Veralto (VLTO) 10-12BRegistration of securities

I am excited for you to get to know our business and look forward to welcoming you as a stockholder of Veralto Corporation (“Veralto”) when we become a separate publicly traded company. We plan to list Veralto on the New York Stock Exchange under the ticker symbol “VLTO”. Veralto is a leader in public health and safety with an attractive operating profile and a proven business system designed to create long-term shareholder value. This strong foundation was born from our rich heritage at Danaher, and we are committed to building on our legacy of growth, innovation, and continuous improvement by carrying forward the principles of the Danaher Business System as we transition to the Veralto Enterprise System (“VES”).

Veralto is comprised of long-established operating companies with leading brands focused on solving global challenges, including water quality, water scarcity, food safety, and labor shortages in our served industries. The breadth of our product offering is complemented by technical applications expertise, digital capabilities, and customer service; all of which help support our customers’ objectives to reduce operating costs, minimize their environmental impact, and support consumer health and safety.

Strong secular trends continue to shape the industries in which we participate and provide opportunities for future growth. These trends include increasing regulatory standards for drinking water and wastewater discharge, growing global demand for safe and affordable water, enhanced focus on product safety, along with a heightened focused on sustainability. Given Veralto's history of helping customers navigate significant regulatory, sustainability and product safety challenges, we believe we are well positioned to capitalize on these secular trends.

Veralto’s leadership team is diverse, talented and experienced and includes a balance of Danaher veterans and external hires with public company experience. Our team of 16,000 associates is data driven and results oriented with a growth and continuous improvement mindset. We strive to create and sustain a culture of empowerment and accountability where our associates feel a sense of belonging in an inclusive workplace that is challenging, rewarding and offers the ability to make meaningful, enduring contributions to humanity.

As a separate publicly traded company we see significant opportunities to create future value by executing against three strategic imperatives:

I personally invite you to learn more about Veralto by reading the attached information statement. Our team looks forward to earning your trust as we focus on delivering results through customer-inspired ingenuity and continuous improvement that leaves an enduring impact.

The distribution is expected to be tax-free to Danaher stockholders for U.S. federal income tax purposes, except for any cash received in lieu of fractional shares.

No vote of Danaher stockholders is required for the distribution. Therefore, you are not being asked for a proxy, and you are requested not to send Danaher a proxy, in connection with the distribution. You do not need to pay any consideration, exchange or surrender your existing shares of Danaher common stock or take any other action to receive your shares of Veralto common stock.

There is no current trading market for Veralto common stock, although Veralto expects that a limited market, commonly known as a “when-issued” trading market, will develop on or shortly before the record date for the distribution, and Veralto expects “regular-way” trading of Veralto common stock to begin on the first trading day following the distribution. Veralto has applied to have its common stock authorized for listing on the New York Stock Exchange (the “NYSE”) under the symbol “VLTO.” Following the distribution, Danaher will continue to trade on the NYSE under the symbol “DHR.”

Unless otherwise indicated, information contained in this information statement concerning Veralto’s industry and the markets in which Veralto operates, including its general expectations and market position, market opportunity and market share, is based on information from third-party sources and management estimates. Veralto’s management estimates are derived from publicly available information, Veralto’s knowledge of its industry and assumptions based on such information and knowledge, which Veralto believes to be reasonable. Veralto’s management estimates have not been verified by any independent source. In addition, assumptions and estimates of Veralto and its industry’s future performance are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described in “Risk Factors.” These and other factors could cause future performance to differ materially from Veralto’s assumptions and estimates. For additional information, please refer to “Cautionary Statement Concerning Forward-Looking Statements.”

The name and mark, Veralto, and other trademarks, trade names and service marks of the Company appearing in this information statement are Veralto’s property or, as applicable, licensed to Veralto, or, as applicable, are the property of Danaher. The name and mark, Danaher, and other trademarks, trade names and service marks of Danaher appearing in this information statement are the property of Danaher. This information statement also contains additional trade names, trademarks and service marks belonging to other companies. Veralto does not intend its use or display of other parties’ trademarks, trade names or service marks to imply, and such use or display should not be construed to imply, a relationship with, or endorsement or sponsorship of Veralto by, these other parties.

Our businesses operate in industries that are intensely competitive and have been subject to increasing consolidation. Because of the range of the products and services we sell and the variety of markets we serve, we encounter a wide variety of competitors; please refer to “Business—Competition” for additional details. In order to compete effectively, we must retain longstanding relationships with major customers and continue to grow our business by establishing relationships with new customers, continually developing new products and services to maintain and expand our brand recognition and leadership position in various product and service categories and penetrating new markets, including high-growth markets.

Our ability to compete can also be impacted by changing customer preferences and requirements (for example increased demand for products incorporating digital capabilities or more environmentally-friendly products and supplier practices). Cost containment efforts by governments and the private sector are also resulting in increased emphasis on products that reduce costs and improve efficiency and effectiveness. In addition, significant shifts in industry market share have occurred and may in the future occur in connection with product problems, safety alerts and publications about products, reflecting the competitive significance of product quality, product efficacy and quality systems in our industry.

Our failure to compete effectively and/or pricing pressures resulting from competition may adversely impact our business and financial statements, and our expansion into new markets may result in greater-than-expected risks, liabilities and expenses. In addition, the Company’s competitors and customers have from time to time introduced, and may in the future introduce, private label, generic or low-cost products that compete with the Company’s products at lower price points. New, disruptive technologies may emerge that displace the Company’s existing technologies. Competitors’ products can capture significant market share or lead to a decrease in market prices overall, resulting in an adverse effect on the Company’s business and financial statements.

We generally sell our products and services in industries that are characterized by rapid technological changes, frequent new product introductions and changing industry standards. If we do not develop innovative new and enhanced products and services on a timely basis, our offerings will become obsolete over time and our business and financial statements will suffer. Our success will depend on several factors, including our ability to:

If we fail to accurately predict future customer needs and preferences or fail to produce viable technologies, we may invest heavily in R&D of products and services that do not lead to significant revenue, which would adversely affect our business and financial statements. Even when we successfully innovate and develop new and enhanced products and services, we often incur substantial costs in doing so, and our profitability may suffer. Competitors may also develop after-market services and parts for our products which may detract from our sales.

International business risks have in the past negatively affected, and may in the future negatively affect, our business and financial statements.

In 2022, we generated approximately 8% of our sales from China. Accordingly, political, economic, legal, compliance, social and business conditions in China generally can adversely influence our business and financial statements. Additionally, China’s government continues to play a significant role in regulating industry development by imposing sector-specific policies, and it maintains control over China’s economic growth through setting monetary policy and determining treatment of particular industries or companies. Further, considerable uncertainty exists regarding the long-term effects of the expansionary monetary and fiscal policies adopted by the central banks and financial authorities of some of the world’s leading economies, including the U.S. and China. Uncertainty or adverse changes to conditions in China or the policies of China’s government or its laws and regulations can adversely affect the overall economic growth of China, or of the particular industries in which we participate, and can adversely affect our business and financial statements.

Certain of the acquisition agreements by which we have acquired companies require the former owners to indemnify us against certain liabilities related to the operation of the acquired company before we acquired it. In most of these agreements, however, the liability of the former owners is limited and certain former owners may be unable to meet their indemnification responsibilities. In addition, we obtain or receive the benefits of representations and warranties insurance in connection with certain acquisitions. There can be no assurance that these indemnification provisions or insurance coverages will protect us fully or at all, and as a result we may face unexpected liabilities that adversely affect our business and financial statements.

We continually assess the strategic fit of our existing businesses and may divest, spin-off, split-off or otherwise dispose of businesses for strategic, financial or other reasons. Such transactions pose risks and challenges that could negatively impact our business and financial statements. For example, divestitures or other dispositions can dilute the Company’s earnings per share, have other adverse financial, tax and accounting impacts and distract management, and disputes can arise with the new owners of the divested/disposed business. 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 or our predecessors have sold or disposed. The resolution of these contingencies has not had a material effect on our business or financial statements but there can be no assurance that this favorable pattern will continue.

We rely on information technology systems, some of which are provided and/or managed by third-parties, to process, transmit and store electronic information (including sensitive data such as confidential business information and personal data relating to employees, customers and other business partners), and to manage or support a variety of critical business processes and activities (such as receiving and fulfilling orders, billing, collecting and making payments, shipping products, providing services and support to customers and fulfilling contractual obligations). In addition, some of our remote monitoring products and services incorporate software and information technology that house personal data and some products or software we sell to customers connect to our systems for maintenance or other purposes. These systems, products and services (including those we acquire through business acquisitions) can be damaged, disrupted or shut down due to attacks by computer hackers, computer viruses, ransomware, human error or malfeasance (including by employees), power outages, hardware failures, telecommunication or utility failures, catastrophes or other unforeseen events, and in any such circumstances our system redundancy and other disaster recovery planning may be ineffective or inadequate. Attacks can also target hardware, software and information installed, stored or transmitted in our products after such products have been purchased and incorporated into third-party products, facilities or infrastructure. Security breaches of systems provided or enabled by us, regardless of whether the breach is attributable to a vulnerability in our products or services, or security breaches of third-party suppliers we rely on to process, store or transmit electronic information, can result in the misappropriation, destruction or unauthorized disclosure of confidential information or personal data belonging to us or to our employees, partners, customers or suppliers. Like most multinational corporations, our information technology systems and data have been subject to computer viruses, malicious codes, unauthorized access and other cyber-attacks and we expect the sophistication and frequency of such attacks to continue to increase. Unauthorized tampering, adulteration or interference with our products may also adversely affect product functionality and result in loss of data and product recalls or field actions. The attacks, breaches, misappropriations and other disruptions and damage described above can interrupt our operations or the operations of our customers and partners, delay production and shipments, result in theft of our and our customers’ intellectual property and trade secrets, result in disclosure of personal data, damage customer, business partner and employee relationships and our reputation and result in defective products or services, legal claims and proceedings, liability and penalties under privacy and other

In addition, our information technology systems require an ongoing commitment of significant resources to maintain and enhance existing systems and develop new systems to keep pace with continuing changes in information processing technology, evolving legal and regulatory standards, evolving customer expectations, changes in the techniques used to obtain unauthorized access to data and information systems, and the information technology needs associated with our changing products and services. There can be no assurance that we will be able to successfully maintain, enhance and upgrade our systems as necessary to effectively address these requirements. Further, a greater number of our employees have been working remotely since the beginning of the COVID-19 pandemic, which exposes us to greater cybersecurity and data privacy risks.

