Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Report of Management on Danaher Corporation’s Internal Control Over Financial Reporting

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Securities Exchange Act of 1934.

The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2022. In making this assessment, the Company’s management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in “Internal Control-Integrated Framework” (2013 framework). Based on this assessment, management concluded that, as of December 31, 2022, the Company’s internal control over financial reporting is effective.

The Company’s independent registered public accounting firm has issued an audit report on the effectiveness of the Company’s internal control over financial reporting. This report dated February 22, 2023 appears on page 60 of this Form 10-K.

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of Danaher Corporation

Opinion on Internal Control over Financial Reporting

We have audited Danaher Corporation and subsidiaries’ internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Danaher Corporation and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2022 and 2021, the related consolidated statements of earnings, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2022, and the related notes and financial statement schedule listed in the Index at Item 15(a) and our report dated February 22, 2023 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Report of Management on Danaher Corporation’s Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

Tysons, Virginia

February 22, 2023

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of Danaher Corporation

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Danaher Corporation and subsidiaries (the Company) as of December 31, 2022 and 2021, the related consolidated statements of earnings, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2022, and the related notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 22, 2023 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.

			Uncertain Tax Positions
Description of the Matter			As discussed in Note 7 to the consolidated financial statements, the Company operates in the U.S. and multiple international tax jurisdictions and as a result files numerous tax returns in those locations. Uncertainty in a tax position may arise for multiple reasons, including because tax laws are subject to interpretation. The Company applies the applicable tax law and judgment to (1) determine whether, based on the technical merits, a tax position is more likely than not to be sustained and (2) measure the amount of tax benefit that qualifies for recognition. As of December 31, 2022, the Company’s gross unrecognized tax benefits related to uncertain tax positions were approximately $1.1 billion. Auditing the recognition and measurement of certain of the Company’s tax positions including the evaluation of whether such tax position is more likely than not to be sustained, and if applicable the measurement of the benefit, is complex and required the use of tax subject matter resources.
How We Addressed the Matter in Our Audit			We tested controls over management’s accounting for tax positions, including assessment of the technical merits of tax positions and if applicable, the measurement of the benefit of the tax position. To evaluate whether the technical merits of certain of the Company’s income tax positions are more likely than not sustainable, our audit procedures included, among others, evaluation of applicable tax law, court cases, tax regulations and other regulatory guidance by our tax subject matter resources. For certain of the income tax positions, we also involved tax subject matter resources in corroborating our understanding of the relevant facts, examining the Company’s analysis, evaluating relevant correspondence with the tax authority and reading third-party advice obtained by management, as applicable. We also evaluated the adequacy of the Company’s disclosures included in Note 7 to the consolidated financial statements.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2002.

Tysons, Virginia

February 22, 2023

DANAHER CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

($ in millions, except per share amount)

			As of December 31
			2022						2021
ASSETS
Current assets:
Cash and equivalents			$	5,995					$	2,586
Trade accounts receivable, less allowance for doubtful accounts of $126 as of December 31, 2022 and $124 as of December 31, 2021			4,918						4,631
Inventories			3,110						2,767
Prepaid expenses and other current assets			1,860						1,664
Total current assets			15,883						11,648
Property, plant and equipment, net			3,956						3,790
Other long-term assets			4,459						3,719
Goodwill			39,752						41,184
Other intangible assets, net			20,300						22,843
Total assets			$	84,350					$	83,184
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Notes payable and current portion of long-term debt			$	591					$	8
Trade accounts payable			2,296						2,569
Accrued expenses and other liabilities			5,502						5,563
Total current liabilities			8,389						8,140
Other long-term liabilities			6,785						7,699
Long-term debt			19,086						22,168
Stockholders’ equity:
Preferred stock, no par value, 15.0 million shares authorized; no shares and 1.65 million shares of 4.75% Mandatory Convertible Preferred Stock, Series A, issued and outstanding as of December 31, 2022 and December 31, 2021, respectively; 1.72 million shares of 5.00% Mandatory Convertible Preferred Stock, Series B, issued and outstanding as of December 31, 2022 and December 31, 2021			1,668						3,268
Common stock - $0.01 par value, 2.0 billion shares authorized; 869.3 million issued and 728.3 million outstanding as of December 31, 2022; 855.7 million issued and 715.0 million outstanding as of December 31, 2021			9						9
Additional paid-in capital			12,072						10,090
Retained earnings			39,205						32,827
Accumulated other comprehensive income (loss)			(2,872)						(1,027)
Total Danaher stockholders’ equity			50,082						45,167
Noncontrolling interests			8						10
Total stockholders’ equity			50,090						45,177
Total liabilities and stockholders’ equity			$	84,350					$	83,184

See the accompanying Notes to the Consolidated Financial Statements.

DANAHER CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

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

			Year Ended December 31
			2022						2021						2020
Sales			$	31,471					$	29,453					$	22,284
Cost of sales			(12,522)						(11,501)						(9,809)
Gross profit			18,949						17,952						12,475
Operating costs:
Selling, general and administrative expenses			(8,516)						(8,198)						(6,896)
Research and development expenses			(1,745)						(1,742)						(1,348)
Other operating expenses			—						(547)						—
Operating profit			8,688						7,465						4,231
Nonoperating income (expense):
Other income (expense), net			(226)						456						494
Loss on early extinguishment of borrowings			—						(96)						(26)
Interest expense			(211)						(238)						(275)
Interest income			41						11						71
Earnings from continuing operations before income taxes			8,292						7,598						4,495
Income taxes			(1,083)						(1,251)						(849)
Net earnings from continuing operations			7,209						6,347						3,646
Earnings from discontinued operations, net of income taxes			—						86						—
Net earnings			7,209						6,433						3,646
Mandatory convertible preferred stock dividends			(106)						(164)						(136)
Net earnings attributable to common stockholders			$	7,103					$	6,269					$	3,510
Net earnings per common share from continuing operations:
Basic			$	9.80					$	8.65					$	4.97
Diluted			$	9.66					$	8.50					$	4.89
Net earnings per common share from discontinued operations:
Basic			$	—					$	0.12					$	—
Diluted			$	—					$	0.12					$	—
Net earnings per common share:
Basic			$	9.80					$	8.77					$	4.97
Diluted			$	9.66					$	8.61		*			$	4.89
Average common stock and common equivalent shares outstanding:
Basic			725.1						714.6						706.2
Diluted			737.1						736.8						718.7

• Net earnings per common share amount does not add due to rounding.

See the accompanying Notes to the Consolidated Financial Statements.

DANAHER CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

($ in millions)

			Year Ended December 31
			2022						2021						2020
Net earnings			$	7,209					$	6,433					$	3,646
Other comprehensive income (loss), net of income taxes:
Foreign currency translation adjustments			(2,105)						(1,284)						2,919
Pension and postretirement plan benefit adjustments			209						378						(147)
Cash flow hedge adjustments			51						247						(72)
Total other comprehensive income (loss), net of income taxes			(1,845)						(659)						2,700
Comprehensive income			$	5,364					$	5,774					$	6,346

See the accompanying Notes to the Consolidated Financial Statements.

DANAHER CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

($ in millions)

			Year Ended December 31
			2022						2021						2020
Preferred stock:
Balance, beginning of period			$	3,268					$	3,268					$	1,600
Issuance of Mandatory Convertible Preferred Stock			—						—						1,668
Conversion of Mandatory Convertible Preferred Stock to common stock			(1,600)						—						—
Balance, end of period			$	1,668					$	3,268					$	3,268
Common stock:
Balance, beginning of period			$	9					$	9					$	8
Common stock-based award activity			—						—						1
Balance, end of period			$	9					$	9					$	9
Additional paid-in capital:
Balance, beginning of period			$	10,090					$	9,698					$	7,565
Common stock-based award activity			396						335						351
Common stock issued in connection with Mandatory Convertible Preferred Stock conversions			1,600						—						—
Common stock issued in connection with acquisitions			—						23						—
Common stock issued in connection with LYONs’ conversions			—						34						53
Issuance of common stock			—						—						1,729
Acquisition of noncontrolling interests			(14)						—						—
Balance, end of period			$	12,072					$	10,090					$	9,698
Retained earnings:
Balance, beginning of period			$	32,827					$	27,159					$	24,166
Adoption of accounting standards			—						—						(8)
Net earnings			7,209						6,433						3,646
Common stock dividends declared			(725)						(601)						(509)
Mandatory Convertible Preferred Stock dividends declared			(106)						(164)						(136)
Balance, end of period			$	39,205					$	32,827					$	27,159
Accumulated other comprehensive income (loss):
Balance, beginning of period			$	(1,027)					$	(368)					$	(3,068)
Other comprehensive income (loss)			(1,845)						(659)						2,700
Balance, end of period			$	(2,872)					$	(1,027)					$	(368)
Noncontrolling interests:
Balance, beginning of period			$	10					$	11					$	11
Change in noncontrolling interests			(2)						(1)						—
Balance, end of period			$	8					$	10					$	11
Total stockholders’ equity, end of period			$	50,090					$	45,177					$	39,777

See the accompanying Notes to the Consolidated Financial Statements.

DANAHER CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

($ in millions)

			Year Ended December 31
			2022						2021						2020
Cash flows from operating activities:
Net earnings			$	7,209					$	6,433					$	3,646
Less: earnings from discontinued operations, net of income taxes			—						(86)						—
Net earnings from continuing operations			7,209						6,347						3,646
Noncash items:
Depreciation			738						718						637
Amortization of intangible assets			1,484						1,450						1,138
Amortization of acquisition-related inventory fair value step-up			—						59						457
Stock-based compensation expense			336						218						187
Contract settlement expense			—						542						—
Pretax loss on early extinguishment of borrowings			—						96						26
Pretax gain on sale of product lines and investment (gains) losses			271						(414)						(455)
Change in deferred income taxes			(559)						(229)						518
Change in trade accounts receivable, net			(477)						(611)						(264)
Change in inventories			(486)						(502)						(123)
Change in trade accounts payable			5						549						227
Change in prepaid expenses and other assets			(78)						(4)						102
Change in accrued expenses and other liabilities			76						139						119
Total operating cash provided by continuing operations			8,519						8,358						6,215
Total operating cash used in discontinued operations			—						—						(7)
Net cash provided by operating activities			8,519						8,358						6,208
Cash flows from investing activities:
Cash paid for acquisitions			(637)						(10,961)						(20,971)
Payments for additions to property, plant and equipment			(1,152)						(1,294)						(791)
Proceeds from sales of property, plant and equipment			9						13						2
Payments for purchases of investments			(523)						(934)						(342)
Proceeds from sales of investments			18						126						13
Proceeds from sale of product lines			—						26						826
All other investing activities			51						37						24
Net cash used in investing activities for continuing operations			(2,234)						(12,987)						(21,239)
Cash flows from financing activities:
Proceeds from the issuance of common stock in connection with stock-based compensation			31						86						153
Proceeds from the public offering of common stock, net of issuance costs			—						—						1,729
Proceeds from the public offering of preferred stock, net of issuance costs			—						—						1,668
Payment of dividends			(818)						(742)						(615)
Net (repayments of) proceeds from borrowings (maturities of 90 days or less)			(723)						2,265						(4,637)
Proceeds from borrowings (maturities longer than 90 days)			—						984						8,670
Repayments of borrowings (maturities longer than 90 days)			(965)						(1,186)						(5,933)
Make-whole premiums to redeem borrowings prior to maturity			—						(96)						(26)
All other financing activities			(95)						(16)						(3)
Net cash (used in) provided by financing activities for continuing operations			(2,570)						1,295						1,006
Effect of exchange rate changes on cash and equivalents			(306)						(115)						148
Net change in cash and equivalents			3,409						(3,449)						(13,877)
Beginning balance of cash and equivalents			2,586						6,035						19,912
Ending balance of cash and equivalents			$	5,995					$	2,586					$	6,035

See the accompanying Notes to the Consolidated Financial Statements.

DANAHER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business—Danaher Corporation (“Danaher” or the “Company”) designs, manufactures and markets professional, medical, industrial and commercial products and services, which are typically characterized by strong brand names, innovative technology and major market positions. As of December 31, 2022, the Company operates in four business segments:

• The Biotechnology segment includes the bioprocessing and discovery and medical businesses and offers a broad range of tools, consumables and services that are primarily used by customers to advance and accelerate the research, development, manufacture and delivery of biological medicines. The biotherapeutics that the Company’s solutions support range from replacement therapies such as insulin, vaccines, recombinant proteins and other biologic drugs, to novel cell, gene, mRNA and other nucleic acid therapies.

*•*The Life Sciences segment offers a broad range of instruments and consumables that are primarily used by customers to study the basic building blocks of life, including DNA and RNA, nucleic acid, proteins, metabolites and cells, in order to understand the causes of disease, identify new therapies, and test and manufacture new drugs, vaccines and gene editing technologies. Additionally, the segment provides products and consumables used to filter and remove contaminants from a variety of liquids and gases in many end-market applications.

• The Diagnostics segment offers clinical instruments, reagents, consumables, software and services that hospitals, physicians’ offices, reference laboratories and other critical care settings use to diagnose disease and make treatment decisions.

• The Environmental & Applied Solutions segment offers products and services that help protect precious resources and keep global food and water supplies safe. The Company’s water quality business provides instrumentation, consumables, software, services and disinfection systems to help analyze, treat and manage the quality of ultra-pure, potable, industrial, waste, ground, source and ocean water in residential, commercial, municipal, industrial and natural resource applications. The Company’s product identification business provides instruments, software, services and consumables for various color and appearance management, packaging design and quality management, packaging converting, printing, marking, coding and traceability applications for consumer, pharmaceutical and industrial products.

Refer to Notes 2 and 3 for a discussion of significant acquisitions, discontinued operations and other dispositions.

Accounting Principles—The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). The Consolidated Financial Statements include the accounts of the Company and its subsidiaries. All intercompany balances and transactions have been eliminated upon consolidation. The Consolidated Financial Statements also reflect the impact of noncontrolling interests. Noncontrolling interests do not have a significant impact on the Company’s consolidated results of continuing operations, therefore earnings attributable to noncontrolling interests for continuing operations are not presented separately in the Company’s Consolidated Statements of Earnings. Earnings attributable to noncontrolling interests have been reflected in selling, general and administrative expenses and were insignificant in all periods presented. Reclassifications of certain prior year amounts have been made to conform to the current year presentation.

Use of Estimates—The preparation of these financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. The Company bases these estimates on historical experience, the current economic environment and on various other assumptions that are believed to be reasonable under the circumstances. However, uncertainties associated with these estimates exist and actual results may differ materially from these estimates.

Cash and Equivalents—The Company considers all highly liquid investments with a maturity of three months or less at the date of purchase to be cash equivalents.

Accounts Receivable and Allowances for Doubtful Accounts—All trade accounts, contract and finance receivables are reported on the accompanying Consolidated Balance Sheets adjusted for any write-offs and net of allowances for doubtful accounts. The allowances for doubtful accounts represent management’s best estimate of the expected future credit losses from the Company’s trade accounts, contract and finance receivable portfolios. Determination of the allowances requires management to exercise judgment about the timing, frequency and severity of credit losses that could materially affect the provision for credit losses and, therefore, net earnings. The Company regularly performs detailed reviews of its portfolios to determine if an

impairment has occurred and evaluates the collectability of receivables based on a combination of various financial and qualitative factors that may affect customers’ ability to pay, including customers’ financial condition, collateral, debt-servicing ability, past payment experience and credit bureau information. In circumstances where the Company is aware of a specific customer’s inability to meet its financial obligations, a specific reserve is recorded against amounts due to reduce the recognized receivable to the amount reasonably expected to be collected. Additions to the allowances for doubtful accounts are charged to current period earnings, amounts determined to be uncollectible are charged directly against the allowances, while amounts recovered on previously written-off accounts increase the allowances. If the financial condition of the Company’s customers were to deteriorate, resulting in an impairment of their ability to make payments, additional reserves would be required. The Company does not believe that trade accounts receivable represents significant concentrations of credit risk because of the diversified portfolio of individual customers and geographical areas. On January 1, 2020, the Company adopted Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, using the modified retrospective transition method and recorded a net increase to the allowance for doubtful accounts of $10 million due to the cumulative impact of adoption. The Company’s allowance for doubtful accounts as of December 31, 2022 reflects the Company’s best estimate of the expected future losses for its accounts receivables; however, these estimates may change and future actual losses may differ from the Company’s estimates. The Company will continue to monitor economic conditions and will revise the estimates of the expected future losses for accounts receivable as necessary. The Company recorded $29 million, $31 million and $31 million of expense associated with doubtful accounts for the years ended December 31, 2022, 2021 and 2020, respectively.

Included in the Company’s trade accounts receivable and other long-term assets as of December 31, 2022 and 2021 are $254 million and $247 million of net aggregate financing receivables, respectively. All financing receivables are evaluated for impairment based on individual customer credit profiles.

Inventories—Inventories include the costs of material, labor and overhead. Inventories are stated at the lower of cost and net realizable value primarily using the first-in, first-out method.

The classes of inventory as of December 31 are summarized as follows ($ in millions):

			2022						2021
Finished goods			$	1,504					$	1,343
Work in process			473						473
Raw materials			1,133						951
Total			$	3,110					$	2,767

Prepaid Expenses and Other Current Assets—Prepaid expenses and other current assets primarily result from advance payments to vendors for good and services and are capitalized until the related goods are received or services are performed and advanced payments to tax authorities. Included in the Company’s prepaid expenses and other current assets as of December 31, 2022 and 2021 are prepaid expenses of $802 million and $770 million, respectively, and taxes receivable for income and other taxes of $962 million and $812 million, respectively.

Property, Plant and Equipment—Property, plant and equipment are carried at cost. The provision for depreciation has been computed principally by the straight-line method based on the estimated useful lives of the depreciable assets as follows:

Category						Useful Life
Buildings						30 years
Leased assets and leasehold improvements						Amortized over the lesser of the economic life of the asset or the term of the lease
Machinery and equipment						3 – 10 years
Customer-leased instruments						5 – 7 years

Estimated useful lives are periodically reviewed and, when appropriate, changes to estimates are made prospectively.

The classes of property, plant and equipment as of December 31 are summarized as follows ($ in millions):

			2022						2021
Land and improvements			$	216					$	203
Buildings			1,994						1,676
Machinery and equipment			3,935						3,610
Customer-leased equipment			1,704						1,766
Gross property, plant and equipment			7,849						7,255
Less: accumulated depreciation			(3,893)						(3,465)
Property, plant and equipment, net			$	3,956					$	3,790

Investments—Investments over which the Company has a significant influence but not a controlling interest, are accounted for using the equity method of accounting which requires the Company to record its initial investment at cost and adjust the balance each period for the Company’s share of the investee’s income or loss and dividends paid. The Company also invests in start-up companies where the Company has neither control of nor significant influence over the investee. The Company measures these non-marketable equity securities at fair value and recognizes changes in fair value in net earnings. For securities without readily available fair values, the Company has elected the measurement alternative to record these investments at cost and to adjust for impairments and observable price changes with a same or similar security from the same issuer within net earnings (the “Fair Value Alternative”). Additionally, the Company is a limited partner in partnerships that invest in start-up companies. While the partnerships record these investments at fair value, the Company’s investment in the partnerships is accounted for under the equity method of accounting. The Company made minority investments in equity method investments and non-marketable equity securities totaling $523 million, $934 million and $342 million in 2022, 2021 and 2020, respectively, including investments in partnerships of $283 million, $662 million and $172 million in 2022, 2021 and 2020, respectively. The Company recorded net realized and unrealized gains and losses related to changes in the fair value of these investments, as well as an impairment to an equity-method investment in other income (expense), net, in the Consolidated Statements of Earnings. Refer to Notes 9 and 12 for additional information about the Company’s investments.

