FTV 10-K & 10-Q changes, risk factors and insider trading

Our business is impacted by general economic conditions, and adverse economic conditions arising from any slower global economic growth, reduced demand or consumer confidence, energy, manufacturing or component supply constraints arising from international conflicts, high inflation rates and the corresponding interest rate policies, volatility in currency and credit markets, actual or anticipated default on sovereign debt, changes in global trade policies, unemployment and underemployment rates, immigration policies, reduced levels of capital expenditures, changes in government fiscal and monetary policies, political initiatives targeted at reducing government funding, government deficit reduction and budget negotiation dynamics, sequestration, other austerity measures, political and social instability, other geopolitical conflict, sanctions, natural disasters, public health crises, terrorist attacks, and other challenges affect us and our distributors, customers, and suppliers, including having the effect of:

If we cannot adjust our manufacturing capacity, supply chain management or the purchases required for our manufacturing activities to reflect changes in market conditions, international trade policies, customer demand and supply chain disruptions, our profitability may suffer. In addition, our reliance upon sole or limited sources of supply for certain materials, components, and services could cause production interruptions, delays and inefficiencies.

Our growth depends in part on the timely development anddevelopment, commercialization and customer acceptance of new and enhanced products and services based on technological innovation.

Our ability to successfully manage our leadership transition in connection with the completed Separation and attract, develop, and retain senior leaders and other key employees is critical to our success.

In connection with the Separation and as part of our long-term succession planning, we transitioned each of our Chief Executive Officer, Chief Financial Officer, and Chief People Officer roles in 2025 and early 2026. Our future performance is dependent upon our ability to manage successfully the leadership transitions and continue to attract, motivate and retain executiveskey leaders and other key employees. TheUnplanned loss of services of executives and other key employees or the failure to attract, motivate and develop new executives or other key employees could prevent us from successfully implementing and executing business strategies, and therefore adversely affect our financial results. In particular, the markets for highly skilled employees and leaders in the technology and healthcare industries remain competitive.

Our success also depends on our ability to attract, develop and retain a talented employee base. Our brand, our culture, our ability to provide competitive compensation, our locations of operations, and our reputation are important to our ability to recruit and retain key employees in these competitive markets. If we are not competitive or successful in our recruiting efforts, if we cannot attract or retain key employees, or if we do not adequately ensure effective succession planning or transfer of knowledge for our key employees, or if some of our key employees leaveare usunable to enter, or choose to leave, the United States given uncertainties relating to theimmigration separation,laws resultingor inimmigration theenforcement inability to operate our business with employees possessing the appropriate expertise,actions, our ability to deliver and execute on our operational, development, or portfolio strategies would be adversely affected.

Disruptions in, or breaches in security of, our information technology systemssystems, exfiltration of confidential or sensitive data, and other cyberattacks have adversely affected, and in the future could adversely affect, our business.

We collect, store, have access to and otherwise process certain confidential or sensitive data, including proprietary business information, customer data, personal data, and other information that is subject to privacy and security laws, regulations and/or customer-imposed controls. We rely on information technology systems, some of which are managed by third parties and some of which are managed on a decentralized, independent basis by our operating companies, to process, transmit, and store electronic information (including sensitive data such as confidential business information and personally identifiable data relating to employees, customers, and other business partners), and to manage or support a variety of critical business processes and activities. These systems maycan bebe, and in the past have been, damaged, disrupted, accessed, or shut down due to attacks by computer hackers, nation states, cyber-criminals, computer viruses, error or malfeasance by employee or former employees, power outages, hardware failures, telecommunication or utility failures, catastrophes, or other similar events, and in any such circumstances our system redundancy and other disaster recovery planning may be ineffective or inadequate. In addition, security breaches of our systems or lack of sufficient control in our systems (or the systems of our customers, suppliers or other business partners) could resultresult, and have resulted, in the misappropriation, change, destruction, exfiltration or unauthorized disclosure of confidential information or personal data belonging to us or to our employees, partners, customers, or suppliers. Like many multinational corporations, our information technology systems have been subject to computer viruses, malicious codes, and other cyber-attacks that have resulted in disruption of our operations, unauthorized access to confidential information and increased the cost of operations through containment, investigation and remediation efforts, including cybersecurity incidents in the fourth quarter of 2023.efforts. Furthermore, we expect to be subject to similar incidents in the future as such attacks become more sophisticated and frequent, any of which may have a material adverse impact on our business continuity, operations or financial results. Increasing use of artificial intelligence may increase these risks. Any of the attacks, breaches, or other disruptions or damage described above, as well as corresponding investigation, containment, and remediation efforts, can disrupt our operations, delay production and shipments, result in theft of our and our customers’ intellectual property and trade secrets, disclosure of personal data, damage customer and business partner relationships and our reputation, or result in defective products or services, legal claims and proceedings, liability and penalties under privacy laws, and increased costs for security and remediation, each of which could adversely affect our business and financial results.