Any inability to maintain reliable information technology systems and appropriate controls with respect to global data privacy and security requirements and prevent data breaches can result in adverse regulatory and business consequences and litigation. As a global organization, we are subject to data privacy and security laws, regulations, and customer-imposed controls in numerous jurisdictions as a result of having access to and processing confidential, personal and/or sensitive data in the course of our business. Please see “Business—Regulatory Matters” for additional information. Failure to comply with the requirements of the EU General Data Protection Regulation that became effective in May 2018 (“GDPR”) and the applicable national data protection laws of the EU member states and other states subject to the GDPR may result in fines of up to €20 million or up to 4% of total worldwide annual turnover for the preceding financial year, whichever is higher, and other administrative penalties. Several other countries such as China and Russia have passed, and other countries have passed or are considering passing, laws that require some or all personal data relating to their citizens to be maintained on local servers or impose significant restrictions on data transfer. State privacy laws in California impose some of the same features as the GDPR and have prompted several other states to enact similar laws.

Additionally, a bipartisan bill under consideration in Congress would, if adopted, impose broad privacy requirements at the U.S. federal level and provide enhanced enforcement authority to the FTC. Government investigations and enforcement actions can be costly and interrupt the regular operation of our business, and data breaches or violations of data privacy laws can result in civil and criminal, monetary and non-monetary penalties and damage to customer, business partner and employee relationships and to our reputation, any of which may adversely affect our business and financial statements. In addition, compliance with the varying data privacy regulations across the U.S. and around the world has required significant expenditures and may require additional expenditures, and may require further changes in our products or business models that increase competition or reduce revenue.

Manufacturing or design defects or “bugs” in, unanticipated use of, safety or quality issues (or the perception of such issues) with respect to, “off label” use of, or inadequate disclosure of risks relating to the use of products and services that we make or sell (including items that we source from third-parties) can lead to personal injury, death, property damage and/or regulatory violations that can adversely affect our business and financial statements. These events can lead to recalls or safety alerts, result in the removal of a product or service from the market and result in product liability or similar claims being brought against us. Recalls, removals and product liability and similar claims (regardless of their validity or ultimate outcome) can result in significant costs, as well as negative publicity and damage to our reputation that could reduce demand for our products and services. Any of the above can result in the discontinuation of marketing of such products in one or more countries and give rise to claims for damages from persons who believe they have been injured as a result of product issues, including claims by individuals or groups seeking to represent a class.

Our facilities, supply chains, distribution systems and information technology systems are subject to catastrophic loss due to fire, flood, cyber-attack, earthquake, hurricane, power shortage or outage, public health crisis (including epidemics and pandemics) and the reaction thereto, war, terrorism, riot, public protest or other natural or man-made disasters, such as the COVID-19 pandemic. If any of these facilities, supply chains or systems were to experience a catastrophic loss, it could disrupt our operations, delay production and shipments, result in defective products or services, diminish demand, damage customer relationships and our reputation and result in legal exposure and significant repair or replacement expenses. The third-party insurance coverage that we maintain varies from time to time in both type and amount depending on cost, availability and our decisions regarding risk retention, and may be unavailable or insufficient to protect us against such losses.

Climate change resulting from increased concentrations of carbon dioxide and other greenhouse gases in the atmosphere presents risks to our operations. Physical risk resulting from acute changes (such as hurricane, tornado, wildfire or flooding) or chronic changes (such as droughts, heat waves or sea level changes) in climate patterns can adversely impact our facilities and operations and disrupt our supply chains and distribution systems. Concern over climate change can also result in new or additional legal, regulatory or quasi-regulatory requirements designed to reduce greenhouse gas emissions and/or mitigate the effects of climate change on the environment (such as taxation of, or caps on the use of, carbon-based energy). Any such new or additional requirements may increase the costs associated with, or disrupt, sourcing, manufacturing and distribution of our products, which may adversely affect our business and financial statements. In addition, any failure to adequately address stakeholder expectations with respect to environmental, social and governance (“ESG”) matters may result in the loss of business, adverse reputational impacts, diluted market valuations and challenges in attracting and retaining customers and talented employees. For example, our ability to achieve any ESG goals we may establish is uncertain and subject to numerous risks, including evolving regulatory requirements and stakeholder expectations, our ability to recruit, develop and retain a diverse workforce, the availability of suppliers and other business partners that can meet our ESG expectations, the effects of the organic and inorganic growth of our business, cost considerations and the development and availability of cost-effective technologies or resources that would support any such goals.

The manufacture of many of our products is a highly exacting and complex process. Problems can arise during manufacturing for a variety of reasons, including equipment malfunction, failure to follow specific protocols and procedures, problems with raw materials or components, cyber-attacks, natural disasters and environmental factors, and if not discovered before the product is released to market can result in recalls and product liability exposure. An alternative manufacturer is not always available on a timely basis to replace lost production capacity. Any of these manufacturing problems could result in adverse impacts to our business and financial statements.

Prices for and availability of the components, raw materials and other commodities we use in our business, as well as for labor, have fluctuated significantly in the past, including during 2022. Please see “Business—Materials” for a discussion of the inputs we use in our business, supply chain and labor availability disruptions and constraints our businesses have faced and are facing, and the adverse impacts that we have incurred and may incur relating thereto. The supply chains for our businesses can be disrupted by supplier capacity constraints, fluctuations in demand, decreased availability of key raw materials or commodities, legislative or regulatory changes, bankruptcy or exiting of the business for other reasons and external events such as natural disasters, pandemic health issues, war, terrorist actions and governmental actions (such as trade protectionism). In addition, some of our businesses purchase certain requirements from sole or limited source suppliers for reasons of quality assurance, cost

Our profitability could also be adversely impacted if we are unable to adjust our purchases to reflect changes in customer demand and market fluctuations, including those caused by seasonality or cyclicality. During a market upturn, suppliers from time to time extend lead times, limit supplies or increase prices. Conversely, in order to secure supplies for the production of products, we sometimes enter into noncancelable purchase commitments with vendors, which can impact our ability to adjust our inventory to reflect declining market demands.

Because we cannot always immediately adapt our production capacity and related cost structures to changing market conditions, at times our manufacturing capacity exceeds or falls short of our production requirements. Any or all of these problems can result in the loss of customers or cost inefficiencies, provide an opportunity for competing products to gain market acceptance and otherwise adversely affect our business and financial statements.

Certain of our businesses sell a significant amount of their products to or through key distributors and other channel partners that have valuable relationships with customers and end-users. Some of these distributors and other partners also sell our competitors’ products or compete with us directly, and if they favor competing products for any reason they may fail to market our products effectively. Adverse changes in our relationships with these distributors and other partners, reduction or discontinuation of their purchases from us or adverse developments in their financial condition, performance or purchasing patterns, can adversely affect our business and financial statements. The levels of inventory maintained by our key distributors and other channel partners, and changes in those levels, also impacts our business and financial statements in any given period. In addition, the consolidation of distributors and customers in certain of our served industries can adversely impact our business and financial statements.

The military conflict between Russia and Ukraine has adversely affected and may further adversely affect our business and financial statements. In 2022, the Company suspended the shipment of products to Russia. We incurred a pretax charge of $1 million in the first quarter of 2022 as a result of Russia-related asset impairments and similar items and we may incur additional charges in the future. In 2021, approximately 1% of the Company’s sales were derived from customers based in Russia and a de minimis percentage of sales were derived from customers based in Ukraine, and in 2022 Russia and Ukraine sales accounted for less than 1% of the Company’s sales. The conflict in Ukraine may escalate and/or expand in scope and the broader consequences of this conflict, which have included and/or may in the future include sanctions, embargoes, regional instability, geopolitical shifts and adverse impacts on energy supplies and prices; potential retaliatory action by the Russian government against companies, including the Company, such as nationalization of foreign businesses in Russia. Further, increased tensions between the United States and countries in which we operate cannot be predicted, nor can we predict the conflict’s future impact on the global economy and on our business and financial statements.

The Russia and Ukraine conflict also heightens many other risks disclosed in this information statement, any of which can adversely affect our business and financial statements. Such risks include, but are not limited to, adverse effects on macroeconomic conditions, including increased inflation, constraints on the availability of commodities, supply chain disruption and decreased business spending; disruptions to our or our business partners’ global technology infrastructure, including through cyber-attack or cyber-intrusion; adverse changes in international trade policies and relations; claims, litigation and regulatory enforcement; our ability to implement and execute our business strategy; terrorist activities; our exposure to foreign currency fluctuations; reputational risk; and constraints, volatility, or disruption in the capital markets.

These are not the only regulations that our businesses must comply with. The regulations we are subject to have tended to become more stringent over time and can be inconsistent across jurisdictions. We, our representatives and the industries in which we operate are at times under review and/or investigation by regulatory authorities. Failure to comply (or any alleged or perceived failure to comply) with the regulations referenced above or any other regulations can result in import detentions, fines, damages, civil and administrative penalties, injunctions, consent decrees, suspensions or losses of regulatory approvals, recall or seizure of products, operating restrictions, refusal of the government to approve product export applications or allow us to enter into supply contracts, disbarment from selling to certain governmental agencies, integrity oversight and reporting obligations to resolve allegations of non-compliance, disruption of our business, limitation on our ability to manufacture, import, export and sell products and services, loss of customers, significant legal and investigatory fees, disgorgement, individual imprisonment, reputational harm, contractual damages, diminished profits, curtailment or restricting of business operations, criminal prosecution and other monetary and non-monetary penalties. Compliance with these and other regulations can also affect our returns on investment, require us to incur significant expenses or modify our business model or impair our flexibility in modifying product, marketing, pricing or other strategies for growing our business. Our products and operations are also often subject to the rules of industrial standards bodies such as the International Standards Organization, and failure to comply with these rules can result in withdrawal of certifications needed to sell our products and services and otherwise adversely impact our business and financial statements. For additional information regarding these risks, please refer to “Business—Regulatory Matters.”

