UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

________________________________________________


(Mark One)
☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: ~~July 2, 2021~~April 1, 2022


Or
☐			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

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading symbol	Name of each exchange on which registered
Common stock, par value $0.01 per share	FTV	New York Stock Exchange

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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒ No ☐

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.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

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. ☐

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

The number of shares of common stock outstanding at ~~July 27, 2021~~April 25, 2022 was ~~358,390,903.~~358,447,899.

FORTIVE CORPORATION

INDEX

FORM 10-Q


PART I -	FINANCIAL INFORMATION	Page
Item 1.	Financial Statements
	Consolidated Condensed Balance Sheets	4
	Consolidated Condensed Statements of Earnings	5
	Consolidated Condensed Statements of Comprehensive Income	6
	Consolidated Condensed Statements of Changes in Equity	7
	Consolidated Condensed Statements of Cash Flows	98
	Notes to Consolidated Condensed Financial Statements	109
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2923
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4637
Item 4.	Controls and Procedures	4637
PART II -	OTHER INFORMATION
Item 1A.	Risk Factors	4637
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37
Item 6.	Exhibits	4739
	Signatures	4840

Table of Contents

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
		July 2, 2021		December 31, 2020			April 1, 2022		December 31, 2021
		(unaudited)					(unaudited)
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and equivalents	Cash and equivalents	$	1,565.8	$	1,824.8	Cash and equivalents	$	684.3	$	819.3
Accounts receivable, net	Accounts receivable, net	817.9		810.3		Accounts receivable, net	929.0		930.2
Inventories:	Inventories:					Inventories:
Finished goods	Finished goods	235.5		227.9		Finished goods	232.0		215.4
Work in process	Work in process	80.2		75.2		Work in process	103.0		94.0
Raw materials	Raw materials	172.3		152.4		Raw materials	218.3		203.3
Inventories	Inventories	488.0		455.5		Inventories	553.3		512.7
Prepaid expenses and other current assets	Prepaid expenses and other current assets	214.7		206.7		Prepaid expenses and other current assets	281.1		252.7
Investment in Vontier Corporation		0		1,119.2
Current assets, discontinued operations		0		30.4

Total current assets	Total current assets	3,086.4		4,446.9		Total current assets	2,447.7		2,514.9
Property, plant and equipment, net of accumulated depreciation of $696.2 and $674.5 at July 2, 2021 and December 31, 2020, respectively		400.0		422.0
Operating lease right-of-use assets		180.1		188.7
Property, plant and equipment, net of accumulated depreciation of $723.2 and $679.0 at April 1, 2022 and December 31, 2021, respectively						Property, plant and equipment, net of accumulated depreciation of $723.2 and $679.0 at April 1, 2022 and December 31, 2021, respectively	412.6		395.5

Other assets	Other assets	348.0		344.1		Other assets	484.3		512.9
Goodwill	Goodwill	7,347.3		7,359.2		Goodwill	9,132.9		9,152.0
Other intangible assets, net	Other intangible assets, net	3,133.7		3,290.6		Other intangible assets, net	3,788.9		3,890.2

Total assets	Total assets	$	14,495.5	$	16,051.5	Total assets	$	16,266.4	$	16,465.5
LIABILITIES AND EQUITY	LIABILITIES AND EQUITY					LIABILITIES AND EQUITY
Current liabilities:	Current liabilities:					Current liabilities:

Current portion of long-term debt	Current portion of long-term debt	$	1,134.6	$	1,399.8	Current portion of long-term debt	999.8		2,151.7
Trade accounts payable	Trade accounts payable	489.4		480.8		Trade accounts payable	576.1		557.9
Current operating lease liabilities		44.2		47.0
Accrued expenses and other current liabilities	Accrued expenses and other current liabilities	900.0		899.9		Accrued expenses and other current liabilities	985.7		1,005.3
Current liabilities, discontinued operations		1.5		33.3

Total current liabilities	Total current liabilities	2,569.7		2,860.8		Total current liabilities	2,561.6		3,714.9
Operating lease liabilities		145.7		154.3

Other long-term liabilities	Other long-term liabilities	1,128.6		1,233.4		Other long-term liabilities	1,399.2		1,426.3
Long-term debt	Long-term debt	1,441.8		2,830.3		Long-term debt	2,738.9		1,807.3

Commitments and Contingencies	Commitments and Contingencies	0		0		Commitments and Contingencies	0		0
Equity:	Equity:					Equity:
Preferred stock: $0.01 par value, 15.0 million shares authorized at July 2, 2021 and December 31, 2020; 5.0% Mandatory convertible preferred stock, series A, 0.0 million and 1.4 million shares designated, issued and outstanding at July 2, 2021 and December 31, 2020, respectively		0		0
Common stock: $0.01 par value, 2.0 billion shares authorized; 359.7 and 339.0 million issued; 358.4 and 337.9 million outstanding at July 2, 2021 and December 31, 2020, respectively		3.6		3.4
Preferred stock: $0.01 par value, 15.0 million shares authorized and no shares issued or outstanding at April 1, 2022 and December 31, 2021						Preferred stock: $0.01 par value, 15.0 million shares authorized and no shares issued or outstanding at April 1, 2022 and December 31, 2021	—		—
Common stock: $0.01 par value, 2.0 billion shares authorized; 360.9 and 360.4 million issued; 358.4 and 359.1 million outstanding at April 1, 2022 and December 31, 2021, respectively						Common stock: $0.01 par value, 2.0 billion shares authorized; 360.9 and 360.4 million issued; 358.4 and 359.1 million outstanding at April 1, 2022 and December 31, 2021, respectively	3.6		3.6
Additional paid-in capital	Additional paid-in capital	3,602.1		3,554.5		Additional paid-in capital	3,619.1		3,670.0
Treasury shares, at cost:						Treasury shares, at cost:	(63.8)		—
Retained earnings	Retained earnings	5,756.6		5,547.4		Retained earnings	6,226.4		6,023.6
Accumulated other comprehensive income (loss)		(157.3)		(141.1)
Accumulated other comprehensive loss						Accumulated other comprehensive loss	(223.9)		(185.0)
Total Fortive stockholders’ equity	Total Fortive stockholders’ equity	9,205.0		8,964.2		Total Fortive stockholders’ equity	9,561.4		9,512.2
Noncontrolling interests	Noncontrolling interests	4.7		8.5		Noncontrolling interests	5.3		4.8
Total stockholders’ equity	Total stockholders’ equity	9,209.7		8,972.7		Total stockholders’ equity	9,566.7		9,517.0
Total liabilities and equity	Total liabilities and equity	$	14,495.5	$	16,051.5	Total liabilities and equity	$	16,266.4	$	16,465.5

See the accompanying Notes to Consolidated Condensed Financial Statements.

Table of Contents

FORTIVE CORPORATION AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS

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

(unaudited)
Three Months Ended Six Months Ended
July 2, 2021 June 26, 2020 July 2, 2021 June 26, 2020
Sales of products and software $ 1,136.0 $ 887.0 $ 2,213.2 $ 1,832.5
Sales of services 183.7 154.6 365.7 317.2
Total sales 1,319.7 1,041.6 2,578.9 2,149.7
Cost of product and software sales (464.0) (375.9) (908.3) (776.2)
Cost of service sales (100.2) (82.9) (203.2) (178.7)
Total cost of sales (564.2) (458.8) (1,111.5) (954.9)
Gross profit 755.5 582.8 1,467.4 1,194.8
Operating costs:
Selling, general and administrative expenses (456.4) (402.8) (884.5) (818.6)
Research and development expenses (87.8) (77.4) (174.0) (158.2)
Operating profit 211.3 102.6 408.9 218.0
Non-operating income (expense), net:
Interest expense, net (25.2) (36.2) (52.9) (74.8)
Loss on extinguishment of debt 0 0 (104.9) 0
Gain on investment in Vontier Corporation 0 0 57.0 0
Gain on litigation dismissal 26.0 0 26.0 0
Other non-operating expense, net (4.6) 5.6 (7.9) 1.1
Earnings from continuing operations before income taxes 207.5 72.0 326.2 144.3
Income taxes (25.5) (12.2) (32.5) (29.7)
Net earnings from continuing operations 182.0 59.8 293.7 114.6
Earnings (loss) from discontinued operations, net of income taxes (1.1) 70.2 (2.6) 57.3
Net earnings 180.9 130.0 291.1 171.9
Mandatory convertible preferred dividends (17.2) (17.2) (34.5) (34.5)
Net earnings attributable to common stockholders $ 163.7 $ 112.8 $ 256.6 $ 137.4
Net earnings per common share from continuing operations:
Basic $ 0.49 $ 0.13 $ 0.76 $ 0.24
Diluted $ 0.48 $ 0.13 $ 0.76 $ 0.24
Net earnings (loss) per share from discontinued operations:
Basic $ 0 $ 0.21 $ (0.01) $ 0.17
Diluted $ 0 $ 0.21 $ (0.01) $ 0.17
Net earnings per share:
Basic $ 0.48 $ 0.33 $ 0.76 $ 0.41
Diluted $ 0.48 $ 0.33 $ 0.75 $ 0.40
Average common stock and common equivalent shares outstanding:
Basic 339.4 337.3 339.0 337.1
Diluted 342.4 339.7 342.1 339.9
The sum of net earnings per share amounts may not add due to rounding.


	Three Months Ended
	April 1, 2022		April 2, 2021
Sales of products and software	$	1,152.7	$	1,077.2
Sales of services	223.8		182.0
Total sales	1,376.5		1,259.2
Cost of product and software sales	(465.1)		(444.3)
Cost of service sales	(119.4)		(103.0)
Total cost of sales	(584.5)		(547.3)
Gross profit	792.0		711.9
Operating costs:
Selling, general and administrative expenses	(480.6)		(428.1)
Research and development expenses	(99.1)		(86.2)

Operating profit	212.3		197.6
Non-operating income (expense), net:

Interest expense, net	(18.8)		(27.7)
Loss on extinguishment of debt	—		(104.9)
Gain on investment in Vontier Corporation	—		57.0

Other non-operating expense, net	(2.7)		(3.3)
Earnings from continuing operations before income taxes	190.8		118.7
Income taxes	(25.7)		(7.0)
Net earnings from continuing operations	165.1		111.7
Earnings (loss) from discontinued operations, net of income taxes	—		(1.5)
Net earnings	165.1		110.2
Mandatory convertible preferred dividends	—		(17.3)
Net earnings attributable to common stockholders	$	165.1	$	92.9

Net earnings per common share from continuing operations:
Basic	$	0.46	$	0.28
Diluted	$	0.45	$	0.28
Net earnings (loss) per share from discontinued operations:
Basic	$	—	$	—
Diluted	$	—	$	—
Net earnings per share:
Basic	$	0.46	$	0.27
Diluted	$	0.45	$	0.27
Average common stock and common equivalent shares outstanding:
Basic	359.3		338.6
Diluted	368.4		341.7
The sum of net earnings per share amounts may not add due to rounding.

See the accompanying Notes to Consolidated Condensed Financial Statements.

Table of Contents

FORTIVE CORPORATION AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME

($ in millions)

(unaudited)


		Three Months Ended				Six Months Ended					Three Months Ended
		July 2, 2021		June 26, 2020		July 2, 2021		June 26, 2020			April 1, 2022		April 2, 2021
Net earnings	Net earnings	$	180.9	$	130.0	$	291.1	$	171.9	Net earnings	$	165.1	$	110.2
Other comprehensive income, net of income taxes:	Other comprehensive income, net of income taxes:									Other comprehensive income, net of income taxes:
Foreign currency translation adjustments	Foreign currency translation adjustments	16.6		36.0		(18.1)		(100.3)		Foreign currency translation adjustments	(39.4)		(34.7)
Pension adjustments	Pension adjustments	0.9		1.0		1.9		0		Pension adjustments	0.5		1.0
Total other comprehensive income (loss), net of income taxes	Total other comprehensive income (loss), net of income taxes	17.5		37.0		(16.2)		(100.3)		Total other comprehensive income (loss), net of income taxes	(38.9)		(33.7)
Comprehensive income	Comprehensive income	$	198.4	$	167.0	$	274.9	$	71.6	Comprehensive income	$	126.2	$	76.5

See the accompanying Notes to Consolidated Condensed Financial Statements.

Table of Contents

FORTIVE CORPORATION AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF CHANGES IN EQUITY

($ and shares in millions)

(unaudited)

Common Stock Preferred Stock Additional Paid-In Capital Retained Earnings Accumulated
Other
Comprehensive
Income (Loss) Noncontrolling
Interests
Shares Amount Shares Amount
Balance, December 31, 2020 339.0 $ 3.4 1.4 $ 0 $ 3,554.5 $ 5,547.4 $ (141.1) $ 8.5
Net earnings for the period — — — — — 110.2
Dividends to common shareholders — — — — — (23.7) — —
Mandatory convertible preferred stock cumulative dividends — — — — — (17.3) — —
Other comprehensive income (loss) — — — — — — (33.7) —
Common stock-based award activity (0.5) — — — (2.3) — — —
Early extinguishment of 0.875% senior convertible notes due 2022 — — — — 11.6 — — —
Change in noncontrolling interests — — — — — — — (0.8)
Balance, April 2, 2021 338.5 $ 3.4 1.4 $ 0 $ 3,563.8 $ 5,616.6 $ (174.8) $ 7.7
Net earnings for the period — — — — — 180.9
Dividends to common shareholders — — — — — (23.7) — —
Mandatory convertible preferred stock cumulative dividends — — — — — (17.2) — —
Other comprehensive income — — — — — — 17.5 —
Common stock-based award activity 0.5 — — — 35.3 — — —
Conversion of Mandatory convertible preferred stock to common stock 19.4 0.2 (1.4) — — — — —
Changes in noncontrolling interests — — — — 3.0 — — (3.0)
Balance, July 2, 2021 358.4 $ 3.6 0 $ 0 $ 3,602.1 $ 5,756.6 $ (157.3) $ 4.7


	Common Stock			Preferred Stock			Treasury Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Noncontrolling Interests
	Shares Outstanding	Amount		Shares	Amount
Balance, December 31, 2021	359.1	$	3.6	—	$	—	$	—	$	3,670.0	$	6,023.6	$	(185.0)	$	4.8
Adoption of ASU 2020-06	—	—		—	—		—		(65.7)		62.8		—		—
Balance, January 1, 2022	359.1	3.6		—	—		—		3,604.3		6,086.4		(185.0)		4.8
Net earnings for the period	—	—		—	—		—		—		165.1		—		—
Dividends to common shareholders	—	—		—	—		—		—		(25.1)		—		—
Other comprehensive income (loss)	—	—		—	—		—		—		—		(38.9)		—
Common stock-based award activity	0.5	—		—	—		—		23.8		—		—		—
Common stock repurchases	(1.0)	—		—	—		(63.8)		—		—		—		—
Shares withheld for taxes	(0.2)	—		—	—		—		(9.0)		—		—		—
Change in noncontrolling interests	—	—		—	—		—		—		—		—		0.5
Balance, April 1, 2022	358.4	$	3.6	—	$	—	$	(63.8)	$	3,619.1	$	6,226.4	$	(223.9)	$	5.3

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

~~Table of Contents~~

~~FORTIVE CORPORATION AND SUBSIDIARIES~~

~~CONSOLIDATED CONDENSED STATEMENTS OF CHANGES IN EQUITY~~

~~($ and shares in millions)~~

~~(unaudited)~~


		Common Stock			Preferred Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Noncontrolling Interests			Common Stock			Preferred Stock			Treasury Stock				Additional Paid-In Capital				Retained Earnings				Accumulated Other Comprehensive Income (Loss)				Noncontrolling Interests
		Shares	Amount		Shares	Amount											Shares Outstanding	Amount		Shares	Amount
Balance, December 31, 2019		336.0	$	3.4	1.4	$	0	$	3,311.1	$	4,128.8	$	(56.3)	$	13.2
Adoption of accounting standard		—	—		—	—		—		(31.3)		—		—
Balance, January 1, 2020		336.0	$	3.4	1.4	$	0	$	3,311.1	$	4,097.5	$	(56.3)	$	13.2
Balance, December 31, 2020																Balance, December 31, 2020	339.0	$	3.4	1.4	$	—			$	—			$	3,554.5			$	5,547.4			$	(141.1)			$	8.5
Net earnings for the period	Net earnings for the period	—	—		—	—		—		41.9		—		—		Net earnings for the period	—	—		—	—		—				—				110.2
Dividends to common shareholders	Dividends to common shareholders	—	—		—	—		—		(23.5)		—		—		Dividends to common shareholders	—	—		—	—		—				—				(23.7)				—				—
Mandatory convertible preferred stock cumulative dividends	Mandatory convertible preferred stock cumulative dividends	—	—		—	—		—		(17.3)		—		—		Mandatory convertible preferred stock cumulative dividends	—	—		—	—		—				—				(17.3)				—				—
Other comprehensive income (loss)	Other comprehensive income (loss)	—	—		—	—		—		—		(137.3)		—		Other comprehensive income (loss)	—	—		—	—		—				—				—				(33.7)				—
Common stock-based award activity	Common stock-based award activity	0.8	—		—	—		22.6		—		—		—		Common stock-based award activity	(0.4)	—		—	—		—				34.1				—				—				—

Change in noncontrolling interests		—	—		—	—		—		—		—		(2.0)
Balance, March 27, 2020		336.8	$	3.4	1.4	$	0	$	3,333.7	$	4,098.6	$	(193.6)	$	11.2
Net earnings for the period		—	—		—	—		—		130.0		—		—
Dividends to common shareholders		—	—		—	—		—		(23.6)		—		—
Mandatory convertible preferred stock cumulative dividends		—	—		—	—		—		(17.2)		—		—
Other comprehensive income		—	—		—	—		—		—		37.0		—
Common stock-based award activity		0.2	—		—	—		27.0		—		—		—
Change in noncontrolling interests		—	—		—	—		—		—		—		0.4
Balance, June 26, 2020		337.0	$	3.4	1.4	$	0	$	3,360.7	$	4,187.8	$	(156.6)	$	11.6
Shares withheld for tax																Shares withheld for tax	(0.1)	—		—	—		—				(13.2)				—				—				—
Early extinguishment of 0.875% convertible senior notes due 2022																Early extinguishment of 0.875% convertible senior notes due 2022	—	—		—	—		—				(11.6)				—				—				—
Change in noncontrolling interest																Change in noncontrolling interest	—	—		—	—		—				—				—				—				(0.8)
Balance, April 2, 2021																Balance, April 2, 2021	338.5	$	3.4	1.4	$	—	$	—			$	3,563.8			$	5,616.6			$	(174.8)			$	7.7

See the accompanying Notes to Consolidated Condensed Financial Statements.