We may use artificial intelligence in our business and in certain of our products, and challenges with properly managing its use could result in reputational harm, competitive harm, and legal liability, and adversely affect our results of operations.

We may incorporate artificial intelligence (“AI”) solutions into certain of our products, services and features, and we mayhave leverageleveraged AI, including generative AI, in our product development, our operations, and our software programming. Our competitors or other third parties may incorporate AI into their products or operational processes more quickly or more successfully than us, which could impair our ability to compete effectively and adversely affect our results of operations.

In 2024,2025, approximately 46%44% of our sales were derived from customers outside the United States. Our principal markets outside the United States are in Europe and Asia. In addition, many of our manufacturing operations, suppliers, and employees are located outside the United States. Since our growth strategy depends in part on our ability to further penetrate markets outside the United States and increase the localization of our products and services, we expect to continue to increase our sales and presence outside the United States, particularly in high-growth markets, such as Eastern Europe, the Middle East, Africa, Latin America, and Asia. OurRegional conflicts, including the Russian invasion of Ukraine, conflict in the Middle East, tension between China and Taiwan, could result in sanctions, regional market instability, increased energy and transportation costs, and other adverse regional financial and economic conditions, any of which can impact the demand for, or our ability to sell, our products and services in the impacted regions. Furthermore, our international business, including our business in high-growth markets outside the United States, is subject to additional risks that are customarily encountered in non-U.S. operations, as well as increased risks due to significant uncertainties related to political and economic changes, including:

•changes in a country’s or region’s political or economic conditions, including changes in relationship with the United States, particularly with respect to ChinaStates;

Trade relations between the United States and other countries have been volatile and could have a material adverse effect on our business and financial results.

ThereAs a result, there continues to be significant uncertainty aboutabout, and volatility in, the future relationship between the United States and other countries, includingespecially with respect to trade policies, treaties, government regulations, sanctions and tariffs. In particular, there continues to be uncertainty about U.S. foreign trade policy with respect to China, including any changes to the trade policies that have been adopted, and that may result from the IEEPA Ruling, including any alternative legislative or executive actions that may be adopted byto thereimpose Trumpsimilar administration.tariffs. Any increased sanctions, tariffs ortariffs, other trade barriers or restrictions or uncertainty on global trade, especially trade withadopted China,by or against the United States could adversely impact our business and financial results.

Risk Related to Our Acquisitions, Investments,Investments and Dispositions

Our abilityFortive Accelerated strategy requires us to grow revenue, earnings,execute and cashdeliver flowdisciplined atcapital orallocation, aboveincluding our anticipated rates dependsinvestments in partorganic upongrowth, our ability to identifyidentifying and successfully acquire and integrateacquiring businesses at appropriate prices and realize anticipated synergies,prices, and to make other appropriate investments that support our long-term strategy. WeIn may not be able to consummateparticular, acquisitions at anticipated rates, which could adversely impact our growth rate and our stock price. Acquisitions and investments that align with our portfolio strategy may be difficult to identify and execute for a number of reasons, including high valuations, competition among prospective buyers, the availability of affordable funding in the capital markets and the need to satisfy applicable closing conditions and obtain antitrust and other regulatory approvals on acceptable terms. In addition, competition for acquisitions and investments may result in higher purchase prices. Changes in accounting or regulatory requirements or instability in the credit markets could also adversely impact our ability to consummate acquisitions and investments.