We are, or following the distribution, may become, subject to or otherwise responsible for a variety of litigation and other legal and regulatory proceedings in the course of our business (or related to the business operations of previously owned entities), including claims or counterclaims for damages arising out of the use of products or services and claims relating to intellectual property matters, employment matters, tax matters, commercial disputes, breach of contract claims, competition and sales and trading practices, environmental matters, personal injury, insurance coverage, acquisition or divestiture-related matters, as well as regulatory subpoenas, requests for information, investigations and enforcement. We also from time to time become subject to lawsuits as a result of acquisitions or as a result of liabilities retained from, or representations, warranties or indemnities provided in connection with, businesses divested by us or our predecessors. The types of claims made in lawsuits include claims for compensatory damages, consequential damages, punitive damages and/or injunctive relief. The defense of these lawsuits can divert our management’s attention, we from time to time incur significant expenses in defending these lawsuits, and we can be required to pay damage awards or settlements or become subject to equitable remedies that adversely affect our business and financial statements. Moreover, any insurance or indemnification rights that we may have may be insufficient or unavailable to protect us against such losses. Because most contingencies are

From time to time, we become aware through our internal audits and other internal control procedures, employees or other parties of possible compliance matters, such as complaints or concerns relating to accounting, internal controls, financial reporting, auditing or ethical matters or relating to compliance with laws. When we become aware of such possible compliance matters, we investigate internally and take what we believe to be appropriate corrective action. Internal investigations can lead to the assertion of claims or the commencement of legal or regulatory proceedings against us and adversely affect our business and financial statements.

In addition, we from time to time incur costs related to remedial efforts or alleged environmental damage associated with past or current waste disposal practices or other hazardous materials handling practices. We are also from time to time party to personal injury, property damage or other claims brought by private parties alleging injury or damage due to the presence of or exposure to hazardous substances. We can also become subject to additional remedial, compliance or personal injury costs due to future events such as changes in existing laws or regulations, changes in agency direction or enforcement policies, developments in remediation technologies, changes in the conduct of our operations and changes in accounting rules. For additional information regarding these risks, refer to the Combined Financial Statements included in this information statement. There can be no assurance that our liabilities arising from past or future releases of, or exposures to, hazardous substances will not exceed our estimates or adversely affect our reputation and financial statements or that we will not be subject to additional claims for personal injury or remediation in the future based on our past, present or future business activities. However, based on the information we have as of the date of this information statement we do not believe that it is reasonably possible that any amounts we may be required to pay in connection with environmental matters in excess of our reserves as of the date of this information statement will have a material effect on our business or financial statements.

The historical information about Veralto in this information statement refers to Veralto’s businesses as operated by and integrated with Danaher. Veralto’s historical and pro forma financial information included in this information statement is derived from the consolidated financial statements and accounting records of Danaher. Accordingly, the historical and pro forma financial information included in this information statement does not necessarily reflect the financial condition, results of operations or cash flows that Veralto would have achieved as a separate, publicly traded company during the periods presented or those that Veralto will achieve in the future primarily as a result of the factors described below:

Other significant changes may occur in Veralto’s cost structure, management, financing and business operations as a result of operating as a company separate from Danaher. For additional information about the past financial performance of Veralto’s businesses and the basis of presentation of the historical Combined Financial Statements and the Unaudited Pro Forma Combined Financial Statements of Veralto’s businesses, please refer to the sections entitled “Unaudited Pro Forma Combined Financial Statements,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the audited Combined Financial Statements and accompanying notes included elsewhere in this information statement.

There is a risk that, by separating from Danaher, Veralto may become more susceptible to market fluctuations and other adverse events than it would have been if it were still a part of the current Danaher organizational structure. As part of Danaher, Veralto has been able to enjoy certain benefits from Danaher’s operating diversity, purchasing power and opportunities to pursue integrated strategies with Danaher’s other businesses. As a separate, publicly traded company, Veralto will not have similar diversity or integration opportunities and may not have similar purchasing power or access to capital markets. Additionally, as part of Danaher, Veralto has been able to leverage the Danaher historical market reputation and performance and brand identity to recruit and retain key personnel to run its business. As a separate, publicly traded company, Veralto will not have the same historical market reputation and performance or brand identity as Danaher and it may be more difficult for us to recruit or retain such key personnel.

The Unaudited Pro Forma Combined Condensed Financial Statements included in this information statement are presented for informational purposes only and are not necessarily indicative of what Veralto’s actual financial condition or results of operations would have been had the separation been completed on the date indicated. The assumptions used in preparing the pro forma financial information may not prove to be accurate and other factors may affect Veralto’s financial condition or results of operations. Accordingly, Veralto’s financial condition and results of operations in the future may not be evident from or consistent with such pro forma financial information.

Sales or distributions of a substantial number of shares after the distribution, or a perception that such sales or distributions could occur, could significantly reduce the market price of Veralto common stock. Upon completion of the distribution, except as otherwise described herein, all shares of Veralto common stock that are being distributed hereby will be freely tradable without restriction, assuming they are not held by Veralto’s affiliates.

Immediately following the distribution, Veralto intends to file a registration statement on Form S-8 registering under the Securities Act the shares of Veralto common stock reserved for issuance under the Veralto 2023 Stock Incentive Plan. If equity securities granted under the Veralto 2023 Stock Incentive Plan are sold or it is perceived that they will be sold in the public market, the trading price of Veralto common stock could decline substantially. These sales also could impede Veralto’s ability to raise future capital.

The Veralto amended and restated certificate of incorporation will provide that, Danaher will have no duty to communicate information regarding a corporate opportunity to Veralto or to refrain from engaging in the same or similar activities or lines of business as Veralto, doing business with any client, customer or vendor of Veralto or employing or otherwise engaging any director, officer or employee of Veralto, and that to the fullest extent permitted by law, except as otherwise provided in the Veralto amended and restated certificate of incorporation, no officer, director or employee of Veralto who is also a director, officer or employee of Danaher will be deemed to have breached his or her fiduciary duties, if any, to Veralto solely by reason of Danaher’s engaging in any such activity. The Veralto amended and restated certificate of incorporation will also provide that, for so long as Danaher has one or more directors, officers or employees serving as a Veralto director, officer or employee, in the event that any of Veralto’s directors, officers or employees who is also a director, officer or employee of Danaher acquires knowledge of a potential transaction or matter that may be a corporate opportunity for Veralto and Danaher, such director, officer or employee shall to the fullest extent permitted by law have fully satisfied and fulfilled his or her fiduciary duty, if any, with respect to such corporate opportunity, and Veralto, to the fullest extent permitted by law,

Some of Veralto’s customers, prospective customers, suppliers or other companies with whom we conduct business may conclude that Veralto’s financial stability as a separate, publicly traded company is insufficient to satisfy their requirements for doing or continuing to do business with them, or may require Veralto to provide additional credit support, such as letters of credit or other financial guarantees. Any failure of parties to be satisfied with Veralto’s financial stability could have a material adverse effect on Veralto’s business and financial statements.

The separation agreement, among other things, provides for indemnification obligations (for uncapped amounts) designed to make Veralto financially responsible for substantially all liabilities that may exist relating to its business activities, whether incurred prior to or after the separation, as well as any other liabilities it agrees to assume pursuant to the separation agreement. If Veralto is required to indemnify Danaher under the circumstances set forth in the separation agreement, Veralto may be subject to substantial liabilities. Please refer to “Certain Relationships and Related Person Transactions—The Separation Agreement—Release of Claims and Indemnification.”

Pursuant to the separation agreement and certain other agreements with Danaher, Danaher will agree to indemnify Veralto for certain liabilities as discussed further in “Certain Relationships and Related Person Transactions.” However, third parties could also seek to hold Veralto responsible for any of the liabilities that Danaher has agreed to retain, and there can be no assurance that the indemnity from Danaher will be sufficient to protect Veralto against the full amount of such liabilities, or that Danaher will be able to fully satisfy its indemnification obligations. In addition, Danaher’s insurance will not necessarily be available to Veralto for liabilities associated with occurrences of indemnified liabilities prior to the separation, and in any event Danaher’s insurers may deny coverage to Veralto for liabilities associated with certain occurrences of indemnified liabilities prior to the separation. Moreover, even if Veralto ultimately succeeds in recovering from Danaher or such insurance providers any amounts for which Veralto is held liable, Veralto may be temporarily required to bear these losses. Each of these risks could negatively affect Veralto’s business and financial statements.

The distribution, along with certain related transactions, is conditioned upon the receipt by Danaher of (i) the Ruling from the IRS substantially to the effect that, among other things, the distribution, together with certain related transactions, will qualify as a transaction that is tax-free for U.S. federal income tax purposes under Sections 355

Because of their current or former positions with Danaher, certain of Veralto’s expected executive officers and directors own equity interests in Danaher. Continuing ownership of shares of Danaher common stock and equity

Danaher will not be restricted from competing with Veralto. If Danaher in the future decides to engage in the type of business Veralto conducts, it may have a competitive advantage over Veralto, which may cause Veralto’s business and financial statements to be materially adversely affected.

Veralto may not be able to achieve the full strategic and financial benefits expected to result from the separation, or such benefits may be delayed or not occur at all. The separation is expected to provide the following benefits, among others:

Veralto may not achieve these and other anticipated benefits for a variety of reasons, including, among others:

If Veralto fails to achieve some or all of the benefits expected to result from the separation, or if such benefits are delayed, the businesses, operating results and financial condition of Veralto could be adversely affected.

The agreements Veralto will enter into with Danaher in connection with the separation, including the separation agreement, transition services agreement, employee matters agreement, tax matters agreement, intellectual property matters agreement and DBS license agreement were prepared in the context of Veralto’s separation from Danaher while Veralto was still a wholly owned subsidiary of Danaher. Accordingly, during the period in which the terms of those agreements were prepared, Veralto did not have a separate or independent board of directors or a management team that was separate from or independent of Danaher. As a result, the terms of those agreements may not reflect terms that would have resulted from arm’s-length negotiations between unaffiliated third parties. Arm’s-length negotiations between Danaher and an unaffiliated third party in another form of transaction, such as a buyer in a sale of a business transaction, may have resulted in more favorable terms to the unaffiliated third party. For more information, please refer to “Certain Relationships and Related Person Transactions.”

The separation agreement and other agreements to be entered into in connection with the separation will determine the allocation of assets and liabilities between the companies following the separation for those respective areas and will include any necessary indemnifications related to liabilities and obligations. The transition services agreement will provide for the performance of certain services by each company for the benefit of the other for a period of time after the separation. Veralto will rely on Danaher after the separation to satisfy its performance and payment obligations under these agreements. If Danaher is unable or unwilling to satisfy its obligations under these agreements, including its indemnification obligations, Veralto could incur operational difficulties or losses. If Veralto does not have in place its own systems and services, or if Veralto does not have agreements with other

In addition, Veralto expects this process to be complex, time-consuming and costly. Veralto is also establishing or expanding its own tax, treasury, internal audit, investor relations, corporate governance and listed company compliance and other corporate functions. Veralto expects to incur one-time costs to replicate, or outsource from other providers, these corporate functions to replace the corporate services that Danaher historically provided Veralto prior to the separation. Any failure or significant downtime in Veralto’s own financial, administrative or other support systems or in the Danaher financial, administrative or other support systems during the transitional period during which Danaher provides Veralto with support could negatively impact Veralto’s business and financial statements or prevent Veralto from paying its suppliers and employees, executing business combinations and foreign currency transactions or performing administrative or other services on a timely basis, which could negatively affect Veralto’s business and financial statements.

