Fortive Corporation
2017 Annual Report

Accelerating Progress

A message to our shareholders

James A. Lico
James A. Lico, President and Chief Executive Officer

Fellow Shareholders,

When we launched Fortive in July of 2016, we established our vision of an industrial growth company, with the Fortive Business System (FBS) as our foundation for success. Our sharpened strategic focus was centered around superior customer satisfaction, accelerated innovation and portfolio-strengthening capital deployment. Having completed our first full year as an independent company, we are proud to say that we have made tremendous progress toward those goals. As we wrap up a year defined by outperformance, we are confident that the best is yet to come for Fortive.

Our 2017 Results

We are pleased with our teams’ accomplishments as they entered this year well prepared to take advantage of our unique exposure to secular growth opportunities. Accelerating our business strategy around these trends, combined with the power of FBS, allowed us to demonstrate organic and inorganic performance ahead of our peers.

  • Market share gains and industry-leading innovations across our businesses drove core revenue growth of 4.5% and reported revenue growth of 6.9%.
  • Continued application of FBS helped expand core operating margin by 110 basis points.
  • Our laser focus on working capital productivity resulted in a 107% free cash flow conversion ratio.
  • We delivered top-tier adjusted net earnings growth of over 15%.
  • We executed our strategy and M&A playbook, deploying $1.6 billion of capital toward several acquisitions that enhance our portfolio.

We are excited to have Landauer, Industrial Scientific and Orpak join Fortive this past year. While each of these teams expands our capabilities differently, what the businesses have in common reflects our focus on building a portfolio with higher recurring revenue and extensive software and service exposure, greater stability and faster growth.

Essential Technology for the People Who Accelerate Progress

Our extraordinary team brings our shared purpose to life

At Fortive, our culture is enduring. It establishes our openness to change and our will to improve all that we do. It is deliberate, time-tested and rooted in our shared purpose and values. We live our purpose and values in a deeper way—a way that is uniquely Fortive—to ensure that we are building the company we want for the future.

While we are equally dedicated to each of our values, 2017 was a particularly significant year for teams across Fortive. That is why this year’s annual report emphasizes: We build extraordinary teams for extraordinary results.

Creating essential technology starts with our teams— extraordinary people who are constantly questioning, learning and experimenting. Our people want to innovate, solve challenging problems and make an impact on our customers’ success. We use FBS to fuel our continuous improvement mindset to make that happen.

We drive harder to achieve the next breakthrough—like at Tektronix, where our team used FBS to develop a unique go-to-market plan that drove accelerated demand for the new 5 Series Mixed-Signal Oscilloscope. We rise to meet the next challenge—like at Gilbarco Veeder-Root, where our team’s effective execution in the high growth markets is driving continued outperformance. We search for the next opportunity to make an impact—like at Setra, where a focus on team building and career development has resulted in best-in-class employee engagement while achieving record core growth.

Our Year Ahead

2018 will be an important year for us to further demonstrate our strength and define our future as Fortive. We will continue building a great company at an accelerated pace and driving outperformance across our key metrics. Through the lens of our shared purpose and values, we will focus on the following strategic and cultural priorities:

Culture of Continuous Improvement

At Fortive, we don’t just drive outstanding performance in manufacturing. FBS is constantly evolving to drive improvements in every area of our business—from sales and marketing, to game-changing innovation, to employee engagement. FBS has also become a key driver of our digital strategy. In the past, this has meant executing digital go-to-market strategies, or enhancing our portfolio with connected devices and software as a service. However, a transformation is occurring in many of our markets. To stay ahead, we must use data to anticipate trends, innovate more quickly by spending time with customers, and fill our innovation pipeline with solutions to their toughest challenges. Thoughtful application of FBS is the way we move fast, drive improvements, and accelerate outperformance.

Portfolio Enhancement

One of the ways We Compete for Shareholders is by building our portfolio to deliver long-term results. We value our shareholders and will continue to identify and invest in the areas of our portfolio that best accelerate growth and profitability—from both an organic and inorganic perspective.

