Item 8. Financial Statements and Supplementary Data

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

			Page
Financial Statements
Report of Independent Registered Public Accounting Firm (PCAOB ID: 42)			41
Consolidated Balance Sheets as of December 31, 2024 and 2023			43
Consolidated Statements of Operations for the years ended December 31, 2024, 2023 and 2022			44
Consolidated Statements of Comprehensive Income for the years ended December 31, 2024, 2023 and 2022			45
Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2024, 2023 and 2022			46
Consolidated Statements of Cash Flows for the years ended December 31, 2024, 2023 and 2022			47
Notes to Consolidated Financial Statements			48

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Zebra Technologies Corporation

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Zebra Technologies Corporation and subsidiaries (the Company) as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 13, 2025 expressed an unqualified opinion thereon.

Basis for Opinion

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

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

Critical Audit Matter

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

Accounting for Income Taxes

Description of the Matter			As discussed in Note 16 of the financial statements, the Company earns a significant amount of its operating income across multiple jurisdictions. As the Company operates in a multinational tax environment and incurs income tax obligations in a number of jurisdictions, complexities and uncertainties can arise in the application of complex tax regulations to the Company’s multinational operations. Auditing the application of taxation legislation to the Company’s business operations and structure is inherently complex and requires judgment. These factors impact the Company’s evaluation and estimation of uncertain tax positions.

How We Addressed the Matter in Our Audit			We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s identification of and accounting for the tax impact of significant changes in the business. This included controls over the Company’s tax technical assessment of cross-jurisdictional transactions. Our audit procedures included, among others, involving our tax professionals in the significant operating jurisdictions to test the Company’s tax provision and the application of significant tax laws to cross-jurisdictional transactions. We evaluated the Company’s transfer pricing used in intercompany transactions to assess whether there was alignment with the Company’s operations. We assessed the completeness of significant tax matters identified and the adequacy of the accounting for any potential uncertainty.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2005.

Chicago, Illinois

February 13, 2025

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In millions, except share data)

			December 31,
			2024						2023
Assets
Current assets:
Cash and cash equivalents			$	901					$	137
Accounts receivable, net of allowances for doubtful accounts of $1 million each as of December 31, 2024 and 2023, respectively			692						521
Inventories, net			693						804
Income tax receivable			20						63
Prepaid expenses and other current assets			134						147
Total Current assets			2,440						1,672
Property, plant and equipment, net			305						309
Right-of-use lease assets			167						169
Goodwill			3,891						3,895
Other intangibles, net			422						527
Deferred income taxes			512						438
Other long-term assets			231						296
Total Assets			$	7,968					$	7,306
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of long-term debt			$	79					$	173
Accounts payable			633						456
Accrued liabilities			503						504
Deferred revenue			453						458
Income taxes payable			36						7
Total Current liabilities			1,704						1,598
Long-term debt			2,092						2,047
Long-term lease liabilities			155						152
Deferred income taxes			57						67
Long-term deferred revenue			304						312
Other long-term liabilities			70						94
Total Liabilities			4,382						4,270
Stockholders’ Equity:
Preferred stock, $.01 par value; authorized 10,000,000 shares; none issued			—						—
Class A common stock, $.01 par value; authorized 150,000,000 shares; issued 72,151,857 shares			1						1
Additional paid-in capital			669						615
Treasury stock at cost, 20,645,798 and 20,772,995 shares as of December 31, 2024 and 2023, respectively			(1,900)						(1,858)
Retained earnings			4,860						4,332
Accumulated other comprehensive loss			(44)						(54)
Total Stockholders’ Equity			3,586						3,036
Total Liabilities and Stockholders’ Equity			$	7,968					$	7,306

See accompanying Notes to Consolidated Financial Statements.

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per share data)

			Year Ended December 31,
			2024						2023						2022
Net sales:
Tangible products			$	4,016					$	3,665					$	4,915
Services and software			965						919						866
Total Net sales			4,981						4,584						5,781
Cost of sales:
Tangible products			2,100						2,012						2,699
Services and software			468						449						458
Total Cost of sales			2,568						2,461						3,157
Gross profit			2,413						2,123						2,624
Operating expenses:
Selling and marketing			600						581						607
Research and development			563						519						570
General and administrative			381						334						375
Settlement and related costs			—						—						372
Amortization of intangible assets			104						104						136
Acquisition and integration costs			6						6						21
Exit and restructuring costs			17						98						14
Total Operating expenses			1,671						1,642						2,095
Operating income			742						481						529
Other income (loss), net:
Foreign exchange gain (loss)			5						(2)						(3)
Interest (expense) income, net			(98)						(133)						23
Other expense, net			(14)						(12)						(5)
Total Other (expense) income, net			(107)						(147)						15
Income before income tax			635						334						544
Income tax expense			107						38						81
Net income			$	528					$	296					$	463
Basic earnings per share			$	10.25					$	5.75					$	8.86
Diluted earnings per share			$	10.18					$	5.72					$	8.80

See accompanying Notes to Consolidated Financial Statements.

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)

			Year Ended December 31,
			2024						2023						2022
Net income			$	528					$	296					$	463
Other comprehensive income (loss), net of tax:
Changes in unrealized gains (losses) on sales hedging			27						6						(29)
Foreign currency translation adjustment			(17)						6						(8)
Comprehensive income			$	538					$	308					$	426

See accompanying Notes to Consolidated Financial Statements.

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In millions, except share data)

						Class A Common Stock Shares						Class A Common Stock Value						Additional Paid-in Capital						Treasury Stock						Retained Earnings						Accumulated Other Comprehensive Loss						Total
Balance at December 31, 2021						53,415,275						$	1					$	462					$	(1,023)					$	3,573					$	(29)					$	2,984
Net share issuances and tax withholding payments related to share-based compensation plans						63,767						—						11						(25)						—						—						(14)
Share-based compensation						—						—						88						—						—						—						88
Repurchase of common stock						(2,027,542)						—						—						(751)						—						—						(751)
Net income						—						—						—						—						463						—						463
Changes in unrealized gains and losses on sales hedging (net of income taxes)						—						—						—						—						—						(29)						(29)
Foreign currency translation adjustment						—						—						—						—						—						(8)						(8)
Balance at December 31, 2022						51,451,500						$	1					$	561					$	(1,799)					$	4,036					$	(66)					$	2,733
Net share issuances and tax withholding payments related to share-based compensation plans						121,681						—						(1)						(7)						—						—						(8)
Share-based compensation						—						—						55						—						—						—						55
Repurchase of common stock						(194,319)						—						—						(52)						—						—						(52)
Net income						—						—						—						—						296						—						296
Changes in unrealized gains and losses on sales hedging (net of income taxes)						—						—						—						—						—						6						6
Foreign currency translation adjustment						—						—						—						—						—						6						6
Balance at December 31, 2023						51,378,862						$	1					$	615					$	(1,858)					$	4,332					$	(54)					$	3,036
Net share issuances and tax withholding payments related to share-based compensation plans						257,757						—						(35)						5						—						—						(30)
Share-based compensation						—						—						89						—						—						—						89
Repurchase of common stock						(130,560)						—						—						(47)						—						—						(47)
Net income						—						—						—						—						528						—						528
Changes in unrealized gains and losses on sales hedging (net of income taxes)						—						—						—						—						—						27						27
Foreign currency translation adjustment						—						—						—						—						—						(17)						(17)
Balance at December 31, 2024						51,506,059						$	1					$	669					$	(1,900)					$	4,860					$	(44)					$	3,586

Certain prior period amounts have been reclassified to conform with the current period presentation.

See accompanying Notes to Consolidated Financial Statements.

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

			Year Ended December 31,
2024						2023						2022
Cash flows from operating activities:
Net income			$	528					$	296					$	463
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization			172						176						204
Share-based compensation			89						55						88
Deferred income taxes			(94)						(36)						(210)
Unrealized gain on forward interest rate swaps			(31)						(9)						(83)
Other, net			14						3						5
Changes in operating assets and liabilities:
Accounts receivable, net			(181)						249						(5)
Inventories, net			105						50						(341)
Other assets			9						(25)						(48)
Accounts payable			176						(365)						92
Accrued liabilities			131						(97)						(51)
Deferred revenue			(13)						12						60
Income taxes			68						(168)						108
Settlement liability			(45)						(180)						225
Cash receipts (payments) on forward interest rate swaps			86						26						(6)
Other operating activities			(1)						9						(13)
Net cash provided by (used in) operating activities			1,013						(4)						488
Cash flows from investing activities:
Acquisition of businesses, net of cash acquired			—						—						(881)
Purchases of property, plant and equipment			(59)						(87)						(75)
Proceeds from sale (purchases) of short-term investments			5						(4)						—
Purchases of long-term investments			(3)						(1)						(12)
Net cash used in investing activities			(57)						(92)						(968)
Cash flows from financing activities:
Proceeds from issuance of debt			651						440						1,284
Payments of debt			(694)						(245)						(247)
Payment of debt issuance costs, extinguishment costs and discounts			(9)						—						(8)
Payments for repurchases of common stock			(47)						(52)						(751)
Net payments related to share-based compensation plans			(30)						(8)						(14)
Change in unremitted cash collections from servicing factored receivables			(61)						(18)						(11)
Net cash (used in) provided by financing activities			(190)						117						253
Effect of exchange rate changes on cash and cash equivalents, including restricted cash			(3)						—						—
Net increase (decrease) in cash and cash equivalents, including restricted cash			763						21						(227)
Cash and cash equivalents, including restricted cash, at beginning of period			138						117						344
Cash and cash equivalents, including restricted cash, at end of period			$	901					$	138					$	117
Less restricted cash, included in Prepaid expenses and other current assets			—						(1)						(12)
Cash and cash equivalents at end of period			$	901					$	137					$	105
Supplemental disclosures of cash flow information:
Income taxes paid			$	124					$	252					$	168
Interest paid inclusive of forward interest rate swaps			$	55					$	111					$	58

Certain prior period amounts included in Net cash provided by (used in) operating activities have been reclassified to conform with the current period presentation.

See accompanying Notes to Consolidated Financial Statements.

