Industrial & Other Manufacturing: Discontinued operations (ASC 205-20)

During the year ended December 31, 2025, the Company divested a product line for a cash purchase price of $ 9 million and recognized a pretax gain on sale of $ 9 million ($ 7 million after-tax). The divested product line generated revenues of approximately $ 50 million in the Diagnostics segment in 2024. The divestiture of this product line did not represent a strategic shift with a major effect on the Company’s operations and financial results and therefore is not reported as a discontinued operation.

Gain on Sale of Facility

During the year ended December 31, 2025, the Company sold a facility and recognized a pretax gain on sale of $ 11 million ($ 8 million after-tax).

NOTE 9. LEASES

The Company has operating leases for office space, warehouses, distribution centers, R&D facilities, manufacturing locations and certain equipment, primarily automobiles. Many leases include one or more options to renew, some of which include options to extend for up to 30 years, and some leases include options to terminate within 30 days. In certain of the Company’s lease agreements, the rental payments are adjusted periodically to reflect actual charges incurred for common area maintenance, utilities, inflation and/or changes in other indexes. The Company’s finance leases were not material as of December 31, 2025 and 2024. ROU assets arising from finance leases are included in property, plant and equipment, net and the liabilities are included in notes payable and current portion of long-term debt and long-term debt in the accompanying Consolidated Balance Sheets.

The Consolidated Financial Statements include the following amounts related to operating leases where the Company is the lessee ($ in millions):

The Company determined that the R&LC HVAC business, which was previously reported in the Global Products segment prior to the Company's resegmentation, met the criteria to be classified as a discontinued operation as it represented a strategic shift in the Company's operations and resulted in the exit of substantially all of its residential and light commercial HVAC businesses. As a result, the R&LC HVAC business was presented in discontinued operations separate from continuing operations for all periods presented.

The Company determined that the assets and liabilities for the R&LC HVAC business met the held for sale criteria during the fourth quarter of 2024 and ceased recording depreciation and amortization for the held for sale assets upon meeting the held for sale criteria.

The major classes of line items constituting income from discounted operations, net, in millions:

Year Ended September 30,
2025	2024	2023
Net sales	3,790	4,466	4,462
Cost of goods sold	2,881	3,300	3,295
Gross profit	909	1,166	1,167
Selling, general and administrative expenses	( 2,008 )	761	794
Restructuring and impairment costs	30	34	15
Net financing charges	5	17	23
Equity income	240	276	262
Income from discontinued operations before income taxes	3,122	630	597
Provision for income taxes on discontinued operations	1,333	141	145
Income from discontinued operations, net of tax	1,789	489	452
Income from discontinued operations attributable to noncontrolling interest, net of tax	219	191	165
Income from discontinued operations	1,570	298	287

The carrying amounts of major classes of assets and liabilities included as part of the R&LC HVAC business discontinued operations and reported as held for sale, were as follows, in millions:

Discontinued Operations – In November 2022, the Company completed the divestiture of a majority equity stake in its industrial businesses, including its entire historical Process Technologies reportable segment and the industrial businesses within its historical Measurement & Analytical Solutions reportable segment, to Clayton, Dubilier & Rice, LLC (“CD&R”). The businesses included in this transaction were Alpha, AMOT, CCC, Cornell, Dynisco, FTI, Hansen, Hardy, Logitech, Metrix, PAC, Roper Pump, Struers, Technolog, Uson, and Viatran (collectively “Indicor”). Following the sale of the majority stake, the Company retained a minority equity interest in Indicor. This transaction is referred to herein as the “Indicor Transaction.” The Company concluded that the Indicor Transaction represented a strategic shift that had a major effect on the Company’s operations and financial results. Accordingly, the financial results of Indicor are reported as discontinued operations for all periods presented. Unless otherwise noted, discussion within these Notes to Consolidated Financial Statements relates to continuing operations.

Recent Accounting Pronouncements – The Financial Accounting Standards Board (“FASB”) establishes changes to accounting principles under GAAP in the form of accounting standards updates (“ASUs”) to the FASB’s Accounting Standards Codification (“ASC”). The Company considers the applicability and impact of all ASUs. Any recent ASUs not listed below were assessed and either determined to be not applicable or are expected to have an immaterial impact on the Company’s Consolidated Financial Statements.

Recently Adopted Accounting Pronouncements

In December 2023, the FASB issued Accounting Standards Update No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (ASU 2023-09), which expands income tax disclosure requirements, including disaggregation of rate reconciliation table categories, disaggregation of earnings before income taxes and income tax expense information, and disaggregation of income taxes paid information, among other changes. This guidance is effective for annual periods beginning after December 15, 2024. The Company adopted this update on a prospective basis for the year ended December 31, 2025. Refer to Note 7 for the inclusion of the expanded disclosures.

Recently Released Accounting Pronouncements