consisted of the following:

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

Prepaid expenses $ 95.9 $ 96.7

(In millions) October 1, 2023 January 1, 2023

Income taxes and other tax receivables $ 93.1 $ 38.6

Prepaid expenses 92.2 96.7

Contract assets 53.5 49.6

8 unchanged sentences

Foreign currency translation ( 0.1 ) ( 4.1 ) ( 6.4 ) 0.6 ( 10.0 )

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

Balance at October 1, 2023 $ 1,534.2 $ 350.4 $ 110.4 $ 447.9 $ 2,442.9

Other Current Liabilities

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

(In millions) October 1, 2023 January 1, 2023

Accrued commissions, rebates and returns $ 51.5 $ 57.5

Accrued other taxes payable 39.7 9.3

Deferred revenue 34.6 76.4

Accrued interest 32.2 1.4

Operating lease liabilities 26.3 24.4

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Total other current liabilities $ 305.4 $ 325.4

Long-term Borrowings

The components of borrowings were as follows:

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

(In millions) October 1, 2023 January 1, 2023

Term Loan $ 2,472.2 $ 2,646.9

Financing lease obligation 0.5 0.8

Other short-term borrowings 2.9 —

Other long-term borrowings 0.7 1.2

3 unchanged sentences

Long-term borrowings $ 2,274.6 $ 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 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.

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

As of October 1, 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 nine months ended October 1, 2023, the Company made $ 174.7 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 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

The Company was in compliance with the financial covenants as of October 1, 2023.

The following table provides the detailed amounts within Interest expense, net for the three and nine months ended October 1, 2023 and October 2, 2022:

Three Months Ended Nine Months Ended

(In millions) October 1, 2023 October 2, 2022 October 1, 2023 October 2, 2022

Term Loan $ 45.7 $ 27.9 $ 130.8 $ 36.3

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Stock-based compensation expense was as follows:

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

(In millions) October 1, 2023 October 2, 2022 October 1, 2023 October 2, 2022

Cost of sales $ 1.2 $ 0.8 $ 3.3 $ 2.0

4 unchanged sentences

Total stock-based compensation expense $ 17.1 $ 16.2 $ 48.1 $ 50.5

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 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 table above includes compensation expense related to liability-classified awards of $ 3.0 million and $ 8.8 million for the three and nine months ended October 1, 2023, respectively, and $ 3.0 million and $ 13.9 million for the three and nine months ended October 2, 2022, respectively, which has been or is expected to be settled in cash.

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

The Company granted 253 thousand stock options during the nine months ended October 1, 2023.

As of October 1, 2023, total unrecognized compensation expense related to stock options was approximately $ 20.0 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:

Six Months Ended

July 2, 2023 July 3, 2022

Nine Months Ended

October 1, 2023 October 2, 2022

Risk-free interest rate 3.52 % 1.99 %

4 unchanged sentences

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 modification resulted in an additional $ 2.9 million and $ 8.0 million of stock-based compensation expense recognized during the three and nine months ended October 1, 2023, respectively.

The total unrecognized expense relating to unvested shares for these stock options as of October 1, 2023 was $ 3.1 million and will be recognized through December 31, 2023.

The Company granted 609 thousand RSUs during the nine months ended October 1, 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 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.

The weighted-average fair value of RSUs granted during the nine months ended October 1, 2023 and October 2, 2022 was $ 87.14 and $ 97.52 , respectively.

The total amount of unrecognized compensation expense related to non-vested RSUs as of October 1, 2023 was approximately $ 78.4 million, which is expected to be recognized over a weighted-average period of approximately 2.2 years.

Commitments and Contingencies

10 unchanged sentences

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:

July 2, 2023 January 1, 2023

October 1, 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 $ — $ 6.7 $ 0.1 $ 6.8 $ — $ 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 six months ended July 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 nine months ended October 1, 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 during the three months ended July 2, 2023.

In connection with the acquisition of the B-type Natriuretic Peptide assay business run on Beckman Coulter analyzers from Alere Inc., the Company paid its last annual installment of $ 40.0 million during the nine months ended October 1, 2023.

Financial Instruments Not Measured at Fair Value

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 estimated fair value of the Company’s borrowings under the Term Loan was $ 2,444.4 million at October 1, 2023, compared to the carrying amount, excluding debt issuance costs, of $ 2,472.2 million.

The estimated fair value of the Company’s borrowings under the Term Loan was $ 2,630.3 million at January 1, 2023, compared to the carrying amount,

excluding debt issuance costs, of $ 2,646.9 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.

