Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is designed to provide material information relevant to an assessment of Danaher Corporation’s (“Danaher,” the “Company,” “we,” “us” or “our”) financial condition and results of operations, including an evaluation of the amounts and certainty of cash flows from operations and from outside sources. The MD&A is designed to focus specifically on material events and uncertainties known to management that are reasonably likely to cause reported financial information not to be necessarily indicative of future operating results or of future financial condition. This includes descriptions and amounts of matters that have had a material impact on reported operations, as well as matters that are reasonably likely based on management’s assessment to have a material impact on future operations. The Company’s MD&A is divided into five sections:

• Information Relating to Forward-Looking Statements

• Overview

• Results of Operations

• Liquidity and Capital Resources

• Critical Accounting Estimates

You should read this discussion along with the Company’s MD&A and audited financial statements and Notes thereto as of and for the year ended December 31, 2023, included in the Company’s 2023 Annual Report and the Company’s Consolidated Condensed Financial Statements and related Notes as of and for the three and nine-month periods ended September 27, 2024 included in this Quarterly Report on Form 10-Q (“Report”).

INFORMATION RELATING TO FORWARD-LOOKING STATEMENTS

Certain statements included or incorporated by reference in this Report, in other documents we file with or furnish to the Securities and Exchange Commission, in our press releases, webcasts, conference calls, materials delivered to shareholders and other communications, are “forward-looking statements” within the meaning of the U.S. federal securities laws. All statements other than historical factual information are forward-looking statements, including without limitation statements regarding: projections of revenue, expenses, profit, profit margins, pricing, tax rates, tax provisions, cash flows, pension and benefit obligations and funding requirements, asset values, our liquidity position or other projected financial measures; management’s plans and strategies for future operations, including statements relating to anticipated operating performance, customer demand, cost reductions, restructuring activities, new product and service developments, competitive strengths or market position, acquisitions and the integration thereof, divestitures, spin-offs, split-offs, initial public offerings, other securities offerings, or other distributions, strategic opportunities, stock repurchases, dividends and executive compensation and potential executive stock sales or purchases; growth, declines and other trends in markets we sell into; new or modified laws, regulations and accounting pronouncements; future laws, regulations or public policy changes; regulatory approvals and the timing and conditionality thereof; outstanding claims, legal proceedings, tax audits and assessments and other contingent liabilities; future currency exchange rates and fluctuations in those rates; the potential or anticipated direct or indirect impact of public health crises, climate change, military conflicts or other man-made or natural disasters on our business, results of operations and/or financial condition; general economic and capital markets conditions; the anticipated timing of any of the foregoing; assumptions underlying any of the foregoing; and any other statements that address events or developments that Danaher intends or believes will or may occur in the future. Terminology such as “believe,” “anticipate,” “assume,” “continue,” “should,” “could,” “intend,” “will,” “plan,” “aim,” “expect,” “estimate,” “project,” “target,” “can,” “may,” “possible,” “potential,” “upcoming,” “forecast” and “positioned” and similar references to future periods are intended to identify forward-looking statements, although not all forward-looking statements are accompanied by such words.

Forward-looking statements are based on assumptions and assessments made by our management in light of their experience and perceptions of historical trends, current conditions, expected future developments and other factors. Forward-looking statements are not guarantees of future performance and actual results may differ materially from the results, developments and business decisions contemplated by our forward-looking statements. Accordingly, you should not place undue reliance on any such forward-looking statements. Important factors that in the future could cause actual results to differ materially from those envisaged in the forward-looking statements, and that in some cases have affected us in the past, include the following:

Business and Strategic Risks

• We face intense competition and if we are unable to compete effectively, we may experience decreased demand and decreased market share. Even if we compete effectively, we may be required to reduce the prices we charge.

• Our growth depends on the timely development and commercialization, and customer acceptance, of new and enhanced products and services based on technological innovation. Our growth can also suffer if the markets into which we sell our products and services decline, do not grow as anticipated or experience cyclicality.

• The healthcare industry and related industries that we serve are undergoing significant changes in an effort to reduce (and increase the predictability of) costs, which can adversely affect our business and financial statements.

• Economic, political, geopolitical, legal, compliance, social and business factors (including the impact of military conflicts), both in the U.S. and outside the U.S., can negatively affect our business and financial statements. For example, elections in the U.S. and other countries may result in significant political shifts and/or disruptions, including changes in the regulatory environment, and recent Supreme Court decisions in the U.S. may also result in regulatory uncertainty.

• Uncertainties with respect to the development, deployment, and use of artificial intelligence in our business and products may result in harm to our business and reputation.

• Collaborative partners and other third-parties we rely on for development, supply and/or marketing of certain products, potential products and technologies could fail to perform sufficiently.

Acquisitions, Divestitures and Investment Risks

• Any inability to consummate acquisitions at our historical rate and appropriate prices, realize the economic benefits of consummated acquisitions or to make appropriate investments that support our long-term strategy, could negatively impact our business. Our acquisition of businesses, investments, joint ventures and other strategic relationships could also negatively impact our business and financial statements and our indemnification rights may not fully protect us from liabilities related thereto.

• Divestitures or other dispositions could negatively impact our business, and contingent liabilities from businesses that we or our predecessors have previously disposed could adversely affect our business and financial statements. For example, we could incur significant liability if any of the split-off or spin-off transactions we have previously consummated are determined to be a taxable transaction or otherwise pursuant to our indemnification obligations with respect to such transactions.

Operational Risks

• Significant disruptions in, or breaches in security of, our information technology (“IT”) systems or data; data privacy violations; other losses or disruptions to facilities, supply chains, distribution systems or IT systems due to catastrophe; and labor disputes can all adversely affect our business and financial statements.

• Defects and unanticipated use or inadequate disclosure with respect to our products or services, or allegations thereof, can adversely affect our business and financial statements.

• Our financial results are subject to fluctuations in the cost and availability of the supplies we use in, and the labor we need for, our operations.

• Climate change, legal or regulatory measures to address climate change and other sustainability topics and any inability to address regulatory requirements or stakeholder expectations with respect to climate change and other sustainability topics, may negatively affect our business and financial statements.

• Our success depends on our ability to recruit, retain and motivate talented employees representing diverse backgrounds, experiences and skill sets, particularly in the areas of science, technology and management.

• Our restructuring actions can have long-term adverse effects on our business and financial statements.