In particular, Veralto’s day-to-day business operations rely on information technology systems. A significant portion of the communications among Veralto’s personnel, customers and suppliers take place on information technology platforms. Veralto expects the transfer of information technology systems from Danaher to Veralto to be complex, time consuming and costly. There is also a risk of data loss in the process of transferring information technology. As a result of Veralto’s reliance on information technology systems, the cost of such information technology integration and transfer and any such loss of key data could have an adverse effect on Veralto’s business and financial statements.

As of the date of this information statement, Veralto expects to have outstanding indebtedness at the closing of the separation of approximately $2.6 billion and have the ability to incur an additional $1.5 billion of indebtedness under a revolving credit agreement that we expect to enter into prior to the closing of the separation. See “Description of Certain Indebtedness.” This debt could have important, adverse consequences to Veralto and its investors, including:

Veralto’s ability to make scheduled payments on or refinance our debt obligations depends on its financial condition and operating performance, which are subject to prevailing economic and competitive conditions and to certain financial, business, legislative, regulatory and other factors beyond Veralto’s control. Veralto may be unable to maintain a level of cash flows from operating activities sufficient to permit it to pay the principal and interest on its indebtedness.

If Veralto’s cash flows and capital resources are insufficient to fund its debt service obligations, Veralto could face substantial liquidity problems and could be forced to reduce or delay investments and capital expenditures, or to dispose of material assets or operations, alter its dividend policy (if Veralto pays dividends), seek additional debt or equity capital or restructure or refinance its indebtedness. Veralto may not be able to effect any such alternative measures on commercially reasonable terms or at all and, even if successful, those alternative actions may not allow Veralto to meet its scheduled debt service obligations. The instruments that will govern Veralto’s indebtedness may restrict its ability to dispose of assets and may restrict the use of proceeds from those dispositions. Veralto may not be able to consummate those dispositions or to obtain proceeds in an amount sufficient to meet any debt service obligations when due.

In addition, Veralto conducts operations through its subsidiaries. Accordingly, repayment of Veralto’s indebtedness will depend on the generation of cash flow by Veralto’s subsidiaries, including certain international subsidiaries, and their ability to make such cash available to Veralto, by dividend, debt repayment or otherwise. Veralto’s subsidiaries may not have any obligation to pay amounts due on Veralto’s indebtedness or to make funds available for that purpose. Veralto’s subsidiaries may not be able to, or may not be permitted to, make adequate distributions to enable Veralto to make payments in respect of Veralto’s indebtedness. Each subsidiary is a distinct legal entity and, under certain circumstances, legal, tax and contractual restrictions may limit Veralto’s ability to obtain cash from its subsidiaries. In the event that Veralto does not receive distributions from its subsidiaries, Veralto may be unable to make required principal and interest payments on its indebtedness.

Veralto’s inability to generate sufficient cash flows to satisfy its debt obligations, or to refinance its indebtedness on commercially reasonable terms or at all, may materially adversely affect its business and financial statements and its ability to satisfy its obligations under its indebtedness or pay dividends on its common stock.

Historically, Danaher has provided, and until Veralto’s separation from Danaher, Danaher will continue to provide, significant corporate and shared services related to corporate functions such as executive oversight, risk management, information technology, accounting, audit, legal, investor relations, human resources, tax, treasury, procurement and other services. Following Veralto’s separation from Danaher, Veralto expects Danaher to continue to provide many of these services on a transitional basis for a fee. While these services are being provided to Veralto by Danaher, Veralto will be dependent on Danaher for services that are critical to its operation as a separate, publicly traded company, and its operational flexibility to modify or implement changes with respect to such services and the amounts we pay for them will be limited. After the expiration of the transition services agreement, Veralto may not be able to replace these services or enter into appropriate third-party agreements on terms and conditions, including cost and quality of service, comparable to those that it will receive from Danaher under the transition services agreement. Although Veralto intends to replace portions of the services currently provided by Danaher following the separation, Veralto may encounter difficulties replacing certain services or be unable to negotiate pricing or other terms as favorable as those it currently has in effect.

Certain entities and assets that are part of Veralto’s separation from Danaher may not be transferred prior to the distribution or at all because the entities or assets, as applicable, are subject to foreign government or third-party approvals that Veralto may not receive prior to the distribution or at all. Such approvals may include, but are not limited to, approvals to merge or demerge, to form new legal entities (including obtaining required registrations and/or licenses or permits) and to transfer assets and/or liabilities. It is currently anticipated that all material transfers will occur without delays that extend beyond the separation, but Veralto cannot offer any assurance that such transfers will not be delayed beyond the separation or assurance that such transfers will ultimately occur at all. To the extent such transfers do not occur prior to the distribution, under the separation agreement, the economic benefits and burdens of owning such assets and/or entities will, to the extent reasonably possible and permitted by applicable law, be provided to the Company.

In the event such transfers do not occur or are significantly delayed because Veralto does not receive the required approvals, Veralto may not realize all of the anticipated benefits of Veralto’s separation from Danaher and Veralto may be dependent on Danaher for transition services for a longer period of time than would otherwise be the case. For additional information, see “Risk Factors—Risks Related to Veralto’s Business” and “—Following the distribution, Veralto will be dependent on Danaher to provide it with certain transition services, which may not be sufficient to meet its needs, and it may have difficulty finding replacement services or be required to pay increased costs to replace these services after its transition services agreement with Danaher expires.”

Prior to the completion of the distribution, there has been no public market for Veralto common stock. Veralto cannot guarantee that an active trading market will develop or be sustained for its common stock after the distribution. If an active trading market does not develop, you may have difficulty selling your shares of Veralto common stock at an attractive price, or at all.

Even if a trading market develops, the market price of Veralto common stock may be highly volatile and could be subject to wide fluctuations. Veralto cannot predict the prices at which shares of Veralto common stock may trade after the distribution. Securities markets worldwide experience significant price and volume fluctuations. This market volatility, as well as general economic, market or political conditions, could reduce the market price of

In the past few years, stock markets have experienced extreme price and volume fluctuations. In the past, following periods of volatility in the overall market and the market price of a company’s securities, securities class action litigation has often been instituted against these companies. Such litigation, if instituted against Veralto and/or its directors and officers, could result in substantial costs and a diversion of our management’s attention and resources.

As a public company, Veralto will be required to maintain internal controls over financial reporting and to report any material weaknesses in such internal controls. In addition, beginning with Veralto’s second annual report on Form 10-K, Veralto expects it will be required to furnish a report by management on the effectiveness of its internal control over financial reporting, pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”). Veralto’s independent registered public accounting firm will also be required to express an opinion as to the effectiveness of its internal control over financial reporting. At such time, Veralto’s independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which Veralto’s internal control over financial reporting is documented, designed or operating.

The process of designing, implementing, and testing the internal control over financial reporting required to comply with this obligation is time consuming, costly, and complicated. If Veralto identifies material weaknesses in its internal control over financial reporting, if Veralto is unable to comply with the requirements of Section 404 of the Sarbanes-Oxley Act in a timely manner or to assert that its internal control over financial reporting is effective, or if Veralto’s independent registered public accounting firm is unable to express an opinion as to the effectiveness of its internal control over financial reporting, investors may lose confidence in the accuracy and completeness of Veralto’s financial reports and the market price of Veralto common stock could be negatively affected, and Veralto could become subject to investigations by the stock exchange on which its securities are listed, the SEC, or other regulatory authorities, which could require additional financial and management resources.

Currently, Veralto is not directly subject to the reporting and other requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Following the effectiveness of the registration statement of which this information statement forms a part, Veralto will be directly subject to such reporting and other obligations under the Exchange Act and the rules of the NYSE. As a separate public company, Veralto is required to, among other things:

These reporting and other obligations will place significant demands on Veralto’s management and Veralto’s administrative and operational resources, and Veralto expects to face increased legal, accounting, administrative and other costs and expenses relating to these demands that it had not incurred as a part of Danaher. Certain of these functions will be provided on a transitional basis by Danaher pursuant to a transition services agreement. Please refer to “Certain Relationships and Related Person Transactions.” Veralto’s investment in compliance with existing and evolving regulatory requirements will result in increased administrative expenses and a diversion of management’s time and attention from sales-generating activities to compliance activities, which could have an adverse effect on its business and financial statements.

Veralto has not yet determined whether or the extent to which it will pay any dividends on its common stock. The payment of any dividends in the future, and the timing and amount thereof, to Veralto stockholders will fall within the discretion of the Board. The Board’s decisions regarding the payment of dividends will depend on many factors, such as Veralto’s financial condition, earnings, capital requirements, debt service obligations, restrictive covenants in Veralto’s then existing debt arrangements, industry practice, legal requirements and other factors that the Board deems relevant. For more information, please refer to “Dividend Policy.” Veralto’s ability to pay dividends will depend on its ongoing ability to generate cash from operations and on its access to the capital markets. Veralto cannot guarantee that it will pay a dividend in the future or continue to pay any dividends if Veralto commences paying dividends.

In the future, your percentage ownership in Veralto may be diluted because of equity issuances for acquisitions, capital market transactions or otherwise, including equity awards that Veralto will be granting to Veralto’s directors, officers and employees. In addition, following the distribution, Veralto’s employees will have rights to purchase or receive shares of Veralto common stock as a result of the conversion of their Danaher equity awards into Veralto equity awards. The conversion of these Danaher awards into Veralto awards is described in further detail in “Treatment of Outstanding Equity Awards at the Time of the Separation.” As of the date of this information statement, the exact number of shares of Veralto common stock that will be subject to the converted Veralto equity awards is not determinable, and, therefore, it is not possible to determine the extent to which your percentage ownership in Veralto could be diluted as a result of the conversion. It is anticipated that the Veralto Compensation Committee will grant additional equity awards to Veralto’s employees and directors after the distribution, from time to time, under Veralto’s employee benefits plans. These additional awards will have a dilutive effect on Veralto’s earnings per share, which could adversely affect the market price of Veralto’s common stock.

