CAPITAL STOCK AND EARNINGS PER SHARE

9 Months Ended

Sep. 30, 2016

NOTE 10. CAPITAL STOCK AND EARNINGS PER SHARE

Capital Stock

Under Fortive’s amended and restated certificate of incorporation, as of July 1, 2016, Fortive’s authorized capital stock consists of 2.0 billion common shares with a par value of $0.01 per share and 15 million preferred shares with a par value of $0.01 per share. On July 1, 2016, the 100 shares of Fortive common stock held by Danaher were recapitalized into 345,237,561 shares of Fortive common stock held by Danaher. On July 2, 2016, Danaher distributed 100 percent of Fortive’s outstanding common stock to its stockholders. No preferred shares were issued or outstanding on September 30, 2016.

Each share of Fortive common stock entitles the holder to one vote on all matters to be voted upon by common stockholders. Fortive’s Board is authorized to issue shares of preferred stock in one or more series and has discretion to determine the rights, preferences, privileges and restrictions, including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences, of each series of preferred stock. The Board’s authority to issue preferred stock with voting rights or conversion rights that, if exercised, could adversely affect the voting power of the holders of common stock, could potentially discourage attempts by third parties to obtain control of Fortive through certain types of takeover practices.

In the third quarter of 2016, the Company declared a regular quarterly dividend of $0.07 per share paid on September 30, 2016 to holders of record on August 26, 2016. For the three months ended September 30, 2016, the $24.2 million was recorded as dividends to shareholders in the Consolidated and Combined Condensed Statement of Changes In Equity.

Net earnings per share ("EPS")

Basic EPS is calculated by dividing net earnings by the weighted average number of shares of common stock outstanding for the applicable period. Diluted EPS is similarly calculated, except that the calculation includes the dilutive effect of the assumed issuance of shares under stock-based compensation plans except where the inclusion of such shares would have an anti-dilutive impact.

The Company was incorporated on November 10, 2015, accordingly, there were no shares or common stock equivalents of the Company outstanding prior to that date. The total number of shares outstanding after the recapitalization described above were 345.2 million and is being utilized for calculation of both basic and diluted EPS for all periods prior to the Separation and specifically for the three and nine months ended October 2, 2015, and as it relates to the pre-Separation periods included in the nine months ended September 30, 2016.

Information related to the calculation of net earnings per share of common stock for the three and nine months ended September 30, 2016 is summarized as follows ($ and shares in millions, except per share amounts):



	Net Earnings (Numerator)		Shares (Denominator)	Per Share Amount
For the Three Months Ended September 30, 2016:
Basic EPS	$	226.9	346.0	$	0.66
Incremental shares from assumed exercise of dilutive options and vesting of dilutive Stock Awards	—		3.2
Diluted EPS	$	226.9	349.2	$	0.65

For the Three Months Ended October 2, 2015:
Basic EPS	$	196.6	345.2	$	0.57
Incremental shares from assumed issuance of shares under stock-based compensation plans	—		—
Diluted EPS	$	196.6	345.2	$	0.57



	Net Earnings (Numerator)		Shares (Denominator)	Per Share Amount
For the Nine Months Ended September 30, 2016:
Basic EPS	$	647.8	345.5	$	1.87
Incremental shares from assumed exercise of dilutive options and vesting of dilutive Stock Awards	—		1.1
Diluted EPS	$	647.8	346.6	$	1.87

For the Nine Months Ended October 2, 2015:
Basic EPS	$	627.7	345.2	$	1.82
Incremental shares from assumed issuance of shares under stock-based compensation plans	—		—
Diluted EPS	$	627.7	345.2	$	1.82