Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Report of Management on Fortive Corporation’s Internal Control Over Financial Reporting

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Securities Exchange Act of 1934.

The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2023. In making this assessment, the Company’s management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in “Internal Control-Integrated Framework” (2013 framework). Based on this assessment, management concluded that, as of December 31, 2023, 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’s independent registered public accounting firm has issued an audit report on the effectiveness of the Company’s internal control over financial reporting. This report dated February 27, 2024 appears on page 48 of this Form 10-K.

Table of Contents

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Fortive Corporation

Opinion on Internal Control Over Financial Reporting

We have audited Fortive Corporation and subsidiaries’ internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), (the COSO criteria). In our opinion, Fortive Corporation and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated statements of earnings, comprehensive income, changes in equity and cash flows for each of the three years in the period ended December 31, 2023, and the related notes and financial statement schedule listed in the Index at Item 15(a)(2) and our report dated February 27, 2024 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Report of Management on Fortive Corporation’s Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. 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.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

Seattle, Washington

February 27, 2024

Table of Contents

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Fortive Corporation

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Fortive Corporation and subsidiaries (the Company) as of December 31, 2023 and 2022, the related consolidated statements of earnings, comprehensive income, changes in equity and cash flows for each of the three years in the period ended December 31, 2023, and the related notes and financial statement schedule listed in the Index at Item 15(a)(2) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 27, 2024 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. 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.

Table of Contents

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.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2015.

Seattle, Washington

February 27, 2024

Table of Contents

FORTIVE CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

($ and shares in millions, except per share amounts)

			As of December 31
			2023						2022
ASSETS
Current assets:
Cash and equivalents			$	1,888.8					$	709.2
Accounts receivable less allowance for doubtful accounts of $39.2 and $43.9, respectively			960.8						958.5
Inventories			536.9						536.7
Prepaid expenses and other current assets			285.1						272.6
Total current assets			3,671.6						2,477.0
Property, plant and equipment, net			439.8						421.9
Other assets			518.9						455.8
Goodwill			9,121.7						9,048.5
Other intangible assets, net			3,159.8						3,487.4
Total assets			$	16,911.8					$	15,890.6
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt			$	—					$	999.7
Trade accounts payable			608.6						623.0
Accrued expenses and other current liabilities			1,182.7						1,104.4
Total current liabilities			1,791.3						2,727.1
Other long-term liabilities			1,149.0						1,223.3
Long-term debt			3,646.2						2,251.6
Commitments and Contingencies (Note 14)
Equity:
Common stock: $0.01 par value, 2.0 billion shares authorized; 363.7 and 361.5 issued; 350.7 and 352.9 outstanding; respectively			3.6						3.6
Additional paid-in capital			3,851.3						3,706.3
Treasury shares, at cost			(715.8)						(442.9)
Retained earnings			7,505.9						6,742.1
Accumulated other comprehensive loss			(326.1)						(325.7)
Total Fortive stockholders’ equity			10,318.9						9,683.4
Noncontrolling interests			6.4						5.2
Total stockholders’ equity			10,325.3						9,688.6
Total liabilities and equity			$	16,911.8					$	15,890.6

See the accompanying Notes to the Consolidated Financial Statements.

Table of Contents

FORTIVE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

($ and shares in millions, except per share amounts)

			Year Ended December 31
			2023						2022						2021
Sales of products and software			$	5,137.7					$	4,920.1					$	4,496.1
Sales of services			927.6						905.6						758.6
Total sales			6,065.3						5,825.7						5,254.7
Cost of product and software sales			(1,981.8)						(1,994.8)						(1,833.4)
Cost of service sales			(489.4)						(467.5)						(414.2)
Total cost of sales			(2,471.2)						(2,462.3)						(2,247.6)
Gross profit			3,594.1						3,363.4						3,007.1
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)
Russia exit and wind down costs			—						(17.9)						—
Operating profit			1,133.7						987.4						812.8
Non-operating income (expense), net:
Interest expense, net			(123.5)						(98.3)						(103.2)
Loss on extinguishment of debt			—						—						(104.9)
Gain on investment in Vontier Corporation			—						—						57.0
Gain on litigation resolution			—						—						29.9
Other non-operating expenses, net			(19.4)						(15.6)						(14.1)
Earnings from continuing operations before income taxes			990.8						873.5						677.5
Income taxes			(125.0)						(118.3)						(63.3)
Net earnings from continuing operations			865.8						755.2						614.2
Earnings (loss) from discontinued operations, net of income taxes			—						—						(5.8)
Net earnings			865.8						755.2						608.4
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:
Basic			$	2.46					$	2.12					$	1.64
Diluted			$	2.43					$	2.10					$	1.63
Average common stock and common equivalent shares outstanding:
Basic			352.5						356.4						349.0
Diluted			355.6						360.8						352.3

See the accompanying Notes to the Consolidated Financial Statements.

Table of Contents

FORTIVE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

($ in millions)

			Year Ended December 31
			2023						2022						2021
Net earnings			$	865.8					$	755.2					$	608.4
Other comprehensive income (loss), net of income taxes:
Foreign currency translation adjustments			9.7						(178.7)						(68.7)
Pension and post-retirement plan benefit adjustments			(10.1)						38.0						24.8
Total other comprehensive income (loss), net of income taxes			(0.4)						(140.7)						(43.9)
Comprehensive income			$	865.4					$	614.5					$	564.5

See the accompanying Notes to the Consolidated Financial Statements.

Table of Contents

FORTIVE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

($ and shares in millions)

			Preferred Stock												Common Stock												Additional Paid-In Capital						Treasury Shares						Retained Earnings						Accumulated Other Comprehensive Loss						Noncontrolling Interests
			Shares						Amount			Shares Outstanding						Amount
Balance, December 31, 2020			1.4						$	—					339.0						$	3.4					$	3,554.5					$	—					$	5,547.4					$	(141.1)					$	8.5
Net earnings for the period			—						—						—						—						—						—						608.4						—						—
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						—						—						—						—						—
Other comprehensive income (loss)			—						—						—						—						—						—						—						(43.9)						—
Common stock-based award activity			—						—						0.7						—						134.5						—						—						—						—
Shares withheld for taxes			—						—						—						—						(16.8)						—						—						—						—
Early extinguishment of 0.00875 senior convertible notes due 2022																											(11.6)
Vontier Separation and other			—						—						—						—						8.6						—						—						—						—
Change in noncontrolling interests			—						—						—						—						0.8						—						—						—						(3.7)
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			—						—						—						—						—						—						(99.5)						—						—
Other comprehensive income (loss)			—						—						—						—						—						—						—						(140.7)						—
Common stock-based award activity			—						—						1.0						—						115.2						—						—						—						—
Common stock repurchases			—						—						(7.0)						—						—						(442.9)						—						—						—
Shares withheld for taxes			—						—						(0.2)						—						(13.2)						—						—						—						—
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
Net earnings for the period			—						—						—						—						—						—						865.8						—						—
Dividends to common shareholders			—						—						—						—						—						—						(102.0)						—						—
Other comprehensive income (loss)			—						—						—						—						—						—						—						(0.4)						—
Common stock-based award activity			—						—						2.3						—						176.8						—						—						—						—
Common stock repurchases			—						—						(4.0)						—						—						(272.9)						—						—						—
Shares withheld for taxes			—						—						(0.5)						—						(31.8)						—						—						—						—
Change in noncontrolling interests			—						—						—						—						—						—						—						—						1.2
Balance, December 31, 2023			—						$	—					350.7						$	3.6					$	3,851.3					$	(715.8)					$	7,505.9					$	(326.1)					$	6.4

See the accompanying Notes to the Consolidated Financial Statements.

Table of Contents

FORTIVE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

($ in millions)

			Year Ended December 31
			2023						2022						2021
Cash flows from operating activities:
Net earnings from continuing operations			$	865.8					$	755.2					$	614.2
Noncash items:
Amortization			370.4						382.1						320.8
Depreciation			86.4						83.5						74.7
Stock-based compensation expense			113.3						93.8						77.4
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 deferred income taxes			(104.1)						(62.1)						(41.0)
Change in accounts receivable, net			9.8						(52.1)						(84.1)
Change in inventories			(1.7)						(40.3)						(53.6)
Change in trade accounts payable			(16.8)						81.3						73.4
Change in prepaid expenses and other assets			(69.0)						10.7						(34.5)
Change in accrued expenses and other liabilities			99.5						41.9						28.3
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			1,353.6						1,303.2						961.1
Cash flows from investing activities:
Cash paid for acquisitions, net of cash received			(95.8)						(12.8)						(2,570.1)
Payments for additions to property, plant and equipment			(107.8)						(95.8)						(50.0)
Proceeds from sale of property			7.4						—						4.5
Proceeds from sale of business			—						9.6						—
All other investing activities			0.8						(3.5)						—
Net cash used in investing activities			(195.4)						(102.5)						(2,615.6)
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			839.9						38.5						364.9
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			(272.9)						(442.9)						—
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)
All other financing activities			18.0						(6.7)						30.6
Net cash provided by (used in) financing activities			32.3						(1,273.0)						652.0
Effect of exchange rate changes on cash and equivalents			(10.9)						(37.8)						(3.0)
Net change in cash and equivalents			1,179.6						(110.1)						(1,005.5)
Beginning balance of cash and equivalents			709.2						819.3						1,824.8
Ending balance of cash and equivalents			$	1,888.8					$	709.2					$	819.3

See the accompanying Notes to the Consolidated Financial Statements.

Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. BUSINESS OVERVIEW AND BASIS FOR PRESENTATION

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

Basis of Presentation

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. All intercompany balances and transactions have been eliminated upon consolidation. The consolidated financial statements also reflect the impact of noncontrolling interests. Noncontrolling interests do not have a significant impact on our consolidated results of operations; therefore, net earnings and net earnings per share attributable to noncontrolling interests are not presented separately in our Consolidated Statements of Earnings. 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.

Russian Invasion of Ukraine

In February 2022, Russian forces invaded Ukraine resulting in broad economic sanctions being imposed on Russia. In the second quarter of 2022, the Company exited business operations in Russia, other than for ASP’s sterilization products, which are exempt from international sanctions as humanitarian products.