ZEBRA TECHNOLOGIES CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 Description of Business and Basis of Presentation

Zebra Technologies Corporation and its subsidiaries (“Zebra” or the “Company”) is a global leader providing innovative Enterprise Asset Intelligence (“EAI”) offerings in the automatic identification and data capture offerings industry. We design, manufacture, and sell a broad range of offerings, including cloud-based software subscriptions, that capture and move data. We also provide a full range of services, including maintenance, technical support, repair, managed and professional services. End-users of our offerings include those in retail and e-commerce, manufacturing, transportation and logistics, healthcare, public sector, and other industries. We provide our offerings globally through a direct sales force and an extensive network of channel partners.

Note 2 Significant Accounting Policies

Principles of Consolidation

These accompanying consolidated financial statements were prepared in accordance with accounting principles generally accepted in the U.S. and include the accounts of Zebra and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.

Fiscal Calendar

The Company’s fiscal year is a 52-week period ending on December 31. Interim fiscal quarters end on a Saturday and generally include 13 weeks of operating activity. During the 2024 fiscal year, the Company’s quarter end dates were March 30, June 29, September 28, and December 31.

Use of Estimates

These consolidated financial statements were prepared using estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period as further discussed in the following footnotes to the Consolidated Financial Statements. The Company bases its estimates on historical experience and on various other assumptions that the Company believes to be reasonable under the circumstances. Actual results could differ from those estimates.

Cash and Cash Equivalents

Cash consists primarily of deposits with banks. Cash equivalents include deposits with banks and other highly liquid investments with original maturities of less than or equal to three months. Cash equivalents are readily convertible to known amounts of cash and are so near their maturity that they present insignificant risk of a change in value because of changes in interest rates.

Accounts Receivable

Accounts receivable consist primarily of amounts due to us from our customers, net of variable consideration and an allowance for doubtful accounts, in the normal course of business. Collateral on trade accounts receivable is generally not required. The Company maintains an allowance for doubtful accounts for estimated uncollectible accounts receivable that is based on expected credit losses. Expected credit losses are estimated based on historical loss experience, the durations of outstanding trade receivables, and expectations of the future economic environment. Accounts are written off against the allowance account when they are determined to be no longer collectible.

Inventories

Inventories are stated at the lower of a moving-average cost (which approximates cost on a first-in, first-out basis) and net realizable value. Manufactured inventory cost includes materials, labor, and manufacturing overhead. Purchased inventory cost also includes internal purchasing overhead costs. Raw material inventories primarily consist of product components as well as supplies used in repair operations. Provisions are made to reduce excess and obsolete inventories to their estimated net realizable values as well as to record liabilities on non-cancellable purchase commitments. These provisions are based on forecasted demand, experience with specific customers or suppliers, the age and nature of the inventory or committed purchase, and the ability to redistribute inventory to other programs or rework it into other consumable inventory as well as renegotiate contractual terms with suppliers.

Property, Plant and Equipment

Property, plant and equipment is stated at cost less accumulated depreciation. Depreciation is computed primarily using the straight-line method over the estimated useful lives of the various classes of property, plant and equipment, which are thirty

years for buildings and range from three to ten years for all other asset categories. Leasehold improvements are amortized using the straight-line method over the shorter of the lease term or ten years.

Leases

The Company recognizes right-of-use (“ROU”) assets and lease liabilities for its lease commitments with terms greater than one year. Contractual options to extend or terminate lease agreements are reflected in the lease term when they are reasonably certain to be exercised. The initial measurement of ROU assets and lease liabilities is based on the present value of future lease payments over the lease term as of the commencement date. In determining future lease payments, the Company has elected not to separate lease and non-lease components. As the Company’s lease arrangements do not provide an implicit interest rate, we apply the Company’s incremental borrowing rate based on the information available at the commencement date in determining the present value of future lease payments. Relevant information used in determining the Company’s incremental borrowing rate includes the duration of the lease, the transaction currency of the lease, and the Company’s credit risk relative to risk-free market rates. The Company’s ROU assets also include any initial direct costs incurred and exclude lease incentives. The Company’s lease agreements do not contain any significant residual value guarantees or restrictive covenants. All leases of the Company are classified as operating leases, with lease expense being recognized on a straight-line basis.

Income Taxes

The Company accounts for income taxes under the liability method in accordance with Accounting Standards Codification (“ASC”) 740 Topic, Income Taxes. Accordingly, deferred income taxes are provided for the future tax consequences attributable to differences between the carrying amounts of assets and liabilities for financial reporting and income tax purposes. Deferred tax assets and liabilities are measured using tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. A valuation allowance is established when necessary to reduce deferred tax assets to the amount that is more likely than not to be realized. The Company recognizes the benefit of tax positions when it is more likely than not to be sustained on its technical merits. The Company recognizes interest and penalties related to income tax matters as part of income tax expense. The Company has elected consolidated tax filings in certain of its jurisdictions which may allow the group to offset one member’s income with losses of other members in the current period and on a carryover basis. The income tax effects of non-inventory intra-entity asset transfers are recognized in the period in which the transfer occurs. The Company classifies its balance sheet accounts by applying jurisdictional netting principles for locations where consolidated tax filing elections are in place.

U.S. tax law contains the Global Intangible Low-Taxed Income (“GILTI”), Base Erosion Anti-Avoidance Tax (“BEAT”), and Deduction for Foreign-Derived Intangible Income (“FDII”) provisions, which relate to the taxation of certain foreign income. The Company recognizes its GILTI, BEAT, and FDII inclusions, when applicable, within income tax expense in the year included in its U.S. tax return.

Goodwill

Goodwill is tested annually for impairment, or more frequently if indicators of impairment exist. When evaluating goodwill for impairment as part of our annual assessment, we include consideration of current events and circumstances. Our annual impairment testing also includes a comparison of the estimated fair value of each reporting unit to its carrying value. If the carrying value of a reporting unit exceeds its estimated fair value, goodwill would be considered to be impaired and reduced to its implied fair value. We estimate the fair value of reporting units by using a weighted combination of the income and market approaches. The income approach requires management to estimate projected future operating and cash flow results, economic projections, and discount rates. The market approach estimates fair value using comparable marketplace fair value data from within a comparable industry group.

We most recently performed our annual goodwill impairment testing in the fourth quarter of 2024 which did not result in any impairment. See Note 6, Goodwill and Other Intangibles for additional information.

Other Intangible Assets

Other intangible assets consist primarily of technology and patent rights, customer and other relationships, and trade names. These assets, which are generally acquired through business combinations, are recorded at fair value upon acquisition and amortized on a straight-line basis over the asset’s useful life which typically ranges from two to eleven years.

Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed of

The Company accounts for long-lived assets in accordance with the provisions of ASC Topic 360, Property, Plant and Equipment, which requires that long-lived assets and certain identifiable intangibles be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the sum of the undiscounted cash flows expected to result from the use and the eventual disposition of the asset. If such assets are impaired, the impairment to be recognized is the excess of the carrying amount over the fair value. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.

Investments in Securities

The Company’s investments primarily include equity securities that are accounted for at cost, adjusted for impairment losses or changes resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer. These investments are primarily in venture capital backed technology companies where the Company's ownership interest is less than 20% and the Company does not have the ability to exercise significant influence. See Note 8, Investments for additional information.

Revenue Recognition

Revenues are primarily comprised of sales of hardware, supplies, services, and software offerings. We recognize revenues when we transfer control of promised goods or services to our customers in an amount that reflects the consideration that we expect to receive, which includes estimates of variable consideration, in exchange for those goods or services. We are typically the principal in all elements of our transactions and record Net sales and Cost of sales on a gross basis. Substantially all revenues for tangible products, supplies, and perpetual or term software licenses are recognized at a point in time, which is generally upon shipment, when control and the risks and rewards of ownership have transferred to the customer, and the Company has a contractual right to payment. Revenues for our service offerings and Company-hosted software and solution offerings are typically recognized over time. Our service offerings include repair and maintenance service contracts, as well as professional services such as installation, integration and provisioning that typically occur in the early stages of a project. The average life of repair and maintenance service contracts is approximately three years. Professional service arrangements range in duration from a day to several weeks or months.

The Company elects to exclude sales and other governmental taxes that are collected by the Company from a customer, from the transaction price. The Company also considers shipping and handling activities as part of its fulfillment costs and not as a separate performance obligation. See Note 3, Revenues for additional information.

Research and Development Costs

Research and development (“R&D”) costs include:

• Salaries, benefits, and other R&D personnel related costs;

• Consulting and other outside services used in the R&D process;

• Engineering supplies;

• Engineering related information systems costs; and

• Allocation of building and related costs.

R&D costs are expensed as incurred, including those associated with developing and maintaining software within our customer offerings. The Company typically applies a dynamic and iterative approach to developing customer product and software offerings as well as ongoing software maintenance, and feature and functionality enhancement releases, and accordingly, such costs do not meet capitalization criteria.

Advertising

Advertising costs are expensed as incurred. These costs totaled $28 million, $31 million and $33 million for the years ended 2024, 2023 and 2022, respectively.

Warranties

In general, the Company provides warranty coverage of one year on mobile computers and batteries. Printers are warrantied from one to three years, depending on the product. Advanced data capture products are warrantied from one to five years, depending on the product. Thermal printheads are warrantied from six months to one year, depending on the product, and battery-based products, such as location tags, are covered by a 90-day warranty. A provision for warranty expense is adjusted quarterly based on historical and expected warranty experience.

Contingencies

The Company establishes a liability for loss contingencies when the loss is both probable and estimable. See Note 14, Accrued Liabilities, Commitments and Contingencies for additional information.

Fair Value of Financial Instruments

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Our financial assets and liabilities that are accounted for at fair value have generally included our employee deferred compensation plan investments, foreign currency forwards, and interest rate swaps. In accordance with ASC Topic 815, Derivatives and Hedging (“ASC 815”), we recognize derivative instruments and hedging activities as either assets or liabilities on the Consolidated Balance Sheets and measure them at fair value. Accounting for the

gains and losses on our derivatives resulting from changes in fair value is dependent on the use of the derivative and whether it is designated and qualifies for hedge accounting.