Intellectual Property Risks

• Any inability to adequately protect or avoid third-party infringement of our intellectual property, and third-party claims we are infringing intellectual property rights, can adversely affect our business and financial statements.

• The U.S. government has certain rights with respect to incremental production capacity attributable to, and/or the intellectual property we have developed using, government financing. In addition, in times of national emergency the U.S. government could also control our allocation of manufacturing capacity.

Financial and Tax Risks

• Our outstanding debt has increased significantly as a result of acquisitions, and we may incur additional debt. Such indebtedness may limit our operations and use of cash flow and negatively impact our credit ratings; and failure to comply with our indebtedness-related covenants could adversely affect our business and financial statements.

• Our business and financial statements can be adversely affected by foreign currency exchange rates, changes in our tax rates (including as a result of changes in tax laws) or income tax liabilities/assessments, the outcome of tax audits, recognition of impairment charges for our goodwill or other intangible assets, and fluctuations in the cost and availability of commodities.

Legal, Regulatory, Compliance and Reputational Risks

• Significant developments or changes in national laws or policies to protect or promote domestic interests and/or address foreign competition can have an adverse effect on our business and financial statements.

• Our businesses are subject to extensive regulation (including those applicable to the healthcare industry). Failure to comply with those regulations (including by our employees, agents or business partners) or significant developments or changes in U.S. or non-U.S. laws or policies can adversely affect our business and financial statements.

• With respect to the regulated medical devices we offer, product introductions or modifications can require regulatory clearance or authorizations; we can be required to recall or cease marketing our products; off-label marketing can result in penalties; and clinical trials can have results that are unexpected or are perceived unfavorably by the market, all of which can adversely affect our business and financial statements.

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

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

• Our By-law exclusive forum provisions could limit our stockholders’ ability to choose their preferred judicial forum for disputes.

See “Part I—Item 1A. Risk Factors” of the Company’s 2023 Annual Report for further discussion regarding reasons that actual results may differ materially from the results, developments and business decisions contemplated by our forward-looking statements. Forward-looking statements speak only as of the date of the report, document, press release, webcast, call, materials or other communication in which they are made. Except to the extent required by applicable law, we do not assume any obligation to update or revise any forward-looking statement, whether as a result of new information, future events and developments or otherwise.

OVERVIEW

General

As a result of the Company’s geographic and industry diversity, the Company faces a variety of opportunities and challenges, including rapid technological development in most of the Company’s served markets, the expansion and evolution of opportunities in high-growth markets, trends and costs associated with a global labor force, consolidation of the Company’s competitors and increasing regulation. The Company operates in a highly competitive business environment in most markets, and the Company’s long-term growth and profitability will depend in particular on its ability to expand its business in high-growth geographies and high-growth market segments, identify, consummate and integrate appropriate acquisitions and identify and consummate appropriate investments and strategic partnerships, develop innovative and differentiated new products and services with higher gross profit margins, expand and improve the effectiveness of the Company’s sales force, continue to reduce costs and improve operating efficiency and quality and effectively address the demands of an increasingly regulated global environment. The Company is making significant investments, organically and through acquisitions and investments, to address the rapid pace of technological change in its served markets and to globalize its manufacturing, research and development and customer-facing resources (particularly in high-growth markets) to be responsive to the Company’s customers throughout the world and improve the efficiency of the Company’s operations.

Business Performance and Outlook

During the third quarter of 2024, the Company’s overall revenues increased 3.0% compared to the comparable period of 2023. Core sales increased 0.5% in the third quarter of 2024 compared to the comparable prior year period due primarily to higher core sales in the Diagnostics segment, partially offset by core sales declines in the Life Sciences segment. The impact of acquisitions increased reported sales 2.5% and foreign currency had no impact on reported sales. For the nine-month period ended September 27, 2024, overall revenues decreased 1.0% and core sales decreased 2.0% compared to the comparable prior year period primarily due to core sales declines in the Biotechnology segment, and to a lesser extent in the Life Sciences segment, partially offset by higher core sales in the Diagnostics segment. The impact of currency translation decreased reported sales 1.0% and the impact of acquisitions increased reported sales 2.0% in the nine-month period compared to the comparable prior year period. Price increases contributed 1.0% to sales growth on a year-over-year basis during both the three and nine-month periods ended September 27, 2024 and are reflected as a component of core sales above. For the definitions of “core sales” and “acquisitions” refer to “—Results of Operations” below.

Geographically, the Company’s sales in the three-month period ended September 27, 2024 in developed markets increased year-over-year by 5% and core sales in developed markets increased at a low-single digit rate. Core sales grew at a low-single digit rate in North America and a mid-single digit rate in Western Europe. The increase in core sales in developed markets was primarily driven by increased demand in the Diagnostics and Biotechnology segments, partially offset by core sales declines in the Life Sciences segment. For the same period, sales in high-growth markets decreased year-over-year by 2% and core sales in high-growth markets decreased at a mid-single digit rate, due primarily to a high-single digit decline in core revenue in China. The decline in core sales in high-growth markets was primarily driven by lower demand across all segments, due to weakness in the funding environment and generally lower underlying activity levels. High-growth markets represented approximately 30% of the Company’s total sales in the third quarter of 2024. For additional information regarding the Company’s sales by geographical region during the three and nine-month periods ended September 27, 2024 and September 29, 2023, refer to Note 5 to the accompanying Consolidated Condensed Financial Statements.

The Company’s net earnings from continuing operations for the three and nine-month periods ended September 27, 2024 totaled $818 million and approximately $2.8 billion or $1.12 and $3.80 per diluted common share from continuing operations, respectively, compared to $940 million and approximately $3.1 billion or $1.26 and $4.15 per diluted common share from continuing operations, respectively, for the three and nine-month periods ended September 29, 2023. Net earnings attributable to common stockholders for the three and nine-month periods ended September 27, 2024 were the same as set forth above, and for the three and nine-month periods ended September 29, 2023 were approximately $1.1 billion and $3.7 billion or $1.51 and $4.94 per diluted common share. 2024 intangible asset impairments and increased 2024 operating expenses, net of increased other income, drove the year-over-year decline in net earnings from continuing operations and diluted net earnings per common share from continuing operations for the three and nine-month periods ended September 27, 2024. In addition to the above factors, lower year-over-year earnings from discontinued operations contributed to lower net earnings attributable to common stockholders in both the three and nine-month periods ended September 27, 2024.