  • Innovation is the hallmark of our shared purpose, and an important part of our ability to drive growth in the short and long term. We will continue to deepen our understanding of what comes next for our customers, and invest in our teams’ ability to develop and deliver solutions that solve tomorrow’s challenges.
  • Our experienced team is armed with a strong balance sheet and a proven playbook that will help us deliver consistent deployment of capital to enhance our portfolio. We have a broad and active cultivation funnel that is focused on strong brands with attractive growth and margin profiles. Equally as important, we seek companies that are a good cultural match, particularly related to FBS.
  • We look for unique opportunities to create shareholder value. Recently, we announced plans to merge our Automation and Specialty businesses—Kollmorgen, Thomson, Portescap and Jacobs Vehicle Systems—with Altra Industrial Motion in a tax-efficient transaction to make Altra a pure-play, global leader in power transmission and motion control. This is not only a step in moving our portfolio toward higher growth and increased software as-a-service exposure, it also adds significantly to our M&A capacity and creates exceptional value for our shareholders. We expect to close by the end of 2018.
Employee Experience

We are committed to accelerating employee engagement around the world. It’s about ongoing learning, challenging the status quo, solving problems together, and making a difference. Our employee value proposition — For you. For us. For growth. — is our promise to help our teams be successful every day by ensuring safe, diverse and supportive work environments, resources for professional learning, and openings for personal growth and impact. It differentiates us and establishes Fortive as a place where great people want to do their best work.

As we embark on another year of growing Fortive, we are conscious of your expectations for our success. However, the highest expectations we face are those we set for ourselves. To us, success is defined by more than just financial outperformance. It is delivering outstanding results for our customers, shareholders, and team in a purpose-driven and socially responsible way.

We are creating essential technologies, inspiring our customers and accelerating progress all over the world. Our people are empowered by our culture and our FBS toolset to drive long-term growth. And I cannot imagine a better team with which to build a promising future.

Thanks for putting your trust in us.

James A. Lico
President and Chief Executive Officer

Fluke Marketing Employees


Sales by Region

  • North America

  • Western Europe

  • High Growth Markets

  • Rest of World

Sales by End Market

  • Retail Fueling

  • Logistics & Supply Chain

  • Industrial Manufacturing

  • Other

  • Vehicle Repair

  • Semiconductor

  • Automotive

  • Government

  • Utilities & Power

  • O&G/Mining

  • A&D

  • Consumer

  • Medical

  • Food & Beverage

  • Communications & Electronics

  • Facilities

Financial Highlights for Fiscal Year Ended December 31, 2017

Pie Chart depicting the breakdown and total sales of Fortive ($6.7 Billion)

Sales increased 6.9% in the year ended December 31, 2017. Core revenues increased 4.5% over the same period.


Operating Profit Margin

Operating profit margin increased 40 bps in the year ended December 31, 2017. Core operating margin expanded 110 basis points over the same period.


Cash Dividend Rate Per Share

Fortive declared regular quarterly cash dividends of $0.07 per share or an annual payout of $0.28 per share.


Net Earnings

Net earnings for the year ended December 31, 2017 increased 19.7%. Adjusted net earnings increased 16.7% over the same period.


Free Cash Flow

Free cash flow increased 3.3% in the year ended December 31, 2017, reflecting a free cash flow conversion ratio of 107% for the same period.


Diluted Net Earnings Per Share

Diluted net earnings per share for the year ended December 31, 2017 increased 17.9%. Adjusted diluted net earnings per share increased 14.7% over the same period.


Share Price

As of 12/29/2017 close

During 2017, our stock price increased almost 35% compared to a 19% increase by the S&P 500 index.


Fortive is a diversified industrial growth company comprised of Professional Instrumentation and Industrial Technologies businesses that are recognized leaders in attractive markets. Fortive’s well-known brands hold leading positions in field solutions, transportation technologies, sensing, product realization, automation and speciality, and franchise distribution markets. With a culture rooted in continuous improvement, the core of our company’s operating model is the Fortive Business System.

Sales by Region
Sales by End Market

Measurement and monitoring that yields actionable intelligence.

Sales by Region
Sales by End Market

Field Solutions*

Our field solutions businesses deliver offline and connected hardware and software solutions that keep critical industrial, power and health infrastructure running smoothly, without interruption.
*Part of Advanced Instrumentation and Solutions

Sales by Region
Sales by End Market

Product Realization*

When it’s time to convert breakthrough concepts into advanced finished products, our product realization businesses supply engineers with the tools, modules, software and services to get it done.
*Part of Advanced Instrumentation and Solutions

Sales by Region
Sales by End Market

Sensing Technologies

Our sensing technologies businesses make precise operational measurements possible by combining material science with innovative hardware and software.

Sales by Region
Sales by End Market

Technical equipment, components, software and services for global manufacturing, repair and transportation markets.

Sales by Region
Sales by End Market

Transportation Technologies

From fleet operations and remote fuel management to safe dispensing and secure payments, our industry-leading transportation technologies keep the world moving.

Sales by Region
Sales by End Market

Automation & Specialty Components

Our automation and specialty businesses supply mission-critical components and equipment for industrial automation, robotics, medical devices and other precision control applications.