Other Assets—Other assets principally include noncurrent financing receivables, noncurrent deferred tax assets and other investments.

Fair Value of Financial Instruments—The Company’s financial instruments consist primarily of cash and cash equivalents, trade accounts receivable, investments in equity securities, available-for-sale debt securities and cross-currency swaps, obligations under trade accounts payable and short and long-term debt. Due to their short-term nature, the carrying values for cash and cash equivalents, trade accounts receivable and trade accounts payable approximate fair value. Refer to Note 12 for the fair values of the Company’s investments in equity securities, available-for-sale debt securities and cross-currency swaps and other obligations.

Goodwill and Other Intangible Assets—Goodwill and other intangible assets result from the Company’s acquisition of existing businesses. In accordance with accounting standards related to business combinations, goodwill is not amortized; however, certain finite-lived identifiable intangible assets, primarily customer relationships and acquired technology, are amortized over their estimated useful lives. Intangible assets with indefinite lives are not amortized. In-process research and development (“IPR&D”) is initially capitalized at fair value and when the IPR&D project is complete, the asset is considered a finite-lived intangible asset and amortized over its estimated useful life. If an IPR&D project is abandoned, an impairment loss equal to the value of the intangible asset is recorded in the period of abandonment. The Company reviews identified intangible assets and goodwill for impairment whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable. The Company also tests intangible assets with indefinite lives and goodwill for impairment at least annually. Refer to Notes 2 and 11 for additional information about the Company’s goodwill and other intangible assets.

Revenue Recognition—The Company derives revenues primarily from the sale of Biotechnology, Life Sciences, Diagnostics and Environmental & Applied Solutions products and services. Revenue is recognized when control of the promised products or services is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those products or services (the transaction price). A performance obligation is a promise in a contract to transfer a distinct product or service to a customer and is the unit of account under Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers. For equipment and consumables sold by the Company, control transfers to the customer at a point in time. To indicate the transfer of control, the Company must have a present right to payment, legal title must have passed to the customer, the customer must have the significant risks and rewards of ownership, and where acceptance is not a formality, the customer must have accepted the product or service. The Company’s principal terms of sale are Free On Board (“FOB”) Shipping Point, or equivalent, and, as such, the Company primarily transfers control

and records revenue for product sales upon shipment. Sales arrangements with delivery terms that are not FOB Shipping Point are not recognized upon shipment and the transfer of control for revenue recognition is evaluated based on the associated shipping terms and customer obligations. If a performance obligation to the customer with respect to a sales transaction remains to be fulfilled following shipment (typically installation or acceptance by the customer), revenue recognition for that performance obligation is deferred until such commitments have been fulfilled. Returns for products sold are estimated and recorded as a reduction of revenue at the time of sale. Customer allowances and rebates, consisting primarily of volume discounts and other short-term incentive programs, are recorded as a reduction of revenue at the time of sale because these allowances reflect a reduction in the transaction price. Product returns, customer allowances and rebates are estimated based on historical experience and known trends. For extended warranty and service, control transfers to the customer over the term of the arrangement. Revenue for extended warranty and service is recognized based upon the period of time elapsed under the arrangement. Revenue for other long-term contracts is generally recognized based upon the cost-to-cost measure of progress, provided that the Company meets the criteria associated with transferring control of the good or service over time.

Certain of the Company’s revenues relate to operating-type lease (“OTL”) arrangements. Leases are outside the scope of ASC 606 and are therefore accounted for in accordance with ASC 842, Leases. Equipment lease revenue for OTL agreements is recognized on a straight-line basis over the life of the lease, and the cost of customer-leased equipment is recorded within property, plant and equipment in the accompanying Consolidated Balance Sheets and depreciated over the equipment’s estimated useful life. Depreciation expense associated with the leased equipment under OTL arrangements is reflected in cost of sales in the accompanying Consolidated Statements of Earnings. The OTLs are generally not cancellable until after an initial term and may or may not require the customer to purchase a minimum number of consumables or tests throughout the contract term. The Company also enters into sales-type lease (“STL”) arrangements with customers which result in earlier recognition of equipment lease revenue as compared to an OTL.

For a contract with multiple performance obligations, the Company allocates the contract’s transaction price to each performance obligation on a relative standalone selling price basis using the Company’s best estimate of the standalone selling price of each distinct product or service in the contract. The primary method used to estimate standalone selling price is the price observed in standalone sales to customers. Allocation of the transaction price is determined at the contracts’ inception.

Shipping and Handling—Shipping and handling costs are included as a component of cost of sales. Revenue derived from shipping and handling costs billed to customers is included in sales.

Advertising—Advertising costs are expensed as incurred.

Research and Development—The Company conducts research and development activities for the purpose of developing new products, enhancing the functionality, effectiveness, ease of use and reliability of the Company’s existing products and expanding the applications for which uses of the Company’s products are appropriate. Research and development costs are expensed as incurred.

Income Taxes—The Company’s income tax expense represents the tax liability for the current year, the tax benefit or expense for the net change in deferred tax liabilities and assets during the year, as well as reserves for unrecognized tax benefits and return to provision adjustments. Deferred tax liabilities and assets are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted rates expected to be in effect during the year in which the differences reverse. Deferred tax assets generally represent items that can be used as a tax deduction or credit in the Company’s tax return in future years for which the tax benefit has already been reflected on the Company’s Consolidated Statements of Earnings. The Company establishes valuation allowances for its deferred tax assets if it is more likely than not that some or all of the deferred tax asset will not be realized. Deferred tax liabilities generally represent items that have already been taken as a deduction on the Company’s tax return but have not yet been recognized as an expense in the Company’s Consolidated Statements of Earnings. The effect on deferred tax assets and liabilities due to a change in tax rates is recognized in income tax expense in the period that includes the enactment date. The Company provides for unrecognized tax benefits when, based upon the technical merits, it is “more likely than not” that an uncertain tax position will not be sustained upon examination. Judgment is required in evaluating tax positions and determining income tax provisions. The Company re-evaluates the technical merits of its tax positions and may recognize an uncertain tax benefit in certain circumstances, including when: (1) a tax audit is completed; (2) applicable tax laws change, including a tax case ruling or legislative guidance; or (3) the applicable statute of limitations expires. The Company recognizes potential accrued interest and penalties associated with unrecognized tax positions in income tax expense. Refer to Note 7 for additional information.

Productivity Improvement and Restructuring—The Company periodically initiates productivity improvement and restructuring activities to appropriately position the Company’s cost base relative to prevailing economic conditions and associated customer demand as well as in connection with certain acquisitions. Costs associated with productivity improvement and restructuring actions can include one-time termination benefits and related charges in addition to facility closure, contract termination and

other related activities. The Company records the cost of the productivity improvement and restructuring activities when the associated liability is incurred.

Foreign Currency Translation—Exchange rate adjustments resulting from foreign currency transactions are recognized in net earnings, whereas effects resulting from the translation of financial statements are reflected as a component of accumulated other comprehensive income (loss) within stockholders’ equity. Assets and liabilities of subsidiaries operating outside the United States with a functional currency other than U.S. dollars are translated into U.S. dollars using year end exchange rates and income statement accounts are translated at weighted average rates. Net foreign currency transaction gains or losses were not material in any of the years presented. As discussed below, the Company uses its foreign currency-denominated debt and cross-currency swap arrangements whereby existing U.S. dollar-denominated borrowings are effectively converted to foreign currency borrowings to partially hedge its net investments in foreign operations against adverse movements in exchange rates.

Derivative Financial Instruments—The Company is neither a dealer nor a trader in derivative instruments. The Company has generally accepted the exposure to transactional exchange rate movements without using derivative instruments to manage this risk, although the Company from time to time partially hedges its net investments in foreign operations against adverse movements in exchange rates through foreign currency-denominated debt and cross-currency swaps. The Company periodically enters into foreign currency forward contracts to mitigate a portion of its foreign currency exchange risk and forward starting swaps to mitigate interest rate risk related to the Company’s debt. The Company also uses cross-currency swap derivative contracts to hedge long-term debt issuances in a foreign currency other than the functional currency of the borrower. When utilized, the derivative instruments are recorded on the Consolidated Balance Sheets as either an asset or liability measured at fair value. To the extent the derivative instrument qualifies as an effective hedge, changes in fair value are recognized in accumulated other comprehensive income (loss) in stockholders’ equity. Changes in the value of the foreign currency denominated debt and cross-currency swaps designated as hedges of the Company’s net investment in foreign operations based on spot rates are recognized in accumulated other comprehensive income (loss) in stockholders’ equity and offset changes in the value of the Company’s foreign currency denominated operations. Refer to Note 15 for additional information.

Accumulated Other Comprehensive Income (Loss)—Accumulated other comprehensive income (loss) refers to certain gains and losses that under U.S. GAAP are included in comprehensive income (loss) but are excluded from net earnings as these amounts are initially recorded as an adjustment to stockholders’ equity. Foreign currency translation adjustments are generally not adjusted for income taxes as they relate to indefinite investments in non-U.S. subsidiaries. Cash flow hedge adjustments reflect the gains or losses on the derivative contract designated as the hedging instrument. Pension and postretirement plan benefit adjustments relate to unrecognized prior service credits and actuarial losses. Refer to Notes 15, 16 and 19 for additional information.

Accounting for Stock-Based Compensation—The Company accounts for stock-based compensation by measuring the cost of employee services received in exchange for all equity awards granted, including stock options, restricted stock units (“RSUs”) and performance stock units (“PSUs”), based on the fair value of the award as of the grant date. Equity-based compensation expense is recognized net of an estimated forfeiture rate on a straight-line basis over the requisite service period of the award, except that in the case of RSUs, compensation expense is recognized using an accelerated attribution method. Refer to Note 19 for additional information on the stock-based compensation plans in which certain employees of the Company participate.

Pension and Postretirement Benefit Plans—The Company measures its pension and postretirement plans’ assets and its obligations that determine the respective plan’s funded status as of the end of the Company’s fiscal year, and recognizes an asset for a plan’s overfunded status or a liability for a plan’s underfunded status in its balance sheet. Changes in the funded status of the plans are recognized in the year in which the changes occur and reported in comprehensive income (loss). Refer to Note 16 for additional information on the Company’s pension and postretirement plans including a discussion of the actuarial assumptions, the Company’s policy for recognizing the associated gains and losses and the method used to estimate service and interest cost components.

Accounting Standards Recently Adopted—In October 2021, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2021-08, Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. The ASU requires companies to apply the definition of a performance obligation under ASC 606 to recognize and measure contract assets and contract liabilities (i.e., deferred revenue) relating to contracts with customers acquired in a business combination. Prior to the adoption of this ASU, an acquirer generally recognized assets acquired and liabilities assumed in a business combination, including contract assets and contract liabilities arising from revenue contracts with customers, at fair value on the acquisition date. The ASU results in the acquirer recording acquired contract assets and liabilities on the same basis that would have been recorded by the acquiree before the acquisition under ASC 606. The ASU is effective for fiscal years beginning after December 15, 2022, with early adoption permitted. The Company early adopted the ASU effective January 1, 2021 and did not apply the standard to immaterial transactions that occurred in 2021. The impact of the adoption of the ASU was not significant.

In August 2020, the FASB issued ASU No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The ASU includes amendments to the guidance on convertible instruments and the derivative scope exception for contracts in an entity’s own equity and simplifies the accounting for convertible instruments which include beneficial conversion features or cash conversion features by removing certain separation models in Subtopic 470-20. Additionally, the ASU requires entities to use the “if-converted” method when calculating diluted earnings per common share for convertible instruments. On January 1, 2022, the Company adopted the ASU and the ASU did not have a significant impact on the Company’s financial statements.

In November 2021, the FASB issued ASU No. 2021-10 Government Assistance (Topic 832), which requires annual disclosures of transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy. These required disclosures include information on the nature of transactions and related accounting policies used to account for transactions, detail on the line items on the balance sheet and income statement affected by these transactions including amounts applicable to each line, and significant terms and conditions of the transactions including commitments and contingencies. The Company prospectively adopted the ASU effective January 1, 2022 and applied the disclosure guidance to all transactions within the scope of the ASU that were reflected in the financial statements at the date of initial application and new transactions that are entered into subsequent to the date of initial application. The Company accounts for the government assistance transactions by analogy to the grant accounting model in International Accounting Standards 20 Accounting for Government Grants and Disclosure of Government Assistance.

The Company receives various forms of government assistance, primarily through grants related to the development of new products and the expansion of production capacity. During 2021, certain agencies of the U.S. government, including the Biomedical Advanced Research and Development Authority (“BARDA”) within the U.S. Department of Health and Human Services, agreed to finance an expansion of production capacity related to chromatography, liquid cell culture media, buffers and cell culture powder media and single-use consumables at certain of the Company’s Biotechnology businesses and the development of diagnostics testing technologies and the expansion of testing production capacity at certain of the Company’s Diagnostics businesses. The Company’s businesses may enter into similar agreements in the future. In consideration of this financing, the U.S. government has certain rights, including rights with respect to the allocation of certain of the incremental production capacity associated with such expansion and/or rights in intellectual property produced with its financial assistance. The amount awarded pursuant to these grants in 2021 totaled $568 million and will be paid over periods ranging from one year to four years. In 2022, the Company received aggregate payments related to the BARDA grants and other government assistance of $137 million that offset operating expenses of $50 million and purchases of property, plant and equipment of $87 million. Property, plant and equipment purchased using funds provided by governments are recorded net of government assistance.

In June 2022, the FASB issued ASU No. 2022-03, Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. The ASU clarifies the guidance in ASC 820, Fair Value Measurement, related to the measurement of the fair value of an equity security subject to contractual sale restrictions and introduces disclosure requirements related to such equity securities. The Company early adopted the ASU effective July 1, 2022 and the impact of the adoption was not significant.

NOTE 2. ACQUISITIONS

The Company continually evaluates potential acquisitions that either strategically fit with the Company’s existing portfolio or expand the Company’s portfolio into a new and attractive business area. The Company has completed a number of acquisitions that have been accounted for as purchases and have resulted in the recognition of goodwill in the Company’s Consolidated Financial Statements. This goodwill arises because the purchase prices for these businesses exceeds the fair value of acquired identifiable net assets due to the purchase prices reflecting a number of factors including the future earnings and cash flow potential of these businesses, the multiple to earnings, cash flow and other factors at which similar businesses have been purchased by other acquirers, the competitive nature of the processes by which the Company acquired the businesses, the avoidance of the time and costs which would be required (and the associated risks that would be encountered) to enhance the Company’s existing product offerings to key target markets and enter into new and profitable businesses and the complementary strategic fit and resulting synergies these businesses bring to existing operations.

The Company makes an initial allocation of the purchase price at the date of acquisition based upon its understanding of the fair value of the acquired assets and assumed liabilities. The Company obtains the information used for the purchase price allocation during due diligence and through other sources. In the months after closing, as the Company obtains additional information about the acquired assets and liabilities, including through tangible and intangible asset appraisals, and learns more about the newly acquired business, it is able to refine the estimates of fair value and more accurately allocate the purchase price. The fair values of acquired intangibles are determined based on estimates and assumptions that are deemed reasonable by the Company. Significant assumptions include the discount rates and certain assumptions that form the basis of the forecasted results of the acquired business including earnings before interest, taxes, depreciation and amortization (“EBITDA”), revenue,

revenue growth rates, royalty rates and technology obsolescence rates. These assumptions are forward looking and could be affected by future economic and market conditions. The Company engages third-party valuation specialists who review the Company’s critical assumptions and calculations of the fair value of acquired intangible assets in connection with significant acquisitions. Only facts and circumstances that existed as of the acquisition date are considered for subsequent adjustment. The Company is continuing to evaluate certain pre-acquisition contingencies associated with certain of its 2022 acquisitions (for those acquisitions with open measurement periods) and is also in the process of obtaining valuations of certain acquisition-related assets and liabilities in connection with these acquisitions. The Company will make appropriate adjustments to the purchase price allocation prior to completion of the measurement period, as required.

The following briefly describes the Company’s acquisition activity for the three years ended December 31, 2022.

During 2022, the Company acquired 10 businesses for total consideration of $637 million in cash, net of cash acquired. The businesses acquired complement existing units of each of the Company’s four segments. The Company preliminarily recorded an aggregate of $427 million of goodwill related to these acquisitions. The aggregate annual sales of the 10 businesses acquired in 2022 at the time of their acquisition, in each case based on the company’s revenues for its last completed fiscal year prior to the acquisition, were approximately $91 million.

On August 30, 2021, the Company acquired Aldevron, L.L.C. (“Aldevron”) for a cash purchase price of approximately $9.6 billion (the “Aldevron Acquisition”). Aldevron manufactures high-quality plasmid DNA, mRNA and proteins, serving biotechnology and pharmaceutical customers across research, clinical and commercial applications, and is now part of the Company’s Life Sciences segment. Aldevron generated revenues of approximately $300 million in 2020. The acquisition of Aldevron has provided and is expected to provide additional sales and earnings opportunities for the Company by expanding product line diversity, including new product offerings supporting genomic medicine. The Company financed the Aldevron Acquisition using cash on hand and proceeds from the issuance of commercial paper. The Company recorded approximately $6.1 billion of goodwill related to the Aldevron Acquisition.

During 2021, in addition to the Aldevron Acquisition, the Company acquired 13 businesses for total consideration of approximately $1.4 billion in cash, net of cash acquired. The businesses acquired complement existing units of each of the Company’s four segments. The Company recorded an aggregate of approximately $1.1 billion of goodwill related to these acquisitions. The aggregate annual sales of the 13 other businesses acquired in 2021 at the time of their acquisition, in each case based on the company’s revenues for its last completed fiscal year prior to the acquisition, were approximately $100 million.