The Company utilizes foreign currency forwards to hedge certain foreign currency exposures. We use broker quotations or market transactions, in either the listed or over-the-counter markets, to value our foreign currency exchange contracts. The Company also periodically utilizes interest rate swaps to hedge a portion of the variability in future cash flows on debt. We use relevant observable market inputs at quoted intervals, such as forward yield curves and the Company’s own credit risk, to value our interest rate swaps. See Note 11, Derivative Instruments for additional information on the Company’s derivatives and hedging activities.

The Company’s securities held for its deferred compensation plans are measured at fair value using quoted prices in active markets for identical assets. If active markets for identical assets are not available to determine fair value, then we use quoted prices for similar assets or inputs that are observable either directly or indirectly.

The carrying amounts of cash and cash equivalents, receivables, and accounts payable approximate fair value due to the short-term nature of those financial instruments. See Note 10, Fair Value Measurements for information related to financial assets and liabilities carried at fair value.

Share-Based Compensation

The Company has share-based compensation plans and an employee stock purchase plan under which shares of Class A Common Stock are available for future grant and purchase. The Company recognizes compensation costs over the vesting period of awards, which is typically three years, net of estimated forfeitures. Compensation costs associated with awards with graded vesting terms are recognized on a straight-line basis. See Note 15, Share-Based Compensation for additional information.

Foreign Currency Translation

The balance sheet accounts of the Company’s subsidiaries that have not designated the U.S. Dollar as its functional currency are translated into U.S. Dollars using the period-end exchange rate, and statement of earnings items are translated using the average exchange rate for the period. The resulting translation gains or losses are recorded in Stockholders’ equity as a cumulative translation adjustment, which is a component of AOCI within the Consolidated Balance Sheets.

Acquisitions

We account for acquired businesses using the acquisition method of accounting which requires that the purchase price be allocated to the identifiable assets acquired and liabilities assumed, generally measured at their estimated fair values. The excess of the purchase price over the identifiable assets acquired and liabilities assumed is recorded as goodwill. The estimates used to determine the fair values of long-lived assets, such as intangible assets, can be complex and require judgment. Critical estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from revenues and the determination of discount rates. Management’s estimates of fair value are based on estimates and assumptions utilized as part of the purchase price allocation process and are believed to be reasonable; however, elements of these estimates and assumptions are inherently uncertain and subject to refinement during the measurement period, which is up to one year after the acquisition date.

Recently Adopted Accounting Pronouncements

In the current year, the Company adopted Accounting Standards Update (“ASU”) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires retrospective disclosure of significant segment expenses and other segment items on an annual and interim basis. Additionally, it requires disclosure of the title and position of the Chief Operating Decision Maker (“CODM”). This ASU did not have an impact on our results of operations, cash flows, or financial condition.

Recently Issued Accounting Pronouncements Not Yet Adopted

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires an annual tabular effective tax rate reconciliation disclosure including information for specified categories and jurisdiction levels, as well as, disclosure of income taxes paid, net of refunds received, disaggregated by federal, state/local, and significant foreign jurisdiction. This ASU will be effective for the Company’s fiscal December 31, 2025 year-end, with early adoption permitted. We are assessing the impact of this guidance on our disclosures; it will not have an impact on our results of operations, cash flows, or financial condition.

In November 2024, the FASB issued ASU No. 2024-03, Disaggregation of Income Statement Expenses, which requires disaggregated disclosure of certain categories of expenses that are included within expense captions presented on the Consolidated Statements of Operations on an annual and interim basis. This ASU will be effective for the Company’s fiscal

December 31, 2027 year-end and interim periods thereafter, with early adoption permitted. We are assessing the impact of this guidance on our disclosures; it will not have an impact on our results of operations, cash flows, or financial condition.

Note 3 Revenues

The Company recognizes revenue to depict the transfer of goods, solutions or services to a customer at an amount that reflects the consideration which it expects to receive for providing those goods, solutions or services. To determine total expected consideration, the Company estimates elements of variable consideration, which primarily include product rights of return, rebates, and other incentives. These estimates are developed using the expected value method and are reviewed and updated, as necessary, at each reporting period. Revenues, inclusive of variable consideration, are recognized to the extent it is probable that a significant reversal in cumulative revenues recognized will not occur in future periods.

We enter into contracts that may include combinations of tangible products, services, solutions and software offerings, which are generally capable of being distinct and accounted for as separate performance obligations. We evaluate whether two or more contracts should be combined and accounted for as a single contract and whether the combined or single contract has more than one performance obligation. This evaluation requires judgment, and the decision to combine a group of contracts or separate the combined or single contract into multiple distinct performance obligations may impact the amount of revenue recorded in a reporting period. We deem performance obligations to be distinct if the customer can benefit from the product or service on its own or together with readily available resources (“capable of being distinct”) and if the transfer of products, solutions or services is separately identifiable from other promises in the contract (“distinct within the context of the contract”).

For contract arrangements that include multiple performance obligations, we allocate the total transaction price to each performance obligation in an amount based on the estimated relative standalone selling prices for each performance obligation. In general, standalone selling prices are observable for tangible products and software licenses, while standalone selling prices for professional services, repair and maintenance services, and solutions are developed primarily with an expected cost-plus margin approach. Regional pricing, marketing strategies, and business practices are evaluated to derive estimated standalone selling prices.

The Company recognizes revenue for each performance obligation upon transfer of control of the promised goods or services. Control is deemed to have been transferred when the customer has the ability to direct the use of and has obtained substantially all of the remaining benefits from the goods and services. The determination of whether control transfers at a point in time or over time requires judgment and includes our consideration of the following: 1) whether the customer simultaneously receives and consumes the benefits provided as the Company performs its promises; 2) whether the Company’s performance creates or enhances an asset that is under control of the customer; and 3) whether the Company’s performance does not create an asset with an alternative use to the Company, while the Company has an enforceable right to payment for its performance completed to date.

Revenues for tangible products are generally recognized upon shipment, whereas revenues for services and solution offerings are generally recognized over time by using an output or time-based method, assuming all other criteria for revenue recognition have been met. Revenues for software are recognized either upon delivery or over time using a time-based method, depending on how control is transferred to the customer. In cases where a bundle of products, services, solutions and/or software are delivered to the customer, judgment is required to select the method of progress which best reflects the transfer of control.

Disaggregation of Revenue

The following table presents our Net sales disaggregated by product category for each of our segments, AIT and EVM, for the years ended December 31, 2024, 2023 and 2022 (in millions):

			Year Ended December 31, 2024
Segment			Tangible Products						Services and Software						Total
AIT			$	1,532					$	115					$	1,647
EVM			2,484						850						3,334
Total			$	4,016					$	965					$	4,981

			Year Ended December 31, 2023
Segment			Tangible Products						Services and Software						Total
AIT			$	1,537					$	114					$	1,651
EVM			2,128						805						2,933
Total			$	3,665					$	919					$	4,584

			Year Ended December 31, 2022
Segment			Tangible Products						Services and Software						Total
AIT			$	1,728					$	109					$	1,837
EVM			3,187						757						3,944
Total			$	4,915					$	866					$	5,781

In addition, refer to Note 20, Segment Information & Geographic Data for Net sales to customers by geographic region.

Performance Obligations

The Company’s remaining performance obligations relate to services and software solutions. The aggregated transaction price allocated to remaining performance obligations for arrangements with an original term exceeding one year was $1.19 billion and $1.13 billion, inclusive of deferred revenue, as of December 31, 2024 and 2023, respectively. On average, remaining performance obligations as of December 31, 2024 and 2023 are expected to be recognized over a period of approximately two years.

Contract Balances

Progress on satisfying performance obligations under contracts with customers related to billed revenues is reflected on the Consolidated Balance Sheets in Accounts receivable, net. Progress on satisfying performance obligations under contracts with customers related to unbilled revenues (“contract assets”) is reflected on the Consolidated Balance Sheets as Prepaid expenses and other current assets for revenues expected to be billed within the next twelve months, and Other long-term assets for revenues expected to be billed thereafter. The total contract asset balances were $11 million and $16 million as of December 31, 2024 and 2023, respectively. These contract assets result from timing differences between billing and satisfying performance obligations, as well as the impact from the allocation of the transaction price among performance obligations for contracts that include multiple performance obligations. Contract assets are evaluated for impairment and no impairment losses have been recognized during the years ended December 31, 2024, 2023 and 2022, respectively.

Deferred revenue on the Consolidated Balance Sheets consists of payments and billings in advance of our performance. The combined short-term and long-term deferred revenue balances were $757 million and $770 million as of December 31, 2024 and 2023, respectively. The Company recognized $455 million, $432 million and $399 million in revenue that was previously included in the beginning balance of deferred revenue during the years ended December 31, 2024, 2023 and 2022, respectively.

Our payment terms vary by the type and location of our customer and the products, solutions or services offered. The time between invoicing and when payment is due is not significant. In instances where the timing of revenue recognition differs from the timing of invoicing, we have determined that our contracts do not include a significant financing component.

Costs to Obtain a Contract

Our incremental direct costs of obtaining a contract, which consist of sales commissions and incremental fringe benefits, are deferred and amortized over the weighted-average contract term. The incremental costs to obtain a contract are derived at a portfolio level and amortized on a straight-line basis. The total ending balance of deferred costs to obtain a contract, which are recorded in Prepaid expenses and other current assets or Other long-term assets on the Consolidated Balance Sheets, depending on the timing of expected amortization, was $38 million and $42 million as of December 31, 2024 and 2023, respectively. Amortization expense, which is recorded in Selling and marketing expense on the Consolidated Statements of Operations, was $29 million, $26 million and $21 million during the years ended December 31, 2024, 2023 and 2022, respectively. Incremental costs of obtaining a contract are expensed as incurred if the amortization period would otherwise be one year or less.

Note 4 Inventories

The categories of Inventories, net are as follows (in millions):

			December 31, 2024						December 31, 2023
Raw materials (1)			$	248					$	403
Work in process			4						4
Finished goods			441						397
Total Inventories, net			$	693					$	804

(1) Raw material inventories primarily consist of product components as well as supplies used in repair operations.

Note 5 Business Acquisitions

Matrox

On June 3, 2022, the Company acquired Matrox Electronic Systems Ltd. (“Matrox”), a developer of advanced machine vision components and software. Through its acquisition of Matrox, the Company significantly expanded its machine vision products and software offerings.