Currency exchange rates had no impact for the three-month period ended September 27, 2024 and decreased reported sales by approximately 1.0% for the nine-month period ended September 27, 2024 compared to the comparable periods of 2023, primarily due to the exchange rates of the U.S. dollar compared to the euro and other major currencies in 2024. Strengthening of the U.S. dollar against other major currencies compared to the exchange rates in effect as of September 27, 2024 would adversely impact the Company’s sales and results of operations on an overall basis, and any weakening of the U.S. dollar against other major currencies compared to the exchange rates in effect as of September 27, 2024 would positively impact the Company’s sales and results of operations for the remainder of the year.

Acquisitions

During the nine-month period ended September 27, 2024, the Company acquired two businesses for total consideration of $525 million in cash, net of cash acquired. The businesses acquired complement existing units of the Company’s Life Sciences segment.

RESULTS OF OPERATIONS

Non-GAAP Measures

In this report, references to the non-GAAP measure of core sales (also referred to as core revenues or sales/revenues from existing businesses) refer to sales calculated according to U.S. GAAP, but excluding:

• sales from acquired businesses (as defined below); and

• the impact of currency translation.

References to sales or operating profit attributable to acquisitions or acquired businesses refer to sales or operating profit, as applicable, from acquired businesses recorded prior to the first anniversary of the acquisition less any sales and operating profit, during the applicable period, attributable to divested product lines not considered discontinued operations. The portion of revenue attributable to currency translation is calculated as the difference between:

• the period-to-period change in revenue (excluding sales from acquired businesses (as defined above)); and

• the period-to-period change in revenue (excluding sales from acquired businesses (as defined above)) after applying current period foreign exchange rates to the prior year period.

Core sales growth (decline) should be considered in addition to, and not as a replacement for or superior to, sales, and may not be comparable to similarly titled measures reported by other companies. Management believes that reporting this non-GAAP financial measure provides useful information to investors by helping identify underlying growth trends in Danaher’s business and facilitating comparisons of Danaher’s revenue performance with its performance in prior and future periods and to Danaher’s peers. Management also uses this non-GAAP financial measure to measure the Company’s operating and financial performance and uses core sales growth as one of the performance measures in the Company’s executive short-term cash incentive compensation program. The Company excludes the effect of currency translation from this measure because currency translation is not under management’s control, is subject to volatility and can obscure underlying business trends. The Company excludes the effect of acquisitions and divestiture-related items because the nature, size, timing and number of acquisitions and divestitures can vary dramatically from period-to-period and between the Company and its peers and can also obscure underlying business trends and make comparisons of long-term performance difficult.

Throughout this discussion, references to sales growth or decline refer to the impact of both price and unit sales and references to productivity improvements generally refer to improved cost-efficiencies resulting from the ongoing application of the Danaher Business System.

Sales Growth (Decline) and Core Sales Growth (Decline)

			% Change Three-Month Period Ended September 27, 2024 vs. Comparable 2023 Period						% Change Nine-Month Period Ended September 27, 2024 vs. Comparable 2023 Period
Total sales growth (decline) (GAAP)			3.0		%				(1.0)		%
Impact of:
Acquisitions			(2.5)		%				(2.0)		%
Currency exchange rates			—		%				1.0		%
Core sales growth (decline) (non-GAAP)			0.5		%				(2.0)		%

Operating Profit Performance

Operating profit margins decreased 460 basis points from 21.1% during the three-month period ended September 29, 2023 to 16.5% for the three-month period ended September 27, 2024.

Third quarter 2024 vs. third quarter 2023 operating profit margin comparisons were unfavorably impacted by:

• Third quarter 2024 impairment charge related to a trade name in the Life Sciences segment. Refer to Note 9 to the accompanying Consolidated Condensed Financial Statements for additional information regarding the impairment - 385 basis points

• Incremental dilutive effect in 2024 of acquired businesses - 120 basis points

Third quarter 2024 vs. third quarter 2023 operating profit margin comparisons were favorably impacted by:

• Higher third quarter 2024 core sales and improvements in the Company’s operational and administrative cost structure, partially offset by the impact of product mix - 45 basis points

Operating profit margins decreased 230 basis points from 22.1% during the nine-month period ended September 29, 2023 to 19.8% for the nine-month period ended September 27, 2024. The following factors unfavorably impacted year-over-year operating profit margin:

• First nine months of 2024 impairment charge referenced above related to a trade name in the Life Sciences segment net of impairment charges related to technology and other assets in the Biotechnology segment during the first nine months of 2023 - 115 basis points

• Incremental dilutive effect in 2024 of acquired businesses - 95 basis points

• First nine months of 2024 acquisition-related fair value adjustment to inventory related to the acquisition of Abcam plc - 15 basis points

• Lower first nine months of 2024 core sales and the impact of product mix, partially offset by improvements in the Company’s operational and administrative cost structure and 2023 inventory write-offs - 5 basis points

Business Segments

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

			Three-Month Period Ended												Nine-Month Period Ended
			September 27, 2024						September 29, 2023						September 27, 2024						September 29, 2023
Biotechnology			$	1,653					$	1,664					$	4,890					$	5,413
Life Sciences			1,782						1,706						5,297						5,211
Diagnostics			2,363						2,254						7,150						6,861
Total			$	5,798					$	5,624					$	17,337					$	17,485

For information regarding the Company’s sales by geographical region, refer to Note 5 to the accompanying Consolidated Condensed Financial Statements.

BIOTECHNOLOGY

The Biotechnology segment includes the bioprocessing and discovery and medical businesses and offers a broad range of equipment, 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.

Biotechnology Selected Financial Data

			Three-Month Period Ended												Nine-Month Period Ended
($ in millions)			September 27, 2024						September 29, 2023						September 27, 2024						September 29, 2023
Sales			$	1,653					$	1,664					$	4,890					$	5,413
Operating profit			390						417						1,177						1,493
Depreciation			36						40						113						119
Amortization of intangible assets			218						214						650						649
Operating profit as a % of sales			23.6		%				25.1		%				24.1		%				27.6		%
Depreciation as a % of sales			2.2		%				2.4		%				2.3		%				2.2		%
Amortization as a % of sales			13.2		%				12.9		%				13.3		%				12.0		%

Sales Decline and Core Sales Growth (Decline)

			% Change Three-Month Period Ended September 27, 2024 vs. Comparable 2023 Period						% Change Nine-Month Period Ended September 27, 2024 vs. Comparable 2023 Period
Total sales decline (GAAP)			(0.5)		%				(9.5)		%
Impact of:
Currency exchange rates			0.5		%				1.0		%
Core sales growth (decline) (non-GAAP)			—		%				(8.5)		%

Price increases in the segment contributed 3.0% and 2.5% to sales growth on a year-over-year basis during the three and nine-month periods ended September 27, 2024, respectively, and are reflected as a component of core sales above.