On March 31, 2020, the Company acquired the Biopharma business of General Electric Company’s (“GE”) Life Sciences division, now known as Cytiva, for a cash purchase price of approximately $20.7 billion (net of approximately $0.1 billion of acquired cash) and the assumption of approximately $0.4 billion of pension liabilities (the “Cytiva Acquisition”). Cytiva is a leading provider of instruments, consumables and software that support the research, discovery, process development and manufacturing workflows of biopharmaceutical drugs. Cytiva is included in the Company’s Biotechnology segment results beginning in the second quarter of 2020. The acquisition has provided and is expected to continue to provide additional sales and earnings growth opportunities for the Company’s Biotechnology segment by expanding the business’ geographic and product line diversity, including new product and service offerings that complement the Company’s current biologics workflow solutions. To fulfill a condition to obtaining certain regulatory approvals for the closing of the transaction, on April 30, 2020 the Company divested certain of its existing product lines in the Biotechnology and Life Sciences segments for a cash purchase price, net of cash transferred and transaction costs, of $826 million and recognized a pretax gain on sale of $455 million ($305 million after-tax or $0.42 per diluted common share). The divested product lines in the aggregate generated revenues of approximately $170 million in 2019. The divestiture of these product lines did not represent a strategic shift with a major effect on the Company’s operations and financial results and therefore is not reported as a discontinued operation.

The Company financed the Cytiva Acquisition with approximately $3.0 billion of proceeds from the 2019 underwritten public offerings of its Common Stock and Series A Mandatory Convertible Preferred Stock (“MCPS Series A”), approximately $10.8 billion of proceeds from the 2019 issuance of euro-denominated and U.S. dollar-denominated long-term debt, and approximately $6.9 billion from the aggregate of proceeds from commercial paper borrowings, borrowings under the Company’s Five-Year Facility (as defined below) and cash on hand. The Company recorded approximately $10.2 billion of goodwill related to the Cytiva Acquisition.

During 2020, in addition to the Cytiva Acquisition, the Company acquired four businesses for total consideration of $256 million in cash, net of cash acquired. The businesses acquired complement existing units of the Company’s Life Sciences and Environmental & Applied Solutions segments. The Company recorded an aggregate of $231 million of goodwill related to these acquisitions. The aggregate annual sales of the five businesses acquired in 2020 at the time of their acquisition, in each case based on the company’s revenues for its last completed fiscal year prior to the acquisition, were approximately $3.3 billion.

The following summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition ($ in millions):

			2022						2021						2020
Trade accounts receivable			$	10					$	65					$	487
Inventories			9						120						934
Property, plant and equipment			9						162						690
Goodwill			427						7,235						10,402
Other intangible assets, primarily technology, customer relationships and trade names			218						4,021						10,712
Trade accounts payable			(4)						(23)						(250)
Pension liabilities			—						—						(423)
Deferred tax liabilities			(14)						(367)						(1,167)
Other assets and liabilities, net			(18)						(177)						(414)
Net assets acquired			637						11,036						20,971
Less: noncash consideration			—						(75)						—
Net cash consideration			$	637					$	10,961					$	20,971

The following summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition for the individually significant acquisition in 2021 discussed above, and all of the other 2021 acquisitions as a group ($ in millions):

			Aldevron						Other						Total
Trade accounts receivable			$	46					$	19					$	65
Inventories			93						27						120
Property, plant and equipment			150						12						162
Goodwill			6,149						1,086						7,235
Other intangible assets, primarily technology, customer relationships and trade names			3,483						538						4,021
Trade accounts payable			(15)						(8)						(23)
Deferred tax liabilities			(249)						(118)						(367)
Other assets and liabilities, net			(73)						(104)						(177)
Net assets acquired			9,584						1,452						11,036
Less: noncash consideration			(23)						(52)						(75)
Net cash consideration			$	9,561					$	1,400					$	10,961

The following summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition for the individually significant acquisition in 2020 discussed above, and all of the other 2020 acquisitions as a group ($ in millions):

			Cytiva						Other						Total
Trade accounts receivable			$	482					$	5					$	487
Inventories			930						4						934
Property, plant and equipment			689						1						690
Goodwill			10,171						231						10,402
Other intangible assets, primarily technology, customer relationships and trade names			10,656						56						10,712
Trade accounts payable			(247)						(3)						(250)
Pension liabilities			(423)						—						(423)
Deferred tax liabilities			(1,157)						(10)						(1,167)
Other assets and liabilities, net			(386)						(28)						(414)
Net cash consideration			$	20,715					$	256					$	20,971

Transaction-related costs for the Aldevron Acquisition were $28 million for the year ended December 31, 2021. Additionally, transaction-related costs for the Cytiva Acquisition were $59 million for the year ended December 31, 2020. The Company’s earnings for 2021 also reflect the pretax impact of $30 million of non-recurring acquisition date fair value adjustments to inventory related to the Aldevron acquisition. In addition, the Company’s earnings for 2021 and 2020 reflect the pretax impact of $46 million and $509 million, respectively, of non-recurring acquisition date fair value adjustments to inventory and deferred revenue related to the Cytiva Acquisition. Transaction-related costs and acquisition-related fair value adjustments attributable to other acquisitions were not material for the years ended December 31, 2022, 2021 or 2020.

Pro Forma Financial Information (Unaudited)

The unaudited pro forma information for the periods set forth below gives effect to the 2022 and 2021 acquisitions as if they had occurred as of January 1, 2021, including the results from operations for the acquired business as well as the impact of

assumed financing of the transaction and the impact of the purchase price allocation (including the amortization of acquired

intangible assets). The pro forma information is presented for informational purposes only and is not necessarily indicative of the results of operations that actually would have been achieved had the acquisitions been consummated as of that time ($ in millions except per share amounts):

			2022						2021
Sales			$	31,538					$	29,817
Net earnings from continuing operations			7,189						6,190
Diluted net earnings per common share from continuing operations (a)			9.64						8.28

(a) Diluted net earnings per common share from continuing operations is calculated by adding the interest on the Company’s Liquid Yield Option Notes (“LYONs”) to net earnings from continuing operations and deducting the MCPS dividends from net earnings from continuing operations for the anti-dilutive MCPS shares.

Acquisition-related transaction costs of $28 million for the year ended December 31, 2021 related to the Aldevron Acquisition were excluded from pro forma net earnings from continuing operations.

NOTE 3. DISCONTINUED OPERATIONS AND ENVIRONMENTAL & APPLIED SOLUTIONS SEPARATION

Fortive Corporation Separation

On July 2, 2016, the Company completed the separation of its former Test & Measurement segment, Industrial Technologies segment (excluding the product identification businesses) and retail/commercial petroleum business by distributing to Danaher stockholders on a pro rata basis all of the issued and outstanding common stock of Fortive Corporation (“Fortive”), the entity the Company incorporated to hold such businesses. For the year ended December 31, 2021, the Company recorded an income tax benefit of $86 million related to the release of previously provided reserves associated with uncertain tax positions on certain of the Company’s tax returns which were jointly filed with Fortive entities. These reserves were released due to the expiration of statutes of limitations for those returns. This income tax benefit is included in earnings from discontinued operations, net of income taxes in the accompanying Consolidated Statements of Earnings.

Environmental & Applied Solutions Separation

In September 2022, the Company announced its intention to spin-off its Environmental & Applied Solutions business into a publicly traded company (the “EAS Separation”). The Environmental & Applied Solutions business had sales for the year-ended December 31, 2022 of approximately $4.8 billion. The transaction is expected to be tax-free to the Company’s shareholders. The Company is targeting to complete the EAS Separation in the fourth quarter of 2023, subject to the satisfaction of certain conditions, including obtaining final approval from the Danaher Board of Directors, satisfactory completion of financing, receipt of tax opinions, receipt of favorable rulings from the Internal Revenue Service (“IRS”) and receipt of other regulatory approvals.

NOTE 4. NET EARNINGS PER COMMON SHARE FROM CONTINUING OPERATIONS

Basic net earnings per share from continuing operations (“EPS”) is calculated by taking net earnings from continuing operations less the MCPS dividends divided by the weighted average number of common shares outstanding for the applicable period. Diluted net EPS from continuing operations is computed by taking net earnings from continuing operations plus the interest accrued on the Company’s LYONs (prior to their redemption in January 22, 2021) less the MCPS dividends divided by the weighted average number of common shares outstanding increased by the number of additional shares that would have been outstanding had the potentially dilutive common shares been issued and reduced by the number of shares the Company could have repurchased with the proceeds from the issuance of the potentially dilutive shares. For the years ended December 31, 2022 and 2020, 1.4 million and 1.0 million options to purchase shares, respectively, were excluded from the diluted earnings

per share calculation, as the impact of their inclusion would have been anti-dilutive. For the year ended December 31, 2021, no options to purchase shares were excluded from the diluted earnings per share calculation.

Basic and diluted EPS are computed independently for each quarter and annual period, which involves the use of different weighted-average share count figures relating to quarterly and annual periods. As a result, and after factoring the effect of rounding to the nearest cent per share, the sum of prior quarter-to-date EPS figures may not equal annual EPS.

On April 15, 2022, all outstanding shares of the MCPS Series A converted into 11.0 million shares of the Company’s common stock. The impact of the MCPS Series A calculated under the if-converted method was dilutive for the years ended December 31, 2022 and December 31, 2021, and as such 3.0 million and 11.0 million shares, respectively, underlying the MCPS Series A were included in the calculation of diluted EPS and the related MCPS Series A dividends of $20 million and $78 million were excluded from the calculation of net earnings for diluted EPS for the periods. Refer to Note 19 for additional information about the MCPS Series A conversion.

The impact of the MCPS Series B calculated under the if-converted method was anti-dilutive for the years ended December 31, 2022 and 2021, and as such 8.6 million shares underlying the MCPS Series B were excluded from the diluted EPS calculation in each period and the related MCPS Series B dividends of $86 million were included in the calculation of net earnings for diluted EPS for the periods.

The impact of the MCPS Series A and Series B calculated under the if-converted method was anti-dilutive for the year ended December 31, 2020 and as such 17.1 million shares underlying the MCPS Series A and Series B were excluded from the calculation of diluted EPS and the related MCPS Series A and Series B dividends of $136 million were included in the calculation of net earnings for diluted EPS for the period.

Information related to the calculation of net earnings per common share from continuing operations for the years ended December 31 is summarized as follows ($ and shares in millions, except per share amounts):

			2022						2021						2020
Numerator:
Net earnings from continuing operations			$	7,209					$	6,347					$	3,646
MCPS dividends			(106)						(164)						(136)
Net earnings from continuing operations attributable to common stockholders for Basic EPS			7,103						6,183						3,510
Adjustment for interest on convertible debentures			—						—						1
Adjustment for MCPS dividends for dilutive MCPS			20						78						—
Net earnings from continuing operations attributable to common stockholders after assumed conversions for Diluted EPS			$	7,123					$	6,261					$	3,511
Denominator:
Weighted average common shares outstanding used in Basic EPS			725.1						714.6						706.2
Incremental common shares from:
Assumed exercise of dilutive options and vesting of dilutive RSUs and PSUs			9.0						11.2						11.4
Assumed conversion of the convertible debentures			—						—						1.1
Weighted average MCPS converted shares			3.0						11.0						—
Weighted average common shares outstanding used in Diluted EPS			737.1						736.8						718.7
Basic EPS from continuing operations			$	9.80					$	8.65					$	4.97
Diluted EPS from continuing operations			$	9.66					$	8.50					$	4.89

NOTE 5. REVENUE

The following table presents the Company’s revenues disaggregated by geographical region and revenue type ($ in millions). Sales taxes and other usage-based taxes collected from customers are excluded from revenues.

			Biotechnology						Life Sciences						Diagnostics						Environmental & Applied Solutions						Total
Year ended December 31, 2022:
Geographical region:
North America(a)			$	3,054					$	3,154					$	5,522					$	2,238					$	13,968
Western Europe			2,645						1,377						1,837						1,051						6,910
Other developed markets			358						506						481						122						1,467
High-growth markets(b)			2,701						1,999						3,009						1,417						9,126
Total			$	8,758					$	7,036					$	10,849					$	4,828					$	31,471
Revenue type:
Recurring			$	6,958					$	4,220					$	9,698					$	2,841					$	23,717
Nonrecurring			1,800						2,816						1,151						1,987						7,754
Total			$	8,758					$	7,036					$	10,849					$	4,828					$	31,471
Year ended December 31, 2021:
Geographical region:
North America(a)			$	2,899					$	2,534					$	4,365					$	2,031					$	11,829
Western Europe			2,497						1,540						1,840						1,088						6,965
Other developed markets			368						508						481						118						1,475
High-growth markets(b)			2,806						1,806						3,158						1,414						9,184
Total			$	8,570					$	6,388					$	9,844					$	4,651					$	29,453
Revenue type:
Recurring			$	6,772					$	3,756					$	8,607					$	2,660					$	21,795
Nonrecurring			1,798						2,632						1,237						1,991						7,658
Total			$	8,570					$	6,388					$	9,844					$	4,651					$	29,453
Year ended December 31, 2020:
Geographical region:
North America			$	1,880					$	2,039					$	3,182					$	1,910					$	9,011
Western Europe			1,683						1,256						1,375						1,009						5,323
Other developed markets			313						441						423						122						1,299
High-growth markets (a)			1,400						1,564						2,423						1,264						6,651
Total			$	5,276					$	5,300					$	7,403					$	4,305					$	22,284
Revenue type:
Recurring			$	4,299					$	3,101					$	6,143					$	2,435					$	15,978
Nonrecurring			977						2,199						1,260						1,870						6,306
Total			$	5,276					$	5,300					$	7,403					$	4,305					$	22,284

(a) The Company defines North America as the United States and Canada.

(b) The Company defines high-growth markets as developing markets of the world experiencing extended periods of accelerated growth in gross domestic product and infrastructure which include Eastern Europe, the Middle East, Africa, Latin America (including Mexico) and Asia (with the exception of Japan, Australia and New Zealand). The Company defines developed markets as all markets of the world that are not high-growth markets.

The Company sells equipment to customers as well as consumables and services, some of which customers purchase on a recurring basis. Consumables sold for use with the equipment sold by the Company are typically critical to the use of the equipment and are typically used on a one-time or limited basis, requiring frequent replacement in the customer’s operating cycle. Examples of these consumables include reagents used in diagnostic tests, chromatography resins used for research and bioprocessing, filters used in filtration, separation and purification processes and cartridges for marking and coding equipment. Additionally, some of the Company’s consumables are used on a standalone basis, such as water treatment solutions, custom nucleic acids and genomics solutions. The Company separates its goods and services between those typically sold to a customer on a recurring basis and those typically sold to a customer on a nonrecurring basis. Recurring revenue includes revenue from consumables, services and OTLs. Nonrecurring revenue includes sales of equipment and STLs. OTLs and STLs are included in the above revenue amounts. For the years ended December 31, 2022, 2021 and 2020, lease revenue was $488 million, $483 million and $473 million, respectively.

Remaining Performance Obligations

Remaining performance obligations represent the aggregate transaction price allocated to performance obligations with an original contract term greater than one year which are fully or partially unsatisfied at the end of the period. Remaining performance obligations include noncancelable purchase orders, the non-lease portion of minimum purchase commitments under long-term consumable supply arrangements, extended warranty and service and other long-term contracts. These remaining performance obligations do not include revenue from contracts with customers with an original term of one year or less, revenue from long-term consumable supply arrangements with no minimum purchase requirements or revenue expected from purchases made in excess of the minimum purchase requirements or revenue from equipment leased to customers. While the remaining performance obligation disclosure is similar in concept to backlog, the definition of remaining performance obligations excludes leases and contracts that provide the customer with the right to cancel or terminate for convenience with no substantial penalty, even if historical experience indicates the likelihood of cancellation or termination is remote. Additionally, the Company has elected to exclude contracts with customers with an original term of one year or less from remaining performance obligations while these contracts are included within backlog.

As of December 31, 2022, the aggregate amount of the transaction price allocated to remaining performance obligations was approximately $5.0 billion. The Company expects to recognize revenue on approximately 57% of the remaining performance obligations over the next 12 months, 25% over the subsequent 12 months, and the remainder recognized thereafter.

Contract Balances

The timing of revenue recognition, billings and cash collections results in billed trade accounts receivable, unbilled receivables (“contract assets”) and deferred revenue, customer deposits and billings in excess of revenue recognized (“contract liabilities”) on the Consolidated Balance Sheets. In addition, the Company defers certain costs incurred to obtain a contract (“contract costs”). Contract assets, liabilities and costs are reported on the accompanying Consolidated Balance Sheets on a contract-by-contract basis.

Contract Assets—Most of the Company’s long-term contracts are billed as work progresses in accordance with the contract terms and conditions, either at periodic intervals or upon achievement of certain milestones. Often this results in billing occurring subsequent to revenue recognition resulting in contract assets. Contract assets are generally classified as other current assets in the Consolidated Balance Sheets. The balance of contract assets as of December 31, 2022 and 2021 was $90 million and $75 million, respectively.

Contract Liabilities—The Company often receives cash payments from customers in advance of the Company’s performance resulting in contract liabilities that are classified as either current or long-term in the Consolidated Balance Sheets based on the timing of when the Company expects to recognize revenue. As of December 31, 2022 and 2021, contract liabilities were approximately $1.9 billion and $1.8 billion, respectively, and are included within accrued expenses and other liabilities and other long-term liabilities in the accompanying Consolidated Balance Sheets. The increase in the contract liability balance during the years ended December 31, 2022 and 2021 was primarily a result of cash payments received in advance of satisfying performance obligations, partially offset by revenue recognized during the year that was included in the opening contract liability balance and the impact of foreign currency. Revenue recognized during the years ended December 31, 2022 and 2021 that was included in the opening contract liability balance was approximately $1.5 billion and $1.1 billion, respectively.

Contract Costs—The Company capitalizes certain direct incremental costs incurred to obtain a contract, typically sales-related commissions, where the amortization period for the related asset is greater than one year. These costs are amortized over the contract term or a longer period, generally the expected life of the customer relationship if renewals are expected and the renewal commission is not commensurate with the initial commission. Contract costs are classified as current or long-term other assets in the Consolidated Balance Sheets based on the timing of when the Company expects to recognize the expense and are generally amortized into earnings on a straight-line basis (which is consistent with the transfer of control for the related

goods or services). Management assesses these costs for impairment at least quarterly and as “triggering” events occur that indicate it is more likely than not that an impairment exists. The balance of contract costs as of December 31, 2022 and 2021 was not significant. Amortization expense related to these costs for the years ended December 31, 2022 and 2021 was also not significant. The costs to obtain a contract where the amortization period for the related asset is one year or less are expensed as incurred and recorded within selling, general and administrative expenses in the accompanying Consolidated Statements of Earnings.

NOTE 6. SEGMENT INFORMATION

In the fourth quarter of 2022, the Company realigned its reportable segments to reflect changes in the Company’s internal organization resulting from the rate of growth within certain of the Company’s businesses in the former Life Sciences segment. There were no changes to the Company’s Diagnostics or Environmental & Applied Solutions segments.

The Company now operates and reports its results in four separate business segments consisting of the Biotechnology, Life Sciences, Diagnostics and Environmental & Applied Solutions segments. When determining the reportable segments, the Company aggregated operating segments based on their similar economic and operating characteristics. Operating profit represents total revenues less operating expenses, excluding nonoperating income and expense, loss on early extinguishment of borrowings, interest and income taxes. Operating profit amounts in the Other segment consist of unallocated corporate costs and other costs not considered part of management’s evaluation of reportable segment operating performance. The identifiable assets by segment are those used in each segment’s operations. Intersegment amounts are not significant and are eliminated to arrive at consolidated totals. Prior period segment amounts have been restated to conform to the revised segment presentation.