Table of Contents

FORTIVE CORPORATION AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

($ in millions)

(unaudited)


		Six Months Ended					Three Months Ended
		July 2, 2021		June 26, 2020			April 1, 2022		April 2, 2021
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net earnings from continuing operations	Net earnings from continuing operations	$	293.7	$	114.6	Net earnings from continuing operations	$	165.1	$	111.7
Noncash items:	Noncash items:					Noncash items:
Amortization	Amortization	155.0		155.6		Amortization	96.3		77.5
Depreciation	Depreciation	37.7		42.3		Depreciation	21.5		19.5
Stock-based compensation expense	Stock-based compensation expense	36.8		29.7		Stock-based compensation expense	19.9		16.6
Loss on extinguishment of debt	Loss on extinguishment of debt	104.2		0		Loss on extinguishment of debt	—		104.2
Gain on investment in Vontier Corporation	Gain on investment in Vontier Corporation	(57.0)		0		Gain on investment in Vontier Corporation	—		(57.0)
Gain on litigation dismissal		(26.0)		0

Change in trade accounts receivable, net	Change in trade accounts receivable, net	(11.8)		133.4		Change in trade accounts receivable, net	(1.4)		(26.9)
Change in inventories	Change in inventories	(24.0)		(26.0)		Change in inventories	(43.2)		(3.8)
Change in trade accounts payable	Change in trade accounts payable	9.1		3.4		Change in trade accounts payable	19.2		(13.0)
Change in prepaid expenses and other assets	Change in prepaid expenses and other assets	(21.4)		30.5		Change in prepaid expenses and other assets	(31.4)		3.8
Change in accrued expenses and other liabilities	Change in accrued expenses and other liabilities	(53.3)		(52.7)		Change in accrued expenses and other liabilities	(31.2)		(80.6)
Total operating cash provided by continuing operations	Total operating cash provided by continuing operations	443.0		430.8		Total operating cash provided by continuing operations	214.8		152.0
Total operating cash provided by (used in) discontinued operations		(18.7)		239.5
Total operating cash used in discontinued operations						Total operating cash used in discontinued operations	—		(7.2)
Net cash provided by operating activities	Net cash provided by operating activities	424.3		670.3		Net cash provided by operating activities	214.8		144.8
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Cash paid for acquisitions, net of cash received						Cash paid for acquisitions, net of cash received	0.9		(0.2)
Payments for additions to property, plant and equipment	Payments for additions to property, plant and equipment	(17.1)		(45.5)		Payments for additions to property, plant and equipment	(18.8)		(8.4)

Cash paid for acquisitions, net of cash received		0.9		(1.8)
All other investing activities		1.1		5.2
Total investing cash used in continuing operations		(15.1)		(42.1)
Total investing cash used in discontinued operations		0		(23.2)

Net cash used in investing activities	Net cash used in investing activities	(15.1)		(65.3)		Net cash used in investing activities	(17.9)		(8.6)
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:

Net repayments of commercial paper borrowings		0		(1,141.9)
Proceeds from borrowings (maturities longer than 90 days), net of issuance costs of $1 million in 2020		0		741.7
Payment of 0.875% convertible senior notes due 2022						Payment of 0.875% convertible senior notes due 2022	(1,156.5)		—
Net proceeds from commercial paper borrowings						Net proceeds from commercial paper borrowings	930.7		—

Repayment of borrowings (maturities greater than 90 days)	Repayment of borrowings (maturities greater than 90 days)	(611.1)		(250.0)		Repayment of borrowings (maturities greater than 90 days)	—		(611.1)

Payment of common stock cash dividend to shareholders	Payment of common stock cash dividend to shareholders	(47.4)		(47.1)		Payment of common stock cash dividend to shareholders	(25.1)		(23.7)
Payment of mandatory convertible preferred stock cash dividend to shareholders	Payment of mandatory convertible preferred stock cash dividend to shareholders	(34.5)		(17.3)		Payment of mandatory convertible preferred stock cash dividend to shareholders	—		(17.3)
Repurchase of common shares						Repurchase of common shares	(63.8)		—
All other financing activities						All other financing activities	(17.9)		(2.8)

All other financing activities		25.2		(10.0)
Total financing cash used in continuing operations		(667.8)		(724.6)
Total financing cash used in discontinued operations		0		(3.9)
Net cash used in financing activities	Net cash used in financing activities	(667.8)		(728.5)		Net cash used in financing activities	(332.6)		(654.9)
Effect of exchange rate changes on cash and equivalents	Effect of exchange rate changes on cash and equivalents	(0.4)		(18.7)		Effect of exchange rate changes on cash and equivalents	0.7		(6.5)
Net change in cash and equivalents	Net change in cash and equivalents	(259.0)		(142.2)		Net change in cash and equivalents	(135.0)		(525.2)
Beginning balance of cash and equivalents	Beginning balance of cash and equivalents	1,824.8		1,205.2		Beginning balance of cash and equivalents	819.3		1,824.8
Ending balance of cash and equivalents	Ending balance of cash and equivalents	$	1,565.8	$	1,063.0	Ending balance of cash and equivalents	$	684.3	$	1,299.6

See the accompanying Notes to Consolidated Condensed Financial Statements.

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FORTIVE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

NOTE 1. BUSINESS OVERVIEW

Fortive Corporation (“Fortive,” ~~the “Company,~~“the Company,” “we,” “us,” or “our”) is a provider of essential technologies for connected workflow solutions across a range of attractive end-markets. Our strategic segments - Intelligent Operating Solutions, Precision Technologies, and Advanced Healthcare Solutions - include well-known brands ~~hold~~with leading positions in ~~intelligent operating solutions, precision technologies, and advanced healthcare solutions.~~their markets. Our businesses design, develop, ~~service,~~ manufacture, and ~~market~~service professional and engineered products, software, and services, ~~for a variety of end markets,~~ building upon leading brand names, innovative technologies, and significant market positions. Our research and development, manufacturing, sales, distribution, service, and administrative facilities are located in more than 50 countries ~~across North America, Asia Pacific, Europe, and Latin America.~~around the world.

We prepared the unaudited consolidated 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 condensed financial statements included herein should be read in conjunction with the audited annual consolidated financial statements as of and for the year ended December 31, ~~2020~~2021 and the footnotes (“Notes”) thereto included within our ~~2020~~2021 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 ~~July 2, 2021~~April 1, 2022 and December 31, ~~2020,~~2021, our results of operations ~~for the three and six month periods ended July 2, 2021 and June 26, 2020,~~ and cash flows for the ~~six~~three month periods ended ~~July~~April 1, 2022 and April 2, ~~2021 and June 26, 2020.~~2021. Reclassification of certain prior year amounts have been made to conform to current year presentation.

Vontier Separation and Discontinued Operations

On October 9, 2020, ~~(the “Distribution Date”), the Company~~we completed the separation ~~of its Industrial Technologies segment by distributing 80.1% of the outstanding shares~~ of Vontier Corporation (“Vontier”), the entity ~~incorporated~~we created to hold ~~such businesses, to Fortive stockholders~~our former Industrial Technologies segment (the ~~“Vontier Separation”~~“Separation”) ~~on a pro rata basis. To effect~~. The accounting requirements for reporting the Vontier business as a discontinued operation were met when the Separation was completed. Accordingly, the ~~Company distributed to its stockholders two shares~~consolidated condensed financial statements reflect the results of ~~Vontier common stock for every five shares of the Company’s common stock outstanding held on September 25, 2020, the record date for the distribution,~~separation activities associated with the ~~Company retaining 19.9% of the shares of~~prior Vontier ~~common stock outstanding immediately following the Vontier Separation (the “Retained Vontier Shares”).~~

~~On the Distribution Date, Vontier paid the Company $1.8 billion, including $1.6 billion~~business as ~~part of the consideration~~a discontinued operation, which was immaterial for the contribution of certain assets and liabilities to Vontier by the Company in connection with the Vontier Separation and $202 million as an adjustment for excess cash balances remaining with Vontier (collectively, the “Cash Consideration”). We have used the Cash Consideration to repay certain outstanding indebtedness, make interest payments on certain debt instruments, and pay certain of the Company’s regular, quarterly cash dividends.all periods presented.

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

Refer to Note 11 of our 2020 Annual Report on Form 10-K and Note 6 to the consolidated condensed financial statements for the description of the debt repayments made subsequent to the Distribution Date. Interest expense and extinguishment costs related to the ~~debt retired~~Debt-for-Equity Exchange during the first quarter of 2021 are included in continuing operations.

We operate and therefore the Retained Vontier Shares were included in our assets of continuing operations as of December 31, 2020 and subsequent fair value changes in the Retained Vontier Shares prior to the Debt-for-Equity Exchange are included inreport our results ~~from continuing operations for~~in 3 segments, Intelligent Operating Solutions, Precision Technologies, and Advanced Healthcare Solutions, each of which is further described below.

Our Intelligent Operating Solutions segment provides leading workflow solutions to accelerate industrial and facility reliability and performance, as well as compliance and safety across a range of vertical end markets, including manufacturing, process industries, healthcare, utilities and power, communications and electronics, among others. We provide differentiated instrumentation and sensors, software and services to address our customers’ toughest workflow challenges.

Our Precision Technologies segment supplies instrumentation and sensing technologies to a broad set of vertical end markets, enabling our customers to accelerate the ~~six month period ended July 2, 2021.~~development, manufacture and launch of innovative products and solutions. We provide our customers with electrical test and measurement instruments and services, energetic material devices, and a broad portfolio of sensor and control system solutions.

~~Segment Presentation~~

~~In light of the Vontier Separation, we changed~~Our Advanced Healthcare Solutions segment supplies critical workflow solutions to hospitals and other healthcare customers, enabling safer, more efficient, and higher quality healthcare. We provide hardware, consumables, software and services that optimize our ~~internal reporting structure on the first day of the fourth quarter, September 26, 2020, to reflect organizational~~customers’ most critical workflows, including instrument sterilization and ~~leadership changes that allow us to better assess the operational performance of,~~device reprocessing, instrument tracking, cell therapy equipment design and manufacturing, biomedical test tools, radiation safety monitoring, end-to-end clinical productivity solutions and asset management.

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allocate resources to, our businesses. Our chief operating decision maker assesses performance and allocates resources based on our new operating segments, which are also our new reportable segments. Our new reportable segments are comprised of Intelligent Operating Solutions, Precision Technologies, and Advanced Healthcare Solutions. All prior period segment information has been restated to reflect our new reportable segments.

Accumulated Other Comprehensive Income (Loss)

Foreign currency translation adjustments are generally not adjusted for income taxes as they relate to indefinite investments in non-U.S. subsidiaries. We designated our ¥13.8 billion senior unsecured term facility loan and our Euro-denominated commercial paper outstanding during the six month period ended June 26, 2020 as net investment hedges of our investment in certain foreign operations; we exited our Euro-denominated commercial paper positions during the second quarter of 2020 and repaid our ¥13.8 billion senior unsecured term facility loan during the fourth quarter of 2020. As of July 2, 2021 and December 31, 2020, we had no designated net investment hedges.

During the three and six month periods ended June 26, 2020, we recognized foreign currency transaction gains of $3.1 million and $4.0 million, respectively, on the debt that were deferred in the foreign currency translation component of Accumulated other comprehensive income (loss) (“AOCI”) as an offset to the foreign currency translation adjustments on our investments in foreign subsidiaries. Any amounts deferred in AOCI will remain until the hedged investment is sold or substantially liquidated. We recorded no ineffectiveness from our net investment hedges during the three and six month periods ended June 26, 2020.

The changes in ~~AOCI~~Accumulated Other Comprehensive Income (“AOCI”) by component are summarized below ($ in millions):
Foreign
currency
translation
adjustments
Pension
adjustments (a)
Total
For the Three Months Ended July 2, 2021:
Balance, April 2, 2021 $ (88.7) $ (86.1) $ (174.8)
Other comprehensive income (loss) before reclassifications, net of income taxes 16.6 0 16.6
Amounts reclassified from accumulated other comprehensive income (loss):
Increase 0 1.2 (b) 1.2
Income tax impact 0 (0.3) (0.3)
Amounts reclassified from accumulated other comprehensive income (loss), net of income taxes 0 0.9 0.9
Net current period other comprehensive income (loss), net of income taxes 16.6 0.9 17.5
Balance, July 2, 2021 $ (72.1) $ (85.2) $ (157.3)
For the Three Months Ended June 26, 2020:
Balance, March 27, 2020 $ (115.1) $ (78.5) $ (193.6)
Other comprehensive income (loss) before reclassifications, net of income taxes 36.0 0 36.0
Amounts reclassified from accumulated other comprehensive income (loss):
Decrease 0 1.2 (b) 1.2
Income tax impact 0 (0.2) (0.2)
Amounts reclassified from accumulated other comprehensive income (loss), net of income taxes 0 1.0 1.0
Net current period other comprehensive income (loss), net of income taxes 36.0 1.0 37.0
Balance, June 26, 2020 $ (79.1) $ (77.5) $ (156.6)

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		Foreign currency translation adjustments		Pension adjustments (a)			Total			Foreign currency translation adjustments		Pension adjustments (a)			Total
For the Six Months Ended July 2, 2021:
For the Three Months Ended April 1, 2022:									For the Three Months Ended April 1, 2022:
Balance, December 31, 2021									Balance, December 31, 2021	$	(122.7)	$	(62.3)		$	(185.0)
Other comprehensive income (loss) before reclassifications, net of income taxes									Other comprehensive income (loss) before reclassifications, net of income taxes	(39.4)		—			(39.4)
Amounts reclassified from accumulated other comprehensive income (loss):									Amounts reclassified from accumulated other comprehensive income (loss):
Increase (decrease)									Increase (decrease)	—		0.6		(b)	0.6
Income tax impact									Income tax impact	—		(0.1)			(0.1)
Amounts reclassified from accumulated other comprehensive income (loss), net of income taxes									Amounts reclassified from accumulated other comprehensive income (loss), net of income taxes	—		0.5			0.5
Net current period other comprehensive income (loss), net of income taxes									Net current period other comprehensive income (loss), net of income taxes	(39.4)		0.5			(38.9)
Balance, April 1, 2022									Balance, April 1, 2022	$	(162.1)	$	(61.8)		$	(223.9)

For the Three Months Ended April 2, 2021:									For the Three Months Ended April 2, 2021:
Balance, December 31, 2020	Balance, December 31, 2020	$	(54.0)	$	(87.1)		$	(141.1)	Balance, December 31, 2020	$	(54.0)	$	(87.1)		$	(141.1)
Other comprehensive income (loss) before reclassifications, net of income taxes	Other comprehensive income (loss) before reclassifications, net of income taxes	(18.1)		0			(18.1)		Other comprehensive income (loss) before reclassifications, net of income taxes	(34.7)		—			(34.7)
Amounts reclassified from accumulated other comprehensive income (loss):	Amounts reclassified from accumulated other comprehensive income (loss):								Amounts reclassified from accumulated other comprehensive income (loss):
Increase (decrease)	Increase (decrease)	0		2.5		(b)	2.5		Increase (decrease)	—		1.3		(b)	1.3
Income tax impact	Income tax impact	0		(0.6)			(0.6)		Income tax impact	—		(0.3)			(0.3)
Amounts reclassified from accumulated other comprehensive income (loss), net of income taxes	Amounts reclassified from accumulated other comprehensive income (loss), net of income taxes	0		1.9			1.9		Amounts reclassified from accumulated other comprehensive income (loss), net of income taxes	—		1.0			1.0
Net current period other comprehensive income (loss)		(18.1)		1.9			(16.2)
Balance, July 2, 2021		$	(72.1)	$	(85.2)		$	(157.3)
Net current period other comprehensive income (loss), net of income taxes									Net current period other comprehensive income (loss), net of income taxes	(34.7)		1.0			(33.7)
Balance, April 2, 2021									Balance, April 2, 2021	$	(88.7)	$	(86.1)		$	(174.8)

For the Six Months Ended June 26, 2020:
Balance, December 31, 2019		$	21.2	$	(77.5)		$	(56.3)
Other comprehensive income (loss) before reclassifications, net of income taxes		(100.3)		0			(100.3)
Amounts reclassified from accumulated other comprehensive income (loss):
Increase (decrease)		0		0			0
Income tax impact		0		0			0
Amounts reclassified from accumulated other comprehensive income (loss), net of income taxes		0		0			0
Net current period other comprehensive income (loss)		(100.3)		0			(100.3)
Balance, June 26, 2020		$	(79.1)	$	(77.5)		$	(156.6)

(a) Includes balances relating to defined benefit plans, supplemental executive retirement plans, and other postretirement employee benefit plans.	(a) Includes balances relating to defined benefit plans, supplemental executive retirement plans, and other postretirement employee benefit plans.								(a) Includes balances relating to defined benefit plans, supplemental executive retirement plans, and other postretirement employee benefit plans.
(b) This component of AOCI is included in the computation of net periodic pension cost (refer to Note 8 for additional details).
(b) This component of AOCI is included in the computation of net periodic pension cost (refer to Note 12 in our most recently filed Form 10-K for additional details).									(b) This component of AOCI is included in the computation of net periodic pension cost (refer to Note 12 in our most recently filed Form 10-K for additional details).

Allowances for Doubtful Accounts

All trade accounts and unbilled receivables are reported in the Consolidated Condensed Balance Sheet adjusted for any write-offs and net of allowances for credit losses. The allowances for credit losses represent management’s best estimate of the credit losses expected from our unbilled and trade accounts receivable portfolios over the life of the underlying assets. Additions to the allowances are charged to current period earnings, amounts determined to be uncollectible are charged directly against the allowances, while amounts recovered on previously written-off accounts increase the allowances.

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The following is a rollforward of the aggregated allowance for credit losses related to our trade accounts receivables as of ~~July 2, 2021~~April 1, 2022 ($ in millions):


Balance, December 31, ~~2020~~2021	$	~~42.5~~39.7
Provision	~~0.1~~3.4
Write-offs	~~(4.3)~~(3.6)
FXForeign currency exchange and ~~Other~~other	~~0.1~~ (0.1)
Balance, ~~July 2, 2021~~April 1, 2022	$	~~38.4~~39.4

The allowance for unbilled receivables was immaterial for all periods presented.

Recently Issued Accounting Standard

In August 2020, the Financial Accounting Standards Board issued Accounting Standards Update No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity

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(Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which amends the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts in an entity’s own equity. ~~We may adopt this standard~~On January 1, 2022, we adopted ASU 2020-06 using ~~either~~ a modified retrospective orapproach and recognized in our balance sheet, as of January 1, 2022, a ~~fully retrospective method~~net of ~~transition. This~~tax adjustment to reduce Additional Paid-in Capital by $65.7 million and increase debt by $3.7 million, with a corresponding net of tax adjustment to beginning retained earnings of $62.8 million. These adjustments are related to our 0.875% Convertible Senior Notes (the “Convertible Notes”), which were the only outstanding instruments impacted by the new standard ~~is effective~~at the time of adoption.

Results for usreporting periods beginning January 1, 2022 reflect the adoption of ASU 2020-06, while prior period amounts were not adjusted and continue to be reported in accordance with our historical accounting practices.

Prior to our adoption of ASU 2020-06 on January 1, 2022, we recognized the fair value of the nonconvertible debt component of our Convertible Notes subject to the cash conversion guidance as debt and attributed the residual value to the conversion feature which was recognized in APIC. Subsequent to the issuance of our Convertible Notes in February 2019, we accreted the debt discount as non-cash interest expense in our Statements of Earnings. Further, we applied the treasury stock method to our Convertible Notes when calculating earnings per share (“EPS”) in all periods prior to our adoption of ASU 2020-06. After our adoption of ASU 2020-06, we account for convertible debt instruments wholly as debt, unless a convertible instrument contains features that require bifurcation as a derivative under ASC 815 or a convertible debt instrument is issued at a substantial premium.

On January 1, 2022, we reclassified the unamortized cost basis of our outstanding Convertible Notes wholly as debt, which subsequently matured and was settled on February 15, 2022. We ~~are currently evaluating~~applied the ~~impact~~if-converted method to all convertible instruments when calculating EPS for the three months ended April 1, 2022. As of ~~this standard on our financial statements and~~April 1, 2022, we had no convertible instruments outstanding subject to the ~~method of adoption.~~guidance in ASU 2020-06.

NOTE 2. ACQUISITIONS

~~For a description of our material acquisition activity, refer to Note 3 of our 2020 Annual Report on Form 10-K.~~

We continually evaluate potential mergers, acquisitions, and divestitures that align with our strategy and expedite the evolution of our portfolio of businesses into new and attractive ~~markets.~~areas. We have completed a number of acquisitions that have been accounted for as purchases of businesses and resulted in the recognition of goodwill in our financial statements. This goodwill arises because the purchase price for each acquired business reflects a number of factors, including the complementary fit, acceleration of our strategy and synergies the business brings with respect to our existing operations, the future earnings and cash flow potential of the business, the potential to add other strategically complementary acquisitions to the acquired business, the scarce or unique nature of the business in its markets, competition to acquire the business, the valuation of similar businesses in the marketplace (as reflected in a multiple of revenues, earnings, or cash flows), and 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.

We make an initial allocation of the purchase price at the date of acquisition based 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 assets and evaluating the tax impact of certain acquisitions. We make appropriate adjustments to purchase price allocations prior to completion of the applicable measurement period, as required.