Total segment sales decreased 0.5% and 9.5% during the three and nine-month periods, respectively. In the three-month period, the decrease in segment sales was led by the impact of currency exchange rates as increased core sales in the bioprocessing business were offset by decreased core sales in the discovery and medical business. In the nine-month period, the decrease in segment sales was led by decreased core sales in the bioprocessing business, and to a lesser extent the impact of currency exchange rates. Geographically, increased core sales in Western Europe were offset by declines in North America in the three-month period. The decrease in total segment core sales in the nine-month period was driven by most major geographies. Year-over-year core sales in the bioprocessing business increased at a low-single digit rate and decreased at a high-single digit rate during the three and nine-month periods, respectively. The revenue decline in the first half of the year was primarily due to lower demand as customers reduced their inventory levels. In the third quarter of 2024, the bioprocessing business returned to core growth primarily driven by improved activity from larger customers in North America and Europe. The Company believes these customers are, in aggregate, returning to normal ordering patterns as demand from these customers has steadily improved throughout the year as they have reduced their excess inventory levels. The Company anticipates this gradual recovery will continue over the coming quarters. Conversely, the Company is not seeing the same level of improvement at smaller customers as they continue to conserve their liquidity and rationalize their therapeutic pipelines. In China, declines are due to weaker demand driven by lower underlying activity levels. The Company expects high-single digit rate core revenue growth in the fourth quarter of 2024 and low-single digit rate core revenue decline for the bioprocessing business for the full year 2024 on a year-over-year basis. Core sales in the discovery and medical business decreased year-over-year during both the three and nine-month periods due primarily to lower demand for equipment, partially offset by an increase in demand for consumables.

Operating Profit Performance

Operating profit margins decreased 150 basis points during the three-month period ended September 27, 2024 as compared to the comparable period of 2023. Year-over-year operating profit margin was unfavorably impacted by the impact of product mix and the segment’s operational and administrative cost structure in 2024, net of higher third quarter 2024 core sales.

Operating profit margins decreased 350 basis points during the nine-month period ended September 27, 2024 as compared to the comparable period of 2023.

Year-to-date 2024 vs. year-to-date 2023 operating profit margin comparisons were unfavorably impacted by:

• Lower 2024 core sales, the impact of product mix and the segment’s operational and administrative cost structure, net of 2023 inventory write-offs - 430 basis points

Year-to-date 2024 vs. year-to-date 2023 operating profit margin comparisons were favorably impacted by:

• Second quarter 2023 impairment charges related to technology and other assets - 80 basis points

Amortization of intangible assets as a percentage of sales increased during both the three and nine-month periods ended September 27, 2024 as compared to the comparable periods of 2023, primarily as a result of the decrease in sales.

LIFE SCIENCES

The Life Sciences segment offers a broad range of instruments, consumables, services and software that are primarily used by customers to study genomics and 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.

Life Sciences Selected Financial Data

			Three-Month Period Ended												Nine-Month Period Ended
($ in millions)			September 27, 2024						September 29, 2023						September 27, 2024						September 29, 2023
Sales			$	1,782					$	1,706					$	5,297					$	5,211
Operating profit			35						313						503						974
Depreciation			44						31						123						92
Amortization of intangible assets			147						104						428						313
Operating profit as a % of sales			2.0		%				18.3		%				9.5		%				18.7		%
Depreciation as a % of sales			2.5		%				1.8		%				2.3		%				1.8		%
Amortization as a % of sales			8.2		%				6.1		%				8.1		%				6.0		%

Sales Growth and Core Sales Decline

			% Change Three-Month Period Ended September 27, 2024 vs. Comparable 2023 Period						% Change Nine-Month Period Ended September 27, 2024 vs. Comparable 2023 Period
Total sales growth (GAAP)			4.5		%				1.5		%
Impact of:
Acquisitions			(7.0)		%				(6.5)		%
Currency exchange rates			0.5		%				1.5		%
Core sales decline (non-GAAP)			(2.0)		%				(3.5)		%

Price increases in the segment contributed 1.0% to sales growth on a year-over-year basis during both the three and nine-month periods ended September 27, 2024 and are reflected as a component of core sales above.

Total segment sales increased 4.5% and 1.5%, respectively, during the three and nine-month periods ended September 27, 2024, primarily as a result of acquisitions, partially offset by decreased segment core sales and to a lesser extent the impact of currency exchange rates. Core sales decreased in the three and nine-month periods, led by China and Western Europe. The year-over-year core sales decline in the mass spectrometry, flow cytometry and lab automation solutions and microscopy businesses in both periods was primarily the result of weaker demand for equipment in most major end-markets, partially offset by increased demand for consumables and service in both periods. Core sales increased year-over-year in the industrial filtration business in the three-month period primarily driven by microelectronic and aerospace customers, partially offset by lower demand from food and beverage customers. For the nine-month period, core sales in the industrial filtration business decreased, driven by decreased core sales from food and beverage and microelectronics customers, partially offset by increased core sales from aerospace customers. Core sales also declined year-over-year in the three and nine-month periods in the genomics consumables business led by lower core sales in the gene reading and proteins product lines, partially offset by increased core sales in the plasmids product line.

Operating Profit Performance

Operating profit margins decreased 1,630 basis points during the three-month period ended September 27, 2024 as compared to the comparable period of 2023. The following factors unfavorably impacted year-over-year operating profit margin:

• Third quarter 2024 impairment charge referenced above related to a trade name in the Life Sciences segment. Refer to Note 9 to the accompanying Consolidated Condensed Financial Statements for additional information regarding the impairment - 1,245 basis points

• The incremental dilutive effect in 2024 of acquired businesses - 360 basis points

• Lower third quarter 2024 core sales and the impact of product mix, net of improvements in the segment’s operational and administrative cost structure - 25 basis points

Operating profit margins decreased 920 basis points during the nine-month period ended September 27, 2024 as compared to the comparable period of 2023. The following factors unfavorably impacted year-over-year operating profit margin:

• First nine months of 2024 impairment charge related to a trade name in the Life Sciences segment - 420 basis points

• The incremental dilutive effect in 2024 of acquired businesses - 270 basis points

• Lower 2024 core sales and the impact of product mix, net of improvements in the segment’s operational and administrative cost structure - 185 basis points

• First nine months of 2024 acquisition-related fair value adjustment to inventory related to the acquisition of Abcam - 45 basis points

Depreciation and amortization of intangible assets increased as a percentage of sales during both the three and nine-month periods ended September 27, 2024, primarily as a result of recent acquisitions.

