Xylem (XYL) 10-K risk factor changes: FY2023 vs FY2022

The global [removed: economic] [added: macroeconomic] and geopolitical [removed: climate, including as a result of the war between Russia and Ukraine, the coronavirus ("COVID-19") pandemic, and macroeconomic conditions,] [added: climate] amplify many of the risks below.

Risks in this section are grouped in the following categories: (1) Risks Related to Geopolitical, Macroeconomic and Industry Factors; (2) Risks Related to Our Business and Operations; (3) Risks Related to Financial and Tax; [added: and] (4) Risks Related to Legal and [removed: Regulatory; and (5) Risks Related to the Proposed Acquisition of Evoqua.][added: Regulatory.]

With sales in approximately 150 countries, we compete across a wide range of [removed: geographic] [added: geographies] and [removed: end-markets.][added: end markets.]

[removed: Material economic] [added: Economic] and industry factors [removed: impacting] [added: that have had, or could in the future have, a material impacted on] our businesses [added: and demand for our products and services] include: (i) the overall strength of, and our customers’ confidence in, local and global macroeconomic conditions; (ii) [added: inflation and related monetary policy actions by governments in response to] inflation, (iii) overall strength of industrial, governmental, public and private sector spending; (iv) overall strength of the industrial, residential and commercial real estate markets; (v) federal, state, local and municipal governmental fiscal, trade and procurement laws, regulations and policies, including [removed: with respect to] [added: as respects] domestic content; (vi) the availability of commercial financing for our customers and end-users; and (vii) the degree of funding for our public sector customers, including [removed: with respect to] [added: for] water infrastructure investments.

Macroeconomic [removed: impacts] [added: impacts, including actual or potential recession,] and [added: supply chain] dynamics, including [removed: as a result of the COVID-19 pandemic, with respect to] supply [removed: chain] shortages, logistics challenges, tight labor [removed: markets and] [added: markets,] inflation, [added: and significant government debt and deficit levels,] have had, and continue to have, a material adverse effect on our business and results of operations.

Future [removed: slowdowns,] economic [added: slowdowns or] recession, or other prolonged downturns in the global economy or our markets could have material adverse effects on our business, financial condition, cash flows, results of operations and stock price.

[removed: We are exposed to] [added: Our business may be materially adversely affected by] geopolitical, regulatory, economic, foreign exchange and other risks associated with our global sales, supply chain and operations.

In [removed: 2022, 47%] [added: 2023, 54%] of our total revenue was from sales to U.S. customers and [removed: 53%] [added: 46%] was from sales to customers outside the U.S. We expect our sales from international operations and export sales to continue to be a significant portion of our revenue.

- instability of and impacts from the evolving global geopolitical environment, including [removed: with respect to] [added: concerning] the relationships among the U.S., European Union, [added: Middle East, Russia,] China, Taiwan, or other foreign countries, and the international community at large;

- threat, outbreak, uncertainty or escalation of terrorism, political instability, insurrection, war or other armed conflict, including between Russia and [removed: Ukraine;][added: Ukraine and the Middle East, and the potential for regional escalation;]

- threat or outbreak of epidemics, global health crises or pandemics, [removed: such as COVID-19,] and related uncertainties;

- changes in tax laws and potential negative consequences from the interpretation, application and enforcement by governmental tax authorities of tax laws and policies, [removed: and] [added: as well as] changes in other laws and regulations or how such provisions are interpreted or administered;

- disruptions in [removed: our] global [added: or regional] supply [removed: chain, operations] [added: chains, our operations,] or those of third parties upon which we rely, including due to labor [removed: or] [added: disruptions,] supply shortages, [added: and] freight and logistics challenges;

- [added: unanticipated regulatory changes or] unfavorable circumstances arising from host country laws or regulations, including those related to infrastructure and data transmission, security and privacy;

In the year ended December 31, [removed: 2022, 19%] [added: 2023, 16%] of our total revenues were generated in emerging markets and we have placed a particular emphasis in our strategy on increasing our growth and presence in emerging markets, including China, India, and key markets in [removed: Africa.][added: Africa, Middle East and Southeast Asia.]

Beyond the general risks that we face outside the U.S., our operations in emerging markets are subject to additional risks and uncertainties, including: (i) governments may impose or increase withholding or other taxes on remittances and other payments to us; (ii) governments may seek to nationalize our assets; (iii) governments may impose or increase investment barriers or other restrictions affecting our business; (iv) difficulty in enforcing commercial [removed: agreements;] [added: agreements or collecting receivables;] (v) challenges [removed: collecting receivables, or] protecting our intellectual property and other assets; (vi) [added: pricing] pressure on [removed: the pricing of] our products and services; [removed: (vii)] [added: (viii)] higher business conduct risks; and [removed: (viii)] [added: (ix)] challenges in our ability to attract and retain qualified talent and labor.

We have significant sales, operations and direct or indirect suppliers located in China, which have been in the past, or could in the future be, adversely affected [removed: by] [added: by: i)] China’s evolving laws, regulations and policies, including [removed: with respect to its evolving COVID Policy,] [added: as respects public health crises,] import and export tariffs and restrictions, and information security and [removed: privacy.][added: privacy, and ii) changes in the political and geopolitical environment involving China, including U.S.-China or China-Taiwan relations.]

[removed: For example, the U.S.’] [added: The U.S.’s] imposition of tariffs on goods imported from China or deemed to be of Chinese origin, as well as the potential for new tariffs, other governmental actions, trade embargoes or sanctions by the U.S., or countermeasures imposed by China in response, has in the past and could in the future have an adverse direct or indirect impact our global supply chain, manufacturing costs, [removed: and sales] [added: business] and [removed: operations in China.][added: operating results.]

[removed: Furthermore, geopolitical] [added: Geopolitical] changes in China-Taiwan relations could disrupt the operations of several companies in Taiwan that are critical to our [removed: complex,] [added: complex] global supply [removed: chain, including with respect to the supply of] [added: chain for] semiconductors (“chips”) and other electronic components.

Such changes could [removed: likely] have significant negative effects on the global semiconductor industry and could adversely affect our ability to manufacture our digitally-enabled products, such as pumps, controllers and smart meters.

In the year ended December 31, [removed: 2022, 47%] [added: 2023, 54%] of our revenues [removed: was] [added: were] from sales to U.S. customers, which included sales of [added: some] products [removed: sold into] [added: for] federally funded projects.

We expect our U.S. sales in [removed: 2023] [added: 2024] and beyond to be similar.

However, [added: on a case-by-case basis,] we may not be able to successfully compete for [added: a] federally funded [removed: projects] [added: project] as some of our products may not comply with the domestic content requirements of the U.S. Buy America mandate under the Infrastructure Investment and Jobs Act [removed: (“IIJA”), as well as] [added: (“IIJA”) or] other federally funded projects.

We continue to evaluate [removed: the risks associated with the Buy America mandate, as well as related] [added: and implement] mitigation [removed: options] [added: measures] around sourcing and [removed: manufacturing,] [added: localization of manufacturing for our most significantly impacted product lines, as well as consider alternative products that may meet both project specifications and domestic content requirements,] but there is no guarantee that we will be able [added: in all cases] to meet applicable domestic content requirements [added: of a project or] across all our product lines.

While governmental exemptions and waivers may [removed: in the future] be issued that negate the application of the Buy America mandate [removed: to] [added: for] some or all of our potential sales into IIJA and other federally funded projects, it is uncertain whether and to what extent such exemptions or waivers may be issued.

An inability to meet applicable domestic content requirements [removed: for U.S. federally funded projects] could have a material adverse impact on our business, financial condition or results of operations.

Our operating costs are subject to fluctuations, particularly due to [added: volatility or] changes in prices for commodities, parts, raw materials, energy and related utilities, freight and logistics, and [added: the] cost of [removed: labor, which] [added: labor., Price volatility and changes] have been and may continue to be driven by a variety of factors, [removed: including] [added: such as] inflation, tight labor markets, [removed: prevailing price levels, exchange rates, changes in trade agreements and trade protection measures including tariffs, and other economic factors.]

Throughout [removed: 2022] [added: 2023] our operating costs [removed: have been] [added: were] adversely impacted by price inflation, including [removed: with respect to] the cost of certain raw materials, [removed: electronic] components, [added: energy,] commodities, freight and logistics, [removed: and we expect this to] [added: which could] continue [removed: for the foreseeable future.][added: in 2024 to varying degrees depending, in part, on broader macroeconomic or geopolitical conditions.]

[removed: In addition,] [added: For example,] we have significant manufacturing operations in Europe, which could be adversely impacted by increased [removed: costs for] energy [removed: as a result of] [added: costs related to an actual or potential escalation in] the [added: ongoing] Russia-Ukraine [removed: conflict and governments' efforts to decrease dependence on Russia energy supplies.][added: conflict.]

[removed: The] [added: Additionally, the] U.S. has enacted various trade actions, including imposing tariffs on certain goods we import from China and other countries, which has resulted in retaliatory tariffs by China and other countries.

Additional tariffs imposed by the U.S., or further retaliatory trade measures taken by China or other countries, could increase the cost of our [removed: products that we may not be able to offset through price increases or productivity.][added: products.]

Our competitive position and future growth [removed: rate] depend upon a number of factors, including our ability to successfully: (i) innovate, [removed: develop] [added: develop, bring to market] and maintain [removed: competitive and] [added: competitive, compelling,] secure [added: and efficient technologies,] products and services, [removed: as well as] business models and customer experience, to address emerging regulations and trends and meet customers’ needs (including those related to [added: digitization of water,] social, environmental and sustainability matters), (ii) defend our market share against an ever-expanding number of competitors, many of which are new and non-traditional [removed: competitors] from outside our industry, such as large technology firms, or those [removed: out of] [added: in the] emerging markets, (iii) enhance our product and service offerings by adding innovative features, increased efficiency or disruptive [removed: technologies] [added: or emerging technologies, such as artificial intelligence,] that differentiate them from those of our competitors and prevent commoditization, (iv) [removed: develop, manufacture and bring compelling, secure and efficient new products and services to market quickly and cost-effectively, (v)] continue to [added: invest in,] cultivate, develop and maintain our distribution network of channel partners, [removed: (vi)] [added: (v)] attract, develop and retain individuals with the requisite innovation, digital and technical [added: capabilities,] expertise and understanding of customers’ needs to develop and commercialize new technologies, products and services, [removed: (vii)] [added: (vi)] continue to leverage and expand our external ecosystem of innovation partners [removed: from] [added: with joint venture partners,] universities, venture capital, the start-up of community and other technology firms, [removed: (viii)] [added: (vii)] continue to invest in our manufacturing, research and development, engineering, sales and marketing, [added: and] digitization of customer service and support tools, [removed: and distribution networks, (ix)] [added: (viii)] win large [removed: contracts,] [added: contracts] and [removed: (i)] [added: execute them on schedule and on budget, (ix) optimize our supply chain and manufacturing to enable predictable and efficient delivery to customers, and (x)] compete for business subject to applicable governmental procurement laws, regulations and policies, including new and existing [added: sustainability and] domestic content requirements in the U.S. and globally, as they may evolve over time.

The failure of our technologies, products or services to maintain and gain market acceptance due to more attractive offerings, [added: the] failure of our products to comply with [removed: new] governmental regulations or policies, or customers’ slower-than-expected adoption of and investment in our new and innovative technologies could significantly reduce our revenues or market share and adversely affect our competitive position.

Pricing pressures could cause us to adjust the prices of certain [removed: products] [added: products, services or projects] to stay competitive, or we may not be able to continue to win large contracts, which could adversely affect our market share and competitive position.

[removed: Our business operations, including manufacturing,] [added: We] rely on information technology, [added: including] operational technology, and communications [removed: networks, some of which are operated by third parties, including cloud-based service providers,] [added: networks] to [removed: process, transmit] [added: run our manufacturing processes] and [added: equipment, to enable business processes, and to process, transmit,] store [added: and manage] our electronic information, including [removed: sensitive data such as] confidential business information and [removed: personal] data relating to employees, customers or other business partners.

Regardless of protection measures, [removed: essentially] all [removed: systems] [added: information technology and communications networks] are [added: inherently] susceptible to [removed: damage, disruption] [added: damage] or [removed: shut-down] [added: disruption] due to [removed: cybersecurity attacks, including ransomware, denial-of-service, computer viruses and security breaches; equipment or] [added: causes such as: equipment,] system [added: or application] failure, including [removed: due to] [added: as a result of] maintenance, [removed: obsolescence] [added: obsolescence, unsupportability] or age; [removed: and other events or circumstances, such as] human error or [removed: malfeasance, vandalism,] [added: malfeasance; vandalism;] natural [removed: disaster, fire,] [added: disaster; fire;] power, communication or other utility [removed: outage, shutdown] [added: outage] or [removed: failure.][added: failure; and cybersecurity incidents, including ransomware, denial-of-service, malware, phishing, and computer viruses.]

Cybersecurity [removed: attacks] [added: incidents] may [removed: target] [added: impact] hardware, software and information installed, stored or transmitted by our products [added: and services] after they have been purchased and incorporated into [removed: customers] [added: customers’] and other third parties’ products, [removed: facilities] [added: facilities, systems] or infrastructure, including critical infrastructure applications.

While we attempt to provide [removed: security] [added: our customers with] measures to safeguard our products and services from [removed: cyber] [added: cybersecurity] threats, the potential for [removed: an attack] [added: a cybersecurity incident] remains.

In addition, [added: certain of] our customers [removed: may] continue to use [removed: digitally-enabled] [added: digitally enabled] products that [removed: were] [added: we] designed, manufactured and sold [removed: by us] at a time when current security features were not available.

To date, none have resulted in any material adverse impact to [added: or theft, misuse or loss of information of] our business, operations, [removed: products, services] [added: products and services,] or customers.

prevailing price levels, exchange rates, changes in trade agreements, tariffs and other trade protection measures, and other economic factors.

Our global supply chain includes shipping routes through the Red Sea, where vessels have been and may continue to be impacted by armed conflicts involving rebel groups; and continued conflicts or escalation of conflict in the Middle East could adversely impact our logistics costs and could also result in an increase in our costs for energy and supplies, and potentially delay shipments to customers.

We may not be able to offset increases in our manufacturing costs through price increases or productivity.

Cybersecurity incidents and related data breaches or other disruptions to our enterprise information technology and operations, or to our connected products and services, including those of third parties on which we or our customers rely, could materially and adversely affect our business.

Our enterprise consists of our businesses, functions, operations, manufacturing and employees.

We also rely on key third parties, including: i) direct and indirect suppliers, ii) strategic joint venture partners that provide certain aspects of our digital services and offerings, iii) contract manufacturers, iv) cloud-based service providers, and v) outsourced business process providers, including in the areas of Information Technology, Finance, Human Resources, Procurement and Travel.

Together, we depend on information technology infrastructure and communication networks for access to reliable and secure networks in order to run our and their businesses.

In addition to damage or disruption, these cybersecurity incidents may lead to security and data breaches.

We provide certain digitally-enabled or internet-connected products, such as pumps, controllers, meters and other equipment, and services, such as Water One® and other remote monitoring capabilities, condition assessment, and an interoperability platform via a strategic joint venture partner.

These products and services are used by us and our customers for operational purposes or to collect data.

Our connected products and services are inherently susceptible to damage or disruption from a myriad of causes as described above, including cybersecurity incidents.

A cybersecurity Incident or other damage or disruption to information technology and communications networks or involving our connected products and services may have adverse effects on us, our customers or third parties on which we rely, including: interference with operations and services, potentially with public health and safety risks involving certain of our customers; disruption of production, supply chain, shipments, billing, collections and customer service; disruption to data analytics; disruption to remote monitoring and control of operational systems; unauthorized access, disclosure, misappropriation, misuse, destruction, compromise or theft of our financial, operational or other proprietary information, including intellectual property and trade secrets, or data pertaining to our employees, customers or suppliers; damage to employee, customer and business partner relationships; recall of our products; legal claims, proceedings or regulatory enforcement actions, and fines or penalties; increased costs to prevent, respond to or mitigate cybersecurity incidents; and damage our brands and reputation.

Moreover, a delay in or failure to detect a cybersecurity incident or the full extent of an incident could exacerbate the effects of the incident.

As such, any of the foregoing could have a material adverse effect on our reputation, competitive position, results of operations, cash flows or financial condition.

To mitigate reliability and cybersecurity risks related to our enterprise and connected products and services, we maintain relevant policies, standards, procedures and technologies that are applicable to all Xylem employees and contractors, including: patching; passwords; network and data access, including requirements and rights; business continuity and disaster recovery; monitoring for external and insider risks; obsolescence or end-of-life of operating technologies or applications’ operating systems; IT general computing controls; secure software development.

