Financial Analysis

NOTE 4. FINANCING The components of our debt were as follows ($ in millions): July 3, 2026 December 31, 2025 Commercial paper programs $ 1,076.6 $ 650.0 4.75% senior unsecured notes due 2031 600.0 5.25% senior unsecured notes due 2036 500.0 4.30% senior unsecured notes due 2046 550.0 550.0 3.70% Euro-denominated senior unsecured notes due 2029 800.6 822.2 3.15% senior unsecured notes due 2026 900.0 3.70% Euro-denominated senior unsecured notes due 2026 291.3 Long-term debt, principal amounts 3,527.2 3,213.5 Less: aggregate unamortized debt discounts, premiums, and issuance costs 17.9 7.5 Long-term debt, carrying value 3,509.3 3,206.0 Less: current portion of long-term debt, carrying value 899.5 Long-term debt, net of current maturities $ 3,509.3 $ 2,306.5 Refer to Note 8 of our 2025 Annual Report on Form 10-K for further details of our debt financing. Commercial Paper Programs We generally satisfy any short-term liquidity needs that are not met through operating cash flows and available cash primarily through issuances of commercial paper under our U.S. dollar and Euro-denominated commercial paper programs (Commercial Paper Programs). Under these programs, we may issue unsecured promissory notes with maturities not exceeding 397 days and 183 days, respectively. Proceeds from borrowings under the Commercial Paper Programs are typically available for general corporate purposes, including acquisitions. Interest expense on commercial paper is paid at maturity and is generally bas …

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Disaggregation of revenue is presented as follows ($ in millions): Three Months Ended Total Intelligent Operating Solutions Advanced Healthcare Solutions July 3, 2026 June 27, 2025 July 3, 2026 June 27, 2025 July 3, 2026 June 27, 2025 Sales: Products and software $ 876.8 $ 812.5 $ 610.8 $ 562.6 $ 266.0 $ 249.9 Services 220.0 203.9 147.4 134.3 72.6 69.6 Total $ 1,096.8 $ 1,016.4 $ 758.2 $ 696.9 $ 338.6 $ 319.5 Geographic: North America (a) $ 660.5 $ 607.5 $ 466.5 $ 421.5 $ 194.0 $ 186.0 Asia-Pacific 190.1 175.7 120.2 107.5 69.9 68.2 Europe, Middle East, and Africa 181.3 181.2 136.7 138.0 44.6 43.2 Latin America 64.9 52.0 34.8 29.9 30.1 22.1 Total $ 1,096.8 $ 1,016.4 $ 758.2 $ 696.9 $ 338.6 $ 319.5 End markets: Healthcare $ 331.8 $ 313.3 $ 10.8 $ 10.9 $ 321.0 $ 302.4 Industrial & Manufacturing 316.4 288.6 311.9 284.1 4.5 4.5 Energy & Infrastructure 179.6 167.5 179.6 167.5 Government 93.4 91.6 83.9 82.4 9.5 9.2 Retail 87.2 75.0 87.2 75.0 Other 88.4 80.4 84.8 77.0 3.6 3.4 Total $ 1,096.8 $ 1,016.4 $ 758.2 $ 696.9 $ 338.6 $ 319.5 (a) North America is comprised of the United States and Canada. Sales attributed to the United States were 56% of total Fortive sales for the three months ended July 3, 2026 and June 27, 2025. Six Months Ended Total Intelligent Operating Solutions Advanced Healthcare Solutions July 3, 2026 June 27, 2025 July 3, 2026 June 27, 2025 July 3, 2026 June 27, 2025 Sales: Products and software $ 1,737.6 $ 1,617.2 $ 1,216.7 $ 1,131.5 $ 520.9 $ 485.7 Service …

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NOTE 7. STOCK-BASED COMPENSATION The 2016 Stock Incentive Plan (the Stock Plan), provides for the grant of stock appreciation rights, restricted stock units, and performance stock units (collectively, Stock Awards), stock options, or any other stock-based award. As of July 3, 2026, approximately 11 million shares of our common stock were available for subsequent issuance under the Stock Plan. For a full description of our Stock Plan, refer to Note 13 of our 2025 Annual Report on Form 10-K. Stock-based compensation has been recognized as a component of Selling, general and administrative expenses in the Consolidated Condensed Statements of Earnings based on the portion of the awards that are ultimately expected to vest. The following summarizes the components of our stock-based compensation expense under the Stock Plan ($ in millions): Three Months Ended Six Months Ended July 3, 2026 June 27, 2025 July 3, 2026 June 27, 2025 Stock Awards: Pretax compensation expense $ 21.9 $ 18.3 $ 40.5 $ 36.2 Income tax benefit (3.7) (3.4) (6.8) (6.4) Stock Award expense, net of income taxes 18.2 14.9 33.7 29.8 Stock options: Pretax compensation expense 2.0 4.3 4.7 9.8 Income tax benefit (0.3) (0.5) (0.6) (1.4) Stock option expense, net of income taxes 1.7 3.8 4.1 8.4 Total stock-based compensation: Pretax compensation expense 23.9 22.6 45.2 46.0 Income tax benefit (4.0) (3.9) (7.4) (7.8) Total stock-based compensation expense, net of income taxes $ 19.9 $ 18.7 $ 37.8 $ 38.2 The following summ …