DIAGNOSTICS

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

Diagnostics Selected Financial Data

			Three-Month Period Ended												Nine-Month Period Ended
($ in millions)			September 27, 2024						September 29, 2023						September 27, 2024						September 29, 2023
Sales			$	2,363					$	2,254					$	7,150					$	6,861
Operating profit			615						539						2,001						1,640
Depreciation			95						93						292						282
Amortization of intangible assets			49						49						145						149
Operating profit as a % of sales			26.0		%				23.9		%				28.0		%				23.9		%
Depreciation as a % of sales			4.0		%				4.1		%				4.1		%				4.1		%
Amortization as a % of sales			2.1		%				2.2		%				2.0		%				2.2		%

Sales Growth and Core Sales Growth

			% Change Three-Month Period Ended September 27, 2024 vs. Comparable 2023 Period						% Change Nine-Month Period Ended September 27, 2024 vs. Comparable 2023 Period
Total sales growth (GAAP)			5.0		%				4.0		%
Impact of:
Currency exchange rates			—		%				1.0		%
Core sales growth (non-GAAP)			5.0		%				5.0		%

Price increases in the segment did not have a significant impact on sales growth on a year-over-year basis during either the three or nine-month periods ended September 27, 2024.

Total segment sales increased 5.0% and 4.0%, respectively, during the three and nine-month periods, primarily as a result of increased core sales resulting from the factors discussed below. Changes in currency exchange rates did not have a significant impact on sales during the three-month period but negatively impacted sales year-over-year during the nine-month period. Overall segment core sales growth in both periods was driven primarily by North America, partially offset by lower year-over-year demand in the high-growth markets. During both the three and nine-month periods, core sales in the molecular diagnostics business grew on a year-over-year basis during both the three and nine-month periods primarily driven by increased sales of both respiratory and non-respiratory disease tests in North America. The Company believes that third quarter demand for respiratory tests was driven in part by customers purchasing in preparation for the upcoming respiratory season. In the segment’s clinical diagnostics businesses core sales during both the three and nine-month periods grew on a year-over-year basis led by the clinical lab business, and to a lesser extent by the acute care business.

Operating Profit Performance

Operating profit margin increased 210 basis points during the three-month period ended September 27, 2024 as compared to the comparable period of 2023. Year-over-year operating profit margin was favorably impacted by higher third quarter 2024 core sales and improvements in the segment’s operational and administrative cost structure.

Operating profit margin increased 410 basis points during the nine-month period ended September 27, 2024 as compared to the comparable period of 2023. Year-over-year operating profit margin was favorably impacted by higher 2024 core sales and improvements in the segment’s operational and administrative cost structure and the impact of product mix.

Amortization of intangible assets as a percentage of sales decreased slightly during both the three and nine-month periods ended September 27, 2024, primarily as a result of the increase in sales.

COST OF SALES AND GROSS PROFIT

			Three-Month Period Ended												Nine-Month Period Ended
($ in millions)			September 27, 2024						September 29, 2023						September 27, 2024						September 29, 2023
Sales			$	5,798					$	5,624					$	17,337					$	17,485
Cost of sales			(2,397)						(2,349)						(7,021)						(7,230)
Gross profit			$	3,401					$	3,275					$	10,316					$	10,255
Gross profit margin			58.7		%				58.2		%				59.5		%				58.7		%

Cost of sales increased year-over-year during the three-month period ended September 27, 2024 and decreased year-over-year during the nine-month period ended September 27, 2024 as compared to the comparable periods in 2023. The increase during the three-month period was primarily due to higher year-over-year sales volumes and to a lesser extent, the impact of recently acquired businesses. Lower year-over-year sales volumes primarily drove the decreased cost of sales during the nine-month period. Also contributing to the decrease in the nine-month period was $87 million of charges incurred in the second quarter of 2023 related to inventory, partially offset by a $25 million acquisition-related charge associated with the fair value adjustment to inventory recorded in connection with the acquisition of Abcam in the first nine months of 2024.

Year-over-year gross profit margin increased during both the three and nine-month periods ended September 27, 2024 as compared to the comparable periods in 2023. In the three-month period, the increase was due to higher core sales and the positive impact from the gross profit margin of recent acquisitions, net of the negative impact of product mix. In the nine-month period, the increase was due to inventory charges incurred in the first nine months of 2023 and the positive impact from the gross profit margin of recent acquisitions, net of the negative impact of product mix and an acquisition-related charge recorded in the first nine months of 2024 referenced above.

OPERATING EXPENSES

			Three-Month Period Ended												Nine-Month Period Ended
($ in millions)			September 27, 2024						September 29, 2023						September 27, 2024						September 29, 2023
Sales			$	5,798					$	5,624					$	17,337					$	17,485
Selling, general and administrative (“SG&A”) expenses			2,060						1,728						5,736						5,294
Research and development (“R&D”) expenses			383						362						1,142						1,096
SG&A as a % of sales			35.5		%				30.7		%				33.1		%				30.3		%
R&D as a % of sales			6.6		%				6.4		%				6.6		%				6.3		%

SG&A expenses as a percentage of sales increased during both the three and nine-month periods ended September 27, 2024 as compared to the comparable periods in 2023, primarily driven by the $222 million impairment charge related to a trade name in the Life Sciences segment recorded in the third quarter of 2024, and to a lesser extent, the impact of the recent acquisitions, including the associated amortization expenses. Refer to Note 9 to the accompanying Consolidated Condensed Financial Statements for additional information regarding the impairment.

R&D expenses (consisting principally of internal and contract engineering personnel costs) as a percentage of sales increased during both the three and nine-month periods ended September 27, 2024 as compared to the comparable periods of 2023 primarily as a result of increased spending on R&D activities, including the impact of recent acquisitions.