Detailed segment data for the years ended December 31 is as follows ($ in millions):

			2022						2021						2020
Sales:
Biotechnology			$	8,758					$	8,570					$	5,276
Life Sciences			7,036						6,388						5,300
Diagnostics			10,849						9,844						7,403
Environmental & Applied Solutions			4,828						4,651						4,305
Total			$	31,471					$	29,453					$	22,284
Operating profit:
Biotechnology			$	3,008					$	3,074					$	1,082
Life Sciences			1,414						1,293						972
Diagnostics			3,436						2,313						1,538
Environmental & Applied Solutions			1,135						1,054						979
Other			(305)						(269)						(340)
Total			$	8,688					$	7,465					$	4,231
Depreciation and amortization of intangible assets:
Biotechnology			$	1,002					$	1,059					$	761
Life Sciences			531						382						292
Diagnostics			590						614						602
Environmental & Applied Solutions			90						106						110
Other			9						7						10
Total			$	2,222					$	2,168					$	1,775

The following table presents additional detailed segment data for the years ended December 31 ($ in millions):

			2022						2021						2020
Identifiable assets:
Biotechnology			$	37,536					$	38,118					$	39,086
Life Sciences			17,572						19,768						9,833
Diagnostics			14,722						15,054						15,042
Environmental & Applied Solutions			4,797						4,882						5,083
Other			9,723						5,362						7,117
Total			$	84,350					$	83,184					$	76,161
Capital expenditures, gross:
Biotechnology			$	405					$	385					$	169
Life Sciences			325						210						137
Diagnostics			382						644						447
Environmental & Applied Solutions			34						54						36
Other			6						1						2
Total			$	1,152					$	1,294					$	791

Operations in Geographical Areas:

			Year Ended December 31
($ in millions)			2022						2021						2020
Sales:
United States			$	13,365					$	11,283					$	8,616
China			4,002						3,975						2,688
Germany			1,461						1,482						1,238
All other (each country individually less than 5% of total sales)			12,643						12,713						9,742
Total			$	31,471					$	29,453					$	22,284
Property, plant and equipment, net:
United States			$	2,007					$	1,799					$	1,317
Sweden			429						513						553
United Kingdom			254						260						214
Germany			225						223						207
All other (each country individually less than 5% of total property, plant and equipment, net)			1,041						995						971
Total			$	3,956					$	3,790					$	3,262

Sales by Major Product Group:

			Year Ended December 31
($ in millions)			2022						2021						2020
Analytical and physical instrumentation			$	2,846					$	2,620					$	2,443
Research and medical products			26,642						24,802						17,979
Product identification			1,983						2,031						1,862
Total			$	31,471					$	29,453					$	22,284

NOTE 7. INCOME TAXES

Earnings from continuing operations before income taxes for the years ended December 31 were as follows ($ in millions):

			2022						2021						2020
United States			$	3,054					$	2,500					$	1,655
Non-U.S.			5,238						5,098						2,840
Total			$	8,292					$	7,598					$	4,495

The provision for income taxes from continuing operations for the years ended December 31 were as follows ($ in millions):

			2022						2021						2020
Current:
Federal U.S.			$	271					$	183					$	(321)
Non-U.S.			1,229						1,134						580
State and local			142						163						72
Deferred:
Federal U.S.			(331)						(156)						530
Non-U.S.			(159)						(23)						(16)
State and local			(69)						(50)						4
Income tax provision			$	1,083					$	1,251					$	849

Noncurrent deferred tax assets and noncurrent deferred tax liabilities are included in other assets and other long-term liabilities, respectively, in the accompanying Consolidated Balance Sheets. Deferred income tax assets and liabilities as of December 31 were as follows ($ in millions):

			2022						2021
Deferred tax assets:
Allowance for doubtful accounts			$	17					$	19
Inventories			118						93
Pension and postretirement benefits			17						105
Environmental and regulatory compliance			39						38
Other accruals and prepayments			406						299
Stock-based compensation expense			105						76
Operating lease liabilities			238						252
Research and development expense			243						49
Tax credit and loss carryforwards			479						544
Valuation allowances			(236)						(242)
Total deferred tax asset			1,426						1,233
Deferred tax liabilities:
Property, plant and equipment			(92)						(79)
Insurance, including self-insurance			(803)						(520)
Operating lease right-of-use assets			(219)						(235)
Goodwill and other intangibles			(3,270)						(3,962)
Total deferred tax liability			(4,384)						(4,796)
Net deferred tax liability			$	(2,958)					$	(3,563)

The Company evaluates the future realizability of tax credits and loss carryforwards considering the anticipated future earnings of the Company’s subsidiaries as well as tax planning strategies in the associated jurisdictions. Deferred taxes associated with U.S. entities consist of net deferred tax liabilities of approximately $1.9 billion and $2.1 billion as of December 31, 2022 and 2021, respectively. Deferred taxes associated with non-U.S. entities consist of net deferred tax liabilities of approximately $1.1 billion and $1.5 billion as of December 31, 2022 and 2021, respectively. During 2022, the Company’s valuation allowance

decreased by $6 million primarily from the use of tax attributes which were previously not deemed realizable. As of December 31, 2022, the total amount of the basis difference in investments indefinitely reinvested outside the United States for which deferred taxes have not been provided is approximately $10.4 billion. The income taxes applicable to repatriating such earnings are not readily determinable. As of December 31, 2022, the Company had no plans which would subject these basis differences to income taxes in the United States or elsewhere.

The Tax Cuts and Jobs Act (“TCJA”) imposes tax on U.S. shareholders for global intangible low-taxed income (“GILTI”) earned by certain non-U.S. subsidiaries. The Company has elected the period cost method for its accounting for GILTI.

The effective income tax rate from continuing operations for the years ended December 31 varies from the U.S. statutory federal income tax rate as follows:

			Percentage of Pretax Earnings
			2022						2021						2020
Statutory federal income tax rate			21.0		%				21.0		%				21.0		%
Increase (decrease) in tax rate resulting from:
State income taxes (net of federal income tax benefit)			1.3		%				1.1		%				1.1		%
Non-U.S. rate differential			(2.8)		%				(2.0)		%				(1.6)		%
Resolution and expiration of statutes of limitation of uncertain tax positions			(0.2)		%				(3.0)		%				(0.7)		%
Realignment of businesses			(4.9)		%				—		%				—		%
Research credits, uncertain tax positions and other			(0.8)		%				0.5		%				0.7		%
Excess tax benefits from stock-based compensation			(0.5)		%				(1.1)		%				(1.6)		%
Effective income tax rate			13.1		%				16.5		%				18.9		%

The Company’s effective tax rate for 2022, 2021 and 2020 differs from the U.S. federal statutory rate of 21.0%, due to the Company’s earnings outside the United States that are indefinitely reinvested and taxed at rates different than the U.S. federal statutory rate as well as the impact of the following:

• The effective tax rate of 13.1% in 2022 includes net deferred tax benefits resulting from legal and operational actions undertaken to realign certain of its businesses, as well as excess tax benefits from stock-based compensation, the release of reserves for uncertain tax positions due to the expiration of statutes of limitation and audit settlements and changes in estimates related to prior year tax filing positions, net of changes in estimates associated with prior period uncertain tax positions. These items decreased the reported rate on a net basis by 6.1%.

• The effective tax rate of 16.5% in 2021 includes net tax benefits primarily related to the release of reserves for uncertain tax positions from the expiration of statutes of limitation, audit settlements and excess tax benefits from stock-based compensation, partially offset by changes in estimates associated with prior period uncertain tax positions. These items decreased the reported rate on a net basis by 3.5%.

• The effective tax rate of 18.9% in 2020 includes net tax benefits primarily related to the release of reserves for uncertain tax positions from audit settlements and expiration of statutes of limitation and excess tax benefits from stock-based compensation, partially offset by a higher tax rate associated with the gain on the divestiture of certain product lines in the Biotechnology and Life Sciences segments and changes in estimates associated with prior period uncertain tax positions. These items decreased the reported rate on a net basis by 0.7%.

The Company made income tax payments related to both continuing and discontinued operations of approximately $1.8 billion, $1.7 billion and $1.1 billion in 2022, 2021 and 2020, respectively. Current income taxes payable related to both continuing and discontinued operations has been reduced by $85 million, $118 million and $110 million in 2022, 2021 and 2020, respectively, for tax deductions attributable to stock-based compensation, of which, the excess tax benefit over the amount recorded for financial reporting purposes for both continuing and discontinued operations was $61 million, $95 million and $85 million, respectively. The excess tax benefits have been recorded as reductions to the current income tax provision and are reflected as operating cash inflows in the accompanying Consolidated Statements of Cash Flows.

Included in deferred income taxes as of December 31, 2022 are tax benefits for U.S. and non-U.S. net operating loss carryforwards totaling $346 million ($147 million of which the Company does not expect to realize and have corresponding valuation allowances). Certain of the losses can be carried forward indefinitely and others can be carried forward to various dates from 2023 through 2042. In addition, the Company had general business and non-U.S. tax credit carryforwards of $133 million ($80 million of which the Company does not expect to realize and have corresponding valuation allowances) as of

December 31, 2022, which can be carried forward to various dates from 2023 to 2032. In addition, as of December 31, 2022, the Company had $9 million of valuation allowances related to other deferred tax asset balances that are not more likely than not of being realized.

As of December 31, 2022, gross unrecognized tax benefits totaled approximately $1.1 billion (approximately $1.2 billion, net of the impact of $65 million of indirect tax benefits offset by $171 million associated with potential interest and penalties). As of December 31, 2021, gross unrecognized tax benefits totaled approximately $1.1 billion (approximately $1.2 billion, net of the impact of $58 million of indirect tax benefits offset by $163 million associated with potential interest and penalties). The Company recognized approximately $14 million of net tax expense from potential interest and penalties during 2022, $182 million of net tax benefits from the reversal of potential interest and penalties during 2021 and $41 million of net tax expense from potential interest and penalties during 2020, related to both continuing and discontinued operations associated with uncertain tax positions. To the extent unrecognized tax benefits (including interest and penalties) are recognized with respect to uncertain tax positions, approximately $1.2 billion and $1.1 billion as of December 31, 2022 and 2021, respectively, would reduce the tax expense and effective tax rate in future periods. The Company recognized interest and penalties related to unrecognized tax benefits within income taxes in the accompanying Consolidated Statements of Earnings. Unrecognized tax benefits and associated accrued interest and penalties are included in taxes, income and other accrued expenses as detailed in Note 13.

A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding amounts accrued for potential interest and penalties related to both continuing and discontinued operations, is as follows ($ in millions):

			2022						2021						2020
Unrecognized tax benefits, beginning of year			$	1,095					$	1,175					$	1,181
Additions based on tax positions related to the current year			44						47						47
Additions for tax positions of prior years			49						166						24
Reductions for tax positions of prior years			(10)						(100)						(20)
Acquisitions, divestitures and other			6						53						(30)
Lapse of statute of limitations			(16)						(219)						(13)
Settlements			(7)						(4)						(38)
Effect of foreign currency translation			(22)						(23)						24
Unrecognized tax benefits, end of year			$	1,139					$	1,095					$	1,175

The Company conducts business globally and files numerous consolidated and separate income tax returns in the U.S. federal and state and non-U.S. jurisdictions. The non-U.S. countries in which the Company has a significant presence include China, Denmark, Germany, Singapore, Sweden, Switzerland and the United Kingdom. Excluding these jurisdictions, the Company believes that a change in the statutory tax rate of any individual non-U.S. country would not have a material effect on the Company’s Consolidated Financial Statements given the geographic dispersion of the Company’s taxable income.

The Company and its subsidiaries are routinely examined by various U.S. and non-U.S. taxing authorities. The IRS has completed substantially all of the examinations of the Company’s federal income tax returns through 2015 and is currently examining certain of the Company’s federal income tax returns for 2016 through 2018. In addition, the Company has subsidiaries in Belgium, Canada, China, Denmark, France, Germany, India, Italy, Japan, Korea, Switzerland, the United Kingdom and various other countries, states and provinces that are currently under audit for years ranging from 2004 through 2021.

Similar to the position it took in connection with the audit of the Company’s taxable income for the years 2012 through 2015, in the fourth quarter of 2022, the IRS proposed significant adjustments to the Company’s taxable income for the years 2016 through 2018 with respect to the deferral of tax on certain premium income related to the Company’s self-insurance programs. The settlement of this matter for the 2012 through 2015 audit was not material to the Company’s financial statements but did not preclude the IRS from proposing similar adjustments in future audit periods, as the IRS has with the 2022 assessment. For income tax purposes, the recognition of premium income has been deferred in accordance with U.S. tax laws related to insurance. The IRS is challenging the deferral of premium income for certain types of the Company’s self-insurance policies. The proposed adjustments would increase the Company’s taxable income over the 2016 through 2018 periods by approximately $2.5 billion. Due to the enactment of the TCJA in 2017 and the resulting reduction in the U.S. corporate tax rate for years after 2017, the Company remeasured its deferred tax liabilities related to the temporary differences associated with this deferred premium income from 35.0% to 21.0%. If the Company is unsuccessful in defending its position, taxes owed to the IRS may be computed under the previous 35.0% statutory tax rate and the Company may be required to remeasure the related deferred tax liabilities from 21.0% to 35.0%, which in addition to any interest due on the amounts assessed, would require a charge to

future earnings. Management believes the positions the Company has taken in its U.S. tax returns are in accordance with the relevant tax laws and intends to vigorously defend these positions.

Tax authorities in Denmark have issued tax assessments related to interest accrued by certain of the Company’s subsidiaries for the years 2004 through 2015. During the first quarter of 2021, the Company received a notice from the Danish tax authorities that included a significant reduction in the interest amounts imposed in the original tax assessments. Taking into account the revised interest amounts, the assessments total approximately DKK 2.1 billion including applicable accrued interest (approximately $298 million based on the exchange rate as of December 31, 2022). The Company’s appeal of the tax assessments with the Danish National Tax Tribunal has been put on hold awaiting the final outcome of other preceding withholding tax cases that have been brought before the Danish High Court and the Danish Supreme Court. Management believes the positions the Company has taken in Denmark are in accordance with the relevant tax laws and is vigorously defending its positions. The Company intends on pursuing this matter through the Danish High Court and the Danish Supreme Court should the appeal to the Danish National Tax Tribunal be unsuccessful. While the ultimate resolution of this matter is uncertain and could take many years, taking into account the payments the Company has previously made related to these assessments in order to mitigate further interest accrual claims, the Company does not expect the resolution of this matter will have a future material adverse impact to the Company’s financial statements, including its cash flow and effective tax rate.

Management estimates that it is reasonably possible that the amount of unrecognized tax benefits related to continuing operations may be reduced by approximately $306 million within 12 months as a result of resolution of worldwide tax matters, net of payments for tax audit settlements and/or statute of limitations expirations. Future resolution of uncertain tax positions related to discontinued operations may result in additional charges or credits to earnings from discontinued operations in the Consolidated Statements of Earnings (refer to Note 3).

The Company operates in various non-U.S. jurisdictions where income tax incentives and rulings have been granted for specific periods of time. In Switzerland, Singapore and Puerto Rico, the Company has various tax rulings and tax holiday arrangements which reduce the overall effective tax rate of the Company. The various rulings and tax holidays expire between 2022 and 2027. As of December 31, 2022, the Company had satisfied the conditions enumerated in these agreements. Included in the accompanying Consolidated Financial Statements are tax benefits of $72 million, $59 million and $43 million (or $0.10, $0.08 and $0.06 per diluted common share) for 2022, 2021 and 2020, respectively, from these rulings and tax holidays.

NOTE 8. OTHER OPERATING EXPENSES

Effective July 24, 2021, the Company’s indirect, wholly-owned subsidiary, Beckman Coulter, Inc. (“Beckman”), entered into a series of related agreements with Quidel Corporation and a subsidiary thereof (“Quidel”) to resolve litigation that Beckman initiated against Quidel and to modify and partially terminate the related prior commercial arrangement. Pursuant to the related agreements, the dispute regarding Beckman’s ability to compete in B-type Naturietic Peptide (“BNP”) test related activities has been settled, allowing Beckman to research, develop, manufacture and distribute BNP type tests. Beckman’s commitment to supply certain BNP test kits to Quidel has also been terminated. Beckman also obtained the right to distribute and sell the BNP assay currently sold by Quidel. As consideration under the agreements, Beckman will pay Quidel predominantly fixed payments of approximately $75 million per year through 2029 (subject to proration in 2021). The Company engaged a third-party valuation specialist to assist in determining the value of the elements of the transaction. The present value of the payments to Quidel was estimated to be $581 million, of which $547 million was recorded as a pretax contract settlement expense primarily due to the unfavorable nature of the prior arrangement (consisting of a cash charge of $5 million and a noncash charge of $542 million) in 2021 related to the modification and partial termination of the prior commercial arrangement and resolution of the associated litigation. The Company also capitalized $34 million in intangible assets, comprised of proprietary technology, customer relationships and the use of a trade name acquired in the settlement, which represent a noncash investing activity. Due to the extended payment terms of the arrangement, the arrangement represents a noncash financing activity of $576 million. Over the period of the arrangement, the cash payments related to servicing the obligation due to Quidel are recorded as cash outflows from financing activities and the payments related to the imputed interest on the obligation due to Quidel are recorded as cash outflows from operating activities in the Consolidated Statements of Cash Flows.

NOTE 9. NONOPERATING INCOME (EXPENSE)

The following sets forth the components of the Company’s other income (expense), net ($ in millions):

			2022						2021						2020
Other components of net periodic benefit costs			$	45					$	42					$	16
Investment gains (losses):
Realized investment gains (losses)			123						120						25
Unrealized investment gains (losses)			(394)						281						(7)
Total investment gains (losses)			(271)						401						18
Gains on sale of product lines			—						13						455
Other			—						—						5
Total other income (expense), net			$	(226)					$	456					$	494

Other Components of Net Period Benefit Costs

The Company disaggregates the service cost component of net periodic benefit costs of noncontributory defined benefit pension plans and other postretirement employee benefit plans and presents the other components of net periodic benefit costs in other income (expense), net. These other components of net period benefit costs include the assumed rate of return on plan assets, partially offset by amortization of actuarial losses. The Company’s net periodic benefit costs for the year ended December 31, 2022 includes a settlement loss of $10 million ($9 million after-tax) as a result of the transfer of a portion of its non-U.S. pension liabilities related to one defined benefit plan to a third-party.

Investment Gains (Losses)

The Company estimates the fair value of investments in equity securities using the Fair Value Alternative and records adjustments to fair value within net earnings. Additionally, the Company is a limited partner in partnerships that invest primarily in early stage companies. While the partnerships record these investments at fair value, the Company’s investments in the partnerships are accounted for under the equity method of accounting. The investment gains (losses) include realized and unrealized gains and losses related to changes in the fair value of the Company’s investments in equity securities and the Company’s equity in earnings of the partnerships that reflect the changes in fair value of the investments of the partnerships and related management fees and operating expenses. In addition, during 2022 the Company recorded an impairment of $91 million related to an equity method investment that is reflected in unrealized investment gains (losses).