During the three ~~and six~~ month ~~periods~~period ended ~~July 2, 2021, immaterial~~April 1, 2022, adjustments were ~~recorded~~made to the preliminary purchase price allocation of prior year acquisitions ~~that closed during 2020.~~

~~Advanced Sterilization Products~~

On April 1, 2019 (the “Principal Closing Date”), we acquired the advanced sterilization products business (“ASP”) of Johnson & Johnson, a New Jersey corporation (“Johnson & Johnson”), for an aggregate purchase price of $2.7 billion (the “Transaction”), subject to certain post-closing adjustments set forth in a Stock and Asset Purchase Agreement, dated effective as of June 6, 2018 (the “Purchase Agreement”), between the Company and Ethicon, Inc., a New Jersey corporation (“Ethicon”) and a wholly owned subsidiary of Johnson & Johnson. ASP engages in the research, development, manufacture, marketing, distribution, and sale of low-temperature terminal sterilization and high-level disinfection ~~products.~~

On the Principal Closing Date, we paid $2.7 billion in cash and obtained the transferred assets and assumed liabilities in 20 countries (“Principal Countries”), general patent and trademark assignments, and all transferred equity interests in ASP. ASP has operations in an additional 39 countries (“Non-Principal Countries”). The transferred assets and liabilities associated with these operations will close when requirements of country-specific agreements or regulatory approvals are satisfied.

The $2.7 billion purchase price was paid in exchange for ASP’s businesses in both Principal and Non-Principal Countries. As of July 2, 2021 we have closed 20 Principal Countries and 38 Non-Principal Countries that, in aggregate, accounted for approximately 99% of the preliminary valuation of ASP. The remaining Non-Principal Country represents less than 1% of the preliminary valuation of ASP, or $1.0 million, which is included as a prepaid asset in Other assets in the Consolidated Condensed Balance Sheet. As each Non-Principal Country closes, we reduce the prepaid asset and record the fair value of the assets acquired and liabilities assumed. All of the provisional goodwill associated with the Transaction is included in goodwill at July 2, 2021, and the majority of the provisional goodwill is tax deductible. There were no material measurement period adjustments recorded for the Non-Principal Countries during the three and six month periods ended July 2, 2021.

In addition, the Company entered into a transition services agreement with Johnson & Johnson for certain administrative and operational services (“TSA”) and distribution agreements in the Non-Principal Countries. Under the distribution agreements, ASP sells finished goods to Ethicon at prices agreed by the parties. ASP recognizes these sales as revenue when the conditions for revenue recognition are met. Following the sale of finished goods by ASP, Ethicon obtains title of the finished goods, has full authority to sell and market the finished goods to end customers as it sees fit, and retains any revenue and profit from sale.described below.

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AsProvation

On December 27, 2021, we acquired Provation Software, Inc. (“Provation”), a leading provider of ~~July 2, 2021, ASP had exited the TSAs~~clinical workflow software solutions used in hospitals and ~~substantially all of the distribution agreements. ASP expects to close the remaining Non-Principal Country in 2021.~~

~~Prior to our~~ambulatory surgery centers. The acquisition of ~~ASP, Johnson & Johnson received a Civil Investigative Demand (“CID”)~~Provation extends our digital offering and software capabilities in the healthcare space. The total consideration paid was approximately $1.4 billion, net of acquired cash and was primarily financed with proceeds from ~~the United States Department of Justice (“DOJ”) regarding a False Claims Act investigation arising from a whistleblower lawsuit pertaining to the pricing, quality, marketing,~~our financing activities and ~~promotion of certain of ASP’s products. Based on the totality of~~ available ~~information at the Principal Closing Date and throughout the applicable measurement period, management allocated $26~~cash. We preliminarily recorded $978 million of ~~the $2.7 billion purchase price to a potential liability~~goodwill related to the aforementioned litigation. Since the Principal Closing Date, management has continually evaluated the likelihood and magnitude of the asserted claims based on any new information that became available. In the second quarter of 2021, following the unsealing of the whistleblower lawsuit and DOJ’s declination to intervene in the litigation, the plaintiff dismissed the whistleblower lawsuit. Based on these developments, management derecognized the litigation liability from our Consolidated Condensed Balance Sheet and recorded the gain on litigation dismissal of $26 million within Non-operating income (expense), net in our Consolidated Condensed Statements of Earnings foracquisition, which is not tax deductible. During the three month period ended April 1, 2022, provisional goodwill increased by $8.1 million for measurement period adjustments. Provation had revenue in 2020 of approximately $90 million and ~~six month periods ended July 2, 2021.~~is an operating company within our Advanced Healthcare Solutions segment.

~~Pending Acquisition of~~ ServiceChannel

On ~~July 8,~~August 24, 2021, ~~the Company entered into a definitive agreement with Bayard Capital and Accel Partners to acquire~~we acquired ServiceChannel Holdings, Inc. (“ServiceChannel”)~~. ServiceChannel is~~, a privately held, global provider of ~~SaaS-based~~Software as a Service (“SaaS”) based multi-site facilities maintenance service solutions with an integrated service-provider network. The acquisition of ServiceChannel ~~acquisition is subject to customary closing conditions, including regulatory approvals. Upon closing~~broadens our offering of software-enabled solutions for the ~~acquisition we will pay~~facility and asset lifecycle workflow. The total consideration ofpaid was approximately $1.2 billion, ~~which includes~~net of acquired cash, and included approximately ~~$60~~$28 million of deferred compensation consideration that is being recognized ratably over a twelve month service period. The ServiceChannel acquisition was primarily financed with available cash and proceeds from our financing activities. We preliminarily recorded approximately $873 million of goodwill related to the acquisition, ~~will be financed primarily with available cash.~~which is not tax deductible. ServiceChannel had revenue in 2020 of approximately $70 million and is an operating company within our Intelligent Operating Solutions segment.

Revenue and operating loss attributable to the Provation and ServiceChannel acquisitions were $67.3 million and $23.4 million for the three months ended April 1, 2022. The operating loss includes $19.5 million of intangible asset amortization and $20.4 million of transaction and integration costs, primary comprised of compensation cost for employee retention and amounts paid to third party advisors, which are recorded in Selling, general and administration expenses.

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~~NOTE 3. DISCONTINUED OPERATIONS~~

~~On October 9, 2020, we completed~~The following table summarizes the Vontier Separation. The accounting requirements for reporting the Vontier business as a discontinued operation were met when the Vontier Separation was completed. Accordingly, the consolidated financial statements reflect the results of the Vontier business as a discontinued operation for all periods presented.

~~Vontier Impairment Charge~~

~~As a result of the interim impairment testing performed, we concluded that the~~preliminary estimated fair value of the ~~Telematics reporting unit was less than its carrying value~~assets acquired and liabilities assumed from ServiceChannel and Provation as of March 27, 2020, and recorded a non-cash goodwill impairment charge of $85.3 million during the three month period ended March 27, 2020. The Telematics reporting unit was included in our former Industrial Technologies segment and part of the Vontier Separation. Accordingly, the impairment charge is recorded in Earnings from discontinued operations, net of income taxes in the Consolidated Statement of Earnings.

~~The key components of income from discontinued operations for the three and six month periods ended July 2, 2021 and June 26, 2020 were as follows~~April 1, 2022 ($ in millions):
Three Months Ended Six Months Ended
July 2, 2021 June 26, 2020 July 2, 2021 June 26, 2020
Sales $ 0 $ 533.7 $ 0 $ 1,142.9
Cost of sales 0 (302.8) 0 (648.9)
Selling, general and administrative expenses (1.3) (112.6) (3.2) (253.6)
Research and development expenses 0 (30.2) 0 (63.1)
Goodwill impairment 0 0 0 (85.3)
Interest expense and other income, net 0 (7.1) 0.1 (12.3)
Earnings before income taxes (1.3) 81.0 (3.1) 79.7
Income taxes 0.2 (10.8) 0.5 (22.4)
Net earnings from discontinued operations $ (1.1) $ 70.2 $ (2.6) $ 57.3
~~The following table summarizes the major classes of assets and liabilities of discontinued operations that were included in the Company’s Consolidated Balance Sheets ($ in millions):~~

July 2, 2021 December 31, 2020
ASSETS
Other current assets $ 0 $ 30.4
Total assets, discontinued operations $ 0 $ 30.4
LIABILITIES
Current liabilities:
Accrued expenses and other current liabilities $ (1.5) $ (33.3)
Total liabilities, discontinued operations $ (1.5) $ (33.3)


	Provation		ServiceChannel		Total
Accounts receivable	$	41.6	$	10.1	$	51.7
Goodwill	977.6		872.9		1,850.5
Other intangible assets, primarily customer relationships, technology, database, and trade names	586.5		342.9		929.4
Deferred revenue, current	(50.2)		(1.7)		(51.9)
Deferred tax liabilities	(119.4)		(50.8)		(170.2)
Other assets and liabilities, net	(30.5)		(7.5)		(38.0)
Net cash consideration	$	1,405.6	$	1,165.9	$	2,571.5

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NOTE 4.3. GOODWILL

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

Intelligent Operating Solutions Precision Technologies Advanced Healthcare Solutions Total Goodwill
Balance, December 31, 2020 $ 3,268.8 $ 1,867.9 $ 2,222.5 $ 7,359.2
Measurement period adjustments for 2020 acquisitions 0.6 0 (3.3) (2.7)
Foreign currency translation and other (0.4) (14.2) 5.4 (9.2)
Balance, July 2, 2021 $ 3,269.0 $ 1,853.7 $ 2,224.6 $ 7,347.3


	Intelligent Operating Solutions		Precision Technologies		Advanced Healthcare Solutions		Total Goodwill
Balance, December 31, 2021	$	4,126.0	$	1,840.0	$	3,186.0	$	9,152.0
Measurement period adjustments for 2021 acquisitions	(0.6)		—		9.3		8.7

Foreign currency translation and other	(10.9)		(13.4)		(3.5)		(27.8)
Balance, April 1, 2022	$	4,114.5	$	1,826.6	$	3,191.8	$	9,132.9

~~We have not~~During the three month period ended April 1, 2022, we identified ~~any~~no triggering events ~~which would have indicated~~indicating a potential impairment of ~~goodwill in the three and six month periods ended July 2, 2021.~~goodwill.

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NOTE 5.4. 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:

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

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

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

Below is a summary of financial liabilities that are measured at fair value on a recurring basis ($ in millions):

Quoted Prices
in Active
Market
(Level 1) Significant Other
Observable Inputs
(Level 2) Significant
Unobservable
Inputs
(Level 3) Total
July 2, 2021
Deferred compensation liabilities $ 0 $ 40.5 $ 0 $ 40.5
December 31, 2020
Investment in Vontier $ 1,119.2 $ 0 $ 0 $ 1,119.2
Deferred compensation liabilities 0 34.8 0 34.8


	Quoted Prices in Active Market (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
April 1, 2022
Deferred compensation liabilities	$	—	$	35.8	$	—	$	35.8
December 31, 2021

Deferred compensation liabilities	—		36.0		—		36.0

Certain management employees participate in our nonqualified deferred compensation programs that permit such employees to defer a portion of their compensation, on a pretax basis, until after their termination of employment. All amounts deferred under such plans are unfunded, unsecured obligations and are presented as a component of our compensation and benefits accrual included in Other long-term liabilities in the Consolidated Condensed Balance Sheets. Participants may choose among alternative earnings 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.

On October 9, 2020, we completed the Vontier Separation and retained 19.9% of the shares of Vontier common stock outstanding immediately following the Vontier Separation. We did not retain a controlling interest in Vontier and therefore the fair value of our Retained Vontier Shares were included in our assets of continuing operations as of December 31, 2020, and subsequent fair value changes are included in our results from continuing operations for the six month period ended July 2, 2021.

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On January 19, 2021, we completed the Debt-for-Equity Exchange of 33.5 million shares of common stock of Vontier, representing all of the Retained Vontier Shares, for $1.1 billion in aggregate principal amount of indebtedness of the Company held by Goldman Sachs & Co., including (i) all $400.0 million of the 364-day delayed draw term loan due March 22, 2021 (the “Term Loan due March 2021”) and (ii) $683.2 million of the delayed-draw term loan due May 30, 2021 (the “Term Loan due May 2021”). The change in fair value of the Retained Vontier Shares and the resulting gain of $57.0 million was recorded in the six month period ended July 2, 2021. We recorded a loss on extinguishment of the debt included in the Debt-for-Equity Exchange of $94.4 million in the six month period ended July 2, 2021.

Nonrecurring Fair Value Measurements

Certain non-financial assets, primarily property, plant, and equipment, goodwill, and intangible assets, are not required to be measured at fair value on a recurring basis and are reported at their carrying value. However, these assets are required to be assessed for impairment whenever events or circumstances indicate that their carrying value may not be fully recoverable, and at least annually for goodwill and indefinite-lived intangible assets.

We evaluated events or circumstances that may indicate the carrying value of our non-financial assets may not be fully recoverable during the three month period ended ~~July 2, 2021,~~April 1, 2022, and recorded no ~~material~~ impairments.

Fair Value of Financial Instruments

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


		July 2, 2021				December 31, 2020					April 1, 2022				December 31, 2021
		Carrying Amount		Fair Value		Carrying Amount		Fair Value			Carrying Amount		Fair Value		Carrying Amount		Fair Value
Current portion of long-term debt	Current portion of long-term debt	$	1,134.6	$	1,165.2	$	1,399.8	$	1,400.0	Current portion of long-term debt	$	999.8	$	1,000.0	$	2,151.7	$	2,158.3
Long-term debt, net of current maturities	Long-term debt, net of current maturities	$	1,441.8	$	1,638.4	$	2,830.3	$	3,155.5	Long-term debt, net of current maturities	$	2,738.9	$	2,767.9	$	1,807.3	$	1,978.9

As of ~~July 2, 2021~~April 1, 2022 and December 31, ~~2020,~~2021, the current portion of long-term debt and long-term debt, net of current maturities were categorized as Level 1.

The fair values of the current portion of long-term 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

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and/or our credit ratings subsequent to the incurrence of the borrowing. The fair value of cash and cash equivalents, accounts receivable, net, and trade accounts payable, and commercial paper approximates their carrying amount due to the short-term maturities of these instruments.

NOTE 6.5. FINANCING AND CAPITAL

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


		July 2, 2021		December 31, 2020			April 1, 2022		December 31, 2021

U.S. dollar-denominated commercial paper						U.S. dollar-denominated commercial paper	$	1,296.2	$	364.9

Delayed-Draw Term Loan due 2022						Delayed-Draw Term Loan due 2022	999.8		999.7
3.15% senior unsecured notes due 2026	3.15% senior unsecured notes due 2026	$	894.6	$	894.1	3.15% senior unsecured notes due 2026	895.4		895.1
4.30% senior unsecured notes due 2046	4.30% senior unsecured notes due 2046	547.2		547.2		4.30% senior unsecured notes due 2046	547.3		547.3
0.875% senior convertible notes due 2022	0.875% senior convertible notes due 2022	1,134.6		1,389.0		0.875% senior convertible notes due 2022	—		1,152.0

Term Loan due May 2021		0		1,000.0
Term Loan due March 2021		0		399.8

Long-term debt	Long-term debt	2,576.4		4,230.1		Long-term debt	3,738.7		3,959.0
Less: current portion of long-term debt	Less: current portion of long-term debt	1,134.6		1,399.8		Less: current portion of long-term debt	999.8		2,151.7
Long-term debt, net of current maturities	Long-term debt, net of current maturities	$	1,441.8	$	2,830.3	Long-term debt, net of current maturities	$	2,738.9	$	1,807.3

Aggregate unamortized debt discounts, premiums, and issuance costs of ~~$30~~$8 million and ~~$57~~$13 million as of ~~July 2, 2021~~April 1, 2022 and December 31, ~~2020,~~2021, respectively, are netted against the principal amounts of the components of debt in the table above. Refer to Note 11 of our ~~2020~~2021 Annual Report on Form 10-K for further details of our debt financing.

~~Debt-for-Equity Exchange~~

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~~Term Loan due May 2021. We recorded a loss on extinguishment of the debt included in the Debt-for-Equity Exchange of $94.4 million in the six month period ended July 2, 2021.~~

~~Term Loan due May 2021~~

On January 21, 2021, we repaid the remaining $316.8 million outstanding of the Term Loan due May 2021 from the cash proceeds received from Vontier in the Vontier Separation. The fees associated with the prepayment were immaterial.

Convertible Senior Notes

On February 22, 2019, we issued $1.4 billion in aggregate principal amount of our 0.875% Convertible Senior Notes due 2022, ~~(the “Convertible Notes”),~~ including $187.5 million in aggregate principal amount resulting from an exercise in full of an over-allotment option. The Convertible Notes were issued in a private placement to certain initial purchasers for resale to qualified institutional buyers pursuant to Rule 144A under the Securities Act.

The Convertible Notes bear interest at a rate of 0.875% per year, payable semiannually in arrears on February 15 and August 15 of each year, beginning on August 15, 2019. The Convertible Notes mature on February 15, 2022, unless earlier repurchased or converted in accordance with their terms prior to such date.

As a result of the Vontier Separation and in accordance with the anti-dilution provisions of the Convertible Notes, effective October 9, 2020, the Convertible Notes are convertible into shares of our common stock at an adjusted conversion rate of 10.9568 shares per $1,000 principal amount of Convertible Notes (which is equivalent to an initial conversion price of $91.27 per share), subject to future adjustment upon the occurrence of certain events. The conversion rate is subject to customary anti-dilution adjustments. If certain corporate events occur prior to the maturity date, the conversion rate will be increased for a holder that elects to convert its Convertible Notes in connection with such corporate event. Upon conversion of the Convertible Notes, holders will receive cash, shares of our common stock, or a combination thereof, at our election. Our intention is to settle such conversions through cash up to the principal amount of the Convertible Notes and, if applicable, through shares of our common stock for conversion value, if any, in excess of the principal amount of the Convertible Notes.

Of the $1.4 billion in principal amount from the issuance of the Convertible Notes, $1.3 billion was classified as debt and $102.2 million was classified as equity, using an assumed effective interest rate of 3.38%. Debt issuance costs of $24.3 million were proportionately allocated to debt and equity.

On February 9, 2021, we repurchased $281 million of the Convertible Notes at fair value using the remaining cash proceeds received from Vontier in the Vontier Separation and other cash on hand. In connection with the repurchase, we recorded a loss on debt extinguishment during the ~~six~~three month period ended ~~July~~April 2, 2021 of $10.5 million. In addition, upon repurchase we recorded $11.6 million as a reduction to additional paid-in capital related to the equity component of the repurchased Convertible Notes.

On January 1, 2022, we adopted ASU 2020-06, as further detailed in Note 1. We reclassified the carrying value of the instrument wholly to debt, eliminating the value formerly attributable to the conversion feature and the associated debt issuance costs that were previously classified as equity.

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

We recognized ~~$11.1 million and $23.3~~$2.1 million in interest expense during the three ~~and six~~ month ~~periods~~period ended ~~July 2, 2021, respectively,~~April 1, 2022, of which ~~$2.5 million and $5.3~~$1.3 million was related to the contractual coupon rate of 0.875% and $0.8 million was attributable to the amortization of debt issuance costs. We recognized $12.2 million in interest expense during the three month period ended April 2, 2021, of which $2.8 million related to the contractual coupon rate of 0.875%, ~~$1.5 million and $3.2~~$1.7 million was attributable to the amortization of debt issuance costs, and ~~$7.1 million and $14.8~~$7.7 million was attributable to the amortization of the discount for each respective period. We recognized $13.6 million and $27.0 million in interest expense during the three and six month periods ended June 26, 2020, respectively, of which $3.2 million and $6.3 million related to the contractual coupon rate of 0.875%, $1.9 million and $3.8 million was attributable to the amortization of debt issuance costs, and $8.5 million and $16.9 million was attributable to the amortization of the discount for each respective period. The discount at issuance was $102.2 million and is being amortized over a three-year period. The unamortized discount at July 2, 2021 was $18.1 million.

Prior to November 15, 2021, the Convertible Notes will be convertible only upon the occurrence of certain events and will be convertible thereafter at any time until the close of business on the business day immediately preceding the maturity date of the Convertible Notes.discount.

Other Liquidity Sources

~~In prior periods, we~~We generally ~~satisfied~~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”). Due to the volatility and disruption in the commercial paper markets during the first six~~

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~~months~~Paper Programs”). Under these programs, we may issue unsecured promissory notes with maturities not exceeding 397 and 183 days, respectively.

Interest expense on commercial paper is paid at maturity and is generally based on our credit ratings at the time of ~~2020, we temporarily reduced our reliance on this source~~issuance and prevailing short-term interest rates.

