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What changed in Fortive's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Fortive's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+322 added−323 removedSource: 10-K (2025-02-25) vs 10-K (2024-02-27)

Top changes in Fortive's 2024 10-K

322 paragraphs added · 323 removed · 254 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

43 edited+12 added−7 removed59 unchanged
Biggest changeWe are required to adhere to the Current Good Manufacturing Practices requirements, as set forth in the Quality Systems Regulation, as well as other applicable standards which require manufacturers, including third-party manufacturers, to follow stringent design, testing, control, documentation, and other quality assurance procedures during all phases of the design and manufacturing process. 8 Table of Contents We must also comply with global post-market surveillance regulations, including adverse event reporting requirements, which require that we review and report to the FDA and other comparable foreign authorities any incident in which our products may have caused or contributed to a death or serious injury.
Biggest changeWe are required to adhere to the Current Good Manufacturing Practices requirements, as set forth in the Quality Systems Regulation, as well as other applicable standards which require manufacturers, including third-party manufacturers, to follow stringent design, testing, control, documentation, and other quality assurance procedures during all phases of the design and manufacturing process.
Precision Technologies Our Precision Technologies segment helps solve tough technical challenges to speed breakthroughs in a wide range of applications, from food and beverage production and manufacturing to next-generation electric vehicles and clean energy, as our customers seek new test solutions to enable the electrification and connectivity of everything.
Our Precision Technologies segment helps solve tough technical challenges to speed breakthroughs in a wide range of applications, from food and beverage production and manufacturing to next-generation electric vehicles and clean energy, as our customers seek new test solutions to enable the electrification and connectivity of everything.
Our expertise in materials, methods and measurements are reflected in our electrical test & measurement, sensing and material technologies offered to a broad set of customers and vertical end markets, including industrial, power and energy, automotive, medical equipment, food and beverage, aerospace and defense, semiconductor, and other general industries.
Our expertise in materials, methods and measurements are reflected in our electrical test & measurement and sensing and material technologies offered to a broad set of customers and vertical end markets, including industrial, power and energy, automotive, medical equipment, food and beverage, aerospace and defense, semiconductor, and other general industries.
Our Performance and Development for Growth processes drive results and career growth for our global teams. Performance for Growth rigorously deploys our strategies into cascaded goals throughout the organization, while Development for Growth translates our beliefs and values into desired leader competencies, at all levels of the organization.
Our Performance and Development processes drive results and career growth for our global teams. Performance for Growth rigorously deploys our strategies into cascaded goals throughout the organization, while Development for Growth translates our beliefs and values into desired leader competencies, at all levels of the organization.
Together, these processes provide a roadmap for the way we work, deliver results, and build high-performing teams. Additionally, we design our Total Rewards programs to attract and retain talented, curious people with a growth mindset and a passion for innovation, collaboration, and continuous improvement.
Together, these provide a roadmap for the way we work, deliver results, and build high-performing teams. Additionally, we design our Total Rewards programs to attract and retain talented, curious people with a growth mindset and a passion for innovation, collaboration, and continuous improvement.
Products and services in our Advanced Healthcare Solutions segment are marketed under a variety of brands, including ASP, CENSIS, CENSITRAC, EVOTECH, FLUKE BIOMEDICAL, INVETECH, LANDAUER, PROVATION, RAYSAFE, and STERRAD. ************************************ The following discussion includes information common to all of our segments.
Products and services in our Advanced Healthcare Solutions segment are marketed under a variety of brands, including ASP, CENSIS, CENSITRAC, EVOTECH, FLUKE BIOMEDICAL, LANDAUER, PROVATION, RAYSAFE, and STERRAD. ************************************ The following discussion includes information common to all of our segments.
Although the LGPD shares similarities with the GDPR, it also contains a number of unique features, including specific legal bases not found in the GDPR that allow an organization to process personal data and requirements for the role of a data protection officer.
Although the LGPD shares similarities with the GDPR, it also contains a number of unique features, including specific legal bases not found in the GDPR that allow an organization to process personal data and specific requirements for the role or appointment of a data protection officer.
While the remediation efforts taken by certain jurisdictions in response to the COVID-19 pandemic and the disruptions from the Ukraine/Russia conflict have raised material and shipping costs, our supply chain was responsive to these dynamics, and we implemented solutions, including through FBS and working collaboratively with our suppliers, to effectively support our operations, and help countermeasure production material shortages and distribution limitations.
While the remediation efforts taken by certain jurisdictions in response to events, such as the COVID-19 pandemic and the disruptions from the Ukraine/Russia conflict, have raised material and shipping costs, our supply chain was responsive to these dynamics, and we implemented solutions, including through FBS and working collaboratively with our suppliers, to effectively support our operations, and help countermeasure production material shortages and distribution limitations.
Key competitive factors vary among our businesses and product and service lines, but include the specific factors noted above with respect to each particular 6 Table of Contents business and typically also include price, quality, performance, delivery speed, applications expertise, distribution channel access, service and support, technology and innovation, breadth of product, service and software offerings, and brand name recognition.
Key competitive factors vary among our businesses and product and service lines, but include the specific factors noted above with respect to each particular business and typically also include price, quality, performance, delivery speed, applications expertise, distribution channel access, service and support, technology and innovation, breadth of product, service and software offerings, and brand name recognition.
For a discussion of the environmental laws and regulations that our operations, products, and services are subject to and other environmental contingencies, please refer to Note 14 to the consolidated financial statements included in this Annual Report.
For a discussion of the environmental laws and regulations that our operations, products, and services are subject to and other environmental contingencies, please refer to Note 13 to the consolidated financial statements included in this Annual Report.
For a further discussion of risks related to the materials and components required for our operations, please refer to “Item 1A. Risk Factors.” Intellectual Property We own numerous patents, trademarks, copyrights, and trade secrets and hold licenses to use intellectual property owned by others.
For a further discussion of risks related to the materials and components required for our operations, please refer to “Item 1A. Risk Factors.” 6 Table of Contents Intellectual Property We own numerous patents, trademarks, copyrights, and trade secrets and hold licenses to use intellectual property owned by others.
Our operations throughout the world, including in developing countries with heightened risks of 9 Table of Contents corruption, and interactions with individuals who are considered public officials under these laws, such as healthcare professionals in countries with state-run healthcare systems, expose us to the risk of violating these laws.
Our operations throughout the world, including in developing countries with heightened risks of corruption, and interactions with individuals who are considered public officials under these laws, such as healthcare professionals in countries with state-run healthcare systems, expose us to the risk of violating these laws.
Fortive Business System Our teams across our operating companies are united by our culture of continuous improvement – characterized by the high expectations, inclusion, humility, and transparency embodied in the Fortive Business System (“FBS”). This cultural foundation 4 Table of Contents is reinforced by the rigor of our disciplined operating cadence.
Fortive Business System Our teams across our operating companies are united by our culture of continuous improvement – characterized by the high expectations, inclusion, humility, and transparency embodied in the Fortive Business System (“FBS”). This cultural foundation is reinforced by the rigor of our disciplined operating cadence.
Department of Treasury, Office of Foreign Assets Control, which implement economic sanctions imposed against designated countries, governments, and persons based on United States foreign policy and national security considerations; and • the import regulations administered by U.S.
Department of Treasury, Office of Foreign Assets Control, which implement economic sanctions imposed against designated countries, governments, and persons based on United States foreign policy and national security considerations; and • the import regulations administered by U.S. Customs and Border Protection.
For us. For growth. Our people strategy is defined by our inclusive growth culture and is advanced through FBS and our career development and reward systems. We continually measure, review, and refine our strategy through measured employee experience processes. These key elements enable us to accelerate progress for our customers, our teams, and the world.
Our people strategy is defined by this inclusive growth culture and is advanced through FBS and our career development and reward systems. We continually measure, review, and refine our people strategy through measured employee experience processes. These key elements enable us to accelerate progress for our customers, our teams, and the world. Inclusive Growth Culture We are more together.
Customers for these products and services 5 Table of Contents include design engineers for advanced electronic devices and equipment, process and quality engineers focused on improved process capability and productivity, facility maintenance managers driving increased uptime, and other customers for whom precise measurement, reliability, and compliance are critical in their applications.
Customers for these products and services include design engineers for advanced electronic devices and equipment, process and quality engineers focused on improved process capability and productivity, facility maintenance managers driving increased uptime, and other customers for whom precise measurement, reliability, and compliance are critical in their applications.
Our offerings include instrument sterilization solutions, instrument tracking, cell therapy equipment design and manufacturing, biomedical test tools, radiation detection and safety monitoring, and end-to-end clinical productivity software and solutions. Our healthcare offerings help ensure critical safety standards are met, instruments and operating rooms are working at peak performance, and complex procedures are followed accurately in these mission-critical healthcare environments.
Our offerings include instrument sterilization solutions, instrument tracking, biomedical test tools, radiation detection and safety monitoring, and end-to-end clinical productivity software and solutions. Our healthcare offerings help ensure critical safety standards are met, instruments and operating rooms are working at peak performance, and complex procedures are followed accurately in these mission-critical healthcare environments.
Most of our sales in non-U.S. markets are made by our subsidiaries located outside the United States, though we also sell directly from the United States into non-U.S. markets through various representatives and distributors and, in some cases, directly. In countries with low sales volumes, we generally sell through representatives and distributors.
Most of our sales in non-U.S. markets are made by our subsidiaries located outside the United States, though we also sell directly from the United States into non-U.S. markets through various representatives and distributors and, in some cases, directly.
If we are found to have violated laws and regulations, it could materially adversely affect our business, reputation, results of operations and financial condition. Whistleblower Laws We operate in jurisdictions, such as the U.S. and Europe, with significant legal whistleblower protection compliance reports for potential violations internally and to government authorities.
If we are found to have violated laws and regulations, it could materially adversely affect our business, reputation, results of operations and financial condition. Whistleblower Laws We operate in jurisdictions, such as the U.S. and European Union, with significant legal protection compliance for whistleblowers who make compliance reports about potential violations internally and to government authorities.
Our FBS and robust career development and reward systems advance our people strategy by attracting, growing, and retaining the exceptional people we need now and in the future. These business and career development systems strengthen our employee value proposition, build our employer brand, drive professional growth for our employees and results for our customers.
Our career development and reward systems advance our people strategy by attracting, growing, and retaining the exceptional people we need now and in the future. These business and career development systems strengthen our ability to deliver our employee value proposition, build our employer brand, drive professional growth for our people and results for our customers.
Collectively, these experiences build skills, strengthen performance, and prepare our employees for challenging opportunities. 7 Table of Contents With our strong and evolving portfolio, employees have the opportunity to accelerate their career across multiple industries, meaningfully contributing to customer success and impact in the world. Employee Experience and Communication Our promise to employees is ‒ For you. For us.
Collectively, these experiences build skills, strengthen performance, and prepare our people for challenging opportunities and outsized impact. With our strong and evolving portfolio, our people have the opportunity to accelerate their career across multiple industries, meaningfully contributing to customer success and impact in the world. Employee Experience and Feedback Our promise to employees is ‒ For you. For us.
In addition, the government may assert that a claim including items and services resulting from a violation of the U.S. Federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the civil False Claims Act. Similar laws and regulations apply in many foreign countries.
In addition, the government may assert that a claim including items and services resulting from a violation of the U.S. Federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the civil False Claims Act.
Available Information We maintain an internet website at www.fortive.com where we make available free of charge our annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K and amendments to those reports, filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicable after filing such material with, or furnishing such material to, the SEC.
In countries with low sales volumes, we generally sell through representatives and distributors. 11 Table of Contents Available Information We maintain an internet website at www.fortive.com where we make available free of charge our annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K and amendments to those reports, filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicable after filing such material with, or furnishing such material to, the SEC.
We are committed to continued transparency by publicly sharing our workforce representation and inclusion results and aspirational goals through our Proxy Statement, EEO-1 report, website, and annual Sustainability Report. Business, Career Development, and Reward Systems Our culture of continuous improvement inspires us to keep experimenting, growing, and learning.
We are committed to continued transparency by publicly sharing our workforce representation and inclusion results through our website (where we provide our EEO-1 report), and our annual Sustainability Report. 7 Table of Contents Business, Career Development, and Reward Systems Our culture of continuous improvement inspires us to keep experimenting, growing, and learning.
In particular, a broad privacy law in California, the California Consumer Privacy Act (“CCPA”), came into effect in January 2020. The CCPA has some of the same features as the GDPR (discussed below), and has already prompted several other states to consider similar legislation.
In particular, a broad privacy law in California, the California Consumer Privacy Act (“CCPA”), which came into effect in January 2020 and was amended by the California Privacy Rights Act effective January 2023, has some of the same features as the GDPR (discussed below) and has prompted several other states to enact or consider similar legislation.
These are not the only regulations that our businesses must comply with. For a description of the risks related to the regulations that our businesses are subject to, please refer to “Item 1A.
For a description of the risks related to the regulations that our businesses are subject to, please refer to “Item 1A.
Across the European Union, the General Data Protection Regulation (“GDPR”) imposes strict requirements in how we collect, transmit, process, and retain personal data, including, among other things, in certain circumstances a requirement for prompt notification of data breaches to supervisory authorities and/or to data subjects, with the risk of significant fines for non-compliance.
Across the European Economic Area, the General Data Protection Regulation (“GDPR”), and similar laws in the United Kingdom and Switzerland impose strict requirements on how we process personal data, including, among other things, in certain circumstances a requirement for prompt notification of data breaches to supervisory authorities and/or to data subjects, with the risk of significant fines for non-compliance.
For example, sales of capital equipment and sterilization consumables are often stronger in the fourth calendar quarter and sales to OEMs are often stronger immediately preceding and following the launch of new products. However, as a whole, we are not subject to material seasonality.
For example, sales of capital equipment and sterilization consumables are often stronger in the fourth calendar quarter and sales to OEMs are often stronger immediately preceding and following the launch of new products. However, as a whole, we are not subject to material seasonality. Human Capital Management Fortive is a global team, over 18,000 strong, energized by a powerful purpose.
Risk Factors.” Export/Import Compliance We are required to comply with various U.S. export/import control and economic sanctions laws, such as: • the International Traffic in Arms Regulations administered by the U.S.
Risk Factors.” 10 Table of Contents Export/Import Regulations We sell products and services to customers all over the world and are required to comply with various U.S. export/import control and economic sanctions laws, such as: • the International Traffic in Arms Regulations administered by the U.S.
For a discussion of risks related to government contracting requirements, please refer to “Item 1A. Risk Factors.” Regulatory Matters We face extensive government regulation both within and outside the United States relating to the development, manufacture, marketing, sale, and distribution of our products, software, and services. The following sections describe certain significant regulations that we are subject to.
Risk Factors.” Regulatory Matters We face extensive government regulation both within and outside the United States relating to the development, manufacture, marketing, sale, and distribution of our products, software, and services. The following sections describe certain significant regulations that we are subject to. These are not the only regulations that our businesses must comply with.
Risk Factors.” Competition Laws Our global operations are subject to complex and changing antitrust and competition laws and regulations, including conflicting laws and regulations in different jurisdictions that have increased the cost of conducting our global operations.
For a discussion of risks related to export/import control and economic sanctions laws, please refer to “Item 1A. Risk Factors.” Competition Laws Our global operations are subject to complex and changing antitrust and competition laws and regulations, including conflicting laws and regulations in different jurisdictions that have increased the cost of conducting our global operations.
These offerings include electrical test & measurement, facility and asset lifecycle software applications, connected worker safety and compliance solutions across a range of vertical end markets, including manufacturing, process industries, healthcare, utilities and power, communications and electronics, among others.
These offerings include electrical test & measurement, facility and asset lifecycle software applications, connected worker safety and compliance solutions across a range of vertical end markets, including manufacturing, process industries, healthcare, utilities and power, communications and electronics, among others. 5 Table of Contents Typical users of these safety, productivity and sustainability solutions include electrical engineers, electricians, electronic technicians, EHS professionals, network technicians, facility managers, first-responders, and maintenance professionals.
People Strategy (Human Capital Management) Fortive is a global team, over 18,000 strong, energized by a powerful purpose. Our people strategy centers on empowering inclusive teams working together to solve problems no one could solve alone. We intentionally seek out different skills, backgrounds, and voices to deliver results for our customers and fulfill our employee promise – For you.
Our people strategy centers on empowering inclusive teams working together to solve problems no one could solve alone. We intentionally seek out different skills, backgrounds, and voices to deliver results for our customers and fulfill our employee promise – For you. For us. For growth.