During the year ended December 31, 2022, the Company recorded pre-tax charges of $17.9 million, primarily relating to the write-off of net assets, the cumulative translation adjustment in earnings for legal entities deemed substantially liquidated, and to record provisions for employee severance and legal contingencies. These costs are identified as the “Russia exit and wind down costs” in the Consolidated Statements of Earnings. 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. 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 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

Table of Contents

and operating rooms are working at peak performance, and complex procedures are followed accurately in these mission-critical healthcare environments.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates—The preparation of financial statements in conformity with GAAP requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We base these estimates on historical experience, the current economic environment, and on various other assumptions that are believed to be reasonable under the circumstances. However, uncertainties associated with these estimates exist and actual results may differ from these estimates.

Cash and Equivalents—We consider all highly liquid investments with a maturity of three months or less at the date of purchase to be cash equivalents.

Accounts Receivable and Allowances for Doubtful Accounts—We measure our allowance to reflect expected credit losses over the remaining contractual life of the asset. Expected credit losses for the pooled assets are estimated based on historical loss experience, credit quality, the durations of outstanding account receivables, and expectations of the future economic environment. Expected credit losses of the assets originating during the year and changes to expected losses in the same period are recognized in earnings.

All trade accounts and unbilled receivables are recorded within the Consolidated Balance Sheet, adjusted for any write-offs, and net of allowances for credit losses. We regularly perform detailed reviews of our portfolios to evaluate the collectability of receivables based on a combination of past, current, and future financial and qualitative factors that may affect customers’ ability to pay. In circumstances where we are aware of a specific customer’s inability to meet its financial obligations, a specific reserve is recorded against amounts due to reduce the recognized receivable to the amount reasonably expected to be collected. Amounts determined to be uncollectible are charged directly against the allowances, while amounts recovered on previously written-off accounts increase the allowances.

The allowance for doubtful accounts as well as the provision for credit losses, write-off activity and recoveries for the periods presented were immaterial. We do not believe that accounts receivable represent significant concentrations of credit risk because of the diversified portfolio of individual customers and geographical areas.

The allowance for unbilled receivables was immaterial for all periods.

Inventory Valuation—Inventories include the costs of material, labor, and overhead. Substantially all inventories are stated at the lower of cost or net realizable value using the first-in, first-out (“FIFO”) method.

Property, Plant, and Equipment—Property, plant, and equipment are carried at cost. The provision for depreciation has been computed principally by the straight-line method based on the estimated useful lives of the depreciable assets as follows:

Category						Useful Life
Buildings						30 years
Leased assets and leasehold improvements						Amortized over the lesser of the economic life of the asset or the term of the lease
Machinery, equipment and other						3 – 10 years

Estimated useful lives are periodically reviewed and, when appropriate, changes to estimates are made prospectively.

Investments—We account for our equity investments using either the measurement alternative approach when the fair value of the investment is not readily determinable and we do not have the ability to exercise significant influence, or the equity method of accounting when it is determined that we have significant influence over but do not have a controlling financial interest. Investments accounted for using the measurement alternative approach are initially recorded at cost and adjusted for changes in the fair value from observable transactions. For investments accounted for using the equity method of accounting, we record the investments at cost and subsequently adjust the investment balance each period for our share of the investee’s income or loss and dividends received from the investee. 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. The loss was recorded within “Other non-operating expense, net” in our Consolidated Statement of Earnings.

Table of Contents

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

Fair Value of Financial Instruments—Our financial instruments consist primarily of cash and cash equivalents, accounts receivable, nonqualified deferred compensation plans, obligations under trade accounts payable, and short and long-term debt. 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 7 for the fair values of our other obligations.

Goodwill and Other Intangible Assets—Goodwill and other intangible assets result from our business acquisitions. In accordance with accounting standards related to business combinations, goodwill and indefinite-lived intangible assets are not amortized; however, certain finite-lived identifiable intangible assets, primarily customer relationships and acquired technology, are amortized over their estimated useful lives. In-process research and development (“IPR&D”) is initially capitalized at fair value and when the IPR&D project is complete, the asset is considered a finite-lived intangible asset and amortized over its estimated useful life. If an IPR&D project is abandoned, an impairment loss equal to the value of the intangible asset is recorded in the period of abandonment. We review identified intangible assets for impairment whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable. 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.

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

Product sales include revenue from the sale of products and equipment, which includes our software and software as a service (“SaaS”) product offerings and equipment rentals.

Service sales include revenues from extended warranties, post-contract customer support (“PCS”), maintenance contracts or services, contract labor to perform ongoing service at a customer location, services related to previously sold products, and software implementation services.

For revenue related to a product or service to qualify for recognition, we must have an enforceable contract with a customer that defines the goods or services to be transferred and the payment terms related to those goods or services. Further, collection of substantially all consideration for the goods or services transferred must be probable based on the customer’s intent and ability to pay the promised consideration. We apply judgment in determining the customer’s ability and intention to pay, which is based on a combination of financial and qualitative factors, including the customer’s financial condition, collateral, debt-servicing ability, past payment experience, and credit bureau information.

Customer allowances and rebates, consisting primarily of volume discounts and other short-term incentive programs, are considered in determining the transaction price for the contract. 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.

Most of our sales contracts contain standard terms and conditions. We evaluate contracts to identify distinct goods and services promised in the contract (performance obligations). Sometimes this evaluation involves judgment to determine whether the goods or services are highly dependent on or highly interrelated with one another, or whether such goods or services significantly modify or customize one another. Certain customer arrangements include multiple performance obligations, typically hardware, software, SaaS, implementation/installation, training, consulting, other services, and/or PCS. Generally, these elements are delivered within the same reporting period, except SaaS, PCS, and other services. We allocate the contract transaction price to each performance obligation on a relative standalone selling price basis. We estimate standalone selling price using the observable price that the good or service sells for separately in similar circumstances and to similar customers or, if observable price is not available, other methods. Allocating the transaction price to each performance obligation sometimes requires significant judgment.

Revenue from sales of hardware is recognized when control transfers to the customer, which is generally when the product is shipped. If any significant obligation to the customer with respect to a sales transaction remains to be fulfilled following shipment (typically installation, other services noted above, or acceptance by the customer), revenue recognition is deferred until such obligations have been fulfilled. Further, revenue related to separately priced extended warranty and product maintenance agreements is deferred when appropriate and recognized as revenue over the term of the agreement.

Table of Contents

Shipping and Handling—Shipping and handling costs are included as a component of Cost of sales in the Consolidated Statements of Earnings. Revenue derived from shipping and handling costs billed to customers is included in Sales of products in the Consolidated Statements of Earnings.

Advertising—Advertising costs are expensed as incurred.

Research and Development—We conduct research and development activities for the purpose of developing new products, enhancing the functionality, effectiveness, ease of use, and reliability of our existing products, and expanding the applications for which uses of our products are appropriate. Research and development costs are expensed as incurred.

Restructuring—We periodically initiate restructuring activities to appropriately position our cost base relative to prevailing economic conditions and associated customer demand, as well as in connection with certain acquisitions. Costs associated with restructuring actions can include one-time termination benefits and related charges, in addition to facility closure, contract termination, and other related activities. 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. 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. 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.

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. Assets and liabilities of subsidiaries operating outside the United States with a functional currency other than U.S. dollars are translated into U.S. dollars using year-end exchange rates and income statement accounts are translated at weighted average exchange rates. These foreign currency translation impacts are reflected as a component of accumulated other comprehensive income (loss) (“AOCI”) within Stockholders’ equity. As discussed below, the Company uses its foreign currency-denominated debt to partially hedge its net investments in foreign operations against adverse movements in exchange rates.

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. Refer to Note 15 for additional information.

Income Taxes—In accordance with GAAP, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted rates expected to be in effect during the year in which the differences reverse. Deferred tax assets generally represent items that can be used as a tax deduction or credit in our tax return in future years for which the tax benefit has already been reflected on our Consolidated Statements of Earnings. Deferred tax liabilities generally represent items that have already been taken as a deduction on our tax return but have not yet been recognized as an expense in our Consolidated Statements of Earnings. The effect on deferred tax assets and liabilities due to a change in tax rates is recognized in income tax expense in the period that includes the enactment date.

Our deferred tax assets are reduced by a valuation allowance if, based on the weight of available evidence, it is more likely than not (a likelihood of more than 50 percent) that some portion or all of the deferred tax assets will not be realized. We evaluate the realizability of deferred income tax assets for each of the jurisdictions in which we operate. If we experience cumulative pretax income in a particular jurisdiction in the three-year period including the current and prior two years, we normally conclude that the deferred income tax assets will more likely than not be realizable and no valuation allowance is recognized, unless known or planned operating developments would lead management to conclude otherwise. However, if we experience cumulative pretax losses in a particular jurisdiction in the three-year period including the current and prior two years, we then consider a series of factors in the determination of whether the deferred income tax assets can be realized. 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

Table of Contents

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.

We recognize tax benefits from uncertain tax positions only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such positions are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. Judgment is required in evaluating tax positions and determining income tax provisions. We reevaluate the technical merits of our tax positions and may recognize an uncertain tax benefit in certain circumstances, including when: (1) a tax audit is completed; (2) applicable tax laws change, including a tax case ruling or legislative guidance; or (3) the applicable statute of limitations expires. We recognize potential accrued interest and penalties associated with unrecognized tax positions in income tax expense. Refer to Note 13 for additional information.

Accumulated Other Comprehensive Income (Loss)—AOCI refers to certain gains and losses that under U.S. GAAP are included in comprehensive income (loss) but are excluded from net earnings as these amounts are initially recorded as an adjustment to stockholders’ equity. Foreign currency translation adjustments are generally not adjusted for income taxes as they relate to indefinite investments in non-U.S. 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. 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.