The details of ~~funding, and consequently paid down and refinanced~~ our outstanding ~~commercial paper with the Term Loan due March 2021 that was retired~~Commercial Paper Programs as of April 1, 2022 were as follows ($ in ~~the Debt-for-Equity Exchange.~~millions):


	Carrying value		Annual effective rate		Weighted average remaining maturity (in days)
U.S. dollar-denominated commercial paper	$	1,296.2	0.91	%	39

Credit support for the Commercial Paper Programs is provided by a five-year $2.0 billion senior unsecured revolving credit facility that expires on November 30, 2023 (the “Revolving Credit Facility”) which, to the extent not otherwise providing credit support for our commercial paper programs, can also be used for working capital and other general corporate purposes. As of ~~July 2, 2021, 0~~April 1, 2022, no borrowings were outstanding under the Revolving Credit Facility.

~~Classification~~Debt-for-Equity Exchange

On January 19, 2021, we completed the Debt-for-Equity Exchange of ~~Debt Due within~~33.5 million shares of common stock of Vontier, representing all of the ~~Next Twelve Months~~

~~Our Convertible Senior Notes are recorded~~Retained Vontier Shares, for $1.1 billion in aggregate principal amount of indebtedness of the Company. During the first quarter of 2021 we recognized a gain of $57.0 million related to the subsequent change in the ~~Current portion~~fair value of ~~long-term~~the Retained Vontier Shares. We recorded a loss on extinguishment of the debt ~~line item~~included in the ~~Consolidated Condensed Balance Sheet as~~Debt-for-Equity Exchange of ~~July~~$94.4 million in the three month period ended April 2, 2021.

NOTE 7.6. SALES

We derive ~~revenues~~revenue primarily from the sale of products and software, and services. Revenue is recognized when control of promised products ~~software,~~ or services is transferred to customers in an amount that reflects the consideration we expect to be entitled to in exchange for those products, software, or services.

~~Sales of products and software includes revenues~~Product sales include revenue from the sale of products and equipment, which includes our software and SaaS product offerings and equipment rentals.

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

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 ~~$70~~$72 million as of ~~July 2, 2021~~April 1, 2022 and ~~$56~~$71 million as of December 31, ~~2020.~~2021.

Contract Costs — We incur and capitalize direct incremental costs to obtain certain contracts, typically sales-related commissions and costs associated with assets used by our customers in certain software arrangements. Deferred sales-related commissions are ~~generally~~ not capitalized aswhen the amortization period is one year or less, ~~and~~as we elected to use the practical expedient to expense these sales commissions as incurred. As of ~~July 2, 2021~~April 1, 2022 and December 31, ~~2020,~~2021, we had ~~$29~~$30 million and ~~$31~~$27 million, respectively, in net revenue-related contract assets primarily related to certain software contracts. Revenue-related contract assets are recorded in the Prepaid expenses and other current assets and Other assets line items in our Consolidated Condensed ~~Consolidated~~ Balance Sheets. These assets have estimated useful lives between 3 and 8 years.

~~Impairment losses recognized on our revenue-related contract assets were immaterial during the three and six month periods ended July 2, 2021 and June 26, 2020.~~

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 Consolidated Condensed Balance Sheets.

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


		July 2, 2021		December 31, 2020			April 1, 2022		December 31, 2021
Deferred revenue - current	Deferred revenue - current	$	398.6	$	376.4	Deferred revenue - current	$	491.4	$	457.6
Deferred revenue - noncurrent	Deferred revenue - noncurrent	30.4		34.2		Deferred revenue - noncurrent	35.8		33.8
Total contract liabilities	Total contract liabilities	$	429.0	$	410.6	Total contract liabilities	$	527.2	$	491.4

During the three ~~and six~~ month ~~periods~~period ended ~~July 2, 2021,~~April 1, 2022, we recognized revenue related to our contract liabilities at December 31, ~~2020~~2021 of ~~$65 million and $188 million, respectively.~~$154 million. The change in our contract liabilities from December 31, ~~2020~~2021 to ~~July 2, 2021~~April 1, 2022 was primarily due to the timing of ~~cash receipts~~billings and ~~sales~~recognition as revenue 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 July 2, 2021,~~and the average contract value for software contracts, for which work has not been performed. We have excluded performance obligations with an original expected duration of one year or less from the amounts below.

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The aggregate performance obligations attributable to each of our segments is as follows ($ in millions):


	~~July 2, 2021~~April 1, 2022
Intelligent Operating Solutions	$	~~106.7~~595.3
Precision Technologies	~~25.1~~52.1
Advanced Healthcare Solutions	~~4.0~~80.2
Total remaining performance obligations	$	~~135.8~~727.6

The majority of remaining performance obligations are related to service and support contracts, which we expect to fulfill approximately 5580 percent within the next two years, approximately 8590 percent within the next three years, and substantially all within four years.

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Disaggregation of Revenue

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

Disaggregation of revenue for the three month period ended ~~July 2, 2021~~April 1, 2022 is presented as follows ($ in millions):


		Total		Intelligent Operating Solutions		Precision Technologies		Advanced Healthcare Solutions			Total		Intelligent Operating Solutions		Precision Technologies		Advanced Healthcare Solutions
Sales:	Sales:									Sales:
Sales of products and software	Sales of products and software	$	1,136.0	$	478.4	$	417.5	$	240.1	Sales of products and software	$	1,152.7	$	500.5	$	410.6	$	241.6
Sales of services	Sales of services	183.7		63.4		54.4		65.9		Sales of services	223.8		87.1		51.8		84.9
Total	Total	$	1,319.7	$	541.8	$	471.9	$	306.0	Total	$	1,376.5	$	587.6	$	462.4	$	326.5

Geographic:	Geographic:									Geographic:
United States	United States	$	671.6	$	276.7	$	236.3	$	158.6	United States	$	739.9	$	321.9	$	234.0	$	184.0
China	China	163.5		53.7		81.7		28.1		China	145.4		47.9		69.3		28.2

All other (each country individually less than 5% of total sales)	All other (each country individually less than 5% of total sales)	484.6		211.4		153.9		119.3		All other (each country individually less than 5% of total sales)	491.2		217.8		159.1		114.3
Total	Total	$	1,319.7	$	541.8	$	471.9	$	306.0	Total	$	1,376.5	$	587.6	$	462.4	$	326.5

End markets:(a)	End markets:(a)									End markets:(a)
Direct sales:	Direct sales:									Direct sales:
Medical	Medical	$	328.6	$	8.4	$	33.9	$	286.3	Medical	$	353.3	$	10.3	$	37.1	$	305.9
Industrial & Manufacturing	Industrial & Manufacturing	312.1		200.7		105.4		6.0		Industrial & Manufacturing	321.9		211.1		103.7		7.1
Utilities & Power	Utilities & Power	97.8		57.2		40.6		0		Utilities & Power	86.3		43.0		43.3		—
Government	Government	99.0		51.3		37.9		9.8		Government	105.7		51.6		44.7		9.4
Communication, Electronics & Semiconductor	Communication, Electronics & Semiconductor	97.6		32.8		64.3		0.5		Communication, Electronics & Semiconductor	87.8		23.8		63.4		0.6
Aerospace & Defense	Aerospace & Defense	65.7		0		65.7		0		Aerospace & Defense	55.4		0.1		55.3		—
Oil & Gas	Oil & Gas	66.7		64.0		2.7		0		Oil & Gas	64.8		62.3		2.5		—
Retail & Consumer	Retail & Consumer	44.6		18.7		25.9		0		Retail & Consumer	81.2		63.7		17.5		—
Other	Other	137.3		71.7		65.6		0		Other	153.9		87.5		66.3		0.1
Total direct sales	Total direct sales	1,249.4		504.8		442.0		302.6		Total direct sales	1,310.3		553.4		433.8		323.1
Distributors	Distributors	70.3		37.0		29.9		3.4		Distributors	66.2		34.2		28.6		3.4
Total	Total	$	1,319.7	$	541.8	$	471.9	$	306.0	Total	$	1,376.5	$	587.6	$	462.4	$	326.5

(a) Direct sales by end market include sales made through third-party distributors where we have visibility into the end customer.	(a) Direct sales by end market include sales made through third-party distributors where we have visibility into the end customer.									(a) Direct sales by end market include sales made through third-party distributors where we have visibility into the end customer.

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Disaggregation of revenue for the three month period ended ~~June 26, 2020 is presented as follows ($ in millions):~~
Total Intelligent Operating Solutions Precision Technologies Advanced Healthcare Solutions
Sales:
Sales of products and software $ 887.0 $ 363.9 $ 330.5 $ 192.6
Sales of services 154.6 49.1 46.8 58.7
Total $ 1,041.6 $ 413.0 $ 377.3 $ 251.3
Geographic:
United States $ 558.1 $ 220.2 $ 195.1 $ 142.8
China 130.9 40.6 67.2 23.1
All other (each country individually less than 5% of total sales) 352.6 152.2 115.0 85.4
Total $ 1,041.6 $ 413.0 $ 377.3 $ 251.3
End markets:(a)
Direct sales:
  Medical $ 274.6 $ 8.9 $ 29.9 $ 235.8
  Industrial & Manufacturing 241.3 158.9 76.9 5.5
  Utilities & Power 77.0 43.3 33.7 0
  Government 78.7 39.2 32.5 7.0
  Communications, Electronics & Semiconductor 64.6 24.8 39.4 0.4
  Aerospace & Defense 57.1 3.5 53.6 0
  Oil & Gas 51.0 48.1 2.9 0
  Retail & Consumer 38.6 21.2 17.4 0
  Other 105.6 53.0 52.6 0
     Total direct sales 988.5 400.9 338.9 248.7
Distributors 53.1 12.1 38.4 2.6
Total $ 1,041.6 $ 413.0 $ 377.3 $ 251.3
(a) Direct sales by end market include sales made through third-party distributors where we have visibility into the end customer.

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~~Disaggregation of revenue for the six month period ended July~~April 2, 2021 is presented as follows ($ in millions):
Total Intelligent Operating Solutions Precision Technologies Advanced Healthcare Solutions
Sales:
Sales of products and software $ 2,213.2 $ 931.4 $ 810.6 $ 471.2
Sales of services 365.7 121.3 108.7 135.7
Total $ 2,578.9 $ 1,052.7 $ 919.3 $ 606.9
Geographic:
United States $ 1,292.4 $ 524.9 $ 455.4 $ 312.1
China 327.8 113.2 158.5 56.1
All other (each country individually less than 5% of total sales) 958.7 414.6 305.4 238.7
Total $ 2,578.9 $ 1,052.7 $ 919.3 $ 606.9
End markets:(a)
Direct sales:
  Medical $ 655.4 $ 17.8 $ 68.9 $ 568.7
  Industrial & Manufacturing 614.4 397.2 205.4 11.8
  Utilities & Power 192.7 111.5 81.2 0
  Government 186.9 96.1 72.3 18.5
  Communication, Electronics & Semiconductor 185.4 60.3 123.9 1.2
  Aerospace & Defense 121.1 0 121.1 0
  Oil & Gas 130.0 124.5 5.5 0
  Retail & Consumer 90.1 42.2 47.9 0
  Other 262.2 127.8 134.4 0
     Total direct sales 2,438.2 977.4 860.6 600.2
Distributors 140.7 75.3 58.7 6.7
Total $ 2,578.9 $ 1,052.7 $ 919.3 $ 606.9
(a) Direct sales by end market include sales made through third-party distributors where we have visibility into the end customer.

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~~Disaggregation of revenue for the six month period ended June 26, 2020 is presented as follows ($ in millions):~~
Total Intelligent Operating Solutions Precision Technologies Advanced Healthcare Solutions
Sales:
Sales of products and software $ 1,832.5 $ 780.1 $ 670.4 $ 382.0
Sales of services 317.2 99.6 98.2 119.4
Total $ 2,149.7 $ 879.7 $ 768.6 $ 501.4
Geographic:
United States $ 1,163.2 $ 469.6 $ 402.5 $ 291.1
China 249.5 87.2 121.5 40.8
All other (each country individually less than 5% of total sales) 737.0 322.9 244.6 169.5
Total $ 2,149.7 $ 879.7 $ 768.6 $ 501.4
End markets:(a)
Direct sales:
  Medical $ 544.4 $ 19.5 $ 54.8 $ 470.1
  Industrial & Manufacturing 490.9 321.7 158.7 10.5
  Utilities & Power 168.0 97.5 70.5 0
  Government 157.8 77.3 66.2 14.3
  Communications, Electronics & Semiconductor 127.8 51.0 76.0 0.8
  Aerospace & Defense 113.2 6.8 106.4 0
  Oil & Gas 109.6 102.9 6.7 0
  Retail & Consumer 84.0 43.9 40.1 0
  Other 224.6 110.9 113.7 0
     Total direct sales 2,020.3 831.5 693.1 495.7
Distributors 129.4 48.2 75.5 5.7
Total $ 2,149.7 $ 879.7 $ 768.6 $ 501.4
(a) Direct sales by end market include sales made through third-party distributors where we have visibility into the end customer.

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~~NOTE 8. PENSION PLANS~~

~~For a full description of our noncontributory defined benefit pension plans refer to Note 12 of our 2020 Annual Report on Form 10-K.~~

~~The following sets forth the components of our net periodic costs associated with our noncontributory defined benefit pension plans ($ in millions):~~
Three Months Ended Six Months Ended
July 2, 2021 June 26, 2020 July 2, 2021 June 26, 2020
U.S. Pension Benefits:
Interest cost $ 0.2 $ 0.3 $ 0.4 $ 0.6
Expected return on plan assets (0.2) (0.3) (0.4) (0.6)
Net periodic pension cost $ 0 $ 0 $ 0 $ 0
Non-U.S. Pension Benefits:
Service cost $ 1.0 $ 1.1 $ 2.0 $ 2.2
Interest cost 0.8 1.0 1.6 2.0
Expected return on plan assets (1.3) (1.3) (2.6) (2.6)
Amortization of net loss 1.0 1.0 2.2 2.0
Amortization of prior service cost 0.1 0.1 0.2 0.2
Net periodic pension cost $ 1.6 $ 1.9 $ 3.4 $ 3.8

We report all components of net periodic pension costs, with the exception of service costs, in other non-operating expenses as a component of non-operating income in the Consolidated Condensed Statements of Earnings. Service costs are reported in cost of sales and selling, general and administrative expenses in the Consolidated Condensed Statements of Earnings according to the classification of the participant’s compensation.

~~Employer Contributions~~

During 2021, our cash contribution requirements for our non-U.S. and U.S. defined benefit plans for Fortive’s pension plans are expected to be approximately $12 million and $1 million, respectively. The 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.


	Total		Intelligent Operating Solutions		Precision Technologies		Advanced Healthcare Solutions
Sales:
Sales of products and software	$	1,077.2	$	453.0	$	393.1	$	231.1
Sales of services	182		57.9		54.3		69.8
Total	$	1,259.2	$	510.9	$	447.4	$	300.9

Geographic:
United States	$	620.8	$	248.2	$	219.1	$	153.5
China	164.3		59.5		76.8		28.0

All other (each country individually less than 5% of total sales)	474.1		203.2		151.5		119.4
Total	$	1,259.2	$	510.9	$	447.4	$	300.9

End markets:(a)
Direct sales:
Medical	$	326.8	$	9.4	$	35.0	$	282.4
Industrial & Manufacturing	302.3		196.5		100.0		5.8
Utilities & Power	94.9		54.3		40.6		—
Government	87.9		44.8		34.4		8.7
Communications, Electronics & Semiconductor	87.8		27.5		59.6		0.7
Aerospace & Defense	55.4		—		55.4		—
Oil & Gas	63.3		60.5		2.8		—
Retail & Consumer	45.5		23.5		22.0		—
Other	124.9		56.1		68.8		—
Total direct sales	1,188.8		472.6		418.6		297.6
Distributors	70.4		38.3		28.8		3.3
Total	$	1,259.2	$	510.9	$	447.4	$	300.9

(a) Direct sales by end market include sales made through third-party distributors where we have visibility into the end customer.

NOTE 9.7. INCOME TAXES

Our effective tax rate for the three ~~and six~~ month ~~periods~~period ended ~~July 2, 2021~~April 1, 2022 was ~~12.3% and 10.0%~~13.5% as compared to ~~16.9% and 20.6%, respectively,~~5.9% for the three ~~and six~~ month ~~periods~~period ended ~~June 26, 2020.~~April 2, 2021. The year-over-year ~~decrease~~increase in the effective tax rate for the three month period ended ~~July 2, 2021~~April 1, 2022 as compared to the three month period ended ~~June 26, 2020~~April 2, 2021 was primarily due ~~primarily~~ to a reduction in our uncertain tax positions and increases in certain federal benefits during the three month period ended July 2, 2021. The year-over-year decrease in the effective tax rate for the six month period ended July 2, 2021 as compared to the six month period ended June 26, 2020 was due primarily to anon-recurring permanent difference on the Q1 2021 gain on our Retained Vontier Shares due to the tax-free treatment of our disposition of the shares through the Debt-for-Equity Exchange ~~a reduction to our uncertain tax positions,~~ and increases in certain federal tax benefits ~~for the six month period ended July 2, 2021. Additionally, the tax costs incurred~~ during the ~~six month period~~three months ended June 26, 2020 associated with the repatriation of a portion of our previously reinvested earnings outside of the United States contributed to the year-over-year decrease in the effective tax rate for the six month period ended July 2, 2021.April 1, 2022.

Our effective tax ~~rate~~rates for the three ~~and six~~ month periods ended ~~July~~April 1, 2022 and April 2, 2021, ~~differs~~differ from the U.S. federal statutory rate of 21% due primarily to the positive ~~and negative~~net effects of the Tax Cuts and Jobs Act, ~~(“TCJA”),~~ U.S. federal permanent differences, the impact of credits and deductions provided by law, and a reduction in our uncertain tax positions. Specific to the ~~six~~three month period ended ~~July 2,~~April 1, 2021, our effective tax rate also differs from the U.S. federal statutory rate of 21% due to a permanent difference on the gain on our Retained Vontier Shares ~~due to~~as a result of the tax-free treatment of our disposition of the shares through the Debt-for-Equity Exchange. Specific to the six month period ended June 26, 2020, our effective tax rate also differs from the U.S. federal statutory rate of 21% due to the repatriation of a portion of our previously reinvested earnings outside of the United States.

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NOTE ~~10.~~8. STOCK-BASED COMPENSATION

Our stock-based compensation program (the “Stock Plan”) provides for the grant of stock appreciation rights, performance stock units, restricted stock units, restricted stock awards, and performance stock awards (collectively, “Stock Awards”), stock

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options, or any other stock-based award. As of ~~July 2, 2021,~~April 1, 2022, approximately 1917 million shares of our common stock were available for subsequent issuance under the Stock Plan. For a full description of our stock-based compensation program refer to Note 17 of our ~~2020~~2021 Annual Report on Form 10-K.

Stock-based Compensation Expense

Stock-based compensation has been recognized as a component of Selling, general and administrative expenses in the Consolidated Condensed Statements of Earnings based on the portion of the awards that are ultimately expected to vest.

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


		Three Months Ended				Six Months Ended					Three Months Ended
		July 2, 2021		June 26, 2020		July 2, 2021		June 26, 2020			April 1, 2022		April 2, 2021
Stock Awards:	Stock Awards:									Stock Awards:
Pretax compensation expense	Pretax compensation expense	$	12.2	$	10.1	$	22.7	$	18.2	Pretax compensation expense	$	12.7	$	10.5
Income tax benefit	Income tax benefit	(1.9)		(1.5)		(3.8)		(2.9)		Income tax benefit	(1.7)		(1.9)
Stock Award expense, net of income taxes	Stock Award expense, net of income taxes	10.3		8.6		18.9		15.3		Stock Award expense, net of income taxes	11.0		8.6
Stock options:	Stock options:									Stock options:
Pretax compensation expense	Pretax compensation expense	8.0		6.8		14.1		11.5		Pretax compensation expense	7.2		6.1
Income tax benefit	Income tax benefit	(1.3)		(1.1)		(2.5)		(1.8)		Income tax benefit	(1.0)		(1.2)
Stock option expense, net of income taxes	Stock option expense, net of income taxes	6.7		5.7		11.6		9.7		Stock option expense, net of income taxes	6.2		4.9
Total stock-based compensation:	Total stock-based compensation:									Total stock-based compensation:
Pretax compensation expense	Pretax compensation expense	20.2		16.9		36.8		29.7		Pretax compensation expense	19.9		16.6
Income tax benefit	Income tax benefit	(3.2)		(2.6)		(6.3)		(4.7)		Income tax benefit	(2.7)		(3.1)
Total stock-based compensation expense, net of income taxes	Total stock-based compensation expense, net of income taxes	$	17.0	$	14.3	$	30.5	$	25.0	Total stock-based compensation expense, net of income taxes	$	17.2	$	13.5

The following summarizes the unrecognized compensation cost for the Stock Plan awards as of ~~July 2, 2021.~~April 1, 2022. 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	$	~~94.8~~125.1
Stock options	~~59.8~~72.1
Total unrecognized compensation cost	$	~~154.6~~197.2

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NOTE ~~11.~~9. COMMITMENTS AND CONTINGENCIES

For a description of our litigation and contingencies and additional information about our leases, refer to Note 16 and Note 10, respectively, in our ~~2020~~2021 Annual Report on Form 10-K.