In the European Union, the Whistleblower Directive has been implemented that affords significant protections to internal and external whistleblowers. Non-compliance with the Whistleblower Directive can result in fines and other penalties against entities. In the U.S., the Securities and Exchange Commission can provide monetary awards to whistleblowers that report securities law violations to the Commission.
Non-compliance with the Whistleblower Directive can result in fines and other penalties against entities. In the U.S., the Securities and Exchange Commission and the Department of Justice can provide monetary awards to whistleblowers that report securities law violations that are subsequently pursued.
After a device has received 510(k) clearance for a specific intended use, any change or modification that significantly affects its safety or effectiveness, such as a significant change in the design, materials, method of manufacture, or intended use, may require a new 510(k) clearance and payment of an FDA user fee.
After a device has received 510(k) clearance for a specific intended use, any change or modification that significantly affects its safety or effectiveness, such as a significant change in the design, materials, method of manufacture, or intended use, may require a new 510(k) clearance and payment of an FDA user fee. 8 Table of Contents Market access, sales, and marketing of medical devices in non-U.S. countries are subject to foreign regulatory requirements that vary widely from country to country.
Federal consumer protection and unfair competition laws broadly regulate marketplace activities and activities that potentially harm consumers.
Similar laws and regulations apply in many foreign countries. 9 Table of Contents Federal consumer protection and unfair competition laws broadly regulate marketplace activities and activities that potentially harm consumers.
Typical users of these safety, productivity and sustainability solutions include electrical engineers, electricians, electronic technicians, EHS professionals, network technicians, facility managers, first-responders, and maintenance professionals. Products and services within our Intelligent Operating Solutions segment are marketed under a variety of leading brands, including ACCRUENT, FLUKE, GORDIAN, INDUSTRIAL SCIENTIFIC, INTELEX, PRUFTECHNIK, and SERVICECHANNEL.
Products and services within our Intelligent Operating Solutions segment are marketed under a variety of leading brands, including ACCRUENT, FLUKE, GORDIAN, INDUSTRIAL SCIENTIFIC, INTELEX, PRUFTECHNIK, and SERVICECHANNEL.
We offer leading programs that inspire and reward superior performance, are equitable, align compensation structure with delivering long-term shareholder value, and foster an inclusive, diverse, and healthy global workforce. We also invest in our people at every level through our growth and development experiences.
We offer leading programs that inspire and reward superior performance, are equitable, and foster an inclusive, diverse, and healthy global workforce. We also invest in our people at every level through our growth and development experiences. These experiences range from leadership learning and FBS immersion to hands-on skill building in each of our three FBS pillars—growth, lean, and leadership.
Inclusive Growth Culture We are more together. Our culture sets the tone for Fortive’s people strategy and drives Fortive’s success. Along with FBS, Inclusion, Diversity, and Equity (“IDE”) are core enablers of our strategy and culture. We know that an inclusive, diverse, and equitable workforce creates extraordinary long-term value for our employees and shareholders.
Our inclusive growth culture sets the tone for Fortive’s people strategy and drives Fortive’s success. We know that a workforce empowered by inclusivity, continuous improvement, and FBS creates extraordinary long-term value for our customers, people and shareholders.
We are committed to IDE in all its forms. We are focused on recruiting from a wide variety of diverse candidate sources, cultivating an inclusive environment where everyone can succeed, providing training on inclusion and unconscious bias, and monitoring policies and practices to ensure that no group is inadvertently disadvantaged.
We are focused on cultivating an inclusive workplace where everyone can contribute to their fullest potential, attracting and retaining top talent from a wide variety of candidate sources, and sustaining policies and practices to ensure that no group is inadvertently disadvantaged. Fortive is committed to adhering to EEO (equal employment opportunity) principles.
Another part of Fortive’s commitment to IDE is our adherence to EEO (equal employment opportunity) principles. All people are evaluated through a neutral merit-based process. We do not consider race, ethnicity, gender, or any other protected trait in our hiring, promotional, or other processes.
All people are evaluated through a neutral merit-based process. We do not consider race, ethnicity, gender, or any other protected trait in our hiring, promotional, or other processes. Our Board of Directors, along with the Compensation Committee, also oversee our inclusive growth culture practices as an integral part of our people strategy and measurement actions.
Government Contracts Although the substantial majority of our revenue in 2023 was from customers other than governmental entities, each of our segments has agreements relating to the sale of products to government entities. As a result, we are subject to various statutes and regulations that apply to companies doing business with governments and government-owned entities.
Our results continue to inform both management and our Board of Directors on appropriate actions to enhance our culture and overall employee experience. Government Contracts Although the majority of our revenue in 2024 was from customers other than governmental entities, each of our segments has agreements relating to the sale of products and services to government entities.
Customs and Border Protection. 10 Table of Contents Other nations’ governments have implemented similar export/import control and economic sanction regulations, which may affect our operations or transactions subject to their jurisdictions. For a discussion of risks related to export/import control and economic sanctions laws, please refer to “Item 1A.
Other nations’ governments have implemented similar export/import control and economic sanction regulations, which may affect our operations or transactions subject to their jurisdictions. Together these controls and regulations may impose licensing requirements on exports of certain technology and software from the U.S. and may impact our ability to transact business in certain countries or with certain customers.
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To drive FBS, continuous improvement, and IDE accountability at all levels, our VP, Inclusion, Diversity, and Equity works closely with our senior management, IDE Council, and IDE practitioners across our businesses. Our Board of Directors, along with the Compensation Committee, oversee our IDE efforts as part of our people strategy and measurement actions.
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On September 4, 2024, we announced our intention to separate our Precision Technologies segment business into an independent publicly-traded company (the “Separation”), which will be named Ralliant.
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These experiences range from leadership learning and FBS immersion to hands-on skill building in each of our three FBS pillars—growth, lean, and leadership.
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The Separation will create (i) a technology solutions company, retaining the Fortive name, with a portfolio of the brands currently operating under Fortive’s Intelligent Operating Solutions and Advanced Healthcare Solutions business segments, focused on resilient, high-quality recurring growth by delivering productivity and safety to customers, and (ii) a global technology company consisting of our brands currently operating under the Precision Technologies segment with a focus on precision instruments and highly engineered products essential for breakthrough innovation and aligned to powerful secular trends.
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For growth. To achieve this promise, our leaders at all levels of the organization actively seek feedback from our employees and other stakeholders to strengthen our culture. Our employee experience surveys are one of the many ways we actively solicit input. Our employee experience survey approach continues to mature through quarterly touchpoints and leader accountability.
Added
The Separation is intended to qualify as a tax-free spin-off for Fortive shareholders for U.S. federal income tax purposes.
Removed
In our last comprehensive census survey in 2023, over 80% of our global team responded, delivering steady gains in both overall engagement and in inclusion and belonging that resulted in historically high ratings of 78% and 82%, respectively. Our results continue to inform both management and our Board of Directors on appropriate actions to enhance our employee experience.
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The Company is targeting completion of the Separation early in the third quarter of 2025, subject to the satisfaction of certain conditions, including, among others, final approval of Fortive’s Board of Directors, satisfactory completion of financing, receipt of a favorable opinion of legal counsel and/or a private letter ruling from the U.S.
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Market access, sales, and marketing of medical devices in non-U.S. countries are subject to foreign regulatory requirements that vary widely from country to country.
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Internal Revenue Service with respect to the tax treatment of 4 Table of Contents the transaction for U.S. federal income tax purposes, the effectiveness of a Form 10 registration statement filed with the SEC, and other regulatory approvals.
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The CCPA has already been amended several times, including through a November 2020 ballot initiative (called the California Privacy Rights Act) (“CPRA”), which became effective in January 2023.
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Precision Technologies On September 4, 2024, we announced our intention to separate our Precision Technologies segment into an independent publicly traded company, subject to the satisfaction of certain conditions, including, among others, final approval of Fortive’s Board of Directors, satisfactory completion of financing, receipt of a favorable opinion of legal counsel and/or a private letter ruling from the U.S.
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Additionally, after a July 2020 decision from the Court of Justice of the European Union, European regulators are requiring additional safeguards to facilitate the transfer of personal information from the European Union to the United States and other certain jurisdictions.
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Internal Revenue Service with respect to the tax treatment of the transaction for U.S. federal income tax purposes, the effectiveness of a Form 10 registration statement filed with the SEC, and other regulatory approvals.
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For growth. To achieve this promise, our leaders at all levels of the organization actively seek feedback with quarterly touchpoints to strengthen our inclusive growth culture. In our last comprehensive census survey in Q4 2024, over 85% of our global team responded, delivering continued strength in overall engagement and inclusion and belonging at high ratings of 76% and 84%, respectively.
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As a result, we are subject to various statutes and regulations that apply to companies doing business with governments and government-owned entities. For a discussion of risks related to government contracting requirements, please refer to “Item 1A.
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We must also comply with global post-market surveillance regulations, including adverse event reporting requirements, which require that we review and report to the FDA and other comparable foreign authorities any incident in which our products may have caused or contributed to a death or serious injury.
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Regulators throughout Europe also require additional safeguards to facilitate the transfer of personal information outside of Europe.
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We have developed compliance programs and training to prevent violations of these programs and regulations, and we regularly monitor changes in the law and regulations. Changes in these or other import or export laws and regulations may restrict or further restrict our ability to sell certain products and solutions and may require us to develop additional compliance programs and training.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

88 edited+23 added−25 removed90 unchanged
Biggest changeThese acquisitions and strategic relationships involve a number of financial, accounting, managerial, operational, legal, compliance, and other risks and challenges, including the following, any of which could adversely affect our financial statements: • any acquired business, technology, service, or product could under-perform relative to our expectations and the price that we paid for it, or not perform in accordance with our anticipated timetable; • we may incur or assume significant debt in connection with our acquisitions or strategic relationships; • acquisitions or strategic relationships could cause our financial results to differ from our own or the investment community’s expectations in any given period, or over the long-term; • pre-closing and post-closing earnings charges could adversely impact operating results in any given period, and the impact may be substantially different from period to period; • acquisitions or strategic relationships could create demands on our management, operational resources, and financial and internal control systems that we are unable to effectively address; • we could experience difficulty in integrating personnel, operations, and financial and other controls and systems and retaining key employees and customers; • we may be unable to achieve cost savings or other synergies anticipated in connection with an acquisition or strategic relationship; • we may assume by acquisition or strategic relationship unknown liabilities, known contingent liabilities that become realized, known liabilities that prove greater than anticipated, internal control deficiencies, or exposure to regulatory sanctions resulting from the acquired company’s activities and the realization of any of these liabilities or deficiencies may increase our expenses, adversely affect our financial position, or cause us to fail to meet our public financial reporting obligations; • in connection with acquisitions, we may enter into post-closing financial arrangements such as purchase price adjustments, earn-out obligations, and indemnification obligations, which may have unpredictable financial results; • in connection with acquisitions, we have recorded significant goodwill and other intangible assets on our balance sheet and if we are not able to realize the value of these assets, we may be required to incur charges relating to the impairment of these assets; and • we may have interests that diverge from those of strategic partners and we may not be able to direct the management and operations of the strategic relationship in the manner we believe is most appropriate, exposing us to additional risk. 18 Table of Contents 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.
Biggest changeThese acquisitions, investments, joint ventures, and strategic relationships involve a number of financial, accounting, managerial, operational, legal, compliance, and other risks and challenges, including the following, any of which could adversely affect our financial results: • any business, technology, service, or product that we acquire or invest in could under-perform relative to our expectations and the price that we paid for it, or not perform in accordance with our anticipated timetable, or we could fail to operate any such business profitably; • we may incur or assume significant debt in connection with our acquisitions, investments, joint ventures, or strategic relationships, which could also cause a deterioration of our credit ratings, result in increased borrowing costs and interest expense, and diminish our future access to the capital markets; • acquisitions, investments, joint ventures, or strategic relationships could cause our financial results to differ from our own or the investment community’s expectations in any given period, or over the long-term; • pre-closing and post-closing earnings charges could adversely impact operating results in any given period, and the impact may be substantially different from period to period; • acquisitions, investments, joint ventures, or strategic relationships could create demands on our management, operational resources, and financial and internal control systems that we are unable to effectively address; • we could experience difficulty in integrating personnel, operations, and financial and other controls and systems and retaining key employees and customers; • we may be unable to achieve cost savings or other synergies anticipated in connection with an acquisition, investment, joint venture, or strategic relationship; 19 Table of Contents • we may assume by acquisition or strategic relationship unknown liabilities, known contingent liabilities that become realized, known liabilities that prove greater than anticipated, internal control deficiencies, or exposure to regulatory sanctions resulting from the acquired company’s or investee’s activities and the realization of any of these liabilities or deficiencies may increase our expenses, adversely affect our financial position, or cause us to fail to meet our public financial reporting obligations; • in connection with acquisitions and joint ventures, we may enter into post-closing financial arrangements such as purchase price adjustments, earn-out obligations, and indemnification obligations, which may have unpredictable financial results; • in connection with acquisitions and investments, we have recorded significant goodwill and other intangible assets on our balance sheet and if we are not able to realize the value of these assets, we may be required to incur charges relating to the impairment of these assets; and • we may have interests that diverge from those of our joint venture partners or other strategic partners and we may not be able to direct the management and operations of the joint venture or other strategic relationship in the manner we believe is most appropriate, exposing us to additional risk.
In addition, divestitures or other dispositions may dilute our earnings per share, have other adverse financial and accounting impacts and distract management, and disputes may arise with buyers. In addition, we have retained responsibility for and/or have agreed to indemnify buyers against some known and unknown contingent liabilities related to a number of businesses we have sold or disposed.
In addition, divestitures or other dispositions may dilute our earnings per share, have other adverse financial and accounting impacts and distract management, and disputes may arise with buyers. In addition, we have retained responsibility for and/or have agreed to indemnify buyers against some known and unknown contingent liabilities related to a number of businesses we have sold or disposed of.
Any significant change or delay in implementation in any of these regulations or standards (or in the interpretation, application, or enforcement thereof) could reduce or delay demand for our products and services, increase our costs of producing or delay the introduction of new or modified products and services, or could restrict our existing activities, products, and services.
Any significant change or delay in implementation in any of these regulations or standards (or in the interpretation, application, or enforcement thereof) could reduce or delay demand for our products and services, increase our costs of producing or delay the introduction of new or modified products and services, or restrict our existing activities, products, and services.
Acquisitions that align with our portfolio strategy may be difficult to identify and execute for a number of reasons, including high valuations, competition among prospective buyers, the availability of affordable funding in the capital markets and the need to satisfy applicable closing conditions and obtain antitrust and other regulatory approvals on acceptable terms.
Acquisitions and investments that align with our portfolio strategy may be difficult to identify and execute for a number of reasons, including high valuations, competition among prospective buyers, the availability of affordable funding in the capital markets and the need to satisfy applicable closing conditions and obtain antitrust and other regulatory approvals on acceptable terms.
The resolution of these contingencies has not had a material effect on our financial statements but we cannot be certain that this favorable pattern will continue. 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.
The resolution of these contingencies has not had a material effect on our financial results but we cannot be certain that this favorable pattern will continue. 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.
Adverse changes in our relationships with these distributors and other partners, or adverse developments in their financial condition, performance, or purchasing patterns, could adversely affect our financial statements. The levels of inventory maintained by our distributors and other channel partners, and changes in those levels, can also significantly impact our results of operations in any given period.
Adverse changes in our relationships with these distributors and other partners, or adverse developments in their financial condition, performance, or purchasing patterns, could adversely affect our financial results. The levels of inventory maintained by our distributors and other channel partners, and changes in those levels, can also significantly impact our results of operations in any given period.
GAAP could adversely affect our reported financial results and may require significant changes to our internal accounting systems and processes. We prepare our consolidated financial statements in conformity with generally accepted accounting principles in the United States of America (“GAAP”).
GAAP could adversely affect our reported financial results and may require significant changes to our internal accounting systems and processes. We prepare our consolidated financial results in conformity with generally accepted accounting principles in the United States of America (“GAAP”).
We are subject to a variety of litigation and other legal and regulatory proceedings incidental to our business (or the business operations of previously owned entities), including claims for damages arising out of the use of products or services and claims relating to intellectual property matters, employment matters, tax matters, commercial disputes, disputes with our supplier or vendors, competition and sales and trading practices, environmental matters, personal injury, insurance coverage, and acquisition or divestiture-related matters, as well as regulatory investigations or enforcement.