Gains on Sale of Product Lines

During 2021 the Company divested certain product lines for a cash purchase price, net of cash transferred and transaction costs, of $26 million and recognized a pretax gain on sale of $13 million ($10 million after-tax). The divested product lines generated revenues of approximately $88 million in the Environmental & Applied Solutions segment in 2020. The divestiture of these product lines did not represent a strategic shift with a major effect on the Company’s operations and financial results and therefore is not reported as a discontinued operation.

As a condition to obtaining certain regulatory approvals for the closing of the Cytiva Acquisition, the Company was required to divest certain of its existing product lines in the Biotechnology and Life Sciences segments that in the aggregate generated revenues of approximately $170 million in 2019. During 2020, the Company completed the sale of these product lines for a cash purchase price, net of cash transferred and transaction costs, of $826 million and recognized a pretax gain on sale of $455 million ($305 million after-tax) in the second quarter of 2020. The divestiture of these product lines did not represent a strategic shift with a major effect on the Company’s operations and financial results and therefore is not reported as a discontinued operation.

Loss on Early Extinguishment of Borrowings

In the fourth quarter of 2021, the Company redeemed the €800 million aggregate principal amount of 2.5% senior unsecured notes due 2025 at a redemption price equal to the outstanding principal amount and a make-whole premium as specified in the applicable indenture, plus accrued and unpaid interest. The Company recorded a loss on early extinguishment of these borrowings related to the payment of the make-whole premiums and deferred costs in connection with the redemption of $96 million ($73 million after-tax), which is reflected as a loss on early extinguishment of borrowings in the Consolidated Statements of Earnings.

In the fourth quarter of 2020, the Company redeemed the €800 million aggregate principal amount of 1.7% senior unsecured notes due 2022 at a redemption price equal to the outstanding principal amount and a make-whole premium as specified in the applicable indenture, plus accrued and unpaid interest. The Company recorded a loss of $26 million ($20 million after-tax) on early extinguishment of these borrowings, including deferred costs, related to the payment of the make-whole premiums in connection with the redemption which is reflected as a loss on early extinguishment of borrowings in the Consolidated Statements of Earnings.

NOTE 10. LEASES

The Company has operating leases for office space, warehouses, distribution centers, research and development facilities, manufacturing locations and certain equipment, primarily automobiles. Many leases include one or more options to renew, some of which include options to extend the leases for up to 30 years, and some leases include options to terminate the leases within 30 days. In certain of the Company’s lease agreements, the rental payments are adjusted periodically to reflect actual charges incurred for common area maintenance, utilities, inflation and/or changes in other indexes. The Company’s finance leases were not material as of December 31, 2022 and 2021. Right-of-use (“ROU”) assets arising from finance leases are included in property, plant and equipment, net and the liabilities are included in notes payable and current portion of long-term debt and long-term debt in the accompanying Consolidated Balance Sheets.

The Consolidated Financial Statements include the following amounts related to operating leases where the Company is the lessee ($ in millions):

						2022						2021						2020
Consolidated Statements of Earnings
Fixed operating lease expense (a)						$	239					$	246					$	216
Variable operating lease expense						73						59						46
Total operating lease expense						$	312					$	305					$	262
Consolidated Statements of Cash Flows
Cash paid for amounts included in the measurement of operating lease liabilities						$	259					$	243					$	221
ROU assets obtained in exchange for operating lease obligations						212						289						246
Consolidated Balance Sheets												December 31, 2022						December 31, 2021
Lease Assets and Liabilities			Classification
Operating lease ROU assets			Other long-term assets									$	1,001					$	1,041
Operating lease liabilities - current			Accrued expenses and other liabilities									$	199					$	207
Operating lease liabilities - long-term			Other long-term liabilities									863						889
Total operating lease liabilities												$	1,062					$	1,096
Weighted average remaining lease term												8 years						8 years
Weighted average discount rate												2.7		%				2.7		%

(a) Includes short-term leases and sublease income, both of which were immaterial.

The following table presents the maturity of the Company’s operating lease liabilities as of December 31, 2022 ($ in millions):

2023			$	222
2024			189
2025			156
2026			126
2027			99
Thereafter			401
Total operating lease payments			1,193
Less: imputed interest			(131)
Total operating lease liabilities			$	1,062

As of December 31, 2022, the Company had no additional significant operating or finance leases that had not yet commenced.

NOTE 11. GOODWILL AND OTHER INTANGIBLE ASSETS

As discussed in Note 2, goodwill arises from the purchase price for acquired businesses exceeding the fair value of tangible and intangible assets acquired less assumed liabilities and noncontrolling interests. Management assesses the goodwill of each of its reporting units for impairment at least annually at the beginning of the fourth quarter and as “triggering” events occur that indicate that it is more likely than not that an impairment exists. The Company elected to bypass the optional qualitative goodwill assessment allowed by applicable accounting standards and performed a quantitative impairment test for all reporting units as this was determined to be the most effective method to assess for impairment across the reporting units.

The Company estimates the fair value of its reporting units primarily using a market approach, based on current trading multiples of EBITDA for companies operating in businesses similar to each of the Company’s reporting units, in addition to recent available market sale transactions of comparable businesses. In determining the estimated fair value of each reporting unit, the Company also applies a control premium. If the estimated fair value of the reporting unit is less than its carrying value, the Company must perform additional analysis to determine if the reporting unit’s goodwill has been impaired.

As a result of the Company’s change to its reportable segments in the fourth quarter of 2022 (refer to Note 6 for additional information), the Company also changed its reporting units for goodwill aggregation and impairment testing and the number of reporting units increased from five reporting units to eight reporting units. As of December 31, 2022, the Company had eight reporting units for goodwill impairment testing. The Company used the relative fair value method to reallocate goodwill to the associated reporting units impacted by the change in reportable segments in the fourth quarter of 2022, resulting in goodwill of approximately $21.0 billion (including the impact of 2022 acquisitions prior to the allocation date) and $8.1 billion being allocated to the Biotechnology and Life Sciences reportable segments, respectively. The Company performed the annual quantitative goodwill impairments analysis immediately prior to and following the change in reportable segments. As of the date of the 2022 annual impairment test, the carrying value of the goodwill included in each individual reporting unit ranged from $524 million to approximately $29.1 billion for the previous five reporting units and $524 million to approximately $21.0 billion for the current eight reporting units. No goodwill impairment charges were recorded for the years ended December 31, 2022, 2021 and 2020 and no “triggering” events have occurred subsequent to the performance of the 2022 annual impairment test. The factors used by management in its impairment analysis are inherently subject to uncertainty. If actual results are not consistent with management’s estimates and assumptions, goodwill and other intangible assets may be overstated and a charge would need to be taken against net earnings.

The following is a rollforward of the Company’s goodwill by segment ($ in millions):

			Biotechnology						Life Sciences						Diagnostics						Environmental & Applied Solutions						Total
Balance, January 1, 2021			$	—					$	25,812					$	7,082					$	2,526					$	35,420
Attributable to 2021 acquisitions			—						7,077						110						48						7,235
Attributable to 2021 divestitures			—						—						—						(12)						(12)
Adjustments due to finalization of purchase price allocations			—						(11)						—						—						(11)
Foreign currency translation and other			—						(1,240)						(148)						(60)						(1,448)
Balance, December 31, 2021			—						31,638						7,044						2,502						41,184
Attributable to acquisitions (a)			—						157						—						40						197
Adjustments due to finalization of purchase price allocations			—						26						(9)						1						18
Foreign currency translation and other			—						(2,676)						(330)						(142)						(3,148)
Balance, before resegmentation			—						29,145						6,705						2,401						38,251
Reallocation among new reporting units (a)			21,019						(21,019)						—						—						—
Attributable to acquisitions			176						43						13						(2)						230
Adjustments due to finalization of purchase price allocations			—						(2)						—						—						(2)
Foreign currency translation and other			892						147						157						77						1,273
Balance, December 31, 2022			$	22,087					$	8,314					$	6,875					$	2,476					$	39,752

(a) A total of approximately $21.0 billion of goodwill was allocated to the Biotechnology reportable segment, of which $116 million is shown on the Attributable to acquisitions line before resegmentation as it relates to a 2022 acquisition that occurred prior to the allocation date.

Finite-lived intangible assets are amortized over their legal or estimated useful life. The following summarizes the gross carrying value and accumulated amortization for each major category of intangible assets as of December 31 ($ in millions):

			2022												2021
			Gross Carrying Amount						Accumulated Amortization						Gross Carrying Amount						Accumulated Amortization
Finite-lived intangibles:
Patents and technology			$	13,508					$	(3,024)					$	14,377					$	(2,281)
Customer relationships, trade names and other intangibles			10,183						(4,212)						9,547						(3,748)
Total finite-lived intangibles			23,691						(7,236)						23,924						(6,029)
Indefinite-lived intangibles:
Trademarks and trade names			3,845						—						4,948						—
Total intangibles			$	27,536					$	(7,236)					$	28,872					$	(6,029)

During 2022, the Company acquired finite-lived intangible assets, consisting primarily of developed technology, customer relationships and trade names, with a weighted average life of 12 years. During 2021, the Company acquired finite-lived intangible assets, consisting primarily of developed technology, customer relationships and trade names, with a weighted average life of 13 years primarily as a result of the Aldevron Acquisition. Refer to Note 2 for additional information on the intangible assets acquired.

The Company reviews identified intangible assets for impairment whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable. Indefinite-lived intangibles are subject to impairment testing at least annually or more frequently if events or changes in circumstances indicate that potential impairment exists. The Company identified impairment triggers during the second quarter of 2022 in the Environmental & Applied Solutions segment and the first quarter of 2021 in the Diagnostics segment which resulted in the impairment of certain long-lived assets, including technology, customer relationships and trade names. In 2022 and 2021, the Company recorded impairment charges totaling $9 million and $10 million, respectively, related to these long-lived assets in selling, general and administrative expenses in the Consolidated Statements of Earnings.

Total intangible amortization expense in 2022, 2021 and 2020 was $1,484 million, $1,450 million and $1,138 million, respectively. Based on the intangible assets recorded as of December 31, 2022, amortization expense is estimated to be approximately $1.5 billion during 2023, $1.5 billion during 2024, $1.5 billion during 2025, $1.4 billion during 2026 and $1.3 billion during 2027.

NOTE 12. FAIR VALUE MEASUREMENTS

Accounting standards define fair value based on an exit price model, establish a framework for measuring fair value where the Company’s assets and liabilities are required to be carried at fair value and provide for certain disclosures related to the valuation methods used within a valuation hierarchy as established within the accounting standards. This hierarchy prioritizes the inputs into three broad levels as follows. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets in markets that are not active, or other observable characteristics for the asset or liability, including interest rates, yield curves and credit risks, or inputs that are derived principally from, or corroborated by, observable market data through correlation. Level 3 inputs are unobservable inputs based on the Company’s assumptions. A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

A summary of financial assets that are measured at fair value on a recurring basis were as follows ($ in millions):

			Year Ended December 31												Quoted Prices in Active Market (Level 1)												Significant Other Observable Inputs (Level 2)												Significant Unobservable Inputs (Level 3)
			2022						2021						2022						2021						2022						2021						2022						2021
Assets:
Available-for-sale debt securities			$	11					$	20					$	—					$	—					$	11					$	20					$	—					$	—
Investment in equity securities			315						336						16						88						—						—						—						—
Cross-currency swap derivative contracts			653						50						—						—						653						50						—						—

Available-for-sale debt securities, which are included in other long-term assets in the accompanying Consolidated Balance Sheets, are measured at fair value using quoted prices reported by investment brokers and dealers based on the underlying terms of the security and comparison to similar securities traded on an active market. As of December 31, 2022 and 2021, available-for-sale debt securities primarily included U.S. Treasury Notes and corporate debt securities.

The Company’s investments in equity securities consist of investments in publicly traded equity securities and investments in non-marketable equity securities. The publicly traded securities are classified as Level 1 in the fair value hierarchy as they are measured based on quotes in active markets. For the non-marketable equity securities, the Company estimates the fair value of the investments in equity securities based on the measurement alternative and adjusts for impairments and observable price changes with a same or similar security from the same issuer within net earnings (the “Fair Value Alternative”). The Company’s investments in these equity securities are not classified in the fair value hierarchy due to the use of these measurement methods. Additionally, the Company is a limited partner in partnerships that invest primarily in early-stage companies. While the partnerships record these investments at fair value, the Company’s investments in the partnerships are accounted for under the equity method of accounting and are not subject to fair value measurement disclosures. As of December 31, 2022 and 2021, the Company’s equity method investments included investments in partnerships with a carrying value of approximately $1.5 billion and $1.3 billion, respectively. During the years ended December 31, 2022 and 2021, the Company recorded net realized and unrealized losses of $271 million and net realized and unrealized gains of $401 million, respectively, related to changes in the fair value of the Company’s investments in equity securities and the Company’s equity in earnings of the partnerships that reflect the changes in fair value of the investments of the partnerships. Refer to Note 9 for additional information on gains and losses on the Company’s investments, including investments in the partnerships.

The cross-currency swap derivative contracts are used to partially hedge the Company’s net investments in non-U.S. operations against adverse movements in exchange rates between the U.S. dollar and the Danish kroner, Japanese yen, euro and Swiss franc. The Company also uses cross-currency swap derivative contracts to hedge the exchange rate exposure from long-term debt issuances in a foreign currency other than the functional currency of the borrower. The cross-currency swap derivative contracts are classified as Level 2 in the fair value hierarchy as they are measured using the income approach with the relevant interest rates and current foreign currency exchange rates and forward curves as inputs. Refer to Note 15 for additional information.

Fair Value of Other Financial Instruments

The carrying amounts and fair values of the Company’s other financial instruments as of December 31 were as follows ($ in millions):

			2022												2021
			Carrying Amount						Fair Value						Carrying Amount						Fair Value
Debt obligations:
Notes payable and current portion of long-term debt			$	591					$	584					$	8					$	8
Long-term debt			19,086						16,079						22,168						22,796

As of December 31, 2022 and 2021, short and long-term borrowings were categorized as Level 1. The fair value of long-term borrowings was based on quoted market prices. The difference between the fair value and the carrying amounts of long-term borrowings is attributable to changes in market interest rates and/or the Company’s credit ratings subsequent to the incurrence of the borrowing. The fair values of borrowings with original maturities of one year or less, as well as cash and cash equivalents, trade accounts receivable, net and trade accounts payable generally approximate their carrying amounts due to the short-term maturities of these instruments.

Refer to Note 16 for information related to the fair value of the Company sponsored defined benefit pension plan assets.

NOTE 13. ACCRUED EXPENSES AND OTHER LIABILITIES

Accrued expenses and other liabilities as of December 31 were as follows ($ in millions):

			2022												2021
			Current						Noncurrent						Current						Noncurrent
Compensation and benefits			$	1,375					$	255					$	1,371					$	269
Pension and postretirement benefits			59						506						72						876
Taxes, income and other			691						4,213						707						4,750
Deferred revenue and customer advance payments			1,648						235						1,613						213
Sales and product allowances			198						6						221						2
Operating lease liabilities			199						863						207						889
Contract settlement financing payable			75						420						75						481
Other			1,257						287						1,297						219
Total			$	5,502					$	6,785					$	5,563					$	7,699

NOTE 14. FINANCING

The components of the Company’s debt as of December 31 were as follows (amounts in millions):

						Outstanding Amount
Description and Aggregate Principal Amount						2022						2021
U.S. dollar-denominated commercial paper(f)						$	—					$	1,440
Euro-denominated commercial paper (€1.9 billion and €1.2 billion, respectively)(e)						2,013						1,366
Floating rate senior unsecured notes due 6/30/2022 (€250 million) (the “Floating Rate 2022 Euronotes”)(a)						—						284
2.05% senior unsecured notes due 11/15/2022 ($700 million) (the “2022 Biopharma Notes”)(b)						—						699
0.5% senior unsecured bonds due 12/08/2023 (CHF 540 million) (the “2023 CHF Bonds”)(c)						584						592
1.7% senior unsecured notes due 3/30/2024 (€900 million) (the “2024 Euronotes”)(f)						962						1,021
2.2% senior unsecured notes due 11/15/2024 ($700 million) (the “2024 Biopharma Notes”)(b)						698						698
3.35% senior unsecured notes due 9/15/2025 ($500 million) (the “2025 U.S. Notes”)(f)						499						498
0.2% senior unsecured notes due 3/18/2026 (€1.3 billion) (the “2026 Biopharma Euronotes”)(b)						1,333						1,416
2.1% senior unsecured notes due 9/30/2026 (€800 million) (the “2026 Euronotes”)(f)						854						907
0.3% senior unsecured notes due 5/11/2027 (¥30.8 billion) (the “2027 Yen Notes”)(d)						234						267
1.2% senior unsecured notes due 6/30/2027 (€600 million) (the “2027 Euronotes”)(a)						639						680
0.45% senior unsecured notes due 3/18/2028 (€1.3 billion) (the “2028 Biopharma Euronotes”)(b)						1,331						1,413
1.125% senior unsecured bonds due 12/08/2028 (CHF 210 million) (the “2028 CHF Bonds”)(c)						230						233
2.6% senior unsecured notes due 11/15/2029 ($800 million) (the “2029 Biopharma Notes”)(b)						796						795
2.5% senior unsecured notes due 3/30/2030 (€800 million) (the “2030 Euronotes”)(f)						856						910
0.75% senior unsecured notes due 9/18/2031 (€1.8 billion) (the “2031 Biopharma Euronotes”)(b)						1,863						1,980
0.65% senior unsecured notes due 5/11/2032 (¥53.2 billion) (the “2032 Yen Notes”)(d)						404						461
1.35% senior unsecured notes due 9/18/2039 (€1.3 billion) (the “2039 Biopharma Euronotes”)(b)						1,323						1,406
3.25% senior unsecured notes due 11/15/2039 ($900 million) (the “2039 Biopharma Notes”)(b)						890						890
4.375% senior unsecured notes due 9/15/2045 ($500 million) (the “2045 U.S. Notes”)(f)						499						499
1.8% senior unsecured notes due 9/18/2049 (€750 million) (the “2049 Biopharma Euronotes”)(b)						794						844
3.4% senior unsecured notes due 11/15/2049 ($900 million) (the “2049 Biopharma Notes”)(b)						889						889
2.6% senior unsecured notes due 10/01/2050 ($1.0 billion) (the “2050 U.S. Notes”)(f)						981						980
2.8% senior unsecured notes due 12/10/2051 ($1.0 billion) (the “2051 U.S. Notes”)(f)						984						983
Other						21						25
Total debt						19,677						22,176
Less: currently payable						(591)						(8)
Long-term debt						$	19,086					$	22,168

(a) Issued by DH Europe Finance S.A. (“Danaher International”).

(b) Issued by DH Europe Finance II S.a.r.l. (“Danaher International II”).