Sales by Region
Sales by End Market

Franchise Distribution

Our franchise distribution businesses offer mobile distribution of high-end tools and diagnostic equipment, as well as wheel service equipment for the automotive aftermarket.

Sales by Region
Sales by End Market

Note: Sales by end of market, presented above in increments of five percentage points, are estimates by management based on assumed participation by Fortive in the selected industries.

Comparison of 18 Month Cumulative Total Shareholder Return

Assumes Initial Investment of $100


DEC 31

DEC 31





S&P 500




S&P Industrials




Download a PDF of the Fact Sheet
View PDF
Fluke Finance Employees

Form 10-K

Our 2017 Form 10-K offers you a view of Fortive’s past year, and a deeper look into our company’s key activities. In addition to information about our financial performance, you’ll find a summary of our operations, a discussion of our strategy, descriptions of our risks, and much more. Please click below to browse the full report or view key sections.

Download Full Form 10-K
Balance Sheet
View PDF
Statement of Earnings
View PDF
Comprehensive Income
View PDF
Statement of Changes in Equity
View PDF
Statements of Cash Flows
View PDF
Results of Operations - IT
View PDF
Results of Operations - PI
View PDF
Consolidated & Combined Financial Statements
View PDF
Overview of Cash Flows & Liquidity Table
View PDF

Our Shared Purpose

Essential technology for the people who accelerate progress

By deepening our understanding of each of our values, we bring to life technology solutions that have a profound impact on the world.

The world’s demand for better, bolder, groundbreaking technology is advancing at an unprecedented rate. The Fortive team creates the technology that keeps the world moving forward. We dive deeper. We learn faster. We work smarter. We care more deeply for our customers. All in the pursuit of progress.

Employees in Obeya Room

Fortive’s rich and rewarding culture revolves around our dedication to our shared purpose.

We believe in our teams and empower them to make a difference for our communities, our customers and each other. We are inspired by our customers’ missions and challenges, and create transformative solutions to help them achieve their goals. We draw strength from our continuous improvement mindset, and relish the impact it has on both our individual and company growth. We drive real results, building a better company every day using the Fortive Business System.

Our shared purpose is grounded in our values

Circular graphic describing the four core values of Fortive: Extraordinary Teams, Customer Success, Kaizen, and Shareholders.

Our Values

We Build Extraordinary Teams for Extraordinary Results

At Fortive, we believe in our team’s ability to move the world forward. Our employees are always leaning into the next challenge, imagining the next breakthrough, and designing the next innovation. We know that a stronger team means a stronger Fortive, and we invest in our people to make growth happen. This is our promise to our employees:

For you. For us.
For growth.
Building Great Places to Work

Setra achieved best-in-class levels of trust and engagement on our annual employee engagement survey. These results stem from a renewed emphasis on recognizing team and individual victories, and empowering leaders at every level of the organization with development opportunities. Setra’s focus on people is promoting high achievement, with the team returning record core revenue growth in 2017.

Setra Team Volunteering
Supporting our Communities

Serving as a springboard for ongoing community involvement and donations, Fortive held our first annual “Day of Caring” with employees contributing an estimated 150,000 volunteer hours through over 200 team events in over 90 global locations. Our Portescap India team came together to organize evenings of fun for children at a local cancer center. The team continued its service by supporting innovation at local technology non-profits, providing career guidance to children, and protecting the environment through clean-ups, tree planting and education.

Portescap India employees with young cancer patients
Inspiring our Future

The Tektronix team launched its breakthrough 5 Series Mixed Signal Oscilloscope to help engineers develop the world’s most sophisticated systems—from smart watches to electric vehicles. The team conducted deep market research and used powerful FBS tools, like Voice of Customer and Speed Design Review, to tailor its development and commercialization approaches every step of the way. With numerous distinguished awards to its name, this significant market innovation is also growing market share for Tektronix.

Tektronix 5-Series in Action

Customer Success Inspires Our Innovation

We partner with our customers to create tomorrow’s essential technologies, fueling their success and creating sustainable advantage. We accelerate progress together.

Working in electrical boxes packed with wires presents a daily challenge and safety hazard for our customers. Fluke responded with another industry-first technology, the T6, to eliminate test leads and simplify grounding, so electricians can measure voltage easily and accurately, without compromising their safety.

Fluke T6 measuring voltage

Kaizen Is Our Way of Life

Kaizen, or continuous improvement, is a critical driver of our growth and the cornerstone of our culture. With the Fortive Business System as our foundation, we learn from our successes and failures, grow as individuals and teams, and always seek ways to improve.