We are subject to a variety of litigation and other legal and regulatory proceedings incidental to our business (or the business operations of previously owned entities), including claims for damages arising out of the use of products or services and claims relating to intellectual property matters, employment matters, tax matters, commercial disputes, disputes with our suppliers or vendors, competition and sales and trading practices, environmental matters, personal injury, insurance coverage, and acquisition or divestiture-related matters, as well as regulatory investigations or enforcement.
Our interpretation and the corresponding amount of income taxes we pay is, and may in the future continue to be, subject to audits by U.S. federal, state, and local tax authorities and by non-U.S. tax authorities.
Our interpretation and the corresponding amount of taxes we pay is, and may in the future continue to be, subject to audits by U.S. federal, state, and local tax authorities and by non-U.S. tax authorities.
If these audits result in payments or assessments different from our reserves, our future results may include unfavorable adjustments to our tax liabilities and our financial statements could be adversely affected.
If these audits result in payments or assessments different from our reserves, our future results may include unfavorable adjustments to our tax liabilities and our financial results could be adversely affected.
Our failure to compete effectively and/or pricing pressures resulting from competition may adversely impact our financial statements, and our expansion into new markets may result in greater-than-expected risks, liabilities and expenses. 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.
Our failure to compete effectively and/or pricing pressures resulting from competition may adversely impact our financial results, and our expansion into new markets may result in greater-than-expected risks, liabilities and expenses. 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.
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. Manufacturing or design defects impacting safety, cybersecurity, or quality issues (or the perception of such issues) for our products and services can lead to personal injury, death, property damage, data loss, or other damages.
Defects and unanticipated use or inadequate disclosure with respect to our products (including software) or services could adversely affect our business, reputation, and financial results. Manufacturing or design defects impacting safety, cybersecurity, or quality issues (or the perception of such issues) for our products and services can lead to personal injury, death, property damage, data loss, or other damages.
Failure to comply with any of these laws could result in civil and criminal, monetary and non-monetary penalties and damage to our reputation. In addition, we cannot provide assurance that our costs of complying with current or future environmental protection and health and safety laws will not exceed our estimates or adversely affect our financial statements.
Failure to comply with any of these laws could result in civil and criminal, monetary and non-monetary penalties and damage to our reputation. In addition, we cannot provide assurance that our costs of complying with current or future environmental protection and health and safety laws will not exceed our estimates or adversely affect our financial results.
The supply chains for our businesses could also be disrupted by supplier capacity constraints, operational or quality issues, bankruptcy or exiting of the business for other reasons, decreased availability of key raw materials or commodities, and external events such as natural disasters, severe weather events that are occurring more frequently or with more intense effects as a result of global climate change, pandemic health issues, war, terrorist actions, governmental actions, and legislative or regulatory changes, among others.
The supply chains for our businesses could also be disrupted by supplier capacity constraints, operational or quality issues, bankruptcy or exiting of the business for other reasons, decreased availability of key raw materials or commodities, and external events such as natural disasters, severe weather events that are occurring more frequently or with more intense effects as a result of global climate change, public health crises, war, terrorist actions, governmental actions, and legislative or regulatory changes, among others.
Our quarterly sales and profits depend substantially on the volume and timing of orders received during the fiscal quarter, which are difficult to forecast. Any decline or lower than expected growth in our served markets could diminish demand for our products and services, which could adversely affect our financial statements.
Our quarterly sales and profits depend substantially on the volume and timing of orders received during the fiscal quarter, which are difficult to forecast. Any decline or lower than expected growth in our served markets could diminish demand for our products and services, which could adversely affect our financial results.
Even if we successfully defend against claims of infringement or misappropriation, we may incur significant costs and diversion of management attention and resources, which could adversely affect our financial statements. 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.
Even if we successfully defend against claims of infringement or misappropriation, we may incur significant costs and diversion of management attention and resources, which could adversely affect our business and financial results. 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 results.
In addition, developments in proceedings in any given period may require us to adjust the loss contingency estimates that we have recorded in our financial statements, record estimates for liabilities or assets that we were previously unable to estimate, or pay cash settlements or judgments. Any of these developments could adversely affect our financial statements in any particular period.
In addition, developments in proceedings in any given period may require us to adjust the loss contingency estimates that we have recorded in our financial results, record estimates for liabilities or assets that we were previously unable to estimate, or pay cash settlements or judgments. Any of these developments could adversely affect our financial results in any particular period.
Overall strengthening of the U.S. dollar during most of fiscal year 2023 has increased the effective price of our products sold in U.S. dollars into other countries, which may require us to lower our prices or adversely affect sales to the extent we do not increase local currency prices.
Overall strengthening of the U.S. dollar during most of fiscal year 2024 has increased the effective price of our products sold in U.S. dollars into other countries, which may require us to lower our prices or adversely affect sales to the extent we do not increase local currency prices.
If we are unable to fully recover higher commodity or component costs through price increases or offset these increases through cost reductions, or if there is a time delay between the increase in costs and our ability to recover or offset these costs, we could experience lower margins and profitability and our financial statements could be adversely affected.
If we are unable to fully recover higher commodity or component costs through price increases or offset these increases through cost reductions, or if there is a time delay between the increase in costs and our ability to recover or offset these costs, we could experience lower margins and profitability and our financial results could be adversely affected.
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. Certain of our businesses sell a significant amount of their products to key distributors and other channel partners that have valuable relationships with customers and end-users.
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 results. Certain of our businesses sell a significant amount of their products to key distributors and other channel partners that have valuable relationships with customers and end-users.
In addition, delays in implementing planned restructuring activities or other productivity improvements, unexpected costs, or failure to meet targeted improvements may diminish the operational or financial benefits we realize from such actions. Any of the circumstances described above could adversely impact our business and financial statements.
In addition, delays in implementing planned restructuring activities or other productivity improvements, unexpected costs, or failure to meet targeted improvements may diminish the operational or financial benefits we realize from such actions. Any of the circumstances described above could adversely impact our business and financial results.
The defense of these lawsuits may divert our management’s attention, we may incur significant expenses in defending these lawsuits, we may experience disruption in supply or sales, and we may be required to pay damage awards or settlements or become subject to equitable remedies that could adversely affect our operations and financial statements.
The defense of these lawsuits may divert our management’s attention, we may incur significant expenses in defending these lawsuits, we may experience disruption in supply or sales, and we may be required to pay damage awards or settlements or become subject to equitable remedies that could adversely affect our operations and financial results.
Significant disruptions in, or breaches in security of, our information technology systems have adversely affected, and in the future could adversely affect, our business.
Disruptions in, or breaches in security of, our information technology systems have adversely affected, and in the future could adversely affect, our business.
In addition, certain of our businesses transact in a currency other than the business’ functional currency, and movements in the transaction currency relative to the functional currency could also result in unfavorable exchange rate effects. We also face exchange rate risk from our investments in subsidiaries owned and operated in foreign countries and borrowings denominated in foreign currencies.
In addition, certain of our businesses transact in a currency other than the business’s functional currency, and movements in the transaction currency relative to the functional currency could also result in unfavorable exchange rate effects. We also face exchange rate risk from our investments in subsidiaries owned and operated in foreign countries and borrowings denominated in foreign currencies.
In addition, regulatory deadlines or industry standard implementation timelines may result in substantially different levels of demand for our products and services from period to period. Our reputation, ability to do business, and financial statements may be impaired by improper conduct by any of our employees, agents, or business partners.
In addition, regulatory deadlines or industry standard implementation timelines may result in substantially different levels of demand for our products and services from period to period. Our reputation, ability to do business, and financial results may be impaired by improper conduct by any of our employees, agents, or business partners.
Any such new or additional legal or regulatory requirements, including extensive disclosure requirements in various jurisdictions, including in the E.U. and domestically, may increase the costs associated with, or disrupt, sourcing, manufacturing and distribution of our products, which may adversely affect our business and financial statements.
Any such new or additional legal or regulatory requirements, including extensive disclosure requirements in various jurisdictions, including in the E.U. and domestically, may increase the costs associated with, or disrupt, sourcing, manufacturing and distribution of our products, which may adversely affect our business and financial results.
Our products and operations are also often subject to the rules of industrial standards bodies such as the International Standards Organization, and failure to comply with these rules could result in withdrawal of certifications needed to sell our products and services and otherwise adversely impact our financial statements.
Our products and operations are also often subject to the rules of industrial standards bodies such as the International Standards Organization, and failure to comply with these rules could result in withdrawal of certifications needed to sell our products and services and otherwise adversely impact our financial results.
If demand for our products is less than we expect, we may experience additional excess and obsolete inventories and be forced to incur additional charges and our profitability may suffer. 12 Table of Contents In addition, some of our businesses purchase certain requirements from sole or limited source suppliers for reasons of quality assurance, cost effectiveness, availability, contractual obligations or uniqueness of design.
If demand for our products is less than we expect, we may experience additional excess and obsolete inventories and be forced to incur additional charges and our profitability may suffer. In addition, some of our businesses purchase certain requirements from sole or limited source suppliers for reasons of quality assurance, cost effectiveness, availability, contractual obligations or uniqueness of design.
We rely on information technology systems, some of which are managed by third parties and some of which are managed on a decentralized, independent basis by our operating companies, to process, transmit, and store electronic information (including sensitive data such as confidential business information and personally identifiable data relating to employees, customers, and other business partners), and to manage or support a variety of critical business processes and activities.
We rely on information technology systems, some of which are managed by third parties and some of which are managed on a decentralized, independent basis by our operating companies, to process, transmit, and store electronic information (including 14 Table of Contents sensitive data such as confidential business information and personally identifiable data relating to employees, customers, and other business partners), and to manage or support a variety of critical business processes and activities.
Our international business, including our business in high-growth markets outside the United States, is subject to risks that are customarily encountered in non-U.S. operations, as well as increased risks due to significant uncertainties related to political and economic changes, including: • interruption in the transportation of materials to us and finished goods to our customers; • impact of geopolitical conflict, including the Russian invasion of Ukraine and the Israel-Hamas war; • differences in terms of sale, including payment terms; • local product preferences and product requirements; • changes in a country’s or region’s political or economic conditions, including changes in relationship with the United States, particularly with respect to China; • trade protection measures, sanctions, increased trade barriers, imposition of significant tariffs on imports or exports, embargoes, and import or export restrictions and requirements; • new conditions to, and possible restrictions of, existing free trade agreements; • epidemics, such as the coronavirus outbreak, that adversely impact travel, production, or demand; • unexpected changes in laws or regulatory requirements, including negative changes in tax laws in the U.S. and in the countries in which we manufacture or sell our products; • limitations on ownership and on repatriation of earnings and cash; • the potential for nationalization of enterprises; • limitations on legal rights and our ability to enforce such rights; • difficulty in staffing and managing widespread operations; • differing labor regulations; • difficulties in implementing restructuring actions on a timely or comprehensive basis; and • differing protection of intellectual property.
Our international business, including our business in high-growth markets outside the United States, is subject to risks that are customarily encountered in non-U.S. operations, as well as increased risks due to significant uncertainties related to political and economic changes, including: • interruption in the transportation of materials to us and finished goods to our customers; • impact of geopolitical conflict; • differences in terms of sale, including payment terms; • local product preferences and product requirements; 17 Table of Contents • changes in a country’s or region’s political or economic conditions, including changes in relationship with the United States, particularly with respect to China; • trade protection measures, sanctions, increased trade barriers, imposition of significant tariffs on imports or exports, embargoes, and import or export restrictions and requirements; • new conditions to, and possible restrictions of, existing free trade agreements; • epidemics, such as the coronavirus outbreak, that adversely impact travel, production, or demand; • unexpected changes in laws or regulatory requirements, including negative changes in tax laws in the U.S. and in countries in which we manufacture or sell our products; • limitations on ownership and on repatriation of earnings and cash; • the potential for nationalization of enterprises; • limitations on legal rights and our ability to enforce such rights; • difficulty in staffing and managing widespread operations; • differing labor regulations; • difficulties in implementing restructuring actions on a timely or comprehensive basis; and • differing protection of intellectual property.
Demand for our products and services is also sensitive to changes in customer order patterns, which may be affected by announced price changes, changes in incentive programs, new product introductions, and customer inventory levels. Any of these factors could adversely affect our growth and results of operations in any given period.
Demand for our products and services is also sensitive to changes in customer order patterns, which 13 Table of Contents may be affected by announced price changes, changes in incentive programs, new product introductions, and customer inventory levels. Any of these factors could adversely affect our growth and results of operations in any given period.
There are many potential bases for liability under the FCA. In addition, we could be held liable under the FCA if we are deemed to “cause” the submission of false or fraudulent claims; and • we are also required to comply with ever changing labor and employment laws and regulations in multiple jurisdictions.
There are many potential bases for liability under the FCA. In addition, we could be held liable under the FCA if we are deemed to “cause” the submission of false or fraudulent claims; and 22 Table of Contents • we are also required to comply with ever changing labor and employment laws and regulations in multiple jurisdictions.
Decreased strength of the U.S. dollar could adversely affect the cost of materials, products and services we purchase overseas. Sales and expenses of our non-U.S. 17 Table of Contents businesses are also translated into U.S. dollars for reporting purposes and the strengthening or weakening of the U.S. dollar could result in unfavorable translation effects.
Decreased strength of the U.S. dollar could adversely affect the cost of materials, products and services we purchase overseas. Sales and expenses of our non-U.S. businesses are also translated into U.S. dollars for reporting purposes and the strengthening or weakening of the U.S. dollar could result in unfavorable translation effects.
We may also become subject to lawsuits as a result of past or future acquisitions or as a result of liabilities retained from, or representations, warranties, or indemnities provided in connection with, divested businesses. These lawsuits may include claims for compensatory damages, punitive and consequential damages, and/or injunctive relief.
We may also become subject to lawsuits as a result of past or future acquisitions or as a result of liabilities retained from, or representations, warranties, or indemnities provided in connection with, divested businesses. These lawsuits may include claims for compensatory damages, 16 Table of Contents punitive and consequential damages, and/or injunctive relief.
Our business is impacted by general economic conditions, and adverse economic conditions arising from any slower global economic growth, reduced demand or consumer confidence, energy, manufacturing or component supply constraints arising from the international conflicts, including Russian invasion of Ukraine and the Israel-Hamas war, high inflation rates and the corresponding interest rate policies, volatility in currency and credit markets, actual or anticipated default on sovereign debt, changes in global trade policies, unemployment and underemployment rates, reduced levels of capital expenditures, changes in government fiscal and monetary policies, government deficit reduction and budget negotiation dynamics, sequestration, other austerity measures, political and social instability, other geopolitical conflict, sanctions, natural disasters, terrorist attacks, and other challenges affect us and our distributors, customers, and suppliers, including having the effect of: • reducing demand for our products, software, and services, limiting the financing available to our customers and suppliers, increasing order cancellations, and resulting in longer sales cycles and slower adoption of new technologies; • increasing the difficulty in collecting accounts receivable and the risk of excess and obsolete inventories; • increasing price competition in our served markets; • supply interruptions, which could disrupt our ability to produce our products; • increasing the risk of impairment of goodwill and other long-lived assets, and the risk that we may not be able to fully recover the value of other assets such as real estate and tax assets; • increasing the impact of currency translation; and • increasing the risk that counterparties to our contractual arrangements will become insolvent or otherwise unable to fulfill their contractual obligations which, in addition to increasing the risks identified above, could result in preference actions against us.
Our business is impacted by general economic conditions, and adverse economic conditions arising from any slower global economic growth, reduced demand or consumer confidence, energy, manufacturing or component supply constraints arising from international conflicts, high inflation rates and the corresponding interest rate policies, volatility in currency and credit markets, actual or anticipated default on sovereign debt, changes in global trade policies, unemployment and underemployment rates, reduced levels of capital expenditures, changes in government fiscal and monetary policies, political initiatives targeted at reducing government funding, government deficit reduction and budget negotiation dynamics, sequestration, other austerity measures, political and social instability, other geopolitical conflict, sanctions, natural disasters, public health crises, terrorist attacks, and other challenges affect us and our distributors, customers, and suppliers, including having the effect of: • reducing demand for our products, software, and services, limiting the financing available to our customers and suppliers, increasing order cancellations, and resulting in longer sales cycles and slower adoption of new technologies; • increasing the difficulty in collecting accounts receivable and the risk of excess and obsolete inventories; • increasing price competition in our served markets; • supply interruptions, which could disrupt our ability to produce our products; • increasing the risk of impairment of goodwill and other long-lived assets, and the risk that we may not be able to fully recover the value of other assets such as real estate and tax assets; • increasing the impact of currency translation; and • increasing the risk that counterparties to our contractual arrangements will become insolvent or otherwise unable to fulfill their contractual obligations which, in addition to increasing the risks identified above, could result in preference actions against us.
