What changed in this filing

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Item 1. Business

2023-02-28 compared with 2022-03-01 · 74 added, 84 removed, 159 unchanged (50% of the section changed)

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We are headquartered in Everett, Washington and employ a team of more than 18,000 research and development, manufacturing, sales, distribution, service, and administrative employees in more than 50 countries around the world.

We are guided by our shared purpose to deliver essential technology for the people who accelerate progress in buildings, factories, and hospitals, and we are united by our culture of continuous improvement and bias for action that embody the Fortive Business System (“FBS”).

Through rigorous application of the proprietary set of growth, lean, and leadership tools and processes that comprise FBS, we continuously improve business performance in the critical areas of innovation, product development and commercialization, global supply chain, sales and marketing, and leadership development.

Our commitment to FBS has enabled us to drive higher customer satisfaction and profitability, and generate significant improvements in innovation, growth, and core operating margins.

Additionally, our FBS tools have enabled us to execute a disciplined acquisition strategy and expand our portfolio into new and attractive markets, evolving to further our goal of creating long-term shareholder value.

On October 9, 2020, we completed the separation of Vontier Corporation (“Vontier”), the entity we created to hold our former Industrial Technologies segment (the “Separation”).

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Accordingly, the consolidated financial statements reflect the results of the Vontier business as a discontinued operation for all periods presented.

Table of Conten t s

Fortive Corporation is a Delaware corporation and was incorporated in 2015 in connection with the separation of Fortive from Danaher Corporation (“Danaher” or “Former Parent”) on July 2, 2016 as an independent, publicly-traded company, listed on the New York Stock Exchange.

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Unless otherwise indicated, all amounts in this Annual Report refer to continuing operations.

Fortive Business System

Our teams across our operating companies are united by our culture of continuous improvement and bias for action that is embodied in the Fortive Business System (“FBS”).

human capital management, sustainability efforts, and leadership development.

Our commitment to FBS has enabled us to drive customer satisfaction and profitability, and generate significant improvements in innovation, growth, and core operating margins.

Additionally, FBS has helped us execute a disciplined acquisition strategy and expand our portfolio into new and attractive markets while creating long-term shareholder value.

Purpose and Values

We are guided by our shared purpose to deliver essential technology for the people who accelerate progress.

Driven by our shared purpose, we strive to accelerate transformation in high-impact fields, such as workplace safety, engineering, and healthcare, delivering high-tech solutions and high impact for engineers, scientists, frontline workers, and patients around the world.

With our shared purpose defining what we do, the following core values guide how we deliver every day for our stakeholders:

We build extraordinary teams for extraordinary results.

We believe we are more together, and we all have something unique to offer as we come together to solve problems no one could solve alone, committed to a strong and inclusive culture.

Customer success inspires our innovation .

We believe our most important breakthroughs are the ones that help our customers succeed, and we strive to break down barriers and forge new paths to world-changing innovations to move our customers forward.

Kaizen is our way of life .

We believe the next time can always be better, and our commitment to continuous improvement inspires us to keep growing and learning.

We compete for our shareholders .

We believe in prioritizing trust, sustainability, and positive impact to create long-term value for all of our stakeholders, including our shareholders, our employees, our customers and our communities.

Reportable Segments

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Intelligent Operating Solutions

Our Intelligent Operating Solutions segment provides leading workflow solutions to accelerate industrial and facility reliability and performance, as well as compliance and safety across a range of vertical end markets, including manufacturing, process industries, healthcare, utilities and power, communications and electronics, among others.

The businesses in our Intelligent Operating Solutions segment provide differentiated instrumentation and sensors, software and services to address our customers’ toughest workflow challenges.

These offerings include connected reliability tools, environment, health, and safety (EHS) enterprise software products, work order and service provider management database and software, facility and asset lifecycle software, and pre-construction planning and construction procurement solutions.

We offer a series of leading hardware offerings, including ruggedized handheld professional test tools, electric, pressure, and temperature calibration tools for high-end government and industrial labs, as well as portable gas detection tools which keep workers safe in industries where air quality and safety cannot be taken for granted.

Typical users of these offerings include electrical engineers, electricians, electronic technicians, EHS professionals, network technicians, facility managers, first-responders, and maintenance professionals.