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

Table of Contents

The changes in AOCI by component are summarized below ($ in millions):

			Foreign currency translation adjustments						Pension & post- retirement plan benefit adjustments (b)						Total
Balance, December 31, 2020			$	(54.0)					$	(87.1)					$	(141.1)
Other comprehensive income (loss) before reclassifications:
Increase (decrease)			(68.7)						27.7						(41.0)
Income tax impact			—						(6.2)						(6.2)
Other comprehensive income (loss) before reclassifications, net of income taxes			(68.7)						21.5						(47.2)
Amounts reclassified from AOCI into income:
Increase (decrease)			—						4.3			(a)			4.3
Income tax impact			—						(1.0)						(1.0)
Amounts reclassified from AOCI into income, net of income taxes:			—						3.3						3.3
Net current period other comprehensive income (loss):			(68.7)						24.8						(43.9)
Balance, December 31, 2021			$	(122.7)					$	(62.3)					$	(185.0)
Other comprehensive income (loss) before reclassifications:
Increase (decrease)			(181.4)						47.6						(133.8)
Income tax impact			—						(10.3)						(10.3)
Other comprehensive income (loss) before reclassifications, net of income taxes			(181.4)						37.3						(144.1)
Amounts reclassified from AOCI into income:
Increase (decrease)			2.7						0.9			(a)			3.6
Income tax impact			—						(0.2)						(0.2)
Amounts reclassified from AOCI into income, net of income taxes			2.7						0.7						3.4
Net current period other comprehensive income (loss)			(178.7)						38.0						(140.7)
Balance, December 31, 2022			$	(301.4)					$	(24.3)					$	(325.7)
Other comprehensive income (loss) before reclassifications:
Increase (decrease)			9.7						(13.9)						(4.2)
Income tax impact			—						3.8						3.8
Other comprehensive income (loss) before reclassifications, net of income taxes			9.7						(10.1)						(0.4)
Amounts reclassified from AOCI into income:
Increase (decrease)			—						0.1			(a)			0.1
Income tax impact			—						(0.1)						(0.1)
Amounts reclassified from AOCI into income, net of income taxes			—						—						—
Net current period other comprehensive income (loss)			9.7						(10.1)						(0.4)
Balance, December 31, 2023			$	(291.7)					$	(34.4)					$	(326.1)
(a) This component of AOCI is included in the computation of net periodic pension cost (refer to Note 11).
(b) Includes balances relating to defined benefit plans, supplemental executive retirement plans, and other postretirement employee benefit plans.

Pension—We measure our pension assets and obligations to determine the funded status as of December 31st each year, and recognize an asset for an overfunded status or a liability for an underfunded status in our Consolidated Balance Sheets. Changes in the funded status of the pension plans are recognized in the year in which the changes occur and are recorded within Other comprehensive income (loss). 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. Refer to Note 11 for additional information on our pension plans including a discussion of actuarial assumptions.

Table of Contents

Recently Issued Accounting Standard

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 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.

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. 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.

NOTE 3. ACQUISITIONS AND DIVESTITURES

We continually evaluate potential mergers and acquisitions that align with our business portfolio strategy. We have completed a number of acquisitions that have been accounted for as purchases of businesses and resulted in the recognition of goodwill in our financial statements. This goodwill arises when the purchase price for an acquired business exceeds its identifiable assets, net of liabilities. 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.

Acquisitions

The following describes our significant acquisition activities for the years ended December 31, 2023, 2022, and 2021.

2023

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. The 2023 acquisitions are intended to accelerate our strategy and strengthen our product portfolio, providing world-class solutions to our customers. We recorded approximately $56.7 million of goodwill related to the acquisitions, which is not tax deductible, as well as $41.5 million of intangible assets, primarily consisting of customer relationships, technology, and trade names. 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.

2021

Provation

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.

Table of Contents

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.

Divestitures

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. As a result of the sale, during the year ended December 31, 2022, we recorded a net realized pre-tax gain totaling $0.5 million, net of transaction costs, which was recorded within “Other non-operating expense, net” in the Consolidated Statements of Earnings. 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

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 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.

NOTE 4. INVENTORIES

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

			2023						2022
Finished goods			$	214.1					$	215.3
Work in process			108.9						96.4
Raw materials			213.9						225.0
Total			$	536.9					$	536.7

Table of Contents

NOTE 5. PROPERTY, PLANT AND EQUIPMENT

The classes of property, plant and equipment as of December 31 are summarized as follows ($ in millions):

			2023						2022
Land and improvements			$	54.4					$	54.3
Buildings and leasehold improvements			317.2						312.3
Machinery, equipment and other			877.2						809.8
Gross property, plant and equipment			1,248.8						1,176.4
Less: accumulated depreciation			(809.0)						(754.5)
Property, plant and equipment, net			$	439.8					$	421.9

NOTE 6. GOODWILL AND OTHER INTANGIBLE ASSETS

As discussed in Note 3, goodwill arises from the purchase price for acquired businesses exceeding the fair value of tangible and intangible assets acquired, less assumed liabilities. We assess the goodwill of each of our reporting units for impairment at least annually as of the first day of the fourth quarter and as “triggering” events occur that indicate that it is more likely than not that an impairment exists. We performed both qualitative and quantitative impairment tests for reporting units, as determined to be appropriate.

We estimate the fair value of our reporting units primarily using a market approach, based on multiples of earnings before interest, taxes, depreciation, and amortization (“EBITDA”) determined by current trading market multiples of earnings for companies operating in businesses similar to each of our reporting units, in addition to recent market available sale transactions of comparable businesses. In certain circumstances we also evaluate other factors including results of the estimated fair value utilizing a discounted cash flow analysis (i.e., an income approach), market positions of the businesses, comparability of market sales transactions, and financial and operating performance in order to validate the results of the market approach. 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 assessed all “triggering” events subsequent to the performance of the 2023 annual impairment test and, as a result, have not identified any impacts to goodwill. The factors used by management in its impairment analysis are inherently subject to uncertainty. If actual results are not consistent with management’s estimates and assumptions, goodwill and other intangible assets may be overstated and a charge would need to be taken against net earnings.

Table of Contents

The following is a rollforward of our goodwill by segment ($ in millions):

			Intelligent Operating Solutions						Precision Technologies						Advanced Healthcare Solutions						Total
Balance, December 31, 2021			$	4,126.0					$	1,840.0					$	3,186.0					$	9,152.0
Measurement period adjustments for prior year acquisitions			(5.9)						—						3.7						(2.2)
Attributable to current year acquisitions and divestitures			—						0.9						(3.2)						(2.3)
Foreign currency translation and other			(45.7)						(30.7)						(22.6)						(99.0)
Balance, December 31, 2022			4,074.4						1,810.2						3,163.9						9,048.5
Attributable to current year acquisitions			56.7						—						—						56.7
Foreign currency translation and other			17.8						(0.6)						(0.7)						16.5
Balance, December 31, 2023			$	4,148.9					$	1,809.6					$	3,163.2					$	9,121.7

Finite-lived intangible assets are amortized over the shorter of their legal or estimated useful lives. The following summarizes the gross carrying value and accumulated amortization for each major category of intangible asset as of December 31 ($ in millions):

			2023												2022
			Gross Carrying Amount						Accumulated Amortization						Gross Carrying Amount						Accumulated Amortization
Finite-lived intangibles:
Patents and technology			$	1,139.6					$	(687.1)					$	1,127.3					$	(581.5)
Customer relationships and other intangibles			3,568.0						(1,573.2)						3,542.6						(1,317.2)
Trademarks and trade names			117.7						(19.8)						111.1						(11.4)
Total finite-lived intangibles			4,825.3						(2,280.1)						4,781.0						(1,910.1)
Indefinite-lived intangibles:
Trademarks and trade names			614.6						—						616.5						—
Total intangibles			$	5,439.9					$	(2,280.1)					$	5,397.5					$	(1,910.1)

Total intangible amortization expense in 2023, 2022, and 2021 was $370 million, $382 million and $321 million, respectively. Based on the intangible assets recorded as of December 31, 2023, amortization expense is estimated to be $373 million during 2024, $369 million during 2025, $353 million during 2026, $326 million during 2027, and $314 million during 2028.

We evaluated events or circumstances that may indicate the carrying value of our intangible assets may not be fully recoverable during the year ended December 31, 2023, and recorded no material impairments.

NOTE 7. FAIR VALUE MEASUREMENTS

Accounting standards define fair value based on an exit price model, establish a framework for measuring fair value for assets and liabilities required to be carried at fair value, and provide for certain disclosures related to the valuation methods used within the valuation hierarchy as established within the accounting standards. This hierarchy prioritizes the inputs into three broad levels as follows:

• Level 1 inputs are quoted prices (unadjusted) for identical assets or liabilities in active markets.

• Level 2 inputs are quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets in markets that are not active, or other observable characteristics for the asset or liability, including interest rates, yield curves and credit risks, or inputs that are derived principally from, or corroborated by, observable market data through correlation.

• Level 3 inputs are unobservable inputs based on our assumptions. A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

Table of Contents

Financial assets and liabilities that are measured at fair value on a recurring basis were as follows ($ in millions):

			Quoted Prices in Active Market (Level 1)						Significant Other Observable Inputs (Level 2)						Significant Unobservable Inputs (Level 3)						Total
December 31, 2023
Deferred compensation liabilities			—						39.9						—						39.9
December 31, 2022
Deferred compensation liabilities			—						31.5						—						31.5

Certain management employees participate in our nonqualified deferred compensation programs that permit such employees to defer a portion of their compensation, on a pretax basis, until after their termination of employment. All amounts deferred under such plans are unfunded, unsecured obligations and are recorded as a component of our compensation and other post-retirement benefits accruals within Other long-term liabilities in the accompanying Consolidated Balance Sheets. Participants may choose among alternative earning rates for the amounts they defer, which are primarily based on investment options within our defined contribution plans for the benefit of U.S. employees (“401(k) Programs”) (except that the earnings rates for amounts contributed unilaterally by the Company are entirely based on changes in the value of Fortive common stock). Changes in the deferred compensation liability under these programs are recognized based on changes in the fair value of the participants’ accounts and are recorded within Selling, general and administrative expenses in the Consolidated Statements of Earnings.