We cannot provide assurance that our internal controls and compliance systems will always protect us from acts committed by employees, agents, or business partners of ours (or of businesses we acquire or partner with) that would violate U.S. and/or non-U.S. laws, including the laws governing payments to government officials, bribery, fraud, kickbacks, and false claims, sales and 19 Table of Contents marketing practices, conflicts of interest, competition, export and import compliance, money laundering, and data privacy.
We cannot provide assurance that our internal controls and compliance systems will always protect us from acts committed by employees, agents, or business partners of ours (or of businesses we acquire or partner with) that would violate U.S. and/or non-U.S. laws, including the laws governing payments to government officials, bribery, fraud, kickbacks, and false claims, sales and marketing practices, conflicts of interest, competition, export and import compliance, and data privacy.
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 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 results.
We have received an opinion from outside tax counsel to the effect that each of the Separation Transactions qualifies as a transaction that is described in Sections 355(a) and 368(a)(1)(D) of the Internal Revenue Code.
We have received or expect to receive an opinion from outside tax counsel to the effect that each of the Separation Transactions qualifies as a transaction that is described in Sections 355(a) and 368(a)(1)(D) of the Internal Revenue Code.
In order to compete effectively, we must retain longstanding relationships with major customers and continue to grow our business by establishing relationships with new customers, continually developing new or enhanced products and services to maintain and expand our brand recognition and leadership position in various product and service categories, and penetrating new markets, including high-growth markets.
See “Business—Competition.” In order to compete effectively, we must retain longstanding relationships with major customers and continue to grow our business by establishing relationships with new customers, continually developing new or enhanced products and services to maintain and expand our brand recognition and leadership position in various product and service categories, and penetrating new markets, including high-growth markets.
Any charges relating to such impairments would adversely affect our results of operations in the periods recognized. Refer to Note 2 and Note 6 to the consolidated financial statements for a description of our policies relating to goodwill and acquired intangibles.
Any charges relating to such impairments would adversely affect our results of operations in the periods recognized. Refer to Note 2 and Note 5 to the consolidated financial results for a description of our policies relating to goodwill and acquired intangibles.
Additional risks and uncertainties not currently known to us or that we currently believe are immaterial also may impair our business, including our results of operations, liquidity, and financial condition. 11 Table of Contents Risk Related to Our Business Operations Conditions in the global economy, the markets we serve and the financial markets may adversely affect our business and financial statements.
Additional risks and uncertainties not currently known to us or that we currently believe are immaterial also may impair our business, including our results of operations, liquidity, and financial condition. Risk Related to Our Business Operations Conditions in the global economy, the markets we serve, and the financial markets may adversely affect our business and financial results.
In addition, competition for acquisitions may result in higher purchase prices. Changes in accounting or regulatory requirements or instability in the credit markets could also adversely impact our ability to consummate acquisitions. Our acquisition of businesses, joint ventures, and strategic relationships could negatively impact our financial statements.
In addition, competition for acquisitions and investments may result in higher purchase prices. Changes in accounting or regulatory requirements or instability in the credit markets could also adversely impact our ability to consummate acquisitions and investments. Our acquisition of businesses, investments, joint ventures, and other strategic relationships could negatively impact our financial results.
Our failure to obtain or maintain intellectual property rights that convey competitive advantage, adequately protect our intellectual property or detect or prevent circumvention or unauthorized use of such property, and the cost of enforcing our intellectual property rights could adversely impact our competitive position and financial statements.
Our failure to obtain or maintain intellectual property rights that convey competitive advantage, adequately protect our intellectual property or detect or prevent circumvention or unauthorized use of such property, and the cost of enforcing our intellectual property rights could adversely impact our business, including our competitive position, and financial results.
An adverse outcome under any such investigation or audit could subject us to fines or other penalties.
An adverse outcome in any such audit or investigation could subject us to fines or other penalties.
We generally sell our products and services in industries that are characterized by rapid technological changes, frequent new product introductions and changing industry standards. If we do not develop innovative new and enhanced products and 13 Table of Contents services on a timely basis, our offerings will become obsolete over time and our competitive position and financial statements will suffer.
We generally sell our products and services in industries that are characterized by rapid technological changes, frequent new product introductions and changing industry standards. If we do not develop innovative new and enhanced products and services on a timely basis, our offerings will become obsolete over time and our competitive position and financial results will suffer.
Our facilities, supply chains, distribution systems, and information technology systems are subject to catastrophic loss due to fire, flood, earthquake, hurricane, public health crisis, war, terrorism, or other natural or man-made disasters, including those 15 Table of Contents caused by climate change and other climate-related causes.
Our facilities, supply chains, distribution systems, and information technology systems are subject to catastrophic loss due to fire, flood, earthquake, hurricane, public health crises, war, terrorism, or other natural or man-made disasters, including those caused by climate change and other climate-related causes.
In addition to the environmental, health, safety, anti-corruption, and other regulations noted above, our businesses are subject to extensive regulation by U.S. and non-U.S. governmental and self-regulatory entities at the supranational, federal, state, local, and other jurisdictional levels, including the following: • we are required to comply with various import laws and export control and economic sanctions laws, which may affect our transactions with certain customers, business partners, and other persons and dealings between our employees and subsidiaries.
In addition to the environmental, health, safety, anticorruption, data privacy, and other regulations noted elsewhere in this Annual Report, our businesses are subject to extensive regulation by U.S. and non-U.S. governmental and self-regulatory entities at the supranational, federal, state, local, and other jurisdictional levels, including the following: • we are required to comply with various import laws and export control and economic sanctions laws, which may affect our transactions with certain customers, business partners, and other persons and dealings between our employees and between our subsidiaries.
These regulations and standards are complex, change frequently, have tended to become more stringent over time, and may be inconsistent across jurisdictions.
These regulations and standards are complex, change frequently, have tended to become more 20 Table of Contents stringent over time, and may be inconsistent across jurisdictions.
As part of our business strategy we acquire businesses and enter other strategic relationships in the ordinary course, some of which may be material; please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (“MD&A”) for additional details.
As part of our business strategy we acquire businesses, make investments, and enter into joint ventures and other strategic relationships in the ordinary course, some of which may be material; please refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (“MD&A”) for additional details.
Foreign currency exchange rates may adversely affect our financial statements. Sales and purchases in currencies other than the U.S. dollar expose us to fluctuations in foreign currencies relative to the U.S. dollar and may adversely affect our financial statements.
Sales and purchases in currencies other than the U.S. dollar expose us to fluctuations in foreign currencies relative to the U.S. dollar and may adversely affect our financial results.
The opinion relies on certain facts, assumptions, representations, and undertakings from the applicable parties regarding the past and future conduct of the 22 Table of Contents companies’ respective businesses and other matters.
The opinion relies or will rely on certain facts, assumptions, representations, and undertakings from the applicable parties regarding the past and future conduct of the companies’ respective businesses and other matters.
Work stoppages, works council campaigns, and other labor disputes could adversely impact our productivity and results of operations. We have various non-U.S. collective labor arrangements. We are subject to potential work stoppages, works council campaigns, and other labor disputes, any of which could adversely impact our productivity, results of operations, and reputation.
Work stoppages, works council campaigns, and other labor disputes could adversely impact our productivity and results of operations. We have various non-U.S. collective labor arrangements.
Any of the attacks, breaches, or other disruptions or damage described above, as well as corresponding remediation efforts, can disrupt our operations, delay production and shipments, result in theft of our and our customers’ intellectual property and trade secrets, damage customer and business partner relationships and our reputation, or result in defective products or services, legal claims and proceedings, liability and penalties under privacy laws, and increased costs for security and remediation, each of which could adversely affect our business and financial statements. 14 Table of Contents We may use artificial intelligence in our business and in our products, and challenges with properly managing its use could result in reputational harm, competitive harm, and legal liability, and adversely affect our results of operations.
Any of the attacks, breaches, or other disruptions or damage described above, as well as corresponding remediation efforts, can disrupt our operations, delay production and shipments, result in theft of our and our customers’ intellectual property and trade secrets, damage customer and business partner relationships and our reputation, or result in defective products or services, legal claims and proceedings, liability and penalties under privacy laws, and increased costs for security and remediation, each of which could adversely affect our business and financial results.
For additional information regarding these risks, please refer to Note 14 to the consolidated financial statements.
For additional information regarding these risks, please refer to Note 13 to the consolidated financial results.
Please refer to Note 10 to the consolidated financial statements for additional details. 23 Table of Contents Our ability to comply with these restrictions and covenants may be affected by events beyond our control.
Please refer to Note 9 to the consolidated financial results for additional details. Our ability to comply with these restrictions and covenants may be affected by events beyond our control.
In addition, as a result of such claims of infringement or misappropriation, we could lose our rights to critical technology, be unable to license critical technology or sell critical products and services, be required to pay substantial damages or license fees with respect to the infringed rights, or be required to redesign our products at substantial cost, any of which could adversely impact our competitive position and financial statements.
In addition, as a result of such claims of infringement or misappropriation, we could lose our rights to critical technology, be unable to license critical technology or sell critical products and services, be required to pay substantial damages or license fees with respect to the infringed rights, be required to license technology or other intellectual property rights from others, be required to cease marketing, manufacturing, or using certain products, or be required to redesign, re-engineer, or re-brand our products at substantial cost, any of which could adversely impact our competitive position and financial results.
If we are not competitive or successful in our recruiting efforts, if we cannot attract or retain key employees, or if we do not adequately ensure effective succession planning or transfer of knowledge for our key employees, our ability to deliver and execute on our operational, development, or portfolio strategies would be adversely affected.
If we are not competitive or successful in our recruiting efforts, if we cannot attract or retain key employees, or if we do not adequately ensure effective succession planning or transfer of knowledge for our key employees, or if our employees leave us given uncertainties relating to the separation, resulting in the inability to operate our business with employees possessing the appropriate expertise, our ability to deliver and execute on our operational, development, or portfolio strategies would be adversely affected.
We cannot assure you that our liabilities arising from past or future releases of, or exposures to, hazardous substances will not exceed our estimates or adversely affect our reputation and financial statements or that we will not be subject to additional claims for personal injury or remediation in the future based on our past, present or future business activities.
We cannot assure you that our liabilities arising from past or future releases of, or exposures to, hazardous substances will not exceed our estimates or adversely affect our reputation and financial results or that we will not be subject to additional claims for personal injury or remediation in the future based on our past, present or future business activities. 21 Table of Contents Our businesses are subject to extensive regulation, including healthcare regulations; failure to comply with those regulations could adversely affect our financial results and our business, including our reputation.
We may be required to recognize impairment charges for our goodwill and other intangible assets. As of December 31, 2023, the net carrying value of our goodwill and other intangible assets totaled approximately $12.3 billion. In accordance with GAAP, we periodically assess these assets to determine if they are impaired.
As of December 31, 2024, the net carrying value of our goodwill and other intangible assets totaled approximately $13.5 billion. In accordance with GAAP, we periodically assess these assets to determine if they are impaired.
Also, an acceleration of the debt under one of our debt instruments would trigger an event of default under other of our debt instruments.
Also, an acceleration of the debt under one of our debt instruments would trigger an event of default under other of our debt instruments. ITEM 1B. UNRESOLVED STAFF COMMENTS Not applicable.
We are also subject to investigation and audit for compliance with the requirements governing government contracts; • we are also required to comply with increasingly complex and changing data privacy regulations in multiple jurisdictions that regulate the collection, use, protection, and transfer of personal data, including the transfer of personal data between or among countries.
An adverse outcome in any such investigation or audit could subject us to fines or other penalties; • we are also required to comply with increasingly complex and changing data privacy regulations in multiple jurisdictions that regulate the collection, use, protection, and transfer of personal data, including the transfer of personal data between or among countries.
Even if we successfully innovate and develop new and enhanced products and services, we may incur substantial costs in doing so, and our profitability may suffer. If we are unable to recruit and retain key employees, our business may be harmed.
Even if we successfully innovate and develop new and enhanced products and services, we may incur substantial costs in doing so, and our profitability may suffer. Our ability to attract, develop, and retain senior leaders and other key employees is critical to our success.
Because of the range of the products and services we sell and the variety of markets we serve, we encounter a wide variety of competitors; please see the section entitled “Business-Competition” for additional details.
Because of the range of the products and services we sell and the variety of markets we serve, we encounter a wide variety of competitors.
Government contracts that have been awarded to us following a bid process 20 Table of Contents could become the subject of a bid protest by a losing bidder, which could result in loss of the contract.
In certain cases, a governmental entity may require us to pay back amounts it has paid to us. Government contracts that have been awarded to us following a bid process could become the subject of a bid protest by a losing bidder, which could result in loss of the contract.
Any of these risks could negatively affect our financial statements and growth. Trade relations between China and the United States could have a material adverse effect on our business and financial statements. We have experienced growth in various end markets in China. During 2023, sales in China accounted for approximately 11% of our total sales for the year.
Any of these risks could negatively affect our financial results and growth rate. Trade relations between the United States and other countries could have a material adverse effect on our business and financial results. We participate in various end markets outside the United States.
In addition, though we rely on our suppliers to adhere to our supplier standards of conduct, material violations of such standards of conduct could occur that could have a material effect on our financial statements.
In addition, though we rely on the third parties with whom we do business to adhere to the law and to our high standards of conduct, material violations of such standards of conduct could occur that could have a material effect on our financial results.
However, resolution of this matter could subject us to fines or penalties, and we cannot assure you of the timing or outcome of such resolution. These are not the only regulations that our businesses must comply with. The regulations we are subject to have tended to become more stringent over time and may be inconsistent across jurisdictions.
These changes could negatively impact our business or financial position. These are not the only regulations that our businesses must comply with. Generally, regulations we are subject to have tended to become more stringent over time and may be inconsistent across jurisdictions.
If growth in the global economy or in any of the markets we serve slows for a significant period, if there is significant deterioration in the global economy or such markets, if there is instability in global capital and credit markets, or if improvements in the global economy do not benefit the markets we serve, our business and financial statements would be adversely affected.
If growth in the global economy or in any of the markets we serve slows for a significant period, if there is significant deterioration in the global economy or such markets, if there is instability in global capital and credit markets, or if improvements in the global economy do not benefit the markets we serve, our business and financial results would be adversely affected. 12 Table of Contents 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 disruptions, our profitability may suffer.
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 are subject to income and transaction taxes in the United States and in multiple foreign jurisdictions.
For additional information regarding these risks, please refer to the section entitled “Business—Regulatory Matters.” Risk Related to Our Tax and Accounting Matters Changes in our effective tax rates or exposure to additional tax liabilities or assessments could affect our profitability. In addition, audits by tax authorities could result in additional tax payments for prior periods.
In 2023, approximately 46% of our sales were derived from customers outside the United States. Our principal markets outside the United States are in Europe and Asia. In addition, many of our manufacturing operations, suppliers, and employees are located outside the United States.
In addition, many of our manufacturing operations, suppliers, and employees are located outside the United States.
These principles are subject to interpretation by the Financial Accounting Standards Board (“FASB”), the SEC, and various bodies formed to interpret and create appropriate accounting principles and guidance. Any new or amended standards may result in different accounting principles, which may significantly impact our reported results or could result in volatility of our financial results.
These principles are subject to interpretation by the Financial Accounting Standards Board (“FASB”), the SEC, and various bodies formed to interpret and create appropriate accounting principles and guidance.
Compliance with the various import laws that apply to our businesses can restrict our access to, and increase the cost of obtaining, certain products and at times can interrupt our supply of imported inventory; • we also have agreements to sell products and services to government entities and are subject to various statutes and regulations that apply to companies doing business with government entities.
Compliance with the various import laws that apply to our businesses can restrict our access to, and increase the cost of obtaining, certain products and at times can interrupt our supply of imported inventory. We may also face audits or investigations by one or more domestic or foreign government agencies relating to our compliance with these regulations.
Certain of the acquisition agreements by which we have acquired companies require the former owners to indemnify us against certain liabilities related to the operation of the company before we acquired it. In most of these agreements, however, the liability of the former owners is limited and certain former owners may be unable to meet their indemnification responsibilities.
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. Certain of the acquisition agreements by which we have acquired companies require the former owners to indemnify us against certain liabilities related to the operation of the company before we acquired it.