OTHER INCOME (EXPENSE), NET

For a description of the Company’s other income (expense), net during the three and nine-month periods ended September 27, 2024 and September 29, 2023, refer to Note 8 to the accompanying Consolidated Condensed Financial Statements.

INTEREST COSTS AND FINANCING

For a discussion of the Company’s outstanding indebtedness, refer to Note 11 to the accompanying Consolidated Condensed Financial Statements.

Interest expense of $87 million and $217 million for the three and nine-month periods ended September 27, 2024, respectively, was $17 million higher and $16 million higher than the comparable periods of 2023, due primarily to higher average interest rates on the Company’s commercial paper borrowings, partially offset by lower outstanding commercial paper borrowings in both the three and nine-month periods versus the comparable periods of 2023.

Interest income of $4 million and $103 million for the three and nine-month periods ended September 27, 2024, respectively, was $75 million lower and $83 million lower than the comparable periods of 2023, due primarily to lower average cash balances in 2024 as a result of share repurchases and acquisitions.

INCOME TAXES

The following table summarizes the Company’s effective tax rate:

			Three-Month Period Ended												Nine-Month Period Ended
			September 27, 2024						September 29, 2023						September 27, 2024						September 29, 2023
Effective tax rate			16.3		%				18.0		%				15.6		%				18.7		%

The Company operates globally, including in certain jurisdictions with lower tax rates than the U.S. federal statutory rate. Therefore, the impact of operating in such jurisdictions contributes to a lower effective tax rate compared to the U.S. federal statutory tax rate. For each period presented, the effective tax rate differs from the U.S. federal statutory rate of 21.0% principally due to the impact of the Company’s global operations, research tax credits, foreign-derived intangible income and aggregate net discrete benefits or charges.

For the three-month period ended September 27, 2024, the effective tax rate included the tax effect from an intangible asset impairment in a jurisdiction with a higher statutory tax rate than the Company’s effective tax rate, which reduced the effective tax rate by 1.4%. There was no net discrete tax benefit in the three-month period, as excess tax benefits from stock-based compensation were offset by other discrete tax charges.

For the three-month period ended September 29, 2023, net discrete tax charges of $5 million, which increased the effective tax rate by 0.4%, related primarily to tax costs related to the separation of the Environmental & Applied Solutions business and changes in estimates associated with prior period uncertain tax positions, partially offset by excess tax benefits from stock-based compensation.

For the nine-month period ended September 27, 2024, aggregate net discrete tax benefits of $45 million, which reduced the effective tax rate by 1.4%, related primarily to excess tax benefits from stock-based compensation, release of reserves for uncertain tax positions due to the expiration of statutes of limitation and changes in estimates associated with prior period uncertain tax positions. The effective tax rate for this period also included the tax effect from the intangible asset impairment referenced above, which reduced the effective tax rate by 0.5%.

For the nine-month period ended September 29, 2023, net discrete tax charges of $24 million, which increased the effective tax rate by 0.6%, related primarily to tax costs related to the separation of the Environmental & Applied Solutions business, tax costs related to legal and operational actions taken to realign certain businesses and changes in estimates associated with prior period uncertain tax positions, partially offset by excess tax benefits from stock-based compensation and interest on prior year tax refunds.

The Company (including its subsidiaries) conducts business globally, and files numerous consolidated and separate income tax returns in federal, state and foreign jurisdictions. In addition to the Company’s significant presence in the U.S., the Company also has a significant presence in 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 foreign country would not have a material impact on the Company’s financial statements given the geographical dispersion of the Company’s taxable income.

The Company and its subsidiaries are routinely examined by various domestic and international taxing authorities. The IRS has completed the examinations of substantially all 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 2022. In addition, the Company has subsidiaries in Canada, China, Denmark, France, Germany, India, Italy, Switzerland, the United Kingdom and various other countries, states and provinces that are currently under audit for years ranging from 2004 through 2023.

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. For income tax purposes, the recognition of premium income has been deferred in accordance with U.S. tax laws related to insurance. The proposed adjustments would have increased the Company’s taxable income over the 2016 through 2018 periods by approximately $2.5 billion. In the first quarter of 2023, the Company settled these proposed adjustments with the IRS, although the audit is still open with respect to other matters for the 2016 through 2018 period. The impact of the settlement with respect to the Company’s self-insurance policies was not material to the Company’s financial statements, including cash flows and the effective tax rate. As the settlement with the IRS was specific to the audit period, the settlement does not preclude the IRS from proposing similar adjustments to the Company’s self-insurance programs with respect to periods subsequent to 2018. Management believes the positions the Company has taken in its U.S. tax returns are in accordance with the relevant tax laws.

The Company expects its effective tax rate for the remainder of 2024 to be approximately 17.5% based on its projected mix of earnings. The Company’s effective tax rate could vary as a result of many factors, including but not limited to the following:

• The expected rate for the remainder of 2024 includes the anticipated discrete income tax benefits from excess tax deductions related to the Company’s stock compensation programs, which are reflected as a reduction in tax expense, though the actual benefits (if any) will depend on the Company’s stock price and stock option exercise patterns.

• The actual mix of earnings by jurisdiction could fluctuate from the Company’s projection.

• The tax effects of other discrete items, including accruals related to tax contingencies, the resolution of worldwide tax matters, tax audit settlements, statute of limitations expirations and changes in tax regulations.

• Any future changes in tax law or the implementation of increases in tax rates, the impact of future regulations and any related additional tax planning efforts to address these changes.

As a result of the uncertainty in predicting these items, it is reasonably possible that the actual effective tax rate used for financial reporting purposes will change in future periods.

Refer to Note 7 to the Consolidated Condensed Financial Statements for discussion regarding the Company’s significant tax matters.