Non-recurring Fair Value Measurements

Certain non-financial and financial assets that are not required to be measured at fair value on a recurring basis and are reported at carrying value. However, these assets are required to be assessed for impairment whenever events or circumstances indicate that their carrying value may not be fully recoverable. Refer to Note 2 for additional information about these assets.

Fair Value of Other Financial Instruments

The carrying amounts and fair values of financial instruments as of December 31 were as follows ($ in millions):

			2023												2022
			Carrying Amount						Fair Value						Carrying Amount						Fair Value
Current portion of long-term debt			$	—					$	—					$	999.7					$	1,000.0
Long-term debt, net of current maturities			3,646.2						3,539.4						2,251.6						2,078.1

As of December 31, 2023 and 2022, the current portion of long-term debt and long-term debt, net of current maturities were categorized as Level 1.

The fair value of the long-term borrowings were based on quoted market prices. 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.

Table of Contents

NOTE 8. ACCRUED EXPENSES AND OTHER LIABILITIES

Accrued expenses and other liabilities as of December 31 were as follows ($ in millions):

			2023												2022
			Current						Long-term						Current						Long-term
Deferred revenue			$	544.6					$	45.8					$	509.6					$	38.0
Compensation and other post-retirement benefits			278.9						53.7						241.7						48.3
Taxes, income and other			129.8						809.0						132.5						893.5
Operating lease liabilities			37.6						126.3						38.4						131.0
Sales and product allowances			17.6						—						20.1						—
Warranty			19.4						1.4						20.0						1.6
Claims, including self-insurance and litigation			6.4						14.4						5.2						14.8
Pension obligations			4.6						88.7						4.4						77.9
Other			143.8						9.7						132.5						18.2
Total			$	1,182.7					$	1,149.0					$	1,104.4					$	1,223.3

Warranty

We generally accrue estimated warranty costs at the time of sale. In general, manufactured products are warranted against defects in material and workmanship when properly used for their intended purpose, installed correctly, and appropriately maintained. Warranty period terms depend on the nature of the product and range from 90 days up to the life of the product. The amount of the accrued warranty liability is determined based on historical information such as past experience, product failure rates or number of units repaired, estimated cost of material and labor, and, in certain instances, estimated property damage. 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.

NOTE 9. LEASES

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. We have operating leases for office space, warehouses, distribution centers, research and development facilities, manufacturing locations, and certain equipment, primarily automobiles. Many leases include optional terms, ranging from options to terminate the lease in less than one year to options to extend the lease for up to 20 years. We include optional periods as part of the lease term when we determine that we are reasonably certain to exercise the renewal option or we will not early terminate the lease. Reasonably certain is based on economic incentives and represents a high threshold. We have lease agreements with lease and non-lease components, and we have elected the practical expedient for all underlying asset classes to account for the lease and related non-lease component(s) as a single lease component.

Lease-related balances are recorded within the following three line items on the Consolidated Balance Sheet: (i) Other assets; (ii) Accrued expenses and Other current liabilities; and (iii) Other long-term liabilities.

Operating lease cost was $49 million, $56 million, and $60 million for the years ended December 31, 2023, 2022, and 2021, 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. Operating lease ROU assets obtained in exchange for operating lease liabilities were $31 million and $32 million for the years ended December 31, 2023 and 2022, respectively. Operating lease ROU assets were $155 million and $162 million as of December 31, 2023 and 2022, respectively. Operating lease liabilities were $164 million and $169 million as of December 31, 2023 and 2022.

Table of Contents

The following table presents the maturities of our operating lease liabilities as of December 31, 2023 ($ in millions):

2024			$	42.2
2025			35.9
2026			28.9
2027			22.1
2028			13.5
Thereafter			41.1
Total lease payments			183.7
Less: imputed interest			(19.8)
Total operating lease liabilities			$	163.9

As of December 31, 2023 and 2022, the weighted average lease term of our operating leases was 9 years and 7 years, respectively, and the weighted average discount rate of our operating leases was 3.6% and 3.0%, respectively. 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, 2023, we did not enter into operating leases for which the lease term had not yet commenced.

NOTE 10. FINANCING

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

			2023						2022
U.S. dollar-denominated commercial paper			$	1,251.2					$	405.0
Delayed-Draw Term Loan due 2024			550.0						—
Euro Term Loan due 2025			303.6						294.4
Yen Term Loan due 2025			102.1						109.8
3.15% senior unsecured notes due 2026			900.0						900.0
4.30% senior unsecured notes due 2046			550.0						550.0
Delayed-Draw Term Loan due 2023			—						1,000.0
Long-term debt, principal amounts			3,656.9						3,259.2
Less: aggregate unamortized debt discounts, premiums, and issuance costs			10.7						7.9
Long-term debt, carrying value			3,646.2						3,251.3
Less: current portion of long-term debt			—						999.7
Long-term debt, net of current maturities			$	3,646.2					$	2,251.6

Commercial Paper Programs

We periodically issue commercial paper under our U.S. dollar and Euro-denominated commercial paper programs (“Commercial Paper Programs”). Under these programs, we may issue unsecured promissory notes with maturities not exceeding 397 and 183 days, respectively.

Credit support for the Commercial Paper Programs is provided by a five-year $2.0 billion senior unsecured revolving credit facility that expires on October 18, 2027 (the “Revolving Credit Facility”). As of December 31, 2023, no borrowings were outstanding under the Revolving Credit Facility. Refer to the section below for further discussion on the Revolving Credit Facility.

The details of our Commercial Paper Programs as of December 31, 2023 were as follows ($ in millions):

			Carrying value (a)						Weighted average annual effective rate						Weighted average maturity (in days)
U.S. dollar-denominated commercial paper			$	1,246.8					5.7		%				40
(a) Net of unamortized debt discount.

Table of Contents

The availability of the Revolving Credit Facility as a standby liquidity facility to repay maturing commercial paper is an important factor in maintaining the Commercial Paper Programs’ credit ratings. We expect to limit any future borrowings under the Revolving Credit Facility to amounts that would leave sufficient credit available under the facility to allow us to borrow, if needed, to repay any outstanding commercial paper as it matures.

We classified our borrowings outstanding under the Commercial Paper Programs as of December 31, 2023 as long-term debt in the accompanying Consolidated Balance Sheets as we have the intent and ability, as supported by availability under the Revolving Credit Facility referenced above, to refinance these borrowings for at least one year from the balance sheet date.

Proceeds from borrowings under the commercial paper programs are typically available for general corporate purposes, including acquisitions.

Credit Facilities

Revolving Credit Facility

We have a five-year $2.0 billion Revolving Credit Facility that was last amended on October 18, 2022 (the “Amended and Restated Credit Agreement”), which extended the availability period of the Revolving Credit Facility to October 18, 2027 with an additional two one year extension options at our request and with the consent of the lenders. The Amended and Restated Credit Agreement also contains an option permitting us to request an increase in the amounts available under the Revolving Credit Facility of up to an aggregate additional $1.0 billion.

We are obligated to pay an annual facility fee for the Revolving Credit Facility of between 6.5 and 15 basis points varying according to our long-term debt credit rating. Borrowings under the new Revolving Credit Facility in U.S Dollars bear interest at a rate equal, at our option, to either (1) Term Secured Overnight Financing Rate (“Term SOFR”), plus a 10 basis points Credit Spread Adjustment (“CSA”) plus a margin of between 68.5 and 110.0 basis points, depending on our long-term debt credit rating or (2) 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 10 basis points depending on our long-term debt credit rating.

In addition, beginning with our 2023 performance relative to our annual greenhouse gas reduction targets, the interest rate on any borrowings can increase or decrease by 4.0 basis points and the facility fee can increase or decrease by 1.0 basis points, for a maximum impact of an increase or decrease of 5.0 basis points.

The Amended and Restated Credit Agreement requires us to maintain a consolidated net leverage ratio of debt to consolidated EBITDA (as defined in the Credit Agreement) of less than 3.5 to 1.0. The maximum consolidated net leverage ratio will be increased to 4.0 to 1.0 for the four consecutive full fiscal quarters immediately following the consummation of any acquisition by us in which the purchase price exceeds $250 million. The Amended and Restated Credit Agreement also contains customary representations, warranties, conditions precedent, events of default, indemnities, and affirmative and negative covenants.

As of December 31, 2023 and 2022, we were in compliance with all covenants under the Amended and Restated Credit Agreement.

Table of Contents

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. dollar. 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. 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.

Euro Term Loan

On June 21, 2022, we entered into a three-year €275 million senior unsecured term facility (“Euro Term Loan”). On June 28, 2022, we drew and converted the entire available balance under the facility, which yielded net proceeds of $290 million. The Euro Term Loan is due on June 23, 2025 and is pre-payable at our option. The Euro Term Loan bears interest at a rate of Euro Interbank Offered Rate (“Euribor”), plus 55 basis points; provided, however that the Euribor may not be less than zero for the Euro Term Loan.

Table of Contents

Yen Term Loan

On June 17, 2022, we entered into a three-year, ¥14.4 billion senior unsecured term facility (“Yen Term Loan”). On the same day, we drew and converted the entire available balance under the facility, which yielded net proceeds of $107 million. The Yen Term Loan is due on June 17, 2025 and is pre-payable at our option. The Yen Term Loan bears interest at a rate of Tokyo Term Risk Free Rate (“TORF”), plus 65 basis points; 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

As of December 31, 2023, we had outstanding the following senior notes, collectively the “Registered Notes”:

• $900 million aggregate principal amount of senior notes due June 15, 2026 issued at 99.644% of their principal amount and bearing interest at the rate of 3.15% per year.

• $350 million and $200 million aggregate principal amounts of senior notes due June 15, 2046 issued at 99.783% and 101.564%, respectively, of their principal amounts and bearing interest at the rate of 4.30% per year.

Interest on the Registered Notes is payable semi-annually in arrears on June 15 and December 15 of each year.

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

Table of Contents

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.

Registered Notes Series			Call Dates
3.15% senior unsecured notes due 2026			March 15, 2026
4.30% senior unsecured notes due 2046			December 15, 2045

If a change of control triggering event occurs, we will, in certain circumstances, be required to make an offer to repurchase the Registered Notes at a purchase price equal to 101% of the principal amount, plus accrued and unpaid interest. 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 Registered Notes indenture. Except in connection with a change of control triggering event, the Registered Notes do not have any credit rating downgrade triggers that would accelerate the maturity of the Registered Notes.

