UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

________________________________________________



(Mark One)
ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended: June ~~30, 2017~~29, 2018
Or
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-37654

________________________________________________

Fortive Corporation

(Exact name of registrant as specified in its charter)

________________________________________________



Delaware		47-5654583
(State or other jurisdiction of incorporation or organization)		(I.R.S. employer identification number)

6920 Seaway Blvd Everett, WA		98203
(Address of principal executive offices)		(Zip code)

Registrant’s telephone number, including area code: (425) 446-5000

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):



Large accelerated filer ¨x		Accelerated filer ¨

Non-accelerated filer x¨	(Do not check if a smaller reporting company)	Smaller reporting company ¨

		Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes o No ý

The number of shares of common stock outstanding at July ~~20, 2017~~19, 2018 was ~~347,101,526.~~349,152,355.

FORTIVE CORPORATION

INDEX

FORM 10-Q

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

FORTIVE CORPORATION AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEETS

($ in millions, except per share amounts)


	As of						As of
	June 30, 2017			December 31, 2016			June 29, 2018			December 31, 2017
	(unaudited)						(unaudited)
ASSETS
Current assets:
Cash and equivalents	$	968.4		$	803.2		$	2,368.2		$	962.1
Accounts receivable, net	985.0			945.4			1,187.8			1,143.6
Inventories:
Finished goods	202.8			198.3			223.2			217.2
Work in process	89.6			79.3			107.9			78.9
Raw materials	268.2			267.0			311.2			284.5
Total inventories	560.6			544.6			642.3			580.6
Prepaid expenses and other current assets	187.7			195.5			305.1			250.5
Total current assets	2,701.7			2,488.7			4,503.4			2,936.8
Property, plant and equipment, net of accumulated depreciation of $1,053.1 and $1,004.2 at June 30, 2017 and December 31, 2016, respectively	562.8			547.6
Property, plant and equipment, net of accumulated depreciation of $1,114.9 and $1,086.8 at June 29, 2018 and December 31, 2017, respectively							690.4			712.5
Other assets	440.7			427.2			479.5			476.8
Goodwill	4,032.1			3,979.0			5,081.9			5,098.5
Other intangible assets, net	729.8			747.3			1,230.9			1,276.0
Total assets	$	8,467.1		$	8,189.8		$	11,986.1		$	10,500.6
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt							$	799.3		$	—
Trade accounts payable	$	648.6		$	666.2		763.5			727.5
Accrued expenses and other current liabilities	722.2			800.3			735.9			874.8
Total current liabilities	1,370.8			1,466.5			2,298.7			1,602.3
Other long-term liabilities	715.2			674.3			1,118.1			1,033.9
Long-term debt	3,208.1			3,358.0			2,927.4			4,056.2
Equity:
Preferred stock: $0.01 par value, 15 million shares authorized; no shares issued or outstanding	—			—
Common stock: $0.01 par value, 2.0 billion shares authorized; 347.2 million and 346.0 million issued; 347.0 million and 345.9 million outstanding at June 30, 2017 and December 31,2016, respectively	3.5			3.5
5.0% Mandatory convertible preferred stock, series A: $0.01 par value, 15.0 million shares authorized; 1.4 million shares issued and outstanding at June 29, 2018; no shares issued or outstanding at December 31, 2017							—			—
Common stock: $0.01 par value, 2.0 billion shares authorized; 349.5 and 348.2 million issued; 349.0 and 347.8 million outstanding at June 29, 2018 and December 31, 2017, respectively							3.5			3.5
Additional paid-in capital	2,427.1			2,427.2			3,836.8			2,444.1
Retained earnings	794.2			403.0			1,853.9			1,350.3
Accumulated other comprehensive income (loss)	(55.3		)	(145.8		)	(69.6		)	(7.6		)
Total Fortive stockholders’ equity	3,169.5			2,687.9			5,624.6			3,790.3
Noncontrolling interests	3.5			3.1			17.3			17.9
Total stockholders’ equity	3,173.0			2,691.0			5,641.9			3,808.2
Total liabilities and equity	$	8,467.1		$	8,189.8		$	11,986.1		$	10,500.6

See the accompanying Notes to the Consolidated ~~and Combined~~ Condensed Financial Statements.

FORTIVE CORPORATION AND SUBSIDIARIES

CONSOLIDATED ~~AND COMBINED~~ CONDENSED STATEMENTS OF EARNINGS

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

(unaudited)


	Three Months Ended						Six Months Ended						Three Months Ended						Six Months Ended
	June 30, 2017			July 1, 2016			June 30, 2017			July 1, 2016			June 29, 2018			June 30, 2017			June 29, 2018			June 30, 2017
Sales	$	1,628.8		$	1,555.1		$	3,164.0		$	3,029.8		$	1,856.0		$	1,628.8		$	3,596.7		$	3,164.0
Cost of sales	(823.7		)	(787.0		)	(1,614.9		)	(1,566.5		)	(917.1		)	(823.7		)	(1,787.0		)	(1,614.9		)
Gross profit	805.1			768.1			1,549.1			1,463.3			938.9			805.1			1,809.7			1,549.1
Operating costs:
Selling, general and administrative expenses	(357.7		)	(349.3		)	(710.6		)	(687.8		)	(445.5		)	(356.9		)	(869.2		)	(709.1		)
Research and development expenses	(99.1		)	(96.7		)	(195.3		)	(190.4		)	(111.0		)	(99.1		)	(219.9		)	(195.3		)
Operating profit	348.3			322.1			643.2			585.1			382.4			349.1			720.6			644.7
Non-operating expense:
Interest expense	(22.7		)	(2.7		)	(45.3		)	(2.7		)
Non-operating expenses:
Interest expense, net													(25.3		)	(22.7		)	(49.9		)	(45.3		)
Other non-operating expenses													(1.1		)	(0.8		)	(1.8		)	(1.5		)
Earnings before income taxes	325.6			319.4			597.9			582.4			356.0			325.6			668.9			597.9
Income taxes	(85.5		)	(80.5		)	(158.1		)	(161.5		)	(61.0		)	(85.5		)	(112.7		)	(158.1		)
Net earnings	$	240.1		$	238.9		$	439.8		$	420.9		295.0			240.1			556.2			439.8
Net earnings per share:
Mandatory convertible preferred stock cumulative dividends													(0.2		)	—			(0.2		)	—
Net earnings attributable to common stockholders													$	294.8		$	240.1		$	556.0		$	439.8
Net earnings per common share:
Basic	$	0.69		$	0.69		$	1.27		$	1.22		$	0.84		$	0.69		$	1.59		$	1.27
Diluted	$	0.68		$	0.69		$	1.25		$	1.22		$	0.83		$	0.68		$	1.57		$	1.25
Average common stock and common equivalent shares outstanding:
Basic	347.2			345.2			347.1			345.2			349.2			347.2			348.9			347.1
Diluted	352.2			345.2			351.8			345.2			355.0			352.2			354.7			351.8

See the accompanying Notes to the Consolidated ~~and Combined~~ Condensed Financial Statements.

FORTIVE CORPORATION AND SUBSIDIARIES

CONSOLIDATED ~~AND COMBINED~~ CONDENSED STATEMENTS OF COMPREHENSIVE INCOME

($ in millions)

(unaudited)


	Three Months Ended					Six Months Ended				Three Months Ended					Six Months Ended
	June 30, 2017		July 1, 2016			June 30, 2017		July 1, 2016		June 29, 2018			June 30, 2017		June 29, 2018			June 30, 2017
Net earnings	$	240.1	$	238.9		$	439.8	$	420.9	$	295.0		$	240.1	$	556.2		$	439.8
Other comprehensive income (loss), net of income taxes:
Other comprehensive income, net of income taxes:
Foreign currency translation adjustments	45.2		(10.6		)	88.8		11.5		(99.8		)	45.2		(63.4		)	88.8
Pension adjustments	0.9		1.1			1.7		2.1		0.7			0.9		1.4			1.7
Total other comprehensive income (loss), net of income taxes	46.1		(9.5		)	90.5		13.6
Total other comprehensive income, net of income taxes										(99.1		)	46.1		(62.0		)	90.5
Comprehensive income	$	286.2	$	229.4		$	530.3	$	434.5	$	195.9		$	286.2	$	494.2		$	530.3

See the accompanying Notes to the Consolidated ~~and Combined~~ Condensed Financial Statements.

FORTIVE CORPORATION AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENT OF CHANGES IN EQUITY

($ and shares in millions)

(unaudited)


	Common Stock			Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Noncontrolling Interests		Common Stock			Preferred Stock			Additional Paid-In Capital		Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Noncontrolling Interests
	Shares	Amount		Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Noncontrolling Interests		Shares	Amount		Shares	Amount		Additional Paid-In Capital		Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Noncontrolling Interests
Balance, December 31, 2016	345.9	$	3.5	$	2,427.2		$	403.0		$	(145.8	)	$	3.1
Balance, December 31, 2017															347.8	$	3.5	—	$	—	$	2,444.1	$	1,350.3		$	(7.6	)	$	17.9
Adoption of accounting standards															—	—		—	—		—		(3.9		)	—			—
Balance, January 1, 2018															347.8	3.5		—	—		2,444.1		1,346.4			(7.6		)	17.9
Net earnings for the period	—	—		—			439.8			—			—		—	—		—	—		—		556.2			—			—
Dividends to shareholders	—	—		—			(48.6		)	—			—		—	—		—	—		—		(48.7		)	—			—
Separation related adjustments	—	—		(35.5		)	—			—			—		—	—		—	—		10.9		—			—			—
Other comprehensive income	—	—		—			—			90.5			—		—	—		—	—		—		—			(62.0		)	—
Common stock-based award activity	1.1	—		35.4			—			—			—		1.2	—		—	—		44.8		—			—			—
Issuance of mandatory convertible preferred stock															—	—		1.4	—		1,337.0		—			—			—
Change in noncontrolling interests	—	—		—			—			—			0.4		—	—		—	—		—		—			—			(0.6		)
Balance, June 30, 2017	347.0	$	3.5	$	2,427.1		$	794.2		$	(55.3	)	$	3.5
Balance, June 29, 2018															349.0	$	3.5	1.4	$	—	$	3,836.8	$	1,853.9		$	(69.6	)	$	17.3

See the accompanying Notes to the Consolidated ~~and Combined~~ Condensed Financial Statements.

FORTIVE CORPORATION AND SUBSIDIARIES

CONSOLIDATED ~~AND COMBINED~~ CONDENSED STATEMENTS OF CASH FLOWS

($ in millions)

(unaudited)


	Six Months Ended						Six Months Ended
	June 30, 2017			July 1, 2016			June 29, 2018			June 30, 2017
Cash flows from operating activities:
Net earnings	$	439.8		$	420.9		$	556.2		$	439.8
Noncash items:
Depreciation	47.2			44.1			69.1			47.2
Amortization	26.6			44.7			49.1			26.6
Stock-based compensation expense	25.3			22.4			26.5			25.3
Change in accounts receivable, net	(20.7		)	29.9			(54.0		)	(20.7		)
Change in inventories	(7.9		)	(36.3		)	(68.4		)	(7.9		)
Change in trade accounts payable	(28.8		)	(12.0		)	41.0			(28.8		)
Change in prepaid expenses and other assets	(8.3		)	(5.3		)	(42.0		)	(8.3		)
Change in accrued expenses and other liabilities	(79.2		)	(20.6		)	(64.7		)	(79.2		)
Net cash provided by operating activities	394.0			487.8			512.8			394.0
Cash flows from investing activities:
Cash paid for acquisitions	—			(12.8		)	(9.3		)	—
Payments for additions to property, plant and equipment	(55.6		)	(61.4		)	(58.7		)	(55.6		)
All other investing activities	(3.0		)	4.4			3.9			(3.0		)
Net cash used in investing activities	(58.6		)	(69.8		)	(64.1		)	(58.6		)
Cash flows from financing activities:
Net repayments of borrowings (maturities of 90 days or less)	(158.8		)	—			(326.0		)	(158.8		)
Proceeds from borrowings (maturities longer than 90 days)	—			3,370.1
Cash dividend paid to Former Parent	—			(3,000.0		)
Proceeds from issuance of mandatory convertible preferred stock net of $36 million of issuance costs							1,338.2			—
Payment of dividends	(48.6		)	—			(48.7		)	(48.6		)
Net transfers to Former Parent	—			(300.9		)
All other financing activities	7.3			—			15.3			7.3
Net cash (used in) provided by financing activities	(200.1		)	69.2
Net cash provided (used) by financing activities							978.8			(200.1		)
Effect of exchange rate changes on cash and equivalents	29.9			—			(21.4		)	29.9
Net change in cash and equivalents	165.2			487.2			1,406.1			165.2
Beginning balance of cash and equivalents	803.2			—			962.1			803.2
Ending balance of cash and equivalents	$	968.4		$	487.2		$	2,368.2		$	968.4

See the accompanying Notes to the Consolidated ~~and Combined~~ Condensed Financial Statements.

FORTIVE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED ~~AND COMBINED~~ CONDENSED FINANCIAL STATEMENTS

NOTE 1. BUSINESS OVERVIEW ~~AND BASIS OF PRESENTATION~~

Fortive Corporation (“Fortive”, the “Company,” “we,” “us,” or ~~the “Company”~~“our”) is a diversified industrial growth company encompassing businesses that are recognized leaders in attractive markets. Our well-known brands hold leading positions in advanced instrumentation and solutions, transportation technology, sensing, automation and specialty, and franchise distribution markets. Our businesses design, develop, service, manufacture and market professional and engineered products, software and services for a variety of end markets, building upon leading brand names, innovative technology and significant market positions.

~~Separation from Danaher Corporation~~—We completed our separation from Danaher Corporation (“Danaher” or “Former Parent”) on July 2, 2016 (the “Separation”). The Separation was completed in the form of a pro rata distribution to Danaher stockholders of record on June 15, 2016 of 100 percent of the outstanding shares of Fortive Corporation held by Danaher.

Fortive was incorporated on November 10, 2015, accordingly, we had no shares or common equivalent shares outstanding prior to that date. The total number of shares outstanding on July 1, 2016, immediately prior to the Separation, was 345.2 million and is utilized for the calculation of both basic and diluted net earnings per share (“EPS”) for all periods prior to the Separation. For further discussion of the Separation refer to Note 1 of our 2016 Annual Report on Form 10-K.

~~Basis of Presentation~~—We prepared the unaudited consolidated ~~and combined~~ condensed financial statements included herein in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) applicable for interim periods. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations; however, we believe the disclosures are adequate to make the information presented not misleading. The consolidated ~~and combined~~ condensed financial statements included herein should be read in conjunction with the audited annual consolidated ~~and combined~~ financial statements as of and for the year ended December 31, ~~2016~~2017 and the ~~Notes~~footnotes (“Notes”) thereto included within our ~~2016~~2017 Annual Report on Form 10-K.

In our opinion, the accompanying financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to fairly present our financial position as of June ~~30, 2017~~29, 2018 and December 31, ~~2016,~~2017, and our results of operations and cash flows for the three and six months ended June 29, 2018 and June 30, ~~2017 and July 1, 2016.~~

~~Prior to the Separation, our businesses were comprised~~2017. Reclassification of certain ~~Danaher operating units (the “Fortive Businesses”). The combined condensed financial statements for periods~~ prior to the Separation were derived from Danaher’s consolidated financial statements and accounting records and prepared in accordance with GAAP for the preparation of carved-out combined financial statements. Prior to the Separation, all revenues and costs as well as assets and liabilities directly associated with Fortiveyear amounts have been ~~included in the combined condensed financial statements. Additionally, the combined condensed financial statements for periods prior~~made to ~~the Separation included allocations of certain general, administrative, sales and marketing expenses and cost of sales from Danaher’s corporate office and from other Danaher businesses~~conform to Fortive, and allocations of related assets, and liabilities, as applicable. The allocations were determined on a reasonable basis; however, the amounts are not necessarily representative of the amounts that would have been reflected in the financial statements had we been operating independently of Danaher during the applicable periods. Accordingly, our combined condensed financial statements may not be indicative of our results had we been a separate, stand-alone entity throughout the periods presented. For further discussion of related party allocations prior to the Separation, including the method for such allocation, refer to Note 19 of our 2016 Annual Report on Form 10-K.

Following the Separation, the consolidated financial statements include the accounts of Fortive and those of our wholly-owned subsidiaries and no longer include any allocations from Danaher. Accordingly:

~~The Consolidated Condensed Balance Sheets at June 30, 2017 and December 31, 2016 consist of our consolidated balances.~~

The Consolidated Condensed Statements of Earnings and Statements of Comprehensive Income for the three and six months ended June 30, 2017 and the Consolidated Condensed Statement of Cash Flows and Statement of Changes in Equity for the six months ended June 30, 2017 consist of our consolidated results. The Combined Condensed Statements of Earnings and Statements of Comprehensive Income for the three and six months ended July 1, 2016 and Combined Condensed Statement of Cash Flows for the six months ended July 1, 2016, consist of the combined results of the Fortive Businesses.

current year presentation.