As part of our business strategy we acquire businesses, make investments, and enter into joint ventures and other strategic relationships in the ordinary course, some of which may be material; please refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (“MD&A”) for additional details. These acquisitions, investments, joint ventures, and strategic relationships involve a number of financial, accounting, managerial, operational, legal, compliance, and other risks and challenges, including the following, any of which could adversely affect our financial results:

We continually assess the strategic fit of our existing businesses and may divest or otherwise dispose of businesses that are deemed not to fit with our strategic plan or are not achieving the desired return on investment. For example, in 2018, we split-off most of our automation and specialty platform in a Reverse Morris Trust transaction with Altra Industrial Motion Corp. and, in 2020,2020 and 2025, we spun-off our former Industrial Technologies segment.segment and our former Precision Technologies segment, respectively. These transactions pose risks and challenges that could negatively impact our business. For example, when we decide to sell or otherwise dispose of a business or assets, we may be unable to do so on satisfactory terms within our anticipated timeframe or at all, and even after reaching a definitive agreement to sell or dispose a business the sale is typically subject to satisfaction of pre-closing conditions which may not become satisfied. In addition, divestitures or other dispositions may dilute our earnings per share, have other adverse financial and accounting impacts and distract management, and disputes may arise with buyers. In addition, we have retained responsibility for and/or have agreed to indemnify buyers against some known and unknown contingent liabilities related to a number of businesses we have sold or disposed of. The resolution of these contingencies has not had a material effect on our financial results but we cannot be certain that this favorable pattern will continue.

Potential indemnification liabilities to Ralliant and Vontier pursuant to the respective separation agreementagreements could materially and adversely affect our businesses, financial condition, results of operations, and cash flows.

We entered into a separation and distribution agreement and related agreements with Vontier and with Ralliant to govern the separation and distribution of Vontier and Ralliant, respectively, and the relationship between each of the two companies and Fortive going forward. These agreements provide for specific indemnity and liability obligations of each party and could lead to disputes between us. If we are required to indemnify Vontier or Ralliant under the circumstances set forth in these agreements, we may be subject to substantial liabilities. In addition, with respect to the liabilities for which Vontier or Ralliant has agreed to indemnify us under these agreements, there can be no assurance that the indemnity rights we have against Vontier or Ralliant, as applicable, will be sufficient to protect us against the full amount of the liabilities, or that Vontier and Ralliant will be able to fully satisfy its indemnification obligations. Each of these risks could negatively affect our businesses, financial condition, results of operations, and cash flows.

•we are also subject to the federal False Claims Act (the “FCA”), which imposes civil and criminal liability on individuals or entities that knowingly submit false or fraudulent claims for payment to the government or knowingly make, or cause to be made, a false statement in order to have a false claim paid, including qui tam or whistleblower suits. There are many potential bases for liability under the FCA. In addition, we could be held liable under the FCA if we are deemed to “cause” the submission of false or fraudulent claims; and

We could incur significant liability if our separation from Danaher, our separation of our Automation and Specialty business,Vontier or our separation of Vontier or our pending separation of the PT segmentRalliant (collectively,together, the “Separation Transactions”) are determined to be a taxable transaction.

We have received or expect to receive an opinionopinions from outside tax counsel to the effect that each of the Separation Transactions qualifies as a transaction that is described in Sections 355(a) and 368(a)(1)(D) of the Internal Revenue Code. The opinion relies or willopinions rely on certain facts, assumptions, representations, and undertakings from the applicable parties regarding the past and future conduct of the companies’ respective businesses and other matters. If any of these facts, assumptions, representations, or undertakings are incorrect or not satisfied, our stockholders and we may not be able to rely on the applicable opinionopinions of tax counsel and could be subject to significant tax liabilities. Notwithstanding the opinionopinions of tax counsel we have received, the IRS could determine on audit that any of the Separation Transactions is taxable if it determines that any of the corresponding facts, assumptions, representations, or undertakings are not correct or have been violated or if it disagrees with the conclusions in any of the applicable opinions. If any of the Separation Transactions is determined to be taxable for U.S. federal income tax purposes, we, as well as our stockholders that are subject to U.S. federal income tax, would incur significant U.S. federal income tax liabilities.

The following discussion and analysis of Fortive’s financial condition and results of operations for the fiscal years ended December 31, 20242025, December 31, 2024, and December 31, 2023 should be read in conjunction with our audited consolidated financial statements and accompanying notes included in Part II, Item 8 of this Form 10-K. This Item generally discusses 20242025, 2024, and 2023 items and year-to-year comparisons between 2025 and 2024, and 2024 and 2023. Discussions of 2022 items and year-to-year comparisons between 2023 and 2022 are not included, and can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (“MD&A”) in Part II, Item 7 of the Company’s Annual Report on Form 10-K filed for the fiscal year ended December 31, 2023 with the Securities and Exchange Commission on February 27, 2024.