Warranty

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

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


Balance, December 31, ~~2020~~2021	$	~~24.9~~25.2
Accruals for warranties issued during the period	~~6.7~~2.3
Settlements made	~~(6.1)~~(4.3)


Balance, ~~July 2, 2021~~April 1, 2022	$	~~25.5~~23.2

Leases

Operating lease cost for both three month periods ended April 1, 2022 and April 2, 2021 was $15 million. During the three month periods ended ~~July~~April 1, 2022 and April 2, 2021, and June 26, 2020 was $15 million in both respective periods. Operating lease cost for the six month periods ended July 2, 2021 and June 26, 2020 was $30 million in both respective periods. During the six-month periods ended July 2, 2021 and June 26, 2020, cash paid for operating leases included in operating cash flows was ~~$28~~$14 million and ~~$27~~$16 million, respectively. Right-of-use assets obtained in exchange for operating lease obligations were ~~$13~~$2 million and ~~$24~~$9 million during the ~~six~~three month periods ended ~~July~~April 1, 2022 and April 2, 2021, respectively. Operating lease right-of-use assets and ~~June 26, 2020,~~operating lease liabilities are reported on the Consolidated Condensed Balance Sheets within Other assets, Accrued expenses and other current liabilities and Other long-term liabilities, respectively.

As of July 2, 2021, we had entered into operating leases for which the lease term had not yet commenced. These operating leases will commence in 2021 with lease terms between 1 and 5 years and have aggregate fixed payments over the non-cancelable lease terms of $2 million.

NOTE ~~12.~~10. NET EARNINGS PER SHARE

Basic net ~~earnings per share (“EPS”)~~EPS is calculated by dividing net earnings attributable to common stockholders by the weighted average number of shares of common stock outstanding for the applicable period. Diluted EPS is similarly calculated, except that the calculation includes the dilutive effect of the assumed conversion of Convertible Notes and associated issuance of shares under the if-converted method and the assumed issuance of shares under stock-based compensation plans under the treasury stock method, except where the inclusion of such shares would have an anti-dilutive impact. Anti-dilutive options excluded from the diluted EPS calculation for the three month ~~period~~periods ended ~~July~~April 1, 2022 and April 2, 2021 were ~~immaterial and there were 5.7 million of anti-dilutive options excluded for the three month period ended June 26, 2020. There were 0.2~~3.1 million and ~~5.7~~0.1 million, ~~anti-dilutive options excluded for the six month periods ended July 2, 2021 and June 26, 2020,~~ respectively.

As described in Note 6,5, upon conversion of the Convertible Notes, holders ~~will~~were entitled to receive cash, shares of our common stock, or a combination thereof, at our election. ~~Our intention is~~As described in Note 1, prior to our adoption of ASU 2020-06 on January 1, 2022, we accounted for the conversion feature under the treasury stock method in our calculation of EPS since we intended and had the ability to settle such conversions through cash up to the principal amount of the Convertible Notes and, if applicable, through shares of our common stock for conversion value, if any, in excess of the principal amount of the Convertible Notes. ~~We believe we have the ability to settle these obligations as intended, and therefore we have accounted for the conversion features under the treasury stock method in our calculation of EPS.~~ Because the fair value of our common stock iswas below the conversion price, the Convertible Notes had no impact on our earnings per share for the three ~~and six~~ month ~~periods~~period ended ~~July~~April 2, ~~2021 and June 26, 2020.~~2021. Upon adopting ASU 2020-06 on January 1, 2022, we accounted for the Convertible Notes under the if-converted method in our calculation of diluted EPS, as required under the new guidance.

On July 1, 2021, all outstanding shares of our 5.0% Mandatory Convertible Preferred Stock (“MCPS”) converted at a rate of 14.0978 common shares per share of preferred stock into an aggregate of approximately 19.4 million shares (net of fractional shares) of the Company’s common stock, pursuant to the terms of the Certificate of Designation governing the Series A Preferred Stock. Fortive issued cash in lieu of fractional shares of common stock in the conversion. These payments were recorded as a reduction to additional paid-in capital. The ~~final dividend of $12.50 per share, or $17.2 million in the aggregate, was paid on July 1, 2021. The~~ impact of the MCPS calculated under the if-converted method was anti-dilutive for the ~~periods in 2021 prior to conversion.~~three months ended April 2, 2021.

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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):


		Three Months Ended				Six Months Ended					Three Months Ended
		July 2, 2021		June 26, 2020		July 2, 2021		June 26, 2020			April 1, 2022		April 2, 2021
Numerator	Numerator									Numerator
Net earnings from continuing operations	Net earnings from continuing operations	$	182.0	$	59.8	$	293.7	$	114.6	Net earnings from continuing operations	$	165.1	$	111.7
Mandatory convertible preferred stock cumulative dividends	Mandatory convertible preferred stock cumulative dividends	(17.2)		(17.2)		(34.5)		(34.5)		Mandatory convertible preferred stock cumulative dividends	—		(17.3)
Net earnings attributable to common stockholders from continuing operations		$	164.8	$	42.6	$	259.2	$	80.1

Convertible note interest add-back (if converted method)										Convertible note interest add-back (if converted method)	1.8		$	—
Diluted Net Earnings from Continuing Operations										Diluted Net Earnings from Continuing Operations	$	166.9	$	94.4

Denominator	Denominator									Denominator
Weighted average common shares outstanding used in basic earnings per share	Weighted average common shares outstanding used in basic earnings per share	339.4		337.3		339.0		337.1		Weighted average common shares outstanding used in basic earnings per share	359.3		338.6
Incremental common shares from:	Incremental common shares from:									Incremental common shares from:
Assumed exercise of dilutive options and vesting of dilutive Stock Awards	Assumed exercise of dilutive options and vesting of dilutive Stock Awards	3.0		2.4		3.1		2.8		Assumed exercise of dilutive options and vesting of dilutive Stock Awards	2.7		3.1

Conversion of convertible notes (if converted method)										Conversion of convertible notes (if converted method)	6.4		—
Weighted average common shares outstanding used in diluted earnings per share	Weighted average common shares outstanding used in diluted earnings per share	342.4		339.7		342.1		339.9		Weighted average common shares outstanding used in diluted earnings per share	368.4		341.7

Net earnings from continuing operations per common share - Basic	Net earnings from continuing operations per common share - Basic	$	0.49	$	0.13	$	0.76	$	0.24	Net earnings from continuing operations per common share - Basic	$	0.46	$	0.28
Net earnings from continuing operations per common share - Diluted	Net earnings from continuing operations per common share - Diluted	$	0.48	$	0.13	$	0.76	$	0.24	Net earnings from continuing operations per common share - Diluted	$	0.45	$	0.28

We declared and paid cash dividends per common share for ~~both~~the periods as presented below. We declared and paid the MCPS dividend in the first quarter of ~~2021, and~~2021.


	Dividend Per Common Share		Amount ($ in millions)		Dividend per MCPS		Amount ($ in millions)
2022:
First quarter	$	0.07	$	25.1	$	—	$	—



Total	$	0.07	$	25.1	$	—	$	—

2021:
First quarter	$	0.07	$	23.7	$	12.5	$	17.3



Total	$	0.07	$	23.7	$	12.5	$	17.3

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

On April 7, 2022, we declared ~~and paid~~a regular quarterly cash dividend of $0.07 per share payable on June 24, 2022 to common stockholders of record on May 27, 2022.

Share Repurchase Program

On February 17, 2022, the ~~final dividend~~Company's Board of Directors approved a share repurchase program authorizing the Company to repurchase up to 20 million shares of the Company's outstanding common stock from time to time on the open market or in ~~the second quarter of 2021, while the MCPS dividends~~privately negotiated transactions. There is no expiration date for the ~~first~~repurchase program, and ~~second quarter~~the timing and amount of ~~2020 were declared, accrued,~~repurchases under the program are determined by the Company's management based on market conditions and ~~paid as follows:~~

Dividend Per
Common Share Amount
($ in millions) Dividend per MCPS Amount
($ in millions)
2021:
First quarter $ 0.07 $ 23.7 $ 12.5 $ 17.3
Second quarter 0.07 23.7 12.5 17.2
Total $ 0.14 $ 47.4 $ 25.0 $ 34.5
2020:
First quarter $ 0.07 $ 23.5 $ 12.5 $ 17.3
Second quarter 0.07 23.6 12.5 17.2
Total $ 0.14 $ 47.1 $ 25.0 $ 34.5
* The sum of the components of total dividends paid may not equal the total amount due to rounding.

other factors. The ~~first quarter 2020 MCPS dividends were paid on~~repurchase program may be suspended or discontinued at any time by the Board of Directors. As of April 1, ~~2020 and~~2022, there were 19.0 million shares remaining for repurchase under the ~~second quarter 2020 MCPS dividends were paid on July 1, 2020.~~program.

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NOTE ~~13.~~11. SEGMENT INFORMATION

We report our results in 3 separate business segments consisting of Intelligent Operating Solutions, Precision Technologies, and Advanced Healthcare Solutions. Our chief operating decision maker assesses performance and allocates resources based on our operating segments, which are also our reportable segments. 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. Our segment results are as follows ($ in millions):


		Three Months Ended				Six Months Ended					Three Months Ended
		July 2, 2021		June 26, 2020		July 2, 2021		June 26, 2020			April 1, 2022		April 2, 2021
Sales:	Sales:									Sales:
Intelligent Operating Solutions	Intelligent Operating Solutions	$	541.8	$	413.0	$	1,052.7	$	879.7	Intelligent Operating Solutions	$	587.6	$	510.9
Precision Technologies	Precision Technologies	471.9		377.3		919.3		768.6		Precision Technologies	462.4		447.4
Advanced Healthcare Solutions	Advanced Healthcare Solutions	306.0		251.3		606.9		501.4		Advanced Healthcare Solutions	326.5		300.9
Total	Total	$	1,319.7	$	1,041.6	$	2,578.9	$	2,149.7	Total	$	1,376.5	$	1,259.2
Operating Profit:	Operating Profit:									Operating Profit:
Intelligent Operating Solutions	Intelligent Operating Solutions	$	115.3	$	54.4	$	223.4	$	135.5	Intelligent Operating Solutions	$	107.0	$	108.1
Precision Technologies	Precision Technologies	104.1		77.1		200.0		150.6		Precision Technologies	101.4		95.9
Advanced Healthcare Solutions	Advanced Healthcare Solutions	22.5		(1.9)		41.4		(17.7)		Advanced Healthcare Solutions	28.0		18.9
Other	Other	(30.6)		(27.0)		(55.9)		(50.4)		Other	(24.1)		(25.3)
Total Operating Profit	Total Operating Profit	211.3		102.6		408.9		218.0		Total Operating Profit	212.3		197.6

Interest expense, net	Interest expense, net	(25.2)		(36.2)		(52.9)		(74.8)		Interest expense, net	(18.8)		(27.7)
Loss on extinguishment of debt	Loss on extinguishment of debt	0		0		(104.9)		0		Loss on extinguishment of debt	—		(104.9)
Gain on investment in Vontier Corporation	Gain on investment in Vontier Corporation	0		0		57.0		0		Gain on investment in Vontier Corporation	—		57.0
Gain on litigation dismissal		26.0		0		26.0		0

Other non-operating expense, net	Other non-operating expense, net	(4.6)		5.6		(7.9)		1.1		Other non-operating expense, net	(2.7)		(3.3)
Earnings from continuing operations before income taxes	Earnings from continuing operations before income taxes	$	207.5	$	72.0	$	326.2	$	144.3	Earnings from continuing operations before income taxes	$	190.8	$	118.7

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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 provider of essential technologies for connected workflow solutions across a range of attractive end-markets. Our strategic segments - Intelligent Operating Solutions, Precision Technologies, and Advanced Healthcare Solutions - include well-known brands ~~hold~~with leading positions in ~~intelligent operating solutions, precision technologies, and advanced healthcare solutions.~~their markets. Our businesses design, develop, ~~service,~~ manufacture, and ~~market~~service professional and engineered products, software, and services, ~~for a variety of end markets,~~ building upon leading brand names, innovative technologies, and significant market positions. ~~Our~~We are headquartered in Everett, Washington and employ a team of more than 18,000 research and development, manufacturing, sales, distribution, service, and administrative ~~facilities are located~~employees in more than 50 countries ~~across North America, Asia Pacific, Europe, and Latin America.~~around the world.

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

The accounting requirements for reporting the Vontier business as a discontinued operation were met when the Vontier Separation was completed. Accordingly, the consolidated financial statements reflect the results of the Vontier business as a discontinued operation for all periods presented. Fortive did not retain a controlling interest in Vontier Interest expense and ~~therefore the Retained Vontier Shares were included in our assets of continuing operations as of December 31, 2020 and subsequent fair value changes in the Retained Vontier Shares prior~~extinguishment costs related to the Debt-for-Equity Exchange during the first quarter of 2021 are included in ~~our results from~~ continuing ~~operations for the six month period ended July 2, 2021.~~operations.

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 financial statements included in our ~~2020~~2021 Annual Report on Form 10-K. Our MD&A is divided into five sections:

•Information Relating to Forward-Looking Statements

•Overview

•Results of Operations

•Liquidity and Capital Resources

•Critical Accounting Estimates

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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 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, including the expected impact of trade and tariff policies; 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 of 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. Forward-looking statements are not guarantees of future performance and actual results may differ materially from

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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, among others, the following:

Risk Related to Our Business Operations

•~~Significant uncertainty remains about how~~The effect of the COVID-19 pandemic, ~~may further impact~~including the corresponding government-mandated mitigation efforts, on our global operations and the operations of our customers, suppliers, and ~~vendors.~~vendors is continuing to have a material, adverse impact on our business and results of operations.

•If we cannot adjust our manufacturing capacity, supply chain management or the purchases required for our manufacturing activities to reflect changes in market conditions, customer demand and supply chain or transportation disruptions, 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.

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

•Conditions in the global economy, the markets we serve and the financial markets may adversely affect our business and financial statements.

•Our growth could suffer if the markets into which we sell our products 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 and services.

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

•If we are unable to recruit and retain key employees, our business may be harmed.

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

•Defects and unanticipated use or inadequate disclosure with respect to our products (including 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 or components that we use in our operations.~~

•~~If we cannot adjust our manufacturing capacity or the purchases required for our manufacturing~~restructuring activities ~~to reflect changes in market conditions and customer demand, our profitability may suffer.~~

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•~~Our reliance upon sole or limited sources of, or any delay in, supply for certain materials, components, and services could cause production interruptions, delays, and inefficiencies.~~

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

•Work stoppages, 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.

•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 or services.

•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.

Risk Related to our International Operations

•International economic, political, legal, compliance, and business factors including, but not limited to, the impact of the invasion of Ukraine by Russia and the corresponding sanctions and supply chain disruptions, could negatively affect our financial statements.

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•Trade relations between China and the United States could have a material adverse effect on our business and financial statements.

•Foreign currency exchange rates may adversely affect our financial statements.

Risk Related to Our Acquisitions, Investments, and Dispositions

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

•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.

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

Risk Related to Regulatory and Compliance Matters

•Changes in industry standards and governmental regulations may reduce demand for our products or services or increase our expenses.

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

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

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Risk Related to Our Tax and Accounting Matters

•Changes in our effective 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 could incur significant liability if ~~the~~any of our separation from Danaher, our separation of our Automation and ~~distribution~~Specialty business or our separation of Vontier (collectively, the “Separation Transactions”) is determined to be a taxable ~~transaction.~~transaction.

•Changes in U.S. ~~generally accepted accounting principles in the United States (“GAAP”)~~GAAP could adversely affect our reported financial results and may require significant changes to our internal accounting systems and processes.

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

Risk Related to Our Financing Activities

•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.

•~~The interest rates on our credit facilities may be impacted by the phase out of the London Interbank Offered Rate (“LIBOR”)~~.

Risk Related to Shareholder Rights

•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.

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See “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020~~2021 for 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 (or such earlier date as may be specified in such statement). 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.

OVERVIEW

General

Fortive is a multinational business with global operations with approximately ~~47%~~49% of our sales derived from customers outside of the United States in ~~2020.~~2021. As a company with global operations, 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 products, software, and services we offer, 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 their sales, to the extent possible, 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, continue to reduce costs and improve operating efficiency and quality, attract relevant talent and retain, grow, and empower our talented workforce, and effectively address the demands of an increasingly regulated environment. We are making significant investments, organically and through acquisitions, to address technological

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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.

~~ASP~~Provation Acquisition

On ~~April 1, 2019 (the “Principal Closing Date”),~~December 27, 2021, we acquired ~~the Advanced Sterilization Products business~~Provation Software, Inc. (“~~ASP”~~Provation”) of Johnson & Johnson, a New Jersey corporation (“Johnson & Johnson”) for an aggregate purchase price of $2.7 billion (the “Transaction”), subject to certain post-closing adjustments set forth in a Stock and Asset Purchase Agreement, dated effective as of June 6, 2018, between the Company and Ethicon, Inc., a ~~New Jersey corporation (“Ethicon”)~~leading provider of clinical workflow software solutions used in hospitals and ~~a wholly owned subsidiary~~ambulatory surgery centers. The acquisition of ~~Johnson & Johnson. ASP engages~~Provation extends our digital offering and software capabilities in the ~~research, development, manufacture, marketing, distribution,~~healthcare space. The total consideration paid was approximately $1.4 billion, net of acquired cash and ~~sale of low-temperature terminal sterilization~~was primarily financed with proceeds from our financing activities and ~~high-level disinfection products. Refer to Note 2 to the consolidated condensed financial statements for additional information regarding the Transaction.~~

Prior to our acquisition of ASP, Johnson & Johnson received a Civil Investigative Demand (“CID”) from the United States Department of Justice (“DOJ”) regarding a False Claims Act investigation arising from a whistleblower lawsuit pertaining to the pricing, quality, marketing, and promotion of certain of ASP’s products. Based on the totality of available ~~information at the Principal Closing Date and throughout the applicable measurement period, management allocated $26~~cash. We preliminarily recorded $978 million of ~~the $2.7 billion purchase price to a potential liability~~goodwill related to the aforementioned litigation. Since the Principal Closing Date, management has continually evaluated the likelihood and magnitude of the asserted claims based on any new information that became available. In the second quarter of 2021, following the unsealing of the whistleblower lawsuit and DOJ’s declination to intervene in the litigation, the plaintiff dismissed the whistleblower lawsuit. Based on these developments, management derecognized the litigation liability from our Consolidated Condensed Balance Sheet and recorded the gain on litigation dismissal of $26 million within Non-operating income (expense), net in our Consolidated Condensed Statements of Earnings foracquisition, which is not tax deductible. During the three month period ended April 1, 2022, provisional goodwill increased by $8.1 million for measurement period adjustments. Provation had revenue in 2020 of approximately $90 million and ~~six month periods ended July 2, 2021.~~is an operating company within our Advanced Healthcare Solutions segment.

~~Pending~~ServiceChannel Acquisition ~~of ServiceChannel~~

On ~~July 8,~~August 24, 2021, ~~the Company entered into a definitive agreement with Bayard Capital and Accel Partners to acquire~~we acquired ServiceChannel Holdings, Inc. (“ServiceChannel”)~~. ServiceChannel is~~, a privately held, global provider of ~~SaaS-based~~Software as a Service (“SaaS”) based multi-site facilities maintenance service solutions with an integrated service-provider network. The acquisition of ServiceChannel ~~acquisition is subject to customary closing conditions, including regulatory approvals. Upon closing~~broadens our offering of software-enabled solutions for the ~~acquisition we will pay~~facility and asset lifecycle workflow. The total consideration ofpaid was approximately $1.2 billion, ~~which includes~~net of acquired cash, and included approximately ~~$60~~$28 million of deferred compensation consideration that is being recognized ratably over a twelve month service period. The ServiceChannel acquisition was primarily financed with available cash and proceeds from our financing activities. We preliminarily recorded approximately $873 million of goodwill related to the acquisition, ~~will be financed primarily with available cash. The Company anticipates that the~~which is not tax deductible. ServiceChannel ~~acquisition will close~~had revenue in ~~the third quarter~~2020 of ~~2021.~~approximately $70 million and is an operating company within our Intelligent Operating Solutions segment.