Accumulated Other Comprehensive Income (Loss)—~~The changes in accumulated other comprehensive income (loss) by component are summarized below ($ in millions).~~ Foreign currency translation adjustments are generally not adjusted for income taxes as they relate to indefinite investments in non-U.S. subsidiaries. The changes in accumulated other comprehensive income (loss) by component are summarized below ($ in millions):


	Foreign currency translation adjustments			Pension & post- retirement plan benefit adjustments ^(b)				Total			Foreign currency translation adjustments			Pension adjustments				Total
For the Three Months Ended June 30, 2017:
Balance, March 31, 2017	$	(29.0	)	$	(72.4	)		$	(101.4	)
For the Three Months Ended June 29, 2018:
Balance, March 30, 2018											$	100.4		$	(70.9	)		$	29.5
Other comprehensive income (loss) before reclassifications, net of income taxes	45.2			—				45.2			(99.8		)	—				(99.8		)
Amounts reclassified from accumulated other comprehensive income (loss):
Increase (decrease)	—			1.1			^(a)	1.1			—			0.9			^(a)	0.9
Income tax impact	—			(0.2		)		(0.2		)	—			(0.2		)		(0.2		)
Amounts reclassified from accumulated other comprehensive income (loss), net of income taxes	—			0.9				0.9			—			0.7				0.7
Net current period other comprehensive income (loss), net of income taxes	45.2			0.9				46.1			(99.8		)	0.7				(99.1		)
Balance, June 30, 2017	$	16.2		$	(71.5	)		$	(55.3	)

For the Three Months Ended July 1, 2016:
Balance, April 1, 2016	$	73.3		$	(64.6	)		$	8.7
Other comprehensive income (loss) before reclassifications, net of income taxes	(10.6		)	—				(10.6		)
Amounts reclassified from accumulated other comprehensive income (loss):
Increase (decrease)	—			1.5			^(a)	1.5
Income tax impact	—			(0.4		)		(0.4		)
Amounts reclassified from accumulated other comprehensive income (loss), net of income taxes	—			1.1				1.1
Net current period other comprehensive income (loss), net of income taxes	(10.6		)	1.1				(9.5		)
Balance, July 1, 2016	$	62.7		$	(63.5	)		$	(0.8	)
Balance, June 29, 2018											$	0.6		$	(70.2	)		$	(69.6	)
^(a) This accumulated other comprehensive income (loss) component is included in the computation of net periodic pension cost (refer to Note 7 for additional details).											^(a) This accumulated other comprehensive income (loss) component is included in the computation of net periodic pension cost (refer to Note 7 for additional details).


											Foreign currency translation adjustments			Pension adjustments				Total
For the Three Months Ended June 30, 2017:
Balance, March 31, 2017											$	(29.0	)	$	(72.4	)		$	(101.4	)
Other comprehensive income (loss) before reclassifications, net of income taxes											45.2			—				45.2
Amounts reclassified from accumulated other comprehensive income (loss):
Increase (decrease)											—			1.1			^(a)	1.1
Income tax impact											—			(0.2		)		(0.2		)
Amounts reclassified from accumulated other comprehensive income (loss), net of income taxes											—			0.9				0.9
Net current period other comprehensive income (loss), net of income taxes											45.2			0.9				46.1
Balance, June 30, 2017											$	16.2		$	(71.5	)		$	(55.3	)

For the Six Months Ended June 29, 2018:
Balance, December 31, 2017											$	64.0		$	(71.6	)		$	(7.6	)
Other comprehensive income (loss) before reclassifications, net of income taxes											(63.4		)	—				(63.4		)
Amounts reclassified from accumulated other comprehensive income (loss):
Increase (decrease)											—			1.8			^(a)	1.8
Income tax impact											—			(0.4		)		(0.4		)
Amounts reclassified from accumulated other comprehensive income (loss), net of income taxes											—			1.4				1.4
Net current period other comprehensive income (loss)											(63.4		)	1.4				(62.0		)
Balance, June 29, 2018											$	0.6		$	(70.2	)		$	(69.6	)
	Foreign currency translation adjustments			Pension & post- retirement plan benefit adjustments ^(b)				Total
For the Six Months Ended June 30, 2017:
Balance, December 31, 2016	$	(72.6	)	$	(73.2	)		$	(145.8	)	$	(72.6	)	$	(73.2	)		$	(145.8	)
Other comprehensive income (loss) before reclassifications, net of income taxes	88.8			—				88.8			88.8			—				88.8
Amounts reclassified from accumulated other comprehensive income (loss):
Increase (decrease)	—			2.2			^(a)	2.2			—			2.2			^(a)	2.2
Income tax impact	—			(0.5		)		(0.5		)	—			(0.5		)		(0.5		)
Amounts reclassified from accumulated other comprehensive income (loss), net of income taxes	—			1.7				1.7			—			1.7				1.7
Net current period other comprehensive income (loss)	88.8			1.7				90.5			88.8			1.7				90.5
Balance, June 30, 2017	$	16.2		$	(71.5	)		$	(55.3	)	$	16.2		$	(71.5	)		$	(55.3	)

For the Six Months Ended July 1, 2016:
Balance, December 31, 2015	$	51.2		$	(65.6	)		$	(14.4	)
Other comprehensive income (loss) before reclassifications, net of income taxes	11.5			—				11.5
Amounts reclassified from accumulated other comprehensive income (loss):
Increase	—			2.8			^(a)	2.8
Income tax impact	—			(0.7		)		(0.7		)
Amounts reclassified from accumulated other comprehensive income (loss), net of income taxes	—			2.1				2.1
Net current period other comprehensive income (loss)	11.5			2.1				13.6
Balance, July 1, 2016	$	62.7		$	(63.5	)		$	(0.8	)

^(a) This accumulated other comprehensive income (loss) component is included in the computation of net periodic pension cost (refer to Note 6 for additional details).
^(b) Includes balances relating to non-U.S. employee defined benefit plans, supplemental executive retirement plans and other postretirement employee benefit plans.
^(a) This accumulated other comprehensive income (loss) component is included in the computation of net periodic pension cost (refer to Note 7 for additional details).											^(a) This accumulated other comprehensive income (loss) component is included in the computation of net periodic pension cost (refer to Note 7 for additional details).

~~New~~Recently Issued Accounting Standards—In ~~May 2017,~~June 2016, the Financial Accounting Standards Board ~~(“FASB”~~(the “FASB”) issued Accounting Standards Update (“ASU”) No. ~~2017-09,~~2016-13, ~~Compensation—Stock Compensation~~Financial Instruments-Credit Losses (Topic ~~718)~~326): ~~Scope~~Measurement of ~~Modification Accounting~~Credit Losses on Financial Instruments, which ~~provided clarity~~amends the impairment model by requiring entities to use a forward-looking approach, based on ~~which changes~~expected losses, to ~~the terms or conditions~~estimate credit losses on certain types of ~~share-based payment awards require an entity to apply the modification accounting provisions required in Topic 718.~~financial instruments, including trade receivables. This standard is effective for us beginning January 1, ~~2018 (with~~2020, with early adoption permitted, including adoption in any interim period for which financial statements have not yet been issued). We do not expect the adoption of this standard will have a material impact on our financial statements.

~~In March 2017, the FASB issued ASU No. 2017-07,~~ ~~Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost~~, which aims to improve the presentation of net periodic pension cost. Under current accounting standards, all components of net periodic pension costs are aggregated and reported in cost of sales or selling, general and administrative expenses in the financial statements. Under the new standard we will be required to report only the service cost component in cost of sales or selling, general and administrative expenses; and the other components of net periodic pension costs (which include interest costs, expected return on plan assets and amortization of net loss) will be required to be presented in non-operating expenses. The presentation requirement of this standard is effective for us beginning January 1, 2018 (with early adoption permitted) using a retrospective transition approach and provides for certain practical expedients.permitted. We are currently evaluating the impact of this standard on our financial statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which will require, among other items, lessees to recognize a right-of-use asset and a lease liability for most leases. The standard also requires ~~disclosures by~~ lessees and lessors ~~about~~to disclose the amount, timing and uncertainty of cash flows arising from leases. The accounting applied by a lessor is largely

unchanged from ~~that applied under~~ the current standard. This standard is effective for us beginning January 1, 2019 (with early adoption permitted) using a modified retrospective transition approach and provides for certain practical expedients. ~~We are currently evaluating the impact of this standard on our financial statements.~~

In ~~May 2014,~~September 2017, the FASB issued

ASU No. ~~2014-09,~~2017-13, Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842), which impacts virtually all aspects of an entity’s revenue recognition. The core principle of the new standard is that revenue should be recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. During 2016, the FASB issued several amendments to the standard, including clarification to theprovided additional implementation guidance on reporting revenues as a principal versus an agent, identifying performance obligations, accounting for intellectual property licenses, assessing collectability, presentation of sales taxes, impairment testing for contract costs and disclosure of performance obligations. The new standard will also require additional disclosures intended to provide users of financial statements comprehensive information about the nature, amount, timing and uncertainty of revenue and cash flows from customer contracts. The two permitted transition methods under the new standard are the full retrospective method, in which case the standard would be applied to each prior reporting period presented and the cumulative effect of applying the standard would be recognized at the earliest period shown, or the modified retrospective method, in which case the cumulative effect of applying the standard would be recognized at the date of initial application. We currently anticipate adopting this standard beginning January 1, 2018 using the modified retrospective method.

previously issued ASU. We are ~~currently completing our assessment and quantifying~~in the process of assessing the impact of the ~~new revenue~~ standard and designing related internal control procedures. Based on our ~~financial statements and related disclosures. We~~efforts to date, we expect the recognition of ~~revenue~~the right-of-use asset and lease liability for our real estate and equipment leases will have a ~~majority~~material impact on the Consolidated Balance Sheets. We do not expect this standard to have a material impact on our future Consolidated Statements of customer contracts to remain substantially unchanged. However, we are continuing to assess all potential impacts of the standard and we currently believe the more significant impacts relate to certain customer contracts that will be recognized over time, accounting for any required deferral of commissions and changes to the timing of recognition of revenue and costs related to certain warranty arrangements. Furthermore, we anticipate that our disclosures will be expanded to meet the new standard’s disclosure objectives.Earnings.

NOTE 2. ACQUISITIONS

On July 27, 2017, we entered into a definitive agreement to acquire all the outstanding shares of Industrial Scientific Corporation, a leading provider of portable gas detection equipment and safety-as-a-service solutions, in exchange for cash consideration of approximately $600 million. We expect the acquisition to close in 2017, subject to satisfaction of customary closing conditions, including regulatory approvals. We anticipate that Industrial Scientific Corporation will become part of our Professional Instrumentation segment following the closing of the acquisition. AND DIVESTITURES

For a ~~full~~ description of our material acquisition activity, ~~reference is made~~refer to Note 3 of our ~~2016~~2017 Annual Report on Form 10-K.

We continually evaluate potential acquisitions and divestitures that ~~either strategically fit~~align with our ~~existing~~ portfolio ~~or expand~~strategy and expedite the evolution of our portfolio into a new and attractive business ~~area.~~areas. We have completed a number of acquisitions that have been accounted for as purchases and have resulted in the recognition of goodwill in our financial statements. This goodwill arises because the purchase ~~prices~~price for ~~these businesses reflect~~each business reflects a number of factors including the future earnings and cash flow potential of ~~these businesses,~~the business, the multiple to earnings, cash flow and other factors at which similar businesses have been purchased by other acquirers, the competitive nature of the processes by which we acquired the ~~businesses,~~business, the avoidance of the time and costs which would be required (and the associated risks that would be encountered) to enhance our existing offerings to key target markets and develop new and profitable businesses, and the complementary strategic fit and resulting synergies ~~these businesses bring~~the business brings to existing operations.

We make an initial allocation of the purchase price at the date of acquisition based ~~upon~~on our understanding of the fair value of the acquired assets and assumed liabilities. We obtain this information during due diligence and through other sources. In the months after closing, as we obtain additional information about these assets and liabilities, including through tangible and intangible asset appraisals, and learn more about the newly acquired business, we are able to refine the estimates of fair value and more accurately allocate the purchase price. Only items identified as of the acquisition date are considered for subsequent adjustment. We are in the process of obtaining valuations of certain acquired ~~intangible~~ assets and evaluating the tax impact in connection with certain acquisitions. We make appropriate adjustments to purchase price allocations prior to completion of the applicable measurement period, as required.

Pending Acquisitions

Advanced Sterilization Products

On June 6, 2018, we made a binding offer to Ethicon, Inc., a subsidiary of Johnson & Johnson, to purchase its Advanced Sterilization Products (“ASP”) business for approximately $2.7 billion in cash. The transaction is expected to close no later than early 2019 and is subject to customary closing conditions, including regulatory approvals.

ASP is a leading global provider of innovative sterilization and disinfection solutions and pioneered low-temperature hydrogen peroxide sterilization technology. ASP’s products, which are sold globally, include the STERRAD system for sterilizing instruments and the EVOTECH and ENDOCLENS systems for endoscope reprocessing and cleaning.

Gordian

On July 2, 2018, we entered into a definitive agreement to acquire TGG Ultimate Holdings, Inc. and its subsidiaries, including The Gordian Group, Inc. (“Gordian”), a privately-held, leading provider of construction cost data, software and service. The purchase price for the acquisition is $775 million and the transaction is expected to close in the third quarter of 2018. The acquisition is subject to customary closing conditions, including regulatory approvals, and is expected to be financed with available cash.

Gordian’s comprehensive offerings serve the entire building lifecycle and provide workflow solutions to optimize every stage of an asset owner’s construction and maintenance needs, including connecting the owner and contractors in the same exchange and providing access to cost and facilities metrics databases via a subscription-based model.

Planned Divestiture of A&S Business

On March 7, 2018, we entered into a definitive agreement to combine four of our operating companies from our Automation & Specialty platform (the “A&S Business”) with Altra Industrial Motion Corp (“Altra”) in a tax-efficient Reverse Morris Trust transaction. In the transaction, we will receive approximately $1.4 billion in cash and debt retirement, and our shareholders will receive in the aggregate 35 million shares of Altra, representing approximately 54% of outstanding shares of Altra common stock immediately following the transaction. The A&S Business includes the market-leading brands of Kollmorgen, Thomson, Portescap and Jacobs Vehicle Systems, and generated approximately $907 million in revenue for the year ended December 31, 2017. The transaction is expected to close by the end of 2018, subject to customary closing conditions, including receipt of certain regulatory approvals, Altra shareholder approval, and our receipt of confirmation of the tax treatment of certain matters. Upon closing of the transaction, we will classify the historical results of the A&S Business as discontinued operations in our financial statements.

NOTE 3. GOODWILL

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

Balance, December 31, 2016 $ 3,979.0
Foreign currency translation & other 53.1
Balance, June 30, 2017 $ 4,032.1



Balance, December 31, 2017	$	5,098.5
Attributable to 2018 acquisitions	1.8
Foreign currency translation & other	(18.4		)
Balance, June 29, 2018	$	5,081.9

The carrying value of goodwill by segment is summarized as follows ($ in millions):


	June 30, 2017		December 31, 2016		June 29, 2018		December 31, 2017
Professional Instrumentation	$	2,457.8	$	2,423.7	$	3,321.1	$	3,331.0
Industrial Technologies	1,574.3		1,555.3		1,760.8		1,767.5
Total goodwill	$	4,032.1	$	3,979.0	$	5,081.9	$	5,098.5

We have not identified any “triggering” events which would have indicated a potential impairment of goodwill in the six months ended June ~~30, 2017.~~29, 2018.

NOTE 4. FAIR VALUE MEASUREMENTS

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

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

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. AThe classification of a financial asset or ~~liability’s classification~~liability within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

ABelow is a summary of financial 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		Quoted Prices in Active Market (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
June 30, 2017
June 29, 2018
Deferred compensation liabilities	$	—	$	18.9	$	—	$	18.9	$	—	$	21.7	$	—	$	21.7
December 31, 2016
December 31, 2017
Deferred compensation liabilities	$	—	$	14.8	$	—	$	14.8	$	—	$	20.9	$	—	$	20.9

Certain ~~of our~~ 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 presented as a component of our compensation and benefits accrual included in other long-term liabilities in the accompanying Consolidated Condensed 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 (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, which are based on the applicable earnings rates.

Fair Value of Financial Instruments

The carrying ~~amounts~~amount and fair ~~values~~value of financial instruments ~~were~~are as follows ($ in millions):

June 30, 2017 December 31, 2016
Carrying Amount Fair Value Carrying Amount Fair Value
Long-term borrowings $ 3,208.1
$ 3,224.0
$ 3,358.0
$ 3,321.4



	June 29, 2018				December 31, 2017
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Current portion of long-term debt	$	799.3	$	796.4	$	—	$	—
Long-term debt, net of current maturities	$	2,927.4	$	2,823.9	$	4,056.2	$	4,051.8

As of June ~~30, 2017~~29, 2018 and December 31, ~~2016,~~2017, the current portion of long-term ~~borrowings~~debt and long-term debt, net of current maturities were categorized as Level 1.

The fair ~~value~~values of the current portion of long-term ~~borrowings was~~debt and long-term debt 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 incurrence of the borrowing. The fair ~~values~~value of cash and cash equivalents, accounts receivable, net and trade accounts payable ~~approximate~~approximates their carrying ~~amounts~~amount due to the short-term maturities of these instruments.