The Registered Notes contain customary covenants, including limits on the incurrence of certain secured debt and sale/leaseback transactions. None of these covenants are considered restrictive to our operations and as of December 31, 2023, 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:

			Term Loans						Registered Notes						Total
2024 (a)			$	550.0					$	—					$	550.0
2025			405.7						—						405.7
2026			—						900.0						900.0
2027			—						—						—
2028			—						—						—
Thereafter			—						550.0						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.

NOTE 11. RETIREMENT BENEFIT PLANS

Certain employees participate in noncontributory defined benefit pension plans. In general, our policy is to fund these plans based on considerations relating to legal requirements, underlying asset returns, the plan’s funded status, the anticipated deductibility of the contribution, local practices, market conditions, interest rates, and other factors. Our U.S. pension plans are frozen, and as such, there are no ongoing benefit accruals associated with the U.S. pension plans. The following describes our significant pension plans as of December 31, 2023 and 2022.

Table of Contents

The following sets forth the funded status of our plans and amounts recorded in Accumulated other comprehensive income (loss) as of the most recent actuarial valuations using measurement dates of December 31 ($ in millions):

			U.S. Pension Benefits												Non-U.S. Pension Benefits
			2023						2022						2023						2022
Change in pension benefit obligation:
Benefit obligation at beginning of year			$	33.1					$	46.4					$	230.7					$	340.8
Service cost			—						—						2.6						3.5
Interest cost			1.7						1.1						8.8						3.4
Employee contributions			—						—						1.4						1.3
Benefits paid and other plan costs			(2.1)						(2.2)						(11.4)						(10.1)
Actuarial loss (gain)			0.5						(12.2)						12.5						(81.0)
Amendments, settlements and curtailments			—						—						(1.8)						(4.6)
Plan acquisitions and other			—						—						(0.4)						1.4
Foreign exchange rate impact			—						—						11.0						(24.0)
Benefit obligation at end of year			33.2						33.1						253.4						230.7
Change in plan assets:
Fair value of plan assets at beginning of year			25.9						31.9						162.7						223.1
Actual return on plan assets			2.3						(5.7)						6.4						(40.2)
Employer contributions			1.4						1.9						10.9						10.7
Employee contributions			—						—						1.4						1.3
Amendments and settlements			—						—						(1.2)						(4.7)
Benefits paid and other plan costs			(2.0)						(2.2)						(11.4)						(10.1)
Plan acquisitions and other			—						—						(0.3)						(0.4)
Foreign exchange rate impact			—						—						8.3						(17.0)
Fair value of plan assets at end of year			27.6						25.9						176.8						162.7
Funded status			$	(5.6)					$	(7.2)					$	(76.6)					$	(68.0)

The difference between the accumulated benefit obligation and the projected benefit obligation as of December 31, 2023 and 2022 is immaterial.

			U.S. Pension Benefits												Non-U.S. Pension Benefits
			2023						2022						2023						2022
Amounts recorded in the Consolidated Balance Sheets as of December 31
Other assets			$	—					$	—					$	11.1					$	7.1
Accrued expenses and other current liabilities			(0.6)						(0.6)						(4.0)						(3.8)
Other long-term liabilities			(5.0)						(6.6)						(83.7)						(71.3)
Net amount			$	(5.6)					$	(7.2)					$	(76.6)					$	(68.0)

			U.S. Pension Benefits												Non-U.S. Pension Benefits
			2023						2022						2023						2022
Amounts recorded in AOCI as of December 31
Prior service cost			$	—					$	—					$	(1.2)					$	(2.0)
Net gain (loss)			2.1						1.6						(48.3)						(34.2)
Total pre-tax amount			$	2.1					$	1.6					$	(49.5)					$	(36.2)

Table of Contents

Weighted average assumptions used to determine benefit obligations at date of measurement

			U.S. Pension Plans												Non-U.S. Pension Plans
			2023						2022						2023						2022
Discount rate			5.14		%				5.42		%				3.33		%				3.94		%
Rate of compensation increase (a)			N/A						N/A						2.65		%				2.73		%
(a) The frozen U.S. pension plans do not use the rate of compensation increase as an input in determining the benefit obligations at date of measurement.

Components of net periodic pension cost

The following sets forth the components of net periodic pension cost for our plans for the years ended December 31 ($ in millions):

			U.S. Pension Benefits																		Non-U.S. Pension Benefits
			2023						2022						2021						2023						2022						2021
Service cost			$	—					$	—					$	—					$	2.6					$	3.5					$	4.1
Interest cost			1.7						1.1						1.0						8.8						3.4						2.8
Expected return on plan assets			(1.4)						(1.4)						(1.0)						(7.1)						(5.2)						(5.0)
Amortization of net loss			0.1						0.1						0.1						0.7						2.6						3.9
Amortization of prior service cost			—						—						—						0.2						0.2						0.3
Net curtailment and settlement loss recognized			—						—						(0.1)						(0.1)						(1.2)						0.2
Net periodic pension cost			$	0.4					$	(0.2)					$	—					$	5.1					$	3.3					$	6.3

Weighted average assumptions used to determine net periodic pension cost at date of measurement

			U.S. Pension Plans																		Non-U.S. Pension Plans
			2023						2022						2021						2023						2022						2021
Discount rate			5.42		%				2.82		%				2.65		%				3.94		%				1.31		%				0.99		%
Expected return on plan assets			6.47		%				5.20		%				4.32		%				4.36		%				2.58		%				2.34		%
Rate of compensation increase (a)			N/A						N/A						N/A						2.73		%				2.43		%				2.36		%
(a) The frozen U.S. pension plans do not use the rate of compensation increase as an input in determining the net periodic pension cost at date of measurement.

The discount rates reflect the market rate on December 31 for high-quality fixed-income investments with maturities corresponding to our benefit obligations and are subject to change each year. Rates appropriate for each plan are determined based on investment grade instruments with maturities approximately equal to the average expected benefit payout under the plan.

The expected rates of return reflect the asset allocation of the plans and ranged from 1.50% to 6.47% in 2023, 1.25% to 5.20% in 2022, and 1.25% to 4.32% in 2021. The domestic plan rate is based primarily on broad publicly-traded-equity and fixed-income indices and forward-looking estimates of active portfolio and investment management. The expected rates of return on asset assumptions for the non-U.S. plans were determined on a plan-by-plan basis based on the composition of assets.

Plan Assets

Plan assets are invested in various mutual funds, insurance contracts, and other private investments as determined by the administrator of each plan. Certain mutual funds and other private investments, are valued using the net asset value (“NAV”) method as a practical expedient. The investments valued using the NAV method are allocated across a broad array of funds and diversify the portfolio. The value of the plan assets directly affects the funded status of our pension plans recorded in the financial statements.

Table of Contents

The fair values of our pension plan assets as of December 31, 2023, by asset category were as follows ($ in millions):

			Quoted Prices in Active Market (Level 1)						Significant Other Observable Inputs (Level 2)						Significant Unobservable Inputs (Level 3)						Total
Cash and equivalents			$	8.4					$	—					$	—					$	8.4
Mutual funds			—						19.4						—						19.4
Insurance contracts			—						25.3						—						25.3
Total			$	8.4					$	44.7					$	—					$	53.1
Investments measured at NAV(a):
Mutual funds																					111.8
Other private investments																					39.5
Total assets at fair value																					$	204.4
(a) The fair value amounts presented in the table above are intended to permit reconciliation of the fair value hierarchy to the total fair value of plan assets.

The fair values of our pension plan assets as of December 31, 2022, by asset category were as follows ($ in millions):

			Quoted Prices in Active Market (Level 1)						Significant Other Observable Inputs (Level 2)						Significant Unobservable Inputs (Level 3)						Total
Cash and equivalents			$	5.7					$	—					$	—					$	5.7
Mutual funds			—						18.4						—						18.4
Insurance contracts			—						19.9						—						19.9
Total			$	5.7					$	38.3					$	—					$	44.0
Investments measured at NAV(a):
Mutual funds																					98.6
Other private investments																					46.0
Total assets at fair value																					$	188.6
(a) The fair value amounts presented in the table above are intended to permit reconciliation of the fair value hierarchy to the total fair value of plan assets.

Certain mutual funds are valued at the quoted closing price reported on the active market on which the individual securities are traded. Common stock, corporate bonds, and mutual funds that are not traded on an active market are valued at quoted prices reported by investment brokers and dealers based on the underlying terms of the security and comparison to similar securities traded on an active market.

Certain mutual funds and other private investments are valued using NAV based on the information provided by the asset fund managers, which reflects the plan’s share of the fair value of the net assets of the investment.

Table of Contents

Expected Contributions

During 2023, we contributed $1 million and $11 million to our U.S. and non-U.S. defined benefit pension plans, respectively. During 2024, our cash contribution requirements for our U.S. and non-U.S. defined benefit pension plans are expected to be approximately $1 million and $9 million, respectively.

The following sets forth benefit payments to participants, which reflect expected future service, as appropriate, expected to be paid by the plans in the periods indicated ($ in millions):

			U.S. Pension Plans						Non-U.S. Pension Plans						All Pension Plans
2024			$	2.3					$	11.5					$	13.8
2025			2.4						10.5						12.9
2026			2.5						10.3						12.8
2027			2.5						10.7						13.2
2028			2.5						11.4						13.9
2029-2033			12.4						51.7						64.1

Defined Contribution Plans

We administer and maintain 401(k) programs and contributions to the 401(k) programs are determined based on a percentage of compensation. We recognized compensation expense for our participating U.S. employees in the 401(k) programs totaling $61 million in 2023, $60 million in 2022, and $57 million in 2021.

NOTE 12. SALES

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.

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. Contract assets were $108 million as of December 31, 2023 and $82 million as of December 31, 2022. Contract assets are recorded within Prepaid expenses and other current assets in our Consolidated Balance Sheets.