COMPREHENSIVE INCOME

Comprehensive income increased during both the three and nine-month periods ended September 27, 2024 by approximately $1.4 billion and $653 million, respectively, as compared to the comparable periods of 2023. For the three and nine-month periods ended September 27, 2024, the increase in comprehensive income was primarily driven by increased gains from foreign currency translation adjustments, partially offset by lower net earnings. The Company recorded foreign currency translation gains of approximately $1.2 billion for the three-month period ended September 27, 2024 compared to losses of $303 million for the three-month period ended September 29, 2023. The Company recorded foreign currency translation gains of $389 million compared to losses of $982 million for the nine-month periods ended September 27, 2024 and September 29, 2023, respectively. The foreign currency translation gains in the three-month period ended September 27, 2024 were primarily driven by the change in the exchange rates between the U.S. dollar, the Swedish krona, the British pound and the euro. Foreign currency translation gains in the nine-month period ended September 27, 2024 were primarily driven by the change in the exchange rates between the U.S. dollar and the British pound. Foreign currency translation adjustments reflect the gain or loss resulting from the impact of the change in currency exchange rates on the Company’s foreign operations as they are translated to the Company’s reporting currency, the U.S. dollar. The Company recorded gains of $63 million and $43 million from cash flow hedge adjustments related to the Company’s cross-currency swap derivative contracts for the three and nine-month periods ended September 27, 2024, respectively, as compared to losses of $81 million and $106 million for the comparable periods of 2023.

LIQUIDITY AND CAPITAL RESOURCES

Management assesses the Company’s liquidity in terms of its ability to generate cash to fund its operating, investing and financing activities. The Company continues to generate substantial cash from operating activities and believes that its operating cash flow, cash on hand and other sources of liquidity will be sufficient to allow it to continue investing in existing businesses (including capital expenditures), consummating strategic acquisitions and investments, paying interest and servicing debt, paying dividends and funding restructuring activities, as well as to repurchase common stock when deemed appropriate and manage its capital structure on a short-term and long-term basis.

The Company has relied primarily on borrowings under its commercial paper program to address liquidity requirements that exceed the capacity provided by its operating cash flows and cash on hand, while also accessing the capital markets from time to time including to secure financing for more significant acquisitions. Subject to any limitations that may result from market disruptions, the Company anticipates following the same approach in the future.

Overview of Cash Flows and Liquidity

Following is an overview of the Company’s cash flows and liquidity ($ in millions):

			Nine-Month Period Ended
			September 27, 2024						September 29, 2023
Total operating cash provided by operating activities from continuing operations			$	4,669					$	4,899
Total operating cash provided by discontinued operations			—						646
Net cash provided by operating activities			$	4,669					$	5,545
Cash paid for acquisitions			$	(525)					$	—
Payments for additions to property, plant and equipment			(876)						(949)
Proceeds from sales of property, plant and equipment			12						6
Payments for purchases of investments			(188)						(152)
Proceeds from sales of investments			251						33
All other investing activities			39						31
Total investing cash used in continuing operations			(1,287)						(1,031)
Total investing cash used in discontinued operations			—						(33)
Total cash used in investing activities			$	(1,287)					$	(1,064)
Proceeds from the issuance of common stock in connection with stock-based compensation, net			$	143					$	51
Payment of dividends			(573)						(621)
Net borrowings (maturities longer than 90 days)			—						2,605
Net proceeds from (repayments of) borrowings (maturities of 90 days or less)			1						(9)
Net repayments of borrowings (maturities longer than 90 days)			(974)						—
Payments for repurchase of common stock			(5,170)						—
All other financing activities			(120)						(53)
Total cash (used in) provided by financing activities			$	(6,693)					$	1,973

As of September 27, 2024, the Company held approximately $2.6 billion of cash and cash equivalents.

Operating Activities

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

Operating cash flows from continuing operations were approximately $4.7 billion for the first nine months of 2024, a decrease of $230 million, or 5%, as compared to the comparable period of 2023. The year-over-year change in operating cash flows from continuing operations from 2023 to 2024 was primarily attributable to the following factors:

• 2024 operating cash flows reflected a decrease of $287 million in net earnings from continuing operations for the first nine months of 2024 as compared to the comparable period in 2023.

• Net earnings from continuing operations for the first nine months of 2024 also included $290 million higher noncash charges for impairments, depreciation, intangible asset amortization and amortization of an acquisition-related inventory step-up as compared to the comparable period of 2023, net of a decrease in unrealized investment gains/losses and a decrease in stock compensation expense in the 2024 period compared to the 2023 period. Depreciation expense relates to the Company’s manufacturing and operating facilities as well as instrumentation leased to customers under OTL arrangements. Depreciation, amortization, impairments and stock compensation are noncash expenses that decrease earnings without a corresponding impact to operating cash flows. Unrealized investment gains/losses impact net earnings without immediately impacting cash flows as the cash flow impact from investments occurs when the invested capital is returned to the Company.

• The aggregate of trade accounts receivable, inventories and trade accounts payable provided $179 million in operating cash flows during the first nine months of 2024, compared to $344 million of operating cash flows provided in the comparable period of 2023. The amount of cash flow generated from or used by the aggregate of trade accounts receivable, inventories and trade accounts payable depends upon how effectively the Company manages the cash conversion cycle, which effectively represents the number of days that elapse from the day it pays for the purchase of raw materials and components to the collection of cash from its customers and can be significantly impacted by the timing of collections and payments in a period.

• The aggregate of prepaid expenses and other assets, deferred income taxes and accrued expenses and other liabilities used $551 million of operating cash flows during the first nine months of 2024, compared to $483 million of operating cash flows used in the comparable period of 2023. The timing of income tax refunds and payments, the timing of cash payments for customer funding and changes in various employee-related liabilities, realized investment returns and accrued expenses drove the majority of this change.

Investing Activities

Cash flows relating to investing activities consist primarily of cash used for acquisitions and capital expenditures, including instruments leased to customers, cash used for investments and cash proceeds from divestitures of businesses or assets.

Net cash used in investing activities from continuing operations increased $256 million in the nine-month period ended September 27, 2024 compared to the comparable period of 2023, primarily as a result of an increase in cash paid for acquisitions, partially offset by an increase in proceeds from sales of investments and a decrease in cash paid for capital expenditures. For a discussion of the Company’s acquisitions during the first nine months of 2024 refer to Note 2 to the Consolidated Condensed Financial Statements. In addition, during the nine-month periods ended September 27, 2024 and September 29, 2023 the Company invested $188 million and $152 million, respectively, in non-marketable equity securities and partnerships.

Though the relative significance of particular categories of capital investment can change from period to period, capital expenditures are typically made for increasing manufacturing capacity, replacing equipment, the manufacture of instruments that are used in OTL arrangements that certain of the Company’s businesses enter into with customers, supporting new product development and improving IT systems. Capital expenditures decreased $73 million on a year-over-year basis for the nine-month period ended September 27, 2024 compared to the comparable period in 2023.