NOTE 5. FINANCING AND CAPITAL

Financing

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


	June 30, 2017		December 31, 2016		June 29, 2018		December 31, 2017
U.S. dollar-denominated commercial paper	$	51.5	$	347.9	$	339.8	$	665.1
Euro-denominated commercial paper	172.0		26.8		275.2		282.7
Variable interest rate term loan	500.0		500.0
U.S. dollar variable interest rate term loan due 2019					500.0		500.0
Yen variable interest rate term loan due 2022					124.5		122.4
1.80% senior unsecured notes due 2019	298.6		298.3		299.3		298.9
2.35% senior unsecured notes due 2021	745.2		744.8		746.5		745.9
3.15% senior unsecured notes due 2026	890.4		890.1		891.5		891.0
4.30% senior unsecured notes due 2046	546.7		546.8		546.8		546.8
Other	3.7		3.3
Other long-term debt					3.1		3.4
Long-term debt	$	3,208.1	$	3,358.0	3,726.7		4,056.2
Less: current portion of long-term debt					799.3		—
Long-term debt, net of current maturities					$	2,927.4	$	4,056.2

~~Net~~Unamortized debt discounts, premiums and issuance costs of ~~$19.0~~$16.1 million and ~~$20.1~~$18.2 million as of June ~~30, 2017~~29, 2018 and December 31, ~~2016,~~2017, respectively, ~~and have been~~are netted against the aggregate principal amounts of the components of debt table above. Refer to Note 109 of our ~~2016~~2017 Annual Report on Form 10-K for ~~a full description~~further details of our debt financing.

We generally satisfy any short-term liquidity needs that are not met through operating cash flows and available cash primarily through issuances of commercial paper under our U.S. dollar and Euro-denominated commercial paper programs (“Commercial Paper Programs”). Credit support for the Commercial Paper Programs is provided by a five-year $1.5 billion senior unsecured revolving credit facility that expires on June 16, 2021 (the “Revolving Credit Facility”) which can also be used for working capital and other general corporate purposes. As of June ~~30, 2017,~~29, 2018, no borrowings were outstanding under the Revolving Credit Facility.

The details of our Commercial Paper Programs as of June ~~30, 2017 were~~29, 2018 are as follows ($ in millions):

Amount Outstanding Weighted average annual interest rate Weighted average remaining maturity (in days)
U.S. dollar-denominated $ 51.5
1.48 % 6
Euro-denominated $ 172.0
(0.07 )% 37



	Carrying value		Annual effective rate		Weighted average remaining maturity (in days)
U.S. dollar-denominated commercial paper	$	339.8	2.39	%	9
Euro-denominated commercial paper	$	275.2	(0.10	)%	76

We classified our borrowings outstanding under the Commercial Paper Programs ~~as of June 30, 2017~~ as long-term debt in the accompanying Consolidated Condensed Balance Sheets as we had 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.

As of June ~~30, 2017,~~29, 2018, we were in compliance with all of our ~~debt~~ covenants.

~~Registration Rights Agreement~~Capital

~~During 2016,~~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 ~~a private placement $2.5~~full to purchase 180,000 shares. We received $1.34 billion ~~of senior unsecured notes~~ in ~~multiple series with maturity dates ranging~~proceeds from ~~June 15, 2019 to June 15, 2046 (collectively, the “Private Notes”). In connection with~~ the issuance of the ~~Private Notes,~~MCPS, net of $36 million of issuance costs. We will use the net proceeds from the issuance of MCPS to fund our acquisition activities and for general corporate purposes, including repayment of debt, working capital and capital expenditures. We expect to pay up to an additional $1.5 million in issuance costs in the third quarter of 2018.

Each outstanding share of MCPS will convert automatically on July 1, 2021 (“the mandatory conversion date”) into between 10.8554 and 13.2979 common shares, subject to anti-dilution adjustments. The number of shares of our common stock issuable on conversion will be determined based on the average volume weighted average price per share of our common stock over the 20 consecutive trading day period preceding the mandatory conversion date. At any time prior to July 1, 2021, holders may elect to convert each share of the MCPS into shares of common stock at the rate of 10.8554, subject to anti-dilution adjustments. In the event of a fundamental change, the MCPS will convert at the fundamental change rates specified in the certificate of designations, and the holders of MCPS would be entitled to a fundamental change make-whole dividend.

We may pay declared dividends in cash or, subject to certain limitations, in shares of our common stock, or in any combination of cash and shares of our common stock in January, April, July and October of each year, commencing on October 1, 2018 and ending on July 1, 2021. Dividends that are declared will be payable on the dividend payment dates to holders of record on the immediately preceding March 15, June 15, September 15 and December 15 (each a “record date”), whether or not such holders convert their shares, or such shares are automatically converted, after the corresponding record date.

Dividends on our MCPS are payable on a cumulative basis when, as and if declared by our Board, at an annual rate of 5.0% of the liquidation preference of $1,000 per share (equivalent to $50.00 annually per share). The dividend on the MCPS for the first dividend period will be $12.78 per share and will be payable, when, as and if declared, on October 1, 2018 to the holders of record at the close of business on September 15, 2018. No dividends on our MCPS were declared as of June 29, 2018.

Subsequent Event

On July 20, 2018, we ~~entered into a registration rights agreement, pursuant~~prepaid $325 million of our outstanding U.S variable interest rate term loan due in 2019. There were no prepayment penalties associated with this payment.

NOTE 6. SALES

On January 1, 2018, we adopted ASU 2014-09 Revenue from Contracts with Customers (“Topic 606”)using the modified retrospective method applied to those contracts which we were ~~obligated to use commercially reasonable efforts to file with the SEC,~~not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under Topic 606, while prior period amounts are not adjusted and ~~cause~~continue to be ~~declared effective,~~reported in accordance with our historic accounting policy under ASC Topic 605 Revenue Recognition. We recorded an immaterial transition adjustment to opening retained earnings as of January 1, 2018 due to the cumulative impact of adopting Topic 606. The impact to sales as a ~~registration statement~~result of applying Topic 606 was immaterial for the three and six months ended June 29, 2018.

Our significant accounting policies are detailed in Note 2 of our 2017 Annual Report on Form 10-K. Significant changes to our accounting policies as a result of adopting Topic 606 are discussed below and have been applied prospectively from the adoption date of January 1, 2018:

Revenue Recognition—We derive revenues primarily from the sale of Professional Instrumentation and Industrial Technologies 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.

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 customers’ 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, installation, training, consulting, services and/or post contract support (“PCS”). Generally, these elements are delivered within the same reporting period, except PCS or other services. We allocate the contract transaction price to each performance obligation using the observable price that the good or service sells for separately in similar circumstances and to similar customers, and/or a residual approach when the observable selling price of a good or service is not known and is either highly variable or uncertain. Allocating the transaction price to each performance obligation sometimes requires significant judgment.

Our principal terms of sale are FOB Shipping Point, or equivalent, and, as such, we primarily record revenue upon shipment as we have transferred control to the customer at that point and our performance obligations are satisfied. We evaluate contracts with delivery terms other than FOB Shipping Point and recognize revenue when we have transfered control and satisfied our performance obligations. If any significant obligation to the customer with respect to ~~an offer~~a sales transaction remains to ~~exchange each series~~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 ~~Private Notes for registered notes (“Registered Notes”) with substantially identical terms (“Exchange Offer”). Accordingly,~~the agreement.

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 immaterial as of June 29, 2018.

Contract Costs — We incur direct incremental costs to obtain certain contracts, typically sales-related commissions. Deferred sales-related commissions are generally not capitalized as the amortization period is one year or less, and we elected to use the practical expedient to expense these sales commissions as incurred.

Impairment losses recognized on May 5, 2017 we filed a Form S-4 with the SEC (the “Registration Statement”), which Registration Statement was declared effective on May 17, 2017. On May 17, 2017, we launched the Exchange Offer, which expired on June 14, 2017. All Private Notesour contract-related assets were ~~tendered and exchanged for Registered Notes~~immaterial in the ~~Exchange Offer.~~three and six months months ended June 29, 2018.

Contract Liabilities — Our contract liabilities consist of deferred revenue generally related to PCS and extended warranty sales, where in most cases we receive up-front payment and recognize revenue over the support term. We classify deferred revenue as current or noncurrent based on the timing of when we expect to recognize revenue. The noncurrent portion of deferred revenue is included in other long-term liabilities in the accompanying Consolidated Condensed Balance Sheets.

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



	June 29, 2018		December 31, 2017
Deferred revenue - current	$	210.5	$	213.4
Deferred revenue - noncurrent	91.8		86.9
Total contract liabilities	$	302.3	$	300.3

In the three and six months ended June 29, 2018, we recognized $21 million and $64 million of revenue related to our contract liabilities at January 1, 2018, respectively. The change in our contract liabilities from December 31, 2017 to June 29, 2018 was primarily due to the timing of cash receipts and sales of PCS and extended warranty services.

Remaining Performance Obligations — Our remaining performance obligations represent the transaction price of firm, noncancelable orders, with expected delivery dates to customers greater than one year from June 29, 2018, 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 performance obligations attributable to each of our segments is as follows ($ in millions):



	June 29, 2018
Professional Instrumentation	$	117.0
Industrial Technologies	453.2
Total	$	570.2

The majority of remaining performance obligations are related to service and support contracts, which we expect to fulfill approximately 40 percent within the next two years, approximately 70 percent within the next three years and substantially all within four years.

Disaggregation of Revenue

We disaggregate revenue from contracts with customers by geographic location, major product group and end market for each of our segments, as we believe it best depicts how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors. Disaggregation of revenue for the three months ended June 29, 2018 is presented as follows ($ in millions):



	Total		Professional Instrumentation		Industrial Technologies
Geographic:
United States	$	993.5	$	435.9	$	557.6
China	161.7		101.0		60.7
Germany	84.3		32.0		52.3
All other (each country individually less than 5% of total sales)	616.5		320.1		296.4
Total	$	1,856.0	$	889.0	$	967.0

Major Products Group:
Professional tools and equipment	$	1,245.9	$	719.8	$	526.1
Industrial automation, controls and sensors	333.5		104.8		228.7
Franchise distribution	152.2		—		152.2
All other	124.4		64.4		60.0
Total	$	1,856.0	$	889.0	$	967.0

End markets:
Direct sales:
Retail fueling^(a)	$	460.9	$	—	$	460.9
Industrial & Manufacturing	175.4		97.2		78.2
Vehicle repair^(a)	137.7		—		137.7
Utilities & Power	46.6		46.0		0.6
Other	541.4		331.8		209.6
Total direct sales	1,362.0		475.0		887.0
Distributors^(a)	494.0		414.0		80.0
Total	$	1,856.0	$	889.0	$	967.0

(a) Retail fueling and vehicle repair include sales to these end markets made through third-party distributors. Total distributor sales for the three months ended June 29, 2018 was $858.4 million.

Disaggregation of revenue for the three months ended June 30, 2017 is presented as follows ($ in millions):



	Total		Professional Instrumentation		Industrial Technologies
Geographic:
United States	$	888.9	$	353.7	$	535.2
China	134.2		91.9		42.3
Germany	71.7		27.5		44.2
All other (each country individually less than 5% of total sales)	534.0		285.9		248.1
Total	$	1,628.8	$	759.0	$	869.8

Major Products Group:
Professional tools and equipment	$	1,055.0	$	593.3	$	461.7
Industrial automation, controls and sensors	305.6		98.5		207.1
Franchise distribution	149.5		—		149.5
All other	118.7		67.2		51.5
Total	$	1,628.8	$	759.0	$	869.8

End markets:
Direct sales:
Retail fueling^(a)	$	401.5	$	—	$	401.5
Industrial & Manufacturing	103.6		57.5		46.1
Vehicle repair^(a)	135.6		—		135.6
Utilities & Power	59.3		57.9		1.4
Other	498.7		288.2		210.5
Total direct sales	1,198.7		403.6		795.1
Distributors^(a)	430.1		355.4		74.7
Total	$	1,628.8	$	759.0	$	869.8

(a) Retail fueling and vehicle repair include sales to these end markets made through third-party distributors. Total distributor sales for the three months ended June 30, 2017 was $774.2 million.

Disaggregation of revenue for the six months ended June 29, 2018 is presented as follows ($ in millions):



	Total		Professional Instrumentation		Industrial Technologies
Geographic:
United States	$	1,910.3	$	844.3	$	1,066.0
China	318.1		209.3		108.8
Germany	170.8		67.9		102.9
All other (each country individually less than 5% of total sales)	1,197.5		639.2		558.3
Total	$	3,596.7	$	1,760.7	$	1,836.0

Major Products Group:
Professional tools and equipment	$	2,366.0	$	1,426.3	$	939.7
Industrial automation, controls and sensors	661.3		209.4		451.9
Franchise distribution	325.1		—		325.1
All other	244.3		125.0		119.3
Total	$	3,596.7	$	1,760.7	$	1,836.0

End markets:
Direct sales:
Retail fueling^(a)	$	809.6	$	—	$	809.6
Industrial & Manufacturing	331.6		187.8		143.8
Vehicle repair^(a)	296.4		—		296.4
Utilities & Power	102.7		101.5		1.2
Other	1,059.3		632.6		426.7
Total direct sales	2,599.6		921.9		1,677.7
Distributors^(a)	997.1		838.8		158.3
Total	$	3,596.7	$	1,760.7	$	1,836.0

(a) Retail fueling and vehicle repair include sales to these end markets made through third-party distributors. Total distributor sales for the six months ended June 29, 2018 was $1,647.3 million.

Disaggregation of revenue for the six months ended June 30, 2017 is presented as follows ($ in millions):



	Total		Professional Instrumentation		Industrial Technologies
Geographic:
United States	$	1,735.7	$	684.1	$	1,051.6
China	264.1		182.4		81.7
Germany	141.3		56.2		85.1
All other (each country individually less than 5% of total sales)	1,022.9		552.4		470.5
Total	$	3,164.0	$	1,475.1	$	1,688.9

Major Products Group:
Professional tools and equipment	$	2,016.6	$	1,151.9	$	864.7
Industrial automation, controls and sensors	596.3		194.6		401.7
Franchise distribution	321.2		—		321.2
All other	229.9		128.6		101.3
Total	$	3,164.0	$	1,475.1	$	1,688.9

End markets:
Direct sales:
Retail fueling^(a)	$	748.0	$	—	$	748.0
Industrial & Manufacturing	213.5		122.6		90.9
Vehicle repair^(a)	293.5		—		293.5
Utilities & Power	111.9		109.6		2.3
Other	959.2		549.9		409.3
Total direct sales	2,326.1		782.1		1,544.0
Distributors^(a)	837.9		693.0		144.9
Total	$	3,164.0	$	1,475.1	$	1,688.9

(a) Retail fueling and vehicle repair include sales to these end markets made through third-party distributors. Total distributor sales for the six months ended June 30, 2017 was $1,521.1 million.

NOTE 6.7. PENSION PLANS

~~We have~~For a full description of our noncontributory defined benefit pension plans, ~~outside~~including the U.S. plan acquired in 2017, refer to Note 10 of ~~the United States.~~ our 2017 Annual Report on Form 10-K.

The following sets forth the components of our net periodic pension costs associated with ~~these~~our noncontributory defined benefit pension plans ($ in millions):


	Three Months Ended						Six Months Ended						Three Months Ended						Six Months Ended
	June 30, 2017			July 1, 2016			June 30, 2017			July 1, 2016			June 29, 2018			June 30, 2017			June 29, 2018			June 30, 2017
U.S. Pension Benefits:
Interest cost													$	0.3		$	—		$	0.6		$	—
Expected return on plan assets													(0.3		)	—			(0.7		)	—
Net periodic pension cost													$	—		$	—		$	(0.1	)	$	—

Non-U.S. Pension Benefits:
Service cost	$	1.0		$	0.9		$	2.0		$	1.7		$	0.4		$	1.0		$	0.9		$	2.0
Interest cost	1.5			1.9			2.9			3.8			1.5			1.5			3.0			2.9
Expected return on plan assets	(1.8		)	(2.1		)	(3.6		)	(4.1		)	(1.8		)	(1.8		)	(3.7		)	(3.6		)
Amortization of net loss	1.1			1.5			2.2			2.8			0.9			1.1			1.8			2.2
Net curtailment and settlement loss recognized													0.6			—			0.6			—
Net periodic pension cost	$	1.8		$	2.2		$	3.5		$	4.2		$	1.6		$	1.8		$	2.6		$	3.5

~~Net~~On January 1, 2018, we retrospectively adopted ASU No. 2017-07, Compensation–Retirement Benefits (Topic 715). Accordingly, we have included all components of net periodic pension costs, ~~are~~with the exception of service costs, in other non-operating expenses as a component of non-operating income in the accompanying Consolidated Condensed Statements of Earnings. Service costs continue to be included in cost of sales and selling, general and administrative expenses in the accompanying Consolidated ~~and Combined~~ Condensed Statements of ~~Earnings.~~Earnings according to the classification of the participant’s compensation. This reclassification of prior year pension cost increased operating income by $0.8 million and $1.5 million for the three and six months ended June 30, 2017, respectively.

Employer Contributions

During ~~2017,~~2018, our cash contribution requirements for our non-U.S. defined benefit pension plans are expected to be approximately $10 million. We do not expect to make contributions to the U.S. plan during 2018. The ~~ultimate~~actual amounts to be contributed depend upon, among other things, legal requirements, underlying asset returns, the plan’s funded status, the anticipated tax deductibility of the contribution, local practices, market conditions, interest rates and other factors.

NOTE 7.8. INCOME TAXES

Our effective tax rates for the three and six months ended June ~~30, 2017,~~29, 2018 were ~~26.3%~~17.1% and ~~26.4%~~16.8%, respectively, as compared to ~~25.2%~~26.3% and ~~27.7%~~26.4% for the three and six months ended ~~July 1, 2016,~~June 30, 2017, respectively. The decrease for both the three and six month periods is due primarily to favorable impacts in 2018 resulting from a lower statutory tax rate in the United States and foreign-derived intangible income tax benefits, partially offset by the loss of the United States domestic production activities deduction, all of which are a result of the Tax Cuts and Jobs Act (“TCJA”), and other federal and international tax benefits.