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

Contract Liabilities — Our contract liabilities consist of deferred revenue generally related to subscription-based software contracts, PCS, and extended warranty sales, where we generally receive up-front payment and recognize revenue over the service or support term. 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.

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

			2023						2022
Deferred revenue - current			$	544.6					$	509.6
Deferred revenue - noncurrent			45.8						38.0
Total contract liabilities			$	590.4					$	547.6

In the year ended December 31, 2023, we recognized $439 million of revenue related to our contract liabilities at January 1, 2023. The change in our contract liabilities from December 31, 2022 to December 31, 2023 was primarily due to the timing of billings and recognition as revenue of subscription-based software contracts, PCS and extended warranty services.

Table of Contents

Remaining Performance Obligations — Our remaining performance obligations represent the transaction price of firm, non-cancelable orders and the average contract value for software contracts, for which work has not been performed. We have excluded performance obligations with an original expected duration of one year or less from the amounts below.

The aggregate remaining performance obligations attributable to each of our segments as of December 31, 2023 is as follows ($ in millions):

			2023
Intelligent Operating Solutions			$	578.1
Precision Technologies			61.4
Advanced Healthcare Solutions			83.8
Total remaining performance obligations			$	723.3

The majority of remaining performance obligations are related to subscription-based software contracts, and service and support contracts, which we expect to fulfill approximately 80 percent within the next two years, approximately 90 percent within the next three years, and substantially all within four years.

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.

Table of Contents

Disaggregation of revenue for the year ended December 31, 2023 is presented as follows ($ in millions):

			Total						Intelligent Operating Solutions						Precision Technologies						Advanced Healthcare Solutions
Sales:
Sales of products and software			$	5,137.7					$	2,202.5					$	1,904.8					$	1,030.4
Sales of services			927.6						409.7						228.0						289.9
Total			$	6,065.3					$	2,612.2					$	2,132.8					$	1,320.3
Geographic:
United States			$	3,288.4					$	1,441.6					$	1,096.3					$	750.5
China			694.9						228.6						361.3						105.0
All other (each country individually less than 5% of total sales)			2,082.0						942.0						675.2						464.8
Total			$	6,065.3					$	2,612.2					$	2,132.8					$	1,320.3
End markets: (a)
Direct sales:
Medical			$	1,431.7					$	47.6					$	143.6					$	1,240.5
Industrial & Manufacturing			1,410.1						931.4						451.5						27.2
Utilities & Power			400.2						189.3						210.9						—
Government			555.0						288.5						229.8						36.7
Communication, Electronics & Semiconductor			398.3						100.4						294.9						3.0
Aerospace & Defense			303.7						0.6						303.1						—
Oil & Gas			281.7						271.6						10.1						—
Retail & Consumer			338.6						258.2						80.4						—
Other			689.0						384.7						304.3						—
Total direct sales			5,808.3						2,472.3						2,028.6						1,307.4
Distributors			257.0						139.9						104.2						12.9
Total			$	6,065.3					$	2,612.2					$	2,132.8					$	1,320.3
(a) Direct sales by end market include sales made through third-party distributors where we have visibility into the end customer.

Table of Contents

Disaggregation of revenue for the year ended December 31, 2022 is presented as follows ($ in millions):

			Total						Intelligent Operating Solutions						Precision Technologies						Advanced Healthcare Solutions
Sales:
Sales of products and software			$	4,920.1					$	2,097.2					$	1,820.8					$	1,002.1
Sales of services			905.6						368.9						217.4						319.3
Total			$	5,825.7					$	2,466.1					$	2,038.2					$	1,321.4
Geographic:
United States			$	3,136.8					$	1,356.0					$	1,026.0					$	754.8
China			702.1						217.9						378.6						105.6
All other (each country individually less than 5% of total sales)			1,986.8						892.2						633.6						461.0
Total			$	5,825.7					$	2,466.1					$	2,038.2					$	1,321.4
End markets:****(a)
Direct sales:
Medical			$	1,458.0					$	46.5					$	167.0					$	1,244.5
Industrial & Manufacturing			1,352.0						887.9						437.4						26.7
Utilities & Power			368.9						183.1						185.8						—
Government			471.0						241.3						194.8						34.9
Communication, Electronics & Semiconductor			399.8						96.3						301.6						1.9
Aerospace & Defense			259.7						0.6						259.1						—
Oil & Gas			271.1						262.1						9.0						—
Retail & Consumer			335.7						248.9						86.8						—
Other			657.9						367.8						289.9						0.2
Total direct sales			5,574.1						2,334.5						1,931.4						1,308.2
Distributors			251.6						131.6						106.8						13.2
Total			$	5,825.7					$	2,466.1					$	2,038.2					$	1,321.4
(a) Direct sales by end market include sales made through third-party distributors where we have visibility into the end customer.

Table of Contents

Disaggregation of revenue for the year ended December 31, 2021 is presented as follows ($ in millions):

			Total						Intelligent Operating Solutions						Precision Technologies						Advanced Healthcare Solutions
Sales:
Sales of products and software			$	4,496.1					$	1,899.8					$	1,630.6					$	965.7
Sales of services			758.6						269.6						218.3						270.7
Total			$	5,254.7					$	2,169.4					$	1,848.9					$	1,236.4
Geographic:
United States			$	2,683.0					$	1,118.1					$	921.2					$	643.7
China			650.7						212.3						321.1						117.3
All other (each country individually less than 5% of total sales)			1,921.0						839.0						606.6						475.4
Total			$	5,254.7					$	2,169.4					$	1,848.9					$	1,236.4
End markets:****(a)
Direct sales:
Medical			$	1,332.7					$	37.7					$	138.4					$	1,156.6
Industrial & Manufacturing			1,256.9						816.0						416.3						24.6
Utilities & Power			390.2						223.4						166.8						—
Government			389.2						203.8						145.8						39.6
Communication, Electronics & Semiconductor			381.4						118.0						261.5						1.9
Aerospace & Defense			239.0						—						239.0						—
Oil & Gas			262.2						252.1						10.1						—
Retail & Consumer			217.2						129.0						88.2						—
Other			506.3						252.3						253.9						0.1
Total direct sales			4,975.1						2,032.3						1,720.0						1,222.8
Distributors			279.6						137.1						128.9						13.6
Total			$	5,254.7					$	2,169.4					$	1,848.9					$	1,236.4
(a) Direct sales by end market include sales made through third-party distributors where we have visibility into the end customer.

NOTE 13. INCOME TAXES

Earnings and Income Taxes

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

			2023						2022						2021
United States			$	698.2					$	587.7					$	367.4
International			292.6						285.8						310.1
Total			$	990.8					$	873.5					$	677.5

Table of Contents

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

			2023						2022						2021
Current:
Federal U.S.			$	108.8					$	75.4					$	21.5
Non-U.S.			97.3						85.3						75.0
State and local			23.0						19.7						7.8
Deferred:
Federal U.S.			(72.0)						(32.8)						(21.9)
Non-U.S.			(23.3)						8.6						(16.9)
State and local			(8.8)						(37.9)						(2.2)
Income tax provision			$	125.0					$	118.3					$	63.3

Effective Income Tax Rate

The continuing operations effective income tax rate for the years ended December 31 varies from the U.S. statutory federal income tax rate as follows:

			Percentage of Pretax Earnings
			2023						2022						2021
Statutory federal income tax rate			21.0		%				21.0		%				21.0		%
Increase (decrease) in tax rate resulting from:
State income taxes (net of federal income tax benefit)			0.9		%				(1.8)		%				0.9		%
Foreign income taxed at different rates than U.S. statutory rate			(0.1)		%				0.1		%				(4.4)		%
U.S. federal permanent differences related to the TCJA			(7.7)		%				(7.0)		%				(5.6)		%
Effect of change in tax rates enacted in the current period			(2.6)		%				0.3		%				(0.1)		%
Changes in valuation allowances			1.7		%				1.8		%				—		%
Other			(0.6)		%				(0.9)		%				(0.5)		%
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		%

Our effective tax rate for 2023 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.

Table of Contents

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):

			2023						2022
Deferred Tax Assets:
Operating lease liabilities			$	38.7					$	39.1
Inventories			14.8						10.4
Pension benefits			27.2						24.4
Stock-based compensation expense			36.2						34.2
Capitalized expenses			233.3						190.7
Tax credit and loss carryforwards			377.7						168.5
Accruals, prepayments, and other			79.1						39.4
Valuation allowances			(282.4)						(74.6)
Total deferred tax assets			$	524.6					$	432.1
Deferred Tax Liabilities:
Property, plant and equipment			$	(36.8)					$	(42.9)
Operating lease right-of-use assets			(36.0)						(36.8)
Insurance, including self-insurance			(211.9)						(205.0)
Goodwill, other intangibles, and other			(748.7)						(779.7)
Total deferred tax liabilities			(1,033.4)						(1,064.4)
Net deferred tax liability			$	(508.8)					$	(632.3)

In accordance with GAAP, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted rates expected to be in effect during the year in which the differences reverse. Deferred tax assets generally represent items that can be used as a tax deduction or credit in our tax return in future years for which the tax benefit has already been reflected in our Consolidated Statements of Earnings. Deferred tax liabilities generally represent items that have already been taken as a deduction on our tax return but have not yet been recognized as an expense in our Consolidated Statements of Earnings. The effect on deferred tax assets and liabilities due to a change in tax rates is recognized in income tax expense in the period that includes the enactment date.

Our deferred tax assets are reduced by a valuation allowance if, based on the weight of available evidence, it is more likely than not (a likelihood of more than 50 percent) that some portion or all of the deferred tax assets will not be realized. We evaluate the realizability of deferred income tax assets for each of the jurisdictions in which we operate. If we experience cumulative pretax income in a particular jurisdiction in the three-year period including the current and prior two years, we normally conclude that the deferred income tax assets will more likely than not be realizable and no valuation allowance is recognized, unless known or planned operating developments would lead management to conclude otherwise. However, if we experience cumulative pretax losses in a particular jurisdiction in the three-year period including the current and prior two years, we then consider a series of factors in the determination of whether the deferred income tax assets can be realized. 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. 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.