We are also operationalizing our strategy to establish segmentation between our information technology and operational technology.

As implementation and compliance is the responsibility of employees across the enterprise, we cannot guarantee adherence in all instances with our policies, standards and procedures, or that our technologies will be sufficient to fully mitigate the aforementioned or evolving risks.

We, and some third parties upon which we rely, have in the past experienced cybersecurity incidents or other attempts to gain unauthorized access to our information technology and connected products and services.

As technology evolves, we may continue to experience such events, likely with more frequency and involving a broader range of devices and more sophisticated modes of attack.

We have implemented processes, procedures and technologies designed to detect and respond to cybersecurity incidents and mitigate potential risks associated with cybersecurity threats and incidents involving our information technology, products and services.

However, because the timing, nature and modes of cybersecurity attacks and incidents change frequently, evolve and are unpredictable, and because unauthorized accesses may be difficult to detect for long periods of time, we may be unable to anticipate these intrusions or implement adequate protective or remedial measures.

While we maintain insurance coverage designed to address certain aspects of business interruption and cybersecurity risks, it may not be sufficient to cover all losses or all types of claims.

In addition, we

Certain of our businesses require that we or our subcontractors have access to customer sites to provide our products and services.

We may not realize some or all the expected benefits and synergies from our acquisition of Evoqua.

On May 24, 2023, we completed the acquisition of Evoqua.

The success of this acquisition will depend, in part, on our ability to realize the anticipated benefits from combining our and Evoqua’s businesses.

We have and continue to devote substantial management attention and resources to the integration of the combined company’s business practices and operations so that we can fully realize the anticipated benefits of the acquisition, including cost and revenue synergies.

Nonetheless, difficulties may arise during the integration process that could result in the failure to achieve the anticipated cost or revenue synergies, including: loss of key talent that may be difficult to replace; disruption of the combined company’s ongoing business; inconsistencies in each company’s standards, controls, procedures and policies; and our ability to maintain and expand relationships with customers, partners, suppliers or creditors.

As a result, the anticipated benefits of the acquisition may not be realized fully within the expected timeframe or at all, may take longer to realize, or may cost more than expected, which could materially and adversely affect our business, results of operations or financial condition, as well as adversely impact the stock price of the combined company.

Water and wastewater treatment operations, including those related to emerging contaminants, as well as the generation, handling, storage, use, transport, treatment, release or disposal of hazardous materials may result in contamination, environmental, personal or other liabilities or pose other significant risks that could cause us to incur significant costs and reputational harm.

Water and wastewater treatment involve various unique risks and require compliance with a variety of laws or regulations, including the Clean Water Act and the Safe Drinking Water Act.

If our treatment systems fail or do not operate properly, or if there is a spill, untreated or partially treated wastewater could discharge onto property or into nearby bodies of water and groundwater, causing various liabilities, damages and injuries, including environmental.

In addition, a number of emerging contaminants might be found in water that we treat, including PFAS, PFOA, selenium, micro-plastics, chemicals or pathogens, that may cause illness or death if not eliminated during the treatment process,.

Liabilities resulting from such events, damages and injuries could materially adversely affect our business, financial condition, results of operations or prospects.

Changes in environmental requirements, laws and regulations, or increased public awareness around the presence and health impacts of human-made chemicals and naturally occurring contaminants in drinking water, could increase or decrease demand for our products and services, increase our cost of operations, result in the obsolescence of our products, or lead to an interruption of suspension of our operations.

Furthermore, certain of our business activities, such as those of our historical Integrated Solutions and Services segment and new Water Solutions and Services segment , include manufacturing and waste recycling and treatment processes that currently involve the use, treatment, storage, transfer, handling and/or disposal of non-hazardous and hazardous materials, chemicals and wastes, which are subject to applicable federal, state, and local

laws and regulations.

The cost of compliance with these laws and regulations may become significant, result in increased operating costs or require additional investment in facilities, and therefore could have a material adverse effect on our business, financial condition, results of operations or prospects.

These business activities also create a risk of accidental contamination or injury to our employees, customers and other third parties, the general public (as end-users of our industrial and municipal customers’ products and services), and the environment.

- actual or threatened war or armed conflict, labor actions, or civil, political or other disturbances;

Our business and operating results could also be adversely impacted by changes in the political and geopolitical environment involving China, including U.S.-China or China-Taiwan relations.

We are unable to predict the extent to which the ongoing global COVID-19 pandemic, or other outbreaks, epidemics, pandemics, or public health crises may adversely impact our business, results of operations and financial condition.

Our global operations expose us to risks associated with public health crises, including epidemics and pandemics.

Outbreaks of epidemics, pandemics, or public health crises could adversely affect, among other things, demand for our products and services; our operations and sales; our supply chain; our research and development capabilities, engineering, design, and manufacturing processes; and other important business activities.

Such outbreaks could result in the restriction or suspension of travel, prohibitions of non-essential activities, and limit in-person activities within our Company and with customers and could also present operational challenges, such as disruptions in our manufacturing and supply chain and logistics, all of which can adversely affect our ability to fulfill orders, provide services, respond to customer requests and maintain our business operations.

We are unable to predict the full extent of the impact of the outbreak of epidemics, pandemics, or public health crises on our operations, customers and suppliers.

Since early 2020, the COVID-19 pandemic and its variants have resulted in, and may continue to result in, a slowdown of global economic activity, travel restrictions, prohibitions of non-essential activities in some cases, disruption and shutdown of businesses, including that of our customers and suppliers.

Our operations have been affected by a range of external factors related to the COVID-19 pandemic that are not within our control, including the various governmental restrictions on employees, customers, partners and suppliers, such as China’s COVID Policy, designed to limit the spread of COVID-19.

The pandemic and broader global market supply and demand dynamics have impacted, and continue to impact our supply chain with unpredictable disruptions due to material and component shortages, including with respect to key electronic components such as chips, capacity constraints, delays in shipment of materials necessary to the manufacture of our products, freight and logistics challenges, tight labor markets and inflation.

While component supply shortages are showing signs of recovery, they may nevertheless persist, adversely disrupting our business.

The ultimate extent of the impacts of the COVID-19 pandemic, including as a result of possible subsequent outbreaks of new variants and measures taken in response thereto remains highly uncertain and cannot currently be predicted and we may not be successful at mitigating such impacts.

The COVID-19 pandemic caused significant volatility and uncertainty in the global financial and capital markets.

A further disruption of these markets, or resulting economic downturn from the COVID-19 pandemic or outbreak of other global health crises, may impact our ability to incur debt or access capital, or increase our cost of capital.

There are no assurances that the credit markets or the capital markets will be available to us in the future or that the lenders participating in our credit facilities will be able to provide financing in accordance with their contractual obligations.

Additionally, concerns over the economic impacts of COVID-19 have caused, and may continue to cause, volatility in our stock price.

A sustained economic downturn could impact our liquidity position, including our ability to continue to pay dividends, or could impact our asset values resulting in the carrying value of our goodwill or other intangible assets exceeding their fair value, which may require us to recognize an impairment to those assets.

Cybersecurity incidents or other disruptions to our information technology infrastructure, communications networks and operations could adversely affect our business, products and services.

As a result of the evolution of new ways of working, a significant portion of our workforce has transitioned to remote working and are therefore reliant on our information technology infrastructure and communication networks and access to reliable and safe communication networks in their communities in order to be able to perform their jobs.

We also rely on third parties’ information technology systems to run manufacturing processes, to store or manage data, or to manage or support a variety of business processes and activities, including with regard to remote work.

While we have certain system redundancies as well as business continuity and disaster recovery planning and response plans, we cannot guarantee that these measures will be effective or adequate to respond to damage, disruption or shut-down circumstances.

In addition, we have in the past offered and continue to offer certain services and products, including pumps, controllers and meters, that are digitally-enabled or that connect to and are part of the “Internet of Things” (IoT), and are used by our customers and other third parties for operational purposes or to collect data.

A successful attack may result in the misappropriation, destruction, unauthorized access to or disclosure of customers or other third parties' confidential information, damage or disruption to customer or third parties’ operations, potentially with personal health and safety risks, recall of our products or increased costs for security and remediation, as well as damage to our brand reputation.

Like many multinational companies, we, and some third parties upon which we rely, have experienced cybersecurity attacks on information technology networks and systems, products and services in the past and may experience them in the future, likely with more frequency and involving a broader range of devices and modes of attack.

We have adopted measures designed to mitigate potential risks associated with cybersecurity threats, breaches or other disruptions or damage to our information technology networks and systems, products and services but the unpredictability of the timing, nature and scope of such disruptions and threats could impact our business, operations, products and services.

Disruption to information technology and communications networks on which we rely, or an attack on our products and services, could interfere with our operations, disrupt our supply chain and service to our customers, interrupt production and shipments, result in theft or compromise of our and our customers’ intellectual property and trade secrets, damage employee, customer and business partner relationships, negatively impact our reputation, result in legal claims and proceedings or regulatory enforcement actions, and increase our costs for security and remediation, any of which could have a material adverse effect on our competitive position, results of operations, cash flows or financial condition.

aluminum and plastics.

We have and continue to take measures, including with respect to buffer stock, the use of alternative suppliers and re-design of certain products, to mitigate the impacts of the ongoing supply chain, freight and logistics issues.

Manufacturing, design, software, security or service defects or inadequacies may also result in contractual damages against us, warranty expenses or issuance of credits, which could impact our profitability.

In 2022 and recent prior fiscal years, we initiated restructuring and realignment plans in an effort to optimize our cost structure, improve our operational efficiency and effectiveness, strengthen our competitive positioning and better serve our customers.

Additionally, in 2020, in response to the business and economic conditions resulting from the COVID-19 pandemic, we initiated additional restructuring and realignment activity.

Globally, the frequency and severity of weather events due to the effects of climate change is increasing.

Significant fluctuations in these weather conditions and climate changes can therefore result in volatility in our financial results.

Governments may implement emissions trading schemes, carbon taxes, fuel taxes and other policies to reduce the impacts of climate change that could impact our business and financial results.

The timing, scope and effect of governments’ implementation of carbon pricing and taxes are uncertain, but could significantly increase our expenses in the future and therefore have material adverse impacts on our business, financial condition, cash flows, results of operations and market price of our common stock.

Refer to

*This section of this Form 10-K generally discusses [removed: 2022] [added: 2023] and [removed: 2021] [added: 2022] items and year-to-year comparisons between [removed: 2022] [added: 2023] and [removed: 2021.][added: 2022.]

Discussions of [removed: 2020] [added: 2021] items and year-to-year comparisons between [removed: 2021] [added: 2022] and [removed: 2020] [added: 2021] that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, [removed: 2021.*][added: 2022.*]

Our product and service offerings are organized into [removed: three] [added: four] reportable segments that are aligned around the critical market applications they provide: Water Infrastructure, Applied [removed: Water and] [added: Water,] Measurement [removed: &] [added: and] Control [removed: Solutions.][added: Solutions and Integrated Solutions and Services.]

- *Measurement [removed: &] [added: and] Control Solutions* primarily serves the utility infrastructure solutions and services sector by delivering communications, smart metering, measurement and control technologies and critical infrastructure technologies that allow customers to more effectively use their distribution networks for the delivery, monitoring and control of critical resources such as water, electricity and natural gas.

In the Measurement [removed: &] [added: and] Control Solutions segment, we generate our sales through a combination of long-standing relationships with leading distributors and dedicated channel partners as well as direct sales depending on the regional availability of distribution channels and the type of product.

On January [removed: 23,] [added: 22,] 2023, Xylem entered into a definitive agreement [removed: under which Xylem will] [added: to] acquire Evoqua, a leader in mission-critical water treatment solutions and services, in an all-stock transaction that [removed: reflects] [added: reflected] an implied enterprise value of approximately $7.5 billion.

Management reviews key performance indicators including revenue, gross margins, segment operating income and operating income margins, [removed: free cash flow,] orders growth, working capital and backlog, among others.

[added: Excluding revenue,] Xylem provides guidance only on a non-GAAP basis due to the inherent difficulty in forecasting certain amounts that would be included in GAAP earnings, such as discrete tax items, without unreasonable effort.

- "adjusted net income" and "adjusted earnings per share" defined as net income and earnings per share, respectively, adjusted to exclude restructuring and realignment costs, [removed: special charges,] [added: amortization of acquired intangible assets,] gain or loss from sale of [removed: businesses] [added: businesses, special charges] and tax-related special items, as applicable.

| (in millions, except per share data) | | | | | | [removed: 2022] [added: 2023] | | | | | | | | | | | | [removed: 2021] [added: 2022] | | | | | | [added: | | |]

| Net income [removed: &] [added: and] Earnings per share | | | | | | $ | [removed: 355] [added: 609] | | | | | $ | [removed: 1.96] [added: 2.79] | | | | | $ | [removed: 427] [added: 355] | | [added: | | |] $ | [removed: 2.35] [added: 1.96] | |

| Restructuring and realignment | | | | | | [removed: 34] [added: 22] | | | | | | [removed: 0.19] [added: 13] | | | | | | [removed: 22] [added: 18] | | | [removed: 0.12] | | | [added: 15 | | |]

| Special charges | | | [removed: | | | 160] [added: 29] | | | [removed: (a)] | | | [removed: 0.89] [added: —] | | | | | | [removed: 12] [added: NM] | | | [removed: 0.07] [added: %] | | |

| (Gain) loss from sale of business | | | | | | [removed: (1)] [added: 1] | | | | | | [removed: (0.01)] [added: —] | | | | | | [removed: (2)] [added: (1)] | | | [added: | | |] (0.01) | | |

| Tax effects of adjustments [removed: (b)] [added: (c)] | | | | | | [removed: (32)] [added: (90)] | | | [removed: (c)] | | | [removed: $] [added: (0.41)] | [removed: (0.18)] | | | | | [removed: $] [added: (51)] | [removed: (7)] | | [removed: $] | [removed: (0.04)] | | [added: (0.28) | | |]

| Adjusted net income [removed: &] [added: and] Adjusted earnings per share | | | | | | $ | [removed: 516] [added: 825] | | | | | $ | [removed: 2.85] [added: 3.78] | | | | | $ | [removed: 452] [added: 570] | | [added: | | |] $ | [removed: 2.49] [added: 3.15] | |

[removed: | (a) The] [added: (b)The] special charges in the year primarily relate to the U.K. pension settlement expense of $140 million and asset impairment charges of $14 million recorded in the period. [removed: | | |]

[removed: | (b) The] [added: (c)The] tax effects of adjustments are calculated using the statutory tax rate, taking into consideration the nature of the item and the relevant taxing jurisdiction. [removed: | | |]

▪"adjusted operating expenses" [removed: and "adjusted gross profit"] defined as operating expenses [removed: and gross profit, respectively,] adjusted to exclude [added: amortization of acquired intangible assets,] restructuring and realignment costs and special charges.

▪“EBITDA” defined as earnings before interest, taxes, depreciation and amortization expense, "EBITDA margin" defined as EBITDA divided by total revenue, "adjusted EBITDA" reflects the adjustment to EBITDA to exclude share-based compensation charges, restructuring and realignment costs, [removed: special charges and] gain or loss from sale of [removed: businesses,] [added: businesses] and [added: special charges, and] "adjusted EBITDA margin" defined as adjusted EBITDA divided by total revenue.

▪“special charges" defined as costs incurred by the Company, such as acquisition and integration related costs, non-cash impairment [removed: charges] [added: charges,] and both operating and non-operating adjustments for costs related to the U.K. pension plan buy-out.

| (in millions) | | | | | | [removed: 2022] [added: 2023] | | | | | | [removed: 2021] [added: 2022] | | | | | | | | |

| Net cash provided by operating activities | | | | | | $ | [removed: 596] [added: 837] | | | | | $ | [removed: 538] [added: 596] | | | | | | | |

| Capital expenditures | | | | | | [removed: (208)] [added: (271)] | | | | | | (208) | | | | | | | | |

| Free cash flow | | | | | | $ | [removed: 388] [added: 599] | | | | | $ | [removed: 330] [added: 388] | | | | | | | |

| Net cash used in investing activities | | | | | | $ | [removed: (191)] [added: (628)] | | | | | $ | [removed: (183)] [added: (191)] | | | | | | | |

| Net cash provided (used) by financing activities | | | | | | $ | [removed: (790)] [added: (157)] | | | | | $ | [removed: (855)] [added: (790)] | | | | | | | |

Xylem reported revenue of [removed: $5,522] [added: $7,364] million for [removed: 2022,] [added: 2023,] an increase of [removed: $327] [added: $1,842] million, or [removed: 6.3%,] [added: 33.4%,] from [removed: $5,195] [added: $5,522] million reported in [removed: 2021.][added: 2022.]