Our Intelligent Operating Solutions segment provides advanced instrumentation, software and services to tens of thousands of customers enabling their mission-critical workflows.

These offerings include electrical test & measurement, facility and asset lifecycle software applications, connected worker safety and compliance solutions across a range of vertical end markets, including manufacturing, process industries, healthcare, utilities and power, communications and electronics, among others.

Typical users of these safety, productivity and sustainability solutions include electrical engineers, electricians, electronic technicians, EHS professionals, network technicians, facility managers, first-responders, and maintenance professionals.

Products and services within our Intelligent Operating Solutions segment are marketed under a variety of leading brands, including ACCRUENT, FLUKE, GORDIAN, INDUSTRIAL SCIENTIFIC, INTELEX, PRUFTECHNIK, and SERVICECHANNEL.

Precision Technologies

Our Precision Technologies segment supplies instrumentation and sensing technologies to a broad set of vertical end markets, enabling our customers to accelerate the development, manufacture and launch of innovative products and solutions.

We provide our customers with electrical test and measurement instruments and services, energetic material devices, and a broad portfolio of sensor and control system solutions.

In our sensing business, we provide solutions that sense, monitor, and control operational or manufacturing variables, such as temperature, pressure, level, and flow.

Our sensing products serve a wide variety of vertical markets, including power and energy, medical equipment, food and beverage, aerospace and defense, off-highway vehicles, electronics, semiconductors, and other general industrial markets.

In our energetic materials business, we design, manufacture, and market highly-engineered energetic material solutions for commercial, defense, and space markets.

At Tektronix, we provide our customers with a leading portfolio of test and measurement instruments serving a variety of end markets including communication, consumer electronics, semiconductor, defense, automotive, and industrial.

Customers for these products and services include design engineers for advanced electronic devices and equipment, process and quality engineers focused on improved process capability and productivity, facility maintenance managers driving increased uptime, and other customers for whom precise measurement, reliability, and compliance are critical in their applications.

Our Precision Technologies segment helps solve tough technical challenges to speed breakthroughs in a wide range of applications, from food and beverage production and manufacturing to next-generation electric vehicles and clean energy, as our customers seek new test solutions to enable the electrification and connectivity of everything.

Our expertise in materials, methods and measurements are reflected in our electrical test & measurement, sensing and material technologies offered to a broad set of customers and vertical end markets, including industrial, power and energy, automotive, medical equipment, food and beverage, aerospace and defense, semiconductor, and other general industries.

Customers for these products and services include design engineers for advanced electronic devices and equipment, process and quality engineers focused on improved

process capability and productivity, facility maintenance managers driving increased uptime, and other customers for whom precise measurement, reliability, and compliance are critical in their applications.

Products and services in our Precision Technologies segment are marketed under a variety of brands, including ANDERSON-NEGELE, GEMS, SETRA, HENGSTLER-DYNAPAR, QUALITROL, PACIFIC SCIENTIFIC, KEITHLEY and TEKTRONIX.

Advanced Healthcare Solutions

Our Advanced Healthcare Solutions segment supplies critical workflow solutions to hospitals and other healthcare customers, enabling safer, more efficient, and higher quality healthcare.

Through the Advanced Healthcare Solutions segment, we provide hardware, consumables, software and services that optimize our customers’ most critical workflows, including instrument sterilization and device reprocessing, instrument tracking, cell therapy equipment design and manufacturing, biomedical test tools, radiation safety monitoring, end-to-end clinical productivity solutions and asset management.

Our offerings provide critical sterilization and disinfection solutions, including low-temperature hydrogen peroxide sterilization solutions and advanced infection prevention and patient safety in healthcare facilities.

In addition, we provide subscription-based surgical inventory management systems to healthcare facilities to facilitate inventory management and regulatory compliance as well as

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subscription-based technical, analytical, and compliance services to determine radiation exposure.

We also serve gastroenterology and other clinical specialties with solutions that span the entire patient procedure, from pre-op through post-op recovery and follow-up, enhancing physician efficiency and effectiveness.

Furthermore, through our solutions and services, we enable developers and engineers in healthcare and other critical industries across the end-to-end product creation cycle from concepts to finished products.

Our Advanced Healthcare Solutions segment supplies critical workflow solutions enabling healthcare providers to deliver exceptional patient care more efficiently.