(c) Issued by DH Switzerland Finance S.A. (“Danaher Switzerland”).

(d) Issued by DH Japan Finance S.A. (“Danaher Japan”).

(e) Issued by Danaher Corporation or Danaher International II.

(f) Issued by Danaher Corporation.

Debt discounts, premiums and debt issuance and other related costs totaled $118 million and $130 million as of December 31, 2022 and 2021, respectively, and have been netted against the aggregate principal amounts of the related debt in the components of debt table above.

Commercial Paper Programs and Credit Facilities

In 2019, the Company entered into a $5.0 billion unsecured revolving credit facility with a syndicate of banks that expires on August 27, 2024, subject to a one-year extension option at the request of the Company with the consent of the lenders (the “Five-Year Facility”). The Five-Year Facility also contains an expansion option permitting Danaher to request up to five increases of up to an aggregate additional $2.5 billion from lenders that elect to make such increase available, upon the satisfaction of certain conditions.

The Company expects to limit borrowings under the Five-Year Facility to amounts that would leave sufficient borrowing capacity under the facilities so that it could borrow, if needed, to repay all of the outstanding commercial paper as it matures.

On February 21, 2022, the Company and the syndicate of banks amended the Five-Year Facility to replace references to the London Interbank Offered Rate with references to the Sterling Overnight Index Average Reference Rate, the Tokyo Interbank Offer Rate or the Euro Interbank Offer Rate depending on the applicable currency of the borrowing.

Borrowings under the Five-Year Facility bear interest as follows: (1) Eurocurrency Rate Committed Loans (as defined in the Five-Year Facility) bear interest at a variable rate equal to the Sterling Overnight Index Average Reference Rate, the Tokyo Interbank Offer Rate or the Euro Interbank Offer Rate plus a margin of between 58.5 and 100 basis points, depending on Danaher’s long-term debt credit rating; (2) Base Rate Committed Loans and Swing Line Loans (each as defined in the Five-Year Facility) bear interest at a variable rate equal to the highest of (a) the Federal funds rate (as published by the Federal Reserve Bank of New York from time to time) plus 50 basis points; (b) Bank of America’s “prime rate” as publicly announced from time to time and (c) the Eurocurrency Rate (as defined in the Five-Year Facility) plus 100 basis points; and (3) Bid Loans (as defined in the Five-Year Facility) bear interest at the rate bid by the particular lender providing such loan. In addition, Danaher is required to pay a per annum facility fee of between 4.0 and 12.5 basis points (depending on Danaher’s long-term debt credit rating) based on the aggregate commitments under the Five-Year Facility, regardless of usage.

The Five-Year Facility requires the Company to maintain a consolidated leverage ratio (as defined in the facility) of 0.65 to 1.00 or less. Borrowings under the Five-Year Facility are prepayable at the Company’s option at any time in whole or in part without premium or penalty. As of December 31, 2022, no borrowings were outstanding under the Five-Year Facility and the Company was in compliance with all covenants under the facilities. The nonperformance by any member of the Five-Year Facility syndicates would reduce the maximum capacity of the Five-Year Facility by such member’s commitment amount.

The Company’s obligations under the Five-Year Facility are unsecured. The Company has unconditionally and irrevocably guaranteed the obligations of each of its subsidiaries in the event a subsidiary is named a borrower under the Five-Year Facility. The Five-Year Facility contains customary representations, warranties, conditions precedent, events of default, indemnities and affirmative and negative covenants. The Five-Year Facility is available for liquidity support for Danaher’s U.S. dollar and euro commercial paper programs, as discussed below, and for general corporate purposes.

Under the Company’s U.S. dollar and euro-denominated commercial paper programs, the Company or a subsidiary of the Company, as applicable, may issue and sell unsecured, short-term promissory notes. The notes are typically issued at a discount from par, generally based on the ratings assigned to the Company by credit rating agencies at the time of the issuance and prevailing market rates. The Five-Year Facility provides liquidity support for issuances under the Company’s commercial paper programs, and can also be used for working capital and other general corporate purposes. The availability of the Five-Year Facility as a standby liquidity facility to repay maturing commercial paper is an important factor in maintaining the existing credit ratings of the Company’s commercial paper programs. As commercial paper obligations mature, the Company may issue additional short-term commercial paper obligations to refinance all or part of these borrowings. As of December 31, 2022, borrowings outstanding under the Company’s euro-denominated commercial paper programs had a weighted average annual interest rate of 1.89% and a weighted average remaining maturity of approximately 30 days. As of December 31, 2022, the Company has classified approximately $2.0 billion of its borrowings outstanding under the euro-denominated commercial paper programs as long-term debt in the accompanying Consolidated Balance Sheet (even though such borrowings are scheduled to mature within one year of December 31, 2022) as the Company had the intent and ability, as supported by availability under the Five-Year Facility, to refinance these borrowings for at least one year from the balance sheet date.

The Company’s ability to access the commercial paper market, and the related costs of these borrowings, is affected by the strength of the Company’s credit rating and market conditions. Any downgrade in the Company’s credit rating would increase the cost of borrowings under the Company’s commercial paper program and the Five-Year Facility, and could limit or preclude the Company’s ability to issue commercial paper. If the Company’s access to the commercial paper market is adversely affected due to a credit downgrade, change in market conditions or otherwise, the Company expects it would rely on a combination of available cash, operating cash flow, the Five-Year Facility and any other available sources of financing to provide short-term funding. In such event, the cost of borrowings under the Five-Year Facility or other available sources of financing could be higher than the cost of commercial paper borrowings.

Covenants and Redemption Provisions Applicable to Notes

With respect to the 2027 and 2032 Yen Notes; the 2024, 2026, 2027 and 2030 Euronotes; the 2025, 2045, 2050 and 2051 U.S. Notes; the 2022 (prior to their repayment in the fourth quarter of 2022), 2024, 2029, 2039 and 2049 Biopharma Notes; and the 2026, 2028, 2031, 2039 and 2049 Biopharma Euronotes, at any time prior to the applicable maturity date, the Company may redeem the applicable series of notes in whole or in part, by paying the principal amount accrued and unpaid interest and, until the par call date specified in the applicable indenture or comparable governing document, the “make-whole” premium specified therein (and in the case of the Yen Notes, net of certain swap-related gains or losses as applicable). With respect to each of the 2023 and 2028 CHF Bonds, at any time after 85% or more of the applicable bonds have been redeemed or purchased and canceled, the Company may redeem some or all of the remaining bonds for their principal amount plus accrued and unpaid

interest. With respect to the 2027 and 2032 Yen Notes; Floating Rate 2022 (prior to their repayment in the second quarter of 2022), 2024, 2026, 2027 and 2030 Euronotes; the 2023 and 2028 CHF Bonds; and the 2026, 2028, 2031, 2039 and 2049 Biopharma Euronotes, the Company may redeem such notes and bonds upon the occurrence of specified, adverse changes in tax laws, or interpretations under such laws, at a redemption price equal to the principal amount of the bonds to be redeemed.

If a change of control triggering event occurs with respect to any of the 2027 and 2032 Yen Notes; the Floating Rate 2022 (prior to their repayment in the second quarter of 2022), 2024, 2026, 2027 and 2030 Euronotes; the 2025, 2045, 2050 and 2051 U.S. Notes; the 2023 and 2028 CHF Bonds; the 2022 (prior to their repayment in the fourth quarter of 2022), 2024, 2029, 2039 and 2049 Biopharma Notes; or the 2026, 2028, 2031, 2039 and 2049 Biopharma Euronotes, each holder of such notes may require the Company to repurchase some or all of such notes and bonds at a purchase price equal to 101% (100% in the case of the 2027 and 2032 Yen Notes) of the principal amount of the notes and bonds, plus accrued and unpaid interest (and in the case of the Yen Notes, certain swap-related losses as applicable). A change of control triggering event means the occurrence of both a change of control and a rating event, each as defined in the applicable indenture or comparable governing document. Except in connection with a change of control triggering event, the Company does not have any credit rating downgrade triggers that would accelerate the maturity of a material amount of outstanding debt. Each holder of the 2027 and 2032 Yen Notes may also require the Company to repurchase some or all of its notes at a purchase price equal to 100% of the principal amount of the notes, plus accrued and unpaid interest and certain swap-related losses as applicable, in certain circumstances whereby such holder comes into violation of economic sanctions laws as a result of holding such notes.

The respective indentures or comparable governing documents under which the above-described notes and bonds were issued contain customary covenants including, for example, limits on the incurrence of secured debt and sale-leaseback transactions. None of these covenants are considered restrictive to the Company’s operations and as of December 31, 2022, the Company was in compliance with all of its debt covenants.

LYONs

In 2001, the Company issued $830 million (value at maturity) in LYONs. Pursuant to the terms of the indenture that governed the Company’s LYONs, each $1,000 of principal amount at maturity could be converted into 38.1998 shares of Danaher common stock at any time on or before the maturity date of January 22, 2021.

During the year ended December 31, 2021, holders of certain of the Company’s LYONs converted such LYONs into an aggregate of approximately 912 thousand shares of the Company’s common stock, par value $0.01 per share. The Company’s deferred tax liability of $10 million associated with the book and tax basis difference in the converted LYONs was transferred to additional paid-in capital. The residual LYONS not converted into shares of the Company’s stock were redeemed at face value on January 22, 2021.

Long-Term Debt Repayments

On June 30, 2022, the Company repaid the €250 million aggregate principal amount of the Floating Rate 2022 Euronotes and on November 15, 2022 the Company repaid the €700 million aggregate principal amount of the 2022 Biopharma Euronotes upon their maturity using available cash and the proceeds from the issuance of commercial paper. The ¥30.0 billion aggregate principal amount of the 2021 Yen Notes were repaid during the first quarter of 2021 using proceeds from the issuance of commercial paper. During 2021 and 2020, the Company redeemed certain outstanding borrowings in advance of their scheduled maturities. Refer to Note 9 for details of these redemptions and the related losses on early extinguishment of borrowings incurred on such redemptions.

Guarantors of Debt

The Company has guaranteed long-term debt and commercial paper issued by certain of its wholly-owned finance subsidiaries: Danaher International, Danaher International II, Danaher Switzerland and Danaher Japan. All of the outstanding and future securities issued by each of these entities are or will be fully and unconditionally guaranteed by the Company and these guarantees rank on parity with the Company’s unsecured and unsubordinated indebtedness.

Other

The Company’s minimum principal payments for the next five years are as follows ($ in millions):

2023			$	591
2024			3,661
2025			489
2026			2,185
2027			871
Thereafter			11,880

The Company made interest payments of $347 million, $452 million and $331 million in 2022, 2021 and 2020, respectively. Interest payments decreased in 2022 due primarily to the decrease in outstanding debt in 2022 and 2021 and the year-over-year decrease in make-whole premiums on the early extinguishment of debt.

NOTE 15. HEDGING TRANSACTIONS AND DERIVATIVE FINANCIAL INSTRUMENTS

The Company uses cross-currency swap derivative contracts to partially hedge its net investments in foreign operations against adverse movements in exchange rates between the U.S. dollar and the Danish kroner, Japanese yen, euro and Swiss franc. The cross-currency swap derivative contracts are agreements to exchange fixed-rate payments in one currency for fixed-rate payments in another currency. These contracts effectively convert U.S. dollar-denominated bonds to obligations denominated in Danish kroner, Japanese yen, euro and Swiss franc, and partially offset the impact of changes in currency rates on the Company’s foreign currency denominated net investments. These contracts also reduce the interest rate from the stated interest rates on the U.S. dollar-denominated debt to the interest rates of the swaps. The changes in the spot rate of these instruments are recorded in accumulated other comprehensive income (loss) in stockholders’ equity, partially offsetting the foreign currency translation adjustment of the Company’s related net investment that is also recorded in accumulated other comprehensive income (loss). The interest income or expense from these swaps are recorded in interest expense in the accompanying Consolidated Statements of Earnings consistent with the classification of interest expense attributable to the underlying debt. These instruments mature on dates ranging from September 2025 to December 2031.

The Company also uses cross-currency swap derivative contracts to hedge U.S. dollar-denominated long-term debt issuances in a foreign subsidiary whose functional currency is the euro against adverse movements in exchange rates between the U.S. dollar and the euro. These contracts effectively convert these U.S. dollar-denominated bonds to obligations denominated in euro. The changes in the fair value of these instruments are recorded in accumulated other comprehensive income (loss), with a reclassification from accumulated other comprehensive income (loss) to net earnings to offset the remeasurement of the hedged debt that is also recorded in net earnings. The interest income or expense from these swaps are recorded in interest expense in the accompanying Consolidated Statements of Earnings consistent with the classification of interest expense attributable to the underlying debt. These instruments mature on dates ranging from November 2024 to November 2049.

The Company has also issued foreign currency denominated long-term debt as partial hedges of its net investments in foreign operations against adverse movements in exchange rates between the U.S. dollar and the euro, Japanese yen and Swiss franc. These foreign currency denominated long-term debt issuances are designated and qualify as nonderivative hedging instruments. Accordingly, the foreign currency translation of these debt instruments is recorded in accumulated other comprehensive income (loss), offsetting the foreign currency translation adjustment of the Company’s related net investment that is also recorded in accumulated other comprehensive income (loss). These instruments mature on dates ranging from January 2023 to May 2032.

The Company used interest rate swap agreements to hedge the variability in cash flows due to changes in benchmark interest rates related to a portion of the U.S. debt the Company issued to fund the Cytiva Acquisition and a portion of the 2051 Notes. These contracts effectively fixed the interest rate for a portion of the Company’s U.S. dollar-denominated debt equal to the notional amount of the swaps to the rate specified in the interest rate swap agreements and were settled in November 2019 and December 2021, respectively. The changes in the fair value of these instruments were recorded in accumulated other comprehensive income (loss) prior to the issuance of the debt and are subsequently being reclassified to interest expense over the life of the related debt.

The following table summarizes the notional values as of December 31, 2022 and 2021 and pretax impact of changes in the fair values of instruments designated as net investment hedges and cash flow hedges in accumulated other comprehensive income (“OCI”) for the year then ended ($ in millions):

			Original Notional Amount						Notional Amount Outstanding						Gain (Loss) Recognized in OCI						Amounts Reclassified from OCI
Year ended December 31, 2022:
Net investment hedges:
Cross-currency contracts			$	3,875					$	3,000					$	225					$	—
Foreign currency denominated debt			5,777						5,777						248						—
Cash flow hedges:
Cross-currency contracts			4,000						3,300						378						(238)
Interest rate swaps			1,600						—						—						3
Total			$	15,252					$	12,077					$	851					$	(235)
Year ended December 31, 2021:
Net investment hedges:
Cross-currency contracts			$	3,875					$	3,000					$	130					$	—
Foreign currency denominated debt			3,883						3,883						333						—
Cash flow hedges:
Cross-currency contracts			4,000						4,000						542						(283)
Interest rate swaps			1,600						—						(19)						3
Total			$	13,358					$	10,883					$	986					$	(280)

Gains or losses related to the net investment hedges are classified as foreign currency translation adjustments in the schedule of changes in OCI in Note 19, as these items are attributable to the Company’s hedges of its net investment in foreign operations. Gains or losses related to the cash flow hedges are classified as cash flow hedge adjustments in the schedule of changes in OCI in Note 19. The amount reclassified from other comprehensive income (loss) for the cross-currency swap derivative contracts that are cash flow hedges of the Company’s U.S. dollar-denominated debt was equal to the remeasurement amount recorded in the period on the hedged debt.

The Company did not reclassify any other deferred gains or losses related to net investment hedges or cash flow hedges from accumulated other comprehensive income (loss) to earnings during the years ended December 31, 2022 and 2021. In addition, the Company did not have any ineffectiveness related to net investment hedges or cash flow hedges during the years ended December 31, 2022 and 2021, and, should they arise, any ineffective portions of the hedges would be reclassified from accumulated other comprehensive income (loss) into earnings during the period of change. The cash inflows and outflows associated with the Company’s derivative contracts designated as net investment hedges are classified in all other investing activities in the accompanying Consolidated Statements of Cash Flows. The cash inflows and outflows associated with the Company’s derivative contracts designated as cash flow hedges are classified in cash flows from operating activities in the accompanying Consolidated Statements of Cash Flows.

The Company’s derivative instruments, as well as its nonderivative debt instruments designated and qualifying as net investment hedges, were classified as of December 31 in the Company’s Consolidated Balance Sheets as follows ($ in millions):

			2022						2021
Derivative assets:
Other long-term assets			$	653					$	50
Nonderivative hedging instruments:
Long-term debt			5,777						3,883

Amounts related to the Company’s derivatives expected to be reclassified from accumulated other comprehensive income (loss) to net earnings during the next 12 months, if interest rates and foreign exchange rates remain unchanged, are not significant.

NOTE 16. PENSION AND OTHER POSTRETIREMENT EMPLOYEE BENEFIT PLANS

The Company has noncontributory defined benefit pension plans which cover certain of its U.S. employees. During 2012, all remaining benefit accruals under the U.S. plans ceased. Defined benefit plans from acquisitions subsequent to 2012 are ceased as soon as practical. The Company also has noncontributory defined benefit pension plans which cover certain of its non-U.S. employees, and under certain of these plans, benefit accruals continue. In general, the Company’s policy is to fund these plans based on considerations relating to legal requirements, underlying asset returns, the plan’s funded status, the anticipated tax deductibility of the contribution, local practices, market conditions, interest rates and other factors. In addition to providing pension benefits, the Company provides certain health care and life insurance benefits for some of its retired employees in the United States. Certain employees may become eligible for these benefits as they reach normal retirement age while working for the Company.

The following sets forth the funded status of the U.S. pension, non-U.S. pension and postretirement benefit plans as of the most recent actuarial valuations using measurement dates of December 31 ($ in millions):

			U.S. Pension Benefits												Non-U.S. Pension Benefits												Postretirement Benefits
			2022						2021						2022						2021						2022						2021
Change in pension benefit obligation:
Benefit obligation at beginning of year			$	(2,532)					$	(2,718)					$	(1,944)					$	(2,161)					$	(135)					$	(148)
Service cost			—						—						(39)						(44)						—						—
Interest cost			(54)						(44)						(23)						(19)						(3)						(2)
Employee/retiree contributions			—						—						(7)						(7)						(1)						(2)
Benefits and other expenses paid			178						167						46						59						13						14
Actuarial gain (loss)			495						63						481						112						20						3
Amendments, settlements and curtailments			—						—						66						18						—						—
Foreign exchange rate impact and other			—						—						148						98						—						—
Benefit obligation at end of year			(1,913)						(2,532)						(1,272)						(1,944)						(106)						(135)
Change in plan assets:
Fair value of plan assets at beginning of year			2,303						2,125						1,360						1,331						—						—
Actual return on plan assets			(278)						335						(322)						80						—						—
Employer contributions			10						10						40						50						12						12
Employee contributions			—						—						7						7						1						2
Amendments and settlements			—						—						(65)						(10)						—						—
Benefits and other expenses paid			(178)						(167)						(46)						(59)						(13)						(14)
Foreign exchange rate impact and other			—						—						(105)						(39)						—						—
Fair value of plan assets at end of year			1,857						2,303						869						1,360						—						—
Funded status			$	(56)					$	(229)					$	(403)					$	(584)					$	(106)					$	(135)

The largest contributor to the net actuarial gains affecting the benefit obligations in 2022 and 2021 U.S. pension, non-U.S. pension plans and the postretirement benefit plans is increases in the discount rates compared to the rates in the prior year.