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NOTE 3. FAIR VALUE MEASUREMENTS Accounting standards define fair value based on an exit price model, establish a framework for measuring fair value for assets and liabilities required to be carried at fair value, and provide for certain disclosures related to the valuation methods used within the valuation hierarchy as established within the accounting standards. This hierarchy prioritizes the inputs into three broad levels as follows: Level 1 inputs are quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 inputs are quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets in markets that are not active, or other observable characteristics for the asset or liability, including interest rates, yield curves and credit risks, or inputs that are derived principally from, or corroborated by, observable market data through correlation. Level 3 inputs are unobservable inputs based on our assumptions. A financial asset or liabilitys classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement in its entirety. Below is a summary of financial assets and liabilities that are measured at fair value on a recurring basis ($ in millions): Quoted Prices in Active Market (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Deferred compensation liabilities, as of July 3, 2026 39.9 …

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NOTE 6. INCOME TAXES Our effective tax rate for the three and six months ended July 3, 2026 was 12.4% and 14.4%, respectively, as compared to 20.1% and 18.0%, for the three and six months ended June 27, 2025, respectively. The decrease in the effective tax rate for the three and six months ended July 3, 2026 as compared to the three and six months ended June 27, 2025 was primarily related to the mix of earnings between jurisdictions and changes in valuation allowances. Our effective tax rate for the three and six months ended July 3, 2026, differs from the U.S. federal statutory rate of 21% due primarily to the impact of credits and deductions provided by law, including those associated with state income taxes, and changes in our uncertain tax position reserves.

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NOTE 8. LEASES Operating lease costs for each period are presented as follows ($ in millions): Three Months Ended Six Months Ended July 3, 2026 June 27, 2025 July 3, 2026 June 27, 2025 Operating lease costs $ 7.6 $ 6.3 $ 16.3 $ 13.9 Supplemental information related to operating leases for each period is presented as follows ($ in millions): As of July 3, 2026 December 31, 2025 Right-of-use (ROU) assets (a) $ 85.2 $ 96.1 Operating lease liabilities (b) 88.8 100.6 (a) ROU assets are recorded in the Consolidated Condensed Balance Sheets within Other assets. (b) Operating lease liabilities are recorded in the Consolidated Condensed Balance Sheets within Accrued expenses and other current liabilities, and Other long-term liabilities. Six Months Ended July 3, 2026 June 27, 2025 Cash paid for operating leases 16.6 15.4 ROU assets obtained in exchange for operating lease obligations 2.2 0.1 For additional information about our leases, refer to Note 7 in our 2025 Annual Report on Form 10-K. …

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Recently Issued Accounting Standards In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40) Disaggregation of Income Statement Expenses , which amends the disclosure requirements related to certain costs and expenses on an interim and annual basis. This standard is effective for fiscal year ending December 31, 2027, and interim periods within fiscal year ending December 31, 2028, and can be applied either on a prospective or retrospective basis. The adoption of the standard will not impact our consolidated financial statements. Upon adoption, we will update the applicable interim and annual disclosures to align with the new standard. In September 2025, the FASB issued ASU 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40) Targeted Improvements to the Accounting for Internal-Use Software , which clarifies and modernizes the software cost capitalization guidance by removing the previous development stage model and introducing a more judgment-based approach. This standard is effective for fiscal year ending December 31, 2028, and interim periods within 2028, with early adoption permitted, and could be applied using a prospective, retrospective or modified transition approach. We are currently in the process of evaluating the effects of this standard on our consolidated financial statements. In May 2026, the FASB issued ASU 2026-02, Environmental Credi …

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NOTE 5. SALES We derive revenue primarily from the sales of products, including software, and services. Revenue is recognized when control of promised products or services is transferred to customers in an amount that reflects the consideration we expect to be entitled to in exchange for those products, software, or services. Product sales include revenue from the sale of products and equipment, which includes our software and software as a service (SaaS) product offerings and equipment rentals. Service sales include revenues from extended warranties, post-contract customer support (PCS), maintenance contracts or services, contract labor to perform ongoing service at a customer location, services related to previously sold products, and software implementation services. Contract Assets In certain circumstances, we record contract assets which include unbilled amounts typically resulting from sales under contracts when revenue recognized exceeds the amount billed to the customer, and right to payment is not based only on the passage of time. Contract assets were $145 million as of July 3, 2026 and $151 million as of December 31, 2025. Contract assets are recorded within Prepaid expenses and other current assets and Other assets in our Consolidated Condensed Balance Sheets. Contract Costs We incur and capitalize incremental costs to obtain certain contracts, typically sales-related commissions where the amortization period is greater than one year and costs associated with asse …

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"NOTE 10. SEGMENT INFORMATION We report our results in two separate business segments consisting of Intelligent Operating Solutions and Advanced Healthcare Solutions. We determine our business segments based on the identification of segment managers and similarities in products, end markets, economic characteristics, technologies, and services, as well as the financial data utilized by the Company's chief executive officer. The Company's chief operating decision maker (""CODM"") is the chief executive officer. The CODM uses gross profit and operating profit at the segment level to assess performance and allocate resources, including those associated with merger and acquisition targets. The CODM also compares the actual results to expectations in assessing the performance of the segments. Operating expenses generally include selling, general and administrative expenses, and research and development expenses. Depreciation expense is allocated between Cost of sales and Selling, general, and administrative expenses. Amortization expense is recorded within Selling, general, and administrative expenses. The identifiable assets by segment are those used in each segments operations. Inter-segment amounts are not significant and are eliminated in the combined totals. Unallocated costs and other costs are not considered part of our evaluation of reportable segment operating performance. Segment results are presented as follows ($ in millions): Three Months Ended July 3, 2026 Total Inte …

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