Our offerings include instrument sterilization solutions, instrument tracking, cell therapy equipment design and manufacturing, biomedical test tools, radiation detection and safety monitoring, and end-to-end clinical productivity software and solutions.

Our healthcare offerings help ensure critical safety standards are met, instruments and operating rooms are working at peak performance, and complex procedures are followed accurately in these mission-critical healthcare environments.

Products and services in our Advanced Healthcare Solutions segment are marketed under a variety of brands, including ASP, CENSIS, CENSITRAC, EVOTECH, FLUKE BIOMEDICAL, INVETECH, LANDAUER, PROVATION, RAYSAFE, and STERRAD.

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However, some components that require particular specifications or qualifications are dependent on a single supplier or a limited number of suppliers that can readily provide such components.

We utilize a number of techniques to address potential disruption in and other risks relating to our supply chain, including in certain cases the use of safety stock, alternative materials, and qualification of multiple supply sources.

While the COVID-19 pandemic and the widespread supply chain challenges due to labor, raw material, and component shortages, as well as widespread logistics issues had affected multiple industries and raised material and shipping costs, our supply chain was responsive to these dynamics, and we implemented solutions, including through FBS, to effectively support our near-term operations, and help countermeasure production material shortages and distribution limitations.

While the remediation efforts taken by certain jurisdictions in response to the COVID-19 pandemic and the disruptions from the Ukraine/Russia conflict have raised material and shipping costs, our supply chain was responsive to these dynamics, and we implemented solutions, including through FBS and working collaboratively with our suppliers, to effectively support our operations, and help countermeasure production material shortages and distribution limitations.

For a further discussion of risks related to the materials and components required for our operations, please refer to “Item 1A.

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Our management believes that we have a market leadership position in most of the markets we serve.

Key competitive factors vary among our businesses and product and service lines, but include the specific factors noted above with respect to each particular business and typically also include price, quality, performance, delivery speed, applications expertise, distribution channel access, service and support, technology and innovation, breadth of product, service and software offerings, and brand name recognition.

access, service and support, technology and innovation, breadth of product, service and software offerings, and brand name recognition.

For a discussion of risks related to competition, please refer to “Item 1A.

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However, as a whole, we are not subject to material seasonality.

Table of Conten t s

Human Capital Management

Building a strong culture and employer brand is critical to activating our shared purpose through our approximately18,000 employees around the world.

We are focused on attracting, retaining, and developing the world’s best talent to drive our business strategy.

We do this by offering challenging career opportunities that enable growth and an inclusive, winning culture strengthen by high expectations.

Empowering our talented, global team to contribute in meaningful ways drives our success and builds the organization for the future.

To realize our promise to make a difference for our customers, teams and the world around us, we are accelerating our work to strengthen our inclusion, diversity, and equity through deliberate action and transparency about our progress.

Growth and Development

To support our teams’ learning and advancement and our company’s success, we invest in our people at every level.

We are committed to creating a challenging and collaborative culture and an environment in which our employees can grow, develop, and do their best work.

We provide numerous, valuable growth and development opportunities for our employees through experiences such as:

The Fortive9 is our leadership behavior framework that guides the development of our employees.

It is a roadmap for the way we aspire to work, deliver value, and build strong teams.

Examples of the Fortive9 include Deliver Results, Customer Obsessed, Innovate for Impact, and Adaptability.

People Leader Experience

Deep, experiential learning for both new and experienced leaders, harnessing the best of interactive learning, and providing critical tools as our employees assume greater people leadership responsibilities.

Accelerated Leadership Experience (ALE)

Designed for high performing employees in preparation for leading Fortive businesses or functions.

We use immersive and experiential learning, where leaders develop personal skill and insight to fulfill their potential.

FBS Office and University

The Fortive Business System Office is dedicated to strategically embedding the mindset and toolset in everything we do.

FBS University, our proprietary virtual and hands-on learning environment, develops and reinforces learning for hundreds of FBS Champions across our company each year to deliver value for our customers and shareholders.

Supported with intensive development in the FBS toolset, active mentoring from the FBS Office, and executive career coaching, participants advance and share their expertise across different businesses.