On a constant currency basis, revenue increased by [removed: $586] [added: $1,867] million, or [removed: 11.3%,] [added: 33.8%,] during the year.

The increase at constant currency [removed: was driven by] [added: consists of revenue from acquisitions of $1,177 million and] an increase in organic revenue of [removed: $595] [added: $690] million reflecting strong organic growth in all [removed: end markets] [added: segments] as well as across all major geographic regions.

Operating income for [removed: 2022] [added: 2023] was [removed: $622] [added: $652] million, reflecting an increase of [removed: $37] [added: $30] million, or [removed: 6.3%,] [added: 4.8%,] compared to [removed: $585] [added: $622] million in [removed: 2021.][added: 2022.]

Operating margin was [added: 8.9% and] 11.3% for [removed: both 2022] [added: 2023] and [removed: 2021.][added: 2022, respectively.]

[removed: Operating] [added: The increase in operating] income for [removed: 2022] [added: 2023] included an increase in special charges of [removed: $12 million] [added: $122 million, an increase in purchased intangible amortization of $104 million,] and an [removed: unfavorable impact from increased] [added: increase in] restructuring and realignment costs of [removed: $12] [added: $72] million as compared to [removed: 2021.][added: 2022.]

Excluding the impact of these items, adjusted operating income was [removed: $672] [added: $1,072] million, with an adjusted operating margin of [removed: 12.2%] [added: 14.6%] in [removed: 2022] [added: 2023] as compared to adjusted operating income of [removed: $611] [added: $744] million with an adjusted operating margin of [removed: 11.8%] [added: 13.5%] in [removed: 2021,] [added: 2022,] an increase of [removed: 40] [added: 110] basis points.

Additional financial highlights for [removed: 2022] [added: 2023] include the following:

- Net cash provided by operating activities of [removed: $596] [added: $837] million and free cash flow of [removed: $388] [added: $599] million, up [removed: 18%] [added: 54%] from [removed: 2021][added: 2022]

- Orders of [removed: $6,257] [added: $7,501] million, [removed: down 0.7%] [added: up 19.9%] from [removed: $6,300] [added: $6,257] million in [removed: 2021] [added: 2022] (up [removed: 4.0%] [added: 1.0%] on an organic basis)

- Dividends paid to shareholders increased [removed: 7%] [added: 10%] in [removed: 2022.][added: 2023.]

[removed: 2023] [added: 2024] Business Outlook

We anticipate total revenue growth in the range of [removed: 3%] [added: 14%] to [removed: 5%] [added: 15%] in [removed: 2023,] [added: 2024,] with organic revenue growth anticipated to be in the range of [removed: 4%] [added: 3%] to [removed: 6%.][added: 5%.]

The Water Infrastructure segment also includes legacy-Evoqua's Applied Product Technologies ("APT") segment.

APT provides a range of highly differentiated and scalable products and technologies with product offerings in the filtration and separation, disinfection, wastewater solutions, anode and electrochlorination technology, and aquatics technologies and solutions spaces.

*•Integrated Solutions and Services* serves the industrial and municipal sectors with tailored services and solutions in collaboration with the customers backed by life‑cycle services including on‑demand water, outsourced water, recycle / reuse, and emergency response service alternatives to improve operational reliability, performance, and environmental compliance.

Key offerings within this segment also include

equipment systems for industrial needs (influent water, boiler feed water, ultrahigh purity, process water, wastewater treatment, and recycle / reuse), full-scale outsourcing of operations and maintenance, and municipal services, including odor and corrosion control services.

The transaction closed on May 24, 2023.

See Note 3, "Acquisitions and Divestitures," to the consolidated financial statements for further information.

Coinciding with the Evoqua acquisition, Xylem has updated our adjusted operating income and adjusted earnings per share to add back non-cash purchase accounting intangible amortization and recast 2022 amounts to reflect the change on a comparative basis

| | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Restructuring and realignment | | | | | | 106 | | | | | | 0.49 | | | | | | 34 | | | | | | 0.19 | | |

| Acquired intangible amortization | | | | | | 176 | | | | | | 0.81 | | | | | | 72 | | | | | | 0.40 | | |

| Special charges | | | | | | 138 | | | (a) | | | 0.63 | | | | | | 160 | | | (b) | | | 0.88 | | |

| Tax-related special items | | | | | | (115) | | | | | | (0.53) | | | | | | 1 | | | | | | 0.01 | | |

(a)The special charges in the year primarily relate to $126 million of acquisition and integration related costs.

| Non-discretionary tax payments (R&D tax law adoption) | | | | | | 33 | | | | | | — | | | | | | | | |

- Net income of $609 million, or $2.79 per diluted share, up 42.3% ($825 million or $3.78 per diluted share on an adjusted basis, up 20.0% from 2022)

| Revenue | | | | | | $ | 7,364 | | | | | $ | 5,522 | | | | | | | | | | | 33.4 | | % | | | | | | |

| Restructuring and realignment costs | | | | | | (102) | | | | | | (30) | | | | | | | | | | | | 240.0 | | % | | | | | | |

| Acquired intangible asset amortization | | | | | | (176) | | | | | | (72) | | | | | | | | | | | | 144.4 | | % | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Adjusted operating expenses | | | | | | 1,681 | | | | | | 1,344 | | | | | | | | | | | | 25.1 | | % | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Organic Growth | | | 255 | | | 10.8 | | % | | | | 96 | | | 5.4 | | % | | | | 339 | | | 24.4 | | % | | | | — | | | NM | | | | | | 690 | | | 12.5 | | % |

| Acquisitions/(Divestitures) | | | 362 | | | 15.3 | | % | | | | — | | | — | | % | | | | — | | | — | | % | | | | 815 | | | NM | | | | | | 1,177 | | | 21.3 | | % |

| Constant Currency | | | 617 | | | 26.1 | | % | | | | 96 | | | 5.4 | | % | | | | 339 | | | 24.4 | | % | | | | 815 | | | NM | | | | | | 1,867 | | | 33.8 | | % |

| Foreign currency translation (a) | | | (14) | | | (0.6) | | % | | | | (10) | | | (0.5) | | % | | | | (1) | | | (0.1) | | % | | | | — | | | NM | | | | | | (25) | | | (0.4) | | % |

| Total change in revenue | | | 603 | | | 25.5 | | % | | | | 86 | | | 4.9 | | % | | | | 338 | | | 24.3 | | % | | | | 815 | | | NM | | | | | | 1,842 | | | 33.4 | | % |

| 2023 Revenue | | | $ | 2,967 | | | | | | | | $ | 1,853 | | | | | | | | $ | 1,729 | | | | | | | | $ | 815 | | | | | | | | $ | 7,364 | | | | |

Revenue growth was partially made up of the revenue contributed by acquisitions from APT of $362 million, with the remainder of the increase coming from organic revenue growth of $255 million, or 10.8%.

Revenue was negatively impacted by $14 million of foreign currency translation.

The emerging markets grew organically due to increased project revenue.

Transport experienced $240 million of revenue growth.

Western Europe also experienced increases driven by strong price realization and delivery on capital projects.

Organic revenue growth for the treatment application was $15 million for the year due to increased sales volume in the U.S. driven by strong backlog execution.

Organic growth was led by strength in building solutions, with commercial revenue growth of $97 million, driven by the U.S. with increased sales volume from backlog execution in the first half of the year and strong price realization, partially offset by the residential declines in revenue of $33 million primarily in the emerging markets, driven by softness in the Middle East, and volume declines in the U.S. The industrial water application had organic growth of $32 million, led by the emerging markets due to increased sales volume, and western Europe where we benefited from strong price realization.

From an application perspective, organic revenue growth during the year was led by growth in the water application of $229 million led by the U.S., where we saw increased sales volume, enabled by recovery on prior year component constraints, and western Europe, due to strong backlog execution.

We also had organic revenue growth in the energy application of $110 million, driven by improved component availability and metrology sales in the U.S.

*Integrated Solutions and Services*

COVID-19 Pandemic Update and Macroeconomic Conditions

The global spread of COVID-19 has curtailed the movement of people, goods and services worldwide, including in many of the regions where we sell our products and services and conduct operations.

This section summarizes the most significant impacts related to the ongoing COVID-19 pandemic that we have experienced to date, and we have included additional details as applicable throughout other sections of this Annual Report.

Given the magnitude and duration of the COVID-19 pandemic and its economic consequences, it has become more difficult to distinguish specific aspects of our operational and financial performance that are most directly related to the pandemic from those more broadly influenced by ongoing macroeconomic, market and industry dynamics that may be, to varying degrees, related to the pandemic and its consequences.

The COVID-19 pandemic, as well as broader global market supply and demand dynamics, have adversely affected, and are expected to continue to adversely affect, our supply chains.

We have experienced, and expect to continue experiencing shortages in the supply of components, including electronics, particularly semiconductors ("chips"), parts and raw materials.

To help mitigate the effects of these challenges and increase the resilience of our supply chain, we continue to enhance and augment our risk management activities, including supplier pulsing and redundancy.

Additionally, we have and continue to take measures with respect to buffer stock, the use of alternative suppliers and redesign of certain products to mitigate the impacts of the ongoing supply chain, freight and logistics delays and bolster our access to electronics, parts and raw materials.

We have also experienced, and continue to experience, increased inflation, freight, logistics, labor and overhead costs.

The Company has taken specific actions to mitigate these inflationary headwinds, including pricing actions to pass cost increases through to customers and productivity efforts, including selective chip allocation, product redesigns, alternate sourcing options, and global procurement efforts.

We have also initiated and plan to continue to initiate restructuring actions in 2023 to further optimize our cost structure.

These supply chain issues have also impacted our delivery times to customers.

To some extent, our mitigation strategies have alleviated these issues but our lead times continue to be impacted to varying degrees.

If these issues continue, they could have a negative impact on our results of operations.

Many of our offices globally remain in a substantially remote work from home or hybrid status, with no material disruption to operations, financial reporting systems, internal control over financial reporting or disclosure controls and procedures.

The severity, magnitude and duration of the COVID-19 pandemic and its economic consequences are uncertain, and the pandemic’s ongoing and future impacts on our business, financial condition, results of operations, and stock price remain uncertain and difficult to predict.

Risks related to the impacts of COVID-19 as well as our supply chain are described in further detail under "Item 1A.

Risk Factors" in the Company's 2022 Annual Report.

The transaction, which is anticipated to close in mid-2023, is subject to approval by shareholders of Xylem and Evoqua, the receipt of required regulatory approvals and other customary closing conditions.

Excluding revenue,

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| --- | --- | --- |

| (c) The $32 million in tax effects of adjustments in the period primarily consists of $23 million related to the U.K. pension settlement expense and $3 million related to the asset impairment charge. | | |

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The increase in adjusted operating margin was primarily due to cost reductions from our productivity, restructuring and other cost saving initiatives, favorable volume and price realization.

These impacts were partially offset by cost inflation and increased spending on strategic investments.

- Net income of $355 million, or $1.96 per diluted share, down 16.6% ($516 million or $2.85 per diluted share on an adjusted basis, up 14.5% from 2021)

- Utilities revenue increased by approximately 10% for 2022 on an organic basis driven by strength in the U.S. and western Europe, partially offset by weakness in the emerging markets.

For 2023, we expect organic revenue growth in the high-single-digits.

On the clean water side, we expect improvements in chip supply through 2023 allowing for large deal deployments already secured in our backlog.

Additionally, we can expect continued momentum for water quality products and increased demand for pipeline assessment services due to aging infrastructure.

We expect wastewater utilities to remain focused on mission-critical applications in wastewater.

Long-term capital expenditure outlook is strong due to aging infrastructure and the emerging markets’ continued advancement.

- Industrial revenue increased by approximately 13% for 2022 on an organic basis driven by strength across all major geographic regions.

For 2023, we expect organic revenue growth in the low to mid-single-digit range.

We expect to see continued robust growth in our dewatering business, driven by mining demand and strategic growth investments.

We expect sustained demand in light industrial activity globally.

We are exposed to market risk, primarily related to foreign currency exchange rates and interest rates.

These exposures are actively monitored by management.

Our exposure to foreign exchange rate risk is due to certain costs, revenue and borrowings being denominated in currencies other than one of our subsidiaries' functional currency.

Similarly, we are exposed to market risk as a result of changes in interest rates which may affect the cost of our financing.

It is our policy and practice to use derivative financial instruments only to the extent necessary to manage exposures.

Foreign Currency Exchange Rate Risk

Approximately 46% of our 2023 revenues were from customers in various locations outside the U.S.

Our economic foreign currency risk primarily relates to receipts from customers, payments to suppliers and intercompany transactions denominated in foreign currencies.

We may use derivative financial instruments to offset risk related to receipts from customers and payments to suppliers, when it is believed that the exposure will not be limited by our normal operating and financing activities.

We enter into currency forward contracts periodically in order to manage the exchange rate fluctuation risk on certain intercompany transactions associated with third-party sales and purchases.

These risks are also mitigated by natural hedges including the presence of manufacturing facilities outside the U.S., global sourcing and other spending which occurs in foreign countries.

Our principal foreign currency transaction exposures primarily relate to the Euro, Swedish Krona, British Pound, Canadian Dollar, Australian Dollar, and Polish Zloty.

We estimate that a hypothetical 10% movement in foreign currency exchange rates would not have a material economic impact to Xylem’s financial position and results of operations.

Additionally, we are subject to foreign exchange translation risk due to changes in the value of foreign currencies in relation to our reporting currency, the U.S. Dollar.

The translation risk is primarily concentrated in the exchange rate between the U.S. Dollar and the Euro, British Pound, Canadian Dollar, Chinese Yuan, Australian Dollar, Indian Rupee, and Swedish Krona.

As the U.S. Dollar strengthens against other currencies in which we transact business, revenue and income will generally be negatively impacted, and if the U.S. Dollar weakens, revenue and income will generally be positively impacted.

We expect to continue to generate significant revenue from non-U.S. operations and we expect the cash generated from that revenue to be predominately held by our foreign subsidiaries.

We expect to manage our worldwide cash requirements considering available funds among the many subsidiaries through which we conduct business and the cost effectiveness with which those funds can be accessed.

We may transfer cash from certain international subsidiaries to the U.S. and other international subsidiaries when it is cost effective to do so, though we continually review our domestic and foreign cash profile, expected future cash generation and investment opportunities and reassess whether there is a need to repatriate funds held internationally to support our U.S. operations.

We also hedge our investment in certain foreign subsidiaries via the use of cross-currency swaps.

Accordingly, we estimate that a 10% movement of the U.S. Dollar to various foreign currency exchange rates we translate from, in aggregate would not have a material economic impact on our financial position and results of operations.

Interest Rate Risk

As of December 31, 2023, our long-term debt portfolio is primarily comprised of four series of fixed-rate senior notes that total approximately $1.9 billion.

The senior notes are not exposed to interest rate risk as the bonds are at a fixed rate until maturity.

In addition to the senior notes, we also have $75 million in equipment financings with fixed interest rates.

Our long-term debt portfolio also includes $326 million of variable rate debt, primarily comprised of the $278 million for the Term Facility (as defined in Note 15, “Credit Facilities and Debt” to the consolidated financial statements) and $48 million of equipment financings with variable interest rates .

We estimate that a 1% movement in interest rates would not have a material economic impact on our financial position and results of operations.

Based on the current interest rate market we do not anticipate material risk associated with our debt refinancing within the target time frame of maturity.

Commodity Price Exposures

For a discussion of risks relating to commodity prices, refer to “Item 1A.

Risk Factors.”

Our financial results can be difficult to predict.

Our business is impacted by a substantial amount of short cycle and book-and-bill business, which we have limited insight into, particularly for the business that we transact through our significant distribution network.

Our businesses, including that of our Measurement & Control Solutions segment, are also impacted by our long-cycle business, including large projects, which could be unexpectedly cancelled, or whose timing can change based upon customer requirements due to a number of factors affecting the project that are beyond our knowledge or control, such as funding, readiness of the project and regulatory approvals.

We rely on a complex global supply chain, which has been subject to dynamic conditions, volatility, unexpected changes and disruptions due to international conditions, including as a result of the war between Russia and Ukraine, the COVID-19 pandemic and macroeconomic conditions, including high inflation.

These supply chain challenges have affected, and may continue to affect, our cost structure, production and ability to timely fill customer orders.

We cannot predict when, or if, these conditions will ease or subside in the future.

Accordingly, our financial results for any given period have been and will continue to be difficult to predict.