The acquisition was accounted for under the acquisition method of accounting for business combinations. The Company’s final purchase consideration was $881 million comprised of cash paid, net of Matrox’s cash on-hand.

The Company utilized estimated fair values as of the acquisition date to allocate the total purchase consideration to the identifiable assets acquired and liabilities assumed. The fair value of the net assets acquired was based on several estimates and assumptions, as well as customary valuation techniques, primarily the excess earnings method for customer relationships as well as the relief from royalty method for technology and patent intangible assets.

The purchase price allocation to assets acquired and liabilities assumed was as follows (in millions):

Identifiable intangible assets			$	297
Inventory			31
Other assets acquired			24
Deferred tax liabilities			(78)
Other liabilities assumed			(32)
Net assets acquired			$	242
Goodwill on acquisition			639
Total purchase price			$	881

The $639 million of goodwill, which is non-deductible for tax purposes, has been allocated to the EVM segment and principally relates to the planned global expansion and integration of Matrox into the Company’s machine vision offerings.

The purchase price allocation to identifiable intangible assets acquired was as follows:

			Fair Value (in millions)						Useful Life (in years)
Customer and other relationships			$	232					11
Technology and patents			63						7
Trade names			2						2
Total identifiable intangible assets			$	297

The operating results have been included in the Company’s Consolidated Balance Sheets and Statements of Operations beginning on the acquisition date. The Company has not included unaudited pro forma results for the year preceding the acquisition, as doing so would not yield materially different results.

Acquisition and integration costs

The Company incurred $6 million, $6 million and $21 million of acquisition-related costs during the years ended December 31, 2024, 2023 and 2022, respectively. These costs are included within Acquisition and integration costs on the Consolidated Statements of Operations and are primarily related to third-party transaction and advisory fees, and integration activities associated with our business acquisitions.

Photoneo

On December 27, 2024, the Company entered into a definitive agreement to acquire Photoneo, a leading developer and manufacturer of 3D machine vision solutions. The purchase price of approximately €60 million is expected to be funded with cash on hand. The transaction is subject to customary closing conditions and is expected to close in the first quarter of 2025. The acquired business will become part of the EVM segment.

Note 6 Goodwill and Other Intangibles

Goodwill

Changes in the net carrying value of goodwill by segment were as follows (in millions):

			AIT						EVM						Total
Goodwill as of December 31, 2023			$	229					$	3,666					$	3,895
Foreign exchange impact			—						(4)						(4)
Goodwill as of December 31, 2024			$	229					$	3,662					$	3,891

See Note 5, Business Acquisitions for further details related to the Company’s acquisitions and purchase price allocation adjustments.

The Company’s goodwill balance consists of four reporting units. The Company completed its annual goodwill impairment testing during the fourth quarter of 2024 utilizing a quantitative approach. The estimated fair value of each reporting unit exceeded its carrying value by at least 150%. No events occurred during the fiscal years ended 2024, 2023 or 2022 that indicated it was more likely than not that our goodwill was impaired.

Other Intangibles, net

The balances in Other Intangibles, net consisted of the following (in millions):

			As of December 31, 2024																		As of December 31, 2023
			Gross Carrying Amount						Accumulated Amortization						Net						Gross Carrying Amount						Accumulated Amortization						Net
Amortized intangible assets
Technology and patents			$	949					$	(737)					$	212					$	951					$	(680)					$	271
Customer and other relationships			857						(647)						210						861						(615)						246
Trade names			65						(65)						—						66						(56)						10
Total			$	1,871					$	(1,449)					$	422					$	1,878					$	(1,351)					$	527

Amortization expense was $104 million, $104 million and $136 million for fiscal years ended 2024, 2023 and 2022, respectively.

Estimated future intangible asset amortization expense is as follows (in millions):

Year Ended December 31,
2025			$	93
2026			90
2027			77
2028			60
2029			29
Thereafter			73
Total			$	422

Note 7 Property, Plant and Equipment

Property, plant and equipment, net is comprised of the following (in millions):

			December 31,
			2024						2023
Buildings			$	99					$	86
Land			7						8
Machinery and equipment			377						343
Furniture and office equipment			33						34
Software and computer equipment			107						104
Leasehold improvements			115						112
Projects in progress			43						44
Property, plant and equipment, gross			$	781					$	731
Less accumulated depreciation			(476)						(422)
Property, plant and equipment, net			$	305					$	309

Depreciation expense was $68 million, $72 million and $68 million for the years ended December 31, 2024, 2023 and 2022, respectively.

Note 8 Investments

The carrying value of the Company’s long-term investments was $110 million and $113 million as of December 31, 2024 and 2023, respectively, which are included in Other long-term assets on the Consolidated Balances Sheets. The Company paid $3 million, $1 million and $12 million for the purchases of long-term investments during the years ended December 31, 2024, 2023 and 2022, respectively. Net gains and losses related to the Company’s long-term investments are included within Other expense, net on the Consolidated Statements of Operations. The Company recognized net losses of $6 million during the year ended December 31, 2024. Net gains and losses were not significant for the years ended December 31, 2023 and 2022.

Note 9 Exit and Restructuring Costs

Total charges associated with the 2022 Productivity Plan, which was completed in the third quarter of 2024, and the U.S. voluntary retirement plan, which was completed in 2023, were $127 million, including $17 million, $98 million and $12 million for the years ended December 31, 2024, 2023 and 2022 respectively. The costs of these plans are classified within Exit and restructuring on the Consolidated Statements of Operations. The Company’s remaining payment obligations of $4 million, are reflected within Accrued liabilities on the Consolidated Balance Sheets.

The rollforward of the liability associated with Exit and restructuring activities is:

Balance as of December 31, 2023			$	22
Exit and restructuring charges			17
Non-cash utilization			(3)
Cash payments			(32)
Balance as of December 31, 2024			$	4

The Company incurred Exit and restructuring costs, under previously announced programs of $2 million for the year ended December 31, 2022.

Note 10 Fair Value Measurements

Financial assets and liabilities are measured using inputs from three levels of the fair value hierarchy in accordance with ASC Topic 820, Fair Value Measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 established a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into the following three broad levels:

• Level 1: Quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs (e.g. U.S. Treasuries and money market funds).

• Level 2: Observable prices that are based on inputs not quoted in active markets but corroborated by market data.

• Level 3: Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs.

In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs. In addition, the Company considers counterparty credit risk in the assessment of fair value.

The Company’s financial assets and liabilities carried at fair value as of December 31, 2024 are classified below (in millions):

			Level 1						Level 2						Level 3						Total
Assets:
Foreign exchange contracts (1)			$	1					$	30					$	—					$	31
Investments related to the deferred compensation plan			41						—						—						41
Total Assets at fair value			$	42					$	30					$	—					$	72
Liabilities:
Liabilities related to the deferred compensation plan			$	41					$	—					$	—					$	41
Total Liabilities at fair value			$	41					$	—					$	—					$	41

The Company’s financial assets and liabilities carried at fair value as of December 31, 2023 are classified below (in millions):

			Level 1						Level 2						Level 3						Total
Assets:
Forward interest rate swap contracts (2)			$	—					$	83					$	—					$	83
Investments related to the deferred compensation plan			41						—						—						41
Total Assets at fair value			$	41					$	83					$	—					$	124
Liabilities:
Foreign exchange contracts (1)			$	1					$	6					$	—					$	7
Forward interest rate swap contracts (2)			—						28						—						28
Liabilities related to the deferred compensation plan			41						—						—						41
Total Liabilities at fair value			$	42					$	34					$	—					$	76

(1)The fair value of the foreign exchange contracts is calculated as follows:

• Fair value of forward contracts associated with forecasted sales hedges is calculated using the period-end exchange rate adjusted for current forward points.

• Fair value of hedges against net assets denominated in foreign currencies is calculated at the period-end exchange rate adjusted for current forward points unless the hedge has been traded but not settled at period-end (Level 2). If this is the case, the fair value is calculated at the rate at which the hedge is being settled (Level 1).

(2)The fair value of forward interest rate swaps is based upon a valuation model that uses relevant observable market inputs at the quoted intervals, such as forward yield curves, and is adjusted for the Company’s credit risk and the interest rate swap terms.

Note 11 Derivative Instruments

In the normal course of business, the Company is exposed to global market risks, including the effects of changes in foreign currency exchange rates and interest rates. The Company uses derivative instruments to manage its exposure to such risks and may elect to designate certain derivatives as hedging instruments under ASC Topic 815, Derivatives and Hedging (“ASC 815”). The Company formally documents all relationships between designated hedging instruments and hedged items as well as its risk management objectives and strategies for undertaking hedge transactions. The Company does not hold or issue derivatives for trading or speculative purposes.

In accordance with ASC 815, the Company recognizes derivative instruments as either assets or liabilities on the Consolidated Balance Sheets and measures them at fair value. The following table presents the fair value of its derivative instruments (in millions):

			Asset (Liability)
									Fair Values as of December 31,
			Balance Sheets Classification						2024						2023
Derivative instruments designated as hedges:
Foreign exchange contracts			Prepaid expenses and other current assets						$	30					$	—
Foreign exchange contracts			Accrued liabilities						—						(6)
Total derivative instruments designated as hedges									$	30					$	(6)
Derivative instruments not designated as hedges:
Foreign exchange contracts			Prepaid expenses and other current assets						$	1					$	—
Forward interest rate swaps			Prepaid expenses and other current assets						—						34
Forward interest rate swaps			Other long-term assets						—						49
Foreign exchange contracts			Accrued liabilities						—						(1)
Forward interest rate swaps			Accrued liabilities						—						(12)
Forward interest rate swaps			Other long-term liabilities						—						(16)
Total derivative instruments not designated as hedges									$	1					$	54
Total net derivative asset									$	31					$	48

The following table presents the net gains (losses) from changes in fair values of derivatives that are not designated as hedges (in millions):

			Gains (Losses) Recognized in Income
			Statements of Operations Classification						Year Ended December 31,
						2024						2023						2022
Derivative instruments not designated as hedges:
Foreign exchange contracts			Foreign exchange gain (loss)						$	4					$	(4)					$	2
Forward interest rate swaps			Interest (expense) income, net						31						9						83
Total net gain recognized in income									$	35					$	5					$	85

Activities related to derivative instruments are reflected within Net cash provided by (used in) operating activities on the Consolidated Statements of Cash Flows.