Vontier Separation

On October 9, 2020, ~~(the “Distribution Date”), the Company~~we completed the separation of its Industrial Technologies segment by distributing 80.1% of the outstanding shares of Vontier Corporation (“Vontier”), the entity incorporated to hold such businesses, to Fortive stockholders (the “Vontier Separation”) on a pro rata basis. To effectSeparation. The accounting requirements for reporting the Vontier business as a discontinued operation were met when the Separation was completed. Accordingly, the ~~Company distributed to its stockholders two shares~~consolidated condensed financial

Table of ~~Vontier common stock for every five shares~~Contents

statements reflect the results of ~~the Company’s common stock outstanding held on September 25, 2020, the record date for the distribution,~~separation activities associated with the ~~Company retaining 19.9% of the shares of~~prior Vontier ~~common stock outstanding immediately following the Vontier Separation (the “Retained Vontier Shares”).~~

On January 19, 2021, we completed ~~an exchange (the “Debt-for-Equity Exchange”)~~the Debt-for-Equity Exchange of 33.5 million shares of common stock of Vontier, representing all of the ~~Retained~~ Vontier ~~Shares,~~common stock retained by the Company immediately following the Separation (the “Retained Vontier Shares”), for $1.1 billion in aggregate principal amount of indebtedness of the Company held by Goldman Sachs & Co.

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business as a discontinued operation for all periods presented. Fortive did not retain a controlling interest in Vontier and therefore the Retained Vontier Shares were included in our assets of continuing operations as of December 31, 2020 and subsequent fair value changes in the Retained Vontier Shares prior to the Debt-for-Equity Exchange are included in our results from continuing operations for the six month period ended July 2, 2021.

In connection with the Vontier Separation, Fortive and Vontier entered into various agreements to effect the Vontier Separation and provide a framework for Vontier’s relationship with Fortive after the Vontier Separation, including a transition services agreement, an employee matters agreement, a tax matters agreement, an intellectual property matters agreement, a Fortive Business System (“FBS”) license agreement, and a stockholder’s and registration rights agreement (the “Agreements”). These Agreements govern the Vontier Separation between Fortive and Vontier of the assets, employees, liabilities and obligations (including its investments, property and employee benefits and tax-related assets and liabilities) of Fortive and its subsidiaries attributable to periods prior to, at and after the Vontier Separation and also govern certain relationships between Fortive and Vontier after the Vontier Separation. The impact of these services on our consolidated condensed financial statements was immaterial.operations.

Segment Presentation

~~In light of the Vontier Separation, we changed~~We operate and report our internal reporting structure on the first day of the fourth quarter, September 26, 2020, to reflect organizational and leadership changes that allow us to better assess the operational performance of, and allocate resources to, our businesses. Our chief operating decision maker assesses performance and allocates resources based on our new operatingresults in three segments, ~~which are also our new reportable segments. Our new reportable segments are comprised of~~ Intelligent Operating Solutions, Precision Technologies, and Advanced Healthcare ~~Solutions. All prior period~~Solutions, each of which is further described below.

Our Intelligent Operating Solutions segment ~~information has been restated~~provides leading workflow solutions to ~~reflect~~accelerate industrial and facility reliability and performance, as well as compliance and safety across a range of vertical end markets, including manufacturing, process industries, healthcare, utilities and power, communications and electronics, among others. We provide differentiated instrumentation and sensors, software and services to address our ~~new reportable segments.~~customers’ toughest workflow challenges.

Our Precision Technologies segment supplies instrumentation and sensing technologies to a broad set of vertical end markets, enabling our customers to accelerate the development, manufacture and launch of innovative products and solutions. We provide our customers with electrical test and measurement instruments and services, energetic material devices, and a broad portfolio of sensor and control system solutions.

Our Advanced Healthcare Solutions segment supplies critical workflow solutions to hospitals and other healthcare customers, enabling safer, more efficient, and higher quality healthcare. We provide hardware, consumables, software and services that optimize our customers’ most critical workflows, including instrument sterilization and device reprocessing, instrument tracking, cell therapy equipment design and manufacturing, biomedical test tools, radiation safety monitoring, end-to-end clinical productivity solutions and asset management.

Non-GAAP Measures

In this report, references to sales from existing businesses refer to sales from operations calculated according to generally accepted accounting principles in the United States (“GAAP”) but excluding (1) the impact from acquired businesses and (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 and the effect of purchase accounting adjustments, 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 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) and (b) the period-to-period change in sales (excluding sales impact from acquired 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 acquisition 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. 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 and currency translation may facilitate the assessment of underlying business trends and may assist in comparisons of long-term performance.

Business Performance and Outlook

COVID-19 directly impacted our business and operating results during the three and six month periods ended June 26, 2020 with reduced year-over-year demand from customers operating in nonessential end-markets and indirectly with reduced demand created by macroeconomic disruption or disruption in adjacent end markets. Our results were severely impacted within certain geographies, most notably Asia in the first quarter of 2020, and North America and Europe in the second quarter of 2020, as virus control measures were deployed in those geographies at varying times. As such, the year-over-year comparisons for the three and six month periods ended July 2, 2021 reflect the detrimental impacts of COVID-19 on our first and second quarter of 2020 results.

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Business Performance For the Period Ended ~~July 2, 2021~~April 1, 2022

Overall global economic conditions have continued to improve during the three and six month periods ended July 2, 2021, as the distribution and administration of vaccinations in developed countries has led to easing of virus control measures and increasedWe experienced robust demand for our products and ~~services. For~~services during the three month period ended April 1, 2022 (“the quarter” or the “first quarter”). Despite ongoing COVID-19 and ~~six month periods ended July 2, 2021, aggregate~~supply chain challenges, year-over-year sales increased ~~26.7%~~9.3% with contributions from both existing and ~~20.0%, respectively, and were largely driven by increased demand from our existing businesses and, to a lesser extent, changes in foreign currency exchange rates.~~newly acquired businesses. Sales from existing businesses increased ~~21.3% and 15.0%~~5.3% during the ~~three and six month periods ended July 2, 2021, respectively,~~quarter, as compared to the comparable ~~periods of 2020,~~period in 2021 reflecting ~~positive,~~ broad-based momentum and focused execution across our portfolio, most notably within our short-cycle industrial and ~~software as a service (“SAAS”) businesses, which have largely returned to, and~~SaaS businesses.

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Geographically, in ~~most cases, exceeded pre-COVID-19 levels of demand.~~

~~Geographically,~~the first quarter, year-over-year sales from existing businesses increased in developed markets ~~increased~~ at a high single-digit rate, driven by high single-digit growth in ~~the high-teens~~North America and ~~at a~~ low ~~double-digit rate for the three and six month periods ended July 2, 2021, respectively. Year-over-year~~single-digit growth in Europe. In our high growth markets, year-over-year sales from existing businesses ~~in high-growth markets increased~~decreased at a low single-digit rate, ~~greater than 20% in both respective periods. The geographic results for the three month period ended July 2, 2021 were~~ driven by strong demand in all geographies, led by high teens growth in North America, greater than 20% growth in Europe and Latin America, and mid-teens growth in Asia. The geographic results for the six month period ended July 2, 2021 were driven by strong demand in all geographies, led bya low double-digit ~~growth~~decline in ~~North America, growth at a rate in the high teens in Europe and Asia, and greater than 20%~~China where business activity was constrained by government mandated COVID-19 containment measures, partially offset by high-teens growth in Latin America.

Year-over-year price increases contributed ~~1.3% and 1.1%~~3.2% to sales growth during the ~~three and six month periods ended July 2, 2021, respectively,~~quarter, as compared to the comparable ~~periods of 2020,~~period in 2021 and is reflected as a component of the change in sales from existing businesses. In the first quarter, the price increases that we deployed exceeded inflationary increases that we experienced on purchased materials.

~~Despite widespread~~Widespread supply chain and logistics ~~issues~~challenges persisted in the quarter, impacting the availability of key materials, including electronic components, and resulting in higher production and logistics costs. We continue to apply the Fortive Business System (“FBS”) to help mitigate the impact of these challenges but demand for our products outpaced our shipments in the quarter and our backlog increased from December 31, 2021.

COVID-19 continues to impact our results, creating operating challenges with ~~port congestion~~logistics, material availability and ~~labor, raw~~absenteeism. The government mandated COVID-19 containment measures in China directly reduced our production levels and shipments in the quarter and creates ongoing risk and uncertainty. We anticipate that the uncertainty and disruption of the pandemic on global commerce will continue into future periods.

In February 2022, Russian forces invaded Ukraine (“Russia Ukraine Conflict”) resulting in broad economic sanctions being imposed on Russia that has further increased existing global supply chain, logistic, and inflationary challenges. As of the filing date of this report, we have temporarily suspended commercial operations in Russia, other than for sales of ASP’s sterilization products, which are exempted from international sanctions and deemed to be humanitarian products. Our business in Russia and Ukraine were not material to our results and ~~component shortages affecting multiple industries during~~accounted for less than 1% of total revenue for the fiscal year ended December 31, 2021. As of April 1, 2022, our net assets in Russia totaled approximately $15 million, including those net assets associated with ASP.

Outlook

We anticipate that the strong demand for our offerings experienced in the first quarter will persist throughout 2022 driven by innovation, share gains and robust end markets. Revenue growth is projected to be between 5.0% and 8.0% for the second quarter of ~~2021, our supply chain was responsive~~2022, and ~~we successfully implemented solutions to support our near-term operations~~9.5% and ~~effectively managed production material shortages~~12.0% for the full year. We anticipate growth from existing businesses will be between 2.0% and ~~distribution limitations to drive growth and market share gains in~~5.0% for the second quarter of ~~2021.~~

~~Further, we have increased the employee capacity at the majority of our facilities based on local COVID-19 guidelines~~2022 and ~~have implemented additional safety~~6.0% and ~~space management protocols to help ensure the health and safety of our employees.~~

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~~Outlook~~

Our results in the second quarter of 2021 demonstrated positive, broad-based momentum across our portfolio, which we expect to continue in the second half of 2021. The majority of our businesses have recovered to greater than pre-COVID-19 levels of demand during the second quarter of 2021 and we believe they will continue accelerating at varied rates in the second half of 2021 if virus control measures continue to ease globally, end markets continue to recover, and customer site access continues to improve. We believe our businesses that are more dependent on short-cycle industrial demand and production dynamics and our businesses with a greater proportion of recurring revenue, including our SAAS businesses that provide critical workflow solutions to their customers, and certain healthcare businesses will grow at faster rates than our businesses that require customer site access. As such, we expect year-over-year global demand for our products and services to increase between 11.5% and 14.5% in the third quarter of 2021, and we expect demand to increase between 13.5% and 15%8.5% for the ~~year ending December 31, 2021.~~

~~While we expect~~full year. This outlook is subject to various assumptions and risks, including but not limited to, the positive, broad-based momentum across our portfolio to continue in the third and fourth quarters of 2021, we will continue deploying and applying the Fortive Business System to help drive near-term performance by actively managing ourglobal supply chain and ~~continuing~~logistic challenges, magnitude of the impact of the COVID-19 pandemic on macroeconomic conditions, the Russia Ukraine Conflict, continued strength of key end markets, elective surgery rates, the availability of electronic components, our ability to convert backlog and maintain manufacturing capacity.

We anticipate that supply chain and inflationary pressures will persist throughout 2022 and that although our backlog may decline compared to 2021, it may remain elevated compared to historical levels. We will continue to deploy FBS to actively manage production challenges, collaborate with ~~our~~ customers and suppliers to minimize ~~anticipated material~~disruptions and component delays and production and logistics disruptions. We expect these supply chain challenges and inflationary pressures will continue in the second half of 2021; however, we believe we will largely offset these costs withutilize price increases and other ~~countermeasures.~~countermeasures to offset inflationary pressures.

~~Additionally, we~~We are monitoring the ~~risks~~ongoing impact of ~~new~~ COVID-19 ~~variants which may be more contagious~~on the global economy and our business, including government mandated containment measures, such as the lockdown implemented recently in Shanghai, China. Continued implementation or ~~severe, or less responsive to treatment and vaccines, and may~~expansion of government mandated containment measures, including shutdowns in countries such as China, could have a material adverse impact ~~the rate that virus control measures ease or become more restrictive, which could impact~~on our future results.

We are also ~~continuing to monitor any escalation of geopolitical uncertainties related to governmental policies toward~~monitoring developments in international trade, monetary and fiscal policies and relations between the U.S. and China, ~~and we are continuing to evaluate the impacts of the American Rescue Plan Act of 2021 on our business and the potential impacts of various~~as well as evaluating proposed investment and taxation policy initiatives being debated in the United States and by the ~~Organisation~~Organization for Economic Co-operation and ~~Development.~~Development (“OECD”). We continue to monitor the Russia Ukraine Conflict and the impact on our business and operations. As of the filing date of this report, we are unable to quantify the ~~anticipated impacts~~impact of these matters on our financial ~~results for the year ending December 31, 2021, if any, and any impact in future periods, and will continue monitoring these developments.~~results.

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RESULTS OF OPERATIONS

Sales Growth

The following table summarizes total aggregate year-over-year sales growth and the components of aggregate year-over-year sales growth during the three ~~and six~~ month periods ended ~~July 2, 2021~~April 1, 2022 as compared to the comparable periods of ~~2020:~~2021:

Components of Sales Growth
% Change Three Months Ended
July 2, 2021 vs. Comparable 2020 Period % Change Six Months Ended
July 2, 2021 vs. Comparable 2020 Period
Total revenue growth (GAAP) 26.7 % 20.0 %
Existing businesses (Non-GAAP) 21.3 % 15.0 %
Acquisitions (Non-GAAP)
2.1 % 2.1 %
Currency exchange rates (Non-GAAP) 3.3 % 2.9 %


	% Change Three Months Ended April 1, 2022 vs. Comparable 2021 Period
Total revenue growth (GAAP)	9.3	%
Existing businesses (Non-GAAP)	5.3	%
Acquisitions(Non-GAAP)	5.5	%
Currency exchange rates (Non-GAAP)	(1.5)	%

Operating Profit Margins

Operating profit margin was ~~16.0%~~15.4% for the ~~three month period ended July 2, 2021, an increase~~first quarter, a decrease of ~~610~~30 basis points as compared to ~~9.9%~~15.7% in the comparable period of ~~2020.~~2021. Year-over-year operating profit margin comparisons were ~~favorably~~ impacted by:

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•~~Higher year-over-year~~Year-over-year price increases and sales volumes from existing businesses, a favorable sales mix, and price increases, and to a lesser extent, lower year-over-year net material costs, changes in foreign currency exchange rates, and incremental year-over-year cost savings associated with restructuring and productivity improvement initiatives, which were partially offset by higher year-over-year freight, logistics and material costs, employee compensation, ~~costs,~~and investments in ~~research and development and~~R&D, sales and ~~marketing growth initiatives, and higher freight and logistics costs~~marketing. — favorable ~~240~~30 basis points

•The year-over-year effect of amortization from existing businesses — favorable 50 basis points

•The year-over-year net effect of acquisition-related transaction costs which were ~~less in~~higher during the ~~three month period ended July 2, 2021~~first quarter than those recognized induring the comparable period in ~~2020~~2021 — ~~favorable 190~~unfavorable 10 basis points

•The year-over-year ~~effect of amortization from existing businesses — favorable 150 basis points~~

•~~The year-over-year~~net effect of acquired businesses, including amortization, and acquisition-related fair value adjustments ~~to deferred revenue and inventory which were less in the three month period ended July 2, 2021 than those recognized in the comparable period in 2020~~ — ~~favorable 30 basis points~~

Operating profit margin was 15.9% for the six month period ended July 2, 2021, an increase of 580 basis points as compared to 10.1% in the comparable period of 2020. Year-over-year operating profit margin comparisons were favorably impacted by:

•Higher year-over-year sales volumes from existing businesses and price increases, and to a lesser extent, lower year-over-year material costs, incremental year-over-year cost savings associated with restructuring and productivity improvement initiatives, a favorable sales mix, and changes in foreign currency exchange rates, partially offset by higher year-over-year employee compensation costs, higher freight and logistics costs, and investments in research and development and sales and marketing growth initiatives — favorable 240 basis points

•The year-over-year net effect of acquisition-related transaction costs which were less in the six month period ended July 2, 2021 than those recognized in the comparable period in 2020 — favorable 160 basis points

•~~The year-over-year effect of amortization from existing businesses — favorable 130 basis points~~

•The year-over-year effect of acquired businesses, including amortization, and acquisition-related fair value adjustments to deferred revenue and inventory which were less in the six month period ended July 2, 2021 than those recognized in the comparable period in 2020 — favorable 50unfavorable 100 basis 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
		July 2, 2021		June 26, 2020		July 2, 2021		June 26, 2020			April 1, 2022		April 2, 2021
Intelligent Operating Solutions	Intelligent Operating Solutions	$	541.8	$	413.0	$	1,052.7	$	879.7	Intelligent Operating Solutions	$	587.6	$	510.9
Precision Technologies	Precision Technologies	471.9		377.3		919.3		768.6		Precision Technologies	462.4		447.4
Advanced Healthcare Solutions	Advanced Healthcare Solutions	306.0		251.3		606.9		501.4		Advanced Healthcare Solutions	326.5		300.9
Total	Total	$	1,319.7	$	1,041.6	$	2,578.9	$	2,149.7	Total	$	1,376.5	$	1,259.2

INTELLIGENT OPERATING SOLUTIONS

Our Intelligent Operating Solutions segment provides leading solutions to accelerate industrial and facility reliability and performance, as well as compliance and safety across a range of vertical end markets, including manufacturing, process industries, healthcare, utilities and power, communications and electronics, among others. ~~The businesses in our Intelligent Operating Solutions segment~~We provide a broad and differentiated offering of instrumentation, sensors, software, and services to address these critical workflows for our customers.

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Intelligent Operating Solutions Selected Financial Data


		Three Months Ended						Six Months Ended							Three Months Ended
($ in millions)	($ in millions)	July 2, 2021			June 26, 2020			July 2, 2021			June 26, 2020			($ in millions)	April 1, 2022			April 2, 2021
Sales	Sales	$	541.8		$	413.0		$	1,052.7		$	879.7		Sales	$	587.6		$	510.9
Operating profit	Operating profit	115.3			54.4			223.4			135.5			Operating profit	107.0			108.1
Depreciation	Depreciation	5.6			9.7			12.2			19.8			Depreciation	9.5			6.6
Amortization	Amortization	38.0			37.7			75.9			75.8			Amortization	46.2			37.9
Operating profit as a % of sales	Operating profit as a % of sales	21.3		%	13.2		%	21.2		%	15.4		%	Operating profit as a % of sales	18.2		%	21.2		%
Depreciation as a % of sales	Depreciation as a % of sales	1.0		%	2.3		%	1.2		%	2.3		%	Depreciation as a % of sales	1.6		%	1.3		%
Amortization as a % of sales	Amortization as a % of sales	7.0		%	9.1		%	7.2		%	8.6		%	Amortization as a % of sales	7.9		%	7.4		%

Components of Sales Growth
% Change Three Months Ended
July 2, 2021 vs. Comparable 2020 Period % Change Six Months Ended
July 2, 2021 vs. Comparable 2020 Period
Total revenue growth (GAAP) 31.2 % 19.7 %
Existing businesses (Non-GAAP) 26.8 % 15.5 %
Acquisitions (Non-GAAP) 0.7 % 0.9 %
Currency exchange rates (Non-GAAP) 3.7 % 3.3 %


	% Change Three Months Ended April 1, 2022 vs. Comparable 2021 Period
Total revenue growth (GAAP)	15.0	%
Existing businesses (Non-GAAP)	8.7	%
Acquisitions (Non-GAAP)	7.7	%
Currency exchange rates (Non-GAAP)	(1.4)	%

Year-over-year sales of products and services from existing businesses of Intelligent Operating Solutions increased ~~26.8% and 15.5%~~8.7% during the ~~three and six month periods ended July 2, 2021, respectively,~~first quarter, as compared to the comparable ~~periods~~period of ~~2020.~~2021. The year-over-year results ~~for both respective periods~~ were driven by ~~broad-based increases in~~higher pricing, continued strong demand ~~particularly from our industrial channel partners, critical workflow, safety, facilities,~~for SaaS products and ~~maintenance SAAS product offerings, and portable~~related services, gas detection instruments, ~~which were partially offset by a decline in demand for our industrial imaging~~and test & measurement products, as ~~demand for those products was elevated~~well as improved factory throughput on gains from supply chain and logistics countermeasures.