Financing Activities and Indebtedness

Cash flows relating to financing activities can consist of cash flows associated with the issuance and repayments of commercial paper, issuance and repayment of long-term debt, borrowings under committed credit facilities, issuance and repurchases of common stock, issuance of preferred stock and payments of cash dividends to shareholders. Financing activities used cash of approximately $6.7 billion during the nine-month period ended September 27, 2024 compared to approximately $2.0 billion of cash provided in the comparable period of 2023. The year-over-year increase in cash used in financing activities was primarily due to the repurchase of approximately $5.2 billion of the Company’s common stock and to a lesser extent due to lower proceeds from borrowings and higher repayments of borrowings, partially offset by an increase in cash proceeds from the issuance of common stock in connection with stock-based compensation and a decrease in dividends paid primarily due to the conversion of all outstanding shares of the Company’s Mandatory Convertible Preferred Stock (“MCPS”) on April 17, 2023.

For a description of the Company’s outstanding debt as of September 27, 2024 and the Company’s commercial paper programs and credit facility, refer to Note 11 to the accompanying Consolidated Condensed Financial Statements. As of September 27, 2024, the Company was in compliance with all of its respective debt covenants. On April 2, 2024, the Company repaid the €900 million aggregate principal amount of the 2024 Euronotes upon their maturity using cash distributions received from Veralto prior to the completion of the separation of Veralto on September 30, 2023 (“the Separation”).

Stock Repurchase Program

For information regarding the Company’s stock repurchase program and repurchases of common stock, refer to Part II—Item 2, “Unregistered Sales of Equity Securities and Use of Proceeds”.

Dividends

Aggregate cash payments for dividends on Company common stock during the nine-month period ended September 27, 2024 were $573 million compared to $578 million for the nine-month period ended September 29, 2023. The decrease in dividend payments on the Company’s common stock compared to the comparable period of 2023 is due to lower average common stock outstanding. Aggregate cash payments for dividends on the Company’s MCPS during the nine-month period ended September 29, 2023 were $43 million. The decrease in MCPS dividend payments in 2024 compared to the comparable period of 2023 is due to the conversion of all outstanding shares of MCPS to common shares on April 17, 2023.

In the third quarter of 2024, the Company declared a regular quarterly dividend of $0.27 per share of Company common stock payable on October 25, 2024 to holders of record as of September 27, 2024.

Cash and Cash Requirements

As of September 27, 2024, the Company held approximately $2.6 billion of cash and cash equivalents that were held on deposit with financial institutions or invested in highly liquid investment-grade debt instruments with a maturity of 90 days or less. Of the cash and cash equivalents, $395 million was held within the U.S. and approximately $2.2 billion was held outside of the U.S. The Company will continue to have cash requirements to support general corporate purposes, which may include working capital needs, capital expenditures, acquisitions and investments, paying interest and servicing debt, paying taxes and any related interest or penalties, funding its restructuring activities and pension plans as required, paying dividends to shareholders, repurchasing shares of the Company’s common stock and supporting other business needs.

The Company generally intends to use available cash and internally generated funds to meet these cash requirements, but in the event that additional liquidity is required, the Company may also borrow under its commercial paper programs (if available) or borrow under the Company’s Credit Facility, enter into new credit facilities and either borrow directly thereunder or use such credit facilities to backstop additional borrowing capacity under its commercial paper programs (if available) and/or access the capital markets (if available). The Company also may from time to time seek to access the capital markets to take advantage of favorable interest rate environments or other market conditions. With respect to the commercial paper and any other notes scheduled to mature during the remainder of 2024, the Company expects to repay the principal amounts when due using available cash, proceeds from new issuances of commercial paper (if available), drawing on its Credit Facility and/or proceeds from other debt issuances.

While repatriation of some cash held outside the U.S. may be restricted by local laws, most of the Company’s foreign cash could be repatriated to the U.S. Following enactment of the Tax Cuts and Jobs Act and the associated Transition Tax, in general, repatriation of cash to the U.S. can be completed with no incremental U.S. tax; however, repatriation of cash could subject the Company to non-U.S. taxes on distributions. The cash that the Company’s non-U.S. subsidiaries hold for indefinite reinvestment is generally used to finance foreign operations and investments, including acquisitions. The income taxes, if any, that would be applicable to the repatriation of such earnings (including basis differences in our foreign subsidiaries) are not readily determinable. As of September 27, 2024, management believes that it has sufficient sources of liquidity to satisfy its cash needs, including its cash needs in the U.S.

CRITICAL ACCOUNTING ESTIMATES

The Company is supplementing the critical accounting estimates as described in the 2023 Annual Report with the following critical accounting estimate. There have been no other material changes to the Company’s critical accounting estimates as described in the 2023 Annual Report.

Acquired intangibles - The Company reviews identified intangible assets for impairment whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable. Determining whether an impairment loss occurred for finite-lived intangibles requires a comparison of the carrying amount to the sum of undiscounted cash flows expected to be generated by the asset. These analyses require management to make judgments and estimates about future revenues, expenses, market conditions and discount rates related to these assets. 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. Determining whether an impairment loss occurred for indefinite-lived intangible assets involves calculating the fair value of the indefinite-lived intangible assets and comparing the fair value to their carrying value. If the fair value is less than the carrying value, the difference is recorded as an impairment loss. 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 which would adversely affect the Company’s financial statements.

The Company estimates the fair value of acquired trade names through the use of a relief from royalty method, which values an indefinite-lived intangible asset by estimating the royalties saved through the ownership of an asset. Under this method, an owner of an indefinite-lived intangible asset determines the arm’s length royalty that likely would have been charged if the owner had to license the asset from a third party. The royalty rate, which is based on the estimated rate applied against forecasted sales, is tax-effected and discounted at present value using a discount rate commensurate with the relative risk of achieving the cash flow attributable to the asset. Management judgment is necessary to determine key assumptions, including revenue growth rates, perpetual revenue growth rates, royalty rates and discount rates. As further described in Note 9 to the accompanying Consolidated Condensed Financial Statements, the Company recorded a non-cash impairment charge of $222 million pretax ($169 million after-tax) for the three and nine-months ended September 27, 2024 related to an indefinite-lived trade name within the genomics consumable business included in the Life Sciences segment, which is included in selling, general and administrative expense in the Consolidated Condensed Statement of Earnings. Following this impact, if the fair value of the trade name declined by 10%, the Company estimates it would record an additional impairment charge of $51 million.