In addition, Veralto’s amended and restated certificate of incorporation will authorize Veralto to issue, without the approval of Veralto’s stockholders, one or more classes or series of preferred stock having such designation, powers, preferences and relative, participating, optional and other special rights, including preferences over Veralto common stock respecting dividends and distributions, as the Board generally may determine. The terms of one or more classes or series of preferred stock could dilute the voting power or reduce the value of Veralto common stock. For example, Veralto could grant the holders of preferred stock the right to elect some number of Veralto’s directors in all events or on the happening of specified events or the right to veto specified transactions. Similarly, the repurchase or redemption rights or liquidation preferences that Veralto could assign to holders of preferred stock could affect the residual value of the common stock. Please refer to “Description of Veralto’s Capital Stock.”

Veralto’s amended and restated certificate of incorporation and amended and restated bylaws will contain, and Delaware law contains, provisions that are intended to deter coercive takeover practices and inadequate takeover bids and to encourage prospective acquirers to negotiate with the Board rather than to attempt an unsolicited takeover not approved by the Board. These provisions include, among others:

In addition, because Veralto has not chosen to be exempt from Section 203 of the Delaware General Corporation Law (the “DGCL”), this provision could also delay or prevent a change of control that you may favor. Section 203 provides that, subject to limited exceptions, persons that acquire, or are affiliated with a person that acquires, more than 15% of the outstanding voting stock of a Delaware corporation (an “interested stockholder”) shall not engage in any business combination with that corporation, including by merger, consolidation or acquisitions of additional shares, for a three-year period following the date on which the person became an interested stockholder, unless (i) prior to such time, the board of directors of such corporation approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder; (ii) upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of such corporation at the time the transaction commenced (excluding for purposes of determining the voting stock outstanding (but not the outstanding voting stock owned by the interested stockholder) the voting stock owned by directors who are also officers or held in employee benefit plans in which the employees do not have a confidential right to tender or vote stock held by the plan); or (iii) on or subsequent to such time the business combination is approved by the board of directors of such corporation and authorized at a meeting of stockholders by the affirmative vote of at least two-thirds of the outstanding voting stock of such corporation not owned by the interested stockholder. Danaher and its affiliates have been approved as an interested stockholder of ours and therefore are not subject to Section 203.

Veralto believes these provisions will protect its stockholders from coercive or otherwise unfair takeover tactics by requiring potential acquirers to negotiate with the Board and by providing the Board with more time to assess any acquisition proposal. These provisions are not intended to make Veralto immune from takeovers. However, these provisions will apply even if the offer may be considered beneficial by some stockholders and could delay or prevent an acquisition that the Board determines is not in the best interests of Veralto and Veralto’s stockholders. These provisions may also prevent or discourage attempts to remove and replace incumbent directors.

These exclusive forum provisions do not apply to actions arising under the Exchange Act or the rules and regulations thereunder. While the Delaware Supreme Court ruled in March 2020 that federal forum selection provisions purporting to require claims under the Securities Act be brought in federal court are “facially valid” under Delaware law, there is uncertainty as to whether other courts will enforce our federal forum provision described above. Our stockholders will not be deemed to have waived compliance with the federal securities laws and the rules and regulations thereunder.

We have not yet determined the extent to which we will pay any dividends on our common stock. The payment of any dividends in the future, and the timing and amount thereof, is within the discretion of the Board. The Board’s decisions regarding the payment of dividends will depend on many factors, such as our financial condition, earnings, capital requirements, debt service obligations, restrictive covenants in our then existing debt agreements, industry practice, legal requirements and other factors that our Board deems relevant. Our ability to pay dividends will depend on our ongoing ability to generate cash from operations and on our access to the capital markets. We cannot guarantee that we will pay a dividend in the future or continue to pay any dividends if we commence paying dividends.

The following table sets forth our cash and cash equivalents and capitalization as of June 30, 2023:

The information below is not necessarily indicative of what our cash and cash equivalents and capitalization would have been had the separation, distribution and related transactions been completed as of June 30, 2023. In addition, it is not indicative of our future cash and equivalents and capitalization. This table should be read in conjunction with “Unaudited Pro Forma Combined Financial Statements,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our Combined Condensed Financial Statements and notes thereto included elsewhere in this information statement (amounts in millions, except share data).

The following Unaudited Pro Forma Combined Financial Statements consist of the unaudited pro forma combined statements of earnings for the year ended December 31, 2022 and the six-month period ended June 30, 2023 and an unaudited pro forma combined balance sheet as of June 30, 2023. The unaudited pro forma combined statement of earnings for the year ended December 31, 2022 was derived from the Company’s historical audited Combined Financial Statements for the year ended December 31, 2022 included in this information statement. The unaudited pro forma combined statement of earnings for six-month period ended June 30, 2023 and the unaudited pro forma combined balance sheet as of June 30, 2023 were derived from our unaudited Combined Condensed Financial Statements included in this information statement. The pro forma adjustments give effect to the separation and the related transactions, as described in the notes to the Unaudited Pro Forma Combined Financial Statements. The unaudited pro forma combined statements of earnings for the year ended December 31, 2022 and the six-month period ended June 30, 2023 give effect to the separation as if it had occurred on January 1, 2022, the first day of fiscal 2022. The unaudited pro forma combined balance sheet gives effect to the separation as if it had occurred on June 30, 2023, the Company’s latest balance sheet date. References in this section and in the following Unaudited Pro Forma Combined Financial Statements and the Company’s Combined Financial Statements and notes thereto included in this information statement to the “Company” or “Veralto” shall mean the Environmental & Applied Solutions segment of Danaher Corporation.

The Unaudited Pro Forma Combined Financial Statements have been prepared to reflect transaction accounting and autonomous entity adjustments to present the financial condition and results of operations as if the Company was a separate stand-alone entity. In addition, we have provided a presentation of management adjustments that management believes are necessary to enhance an understanding of the pro forma effects of the transaction. The Unaudited Pro Forma Combined Financial Statements have been adjusted to give effect to the following (collectively, the “Pro Forma Transactions”):

The Unaudited Pro Forma Combined Financial Statements were prepared in accordance with Article 11 of Regulations S-X.

The Unaudited Pro Forma Combined Financial Statements are subject to the assumptions and adjustments described in the accompanying notes. These Unaudited Pro Forma Combined Financial Statements are subject to change as Danaher and the Company finalize the terms of the separation agreement and other agreements and transactions related to the separation.

In connection with the separation, the Company expects to enter into a transition services agreement with Danaher, pursuant to which Danaher will provide the Company with certain specified services on a temporary basis, including various information technology, financial and administrative services. The charges for the transition services generally are expected to allow Danaher to fully recover all out-of-pocket costs and expenses it actually incurs in connection with providing the service, plus, in some cases, the allocated indirect costs of providing the services, generally without profit. The adjustment for the transition services agreement is not expected to have a material impact on pro forma net earnings for the year ended December 31, 2022 or the six-month period ended June 30, 2023, since the historical combined statements of earnings for these periods already reflect Danaher’s existing allocations of costs for corporate services. Any incremental costs expected to be incurred from the transition services agreement are reflected as an autonomous entity adjustment.

The Unaudited Pro Forma Combined Financial Statements have been presented for informational purposes only. The pro forma information is not necessarily indicative of the Company’s results of operations or financial condition had the separation and the related transactions been completed on the dates assumed and should not be relied upon as a representation of the Company’s future performance.

The following Unaudited Pro Forma Combined Financial Statements should be read in conjunction with the historical Combined and Combined Condensed Financial Statements for the Company and MD&A and “Description of Certain Indebtedness” included in this information statement.

For further information regarding the historical Combined Financial Statements of Veralto, please refer to the Combined and Combined Condensed Financial Statements and the notes thereto in this information statement. The unaudited pro forma combined balance sheet as of June 30, 2023 and unaudited pro forma combined statement of earnings for the year ended December 31, 2022 and the six-month period ended June 30, 2023, include adjustments related to the following:

The Company has elected to present management adjustments to the pro forma financial information and included all adjustments necessary for a fair statement of such information. As a separate public company, Veralto expects to incur incremental costs within certain corporate functions including finance, tax, legal, human resources and other general and administrative related functions. The Company received the benefit of economies of scale as a segment within the Parent, however, in establishing these functions independently, the expenses will be higher than the prior corporate allocation from Parent.

As a separate public company, Veralto expects to incur certain costs reflected in the autonomous entity adjustments and described in note (j) above, including costs resulting from recurring and ongoing corporate governance costs, including board of director compensation and expenses, audit and other professional services fees, annual report and proxy statement costs, SEC filing fees, transfer agent fees, consulting and legal fees and stock exchange fees. The Company expects to incur these costs beginning at the spin-off.

The Company estimated that it would incur approximately $27 million and $14 million of total incremental expenses for the year ended December 31, 2022 and for the six-month period ended June 30, 2023, respectively.

The Company estimated these additional expenses by assessing the resources and associated recurring costs each function (e.g., finance, information technology, human resources, etc.) will require to stand up and operate as part of a separate publicly traded company. The Company expects to address any required resources incremental to the services provided by Danaher under the transition services agreement through additional hiring or incremental vendor and other third-party services spend.

The additional expenses have been estimated based on assumptions that our management believes are reasonable. However, actual additional costs that will be incurred could differ from these estimates and would depend on several factors, including the economic environment, results of contractual negotiations with third party vendors, ability to execute on proposed separation plans and strategic decisions made in areas such as manufacturing, selling and marketing, research and development, information technology and infrastructures. In addition, adverse effects and limitations including those discussed in the section entitled “Risk Factors” to this document may impact actual costs incurred. The Company may also decide to increase or reduce resources or invest more heavily in certain areas in the future, which may result in further differences between management’s estimates and actual costs incurred in the future.

These management adjustments include forward-looking information that is subject to the safe harbor protections of the Exchange Act. The tax effect has been determined by applying the respective statutory tax rates to the aforementioned adjustments in jurisdictions where valuation allowances were not required.

Unless the context otherwise requires, references in this Management’s Discussion and Analysis of Financial Condition and Results of Operations to “Veralto” or the “Company” shall mean the businesses comprising Danaher Corporation’s (“Danaher” or “Parent”) Environmental & Applied Solutions segment. Veralto Corporation has engaged in no business activities to date and it has no assets or liabilities of any kind, other than those incident to its formation.