Geographically, during the ~~comparable period in 2020 for COVID-19 monitoring.~~

~~Geographically, demand~~first quarter, sales from existing businesses in ~~our~~ Intelligent Operating Solutions ~~segment~~ increased in ~~both~~ developed markets by low double digits on North America and Western Europe. Sales in high growth markets ~~during the three and six month periods ended July 2, 2021. The results~~declined by low single digits on declines in ~~both respective periods~~China which were ~~driven~~impacted by government mandated COVID-19 containment measures, partially offset by growth in ~~every major geography, led by North~~Latin America and ~~Europe, and to a lesser extent, Asia and Latin America.~~the Middle East.

Year-over-year price increases in our Intelligent Operating Solutions segment contributed ~~1.6% and 1.3%~~3.0% to sales growth during the ~~three and six month periods ended July 2, 2021, respectively,~~first quarter, as compared to the comparable ~~periods~~period of ~~2020,~~2021, and is reflected as a component of the change in sales from existing businesses.

Operating profit margin ~~increased 810~~decreased 300 basis points during the ~~three month period ended July 2, 2021~~first quarter as compared to the comparable period of ~~2020.~~2021. Year-over-year operating profit margin comparisons were ~~favorably~~ impacted by:

•Higher year-over-year sales volumes from existing businesses, price increases, a favorable sales mix, and to a lesser extent, lower year-over-year material costs, incremental year-over-year cost savings associated with restructuring and productivity improvement initiatives, and changes in foreign currency exchange rates, which were partially offset by higher year-over-year employee compensation costs and investments in research and development and sales and marketing growth initiatives — favorable 570 basis points

•The year-over-year effect of amortization from existing businesses — favorable ~~210~~90 basis points

•The year-over-year net effect of acquisition-related transaction costs, which were higher during first quarter than those recognized during the comparable period in 2021 — unfavorable 110 basis points

•Year-over-year increase in price and volumes from existing businesses were offset by higher year- over-year freight, logistics and material costs and employee compensation costs — flat

•The year-over-year effect of acquired businesses, including amortization ~~and acquisition-related fair value adjustments to deferred revenue and inventory which were less in the three month period ended July 2, 2021 than those recognized in the comparable period in 2020~~ — ~~favorable 40~~unfavorable 280 basis points

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

•
~~The incremental year-over-year net dilutive effect of acquisition-related transaction costs — unfavorable 10 basis points~~

Operating profit margin increased 580 basis points during the six month period ended July 2, 2021 as compared to the comparable period of 2020. Year-over-year operating profit margin comparisons were favorably impacted by:

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•~~The year-over-year effect of amortization from existing businesses — favorable 140 basis points~~

PRECISION TECHNOLOGIES

Our Precision Technologies segment supplies technologies to a broad set of vertical end markets, enabling our customers to accelerate the development of innovative products and solutions. We provide our customers with electrical test and measurement instruments and services, energetic material devices, and a broad portfolio of sensor and control system solutions.

Precision Technologies Selected Financial Data


		Three Months Ended						Six Months Ended							Three Months Ended
($ in millions)	($ in millions)	July 2, 2021			June 26, 2020			July 2, 2021			June 26, 2020			($ in millions)	April 1, 2022			April 2, 2021
Sales	Sales	$	471.9		$	377.3		$	919.3		$	768.6		Sales	$	462.4		$	447.4
Operating profit	Operating profit	104.1			77.1			200.0			150.6			Operating profit	101.4			95.9
Depreciation	Depreciation	6.3			6.6			12.6			13.4			Depreciation	6.0			6.3
Amortization	Amortization	4.2			4.3			8.5			8.8			Amortization	3.6			4.3

Operating profit as a % of sales	Operating profit as a % of sales	22.1		%	20.4		%	21.8		%	19.6		%	Operating profit as a % of sales	21.9		%	21.4		%
Depreciation as a % of sales	Depreciation as a % of sales	1.3		%	1.7		%	1.4		%	1.7		%	Depreciation as a % of sales	1.3		%	1.4		%
Amortization as a % of sales	Amortization as a % of sales	0.9		%	1.1		%	0.9		%	1.1		%	Amortization as a % of sales	0.8		%	1.0		%

Components of Sales Growth
% Change Three Months Ended
July 2, 2021 vs. Comparable 2020 Period % Change Six Months Ended
July 2, 2021 vs. Comparable 2020 Period
Total revenue growth (GAAP) 25.1 % 19.6 %
Existing businesses (Non-GAAP) 22.2 % 17.0 %
Acquisitions (Non-GAAP)
— % — %
Currency exchange rates (Non-GAAP) 2.9 % 2.6 %


	% Change Three Months Ended April 1, 2022 vs. Comparable 2021 Period
Total revenue growth (GAAP)	3.4	%
Existing businesses (Non-GAAP)	4.6	%
Acquisitions(Non-GAAP)	—	%
Currency exchange rates (Non-GAAP)	(1.2)	%

Year-over-year sales of products and services from existing businesses ofin Precision Technologies increased ~~22.2% and 17.0%~~4.6% during the ~~three and six month periods ended July 2, 2021, respectively,~~first quarter as compared to the comparable ~~periods~~period of ~~2020.~~2021. The year-over-year results ~~for both respective periods~~ were driven by ~~broad-based demand for test~~price increases, market growth and ~~measurement instruments,~~share gains in key verticals and increased ~~demand for sensing technologies in the industrial and semiconductor end markets, and to a lesser extent, increased demand for~~shipments of energetic materials, ~~which were~~all partially offset by reductions in sales in China as a ~~decrease in demand in~~result of the ~~medical end market for ventilator components and critical environment products that supported~~government mandated COVID-19 ~~patient treatment efforts in the comparable periods in 2020.~~containment measures.

Geographically, ~~demand~~sales from existing businesses in our Precision Technologies segment increased ~~in both developed and high growth markets~~ during the ~~three and six month periods ended July 2, 2021. The results~~first quarter in ~~both respective periods were~~developed markets, driven by growth in ~~every major geography, led by~~ North America ~~Asia,~~ and ~~Europe.~~Europe, and slightly declined in high growth markets where, despite growth in Latin America, the Middle East and Africa, we experienced a large decrease in China, which was a result of government mandated COVID-10 containment measures.

Year-over-year price increases in our Precision Technologies segment contributed ~~1.3% and 1.1%~~4.6% to sales growth ~~during~~for the ~~three and six month periods ended July 2, 2021, respectively,~~first quarter, as compared to the comparable ~~periods~~period of ~~2020,~~2021, and is reflected as a component of the change in sales from existing businesses.

Operating profit margin increased ~~170~~50 basis points ~~during~~for the ~~three month period ended July 2, 2021~~first quarter as compared to the comparable period of ~~2020.~~2021. Year-over-year operating profit margin comparisons were ~~favorably~~ impacted by:

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•Higher year-over-year ~~sales volumes from existing businesses,~~ price increases lower year-over-year material costs, incremental year-over-year cost savings associated with restructuring and productivity improvement initiatives, and to a lesser extent, changes in foreign currency exchange rates, which were partially offset by higher ~~year-over-year~~material, freight and employee compensation costs ~~and an unfavorable sales mix~~ — favorable ~~140~~30 basis points

•The year-over-year effect of amortization from existing businesses — favorable ~~30 basis points~~

Operating profit margin increased 220 basis points during the six month period ended July 2, 2021 as compared to the comparable period of 2020. Year-over-year operating profit margin comparisons were favorably impacted by:

•Higher year-over-year sales volumes from existing businesses, price increases, and incremental year-over-year cost savings associated with restructuring and productivity improvement initiatives, and to a lesser extent, lower year-over-year material costs, which were partially offset by higher year-over-year employee compensation costs and an unfavorable sales mix — favorable 190 basis points

•~~The year-over-year effect of amortization from existing businesses — favorable 30~~20 basis points

ADVANCED HEALTHCARE SOLUTIONS

Our Advanced Healthcare Solutions segment serves healthcare customers with enabling products and services for critical activities that help ensure safe, efficient, and timely healthcare. ~~Through the Advanced Healthcare Solutions segment, we~~We provide broad hardware and software portfolio offerings optimized around our end-users’ most critical workflows, including instrument and device reprocessing, instrument tracking, cell therapy equipment design and manufacturing, biomedical test tools, radiation safety monitoring, and asset management.

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Advanced Healthcare Solutions Financial Data


		Three Months Ended						Six Months Ended							Three Months Ended
($ in millions)	($ in millions)	July 2, 2021			June 26, 2020			July 2, 2021			June 26, 2020			($ in millions)	April 1, 2022			April 2, 2021
Sales	Sales	$	306.0		$	251.3		$	606.9		$	501.4		Sales	$	326.5		$	300.9
Operating profit	Operating profit	22.5			(1.9)			41.4			(17.7)			Operating profit	28.0			18.9
Depreciation	Depreciation	5.2			5.2			10.7			7.9			Depreciation	4.7			5.5
Amortization	Amortization	35.3			35.4			70.6			71.0			Amortization	46.5			35.3
Operating profit as a % of sales	Operating profit as a % of sales	7.4		%	(0.8)		%	6.8		%	(3.5)		%	Operating profit as a % of sales	8.6		%	6.3		%
Depreciation as a % of sales	Depreciation as a % of sales	1.7		%	2.1		%	1.8		%	1.6		%	Depreciation as a % of sales	1.4		%	1.8		%
Amortization as a % of sales	Amortization as a % of sales	11.5		%	14.1		%	11.6		%	14.2		%	Amortization as a % of sales	14.2		%	11.7		%

Components of Sales Growth
% Change Three Months Ended
July 2, 2021 vs. Comparable 2020 Period % Change Six Months Ended
July 2, 2021 vs. Comparable 2020 Period
Total revenue growth (GAAP) 21.8 % 21.0 %
Existing businesses (Non-GAAP) 11.0 % 11.0 %
Acquisitions (Non-GAAP)
7.6 % 7.2 %
Currency exchange rates (Non-GAAP) 3.2 % 2.8 %


	% Change Three Months Ended April 1, 2022 vs. Comparable 2021 Period
Total revenue growth (GAAP)	8.5	%
Existing businesses (Non-GAAP)	0.6	%
Acquisitions(Non-GAAP)	10.0	%
Currency exchange rates (Non-GAAP)	(2.1)	%

Year-over-year sales of products and services from existing businesses of Advanced Healthcare Solutions increased ~~11.0%~~0.6% during ~~both~~ the ~~three and six month periods ended July 2, 2021~~first quarter, as compared to the comparable ~~periods~~period of ~~2020.~~2021. The year-over-year results ~~in the three month period ended July 2, 2021~~ were driven by higher pricing and increased demand for ~~sterilization consumables,~~ radiation ~~safety monitoring,~~management and surgical instrument tracking offerings partially offset by reductions in cell therapy equipment design and ~~manufacturing,~~sterilization products, primarily in China and surgical instrument tracking SAAS products. The year-over-year results in the six month period ended July 2, 2021 were driven by increased demand for sterilization capital equipment and consumables, radiation safety monitoring, cell therapy equipment design and manufacturing, and surgical instrument tracking SAAS products.

~~Several of our Advanced Healthcare Solutions businesses are~~ impacted by ~~elective surgical procedure volumes which decreased from pre-COVID-19 levels at a high-single digit rate across most major geographic markets during~~ the ~~second quarter of 2021.~~government mandated COVID-19 containment measures.

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~~We expect elective surgical procedure volumes to sequentially improve throughout 2021 as COVID-19 patient hospitalizations decline and virus control measures ease.~~

~~Geographically, demand~~Sales from existing businesses in our Advanced Healthcare Solutions segment increased low single digits during the first quarter in ~~both~~ developed ~~and high~~markets, driven by a mid single digit increase in North America, which was partially offset by a low single digit decrease in Europe. High growth markets ~~during~~declined by low single digits on government mandated COVID-19 containment measures in China and declines in the ~~three~~Middle East and ~~six month periods ended July 2, 2021. The results in both respective periods were driven by growth in every major geography, led by North America, Asia, and Europe.~~Africa.

Year-over-year price increases in our Advanced Healthcare Solutions segment contributed ~~0.7%~~1.3% to sales growth during ~~both~~ the ~~three and six month periods ended July 2, 2021, respectively,~~first quarter, as compared to the comparable ~~periods~~period of ~~2020,~~2021, and is reflected as a component of the change in sales from existing businesses.

Operating profit margin increased ~~820~~230 basis points during the three month period ended ~~July 2, 2021~~April 1, 2022 as compared to the comparable period of ~~2020.~~2021. Year-over-year operating profit margin comparisons were ~~favorably~~ impacted by:

•The year-over-year net effect of acquisition-related transaction costs which were less in the ~~three month period ended July 2, 2021~~first quarter than those recognized in the comparable period in ~~2020~~2021 — favorable ~~790~~150 basis points

•The year-over-year effect of amortization from existing businesses — favorable ~~250~~90 basis points

•The year-over-year effect of acquired businesses, including amortization, and acquisition-related fair value adjustments to ~~deferred revenue and~~ inventory ~~which were less in the three month period ended July 2, 2021 than those recognized in the comparable period in 2020~~ — favorable 9030 basis points

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

•~~Higher~~Lower year-over-year ~~product, freight,~~sales volumes from existing businesses and ~~logistics costs,~~ higher ~~year-over-year~~ employee compensation costs, ~~and sales and marketing investments,~~ which were partially offset by higher year-over-year ~~sales volumes from existing businesses, a favorable sales mix, and to a lesser extent,~~ price increases ~~— unfavorable 310 basis points~~

Operating profit margin increased 1,030 basis points during the six month period ended July 2, 2021 as compared to the comparable period of 2020. Year-over-year operating profit margin comparisons were favorably impacted by:

•~~The year-over-year effect of amortization from existing businesses — favorable 240 basis points~~

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

•Higher year-over-year product, freight, and logistics costs, higher year-over-year employee compensation costs, and sales and marketing investments, which were partially offset by higher year-over-year sales volumes from existing businesses, a favorable sales mix, and to a lesser extent, price increases and changes in foreign currency exchange rates — unfavorable 40 basis points

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COST OF SALES AND GROSS PROFIT


		Three Months Ended						Six Months Ended							Three Months Ended
($ in millions)	($ in millions)	July 2, 2021			June 26, 2020			July 2, 2021			June 26, 2020			($ in millions)	April 1, 2022			April 2, 2021
Sales	Sales	$	1,319.7		$	1,041.6		$	2,578.9		$	2,149.7		Sales	$	1,376.5		$	1,259.2
Cost of sales	Cost of sales	(564.2)			(458.8)			(1,111.5)			(954.9)			Cost of sales	(584.5)			(547.3)
Gross profit	Gross profit	$	755.5		$	582.8		$	1,467.4		$	1,194.8		Gross profit	$	792.0		$	711.9
Gross profit margin	Gross profit margin	57.2		%	56.0		%	56.9		%	55.6		%	Gross profit margin	57.5		%	56.5		%

The year-over-year increase in cost of sales during the ~~three and six month periods ended July 2, 2021,~~first quarter, as compared to the comparable ~~periods~~period in ~~2020,~~2021, is due primarily to ~~higher~~ year-over-year increases in sales volumes from existing and newly acquired businesses, and ~~incremental expenses from our recently acquired businesses, which were partially offset by lower year-over-year~~higher material, ~~costs~~freight and ~~cost savings associated with restructuring and productivity improvement initiatives.~~employee compensation costs. Year-over-year changes in currency exchange rates ~~increased~~decreased cost of sales during the ~~three and six month periods ended July 2, 2021.~~

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first quarter.

The year-over-year increase in gross profit and gross profit margin for the ~~three and six month periods ended July 2, 2021,~~first quarter, as compared to the comparable ~~periods~~period in ~~2020,~~2021, is due primarily to higher year-over-year sales volumes ~~a favorable sales mix,~~ and price increases, which were partially offset by ~~changes in foreign currency exchange rates. Gross profit and gross profit margin for the three month period ended July 2, 2021 was also unfavorably impacted by~~ higher material, freight and ~~logistics~~employee compensation costs.

OPERATING EXPENSES


		Three Months Ended						Six Months Ended							Three Months Ended
($ in millions)	($ in millions)	July 2, 2021			June 26, 2020			July 2, 2021			June 26, 2020			($ in millions)	April 1, 2022			April 2, 2021
Sales	Sales	$	1,319.7		$	1,041.6		$	2,578.9		$	2,149.7		Sales	$	1,376.5		$	1,259.2
Selling, general and administrative (“SG&A”) expenses	Selling, general and administrative (“SG&A”) expenses	456.4			402.8			884.5			818.6			Selling, general and administrative (“SG&A”) expenses	480.6			428.1
Research and development (“R&D”) expenses	Research and development (“R&D”) expenses	87.8			77.4			174.0			158.2			Research and development (“R&D”) expenses	99.1			86.2
SG&A as a % of sales	SG&A as a % of sales	34.6		%	38.7		%	34.3		%	38.1		%	SG&A as a % of sales	34.9		%	34.0		%
R&D as a % of sales	R&D as a % of sales	6.7		%	7.4		%	6.7		%	7.4		%	R&D as a % of sales	7.2		%	6.8		%

SG&A expenses increased during the ~~three and six month periods ended July 2, 2021~~first quarter as compared to the comparable ~~periods~~period of ~~2020 primarily~~2021 due to ~~continued investments in~~higher intangible amortization and incremental expenses from our ~~sales~~recent acquisitions, increased employee compensation expenses and customer acquisition and marketing growth initiatives, higher employee compensation costs due to broad cost reduction efforts that reduced labor expenses to better align with reductions in demand in the comparable periods of 2020, and changes in foreign currency exchange rates that were partially offset by lower year-over-year costs associated with the integration of the ASP business and incremental year-over-year cost savings associated with restructuring and productivity improvement initiatives.costs.

On a year-over-year basis, SG&A expenses as a percentage of sales ~~decreased 410 and 380~~increased 90 basis points ~~during~~in the ~~three and six month periods ended July 2, 2021, respectively, primarily due to demand for~~first quarter as a result of higher amortization expenses from our ~~products and services~~recent acquisitions, partially offset by leverage on SG&A costs, which grew at a ~~faster~~slower rate than our fixed costs. Additionally, lower year-over-year costs associated with the integration of the ASP business and incremental year-over-year cost savings associated with restructuring and productivity improvement initiatives reduced SG&A expenses as a percentage of sales.sales growth.

R&D expenses (consisting principally of internal and contract engineering personnel costs) increased during the ~~three and six months ended July 2, 2021~~first quarter as compared to the comparable ~~periods~~period of ~~2020 primarily~~2021 due to ~~targeted~~incremental costs from our recent acquisitions, investments in innovation and key ~~growth~~ initiatives and ~~innovation.~~higher employee compensation costs. On a year-over-year basis, R&D expenses increased as a percentage of sales ~~decreased during~~by 40 basis points in the ~~three and six month periods ended July 2, 2021 reflecting demand for~~first quarter mainly driven by our ~~products and services that grew at~~recent acquisitions, where R&D spending is higher as a ~~faster rate~~percentage of sales than ~~our investments~~ in ~~key growth initiatives and innovations.~~existing businesses.

INTEREST COSTS

For a discussion of our outstanding indebtedness, refer to Note 65 to the consolidated condensed financial statements.

Net interest expense for the three ~~and six~~ month ~~periods~~period ended ~~July 2, 2021~~April 1, 2022 was ~~$25 million and $53~~$19 million compared to ~~$36 million and $75~~$28 million for the three ~~and six~~ month ~~periods~~period ended ~~June 26, 2020, respectively.~~April 2, 2021. The year-over-year decrease in interest expense was due to lower year-over-year ~~average~~effective interest rates on debt ~~balances.~~instruments.