We may incur additional impairment charges for our goodwill and other indefinite-lived intangible assets which would negatively impact our operating results.

We have a significant amount of goodwill and purchased intangible assets on our balance sheet as a result of acquisitions.

As of December 31, 2022, the net carrying value of our goodwill and other indefinite-lived intangible assets totaled approximately $3 billion.

In accordance with generally accepted accounting principles, we evaluate these assets for impairment at least annually, or more frequently if changes in events or circumstances indicate it is more likely than not that a potential impairment could exist.

Significant negative industry or economic trends, disruptions to our business or our customers’ business, inability to effectively integrate or scale acquired businesses, increases in cost of capital, unexpected significant changes or planned changes in use of the assets, failure of the FCC to renew radio spectrum licenses, and divestitures and market capitalization declines may cause impairment of our goodwill and other indefinite-lived intangible assets.

For example, in 2020 we recorded goodwill impairment charges $58 million within our Measurement & Control Solutions segment primarily related to the performance of the business of the Pure Technologies Ltd. acquisition ("Pure") (as detailed in Note 11, “Goodwill and Other Intangible Assets”).

We did not record goodwill impairment charges within our Measurement & Control Solutions segment in 2021 or 2022.

Material impairment charges have in the past and could in the future adversely affect our results of operations and financial condition.

Changes in our effective tax rates and tax expenses may adversely affect our financial results.

We sell our products in approximately 150 countries and 53% of our revenue was generated outside the U.S. for the year ended December 31, 2022.

Given the global nature of our business, a number of factors may increase our effective tax rates and tax expense, including:

- the geographic mix of jurisdictions in which profits are earned and taxed;

- the statutory tax rates and tax laws in jurisdictions in which we conduct business;

- the resolution of tax issues arising from tax examinations by various tax authorities; and

- the valuation of our deferred tax assets and liabilities.

Additionally, tax laws, regulations, and administrative practices in various jurisdictions may be subject to significant change, with or without notice, due to economic, political, and other conditions, and significant judgment is required in evaluating and estimating our provision and accruals for these taxes.

The recent agreement by countries in the Organization for Economic Cooperation and Development to implement additional legislative changes increases the uncertainty of future income tax positions, and such changes may result in additional tax expense and effective tax rate volatility.

Our businesses are regularly examined by various tax authorities throughout the world and the resolutions of these examinations do not typically have a significant impact on our effective tax rates and tax expenses, but they could.

For example, following an examination regarding aspects of the reorganization of our European business that occurred in 2013, the Swedish tax authority issued a tax assessment to Xylem’s Swedish subsidiary in 2019, which we are appealing as further described in Note 6, “Income Taxes.” This examination as well as other examinations can result in increased tax assessments, and settlement or litigation about the assessments and final resolution could be unfavorable to Xylem.

We regularly assess the likelihood of favorable or unfavorable outcomes resulting from these examinations to determine the adequacy of our provision for income taxes, including unrecognized tax benefits; however, developments in an audit or litigation could materially and adversely affect us.

Although we

believe our tax estimates and accruals are reasonable, there can be no assurance that any final determination will not be materially different than the treatment reflected in its historical income tax provisions, accruals and unrecognized tax benefits, which could materially and adversely affect our business, operating results, cash flows and financial condition.

Our pension and other defined benefit plans are subject to financial market risks that could adversely impact our earnings, financial condition and cash flows in future periods.

Certain current and retired employees are covered by pension and other defined benefit plans (collectively, “post-retirement benefit plans”).

We make contributions to fund our post-retirement benefit plans when we consider it necessary or advantageous to do so.

Significant changes in market interest rates, decreases in fair value of or investment losses on plan assets, changes in discount rates, or changes in minimum funding requirements established by governments, taxing authorities or other agreements, could increase our funding obligations and adversely impact our earnings, financial condition and cash flows in future periods.

In addition, the cost of our post-retirement benefit plans is incurred over long periods of time and involves factors that can be volatile and unpredictable, including rates of return on plan assets, discount rates used to calculate liabilities and expenses, change in laws and regulatory actions, and changes in actuarial experience and assumptions, which could adversely impact our earnings, results of operations, financial condition and cash flows.

Our debt obligations may adversely affect our business and our ability to meet our obligations and pay dividends.

As of December 31, 2022, our total outstanding indebtedness was $1,880 million as described under “Liquidity and Capital Resources" and we may incur additional debt in the future.

Our current or future indebtedness could have adverse consequences to us and our investors, including:

- increasing our vulnerability to general adverse economic and industry conditions;

- limiting our ability to obtain additional financing or borrow additional funds;

- reducing or eliminating our ability to pay future dividends or repurchase our common stock;

Xylem is a leading global water technology company with [removed: 2022] [added: 2023] revenues of [removed: $5.5] [added: $7.4] billion and approximately [removed: 17,800] [added: 23,000] employees worldwide.

We design, manufacture and service highly engineered products and solutions across a wide variety of critical [removed: applications,] [added: applications] primarily in the water [removed: sector, but also in energy.][added: sector.]

Our broad portfolio of products, services and solutions addresses customer needs of scarcity, resilience, [added: quality,] and affordability across the water cycle, from the delivery, [added: treatment,] measurement and use of drinking water, to the collection, testing, analysis and treatment of wastewater, to the return of water to the environment.

We have differentiated market positions in core application areas including transport, treatment, dewatering, analytic instrumentation and measurement, smart metering, infrastructure assessment services, digital software solutions for utilities, [added: industrial processes, outsourced water services, filtration] and [added: separation,] applied water systems for commercial and residential [removed: building services] [added: business services, disinfection, wastewater treatment,] and [removed: industrial processes.][added: anodes.]

- A dedicated, experienced, qualified and technologically advanced group of [removed: experienced] employees focused on safely satisfying our customers' requirements in the water and energy spaces

We compete in areas that are pivotal to improving "water [removed: affordability"] [added: affordability," "water quality,"] and "resilience", while reducing the impact of "water scarcity".

Our customers often face all [removed: three] [added: four] of these challenges, ranging from inefficient and aging water distribution networks and energy-intensive or unreliable water and wastewater management systems (requiring improvements in water affordability); droughts and pollution which limit the amount of water readily available (causing water scarcity); or exposure to natural disasters such as floods or droughts (requiring improvements in resilience).

Additionally, we also provide solutions to enhance communications and efficiency, [removed: improve safety and conserve resources to customers in the water and energy sectors.]

In addition to utilities, Equipment, Technology and Service companies also provide distinct technologies and application expertise [added: and services] to a wide array of entities, including farms, mines, power plants, industrial facilities (such as food and beverage and pharmaceutical manufacturers) and residential and commercial customers seeking to address similar trends.

[removed: ][added: ]

- [removed: Drive] [added: Drive] Customer Success. We seek to partner with customers to meet their stakeholders’ needs through our broad portfolio of products, services and solutions.

- Grow in the Emerging Markets. We continue to invest in [removed: localizing] [added: regionalizing] our capabilities in the emerging markets.

We seek to address the base of the pyramid population by providing water and sanitation needs with new [removed: solutions] and [added: fit-for-market product portfolios, solutions, and] business models.

- [removed: Strengthen] [added: Strengthen] Innovation and Technology. We seek to create new customer offerings that help them solve water challenges more powerfully than ever before, while also providing our company with [removed: rapid] [added: rapid, profitable,] growth opportunities.

This will further strengthen our core product offerings, and deliver strategic, sustainable innovations [added: and insightful data analytics] that help us tap into new markets through advanced technology and new business models.

- Build a [removed: Culture of Continuous Improvement.] [added: High Impact Culture.] We seek to continue embedding a continuous improvement mindset throughout the Company, [removed: and will continue] to [added: further] improve our efficiency, simplify our business and manage costs to support continued growth.

- [removed: Cultivate] [added: Cultivate] Leadership and Talent Development. We continue to foster an empowering, mission-driven, diverse, equitable and inclusive culture.

We have [removed: three] [added: four] reportable business segments that are aligned around the critical market applications they provide: Water Infrastructure, Applied Water, [removed: and] Measurement [removed: &] [added: and] Control [removed: Solutions.][added: Solutions and Integrated Solutions and Services.]

| | | | | | | Market Applications | | | | | | [removed: 2022] [added: 2023] Revenue (in millions) | | | | | | % Revenue | | | | | | Major Products | | | | | | Primary Brands | | |

| Water Infrastructure | | | | | | Transport | | | | | | $ | [removed: 1,943] [added: 2,172] | | | | | [removed: 82] [added: 73] | | % | | | | • Water and wastewater pumps • Filtration, disinfection and biological treatment equipment • Mobile dewatering equipment and rental services | | | | | | [removed: • Flygt • Godwin • Leopold • Sanitaire • Wedeco • Xylem] [added: •ADI •Flygt •Godwin •Ionpure •Leopold •Magneto •Neptune Benson •Sanitaire •Wallace & Tiernan •Wedeco •Xylem] Vue | | |

| Applied Water | | | | | | [removed: Commercial] Building [removed: Services] [added: Solutions] | | | | | | $ | [removed: 659] [added: 1,025] | | | | | [removed: 37] [added: 55] | | % | | | | • Pumps • Valves • Heat exchangers • Controls • Dispensing equipment systems | | | | | | • A-C Fire Pump • Bell & Gossett • Flojet • Goulds Water Technology • Jabsco • Lowara • Standard Xchange • Xylem Vue | | |

| | | | Industrial Water | | | | | | [removed: 802] [added: 828] | | | | | | [removed: 46] [added: 45] | | % | | | | | | | | | | | | | | | |

| Measurement [removed: &] [added: and] Control Solutions | | | | | | Water | | | | | | $ | [removed: 1,126] [added: 1,354] | | | | | [removed: 81] [added: 78] | | % | | | | • Smart meters • Networked communication devices • Data analytics • Test equipment • Controls • Sensor devices • Software & managed services • Critical infrastructure services | | | | | | • Pure Technologies • Sensus • Smith Blair • WTW • YSI • Xylem Vue | | |

The Transport application also includes sales and rental of specialty dewatering [removed: pumps] [added: pumps, scalable products,] and related [removed: equipment] [added: equipment, technology,] and services, which provide the safe removal or draining of groundwater and surface water from construction sites or other industrial sites and bypass pumping for the repair of aging utility infrastructure, as well as emergency water transport and removal during severe weather events.

Several trends are increasing demand for this application expertise: (i) the increase in both the type and amount of contaminants found in the water supply, (ii) increasing environmental regulations, (iii) the need to increase system [removed: efficiencies and] resilience [added: and efficiencies] to optimize energy and other operational costs, (iv) the retirement of an aging water industry workforce that has not been systematically renewed at utilities and other end-user customers, and (v) the build-out of water infrastructure in the emerging markets.

Our key competitors in the Water Infrastructure segment include KSB Inc., Sulzer Ltd., Grundfos, United Rentals, Trojan [removed: (Danaher Corporation)] [added: (Veralto Corporation), Veolia, De Nora,] and [removed: Evoqua.][added: ProMinent.]

The industrial market includes original equipment manufacturers ("OEMs"), exploration and production firms, [added: agricultural customers,] and developers and managers of industrial facilities, such as electrical power generators, chemical manufacturers, machine shops, clothing manufacturers, marine, food and beverage companies and car washes.

Measurement [removed: &] [added: and] Control Solutions

Measurement [removed: &] [added: and] Control Solutions develops advanced technology solutions that enable intelligent use and conservation of critical water and energy resources.

In short, they provide insight into operations and enable our customers to manage the entire scope of their operations remotely through their [removed: networks.][added: networks and to optimize their operational costs.]

A [removed: more] direct sales approach, with key account management, is employed for large utilities and government programs.

Macro growth drivers include increasing regulation, aging infrastructure and worldwide movement towards smart grid [removed: implementation.][added: implementation and automated meter infrastructure (“AMI").]

We set ourselves apart in the industry by focusing on our communication network, innovation, new product development and service offerings that deliver tangible savings from efficiency of operating costs in meter reading and [removed: billing] [added: billing,] as well as reduction of non-revenue water through improved meter accuracy, reduced theft and identification of leaks.

Our key competitors in the Measurement [removed: &] [added: and] Control Solutions segment include Itron, Badger Meter, Landis+Gyr, Neptune (Roper), Kamstrup, Echologics (Mueller Water Products), Hach [removed: (Danaher] [added: (Veralto] Corporation) and Teledyne.

| (in millions) | | | [removed: 2022] [added: 2023] | | | | | | | | | | | | [removed: 2021] [added: 2022] | | | | | | | | | | | | [removed: 2020] [added: 2021] | | | | | | | | |

| United States | | | $ | [removed: 2,573] [added: 3,956] | | | | | [removed: 47] [added: 54] | | % | | | | $ | [removed: 2,280] [added: 2,573] | | | | | [removed: 44] [added: 47] | | % | | | | $ | [removed: 2,297] [added: 2,280] | | | | | [removed: 47] [added: 44] | | % |

| Western Europe | | | [removed: 1,411] [added: 1,655] | | | | | | [removed: 26] [added: 22] | | % | | | | [removed: 1,414] [added: 1,411] | | | | | | [removed: 27] [added: 26] | | % | | | | [removed: 1,259] [added: 1,414] | | | | | | [removed: 26] [added: 27] | | % |

| Emerging Markets (a) | | | [removed: 1,074] [added: 1,182] | | | | | | [removed: 19] [added: 16] | | % | | | | [removed: 1,066] [added: 1,074] | | | | | | [removed: 21] [added: 19] | | % | | | | [removed: 919] [added: 1,066] | | | | | | [removed: 19] [added: 21] | | % |

| Other | | | [removed: 464] [added: 571] | | | | | | 8 | | % | | | | [removed: 435] [added: 464] | | | | | | 8 | | % | | | | [removed: 401] [added: 435] | | | | | | 8 | | % |

| Total | | | $ | [removed: 5,522] [added: 7,364] | | | | | | | | | | | $ | [removed: 5,195] [added: 5,522] | | | | | | | | | | | $ | [removed: 4,876] [added: 5,195] | | | | | | | |

It is expected that there will be a 40% gap between global water supply and demand by 2030.

"Water quality" refers to the suitability of water for a particular use based on its physical, chemical and biological characteristics.

improve safety and conserve resources to customers in the water sector.

| | | | Treatment | | | | | | 795 | | | | | | 27 | | % | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | $ | 2,967 | | | | | 100 | | % | | | | | | | | | | | | |

| | | | | | | | | | | | | $ | 1,853 | | | | | 100 | | % | | | | | | | | | | | | |

| | | | Energy | | | | | | 375 | | | | | | 22 | | % | | | | | | | | | | | | | | | |

| | | | | | | | | | $ | 1,729 | | | | | 100 | | % | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Integrated Solutions and Services | | | | | | | | | | | | $ | 815 | | | | | 100 | | % | | | | •Preventative maintenance services •Rapid response mobile services •Digitally enabled/outsourced solutions •Process and wastewater systems •Environmental remediation •Odor and corrosion control •Filtration •Reverse osmosis •Ion exchange •Continuous deionization | | | | | | •AquaPro •WaterOne •Ion Pure | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

Integrated Solutions and Services

Our Integrated Solutions and Services segment provides application-specific solutions and full lifecycle services to treat process water, utility water, and wastewater for customers in a variety of end markets.

Integrated Solutions and Services also provides odor and corrosion control services and drinking water treatment systems for municipalities.

Integrated Solutions and Services offers customers outsourced water service contracts, capital

systems and related recurring aftermarket services, parts and consumables, and emergency services.

Our outsourced water service contracts include short-term service deionization contracts, averaging one to two years in duration, longer-term build-own-operate contracts, averaging eight to ten years in duration, and event driven mobile fleet deployments, including a growing portfolio of digitally connected technologies encompassed in our Water One® service platform.

Key capital and related aftermarket service and product offerings include filtration, reverse osmosis, ion exchange and continuous deionization.

Integrated Solutions and Services supports service and aftermarket sales through what we believe to be the largest integrated industrial service branch network in North America, which is comprised of approximately 1,060 highly qualified professionals in field service and application engineering roles and our extensive fleet of mobile reverse osmosis and deionization water treatment systems.

This is complemented by our digitally connected Water One® service platform, which uniquely combines our water expertise, proactive service, proven technology, and data intelligence to continually improve customers’ water operation management.

Our remote monitoring capabilities enable us to optimize our routine service calls through predictive analytics and provide customers a more predictable, cost-efficient water solution.

Integrated Solutions and Services partners with customers through our direct sales and service team, which is organized geographically and by end market and is complemented by an inside sales force, field sales engineers, and a growing e-commerce platform.