The accompanying Combined Financial Statements present the historical financial position, results of operations, changes in Danaher’s equity and cash flows of the Company in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for the preparation of carved-out Combined Financial Statements.

As part of Danaher, the Company is dependent upon Danaher for all of its working capital and financing requirements as Danaher uses a centralized approach to cash management and financing of its operations. Financial transactions relating to the Company are accounted for through the Company’s “net Parent investment” account. Accordingly, none of Danaher’s cash, cash equivalents or debt at the corporate level has been assigned to the Company in the financial statements.

The Company’s business consists of two segments: Water Quality and Product Quality & Innovation. For additional details regarding these businesses, please refer to the section titled “Business” included in this information statement.

Refer to “Business” for a discussion of the Company’s strategic objectives and methodologies for delivering long-term stockholder value.

The Company operates through two segments – Water Quality (“WQ”) and Product Quality & Innovation (“PQI”). The Company’s businesses within these segments have strong globally recognized brands as a result of its leadership in served markets over several decades. Through WQ, the Company improves the quality and reliability of water through leading brands including Hach, Trojan Technologies and ChemTreat. Through PQI, the Company promotes consumer trust in products and help enable product innovation through leading brands including Videojet, Linx, Esko, X-Rite and Pantone. The Company believes its leading positions result from the strength of our commercial organizations, our legacy of innovation, and our close and long-term connectivity to its customers and knowledge of their workflows, underpinned by our culture of continuous improvement. This has resulted in a large installed base of instruments that drive ongoing consumables and software sales to support the Company’s customers. As a result, the Company’s business generates recurring sales which represented approximately 59% of total sales during the year ended December 31, 2022. The Company’s business model also supports a strong margin profile with limited capital expenditure requirements and has generated attractive cash flows. The Company believes these attributes allow it to deliver financial performance that is resilient across economic cycles.

Members of the team that will serve as Veralto management have served as Danaher leaders and have been integral to the evolution of DBS. For example, Veralto’s President and Chief Executive Officer has practiced and championed DBS in multiple operating companies across multiple geographies and industries since 1999 and has contributed meaningfully to the evolution of DBS over that period. Veralto’s Senior Vice President, Water Quality previously led the Danaher Business System Office, which bears central responsibility for stewardship of the DBS processes and tools and development of DBS practitioners who support the operating companies and train business

Danaher will license to Veralto the DBS tools and processes as they exist at the separation. Following the separation, Veralto will use and evolve those tools and processes as the Veralto Enterprise System (“VES”). We expect to use VES tools to improve our profitability and cash flows, which support our ability to expand our addressable market and improve our market position through investments in areas such as our commercial organization and research and development (“R&D”), including software and digital solutions. Our cash flows also support acquisitions to enhance our product capabilities and expansion into new and attractive markets, which we have successfully done through the acquisition of approximately 80 businesses over more than two decades.

Sales for the six-month period ended June 30, 2023 increased 3.0% as compared to the comparable period of 2022. Core sales increased 4.0%, as compared to the comparable period of 2022, primarily driven by core sales in the Water Quality segment. Acquisitions, net of divestitures contributed 0.5% to the increase in sales and the impact of currency translation decreased reported sales 1.5%. The Company’s continued investments in sales growth initiatives and the other business-specific factors referenced below contributed to core sales growth. For the definition of “core sales,” refer to “—Non-GAAP Financial Measures” below.

Geographically, the Company’s reported sales in the six-month period ended June 30, 2023 in developed markets increased year-over-year by 4.0% driven by increased sales of 4.5% both in North America and Western Europe. For the same period, core sales in developed markets increased 4.5% driven by an increase in core sales of 4.5% in both North America and Western Europe. Reported sales in high-growth markets remained flat year over year, due primarily to declines in China of 8.5% and the suspension of sales to Russia beginning in the first quarter of 2022, offset by increased reported sales in Latin America of 6.5%. For the same period, core sales in high-growth markets increased 3.0% as core sales increased 6.0% in Latin America partially offset by a core sales decline of 3.0% in China and the suspension of shipments to Russia. High-growth markets represented approximately 28% of the Company’s total reported sales during the six-month period ended June 30, 2023. For additional information regarding the Company’s reported sales by geographical region during the six-month periods ended June 30, 2023 and July 1, 2022, refer to Note 2 to the accompanying Quarterly Combined Condensed Financial Statements.

The Company’s net earnings for the six-month period ended June 30, 2023 totaled $434 million, compared to $411 million for the six-month period ended July 1, 2022. The increase in net earnings during the six-month period ended June 30, 2023 as compared to the comparable period in 2022 was driven by increased revenues, partially offset by the adverse impact of foreign exchange rates during the six-month period ended June 30, 2023 as compared to the comparable period in 2022. Refer to “—Results of Operations” for further discussion of the year-over-year changes in net earnings for the six-month period ended June 30, 2023.

Sales for the year ended December 31, 2022 increased 3.5% as compared to 2021. The impact of currency translation decreased reported sales 4.0% and divestitures, net of acquisitions decreased reported sales by 0.5%. Core sales increased 8.0% in 2022 compared to 2021. The Company’s continued investments in sales growth initiatives and the other business-specific factors referenced below contributed to core sales growth.

Geographically, the Company’s reported sales for the year ended December 31, 2022 in developed markets increased year-over-year by 5.0%, as increased reported sales in North America of 10.0% more than offset the impact of currency translation on reported sales in Western Europe, which declined 3.5%. For the same period, core sales in developed markets grew 10.5% and were driven by North America and Western Europe, which increased 11.0% and 9.0%, respectively. Reported sales in high-growth markets were flat in 2022 as compared to 2021, as the impact of currency translation and the loss of revenue resulting from the suspension of sales to Russia offset increased sales in Latin America, which increased 10.0%. For the same period, core sales in high-growth markets grew 4.5%, led by increased core sales of 12.5% in Latin America, partially offset by the loss of revenue resulting from the suspension of shipments to Russia. High-growth markets represented approximately 29% of the Company’s total reported sales in 2022. For additional information regarding the Company’s reported sales by geographical region, refer to Note 3 to the audited Combined Financial Statements.

The Company’s net earnings for the year ended December 31, 2022 totaled $845 million, compared to $861 million for the year ended December 31, 2021. The decrease in net earnings in 2022 as compared to 2021 was driven by a higher effective tax rate in 2022 driven by lower discrete tax benefits in 2022 compared to 2021, partially offset by increased operating profit driven by the increase in revenues. Refer to “—Results of Operations” for further discussion of the year-over-year changes in net earnings for the year ended December 31, 2022.

For a discussion of the impact of supply chain disruptions, labor availability constraints and increased labor costs on our businesses in 2022, refer to section titled “Business – Materials.” For a discussion of the impact of the Russia-Ukraine conflict on our businesses in 2022, refer to section titled “Business – Russia-Ukraine Conflict.”

Overall, while conditions related to the COVID-19 pandemic generally have improved in 2023 compared to 2022 (including the announcement on April 10, 2023 that the U.S. public health emergency related to COVID-19 ended), conditions vary by geography. In response to COVID-19 evolving to an endemic status, the Company continues to review and adjust its cost structure.

For additional information on the risks of COVID-19 to the Company’s operations, refer to the section titled “Risk Factors” included in this information statement.

The Company’s growth strategy contemplates future acquisitions. The Company’s operations and results can be affected by the rate and extent to which appropriate acquisition opportunities are available, acquired businesses are effectively integrated and anticipated synergies or cost savings are achieved.

As a result of this offering, we will become subject to the reporting requirements of the Exchange Act and the Sarbanes-Oxley Act. We will have additional procedures and practices to establish as a separate publicly traded company. As a result, we will incur additional costs, including corporate governance, internal audit, investor relations, stock administration and regulatory compliance costs.

In this information statement, references to the non-GAAP financial measure of core sales (also referred to as core revenues or sales/revenues from existing businesses) refer to sales from continuing operations calculated according to GAAP but excluding sales from acquired businesses (as defined below) and the impact of currency translation.

References to sales or operating profit attributable to acquisitions or acquired businesses refer to sales or operating profit, as applicable, from acquired businesses recorded prior to the first anniversary of the acquisition less any sales and operating profit, during the applicable period, attributable to divested product lines not considered

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

Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information calculated in accordance with U.S. GAAP. Investors are encouraged to review the reconciliation of each non-GAAP financial measure to its most directly comparable U.S. GAAP financial measure.

The non-GAAP performance measures free cash flow and free cash flow to net earnings conversion ratio are included in this information statement because they help investors understand Veralto’s ability to generate cash without external financings, strengthen its balance sheet, invest in its business and grow its business through acquisitions and other strategic opportunities (although a limitation of free cash flow is that it does not take into account non-discretionary expenditures, and as a result the entire free cash flow amount is not necessarily available for discretionary expenditures). Additionally, the free cash flow measures are used as a measure of performance in the Parent’s executive compensation program. With respect to the free cash flow measures, we exclude payments for additions to property, plant and equipment (net of the proceeds from capital disposals) to demonstrate the amount of operating cash flow for the period that remains after accounting for the Company’s capital expenditure requirements.

The following table sets forth a reconciliation of cash provided by operating activities, the most directly comparable U.S. GAAP financial measure, to free cash flow and the operating cash flow to net earnings ratio to free cash flow to net earnings ratio.

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

The following discussion and analysis of our combined statements of earnings should be read together with our Combined Financial Statements included elsewhere in this information statement, which reflect the results of operations of the business compromising Danaher’s Environmental & Applied Solutions segment to be transferred to us. For more information on the combined basis of preparation, see Note 1 to our audited Combined Financial Statements elsewhere in this information statement.

Total sales increased 3.0% on a year-over-year basis for the six-month period ended June 30, 2023, primarily as a result of core sales growth driven by the factors discussed in the Business Performance section above and the discussion below by segment and by an increase in sales attributable to acquisitions, net of divestitures. The impact of currency translation decreased reported sales by 1.5% on a year-over-year basis, primarily due to the unfavorable impact of the strengthening of the U.S. dollar against most major currencies in 2023.

Operating profit margins were 23.4% for the six-month period ended June 30, 2023 as compared to 22.2% for the comparable period of 2022. The following factors favorably impacted year-over-year operating profit margin comparisons:

Total sales increased 3.5% on a year-over-year basis in 2022 primarily as a result of core sales growth driven by the factors discussed below by segment, partially offset by a decrease in sales attributable to divestitures, net of acquisitions. The impact of currency translation decreased reported sales by 4.0% on a year-over-year basis in 2022, primarily due to the unfavorable impact of the strengthening of the U.S. dollar against most other major currencies in 2022.