Our effective tax rates for ~~2017~~2018 and ~~2016~~2017 differ from the U.S. federal statutory rate of 21% and 35%, respectively, due ~~principally~~primarily to our earnings outside the United States that are indefinitely reinvested and taxed at rates lower than the U.S. federal statutory rate, ~~and~~ the impact of credits and deductions provided by ~~law.~~law and the effect of favorable adjustments to the provisional estimates recorded in 2017 related to the TCJA as permitted under SEC Staff Accounting Bulletin No. 118 (“SAB 118”). We recorded an adjustment of $1.9 million to our provisional estimates during the three months ended June 29, 2018, which decreased tax expense and decreased our effective tax rate by 50 basis points, and was attributable to transition taxes, specifically from a decrease in foreign remittance taxes. We recorded an adjustment of $6.1 million to our provisional estimates during the six months ended June 29, 2018, which decreased tax expense and decreased our effective tax rate by 90 basis points, and was related to a $15.1 million decrease from revaluation of certain deferred tax assets and liabilities, a $1.9 million decrease related to transition taxes, specifically from decrease in foreign remittance taxes, and an offsetting $10.9 million increase from a reduction of foreign tax credits.We will continue to evaluate the effects of the TCJA on the 2017 provisional estimates through the end of the SAB 118 allowable measurement period. Refer to Note 11 of our 2017 Annual Report on Form 10-K for further details including disclosures pursuant to SAB 118 interpretive guidance, and provisional estimates for all TCJA effects.

On January 1, 2018, we adopted ASU No. 2016-16, Income Taxes (Topic 715): Intra-entity Transfers of Assets Other Than Inventory using the modified retrospective method, and recorded an immaterial adjustment to opening retained earnings as of January 1, 2018.

NOTE 8.9. STOCK-BASED COMPENSATION

~~We had no~~Our stock-based compensation plans prior to the Separation; however certain of our employees had participated in Danaher’s stock-based compensation plans (“Danaher Plans”), which provided for the grants of stock options, performance stock units (“PSUs”), and restricted stock units (“RSUs”) among other types of awards.

~~In connection with the Separation, the Company adopted the 2016 Stock Incentive Plan~~program (the “Stock Plan”)~~. Outstanding equity awards of Danaher held by our employees at the Separation date were converted into or replaced with Fortive equity awards under the Stock Plan. The Stock Plan~~ provides for the grant of stock appreciation rights, ~~RSUs, PSUs,~~performance stock units, restricted stock units, restricted stock awards and performance stock awards (collectively, “Stock Awards”), stock options or any other stock-based award. As of June ~~30, 2017,~~29, 2018, approximately 722 million shares of our common stock were ~~reserved~~available for subsequent issuance under the Stock Plan. For a full description of our stock-based compensation program refer to Note 1615 of our ~~2016~~2017 Annual Report on Form 10-K.

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. During the three and six months ended June 30, 2017, we realized a tax benefit of $6.9 million and $16.5 million, respectively, related to employee stock options that were exercised and Stock Awards that vested. As of January 1, 2017, we prospectively adopted ASU No. 2016-09, ~~Compensation—Stock Compensation (Topic 718).~~ Accordingly, we recorded 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 accompanying consolidated and combined condensed financial statements. Such Excess Tax Benefit was $5.2 million and $10.1 million during the three and six months ended June 30, 2017, respectively.

Stock-based Compensation Expense

Stock-based compensation has been recognized as a component of selling, general & administrative expenses in the accompanying Consolidated ~~and Combined~~ Condensed Statements of ~~Earnings. Under ASU 2016-09, we will continue to recognize stock-based compensation expense~~Earnings based on the portion of the awards that are ultimately expected to vest. Prior to the Separation, Danaher allocated stock-based compensation expense to the Company based on Fortive employees participating in the Danaher Plans. These allocations are reflected in the accompanying Combined Condensed Statement of Earnings for the three and six months ended July 1, 2016.

The following summarizes the components of our stock-based compensation expense under the Stock Plan ~~and the Danaher Plans~~ ($ in millions):


	Three Months Ended						Six Months Ended						Three Months Ended						Six Months Ended
	June 30, 2017			July 1, 2016			June 30, 2017			July 1, 2016			June 29, 2018			June 30, 2017			June 29, 2018			June 30, 2017
Stock Awards:
Pretax compensation expense	$	8.0		$	7.1		$	15.4		$	14.2		$	8.5		$	8.0		$	15.6		$	15.4
Income tax benefit	(3.1		)	(2.5		)	(5.6		)	(4.8		)	(1.8		)	(3.1		)	(3.3		)	(5.6		)
Stock Award expense, net of income taxes	4.9			4.6			9.8			9.4			6.7			4.9			12.3			9.8
Stock options:
Pretax compensation expense	5.3			3.8			9.9			8.2			6.1			5.3			10.9			9.9
Income tax benefit	(1.8		)	(1.3		)	(3.4		)	(2.8		)	(1.3		)	(1.8		)	(2.3		)	(3.4		)
Stock option expense, net of income taxes	3.5			2.5			6.5			5.4			4.8			3.5			8.6			6.5
Total stock-based compensation:
Pretax compensation expense	13.3			10.9			25.3			22.4			14.6			13.3			26.5			25.3
Income tax benefit	(4.9		)	(3.8		)	(9.0		)	(7.6		)	(3.1		)	(4.9		)	(5.6		)	(9.0		)
Total stock-based compensation expense, net of income taxes	$	8.4		$	7.1		$	16.3		$	14.8		$	11.5		$	8.4		$	20.9		$	16.3

The following summarizes the unrecognized compensation cost for the Stock Plan awards as of June ~~30, 2017.~~29, 2018. This compensation cost is expected to be recognized over a weighted average period of approximately two 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 $ 53.2
Stock options 50.0
Total unrecognized compensation cost $ 103.2

In connection with the exercise of certain stock options and the vesting of Stock Awards issued under the Stock Plan, a number of shares of Fortive common stock sufficient to fund statutory minimum tax withholding requirements has been withheld from the total shares issued or released to the award holder (though under the terms of the Stock Plan, the shares are considered to have been issued and are not added back to the pool of shares available for grant). During the six months ended June 30, 2017, approximately 133 thousand shares of Fortive common stock with an aggregate value of $7.7 million were withheld to satisfy this requirement. This withholding is treated as a reduction in additional paid-in capital in the accompanying Consolidated Condensed Statement of Changes in Equity.

~~Stock Options~~

~~The following summarizes the assumptions used in the Black-Scholes Merton option pricing model to value stock options granted under the Stock Plan during the six months ended June 30, 2017:~~



~~Risk-free interest rate~~	~~1.93% - 2.26%~~
~~Weighted average volatility~~^(a)	~~21.0~~	%
~~Dividend yield~~	~~0.5~~	%
~~Expected years until exercise~~	~~5.5 - 8.0~~

^(a) ~~Weighted average volatility was estimated based on an average historical stock price volatility of a group of peer companies, given our limited trading history.~~

~~The following summarizes option activity under the Stock Plan for the six months ended June 30, 2017 (in millions, except price per share and numbers of years):~~

Options
Weighted
Average
Exercise
Price

Weighted Average
Remaining
Contractual Term
(in years)

Aggregate
Intrinsic
Value
Outstanding as of December 31, 2016 10.7
$ 33.23

Granted 1.8
57.41

Exercised (0.7 ) 23.50

Canceled/forfeited (0.2 ) 42.51

Outstanding as of June 30, 2017 11.6
$ 37.40
6.7 $ 302.4
Vested and expected to vest as of June 30, 2017 ^(a)
11.2
$ 36.16
6.5 $ 295.8
Vested as of June 30, 2017 5.1
$ 27.25
4.7 $ 183.8

^(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 the second quarter of 2017 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 June 30, 2017. The amount of aggregate intrinsic value will change based on the price of Fortive’s common stock. The aggregate intrinsic value of options exercised during the six months ended June 30, 2017 was $25 million. Exercise of options during the first six months of 2017 resulted in cash receipts of $15 million.

~~Stock Awards~~

~~The following summarizes information related to unvested Stock Award activity under the Stock Plan for the six months ended June 30, 2017 (in millions; except price per share):~~

Number of
Stock Awards

Weighted Average
Grant-Date
Fair Value
Unvested as of December 31, 2016 2.2
$ 39.20
Granted 0.6
56.90
Vested (0.4 ) 36.27
Forfeited (0.1 ) 41.35
Unvested as of June 30, 2017 2.3
$ 44.11



Stock Awards	$	59.6
Stock options	56.0
Total unrecognized compensation cost	$	115.6

NOTE 9.10. COMMITMENTS AND CONTINGENCIES

For a description of our litigation and contingencies, ~~reference is made~~refer to Notes 1413 and 1514 of our ~~2016~~2017 Annual Report on Form 10-K.

Our operating leases extend for varying periods of time up to twenty years and, in some cases, contain renewal options that would extend existing terms beyond twenty years. Minimum rental payments for all operating leases having initial or remaining noncancelable lease terms in excess of one year for 2018 through 2022 and thereafter are: $48 million in 2018, $42 million in 2019, $31 million in 2020, $20 million in 2021, $16 million in 2022 and $20 million thereafter.

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.

The following is a rollforward of our accrued warranty liability ($ in millions):


Balance, December 31, 2016	$	65.0
Balance, December 31, 2017				$	69.4
Accruals for warranties issued during the period	35.8			37.2
Settlements made	(34.1		)	(39.4		)
Effect of foreign currency translation	0.2			(0.2		)
Balance, June 30, 2017	$	66.9
Balance, June 29, 2018				$	67.0

NOTE ~~10.~~11. NET EARNINGS PER SHARE

Basic ~~EPS~~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 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~~There were 1.5 million anti-dilutive options to purchase shares excluded from the diluted EPS calculation for both the three and six months ended June ~~30, 2017 the~~29, 2018.The anti-dilutive options to purchase shares excluded from the diluted EPS calculation were ~~immaterial.~~

We were incorporated on November 10, 2015, accordingly, we had no shares or common equivalent shares outstanding prior to that date. The total number of shares outstanding on July 1, 2016, immediately before the Separation, was 345.2 million and is utilizedimmaterial for the ~~calculation of both basic~~three and ~~diluted EPS for~~six months ended June 30, 2017.

The dilutive impact from our MCPS issued on June 29, 2018 is calculated under the ~~period prior to the Separation.~~if-converted method.

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):

Net Earnings (Numerator) Shares (Denominator) Per Share Amount
For the Three Months Ended June 30, 2017:
Basic EPS $ 240.1
347.2 $ 0.69
Incremental shares from assumed exercise of dilutive options and vesting of dilutive Stock Awards —
5.0
Diluted EPS $ 240.1
352.2 $ 0.68

For the Three Months Ended July 1, 2016:
Basic and diluted EPS $ 238.9
345.2 $ 0.69

For the Six Months Ended June 30, 2017:
Basic EPS $ 439.8
347.1 $ 1.27
Incremental shares from assumed exercise of dilutive options and vesting of dilutive Stock Awards —
4.7
Diluted EPS $ 439.8
351.8 $ 1.25

For the Six Months Ended July 1, 2016:
Basic and diluted EPS $ 420.9
345.2 $ 1.22



	Three Months Ended					Six Months Ended
	June 29, 2018			June 30, 2017		June 29, 2018			June 30, 2017
Numerator
Net earnings	$	295.0		$	240.1	$	556.2		$	439.8
Mandatory convertible preferred stock cumulative dividends	(0.2		)	—		(0.2		)	—
Net earnings attributable to common stockholders	$	294.8		$	240.1	$	556.0		$	439.8

Denominator
Weighted average common shares outstanding used in basic earnings per share	349.2			347.2		348.9			347.1
Incremental common shares from:
Assumed exercise of dilutive options and vesting of dilutive Stock Awards	5.6			5.0		5.7			4.7
Assumed conversion of outstanding mandatory convertible preferred stock	0.2			—		0.1			—
Weighted average common shares outstanding used in diluted earnings per share	355.0			352.2		354.7			351.8

Net earnings per common share - Basic	$	0.84		$	0.69	$	1.59		$	1.27
Net earnings per share - Diluted	$	0.83		$	0.68	$	1.57		$	1.25

~~On April 13, 2017, we~~We declared ~~a regular quarterly dividend of $0.07~~and paid cash dividends per share ~~paid~~during the periods presented as follows:



	Dividend Per Common Share		Amount ($ in millions)
2018:
First quarter	$	0.07	$	24.3
Second quarter	0.07		24.4
Total	$	0.14	$	48.7

2017:
First quarter	$	0.07	$	24.3
Second quarter	0.07		24.3
Total	$	0.14	$	48.6

As of June 29, 2018, no dividends have been declared on June 30, 2017 to holders of record on May 26, 2017. For the six months ended June 30, 2017, cash dividend payments of $48.6 million were recorded as dividends to shareholders in the Consolidated Condensed Statement of Changes in Equity.our MCPS.

NOTE ~~11.~~12. SEGMENT INFORMATION

We ~~operate and~~ report our results in two separate business segments consisting of ~~the~~ Professional Instrumentation and Industrial ~~Technologies segments.~~Technologies. When determining the reportable segments, we aggregated operating segments based on their similar economic and operating characteristics. Operating profit amounts in the Other category consist of unallocated corporate costs and other costs not considered part of our evaluation of reportable segment operating performance. As of June ~~30, 2017,~~29, 2018, there have been no material changes in total assets or liabilities by segment since December 31, ~~2016.~~2017. Segment results are shown below ($ in millions):


	Three Months Ended						Six Months Ended						Three Months Ended						Six Months Ended
	June 30, 2017			July 1, 2016			June 30, 2017			July 1, 2016			June 29, 2018			June 30, 2017			June 29, 2018			June 30, 2017
Sales:
Professional Instrumentation	$	759.0		$	724.2		$	1,475.1		$	1,421.6		$	889.0		$	759.0		$	1,760.7		$	1,475.1
Industrial Technologies	869.8			830.9			1,688.9			1,608.2			967.0			869.8			1,836.0			1,688.9
Total	$	1,628.8		$	1,555.1		$	3,164.0		$	3,029.8		$	1,856.0		$	1,628.8		$	3,596.7		$	3,164.0
Operating Profit:
Professional Instrumentation	$	184.9		$	162.4		$	342.9		$	308.4		$	219.4		$	185.5		$	425.8		$	344.0
Industrial Technologies	181.5			173.4			334.1			304.1			200.9			181.7			359.2			334.5
Other	(18.1		)	(13.7		)	(33.8		)	(27.4		)	(37.9		)	(18.1		)	(64.4		)	(33.8		)
Total	$	348.3		$	322.1		$	643.2		$	585.1
Total Operating Profit													382.4			349.1			720.6			644.7
Interest expense													(25.3		)	(22.7		)	(49.9		)	(45.3		)
Other non-operating expenses													(1.1		)	(0.8		)	(1.8		)	(1.5		)
Earnings before income taxes													$	356.0		$	325.6		$	668.9		$	597.9

~~NOTE 12. RELATED-PARTY TRANSACTIONS~~

~~Revenue and Other Transactions Entered Into In the Ordinary Course of Business~~

Prior to the Separation, we operated as part of Danaher and not as a stand-alone company and certain of our revenue arrangements related to contracts entered into in the ordinary course of business with Danaher and its affiliates. Following the Separation, we continue to enter into arms-length arrangements in the ordinary course of business with Danaher and its affiliates, although certain agreements were entered into or terminated as a result of the Separation. Sales and purchases from these arrangements with Danaher were not material during the three and six months ended June 30, 2017 and July 1, 2016.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Fortive Corporation (“Fortive”, the “Company,” “we,” “us,” or “our”) is a diversified industrial growth company comprised of Professional Instrumentation and Industrial Technologies segments and encompassing businesses that are recognized leaders in attractive markets. Our well-known brands hold leading positions in advanced instrumentation and solutions, transportation technology, sensing, automation and specialty, and franchise distribution markets. Our businesses design, develop, service, manufacture and market professional and engineered products, software and services for a variety of end markets, building upon leading brand names, innovative technology and significant market positions.

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is designed to provide a reader of our financial statements with a narrative from the perspective of management. The following discussion should be read in conjunction with the MD&A and consolidated and combined financial statements included in our ~~2016~~2017 Annual Report on Form 10-K. Our MD&A is divided into ~~six~~five sections:

Information Relating to Forward-Looking Statements

~~Basis of Presentation~~

Overview

Results of Operations

Liquidity and Capital Resources

Critical Accounting Estimates

INFORMATION RELATING TO FORWARD-LOOKING STATEMENTS

Certain statements included or incorporated by reference in this quarterly report, in other documents we file with or furnish to the Securities and Exchange Commission (“SEC”), in our press releases, webcasts, conference calls, materials delivered to shareholders and other communications, are “forward-looking statements” within the meaning of the United States federal securities laws. All statements other than historical factual information are forward-looking statements, including without limitation statements regarding: projections of revenue, expenses, profit, profit margins, tax rates, tax provisions, cash flows, pension and benefit obligations and funding requirements, our liquidity position or other ~~projected~~ financial measures; management’s plans and strategies for future operations, including statements relating to anticipated operating performance, cost reductions, restructuring activities, new product and service developments, competitive strengths or market position, acquisitions, divestitures, strategic opportunities, securities offerings, stock repurchases, dividends and executive compensation; growth, declines and other trends in markets we sell into; new or modified laws, regulations and accounting pronouncements; outstanding claims, legal proceedings, tax audits and assessments and other contingent liabilities; foreign currency exchange rates and fluctuations in those rates; impact on changes to tax laws; general economic and capital markets conditions; the timing of any of the foregoing; assumptions underlying any of the foregoing; and any other statements that address events or developments that we intend or believe will or may occur in the future. Terminology such as “believe,” “anticipate,” “should,” “could,” “intend,” “will,” “plan,” “expect,” “estimate,” “project,” “target,” “may,” “possible,” “potential,” “forecast” and “positioned” and similar references to future periods are intended to identify forward-looking statements, although not all forward-looking statements are accompanied by such words.