Credit and Market Risk Management

Financial instruments, including derivatives, expose the Company to counterparty credit risk of nonperformance and to market risk related to currency exchange rate and interest rate fluctuations. The Company manages its exposure to counterparty credit risk by establishing minimum credit standards, diversifying its counterparties, and monitoring its concentrations of credit. The Company’s counterparties are commercial banks with expertise in derivative financial instruments. The Company evaluates the impact of market risk on the fair value and cash flows of its derivative and other financial instruments by considering reasonably possible changes in interest rates and currency exchange rates. The Company continually monitors the creditworthiness of the customers to which it grants credit terms in the normal course of business. The terms and conditions of the Company’s credit policies are designed to mitigate concentrations of credit risk.

The Company’s master netting and other similar arrangements with the respective counterparties allow for net settlement under certain conditions, which are designed to reduce credit risk by permitting net settlement with the same counterparty. We present the assets and liabilities of our derivative financial instruments, for which we have net settlement agreements in place, on a net basis on the Consolidated Balance Sheets. If the derivative financial instruments had been presented gross on the Consolidated Balance Sheets, the asset and liability positions would have not been significant as of December 31, 2024 and December 31, 2023, respectively.

Foreign Currency Exchange Risk Management

The Company conducts business on a multinational basis in a variety of foreign currencies. Exposure to market risk for changes in foreign currency exchange rates arises primarily from Euro-denominated external revenues, cross-border financing activities between subsidiaries, and foreign currency denominated monetary assets and liabilities. The Company manages its objective of preserving the economic value of non-functional currency denominated cash flows by initially hedging transaction exposures with natural offsets and, once these opportunities have been exhausted, through foreign exchange forward and option contracts, as deemed appropriate.

The Company manages the exchange rate risk of anticipated Euro-denominated sales using forward contracts, which typically mature within twelve months of execution. The Company designates these derivative contracts as cash flow hedges. Unrealized gains and losses on these contracts are deferred in Accumulated other comprehensive income (loss) (“AOCI”) on the Consolidated Balance Sheets until the contract is settled and the hedged sale is realized. The realized gain or loss is then recorded as an adjustment to Net sales on the Consolidated Statements of Operations. Realized amounts reclassified to Net sales were $11 million of gains for the year ended December 31, 2024, $15 million of losses for the year ended December 31, 2023 and $87 million of gains for the year ended December 31, 2022. As of December 31, 2024 and 2023, the notional amounts of the Company’s foreign exchange cash flow hedges were €592 million and €485 million, respectively. The Company has reviewed its cash flow hedges for effectiveness and determined that they are highly effective.

The Company uses forward contracts, which are not designated as hedging instruments, to manage its exposures related to net assets denominated in foreign currencies. These forward contracts typically mature within one month after execution. Monetary gains and losses on these forward contracts are recorded in income and are generally offset by the transaction gains and losses related to their net asset positions. The notional values and the net fair values of these outstanding contracts were as follows (in millions):

			December 31,
			2024						2023
Notional balance of outstanding contracts:
British Pound/U.S. Dollar			£	5					£	11
Euro/U.S. Dollar			€	146					€	80
Euro/Czech Koruna			€	16					€	17
Japanese Yen/U.S. Dollar			¥	360					¥	685
Singapore Dollar/U.S. Dollar			S$	23					S$	14
Mexican Peso/U.S. Dollar			Mex$	142					Mex$	144
Polish Zloty/U.S. Dollar			zł	53					zł	116
Net fair value of assets (liabilities) of outstanding contracts			$	1					$	(1)

Interest Rate Risk Management

The Company is exposed to market risk associated with interest rate payments on its borrowings under a term loan (“Term Loan A”), Revolving Credit Facility, and Receivables Financing Facilities, which bear interest at variable rates plus applicable margins. The Company manages its exposure to changes in interest rates by issuing both fixed and variable rate borrowings as well as periodically utilizing interest rate swaps to economically hedge interest rate exposure based on current and projected market conditions.

In the second quarter of 2024, the Company terminated all of its interest rate swap agreements, none of which were designated as hedges, resulting in a $77 million cash receipt that is classified within Cash flows from operating activities on the Consolidated Statements of Cash Flows. Total cash receipts for the fiscal year ended 2024 were $86 million.

Note 12 Long-Term Debt

The following table shows the carrying value of the Company’s debt (in millions):

			December 31,
			2024						2023
Term Loan A			$	1,575					$	1,684
Senior Notes			500						—
Revolving Credit Facility			—						413
Receivables Financing Facilities			108						129
Total debt			$	2,183					$	2,226
Less: Debt issuance costs			(9)						(2)
Less: Unamortized discounts			(3)						(4)
Less: Current portion of debt			(79)						(173)
Total long-term debt			$	2,092					$	2,047

As of December 31, 2024, the future maturities of debt are as follows (in millions):

2025						$	79
2026						88
2027						1,516
2028						—
2029						—
Thereafter						500
Total future maturities of debt						$	2,183

All borrowings as of December 31, 2024 were denominated in U.S. Dollars.

The estimated fair value of the Company’s debt approximated $2.2 billion as of both December 31, 2024 and 2023, respectively. These fair value amounts, developed based on inputs classified as Level 2 within the fair value hierarchy, represent the estimated value at which the Company’s lenders could trade its debt within the financial markets and do not represent the settlement value of these liabilities to the Company. The fair value of debt will continue to vary each period based on a number of factors, including fluctuations in market interest rates as well as changes to the Company’s credit ratings.

Term Loan A

The principal on Term Loan A is due in quarterly installments, with the next quarterly installment due in the second quarter of 2026 and the majority due upon maturity in 2027. The Company has and may make prepayments in whole or in part, without premium or penalty; and would be required to prepay certain outstanding amounts in the event of certain circumstances or transactions. As of December 31, 2024, the Term Loan A interest rate was 5.71%. Interest payments are made monthly and are subject to variable rates plus an applicable margin.

Senior Notes

In the second quarter of 2024, the Company completed a private offering of $500 million senior unsecured notes (the “Senior Notes”) with a 6.5% fixed interest rate. The net proceeds of the issuance, after deducting debt issuance costs which were deferred, were approximately $492 million. The Senior Notes mature on June 1, 2032, and interest is payable semi-annually in arrears in June and December of each year, commencing on December 1, 2024. The Company may make prepayments in whole or in part, without premium or penalty, and would be required to prepay certain outstanding amounts in the event of certain circumstances or transactions.

The Senior Notes are fully and unconditionally guaranteed on a senior unsecured basis by certain of Zebra’s existing and future subsidiaries. The Senior Notes contain covenants that, among other things, limit the ability of Zebra to: (i) grant or incur liens; (ii) have its subsidiaries guarantee debt without becoming guarantors; and (iii) merge or consolidate with another company or sell all or substantially all of its assets.

Revolving Credit Facility

The Company has a Revolving Credit Facility that is available for working capital and other general business purposes, including letters of credit. As of December 31, 2024, the Company had letters of credit totaling $10 million, which reduced funds available for borrowings under the Revolving Credit Facility from $1,500 million to $1,490 million. As of December 31, 2024, the Revolving Credit Facility had an average interest rate of 5.68%. Upon borrowing, interest payments are made monthly and are subject to variable rates plus an applicable margin. The Revolving Credit Facility matures on May 25, 2027.

Receivables Financing Facility

As of December 31, 2024, the Company has a Receivables Financing Facility with a borrowing limit of up to $180 million. As collateral, the Company pledges perfected first-priority security interests in its U.S. domestically originated accounts receivable. The Company has accounted for transactions under this facility as secured borrowings. During the first quarter of 2024, the Company amended this facility to extend the maturity to March 19, 2027 but otherwise did not substantially change the terms of the facility.

As of December 31, 2024, the Company’s Consolidated Balance Sheets included $638 million of gross receivables that were pledged under the facility. As of December 31, 2024, $108 million had been borrowed, of which $79 million was classified as current. Borrowings under the facility bear interest at a variable rate plus an applicable margin. As of December 31, 2024, the facility had an average interest rate of 5.38%. Interest is paid monthly on these borrowings.

The Company’s borrowings described above include terms and conditions that limit the incurrence of additional borrowings and require that certain financial ratios be maintained at designated levels.

The Company periodically uses interest rate swaps to manage the interest rate risk associated with its debt. See Note 11, Derivative Instruments for further information.

As of December 31, 2024, the Company was in compliance with all debt covenants.

Note 13 Leases

The Company leases various manufacturing and repair facilities, distribution centers, research facilities, sales and administrative offices, equipment, and vehicles. All leases are classified as operating leases with remaining terms of up to 10 years, with certain leases containing renewal options and termination options. The Company records ROU assets and lease liabilities on the Consolidated Balance Sheets associated with the fixed lease and non-lease payments of leases with terms greater than one year.

The following table presents activities associated with our leases (in millions):

			December 31,
			2024						2023						2022
Fixed lease expenses			$	50					$	52					$	48
Variable lease expenses			20						35						40
Total lease expenses			$	70					$	87					$	88
Cash paid for leases			$	72					$	82					$	93
ROU assets obtained in exchange for lease obligations			$	44					$	55					$	72
Reductions of ROU assets and lease liabilities			(7)						(1)						(4)
Net non-cash increases to ROU assets and lease liabilities			$	37					$	54					$	68

Variable lease expenses incurred were not included in the measurement of the Company’s ROU assets and lease liabilities. These expenses consisted primarily of distribution center service costs that were based on product distribution volumes, as well as non-fixed common area maintenance, real estate taxes, and other operating costs associated with various facility leases. Expenses related to short-term leases were not significant.

Cash payments for leases are included within Net cash provided by (used in) operating activities on the Consolidated Statements of Cash Flows.

ROU assets obtained in exchange for lease obligations include new lease arrangements entered into by the Company as well as contract modifications that extend lease terms and/or provide us additional rights, changes in assessments that render it reasonably certain that lease renewal options will be exercised based on facts and circumstances that arose during the period, as well as lease arrangements obtained through acquisitions.