We cannot assure you that our liabilities 16 Table of Contents in connection with litigation and other legal and regulatory proceedings will not exceed our estimates or adversely affect our financial statements and reputation. Risk Related to our International Operations International economic, political, legal, compliance, and business factors could negatively affect our financial statements.
We cannot assure you that our liabilities in connection with litigation and other legal and regulatory proceedings will not exceed our estimates or adversely affect our financial results and reputation. Climate change, or legal or regulatory measures to address climate change, may negatively affect us.
Much of our future success and our ability to realize the benefit of our acquisitions and execute our portfolio strategy depends on our ability to attract and retain key employees, including our senior management. In particular, the markets for highly skilled employees and leaders in the technology and healthcare industries remain competitive.
In particular, the markets for highly skilled employees and leaders in the technology and healthcare industries remain competitive. Our success also depends on our ability to attract, develop and retain a talented employee base.
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. We own numerous patents, trademarks, copyrights, trade secrets, and other intellectual property and licenses to intellectual property owned by others, which in aggregate are important to our business.
We own numerous patents, trademarks, copyrights, trade secrets, and other intellectual property and have licenses to intellectual property owned by others, which in aggregate are important to our business.
A global minimum corporate tax rate and any other implemented changes could significantly increase tax uncertainty due to differing interpretations and increased audit scrutiny. We could incur significant liability if any of our separation from Danaher, our separation of our Automation and Specialty business or our separation of Vontier (collectively, the “Separation Transactions”) is determined to be a taxable transaction.
We could incur significant liability if our separation from Danaher, our separation of our Automation and Specialty business, or our separation of Vontier or our pending separation of the PT segment (collectively, the “Separation Transactions”) are determined to be a taxable transaction.
Our ability to grow revenues, earnings, and cash flow at or above our anticipated rates depends in part upon our ability to identify and successfully acquire and integrate businesses at appropriate prices and realize anticipated synergies. We may not be able to consummate acquisitions at rates anticipated, which could adversely impact our growth rate and our stock price.
Our ability to grow revenue, earnings, and cash flow at or above our anticipated rates depends in part upon our ability to identify and successfully acquire and integrate businesses at appropriate prices and realize anticipated synergies, and to make appropriate investments that support our long-term strategy.
We cannot assure you that these indemnification provisions will protect us fully or at all, and as a result we may face unexpected liabilities that adversely affect our financial statements. Divestitures or other dispositions could negatively impact our business, and contingent liabilities from businesses that we have sold could adversely affect our financial statements.
Divestitures or other dispositions could negatively impact our business, and contingent liabilities from businesses that we have sold could adversely affect our financial results.
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.
We are subject to potential work stoppages, works council campaigns, and other labor disputes, any of which could adversely impact our productivity, results of operations, and reputation. 15 Table of Contents 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.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

4 edited+2 added−0 removed14 unchanged
Biggest changeRefer to the discussions under the headings “Significant disruptions in, or breaches in security of, our information technology systems have adversely affected, and in the future could adversely affect, our business” included as part of our risk factor disclosures at Item 1A of this Annual Report on Form 10-K, and “Overview-Other Matters” included as part of our Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) at Item 7 of this Annual Report on Form 10-K, which disclosures are incorporated by reference herein.
Biggest changeRefer to the discussions under the headings “Significant disruptions in, or breaches in security of, our information technology systems have adversely affected, and in the future could adversely affect, our business” included as part of our risk factor disclosures at Item 1A of this Annual Report on Form 10-K, which disclosures are incorporated by reference herein.
As part of our cybersecurity controls and processes: • we have designed our cybersecurity program based on the National Institute of Security and Technology (“NIST”) framework, Generally Accepted Privacy Program (“GAPP”) guiding principles, and ISO 27001/2 standards; • our cybersecurity team, led by our Chief Information Officer (“CIO”) and Chief Information Security Officer (“CISO”) coordinates with our privacy and information governance team within our legal department to help ensure compliance with applicable regulatory and reporting requirements; • the CIO and CISO undertake an annual review of the cybersecurity strategy and initiatives for Fortive and each of the operating companies, with monthly reviews of performance relative to strategic initiatives with the Chief Executive Officer (“CEO”) and the other executive officers; • the CIO and CISO participate in product design efforts with operating company leaders to enhance our product security; • through the compliance training program, we conduct mandatory cybersecurity management, data privacy and incident training for all employees; • we conduct regular phishing email simulations for all employees and all contractors with access to corporate email systems to enhance awareness and responsiveness to possible threats; • through policy, practice and contract provisions, we require employees, as well as third-party vendors who process data, to treat customer and other personal information and data with care and in compliance with regulations; • we run tabletop exercises conducted by leading third-party cybersecurity experts, with involvement by the broader IT team, legal team, communications team, executive management team, and the Board, to simulate a response to a cybersecurity incident and use the findings to improve our processes and technologies; • we conduct regular network and endpoint monitoring, vulnerability assessments, and penetration testing designed to improve our information systems; • we review and update, and provide training, on cybersecurity incident response plans, business continuity plans, and cyber incident escalation plans, including the involvement of our Disclosure Committee (which includes our CISO as a regular member); • as part of that cyber incident escalation plan, our Disclosure Committee reviews cybersecurity incidents to assess materiality and consider disclosure requirements; 25 Table of Contents • the CISO meets with the information security teams at the operating companies on a monthly basis, or as needed, to review escalated items, compliance with incident response plans, and performance against strategic targets; • the CIO and the CISO meet with the CEOs of our operating segments and the presidents of our operating companies to discuss IT strategies, updates, and initiatives, including those related to cybersecurity; • the CIO and the CISO meet with the Audit Committee on a quarterly basis and the full Board on an annual basis to provide updates on the cybersecurity program, including controls and processes, strategies, achievements, risks, and recent incidents; • the CIO and the CISO also meet with the full Board on an annual basis as part of the overall enterprise risk management review; and • the CISO, as a member of the Disclosure Committee, meets with other members of the Disclosure Committee to discuss materiality and disclosure with respect to cybersecurity matters.
As part of our cybersecurity controls and processes: • we have designed our cybersecurity program based on the National Institute of Security and Technology (“NIST”) framework, Generally Accepted Privacy Program (“GAPP”) guiding principles, and ISO 27001/2 standards; • our cybersecurity team, led by our Chief Information Officer (“CIO”) and Chief Information Security Officer (“CISO”) coordinates with our privacy and information governance team within our legal department to help ensure compliance with applicable regulatory and reporting requirements; • the CIO and CISO undertake an annual review of the cybersecurity strategy and initiatives for Fortive and each of the operating companies, with monthly reviews of performance relative to strategic initiatives with the Chief Executive Officer (“CEO”) and the other executive officers; • the CIO and CISO participate in product design efforts with operating company leaders to enhance our product security; • through the compliance training program, we conduct mandatory cybersecurity management, data privacy and incident training for all employees; • we conduct regular phishing email simulations for all employees and all contractors with access to corporate email systems to enhance awareness and responsiveness to possible threats; • through policy, practice and contract provisions, we require employees, as well as third-party vendors who process data, to treat customer and other personal information and data with care and in compliance with regulations; • we run tabletop exercises conducted by leading third-party cybersecurity experts, with involvement by the broader IT team, legal team, communications team, executive management team, and the Board, to simulate a response to a cybersecurity incident and use the findings to improve our processes and technologies; • we conduct regular network and endpoint monitoring, vulnerability assessments, and penetration testing designed to improve our information systems; • we review and update, and provide training, on cybersecurity incident response plans, business continuity plans, and cyber incident escalation plans, including the involvement of our Disclosure Committee (which includes our CISO as a regular member); • as part of that cyber incident escalation plan, our Disclosure Committee reviews cybersecurity incidents to assess materiality and consider disclosure requirements; • the CISO meets with the information security teams at the operating companies on a monthly basis, or as needed, to review escalated items, compliance with incident response plans, and performance against strategic targets; • the CIO and the CISO meet with the CEOs of our operating segments and the presidents of our operating companies to discuss IT strategies, updates, and initiatives, including those related to cybersecurity; • the CIO and the CISO meet with the Audit Committee on a quarterly basis and the full Board on an annual basis to provide updates on the cybersecurity program, including controls and processes, strategies, achievements, risks, and recent incidents; • the CIO and the CISO also meet with the full Board on an annual basis as part of the overall enterprise risk management review; and 25 Table of Contents • the CISO, as a member of the Disclosure Committee, meets with other members of the Disclosure Committee to discuss materiality and disclosure with respect to cybersecurity matters.
Our CIO and our CISO are informed about and monitor the prevention, mitigation, detection, and remediation of cybersecurity incidents through their management of, and participation in, the cybersecurity risk management and strategy processes described above, including the operation of our incident response plan, oversight of the entire IT function, including at Fortive Corporation and the IT leaders at our operating companies. 26 Table of Contents Our CIO and our CISO report to the Audit Committee and to the full Board about cybersecurity threat risks and other cybersecurity related matters.
Our CIO and our CISO are informed about and monitor the prevention, mitigation, detection, and remediation of cybersecurity incidents through their management of, and participation in, the cybersecurity risk management and strategy processes described above, including the operation of our incident response plan, oversight of the entire IT function, including at Fortive Corporation and the IT leaders at our operating companies.
As part of this process, both corporate and operating company leaders collaborate with subject matter experts to identify and assess cybersecurity threats and implement relevant countermeasures. In addition to this component of our overall risk management process, we have separate cybersecurity-specific risk assessment and management processes that are managed centrally and executed at both the corporate and operating company levels.
In addition to this component of our overall risk management process, we have separate cybersecurity-specific risk assessment and management processes that are managed centrally and executed at both the corporate and operating company levels.
Added
As part of this process, 24 Table of Contents both corporate and operating company leaders collaborate with subject matter experts to identify and assess cybersecurity threats and implement relevant countermeasures.
Added
Our CIO and our CISO report to the Audit Committee and to the full Board about cybersecurity threat risks and other cybersecurity related matters.

Item 2. Properties

Properties — owned and leased real estate

4 edited+0 added−0 removed0 unchanged
Biggest changeParticularly outside the United States, facilities may serve more than one business segment and may be used for multiple purposes, such as administration, sales, manufacturing, warehousing, and/or distribution. The approximate number of significant facilities by business segment is: Intelligent Operating Solutions 25, Precision Technologies 25, and Advanced Healthcare Solutions 10.
Biggest changeParticularly outside the United States, facilities may serve more than one business segment and may be used for multiple purposes, such as administration, sales, manufacturing, warehousing, and/or 26 Table of Contents distribution. The approximate number of significant facilities by business segment is: Intelligent Operating Solutions 20, Precision Technologies 30, and Advanced Healthcare Solutions 10.
We consider our facilities suitable and adequate for the purposes for which they are used and do not anticipate difficulty in renewing existing leases as they expire or in finding alternative facilities. We believe our properties and equipment have been well-maintained. Please refer to Note 9 to the consolidated financial statements for additional information with respect to our lease commitments.
We consider our facilities suitable and adequate for the purposes for which they are used and do not anticipate difficulty in renewing existing leases as they expire or in finding alternative facilities. We believe our properties and equipment have been well-maintained. Please refer to Note 8 to the consolidated financial statements for additional information with respect to our lease commitments.
ITEM 2. PROPERTIES Our corporate headquarters is located in Everett, Washington in a facility that we own. As of December 31, 2023, our facilities included approximately 60 significant facilities, which are used for manufacturing, distribution, warehousing, research and development, general administrative, and/or sales functions.
ITEM 2. PROPERTIES Our corporate headquarters is located in Everett, Washington in a facility that we own. As of December 31, 2024, our facilities included approximately 60 significant facilities, which are used for manufacturing, distribution, warehousing, research and development, general administrative, and/or sales functions.
Approximately 35 of these facilities are located in the United States in 20 states and approximately 25 are located outside the United States in over 10 countries, including Canada and countries in Asia Pacific, Europe, and Latin America.
Approximately 35 of these facilities are located in the United States in over 15 states and approximately 25 are located outside the United States in 15 countries, including Canada and countries in Asia Pacific, Europe, and Latin America.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed2 unchanged
Biggest changePlease refer to Note 14 to the consolidated financial statements for information regarding legal proceedings and contingencies, and for a discussion of risks related to legal proceedings and contingencies, refer to "Item 1A. Risk Factors."
Biggest changePlease refer to Note 13 to the consolidated financial statements for information regarding legal proceedings and contingencies, and for a discussion of risks related to legal proceedings and contingencies, refer to "Item 1A. Risk Factors."

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

8 edited+0 added−0 removed5 unchanged
Biggest changeSimmons served as a Partner of Bain & Company where he served as a Director in its Private Equity Practice and led its Technology, Media, and Telecommunications practice. Olumide Soroye has served as President and CEO of Intelligent Operating Solutions since August 2021. Prior to joining Fortive, Mr.
Biggest changeSimmons served as a Partner of Bain & Company where he served as a Director in its Private Equity Practice and led its Technology, Media, and Telecommunications practice. Olumide Soroye has served as President and CEO of Intelligent Operating Solutions since August 2021 and President and CEO of Advanced Healthcare Solutions since January 2025. Prior to joining Fortive, Mr.
Simmons has served as Senior Vice President, Strategy of Fortive since February 2021. From June 2018 to December 2020, Mr. Simmons was the President of Vista Consulting Group for Vista Equity Partners, a leading private investment firm focused on software, data, and technology-enabled businesses. In addition, from September 1999 through May 2018, Mr.
Simmons has served as Senior Vice President, Strategy of Fortive since February 2021. From June 2018 to December 2020, Mr. Simmons was the President of Vista Consulting Group for Vista Equity Partners, a leading private investment firm focused on software, data, and technology-enabled businesses. In addition, from September 1999 through May 27 Table of Contents 2018, Mr.
Walker served as Vice President-Talent Management of Danaher from January 2014 to July 2016 after serving as Vice President-Talent Planning from December 2012 to December 2013 and as Vice President-Human Resources for Danaher’s Chemtreat business from 2008 to November 2012. PART II
Walker served as Vice President-Talent Management of Danaher from January 2014 to July 2016 after serving as Vice President-Talent Planning from December 2012 to December 2013 and as Vice President-Human Resources for Danaher’s Chemtreat business from 2008 to November 2012. 28 Table of Contents PART II
Newcombe has served as President and CEO of Precision Technologies since January 2022 and President and CEO and Advanced Healthcare Solutions since June 2023. Prior to January 2022, Ms.
Newcombe has served as President and CEO of Precision Technologies since January 2022 and President and CEO of Advanced Healthcare Solutions from June 2023 to January 2025. Prior to January 2022, Ms.
Newcombe was Group President from May 27 Table of Contents 2021 to December 2021, President of Tektronix from April 2019 to December 2021, and Commercial President of Tektronix from February 2017 to April 2019. Prior to joining Tektronix, Ms. Newcombe was Vice President of Sales at Cisco Systems, Inc. from November 2009 to February 2017. Jonathan L.
Newcombe was Group President from May 2021 to December 2021, President of Tektronix from April 2019 to December 2021, and Commercial President of Tektronix from February 2017 to April 2019. Prior to joining Tektronix, Ms. Newcombe was Vice President of Sales at Cisco Systems, Inc. from November 2009 to February 2017. Jonathan L.
ITEM 4. MINE SAFETY DISCLOSURES Not applicable. INFORMATION ABOUT OUR EXECUTIVE OFFICERS Set forth below are the names, ages, positions, and experience of our executive officers as of February 27, 2024. All of our executive officers hold office at the pleasure of our Board. Name Age Position Officer Since James A.
ITEM 4. MINE SAFETY DISCLOSURES Not applicable. INFORMATION ABOUT OUR EXECUTIVE OFFICERS Set forth below are the names, ages, positions, and experience of our executive officers as of February 25, 2025. All of our executive officers hold office at the pleasure of our Board. Name Age Position Officer Since James A.
Simmons 50 Senior Vice President – Strategy 2021 Olumide Soroye 51 President and CEO of Intelligent Operating Solutions 2021 Peter C. Underwood 54 Senior Vice President – General Counsel 2016 Stacey A. Walker 53 Senior Vice President – Human Resources 2016 James A.
Simmons 51 Senior Vice President – Strategy 2021 Olumide Soroye 52 President and CEO of Intelligent Operating Solutions and Advanced Healthcare Solutions 2021 Peter C. Underwood 55 Senior Vice President – General Counsel 2016 Stacey A. Walker 54 Senior Vice President – Human Resources 2016 James A.