Applying the above methodology, valuation allowances have been established for certain deferred income tax assets to the extent they are not expected to be realized within the particular tax carryforward period.

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. 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

Table of Contents

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

As of December 31, 2023, our U.S. and non-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. Included in deferred tax assets as of December 31, 2023 are tax benefits for U.S. and non-U.S. net operating loss carryforwards totaling $179 million, before applicable valuation allowances of $76 million. Certain of these losses can be carried forward indefinitely and others can be carried forward to various dates from 2024 through 2042. Recognition of some of these loss carryforwards is subject to an annual limit, which may cause them to expire before they are used.

As of December 31, 2023, our U.S. and non-U.S. tax credit carryforwards totaled $199 million, which is primarily related to non-U.S. tax credit carryforwards. Certain of these credits can be carried forward indefinitely and other can be carried forward to various dates from 2024 through 2042. As of December 31, 2023, we maintain a $188 million valuation allowance related to certain tax credit carryforwards.

Unrecognized Tax Benefits

We recognize tax benefits from uncertain tax positions only if, in our assessment, it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such positions are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. Judgment is required in evaluating tax positions and determining income tax provisions. We re-evaluate the technical merits of our tax positions and may recognize an uncertain tax benefit in certain circumstances, including when: (i) a tax audit is completed; (ii) applicable tax laws change, including a tax case ruling or legislative guidance; or (iii) the applicable statute of limitations expires. 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). We recognized approximately $11 million, $10 million and $6 million in potential interest and penalties associated with uncertain tax positions during 2023, 2022, and 2021, respectively. To the extent taxes are not assessed with respect to uncertain tax positions, substantially all amounts accrued (including interest and penalties and net of indirect offsets) will be reduced and reflected as a reduction of the overall income tax provision. Unrecognized tax benefits and associated accrued interest and penalties are included in our income tax provision.

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. Some examinations may conclude in the next twelve months and the unrecognized tax benefits recorded in relation to the audits may differ from actual settlement amounts. 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.

Table of Contents

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):

			2023						2022						2021
Unrecognized tax benefits, beginning of year			$	178.2					$	193.0					$	200.1
Additions based on tax positions related to the current year			21.6						6.2						7.9
Additions for tax positions of prior years			13.5						11.2						3.4
Reductions for tax positions of prior years			(3.0)						(6.3)						(1.4)
Lapse of statute of limitations			(33.0)						(24.4)						(15.6)
Settlements			(2.2)						—						(0.2)
Effect of foreign currency translation			—						(1.5)						(1.2)
Acquisition related adjustments			1.0						—						—
Unrecognized tax benefits, end of year			$	176.1					$	178.2					$	193.0

Repatriation and Unremitted Earnings

As of December 31, 2023, we recorded estimated incremental foreign remittance taxes of $10 million on the planned 2024 repatriation of $179 million of previously unremitted earnings from 2023 and prior periods.

As of December 31, 2023, the earnings we plan to reinvest indefinitely outside of the United States for which foreign deferred taxes have not been provided was estimated at $1.8 billion. No provisions for foreign remittance taxes have been made with respect to earnings that are planned to be reinvested indefinitely. The amount of foreign remittance taxes that may be applicable to such earnings is not readily determinable given local law restrictions that may apply to a portion of such earnings, unknown changes in foreign tax law that may occur during the applicable restriction periods caused by applicable local corporate law for cash repatriation, and the various tax planning alternatives we could employ if we repatriated these earnings.

NOTE 14. LITIGATION AND CONTINGENCIES

We are, from time to time, subject to a variety of litigation and other proceedings incidental to our business, including lawsuits involving claims for damages arising out of the use of our products, software, and services, claims relating to intellectual property matters, employment matters, commercial disputes, and personal injury as well as regulatory investigations or enforcement. We may also become subject to lawsuits as a result of past or future acquisitions or as a result of liabilities retained from, or representations, warranties, or indemnities provided in connection with divested businesses. Some of these lawsuits may include claims for punitive and consequential as well as compensatory damages. Based upon our experience, current information and applicable law, we do not believe that these proceedings and claims will have a material adverse effect on our financial position, results of operations, or cash flows.

While we maintain workers’ compensation, property, cargo, automobile, crime, fiduciary, product, general, and directors’ and officers’ liability insurance (and have acquired rights under similar policies in connection with certain acquisitions) that cover a portion of these claims, this insurance may be insufficient or unavailable to cover such losses. In addition, while we believe we are entitled to indemnification from third parties for some of these claims, these rights may also be insufficient or unavailable to cover such losses. We maintain third party insurance policies up to certain limits to cover certain liability costs in excess of predetermined retained amounts. For most insured risks, we purchase outside insurance coverage only for severe losses (stop loss insurance) and reserves must be established and maintained with respect to amounts within the self-insured retention.

In accordance with accounting guidance, we record a liability in our consolidated financial statements for loss contingencies when a loss is known or considered probable and the amount can be reasonably estimated. If the reasonable estimate of a known or probable loss is a range, and no amount within the range is a better estimate than any other, the minimum amount of the range is accrued. If a loss does not meet the known or probable level but is reasonably possible and a loss or range of loss can be reasonably estimated, the estimated loss or range of loss is disclosed. These reserves consist of specific reserves for individual claims and additional amounts for anticipated developments of these claims as well as for incurred but not yet reported claims. The specific reserves for individual known claims are quantified with the assistance of legal counsel and outside risk insurance professionals where appropriate. In addition, outside risk insurance professionals may assist in the determination of reserves for incurred but not yet reported claims through evaluation of our specific loss history, actual claims reported, and industry trends among statistical and other factors. Reserve estimates are adjusted as additional information regarding a claim becomes known. While we actively pursue financial recoveries from insurance providers, we do not recognize any recoveries until realized or until such time as a sustained pattern of collections is established related to historical matters of a similar nature and magnitude. If risk insurance reserves we have established are inadequate, we would be required

Table of Contents

to incur an expense equal to the amount of the loss incurred in excess of the reserves, which would adversely affect our net earnings. Refer to Note 8 for information about the amount of our accruals for self-insurance and litigation liability.

In addition, our operations, products, and services are subject to environmental laws and regulations in various jurisdictions, which impose limitations on the discharge of pollutants into the environment and establish standards for the generation, use, treatment, storage, and disposal of hazardous and non-hazardous wastes. A number of our operations involve the handling, manufacturing, use, or sale of substances that are or could be classified as hazardous materials within the meaning of applicable laws. We must also comply with various health and safety regulations in both the United States and abroad in connection with our operations. Compliance with these laws and regulations has not had and, based on current information and the applicable laws and regulations currently in effect, is not expected to have a material effect on our capital expenditures, earnings, or competitive position, and we do not anticipate material capital expenditures for environmental control facilities.

In addition to environmental compliance costs, from time to time, we incur costs related to alleged damages associated with past or current waste disposal practices or other hazardous materials handling practices. For example, generators of hazardous substances found in disposal sites at which environmental problems are alleged to exist, as well as the current and former owners of those sites and certain other classes of persons, are subject to claims brought by state and federal regulatory agencies pursuant to statutory authority. 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. 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. Remediation activities generally relate to soil and/or groundwater contamination and may include pre-remedial activities such as fact-finding and investigation, risk assessment, feasibility study and/or design, as well as remediation actions such as contaminant removal, monitoring and/or installation, operation and maintenance of longer-term remediation systems. From time to time we are also party to personal injury or other claims brought by private parties alleging injury due to the presence of, or exposure to, hazardous substances.

We have recorded a provision for environmental investigation and remediation and environmental-related claims with respect to sites we and our subsidiaries owned or formerly owned and third party sites where we have been determined to be a potentially responsible party. We generally make an assessment of the costs involved for our remediation efforts based on environmental studies, as well as our prior experience with similar sites. The ultimate cost of site cleanup is difficult to predict given the uncertainties of our involvement in certain sites, uncertainties regarding the extent of the required cleanup, the availability of alternative cleanup methods, variations in the interpretation of applicable laws and regulations, the possibility of insurance recoveries with respect to certain sites and the fact that imposition of joint and several liability with right of contribution is possible under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 and other environmental laws and regulations. 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.

All reserves for environmental liabilities have been recorded without giving effect to any possible future third party recoveries. While we actively pursue insurance recoveries, as well as recoveries from other potentially responsible parties, we do not recognize any insurance recoveries for environmental liability claims until realized or until such time as a sustained pattern of collections is established related to historical matters of a similar nature and magnitude.

As of December 31, 2023 and 2022, we had approximately $57 million and $58 million, respectively, of guarantees consisting primarily of outstanding standby letters of credit, bank guarantees, and performance and bid bonds. These guarantees have been provided in connection with certain arrangements with vendors, customers, financing counterparties, and governmental entities to secure our obligations and/or performance requirements related to specific transactions. We believe that if the obligations under these instruments were triggered, they would not have a material effect on our consolidated financial statements.

We have entered into agreements to purchase goods or services that are enforceable and legally binding on us and that specify all significant terms, including fixed or minimum quantities to be purchased, fixed, minimum or variable price provisions and the approximate timing of the transaction. Purchase obligations exclude agreements that are cancellable at any time without penalty. As of December 31, 2023, the aggregate amount of our purchase obligations totaled $488 million, of which $355 million are expected to be settled within one year of December 31, 2023.

Table of Contents

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.

NOTE 15. STOCK-BASED COMPENSATION

The 2016 Stock Incentive Plan (the “Stock Plan”) provides for the grant of stock appreciation rights, restricted stock units (“RSUs”) and performance stock units (“PSUs”) (collectively, “Stock Awards”), stock options, or any other stock-based award. A total of 43 million shares of our common stock have been authorized for issuance under the Stock Plan. As of December 31, 2023, approximately 14.2 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 each 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. Exercise prices for stock options granted under the Stock Plan were equal to the closing price of Fortive’s common stock on the NYSE on the date of grant, while stock options issued as conversion awards in connection with the separation from Danaher were priced to maintain the economic value before and after the separation.

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. Certain members of our senior management are also awarded incremental RSUs subject to performance-based vesting criteria. Prior to vesting, RSUs do not have dividend equivalent rights, do not have voting rights, and the shares underlying the RSUs are not considered issued or outstanding.