Reductions of the Company’s ROU assets and lease liabilities generally relate to modifications to lease agreements that result in a reduction to future minimum lease payments, as well as changes in assessments that render it no longer reasonably certain that lease renewal options will be exercised based on facts and circumstances that arose during the period. The Company’s reduction of ROU assets and lease liabilities during 2024, 2023 and 2022 were not significant.

The weighted average remaining term of the Company’s leases was approximately 6 years each as of December 31, 2024, 2023 and 2022. The weighted average discount rate used to measure the ROU assets and lease liabilities was approximately 6% as of both December 31, 2024 and December 31, 2023, respectively, and 5% as of December 31, 2022.

Future minimum lease payments under non-cancellable leases as of December 31, 2024 were as follows (in millions):

2025						$	46
2026						40
2027						33
2028						30
2029						25
Thereafter						59
Total future minimum lease payments						$	233
Less: Interest						(42)
Present value of lease liabilities						$	191
Reported as of December 31, 2024:
Current portion of lease liabilities						$	36
Long-term lease liabilities						155
Present value of lease liabilities						$	191

The current portion of lease liabilities is included within Accrued liabilities on the Consolidated Balance Sheets.

Revenues earned from lease arrangements under which the Company is a lessor during the years ended December 31, 2024, 2023 and 2022 were not significant.

Note 14 Accrued Liabilities, Commitments and Contingencies

Accrued Liabilities

The components of Accrued liabilities are as follows (in millions):

			December 31,
			2024						2023
Incentive compensation			$	174					$	47
Payroll and benefits			76						83
Customer rebates			56						40
Unremitted cash collections due to banks on factored accounts receivable			51						112
Current portion of lease liabilities			36						42
Warranty			26						27
Freight and duty			12						10
Exit and restructuring			4						22
Settlement			—						45
Other			68						76
Accrued liabilities			$	503					$	504

Warranties

The following table is a summary of the Company’s accrued warranty obligations (in millions):

			Year Ended December 31,
Warranty Reserve			2024						2023						2022
Balance at the beginning of the year			$	27					$	26					$	26
Warranty expense			28						29						29
Warranties fulfilled			(29)						(28)						(29)
Balance at the end of the year			$	26					$	27					$	26

Commitments

The Company has a limited number of multi-year purchase commitments, primarily related to semiconductors and cloud services, which contain minimum purchase requirements and are non-cancellable. Commitments under these multi-year contracts, which exclude routine purchase orders for goods and services, are as follows (in millions):

2025						$	53
2026						54
2027						31
Thereafter						—
Total						$	138

We record a liability for non-cancellable purchase commitments for quantities in excess of our forecasted demand consistent with the assessment of net realizable value of our inventory, which is included within Current liabilities on the Consolidated Balance Sheets. There was no liability for these purchase commitments as of December 31, 2024 and an $11 million liability as of December 31, 2023.

Contingencies

The Company is subject to a variety of investigations, claims, suits, and other legal proceedings that arise from time to time in the ordinary course of business, including but not limited to, intellectual property, employment, tort, and breach of contract matters. The Company currently believes that the outcomes of such proceedings, individually and in the aggregate, will not have a material adverse impact on its business, cash flows, financial position, or results of operations. Any legal proceedings are subject to inherent uncertainties, and the Company’s view of these matters and their potential effects may change in the future. The Company records a liability for contingencies when a loss is deemed to be probable and the loss can be reasonably estimated.

During the second quarter of 2022, the Company entered into a License and Settlement Agreement (“Settlement”) to resolve certain patent-related litigation. The payment terms under the Settlement consisted of 8 quarterly payments of $45 million that began in the second quarter of 2022. The final quarterly payment was paid in the first quarter of 2024.

Note 15 Share-Based Compensation

The Company issues share-based compensation awards under the Zebra Technologies 2018 Long-Term Incentive Plan (“2018 Plan”), approved by shareholders in 2018 which superseded and replaced all prior share-based incentive plans. Outstanding awards issued prior to the 2018 Plan are governed by the provisions of those plans until such awards have been exercised, forfeited, cancelled, expired, or otherwise terminated in accordance with their terms. Awards available under the 2018 Plan include stock-settled awards, including stock-settled restricted stock units, stock-settled performance stock units, restricted stock awards, performance share awards, stock appreciation rights, incentive stock options, and non-qualified stock options. Awards available under the 2018 Plan also include cash-settled awards, including cash-settled stock appreciation rights, cash-settled restricted stock units, and cash-settled performance stock units. No awards remain available for future grants under previous plans.

The Company uses treasury shares as its source for issuing shares under the share-based compensation programs. As of December 31, 2024, the Company had 1,841,117 shares of Class A Common Stock remaining available to be issued under the 2018 Plan.

The compensation expense from the Company’s share-based compensation plans and associated income tax benefit, excluding the effects of excess tax benefits or shortfalls, are included in the Consolidated Statements of Operations as follows (in millions):

			Year Ended December 31,
Compensation costs and related income tax benefit			2024						2023						2022
Cost of sales			$	9					$	6					$	6
Selling and marketing			27						16						22
Research and development			36						25						34
General and administration			38						19						34
Total compensation expense			$	110					$	66					$	96
Income tax benefit			$	18					$	13					$	17

As of December 31, 2024, total unearned compensation cost related to the Company’s share-based compensation plans was $127 million, which will be recognized over the weighted average remaining service period of approximately 1.4 years.

The majority of the Company’s share-based compensation awards are generally issued as part of its employee and non-employee director incentive program during the second quarter of each fiscal year. The Company also issues awards associated with business acquisitions or other off-cycle events. The majority of the Company’s share-based compensation is comprised of stock-settled awards.

Stock-settled awards

Beginning in 2021, the Company began issuing stock-settled restricted stock units (“stock-settled RSUs”) and stock-settled performance share units (“stock-settled PSUs”) for the majority of its share-based compensation awards. Prior to 2021, the Company primarily awarded restricted stock awards (“RSAs”) and performance share awards (“PSAs”). The Company’s awards are typically time-vested with stock-settled RSUs and RSAs vesting ratably in three annual installments and stock-settled PSUs and PSAs vesting at the end of the three-year period. No RSAs or PSAs were issued to employees in the current year.

Vesting for each participant is subject to restrictions, such as continuous employment, except in certain cases as set forth in each stock agreement. Upon vesting, stock-settled RSUs and PSUs convert to shares of Class A Common Stock that are released to participants. RSAs and PSAs are considered participating securities, and as such, are included as part of the Company’s Class A Common Stock outstanding at the time of grant.

Compensation cost for the stock-settled RSUs, stock-settled PSUs, RSAs, and PSAs is expensed over each participant’s required service period. Compensation cost is calculated as the fair market value of the Company’s Class A Common Stock on the grant date multiplied by the number of units or awards granted, net of estimated forfeitures. The expected attainment of the performance goals for the stock-settled PSUs and PSAs is reviewed at the end of each reporting period, with adjustments recorded to compensation expense in the Consolidated Statements of Operations, as necessary.

The Company issues RSAs to non-employee directors. The number of shares granted to each non-employee director is determined by dividing the value of the annual grant by the price of a share of the Company’s Class A Common Stock. New directors in any fiscal year earn a prorated amount. During fiscal 2024, there were 6,264 shares granted to non-employee directors compared to 6,640 and 5,686 during fiscal 2023 and 2022, respectively. The shares vest immediately upon grant.

A summary of the Company’s restricted and performance stock-settled awards for the years ended December 31, 2024, 2023 and 2022 is as follows:

						Year Ended December 31, 2024
						RSUs												PSUs												RSAs
						Units						Weighted-Average Grant Date Fair Value						Units						Weighted-Average Grant Date Fair Value						Shares						Weighted-Average Grant Date Fair Value
Outstanding at beginning of year						437,379						$	299.19					195,932						$	334.59					433						$	477.74
Granted						277,390						309.99						88,029						309.05						6,264						319.95
Released						(210,972)						322.67						(35,597)						482.42						(6,697)						330.15
Forfeited						(21,730)						293.83						(6,418)						304.52						—						—
Outstanding at end of year						482,067						$	295.39					241,946						$	304.44					—						$	—

						Year Ended December 31, 2023
						RSUs												PSUs												RSAs												PSAs
						Units						Weighted-Average Grant Date Fair Value						Units						Weighted-Average Grant Date Fair Value						Shares						Weighted-Average Grant Date Fair Value						Shares						Weighted-Average Grant Date Fair Value
Outstanding at beginning of year						242,732						$	404.19					105,928						$	406.89					46,971						$	271.92					35,246						$	245.79
Granted						336,168						260.31						104,620						258.57						6,640						271.77						—						—
Released						(95,837)						412.47						(64)						482.42						(51,695)						267.66						(35,171)						245.82
Forfeited						(45,684)						332.66						(14,552)						313.74						(1,483)						335.98						(75)						244.97
Outstanding at end of year						437,379						$	299.19					195,932						$	334.59					433						$	477.74					—						$	—

						Year Ended December 31, 2022
						RSUs												PSUs												RSAs												PSAs
						Units						Weighted-Average Grant Date Fair Value						Units						Weighted-Average Grant Date Fair Value						Shares						Weighted-Average Grant Date Fair Value						Shares						Weighted-Average Grant Date Fair Value
Outstanding at beginning of year						130,009						$	518.80					37,691						$	482.42					154,322						$	253.54					74,032						$	225.34
Granted						181,351						359.02						70,777						367.16						6,122						321.03						—						—
Released						(48,095)						518.64						(226)						482.42						(104,891)						248.36						(38,671)						206.62
Forfeited						(20,533)						463.11						(2,314)						410.80						(8,582)						259.93						(115)						244.62
Outstanding at end of year						242,732						$	404.19					105,928						$	406.89					46,971						$	271.92					35,246						$	245.79

Stock Appreciation Rights (“SARs”)

SARs were previously granted primarily as part of the Company’s annual share-based compensation incentive program. Beginning in 2021, the Company no longer included SARs in its annual share-based compensation award issuances.