Operating profit margins were 22.8% for the year ended December 31, 2022 as compared to 22.1% in 2021. The following factors impacted year-over-year operating profit margin comparisons.

Total sales increased 8.0% on a year-over-year basis in 2021 primarily as a result of an increase in core sales resulting from the factors discussed below by segment, partially offset by a decrease in sales attributable to divestitures, net of acquisitions. The impact of currency translation increased reported sales by 1.5% on a year-over-year basis in 2021 primarily due to the favorable impact of the weakening of the U.S. dollar against most other major currencies in 2021.

Operating profit margins were 22.1% for the year ended December 31, 2021 as compared to 21.9% in 2020. The following factors impacted year-over-year operating profit margin comparisons:

Sales by business segment were as follows ($ in millions):

For information regarding the Company’s sales by geographical region, refer to Note 3 to the audited Combined Financial Statements.

The Company’s Water Quality segment provides proprietary precision instrumentation, consumables, software, services and advanced water treatment technologies to help measure, analyze and treat the world’s water in residential, commercial, municipal, industrial, research and natural resource applications.

For the six-month period ended June 30, 2023, total Water Quality segment sales increased 7.0%, primarily as a result of core sales growth driven by the factors discussed below. Additionally, currency translation decreased reported sales 1.0% for the six-month period ended June 30, 2023. Geographically, the year-over-year increase in reported sales was driven by North America, Western Europe and the high-growth markets, which increased 7.5%, 6.5% and 6.5%, respectively.

Price increases in the segment contributed 6.5% to sales growth on a year-over-year basis for the six-month period ended June 30, 2023, as compared to the comparable period in 2022 and are reflected as a component of the change in core sales growth.

Core sales in the Water Quality segment increased 8.0% year-over-year during the six-month period ended June 30, 2023 compared to the comparable period of 2022. Geographically, the year-over-year increase in core sales was driven by North America, Western Europe and the high-growth markets, which increased 8.0%, 7.5% and 9.0%, respectively. The increase in core sales was driven primarily by the analytical instrumentation product line, and to a lesser extent by the chemical treatment solutions product line. Year-over-year core sales in the analytical instrumentation product line increased 7.5%, driven by the industrial and municipal end-markets in the developed markets and the high-growth markets. Core sales in the business’ chemical treatment solutions product line increased 11.5% year-over-year as a result of increased core sales across most major served end-markets. Core sales in the ultraviolet water disinfection business increased 2.0% in 2022, driven primarily by the municipal end-market and to a lesser extent by the industrial end-market.

Operating profit margins were 23.4% for the six-month period ended June 30, 2023 as compared to 21.6% for the six-month period ended July 1, 2022. The following factors favorably impacted year-over-year operating profit margin comparisons:

In 2022, total Water Quality segment sales increased 8.0%, primarily as a result of core sales growth, which refers to the impact of both price and unit sales, driven by the factors discussed below. Additionally, the impact of currency translation decreased reported sales 3.5% in 2022. Geographically, the increase in reported sales was driven by North America, which increased 13.0%.

Price increases in the segment contributed 9.5% to sales growth on a year-over-year basis during 2022 as compared with 2021 and are reflected as a component of the change in core sales growth.

Core sales in the Water Quality segment increased 11.5% year-over-year compared to the comparable period of 2021. Geographically, the year-over-year increase in core sales was driven by North America, Western Europe and the high-growth markets, which increased 13.5%, 13.5% and 8.0%, respectively. The increase in core sales was driven primarily by the analytical instrumentation business and to a lesser extent by the chemical treatment solutions business. In addition, the ultraviolet water disinfection business modestly contributed to segment core growth. Year-over-year core sales in the analytical instrumentation business increased 11.5% driven primarily by higher core sales in the municipal end-market and to a lesser extent the industrial end-market. Core sales in the chemical treatment solutions business increased 15.0% as a result of higher core sales across all major served end-markets. Core sales in the ultraviolet water disinfection business increased 7.5% in 2022, driven primarily by the municipal end-market and to a lesser extent by the industrial end-market.

Operating profit margins were 23.1% for the year ended December 31, 2022 as compared to 21.9% in 2021. The following factors impacted year-over-year operating profit margin comparisons:

Depreciation as a percentage of sales decreased in 2022 as compared with 2021 primarily as a result of the increase in sales and the impact of currency exchange rates in 2022. Amortization of intangible assets as a percentage of sales decreased in 2022 as compared with 2021 primarily as a result of certain intangible assets becoming fully amortized in 2022 and the impairment of an intangible asset in 2022.

In 2021, total Water Quality segment sales increased 7.5%, primarily as a result of core sales growth, which

Price increases in the segment contributed 1.5% to sales growth on a year-over-year basis during 2021 as compared with 2020 and are reflected as a component of the change in core sales growth.

During 2021, Water Quality core sales increased 5.0% year-over-year as a result of increased core sales of consumables and equipment, driven in part by the recovery from the decline in equipment demand in 2020 as a result of the COVID-19 pandemic. Geographically, the increase in core sales was driven by North America and the high-growth markets, which increased 6.0% and 5.5%, respectively. The year-over-year increase in core sales was driven primarily by the analytical instrumentation business and to a lesser extent by the chemical treatment solutions business. In addition, the ultraviolet water disinfection business modestly contributed to segment core growth. Year-over-year core sales in the analytical instrumentation business increased 4.5% driven primarily by demand in both the municipal and industrial end-markets. Core sales in the chemical treatment solutions business increased 5.5% as a result of broad-based demand across most major served end-markets Core sales in the ultraviolet water disinfection business increased 7.0% in 2021, driven primarily by the municipal end-market followed by the industrial and residential end-markets, in order of significance.

Operating profit margins were 21.9% for the year ended December 31, 2021 as compared to 23.0% in 2020. The following factors unfavorably impacted year-over-year operating margin comparisons:

The Company’s Product Quality & Innovation segment provides instruments, software, services and consumables for various color and appearance management, packaging design and quality management, packaging converting, printing, marking and coding, and traceability applications for consumer, pharmaceutical and industrial products.

For the six-month period ended June 30, 2023, total Product Quality & Innovation segment sales decreased 2.0% year-over-year, as a result of core sales decline driven by the factors discussed below. Additionally, currency translation decreased reported sales 1.5% and acquisitions, net of divestitures increased reported sales by 1.0% for the six-month period ended June 30, 2023. Geographically, reported sales declined 2.5% in North America and 4.5% in the high-growth markets, partially offset by an increase of 3.0% in Western Europe.

Price increases in the segment contributed 2.5% to sales growth on a year-over-year basis for the six-month period ended June 30, 2023, as compared to the comparable period of 2022 and are reflected as a component of the change in core sales growth.

Core sales in the Product Quality & Innovation segment decreased 1.5% during the six-month period ended June 30, 2023, as compared to the comparable period of 2022. Geographically, the year-over-year decrease in core sales was driven by a decrease of 2.5% in North America and the suspension of sales to Russia, partially offset by an increase of 2.0% in Western Europe. The decrease in core sales in the segment was primarily driven by the marking and coding business where core sales decreased 2.0% during the six-month period driven by lower demand in the industrial and consumer packaged goods end-markets. For the packaging and color solutions products and services business, core sales were essentially flat in the six-month period primarily driven by reduced capital spending across the consumer packed goods and industrial end-markets.

Operating profit margins were 25.9% for the six-month period ended June 30, 2023 compared to 25.2% for the six-month period ended July 1, 2022. The following factors impacted year-over-year operating profit margin comparisons.

Price increases in the segment contributed 5.0% to sales growth on a year-over-year basis during 2022 as compared with 2021 and is reflected as a component of the change in core sales growth.

Core sales in the Product Quality & Innovation segment increased 3.5% year-over-year. Geographically, the year-over-year increase in core sales was driven by North America and Western Europe, which increased 5.5% and 5.0%, respectively, partially offset by the suspension of sales to Russia beginning in the first quarter of 2022. The year-over-year increase in core sales was primarily driven by the marking and coding business and to a lesser extent by the packaging and color solutions products and services business. Core sales in the marking and coding business increased 4.5%, led by the food and beverage end-market. Year-over-year core sales in the packaging and color solutions products and services business increased 1.5%.

Operating profit margins were 24.6% for the year ended December 31, 2022 as compared to 24.4% in 2021. The following factors impacted year-over-year operating profit margin comparisons.

Amortization of intangible assets as a percentage of sales decreased in 2022 as compared with 2021 primarily as a result of certain intangible assets becoming fully amortized in 2022.

Price increases in the segment contributed 2.0% to sales growth on a year-over-year basis during 2021 as compared with 2020 and are reflected as a component of the change in core sales growth.

Operating profit margins were 24.4% for the year ended December 31, 2021 as compared to 22.5% in 2020. The following factors favorably impacted year-over-year operating margin comparisons:

Cost of sales decreased by $2 million or 0.2% during the six-month period ended June 30, 2023, as compared to the comparable period of 2022, due primarily to lower year-over-year costs associated with material and labor, net of the impact of higher year-over-year sales volumes described above.

Gross profit margins increased 140 basis points on a year-over-year basis for the six-month period ended June 30, 2023, as compared to the comparable period of 2022. Gross profit margins were impacted by positive pricing actions discussed above and to a lesser extent lower material costs, partially offset by the impacts from foreign currency exchange rates.

Cost of sales increased $123 million, or 6.2%, during 2022 as compared with 2021, due primarily to higher year-over-year sales volumes and to incremental year-over-year costs associated with material, transportation and labor.

Gross profit margins decreased 100 basis points on a year-over-year basis during 2022 as compared to 2021, due primarily to incremental year-over-year costs associated with material, transportation and labor, the impact of product mix and the impact of currency exchange rates. The gross profit margin decline was partially offset by pricing actions enacted to offset the impact of material, transportation and labor cost increases.

Cost of sales increased $149 million, or 8.1%, on a year-over-year basis during 2021 as compared to 2020, due primarily to higher year-over-year sales volumes and to a lesser extent incremental year-over-year material, transportation and labor costs.

Gross profit margins remained consistent on a year-over-year basis for 2021 as compared to 2020, as the increase in year-over-year sales corresponded to the increase in cost of sales.