Projected benefit obligation (“PBO”) and fair value of plan assets for pension plans and postretirement benefit plans with PBO’s in excess of plan assets ($ in millions):

			U.S. Pension Benefits												Non-U.S. Pension Benefits												Postretirement Benefits
			2022						2021						2022						2021						2022						2021
Projected benefit obligation			$	98					$	2,532					$	754					$	1,125					$	106					$	135
Fair value of plan assets			—						2,303						260						357						—						—

The year-over-year change in the amounts above reflects the changes in the benefit plans with a fair value of plan assets in excess of the projected benefit obligation.

Accumulated benefit obligation (“ABO”) and fair value of plan assets for pension plans with ABO’s in excess of plan assets ($ in millions):

			U.S. Pension Benefits												Non-U.S. Pension Benefits
			2022						2021						2022						2021
Accumulated benefit obligation			$	98					$	2,532					$	694					$	1,184
Fair value of plan assets			—						2,303						250						521

The year-over-year change in the amounts above reflects the changes in the benefit plans with a fair value of plan assets in excess of the accumulated benefit obligation.

Weighted average assumptions used to determine benefit obligations at date of measurement:

			U.S. Pension Benefits												Non-U.S. Pension Benefits												Postretirement Benefits
			2022						2021						2022						2021						2022						2021
Discount rate			5.4		%				2.7		%				3.9		%				1.4		%				5.4		%				2.6		%
Rate of compensation increase			N/A						N/A						3.0		%				2.6		%				N/A						N/A

In 2022, the medical trend rate used to determine the postretirement benefit obligation was 5.2%. The rate decreases gradually to an ultimate rate of 4.0% by 2046 and remains at that level thereafter. In 2021, the medical trend rate used to determine the postretirement benefit obligation was 5.3%, gradually decreasing to an ultimate rate of 4.0% by 2046 and remaining at that level thereafter. The trend rate is a significant factor in determining the amounts reported.

Components of net periodic pension and postretirement benefit (cost) ($ in millions):

			U.S. Pension Benefits												Non-U.S. Pension Benefits												Postretirement Benefits
			2022						2021						2022						2021						2022						2021
Service cost			$	—					$	—					$	(39)					$	(44)					$	—					$	—
Interest cost			(54)						(44)						(23)						(19)						(3)						(2)
Expected return on plan assets			130						123						37						42						—						—
Amortization of prior service (cost) credit			(1)						(1)						2						1						2						2
Amortization of net loss			(35)						(46)						(2)						(11)						(1)						(2)
Curtailment and settlement gains (losses) recognized			—						—						(7)						(1)						—						—
Net periodic pension benefit (cost)			$	40					$	32					$	(32)					$	(32)					$	(2)					$	(2)

The components of the net periodic benefit (cost) of the noncontributory defined benefit pension plans and other postretirement employee benefit plans other than service cost are included in other income (expense), net in the Consolidated Statements of Earnings.

Weighted average assumptions used to determine net periodic pension benefit (cost) at date of measurement:

			U.S. Plans												Non-U.S. Plans
			2022						2021						2022						2021
Discount rate			2.7		%				2.3		%				1.4		%				1.1		%
Expected long-term return on plan assets			6.8		%				6.8		%				3.2		%				3.3		%
Rate of compensation increase			N/A						N/A						2.6		%				2.5		%

The discount rate reflects the market rate on December 31 of the prior year for high-quality fixed-income investments with maturities corresponding to the Company’s benefit obligations and is subject to change each year. For non-U.S. pension plans, rates appropriate for each plan are determined based on investment-grade instruments with maturities approximately equal to the average expected benefit payout under the plan. During 2021, the Company updated the mortality assumptions used to estimate the projected benefit obligation to reflect updated mortality tables.

Included in accumulated other comprehensive income (loss) as of December 31, 2022 are the following amounts that have not yet been recognized in net periodic pension cost: unrecognized prior service credit of $7 million ($5 million, after-tax) and unrecognized actuarial losses of approximately $464 million ($353 million, after-tax). The unrecognized losses and prior service cost, net, is calculated as the difference between the actuarially determined projected benefit obligation and the value of the plan assets less accrued pension costs as of December 31, 2022.

Included in accumulated other comprehensive income (loss) as of December 31, 2022 are the following amounts that have not yet been recognized in net periodic postretirement benefit cost: unrecognized prior service credits of $10 million ($8 million, after-tax) and unrecognized actuarial losses of $1 million ($1 million, after-tax). The unrecognized losses and prior service credits, net, is calculated as the difference between the actuarially determined projected benefit obligation and the value of the plan assets less accrued benefit costs as of December 31, 2022.

Selection of Expected Rate of Return on Assets

For the years ended December 31, 2022, 2021 and 2020, the Company used an expected long-term rate of return assumption of 6.75%, 6.75%, and 7.00%, respectively, for its U.S. defined benefit pension plan. The Company intends to use an expected long-term rate of return assumption of 6.75% for 2023 for such plan. This expected rate of return reflects the asset allocation of the plan, and is based primarily on broad, publicly-traded equity and fixed-income indices and forward-looking estimates of active portfolio and investment management. Long-term rate of return on asset assumptions for the non-U.S. plans were determined on a plan-by-plan basis based on the composition of assets and ranged from 0.8% to 5.3% in 2022 and 0.3% to 5.0% in 2021, with a weighted average rate of return assumption of 3.2% in 2022 and 3.3% in 2021.

Pension Plan Assets

The U.S. pension plan’s goal is to maintain between 60% and 70% of its assets in equity portfolios, which are invested in individual equity securities or funds that are expected to mirror broad market returns for equity securities or in assets with characteristics similar to equity investments, such as venture capital funds and partnerships. Asset holdings are periodically rebalanced when equity holdings are outside this range. The balance of the U.S. plan asset portfolio is invested in bond funds, real estate funds, various absolute and real return funds and private equity funds. Non-U.S. plan assets are invested in various insurance contracts, equity and debt securities as determined by the administrator of each plan. The value of the plan assets directly affects the funded status of the Company’s pension plans recorded in the Consolidated Financial Statements.

The Company has certain investments that are valued using Net Asset Value (“NAV”) as the practical expedient. In addition, certain of the investments valued using NAV as the practical expedient have limits on their redemption to monthly, quarterly, semiannually or annually and require up to 90 days prior written notice. These investments valued using NAV consist of mutual funds, venture capital funds, partnerships, real estate, and other private investments, which allow the Company to allocate investments across a broad array of types of funds and diversify the portfolio.

The fair values of the Company’s pension plan assets for both the U.S. and non-U.S. plans as of December 31, 2022 and 2021, by asset category were as follows ($ in millions):

			Quoted Prices in Active Market (Level 1)												Significant Other Observable Inputs (Level 2)												Significant Unobservable Inputs (Level 3)												Total
			2022						2021						2022						2021						2022						2021						2022						2021
Cash and equivalents			$	113					$	85					$	—					$	—					$	—					$	—					$	113					$	85
Equity securities:
Common stock			379						486						—						—						—						—						379						486
Preferred stock			—						2						—						—						—						—						—						2
Fixed income securities:
Corporate bonds			—						—						129						47						—						—						129						47
Government issued			—						—						24						46						—						—						24						46
Mutual funds			156						223						118						248						—						—						274						471
Insurance contracts			—						—						303						357						—						—						303						357
Total			$	648					$	796					$	574					$	698					$	—					$	—					1,222						1,494
Investments measured at NAV (a):
Common/collective trusts																																							811						1,073
Venture capital, partnerships and other private investments																																							693						1,096
Total assets at fair value																																							$	2,726					$	3,663

(a) The fair value amounts presented in the table above are intended to permit reconciliation of the fair value hierarchy to the total plan assets.

Preferred stock and common stock traded on an active market, as well as mutual funds are valued at the quoted closing price reported on the active market on which the individual securities are traded. Preferred stock, common stock, corporate bonds, U.S. government securities and mutual funds that are not traded on an active market are valued at quoted prices reported by investment brokers and dealers based on the underlying terms of the security and comparison to similar securities traded on an active market. Insurance contracts are valued based upon the quoted prices of the underlying investments with the insurance company.

Common/collective trusts are valued based on the plan’s interest, represented by investment units, in the underlying investments held within the trust that are traded in an active market by the trustee.

Venture capital, partnerships and other private investments are valued using the NAV based on the information provided by the asset fund managers, which reflects the plan’s share of the fair value of the net assets of the investment. Depending on the nature of the assets, the underlying investments are valued using a combination of either discounted cash flows, earnings and market multiples, third-party appraisals or through reference to the quoted market prices of the underlying investments held by the venture, partnership or private entity where available. Valuation adjustments reflect changes in operating results, financial condition, or prospects of the applicable portfolio company.

The methods described above may produce a fair value estimate that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Company believes the valuation methods are appropriate and consistent with the methods used by other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

Expected Contributions

During 2023, the Company’s cash contribution requirements for its U.S. and its non-U.S. defined benefit pension plans are expected to be approximately $10 million and $35 million, respectively. During 2023, the Company’s cash contribution requirements for its other postretirement benefit plans are expected to be approximately $14 million. The ultimate amounts to be contributed depend upon, among other things, legal requirements, underlying asset returns, the plan’s funded status, the anticipated tax deductibility of the contributions, local practices, market conditions, interest rates and other factors.

The following sets forth benefit payments, which reflect expected future service, as appropriate, expected to be paid by the plans in the periods indicated ($ in millions):

			U.S. Pension Plans						Non-U.S. Pension Plans												Postretirement Benefit Plans						All Plans
2023			$	186					$	56											$	14					$	256
2024			184						62												13						259
2025			183						59												12						254
2026			182						64												11						257
2027			180						64												10						254
2028 - 2032			718						352												42						1,112

Other Matters

Substantially all employees not covered by defined benefit plans are covered by defined contribution plans, which generally provide for Company funding based on a percentage of compensation.

A limited number of the Company’s subsidiaries participate in multiemployer defined benefit and contribution plans, primarily outside of the United States, that require the Company to periodically contribute funds to the plan. The risks of participating in a multiemployer plan differ from the risks of participating in a single-employer plan in the following respects: (1) assets contributed to the multiemployer plan by one employer may be used to provide benefits to employees of other participating employers, (2) if a participating employer ceases contributing to the plan, the unfunded obligations of the plan may be required to be borne by the remaining participating employers and (3) if the Company elects to stop participating in the plan, the Company may be required to pay the plan an amount based on the unfunded status of the plan. None of the multiemployer plans in which the Company’s subsidiaries participate are considered to be quantitatively or qualitatively significant, either individually or in the aggregate. In addition, contributions made to these plans during 2022, 2021 and 2020 were not significant, either individually or in the aggregate.

The Company’s expenses for all defined benefit and defined contribution pension plans amounted to $281 million, $245 million and $224 million for the years ended December 31, 2022, 2021 and 2020, respectively.

NOTE 17. COMMITMENTS

Warranties

The Company generally accrues estimated warranty costs at the time of sale. In general, manufactured products are warranted against defects in material and workmanship when properly used for their intended purpose, installed correctly and appropriately maintained. Warranty periods depend on the nature of the product and range from the date of such sale up to twenty years. The amount of the accrued warranty liability is determined based on historical information such as past experience, product failure rates or number of units repaired, estimated cost of material and labor and in certain instances estimated property damage. As of December 31, 2022 and 2021, the Company had accrued warranty liabilities of $95 million and $97 million, respectively.

Purchase Obligations

The Company has entered into agreements to purchase goods or services that are enforceable and legally binding on the Company and that specify all significant terms, including fixed or minimum quantities to be purchased, fixed, minimum or variable price provisions and the approximate timing of the transaction. Purchase obligations exclude agreements that are cancellable at any time without penalty. As of December 31, 2022, the aggregate amount of the Company’s purchase obligations totaled approximately $2.3 billion and the majority of these obligations are expected to be settled during 2023.

NOTE 18. LITIGATION AND CONTINGENCIES

The Company is subject to or otherwise responsible for a variety of litigation and other legal and regulatory proceedings in the course of its business (or related to the business operations of previously owned entities), including claims or counterclaims for damages arising out of the use of products or services and claims relating to intellectual property matters, employment matters, tax matters, commercial disputes, breach of contract claims, competition and sales and trading practices, environmental matters, personal injury, insurance coverage, securities matters, fiduciary duties and acquisition or divestiture-related matters, as well as regulatory subpoenas, requests for information, investigations and enforcement. The Company also from time to time becomes subject to lawsuits as a result of acquisitions or as a result of liabilities retained from, or representations, warranties or indemnities provided in connection with, businesses divested by the Company or its predecessors. The types of claims made in lawsuits include claims for compensatory damages, punitive and consequential damages (and in some cases, treble damages) and/or injunctive relief.

While the Company maintains general, products, property, workers’ compensation, automobile, cargo, aviation, crime, cyber, fiduciary and directors’ and officers’ liability insurance (and has acquired rights under similar policies in connection with certain acquisitions) up to certain limits that cover certain of these claims, this insurance may be insufficient or unavailable to cover such losses. For general, products and property liability and most other insured risks, the Company purchases outside insurance coverage only for severe losses and must establish and maintain reserves with respect to amounts within the self-insured retention. In addition, while the Company believes it is entitled to indemnification from third-parties for some of these claims, these rights may also be insufficient or unavailable to cover such losses.

The Company records a liability in the Consolidated Financial Statements for loss contingencies when a loss is known or considered probable and the amount can be reasonably estimated. If the reasonable estimate of a known or probable loss is a range, and no amount within the range is a better estimate than any other, the minimum amount of the range is accrued. If a loss does not meet the known or probable level but is reasonably possible it is disclosed and if the loss or range of loss can be reasonably estimated, the estimated loss or range of loss is disclosed. The Company’s reserves consist of specific reserves for individual claims and additional amounts for anticipated developments of these claims as well as for incurred but not yet reported claims. The specific reserves for individual known claims are quantified with the assistance of legal counsel and outside risk professionals where appropriate. In addition, outside risk professionals assist in the determination of reserves for incurred but not yet reported claims through evaluation of the Company’s specific loss history, actual claims reported and industry trends together with statistical and other factors. Reserve estimates may be adjusted as additional information regarding a claim becomes known. Because most contingencies are resolved over long periods of time, new developments (including litigation developments, the discovery of new facts, changes in legislation and outcomes of similar cases), changes in assumptions or changes in the Company’s strategy in any given period can require the Company to adjust the loss contingency estimates that have been recorded in the financial statements, record estimates for liabilities or assets previously not susceptible of reasonable estimates or pay cash settlements or judgments. While the Company actively pursues financial recoveries from insurance providers and indemnifying parties, it does not recognize any recoveries until realized or until such time as a sustained pattern of collections is established related to historical matters of a similar nature and magnitude. If the Company’s self-insurance and litigation reserves prove inadequate, it would be required to incur an expense equal to the amount of the loss incurred in excess of the reserves, which would adversely affect the Company’s Consolidated Financial Statements.

In addition, the Company’s operations, products and services are subject to numerous U.S. federal, state, local and non-U.S. environmental, health and safety laws and regulations concerning, among other things, the health and safety of our employees, the generation, storage, use and transportation of hazardous materials, emissions or discharges of substances into the environment, investigation and remediation of hazardous substances or materials at various sites, chemical constituents in products and end-of-life disposal and take-back programs for products sold. A number of the Company’s operations involve the handling, manufacturing, use or sale of substances that are or could be classified as hazardous materials within the meaning of applicable laws. Compliance with these laws and regulations has not had and, based on current information and the applicable laws and regulations currently in effect, is not expected to have a material effect on the Company’s capital expenditures, earnings or competitive position, and the Company does not anticipate material capital expenditures for environmental control facilities.

In addition to environmental compliance costs, the Company from time to time incurs costs related to remedial efforts or alleged environmental damage associated with past or current waste disposal practices or other hazardous materials handling practices. For example, generators of hazardous substances found in disposal sites at which environmental problems are alleged to exist, as well as the current and former owners of those sites and certain other classes of persons, are subject to claims brought by state and federal regulatory agencies pursuant to statutory authority. The Company has received notification from the U.S. Environmental Protection Agency, and from state and non-U.S. environmental agencies, that conditions at certain sites where the Company and others previously disposed of hazardous wastes and/or are or were property owners require clean-up and other possible remedial action, including sites where the Company has been identified as a potentially responsible party under U.S. federal and state environmental laws. The Company has projects underway at a number of current and former facilities, in both the United States and abroad, to investigate and remediate environmental contamination resulting from past operations. Remediation activities generally relate to soil and/or groundwater contamination and may include pre-remedial activities such as fact-finding and investigation, risk assessment, feasibility study and/or design, as well as remediation actions such as contaminant removal, monitoring and/or installation, operation and maintenance of longer-term remediation systems. The Company is also from time to time party to personal injury, property damage or other claims brought by private parties alleging injury or damage due to the presence of, or exposure to, hazardous substances. The Company can also become subject to additional remedial, compliance or personal injury costs due to future events such as changes in existing laws or regulations, changes in agency direction or enforcement policies, developments in remediation technologies, changes in the conduct of the Company’s operations and changes in accounting rules.

The Company has recorded a provision for environmental investigation and remediation and environmental-related claims with respect to sites owned or formerly owned by the Company and its subsidiaries and third-party sites where the Company has been determined to be a potentially responsible party. The Company generally makes an assessment of the costs involved for its remediation efforts based on environmental studies, as well as its prior experience with similar sites. The ultimate cost of site cleanup is difficult to predict given the uncertainties of the Company’s involvement in certain sites, uncertainties regarding the extent of the required cleanup, the availability of alternative cleanup methods, variations in the interpretation of applicable laws and regulations, the possibility of insurance recoveries with respect to certain sites and the fact that imposition of joint and several liability with right of contribution is possible under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 and other environmental laws and regulations. If the Company determines that potential liability for a particular site or with respect to a personal injury claim is known or considered probable and reasonably estimable, the Company accrues the total estimated loss, including investigation and remediation costs, associated with the site or claim. As of December 31, 2022, the Company had a reserve of $197 million for environmental matters which are known or considered probable and reasonably estimable (of which $164 million are noncurrent), which reflects the Company’s best estimate of the costs to be incurred with respect to such matters.

While the Company actively pursues insurance recoveries, as well as recoveries from other potentially responsible parties, it does not recognize any insurance recoveries for environmental liability claims until realized or until such time as a sustained pattern of collections is established related to historical matters of a similar nature and magnitude.