Lico 58 President and Chief Executive Officer 2016 Charles E. McLaughlin 62 Senior Vice President – Chief Financial Officer 2016 Tamara S. Newcombe 58 President and CEO of Precision Technologies and Advanced Healthcare Solutions 2022 Jonathan L. Schwarz 52 Senior Vice President – Corporate Development 2016 Edward R.
Lico 59 President and Chief Executive Officer 2016 Charles E. McLaughlin 63 Senior Vice President – Chief Financial Officer 2016 Tamara S. Newcombe 59 President and CEO of Precision Technologies 2022 Jonathan L. Schwarz 53 Senior Vice President – Corporate Development 2016 Edward R.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

6 edited+0 added−1 removed2 unchanged
Biggest changePeriod Total number of shares (or units) purchased Average price paid per share (or unit) 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 Oct 1 - Oct 31 250,000 $ 65.04 250,000 9,750,000 Nov 1 - Nov 30 750,000 64.97 750,000 9,000,000 Dec 1 - Dec 31 — — N/A N/A Total 1,000,000 $ 64.99 1,000,000 9,000,000 * *Does not reflect the 11 million additional shares the Company’s Board of Directors authorized under the share repurchase program on January 23, 2024.
Biggest changePeriod Total number of shares (or units) purchased Average price paid per share (or unit) 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 September 28 - October 27 — $ — N/A N/A October 28 - November 27 6,200,000 75.01 6,200,000 7,990,143 November 28 - December 31 — — N/A N/A Total 6,200,000 $ 75.01 6,200,000 7,990,143 Recent Issuances of Unregistered Securities None.
ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock has been traded on the New York Stock Exchange under the symbol FTV since July 2, 2016. As of February 22, 2024, there were approximately 1700 holders of record of our common stock.
ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock has been traded on the New York Stock Exchange under the symbol FTV since July 2, 2016. As of February 21, 2025, there were approximately 1,600 holders of record of our common stock.
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.
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.
We have historically paid a quarterly dividend on our common stock. In November 2023, our Board of Directors increased the quarterly dividend paid December 29, 2023 to $0.08 per share from $0.07 per share, an increase of 14%.
In the fourth quarter of 2023, we increased the quarterly dividend paid from $0.07 per share to $0.08 per share on our common stock.
On January 23, 2024, the Company’s Board of Directors increased the number of shares authorized under the share repurchase program by an additional 11 million shares. The following table provides details about our share repurchases during the fiscal quarter ended December 31, 2023.
On January 23, 2024, the Company’s Board of Directors increased the number of shares authorized under the share repurchase program by an additional 11 million shares, with 8 million remaining authorized under the share repurchase program as of December 31, 2024.
The repurchase program may be suspended or discontinued at any time by the Board of Directors. 28 Table of Contents During the fiscal year ended December 31, 2023, the Company purchased 4 million shares of its common stock at an average share price of $68.20, including 1 million shares at an average share price of $64.99 during the fourth quarter of 2023, leaving 9 million shares authorized for repurchase under the share repurchase program as of December 31, 2023.
During the fiscal year ended December 31, 2024, the Company purchased 12.0 million shares of its common stock at an average share price of $73.93, including 6.2 million shares at an average share price of $75.01 during the fourth quarter of 2024. The following table provides details about our share repurchases during the fiscal quarter ended December 31, 2024.
Removed
Recent Issuances of Unregistered Securities None. ITEM 6. [RESERVED] Not applicable.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

100 edited+31 added−36 removed64 unchanged
Biggest changeOperating Profit Margins 2023 vs. 2022 Operating profit margins were 18.7% for the year ended December 31, 2023, an increase of 180 basis points as compared to 16.9% in 2022 with year-over-year operating profit margin comparisons impacted by: • Year-over-year increase in price and volume from existing businesses and gains from productivity measures, which were partially offset by higher employee compensation, unfavorable product mix and foreign exchange rates — favorable 160 basis points • The year-over-year effect of amortization from existing businesses offset by impairment of intangible assets — favorable 40 basis points • The year-over-year net effect of acquisition-related transaction costs which were lower in 2023 — favorable 40 basis points • The year-over-year net effect of acquired and divested businesses, including amortization, and acquisition-related fair value adjustments — favorable 5 basis points • The year-over-year effect of costs relating to the discrete restructuring plan in 2023 — unfavorable 95 basis points • Russia exit and wind down costs that were incurred during 2022 — favorable 30 basis points 32 Table of Contents Business Segments and Geographic Area Results Sales by business segment and geographic area for the year ended December 31 are as follows ($ in millions): 2023 2022 Segments Intelligent Operating Solutions $ 2,612.2 $ 2,466.1 Precision Technologies 2,132.8 2,038.2 Advanced Healthcare Solutions 1,320.3 1,321.4 Total $ 6,065.3 $ 5,825.7 Geographic area United States $ 3,288.4 $ 3,136.8 China 694.9 702.1 All other (each country individually less than 5% of total sales) 2,082.0 1,986.8 Total $ 6,065.3 $ 5,825.7 INTELLIGENT OPERATING SOLUTIONS Our Intelligent Operating Solutions segment provides advanced instrumentation, software and services to tens of thousands of customers enabling their mission-critical workflows.
Biggest changeAdditionally, there were unfavorable foreign exchange rates — favorable 80 basis points • The year-over-year effect of amortization from existing businesses, and impairment of intangible assets incurred in 2023 — favorable 30 basis points • The year-over-year net effect of acquisition, divestiture and separation related transaction costs incurred in the year — unfavorable 85 basis points 32 Table of Contents • The year-over-year net effect of acquired and divested businesses, including amortization and acquisition-related fair value adjustments — unfavorable 120 basis points • The year-over-year effect of costs relating to discrete restructuring plans — favorable 65 basis points • The year-over-year effect of the gain on sale of land and certain office buildings in the PT segment during the year - favorable 100 basis points Business Segments and Geographic Area Results Sales by business segment and geographic area for the year ended December 31 are as follows ($ in millions): 2024 2023 Segments Intelligent Operating Solutions $ 2,714.7 $ 2,612.2 Precision Technologies 2,229.4 2,223.7 Advanced Healthcare Solutions 1,287.7 1,229.4 Total $ 6,231.8 $ 6,065.3 Geographic area United States $ 3,372.0 $ 3,288.4 China 648.2 694.9 All other 2,211.6 2,082.0 Total $ 6,231.8 $ 6,065.3 INTELLIGENT OPERATING SOLUTIONS Our IOS segment provides advanced instrumentation, software and services to tens of thousands of customers enabling their mission-critical workflows.
Our expertise in materials, methods and measurements are reflected in our electrical test & measurement, sensing and material technologies offered to a broad set of customers and vertical end markets, including industrial, power and energy, automotive, medical equipment, food and beverage, aerospace and defense, semiconductor, and other general industries.
Our expertise in materials, methods and measurements are reflected in our electrical test & measurement and sensing and material technologies offered to a broad set of customers and vertical end markets, including industrial, power and energy, automotive, medical equipment, food and beverage, aerospace and defense, semiconductor, and other general industries.
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. 42 Table of Contents Cash Requirements The following table sets forth a summary of our short-term and long-term cash requirements as of December 31, 2023 under (1) long-term debt principal and interest obligations, (2) leases, (3) purchase obligations and (4) other long-term liabilities reflected on our balance sheet under GAAP.
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. 42 Table of Contents Cash Requirements The following table sets forth a summary of our short-term and long-term cash requirements as of December 31, 2024 under (1) long-term debt principal and interest obligations, (2) leases, (3) purchase obligations and (4) other long-term liabilities reflected on our balance sheet under GAAP.
However, the timing of these liabilities is uncertain, and therefore, they have been included in the “due later than one year from December 31, 2023” column. The amounts also include our obligation under the TCJA for the transition tax on cumulative foreign earnings and profits, which we expect to pay over eight years.
However, the timing of these liabilities is uncertain, and therefore, they have been included in the “due later than one year from December 31, 2024” column. The amounts also include our obligation under the TCJA for the transition tax on cumulative foreign earnings and profits, which we expect to pay over eight years.
The discounted cash flow model requires judgmental assumptions about projected revenue growth, future operating margins, discount rates, and terminal values. There are inherent uncertainties related to these assumptions and management’s judgment in applying them to the analysis of goodwill impairment. In 2023, we performed goodwill impairment testing for our reporting units.
The discounted cash flow model requires judgmental assumptions about projected revenue growth, future operating margins, discount rates, and terminal values. There are inherent uncertainties related to these assumptions and management’s judgment in applying them to the analysis of goodwill impairment. In 2024, we performed goodwill impairment testing for our reporting units.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of Fortive’s financial condition and results of operations for the fiscal years ended December 31, 2023 and December 31, 2022 should be read in conjunction with our audited consolidated financial statements and accompanying notes included in Part II, Item 8 of this Form 10-K.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of Fortive’s financial condition and results of operations for the fiscal years ended December 31, 2024 and December 31, 2023 should be read in conjunction with our audited consolidated financial statements and accompanying notes included in Part II, Item 8 of this Form 10-K.
As a company with global operations, our businesses are affected by worldwide, regional, and industry-specific economic and political factors.
As a company with global operations, our businesses are affected by worldwide, regional, and industry-specific economic, regulatory, and political factors.
We had $2.0 billion available under the Revolving Credit Facility as of December 31, 2023. 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 had $2.0 billion available under the Revolving Credit Facility as of December 31, 2024. 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.
Refer to Notes 2, 3 and 6 to the consolidated financial statements for a description of our policies relating to goodwill, acquired intangibles, and acquisitions. In performing our goodwill impairment testing, we estimate the fair value of our reporting units primarily using a market based approach.
Refer to Notes 2, 3 and 5 to the consolidated financial statements for a description of our policies relating to goodwill, acquired intangibles, and acquisitions. In performing our goodwill impairment testing, we estimate the fair value of our reporting units primarily using a market based approach.
As of December 31, 2023, 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.
As of December 31, 2024, 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.
The timing of cash flows associated with these obligations is based upon management’s estimates over the terms of these arrangements and is largely based upon historical experience. (f) Includes non-contractual obligations of $207 million of noncurrent gross unrecognized tax benefits.
The timing of cash flows associated with these obligations is based upon management’s estimates over the terms of these arrangements and is largely based upon historical experience. (f) Includes non-contractual obligations of $173 million of noncurrent gross unrecognized tax benefits.
We emphasize safety and liquidity of principal over yield on those funds. In addition, concentrations of credit risk 38 Table of Contents 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.
We emphasize safety and liquidity of principal over yield on those funds. In addition, 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.
We base these estimates and judgments on historical experience, the current economic environment, and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ materially from these estimates and judgments. We believe the following accounting estimates are most critical to an understanding of our financial statements.
We base these estimates and judgments on historical 43 Table of Contents experience, the current economic environment, and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ materially from these estimates and judgments. We believe the following accounting estimates are most critical to an understanding of our financial statements.
Discussions of 2021 items and year-to-year comparisons between 2022 and 2021 are not included, and can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (“MD&A”) in Part II, Item 7 of the Company’s Annual Report on Form 10-K filed for the fiscal year ended December 31, 2022 with the Securities and Exchange Commission on February 28, 2023.
Discussions of 2022 items and year-to-year comparisons between 2023 and 2022 are not included, and can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (“MD&A”) in Part II, Item 7 of the Company’s Annual Report on Form 10-K filed for the fiscal year ended December 31, 2023 with the Securities and Exchange Commission on February 27, 2024.
We generally expect to satisfy any short-term liquidity needs that are not met through operating cash flows and available cash primarily through term loans or issuances of commercial paper under the Commercial Paper Programs, with credit support provided by the Revolving Credit Facility. The carrying value of total debt outstanding as of December 31, 2023 was approximately $3.6 billion.
We generally expect to satisfy any short-term liquidity needs that are not met through operating cash flows and available cash primarily through term loans or issuances of commercial paper under the Commercial Paper Programs, with credit support provided by the Revolving Credit Facility. The carrying value of total debt outstanding as of December 31, 2024 was approximately $3.7 billion.
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 and divested businesses and (2) the impact of currency translation.
Non-GAAP Measures In this report, references to sales from existing businesses (“core revenue”) refer to sales from operations calculated according to generally accepted accounting principles in the United States (“GAAP”) but excluding (1) the impact from acquired and divested businesses and (2) the impact of foreign currency translation.
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 change in prepaid expenses and other assets, accrued expenses and other liabilities, and changes in deferred income taxes used $74 million of cash in 2023 as compared to using $10 million in 2022.
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 change in prepaid expenses and other assets, accrued expenses and other liabilities, and changes in deferred income taxes used $40 million of cash in 2024 as compared to using $91 million in 2023.
Fortive is a provider of essential technologies for connected workflow solutions across a range of attractive end-markets. Our strategic segments - Intelligent Operating Solutions, Precision Technologies, and Advanced Healthcare Solutions - include well-known brands with leading positions in their markets.
Fortive is a provider of essential technologies for connected workflow solutions across a range of attractive end-markets. Our strategic segments - Intelligent Operating Solutions (“IOS”), Precision Technologies (“PT”), and Advanced Healthcare Solutions (“AHS”) - include well-known brands with leading positions in their markets.
In determining if control has transferred, we consider whether certain indicators of the transfer of control are present, such as the transfer of title, present right to payment, significant risks and 44 Table of Contents rewards of ownership, and customer acceptance when acceptance is not a formality.
In determining if control has transferred, we consider whether certain indicators of the transfer of control are present, such as the transfer of title, present right to payment, significant risks and rewards of ownership, and customer acceptance when acceptance is not a formality.
Credit Risk We are exposed to potential credit losses in the event of nonperformance by counterparties to our financial instruments. Financial instruments that potentially subject us to credit risk consist of cash and highly-liquid investment grade cash equivalents and receivables from customers.
Credit Risk We are exposed to potential credit losses in the event of nonperformance by counterparties to our financial instruments. Financial instruments that potentially subject us to credit risk consist of cash and highly-liquid investment grade cash 38 Table of Contents equivalents and receivables from customers.
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.
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 30 Table of Contents period.
Our MD&A is divided into seven sections: • Basis of Presentation • Overview • Results of Operations • Financial Instruments and Risk Management • Liquidity and Capital Resources • Critical Accounting Estimates 29 Table of Contents • New Accounting Standards OVERVIEW General Fortive is a multinational business with global operations with approximately 46% of our sales derived from customers outside the United States in 2023.
Our MD&A is divided into seven sections: • Basis of Presentation • Overview • Results of Operations • Financial Instruments and Risk Management • Liquidity and Capital Resources • Critical Accounting Estimates • New Accounting Standards OVERVIEW General Fortive is a multinational business with global operations with approximately 46% of our sales derived from customers outside the United States in 2024.
Our offerings include instrument sterilization solutions, instrument tracking, cell therapy equipment design and manufacturing, biomedical test tools, radiation detection and safety monitoring, and end-to-end clinical productivity software and solutions. Our healthcare offerings help ensure critical safety standards are met, instruments and operating rooms are working at peak performance, and complex procedures are followed accurately in these mission-critical healthcare environments.
Our offerings include instrument sterilization solutions, instrument tracking, biomedical test tools, radiation detection and safety monitoring, and end-to-end clinical productivity software and solutions. Our healthcare offerings help ensure critical safety standards are met, instruments and operating rooms are working at peak performance, and complex procedures are followed accurately in these mission-critical healthcare environments.
The amount of income taxes we pay is subject to audit by federal, state, and foreign tax authorities, which may result in proposed assessments (see “-Results of Operations - Income Taxes” and Note 13 to the consolidated financial statements). We review our global tax positions on a 45 Table of Contents quarterly basis.
The amount of income taxes we pay is subject to audit by federal, state, and foreign tax authorities, which may result in proposed assessments (see “-Results of Operations - Income Taxes” and Note 12 to the consolidated financial statements). We review our global tax positions on a quarterly basis.
Refer to Note 10 to the Consolidated Financial Statements for additional information regarding the Company’s indebtedness as of December 31, 2023. (b) Interest payments on long-term debt are projected for future periods using the interest rates in effect as of December 31, 2023.
Refer to Note 9 to the consolidated financial statements for additional information regarding the Company’s indebtedness as of December 31, 2024. (b) Interest payments on long-term debt are projected for future periods using the interest rates in effect as of December 31, 2024.
The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and 43 Table of Contents expenses, and related disclosure of contingent assets and liabilities.
The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities.