A summary of the Company’s SARs is as follows:

			2024												2023												2022
			SARs						Weighted-Average Grant Date Exercise Price						SARs						Weighted-Average Grant Date Exercise Price						SARs						Weighted-Average Grant Date Exercise Price
Outstanding at beginning of year			398,838						$	124.96					443,476						$	122.67					474,151						$	121.05
Granted			—						—						—						—						—						—
Exercised			(178,203)						103.05						(42,957)						99.39						(28,659)						88.35
Forfeited			—						—						(976)						244.15						(1,987)						229.46
Expired			(2)						86.80						(705)						78.54						(29)						205.12
Outstanding at end of year			220,633						$	142.57					398,838						$	124.96					443,476						$	122.67
Exercisable at end of year			220,633						$	142.57					385,305						$	120.35					400,351						$	110.14

The following table summarizes information about SARs outstanding as of December 31, 2024:

			Outstanding						Exercisable
Aggregate intrinsic value (in millions)			$	54					$	54
Weighted-average remaining contractual life (in years)			1.3						1.3

The intrinsic value of SARs exercised during fiscal 2024, 2023 and 2022 was $39 million, $8 million and $8 million, respectively. The total fair value of SARs that vested during fiscal 2024, 2023 and 2022 was $1 million, $2 million and $3 million, respectively.

Cash-settled awards

The Company also issues cash-settled share-based compensation awards, including cash-settled restricted stock units and cash-settled performance stock units that are classified as liability awards. These awards are expensed over the vesting period of the related award, which is typically three years. Compensation cost is calculated as the fair market value of the Company’s Class A Common Stock on the grant date multiplied by the number of share-equivalents granted, net of forfeitures. The fair value for all cash-settled awards and the expected attainment of the performance goals for the cash-settled performance stock units is reviewed at the end of each reporting period, with adjustments recorded to compensation expense in the Consolidated Statements of Operations, as necessary. Cash settlement is based on the fair value of share equivalents at the time of vesting, which was $13 million, $9 million and $5 million in 2024, 2023 and 2022, respectively. Share-equivalents issued under these programs totaled 59,266, 45,460 and 66,923 in fiscal 2024, 2023 and 2022, respectively.

Employee Stock Purchase Plan

Eligible Zebra employees may purchase common stock at 95% of the fair market value at the date of purchase pursuant to the Zebra Technologies Corporation 2020 Employee Stock Purchase Plan (“2020 ESPP”). Employees may make purchases by cash or payroll deductions up to certain limits. The aggregate number of shares that may be purchased under the 2020 ESPP is 1,500,000 shares. As of December 31, 2024, 1,304,693 shares remained available for future purchase.

Note 16 Income Taxes

The geographical sources of income (loss) before income taxes were as follows (in millions):

			Year Ended December 31,
			2024						2023						2022
U.S.			$	486					$	167					$	(69)
Outside U.S.			149						167						613
Total			$	635					$	334					$	544

Income tax expense (benefit) consisted of the following (in millions):

			Year Ended December 31,
			2024						2023						2022
Current:
Federal			$	129					$	2					$	141
State			27						8						22
Foreign			45						63						126
Total current			$	201					$	73					$	289
Deferred:
Federal			(83)						(5)						(168)
State			(10)						(7)						(22)
Foreign			(1)						(23)						(18)
Total deferred			$	(94)					$	(35)					$	(208)
Total			$	107					$	38					$	81

The Company’s effective tax rates were 16.9%, 11.4% and 14.9% for the years ended December 31, 2024, 2023 and 2022, respectively.

A reconciliation of the U.S. federal statutory income tax rate to our actual income tax rate is provided below:

			Year Ended December 31,
			2024						2023						2022
Provision computed at statutory rate			21.0		%				21.0		%				21.0		%
Remeasurement of deferred taxes			2.9						(2.4)						(0.4)
Change in valuation allowance			(2.9)						2.3						0.1
U.S. impact of Enterprise acquisition			0.1						0.3						0.4
Change in contingent income tax reserves			0.5						0.4						(0.3)
Foreign earnings subject to U.S. taxation			(6.0)						(5.3)						(3.5)
Foreign rate differential			0.6						(0.1)						(3.4)
State income tax, net of federal tax benefit			1.6						0.5						(0.5)
Tax credits			(2.2)						(5.5)						(3.1)
Equity compensation deductions			—						0.4						(0.1)
Return to provision and other true ups			0.4						(1.8)						1.5
Settlements with tax authorities			(0.2)						0.3						2.0
Permanent differences and other			1.1						1.3						1.2
Provision for income taxes			16.9		%				11.4		%				14.9		%

For the year ended December 31, 2024, the Company’s effective tax rate was lower than the federal statutory rate of 21% primarily due to the tax benefit related to foreign earnings subject to U.S. taxation, and the generation of tax credits. For the year ended December 31, 2023, the Company’s effective tax rate was lower than the federal statutory rate of 21% primarily due to the tax benefit related to foreign earnings subject to U.S. taxation, remeasurements of deferred taxes, and the generation of tax credits. For the year ended December 31, 2022, the Company’s effective tax rate was lower than the federal statutory rate of 21% due to lower tax rates in foreign jurisdictions, the generation of tax credits and the favorable impacts of foreign earnings subject to U.S. taxation.

The Organization for Economic Co-Operation and Development (OECD) has implemented a global minimum tax framework of 15% for companies with annual revenues greater than €750 million, referred to as Pillar 2. Aspects of Pillar 2 are effective beginning January 1, 2024 and 2025, in various jurisdictions in which the Company operates. There is uncertainty about whether the U.S. will enact legislation to adopt Pillar 2. As a result of the Company’s operational footprint, Management has assessed the jurisdictions where legislation is enacted and applicable Transitional Safe Harbor provisions, and has determined an immaterial impact on the Company’s financial results.

The Company earns a significant amount of its operating income outside of the U.S. that is taxed at rates different than the U.S. federal statutory rate. The Company’s principal foreign jurisdictions that provide sources of operating income are the U.K. and Singapore. In Singapore, the Company previously benefited from an incentivized corporate income tax rate from the Singapore

Economic Development Board of 10.5% and a full exemption from withholding taxes. Without these benefits, the corporate tax rate in Singapore is 17% and the withholding tax rate is 10%. The Company decided to forgo a renewal of this benefit beyond 2023; therefore the 2024 tax rate is computed using the standard corporate rate of 17%. Under current U.S. Foreign Tax Credit rules, any withholding taxes paid are creditable for U.S. tax purposes, negating any impact of the increased withholding rate.

Tax effects of temporary differences that resulted in deferred tax assets and liabilities are as follows (in millions):

			December 31,
			2024						2023
Deferred tax assets:
Capitalized research expenditures			$	292					$	225
Deferred revenue			102						76
Tax credits			45						43
Net operating loss carryforwards			400						435
Other accruals			34						38
Inventory items			24						23
Sales return/rebate reserve			53						42
Share-based compensation expense			16						15
Legal accrual			1						13
Lease liabilities			24						23
Valuation allowance			(404)						(422)
Total deferred tax assets			$	587					$	511
Deferred tax liabilities:
Depreciation and amortization			83						103
Unrealized gains and losses on securities and investments			22						11
Undistributed earnings			3						2
Right of use lease assets			19						19
Other			5						5
Total deferred tax liabilities			$	132					$	140
Net deferred tax assets			$	455					$	371

For tax years beginning in 2022, the Tax Cuts and Jobs Act of 2017 imposed a requirement that all R&D expenses be capitalized and amortized for U.S. tax purposes. The effect of this new provision is an increase of approximately $74 million and $100 million to deferred tax assets for the years ended December 31, 2024 and 2023, respectively, with corresponding increases to the current tax liabilities.

The Company’s valuation allowance consists of certain net operating loss (“NOL”) and credit carryforwards for which the Company believes it is more likely than not that a tax benefit will not be realized. With respect to all other deferred tax assets, the Company believes it is more likely than not that the results of future operations will generate sufficient taxable income to realize a tax benefit. The Company’s valuation allowance decreased by $18 million from 2023, primarily due to the impact of remeasuring deferred taxes resulting from a reduction in a statutory tax rate which becomes effective in 2025.

As of December 31, 2024, the Company had approximately $400 million (tax effected) of “NOLs” and $45 million of credit carryforwards. Approximately $160 million of NOLs will expire beginning in 2025 through 2043, and $34 million of credits will expire beginning in 2025 through 2042, with the remaining amounts of NOLs and credit carryforwards having no expiration dates.

The Company is subject to the GILTI, BEAT and FDII provisions, for which we recorded an income tax benefit of $38 million, $16 million and $19 million for the years ended December 31, 2024, 2023 and 2022, respectively. These impacts are included in the calculation of the Company’s effective tax rate.

The Company is not permanently reinvested with respect to its U.S. directly-owned foreign subsidiaries. The Company is subject to U.S. income tax on substantially all foreign earnings under GILTI, while any remaining foreign earnings are eligible for a dividends received deduction. As a result, future repatriation of earnings will not be subject to additional U.S. federal income tax but may be subject to currency translation gains or losses. Where required, the Company has recorded a deferred tax liability for foreign withholding taxes on current earnings. Additionally, gains and losses on any future taxable dispositions of U.S.-owned foreign affiliates continue to be subject to U.S. income tax.

The Company has not recognized deferred tax liabilities in the U.S. with respect to its outside basis differences in its directly-owned foreign affiliates. It is not practicable to determine the amount of unrecognized deferred tax liabilities on these indefinitely reinvested earnings.

Unrecognized tax benefits

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in millions):

			Year ended December 31,
			2024						2023
Balance at beginning of year			$	17					$	7
Additions for tax positions related to the current year			14						11
Additions for tax positions related to prior years			—						—
Settlements for tax positions			—						—
Lapse of statutes			(1)						(1)
Balance at end of year			$	30					$	17

As of December 31, 2024 and December 31, 2023, there were $13 million and $9 million of unrecognized tax benefits that, if recognized, would affect the annual effective tax rate. Additionally, fiscal years 2009 through 2024 remain open to examination by multiple foreign and U.S. state taxing jurisdictions.

Amounts associated with positions the Company expects to be settled within the next twelve months are classified as current assets or current liabilities on the Consolidated Balance Sheets. Due to uncertainties in any tax audit or litigation outcome, the Company’s estimates of the ultimate settlements of uncertain tax positions may change and the actual tax benefits may differ significantly from estimates.