Fortive isCorporation a(“Fortive,” provider“the ofCompany,” “we,” “us,” or “our”) innovates essential technologies forto connectedkeep workflowour solutionsworld acrosssafe aand range of attractive end-markets.productive. Our strategic segments - Intelligent Operating Solutions (“IOS”), Precision Technologies (“PT”), and Advanced Healthcare Solutions (“AHS”) - include well-knowniconic inventor brands with leading positions in their markets. Our businesses design, develop, manufacture, and service professional and engineeredmarket products, software, and services, building upon leading brand names, innovative technologies, and significantstrong market positions. We are headquartered in Everett, Washington and have a workforce of more than 18,000Our research and development, manufacturing, sales, distribution, service, and administrative professionalsfacilities are located in more thanapproximately 50 countries around the world.

Fortive is a multinational business with global operations with approximately 46%44% of our sales derived from customers outside the United States in 2024.2025. As a company with global operations, our businesses are affected by worldwide, regional, and industry-specific economic, trade policies, fiscal policies, regulatory, and political factors. Our geographic and industry diversity, as well as the range of products, software, and services we offer, typically help limit the impact of any one industry or the economy of any single countrycountry, (except for the United States)States, on our operating results. Given the broad range of products manufactured, software and services provided, and geographies served, we do not use any indices other than general economic trends to predict the overall outlook for the Company. Our individual businesses monitor key competitors and customers, including their sales, to the extent possible, to gauge relative performance and the outlook for the future.

As a result of our geographic and industry diversity, we face a variety of opportunities and challenges, including technological development in most of the markets we serve, the expansion and evolution of opportunities in high-growthgrowing markets, trends and costs associated with a global labor force, trade policies, and consolidation of our competitors. We define high-growth markets as developing markets of the world experiencing extended periods of accelerated growth in gross domestic product and infrastructure which include Eastern Europe, the Middle East, Africa, Latin America, and Asia with the exception of Japan and Australia. We operate in a highly competitive business environment in most markets, and our long-term growth and profitability will depend, in particular, on our ability to expand our business across geographies and market segments, identify, consummate, and integrate appropriate acquisitions, develop innovative and differentiated new products, services, and software, expand and improve the effectiveness of our sales force, continue to reduce costs and improve operating efficiency and quality, attract relevant talent and retain, grow, and empower our talented workforce, and effectively address the demands of an increasingly regulated environment. We are making significant investments, organically and through acquisitions, to address technological change in the markets we serve and to improve our manufacturing, research and development, and customer-facing resources in order to be responsive to our customers throughout the world.

Management believes that reporting the non-GAAP financial measure of core revenue provides useful information to investors by helping identify underlying growth trends in our business and facilitating comparisons of our sales performance with our performance in prior and future periods and to our peers. We exclude the effect of acquisition and divestiture related items because the nature, size, and number of such transactions can vary dramatically from period to period and between us and our peers. We exclude the effect of currency translation from core revenue because the impact of currency translation is not under management’s control and is subject to volatility. Management believes the exclusion of the effect of acquisitions and divestitures and currency translation may facilitate the assessment of underlying business trends and may assist in comparisons of long-term performance. References to core sales volume from existing businessesgrowth refer to the impact of both price and unit sales.

Business PerformanceTrends

•Year-over-yearThe year-over-year increase in price from existingfavorable businesses,pricing volumeacross growththe in IOS and AHS,segments and benefits from productivity measures wereand FBS initiatives, partially offset by a volume decline in certain businesses and end markets within our PT segment, higher employee compensation andin investmentboth growthsegments; initiatives.additionally, Additionally,within therethe wereyear, the unfavorable foreignimpact exchangefrom ratestariffs was mitigated by countermeasures — favorable 80105 basis points

•The year-over-year effectincrease ofin amortizationprice and volume from existing businesses,businesses and impairmentbenefits from productivity measures were partially offset by higher employee compensation, growth investments and the impact of intangibleunfavorable assets incurredchanges in 2023foreign exchange rates — favorable 30170 basis points

Precision Technologies Selected Financial Data

Information regarding risk factors appears in “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Information Relating to Forward-Looking Statements,” in Part I - Item 2 of this Form 10-Q and in the “Risk Factors” section of our 2025 Annual Report on Form 10-K. There were no material changes during the quarter ended AprilJuly 3, 2026 to the risk factors reported in the “Risk Factors” section of our 2025 Annual Report on Form 10-K.