Our key competitors in the Integrated Solutions and Services segment include Veolia, Ecolab, MPW Industrial Services, and Ovivo.

This seasonality is dependent on factors such as customers' capital spending, as well as the effects of climate change and weather

As of December 31, 2023, we are working to determine the impact of the Evoqua Water Technologies Corp. ("Evoqua") acquisition on these targets.

Facility fees under the 2023 Credit Facility are also adjusted based on Xylem's credit rating and the KPIs.

We seek to foster a high-impact culture - that is, one in which our colleagues are inspired to innovate, empowered to lead, and accountable to deliver – creating an environment that is mission-driven, people-centered, diverse, equitable and inclusive.

In 2023, we changed our approach in order to gather more frequent and specific feedback from our wired colleagues through shorter, pulse surveys that provide insights into employee engagement, customer focus, company culture and organizational effectiveness.

In addition, we periodically conduct ad hoc surveys to gain insights into other relevant topics, including well-being, safety and professional development.

We believe that Xylem is strongest when we embrace the power of diversity, equity and inclusion to drive innovation, make us more competitive, positively impact employee and customer

In 2023, approximately 89% of our colleagues participated in employee-led volunteerism, including through Watermark, enhancing the Company’s commitment to employee development, retention, recruiting and collaboration in the communities where we live and work.

*Evoqua Acquisition*

By 2025, more than 30% of the world’s population is expected to live in areas without adequate water supply.

| | | | Treatment | | | | | | 421 | | | | | | 18 | | % | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | $ | 2,364 | | | | | 100 | | % | | | | | | | | | | | | |

| | | | Residential Building Services | | | | | | 306 | | | | | | 17 | | % | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | $ | 1,767 | | | | | 100 | | % | | | | | | | | | | | | |

| | | | Energy | | | | | | 265 | | | | | | 19 | | % | | | | | | | | | | | | | | | |

| | | | | | | | | | $ | 1,391 | | | | | 100 | | % | | | | | | | | | | | | | | | |

partnerships with academic institutions as well as other technology firms, start-up accelerators and venture capital organizations.

As of year end, these are currently under review.

We continue to foster an empowering, mission-driven, people-centered, diverse, equitable and inclusive culture.

These surveys cover a range of topics, including employee engagement, company culture, customer focus, organizational effectiveness, employee well-being, safety, diversity, equity and inclusion, pay for performance and career development opportunities.

Our approach currently includes a periodic comprehensive global survey, shorter pulse surveys and listening sessions.

86% of our employees globally participated in our 2021 comprehensive engagement survey, and our engagement index showed increases from the 2019 survey.

In response to the ongoing crisis in Ukraine, we continue to provide financial and logistical support to our colleagues and partners in Ukraine, including travel assistance and temporary accommodations near our facilities in Poland.

These proceedings may seek remedies relating to matters including environmental, tax, intellectual property, acquisitions or divestitures, product liability, property damage, personal injury, privacy, employment, labor and pension, government [added: investigations or] contract issues and commercial or contractual disputes.

See Note [removed: 19,] [added: 20,] "Commitments and Contingencies", of the consolidated financial statements included in Item 8 of Part II of this 10-K for information regarding certain legal and regulatory proceedings we are involved in.

Evoqua previously disclosed in its public filings that the United States Attorney’s Office for the District of Massachusetts was investigating whether financial misstatements were made in Evoqua’s public filings and earnings announcements.

That investigation has been moved to the United States Attorney’s Office for the District of Rhode Island.

The Company is cooperating with the investigation.

We currently believe that it will not have a material adverse effect on our business, financial condition, results of operations, or prospects.

| | | | | | | For the fiscal year ended | | | December 31, [removed: 2022] [added: 2023] | | | | | | | | |

[removed: 300] [added: 301] Water Street SE, Washington, DC 20003

The aggregate market value of the common stock of the registrant held by non-affiliates of the registrant as of June 30, [removed: 2022] [added: 2023] was approximately [removed: $14.0] [added: $26.9] billion.

As of February [removed: 17, 2023,] [added: 23, 2024,] there were [removed: 180,278,376] [added: 241,770,413] outstanding shares of the registrant’s common stock, par value $0.01 per share.

Portions of the registrant’s definitive proxy statement for its [removed: 2023] [added: 2024] Annual Meeting of Shareowners, to be held in May [removed: 2023,] [added: 2024,] are incorporated by reference into Part II and Part III of this Report.

For the fiscal year ended December 31, [removed: 2022][added: 2023]

| 1A. | | | [Risk [removed: Factors](#ice21da0ba68f43349fe99c1e37b9f2e3_16)] [added: Factors](#if7b557ec01b24fe2a7ff4307f8c51301_16)] | | | [removed: [17](#ice21da0ba68f43349fe99c1e37b9f2e3_16)] [added: [16](#if7b557ec01b24fe2a7ff4307f8c51301_16)] | | |

| 1B. | | | [Unresolved Staff [removed: Comments](#ice21da0ba68f43349fe99c1e37b9f2e3_19)] [added: Comments](#if7b557ec01b24fe2a7ff4307f8c51301_19)] | | | [removed: [30](#ice21da0ba68f43349fe99c1e37b9f2e3_19)] [added: [29](#if7b557ec01b24fe2a7ff4307f8c51301_19)] | | |

| 3 | | | [Legal [removed: Proceedings](#ice21da0ba68f43349fe99c1e37b9f2e3_25)] [added: Proceedings](#if7b557ec01b24fe2a7ff4307f8c51301_25)] | | | [removed: [31](#ice21da0ba68f43349fe99c1e37b9f2e3_25)] [added: [33](#if7b557ec01b24fe2a7ff4307f8c51301_25)] | | |

| 4 | | | [Mine Safety [removed: Disclosures](#ice21da0ba68f43349fe99c1e37b9f2e3_28)] [added: Disclosures](#if7b557ec01b24fe2a7ff4307f8c51301_28)] | | | [removed: [32](#ice21da0ba68f43349fe99c1e37b9f2e3_28)] [added: [33](#if7b557ec01b24fe2a7ff4307f8c51301_28)] | | |

| * | | | [Information about our Executive [removed: Officers](#ice21da0ba68f43349fe99c1e37b9f2e3_31)] [added: Officers](#if7b557ec01b24fe2a7ff4307f8c51301_31)] | | | [removed: [33](#ice21da0ba68f43349fe99c1e37b9f2e3_31)] [added: [34](#if7b557ec01b24fe2a7ff4307f8c51301_31)] | | |

| | | | [Board of [removed: Directors](#ice21da0ba68f43349fe99c1e37b9f2e3_34)] [added: Directors](#if7b557ec01b24fe2a7ff4307f8c51301_34)] | | | [removed: [34](#ice21da0ba68f43349fe99c1e37b9f2e3_34)] [added: [35](#if7b557ec01b24fe2a7ff4307f8c51301_34)] | | |

| 5 | | | [Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#ice21da0ba68f43349fe99c1e37b9f2e3_40)] [added: Securities](#if7b557ec01b24fe2a7ff4307f8c51301_40)] | | | [removed: [35](#ice21da0ba68f43349fe99c1e37b9f2e3_40)] [added: [36](#if7b557ec01b24fe2a7ff4307f8c51301_40)] | | |

| 7 | | | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#ice21da0ba68f43349fe99c1e37b9f2e3_46)] [added: Operations](#if7b557ec01b24fe2a7ff4307f8c51301_46)] | | | [removed: [38](#ice21da0ba68f43349fe99c1e37b9f2e3_46)] [added: [39](#if7b557ec01b24fe2a7ff4307f8c51301_46)] | | |

| 7A. | | | [Quantitative and Qualitative Disclosures About Market [removed: Risk](#ice21da0ba68f43349fe99c1e37b9f2e3_58)] [added: Risk](#if7b557ec01b24fe2a7ff4307f8c51301_58)] | | | [removed: [59](#ice21da0ba68f43349fe99c1e37b9f2e3_58)] [added: [60](#if7b557ec01b24fe2a7ff4307f8c51301_58)] | | |

| 8 | | | [Financial Statements and Supplementary [removed: Data](#ice21da0ba68f43349fe99c1e37b9f2e3_61)] [added: Data](#if7b557ec01b24fe2a7ff4307f8c51301_61)] | | | [removed: [60](#ice21da0ba68f43349fe99c1e37b9f2e3_61)] [added: [61](#if7b557ec01b24fe2a7ff4307f8c51301_61)] | | |

| 9 | | | [Changes In and Disagreements With Accountants on Accounting and Financial [removed: Disclosure](#ice21da0ba68f43349fe99c1e37b9f2e3_157)] [added: Disclosure](#if7b557ec01b24fe2a7ff4307f8c51301_154)] | | | [removed: [114](#ice21da0ba68f43349fe99c1e37b9f2e3_157)] [added: [120](#if7b557ec01b24fe2a7ff4307f8c51301_154)] | | |

| 9A. | | | [Controls and [removed: Procedures](#ice21da0ba68f43349fe99c1e37b9f2e3_160)] [added: Procedures](#if7b557ec01b24fe2a7ff4307f8c51301_157)] | | | [removed: [114](#ice21da0ba68f43349fe99c1e37b9f2e3_160)] [added: [120](#if7b557ec01b24fe2a7ff4307f8c51301_157)] | | |

| 9C. | | | [Disclosure Regarding Foreign Jurisdictions that Prevent [removed: Inspections](#ice21da0ba68f43349fe99c1e37b9f2e3_166)] [added: Inspections](#if7b557ec01b24fe2a7ff4307f8c51301_163)] | | | [removed: [114](#ice21da0ba68f43349fe99c1e37b9f2e3_166)] [added: [121](#if7b557ec01b24fe2a7ff4307f8c51301_163)] | | |

| 10 | | | [Directors, Executive Officers and Corporate [removed: Governance](#ice21da0ba68f43349fe99c1e37b9f2e3_175)] [added: Governance](#if7b557ec01b24fe2a7ff4307f8c51301_172)] | | | [removed: [116](#ice21da0ba68f43349fe99c1e37b9f2e3_175)] [added: [123](#if7b557ec01b24fe2a7ff4307f8c51301_172)] | | |

| 12 | | | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#ice21da0ba68f43349fe99c1e37b9f2e3_181)] [added: Matters](#if7b557ec01b24fe2a7ff4307f8c51301_178)] | | | [removed: [116](#ice21da0ba68f43349fe99c1e37b9f2e3_181)] [added: [123](#if7b557ec01b24fe2a7ff4307f8c51301_178)] | | |

| 13 | | | [Certain Relationships and Related Transactions, and Director [removed: Independence](#ice21da0ba68f43349fe99c1e37b9f2e3_184)] [added: Independence](#if7b557ec01b24fe2a7ff4307f8c51301_181)] | | | [removed: [116](#ice21da0ba68f43349fe99c1e37b9f2e3_184)] [added: [123](#if7b557ec01b24fe2a7ff4307f8c51301_181)] | | |

| 14 | | | [Principal Accounting Fees and [removed: Services](#ice21da0ba68f43349fe99c1e37b9f2e3_187)] [added: Services](#if7b557ec01b24fe2a7ff4307f8c51301_184)] | | | [removed: [116](#ice21da0ba68f43349fe99c1e37b9f2e3_187)] [added: [123](#if7b557ec01b24fe2a7ff4307f8c51301_184)] | | |

| 15 | | | [Exhibits, Financial Statement [removed: Schedules](#ice21da0ba68f43349fe99c1e37b9f2e3_193)] [added: Schedules](#if7b557ec01b24fe2a7ff4307f8c51301_190)] | | | [removed: [117](#ice21da0ba68f43349fe99c1e37b9f2e3_193)] [added: [124](#if7b557ec01b24fe2a7ff4307f8c51301_190)] | | |

Important factors that could cause our actual results, performance and achievements, or industry results to differ materially from estimates or projections contained in or implied by our forward-looking statements include, among others, the following: the impact of overall industry and general economic conditions, including industrial, governmental, and public and private sector spending, [removed: inflation,] interest [removed: rates] [added: rates, inflation] and related monetary policy by governments in response to inflation, and the strength of the residential and commercial real estate markets, on economic activity and our operations; geopolitical events, including the [removed: war between] [added: ongoing and possible escalation of the conflicts involving] Russia and Ukraine, and [added: the Middle East, as well as] regulatory, economic and other risks associated with our global sales and operations, including [removed: with respect] [added: those related] to domestic content requirements applicable to projects [removed: with] [added: receiving] governmental funding; [removed: continued uncertainty around the ongoing impacts of the COVID-19 pandemic on the macroeconomy and our business, operations, growth, and financial condition; actual or potential other epidemics, pandemics or global health crises; availability, shortage or delays in receiving electronic components (in particular, semiconductors), parts and raw materials from our supply chain;] manufacturing and operating cost increases due to macroeconomic conditions, including inflation, energy supply, supply chain shortages, logistics challenges, tight labor markets, prevailing price changes, tariffs and other factors; demand for our products, disruption, competition or pricing pressures in the markets we serve; cybersecurity incidents or other disruptions of information technology systems on which we rely, or involving our [removed: products;] [added: connected products and services; lack of availability or delays in receiving parts and raw materials from our supply chain, including electronic components (in particular, semiconductors);] disruptions in operations at our facilities or that of third parties upon which we rely; [added: uncertainty related to the realization of the benefits and synergies from our acquisition of Evoqua Water Technologies Corp.; safe and compliant treatment and handling of water, wastewater and hazardous materials; failure to successfully execute large projects, including with respect to meeting performance guarantees and customers’ budgets, timelines and safety requirements; our] ability to retain and attract [removed: senior management] [added: leadership] and other diverse and key talent, as well as competition for overall talent and labor; [removed: difficulty predicting our financial results;] defects, security, warranty and liability claims, and recalls [removed: with respect] [added: related] to [removed: products; availability, regulation or interference with radio spectrum used by certain of] our products; uncertainty [removed: related to] [added: around] restructuring and realignment actions and related costs and savings; our ability to [removed: continue] [added: execute] strategic investments for [removed: growth; our ability] [added: growth, including related] to [removed: successfully identify, execute] [added: acquisitions] and [removed: integrate acquisitions;] [added: divestitures; availability, regulation or interference with radio spectrum used by certain of our products;] volatility in served markets or impacts on [added: our] business and operations due to weather conditions, including the effects of climate change; [added: risks related to our sustainability commitments and related disclosures;] fluctuations in foreign currency exchange rates; [removed: our ability to borrow or refinance our existing indebtedness, and uncertainty around the availability of liquidity sufficient to meet] [added: difficulty predicting] our [removed: needs;] [added: financial results;] risk of future impairments to goodwill and other intangible assets; [added: changes in our effective tax rates or tax expenses; financial market risks related to our pension and other defined benefit plans;] failure to comply with, or changes in, laws or regulations, including those pertaining to [added: our business conduct, operations, products and services, including] anti-corruption, data privacy and security, [removed: export and import, our products,] [added: trade,] competition, [removed: and] the [removed: environment and] [added: environment,] climate [removed: change; changes in our effective tax rates or tax expenses;] [added: change and health and safety;] legal, governmental or regulatory claims, investigations or proceedings and associated contingent liabilities; [removed: risks related to our proposed acquisition of Evoqua Water Technologies ("Evoqua"), including] [added: matters] related to [removed: realization of expected benefits and synergies, our ability to complete the transaction and need to incur additional transaction costs and expenses, impacts to our share price and dilution of shareholders’ ownership, and incurrence] [added: intellectual property infringement or expiration] of [removed: additional costs and expenses to integrate the combined companies;] [added: rights;] and other factors set forth under [removed: "Item] [added: “Item] 1A.

| 1 | | | [Business](#if7b557ec01b24fe2a7ff4307f8c51301_13) | | | [4](#if7b557ec01b24fe2a7ff4307f8c51301_13) | | |

| 1C. | | | [C](#if7b557ec01b24fe2a7ff4307f8c51301_1649)[yber Security](#if7b557ec01b24fe2a7ff4307f8c51301_1649) | | | [29](#if7b557ec01b24fe2a7ff4307f8c51301_1649) | | |

| 2 | | | [Properties](#if7b557ec01b24fe2a7ff4307f8c51301_22) | | | [32](#if7b557ec01b24fe2a7ff4307f8c51301_22) | | |

| 6 | | | [Reserved](#if7b557ec01b24fe2a7ff4307f8c51301_43) | | | [38](#if7b557ec01b24fe2a7ff4307f8c51301_43) | | |

| 9B. | | | [Other Information](#if7b557ec01b24fe2a7ff4307f8c51301_160) | | | [121](#if7b557ec01b24fe2a7ff4307f8c51301_160) | | |

| 11 | | | [Executive Compensation](#if7b557ec01b24fe2a7ff4307f8c51301_175) | | | [123](#if7b557ec01b24fe2a7ff4307f8c51301_175) | | |

| 16 | | | [Form 10-K Summary](#if7b557ec01b24fe2a7ff4307f8c51301_193) | | | [129](#if7b557ec01b24fe2a7ff4307f8c51301_196) | | |

| | | | [Signatures](#if7b557ec01b24fe2a7ff4307f8c51301_196) | | | [129](#if7b557ec01b24fe2a7ff4307f8c51301_196) | | |

| 1 | | | [Business](#ice21da0ba68f43349fe99c1e37b9f2e3_13) | | | [5](#ice21da0ba68f43349fe99c1e37b9f2e3_13) | | |

| 2 | | | [Properties](#ice21da0ba68f43349fe99c1e37b9f2e3_22) | | | [31](#ice21da0ba68f43349fe99c1e37b9f2e3_22) | | |

| 6 | | | [Reserved](#ice21da0ba68f43349fe99c1e37b9f2e3_43) | | | [37](#ice21da0ba68f43349fe99c1e37b9f2e3_43) | | |

| 9B. | | | [Other Information](#ice21da0ba68f43349fe99c1e37b9f2e3_163) | | | [114](#ice21da0ba68f43349fe99c1e37b9f2e3_163) | | |

| 11 | | | [Executive Compensation](#ice21da0ba68f43349fe99c1e37b9f2e3_178) | | | [116](#ice21da0ba68f43349fe99c1e37b9f2e3_178) | | |

| 16 | | | [Form 10-K Summary](#ice21da0ba68f43349fe99c1e37b9f2e3_196) | | | [121](#ice21da0ba68f43349fe99c1e37b9f2e3_199) | | |

| | | | [Signatures](#ice21da0ba68f43349fe99c1e37b9f2e3_199) | | | [121](#ice21da0ba68f43349fe99c1e37b9f2e3_199) | | |

Additionally, many of these risks and uncertainties are, and may continue to be, amplified by impacts from changes in international conditions, including as a result of the war between Russia and Ukraine, coronavirus (“COVID-19”) pandemic and macroeconomic conditions, including inflation.