Forward-looking statements are based on assumptions and assessments made by our management in light of their experience and perceptions of historical trends, current conditions, expected future developments and other ~~factors they believe to be appropriate.~~factors. Forward-looking statements are not guarantees of future performance and actual results may differ materially from the results, developments and business decisions contemplated by our forward-looking statements. Accordingly, you should not place undue reliance on any such forward-looking statements. Important factors that could cause actual results to differ materially from those envisaged in the forward-looking statements include the following:

Conditions in the global economy, the markets we serve and the financial markets may adversely affect our business and financial statements. Furthermore, significant uncertainties related to changes in governmental policies toward international trade currently exist, and depending on how such uncertainties are resolved, could have a material adverse effect on our financial results.

Potential changes in international trade relations between China and the United States could have a material adverse effect on our business and financial statements.

Our growth could suffer if the markets into which we sell our products, software and services decline, do not grow as anticipated or experience cyclicality.

We face intense competition and if we are unable to compete effectively, we may experience decreased demand and decreased market share. Even if we compete effectively, we may be required to reduce prices for our products, software and services.

Changes in industry standards, governmental regulations and applicable laws may reduce demand for our products, software or services or increase our expenses.

Any inability to consummate acquisitions at our historical rate and at appropriate prices could negatively impact our growth rate and stock price.

Our growth depends in part on the timely development and commercialization, and customer acceptance, of new and enhanced products, software and services based on technological innovation.

Our reputation, ability to do business and financial statements may be impaired by improper conduct by any of our employees, agents or business partners.

Our acquisition of businesses, joint ventures and strategic relationships could negatively impact our financial statements.

The indemnification provisions of acquisition agreements by which we have acquired companies may not fully protect us and as a result we may face unexpected liabilities.

Divestitures or other dispositions could negatively impact our business, and contingent liabilities from businesses that we have sold could adversely affect our financial statements.

We are pursuing a plan to combine four operating companies from our Automation & Specialty platform into a new company and to merge that new company into a subsidiary of Altra Industrial Motion Corp. in a tax-efficient transaction. The proposed transaction may not be completed on the currently contemplated timeline or at all and may not achieve the intended benefits.

Our operations, products and services expose us to the risk of environmental, health and safety liabilities, costs and violations that could adversely affect our reputation, business and financial statements.

Our businesses are subject to extensive regulation; failure to comply with those regulations could adversely affect our business, financial statements and reputation.

International economic, trade, political, legal, compliance and business factors could negatively affect our business and financial statements.

We may be required to recognize impairment charges for our goodwill and other intangible assets.

Foreign currency exchange rates may adversely affect our financial statements.

Changes in our tax rates or exposure to additional income tax liabilities or assessments could affect our profitability. In addition, audits by tax authorities could result in additional tax payments for prior periods.

We have incurred a significant amount of debt, and our debt will increase further if we incur additional debt and do not retire existing debt.

We are subject to a variety of litigation and other legal and regulatory proceedings in the course of our business that could adversely affect our financial statements.

If we do not or cannot adequately protect our intellectual property, or if third parties infringe our intellectual property rights, we may suffer competitive injury or expend significant resources enforcing our rights.

Third parties may claim that we are infringing or misappropriating their intellectual property rights and we could suffer significant litigation expenses, losses or licensing expenses or be prevented from selling products, software or services.

Defects and unanticipated use or inadequate disclosure with respect to our products, software or services could adversely affect our business, reputation and financial statements.

Adverse changes in our relationships with, or the financial condition, performance, purchasing patterns or inventory levels of, key distributors and other channel partners could adversely affect our financial statements.

Our financial results are subject to fluctuations in the cost and availability of commodities that we use in our operations.

If we cannot adjust our manufacturing capacity or the purchases required for our manufacturing activities to reflect changes in market conditions and customer demand, our profitability may suffer. In addition, our reliance upon sole or limited sources of supply for certain materials, components and services could cause production interruptions, delays and inefficiencies.

A significant disruption in, or breach in security of, information technology systems we use could adversely affect our business.

Our restructuring actions could have long-term adverse effects on our business.

Work stoppages, union and works council campaigns and other labor disputes could adversely impact our productivity and results of operations.

If we suffer loss to our facilities, supply chains, distribution systems or information technology systems due to catastrophe or other events, our operations could be seriously harmed.

Certain provisions in our amended and restated certificate of incorporation and bylaws, and of Delaware law, may prevent or delay an acquisition of our company, which could decrease the trading price of our common stock.

Our amended and restated certificate of incorporation designates the state courts in the State of Delaware or, if no state court located within the State of Delaware has jurisdiction, the federal court for the District of Delaware, as the

sole and exclusive forum for certain types of actions and proceedings that may be initiated by our shareholders which could discourage lawsuits against us and our directors and officers.

As an independent, publicly traded company, we may not enjoy the same benefits that we did as a part of Danaher Corporation (“Danaher” or “Former Parent”).

Potential indemnification liabilities to Danaher pursuant to our separation agreement with Danaher could materially and adversely affect our businesses, financial condition, results of operations and cash flows.

In connection with our separation from Danaher, Danaher has indemnified us for certain liabilities. However, there can be no assurance that the indemnity will be sufficient to insure us against the full amount of such liabilities, or that Danaher’s ability to satisfy its indemnification obligation will not be impaired in the future.

There could be significant liability if the separation from Danaher fails to qualify as a tax-free transaction for U.S. federal income tax purposes.

~~We may not be able to engage in certain corporate transactions for a two-year period after the separation from Danaher on July 2, 2016.~~

See “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016~~2017 and Form 10-Q for the fiscal quarter ended March 30, 2018 and “Part II – Item 1A. Risk Factors” in this Form 10-Q for a further discussion regarding reasons that actual results may differ materially from the results, developments and business decisions contemplated by our forward-looking statements. Forward-looking statements speak only as of the date of the report, document, press release, webcast, call, materials or other communication in which they are made. We do not assume any obligation to update or revise any forward-looking statement, whether as a result of new information, future events and developments or otherwise.

~~BASIS OF PRESENTATION~~

The accompanying consolidated and combined condensed 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”). Prior to our separation from Danaher on July 2, 2016 (the “Separation”), our businesses were comprised of certain Danaher operating units. Fortive Corporation and the Fortive businesses (including for the periods prior to the Separation) are collectively referred to as “Fortive” or “the Company” herein.

The combined condensed financial statements for periods prior to the Separation were derived from Danaher’s consolidated financial statements and accounting records and prepared in accordance with GAAP for the preparation of carved-out combined financial statements. Prior to the Separation, all revenues and costs as well as assets and liabilities directly associated with Fortive have been included in the combined condensed financial statements. Additionally, the combined condensed financial statements for periods prior to the Separation included allocations of certain general, administrative, sales and marketing expenses and cost of sales from Danaher’s corporate office and from other Danaher businesses to Fortive, and allocations of related assets, and liabilities, as applicable. The allocations were determined on a reasonable basis; however, the amounts are not necessarily representative of the amounts that would have been reflected in the financial statements had we been operating independently of Danaher during the applicable periods. Accordingly, our combined condensed financial statements may not be indicative of our results had we been a separate, stand-alone entity throughout the periods presented. For further discussion of related party allocations prior to the Separation, including the method for such allocation, refer to Note 19 of our 2016 Annual Report on Form 10-K.

~~Following the Separation, the consolidated financial statements include the accounts of Fortive and those of our wholly-owned subsidiaries and no longer include any allocations from Danaher.~~

OVERVIEW

General

Fortive is a diversified, multinational industrial growth company with global operations and our businesses are affected by worldwide, regional and industry-specific economic and political factors. Our geographic and industry diversity, as well as the range of our products, software and services, typically help limit the impact of any one industry or the economy of any single country (except for the United States) on our operating results. Given the broad range of products manufactured, software and services provided and geographies served, we do not use any indices other than general economic trends to predict the overall outlook for the Company. Our individual businesses monitor key competitors and customers, including to the extent possible their sales, to gauge relative performance and the outlook for the future.

As a result of our geographic and industry diversity, we face a variety of opportunities and challenges, including technological development in most of the markets we serve, the expansion and evolution of opportunities in high-growth markets, trends and costs associated with a global labor force and consolidation of our competitors. We define high-growth markets as developing markets of the world experiencing extended periods of accelerated growth in gross domestic product and infrastructure which include Eastern Europe, the Middle East, Africa, Latin America and Asia with the exception of Japan and Australia. We operate in a highly competitive business environment in most markets, and our long-term growth and profitability will depend in particular on our ability to expand our business across geographies and market segments, identify, consummate and integrate appropriate acquisitions, develop innovative and differentiated new products, services and software, expand and improve the effectiveness of our sales force and continue to reduce costs and improve operating efficiency and quality, and effectively address the demands of an increasingly regulated environment. We are making significant investments, organically and through acquisitions, to address technological change in the markets we serve and to improve our manufacturing, research and development and customer-facing resources in order to be responsive to our customers throughout the world.

In this report, references to sales from existing businesses refers to sales from operations calculated according to ~~GAAP~~generally accepted accounting principles in the United States (“GAAP”) but excluding (1) the impact from acquired businesses ~~(2) the impact from the Separation~~ and ~~(3)~~(2) the impact of currency translation. References to sales attributable to acquisitions or acquired businesses refer to GAAP sales from acquired businesses recorded prior to the first anniversary of the acquisition less the amount of sales attributable to certain divested businesses or product lines not considered discontinued operations prior to the first anniversary of the divestiture. The impact from the Separation refers to the impact from sales to or from Danaher made under agreements entered into, or terminated, in connection with the Separation prior to the first anniversary of the Separation. The portion of sales attributable to the impact of currency translation is calculated as the difference between (a) the period-to-period change in sales (excluding sales impact from acquired ~~businesses or the Separation)~~businesses) and (b) the period-to-period change in sales (excluding sales impact from acquired ~~businesses or the Separation)~~businesses) after applying the current period foreign exchange rates to the prior year period. Sales from existing businesses should be considered in addition to, and not as a replacement for or superior to, sales, and may not be comparable to similarly titled measures reported by other companies.

Management believes that reporting the non-GAAP financial measure of sales from existing businesses provides useful information to investors by helping identify underlying growth trends in our business and facilitating comparisons of our sales

performance with our performance in prior and future periods and to our peers. We exclude the effect of acquisitions and divestiture related items because the nature, size and number of such transactions can vary dramatically from period to period and between us and our peers. In addition, we exclude the impact of agreements that were terminated, or entered into, in connection with the Separation because we believe that excluding such impact may be useful to investors in assessing our

~~operational performance independent of the impact on sales to or from Danaher resulting primarily from the Separation.~~ We exclude the effect of currency translation from sales from existing businesses because the impact of currency translation is not under management’s control and is subject to volatility. Management believes the exclusion of the effect of acquisitions and divestitures ~~(including Separation-related items)~~ and currency translation may facilitate the assessment of underlying business trends and may assist in comparisons of long-term performance. References to sales volume refer to the impact of both price and unit sales.

Business Performance and Outlook

While differences exist among our businesses, on an overall basis, demand for our products, software and services increased during the three months ended June ~~30, 2017~~29, 2018 as compared to the comparable period of ~~2016~~2017 resulting in aggregate year-over-year total sales growth of ~~4.7%~~13.9% and sales growth from existing businesses of ~~5.4%~~5.3%. Our continued application and deployment of the Fortive Business System including investments in sales growth initiatives and new product introductions, as well as increased demand in both high-growth ~~markets~~ and ~~stabilization of market conditions in~~ developed markets and other business-specific factors discussed below, contributed to overall sales growth from existing businesses across the majority of our businesses in the period.

On a year-over-year basis, sales growth from existing businesses was broad based across our businesses in ~~the~~both our Professional Instrumentation ~~segment was driven by increased demand in the businesses within both Advanced Instrumentation & Solutions~~ and ~~Sensing Technologies. Year-over-year sales growth in the~~ Industrial Technologies ~~segment was led by increased demand~~segments. We are beginning to see an improvement in our Transportation Technologies ~~and Automation & Specialty Components~~ businesses ~~driven by demand~~as a result of the approaching deadline of the liability shift related to the enhanced credit card security requirements in the ~~United~~Unites States based on the Europay, Mastercard and Visa (“EMV”) global standards ~~as well as increased demand in the businesses within Automation & Specialty Components. We expect the EMV-related demand to continue to drive growth for the next several years.~~.

Geographically, sales from existing businesses grew at a ~~low-single~~mid-single digit rate in both developed ~~markets~~ and ~~at a double digit rate in~~ high-growth markets during the three months ended June ~~30, 2017~~29, 2018 as compared to the comparable ~~2016~~2017 period. Year-over-year sales from existing businesses grew at a low double-digit rate ~~in the high-teens~~ in China, at a ~~high-single~~mid-single digit rate ~~in Western Europe~~North America and at a low-single digit rate in ~~North America~~Western Europe during the three months ended June ~~30, 2017.~~ 29, 2018.

We expect overall sales from existing businesses to continue to grow on a year-over-year basis during the remainder of ~~2017 although~~2018; however, we continue to monitor developments from macro-economic and geopolitical uncertainties, including global uncertainties related to governmental policies toward international trade, monetary and fiscal policies; including the current uncertainty about the future relationship between the United States and China with respect to trade policies, ~~as well as~~treaties, government regulations, and tariffs. We are also monitoring other factors identified above in “—Information Relating to Forward-Looking Statements.”

Pending Acquisitions

Advanced Sterilization Products

Gordian

Planned Divestiture of A&S Business

On March 7, 2018, we entered into a definitive agreement to combine four of our operating companies from our Automation & Specialty platform (the “A&S Business”) with Altra Industrial Motion Corp (“Altra”) in a tax-efficient Reverse Morris Trust transaction. In the transaction, we will receive approximately $1.4 billion in cash and debt retirement, and our shareholders will receive in the aggregate 35 million shares of Altra, representing approximately 54% of outstanding shares of Altra common stock immediately following the transaction. The A&S Business includes the market-leading brands of Kollmorgen, Thomson, Portescap and Jacobs Vehicle Systems, and generated approximately $907 million in revenue for the year ended December 31, 2017. The transaction is expected to close by the end of 2018, subject to customary closing conditions, including receipt of certain regulatory approvals, Altra shareholder approval and our receipt of confirmation of the tax treatment of certain matters. Upon closing of the transaction, we will classify the A&S Business as discontinued operations in our financial statements.