10 unchanged sentences

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 $ 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 July 2, 2023, all of which were interest rate swaps:

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.

Pre-tax unrealized gains of $ 29.0 million as of October 1, 2023 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 October 1, 2023, all of which were interest rate swaps:

Notional Amount

23 unchanged sentences

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, Euro, Indian Rupee, Japanese Yen, Mexican Peso, 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, Colombian Peso, Euro, Indian Rupee, Japanese Yen, Mexican Peso, Philippine Peso, South Korean Won, 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 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 loss of $ 5.4 million within OCI as of July 2, 2023 is expected to be reclassified to earnings in the next 12 months.

Pre-tax unrealized loss of $ 2.0 million as of October 1, 2023 is expected to be reclassified from OCI 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, net.

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

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 October 1, 2023:

Description Notional Amount

2 unchanged sentences

Foreign currency forward contracts $ 616.9 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 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

Three Months Ended October 1, 2023

Foreign currency forward contracts (sales) $ ( 1.0 ) Total revenues $ 1.8

1 unchanged sentence

Interest rate derivatives $ ( 28.0 ) Interest expense, net $ ( 8.5 )

Six Months Ended July 2, 2023

Nine Months Ended October 1, 2023

Foreign currency forward contracts (sales) $ 0.7 Total revenues $ 2.7

1 unchanged sentence

Interest rate derivatives $ ( 54.1 ) Interest expense, net $ ( 21.1 )

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

Three Months Ended October 2, 2022

Foreign currency forward contracts (sales) $ ( 2.6 ) Total revenues $ ( 0.7 )

Foreign currency forward contracts (purchases) $ ( 0.6 ) Cost of sales, excluding amortization of intangibles $ ( 0.1 )

Interest rate derivatives $ ( 7.9 ) Interest expense, net $ 0.4

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

Fair value (gains) and losses on foreign currency forward contracts, as determined using Level 2 inputs, that do not qualify for hedge accounting treatment are recorded in Other expense (income), net.

Fair value losses were $ 0.2 million for the three months ended October 1, 2023 and fair value gains were $ 0.3 million for the nine months ended October 1, 2023.

Fair value losses on foreign currency forward contracts, as determined using Level 2 inputs, that do not qualify for hedge accounting treatment are recorded in Other expense (income), net and were $ 2.7 million and $ 3.0 million for the three and nine months ended October 2, 2022, respectively.

Fair value gains on interest rate derivatives, as determined using Level 2 inputs, that do not qualify for hedge accounting treatment are recorded in Other expense (income), net and were $ 3.4 million and $ 4.4 million for the three and nine months ended October 2, 2022, respectively.

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

(In millions) October 1, 2023 January 1, 2023

Designated cash flow hedges

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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 and six months ended July 2, 2023 and July 3, 2022:

Three Months Ended July 2, 2023

The following table summarizes the changes in Accumulated other comprehensive loss by component:

Three Months Ended October 1, 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 )

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

Current period deferrals (1)

2 unchanged sentences

Net change — 18.2 0.2 ( 55.3 ) ( 36.9 )

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

Six Months Ended July 2, 2023

Balance at October 1, 2023 $ 0.7 $ 32.8 $ ( 0.2 ) $ ( 86.5 ) $ ( 53.2 )

Nine Months Ended October 1, 2023

Pension and Other Post-

5 unchanged sentences

Net change — 31.3 0.3 ( 17.2 ) 14.4

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

Three Months Ended July 3, 2022

Balance at October 1, 2023 $ 0.7 $ 32.8 $ ( 0.2 ) $ ( 86.5 ) $ ( 53.2 )

Three Months Ended October 2, 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

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

Current period deferrals (2)

2 unchanged sentences

Net change 9.1 — ( 92.9 ) ( 83.8 )

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

Six Months Ended July 3, 2022

Balance at October 2, 2022 $ 14.6 $ ( 0.7 ) $ ( 158.4 ) $ ( 144.5 )

Nine Months Ended October 2, 2022

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

4 unchanged sentences

Net change 14.6 ( 0.6 ) ( 158.9 ) ( 144.9 )

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.

Balance at October 2, 2022 $ 14.6 $ ( 0.7 ) $ ( 158.4 ) $ ( 144.5 )

(1) Includes tax impact of $ 4.6 million and $ 8.0 million related to cash flow hedges for the three and nine months ended October 1, 2023, respectively.

(2) Includes tax impact of $ 1.7 million and $ 2.8 million related to cash flow hedges for the three and nine months ended October 2, 2022, respectively.

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