At Fortive, continuous improvement is an essential part of who we are, evidenced by over 1,000 kaizens held companywide in 2017. This mindset starts at the top and was reinforced during our annual CEO Kaizen, where over 20 teams invested a week of focused work, tackling their most challenging problems. Results ranged from gross margin improvement in production cells in Thomson’s Tianjin, China location, to the creation of multi-million dollar sales funnels at Teletrac Navman.

Thomson’s Tianjin, China employees

We Compete for Shareholders

We value our shareholders’ commitment to our purpose. We dedicate ourselves to earning their loyalty every day when we look for the most e effective ways to serve our customers, improve our performance and fuel innovation.

The acquisition of Industrial Scientific (ISC), a leader in portable gas detection solutions and a safety-as-a-service pioneer, marks a significant acceleration in our strategy. ISC contributes 65% recurring revenue and strengthens our menu of connected solutions for critical maintenance and safety applications. Joining Fortive equips ISC with the technological, operational and financial resources to pursue an even more aggressive path to achieving its vision: eliminating death on the job by 2050.

Industrial Scientific monitor in the field
Kollmorgen leader presenting Our Shared Purpose


  • * Includes the impact from acquisitions and the separation from Danaher.
  • ** Non-recurring, provisional impact of the Tax Cut and Jobs Act (the “TCJA”), including the provisional amount of the remeasurement of deferred tax assets and liabilities and the provisional amount of the transitional tax obligations on deemed repatriation of foreign earnings.
  • *** The sum of the components of Adjusted Diluted Net Earnings Per Share may not equal the total amount due to rounding.

Reconciliation of Non-GAAP Financial Information to Corresponding Financial Information Presented in Accordance with GAAP
($ in millions)

2016 vs 2017

Total Revenue Growth (GAAP)


Core (Non‑GAAP)


Acquisitions* (Non‑GAAP)


Impact of currency translation (Non‑GAAP)




Year-Over-Year Operating Profit Margin (GAAP)



Year ended December 31, 2017 impact from operating profit margin of businesses that have been owned for less than one year* (Non‑GAAP)



Year ended December 31, 2017 acquisition-related transaction costs and restructuring deemed significant (Non‑GAAP)



Year-over-year core operating margin changes for year ended December 31, 2017 (defined as all year-over-year operating margin changes other than the changes identified in the line item above) (Non‑GAAP)



Free Cash Flow (Non‑GAAP)



Cash Flows from Operations (GAAP)



Less: purchases of property, plant and equipment (capital expenditures) from operations (GAAP)



Free Cash Flow (Non‑GAAP)





Net Earnings (GAAP)



TCJA Adjustments (GAAP)**


Net earnings excluding the estimated provisional TCJA impact (Non‑GAAP)**



Free Cash Flow to Net Earnings Conversion Ratio Excluding the Estimated Provisional TCJA Impact (Non‑GAAP)





Net Earnings (GAAP)



Pretax amortization of acquisition-related intangible assets in the year ended December 31, 2017 ($65 million pretax, $49 million after tax), and in the year ended December 31, 2016 ($86 million pretax, $62 million after tax)



Pretax Additional Interest Expense in the year ended December 31, 2016 ($42 million pretax, $30 million after tax)


Acquisition-related transaction costs and acquisition-related restructuring in the year ended December 31, 2017 ($22 million pretax, $16 million after tax)


Gain on sale of real property in the year ended December 31, 2017 ($8 million pretax, $5 million after tax)


Gain from acquisition in the year ended December 31, 2017 ($15 million after tax)


Estimated tax effect of the adjustments reflected above



Estimated provisional TCJA Adjustments**


Additional Income Tax Adjustment in the year ended December 31, 2016 ($30 million after tax)


Adjusted Net Earnings (Non‑GAAP)





Diluted Net Earnings Per Share (GAAP)



Pretax amortization of acquisition-related intangible assets in the year ended December 31, 2017 ($65 million pretax, $49 million after tax), and in the year ended December 31, 2016 ($86 million pretax, $62 million after tax)



Pretax Additional Interest Expense in the year ended December 31, 2016 ($42 million pretax, $30 million after tax)


Acquisition-related transaction costs and acquisition-related restructuring in the year ended December 31, 2017 ($22 million pretax, $16 million after tax)


Gain on sale of real property in the year ended December 31, 2017 ($8 million pretax, $5 million after tax)


Gain from acquisition in the year ended December 31, 2017 ($15 million after tax)


Estimated tax effect of the adjustments reflected above



Estimated provisional TCJA Adjustments**


Additional Income Tax Adjustment in the year ended December 31, 2016 ($30 million after tax)


Adjusted Diluted Net Earnings Per Share (GAAP)



Visual Management in Marketing