RESULTS OF OPERATIONS

Sales Growth

The following tables summarize total aggregate year-over-year sales growth and the components of aggregate year-over-year sales growth during the three and six months ended June ~~30, 2017~~29, 2018 as compared to the comparable periods of ~~2016:~~2017:

Components of Sales Growth


	% Change Three Months Ended June 30, 2017 vs. Comparable 2016 Period		% Change Six Months Ended June 30, 2017 vs. Comparable 2016 Period		% Change Three Months Ended June 29, 2018 vs. Comparable 2017 Period		% Change Six Months Ended June 29, 2018 vs. Comparable 2017 Period
Total revenue growth (GAAP)	4.7	%	4.4	%	13.9	%	13.7	%
Existing businesses (Non-GAAP)	5.4	%	5.2	%	5.3	%	4.0	%
Acquisitions ^(a)(Non-GAAP)	0.4	%	0.3	%
Acquisitions(Non-GAAP)					7.0	%	7.2	%
Currency exchange rates (Non-GAAP)	(1.1	)%	(1.1	)%	1.6	%	2.5	%

^(a)Includes the impact from both acquisitions and the Separation

Operating Profit Margins

Operating profit margin was ~~21.4%~~20.6% for the three months ended June ~~30, 2017, an increase~~29, 2018, a decrease of 7080 basis points as compared to ~~20.7%~~21.4% in the comparable period of ~~2016. This year-over-year increase was due primarily to higher 2017~~2017. Year-over-year operating profit margin comparisons were favorably impacted by:

Higher 2018 sales volumes from existing businesses, incremental year-over-year cost savings associated with restructuring and productivity improvement initiatives and ~~lower year-over-year intangible asset amortization due to certain intangible assets, primarily~~changes in ~~our Professional Instrumentation segment, being fully amortized,~~currency exchange rates, net of the incremental year-over-year costs associated with various product development and sales and marketing growth investments ~~increased general and administrative costs required to operate as a stand-alone public company,~~

~~and changes in currency exchange rates. Included in the 70~~— 50 basis points ~~increase in~~

Year-over-year operating profit margin ~~is the~~comparisons were unfavorably impacted by:

The incremental year-over-year net dilutive effect of acquired businesses — 70 basis points

The incremental year-over-year net dilutive effect of 20acquisition and divestiture-related transaction costs — 60 basis ~~points.~~points

Operating profit margin was ~~20.3%~~20.0% for the six months ended June ~~30, 2017, an increase~~29, 2018, a decrease of ~~100~~40 basis points as compared to ~~19.3%~~20.4% in the comparable period of ~~2016. This year-over-year increase was due primarily to higher 2017~~2017. Year-over-year operating profit margin comparisons were favorably impacted by:

Higher 2018 sales volumes from existing businesses, incremental year-over-year cost savings associated with restructuring and productivity improvement initiatives ~~lower year-over-year intangible asset amortization due to certain intangible assets, primarily~~and changes in ~~our Professional Instrumentation segment, being fully amortized and costs associated with various growth investments made in 2016,~~currency exchange rates, net of the incremental year-over-year costs associated with various product development and sales and marketing growth investments ~~increased general and administrative costs required to operate as a stand-alone public company, and changes in currency exchange rates. Included in the 100~~— 80 basis points ~~increase in~~

Year-over-year operating profit margin ~~is the~~comparisons were unfavorably impacted by:

The incremental year-over-year net dilutive effect of acquired businesses — 80 basis points

The incremental year-over-year net dilutive effect of 20acquisition and divestiture-related transaction costs — 40 basis ~~points.~~points

Business Segments

Sales by business segment for each of the periods indicated were as follows ($ in millions):


	Three Months Ended				Six Months Ended				Three Months Ended				Six Months Ended
	June 30, 2017		July 1, 2016		June 30, 2017		July 1, 2016		June 29, 2018		June 30, 2017		June 29, 2018		June 30, 2017
Professional Instrumentation	$	759.0	$	724.2	$	1,475.1	$	1,421.6	$	889.0	$	759.0	$	1,760.7	$	1,475.1
Industrial Technologies	869.8		830.9		1,688.9		1,608.2		967.0		869.8		1,836.0		1,688.9
Total	$	1,628.8	$	1,555.1	$	3,164.0	$	3,029.8	$	1,856.0	$	1,628.8	$	3,596.7	$	3,164.0

PROFESSIONAL INSTRUMENTATION

The Professional Instrumentation segment consists of our Advanced Instrumentation & Solutions and Sensing Technologies businesses. The Advanced Instrumentation & Solutions businesses provide product realization and field solutions services and products. Field solutions include a variety of compact professional test tools, thermal imaging and calibration equipment for electrical, industrial, electronic and calibration applications, online condition-based monitoring equipment; portable gas detection equipment, consumables, and software as a service (SaaS) offerings including safety/user behavior, asset management, and compliance monitoring; subscription-based technical, analytical, and compliance services to determine occupational and environmental radiation exposure; and computerized maintenance management software for critical infrastructure in ~~electrical~~ utility, industrial, energy, construction, public safety, mining, and ~~industrial~~healthcare applications. Product realization ~~provides solutions including hardware, software~~services and ~~services to~~products help developers and engineers ~~convert~~across the end-to-end product creation cycle from concepts ~~into~~to finished ~~products. Product realization~~products and also ~~includes~~include highly-engineered energetic materials components in specialized vertical ~~applications and design, engineering and manufacturing services. The businesses comprising~~applications. Our Sensing Technologies ~~offer~~business offers devices that sense, monitor and control operational or manufacturing variables, such as temperature, pressure, level, flow, turbidity and conductivity.

Professional Instrumentation Selected Financial Data


	Three Months Ended						Six Months Ended						Three Months Ended						Six Months Ended
($ in millions)	June 30, 2017			July 1, 2016			June 30, 2017			July 1, 2016			June 29, 2018			June 30, 2017			June 29, 2018			June 30, 2017
Sales	$	759.0		$	724.2		$	1,475.1		$	1,421.6		$	889.0		$	759.0		$	1,760.7		$	1,475.1
Operating profit	184.9			162.4			342.9			308.4			219.4			185.5			425.8			344.0
Depreciation	8.7			8.8			17.5			17.9			15.5			8.7			32.5			17.5
Amortization	7.7			16.9			15.5			33.9			16.3			7.7			33.5			15.5
Operating profit as a % of sales	24.4		%	22.4		%	23.2		%	21.7		%	24.7		%	24.4		%	24.2		%	23.3		%
Depreciation as a % of sales	1.1		%	1.2		%	1.2		%	1.3		%	1.7		%	1.1		%	1.8		%	1.2		%
Amortization as a % of sales	1.0		%	2.3		%	1.1		%	2.4		%	1.8		%	1.0		%	1.9		%	1.1		%

Components of Sales Growth


	% Change Three Months Ended June 30, 2017 vs. Comparable 2016 Period		% Change Six Months Ended June 30, 2017 vs. Comparable 2016 Period		% Change Three Months Ended June 29, 2018 vs. Comparable 2017 Period		% Change Six Months Ended June 29, 2018 vs. Comparable 2017 Period
Total revenue growth (GAAP)	4.8	%	3.8	%	17.1	%	19.4	%
Existing businesses (Non-GAAP)	6.6	%	5.6	%	3.4	%	4.4	%
Acquisitions ^(a)(Non-GAAP)	(0.4	)%	(0.5	)%
Acquisitions (Non-GAAP)					11.9	%	12.1	%
Currency exchange rates (Non-GAAP)	(1.4	)%	(1.3	)%	1.8	%	2.9	%

^(a)Includes the impact from both acquisitions and the Separation

Sales from existing businesses in the segment’s Advanced Instrumentation & Solutions businesses grew at a ~~high-single~~low-single digit and mid-single digit rate during the three ~~months ended June 30, 2017~~ and ~~at a mid-single digit rate during the~~ six months ended June ~~30, 2017~~29, 2018, respectively, as compared to the comparable periods of ~~2016.~~2017. Year-over-year sales from existing businesses of field solutions products and services grew at a mid-single digit rate during ~~both~~ the three and six months ended June ~~30, 2017~~29, 2018, due to ~~increased~~continued strong demand for industrial test and thermography equipment, network tools and ~~online~~SaaS offerings, offset somewhat by declines in demand for electrical grid condition-based monitoring equipment. Year-over-year sales from existing businesses of product realization solutions ~~grew at a low-double digit rate~~increased slightly during the three months ended June ~~30, 2017~~29, 2018 and grew at a ~~high-single~~low-single digit rate during the six months ended June ~~30,~~29, 2018, as compared to the comparable periods of 2017, driven primarily by continued growth in the ~~semiconductor~~industrial and ~~consumer electronics~~

manufacturing end ~~markets and the segment’s energetic materials business~~market as well as increased demand for oscilloscopes and new product introductions. These increases were partly offset by ~~a year-over-year decline~~declines in the consumer electronics end-market, lower demand for design, engineering and manufacturing ~~services. Geographically, sales from existing businesses~~services as well as in the segment’s Advanced Instrumentation & Solutions businesses increased on a year-over-year basis primarily in Asia, driving strong growth in high-growth markets, and to a lesser extent in North America and Western Europeenergetic materials business during ~~both~~ the three and six months ended June ~~30, 2017.~~29, 2018. Geographically, demand from existing businesses increased on a year-over-year basis in North America, Western Europe and Japan during the three and six months ended June 29, 2018, which was partially offset by declines in Korea. In addition, demand from existing businesses increased in China during the six months ended June 29, 2018.

Sales from existing businesses in the segment’s Sensing Technologies businesses grew at a mid-single digit rate during ~~both~~ the three and six months ended June ~~30, 2017~~29, 2018, respectively, as compared to the comparable ~~period~~periods of ~~2016. Increased~~2017 largely due to increased year-over-year demand in the industrial ~~and food and beverage end markets was partly offset by lower demand in the medical~~ end market. Geographically, increases in sales from existing businesses ~~increased~~ on a year-over-year basis ~~in North America and China during both the three and six months ended June 30, 2017.~~

~~Year-over-year price increases in the segment contributed 0.6% and 0.3%~~ during the three and six months ended June ~~30, 2017,~~29, 2018 were driven by growth in Asia and Western Europe.

Year-over-year price increases in the Professional Instrumentation segment contributed 0.6% and 0.7% during the three and six months ended June 29, 2018, respectively, as compared to the comparable periods of ~~2016~~2017 and are reflected as a component of the change in sales from existing businesses.

Operating profit margin increased ~~200~~30 basis points during the three months ended June ~~30, 2017~~29, 2018 as compared to the comparable period of ~~2016. This year-over-year increase was due primarily to higher 2017~~2017. Year-over-year operating profit margin comparisons were favorably impacted by:

Higher 2018 sales volumes from existing businesses, incremental year-over-year cost savings associated with restructuring and productivity improvement initiatives and ~~lower year-over-year intangible asset amortization due to certain intangible assets being fully amortized,~~changes in currency exchange rates net of incremental year-over-year costs associated with various product development and sales and marketing growth investments ~~the positive impact in 2016 of a transition services agreement related to a disposition made by Danaher prior to the Separation and changes in currency exchange rates. Included in the 200~~— 180 basis points ~~increase in~~

Year-over-year operating profit margin ~~is the~~comparisons were unfavorably impacted by:

The incremental year-over-year net dilutive effect of acquired businesses ~~of 50~~— 150 basis ~~points.~~points

Operating profit margin increased ~~150~~90 basis points during the six months ended June ~~30, 2017~~29, 2018 as compared to the comparable period of ~~2016. This year-over-year increase was due primarily to higher 2017~~2017. Year-over-year operating profit margin comparisons were favorably impacted by:

Higher 2018 sales volumes from existing businesses, incremental year-over-year cost savings associated with restructuring and productivity improvement initiatives and ~~lower year-over-year intangible asset amortization due to certain intangible assets being fully amortized,~~changes in currency exchange rates net of incremental year-over-year costs associated with various product development and sales and marketing growth investments the positive impact in 2016 of a transition services agreement related to a disposition made by Danaher prior to the Separation, incremental year-over-year bad debt charges and changes in currency exchange rates. Included in the 150— 240 basis points ~~increase in~~

Year-over-year operating profit margin ~~is the~~comparisons were unfavorably impacted by:

The incremental year-over-year net dilutive effect of acquired businesses ~~of 50~~— 150 basis ~~points.~~points

INDUSTRIAL TECHNOLOGIES

The Industrial Technologies segment consists of our Transportation Technologies, Automation & Specialty Components and Franchise Distribution businesses. Our Transportation Technologies ~~businesses are~~business is a leading worldwide ~~providers~~provider of solutions and services focused on fuel dispensing, remote fuel management, point-of-sale and payment systems, environmental

compliance, vehicle tracking and fleet management, and traffic management. The Automation & Specialty Components ~~businesses provide~~business provides a wide range of electromechanical and electronic motion control products and mechanical components, as well as supplemental braking systems for commercial vehicles. Our Franchise Distribution ~~businesses manufacture~~business manufactures and ~~distribute~~distributes professional tools and a ~~full line~~full-line of wheel service equipment.

Industrial Technologies Selected Financial Data


	Three Months Ended						Six Months Ended						Three Months Ended						Six Months Ended
($ in millions)	June 30, 2017			July 1, 2016			June 30, 2017			July 1, 2016			June 29, 2018			June 30, 2017			June 29, 2018			June 30, 2017
Sales	$	869.8		$	830.9		$	1,688.9		$	1,608.2		$	967.0		$	869.8		$	1,836.0		$	1,688.9
Operating profit	181.5			173.4			334.1			304.1			200.9			181.7			359.2			334.5
Depreciation	14.4			13.8			28.5			26.2			18.4			14.4			34.8			28.5
Amortization	5.6			5.4			11.1			10.8			7.8			5.6			15.6			11.1
Operating profit as a % of sales	20.9		%	20.9		%	19.8		%	18.9		%	20.8		%	20.9		%	19.6		%	19.8		%
Depreciation as a % of sales	1.7		%	1.7		%	1.7		%	1.6		%	1.9		%	1.7		%	1.9		%	1.7		%
Amortization as a % of sales	0.6		%	0.6		%	0.7		%	0.7		%	0.8		%	0.6		%	0.8		%	0.7		%

Components of Sales Growth


	% Change Three Months Ended June 30, 2017 vs. Comparable 2016 Period		% Change Six Months Ended June 30, 2017 vs. Comparable 2016 Period		% Change Three Months Ended June 29, 2018 vs. Comparable 2017 Period		% Change Six Months Ended June 29, 2018 vs. Comparable 2017 Period
Total revenue growth (GAAP)	4.7	%	5.0	%	11.2	%	8.7	%
Existing businesses (Non-GAAP)	4.5	%	4.7	%	6.9	%	3.6	%
Acquisitions ^(a)(Non-GAAP)	1.1	%	1.1	%
Acquisitions(Non-GAAP)					2.8	%	2.8	%
Currency exchange rates (Non-GAAP)	(0.9	)%	(0.8	)%	1.5	%	2.3	%

^(a)Includes the impact from both acquisitions and the Separation

Sales from existing businesses in the segment’s Transportation Technologies businesses grew at a ~~mid-single~~high-single digit rate during ~~both~~ the three months ended June 29, 2018 and were up slightly during the six months ended June ~~30, 2017~~29, 2018, as compared to the comparable periods of ~~2016, due primarily~~2017. These results were largely attributable to strong demand for ~~dispensers~~dispenser systems, payment solutions primarily in North America and ~~payment~~fuel management systems ~~partly offset by weaker~~primarily in China during the three months ended June 29, 2018 as compared to the comparable periods of 2017. We are beginning to see an improvement in year-over-year demand ~~for indoor point-of-sale systems. The businesses continued~~as a result of the approaching deadline of the liability shift related to ~~experience reduced year-over-year EMV-related demand for indoor point-of-sale solutions~~the enhanced credit card security requirements in the United States ~~as customers had largely upgraded to products that support indoor~~based on the EMV requirements in the prior year in response to the indoor liability shift. However, demand increased on a year-over-year basis for dispensers and payment systems during both the three and six months ended June 30, 2017 as customers in the United States continue to upgrade equipment. We expect the EMV-related demand to continue to drive growth for the next several years.global standards. Geographically, sales from existing businesses increased on a year-over-year basis during the three months ended June 29, 2018 due to strong growth in ~~the United States~~China, India and ~~Western Europe, driven primarily by increased year-over-year demand for dispensers,~~North America, which was partially offset by declines in ~~the Asia-Pacific region~~Western Europe. Sales from existing businesses during ~~both~~ the ~~three and~~ six months ended June ~~30, 2017.~~29, 2018 were primarily driven by strong growth in China and Latin America, offset by declines in Western Europe and North America.

Sales from existing businesses in the segment’s Automation & Specialty Components businesses grew at a ~~mid-single~~high single-digit and low double digit rate during ~~both~~ the three and six months ended June ~~30, 2017 as~~29, 2018, respectively, compared to the comparable periods of ~~2016, due primarily~~2017. The results were largely attributable to increased year-over-year demand in ~~distribution~~industrial and robotics ~~end markets.~~end-markets in Western Europe, North America and China, and strong demand for engine retarder products in the United States, which benefited from improved heavy-duty truck production, and in China. Geographically, ~~year-over-year~~increases in sales from existing businesses ~~increased~~on a year-over-year basis during ~~both~~ the three and six months ended June ~~30, 2017~~29, 2018 were driven by strong growth in ~~China and~~North America, Western Europe ~~partly offset by lower year-over-year demand in the United States during the first quarter of 2017 which has stabilized in the second quarter of 2017.~~and China.

Sales from existing businesses in the segment’s Franchise Distribution businesses ~~declined~~increased at a low-single digit rate during the three and six months ended June ~~30, 2017~~29, 2018, respectively, compared to the comparable periods of 2017. We recognized sequential growth in tool storage and ~~grew at a low-single digit rate~~specialty tools during the three months ended June 29, 2018, and increased demand for hardline and specialty tools contributed to the year-over-year growth during the six months ended June 30, 2017 as compared to the comparable periods of 2016. During the three months ended June 30, 2017, increased year-over-year demand for hardline tools was more than offset by a year-over-year decline in demand for powered and diagnostic tools and tool storage products. During the six months ended June 30, 2017, increased year-over-year demand for hardline and diagnostic tools in the United States was partly offset by a decline in demand for professional tool products and wheel service equipment.29, 2018.

~~The impact of year-over-year~~Year-over-year price increases in the Industrial Technologies segment ~~was negligible~~contributed 0.5% and 0.4% during ~~both~~ the three and six months ended June ~~30, 2017~~29, 2018 as compared to the comparable ~~periods~~period of ~~2016~~2017, and are reflected as a component of the change in sales from existing businesses.

Operating profit margin ~~was flat~~decreased 10 basis points during the three months ended June ~~30, 2017~~29, 2018 as compared to the comparable period of ~~2016 due to higher 2017~~2017. Year-over-year operating profit margin comparisons were unfavorably impacted by:

The incremental year-over-year net dilutive effect of acquired businesses — 40 basis points

Year-over-year operating profit margin comparisons were favorably impacted by:

Higher 2018 sales volumes and incremental year-over-year cost savings associated with restructuring and productivity improvement initiatives, offset by incremental year-over-year costs associated with various product development and sales and marketing growth investments and changes in currency exchange rates.