Certain statements included or incorporated by reference in this quarterly report, in other documents we file with or furnish to the Securities and Exchange Commission (“SEC”), in our press releases, webcasts, conference calls, materials delivered to shareholders and other communications, are “forward-looking statements” within the meaning of the United States federal securities laws. All statements other than historical factual information are forward-looking statements, including without limitation statements regarding: projections of revenue, expenses, profit, profit margins, tax rates, tax provisions, cash flows, pension and benefit obligations and funding requirements, our liquidity position or other financial measures; impact of government actions, including tariffs,tariffs and tariff refunds, other trade policies, government spending and tax laws; management’s plans and strategies for future operations, including statements relating to anticipated operating performance, capital allocation, financing, cost reductions, restructuring activities, new product and service developments, competitive strengths or market position, acquisitions, divestitures, strategic opportunities, financing, stock repurchases, and dividends; growth, declines and other trends in markets we sell into, including the expected impact of trade and tariff policies; the anticipated impacts and benefits of the completed separation of Ralliant; new or modified laws, regulations and accounting pronouncements; outstanding claims, legal proceedings, tax audits and assessments and other contingent liabilities; foreign currency exchange rates and fluctuations in those rates; impact of changes to tax laws; general economic and capital markets conditions, including expected impact of inflation or interest rate changes; impact of geopolitical events and other hostilities; the timing of any of the foregoing; assumptions underlying any of the foregoing; and any other statements that address events or developments that we intend or believe will or may occur in the future. Terminology, such as “believe,” “anticipate,” “should,” “could,” “intend,” “will,” “plan,” “expect,” “estimate,” “project,” “target,” “may,” “possible,” “potential,” “forecast” and “positioned” and similar references to future periods, are intended to identify forward-looking statements, although not all forward-looking statements are accompanied by such words.

•Our ability to successfully manage leadership transitions and attract, develop, and retain senior leaders and other key employees is critical to our success.

Fortive is a multinational business with global operationsoperations, with approximately 44% of our sales derived from customers outside the United States in 2025. As a company with global operations, our businesses are affected by worldwide, regional, and industry-specific economic,economic conditions, trade policies, fiscal policies, regulatory,regulatory factors, and political factors. Our geographic and industry diversity, as well as the range of products, software, and services we offer, typically help limit the impact of any one industry or the economy of any single country, except for the United States, on our operating results. Given the broad range of products manufactured, software and services provided, and geographies served, we do not use any indices other than general economic trends to predict the overall outlook for the Company. Our individual businesses monitor key competitors and customers, including their sales, to the extent possible, to gauge relative performance and the outlook for the future.

Our financial outlook is subject to various assumptions and risks, including but not limited to: ongoing geopolitical events; wars and hostilities in the Middle East and in Ukraine, including the corresponding impact on energy costs, interest rates, cybersecurity, international trade, and global economic conditions; monetary policies; inflationary pressures on expenses and pricing; uncertainties in governmental policies on international trade, regulations, sanctions, and healthcare; operational challenges from existing, new, increased, or the uncertain status of tariffs, including in some cases, subsequent rollbacks, refunds, or suspensions; foreign exchange rate volatility, including the impact of unhedged foreign currency debts; reduction in U.S. government spending due to H.R.1, also known as the One Big Beautiful Bill Act (“OBBBA”); and overall fiscal policies, including investment and taxation policy initiatives being considered in the U.S.; the incremental impacts of the Pillar Two initiative from the Organization for Economic Co-operation and Development (“OECD”); and the impact from the Separation.

The following table summarizes total aggregate year-over-year sales growth and the components thereof for the firstsecond quarter as compared to the comparable period of 2025:

In the firstsecond quarter, operating profit margin was 17.9%,19.1% compared to 16.6%16.7% in the comparable period of 2025, resulting in an increase of 130240 basis points due to:

•The year-over-year favorable impacts from pricing, higher volume, reductions of excess cost through organizational streamlining, the favorable impact of foreign currency exchange rates and increased productivity measures through our FBS initiatives, and reductions of cost through organizational streamlining, partially offset by higher employee compensationcosts, product mix, and thegrowth unfavorable net impact of tariffs and related countermeasuresinvestments — favorable 12580 basis points