Growth Accelerator

A key development experience that enables our team to solve challenges in new, inspiring ways through three key innovation tools:

Deep Customer Insight, Solution Generation, and Experimentation -- each designed to enable our employees to develop critical, breakthrough solutions for customers.

Each one of these investments in our team delivers value to both our people and our customers.

Inclusion and Diversity

Creating inclusive places to work and promoting diverse points of view are the lifeblood of our success.

In the spirit of continuous improvement, we continued to make significant strides in 2021 to reflect the priorities, and experiences of our global team and strengthen our culture of inclusion.

Our Board of Directors and our Compensation Committee oversee our Human Capital Management strategies, including our inclusion and diversity efforts.

Our VP, Inclusion & Diversity works closely with our senior management and our Inclusion & Diversity Council, involving employees at every level in advancing our work to build and nurture and strong and diverse global team.

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Strategic Pillar

Inclusion and Diversity Matters:

Build a diverse Fortive through hiring, developing, and retaining a strong and diverse team

Everyone Owns Inclusion:

Invest in development of our teams to build a Fortive where you can be yourself and do your best work

I&D in Our DNA:

Build a culture of equity that enables greater innovation and performance for customers and the world

In 2021, we continued to strengthen our culture of inclusion and diversity by introducing a new development experience, providing our leaders tools and support to become more inclusive leaders.

We also expanded our employee resource communities, and operationalized equitable talent processes.

Reinforcing our I&D priorities, annual I&D goals are imbedded into performance measures for both executives and other senior leader roles across Fortive.

Fortive is a global team, approximately 18,000 strong, energized by a shared purpose.

Our People strategy centers on empowering strong, inclusive teams working together to solve problems no one could solve alone.

We intentionally seek out different skills, backgrounds, and voices to deliver results for our customers and fulfill our employee promise – For you.

Our People strategy is defined by our inclusive growth culture, advanced through FBS, our talent and reward systems, and measured by our employee experience processes.

These key elements enable us to accelerate progress for our customers, our teams, and the world around us.

Inclusive Growth Culture

We believe we are more together.

Our culture sets the tone for Fortive’s People strategy and drives Fortive’s success.

Inclusion, Diversity, and Equity (“IDE”) are core pillars of our strategy and culture.

– Inclusion - Develop our teams to build a Fortive where you can be yourself and do your best work.

– Diversity - Build a diverse Fortive through hiring, developing, and retaining a strong and diverse team.

– Equity - Build a culture of equity that enables greater innovation and performance for customers and for the world.

We accelerated the impact of IDE in 2022 by introducing our new inclusive leader experience to our senior leaders across the organization.

This development experience provides the tools and support to build an inclusive culture and prepares leaders to lead diverse high-performing teams.

We also continued to expand the impact of our Employee Friends and Resources Groups (“EFRG’s”) to increase inclusion and belonging within and for our underrepresented communities.

To drive FBS, continuous improvement and IDE accountability at all levels of our organization, our VP, Inclusion, Diversity, and Equity works closely with our senior management, our IDE Council, and our IDE practitioners.

We also cascade annual IDE goals into executive and senior leader performance measures.

Additionally, our Board of Directors and our Compensation Committee oversee our IDE efforts as part of our People strategy and measurement actions.

We are committed to continued transparency by publicly sharing our workforce representation and inclusion results and aspirational goals through our Proxy, EEO-1 report, website, and annual Sustainability Report.

Business, Talent, and Reward Systems

Our culture of continuous improvement inspires us to keep experimenting, growing, and learning.

Our FBS and robust talent and reward systems advance our people strategies by attracting, growing, and retaining the talent we need now and in the future.

Together, these business and talent systems strengthen our employee value proposition and build our employer brand while delivering new experiences to our employees and results for our customers.

Our Performance and Development for Growth processes drive results and career growth for our global teams.

Performance for Growth rigorously deploys our strategies into cascaded goals throughout the organization, while Development for Growth translates our beliefs and values into desired leader competencies.

Together, these processes provide a roadmap for the way we work, deliver results, and build high performing teams.

Additionally, we design our Total Rewards programs to attract and retain talented, curious people with a growth mindset and a passion for innovation, collaboration, and continuous improvement.

We offer leading programs that inspire and reward superior performance, are equitable, and foster an inclusive, diverse, and healthy global workforce.