Additionally, risks and uncertainties relating to our plans to acquire Evoqua could cause our actual results to differ, perhaps materially, from those indicated by these forward-looking statements, including: the risk that the conditions to the closing of the transaction are not satisfied, including the risk that required approvals of the transaction from the shareholders of Xylem or stockholders of Evoqua or from regulators are not obtained; litigation relating to the transaction; uncertainties as to the timing of the consummation of the transaction and the ability of each party to

consummate the transaction; risks that the proposed transaction disrupts the current plans or operations of Xylem or Evoqua; the ability of Xylem and Evoqua to retain and hire key personnel; competitive responses to the proposed transaction; unexpected costs, charges or expenses resulting from the transaction; potential adverse reactions or changes to relationships with customers, suppliers, distributors and other business partners resulting from the announcement or completion of the transaction; the combined company’s ability to achieve the synergies expected from the transaction, as well as delays, challenges and expenses associated with integrating the combined company’s existing businesses.

We have implemented a comprehensive cybersecurity program guided by recognized industry practices and frameworks and we continue to evolve the program in order to be able to assess, identify and manage risks from the continually evolving cybersecurity threat landscape.

Our cybersecurity program encompasses our enterprise information technology, including operational technology and technology of third parties on which we rely, and connected products and services.

Although we maintain a cybersecurity program that we believe is reasonably designed to protect the Company, cybersecurity threats may result in adverse effects on the confidentiality, integrity, and availability of our information systems or those of third parties on which we rely, and our connected products and services.

*Management and Internal Cybersecurity Team*

Our Chief Information Officer (“CIO”), who has over 30 years of relevant work experience in information technology, including cybersecurity, is responsible for the Company’s information technology systems and cybersecurity and is an integral part of the Company’s management of cybersecurity and related risks.

The CIO reports to the Senior Vice President, Operations and Supply Chain, who reports directly to the Chief Executive Officer.

Our Chief Information Security Officer ("CISO"), who has extensive cybersecurity knowledge and skills gained from over 25 years of relevant work experience and holds the Certified Information Systems Security Professional certification, reports to the CIO.

The CISO is responsible for assessing, monitoring and advising the Company’s businesses, management and the Board of Directors (“Board”) on the Company’s risks from cybersecurity threats; implementing cybersecurity strategy, programs and processes across our enterprise and connected products and services; reviewing the risk management measures implemented by the Company to identify and mitigate cybersecurity risks; and overseeing the maintenance and deployment of the Cybersecurity Incident Response Plan.

The Company’s Cybersecurity Team (“Team”), comprised of individuals with a broad range of cybersecurity skills, experiences and certifications, is led by the CISO.

The Team is responsible for the implementation, monitoring and maintenance of the Company’s cybersecurity practices in coordination with its businesses, operations and functions, and oversees the Company’s cybersecurity program, including infrastructure, governance and incident response as detailed below.

On a regular basis, the CISO receives reports from the Team on these cybersecurity program matters.

In addition, the CISO also receives reports and updates on incident response and cybersecurity threats.

*Risk Management and Strategy*

The CISO and Team manage a program for enterprise cybersecurity that is guided by the National Institute of Standards and Technology’s (“NIST”) Cybersecurity Framework.

Key areas of responsibility in the program include governance, risk and compliance, threat analysis and response, security architecture and engineering, security operations, and secure manufacturing operations.

The CISO and Team also manage a program for connected products and services cybersecurity risk management that is guided by the ISA/IEC 62443 standard to enable protection and resiliency across products and services.

Key areas of responsibility include product security, software development, innovation management, threat analysis and incident response.

Both the enterprise and connected products and services programs are designed to assess, identify and manage risks from cybersecurity threats in order to protect and preserve the security, integrity and continued availability of the Company’s information technology systems and connected products and services, and also to protect the confidentiality and integrity of information owned by, or in the custody and care of, the Company.

Elements of the programs include policies, standards, architecture, processes, tools, technology, employee education and training, and incident response.

Our risk management processes undergo at least quarterly review to identify potential gaps and areas for additional investment, resources and focus.

Our enterprise and product security programs undergo regular testing, including periodic vulnerability scanning and penetration testing.

In addition, we also periodically engage third parties to assess our enterprise and product security programs and provide consultation and advice to assist with assessing, identifying, and managing cybersecurity risks.

Our Enterprise Risk Management (“ERM”) Program annually assesses and, on an ongoing basis, monitors the Company’s key risks, including cybersecurity risk.

We maintain a suite of policies – the Cybersecurity Policy, the Product Cybersecurity Policy and the Acceptable Use of Information Technology Resources Policy – that apply globally to all of our employees, businesses and functions, as well as third-party vendors and contractors as required by our legal agreements with them.

These policies specify roles and responsibilities, fundamental principles and proper controls required for Xylem’s protection.

Our policies are reviewed annually to identify potential gaps or areas for improvement, considering changes in the Company, and its connected products and services, as appropriate.

Our Code of Conduct, implemented by the Board, requires our employees’ adherence with our policies and practices, including with respect to cybersecurity risk management.

Employees receive ongoing annual education and training regarding relevant cybersecurity risks and practices, including how to protect information and systems from cyber threats.

We also conduct monthly phishing simulations to increase employees’ ability to detect and prevent such threats.

Through our internal social media channel, we provide cybersecurity alerts and education.

In addition, our policies require the use of a cyber risk management process to onboard new suppliers and other third parties.

The Company’s cybersecurity risk mitigation strategy includes the use of risk transfer via insurance that provides protection against certain potential losses arising from certain cybersecurity incidents.

*Board of Directors*

Our Board recognizes the importance of maintaining the trust and confidence of our customers, suppliers, employees and shareholders.

In line with its broader strategic oversight, the Board oversees cybersecurity, including strategy and processes.

To assist with oversight of cybersecurity, the Board has delegated to the Audit Committee responsibility to oversee certain aspects of cybersecurity, including controls and reporting.

As part of its independent oversight of the key risks facing the Company, the Board and Audit Committee devote considerable time and attention to the oversight of management’s approach to cybersecurity and related risk mitigation, including strategy, controls.

resources, policies, standards, processes and practices.

At least semi-annually, the Audit Committee or full Board receive reports from the CIO and CISO.

Such reports include updates on the Company’s cybersecurity risk profile, assessments of the Company’s enterprise and product security programs, management’s strategy for managing risks, measures implemented to identify and mitigate cybersecurity risks, the status of projects to strengthen the Company’s cybersecurity posture, the emerging cybersecurity threat landscape, and other relevant topics.

We have approximately [removed: 370] [added: 500] locations in more than 50 countries.

These properties total approximately [removed: 13] [added: 15] million square feet, of which more than [removed: 300] [added: 400] locations, or approximately [removed: 7] [added: 8] million square feet, are leased.

| Location | | | | | | State or Country | | | | | | Principal Business Activity | | | | | | Approx. Square Feet | | | | | | Owned or Leased | | | [added: | | | | | |]

| | | | | | | | | | | | | Water Infrastructure | | | | | | | | | | | | | | | [added: | | | | | |]

| Emmaboda | | | | | | Sweden | | | | | | Administration and Manufacturing | | | | | | 1,197,000 | | | | | | Owned | | | [added: | | | | | |]

| Vadodara | | | | | | India | | | | | | Manufacturing and Research & Development | | | | | | [removed: 366,000] [added: 240,000] | | | | | | Leased | | | [added: | | | | | |]

| Stockholm | | | | | | Sweden | | | | | | Administration and Research & Development | | | | | | 182,000 | | | | | | Leased | | | [added: | | | | | |]

| Bridgeport | | | | | | NJ | | | | | | Administration and Manufacturing | | | | | | 136,000 | | | | | | Leased | | | [added: | | | | | |]

| Shenyang | | | | | | China | | | | | | Manufacturing | | | | | | [removed: 125,000] [added: 271,000] | | | | | | Owned | | | [added: | | | | | |]

| | | | | | | | | | | | | Applied Water | | | | | | | | | | | | | | | [added: | | | | | |]

| Morton Grove | | | | | | IL | | | | | | Administration and Manufacturing | | | | | | 530,000 | | | | | | Owned | | | [added: | | | | | |]

| Montecchio | | | | | | Italy | | | | | | Administration and Manufacturing | | | | | | 379,000 | | | | | | Owned | | | [added: | | | | | |]

| Nanjing | | | | | | China | | | | | | Manufacturing | | | | | | 363,000 | | | | | | Owned | | | [added: | | | | | |]

| Auburn | | | | | | NY | | | | | | Manufacturing | | | | | | 273,000 | | | | | | Owned | | | [added: | | | | | |]

| Abony | | | | | | Hungary | | | | | | Manufacturing | | | | | | 250,000 | | | | | | Leased | | | [added: | | | | | |]

| Stockerau | | | | | | Austria | | | | | | Sales & Service Office | | | | | | 234,000 | | | | | | Owned | | | [added: | | | | | |]

| Strzelin | | | | | | Poland | | | | | | Manufacturing | | | | | | 185,000 | | | | | | Owned | | | [added: | | | | | |]

| Cheektowaga | | | | | | NY | | | | | | Manufacturing | | | | | | 147,000 | | | | | | Owned | | | [added: | | | | | |]

| | | | | | | | | | | | | Measurement [removed: &] [added: and] Control Solutions | | | | | | | | | | | | | | | [added: | | | | | |]

| Ludwigshafen | | | | | | Germany | | | | | | Manufacturing | | | | | | 318,000 | | | | | | Owned | | | [added: | | | | | |]

| Texarkana | | | | | | AR | | | | | | Manufacturing | | | | | | 254,000 | | | | | | Owned | | | [added: | | | | | |]

| Uniontown | | | | | | PA | | | | | | Manufacturing | | | | | | 240,000 | | | | | | Leased | | | [added: | | | | | |]

| DuBois | | | | | | PA | | | | | | Manufacturing | | | | | | 197,000 | | | | | | Owned | | | [added: | | | | | |]

| Durham | | | | | | NC | | | | | | Administration and Research & Development | | | | | | 172,000 | | | | | | Leased | | | [added: | | | | | |]

| Weilheim | | | | | | Germany | | | | | | Manufacturing | | | | | | 160,000 | | | | | | Leased | | | [added: | | | | | |]

| Dubois | | | | | | PA | | | | | | Manufacturing | | | | | | 137,000 | | | | | | Leased | | | [added: | | | | | |]

| | | | | | | | | | | | | Regional Locations | | | | | | | | | | | | | | | [added: | | | | | |]

| Dubai | | | | | | United Arab Emirates | | | | | | Manufacturing | | | | | | 144,000 | | | | | | Owned | | | [added: | | | | | |]

| Nottinghamshire | | | | | | United Kingdom | | | | | | Administration | | | | | | 139,000 | | | | | | Leased | | | [added: | | | | | |]

| Nanterre | | | | | | France | | | | | | Sales & Service Office | | | | | | 139,000 | | | | | | Leased | | | [added: | | | | | |]

| Langenhagen | | | | | | Germany | | | | | | Sales & Service Office | | | | | | 134,000 | | | | | | Owned | | | [added: | | | | | |]

| Schaffhausen | | | | | | Switzerland | | | | | | Administration | | | | | | 26,000 | | | | | | Leased | | | [added: | | | | | |]

| | | | | | | | | | | | | Corporate Headquarters | | | | | | | | | | | | | | | [added: | | | | | |]

| Washington | | | | | | DC | | | | | | Administration | | | | | | 18,000 | | | | | | Leased | | | [added: | | | | | |]

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | Integrated Solutions and Services | | | | | | | | | | | | | | | | | | | | |

| Thomasville | | | | | | GA | | | | | | Manufacturing | | | | | | 211,000 | | | | | | Owned | | | | | | | | |

| Rockford | | | | | | IL | | | | | | Manufacturing | | | | | | 165,000 | | | | | | Owned | | | | | | | | |

| Holland | | | | | | MI | | | | | | Manufacturing | | | | | | 132,000 | | | | | | Owned | | | | | | | | |

| Houston | | | | | | TX | | | | | | Service | | | | | | 107,000 | | | | | | Leased | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

The following information is provided regarding the executive officers of Xylem as of February 7, [removed: 2023:][added: 2024:]

| [removed: Patrick K. Decker | | | | | | 58] [added: Matthew F. Pine] | | | | | | President and Chief Executive [removed: Officer (2014) | | | | | |] [added: Officer, Xylem Inc.] | | |

| [removed: Sandra E. Rowland | | | | | | 51 | | | | | | Senior VP and Chief Financial Officer (2020)] [added: Earl R. Ellis] | | | | | | [removed: •] Executive Vice President and Chief Financial Officer, [removed: Harman International] [added: ABM] Industries [removed: Inc. (2015)] [added: Incorporated] | | |

| Dorothy [added: G.] Capers | | | | | | [removed: 61] [added: 62] | | | | | | Senior VP, General Counsel (2022) | | | | | | • Executive Vice President, Global General Counsel and Corporate Secretary, National Express [removed: Group] [added: Group, a leading transport provider] (2015) | | |

| Franz [added: W.] Cerwinka | | | | | | 53 | | | | | | Senior VP and President, [removed: Emerging Markets and] Applied Water Systems [added: and Xylem Business Transformation] (2023) | | | | | | [removed: • Senior] [added: •Senior] VP and President, Emerging Markets (2020) •Chief Executive Officer, Johnson [removed: Controls-Hitachi] [added: Controls Hitachi] Air [removed: Conditioning] [added: Conditioning, a multinational air conditioning manufacturing company] (2015) | | |

| Michael [added: J.] McGann | | | | | | [removed: 52] [added: 53] | | | | | | Senior VP and President, Americas and Measurement [removed: &] [added: and] Control Solutions (2023) | | | | | | [removed: • VP,] [added: •VP,] North America Utilities Commercial Team (2022) [removed: \- • VP,] [added: •VP,] Sensus Americas, Global Engineering and Assessment Services (2017) [removed: \- • VP, Quality, Sensus USA Inc. (2013)] | | |

| [removed: Geri] [added: Geri-Michelle] McShane | | | | | | [removed: 49] [added: 50] | | | | | | VP, Controller and Chief Accounting Officer (2019) | | | | | | [removed: • Controller,] [added: •Controller,] Accounting and Reporting (2016) | | |

| Matthew [added: F.] Pine | | | | | | [removed: 51] [added: 52] | | | | | | [added: President and] Chief [removed: Operating] [added: Executive] Officer [removed: (2023)] [added: (2024)] | | | | | | [removed: • Senior] [added: •Chief Operating Officer (2023) •Senior] VP and President, Americas, Applied Water Systems and Measurement [removed: &] [added: and] Control Systems (2022) [removed: • Senior] [added: •Senior] VP and President, Americas and Applied Water Systems (2020) [removed: • President, Carrier Residential, United Technologies Corporations (2018) • VP and General Manager,] [added: •President,] Carrier Residential, United Technologies Corporations [removed: (2017)] [added: (2018), a multinational industrial conglomerate] | | |

| Claudia S. Toussaint | | | | | | [removed: 59] [added: 60] | | | | | | Senior VP, Chief People and Sustainability Officer (2021) | | | | | | • Senior VP, General Counsel and Corporate Secretary (2014) | | |

| Hayati Yarkadas | | | | | | [removed: 54] [added: 55] | | | | | | Senior VP and President, Europe, Water Infrastructure and Global Services (2020) | | | | | | • Senior [removed: Vice President] [added: VP] and President, Performance Materials, Trinseo [removed: S.A.] [added: S.A., a specialty material solutions provider] (2015) | | |

The following information is provided regarding the Board of Directors of Xylem as of February 7, [removed: 2023:][added: 2024:]

| William K. Grogan | | | | | | 45 | | | | | | Senior VP and Chief Financial Officer (2023) | | | | | | • Senior VP and Chief Financial Officer, IDEX Corporation, a diversified manufacturer of highly engineered products (2017) | | |

| Rodney O. Aulick | | | | | | 56 | | | | | | Senior VP and President, Water Solutions and Services (2023) | | | | | | •Executive Vice President Integrated Solutions and Services, Evoqua Water Technologies Corp. (2018) | | |

| Lisa Glatch | | | | | | Former President, LNG and Net-Zero Solutions and Chief Sustainability Officer, Sempra Infrastructure | | |

| Lynn C. Swann | | | | | | President, Swann Inc. | | |

| | | | | | | | | |

| | | | | | | | | |

| | | | | | | | | |

| Patrick K. Decker | | | | | | President and Chief Executive Officer, Xylem Inc. | | |

| Markos I. Tambakeras | | | | | | Former Chairman, President and Chief Executive Officer, Kennametal, Inc. | | |

As of January 31, [removed: 2023,] [added: 2024,] there were [removed: 8,359] [added: 7,833] holders of record of our common stock.