•The year-over-year effect of all other items in the firstsecond quarter including +5070 basis points from amortization expense for existing businesses, +55 basis points from reduced discrete restructuring spending versus the comparable period, and +40 basis points from tariff refunds, partially offset by -20-5 basis points from unfavorable acquisition and divestiture-related impacts,impacts and— -25favorable 160 basis points fromIn discretethe restructuringyear-to-date plansperiod, —operating favorableprofit 5margin was 18.5% compared to 16.7% in the comparable period of 2025, resulting in an increase of 180 basis points due to:

Sales growth in the firstsecond quarter and the year-to-date period was driven by favorable pricing of 2.1% across the segment,segment of 2.7% and 2.4%, respectively, volume growth of 3.1%,4.8% and 3.9%, respectively, primarily driven by professional instrumentation, facilities and asset lifecycle softwaresoftware, and gas detection products,detection, and favorable foreign currency translation. Geographically, in the first quarter, core revenue growth was driven primarily by strong demand in North America and Western Europe.

In the firstsecond quarter, operating profit margin decreasedincreased 20230 basis points,points as compared to the comparable period of 2025,2025 due to:

•The year-over-year effectfavorable effects of favorable pricing, higher volume, organizational streamlining, favorable impact from foreign currency exchange rates and increased productivity measures through our FBS initiatives, more than offset by product mix and higher employee compensation, the unfavorable net impact of tariffs and related countermeasures, and unfavorable mixcosts — unfavorablefavorable 1570 basis points

•The year-over-year effect of all other items in the first quarter,items, including +3580 basis points from reductions in discrete restructuring spending, +45 basis points from amortization expense for existing businesses, moreand than+45 basis points from tariff refunds, slightly offset by -10 basis points in unfavorable acquisition and divestiture-related impacts,impacts and— -30favorable 160 basis points fromIn discretethe restructuringyear-to-date plansperiod, —operating unfavorableprofit 5margin increased 110 basis pointspoints, as compared to the comparable period of 2025 due to:

In the firstsecond quarter, operating profit margin increased 28010 basis pointspoints, as compared to the comparable period of 2025, due to:

•Year-over-year favorable impact from pricing,favorable pricing and higher volume, organizationalmore streamlining, foreign currency exchange rates, and productivity measures through our FBS initiatives, partiallythan offset by product mix, higher employee compensationcosts and growth investments — favorableunfavorable 21575 basis points

•The year-over-year effect of all other items in the firstsecond quarter, including +80120 basis points from amortization expense for existing businesses,businesses and +25 basis points from tariff refunds, slightly offset by -5-35 basis points from discrete restructuring plans and -25 basis points from net effects of acquired andbusinesses divested— businesses,favorable and -1085 basis points fromIn discretethe restructuringyear-to-date plansperiod, —operating favorableprofit 65margin increased 150 basis pointspoints, as compared to the comparable period of 2025, due to:

The year-over-year increase in SG&A during the second quarter and year-to-date period was primarily due to higher employee compensation costs, in part from additional days in the quarter,costs and targeted growth investments to support innovation and commercial initiatives, partially offset by reductions of excess cost through organizational streamlining and benefits from productivity measures implemented through our FBS initiatives. The increase in SG&A in the year-to-date period also reflected unfavorable foreign currency translation.

R&D, consisting principally of internal and contract engineering personnel costs, increased during the firstsecond quarter and year-to-date period as compared to the comparable period of 2025 due to ongoing investments in innovation.

Net interest expense for the firstsecond quarter ofand $31.6year-to-date period was $35.4 million wasand relatively$67.0 flatmillion as compared to $32.0$32.1 million and $64.1 million in the comparable periodperiods in 2025. The year-over-year increases are due to a higher weighted average interest rate of the debt portfolio driven by the paydown of lower interest rate foreign currency debt and refinancing U.S. dollar-denominated senior notes. For discussion of our outstanding indebtedness, refer to Note 4 to the consolidated condensed financial statements.

Our effective tax rate for the three and six months ended AprilJuly 3, 2026 was 16.6%,12.4% and 14.4%, respectively, as compared to 15.8%20.1% and 18.0%, for the three and six months ended MarchJune 28,27, 2025.2025, respectively. The increasedecrease in the effective tax rate for the three and six months ended AprilJuly 3, 2026 as compared to the three and six months ended MarchJune 28,27, 2025 was primarily related to the mix of earnings between jurisdictions and thechanges impactin ofvaluation discrete items.allowances.