SG&A expenses as a percentage of sales increased 30 basis points on a year-over-year basis for the six-month period ended June 30, 2023 as compared to the comparable period of 2022. The year-over-year increase was driven primarily by the increase in the Company’s SG&A expenses exceeding the increase in the Company’s sales, primarily due to the continued investments in sales and marketing growth initiatives and increased labor costs. Intangible asset impairment charges totaling $6 million in the six-month period ended June 30, 2023, net of $9 million intangible asset impairment charges in the six-month period ended July 1, 2022 decreased SG&A expenses as a percentage of sales.

SG&A expenses as a percentage of sales declined 100 basis points on a year-over-year basis for 2022 compared to 2021. The year-over-year decrease reflects the benefit of increased leverage of the Company’s general and administrative cost base, including amortization expense, resulting from higher 2022 sales, continuing productivity improvement initiatives and lower amortization expense, partially offset by continued investments in sales and marketing growth initiatives and increased labor costs.

SG&A expenses as a percentage of sales declined 40 basis points on a year-over-year basis for 2021 compared to 2020. The decline was driven by the benefit of increased leverage of the Company’s general and administrative cost base, including amortization expense, resulting from higher 2021 sales volumes, incremental year-over-year cost savings associated with continuing productivity improvement initiatives and to a lesser extent lower year-over-year impairment charges related to a trade name and other intangible assets incurred in 2020. These decreases were partially offset by continued investments in sales and marketing growth initiatives in 2021 and increased labor costs.

R&D expenses as a percentage of sales declined 10 basis points on a year-over-year basis for the six-month period ended June 30, 2023 as compared to the comparable period of 2022 due primarily to the increase in sales.

R&D expenses as a percentage of sales declined 70 basis points on a year-over-year basis in 2022 as compared to 2021 due primarily to the increase in sales.

R&D expenses as a percentage of sales increased 20 basis points on a year-over-year basis in 2021 as compared to 2020 primarily due to an increase in spending growth related to the timing of new product development initiatives.

For the six-month period ended June 30, 2023, the nonoperating expense of $14 million consists primarily of an impairment of an equity method investment. Refer to Note 5 of the Combined Condensed Financial Statements for more information.

In 2022, 2021 and 2020, nonoperating income (expense) consists primarily of the non-service cost components of net periodic benefit costs and gains on the sale of product lines. Refer to Note 6 in the audited Combined Financial Statements.

Income tax expense and deferred tax assets and liabilities reflect management’s assessment of future taxes expected to be paid on items reflected in the Company’s Combined Financial Statements. The Company records the tax effect of discrete items and items that are reported net of their tax effects in the period in which they occur.

The Company’s effective tax rate can be affected by changes in the mix of earnings in countries with different statutory tax rates (including as a result of business acquisitions and dispositions), changes in the valuation of deferred tax assets and liabilities, accruals related to contingent tax liabilities and period-to-period changes in such accruals, the results of audits and examinations of previously filed tax returns (as discussed below), the expiration of statutes of limitations, the implementation of tax planning strategies, tax rulings, court decisions, settlements with tax authorities and changes in tax laws and regulations, and legislative policy changes (for example, any changes that may result from the OECD’s initiative on Base Erosion and Profit Shifting). For a description of the tax treatment of earnings that are planned to be reinvested indefinitely outside the United States, refer to “Liquidity and Capital Resources” below.

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

The Company’s effective tax rate for the six-month period ended June 30, 2023 and July 1, 2022 differs from the U.S. federal statutory rate of 21.0% principally due to the Company’s earnings outside the United States that are taxed at rates different than the U.S. federal statutory rate, as well as state taxes, partially offset by net tax benefits of $6 million and $8 million for the respective periods, primarily related to excess tax benefits from stock-based compensation.

The Company’s effective tax rate for 2022 differs from the U.S. federal statutory rate of 21.0% due principally to the Company’s earnings outside the United States that are taxed at rates different than the U.S. federal statutory rate, and state taxes, partially offset by net discrete tax benefits of $4 million. The net discrete tax benefits related primarily to excess tax benefits from stock-based compensation, partially offset by changes in estimates associated with prior period uncertain tax positions and audit settlements.

The Company’s effective tax rate for 2021 differs from the U.S. federal statutory rate of 21.0% due principally to net discrete tax benefits of $65 million primarily related to the release of reserves for uncertain tax positions from the expiration of statutes of limitation and audit settlements and excess tax benefits from stock-based compensation, partially offset by changes in estimates associated with prior period uncertain tax positions. The impact of the net discrete tax benefits were partially offset by the Company’s earnings outside the United States that are taxed at rates different than the U.S. federal statutory rate, state taxes and changes in estimates associated with prior period uncertain tax positions.

The Company’s effective tax rate for 2020 differs from the U.S. federal statutory rate of 21.0% due principally to the Company’s earnings outside the United States that are taxed at rates different than the U.S. federal statutory rate, and state taxes, partially offset by net discrete tax benefits of $16 million. Net discrete tax benefits related primarily to excess tax benefits from stock-based compensation and release of reserves for uncertain tax positions from the expiration of statutes of limitation and audit settlements, partially offset by changes in estimates associated with prior period uncertain tax positions.

The Company conducts business globally, and the Parent files numerous consolidated and separate income tax returns in the U.S. federal and state and non-U.S. jurisdictions. The non-U.S. countries in which the Company has a significant presence include Belgium, Brazil, Canada, China, Germany, Netherlands and the United Kingdom.

The Parent and its subsidiaries (including the businesses of the Company) are routinely examined by various domestic and international taxing authorities. The Internal Revenue Service (“IRS”) has completed examinations of certain of the Parent’s federal income tax returns through 2015 and is currently examining certain of the Parent’s federal income tax returns for 2016 through 2018. In addition, the Parent has subsidiaries (including the businesses of the Company) in Belgium, Canada, Germany, India, Italy, Sweden, Switzerland and the United Kingdom and in states and provinces that are currently under audit for years ranging from 2006 through 2021.

As part of Danaher, the amount of income taxes the Company pays is subject to ongoing audits by federal, state and foreign tax authorities, which often result in proposed assessments. Management performs a comprehensive review of its global tax positions on a quarterly basis. Based on these reviews, the results of discussions and resolutions of matters with certain tax authorities, tax rulings and court decisions and the expiration of statutes of limitations, reserves for contingent tax liabilities are accrued or adjusted, as necessary. For a discussion of risks related to these and other tax matters, refer to “Risk Factors”.

Comprehensive income increased by $165 million for the six-month period ended June 30, 2023, as compared to the comparable period of 2022, primarily driven by gains from foreign currency translation adjustments. The Company recorded foreign currency translation gains of $28 million for the six-month period ended June 30, 2023, primarily driven by the weakening of the U.S. dollar against the euro, Canadian dollar, British pound and Swiss franc in the period, compared to losses of $115 million for the six-month period ended July 1, 2022, primarily driven by the strengthening of the U.S. dollar against the euro, British pound and the Swiss franc in that period. Foreign currency translation adjustments reflect the gain or loss resulting from the impact of the change in currency exchange rates on the Company’s foreign operations as they are translated to the Company’s reporting currency, the U.S. dollar.

Comprehensive income decreased by $10 million in 2022 as compared to 2021, primarily due to decreased net earnings and higher losses from foreign currency translation adjustments in 2022 as compared to 2021, partially offset by higher gains from pension and postretirement benefit adjustments. The Company recorded foreign currency translation adjustment losses of $100 million for 2022 primarily driven by the strengthening of the U.S. dollar against the euro, Canadian dollar and the British pound in 2022 compared to losses of $88 million for 2021 primarily driven by the strengthening of the U.S. dollar against the euro in 2021. The Company also recorded a gain on pension plan adjustments of $33 million for 2022 compared to a gain of $15 million for 2021.

Comprehensive income decreased by $12 million in 2021 as compared to 2020, primarily driven by losses from foreign currency translation adjustments in 2021 as compared to gains in 2020, partially offset by higher net earnings and higher gains from pension plan adjustments in 2021 compared to 2020. The Company recorded foreign currency translation losses of $88 million in 2021 primarily driven by the strengthening of the U.S. dollar against the euro in 2021 as compared to gains of $84 million for 2020 primarily driven by the weakening of the U.S. dollar against the euro and Swiss franc in 2020. The Company recorded a pension and postretirement plan benefit adjustment gain of $15 million in 2021 compared to a loss of $8 million in 2020.

The Company is exposed to market risk from changes in foreign currency exchange rates and commodity prices as well as credit risk, each of which could impact its Combined Financial Statements. The Company generally addresses its exposure to these risks through its normal operating activities.

The Company faces transactional exchange rate risk from transactions with customers in countries outside the United States and from intercompany transactions between affiliates. Transactional exchange rate risk arises from

On a year-over-year basis, currency exchange rates negatively impacted reported sales by approximately 1.5% for the six-month period ended June 30, 2023 as compared to the comparable period of 2022, primarily due to the strengthening of the U.S. dollar against most major currencies in 2023. If the currency exchange rates in effect as of June 30, 2023 were to prevail throughout 2023, currency exchange rates would increase the Company’s estimated second half 2023 sales by approximately 2.0% and full year 2023 sales would increase by approximately 0.5% relative to 2022. Further strengthening of the U.S. dollar against other major currencies compared to the exchange rates in effect as of June 30, 2023 would adversely impact the Company’s sales and results of operations on an overall basis, and any weakening of the U.S. dollar against other major currencies compared to the exchange rates in effect as of June 30, 2023 would positively impact the Company’s sales and results of operations.

Currency exchange rates negatively impacted 2022 reported sales by 4.0% on a year-over-year basis primarily due to the strengthening of the U.S. dollar against most major currencies in 2022.

The Company has generally accepted the exposure to exchange rate movements without using derivative financial instruments to manage this risk. Both positive and negative movements in currency exchange rates against the U.S. dollar will therefore continue to affect the reported amount of sales and net earnings in the Company’s Combined Financial Statements. In addition, the Company has assets and liabilities held in foreign currencies. A 10% depreciation in major currencies relative to the U.S. dollar as of June 30, 2023 and December 31, 2022 would have reduced Parent’s equity by approximately $175 million and $176 million, respectively.

The Company is exposed to potential credit losses in the event of nonperformance by counterparties to its financial instruments. Financial instruments that potentially subject the Company to credit risk consist of receivables from customers.

For a discussion of risks relating to commodity prices, refer to “Risk Factors—Risks Related to Veralto’s Businesses.”

Following is an overview of the Company’s cash flows and liquidity: