What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2025-02-25 compared with 2024-02-27 · 360 added, 358 removed, 1072 unchanged (40% of the section changed)

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Based on this assessment, management concluded that, as of December 31, 2024, the Company’s internal control over financial reporting is effective.

The Company completed four acquisitions in the IOS Segment during the year ended December 31, 2023, collectively “the IOS Acquisitions”.

The Company has not yet fully incorporated the internal controls and procedures of the IOS Acquisitions into the Company’s internal control over financial reporting, and as such, management excluded the IOS Acquisitions from its assessment.

The assets and revenues of the IOS Acquisitions excluded from management’s assessment of internal controls constituted less than 1% of the Company’s total assets as of December 31, 2023 and less than 1% of the Company’s total revenues for the year ended December 31, 2023, respectively.

The Company acquired EA Elektro-Automatik Holding GmbH (“EA”) during the year ended December 31, 2024.

The Company has not yet fully incorporated the internal controls and procedures of the EA acquisition into the Company’s internal control over financial reporting, and as such, management excluded the EA acquisition from its assessment.

The assets and revenues of the EA acquisition excluded from management’s assessment of internal controls constituted approximately 12% of the Company’s total assets as of December 31, 2024 and less than 2% of the Company’s total revenues for the year ended December 31, 2024, respectively.

The Company’s independent registered public accounting firm has issued an audit report on the effectiveness of the Company’s internal control over financial reporting.

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Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Fortive Corporation

To the Stockholders and the Board of Directors of Fortive Corporation

Opinion on Internal Control Over Financial Reporting

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We believe that our audit provides a reasonable basis for our opinion.

As indicated in the accompanying Report of Management on Fortive Corporation’s Internal Control Over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of the IOS acquisitions which is included in the 2023 consolidated financial statements of the Company and constituted less than 1% of total and assets, respectively, as of December 31, 2023 and less than 1% of revenues, for the year then ended.

Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of the IOS Acquisitions.

As indicated in the accompanying Report of Management on Fortive Corporation’s Internal Control Over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of the EA Elektro-Automatik Holding GmbH which is included in the 2024 consolidated financial statements of the Company and constituted less than 12% of total assets, respectively, as of December 31, 2024 and less than 2% of revenues, for the year then ended.

Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of the EA Elektro-Automatik Holding GmbH.

Definition and Limitations of Internal Control Over Financial Reporting

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Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Fortive Corporation

To the Stockholders and the Board of Directors of Fortive Corporation

Opinion on the Financial Statements

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which it relates.

Description of the Matter Valuation of Goodwill

The Company’s evaluation of goodwill for impairment involves the comparison of the fair value of each reporting unit to its carrying value.

To estimate the fair value, management uses a market approach based on multiples of earnings before interest, taxes, depreciation and amortization (EBITDA).

In certain circumstances, management computes the estimated fair value through a discounted cash flow analysis to validate the results of the market approach.

The goodwill evaluation is performed on an annual basis, or more frequently if a triggering event is identified.

As described in Note 6, the Company’s goodwill balance is $9.1 billion as of December 31, 2023.

Auditing the Company’s annual goodwill impairment assessment is complex and highly judgmental due to the significant estimation required in determining the fair value of the reporting units.

In particular, the estimated fair value is sensitive to the significant assumptions related to the selection of market multiples and projected financial information.

A high degree of audit judgment and an increased extent of effort including the need to involve our fair value specialists was required.

How We Addressed the Matter in Our Audit We tested controls over management’s goodwill impairment assessment.

This included controls related to management’s forecasting and selection of market multiples.

To test the annual evaluation of goodwill, among other procedures, we evaluated the reasonableness of management’s forecasts, tested the completeness and accuracy of the underlying data used to develop the forecast and tested the carrying value of the reporting units.

Our fair value specialists assisted us with our testing of management’s selected EBITDA multiples for the annual goodwill evaluation.

We also evaluated the Company’s disclosures included in Note 6 to the consolidated financial statements in relation to these matters.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Description of the Matter

Accounting for the acquisition of EA Elektro-Automatik Holding GmbH

As discussed in Note 3 to the consolidated financial statements, on January 3, 2024, the Company acquired EA Elektro-Automatik Holding GmbH (“EA”), for a purchase price of $1.72 billion.

The transaction was accounted for as a business combination.

As part of the allocation of the purchase price, the Company estimated the fair value of finite-lived intangible assets to be $681.2 million, comprised of product trade names, developed technology and customer relationships.

Auditing the Company's accounting for its acquisition of EA was complex due to the estimation uncertainty in determining the fair value of finite-lived intangible assets related to customer relationships.

The significant assumption used to estimate the value of this asset was the attrition rate.

This assumption is forward looking and could be affected by future economic and market conditions.

How We Addressed the Matter in Our Audit We tested the Company's controls over its accounting for acquisitions, including controls over management’s review of the significant assumption described above.

To test the estimated fair value of customer relationship asset, we performed audit procedures that included, among others, evaluating the Company's use of the selected valuation model, testing the significant assumption used in the model and testing the completeness and accuracy of the underlying data.

For example, we compared the attrition rate selected by management to the historical results of the acquired business and to assumptions used by guideline companies within the industry.

Our valuation specialists assisted with the evaluation of the valuation model selected, including the attrition rate.

/s/ Ernst & Young LLP

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Accounts receivable less allowance for doubtful accounts of $ 30.7 and $ 39.2 , respectively

Finished goods

Work in process

Raw materials

Inventories 544.8 536.9

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Common stock:

$ 0.01 par value, 2.0 billion shares authorized;

$ 0.01 par value, 2,000.0 shares authorized;

366.6 and 363.7 issued;

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Operating costs:

Selling, general, and administrative expenses ( 2,062.6 ) ( 1,956.6 ) ( 1,839.5 )

Research and development expenses ( 397.8 ) ( 401.5 ) ( 354.8 )

Selling, general, and administrative

( 2,173.5 ) ( 2,062.6 ) ( 1,956.6 )

Research and development

( 414.0 ) ( 397.8 ) ( 401.5 )

Gain on sale of property

Russia exit and wind down costs — — ( 17.9 )

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Interest expense, net ( 152.8 ) ( 123.5 ) ( 98.3 )

Loss on extinguishment of debt — — ( 104.9 )

Gain on investment in Vontier Corporation — — 57.0

Gain on litigation resolution — — 29.9

Loss from divestiture

Other non-operating expenses, net ( 58.6 ) ( 19.4 ) ( 15.6 )

Earnings from continuing operations before income taxes 990.8 873.5 677.5

Earnings before income taxes

969.6 990.8 873.5

Income taxes ( 136.7 ) ( 125.0 ) ( 118.3 )

Net earnings from continuing operations 865.8 755.2 614.2

Earnings (loss) from discontinued operations, net of income taxes — — ( 5.8 )

Net earnings $ 832.9 $ 865.8 $ 755.2

Mandatory convertible preferred dividends — — ( 34.5 )

Net earnings attributable to common stockholders $ 865.8 $ 755.2 $ 573.9

Net earnings per common share from continuing operations:

Basic $ 2.46 $ 2.12 $ 1.66

Diluted $ 2.43 $ 2.10 $ 1.65

Net earnings per common share from discontinued operations:

Basic $ — $ — $ ( 0.02 )

Diluted $ — $ — $ ( 0.02 )

Net earnings per common share:

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($ and shares in millions)

Preferred Stock Common Stock Additional Paid-In Capital Treasury Shares Retained Earnings Accumulated

Common Stock Additional Paid-In Capital Treasury Shares Retained Earnings Accumulated

Comprehensive

Loss Noncontrolling

Shares Amount Shares Outstanding Amount

Shares Outstanding Amount

Balance, December 31, 2021 359.1 $ 3.6 $ 3,670.0 $ — $ 6,023.6 $ ( 185.0 ) $ 4.8

Adoption of ASU 2020-06 — — ( 65.7 ) — 62.8 — —

Balance, January 1, 2022

359.1 3.6 3,604.3 — 6,086.4 ( 185.0 ) 4.8

Net earnings for the period — — — — 755.2 — —

Dividends to common shareholders — — — — — — ( 97.7 ) — —

Mandatory convertible preferred dividends — — — — — — ( 34.5 ) — —

Conversion of Mandatory convertible preferred stock to common stock ( 1.4 ) — 19.4 0.2 — — — — —

Dividends to common stockholders

— — — — ( 99.5 ) — —

Other comprehensive income (loss)

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Common stock-based award activity 1.0 — 115.2 — — — —

Common stock repurchases

( 7.0 ) — — ( 442.9 ) — — —

Shares withheld for taxes ( 0.2 ) — ( 13.2 ) — — — —

Early extinguishment of 0.00875 senior convertible notes due 2022

Vontier Separation and other — — — — 8.6 — — — —

Change in noncontrolling interests — — — — — — 0.4

Balance, December 31, 2022 352.9 $ 3.6 $ 3,706.3 $ ( 442.9 ) $ 6,742.1 $ ( 325.7 ) $ 5.2

Adoption of ASU 2020-06 — — — — ( 65.7 ) — 62.8 — —

Balance, January 1, 2022

— — 359.1 3.6 3,604.3 — 6,086.4 ( 185.0 ) 4.8

Net earnings for the period — — — — 865.8 — —

Dividends to common shareholders — — — — — — ( 99.5 ) — —

Dividends to common stockholders — — — — ( 102.0 ) — —

Other comprehensive income (loss)

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Net earnings for the period — — — — 832.9 — —

Dividends to common shareholders — — — — — — ( 102.0 ) — —

Dividends to common stockholders — — — — ( 111.2 ) — —

Other comprehensive income (loss)

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Common stock repurchases

( 12.0 ) — — ( 896.5 ) — — —

Shares withheld for taxes ( 0.5 ) — ( 29.0 ) — — — —

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Cash flows from operating activities:

Net earnings from continuing operations $ 865.8 $ 755.2 $ 614.2

Noncash items:

$ 832.9 $ 865.8 $ 755.2

Adjustments to reconcile net earnings to net cash provided by operating activities:

Amortization 453.3 370.4 382.1

Depreciation 90.6 86.4 83.5

Stock-based compensation expense 113.3 93.8 77.4

Stock-based compensation

109.2 113.3 93.8

Gain on sale of property

Loss from divestiture

Loss from equity investments

39.4 17.3 17.3

Russia exit and wind down costs — — 9.2

Loss on extinguishment of debt — — 104.2

Gain on investment in Vontier Corporation — — ( 57.0 )

Gain on litigation resolution — — ( 29.9 )

Change in certain assets and liabilities:

Change in deferred income taxes ( 65.0 ) ( 104.1 ) ( 62.1 )

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Change in accrued expenses and other liabilities 16.8 99.5 41.9

Total operating cash provided by continuing operations 1,353.6 1,303.2 992.9

Total operating cash (used in) provided by discontinued operations — — ( 31.8 )

Net cash provided by operating activities 1,526.8 1,353.6 1,303.2

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Cash paid for acquisitions, net of cash received ( 1,721.8 ) ( 95.8 ) ( 12.8 )

Payments for additions to property, plant and equipment ( 107.8 ) ( 95.8 ) ( 50.0 )

Purchases of property, plant and equipment

( 120.4 ) ( 107.8 ) ( 95.8 )

Proceeds from sale of property

Cash infusion into divestiture

Proceeds from sale of business

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Cash flows from financing activities:

Proceeds from borrowings (maturities greater than 90 days), net of issuance costs 549.3 1,394.1 999.8

Net proceeds from commercial paper borrowings

Net proceeds from (repayments of) commercial paper borrowings

( 596.5 ) 839.9 38.5

Proceeds from borrowings (maturities greater than 90 days), net of issuance costs 1,733.5 549.3 1,394.1

Repayment of borrowings (maturities greater than 90 days) ( 1,000.0 ) ( 1,000.0 ) ( 1,000.0 )

Payment of 0.875 % convertible senior notes due 2022

— — ( 1,156.5 )

Repayment of borrowings (maturities greater than 90 days) ( 1,000.0 ) ( 1,000.0 ) ( 611.1 )

Repurchase of common shares

Payment of common stock cash dividend to shareholders ( 102.0 ) ( 99.5 ) ( 97.7 )

Payment of mandatory convertible preferred stock cash dividend to shareholders — — ( 34.5 )

( 889.6 ) ( 272.9 ) ( 442.9 )

Payment of dividends

( 111.2 ) ( 102.0 ) ( 99.5 )

All other financing activities 71.1 18.0 ( 6.7 )

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Fortive Corporation (“Fortive,” “the Company,” “we,” “us,” or “our”) is a provider of essential technologies for connected workflow solutions across a range of attractive end-markets.

Our strategic segments - Intelligent Operating Solutions, Precision Technologies, and Advanced Healthcare Solutions - include well-known brands with leading positions in their markets.

Our strategic segments - Intelligent Operating Solutions (“IOS”), Precision Technologies (“PT”), and Advanced Healthcare Solutions (“AHS”) - include well-known brands with leading positions in their markets.

Our businesses design, develop, manufacture, and service professional and engineered products, software, and services, building upon leading brand names, innovative technologies, and significant market positions.

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The accompanying consolidated financial statements present our historical financial position, results of operations, changes in equity and cash flows in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

Unless otherwise indicated, all amounts in the notes to the consolidated financial statements refer to continuing operations.

The financial statements include our accounts and the accounts of our subsidiaries.

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Net earnings attributable to noncontrolling interests have been reflected in Selling, general, and administrative expenses and were insignificant in all periods presented.

Discontinued Operations

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

The accounting requirements for reporting the Vontier business as a discontinued operation were met when the Separation was completed.

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

Reclassification of certain prior year amounts in the Consolidated Statements of Cash Flows have been made to conform to current year presentation.

Update on Pending Separation of the Precision Technologies Segment

On September 4, 2024, we announced our intention to separate our PT segment business into an independent publicly-traded company (the “Separation”), which will be named Ralliant.

The Separation will create (i) a technology solutions company, retaining the Fortive name, with a portfolio of the brands currently operating under Fortive’s IOS and AHS business segments, focused on resilient, high-quality recurring growth by delivering productivity and safety to customers, and (ii) a global technology company consisting of our brands currently operating under the PT segment with a focus on precision instruments and highly engineered products essential for breakthrough innovation and aligned to powerful secular trends.

The Separation is intended to qualify as a tax-free spin-off for Fortive shareholders for U.S.

federal income tax purposes.

The Company is targeting completion of the Separation early in the third quarter of 2025, subject to the satisfaction of certain conditions, including, among others, final approval of Fortive’s Board of Directors, satisfactory completion of financing, receipt of a favorable opinion of legal counsel and/or a private letter ruling from the U.S.

Internal Revenue Service with respect to the tax treatment of the transaction for U.S.

federal income tax purposes, the effectiveness of a Form 10 registration statement filed with the SEC, and other regulatory approvals.

All assets, liabilities, revenues and expenses of Ralliant are included in the consolidated results of the Company in the accompanying consolidated financial statements.

Segment Presentation

We operate and report our results in three segments, Intelligent Operating Solutions, Precision Technologies, and Advanced Healthcare Solutions, each of which is further described below.

Our IOS 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.

Our PT 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 and 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.

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

Our offerings include instrument sterilization solutions, instrument tracking, 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.

Segment Realignment

In January 2024, we realigned Invetech from the AHS segment to the PT segment (the “Segment Realignment”) based on our strategic decision to divest the equipment design and manufacturing businesses of Invetech, while retaining the motion solution businesses (the “Motion Solution Business”) that are more closely aligned with the PT segment than the AHS segment.

Prior period segment amounts in Note 5, 11, and 16 have been recast to conform to the revised segment presentation.

Refer to Note 3 for further detail on the divestiture.

Russian Invasion of Ukraine

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The exit activities were completed in 2022.

Segment Presentation

We operate and report our results in three segments, Intelligent Operating Solutions, Precision Technologies, and Advanced Healthcare Solutions, each of which is further described below.

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

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.

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.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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These investments are subject to a periodic impairment review.

There were no changes in fair value or impairment losses during the years ended December 31, 2023 or 2021.

We evaluated events and circumstances that, as of September 30, 2022, indicated the carrying value of an equity investment in a third-party entity held by our Intelligent Operating Solutions segment was no longer recoverable.

As a result, during the year ended December 31, 2022, we recorded a pre-tax impairment loss of $ 8.1 million to write down the investment to fair value.

There were no material impairment losses during the years ended December 31, 2024 or 2023.

We recorded a loss from equity investments of $ 39.4 million during the year ended December 31, 2024, and $ 17.3 million during both the years ended December 31, 2023 and 2022.

The loss was recorded within Other non-operating expense, net in our Consolidated Statement of Earnings.

During the year ended December 31, 2022, we recorded a pre-tax impairment loss of $ 8.1 million to write down an equity investment in a third party held by our IOS segment to fair value.

The loss was recorded within “Other non-operating expense, net” in our Consolidated Statement of Earnings.

Other Assets —Other assets principally include operating lease right-of-use assets, contract assets, deferred tax assets, and other investments.

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Due to their short-term nature, the carrying values for accounts receivable, trade accounts payable, and short-term debt approximate fair value.

While outstanding in 2021, we remeasured our investment in Vontier common stock at fair value based on Vontier's closing stock price on the measurement date, with unrealized gains recorded in the Consolidated Statement of Earnings during the year ended December 31, 2021.

Refer to Note 6 for the fair values of our other obligations.

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We also test intangible assets with indefinite lives and goodwill at least annually for impairment.

Refer to Note 3 and Note 6 for additional information about our goodwill and other intangible assets.

Refer to Note 5 for additional information about our goodwill and other intangible assets.

Revenue Recognition —We derive revenue from the sale of products and services.

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These allowances and rebates are reflected as a reduction in the contract transaction price.

Significant judgment is exercised in determining product returns, customer allowances, and rebates, and are estimated based on historical experience and known trends.

Judgment is exercised in determining product returns, customer allowances, and rebates, and are estimated based on historical experience and known trends.

Most of our sales contracts contain standard terms and conditions.

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We record the cost of the restructuring activities when the associated liability is incurred.

We initiated a discrete plan in the first quarter of 2023 that was completed during the fourth quarter of 2023.

The nature of these activities were broadly consistent throughout our segments and consist primarily of targeted workforce reductions in response to overall macroeconomic and other external conditions.

In the fourth quarter of 2024, we initiated a discrete restructuring plan that is expected to be completed by December 31, 2025.

The nature of the plan initiated in 2024 was related to the Separation and consisted primarily of targeted workforce reductions to realign the cost structures between the two companies.

In the first quarter of 2023, we initiated a separate discrete restructuring plan that was completed by the end of 2023.

The nature of the activities in 2023 was broadly consistent throughout our segments and consisted primarily of targeted workforce reductions in response to overall macroeconomic and other external conditions.

We incurred these costs to position ourselves to provide superior products and services to customers in a cost-efficient manner, while taking into consideration the impact of broad economic uncertainties.

We incurred charges of $ 58.6 million during the year ended December 31, 2023.

We incurred charges of $ 19.7 million and $ 58.6 million during the years ended December 31, 2024 and 2023, respectively.

These charges are recorded within Cost of sales and Selling, general, and administrative expenses in the Consolidated Statements of Earnings.

Accrued restructuring costs were $ 26 million as of December 31, 2023 and are recorded within Accrued expenses and other current liabilities in the Consolidated Balance Sheets.

Accrued restructuring costs were approximately $ 13 million and $ 26 million as of December 31, 2024 and 2023, respectively, and are recorded within Accrued expenses and other current liabilities in the Consolidated Balance Sheets.

Foreign Currency Transaction and Translation —Exchange rate adjustments resulting from foreign currency transactions are recognized in Net earnings.

Net foreign currency transaction losses were $ 5.5 million and $ 18.2 million for the years ended December 31, 2023 and 2022, respectively.

Net foreign currency transaction losses were immaterial for the year ended December 31, 2021.

Net foreign currency transaction losses were $ 13.2 million, $ 5.5 million and $ 18.2 million for the years ended December 31, 2024, 2023, and 2022, respectively.

Assets and liabilities of subsidiaries operating outside the United States with a functional currency other than U.S.

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Accounting for Stock-Based Compensation —We account for stock-based compensation by measuring the cost of employee services received in exchange for all equity awards granted, including stock options, restricted stock units (“RSUs”), and performance stock units (“PSUs”), based on the fair value of the award as of the grant date.

Equity-based compensation expense is recognized net of an estimated forfeiture rate on a straight-line basis over the requisite service period of the award.

For awards subject to graded vesting, compensation expense is recognized separately over each vesting tranche of the award, resulting in an accelerated expense recognition pattern.

Equity-based compensation expense is recognized net of an estimated forfeiture rate over the requisite service period.

Generally, equity awards are subject

to graded vesting and compensation expense is recognized separately over each vesting tranche of the award, resulting in an accelerated expense recognition pattern.

Refer to Note 14 for additional information.

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These factors include historical operating results, known or planned operating developments, the period of time over which certain temporary differences will reverse, consideration of the utilization of certain deferred income tax liabilities, tax law carryback capability in the particular country, and prudent and feasible tax planning strategies.

After evaluation of these factors, if the deferred income

tax assets are expected to be realized within the tax carryforward period allowed for that specific country, we would conclude that no valuation allowance would be required.

After evaluation of these factors, if the deferred income tax assets are expected to be realized within the tax carryforward period allowed for that specific country, we would conclude that no valuation allowance would be required.

To the extent that the deferred income tax assets exceed the amount that is expected to be realized within the tax carryforward period for a particular jurisdiction, we establish a valuation allowance.

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subsidiaries.

During the second quarter of 2022, we designated our ¥ 14.4 billion Yen-denominated variable interest rate term loan and our € 275 million Euro-denominated variable interest rate term loan outstanding as net investment hedges of our investment in certain foreign operations.

As of December 31, 2024, our outstanding € 500 million Euro-denominated senior unsecured notes due 2026, € 700 million Euro-denominated senior unsecured notes due 2029, ¥ 14.4 billion Yen-denominated variable interest rate term loan, and € 275 million Euro-denominated variable interest rate term loan were designated as net investment hedges of our investment in applicable foreign operations.

Accordingly, foreign currency transaction gains or losses on the debt were deferred in the foreign currency translation component of AOCI as an offset to the foreign currency translation adjustments on our investments in foreign subsidiaries.

For the years ended December 31, 2023 and 2022, we recognized after-tax losses of $ 1.2 million and $ 5.1 million within Other comprehensive income (loss) related to the net investment hedges, respectively.

For the years ended December 31, 2024, 2023, and 2022, we recognized after-tax gains of $ 60.4 million, losses of $ 1.2 million, and losses of $ 5.1 million within Other comprehensive income (loss) related to the net investment hedges, respectively.

We recorded no ineffectiveness from our net investment hedges during the years ended December 31, 2024, 2023, and 2022.

We did not designate any net investment hedges during the year ended December 31, 2021.

Any amounts deferred in AOCI will remain until the hedged investment is sold or substantially liquidated.

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(b) Includes balances relating to defined benefit plans, supplemental executive retirement plans, and other postretirement employee benefit plans.

Refer to Note 3 for additional details.

Pension —We measure our pension assets and obligations to determine the funded status as of December 31 st each year, and recognize an asset for an overfunded status or a liability for an underfunded status in our Consolidated Balance Sheets.

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We record all components of net periodic pension costs, with the exception of service costs, in other non-operating expenses as a component of non-operating income in the accompanying Consolidated Statements of Earnings.

Service costs are recorded within Cost of sales and Selling, general and administrative expenses in the Consolidated Statements of Earnings according to the classification of the participant’s compensation.

Service costs are recorded within Cost of sales and Selling, general and administrative expenses in the Consolidated

Statements of Earnings according to the classification of the participant’s compensation.

Refer to Note 10 for additional information on our pension plans including a discussion of actuarial assumptions.

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2023-07, Segment Reporting (Topic 280)—Improvements to Reportable Segment Disclosures , which amends the disclosure requirements for reportable segments on the interim and annual basis.

This standard is effective for fiscal year ending December 31, 2024 and interim periods within fiscal year ending December 31, 2025, with early adoption permitted.

The adoption of the standard will not impact our consolidated financial statements.

Upon adoption, we will update the applicable interim and annual disclosures to align with the new standard.

This standard is effective for fiscal year ending December 31, 2024 and interim periods within fiscal year ending December 31, 2025.

The adoption of the standard did not impact our consolidated financial statements and we updated the applicable annual disclosures to align with the new standard.

In the first quarter of 2025, we will update the applicable interim disclosures to align with the new standard.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) —Improvements to Income Tax Disclosures , which amends certain disclosure requirements related to income taxes on an annual basis.

This standard is effective for fiscal year ending December 31, 2025, with early adoption permitted.

This standard is effective for fiscal year ending December 31, 2025.

This standard should be applied on a prospective basis, with retrospective application permitted.

The adoption of the standard will not impact our consolidated financial statements;

Upon adoption, we will update the applicable annual disclosures to align with the new standard.

however, we are currently evaluating the impact of the new disclosure requirements on the notes to the financial statements.

We will update the applicable annual disclosures to align with the new standard.

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40) — Disaggregation of Income Statement Expenses , which amends the disclosure requirements related to certain costs and expenses on an interim and annual basis.

This standard is effective for fiscal year ending December 31, 2027, and interim periods within fiscal year ending December 31, 2028.

This standard should be applied either on a prospective basis or retrospective basis.

The adoption of the standard will not impact our combined financial statements;

however, we are currently evaluating the impact of the new disclosure requirements on the notes to the financial statements.

Upon adoption, we will update the applicable interim and annual disclosures to align with the new standard.

ACQUISITIONS AND DIVESTITURES

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The purchase price for acquired businesses reflect a number of factors, including the future earnings and cash flow potential of the business, the strategic fit and resulting synergies from the complementary portfolio of the acquired business to our existing operations, industry expertise, and market access.

During the year ended December 31, 2024, immaterial adjustments were made to the purchase price allocation of current and prior year acquisitions.

The following describes our significant acquisition activities for the years ended December 31, 2024 and 2023.

On January 3, 2024, we acquired EA Elektro-Automatik Holding GmbH (“EA”), a leading supplier of high-power electronic test solutions for energy storage, mobility, hydrogen, and renewable energy applications.

The acquisition of EA will bolster the PT segment’s innovative portfolio of products and services for engineers with complementary test and measurement solutions enabling the global energy transition.

The total consideration paid was approximately $ 1.72 billion, net of acquired cash.

We funded this transaction with financing activities and available cash.

We recorded approximately $ 1.18 billion of goodwill within our PT segment related to the EA acquisition, which is not tax deductible.

For the year ended December 31, 2024, we incurred approximately $ 33.2 million of pretax transaction-related costs related to the EA acquisition, which were primarily for banking fees, legal fees, and amounts paid to other third-party advisers.

These costs were recorded within Selling, general, and administrative expenses in the Consolidated Statement of Earnings.

The fair value of the net assets acquired was based on estimates and assumptions.

Significant assumptions include the discount rates and certain assumptions that form the basis of the forecasted cash flows of the acquired business including earnings before interest, taxes, depreciation and amortization (“EBITDA”), revenue, revenue growth rates, royalty rates, customer attrition rates, and technology obsolescence rates.

The following table summarizes the estimated acquisition date fair values of the assets acquired and liabilities assumed as of December 31, 2024 ($ in millions):

Accounts receivable $ 18.1

Property, plant and equipment

Goodwill 1,175.0

Other intangible assets (customer relationships, technology, and trade names)

Deferred tax liabilities ( 191.8 )

Other assets and liabilities, net ( 18.4 )

Net cash consideration $ 1,718.2

During the year ended December 31, 2023, we made four acquisitions (“the 2023 acquisitions”) in our Intelligent Operating Solutions segment for an aggregate cash consideration of $ 101.4 million, which includes an immaterial deferred payment, net of acquired cash.

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All other acquired assets and assumed liabilities are immaterial.

The revenues and operating results from the 2023 acquisitions were immaterial.

The purchase price allocation is provisional and is subject to further adjustments as additional information becomes available concerning the fair value of the assets acquired and liabilities assumed.

We make appropriate adjustments to purchase price allocations as soon as practicable but no later than the expiration of the applicable measurement period.

On December 27, 2021, we acquired Provation Software, Inc.

(“Provation”), a leading provider of clinical workflow software solutions used in hospitals and ambulatory surgery centers.

The acquisition of Provation extends our digital offering and software capabilities in the healthcare space.

The total consideration paid was approximately $ 1.4 billion, net of acquired cash and was primarily financed with proceeds from our financing activities and available cash.

We recorded $ 972 million of goodwill related to the acquisition, which is not tax deductible.

Provation is an operating company within our Advanced Healthcare Solutions segment.

ServiceChannel

On August 24, 2021, we acquired ServiceChannel Holdings, Inc.

(“ServiceChannel”), a privately held, global provider of SaaS based multi-site facilities maintenance service solutions with an integrated service-provider network.

The acquisition of ServiceChannel broadens our offering of software-enabled solutions for the facility and asset lifecycle workflow.

The total consideration paid was approximately $ 1.2 billion, net of acquired cash, and includes approximately $ 28 million of deferred compensation consideration that was recognized ratably over a twelve-month service period.

The ServiceChannel acquisition was primarily financed with available cash and proceeds from our financing activities.

We recorded approximately $ 868 million of goodwill related to the ServiceChannel acquisition, which is not tax deductible.

ServiceChannel is an operating company within our Intelligent Operating Solutions segment.

Other Acquisition-related Matters

On April 1, 2019 (the “Principal Closing Date”), we acquired the advanced sterilization products business (“ASP”) of Johnson & Johnson, a New Jersey corporation.

Prior to our acquisition of ASP, Johnson & Johnson received a Civil Investigative Demand from the United States Department of Justice (“DOJ”) regarding a False Claims Act investigation arising from a whistleblower lawsuit pertaining to the pricing, quality, marketing, and promotion of certain of ASP’s products.

Based on the totality of available information at the Principal Closing Date and throughout the applicable measurement period, management allocated $ 26 million of the $ 2.7 billion purchase price to a potential liability related to the aforementioned litigation.

Following the Principal Closing Date, management continually evaluated the likelihood and magnitude of the asserted claims based on any new information that became available.

In the second quarter of 2021, following the unsealing of the whistleblower lawsuit and DOJ’s declination to intervene in the litigation, the plaintiff dismissed the whistleblower lawsuit.

Based on these developments, management derecognized the litigation liability from our Consolidated Balance Sheet and recorded as a Gain on litigation resolution of $ 26 million within Non-operating income (expense), net in our Consolidated Statements of Earnings during the year ended December 31, 2021.

During 2019, we acquired Censis Technologies (“Censis”).

At the closing date of the purchase of Censis, a contractual liability existed which management allocated to the purchase price and was recorded in our Consolidated Balance Sheet.

During the fourth quarter of 2021, that liability was discharged for an amount less than the amount allocated, and the excess was recorded as a Gain on litigation resolution of $ 3.9 million within Non-operating income (expense), net in our Consolidated Statements of Earnings during the year ended December 31, 2021.

In June 2024, we divested and transferred ownership of Invetech, excluding the Motion Solution Business, to its management team (the “Invetech Divestiture”).

As a result of the divestiture, in the year ended December 31, 2024, we recorded a net realized loss of $ 25.6 million, which is identified as “Loss from divestiture” in the Consolidated Statements of Earnings.

The divested businesses accounted for less than 1.0 % of total revenue and less than 1.0 % of total assets for the fiscal year ended December 31, 2023.

The Invetech Divestiture did not represent a strategic shift with a major effect on the Company’s operations and financial results, and therefore the divested businesses are not reported as discontinued operations.

On September 30, 2022, we completed the sale of our Therapy Physics product line, which was reported in our Advanced Healthcare Solutions segment, to an unrelated third party for cash consideration of $ 9.6 million.

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The divestiture of this product line did not represent a strategic shift with a significant effect on the Company’s operations and financial results and therefore the divested product line is not reported as a discontinued operation.

Subsequent Event

The total consideration paid was approximately $ 1.72 billion, net of acquired cash.

We funded this transaction with financing activities and available cash.

We will record a preliminary purchase price allocation for the assets acquired and liabilities assumed in connection with the acquisition based on their estimated fair values as of the acquisition date.

We expect to allocate a significant portion of the purchase to goodwill and intangible assets.

We will assign the full amount of goodwill to our Precision Technologies segment.

We do not expect the goodwill to be deductible for tax purposes.

We are currently in the process of finalizing the accounting for this transaction.

We have not completed our analysis of identifying and estimating the fair value of identifiable intangible assets acquired.

The measurement period for the valuation of net assets acquired ends as soon as information on the facts and circumstances that existed as of the acquisition date becomes available, but not to exceed 12 months following the acquisition date.

Adjustments in purchase price allocations may require a change in the amounts allocated to net assets acquired during the periods in which the adjustments are determined.

The classes of inventory as of December 31 are summarized as follows ($ in millions):

Finished goods $ 214.1 $ 215.3

Work in process 108.9 96.4

Raw materials 213.9 225.0

Total $ 536.9 $ 536.7

PROPERTY, PLANT AND EQUIPMENT

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Property, plant and equipment, net $ 433.1 $ 439.8

Property Sale

On March 14, 2024, we sold land and certain office buildings in our PT segment for $ 90 million, for which we received $ 20 million in cash proceeds and a $ 70 million promissory note secured by a letter of credit.

We received $ 10 million of principal in August and the remaining in November 2024.

During the year ended December 31, 2024, we recorded a gain on sale of property of $ 63.1 million in the Consolidated Statements of Earnings.

Concurrently, using a portion of the proceeds from the property sale, we pledged a charitable contribution of $ 20 million to the Fortive Foundation (the “Foundation”), which had no donor imposed conditions or restrictions.

The Foundation, a not-for-profit entity established to expand our philanthropic efforts, is a related party due to certain Fortive executives serving as members of the entity’s board of directors.

The charitable contribution is recorded within the “Other non-operating expense, net” line in the Consolidated Statements of Earnings.

In the third quarter of 2024, $ 20 million of the promissory note due in November 2024 was reassigned to the Foundation.

GOODWILL AND OTHER INTANGIBLE ASSETS

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If the estimated fair value of the reporting unit is less than its carrying value, we will impair the goodwill for the amount of the carrying value in excess of the fair value.

We performed goodwill impairment testing for our reporting units.

As of the date of the 2023 annual impairment test, the carrying value of goodwill in each reporting unit ranged from $ 180.0 million to approximately $ 5.6 billion.

No goodwill impairment charges were recorded for continuing operations for the years ended December 31, 2023, 2022, and 2021.

We performed goodwill impairment testing for our reporting units, and no goodwill impairment charges were recorded for the years ended December 31, 2024, 2023, and 2022.

We assessed all “triggering” events subsequent to the performance of the 2024 annual impairment test and, as a result, have not identified any impacts to goodwill.

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Balance, December 31, 2022 $ 4,074.4 $ 1,857.1 $ 3,117.0 $ 9,048.5

Measurement period adjustments for prior year acquisitions

( 5.9 ) — 3.7 ( 2.2 )

Attributable to current year acquisitions and divestitures

Attributable to current year acquisitions

56.7 — — 56.7

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Balance, December 31, 2023 4,148.9 1,856.5 3,116.3 9,121.7

Measurement period adjustments for prior year acquisitions

Attributable to current year acquisitions

— 1,175.0 — 1,175.0

Foreign currency translation and other 17.8 ( 0.6 ) ( 0.7 ) 16.5

Foreign currency translation

( 27.8 ) ( 91.5 ) ( 22.0 ) ( 141.3 )

Balance, December 31, 2024 $ 4,121.7 $ 2,940.0 $ 3,094.3 $ 10,156.0

Due to the Segment Realignment, the beginning goodwill balances for PT and AHS have been recast to conform to the revised segment presentation.

Refer to Note 1 for further information on the realignment.

Refer to Note 3 for more information related to goodwill attributable to acquisitions.

Finite-lived intangible assets are amortized over the shorter of their legal or estimated useful lives.

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Total intangibles $ 6,053.4 $ ( 2,713.4 ) $ 5,439.9 $ ( 2,280.1 )

During the year ended December 31, 2024, we acquired finite-lived intangible assets, consisting of customer relationships, developed technology, and trade names, with a weighted average life of approximately nine years as a result of the EA acquisition.

Total intangible amortization expense in 2024, 2023, and 2022 was $ 453 million, $ 370 million and $ 382 million, respectively.

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The difference between the fair value and the carrying amounts of long-term borrowings may be attributable to changes in market interest rates and/or our credit ratings subsequent to the borrowing.

The fair value of cash and equivalents, trade accounts receivable, net, and trade accounts payable, and commercial paper approximates their carrying amount due to the short-term maturities of these instruments.

Refer to Note 11 for information related to the fair value of the Company-sponsored defined benefit pension plan assets.

The fair value of cash and equivalents, trade accounts receivable, net, trade accounts payable, and commercial paper approximates their carrying amount due to the short-term maturities of these instruments.

Refer to Note 10 for information related to the fair value of the assets related to the significant Company-sponsored noncontributory defined benefit pension plans.

ACCRUED EXPENSES AND OTHER LIABILITIES

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The accrued warranty liability is reviewed on a quarterly basis and may be adjusted as additional information regarding expected warranty costs becomes known.

Warranty activity and settlements for the periods presented were immaterial.

Warranty related activity for the periods presented was immaterial.

We determine if an arrangement is or contains a lease at inception and recognize a right-of-use (“ROU”) asset and a lease liability for all leases with terms greater than 12 months.

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Operating lease cost was $ 51 million, $ 49 million, and $ 56 million for the years ended December 31, 2024, 2023, and 2022, respectively.

During the years ended December 31, 2023 and 2022, cash paid for operating leases included in operating cash flows was $ 47 million and $ 50 million, respectively.

During the years ended December 31, 2024, 2023, and 2022, cash paid for operating leases included in operating cash flows was $ 49 million, $ 47 million, and $ 50 million, respectively.

Operating lease ROU assets obtained in exchange for operating lease liabilities were $ 33 million and $ 31 million for the years ended December 31, 2024 and 2023, respectively.

Operating lease ROU assets were $ 164 million and $ 155 million as of December 31, 2024 and 2023, respectively.

Operating lease liabilities were $ 164 million and $ 169 million as of December 31, 2023 and 2022.

Operating lease liabilities were $ 170 million and $ 164 million as of December 31, 2024 and 2023, respectively.

The following table presents the maturities of our operating lease liabilities as of December 31, 2024 ($ in millions):

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Total operating lease liabilities $ 169.6

As of December 31, 2023 and 2022, the weighted average lease term of our opera ting leas es was 9 year s and 7 years, respectively, and the weighted average discount rate of our operating leases was 3.6 % an d 3.0 %, respectively.

As of December 31, 2024 and 2023, the weighted average lease term of our operating leases was 7.2 years and 9 years, respectively, and the weighted average discount rate of our operating leases was 3.9 % and 3.6 %, respec tively.

We primarily use our incremental borrowing rate as the discount rate for our operating leases, as we are generally unable to determine the interest rate implicit in the lease.

As of December 31, 2024, we did not enter into operating leases for which the lease term had not yet commenced.

The carrying value of the components of our long-term debt as of December 31 were as follows ($ in millions):

The components of our debt as of December 31 were as follows ($ in millions):

dollar-denominated commercial paper $ 650.0 $ 1,251.2

Delayed-Draw Term Loan due 2024

3.7 % Euro-denominated senior unsecured notes due 2026

3.7 % Euro-denominated senior unsecured notes due 2029

Euro Term Loan due 2025 284.7 303.6

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As of December 31, 2024 and 2023, we were in compliance with all covenants under the Amended and Restated Credit Agreement.

Delayed-Draw Term Loan due 2024

On December 7, 2023, we entered into a term loan credit agreement, which provides for a delayed-draw term loan facility up to an aggregate principal amount of $ 1.3 billion (the “Term Loan Credit Agreement”).

The Company may draw on the funds under the Term Loan Credit Agreement, in up to three advances, which may be made on or prior to March 31, 2024.

Borrowings under the Delayed-Draw Term Loan facility may be Base Rate Loans or Term SOFR Loans, and bears interest as follows:

(1) Term SOFR Loans bear interest at a variable rate equal to Term SOFR plus a margin of between 75 and 125 basis point, depending on the Company’s long-term credit rating;

and (2) Base Rate Loans bear interest at the highest of (a) the Federal funds rate plus 50 basis points, (b) the prime rate, (c) Term SOFR plus 100 basis points and (d) 1.0 %, plus in each case a margin between zero and 25 basis points depending on our long-term debt credit rating.

In addition, the Company will pay to each lender under the Term Loan Credit Agreement a ticking fee at a rate per annum equal to an amount between 6.5 and 15 basis points, depending on the Company’s long-term debt credit rating, of such lender’s daily maximum aggregate amount of commitments under the Term Loan Credit Agreement, ending on the earlier of March 31, 2024 or termination of the commitments under the Term Loan Credit Agreement.

The ticking fee begins to accrue on February 5, 2024.

On December 14, 2023, we drew down $ 550 million of the $ 1.3 billion available under the delayed-draw senior unsecured term facility (“Delayed-Draw Term Loan Due 2024”) as a Term SOFR Loan.

The repayment of the principal is due on December 12, 2024.

Borrowings under the Delayed-Draw Term Loan Due 2024 are prepayable at our option in whole or in part without premium or penalty and amounts borrowed may not be reborrowed once repaid.

Financing Transactions Subsequent to December 31, 2023

On January 2, 2024, we drew down an additional $ 450 million of the $ 1.3 billion Delayed-Draw Term Loan due 2024 as part of the funding for the acquisition of EA.

Refer to Note 3 for additional information regarding the EA acquisition.

On February 13, 2024, we completed the sale of our registered offering of € 500 million aggregate principal amount of our 3.7 % Euro-denominated senior unsecured notes due 2026 (the “2026 Notes”) and € 700 million aggregate principal amount of our 3.7 % Euro-denominated senior unsecured notes due 2029 (the “2029 Notes”).

The 2026 Notes bear interest at 3.7 % per annum and mature on February 13, 2026, and the 2029 Notes also bear interest at 3.7 % per annum and mature on August 15, 2029.

Interest on the 2026 Notes will be paid annually in arrears on February 13 of each year, beginning on February 13, 2025 and interest on the 2029 Notes will be paid annually in arrears on August 15 of each year, beginning on August 15, 2024.

We received net proceeds, after underwriting discounts and commissions and offering expenses, of approximately $ 1.3 billion based on the currency exchange rates at which the proceeds denominated in Euro were converted into U.S.

We used the net proceeds to refinance the $ 1.0 billion outstanding principal of the Delayed-Draw Term Loan Due 2024 and pay accrued interest thereon, refinance borrowings under the U.S.

Euro-denominated Senior Unsecured Notes Due 2026 and 2029

On February 13, 2024, we completed the registered offering of the following Euro-denominated senior unsecured notes:

• € 500 million in aggregate principal amount of our 3.7 % Euro-denominated senior unsecured notes due 2026 (the “2026 Notes”) issued at 99.928 % of their principal amount and bearing interest at 3.7 % per annum.

The 2026 Notes mature on February 13, 2026 with interest payable in arrears on February 13 of each year, beginning in 2025.

• € 700 million in aggregate principal amount of our 3.7 % Euro-denominated senior unsecured notes due 2029 (the “2029 Notes”) issued at 99.943 % of their principal amount and bearing interest at 3.7 % per annum.

The 2029 Notes mature on August 15, 2029 with interest payable in arrears on August 15 of each year, beginning in 2024.

The net proceeds from the offering, after underwriting discounts and commissions and offering expenses, were approximately $ 1.3 billion based on the currency exchange rates at which the Euro denominated proceeds were converted into U.S.

We used the net proceeds to refinance the $ 1.0 billion outstanding principal of the Delayed-Draw Term Loan Due 2024, refinance borrowings under the U.S.

dollar-denominated commercial paper, and for general corporate purposes.

We also designated both the 2026 Notes and the 2029 Notes as net investment hedges of our investment in certain foreign operations.

Delayed-Draw Term Loan due 2023

On October 18, 2022, we entered into a term loan credit agreement, which provides for a 364-day delayed-draw term loan facility up to an aggregate principal amount of $ 1.0 billion.

On December 15, 2022, we drew down the full $ 1.0 billion delayed-draw senior unsecured term facility (“Delayed-Draw Term Loan Due 2023”) as a Term SOFR Loan with repayment of the principal is due on December 14, 2023.

The Delayed-Draw Term Loan Due 2023 bore interest at a variable rate equal to Term SOFR with a one month period plus a Credit Spread Adjustment of 10 basis point plus a spread of between 82.5 and 107.5 basis point, depending on the Company’s long-term credit rating.

Borrowings under the Delayed-Draw Term Loan Due 2023 were prepayable at our option in whole or in part without premium or penalty and amounts borrowed may not be reborrowed once repaid.

On August 24, 2023, we repaid $ 250 million of the Delayed-Draw Term Loan Due 2023.

On December 14, 2023, we repaid the remaining $ 750 million in outstanding principal and accrued interest thereon using the proceeds from the Delayed-Draw Term Loan Due 2024 and available cash.

Redemption Provisions and Covenants Applicable to 2026 and 2029 Notes

Prior to July 15, 2029 for the 2029 Notes, and prior to maturity for the 2026 Notes, we may redeem the applicable series of notes at our option, in whole or in part, at any time and from time to time, at the applicable make-whole redemption price

specified in the indentures.

On or after July 15, 2029, we may redeem the 2029 Notes, in whole or in part, at any time and from time to time, at a redemption price equal to 100 % of the principal amount of the 2029 Notes being redeemed plus accrued and unpaid interest thereon to, but not including, the redemption date.

We may, at our option, redeem the applicable series of notes, in whole but not in part, at a redemption price equal to 100 % of the principal amount of such series of notes to be redeemed, together with any accrued and unpaid interest thereon to, but not including, the redemption date, at any time, if as a result of any change in, or amendment to, the laws, regulations, treaties, or rulings of the United States or any political subdivision of or in the United States or any taxing authority thereof or therein affecting taxation, or any change in, or amendment to, the application, official interpretation, administration or enforcement of such laws, regulations, treaties or rulings (including a holding by a court of competent jurisdiction in the United States), which change or amendment is enacted, adopted, announced or become effective, we become or, based upon a written opinion of independent counsel selected by us, will become obligated to pay additional amounts with respect to the applicable series of notes.

If a change of control triggering event occurs, we will, in certain circumstances, be required to make an offer to repurchase the notes from each holder at a purchase price equal to 101 % of the principal amount of the notes being repurchased, plus accrued and unpaid interest to, but not including the repurchase date.

A change of control triggering event is defined as the occurrence of both a change of control and a rating event, each as defined in the indentures.

Except in connection with a change of control triggering event, the 2026 Notes and 2029 Notes do not have any credit rating downgrade triggers that would accelerate the maturity of the notes.

The 2026 Notes and 2029 Notes contain customary covenants.

None of these covenants are considered restrictive to our operations and as of December 31, 2024, we were in compliance with all of our covenants.

Euro Term Loan

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provided, however, that the TORF may not be less than zero for the Yen Term Loan.

Debt-for-Equity Exchange

On January 19, 2021, we completed the Debt-for-Equity Exchange of 33.5 million shares of common stock of Vontier, representing all of the Retained Vontier Shares, for $ 1.1 billion in aggregate principal amount of indebtedness of the Company held by Goldman Sachs & Co.

We recorded a loss on extinguishment of the debt included in the Debt-for-Equity Exchange of $ 94.4 million in the year ended December 31, 2021.

Additionally, during the first quarter of 2021 we recognized a gain of $ 57.0 million related to the subsequent change in the fair value of the Retained Vontier Shares.

Convertible Senior Notes

On February 22, 2019, we issued $ 1.4 billion in aggregate principal amount of our 0.875 % Convertible Senior Notes due 2022 (the “Convertible Notes”), including $ 187.5 million in aggregate principal amount resulting from an exercise in full of an over-allotment option.

The Convertible Notes were issued in a private placement to certain initial purchasers for resale to qualified institutional buyers pursuant to Rule 144A under the Securities Act.

The Convertible Notes bear interest at a rate of 0.875 % per year, payable semiannually in arrears on February 15 and August 15 of each year, beginning on August 15, 2019.

Of the $ 1.4 billion in principal amount from the issuance of the Convertible Notes, $ 1.3 billion was classified as debt and $ 102.2 million was classified as equity, using an assumed effective interest rate of 3.38 %.

Debt issuance costs of $ 24.3 million were proportionately allocated to debt and equity.

On February 9, 2021, we repurchased $ 281 million of the Convertible Notes using the remaining cash proceeds received from Vontier in the Separation and other cash on hand.

In connection with the repurchase, we recorded a loss on debt extinguishment during 2021 of $ 10.5 million.

In addition, upon repurchase we recorded $ 11.6 million as a reduction to additional paid-in capital related to the equity component of the repurchased Convertible Notes.

Upon conversion of the Convertible Notes, holders were entitled to receive cash, shares of our common stock, or a combination thereof, at our election.

Upon adopting Accounting Standards Update No.

2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), on January 1, 2022, we reclassified the carrying value of the instrument wholly to debt, eliminating the value formerly attributable to the conversion feature and the associated debt issuance costs that were previously classified as equity.

On February 15, 2022, the maturity date of the Convertible Notes, Fortive repaid, in cash, $ 1.2 billion in outstanding principal and accrued interest thereon.

We recognized $ 2.1 million in interest expense during the year ended December 31, 2022, of which $ 1.3 million related to the contractual coupon rate of 0.875 %, $ 0.8 million was attributable to the amortization of debt issuance costs.

We recognized $ 45 million in interest expense during the year ended December 31, 2021, of which $ 10 million related to the contractual coupon rate of 0.875 %, $ 6 million was attributable to the amortization of debt issuance costs, and $ 29 million was attributable to the amortization of the discount.

Registered Notes

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Covenants and Redemption Provisions Applicable to Registered Notes

We may redeem the Registered Notes of the applicable series, in whole or in part, at any time prior to the dates specified in the Registered Notes indenture (the “Call Dates”) by paying the principal amount and the “make-whole” premium specified in the

Registered Notes indenture, plus accrued and unpaid interest.

Additionally, we may redeem all or any part of the Registered Notes of the applicable series on or after the Call Dates without paying the “make-whole” premium specified in the Registered Notes indenture.

Additionally, we may redeem all or any part of the Registered Notes of the applicable series on or after the Call Dates without paying the “make-whole” premium specified in the Registered

Notes indenture.

Registered Notes Series Call Dates

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None of these covenants are considered restrictive to our operations and as of December 31, 2024, we were in compliance with all of our covenants.

There are $ 550 million of minimum principal payments due under our total long-term debt as of December 31, 2023 during 2024.

The future minimum principal payments due are presented in the following table:

Loans Registered Notes Total

$ 550.0 $ — $ 550.0

2025 405.7 — 405.7

2026 — 900.0 900.0

Delayed-Draw Term Loan due 2024

On December 14, 2023 and January 2, 2024, we drew down $ 550 million and $ 450 million of the $ 1.3 billion available under the delayed-draw senior unsecured term facility (“Delayed-Draw Term Loan Due 2024”) as a Term SOFR Loan, as part of the funding for the acquisition of EA, with $ 1.0 billion outstanding immediately following such additional draw.

Refer to Note 3 for additional information regarding the EA acquisition.

The Delayed-Draw Term Loan Due 2024 bore interest at a variable rate equal to Term SOFR plus a margin of between 75 and 125 basis point, depending on the Company’s long-term credit rating.

On February 13, 2024, we used the net proceeds from the 2026 Notes and 2029 Notes to refinance the entire $ 1.0 billion outstanding principal and accrued interest thereon.

Delayed-Draw Term Loan due 2023

On August 24, 2023, we repaid $ 250 million of the Delayed-Draw Term Loan Due 2023.

On December 14, 2023, we repaid the remaining $ 750 million in outstanding principal and accrued interest thereon using the proceeds from the Delayed-Draw Term Loan Due 2024 and available cash.

Convertible Senior Notes

On February 22, 2019, we issued $ 1.4 billion in aggregate principal amount of our 0.875 % Convertible Senior Notes due 2022 (the “Convertible Notes”).

Upon adopting ASU No.

2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity , on January 1, 2022, we reclassified the carrying value of the instrument wholly to debt, eliminating the value formerly attributable to the conversion feature and the associated debt issuance costs that were previously classified as equity.

On February 15, 2022, the maturity date of the Convertible Notes, Fortive repaid, in cash, $ 1.2 billion in outstanding principal and accrued interest thereon.

The Company’s future minimum principal payments due are presented in the following table:

Thereafter 550.0

Total principal payments (b)

$ 955.7 $ 1,450.0 $ 2,405.7

(a) This outstanding principal amount is related to the Delayed Draw Term Loan due 2024.

(b) Not included in the table above are discounts, premiums and issuance costs associated with the Registered Notes and Commercial Paper, which totaled $ 6.3 million as of December 31, 2023, and have been recorded as an offset to the carrying amount of the related debt in the accompanying Consolidated Balance Sheet as of December 31, 2023.

In addition, the table above does not include principal balance of $ 1,251.2 million under the Commercial Paper Program.

Total principal payments (a)

(a) The table above does not include principal balance of $ 650 million under the Commercial Paper Program.

We made interest payments of $ 136 million, $ 131 million, and $ 92 million during the years ended December 31, 2024, 2023 and 2022, respectively.

RETIREMENT BENEFIT PLANS

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employees in the 401(k) programs totaling $ 63 million in 2024, $ 61 million in 2023, and $ 60 million in 2022.

We derive revenue primarily from the sales of products and software, and services.

Revenue is recognized when control of promised products or services is transferred to customers in an amount that reflects the consideration we expect to be entitled to in exchange for those products or services.

We derive revenue primarily from the sales of products, including software, and services.

Contract Assets — In certain circumstances, we record contract assets which include unbilled amounts typically resulting from sales under contracts when revenue recognized exceeds the amount billed to the customer, and right to payment is not only subject to the passage of time.

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Contract Costs — We incur and capitalize incremental costs to obtain certain contracts, typically sales-related commissions where the amortization period is greater than one year , and costs associated with assets used by our customers in certain service arrangements.

As of December 31, 2023 and 2022, we had $ 51 million and $ 42 million, respectively, in net revenue-related contract assets primarily related to certain software contracts.

Revenue-related contract costs are recorded within Prepaid expenses and other current assets and Other assets in our Consolidated Balance Sheet.

As of December 31, 2024 and 2023, we had $ 59 million and $ 51 million, respectively, in net revenue-related contract cost assets primarily related to certain software contracts.

Revenue-related contract costs are recorded within Other assets in our Consolidated Balance Sheets.

These assets have estimated useful lives between three and five years .

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We classify deferred revenue as current or noncurrent based on the timing of when we expect to recognize revenue.

The current portion of the deferred revenue is recorded within Accrued expenses and other current liabilities and the non-current portion of deferred revenue is recorded within Other long-term liabilities in our Consolidated Balance Sheets.

The current portion of deferred revenue is recorded within Accrued expenses and other current liabilities and the non-current portion of deferred revenue is recorded within Other long-term liabilities in our Consolidated Balance Sheets.

Our contract liabilities as of December 31 consisted of the following ($ in millions):

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Disaggregation of Revenue

We disaggregate revenue from contracts with customers by sales of product and services, geographic location, and end market for each of our segments, as we believe it best depicts how the nature, amount, timing, and uncertainty of our revenue and cash flows are affected by economic factors.

We disaggregate revenue from contracts with customers by sales of product and software and services, geographic location, and end market for each of our segments, as we believe it best depicts how the nature, amount, timing, and uncertainty of our revenue and cash flows are affected by economic factors.

Disaggregation of revenue for the year ended December 31, 2024 is presented as follows ($ in millions):

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China 648.2 219.8 325.0 103.4

All other (each country individually less than 5% of total sales) 2,082.0 942.0 675.2 464.8

2,211.6 980.7 768.1 462.8

Total $ 6,231.8 $ 2,714.7 $ 2,229.4 $ 1,287.7

Direct sales:

Medical $ 1,431.7 $ 47.6 $ 143.6 $ 1,240.5

$ 1,451.8 $ 46.6 $ 188.0 $ 1,217.2

Industrial & Manufacturing 1,336.2 947.1 370.8 18.3

Utilities & Power 400.2 189.3 210.9 —

590.2 310.2 241.4 38.6

Utilities & Power 427.4 198.6 228.8 —

Communication, Electronics & Semiconductor 368.1 112.4 255.7 —

Aerospace & Defense 331.2 0.5 330.7 —

Oil & Gas 281.7 271.6 10.1 —

Retail & Consumer 335.1 270.8 64.3 —

Oil & Gas 293.7 281.8 11.9 —

Other 717.9 392.5 325.4 —

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China 694.9 228.6 361.8 104.5

All other (each country individually less than 5% of total sales) 1,986.8 892.2 633.6 461.0

2,082.0 942.0 696.8 443.2

Total $ 6,065.3 $ 2,612.2 $ 2,223.7 $ 1,229.4

Direct sales:

Medical $ 1,458.0 $ 46.5 $ 167.0 $ 1,244.5

$ 1,431.7 $ 47.6 $ 221.7 $ 1,162.4

Industrial & Manufacturing 1,410.1 931.4 461.3 17.4

Utilities & Power 368.9 183.1 185.8 —

555.0 288.5 229.8 36.7

Utilities & Power 400.2 189.3 210.9 —

Communication, Electronics & Semiconductor 398.3 100.4 297.9 —

Aerospace & Defense 303.7 0.6 303.1 —

Oil & Gas 271.1 262.1 9.0 —

Retail & Consumer 338.6 258.2 80.4 —

Oil & Gas 281.7 271.6 10.1 —

Other 689.0 384.7 304.3 —

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China 702.1 217.9 378.7 105.5

All other (each country individually less than 5% of total sales) 1,921.0 839.0 606.6 475.4

1,986.8 892.2 665.7 428.9

Total $ 5,825.7 $ 2,466.1 $ 2,152.3 $ 1,207.3

Direct sales:

Medical $ 1,332.7 $ 37.7 $ 138.4 $ 1,156.6

$ 1,458.0 $ 46.5 $ 270.4 $ 1,141.1

Industrial & Manufacturing 1,352.0 887.9 446.2 17.9

Utilities & Power 390.2 223.4 166.8 —

471.0 241.3 194.8 34.9

Utilities & Power 368.9 183.1 185.8 —

Communication, Electronics & Semiconductor 399.8 96.3 303.5 —

Aerospace & Defense 259.7 0.6 259.1 —

Oil & Gas 262.2 252.1 10.1 —

Retail & Consumer 335.7 248.9 86.8 —

Oil & Gas 271.1 262.1 9.0 —

Other 657.9 367.8 289.9 0.2

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Earnings and Income Taxes

Earnings from continuing operations before income taxes for the years ended December 31 were as follows ($ in millions):

Earnings before income taxes for the years ended December 31 were as follows ($ in millions):

2024 2023 2022

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Total $ 969.6 $ 990.8 $ 873.5

The continuing operations provision for income taxes for the years ended December 31 were as follows ($ in millions):

The provision for income taxes for the years ended December 31 were as follows ($ in millions):

2024 2023 2022

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Effective Income Tax Rate

The continuing operations effective income tax rate for the years ended December 31 varies from the U.S.

The effective income tax rate for the years ended December 31 varies from the U.S.

statutory federal income tax rate as follows:

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federal permanent differences related to the TCJA ( 7.8 ) % ( 7.7 ) % ( 7.0 ) %

Separation transaction tax costs

3.3 % — % — %

Effect of change in tax rates enacted in the current period ( 0.2 ) % ( 2.6 ) % 0.3 %

Changes in valuation allowances ( 2.8 ) % 1.7 % 1.8 %

Uncertain tax positions

( 2.2 ) % ( 1.2 ) % ( 1.5 ) %

Other 1.3 % 0.6 % 0.6 %

Effective income tax rate before adjustments related to the unrealized gain on the Retained Vontier Shares 12.6 % 13.5 % 11.3 %

Adjustment for the unrealized gain on the Retained Vontier Shares — % — % ( 2.0 ) %

Effective income tax rate after adjustments related to the unrealized gain on the Retained Vontier Shares 12.6 % 13.5 % 9.3 %

Effective income tax rate

14.1 % 12.6 % 13.5 %

Our effective tax rate for 2024 differs from the U.S.

federal statutory rate of 21% due primarily to the positive and negative effects of the Tax Cuts and Jobs Act (“TCJA”), U.S.

federal permanent differences, the impacts of credits and deductions provided by law, including those associated with state income taxes, a decrease in our uncertain tax positions, and the effect of changes in tax rates enacted in the current period.

We conduct business globally, and, as part of our global business, we file numerous income tax returns in the U.S.

federal, state and foreign jurisdictions.

We are routinely examined by various domestic and international taxing authorities.

The amount of income taxes we pay is subject to audit by federal, state, and foreign tax authorities, which may result in proposed assessments.

The Company is subject to examination in the United States, various states, and foreign jurisdictions for the tax years 2015 to 2023.

These examinations include filings of tax returns prior to our separation from Danaher, tax returns of enterprises no longer in our portfolio, and tax returns for pre-acquisition periods of enterprises added to our portfolio.

Significant obligations are detailed in the tax matters agreements in connection with the separation of Fortive from Danaher on July 1, 2016, the split-off of the A&S business on October 1, 2018, and the Vontier separation on October 9, 2020.

We review our 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.

We made income tax payments related to continuing operations of $ 225 million, $ 148 million, and $ 103 million during the years ended December 31, 2023, 2022 and 2021, respectively.

federal permanent differences, the impacts of credits and deductions provided by law, including those associated with state income taxes, a decrease in our uncertain tax positions, non-deductible transaction costs related to the Separation and the effect of changes in tax rates enacted in the current period.

We made income tax payments of $ 220 million, $ 225 million, and $ 148 million during the years ended December 31, 2024, 2023 and 2022, respectively.

Deferred Tax Assets and Liabilities

All deferred tax assets and liabilities have been classified as noncurrent and are included in Other assets and Other long-term liabilities in the Consolidated Balance Sheets.

Deferred income tax assets and liabilities from continuing operations as of December 31 were as follows ($ in millions):

Deferred income tax assets and liabilities as of December 31 were as follows ($ in millions):

Deferred Tax Assets:

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Deferred taxes associated with U.S.

entities from continuing operations consist of net deferred tax liabilities of approximately $ 519 million and $ 615 million inclusive of valuation allowances of $ 38 million and $ 39 million as of December 31, 2023 and 2022, respectively.

entities consist of net deferred tax liabilities of approximately $ 485 million and $ 519 million inclusive of valuation allowances of $ 30 million and $ 38 million as of December 31, 2024 and 2023, respectively.

Deferred taxes associated with non-U.S.

entities from continuing operations consist of net deferred tax assets of $ 10 million and net deferred tax liabilities of $ 17 million, inclusive of valuation allowances of $ 245 million and $ 35 million, as of December 31, 2023 and 2022, respectively.

Our valuation allowance increased by $ 208 million and by $ 1 million

during the years ended December 31, 2023 and 2022, respectively, due primarily to foreign credits and net operating losses in both years.

entities consist of net deferred tax liabilities of $ 159 million and net deferred tax assets of $ 10 million, inclusive of valuation allowances of $ 282 million and $ 245 million, as of December 31, 2024 and 2023,

respectively.

Our valuation allowance increased by $ 29 million and by $ 208 million during the years ended December 31, 2024 and 2023, respectively, due primarily to foreign credits and net operating losses in both years.

As of December 31, 2024, our U.S.

net operating loss carryforwards totaled $ 1.6 billion, of which $ 90 million is related to federal net operating loss carryforwards, $ 805 million is related to state net operating loss carryforwards, and $ 709 million is related to non-U.S.

net operating loss carryforwards totaled $ 1.9 billion, of which $ 52 million is related to federal net operating loss carryforwards, $ 740 million is related to state net operating loss carryforwards, and $ 1.1 billion is related to non-U.S.

net operating loss carryforwards.

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We recognize potential accrued interest and penalties associated with unrecognized tax positions in income tax expense.

As of December 31, 2023, gross unrecognized tax benefits for continuing and discontinued operations were $ 176 million ($ 189 million total, including $ 31 million associated with interest and penalties, and net of the impact of $ 18 million of indirect tax benefits).

As of December 31, 2022, gross unrecognized tax benefits for continuing and discontinued operations were $ 178 million ($ 202 million total, including $ 26 million associated with interest and penalties, and net of the impact of $ 3 million of indirect tax benefits).

As of December 31, 2024, gross unrecognized tax benefits were $ 145 million ($ 155 million total, including $ 28 million associated with interest and penalties, and net of the impact of $ 18 million of indirect tax benefits).

As of December 31, 2023, gross unrecognized tax benefits were $ 176 million ($ 189 million total, including $ 31 million associated with interest and penalties, and net of the impact of $ 18 million of indirect tax benefits).

We recognized approximately $ 13 million, $ 11 million and $ 10 million in potential interest and penalties associated with uncertain tax positions during 2024, 2023, and 2022, respectively.

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It is not practical to estimate the effect, if any, of any amount of such change during the next twelve months to previously recorded uncertain tax positions in connection with the audits.

The Company does not anticipate that there will be a material increase or decrease in the total amount of unrecognized tax benefits in the next twelve months.

It is reasonably possible that $ 55 million in unrecognized tax benefits may be resolved in the next twelve months, due to statute of limitations expiration.

A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding amounts accrued for potential interest and penalties, is as follows ($ in millions):

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We have received notification from the United States Environmental Protection Agency, and from state and non-U.S.

environmental agencies, that conditions at certain sites where we and others previously disposed of hazardous wastes and/or are or were property owners require clean-up and other possible remedial action, including sites where we have been identified as a potentially responsible party under United States federal and state environmental laws.

environmental agencies, that conditions at certain sites where we and others previously disposed of hazardous wastes and/or of which we are or were property owners require clean-up and other possible remedial action, including sites where we have been identified as a potentially responsible party under United States federal and state environmental laws.

We have projects underway at a number of current and former facilities, in both the United States and abroad, to investigate and remediate environmental contamination resulting from past operations.

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If we determine that potential liability for a particular site or with respect to a personal injury claim is known or considered probable and reasonably estimable, we accrue the total estimated loss, including investigation and remediation costs, associated with the site or claim.

As of both December 31, 2023 and 2022, we had reserves of $ 6 million, recorded within Accrued expenses and Other liabilities in the Consolidated Balance Sheets for environmental matters that are known or considered probable and reasonably estimable, which reflects our best estimate of the costs to be incurred with respect to such matters on an undiscounted basis.

As of both December 31, 2024 and 2023, we had reserves of $ 7 million and $ 6 million, respectively, recorded within Accrued expenses and Other liabilities in the Consolidated Balance Sheets for environmental matters that are known or considered probable and reasonably estimable, which reflects our best estimate of the costs to be incurred with respect to such matters on an undiscounted basis.

All reserves for environmental liabilities have been recorded without giving effect to any possible future third party recoveries.

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As of December 31, 2024, the aggregate amount of our purchase obligations totaled $ 446 million, of which $ 366 million are expected to be settled within one year of December 31, 2024.

We recently discovered that Gems Sensors, Inc., an entity that has been merged into Setra Systems, Inc.

and now operates as Gems Setra, made certain incorrect representations regarding its status as a small business concern as defined by the Small Business Act for certain contracts that it was awarded by the Defense Logistics Agency ("DLA").

As a result, on January 26, 2024, we voluntarily notified the Department of Defense Office of Inspector General (“OIG”) and the DLA of this matter.

While we are continuing to investigate, we currently do not expect this matter to have a material adverse effect on our financial condition or results of operations.

However, resolution of this matter could subject us to fines or penalties, and we cannot assure you of the timing or outcome of such resolution.

STOCK-BASED COMPENSATION

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As of December 31, 2024, approximately 12.1 million shares of our common stock remain available for issuance under the Stock Plan.

Stock options under the Stock Plan generally vest pro rata over a four-year or five-year period and terminate 10 years from the grant date, though the specific terms of e ach grant are determined by the Compensation Committee of our Board of Directors.

Stock options under the Stock Plan generally vest pro rata over a four-year period and terminate 10 years from the grant date, though the specific terms of e ach grant are determined by the Compensation Committee of our Board of Directors.

Our executive officers and certain other employees may be awarded stock options with different vesting criteria and stock options granted to non-employee directors are fully vested as of the grant date.

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RSUs granted under the Stock Plan provide for the issuance of common stock at no cost to the holder.

RSUs granted to employees generally vest over four or five years , although certain other employees and non-employee directors may be awarded RSUs with different time-based vesting criteria.

RSUs granted to employees generally vest over four years , although certain other employees and non-employee directors may be awarded RSUs with different time-based vesting criteria.

Certain members of our senior management are also awarded incremental RSUs subject to performance-based vesting criteria.

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Income tax benefit ( 16.5 ) ( 15.6 ) ( 13.8 )

Total stock-based compensation expense, net of income taxes $ 97.7 $ 80.0 $ 64.5

Total stock-based compensation, net of income taxes

$ 92.7 $ 97.7 $ 80.0

When stock options are exercised by the employee or Stock Awards vest, we derive a tax deduction measured by the excess of the market value on such date over the grant date price.

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The Board’s authority to issue preferred stock with voting rights or conversion rights that, if exercised, could adversely affect the voting power of the holders of common stock, could potentially discourage attempts by third parties to obtain control of the Company through certain types of takeover practices.

We declared and paid cash dividends per common share during the periods presented as follows:

Common Share Amount

($ in millions)

First quarter $ 0.07 $ 24.7

Second quarter 0.07 24.6

Third quarter 0.07 24.6

Fourth quarter 0.08 28.1

Total $ 0.29 $ 102.0

First quarter $ 0.07 $ 25.1

Second quarter 0.07 24.9

Third quarter 0.07 24.8

Fourth quarter 0.07 24.7

Total $ 0.28 $ 99.5

The sum of the components of total dividends paid may not equal the total amount due to rounding.

Aggregate cash payments for the dividends paid to shareholders are recorded as dividends to shareholders in our Consolidated Statements of Changes in Equity and Consolidated Statements of Cash Flows.

Beginning in the fourth quarter of 2023, we increased the quarterly dividend paid on our common stock from $ 0.07 per share to $ 0.08 per share.

Share Repurchase Program

On February 17, 2022, the Company's Board of Directors approved a share repurchase program authorizing the Company to repurchase up to 20 million shares of the Company's outstanding common stock from time to time on the open market or in privately negotiated transactions.

On January 23, 2024, the Company’s Board of Directors increased the number of shares authorized under the share repurchase program by an additional 11 million shares, with 8 million remaining authorized under the share repurchase program as of December 31, 2024.

There is no expiration date for the repurchase program, and the timing and amount of repurchases under the program are determined by the Company's management based on market conditions and other factors.

The repurchase program may be suspended or discontinued at any time by the Board of Directors.

During the years ended December 31, 2023 and 2022, respectively, the Company purchased 4 million and 7 million shares of its common stock at an average share price of $ 68.20 and $ 63.25 .

As of December 31, 2023, there were 9 million shares remaining for repurchase under the program.

On January 23, 2024, the Company’s Board of Directors increased the number of shares authorized under the share repurchase program by an additional 11 million shares.

Mandatory Convertible Preferred Stock

On June 29, 2018, we issued 1,380,000 shares of 5.0 % Mandatory Convertible Preferred Stock, Series A (“MCPS”) with a par value of $ 0.01 per share and liquidation preference of $ 1,000 per share, which included the exercise of an over-allotment option in full to purchase 180,000 shares.

On July 1, 2021, all outstanding shares of our 5.0 % Mandatory Convertible Preferred Stock (“MCPS”) converted at a rate of 14.0978 common shares per share of preferred stock into an aggregate of approximately 19.4 million shares (net of fractional shares) of the Company’s common stock, pursuant to the terms of the Certificate of Designation governing the Series A Preferred Stock.

Fortive issued cash in lieu of fractional shares of common stock in the conversion.

These payments were recorded as a reduction to additional paid-in capital.

The impact of the MCPS calculated under the if-converted method was anti-dilutive for the periods in 2021 prior to conversion.

We declared and paid cash dividends on our MCPS during the periods presented as follows:

Preferred Share Amount

($ in millions)

First quarter $ 12.50 $ 17.3

Second quarter 12.50 17.2

Third quarter — —

Fourth quarter — —

Total $ 25.00 $ 34.5

During the years ended December 31, 2024, 2023, and 2022, respectively, the Company purchased 12 million, 4 million, and 7 million shares of its common stock at an average share price of $ 73.93 and $ 68.20 , and $ 63.25 .

Our common stock repurchases in excess of issuances are subject to a 1% excise tax enacted by the Inflation Reduction Act.

Any excise tax incurred is recorded as part of the cost basis of the shares acquired within Common stock repurchases in the consolidated statement of equity.

The payment of the excise tax is recorded within Repurchase of common shares in the consolidated statement of cash flows.

Net Earnings Per Share

Basic net earnings per share (“EPS”) is calculated by dividing net earnings attributable to common stockholders by the weighted average number of shares of common stock outstanding for the applicable period.

Basic net earnings per share (“EPS”) is calculated by dividing net earnings by the weighted average number of shares of common stock outstanding for the applicable period.

Diluted EPS is similarly calculated, except that the calculation includes the dilutive effect of the assumed conversion of 0.875 % Convertible Notes and associated issuance of shares under the if-converted method, while outstanding in 2022, and the assumed issuance of shares under stock-based compensation plans under the treasury stock method, except where the inclusion of such shares would have an anti-dilutive impact.

For the years ended December 31, 2024, 2023, and 2022, the anti-dilutive options to purchase shares excluded from the diluted EPS calculation were 1.2 million shares, 0.5 million shares, and 7.3 million shares, respectively.

As described in Note 10, upon conversion of the Convertible Notes, holders were entitled to receive cash, shares of our common stock, or a combination thereof, at our election.

Prior to our adoption of ASU 2020-06 on January 1, 2022, we accounted for the conversion feature under the treasury stock method in our calculation of EPS since we intended and had the ability to settle such conversions through cash up to the principal amount of the Convertible Notes and, if applicable, through shares of our common stock for conversion value, if any, in excess of the principal amount of the Convertible Notes.

Because the fair value of our common stock was below the conversion price, the Convertible Notes had no impact on our earnings per share for the year ended December 31, 2021.

Upon adopting ASU 2020-06, we accounted for the Convertible Notes under the if-converted method in our calculation of diluted EPS, as required under the new guidance.

Information related to the calculation of net earnings per share of common stock is summarized as follows ($ and shares in millions, except per share amounts):

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2024 2023 2022

Net earnings from continuing operations $ 865.8 $ 755.2 $ 614.2

Mandatory convertible preferred stock cumulative dividends — — ( 34.5 )

Net earnings attributable to common stockholders from continuing operations used in basic earnings per share $ 865.8 $ 755.2 $ 579.7

$ 832.9 $ 865.8 $ 755.2

Convertible note interest add-back (“if-converted” method) — — 1.8

Net earnings attributable to common stockholders from continuing operations and assumed conversions used in diluted earnings per share $ 865.8 $ 757.0 $ 579.7

Diluted Net earnings

$ 832.9 $ 865.8 $ 757.0

Weighted average common shares outstanding used in basic earnings per share 349.2 352.5 356.4

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Weighted average common shares outstanding used in diluted earnings per share 352.8 355.6 360.8

Net earnings from continuing operations per common share - Basic $ 2.46 $ 2.12 $ 1.66

Net earnings from continuing operations per common share - Diluted $ 2.43 $ 2.10 $ 1.65

Net earnings per common share - Basic

$ 2.39 $ 2.46 $ 2.12

Net earnings per common share - Diluted

$ 2.36 $ 2.43 $ 2.10

SEGMENT INFORMATION

We report our results in three separate business segments consisting of Intelligent Operating Solutions, Precision Technologies, and Advanced Healthcare Solutions.

Operating profit represents total revenues less operating expenses, excluding other income/expense, interest, and income taxes.

We determine our business segments based on the identification of segment managers and similarities in products, end markets, economic characteristics, technologies, and services, as well as the financial data utilized by the Company's chief executive officer.

The Company's chief operating decision maker ("CODM") is the chief executive officer.

The CODM uses gross profit and operating profit at the segment level to assess performance and allocate resources, including merger and acquisition targets.

The CODM also compares the actual results to expectations in assessing the performance of the segments.

Gross profit represents total revenue less total cost of sales.

Operating expenses generally include selling, general and administrative expenses, and research and development expenses.

Depreciation expense is allocated between Cost of sales and Selling, general, and administrative expenses.

Amortization expense is recorded within Selling, general, and administrative expenses.

Operating profit represents gross profit less operating expenses.

The identifiable assets by segment are those used in each segment’s operations.

Inter-segment amounts are not significant and are eliminated in the combined totals.

Amounts in the Other category consist of unallocated corporate costs and other costs not considered part of our evaluation of reportable segment operating performance.

Segment results are shown below ($ in millions):

Year Ended December 31

Unallocated costs and other costs are not considered part of our evaluation of reportable segment operating performance.

On January 1, 2024, we realigned Invetech from the AHS segment to the PT segment.

Prior period segment amounts have been recast to conform to the revised segment presentation.

Refer to Note 1 for further information on the realignment.

Segment results for the year ended December 31, 2024 are shown below ($ in millions):

Intelligent Operating Solutions

Precision Technologies

Advanced Healthcare Solutions

Unallocated Corporate Costs and Other

$ 6,231.8 $ 2,714.7 $ 2,229.4 $ 1,287.7 $ —

Cost of sales

( 2,500.8 ) ( 888.6 ) ( 1,073.3 ) ( 538.9 ) —

3,731.0 1,826.1 1,156.1 748.8 —

Operating expenses

( 2,587.5 ) ( 1,121.5 ) ( 719.2 ) ( 593.2 ) ( 153.6 )

Gain on sale of property (a)

63.1 — 63.1 — —

Operating profit (loss)

1,206.6 704.6 500.0 155.6 ( 153.6 )

Non-operating income (expense), net

Interest expense, net

( 152.8 ) — — — ( 152.8 )

Loss from divestiture (a)

( 25.6 ) — — — ( 25.6 )

Other non-operating expense, net

( 58.6 ) — — — ( 58.6 )

Earnings before income taxes

$ 969.6 $ 704.6 $ 500.0 $ 155.6 $ ( 390.6 )

Depreciation and amortization expenses

$ ( 543.9 ) $ ( 228.8 ) $ ( 113.0 ) $ ( 201.2 ) $ ( 0.9 )

Capital expenditure

$ ( 120.4 ) $ ( 67.6 ) $ ( 34.3 ) $ ( 15.6 ) $ ( 2.9 )

(a) Refer to Note 4 and Note 3, respectively, for further detail on Gain on sale of property, and Loss from divestiture.

Segment results for the year ended December 31, 2023 are shown below ($ in millions):

Intelligent Operating Solutions

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Advanced Healthcare Solutions

Total $ 6,065.3 $ 5,825.7 $ 5,254.7

Operating Profit:

Unallocated Corporate Costs and Other

$ 6,065.3 $ 2,612.2 $ 2,223.7 $ 1,229.4 $ —

Cost of sales

( 2,471.2 ) ( 875.1 ) ( 1,064.7 ) ( 531.4 ) —

3,594.1 1,737.1 1,159.0 698.0 —

Operating expenses

( 2,460.4 ) ( 1,108.3 ) ( 614.8 ) ( 596.4 ) ( 140.9 )

Operating profit (loss)

1,133.7 628.8 544.2 101.6 ( 140.9 )

Non-operating income (expense), net

Interest expense, net

( 123.5 ) — — — ( 123.5 )

Other non-operating expense, net

( 19.4 ) — — — ( 19.4 )

Earnings before income taxes

$ 990.8 $ 628.8 $ 544.2 $ 101.6 $ ( 283.8 )

Depreciation and amortization expenses

$ ( 456.8 ) $ ( 219.4 ) $ ( 30.8 ) $ ( 202.6 ) $ ( 4.0 )

Capital expenditure

$ ( 107.8 ) $ ( 55.7 ) $ ( 29.1 ) $ ( 17.7 ) $ ( 5.3 )

Segment results for the year ended December 31, 2022 are shown below ($ in millions):

Intelligent Operating Solutions

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Advanced Healthcare Solutions

Other ( 140.9 ) ( 113.3 ) ( 105.6 )

Unallocated Corporate Costs and Other

$ 5,825.7 $ 2,466.1 $ 2,152.3 $ 1,207.3 $ —

Cost of sales

( 2,462.3 ) ( 863.5 ) ( 1,066.9 ) ( 531.9 ) —

3,363.4 1,602.6 1,085.4 675.4 —

Operating expenses

( 2,358.1 ) ( 1,083.2 ) ( 581.8 ) ( 579.8 ) ( 113.3 )

Russia exit and wind down costs (a)

Total $ 1,133.7 $ 987.4 $ 812.8

( 17.9 ) — — — ( 17.9 )

Operating profit (loss)

987.4 519.4 503.6 95.6 ( 131.2 )

Non-operating income (expense), net

Interest expense, net

( 98.3 ) — — — ( 98.3 )

Other non-operating expense, net

( 15.6 ) — — — ( 15.6 )

Earnings before income taxes

$ 873.5 $ 519.4 $ 503.6 $ 95.6 $ ( 245.1 )

Depreciation and amortization expenses

$ ( 465.6 ) $ ( 218.3 ) $ ( 38.3 ) $ ( 205.2 ) $ ( 3.8 )

Capital expenditure

$ ( 95.8 ) $ ( 36.7 ) $ ( 30.8 ) $ ( 15.8 ) $ ( 12.5 )

(a) Refer to Note 1 for further detail on Russia exit and wind down costs.

Segment Assets:

As of December 31,

($ in millions) 2024 2023

Intelligent Operating Solutions $ 6,320.1 $ 6,550.0

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Total segment assets 16,020.6 14,826.0

Other 2,085.8 825.7 964.6

995.5 2,085.8

Total assets $ 17,016.1 $ 16,911.8

Depreciation and amortization:

Intelligent Operating Solutions $ 219.4 $ 218.3 $ 187.8

Precision Technologies 29.8 37.7 41.6

Advanced Healthcare Solutions 203.6 205.8 161.7

Other 4.0 3.8 4.4

Total $ 456.8 $ 465.6 $ 395.5

Capital expenditures, gross:

Intelligent Operating Solutions $ 55.7 $ 36.7 $ 16.7

Precision Technologies 28.3 29.6 21.4

Advanced Healthcare Solutions 18.5 17.0 6.4

Other 5.3 12.5 5.5

Total $ 107.8 $ 95.8 $ 50.0

(a) Refer to Note 1 for further detail on Russia exit and wind down costs.

(a) Other represents corporate assets which consist primarily of cash, property, plant, and equipment, and net deferred income tax assets.

Operations in Geographic Areas:

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United States $ 338.8 $ 369.0

Switzerland 14.3 20.5

All other (each country individually less than 5% of total property, plant and equipment, net) 56.5 98.3

Total $ 433.1 $ 439.8

RELATED-PARTY TRANSACTIONS

All transactions with related parties are executed in the ordinary course of business.

Beginning during the third quarter of 2022, CommonSpirit Health met the criteria for recognition as a related party due to CommonSpirit’s chief executive officer’s participation on Fortive’s Board of Directors.

We entered into transactions in the ordinary course of business with CommonSpirit Health and made sales of approximately $ 12.6 million and $ 10.6 million in 2023 and 2022, respectively.

We enter into transactions in the ordinary course of business with Danaher.

During 2021, we had two board members on both our Board of Directors and Danaher’s Board of Directors, which resulted in Danaher meeting the criteria for recognition as a related party.

During 2022, Danaher no longer met the criteria for recognition of a related party.

In 2021, we made sales of approximately $ 13 million to Danaher, and purchases of approximately $ 14 million.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

1 unchanged sentence

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 8. Financial Statements and Supplementary Data