INCOME TAXES

Our effective tax rate for the ~~three and six month periods ended July 2, 2021~~quarter was ~~12.3% and 10.0%~~13.5% as compared to ~~16.9% and 20.6%, respectively, for the three and six month periods ended June 26, 2020. The year-over-year decrease~~5.9% in the ~~effective tax rate for~~comparable period in 2021 and the ~~three month period ended July 2, 2021 as compared to the three month period ended June 26, 2020~~year-over year increase was primarily due ~~primarily~~ to a reduction in our uncertain tax positions and increases in certain federal benefits during the three month period ended July 2, 2021. The year-over-year decrease in the effective tax rate for the six month period ended July 2, 2021 as compared to the six month period ended June 26, 2020 was due primarily to anon-recurring permanent difference on the Q1 2021 gain on our Retained Vontier Shares due to the tax-free treatment of our disposition of the shares through the Debt-for-Equity Exchange ~~a reduction to our uncertain tax positions,~~ and increases in certain federal tax benefits ~~for the six month period ended July 2, 2021. Additionally, the tax costs incurred~~ during the six month period ended June 26, 2020 associated with the repatriation of a portion of our previously reinvested earnings outside of the United States contributed to the year-over-year decrease in the effective tax rate for the six month period ended July 2, 2021.first quarter.

Our effective tax rate for the ~~three~~first quarter and ~~six month periods ended July 2,~~the comparable period in 2021, ~~differs~~differ from the U.S. federal statutory rate of 21% due primarily to the positive and negative effects of the Tax Cuts and Jobs Act, ~~(“TCJA”),~~ U.S. federal permanent differences, the impact of credits and deductions provided by law, and a reduction in our uncertain tax positions. Specific to the ~~six~~three month period

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~~period~~ ended ~~July 2,~~April 1, 2021, our effective tax rate also differs from the U.S. federal statutory rate of 21% due to a permanent difference on the gain on our Retained Vontier Shares due to the tax-free treatment of our disposition of the shares through the Debt-for-Equity Exchange. Specific to the six month period ended June 26, 2020, our effective tax rate also differs from the U.S. federal statutory rate of 21% due to the repatriation of a portion of our previously reinvested earnings outside of the United States.

COMPREHENSIVE INCOME

Comprehensive income increased by ~~$31~~$50 million during the ~~three month period ended July 2, 2021~~first quarter as compared to the comparable period in ~~2020~~2021 due primarily to net earnings that were higher by ~~$51~~$55 million, partially offset by unfavorable changes in foreign currency translation adjustments of ~~$19 million.~~

Comprehensive income increased by $203 million during the six month period ended July 2, 2021 as compared to the comparable period in 2020 due primarily to net earnings that were higher by $119 million and favorable changes in foreign currency translation adjustments of $82$4 million.

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 that our operating cash flow and other sources of liquidity, which consist of access to bank loans, commercial paper, capital markets, and our revolving credit facility will be sufficient to allow us to continue funding and investing in our existing businesses, consummate strategic acquisitions, make interest and principal payments on our outstanding indebtedness, fulfill our contractual obligations, and manage our capital structure on a short and long-term basis.

~~In prior periods, we~~We have generally satisfied any short-term liquidity needs that are not met through operating cash flows and available cash through issuances of commercial paper under our U.S. dollar and Euro-denominated commercial paper programs (“Commercial Paper Programs”). Due to the volatility and disruption in the commercial paper markets during the first six months of 2020, we temporarily reduced our reliance on this source of funding, and consequently paid down and refinanced our outstanding commercial paper with a 364-day delayed-draw term loan due March 22, 2021 (the “Term Loan due March 2021”) that was subsequently retired in the Debt-for-Equity Exchange. As of July 2, 2021, we had no borrowings outstanding under our commercial paper program.

Credit support for the Commercial Paper Programs is provided by a five-year $2.0 billion senior unsecured revolving credit facility that expires on November 30, 2023 (the “Revolving Credit Facility”) which, to the extent not otherwise providing credit support for the commercial paper programs, can also be used for working capital and other general corporate purposes. As of ~~July 2, 2021,~~April 1, 2022, no borrowings were outstanding under the Revolving Credit Facility.

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 when we have outstanding borrowings. We expect to limit any future borrowings under the Revolving Credit Facility to amounts that would leave sufficient credit available under the facility to allow us to borrow, if needed, and repay any outstanding commercial paper as it matures.

We continue to monitor the financial markets and general global economic ~~conditions and if~~conditions. If changes in financial markets or other areas of the economy adversely affect our access to the capital markets, we would expect to rely on a combination of available cash and existing available capacity under our credit facilities to provide short-term funding.

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Overview of Cash Flows and Liquidity

Following is an overview of our cash flows and liquidity for the ~~six~~three month period ended ~~July 2, 2021:~~April 1, 2022:


		Six Months Ended					Three Months Ended
($ in millions)	($ in millions)	July 2, 2021		June 26, 2020		($ in millions)	April 1, 2022		April 2, 2021
Total operating cash provided by continuing operations	Total operating cash provided by continuing operations	$	443.0	$	430.8	Total operating cash provided by continuing operations	$	214.8	$	152.0

Cash paid for acquisitions, net of cash received						Cash paid for acquisitions, net of cash received	$	0.9	$	(0.2)
Payments for additions to property, plant and equipment	Payments for additions to property, plant and equipment	$	(17.1)	$	(45.5)	Payments for additions to property, plant and equipment	(18.8)		(8.4)
Cash paid for acquisitions, net of cash received		0.9		(1.8)

All other investing activities	All other investing activities	1.1		5.2		All other investing activities	—		—
Total investing cash used in continuing operations	Total investing cash used in continuing operations	$	(15.1)	$	(42.1)	Total investing cash used in continuing operations	$	(17.9)	$	(8.6)

Net repayments of commercial paper borrowings		$	—	$	(1,141.9)
Proceeds from borrowings (maturities longer than 90 days), net of issuance costs of $1 million in 2020		—		741.7
Payment of 0.875% convertible senior notes due 2022						Payment of 0.875% convertible senior notes due 2022	$	(1,156.5)	$	—
Net proceeds from commercial paper borrowings						Net proceeds from commercial paper borrowings	930.7		—
Repayment of borrowings (maturities greater than 90 days)	Repayment of borrowings (maturities greater than 90 days)	(611.1)		(250.0)		Repayment of borrowings (maturities greater than 90 days)	—		(611.1)

Payment of common stock cash dividend to shareholders	Payment of common stock cash dividend to shareholders	(47.4)		(47.1)		Payment of common stock cash dividend to shareholders	(25.1)		—
Payment of mandatory convertible preferred stock cash dividend to shareholders	Payment of mandatory convertible preferred stock cash dividend to shareholders	(34.5)		(17.3)		Payment of mandatory convertible preferred stock cash dividend to shareholders	—		(23.7)
Repurchase of common shares						Repurchase of common shares	(63.8)		(17.3)
All other financing activities	All other financing activities	25.2		(10.0)		All other financing activities	(17.9)		(2.8)
Total financing cash used in continuing operations	Total financing cash used in continuing operations	$	(667.8)	$	(724.6)	Total financing cash used in continuing operations	$	(332.6)	$	(654.9)

Operating Activities

Operating cash flows from continuing operations can fluctuate significantly from period-to-period as working capital needs and the timing of payments for income taxes, pension funding, and other items impact reported cash flows.

Operating cash flows from continuing operations were ~~$443~~$215 million during the first ~~six months of 2021,~~quarter, an increase of ~~$12~~$63 million, or 3%41%, as compared to the comparable period of ~~2020.~~2021. The year-over-year change in operating cash flows from continuing operations was primarily attributable to the following factors:

•Year-over-year increases of $31.9 million in Operating cash flows ~~were impacted by higher~~from net earnings ~~for the first six months~~from continuing operations, net of 2021 as compared to the comparable period in 2020. Net earnings for the six month period ended July 2, 2021 were impacted by a year-over-year increase in operating profit of $191 million, a decrease in net interest expense of $22 million associated with the repayment of debt, a gain on the Retained Vontier Shares of $57 million and a gain on litigation dismissal of $26 million, which were partially offset by the lossnon-cash expenses (Depreciation, Amortization, Stock-based compensation, Loss on extinguishment of debt ~~of $105 million. The gain~~and Gain on ~~the Retained~~investment in Vontier ~~Shares, the loss on the extinguishment of debt, and gain on litigation dismissal are non-cash items that impact net earnings without a corresponding impact to operating cash flows.~~Corporation)

•The aggregate of accounts receivable, inventories, and trade accounts payable used ~~$27~~$25 million of cash during the first ~~six months~~quarter of ~~2021~~2022 as compared to ~~providing $111~~using $44 million in the comparable period of ~~2020.~~2021. 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 generally 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 ~~$75~~$63 million of cash during the first ~~six months~~quarter of ~~2021~~2022 as compared to using ~~$22~~$77 million of cash in the comparable period of ~~2020.~~2021. The ~~year over year change was largely~~year-over-year changes were driven by ~~various~~reduced tax cash payments, timing on deferred revenue, partially offset by higher payments for employee compensation and ~~benefit payments.~~benefits.

Investing Activities

Investing cash flows from continuing operations consist primarily of cash paid for acquisitions and capital ~~expenditures. Net cash used in investing activities from continuing operations decreased $27~~expenditures, and increased $9.3 million during the ~~six month period ended July 2, 2021~~first quarter as compared to the comparable period of ~~2020,~~2021. The increase in investing cash flows was primarily due to a year-over-year ~~decreases~~increase in capital expenditures of ~~$28 million largely due to higher spending in the comparable period in 2020 related to the integration of the ASP business.~~

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approximately $10 million.

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 revenue arrangements with customers. For the year ending December 31, ~~2021,~~2022, we expect capital spending to be ~~in a range between~~ approximately ~~$60~~$80-100 million, ~~and $70 million, though~~although actual expenditures will ultimately depend on business conditions.

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Financing Activities and Indebtedness

Financing cash flows from continuing operations consist primarily of cash flows associated with the issuance of equity, the issuance and repayments of debt and commercial paper, and payments of quarterly cash dividends to shareholders.

Financing activities from continuing operations used cash of ~~$668~~$333 million during the ~~six~~three month period ended ~~July 2, 2021,~~April 1, 2022, reflecting the following transactions:

•On ~~January 21,~~February 15, 2022, the maturity date of the Convertible Notes, Fortive repaid, in cash, $1.2 billion in outstanding principal and accrued interest thereon.

•During the first quarter, we incurred $931 million in net commercial paper borrowings under the U.S. dollar-denominated commercial paper program, which had a weighted annual effective rate of 0.91% and a weighted average remaining maturity of approximately 39 days.

•During the first quarter we repurchased 1,000,000 shares for approximately $64 million under our share repurchase program.

In the comparable 2021 ~~we repaid~~period, financing activities from continuing operations used $655 million of cash, reflecting payment of the remaining $317 million outstanding of the Delayed-Draw Term ~~Loan Due~~loan due April 2020, ~~using the cash proceeds received from Vontier in the Vontier Separation.~~

•~~On February 9, 2021, we repurchased~~and repurchase of $281 million of the ~~0.875%~~ Convertible Senior Notes due 2022 using the remaining cash proceeds received from Vontier in the Separation and other cash on hand. In connection with the repurchase, we recorded a loss on debt extinguishment during the three months ended July 2, 2021 of $10.5 million.

In the comparable 2020 period, financing activities from continuing operations used $725 million of cash, reflecting borrowings from our Term Loan due March 2021, which were more than offset by repayments of commercial paper of $1.1 billion and $250 million of our 2020 Term Loan.Notes.

On January 19, 2021, we completed the non-cash Debt-for-Equity Exchange of 33.5 million shares of common stock of Vontier, representing all of the Retained Vontier Shares, for $1.1 billion in aggregate principal amount of indebtedness of the Company held by Goldman Sachs & Co.~~, including (i) all $400.0 million of the Term Loan due March 2021 and (ii) $683.2 million of the Term Loan due May 2021.~~ We recorded a loss on extinguishment of the debt included in the Debt-for-Equity Exchange of $94.4 million in the ~~six~~three month period ended ~~July 2,~~April 1, 2021.

Refer to Note 65 to the consolidated condensed financial statements for information regarding our financing activities and indebtedness.

Aggregate cash payments for ~~preferred and~~ common stock dividends paid to shareholders during the ~~six month period ended July 2, 2021~~first quarter were ~~$82~~$25 million and are recorded as dividends to shareholders in the Consolidated Condensed Statement of Changes in Equity and the Consolidated Condensed Statement of Cash Flows.

On April 7, 2022, we declared a regular quarterly cash dividend of $0.07 per share payable on June 24, 2022 to common stockholders of record on May 27, 2022.

Cash and Cash Requirements

As of ~~July 2, 2021,~~April 1, 2022, we held approximately ~~$1.6 billion~~$684 million of cash and equivalents that were invested in highly liquid investment-grade instruments with a maturity of 90 days or less that yielded insignificant interest income during the three ~~and six month periods~~period ended ~~July 2, 2021.~~April 1, 2022. Approximately ~~40%~~90% of the ~~$1.6 billion~~$684 million of cash and equivalents we held as of ~~July 2, 2021~~April 1, 2022 was held outside of the United States.

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, fund 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 and repayment of maturing debt, we may also borrow under our commercial paper programs or credit facilities or 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. We also may from time to time access the capital markets, including to take advantage of favorable interest rate environments or other market conditions.

Foreign cumulative earnings remain subject to foreign remittance taxes. 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. For most of our foreign operations, we make an assertion regarding the amount of earnings in excess of intended repatriation that are expected to be held for indefinite reinvestment. No provisions for foreign remittance taxes have been made with respect to earnings that are planned to be reinvested indefinitely. The amount of foreign remittance taxes that may be applicable to such earnings is not readily determinable given local law restrictions that may apply to a portion of such earnings, unknown changes in foreign tax law that may occur during the applicable restriction periods caused by applicable local corporate law for cash repatriation, and the various tax planning alternatives we could employ if we repatriated these earnings.

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As of ~~July 2, 2021,~~April 1, 2022, we expect to have sufficient liquidity to satisfy our cash needs for the foreseeable future.

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CRITICAL ACCOUNTING ESTIMATES

There were no material changes during the three ~~and six~~ month ~~periods~~period ended ~~July 2, 2021~~April 1, 2022 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 ~~2020~~2021 Annual Report on Form 10-K.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our concentrations of credit risk arising from receivables from customers are limited due to the diversity of our customers. Our businesses perform credit evaluations of their customers’ financial conditions as appropriate and also obtain collateral or other security when appropriate.

Additional 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 ~~2020~~2021 Annual Report on Form 10-K. There were no material changes during the three ~~and six~~ month periods ended ~~July 2, 2021~~April 1, 2022 to the information reported in our ~~2020~~2021 Annual Report on Form 10-K relating to our evaluation of interest rate, foreign currency exchange, and commodity price risk.

ITEM 4. CONTROLS AND PROCEDURES

Our management, with the participation of the President and Chief Executive Officer, and the 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 the 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 Relating to Forward-Looking Statements,” in Part I - Item 2 of this Form 10-Q and in the “Risk Factors” section of our ~~2020~~2021 Annual Report on Form 10-K. There were no material changes during the quarter ended ~~July 2, 2021~~April 1, 2022 to the risk factors reported in the “Risk Factors” section of our ~~2020~~2021 Annual Report on Form 10-K.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On February 17, 2022, the Company's Board of Directors approved a share repurchase program authorizing the Company to repurchase up to 20 million shares of the Company's outstanding common stock from time to time on the open market or in privately negotiated transactions. There is no expiration date for the repurchase program, and the timing and amount of repurchases under the program are determined by the Company's management based on market conditions and other factors. The repurchase program may be suspended or discontinued at any time by the Board of Directors. During the quarter ended April 1, 2022, the Company purchased 1,000,000 shares of its common stock at an average price of $63.74 per share, with 19 million shares remaining authorized under the share repurchase program at the end of the quarter ended April 1, 2022.

In addition, in connection with the vesting of Restricted Stock Awards ("RSAs") of the Company granted to certain employees and in accordance with the terms of the Company's 2016 Stock Incentive Plan, the Company withheld 14,033 shares of its common stock under the RSAs based on the closing price of $62.56 per share to offset tax withholding that arose upon vesting of such RSAs. There were no RSAs that remained outstanding at the end of the quarter ended April 1, 2022.

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The following table provides details about our share repurchases during the fiscal quarter ended April 1, 2022.


Period	Total number of shares (or units) purchased (1)	Average price paid per share (or unit) (1)		Total number of shares (or units) purchased as part of publicly announced plans or programs	Maximum number (or approximate dollar value) of shares (or units) that may yet be purchased under the plans or programs
Jan 1 - Jan 31	—	$	—	N/A	N/A
Feb 1 - Feb 28	1,014,033	63.62		1,000,000	19,000,000
Mar 1 - Apr 1	—	—		N/A	N/A
Total	1,014,033	$	63.62	1,000,000	19,000,000

(1) The total number of shares of common stock purchased during the quarter ended April 1, 2022 includes (i) 1,000,000 shares purchased at an average price of $63.74 per share in February 2022 and (iii) 14,033 shares of common stock under the RSAs based on the closing price of $62.56 per share in February 2022 to offset tax withholding obligations that arose upon vesting of the RSAs.

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ITEM 6. EXHIBITS



Exhibit Number						Description

3.1						Restated Certificate of Incorporation of Fortive ~~Corporation.~~Corporation (incorporated by reference to Exhibit 3.1 to Fortive Corporation’s Quarterly Report on Form 10-Q for the quarter ended July 2, 2021, 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~~ 1110 ~~, 20~~-K f 21or the ,fisca l year ended December 3 1, 2021, File No 1-37654).

10.1						Form of Fortive Corporation Performance Stock Unit Agreement*

31.1						Certification of Chief Executive Officer p ~~ursuant~~pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2						Certification of Chief Financial Officer p ~~ursuant~~pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1						Certification of Chief Executive Officer p ~~ursuant~~ pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2						Certification of Chief Financial Officer p ~~ursuant~~ pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS						XBRL Instance Document (1) - the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.

101.SCH						Inline XBRL Taxonomy Extension Schema Document (1)

101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document (1)

101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document (1)

101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document (1)

101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document (1)

104						The cover page from this Quarterly Report on Form 10-Q for the quarter ended ~~July 2, 2021,~~April 1, 2022, formatted in Inline XBRL and contained in Exhibit 101

*Indicates management contract or compensatory plan, contract or arrangement

(1) Exhibit 101 to this report includes the following documents formatted in Inline XBRL (Extensible Business Reporting Language): (i) Consolidated Condensed Balance Sheets as of ~~July 2, 2021~~April 1, 2022 and December 31, ~~2020,~~2021, (ii) Consolidated Condensed Statements of Earnings for the three ~~and six~~ month periods ended ~~July~~April 1, 2022 and April 2, 2021, ~~and June 26, 2020,~~ (iii) Consolidated Condensed Statements of Comprehensive Income for the three ~~and six~~ month periods ended ~~July~~April 1, 2022 and April 2, 2021, ~~and June 26, 2020,~~ (iv) Consolidated Condensed Statement of Changes in Equity for the three month periods ended ~~July~~April 1, 2022 and April 2, 2021, ~~and June 26, 2020,~~ (v) Consolidated Condensed Statements of Cash Flows for the ~~six~~three month periods ended ~~July~~April 1, 2022 and April 2, 2021, ~~and June 26, 2020,~~ and (vi) Notes to Consolidated Condensed Financial Statements.

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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 29, 2021~~April 28, 2022	By:	/s/ Charles E. McLaughlin
		Charles E. McLaughlin
		Senior Vice President and Chief Financial Officer

Date: ~~July 29, 2021~~April 28, 2022	By:	/s/ Christopher M. Mulhall
		Christopher M. Mulhall
		Chief Accounting Officer

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	% Change Three Months Ended July 2, 2021 vs. Comparable 2020 Period		% Change Six Months Ended July 2, 2021 vs. Comparable 2020 Period
Total revenue growth (GAAP)	26.7	%	20.0	%
Existing businesses (Non-GAAP)	21.3	%	15.0	%
Acquisitions (Non-GAAP)	2.1	%	2.1	%
Currency exchange rates (Non-GAAP)	3.3	%	2.9	%