The Company’s Restated Certificate of Incorporation requires it to indemnify to the full extent authorized or permitted by law any person made, or threatened to be made a party to any action or proceeding by reason of his or her service as a director or officer of the Company, or by reason of serving at the request of the Company as a director or officer of any other entity, subject to limited exceptions. Danaher’s Amended and Restated By-laws provide for similar indemnification rights. In addition, Danaher has executed with each director and executive officer of Danaher Corporation an indemnification agreement which provides for substantially similar indemnification rights and under which Danaher has agreed to pay expenses in advance of the final disposition of any such indemnifiable proceeding. While the Company maintains insurance for this type of liability, a significant deductible applies to this coverage and any such liability could exceed the amount of the insurance coverage.

As of December 31, 2022, the Company had approximately $632 million of guarantees consisting primarily of outstanding standby letters of credit, bank guarantees and performance and bid bonds. These guarantees have been provided in connection

with certain arrangements with vendors, customers, insurance providers, financing counterparties and governmental entities to secure the Company’s obligations and/or performance requirements related to specific transactions. The Company believes that if the obligations under these instruments were triggered, it would not have a material effect on its Consolidated Financial Statements.

NOTE 19. STOCKHOLDERS' EQUITY AND STOCK-BASED COMPENSATION

Stockholders’ Equity

On July 16, 2013, the Company’s Board of Directors approved a repurchase program (the “Repurchase Program”) authorizing the repurchase of up to 20 million shares of the Company’s common stock from time to time on the open market or in privately negotiated transactions. There is no expiration date for the Repurchase Program, and the timing and amount of any shares repurchased under the program will be determined by the Company’s management based on its evaluation of market conditions and other factors. The Repurchase Program may be suspended or discontinued at any time. Any repurchased shares will be available for use in connection with the Company’s equity compensation plans (or any successor plan) and for other corporate purposes. On July 22, 2022, the Company repurchased 3,906 shares of the Company’s common stock for $1 million as part of the Repurchase Program. As of December 31, 2022, approximately 20 million shares remained available for repurchase pursuant to the Repurchase Program. The Company expects to fund any future stock repurchases using the Company’s available cash balances or proceeds from the issuance of debt.

Except as discussed above, neither the Company nor any “affiliated purchaser” repurchased any shares of Company common stock during 2022, 2021 or 2020.

The following table summarizes the Company’s share activity for the years ended December 31 (shares in millions):

			2022						2021						2020
Preferred stock - shares issued:
Balance, beginning of period			3.4						3.4						1.7
Issuance of MCPS			—						—						1.7
Conversion of MCPS to common stock			(1.7)						—						—
Balance, end of period			1.7						3.4						3.4
Common stock - shares issued:
Balance, beginning of period			855.7						851.3						835.5
Issuance of common stock attributable to stock-based compensation			2.6						3.4						4.5
Conversion of MCPS to common stock			11.0						—						—
Common stock issued in connection with acquisitions			—						0.1						—
Common stock issued in connection with LYONs’ conversions			—						0.9						0.4
Other issuance of common stock			—						—						10.9
Balance, end of period			869.3						855.7						851.3

On April 15, 2022, all outstanding shares of the Company’s 4.75% MCPS Series A converted to common shares at a rate of 6.6632 common shares per share of preferred stock into an aggregate of 11.0 million shares of the Company’s common stock, pursuant to the terms of the Certificate of Designation governing the Series A Preferred Stock. Danaher issued cash in lieu of fractional shares of common stock in the conversion. The final quarterly cash dividend of $11.875 per share was paid on April 15, 2022.

In May 2020, the Company completed the underwritten public offering of 10.9 million shares of Danaher common stock at a price to the public of $163.00 per share (the “2020 Common Stock Offering”), resulting in net proceeds of approximately $1.7 billion, after deducting expenses and the underwriters’ discount of $54 million. Simultaneously, the Company completed the underwritten public offering of 1.72 million shares of its 5.0% MCPS Series B, without par value and with a liquidation preference of $1,000 per share (the “2020 MCPS Offering”), resulting in net proceeds of approximately $1.7 billion, after deducting expenses and the underwriters’ discount of $49 million. The Company has used the net proceeds from the 2020 Common Stock Offering and the 2020 MCPS Offering for general corporate purposes.

Unless converted earlier in accordance with the terms of the applicable certificate of designations, each share of MCPS Series B will mandatorily convert on April 15, 2023 into a number of shares of the Company’s common stock between the Minimum Conversion Rate of 5.0156 shares and the Maximum Conversion Rate of 6.1441 shares (subject to further anti-dilution

adjustments). The number of shares of the Company’s common stock issuable upon conversion will be determined based on the average volume-weighted average price per share of the Company’s common stock over the 20 consecutive trading day period beginning on, and including, the 21st scheduled trading day immediately before the Mandatory Conversion Date. Subject to certain exceptions, at any time prior to the Mandatory Conversion Date, holders may elect to convert the MCPS Series B shares into common stock based on the Minimum Conversion Rate (subject to further anti-dilution adjustments). In the event of a fundamental change, the MCPS Series B shares will convert at the fundamental change rates specified in the certificate of designations, and the holders of MCPS Series B shares would be entitled to a fundamental change make-whole dividend.

Holders of MCPS Series B will be entitled to receive, when and if declared by the Company’s Board of Directors, cumulative dividends at the Annual Cumulative Dividend Rate of the Liquidation Preference per share, payable in cash or, subject to certain limitations, by delivery of shares of the Company’s common stock or any combination of cash and shares of the Company’s common stock, at the Company’s election. If declared, dividends on the MCPS Series B shares are payable quarterly on January 15, April 15, July 15 and October 15 of each year (to, and including, the Mandatory Conversion Date), to the holders of record of the MCPS Series B shares as they appear on the Company’s stock register at the close of business on the immediately preceding December 31, March 31, June 30 and September 30, respectively.

Stock-Based Compensation

Stock options, RSUs and PSUs have been issued to directors, officers and other employees under the Company’s 2007 Omnibus Incentive Plan. The 2007 Omnibus Incentive Plan provides for the grant of stock options, stock appreciation rights, RSUs, restricted stock, PSUs or any other stock-based award and cash-based awards. A total of approximately 127 million shares of Danaher common stock have been authorized for issuance under the 2007 Omnibus Incentive Plan. As of December 31, 2022, approximately 45 million shares of the Company’s common stock remain available for issuance under the 2007 Omnibus Incentive Plan.

Stock options granted prior to 2022 under the 2007 Omnibus Incentive Plan generally vest pro rata over a five-year period and terminate ten years from the grant date, though the specific terms of each grant are determined by the Compensation Committee of the Company’s Board (the “Compensation Committee”). Stock options granted subsequent to December 31, 2021 under the amended and restated 2007 Omnibus Incentive Plan generally vest pro rata over a four-year period and terminate ten years from the grant date, though specific terms of each grant are determined by the Compensation Committee. The Company’s executive officers and certain other employees have been awarded options with different vesting criteria, and options granted to outside directors are fully vested as of the grant date. Option exercise prices for options granted by the Company equal the closing price of the Company’s common stock on the New York Stock Exchange on the date of grant.

RSUs issued under the 2007 Omnibus Incentive Plan provide for the issuance of a share of the Company’s common stock at no cost to the holder. RSUs granted prior to 2022 to employees under the 2007 Omnibus Incentive Plan generally provide for pro rata time-based vesting over a five-year period, although executive officers and certain other employees have been awarded RSUs with different vesting criteria. RSUs granted subsequent to December 31, 2021 to employees under the amended and restated 2007 Omnibus Incentive Plan generally vest pro rata over a four-year period, although certain employees have been awarded RSUs with different vesting criteria. The RSUs that have been granted to directors under the 2007 Omnibus Incentive Plan vest on the earlier of the first anniversary of the grant date or the date of, and immediately prior to, the next annual meeting of the Company’s shareholders following the grant date, but the underlying shares are not issued until the earlier of the director’s death or the first day of the seventh month following the director’s retirement from the Board. Prior to vesting, RSUs granted under the 2007 Omnibus Incentive Plan do not have dividend equivalent rights, do not have voting rights and the shares underlying the RSUs are not considered issued and outstanding.

PSUs issued under the 2007 Omnibus Incentive Plan provide for the issuance of a share of the Company’s common stock at no cost to the holder, vest based on specified performance criteria, are subject to an additional holding period following vesting and are entitled to dividend equivalent rights. The PSU dividend equivalent rights are subject to the same vesting and payment restrictions as the related shares, and the shares underlying the PSUs are not considered issued and outstanding.

The equity compensation awards granted by the Company generally vest only if the employee is employed by the Company (or in the case of directors, the director continues to serve on the Company Board) on the vesting date or in other limited circumstances, including following a qualifying retirement. To cover the exercise of options and vesting of RSUs and PSUs, the Company generally issues new shares from its authorized but unissued share pool, although it may instead issue treasury shares in certain circumstances.

The Company accounts for stock-based compensation by measuring the cost of employee services received in exchange for all equity awards granted based on the fair value of the award as of the grant date. The Company recognizes the compensation expense over the requisite service period (which is generally the vesting period but may be shorter than the vesting period if the

employee becomes retirement eligible before the end of the vesting period). The fair value for RSU awards was calculated using the closing price of the Company’s common stock on the date of grant, adjusted for the fact that RSUs do not accrue dividends. The fair value of the PSU awards was calculated using a Monte Carlo pricing model. The fair value of the options granted was calculated using a Black-Scholes Merton option pricing model (“Black-Scholes”).

The following summarizes the assumptions used in the Black-Scholes model to value options granted during the years ended December 31:

			2022						2021						2020
Risk-free interest rate			1.8 – 4.0%						0.6 – 1.5%						0.3 – 1.3%
Weighted average volatility			30.3		%				29.8		%				24.3		%
Dividend yield			0.4		%				0.3		%				0.4		%
Expected years until exercise			5.0 – 7.5						5.0 – 7.5						5.0 – 8.0

The Black-Scholes model incorporates assumptions to value stock-based awards. The risk-free rate of interest for periods within the contractual life of the option is based on a zero-coupon U.S. government instrument whose maturity period equals or approximates the option’s expected term. Expected volatility is based on implied volatility from traded options on the Company’s stock and historical volatility of the Company’s stock. The dividend yield is calculated by dividing the Company’s annual common stock dividend, based on the most recent quarterly dividend rate, by the closing stock price on the grant date. To estimate the option exercise timing used in the valuation model (which impacts the risk-free interest rate and the expected years until exercise), in addition to considering the vesting period and contractual term of the option, the Company analyzes and considers actual historical exercise experience for previously granted options. The Company stratifies its employee population into multiple groups for option valuation and attribution purposes based upon distinctive patterns of forfeiture rates and option holding periods, as indicated by the ranges set forth in the table above for the risk-free interest rate and the expected years until exercise.

The amount of stock-based compensation expense recognized during a period is also based on the portion of the awards that are ultimately expected to vest. The Company estimates pre-vesting forfeitures at the time of grant by analyzing historical data and revises those estimates in subsequent periods if actual forfeitures differ from those estimates. Ultimately, the total expense recognized over the vesting period will equal the fair value of awards that actually vest.

The following summarizes the components of the Company’s continuing operations stock-based compensation expense for the years ended December 31 ($ in millions):

			2022						2021						2020
RSUs/PSUs:
Pretax compensation expense			$	195					$	129					$	114
Income tax benefit			(40)						(26)						(24)
RSU/PSU expense, net of income taxes			155						103						90
Stock options:
Pretax compensation expense			141						89						73
Income tax benefit			(28)						(18)						(15)
Stock option expense, net of income taxes			113						71						58
Total stock-based compensation:
Pretax compensation expense			336						218						187
Income tax benefit			(68)						(44)						(39)
Total stock-based compensation expense, net of income taxes			$	268					$	174					$	148

Stock-based compensation has been recognized as a component of selling, general and administrative expenses in the accompanying Consolidated Statements of Earnings. As of December 31, 2022, $204 million of total unrecognized compensation cost related to RSUs/PSUs is expected to be recognized over a weighted average period of approximately two years. As of December 31, 2022, $240 million of total unrecognized compensation cost related to stock options is expected to be recognized over a weighted average period of approximately two years. Future compensation amounts will be adjusted for any changes in estimated forfeitures.

The following summarizes option activity under the Company’s stock plans (in millions, except weighted exercise price and number of years):

			Options						Weighted Average Exercise Price						Weighted Average Remaining Contractual Term (in years)						Aggregate Intrinsic Value
Outstanding as of January 1, 2020			17.0						$	82.95
Granted			2.9						160.71
Exercised			(3.5)						62.54
Cancelled/forfeited			(0.5)						113.94
Outstanding as of December 31, 2020			15.9						100.65
Granted			2.8						240.75
Exercised			(2.4)						79.16
Cancelled/forfeited			(0.7)						144.60
Outstanding as of December 31, 2021			15.6						127.13
Granted			2.3						269.10
Exercised			(1.6)						89.62
Cancelled/forfeited			(0.6)						198.85
Outstanding as of December 31, 2022			15.7						149.01						6						$	1,847
Vested and expected to vest as of December 31, 2022 (a)			15.3						$	147.34					6						$	1,833
Vested as of December 31, 2022			8.2						$	102.64					5						$	1,341

(a) The “expected to vest” options are the net unvested options that remain after applying the forfeiture rate assumption to total unvested options.

The aggregate intrinsic value in the table above represents the total pretax intrinsic value (the difference between the Company’s closing stock price on the last trading day of 2022 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on December 31, 2022. The amount of aggregate intrinsic value will change based on the price of the Company’s common stock.

The weighted average per share grant-date fair values of options granted during 2022, 2021 and 2020 were $80.32, $64.57 and $37.42, respectively.

Options outstanding as of December 31, 2022 are summarized below (in millions, except price per share and number of years):

			Outstanding																		Exercisable
Exercise Price			Shares						Average Exercise Price						Average Remaining Life (in years)						Shares						Average Exercise Price
$39.6 to $66.79			1.8						$	62.75					2						1.8						$	62.75
$66.8 to $92.41			2.4						81.60						4						2.4						81.60
$92.42 to $141.10			4.4						107.41						5						2.7						105.90
$141.11 to $249.18			4.2						185.12						7						1.1						173.94
$249.19 to $299.68			2.9						272.79						9						0.2						283.43

The aggregate intrinsic value of options exercised during the years ended December 31, 2022, 2021 and 2020 was $288 million, $446 million and $415 million, respectively. Exercise of options during the years ended December 31, 2022, 2021 and 2020 resulted in cash receipts of $130 million, $167 million and $211 million, respectively. Upon exercise of the award by the employee, the Company derives a tax deduction measured by the excess of the market value over the grant price at the date of exercise. The Company realized a tax benefit of $48 million, $83 million and $82 million in 2022, 2021 and 2020, respectively, related to the exercise of employee stock options.

The following summarizes information on unvested RSU and PSU activity (in millions, except weighted average grant-date fair value):

			Number of RSUs/PSUs						Weighted Average Grant-Date Fair Value
Unvested as of January 1, 2020			3.5						$	94.85
Granted			1.1						159.93
Vested			(1.0)						91.08
Forfeited			(0.2)						111.59
Unvested as of December 31, 2020			3.4						116.03
Granted			0.9						234.52
Vested			(1.0)						101.86
Forfeited			(0.2)						147.20
Unvested as of December 31, 2021			3.1						152.99
Granted			1.1						268.00
Vested			(1.0)						159.42
Forfeited			(0.2)						202.55
Unvested as of December 31, 2022			3.0						189.71

The Company realized a tax benefit of $37 million, $35 million and $18 million in the years ended December 31, 2022, 2021 and 2020, respectively, related to the vesting of RSUs and PSUs.

The excess tax benefit of $61 million, $95 million and $85 million related to the exercise of employee stock options and vesting of RSUs and PSUs for the years ended December 31, 2022, 2021 and 2020, respectively, has been recorded as a reduction to the current income tax provision and is reflected as an operating cash inflow in the accompanying Consolidated Statements of Cash Flows.

In connection with the exercise of certain stock options and the vesting of RSUs previously issued by the Company, a number of shares sufficient to fund statutory minimum tax withholding requirements has been withheld from the total shares issued or released to the award holder (though under the terms of the applicable plan, the shares are considered to have been issued and are not added back to the pool of shares available for grant). During the year ended December 31, 2022, 362 thousand shares with an aggregate value of $99 million were withheld to satisfy the requirement. During the year ended December 31, 2021, 346 thousand shares with an aggregate value of $81 million were withheld to satisfy the requirement. The withholding is treated as a reduction in additional paid-in capital in the accompanying Consolidated Statements of Stockholders’ Equity and a reduction in proceeds from the issuance of common stock in connection with stock-based compensation in the Consolidated Statements of Cash Flows.

Accumulated Other Comprehensive Income

The changes in accumulated other comprehensive income (loss) by component are summarized below ($ in millions).

			Foreign Currency Translation Adjustments						Pension and Postretirement Plan Benefit Adjustments												Cash Flow Hedge Adjustments						Accumulated Comprehensive Income (Loss)
Balance, January 1, 2020			$	(2,174)					$	(781)											$	(113)					$	(3,068)
Other comprehensive income (loss) before reclassifications:
Increase (decrease)			2,894						(239)												(432)						2,223
Income tax impact			25						57												—						82
Other comprehensive income (loss) before reclassifications, net of income taxes			2,919						(182)												(432)						2,305
Reclassification adjustments
Increase (decrease)			—						46			(a)									361			(b)			407
Income tax impact			—						(11)												(1)						(12)
Reclassification adjustments, net of income taxes			—						35												360						395
Net other comprehensive income (loss), net of income taxes			2,919						(147)												(72)						2,700
Balance, December 31, 2020			745						(928)												(185)						(368)
Other comprehensive income (loss) before reclassifications:
Increase (decrease)			(1,277)						436												523						(318)
Income tax impact			(7)						(102)												5						(104)
Other comprehensive income (loss) before reclassifications, net of income taxes			(1,284)						334												528						(422)
Reclassification adjustments
Increase (decrease)			—						58			(a)									(280)			(b)			(222)
Income tax impact			—						(14)												(1)						(15)
Reclassification adjustments, net of income taxes			—						44												(281)						(237)
Net other comprehensive income (loss), net of income taxes			(1,284)						378												247						(659)
Balance, December 31, 2021			(539)						(550)												62						(1,027)
Other comprehensive income (loss) before reclassifications:
Increase (decrease)			(2,051)						233												378						(1,440)
Income tax impact			(54)						(56)												(91)						(201)
Other comprehensive income (loss) before reclassifications, net of income taxes			(2,105)						177												287						(1,641)
Reclassification adjustments
Increase (decrease)			—						42			(a)									(235)			(b)			(193)
Income tax impact			—						(10)												(1)						(11)
Reclassification adjustments, net of income taxes			—						32												(236)						(204)
Net other comprehensive income (loss), net of income taxes			(2,105)						209												51						(1,845)
Balance, December 31, 2022			$	(2,644)					$	(341)											$	113					$	(2,872)

(a) This accumulated other comprehensive income (loss) component is included in the computation of net periodic pension and postretirement cost (refer to Note 16 for additional details).

(b) Reflects reclassification to earnings related to remeasurement of certain long-term debt (refer to Note 15 for additional details).