~~Operating profit margin increased 90 basis points during the six months ended June 30, 2017 as compared to the comparable period of 2016 due to higher 2017 sales volumes,~~from existing businesses, incremental year-over-year cost savings associated with restructuring and productivity improvement initiatives and ~~costs associated with various growth investments made~~changes in ~~2016,~~currency exchange rates, partially offset by incremental year-over-year costs associated with various product development and sales and marketing growth investments — 30 basis points

Operating profit margin decreased 20 basis points during the six months ended June 29, 2018 as compared to the comparable period of 2017. Year-over-year operating profit margin comparisons were unfavorably impacted by:

The incremental year-over-year net dilutive effect of acquired businesses — 50 basis points

Year-over-year operating profit margin comparisons were favorably impacted by:

Higher 2018 sales volumes from existing businesses, incremental year-over-year cost savings associated with restructuring and productivity improvement initiatives and changes in currency exchange ~~rates.~~rates, partially offset by incremental year-over-year costs associated with various product development and sales and marketing growth investments — 30 basis points

COST OF SALES AND GROSS PROFIT


	Three Months Ended						Six Months Ended						Three Months Ended						Six Months Ended
($ in millions)	June 30, 2017			July 1, 2016			June 30, 2017			July 1, 2016			June 29, 2018			June 30, 2017			June 29, 2018			June 30, 2017
Sales	$	1,628.8		$	1,555.1		$	3,164.0		$	3,029.8		$	1,856.0		$	1,628.8		$	3,596.7		$	3,164.0
Cost of sales	(823.7		)	(787.0		)	(1,614.9		)	(1,566.5		)	(917.1		)	(823.7		)	(1,787.0		)	(1,614.9		)
Gross profit	$	805.1		$	768.1		$	1,549.1		$	1,463.3		$	938.9		$	805.1		$	1,809.7		$	1,549.1
Gross profit margin	49.4		%	49.4		%	49.0		%	48.3		%	50.6		%	49.4		%	50.3		%	49.0		%

The year-over-year increase in cost of sales during the three and six months ended June ~~30, 2017~~29, 2018 as compared to the comparable ~~period~~periods in ~~2016~~2017 is due primarily to the impact of higher year-over-year sales volumes ~~partly offset by~~from existing businesses, incremental year-over-year cost ~~savings associated with restructuring and productivity improvement initiatives, material cost and supply chain improvement actions~~of sales from our recently acquired businesses and changes in currency exchange ~~rates.~~

The year-over-year increase in cost of sales during the six months ended June 30, 2017 as compared to the comparable period in 2016 is due primarily to the impact of higher year-over-year sales volumes partly offset by incremental year-over-year cost savings associated with restructuring and productivity improvement initiatives, material cost and supply chain improvement actions, costs associated with various growth investments made in 2016 and changes in currency exchange rates.

The year-over-year increase in gross profit during the three months ended June 30, 2017 as compared to the comparable period in 2016 is due primarily to the favorable impact of higher year-over-year sales volumes and incremental year-over-year cost savings associated with restructuring and productivity improvement initiatives, material cost and supply chain improvement actions partly offset by changes in currency exchange rates. Gross profit margin was flat during the three months ended June 30, 2017 as compared to the comparable period of 2016.

The year-over-year increase in gross profit (and the related 70 basis point increase in gross profit margin) during the six months ended June 30, 2017 as compared to the comparable period in 2016 is due primarily to the favorable impact of higher year-over-year sales volumes, incremental year-over-year cost savings associated with restructuring and productivity improvement initiatives, material cost and supply chain improvement actions and costs associated with various growth investments made in 2016 partly offset by changes in currency exchange rates.

~~OPERATING EXPENSES~~

Three Months Ended Six Months Ended
($ in millions) June 30, 2017 July 1, 2016 June 30, 2017 July 1, 2016
Sales $ 1,628.8
$ 1,555.1
$ 3,164.0
$ 3,029.8
Selling, general and administrative (“SG&A”) expenses 357.7
349.3
710.6
687.8
Research and development (“R&D”) expenses 99.1
96.7
195.3
190.4
SG&A as a % of sales 22.0 % 22.5 % 22.5 % 22.7 %
R&D as a % of sales 6.1 % 6.2 % 6.2 % 6.3 %

SG&A expenses increased during the three and six months ended June 30, 2017 as compared to the comparable periods of 2016 due primarily to continued investments in our sales and marketing growth initiatives, and increased general and administrative costs required to operate as a stand-alone public company as compared to the allocations derived from Danaher in periods prior to the Separationrates, partly offset by incremental year-over-year cost savings associated with restructuring and productivity improvement initiatives and ~~lower~~material cost and supply chain improvement actions.

The year-over-year ~~intangible asset amortization~~increase in gross profit, and the related 120 and 130 basis point increase in gross profit margin for the three and six months ended June 29, 2018, respectively, as compared to the comparable periods in 2017 is due primarily to ~~certain intangible assets,~~the favorable impact of pricing improvements and higher year-over-year sales volumes from existing businesses, incremental year-over-year cost savings associated with restructuring and productivity improvement initiatives and material cost and supply chain improvement actions.

OPERATING EXPENSES



	Three Months Ended						Six Months Ended
($ in millions)	June 29, 2018			June 30, 2017			June 29, 2018			June 30, 2017
Sales	$	1,856.0		$	1,628.8		$	3,596.7		$	3,164.0
Selling, general and administrative (“SG&A”) expenses	445.5			356.9			869.2			709.1
Research and development (“R&D”) expenses	111.0			99.1			219.9			195.3
SG&A as a % of sales	24.0		%	21.9		%	24.2		%	22.4		%
R&D as a % of sales	6.0		%	6.1		%	6.1		%	6.2		%

SG&A expenses increased during the three and six months ended June 29, 2018 as compared to the comparable periods of 2017 due primarily to continued investments in our ~~Professional Instrumentation segment, being fully amortized.~~sales and marketing growth initiatives, incremental year-over-year general and administrative expenses, incremental expenses from recently acquired businesses, increased depreciation and amortization expense due primarily to our recently acquired businesses and costs associated with the divestiture of the A&S businesses and announced acquisitions. These increases were partly offsetby incremental year-over-year cost savings associated with restructuring and productivity improvement initiatives. On a year-over-year basis, SG&A expenses as a percentage of sales ~~decreased 50~~increased 210 and 20180 basis points in the three and six months ended June ~~30, 2017,~~29, 2018, respectively, due primarily to ~~the impact of sales growing at a faster rate than SG&A expenses~~acquisition and divestiture-related transaction costs incurred during the ~~period.~~three and six months ended June 29, 2018, and higher relative spending levels at our recently acquired businesses.

We expect to recognize significant acquisition and divestiture-related costs associated with the divestiture of the A&S businesses and announced acquistions in the second half of 2018.

R&D expenses (consisting principally of internal and contract engineering personnel costs) increased during ~~both~~ the three and six months ended June ~~30, 2017~~29, 2018 as compared to the comparable periods of ~~2016~~2017 due to incremental year-over-year investments in our product development initiatives. On a year-over-year basis, R&D expenses as a percentage of sales ~~decreased 10 basis points~~were relatively flat during both the three and six months ended June ~~30, 2017 due primarily to the impact of sales growing at a faster rate than R&D expenses during the period.~~29, 2018.

INTEREST COSTS

For a discussion of our outstanding indebtedness, refer to Note 5 to the accompanying Consolidated ~~and Combined~~ Condensed Financial Statements.

~~Interest~~Net interest expense of ~~$23~~$25 million and ~~$45~~$50 million was recorded for the three and six months ended June 29, 2018, respectively, compared to $23 million and $45 millionfor the three and six months ended June 30, 2017, respectively, arising from our outstanding indebtedness, initiated in June 2016. Before the Separation, we depended on Danaher for all of our working capital and financing requirements under Danaher’s centralized approach to cash management and financing of operations of its subsidiaries. As a result, with the exception of cash, cash equivalents and borrowings clearly associated with Fortive and related to the Separation, we recorded no interest expense in our combined condensed financial statements for periods prior to the Separation.respectively.

INCOME TAXES

Our effective tax ~~rate~~rates for the three and six months ended June ~~30, 2017, was 26.3%~~29, 2018 were 17.1% and 16.8%, respectively, as compared to ~~25.2%~~26.3% and 26.4% for the three ~~months ended July 1, 2016. The year-over-year 110 basis point increase was due primarily to favorable impacts in 2017 from greater federal~~ and international tax benefits of 510 basis points which was more than offset by the favorable impact in 2016 from the release of tax-related reserves established prior to the Separation of 620 basis points.

~~Our effective tax rate for the~~ six months ended June 30, 2017, ~~was 26.4% as compared to 27.7% for the six months ended July 1, 2016.~~respectively. The year-over-year ~~130 basis point~~ decrease was due primarily to favorable impacts in ~~2017~~2018 resulting from ~~greater~~a lower statutory tax rate in the United States as a result of the Tax Cuts and Jobs Act (“TCJA”) as well as other federal and international tax ~~benefits of 525 basis points which was partially offset by the favorable impact in 2016 from the release of tax-related reserves established prior to the Separation of 395 basis points.~~benefits.

Our effective tax ~~rate~~rates for 2018 and 2017 ~~and 2016 differs~~differ from the U.S. federal statutory rate of 21% and 35%, respectively, due ~~principally~~primarily to our earnings outside the United States that are indefinitely reinvested and taxed at rates lower than the U.S. federal statutory rate, ~~and~~ the impact of credits and deductions provided by ~~law.~~law and the effect of favorable adjustments to the provisional estimates recorded in 2017 related to the TCJA as permitted under SEC Staff Accounting Bulletin No. 118 (“SAB 118”). We recorded an adjustment of $1.9 million to our provisional estimates during the three months ended June 29, 2018, which decreased tax expense and our effective tax rate by 50 basis points, and was attributable to transition taxes, specifically from a decrease in foreign remittance taxes. We recorded an adjustment of $6.1 million to our provisional estimates during the six months ended June 29, 2018, which decreased tax expense and our effective tax rate by 90 basis points, and was related to a $15.1 million decrease from revaluation of certain deferred tax assets and liabilities, a $1.9 million decrease related to transition taxes, specifically from decrease in foreign remittance taxes, and an offsetting $10.9 million increase from a reduction of foreign tax credits.We will continue to evaluate the effects of the TCJA on the 2017 provisional estimates through the end of the SAB 118 allowable measurement period. Refer to Note 11 of our 2017 Annual Report on Form 10-K for further details including disclosures pursuant to SAB 118 interpretive guidance, and provisional estimates for all TCJA effects.

COMPREHENSIVE INCOME

Comprehensive income ~~increased $57~~decreased by $90 million ~~from $229 million for the three months ended July 1, 2016 to $286 million for~~during the three months ended June ~~30,~~29, 2018 as compared to the comparable period in 2017, due primarily to ~~favorable~~unfavorable changes in foreign currency translation adjustments of ~~$56~~$145 million ~~due to changes in currency exchange rates.~~that were partially offset by net earnings that were higher by $55 million.

Comprehensive income ~~increased $96~~decreased by $36 million ~~from $434 million for the six months ended July 1, 2016 to $530 million for~~during the six months ended June ~~30,~~29, 2018 as compared to the comparable period in 2017, due primarily to ~~higher net earnings and favorable~~unfavorable changes in foreign currency translation adjustments of ~~$77~~$152 million ~~due to changes in currency exchange rates.~~that were partially offset by net earnings that were higher by $116 million.

INFLATION

The effect of inflation on our sales and net earnings was not significant in the three and six month ~~period~~periods ended June ~~30, 2017.~~29, 2018.

LIQUIDITY AND CAPITAL RESOURCES

We assess our liquidity in terms of our ability to generate cash to fund our operating, investing and financing activities. We generate substantial cash from operating activities and ~~believe~~expect that our operating cash flow and other sources of liquidity will

be sufficient to allow us to continue to invest in existing businesses, consummate strategic acquisitions, make interest payments on our outstanding indebtedness, and manage our capital structure on a short and long-term basis.

Overview of Cash Flows and Liquidity

Following is an overview of our cash flows and liquidity for the six months ended June ~~30, 2017:~~29, 2018:


	Six Months Ended						Six Months Ended
($ in millions)	June 30, 2017			July 1, 2016			June 29, 2018			June 30, 2017
Net cash provided by operating activities	$	394.0		$	487.8		$	512.8		$	394.0

Cash paid for acquisitions	$	—		$	(12.8	)	$	(9.3	)	$	—
Payments for additions to property, plant and equipment	(55.6		)	(61.4		)	(58.7		)	(55.6		)
All other investing activities	(3.0		)	4.4			3.9			(3.0		)
Net cash used in investing activities	$	(58.6	)	$	(69.8	)	$	(64.1	)	$	(58.6	)

Net repayments of borrowings (maturities of 90 days or less)	$	(158.8	)	$	—		$	(326.0	)	$	(158.8	)
Proceeds from borrowings (maturities longer than 90 days)	—			3,370.1
Cash dividend paid to Former Parent	—			(3,000.0		)
Proceeds from issuance of mandatory convertible preferred stock net of $36 million of issuance costs							1,338.2			—
Payment of dividends	(48.6		)	—			(48.7		)	(48.6		)
Net transfers to Former Parent	—			(300.9		)
All other financing activities	7.3			—			15.3			7.3
Net cash (used in) provided by financing activities	$	(200.1	)	$	69.2
Net cash provided (used) by financing activities							$	978.8		$	(200.1	)

Operating Activities

Cash flows from operating activities can fluctuate significantly from period-to-period as working capital needs and the timing of payments for income taxes, various employee liabilities, restructuring activities and other items impact reported cash flows.

Operating cash flows were approximately ~~$394~~$513 million for the first six months of ~~2017, a decrease~~2018, an increase of ~~$94~~$119 million, or approximately ~~19%~~30%, as compared to the comparable period of ~~2016.~~2017. The year-over-year change in operating cash flows was primarily attributable to the following factors:

~~2017~~2018 operating cash flows benefited from higher net earnings for the first six months of ~~2017~~2018 as compared to the comparable period in ~~2016.~~2017. Net earnings for the six months ended June ~~30, 2017~~29, 2018 benefited from a year-over-year increase in operating profits of ~~$58~~$76 million, partially offset by a year-over-year increase in net interest expense of ~~$43~~$5 million associated with ~~debt issued in June 2016 in connection with the Separation.~~our Commercial Paper Programs. The year-over-year increase in operating profit also includes a year-over-year ~~decrease~~increase in depreciation and amortization ~~expense~~expenses of ~~$15~~$44 million ~~due primarily~~largely attributable to ~~certain intangible assets, primarily in our Professional Instrumentation segment, being fully amortized.~~recently acquired businesses. Depreciation and amortization are noncash expenses that decrease earnings without a corresponding impact to operating cash flows.

The aggregate of accounts receivable, inventories and trade accounts payable used ~~$57~~$81 million of cash during the first six months of ~~2017 as~~2018 compared to using ~~$18~~$57 million of cash in the comparable period of ~~2016.~~2017. The amount of cash flow generated from or used by the aggregate of accounts receivable, inventories and trade accounts payable depends upon how effectively we manage the cash conversion cycle, which effectively represents the number of days that elapse from the day we pay for the purchase of raw materials and components to the collection of cash from our customers, and can be significantly impacted by the timing of collections and payments in a period.

The aggregate of prepaid expenses and other assets and accrued expenses and other liabilities used ~~$88~~$107 million of cash during the first six months of ~~2017~~2018 as compared to using ~~$26~~$88 million of cash in the comparable period of ~~2016.~~2017. The timing of ~~cash payments for income taxes and various employee related liabilities~~tax refunds drove the majority of this change. During the six months ended July 1, 2016 our combined financial statements accounted for income taxes under the separate return method; accordingly our taxes payable during this period was recorded as an adjustment to equity as it did not represent a liability with the relevant taxing authorities as we were a part of Danaher’s tax returns.

Investing Activities

Cash flows relating to investing activities consist primarily of cash used for acquisitions and capital expenditures. Net cash used in investing activities ~~decreased $11~~increased $6 million during the six months ended June ~~30, 2017~~29, 2018 as compared to the comparable period of ~~2016,~~2017, due primarily to ~~the~~a business acquisition completed during the six months ended ~~July 1, 2016 and a year-over-year decrease in capital expenditures.~~June 29, 2018.

Capital expenditures are made primarily for increasing capacity, replacing equipment, supporting product development initiatives, improving information technology systems and purchasing equipment that is used in operating-type lease arrangements with customers. ~~Capital expenditures decreased $6 million during the six months ended June 30, 2017 as compared to the comparable period of 2016 due primarily to timing of these investments within the year.~~ For the full year ~~2017,~~2018, we expect capital spending to be between approximately $125 million and $135 million, though actual expenditures will ultimately depend on business conditions.

Financing Activities and Indebtedness

Cash flows from financing activities consist primarily of cash flows associated with the issuance and repayments of commercial paper and other debt, the issuance of shares of 5.0% Mandatory Convertible Preferred Stock, Series A (“MCPS”) and payments of quarterly cash dividends to ~~shareholders and, prior to the Separation, net payments and transfers to Former Parent.~~shareholders. Financing activities ~~used~~generated cash of ~~$200~~$979 million during the six months ended June ~~30, 2017~~29, 2018, of which $1.34 billion was due to MCPS, as compared to using approximately ~~$69~~$200 million of cash ~~provided~~ in the comparable period in ~~2016.~~2017. In the six months ended June ~~30, 2017,~~29, 2018, we made net repayments of ~~outstanding~~ commercial paper under the U.S. and Euro commercial paper programs (“Commercial Paper Programs”) of ~~$159~~$326 million and paid $49 million of cash dividends to shareholders. In

On June 29, 2018, we issued 1,380,000 shares of MCPS with a par value of $0.01 per share and liquidation preference of $1,000 per share, which included the ~~six months ended July 1, 2016, we incurred approximately $3.4~~exercise of an over-allotment option in full to purchase 180,000 shares. We received $1.34 billion ~~of indebtedness offset by $3.3 billion of payments and net transfers to Former Parent. We no longer make any net transfers to Former Parent as a result~~in proceeds from the issuance of the ~~Separation.~~MCPS, net of $36 million of issuance costs. We will use the net proceeds from the issuance of MCPS to fund our acquisition activities and for general corporate purposes, including repayment of debt, working capital and capital expenditures. We expect to pay up to an additional $1.5 million in issuance costs in the third quarter of 2018.