Our effective tax rate for the three and six months ended AprilJuly 3, 2026, differs from the U.S. federal statutory rate of 21% due primarily to the impact of credits and deductions provided by law, including those associated with state income taxes, and changes in our uncertain tax position reserves.

Comprehensive income decreased by $105$114 million during the firstsecond quarter as compared to the comparable period in 2025 due to unfavorable changes in foreign currency translation of $72$105 million, partially offset by a $24$46 million increase in net earnings from continuing operations and a $3 million increase from hedge adjustments.operations. Additionally, there was a $59$55 million decrease inof net earnings from discontinued operations.operations in the 2025 comparable period.

We assess our liquidity in terms of our ability to generate cash to fund our operating, investing, and financing activities. We generate substantial cash from operating activities and believe that our operating cash flow and other sources of liquidity, which consist of available cash, our revolving credit facility, and access to commercial paper, bank loans, and capital markets, will be sufficient to allow us to continue funding and investing in our existing businesses, consummate strategic acquisitions, execute strategic separations, repurchase common stock, make interest and principal payments on our outstanding indebtedness, fulfill our contractual obligations, and manage our capital structure on a shortshort- and long-term basis.

As of AprilJuly 3, 2026, we held approximately $356$374 million of cash and equivalents that were invested in highly liquid investment-grade instruments with a maturity of 90 days or less, of which approximately 90%91% was held outside of the United States.

We generally satisfy any short-term liquidity needs that are not met through operating cash flows and available cash primarily through issuances under our Commercial Paper Programs, which are supported by our $2.0 billion Revolving Credit Facility. In addition to providing support for our Commercial Paper Programs, the Revolving Credit Facility can also be used for working capital and other general corporate purposes. As of AprilJuly 3, 2026, no borrowings were outstanding under the Revolving Credit Facility. We also may from time to time access the capital markets, including to take advantage of favorable interest rate environments or other market conditions.

On JuneJuly 7,20, 2023,2026, we filed with the SEC an “automatic shelf” registration statement (the “Shelf Registration Statement”). Under the Shelf Registration Statement, we may from time to time sell shares of common stock, preferred stock, debt securities, depository shares, purchase contracts, purchase units, warrants and subscription rights in one or more offerings.

We continue to monitor the financial markets, the stability of U.S. and international banks and general global economic conditions. In addition, our access to the capital markets and other financing sources is impacted by any change in our credit rating. If changes in financial markets or other areas of the economy or a downgrade in our credit rating adversely affect our access to the capital markets and other financing sources, we would expect to rely on a combination of available cash and existing available capacity under our credit facilities to provide short-term funding. As of AprilJuly 3, 2026, we expect to have sufficient liquidity to satisfy our cash needs for the foreseeable future.

Operating cash flows from continuing operations were $220$519 million during the firstyear-to-date quarter,period, representing an increase of $29$122 million when compared to the comparable period of 2025. The year-over-year change in operating cash flows was primarily attributable to the following factors:

•Year-over-year increase of $27$79 million in operating cash flows from net earnings,earnings from continuing operations, net of non-cash items (Amortization, Depreciation, and Stock-based compensation).

•The aggregate cash generated from accounts receivable was entirely offset by cash used in inventories and trade accounts payable during the first quarter. The aggregate changes in accounts receivable, inventories, and trade accounts payable generatedused $18$1 million during the year-to-date period as compared to generating $43 million in the comparable period of 2025. The amount of cash flow generated from or used in a period depends upon how effectively we manage the cash conversion cycle, which can be impacted by timing of revenue and collection from customers, vendor cash disbursement, and purchases of materials and components for certain businesses.components.

•The aggregate changes in prepaid expenses and other assets, and accrued expenses and other liabilities used $51$46 million of cash in the firstyear-to-date quarterperiod as compared to using $71$133 million of cash in the comparable period of 2025. The year-over-year changes were driven primarily by timing differences related to contract assets, contract liabilities, and payments of interest.interest and taxes.

Investing cash outflows from continuing operations in the firstyear-to-date quarterperiod were $5$73 million greater than the comparable period of 2025, driven by a year-over-year increase in cash used for acquisitions and higher capital expenditures.

In the comparable 2025year-to-date period, financing activities from continuing operations used cash of $141$400 million, reflecting the following transactions:

•We made dividend payments to common shareholders totaling $27$18 million.million in the first quarter. Dividends declared in the second quarter of $18 million were not paid to shareholders until July 6, 2026.