In the first quarter of [removed: 2023,] [added: 2024,] we declared a dividend of [removed: $0.33] [added: $0.36] per share to be paid on March [removed: 22, 2023 for] [added: 20, 2024 to] shareholders of record on February [removed: 22, 2023.][added: 21, 2024.]

There were no unregistered offerings of our common stock during [removed: 2022.][added: 2023.]

*Fourth Quarter [removed: 2022] [added: 2023] Share Repurchase Activity*

The following table summarizes our [removed: purchases] [added: repurchases] of our common stock for the quarter ended December 31, [removed: 2022:][added: 2023:]

| [removed: 10/1/22] [added: 10/1/23] - [removed: 10/31/22] [added: 10/31/23] | | | | | | — | | | | | | — | | | | | | — | | | | | | $182 | | |

| [removed: 11/1/22] [added: 11/1/23] - [removed: 11/30/22] [added: 11/30/23] | | | | | | — | | | | | | — | | | | | | — | | | | | | $182 | | |

| [removed: 12/1/22] [added: 12/1/23] - [removed: 12/31/22] [added: 12/31/23] | | | | | | — | | | | | | — | | | | | | — | | | | | | $182 | | |

There were no shares repurchased under this program during the three months ended December 31, [removed: 2022.][added: 2023.]

There are up to $182 million in shares that may still be purchased under this plan as of December 31, [removed: 2022.][added: 2023.]

This graph covers the period from December 31, [removed: 2017] [added: 2018] through December 31, [removed: 2022] [added: 2023] and assumes that $100 was invested on December 31, [removed: 2017] [added: 2018] in our common stock, the S&P 500 and the S&P 500 Industrials with the reinvestment of any dividends.

[removed: ][added: ]

| December 31, 2019 | | | 120 | | | | | | 131 | | | | | | 129 | | |

| December 31, 2020 | | | 157 | | | | | | 156 | | | | | | 144 | | |

| December 31, 2021 | | | 186 | | | | | | 200 | | | | | | 174 | | |

| December 31, 2022 | | | 174 | | | | | | 164 | | | | | | 164 | | |

| December 31, 2023 | | | 182 | | | | | | 207 | | | | | | 194 | | |

| December 31, 2017 | | | 100 | | | | | | 100 | | | | | | 100 | | |

| December 31, 2018 | | | 99 | | | | | | 96 | | | | | | 87 | | |

| December 31, 2019 | | | 118 | | | | | | 126 | | | | | | 112 | | |

| December 31, 2020 | | | 155 | | | | | | 149 | | | | | | 124 | | |

| December 31, 2021 | | | 184 | | | | | | 191 | | | | | | 151 | | |

| December 31, 2022 | | | 172 | | | | | | 157 | | | | | | 142 | | |

| [Report of Independent Registered Public Accounting [removed: Firm](#ice21da0ba68f43349fe99c1e37b9f2e3_64)] [added: Firm](#if7b557ec01b24fe2a7ff4307f8c51301_64)] (PCAOB ID No. 34) | | | [removed: [61](#ice21da0ba68f43349fe99c1e37b9f2e3_64)] [added: [62](#if7b557ec01b24fe2a7ff4307f8c51301_64)] | | |

| [Consolidated Income Statements for the Years Ended December 31, [removed: 2022, 2021] [added: 2023, 2022] and [removed: 2020](#ice21da0ba68f43349fe99c1e37b9f2e3_67)] [added: 2021](#if7b557ec01b24fe2a7ff4307f8c51301_67)] | | | [removed: [63](#ice21da0ba68f43349fe99c1e37b9f2e3_67)] [added: [64](#if7b557ec01b24fe2a7ff4307f8c51301_67)] | | |

| [Consolidated Statements of Comprehensive Income for the Years Ended December 31, [removed: 202](#ice21da0ba68f43349fe99c1e37b9f2e3_70)[2](#ice21da0ba68f43349fe99c1e37b9f2e3_70)[, 202](#ice21da0ba68f43349fe99c1e37b9f2e3_70)[1](#ice21da0ba68f43349fe99c1e37b9f2e3_70) [and 20](#ice21da0ba68f43349fe99c1e37b9f2e3_70)[20](#ice21da0ba68f43349fe99c1e37b9f2e3_70)] [added: 2023, 2022 and 2021](#if7b557ec01b24fe2a7ff4307f8c51301_70)] | | | [removed: [64](#ice21da0ba68f43349fe99c1e37b9f2e3_70)] [added: [65](#if7b557ec01b24fe2a7ff4307f8c51301_70)] | | |

| [Consolidated Balance Sheets as of December 31, [removed: 202](#ice21da0ba68f43349fe99c1e37b9f2e3_73)[2](#ice21da0ba68f43349fe99c1e37b9f2e3_73) [and 202](#ice21da0ba68f43349fe99c1e37b9f2e3_73)[1](#ice21da0ba68f43349fe99c1e37b9f2e3_73)] [added: 2023 and 2022](#if7b557ec01b24fe2a7ff4307f8c51301_73)] | | | [removed: [65](#ice21da0ba68f43349fe99c1e37b9f2e3_73)] [added: [66](#if7b557ec01b24fe2a7ff4307f8c51301_73)] | | |

| [Consolidated Statements of Cash Flows for the Years Ended December 31, [removed: 202](#ice21da0ba68f43349fe99c1e37b9f2e3_76)[2](#ice21da0ba68f43349fe99c1e37b9f2e3_76)[, 202](#ice21da0ba68f43349fe99c1e37b9f2e3_76)[1](#ice21da0ba68f43349fe99c1e37b9f2e3_76) [and 20](#ice21da0ba68f43349fe99c1e37b9f2e3_76)[20](#ice21da0ba68f43349fe99c1e37b9f2e3_76)] [added: 2023, 2022 and 2021](#if7b557ec01b24fe2a7ff4307f8c51301_76)] | | | [removed: [66](#ice21da0ba68f43349fe99c1e37b9f2e3_76)] [added: [67](#if7b557ec01b24fe2a7ff4307f8c51301_76)] | | |

| [Consolidated Statements of Changes in Stockholders’ Equity for the Years Ended December 31, [removed: 202](#ice21da0ba68f43349fe99c1e37b9f2e3_79)[2](#ice21da0ba68f43349fe99c1e37b9f2e3_79)[, 202](#ice21da0ba68f43349fe99c1e37b9f2e3_79)[1](#ice21da0ba68f43349fe99c1e37b9f2e3_79) [and 20](#ice21da0ba68f43349fe99c1e37b9f2e3_79)[20](#ice21da0ba68f43349fe99c1e37b9f2e3_79)] [added: 2023, 2022 and 2021](#if7b557ec01b24fe2a7ff4307f8c51301_79)] | | | [removed: [67](#ice21da0ba68f43349fe99c1e37b9f2e3_79)] [added: [68](#if7b557ec01b24fe2a7ff4307f8c51301_79)] | | |

| [Note 1 Summary of Significant Accounting [removed: Policies](#ice21da0ba68f43349fe99c1e37b9f2e3_85)] [added: Policies](#if7b557ec01b24fe2a7ff4307f8c51301_85)] | | | [removed: [68](#ice21da0ba68f43349fe99c1e37b9f2e3_85)] [added: [69](#if7b557ec01b24fe2a7ff4307f8c51301_85)] | | |

| [Note 2 Recently Issued Accounting [removed: Pronouncements](#ice21da0ba68f43349fe99c1e37b9f2e3_88)] [added: Pronouncements](#if7b557ec01b24fe2a7ff4307f8c51301_88)] | | | [removed: [75](#ice21da0ba68f43349fe99c1e37b9f2e3_88)] [added: [77](#if7b557ec01b24fe2a7ff4307f8c51301_88)] | | |

| [removed: [Note](#ice21da0ba68f43349fe99c1e37b9f2e3_94) [3](#ice21da0ba68f43349fe99c1e37b9f2e3_94) [Revenue](#ice21da0ba68f43349fe99c1e37b9f2e3_94)] [added: [Note 4 Revenue](#if7b557ec01b24fe2a7ff4307f8c51301_91)] | | | [removed: [76](#ice21da0ba68f43349fe99c1e37b9f2e3_94)] [added: [81](#if7b557ec01b24fe2a7ff4307f8c51301_91)] | | |

| [removed: [Note](#ice21da0ba68f43349fe99c1e37b9f2e3_97) [4](#ice21da0ba68f43349fe99c1e37b9f2e3_97) [Restructuring] [added: [Note 5 Restructuring] and Asset Impairment [removed: Charges](#ice21da0ba68f43349fe99c1e37b9f2e3_97)] [added: Charges](#if7b557ec01b24fe2a7ff4307f8c51301_94)] | | | [removed: [78](#ice21da0ba68f43349fe99c1e37b9f2e3_97)] [added: [83](#if7b557ec01b24fe2a7ff4307f8c51301_94)] | | |

| [removed: [Note](#ice21da0ba68f43349fe99c1e37b9f2e3_100) [5](#ice21da0ba68f43349fe99c1e37b9f2e3_100) [Other] [added: [Note 6 Other] Non-Operating Income, [removed: Net](#ice21da0ba68f43349fe99c1e37b9f2e3_100)] [added: Net](#if7b557ec01b24fe2a7ff4307f8c51301_97)] | | | [removed: [81](#ice21da0ba68f43349fe99c1e37b9f2e3_100)] [added: [86](#if7b557ec01b24fe2a7ff4307f8c51301_97)] | | |

| [removed: [Note](#ice21da0ba68f43349fe99c1e37b9f2e3_103) [6](#ice21da0ba68f43349fe99c1e37b9f2e3_103) [Income Taxes](#ice21da0ba68f43349fe99c1e37b9f2e3_103)] [added: [Note 7 Income Taxes](#if7b557ec01b24fe2a7ff4307f8c51301_100)] | | | [removed: [81](#ice21da0ba68f43349fe99c1e37b9f2e3_103)] [added: [86](#if7b557ec01b24fe2a7ff4307f8c51301_100)] | | |

| [removed: [Note](#ice21da0ba68f43349fe99c1e37b9f2e3_106) [7](#ice21da0ba68f43349fe99c1e37b9f2e3_106) [Earnings] [added: [Note 8 Earnings] Per [removed: Share](#ice21da0ba68f43349fe99c1e37b9f2e3_106)] [added: Share](#if7b557ec01b24fe2a7ff4307f8c51301_103)] | | | [removed: [86](#ice21da0ba68f43349fe99c1e37b9f2e3_106)] [added: [91](#if7b557ec01b24fe2a7ff4307f8c51301_103)] | | |

| [removed: [Note](#ice21da0ba68f43349fe99c1e37b9f2e3_112) [9](#ice21da0ba68f43349fe99c1e37b9f2e3_112) [Property,] [added: [Note 10 Property,] Plant and [removed: Equipment](#ice21da0ba68f43349fe99c1e37b9f2e3_112)] [added: Equipment](#if7b557ec01b24fe2a7ff4307f8c51301_109)] | | | [removed: [87](#ice21da0ba68f43349fe99c1e37b9f2e3_112)] [added: [92](#if7b557ec01b24fe2a7ff4307f8c51301_109)] | | |

| [Note [removed: 1](#ice21da0ba68f43349fe99c1e37b9f2e3_121)[1](#ice21da0ba68f43349fe99c1e37b9f2e3_121) [Goodwill] [added: 12 Goodwill] and Other Intangible [removed: Assets](#ice21da0ba68f43349fe99c1e37b9f2e3_121)] [added: Assets](#if7b557ec01b24fe2a7ff4307f8c51301_115)] | | | [removed: [89](#ice21da0ba68f43349fe99c1e37b9f2e3_121)] [added: [95](#if7b557ec01b24fe2a7ff4307f8c51301_115)] | | |

| [Note [removed: 1](#ice21da0ba68f43349fe99c1e37b9f2e3_124)[2](#ice21da0ba68f43349fe99c1e37b9f2e3_124) [Derivative] [added: 13 Derivative] Financial [removed: Instruments](#ice21da0ba68f43349fe99c1e37b9f2e3_124)] [added: Instruments](#if7b557ec01b24fe2a7ff4307f8c51301_118)] | | | [removed: [90](#ice21da0ba68f43349fe99c1e37b9f2e3_124)] [added: [96](#if7b557ec01b24fe2a7ff4307f8c51301_118)] | | |

| [removed: [Note 1](#ice21da0ba68f43349fe99c1e37b9f2e3_127)[3](#ice21da0ba68f43349fe99c1e37b9f2e3_127) [Accrued] [added: Accrued] and [removed: Other Current Liabilities](#ice21da0ba68f43349fe99c1e37b9f2e3_127)] [added: other current liabilities] | | | [removed: [93](#ice21da0ba68f43349fe99c1e37b9f2e3_127)] [added: (13)] | | | [added: | | | (3) | | | | | | (16) | | | | | | (12) | | | | | | (3) | | | | | | (15) | | |]

| [Note [removed: 1](#ice21da0ba68f43349fe99c1e37b9f2e3_130)[4](#ice21da0ba68f43349fe99c1e37b9f2e3_130) [Credit] [added: 15 Credit] Facilities and [removed: Debt](#ice21da0ba68f43349fe99c1e37b9f2e3_130)] [added: Debt](#if7b557ec01b24fe2a7ff4307f8c51301_124)] | | | [removed: [93](#ice21da0ba68f43349fe99c1e37b9f2e3_130)] [added: [99](#if7b557ec01b24fe2a7ff4307f8c51301_124)] | | |

| [Note [removed: 1](#ice21da0ba68f43349fe99c1e37b9f2e3_133)[5](#ice21da0ba68f43349fe99c1e37b9f2e3_133) [Post-retirement] [added: 16 Post-retirement] Benefit [removed: Plans](#ice21da0ba68f43349fe99c1e37b9f2e3_133)] [added: Plans](#if7b557ec01b24fe2a7ff4307f8c51301_127)] | | | [removed: [95](#ice21da0ba68f43349fe99c1e37b9f2e3_133)] [added: [102](#if7b557ec01b24fe2a7ff4307f8c51301_127)] | | |

| [Note [removed: 1](#ice21da0ba68f43349fe99c1e37b9f2e3_136)[6](#ice21da0ba68f43349fe99c1e37b9f2e3_136) [Share-Based] [added: 17 Share-Based] Compensation [removed: Plans](#ice21da0ba68f43349fe99c1e37b9f2e3_136)] [added: Plans](#if7b557ec01b24fe2a7ff4307f8c51301_130)] | | | [removed: [102](#ice21da0ba68f43349fe99c1e37b9f2e3_136)] [added: [109](#if7b557ec01b24fe2a7ff4307f8c51301_130)] | | |

| [Note [removed: 1](#ice21da0ba68f43349fe99c1e37b9f2e3_142)[8](#ice21da0ba68f43349fe99c1e37b9f2e3_142) [Accumulated] [added: 19 Accumulated] Other Comprehensive Income [removed: (Loss)](#ice21da0ba68f43349fe99c1e37b9f2e3_142)] [added: (Loss)](#if7b557ec01b24fe2a7ff4307f8c51301_136)] | | | [removed: [107](#ice21da0ba68f43349fe99c1e37b9f2e3_142)] [added: [114](#if7b557ec01b24fe2a7ff4307f8c51301_136)] | | |

| [removed: [Note](#ice21da0ba68f43349fe99c1e37b9f2e3_145) [19](#ice21da0ba68f43349fe99c1e37b9f2e3_145) [Commitment] [added: [Note 20 Commitment] and [removed: Contingencies](#ice21da0ba68f43349fe99c1e37b9f2e3_145)] [added: Contingencies](#if7b557ec01b24fe2a7ff4307f8c51301_139)] | | | [removed: [108](#ice21da0ba68f43349fe99c1e37b9f2e3_145)] [added: [115](#if7b557ec01b24fe2a7ff4307f8c51301_139)] | | |

| [Note [removed: 2](#ice21da0ba68f43349fe99c1e37b9f2e3_151)[1](#ice21da0ba68f43349fe99c1e37b9f2e3_151)] [added: 2](#if7b557ec01b24fe2a7ff4307f8c51301_145)[1](#if7b557ec01b24fe2a7ff4307f8c51301_145)] [Segment and Geographic [removed: Data](#ice21da0ba68f43349fe99c1e37b9f2e3_151)] [added: Data](#if7b557ec01b24fe2a7ff4307f8c51301_145)] | | | [removed: [110](#ice21da0ba68f43349fe99c1e37b9f2e3_151)] [added: [117](#if7b557ec01b24fe2a7ff4307f8c51301_145)] | | |