We generally expect to satisfy any short-term liquidity needs that are not met through operating cash flows and available cash primarily through issuances of commercial paper under the Commercial Paper Programs. Credit support for the Commercial Paper Programs is provided by our five-year, $1.5 billion senior unsecured revolving credit facility that expires on June 16, 2021 (“Revolving Credit Facility”). We classified our borrowings outstanding under the Commercial Paper Programs as ~~of June 30, 2017 as~~ long-term debt in the accompanying Consolidated Condensed Balance Sheet as of June 29, 2018, as we have the intent and ability, as supported by availability under the Revolving Credit Facility, to refinance these borrowings for at least one year from the balance sheet date. As commercial paper obligations mature, we may issue additional short-term commercial paper obligations to refinance all or part of these borrowings.

We had $1.5 billion available under the Revolving Credit Facility as of June ~~30, 2017.~~29, 2018. Of this amount, approximately ~~$224~~$615 million was being used to backstop outstanding U.S. and Euro commercial paper balances. Accordingly, we had the ability to incur an additional ~~$1.3~~$0.9 billion of indebtedness under the Revolving Credit Facility as of June ~~30, 2017.~~29, 2018. Refer to Note 5 of the Consolidated ~~and Combined~~ Condensed Financial Statements for information regarding our financing activities and indebtedness.

The availability of the Revolving Credit Facility as a standby liquidity facility to repay maturing commercial paper is an important factor in maintaining the existing credit ratings of the Commercial Paper Programs. We expect to limit any 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 all of the outstanding commercial paper as it matures.

As of June ~~30, 2017,~~29, 2018, commercial paper outstanding under the U.S. dollar-denominated commercial paper program had ~~a weighted average~~an annual ~~interest~~effective rate of ~~1.48%~~2.39% and a weighted average remaining maturity of approximately 69 days. As of June ~~30, 2017,~~29, 2018, commercial paper outstanding under the Euro-denominated commercial paper program had ~~a weighted average~~an annual ~~interest~~effective rate of ~~(0.07)~~(0.10)% and a weighted average remaining maturity of approximately 3776 days.

~~Registration Rights Agreement~~

~~During 2016,~~Pursuant to our senior note and term loan agreements, $799 million of our long-term debt is scheduled for maturity and repayment in June 2019. Accordingly, we ~~issued~~have classified these as short-term debt on the accompanying Consolidated Condensed Balance Sheet. On July 20, 2018, we prepaid $325 million of our outstanding U.S variable interest rate term loan due in ~~a private placement $2.5 billion of senior unsecured notes in multiple series~~2019. There were no prepayment penalties associated with maturity dates ranging from June 15, 2019 to June 15, 2046 (collectively, the “Private Notes”). In connection with the issuance of the Private Notes, we entered into a registration rights agreement, pursuant to which we were obligated to use commercially reasonable efforts to file with the SEC, and cause to be declared effective, a registration statement with respect to an offer to exchange each series of Private Notes for registered notes (“Registered Notes”) with substantially identical terms (“Exchange Offer”). Accordingly, on May 5, 2017 we filed a Form S-4 with the SEC (the “Registration Statement”), which Registration Statement was declared effective on May 17, 2017. On May 17, 2017, we launched the Exchange Offer, which expired on June 14, 2017. All Private Notes were tendered and exchanged for Registered Notes in the Exchange Offer.this payment.

~~Shelf Registration Statement~~Dividends

On ~~June~~April 12, 2017, we filed a shelf registration statement on Form S-3 with the SEC (the “Shelf Registration Statement”) that registers an indeterminate amount of debt securities, common stock, preferred stock, warrants, depositary shares, purchase contracts and units that may be issued in the future in one or more offerings. Unless otherwise specified in the corresponding prospectus supplement, we expect to use net proceeds realized from future securities issuances off the Shelf Registration Statement for general corporate purposes, including without limitation repayment or refinancing of debt or other corporate obligations, acquisitions, capital expenditures and dividends, and working capital.

~~Dividends~~

~~We began paying a regular quarterly dividend during the third quarter of 2016. On April 13, 2017,~~2018, we declared a regular quarterly dividend of $0.07 per share paid on June ~~30, 2017~~29, 2018 to holders of record on May ~~26, 2017.~~25, 2018. For the six months ended June ~~30, 2017,~~29, 2018, cash ~~dividends~~dividend payments of ~~$48.6~~$48.7 million were ~~paid~~recorded as dividends to ~~shareholders.~~shareholders in the Consolidated Condensed Statement of Changes in Equity.

Cash and Cash Requirements

As of June ~~30, 2017,~~29, 2018, we held ~~$968~~approximately $2,368.2 million of cash and cash equivalents that were invested in highly liquid investment-grade instruments with a maturity of 90 days or less with ~~a negligible weighted average~~an annual effective interest ~~rate. Substantially all~~rate that approximated 1.35% during the three months ended June 29, 2018. Approximately 60% of the cash balance as of June 29, 2018 was held ~~outside of the United States.~~

While repatriation of some cash held outside the United States may be restricted by local laws, most of our foreign cash balances could be repatriated to the United States but, under current law, would be subject to U.S. federal income taxes, less applicable foreign tax credits. For most of our foreign subsidiaries, we make an assertion regarding the amount of earnings intended for indefinite reinvestment, with the balance available to be repatriated to the United States. We record a current tax liability for the funds when we plan to repatriate cash to the United States. No provisions for U.S. income taxes have been made with respect to earnings that are planned to be reinvested indefinitely outsidewithin the United States and relates primarily to the ~~amount~~proceeds received from the issuance of ~~U.S. income taxes that may be applicable to such earnings is not readily determinable given the various alternatives we could employ if we repatriated these earnings. The cash that~~ our ~~foreign subsidiaries hold for indefinite reinvestment is generally used to finance foreign operations and investments, including acquisitions. As of~~MCPS on June ~~30, 2017, we believe that we have sufficient liquidity to satisfy our cash needs, including our cash needs in the United States.~~29, 2018.

We have cash requirements to support working capital needs, capital expenditures and acquisitions, pay interest and service debt, pay taxes and any related interest or penalties, ~~pay dividends to shareholders,~~ fund our restructuring activities and ~~our~~ pension plans as required, pay dividends to shareholders and support other business needs or objectives. With respect to our cash requirements, we generally intend to use available cash and internally generated funds to meet these cash requirements, but in the event that additional liquidity is required, particularly in connection with acquisitions, we may also borrow under our commercial paper programs or credit facilities, enter into new credit facilities and either borrow directly thereunder or use such credit facilities to backstop additional borrowing capacity under our commercial paper programs and/or access the capital markets. We also may from time to time access the capital markets, including to take advantage of favorable interest rate environments or other market conditions.

The TCJA that was enacted in December 2017 is materially improving our U.S. liquidity through lower corporate tax rates and enhanced cash repatriation. During the first six months of 2018, we repatriated $187.4 million and expect to repatriate an additional $87.6 million during the second half of 2018. These repatriations are subject to an estimated $3.1 million in foreign remittance taxes.

As of June 29, 2018, we recorded a current liability for the funds we have or intend to repatriate under the TCJA final transition tax. Conversely, we have made an election regarding the amount of earnings that we do not intend to repatriate due to local working capital needs, local law restrictions, high foreign remittance costs, previous investments in physical assets and acquisitions, or future growth needs. Such earnings are intended for indefinite foreign reinvestment and no provision for non-U.S. income taxes has been made. The amount of income taxes that may be applicable to such earnings is not readily determinable given the unknown duration of local law restrictions as applicable to such earnings, unknown changes in foreign tax law that may occur during the restriction periods, and the various alternatives we could employ if we repatriated these earnings. The cash that our foreign subsidiaries hold for indefinite reinvestment is generally used to finance foreign operations and investments, including acquisitions. We expect the TCJA to have a favorable impact in our future ability to engage in acquisition activities.

As of June 29, 2018, we expect to have sufficient liquidity to satisfy our cash needs for the foreseeable future, including our cash needs in the United States.

CRITICAL ACCOUNTING ESTIMATES

There were no material changes during the three and six months ended June ~~30, 2017~~29, 2018 to the items we disclosed as our critical accounting estimates in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our ~~2016~~2017 Annual Report on Form 10-K. Changes to our accounting policy for revenue recognition as a result of adopting ASU 2014-09 Revenue from Contracts with Customers (“Topic 606”)are discussed in Note 6 to the consolidated condensed financial statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Quantitative and qualitative disclosures about market risk appear in “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Instruments and Risk Management,” in our ~~2016~~2017 Annual Report on Form 10-K. There were no material changes during the three months ended June ~~30, 2017~~29, 2018 to the information reported in our ~~2016~~2017 Annual Report on Form 10-K.

ITEM 4. CONTROLS AND PROCEDURES

Our management, with the participation of the President and Chief Executive Officer, and Senior Vice President and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on such evaluation, the President and Chief Executive Officer, and Senior Vice President and Chief Financial Officer, have concluded that, as of the end of such period, these disclosure controls and procedures were effective.

There have been no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the most recent completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1A. RISK FACTORS

Information regarding risk factors appears in “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Information Related to Forward-Looking Statements,” in Part I - Item 2 of this Form 10-Q, ~~and~~ in the “Risk Factors” section of our ~~2016~~2017 Annual Report on Form ~~10-K. There~~10-K and our Quarterly Report on Form 10-Q for the fiscal quarter ended March 30, 2018. Other than as provided below, there were no material changes during the quarter ended June ~~30, 2017~~29, 2018 to the risk factors reported in the “Risk Factors” section of our ~~2016~~2017 Annual Report on Form ~~10-K.~~10-K and our Quarterly Report on Form 10-Q for the fiscal quarter ended March 30, 2018.

Potential changes in international trade relations between China and the United States could have a material adverse effect on our business and financial statements.

In recent years, we have experienced growth in various end markets in China. During 2017, year-over-year sales from existing businesses grew at a rate in the mid-teens in China, and sales in China accounted for approximately 9% of our total sales for the year ended December 31, 2017. In addition, we have numerous facilities in China, many of which serve multiple businesses and are used for multiple purposes.

There is currently significant uncertainty about the future relationship between the United States and China, including with respect to trade policies, treaties, government regulations and tariffs. The current U.S. presidential administration has called for substantial changes to U.S. foreign trade policy with respect to China, including the possibility of imposing greater restrictions on international trade and significant increases in tariffs on goods imported into the United States. Recently, the United States has increased tariffs on certain goods imported into the United States from China, following which the Chinese government increased tariffs on certain goods imported into China from the United States, in response to which the United States announced plans to impose additional tariffs. There is a risk of further escalation and retaliatory actions between the two countries. In addition, the current administration, certain members of Congress and federal officials have stated that United States may seek to implement more protective trade measures, not just with respect to China but with respect to other countries in the Asia Pacific region as well. Any increased trade barriers or restrictions on global trade, especially trade with China, could adversely impact our business and financial statements.

ITEM 6. EXHIBITS




Exhibit Number		Description
2.1		Binding Offer Letter, dated as of June 6, 2018, by and among Fortive Corporation and Ethicon, Inc., together with the Stock and Asset Purchase Agreement, executed by Fortive Corporation (incorporated by reference to Exhibit 2.1 to Fortive Corporation’s Current Report on Form 8-K filed on June 6, 2018, File No. 1-37654).

3.1		Amended and Restated Certificate of Incorporation of Fortive Corporation (incorporated by reference to Exhibit 3.1 to Fortive Corporation’s Current Report on Form 8-K filed on June 9, 2017, File No. 1-37654).

3.2		Amended and Restated Bylaws of Fortive Corporation (incorporated by reference to Exhibit 3.2 to Fortive Corporation’s Current Report on Form 8-K filed on June 9, 2017, File No 1-37654).

~~10.1~~3.3		~~Description~~Certificate of ~~Compensation Arrangements for Non-Management Directors.~~

~~11.1~~		~~Computation~~Designations of ~~per-share earnings (See Note 10, “Earnings Per Share”,~~the 5.00% Mandatory Convertible Preferred Stock, Series A (incorporated by reference to ~~our Consolidated and Combined Condensed Financial Statements)~~Exhibit 3.1 to Fortive Corporation’s Current Report on Form 8-K filed on June 29, 2018, File No 1-37654).

4.1		Specimen Certificate of the 5.00% Mandatory Convertible Preferred Stock, Series A (incorporated by reference to Exhibit 3.1 to Fortive Corporation’s Current Report on Form 8-K filed on June 29, 2018, File No. 1-37654).

10.1		Fortive Corporation 2016 Stock Incentive Plan, as amended and restated (incorporated by reference from Appendix B to Fortive Corporation’s Proxy Statement on Schedule 14A filed on April 16, 2018, File No. 1-37654).



12.1		Computation of earnings to fixed charges.

31.1		Certification of Chief Executive Officer Pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Chief Financial Officer Pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of Chief Executive Officer, Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of Chief Financial Officer, Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		XBRL Instance Document* - the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.

101.SCH		XBRL Taxonomy Extension Schema Document*

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document*

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document*

101.LAB		XBRL Taxonomy Extension Label Linkbase Document*

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document*

Attached as Exhibit 101 to this report are the following documents formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Condensed Balance Sheets as of June ~~30, 2017~~29, 2018 and December 31, ~~2016,~~2017, (ii) Consolidated ~~and Combined~~ Condensed Statements of Earnings for the three and six months ended June 29, 2018 and June 30, 2017, ~~and July 1, 2016,~~ (iii) Consolidated ~~and Combined~~ Condensed Statements of Comprehensive Income for the three and six months ended June 29, 2018 and June 30, 2017, ~~and July 1, 2016,~~ (iv) Consolidated Condensed Statement of Changes in Equity for the six months ended June ~~30, 2017,~~29, 2018, (v) Consolidated ~~and Combined~~ Condensed Statements of Cash Flows for the six months ended June 29, 2018 and June 30, 2017, ~~and July 1, 2016,~~ and (vi) Notes to Consolidated ~~and Combined~~ Condensed Financial Statements.

The registrant agrees to furnish to the Commission supplementally upon request a copy of schedules or exhibits omitted pursuant to Item 601(b)(2) of Regulation S-K of any material plan or acquisition, disposition or reorganization set forth above.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



	FORTIVE CORPORATION:

Date: July ~~27, 2017~~26, 2018	By:	/s/ Charles E. McLaughlin
		Charles E. McLaughlin
		Senior Vice President and Chief Financial Officer

Date: July ~~27, 2017~~26, 2018	By:	/s/ Emily A. Weaver
		Emily A. Weaver
		Chief Accounting Officer

3541



PART I -	FINANCIAL INFORMATION	Page
Item 1.	Financial Statements
	Consolidated Condensed Balance Sheets	3
	Consolidated ~~and Combined~~ Condensed Statements of Earnings	4
	Consolidated ~~and Combined~~ Condensed Statements of Comprehensive Income	5
	Consolidated Condensed Statement of Changes in Equity	6
	Consolidated ~~and Combined~~ Condensed Statements of Cash Flows	7
	Notes to Consolidated ~~and Combined~~ Condensed Financial Statements	8
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	1924
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3137
Item 4.	Controls and Procedures	3238
PART II -	OTHER INFORMATION
Item 1A.	Risk Factors	3339
Item 6.	Exhibits	3439
	Signatures	3541



	Amount Outstanding		Weighted average annual interest rate		Weighted average remaining maturity (in days)
U.S. dollar-denominated	$	51.5	1.48	%	6
Euro-denominated	$	172.0	(0.07	)%	37



Stock Awards	$	53.2
Stock options	50.0
Total unrecognized compensation cost	$	103.2



	Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value
Outstanding as of December 31, 2016	10.7		$	33.23
Granted	1.8		57.41
Exercised	(0.7	)	23.50
Canceled/forfeited	(0.2	)	42.51
Outstanding as of June 30, 2017	11.6		$	37.40	6.7	$	302.4
Vested and expected to vest as of June 30, 2017 ^(a)	11.2		$	36.16	6.5	$	295.8
Vested as of June 30, 2017	5.1		$	27.25	4.7	$	183.8

^(a) The “expected to vest” options are the net unvested options that remain after applying the forfeiture rate assumption to total unvested options.



	Number of Stock Awards		Weighted Average Grant-Date Fair Value
Unvested as of December 31, 2016	2.2		$	39.20
Granted	0.6		56.90
Vested	(0.4	)	36.27
Forfeited	(0.1	)	41.35
Unvested as of June 30, 2017	2.3		$	44.11



	Net Earnings (Numerator)		Shares (Denominator)	Per Share Amount
For the Three Months Ended June 30, 2017:
Basic EPS	$	240.1	347.2	$	0.69
Incremental shares from assumed exercise of dilutive options and vesting of dilutive Stock Awards	—		5.0
Diluted EPS	$	240.1	352.2	$	0.68

For the Three Months Ended July 1, 2016:
Basic and diluted EPS	$	238.9	345.2	$	0.69

For the Six Months Ended June 30, 2017:
Basic EPS	$	439.8	347.1	$	1.27
Incremental shares from assumed exercise of dilutive options and vesting of dilutive Stock Awards	—		4.7
Diluted EPS	$	439.8	351.8	$	1.25

For the Six Months Ended July 1, 2016:
Basic and diluted EPS	$	420.9	345.2	$	1.22