We also invest in our people at every level through our growth and development experiences.

These experiences range from leadership learning and FBS immersion, to hands-on skill building in each of our three FBS pillars - growth, lean, and leadership.

Collectively, these experiences build skills, strengthen performance, and prepare our employees for challenging opportunities.

Employee Experience and Communication

A key focus of our human capital management strategy is creating exceptional employee experiences through active listening and communication throughout the organization.

Our senior leaders are committed to actively searching out and listening to our employees and other stakeholders to build our culture.

As part of this effort, we have continued to conduct our annual employee experience survey, but also, beginning in 2021, we moved to a shorter feedback loop, introducing quarterly pulse surveys.

This cadence has enabled us to be more responsive to feedback while enhancing our ability to understand trends over time.

With over 80% of our team participating throughout 2021, our overall employee engagement score averaged 77%, and our inclusion and belonging score averaged 81%.

As in prior years, the 2021 results informed both management and the Board of Directors on appropriate actions to continuously enhance our employees’ experience.

Our promise to employees is ‒ For you.

To achieve this promise, our leaders at all levels of the organization actively seek feedback from our employees and other stakeholders to strengthen our culture.

Our employee experience surveys are one of the many ways we actively solicit input.

Our employee experience survey approach continues to mature through quarterly touchpoints and leader accountability.

In the fourth quarter of 2022, over 80% of our global team completed our biannual, full census survey, delivering steady gains in both overall engagement and in inclusion and belonging that resulted in historically high ratings of 78% and 82%, respectively.

Consistent with prior years, our results continue to inform both management and our Board of Directors on appropriate actions to enhance our employee experience.

Government Contracts

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After a device has received 510(k) clearance for a specific intended use, any change or modification that significantly affects its safety or effectiveness, such as a significant change in the design, materials, method of manufacture, or intended use, may require a new 510(k) clearance and payment of an FDA user fee.

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Market access, sales, and marketing of medical devices in non-U.S.

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The qui tam provisions of the False Claims Act allow a private individual to bring actions on behalf of the federal government alleging that the defendant has submitted a false claim to the federal government, and to share in any monetary recovery.

In addition, the government may assert that a claim

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including items and services resulting from a violation of the U.S.

In addition, the government may assert that a claim including items and services resulting from a violation of the U.S.

Federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the civil False Claims Act.

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In the past several years, there has been a substantial increase in the enforcement of these global anti-bribery and anti-corruption laws.

Our operations throughout the world, including in developing countries with heightened risks of corruption, and interactions with individuals who are considered public officials under these laws, such as healthcare professionals in countries with state-run healthcare systems, expose us to the risk of violating these laws.

Our operations throughout the world, including in developing countries with heightened risks of

corruption, and interactions with individuals who are considered public officials under these laws, such as healthcare professionals in countries with state-run healthcare systems, expose us to the risk of violating these laws.

Violations of these laws or even allegations of violations of these laws could pose reputational risks, subject us to investigations and related litigation, cause disruptions to our business, and result in monetary fines and damages and other sanctions.

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The CCPA has some of the same features as the GDPR (discussed below), and has already prompted several other states to consider similar legislation.

The CCPA has already been amended several times, including through a November 2020 ballot initiative (called the California Privacy Rights Act) (“CPRA”), which will go into effect in January 2023.

The CCPA has already been amended several times, including through a November 2020 ballot initiative (called the California Privacy Rights Act) (“CPRA”), which became effective in January 2023.

Across the European Union, the General Data Protection Regulation (“GDPR”) imposes strict requirements in how we collect, transmit, process, and retain personal data, including, among other things, in certain circumstances a requirement for prompt notification of data breaches to supervisory authorities and/or to data subjects, with the risk of significant fines for non-compliance.

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In these countries and elsewhere, the laws applicable to data privacy and security may require changes to business practices or additional investment for compliance purposes.

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Environmental Laws and Regulations

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We maintain an internet website at www.fortive.com where we make available free of charge our annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K and amendments to those reports, filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicable after filing such material with, or furnishing such material to, the SEC.

Our internet website and the information contained on, or linked from, that website are not incorporated by reference into this Form 10-K.

Our internet website and the information contained in, or linked from, that website are not incorporated by reference into this Form 10-K.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business