PSUs granted under the Stock Plan provide for the issuance of a share of the Company’s common stock at no cost to the holder and will vest at 0% to 200% of the target share amount based on achievement of performance targets. Grants made prior to 2022 are earned based on the Company’s total shareholder return ranking relative to the S&P 500 Index over a performance period of approximately three years. For grants made subsequent to 2022, the performance target is based on a mix of both achievement of an internal growth metric and the Company’s total shareholder return ranking, both over a performance period of approximately three years. PSUs issued are subject to an additional holding period of up to two years and are entitled to dividend equivalent rights. The PSU dividend equivalent rights are subject to the same vesting and payment restrictions as the related shares, but do not have voting rights and the shares underlying the PSUs are not considered issued and outstanding.

Other than pursuant to any retirement benefits provided under our Stock Plan, the equity compensation awards granted by the Company generally vest only if the employee is employed by us (or in the case of directors, the director continues to serve on the Board) on the vesting date. To cover the exercise of stock options and vesting of RSUs and PSUs, we generally issue shares authorized but previously unissued, although we may instead issue treasury shares; provided, however, that either type of issuance would equally reduce the number of shares available under our Stock Plan.

We account for stock-based compensation by measuring the cost of employee services received in exchange for all equity awards granted based on the fair value of the award as of the grant date. We recognize the compensation expense over the requisite service period (which is generally the vesting period but may be shorter than the vesting period, for example, if the employee becomes retirement eligible before the end of the vesting period).

The fair value of RSUs and performance based PSUs is calculated using the closing price of Fortive common stock on the date of grant. RSU’s are further adjusted for the impact of RSUs not having dividend rights prior to vesting. The fair value of market-based PSUs is calculated using a Monte Carlo pricing model. The fair value of the stock options granted is calculated using a Black-Scholes Merton (“Black-Scholes”) option pricing model.

Stock-based Compensation Expense

Stock-based compensation has been recognized as a component of Selling, general, and administrative expenses in the Consolidated Statements of Earnings. The amount of stock-based compensation expense recognized during a period is based on the portion of the awards that are ultimately expected to vest. We estimate pre-vesting forfeitures at the time of grant by analyzing historical data and revise those estimates in subsequent periods if actual forfeitures differ from those estimates. Ultimately, the total expense recognized over the vesting period will equal the fair value of awards that actually vest.

Table of Contents

The following summarizes the components of our stock-based compensation expense under the Stock Plan for the years ended December 31 ($ in millions):

			2023						2022						2021
Stock Awards:
Pretax compensation expense			$	78.4					$	60.1					$	48.6
Income tax benefit			(11.0)						(8.7)						(7.9)
Stock Award expense, net of income taxes			67.4						51.4						40.7
Stock options:
Pretax compensation expense			34.9						33.7						28.8
Income tax benefit			(4.6)						(5.1)						(5.0)
Stock option expense, net of income taxes			30.3						28.6						23.8
Total stock-based compensation:
Pretax compensation expense			113.3						93.8						77.4
Income tax benefit			(15.6)						(13.8)						(12.9)
Total stock-based compensation expense, net of income taxes			$	97.7					$	80.0					$	64.5

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. Accordingly, we record the excess of the tax benefit related to the exercise of stock options and vesting of Stock Awards over the expense recorded for financial statement reporting purposes (the “Excess Tax Benefit”) as a component of Income tax expense and as an operating cash inflow in the consolidated financial statements. During the years ended December 31, 2023, 2022, and 2021 we realized an Excess Tax Benefit of $3.8 million, $1 million, and $10 million, respectively, related to stock options that were exercised and Stock Awards that vested.

The following summarizes the unrecognized compensation cost for the Stock Plan awards as of December 31, 2023. This compensation cost is expected to be recognized over a weighted average period of approximately 1.5 years, representing the remaining service period related to the awards. Future compensation amounts will be adjusted for any changes in estimated forfeitures ($ in millions):

Stock Awards			$	36.0
Stock options			88.4
Total unrecognized compensation cost			$	124.4

Stock Options

The following summarizes the assumptions used in the Black-Scholes model to value stock options granted under the Stock Plan during the years ended December 31:

			2023						2022						2021
Risk-free interest rate			3.5% - 4.5%						1.7% - 3.9%						0.8% - 1.3%
Volatility (a)			28.6		%				29.3		%				27.2		%
Dividend yield (b)			0.4		%				0.4		%				0.4		%
Expected years until exercise			5.5 - 8.0						5.5 - 8.0						5.5 - 8.0
(a) Expected volatility is based on a weighted average blend of the company’s historical stock price volatility from July 2, 2016 (the date of separation from Danaher) through the stock option grant date and the average historical stock price volatility of a group of peer companies for the expected term of the options.
(b) The dividend yield is calculated by dividing our annual dividend, based on the most recent quarterly dividend rate, by Fortive’s closing stock price on the grant date.

Table of Contents

The following summarizes option activity under the Stock Plan (in millions, except price per share and numbers of years):

			Options						Weighted Average Exercise Price						Weighted Average Remaining Contractual Term (years)						Aggregate Intrinsic Value
Outstanding as of December 31, 2021			10.4						54.81
Granted			2.2						64.76
Exercised			(0.5)						38.19
Canceled/forfeited			(0.8)						65.56
Outstanding as of December 31, 2022			11.3						56.70
Granted			1.5						66.78
Exercised			(1.4)						45.21
Canceled/forfeited			(0.5)						66.21
Outstanding as of December 31, 2023			10.9						59.06						6						$	159.5
Vested and expected to vest as of December 31, 2023 (a)			10.7						58.95						6						$	158.3
Exercisable as of December 31, 2023			5.9						53.06						4						$	122.3
(a) The “expected to vest” options are the net unvested options that remain after applying the forfeiture rate assumption to total unvested options.

The aggregate intrinsic values in the table above represent the total pretax intrinsic value (the difference between the closing stock price of Fortive common stock on the last trading day of 2023 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on December 31, 2023. The amount of aggregate intrinsic value will change based on the price of Fortive’s common stock.

The following summarizes aggregate intrinsic value and cash receipts related to stock options that were exercised under the Stock Plan for the years ended December 31 ($ in millions):

			2023						2022						2021
Aggregate intrinsic value of stock options exercised			$	35.9					$	12.4					$	55.9
Cash receipts from stock options exercised			$	51.5					$	17.6					$	52.4

Stock Awards

The following summarizes information related to Stock Award activity under the Stock Plan for the years ended December 31, 2023 and 2022 (in millions; except price per share):

			Number of Stock Awards						Weighted Average Grant-Date Fair Value
Unvested as of December 31, 2021			2.6						$	66.43
Granted			1.4						64.01
Vested			(0.5)						63.51
Forfeited			(0.4)						64.01
Unvested as of December 31, 2022			3.1						66.00
Granted			1.3						67.32
Vested			(0.8)						67.09
Forfeited			(0.3)						66.12
Unvested as of December 31, 2023			3.3						66.30

NOTE 16. CAPITAL STOCK AND EARNINGS PER SHARE

Common Stock

Under our amended and restated certificate of incorporation, as of July 1, 2016, our authorized capital stock consists of 2.0 billion common shares with a par value of $0.01 per share and 15 million preferred shares with a par value of $0.01 per share.

Table of Contents

Each share of our common stock entitles the holder to one vote on all matters to be voted upon by common stockholders. Our Board is authorized to issue shares of preferred stock in one or more series and has discretion to determine the rights, preferences, privileges, and restrictions, including voting rights, dividend rights, conversion rights, redemption privileges, and liquidation preferences, of each series of preferred stock. 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:

			Dividend Per Common Share						Amount ($ in millions)
2023:
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
2022:
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.

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. 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.

Table of Contents

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

			Dividend Per Preferred Share						Amount ($ in millions)
2021:
First quarter			$	12.50					$	17.3
Second quarter			12.50						17.2
Third quarter			—						—
Fourth quarter			—						—
Total			$	25.00					$	34.5

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. 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, 2023, 2022, and 2021, the anti-dilutive options to purchase shares excluded from the diluted EPS calculation were 0.5 million shares, 7.3 million shares, and 0.3 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):

			Year Ended December 31,
			2023						2022						2021
Numerator
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
Add-back: 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
Denominator
Weighted average common shares outstanding used in basic earnings per share			352.5						356.4						349.0
Incremental common shares from:
Assumed exercise of dilutive options and vesting of dilutive Stock Awards			3.1						2.8						3.3
Conversion of convertible notes (if converted method)			—						1.6						—
Weighted average common shares outstanding used in diluted earnings per share			355.6						360.8						352.3
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

Table of Contents

NOTE 17. 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. 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
			2023						2022						2021
Sales:
Intelligent Operating Solutions			$	2,612.2					$	2,466.1					$	2,169.4
Precision Technologies			2,132.8						2,038.2						1,848.9
Advanced Healthcare Solutions			1,320.3						1,321.4						1,236.4
Total			$	6,065.3					$	5,825.7					$	5,254.7
Operating Profit:
Intelligent Operating Solutions			$	628.8					$	519.4					$	408.5
Precision Technologies			540.3						491.3						408.0
Advanced Healthcare Solutions			105.5						107.9						101.9
Other			(140.9)						(113.3)						(105.6)
Russia exit and wind down costs (a)			—						(17.9)						—
Total			$	1,133.7					$	987.4					$	812.8
Segment assets:
Intelligent Operating Solutions			$	6,550.0					$	6,583.1					$	6,769.3
Precision Technologies			2,966.2						2,983.3						2,994.2
Advanced Healthcare Solutions			5,309.8						5,498.5						5,737.4
Total segment assets			14,826.0						15,064.9						15,500.9
Other			2,085.8						825.7						964.6
Total assets			$	16,911.8					$	15,890.6					$	16,465.5
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.

Table of Contents

Operations in Geographic Areas:

			As of December 31
($ in millions)			2023						2022
Property, plant and equipment, net:
United States			$	369.0					$	303.1
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			$	439.8					$	421.9

NOTE 18. 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.

Table of Contents