As a result, our primary interest rate exposure results from changes in short-term interest rates. As these shorter duration obligations mature, we anticipate issuing additional short-term commercial paper obligations and/or term loans to refinance all or part of these borrowings. The annual effective rate associated with our outstanding variable-rate obligation was approximately 5.15% with interest expense of $83 million.
As a result, our primary interest rate exposure results from changes in short-term interest rates. As these shorter duration obligations mature, we anticipate issuing additional short-term commercial paper obligations and/or term loans to refinance all or part of these borrowings. The annual effective rate associated with our outstanding variable-rate obligation was approximately 4.85% with interest expense of $59 million.
An increase in our 2023 effective tax rate of 1.0% would have resulted in an additional income tax provision for the year ended December 31, 2023 of approximately $10 million. NEW ACCOUNTING STANDARDS For a discussion of new accounting standards relevant to our businesses, refer to Note 2 to the consolidated financial statements.
An increase in our 2024 effective tax rate of 1.0% would have resulted in an additional income tax provision for the year ended December 31, 2024 of approximately $10 million. 45 Table of Contents NEW ACCOUNTING STANDARDS For a discussion of new accounting standards relevant to our businesses, refer to Note 2 to the consolidated financial statements.
A 10% depreciation in major currencies relative to the U.S. dollar as of December 31, 2023 would have resulted in a reduction of foreign currency-denominated net assets and stockholders’ equity of approximately $186 million.
A 10% depreciation in major currencies relative to the U.S. dollar as of December 31, 2024 would have resulted in a reduction of foreign currency-denominated net assets and stockholders’ equity of approximately $326 million.
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.
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 core revenue because the impact of currency translation is not under management’s control and is subject to volatility.
We expect capital spending to be between approximately $100 million and $120 million in 2024, though actual expenditures will ultimately depend on business conditions. 40 Table of Contents Financing Activities and Indebtedness Financing cash flows consist primarily of cash flows associated with the issuance and repayments of debt and commercial paper, payments of cash dividends to shareholders.
We expect capital spending to be between approximately $120 million and $150 million in 2025, though actual expenditures will ultimately depend on business conditions. 40 Table of Contents Financing Activities and Indebtedness Financing cash flows consist primarily of cash flows associated with the issuance and repayments of debt and commercial paper, payments of cash dividends to shareholders and share repurchases.
Refer to Note 13 to the consolidated financial statements for additional information on unrecognized tax benefits.
Refer to Note 12 to the consolidated financial statements for additional information on unrecognized tax benefits.
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.
Management believes that reporting the non-GAAP financial measure of core revenue 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.
As of December 31, 2023, an increase of 100 basis points in interest rates would have decreased the fair value of our fixed-rate long-term debt by approximately $78 million.
As of December 31, 2024, an increase of 100 basis points in interest rates would have decreased the fair value of our fixed-rate long-term debt by approximately $101 million.
Our effective tax rate for 2023 differs from the U.S. federal statutory rate of 21% due primarily to the positive and negative effects of the Tax Cuts and Jobs Act (“TCJA”), U.S. federal permanent differences, the impacts of credits and deductions provided by law, including those associated with state income taxes, a decrease in our uncertain tax positions, and the effect of changes in tax rates enacted in the current period.
Our effective tax rate for 2024 differs from the U.S. federal statutory rate of 21% due primarily to the positive and negative effects of the Tax Cuts and Jobs Act (“TCJA”), U.S. federal permanent differences, the impacts of credits and deductions provided by law, including those associated with state income taxes, a decrease in our uncertain tax positions, non-deductible transaction costs related to the Separation and the effect of changes in tax rates enacted in the current period.
On an annualized basis, a hypothetical 10 basis points increase in market interest rates as of December 31, 2023 on our variable-rate debt obligations as of December 31, 2023 would have increased our interest expense by approximately $2.2 million in 2023.
As of December 31, 2024, on an annualized basis, a hypothetical 10 basis points increase in market interest rates on our variable-rate debt obligations would have increased our interest expense by approximately $1.0 million in 2024.
(e) Primarily consist of obligations under product service and warranty policies and allowances, performance and operating cost guarantees, estimated environmental remediation costs, self-insurance and litigation claims, post-retirement benefits, pension benefit obligations, net tax liabilities, deferred compensation obligations, and the deferred payment related to the 2023 acquisitions.
(e) Primarily consist of obligations under product service and warranty policies and allowances, performance and operating cost guarantees, estimated environmental remediation costs, self-insurance and litigation claims, post-retirement benefits, pension benefit obligations, net tax liabilities, and deferred compensation obligations.
As of December 31, 2023, our variable-rate debt obligations consist of U.S. dollar denominated commercial paper, U.S. dollar denominated delay-draw term loan, and senior unsecured term facilities denominated in either Euros or Japanese Yen (refer to Note 10 to the consolidated financial statements for information regarding our outstanding indebtedness as of December 31, 2023).
As of December 31, 2024, our variable-rate debt obligations consist of U.S. dollar denominated commercial paper and senior unsecured term facilities denominated in either Euros or Japanese Yen (refer to Note 9 to the consolidated financial statements for information regarding our outstanding indebtedness as of December 31, 2024).
This Item generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022.
This Item generally discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023.
During 2023, our cash contribution requirements for our U.S. and non-U.S. defined benefit pension plans are expected to be approximately $1 million and $9 million, respectively.
During 2025, our cash contribution requirements for our U.S. and non-U.S. defined benefit pension plans are expected to be approximately $1 million and $8 million, respectively.
These guarantees are not recorded on our balance sheet and $46 million in commitments expire within one year of December 31, 2023 and $11 million later than one year from December 31, 2023. During 2023, we contributed $1 million and $11 million to our U.S. and non-U.S. defined benefit pension plans, respectively.
These guarantees are not recorded on our balance sheet and $41 million in commitments expire within one year of December 31, 2024 and $20 million later than one year from December 31, 2024. During 2024, we contributed $1 million and $8 million to our U.S. and non-U.S. defined benefit pension plans, respectively.
In addition, our broad-based business activities help to reduce the impact that volatility in any particular area or related areas may have on our operating profit as a whole. Interest Rate Risk We manage interest cost using a mixture of fixed-rate and variable-rate debt.
We generally address our exposure to these risks through our normal operating and financing activities. In addition, our broad-based business activities help to reduce the impact that volatility in any particular area or related areas may have on our operating profit as a whole. Interest Rate Risk We manage interest cost using a mixture of fixed-rate and variable-rate debt.
We generate substantial cash from operating activities and believe that our operating cash flow and other sources of liquidity, which consist of available cash, our revolving credit facility, and access to commercial paper, bank loans, and capital markets, 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.
We generate substantial cash from operating activities and believe that our operating cash flow and other sources of liquidity, which consist of available cash, our revolving credit facility, and access to commercial paper, bank loans, and capital markets, will be sufficient to allow us to continue funding and investing in our existing businesses, consummate strategic acquisitions, execute strategic separations, repurchase common stock on the open market or in privately negotiated transactions, 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.
For the years ended December 31, 2023 and 2022, we recognized after-tax losses of $1.2 million and $5.1 million, respectively, in Other comprehensive income (loss) related to the net investment hedges.
For the years ended December 31, 2024, 2023, and 2022, we recognized after-tax gains of $60.4 million, losses of $1.2 million, and losses of $5.1 million within Other comprehensive income (loss) related to the net investment hedges, respectively.
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.
Core revenue 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.
Revenue is recognized when control over the promised products or services is transferred to the customer in an amount that reflects the consideration that we expect to receive in exchange for those goods or services.
Revenue Recognition : We derive revenue from the sale of products and services. Revenue is recognized when control over the promised products or services is transferred to the customer in an amount that reflects the consideration that we expect to receive in exchange for those goods or services.
Currency exchange rates unfavorably impacted 2023 reported sales by 0.6% as compared to 2022, as the U.S. dollar was, on average, stronger against most major currencies during 2023 as compared to exchange rate levels during 2022. In the fourth quarter of 2023, the U.S. dollar was, on average, weaker against most major currencies.
Currency exchange rates unfavorably impacted 2024 reported sales by 0.6% as compared to 2023, as the U.S. dollar was, on average, stronger against most major currencies during 2024 as compared to exchange rate levels during 2023.
Significant obligations are detailed in our tax matters agreements in connection with the separation of Fortive from Danaher on July 1, 2016, the split-off of the Automation and Specialty business on October 1, 2018, and the Vontier separation on October 9, 2020. We review our global tax positions on a quarterly basis.
In addition, significant obligations are detailed in our tax matters agreements in connection with the separation of Fortive from Danaher on July 1, 2016, the split-off of the Automation and Specialty business on October 1, 2018, and the Vontier separation on October 9, 2020.
As of December 31, 2023 and 2022, we had $1.3 billion and $405.0 million borrowings outstanding under our Commercial Paper Program, respectively.
As of December 31, 2024 and 2023, we had $650 million and $1.3 billion borrowings outstanding under our Commercial Paper Program, respectively.
Capital expenditures are made primarily for increasing production capacity, replacing aged equipment, supporting product development initiatives for hardware and software offerings, improving information technology systems, and purchasing equipment used in revenue arrangements with customers. Capital expenditures totaled $108 million in 2023 and $96 million in 2022.
Capital expenditures are made primarily for increasing production capacity, replacing aged equipment, supporting product development initiatives for hardware and software offerings, improving information technology systems, and purchasing equipment that is used in revenue arrangements with customers.
Based on this hypothetical 10% decrease, the excess of the estimated fair value over carrying value (expressed as a percentage of carrying value for the respective reporting unit) for each of our reporting units ranged from approximately 44% to approximately 711%.
Based on this hypothetical 10% decrease, the excess of the estimated fair value over carrying value (expressed as a multiple of the carrying value for the respective reporting unit) for each of our reporting units ranged from approximately 1.5x to approximately 11.8x.
Financing activities from continuing operations generated cash of $32 million in 2023, and used cash of $1.3 billion in 2022. Financing activities during 2023 reflected the following transactions: • On December 7, 2023, we entered into a term loan credit agreement, which provides for a 364-days delayed draw term loan facility up to an aggregate principal amount of $1.3 billion.
Financing activities during 2023 reflected the following transactions: • On December 7, 2023, we entered into a term loan credit agreement, which provides for a 364-days delayed draw term loan facility up to an aggregate principal amount of $1.3 billion.
The excess of the estimated fair value over carrying value (expressed as a percentage of carrying value for the respective reporting unit) for each of our reporting units as of the annual testing date ranged from approximately 60% to approximately 801%.
The excess of the estimated fair value over carrying value (expressed as a multiple of the carrying value for the respective reporting unit) for each of our reporting units as of the annual testing date ranged from approximately 1.6x to approximately 13.1x.
If changes in financial markets or other areas of the economy adversely affect our access to the capital markets and other financing sources, we would expect to rely on a combination of available cash and existing available capacity under our credit facilities to provide short-term funding. 39 Table of Contents Overview of Cash Flows and Liquidity Following is an overview of our cash flows and liquidity: Year Ended December 31, ($ in millions) 2023 2022 Net cash provided by operating activities $ 1,353.6 $ 1,303.2 Cash paid for acquisitions, net of cash received $ (95.8) $ (12.8) Payments for additions to property, plant and equipment (107.8) (95.8) Proceeds from sale of property 7.4 — Proceeds from sale of business — 9.6 All other investing activities 0.8 (3.5) Net cash used in investing activities $ (195.4) $ (102.5) Proceeds from borrowings (maturities longer than 90 days), net of issuance costs $ 549.3 $ 1,394.1 Net proceeds from commercial paper borrowings 839.9 38.5 Payment of 0.875% convertible senior notes due 2022 — (1,156.5) Repurchase of common shares (272.9) (442.9) Repayment of borrowings (maturities greater than 90 days) (1,000.0) (1,000.0) Payment of common stock cash dividend to shareholders (102.0) (99.5) All other financing activities 18.0 (6.7) Net cash provided by (used in) financing activities $ 32.3 $ (1,273.0) Operating Activities Operating cash flows can fluctuate significantly from period-to-period as working capital needs and the timing of payments for income taxes, interest, pension funding, and other items impact reported cash flows.
If changes in financial markets or other areas of the economy or downgrade in our credit rating adversely affect our access to the capital markets and other financing sources, we would expect to rely on a combination of available cash and existing available capacity under our credit facilities to provide short-term funding. 39 Table of Contents Overview of Cash Flows and Liquidity Following is an overview of our cash flows and liquidity ($ in millions): Year Ended December 31, 2024 2023 Net cash provided by operating activities $ 1,526.8 $ 1,353.6 Cash paid for acquisitions, net of cash received $ (1,721.8) $ (95.8) Purchases of property, plant and equipment (120.4) (107.8) Proceeds from sale of property 61.2 7.4 Cash infusion into divestiture (14.0) — All other investing activities (1.0) 0.8 Net cash used in investing activities $ (1,796.0) $ (195.4) Net proceeds from (repayments of) commercial paper borrowings $ (596.5) $ 839.9 Proceeds from borrowings (maturities longer than 90 days), net of issuance costs 1,733.5 549.3 Repayment of borrowings (maturities greater than 90 days) (1,000.0) (1,000.0) Repurchase of common shares (889.6) (272.9) Payment of dividends (111.2) (102.0) All other financing activities 71.1 18.0 Net cash provided by (used in) financing activities $ (792.7) $ 32.3 Operating Activities Cash flows from operating activities can fluctuate significantly from period-to-period as working capital needs and the timing of payments for income taxes, interest, pension funding, and other items impact reported cash flows.
Year-over-year changes in operating profit margin were comprised of the following: • Year-over-year increase in price and sales volume from existing businesses and gains from productivity measures, partially offset by higher employee compensation — favorable 315 basis points • The year-over-year effect of amortization from existing businesses offset by impairment of intangible assets — favorable 20 basis points • The year-over-year effect of acquisition-related transaction costs which were lower in 2023 — favorable 65 basis points • The year-over-year effect of acquired businesses, including amortization, and acquisition-related fair value adjustments — unfavorable 10 basis points • The year-over-year effect of costs relating to the d iscrete restructuring plan in 2023 — unfavorable 90 basis points PRECISION TECHNOLOGIES Our Precision Technologies segment helps solve tough technical challenges to speed breakthroughs in a wide range of applications, from food and beverage production and manufacturing to next-generation electric vehicles and clean energy, as our customers seek new test solutions to enable the electrification and connectivity of everything.
Year-over-year changes in operating profit margin were comprised of the following: • Year-over-year increase from favorable pricing and higher sales volume from existing businesses, partially offset by higher employee compensation, customer acquisition costs and marketing costs to support growth initiatives — favorable 100 basis points • The year-over-year effect of amortization from existing businesses, and impairment of intangible assets incurred in 2023— favorable 50 basis points • The year-over-year net effect of acquired businesses, including amortization, and acquisition-related fair value adjustments — unfavorable 15 basis points • The year-over-year effect of costs relating to d iscrete restructuring plans — favorable 55 basis points PRECISION TECHNOLOGIES Our PT segment helps solve tough technical challenges to speed breakthroughs in a wide range of applications, from food and beverage production and manufacturing to next-generation electric vehicles and clean energy, as our customers seek new test solutions to enable the electrification and connectivity of everything.
Refer to Note 10 to the Consolidated Financial Statements for additional information regarding the Company’s financing activities and indebtedness, including the Company’s outstanding debt as of December 31, 2023, financing activities subsequent to December 31, 2023, the Company’s commercial paper program, and the Revolving Credit Facility.
Refer to Note 9 to the consolidated financial statements for additional information regarding the Company’s financing activities and indebtedness, including the Company’s outstanding debt as of December 31, 2024, the Company’s commercial paper program, and the Revolving Credit Facility. Refer to Note 15 to the consolidated financial statements for a description of the Company’s share repurchase program.
References to sales attributable to acquisitions or acquired businesses refer to GAAP sales from acquired businesses recorded prior to the first anniversary of the acquisition less the amount of sales attributable to certain divested businesses or product lines not considered discontinued operations prior to the first anniversary of the divestiture.
References to sales attributable to acquisitions or acquired businesses refer to GAAP sales from acquired businesses recorded prior to the first anniversary of the acquisition, less the amount of sales attributable to certain businesses or product lines that have been divested, or, at the time of reporting, are pending divestiture, but are not, and will not be, considered discontinued operations prior to the first anniversary of the divestiture.
We will continue to deploy FBS to actively manage production challenges, collaborate with customers and suppliers to minimize disruptions and utilize pricing and other countermeasures to offset the aforementioned dynamics.