We have audited the accompanying consolidated balance sheets of Xylem Inc. and subsidiaries (the "Company") as of December 31, [removed: 2022] [added: 2023] and [removed: 2021,] [added: 2022,] the related consolidated statements of income, comprehensive income, [added: changes in] stockholders' equity, and cash flows, for each of the three years in the period ended December 31, [removed: 2022,] [added: 2023,] and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, [removed: 2022] [added: 2023] and [removed: 2021,] [added: 2022,] and the results of its operations and its cash flows for each of the three years in the period ended December 31, [removed: 2022,] [added: 2023,] in conformity with accounting principles generally accepted in the United States of America.

We have also 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, [removed: 2022,] [added: 2023,] based on criteria established in [removed: *Internal] [added: Internal] Control — Integrated Framework [removed: (2013)*] [added: (2013)] issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February [removed: 24, 2023,] [added: 28, 2024,] expressed an unqualified opinion on the Company's internal control over financial reporting.

[removed: Critical] [added: *Critical] Audit [removed: Matter][added: Matter Description*]

The critical audit [removed: matter] [added: matters] communicated below [removed: is a matter] [added: are matters] arising from the current-period audit of the financial statements that [removed: was] [added: were] communicated or required to be communicated to the audit committee and that (1) [removed: relates] [added: relate] to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

Goodwill [removed: - M&CS] [added: — Measurement and Control Solutions] Reporting Units [removed: -] [added: —] Refer to Note [removed: 11] [added: 12] to the financial statements

The goodwill balance was [removed: $2.7] [added: $7.6] billion as of December 31, [removed: 2022,] [added: 2023,] of which [removed: $1.6] [added: $1.7] billion is allocated to the [removed: M&CS Reporting Units.][added: Measurement and Control Solutions reporting units.]

The fair value of the [removed: M&CS] [added: Measurement and Control Solutions] reporting units exceeded [removed: its] [added: their] carrying value as of the [removed: 2022] [added: 2023] measurement date and, therefore, no impairment was recognized.

To determine the fair value of the [removed: M&CS] [added: Measurement and Control Solutions] reporting units, the Company used the income approach.

Under the income approach, the fair value of the [removed: M&CS] [added: Measurement and Control Solutions] reporting units was based on the discounted value of the estimated cash flows that the reporting unit is expected to generate.

[removed: Cash flow projections] [added: Projections] were based on management’s estimates of revenue growth rates and [removed: operating margins,] [added: the selection of the discount rate,] taking into consideration industry and market conditions.

The discount rate was based on the weighted average cost of capital appropriate for the [removed: M&CS] [added: Measurement and Control Solutions] reporting units.

Given the significant judgments made by management to estimate the fair value of the [removed: M&CS] [added: Measurement and Control Solutions] reporting units, performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions related to the selection of the discount rate and forecasts of future revenue required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists.

Our audit procedures related to forecasts of future revenue and selection of the discount rate for the [removed: M&CS] [added: Measurement and Control Solutions] reporting units included the following, among others:

- We tested the effectiveness of controls over management’s goodwill impairment evaluation, including those over the determination of the fair value of the [removed: M&CS] [added: Measurement and Control Solutions] reporting units, such as controls related to management’s forecasts of future revenue and the selection of the discount rate.

- Our fair value specialists also assisted in evaluating the reasonableness of the [removed: M&CS] [added: Measurement and Control Solutions] reporting [removed: units] [added: units’] fair value by considering comparable EBITDA multiples of peer companies.

| Year Ended December 31, | | | [removed: 2022] [added: 2023] | | | | | | [removed: 2021] [added: 2022] | | | | | | [removed: 2020] [added: 2021] | | |

| [Note 3 Acquisitions and Divestitures](#if7b557ec01b24fe2a7ff4307f8c51301_1618) | | | [77](#if7b557ec01b24fe2a7ff4307f8c51301_1618) | | |

| [Note 9 Inventories](#if7b557ec01b24fe2a7ff4307f8c51301_106) | | | [91](#if7b557ec01b24fe2a7ff4307f8c51301_106) | | |

| [Note 11 Leases](#if7b557ec01b24fe2a7ff4307f8c51301_112) | | | [92](#if7b557ec01b24fe2a7ff4307f8c51301_112) | | |

| [Note 14 Accrued and Other Current Liabilities](#if7b557ec01b24fe2a7ff4307f8c51301_121) | | | [99](#if7b557ec01b24fe2a7ff4307f8c51301_121) | | |

| [Note 18 Capital Stock](#if7b557ec01b24fe2a7ff4307f8c51301_133) | | | [112](#if7b557ec01b24fe2a7ff4307f8c51301_133) | | |

| [Note 2](#if7b557ec01b24fe2a7ff4307f8c51301_151)[2](#if7b557ec01b24fe2a7ff4307f8c51301_151) [Subsequent Events](#if7b557ec01b24fe2a7ff4307f8c51301_151) | | | [119](#if7b557ec01b24fe2a7ff4307f8c51301_151) | | |

Critical Audit Matters

- We assessed the reasonableness of management’s revenue forecasts by comparing the projections to historical results and certain peer companies and information included in industry reports.

Evoqua Acquisition Intangibles Valuation — Refer to Note 3 to the financial statements

The Company completed the acquisition of Evoqua Water Technologies Corp. (“Evoqua”) for $6.9 billion on May 24, 2023.

The Company accounted for the acquisition under the acquisition method of accounting for business combinations.

Accordingly, the purchase price was allocated to the assets acquired and liabilities assumed based on their respective fair values, including Customer and Distributor Relationships valued at $1.4 billion.

Management estimated the fair value of the Customer and Distributor Relationships using the multi-period excess earnings method, which is a specific discounted cash flow method.

The fair value determination required management to make significant estimates and assumptions related to future cash flows and the selection of the discount rate.

Given the fair value determination of Customer and Distributor Relationships requires management to make significant estimates and assumptions related to the forecasts of future cash flows and the selection of the discount rate, performing audit procedures to evaluate the reasonableness of these estimates and assumptions required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists.

*How the Critical Audit Matter Was Addressed in the Audit*

Our audit procedures related to forecasts of future cash flows and selection of the discount rate for the Evoqua Customer and Distributor Relationships included the following, among others:

- We tested the effectiveness of controls over the valuation of the Customer and Distributor Relationships, including management’s controls over forecasts of future cash flows and selection of the discount rate.

- We assessed the reasonableness of management’s forecasts of future cash flows by comparing the projections to historical results and certain peer companies.

- With the assistance of our fair value specialists, we evaluated the reasonableness of the (1) valuation methodology, and (2) discount rate by testing the source information underlying the determination of the various assumptions, testing the mathematical accuracy of the calculation, and developing a range of independent estimates and comparing those to the discount rate selected by management.

February 28, 2024

| Revenue from products | | | $ | 6,291 | | | | | $ | 4,978 | | | | | $ | 4,684 | |

| Revenue from services | | | 1,073 | | | | | | 544 | | | | | | 511 | | |

| Cost of revenue from products | | | 3,817 | | | | | | 3,002 | | | | | | 2,831 | | |

| Cost of revenue from services | | | 830 | | | | | | 436 | | | | | | 389 | | |

| Short-term borrowings and current maturities of long-term debt | | | 16 | | | | | | — | | |

| Year Ended December 31, | | | 2023 | | | | | | 2022 | | | | | | 2021 | | |

| Net income | | | $ | 609 | | | | | $ | 355 | | | | | $ | 427 | |

| Restructuring and asset impairment charges | | | 76 | | | | | | 29 | | | | | | 7 | | |

| U.K. pension settlement expense | | | — | | | | | | 140 | | | | | | — | | |

| Proceeds from the sale of property, plant and equipment | | | 1 | | | | | | 4 | | | | | | 3 | | |

| Acquisitions of businesses, net of cash acquired | | | (476) | | | | | | — | | | | | | — | | |

| Cash paid for equity investments | | | (57) | | | | | | (3) | | | | | | (5) | | |

| Cash received from interest rate swaps | | | 38 | | | | | | — | | | | | | — | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Net income | | | | | | | | | | | | | | | 609 | | | | | | | | | | | | | | | | | | | | | | | | 609 | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Issuance of common stock | | | 1 | | | | | | 6,120 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 6,121 | | |

| Issuance of replacement equity awards | | | | | | | | | 160 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 160 | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| [Note](#ice21da0ba68f43349fe99c1e37b9f2e3_109) [8](#ice21da0ba68f43349fe99c1e37b9f2e3_109) [Inventories](#ice21da0ba68f43349fe99c1e37b9f2e3_109) | | | [86](#ice21da0ba68f43349fe99c1e37b9f2e3_109) | | |

| [Note 1](#ice21da0ba68f43349fe99c1e37b9f2e3_115)[0](#ice21da0ba68f43349fe99c1e37b9f2e3_115) [Leases](#ice21da0ba68f43349fe99c1e37b9f2e3_115) | | | [87](#ice21da0ba68f43349fe99c1e37b9f2e3_115) | | |

| [Note 1](#ice21da0ba68f43349fe99c1e37b9f2e3_139)[7](#ice21da0ba68f43349fe99c1e37b9f2e3_139) [Capital Stock](#ice21da0ba68f43349fe99c1e37b9f2e3_139) | | | [105](#ice21da0ba68f43349fe99c1e37b9f2e3_139) | | |

| [Note 2](#ice21da0ba68f43349fe99c1e37b9f2e3_148)[0](#ice21da0ba68f43349fe99c1e37b9f2e3_148) [Related Party Transactions](#ice21da0ba68f43349fe99c1e37b9f2e3_148) | | | [109](#ice21da0ba68f43349fe99c1e37b9f2e3_148) | | |

| [Note 2](#ice21da0ba68f43349fe99c1e37b9f2e3_154)[2](#ice21da0ba68f43349fe99c1e37b9f2e3_154) [Valuation and Qualifying Accounts](#ice21da0ba68f43349fe99c1e37b9f2e3_154) | | | [113](#ice21da0ba68f43349fe99c1e37b9f2e3_154) | | |

| [Note 23 Subsequent Events](#ice21da0ba68f43349fe99c1e37b9f2e3_1660) | | | [113](#ice21da0ba68f43349fe99c1e37b9f2e3_1660) | | |

- We evaluated the reasonableness of management’s revenue forecasts by comparing the forecasts to:

–Historical revenues

–Internal communications to management and the Board of Directors.

–Information included in industry reports and certain peer company data.

February 24, 2023

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| Goodwill impairment charge | | | — | | | | | | — | | | | | | 58 | | |

| Less: comprehensive (loss) gain attributable to noncontrolling interests | | | — | | | | | | — | | | | | | (1) | | |

| Comprehensive income attributable to Xylem | | | $ | 500 | | | | | $ | 469 | | | | | $ | 216 | |

| Long-term debt repaid, net | | | (527) | | | | | | (600) | | | | | | — | | |

| Balance at December 31, 2019 | | | $ | 2 | | | | | $ | 1,991 | | | | | $ | 1,866 | | | | | $ | (375) | | | | | $ | (527) | | | | | $ | 10 | | | | | $ | 2,967 | |

| Cumulative effect of change in accounting principle | | | | | | | | | | | | | | | (2) | | | | | | | | | | | | | | | | | | | | | | | | (2) | | |

| Distribution to minority shareholders | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (1) | | | | | | (1) | | |

| Acquisition activity | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | — | | |

Actual results could differ from these estimates.

The global outbreak of COVID-19 in March 2020, declared a pandemic by the World Health Organization, has created significant global volatility, uncertainty and economic disruption.

The COVID-19 pandemic also has caused increased uncertainty in estimates and assumptions affecting the consolidated financial statements.

If circumstances

Early adoption is permitted.

We will reflect the impact of these disclosure updates in our Form 10-Q for the quarterly period ended March 31, 2023.

We are currently evaluating the impact of the guidance on our financial condition and results of operations in light of the proposed acquisition of Evoqua.

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| Commercial Building Services | | | 659 | | | | | | 609 | | | | | | 558 | | | | | | | | |

| Residential Building Services | | | 306 | | | | | | 268 | | | | | | 238 | | | | | | | | |

| Balance at 1/1/2021 | | | $ | 117 | | $ | 166 | | | | | | | | | | | | | |

| Additions, net | | | 112 | | | 117 | | | | | | | | | | | | | | |

During 2020, we recognized restructuring costs of $19 million, $4 million and $30 million in our Water Infrastructure, Applied Water and Measurement & Control Solutions segments, respectively.

These charges included reduction of headcount across all segments and asset impairments within our Measurement & Control Solutions segment.

Immaterial restructuring charges from other actions incurred during the first quarter of 2020 are included in the 2020 plan information presented below.

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Our management, with the Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO") of the Company, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the year ended December 31, [removed: 2022] [added: 2023] pursuant to Rule 13a-15(b) and 15d-15(e) of the Securities Exchange Act of 1934 (“the Exchange Act”).

Based upon that evaluation, our CEO and our CFO concluded that our disclosure controls and procedures as of the year ended December 31, [removed: 2022] [added: 2023] were effective, in all material respects, and designed to provide reasonable assurance that the information required to be disclosed by us in the reports we file or submit under the Exchange Act is (1) recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms and (2) accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosures.

The Company's management, including the CEO and CFO, conducted an assessment of the effectiveness of our internal control over financial reporting as of December 31, [removed: 2022] [added: 2023] based on the framework established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organization of the Treadway Commission (2013).

Based on our assessment, the Company's management has concluded that our internal control over financial reporting was effective as of December 31, [removed: 2022.][added: 2023.]

The effectiveness of the Company's internal control over financial reporting as of December 31, [removed: 2022] [added: 2023] has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report which appears following Item 9C of this Annual Report on Form 10-K.

There have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the 1934 Act) during the fiscal quarter ended December 31, [removed: 2022] [added: 2023] that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Management's assessment of the effectiveness of the Company's internal control over financial reporting as of December 31, 2023 excluded Evoqua, which was acquired by the Company on May 24, 2023.

Evoqua is a wholly-owned subsidiary of the Company whose total assets (excluding goodwill and intangible assets, net) and total net sales represent 17% of consolidated total assets and 16% of consolidated net sales, respectively, of the Company as of and for the year ended December 31, 2023.

As permitted by guidelines established by the Securities and Exchange Commission, companies are allowed to exclude certain acquisitions from their assessments of internal control over financial reporting during the first year following an acquisition while integrating the acquired companies.

Trading Plans