The Company did not recognize any net tax benefits associated with interest and penalties related to income tax matters during the year ended December 31, 2024. The Company recognized a net tax benefit of less than $1 million associated with interest and penalties related to income tax matters during the years ended December 31, 2023 and 2022. The expense or benefit associated with interest and penalties is reflected within Income tax expense on the Consolidated Statements of Operations. The Company has included $4 million of estimated interest and penalty obligations within Other long-term liabilities on the Consolidated Balance Sheets each as of December 31, 2024 and 2023, respectively.

Note 17 Earnings Per Share

Basic net earnings per share is calculated by dividing net income by the weighted average number of common shares outstanding for the period. Diluted earnings per share is computed by dividing net income by the weighted average number of diluted common shares outstanding. Diluted common shares outstanding is computed using the Treasury Stock method and, in periods of income, reflects the additional shares that would be outstanding if dilutive share-based compensation awards were converted into common shares during the period.

Earnings per share (in millions, except share data):

			Year Ended December 31,
			2024						2023						2022
Basic:
Net income			$	528					$	296					$	463
Weighted-average shares outstanding			51,494,957						51,378,051						52,207,903
Basic earnings per share			$	10.25					$	5.75					$	8.86
Diluted:
Net income			$	528					$	296					$	463
Weighted-average shares outstanding			51,494,957						51,378,051						52,207,903
Dilutive shares			384,752						332,911						350,809
Diluted weighted-average shares outstanding			51,879,709						51,710,962						52,558,712
Diluted earnings per share			$	10.18					$	5.72					$	8.80

Anti-dilutive share-based compensation awards are excluded from diluted earnings per share calculations. There were 46,278, 129,856 and 173,519 shares that were anti-dilutive for the years ended December 31, 2024, 2023 and 2022, respectively.

Note 18 Accumulated Other Comprehensive (Loss) Income

Stockholders’ equity includes certain items classified as AOCI, including:

• Unrealized gain (loss) on sales hedging relates to derivative instruments used to hedge the exposure related to currency exchange rates for forecasted Euro sales. These hedges are designated as cash flow hedges, and the Company defers income statement recognition of gains and losses until the hedged transaction occurs. See Note 11, Derivative Instruments for more details.

• Foreign currency translation adjustments relate to the Company’s non-U.S. subsidiary companies that have designated a functional currency other than the U.S. Dollar. The Company translates the subsidiary functional currency financial statements to U.S. Dollars using a combination of historical, period-end, and average foreign exchange rates. This combination of rates creates the foreign currency translation adjustment component of AOCI.

The changes in each component of AOCI during the three years ended December 31, 2024, 2023 and 2022 were as follows (in millions):

			Unrealized gain (loss) on sales hedging												Foreign currency translation adjustments						Total
Balance at December 31, 2021			$	18											$	(47)					$	(29)
Other comprehensive income (loss) before reclassifications			50												(8)						42
Amounts reclassified from AOCI(1)			(87)												—						(87)
Tax effect			8												—						8
Other comprehensive (loss), net of tax			(29)												(8)						(37)
Balance at December 31, 2022			(11)												(55)						(66)
Other comprehensive (loss) income before reclassifications			(7)												6						(1)
Amounts reclassified from AOCI(1)			15												—						15
Tax effect			(2)												—						(2)
Other comprehensive income, net of tax			6												6						12
Balance at December 31, 2023			(5)												(49)						(54)
Other comprehensive income (loss) before reclassifications			47												(17)						30
Amounts reclassified from AOCI(1)			(11)												—						(11)
Tax effect			(9)												—						(9)
Other comprehensive income (loss), net of tax			27												(17)						10
Balance at December 31, 2024			$	22											$	(66)					$	(44)

(1) See Note 11, Derivative Instruments regarding the timing of reclassifications to operating results.

Note 19 Accounts Receivable Factoring

The Company has a Receivables Factoring arrangement, pursuant to which certain receivables originated from the EMEA and Asia-Pacific regions up to a maximum of €75 million, as amended, are sold to a bank without recourse in exchange for cash. Transactions under the Receivables Factoring arrangement are accounted for as sales under ASC 860, Transfers and Servicing of Financial Assets, with the sold receivables removed from the Company’s balance sheet. The Company does not maintain any beneficial interest in the receivables sold. The bank’s purchase of eligible receivables is subject to a maximum amount of uncollected receivables. The Company services the receivables on behalf of the bank, but otherwise maintains no significant continuing involvement with respect to the receivables. Sale proceeds that are representative of the fair value of factored receivables, less a factoring fee, are reflected in Cash flows from operating activities on the Consolidated Statements of Cash Flows, while sale proceeds in excess of the fair value of factored receivables are reflected in Cash flows from financing activities on the Consolidated Statements of Cash Flows.

During the years ended December 31, 2024, 2023 and 2022, the Company received cash proceeds of $1,019 million, $1,404 million and $1,496 million, respectively, from the sales of accounts receivables under its factoring arrangements. As of December 31, 2024 and 2023, there were a total of $28 million and $56 million, respectively, of uncollected receivables that had been sold and removed from the Company’s Consolidated Balance Sheets.

As servicer of sold receivables, the Company had $51 million and $112 million of obligations that were not yet remitted to the bank as of December 31, 2024 and 2023, respectively. These obligations are included within Accrued liabilities on the Consolidated Balance Sheets, with changes in such obligations reflected within Cash flows from financing activities on the Consolidated Statements of Cash Flows.

Fees incurred in connection with these arrangements are included within Other expense, net on the Consolidated Statements of Operations and were $9 million, $11 million and $5 million for the years ended December 31, 2024, 2023 and 2022, respectively.

Note 20 Segment Information & Geographic Data

Segment results

Our operations consist of two reportable segments that provide complementary offerings to our customers: Asset Intelligence & Tracking (“AIT”), which includes barcode and card printing, RFID and RTLS offerings, supplies, and services; and Enterprise Visibility & Mobility (“EVM”), which includes mobile computing, data capture, fixed industrial scanning and machine vision, services, and workflow optimization solutions. The reportable segments have been identified based on the financial data utilized by the Company’s Chief Executive Officer (the chief operating decision maker or “CODM”) to assess segment performance and allocate resources among the Company’s segments. The CODM reviews adjusted operating income to assess segment profitability primarily during the Company’s annual budget and forecasting process. The CODM assesses the profitability of each segment relative to its long-term growth objectives in evaluating resource allocation priorities. Segment assets are not reviewed by the Company’s CODM and therefore are not disclosed below.

Financial information by segment is presented as follows (in millions):

			Year Ended December 31,
			2024						2023						2022
Net sales:
AIT			$	1,647					$	1,651					$	1,837
EVM			3,334						2,933						3,944
Total Net sales			$	4,981					$	4,584					$	5,781
Cost of sales:
AIT			854						864						1,042
EVM			1,714						1,597						2,115
Operating expenses:
AIT(1)			458						441						434
EVM(1)			1,086						993						1,118
Operating income:
AIT(2)			335						346						361
EVM(2)			534						343						711
Total segment operating income			$	869					$	689					$	1,072
Corporate (3)			(127)						(208)						(543)
Total Operating income			$	742					$	481					$	529

(1)AIT and EVM segment operating expenses include Selling and marketing, Research and development, and General and administrative expenses, excluding the amounts classified within Corporate.

(2)AIT and EVM segment operating income includes depreciation and share-based compensation expense. The depreciation and share-based compensation expense amounts are proportionate to each segment’s Net sales.

(3)To the extent applicable, amounts included in Corporate consist of Amortization of intangible assets, Acquisition and integration costs, Exit and restructuring costs, as well as certain other non-recurring costs (such as the Settlement costs in 2022, impairment of goodwill and other intangibles, and business acquisition purchase accounting adjustments).

Sales to significant customers

The Company has three customers, who are distributors of the Company’s offerings, that individually accounted for more than 10% of total Company Net sales during the years ended December 31, 2024, 2023 and 2022. The approximate percentage of Company total Net sales by segment to these customers were as follows:

			Year Ended December 31,
			2024																		2023																		2022
			AIT						EVM						Total						AIT						EVM						Total						AIT						EVM						Total
Customer A			5		%				16		%				21		%				5		%				13		%				18		%				7		%				14		%				21		%
Customer B			9		%				10		%				19		%				8		%				6		%				14		%				6		%				9		%				15		%
Customer C			4		%				10		%				14		%				4		%				8		%				12		%				4		%				9		%				13		%

These customers accounted for 24%, 13% and 11%, respectively, of accounts receivable as of December 31, 2024, and 22%, 10% and 17%, respectively, of accounts receivable as of December 31, 2023. No other customer accounted for more than 10% of total Net sales during the years ended December 31, 2024, 2023 or 2022, or more than 10% of outstanding accounts receivable as of December 31, 2024 or 2023.

Geographic data

Information regarding the Company’s operations by geographic area is contained in the following tables. Net sales amounts are attributed to geographic area based on customer location.

Net sales by region were as follows (in millions):

			Year Ended December 31,
			2024						2023						2022
North America			$	2,547					$	2,405					$	2,919
EMEA			1,617						1,414						1,920
Asia-Pacific			490						481						609
Latin America			327						284						333
Total Net sales			$	4,981					$	4,584					$	5,781

The U.S. and Germany were the only countries that accounted for more than 10% of the Company’s net sales in 2024, 2023 and 2022. Net sales during these years were as follows (in millions):

			Year Ended December 31,
			2024						2023						2022
U.S.			$	2,486					$	2,330					$	2,840
Germany			797						682						949
Other			1,698						1,572						1,992
Total Net sales			$	4,981					$	4,584					$	5,781

Geographic data for long-lived assets is as follows (in millions):

			Year Ended December 31,
			2024						2023						2022
North America			$	341					$	338					$	336
EMEA			56						61						58
Asia-Pacific			69						73						35
Latin America			6						6						5
Total long-lived assets			$	472					$	478					$	434

Long-lived assets are defined by the Company as property, plant and equipment and ROU assets. Primarily all of the Company’s long-lived assets in the North America region are located in the U.S.