We will continue to deploy FBS to actively manage these challenges and utilize pricing and other countermeasures to offset the aforementioned dynamics.
For a discussion of risks related to these and other tax matters, please refer to “Item 1A. Risk Factors.” Comparison of the Years Ended December 31, 2023 and 2022 Our effective tax rate for the years ended December 31, 2023 and 2022 was 12.6% and 13.5%, respectively.
For a discussion of risks related to these and other tax matters, please refer to “Item 1A. Risk Factors.” Effective Tax Rate Our effective tax rate was 14.1% during 2024 and 12.6% during 2023, respectively.
The ultimate amounts we will contribute 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.
The ultimate amounts we will contribute 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. As of December 31, 2024 we expect to have sufficient liquidity to satisfy our cash needs for the foreseeable future.
If our judgments regarding revenue recognition prove incorrect, our reported revenues in particular periods may be adversely affected. Historically, our estimates of revenue have been materially correct. Pension : For a description of our pension accounting practices, refer to Note 11 to the consolidated financial statements. Certain of our U.S. and non-U.S. employees participate in noncontributory defined benefit pension plans.
If our judgments regarding revenue recognition prove incorrect, our reported revenues in particular periods may be adversely affected. Historically, our estimates of revenue have been materially correct. Income Taxes : For a description of our income tax accounting policies, refer to Note 2 and Note 12 to the consolidated financial statements.
Certain of our acquisitions may involve the potential payment of contingent consideration. The table below does not reflect any such obligations, as the timing and amounts of any such payments are uncertain.
The table below does not reflect any such obligations, as the timing and amounts of any such payments are uncertain.
Based on these reviews, the results of discussions and resolutions of matters with certain tax authorities, tax rulings, and court decisions and the expiration of statutes of limitations reserves for contingent tax liabilities are accrued or adjusted as necessary.
We review our global tax positions on a quarterly basis, considering many factors including the results of discussions and resolutions of matters with certain tax authorities, tax rulings and court decisions, and the expiration of statutes of limitations reserves for contingent tax liabilities are accrued or adjusted as necessary.
Precision Technologies Selected Financial Data For the Year Ended December 31 ($ in millions) 2023 2022 Sales $ 2,132.8 $ 2,038.2 Operating profit 540.3 491.3 Depreciation 26.2 24.2 Amortization 3.6 13.5 Operating profit as a % of sales 25.3 % 24.1 % Depreciation as a % of sales 1.2 % 1.2 % Amortization as a % of sales 0.2 % 0.7 % Components of Sales Growth 2023 vs. 2022 Total revenue growth (GAAP) 4.6 % Existing businesses (Non-GAAP) 5.1 % Currency exchange rates (Non-GAAP) (0.5) % 2023 COMPARED TO 2022 The sales result for 2023 was driven by price increases across the segment and volume increases with test and measurement products, power and energy equipment and energetic materials, partially offset by volume reductions in certain end markets for sensing technologies.
Precision Technologies Selected Financial Data For the Year Ended December 31 ($ in millions) 2024 2023 Sales $ 2,229.4 $ 2,223.7 Operating profit 500.0 544.2 Depreciation 29.0 27.2 Amortization 84.0 3.6 Operating profit as a % of sales 22.4 % 24.5 % Depreciation as a % of sales 1.3 % 1.2 % Amortization as a % of sales 3.8 % 0.2 % Components of Sales Growth 2024 vs. 2023 Total revenue growth (GAAP) 0.3 % Impact of: Acquisitions and divestitures (4.4) % Currency exchange rates 0.4 % Core revenue growth (Non-GAAP) (3.7) % 2024 COMPARED TO 2023 The sales result for 2024 was driven by price increases across the segment and volume increases in energetic materials and utility sensing and solutions, offset by volume reductions in test and measurement and industrial sensing products.
Year-over-year price increases in our Precision Technologies segment contributed 5.7% to sales growth during 2023 as compared to 2022, and is reflected as a component of the change in sales from existing businesses. Operating profit margin increased 120 basis points during 2023 as compared to 2022.
Year-over-year price increases in our IOS segment contributed 2.8% to sales growth in 2024, as compared to 2023, and is reflected as a component of the change in core revenue. Operating profit margin increased 190 basis points during 2024 as compared to 2023.
For a detailed discussion on the application of these and other accounting estimates, refer to Note 2 to the consolidated financial statements. Acquired Intangibles and Goodwill : Our business acquisitions typically result in the recognition of goodwill, developed technology, and other intangible assets, which affect the amount of future period amortization expense and possible impairment charges that we may incur.
Acquired Intangibles and Goodwill : Our business acquisitions, including EA, typically result in the recognition of goodwill, developed technology, and other intangible assets, which affect the amount of future period amortization expense and possible impairment charges that we may incur.
Year-over-year price increases in our Intelligent Operating Solutions segment contributed 4.2% to sales growth in 2023, as compared to 2022, and is reflected as a component of the change in sales from existing businesses. 33 Table of Contents Operating profit margin increased 300 basis points during 2023 as compared to 2022.
Year-over-year price increases in our PT segment contributed 2.4% to sales growth during 2024 as compared to 2023, and is reflected as a component of the change in core revenue. Operating profit margin decreased 210 basis points during 2024 as compared to 2023.
OPERATING EXPENSES For the Year Ended December 31 ($ in millions) 2023 2022 Sales $ 6,065.3 $ 5,825.7 Selling, general, and administrative (“SG&A”) expenses 2,062.6 1,956.6 Research and development (“R&D”) expenses 397.8 401.5 Russia exit and wind down costs — 17.9 SG&A as a % of sales 34.0 % 33.6 % R&D as a % of sales 6.6 % 6.9 % SG&A expenses increased during 2023 as compared to 2022 due to increased employee compensation expenses, customer acquisition and marketing costs, and restructuring costs, partially offset by savings from productivity measures.
OPERATING EXPENSES For the Year Ended December 31 ($ in millions) 2024 2023 Sales $ 6,231.8 $ 6,065.3 Selling, general, and administrative (“SG&A”) expenses 2,173.5 2,062.6 Research and development (“R&D”) expenses 414.0 397.8 SG&A as a % of sales 34.9 % 34.0 % R&D as a % of sales 6.6 % 6.6 % SG&A expenses increased during 2024 as compared to 2023, primarily due to higher intangible amortization and incremental operating costs from our recent acquisitions, transaction and separation costs, and employee compensation, partially offset by benefits from productivity measures and lower discrete restructuring costs.
Operating cash flows were approximately $1.4 billion in 2023, representing an increase of $50 million, or approximately 3.9%, as compared to 2022, and primarily attributable to the following factors: • Year-over-year increases of $112 million in Operating cash flow from net earnings, net of non-cash items (Amortization, Depreciation, Stock-based compensation, and Russia exit and wind down costs incurred in 2022). • The aggregate changes in accounts receivable, inventories, and trade accounts payable used $9 million of cash during 2023 compared to using $11 million of cash during 2022.
Operating cash flows were $1.5 billion in 2024, representing an increase of $173 million, or 12.8%, as compared to 2023, primarily attributable to the following factors: • Year-over-year increases of $35 million in Operating cash flow from net earnings, net of non-cash items (Amortization, Depreciation, Stock-based compensation, Gain on sale of property, Loss from divestiture, and Loss from equity investments). • The aggregate changes in accounts receivable, inventories, and trade accounts payable generated $79 million of cash during 2024 compared to using $9 million of cash during 2023.
Geographically, year-over-year sales from existing businesses in developed markets increased by high single-digits during 2023, driven by high single-digit growth in both North America, low single-digit growth in Western Europe, and mid-teens growth in Japan.
Geographically, core revenue in developed markets increased by mid-single-digits during 2024, driven by mid-single-digit growth in North America and Western Europe, and high single-digit growth in Japan.
Year-over-year changes in operating profit margin were comprised of the following: 34 Table of Contents • Year-over-year increases in price from existing businesses and gains from productivity measures, all partially offset by higher employee compensation, unfavorable product mix, and reductions in volume — favorable 170 basis points • The year-over-year effect of amortization from existing businesses — favorable 50 basis points • The year-over-year effects of acquisition-related transaction expenses incurred in 2023 - unfavorable 10 basis points • The year-over-year effect of costs relating to the discrete restructuring plan in 2023 — unfavorable 90 basis points ADVANCED HEALTHCARE SOLUTIONS Our Advanced Healthcare Solutions segment supplies critical workflow solutions enabling healthcare providers to deliver exceptional patient care more efficiently.
Year-over-year changes in operating profit margin were comprised of the following: • Year-over-year increases in price from existing businesses and benefits from productivity measures were offset by net volume reductions in the segment, and higher employee compensation — unfavorable 80 basis points • The year-over-year net effects of acquisition and divestiture-related transaction costs incurred in the year primarily related to the EA acquisition — unfavorable 145 basis points • The year-over-year net effects of acquired and divested businesses, including amortization, and acquisition-related fair value adjustments — unfavorable 320 basis points • The year-over-year effect of costs relating to discrete restructuring plans — favorable 50 basis points • The year-over-year effect of the gain on sale of land and certain office buildings in 2024 — favorable 285 basis points ADVANCED HEALTHCARE SOLUTIONS Our AHS segment supplies critical workflow solutions enabling healthcare providers to deliver exceptional patient care more efficiently.
As of the date of the 2023 annual impairment test, the carrying value of goodwill in each reporting unit ranged from $180.0 million to $5.6 billion. Our annual goodwill impairment analysis in 2023 indicated that, in all instances, the fair values of our reporting units exceeded their carrying values and consequently did not result in an impairment charge.
Our annual goodwill impairment analysis in 2024 indicated that, in all instances, the fair values of our reporting units exceeded their carrying values and consequently did not result in an impairment charge.
Intelligent Operating Solutions Selected Financial Data For the Year Ended December 31 ($ in millions) 2023 2022 Sales $ 2,612.2 $ 2,466.1 Operating profit 628.8 519.4 Depreciation 33.9 33.9 Amortization 185.5 184.4 Operating profit as a % of sales 24.1 % 21.1 % Depreciation as a % of sales 1.3 % 1.4 % Amortization as a % of sales 7.1 % 7.5 % Components of Sales Growth 2023 vs. 2022 Total revenue growth (GAAP) 5.9 % Existing businesses (Non-GAAP) 5.9 % Acquisitions and divestitures (Non-GAAP) 0.3 % Currency exchange rates (Non-GAAP) (0.3) % 2023 COMPARED TO 2022 The sales result for 2023 was driven by price increases across the segment and demand in software and service offering in EHS and facility and asset lifecycle applications, partially offset by volume reductions in certain products in our test and measurement instrumentation business.
Intelligent Operating Solutions Selected Financial Data For the Year Ended December 31 ($ in millions) 2024 2023 Sales $ 2,714.7 $ 2,612.2 Operating profit 704.6 628.8 Depreciation 40.5 33.9 Amortization 188.3 185.5 Operating profit as a % of sales 26.0 % 24.1 % Depreciation as a % of sales 1.5 % 1.3 % Amortization as a % of sales 6.9 % 7.1 % Components of Sales Growth 2024 vs. 2023 Total revenue growth (GAAP) 3.9 % Impact of: Acquisitions and divestitures (0.8) % Currency exchange rates 0.3 % Core revenue growth (Non-GAAP) 3.4 % 2024 COMPARED TO 2023 The sales growth in 2024 was driven primarily by favorable pricing across the segment and increased volume in our gas detection products, as well as software and service offerings in facility and assets lifecycle applications, including software as a service (“SaaS”).
Advanced Healthcare Solutions Selected Financial Data For the Year Ended December 31 ($ in millions) 2023 2022 Sales $ 1,320.3 $ 1,321.4 Operating profit 105.5 107.9 Depreciation 22.2 21.6 Amortization 181.4 184.2 Operating profit as a % of sales 8.0 % 8.2 % Depreciation as a % of sales 1.7 % 1.6 % Amortization as a % of sales 13.7 % 13.9 % Components of Sales Growth 2023 vs. 2022 Total revenue growth (GAAP) (0.1) % Existing businesses (Non-GAAP) 2.2 % Acquisitions and divestitures (Non-GAAP) (1.1) % Currency exchange rates (Non-GAAP) (1.2) % 2023 COMPARED TO 2022 The sales results for 2023 was primarily driven by price increases across the segment and demand increases for software and related services, partially offset by a reduction in volume in system design services.
Advanced Healthcare Solutions Selected Financial Data For the Year Ended December 31 ($ in millions) 2024 2023 Sales $ 1,287.7 $ 1,229.4 Operating profit 155.6 101.6 Depreciation 20.2 21.2 Amortization 181.0 181.4 Operating profit as a % of sales 12.1 % 8.3 % Depreciation as a % of sales 1.6 % 1.7 % Amortization as a % of sales 14.1 % 14.8 % Components of Sales Growth 2024 vs. 2023 Total revenue growth (GAAP) 4.7 % Impact of: Currency exchange rates 1.4 % Core revenue growth (Non-GAAP) 6.1 % 2024 COMPARED TO 2023 The sales results for 2024 were driven by growth in our existing businesses due to price increases across the segment and volume increases primarily in our sterilization and dosimetry products.
The nature of these activities were broadly consistent throughout our segments and consist primarily of targeted workforce reductions in response to overall macroeconomic and other external conditions. We incurred these costs to position ourselves to provide superior products and services to customers in a cost-efficient manner, while taking into consideration the impact of broad economic uncertainties.
We incurred these costs to position ourselves to provide superior products and services to customers in a cost-efficient manner, while taking into consideration the impact of broad economic uncertainties.
As of December 31, 2023 we expect to have sufficient liquidity to satisfy our cash needs for the foreseeable future, including our cash needs in the United States. CRITICAL ACCOUNTING ESTIMATES Management’s discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with GAAP.
CRITICAL ACCOUNTING ESTIMATES Management’s discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with GAAP.
($ in millions) Total Due within one year of December 31, 2023 Due later than one year from December 31, 2023 Debt and leases: Long-term debt principal payments (a) $ 3,656.9 $ 550.0 $ 3,106.9 Interest payments on long-term debt (b) 729.8 172.0 557.8 Operating lease obligations (c) 183.7 42.2 141.5 Other: Purchase obligations (d) 487.6 355.2 132.4 Other liabilities reflected on the balance sheet under GAAP (e)(f) 2,167.8 1,145.1 1,022.7 Total $ 7,225.8 $ 2,264.5 $ 4,961.3 (a) The amount due within one year of December 31, 2023 is related to the Delayed Draw Term Loan due 2024.
($ in millions) Total Due within one year of December 31, 2024 Due later than one year from December 31, 2024 Debt and leases: Long-term debt principal payments (a) $ 3,718.8 $ 376.3 $ 3,342.5 Interest payments on long-term debt (b) 759.4 133.9 625.5 Operating lease obligations (c) 197.3 38.4 158.9 Other: Purchase obligations (d) 445.7 366.2 79.5 Other liabilities reflected on the balance sheet under GAAP (e)(f) 2,266.2 1,148.0 1,118.2 Total $ 7,387.4 $ 2,062.8 $ 5,324.6 (a) The amount due within one year of December 31, 2024 is related to the Euro Term Loan due 2025 and Yen Term Loan due 2025.
During the second quarter of 2022, we designated our ¥14.4 billion Yen-denominated variable interest rate term loan and our €275 million Euro-denominated variable interest rate term loan outstanding as net investment hedges of our investment in certain foreign operations.
As of December 31, 2024, our outstanding €500 million Euro-denominated senior unsecured notes due 2026, €700 million Euro-denominated senior unsecured notes due 2029, ¥14.4 billion Yen-denominated variable interest rate term loan, and €275 million Euro-denominated variable interest rate term loan were designated as net investment hedges of our investment in applicable foreign operations.
If actual results are not consistent with management’s estimates and assumptions, goodwill and other intangible assets may be overstated and a charge would need to be taken against net earnings which would adversely affect our financial statements. Revenue Recognition : We derive revenue from the sale of products and services.
We evaluated events or circumstances that may indicate the carrying value of our intangible assets may not be fully recoverable during the year ended December 31, 2024, and recorded no impairments. 44 Table of Contents If actual results are not consistent with management’s estimates and assumptions, goodwill and other intangible assets may be overstated and a charge would need to be taken against net earnings which would adversely affect our financial statements.
We continue to monitor the financial markets, the stability of U.S and international banks and general global economic conditions.
We continue to monitor the financial markets, the stability of U.S and international banks and general global economic conditions. In addition, our access to the capital markets and other financing sources is impacted by any change in our credit rating.

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