Fortive Corporation is a diversified industrial growth company encompassing businesses that are recognized leaders in attractive markets. Fortive Corporation’s well-known brands hold leading positions in field instrumentation, transportation, sensing, product realization, automation and specialty, and franchise distribution markets. Fortive Corporation's businesses design, develop, manufacture and market professional and engineered products, software and services for a variety of end markets, building upon leading brand names, innovative technology and significant market positions.

Fortive Corporation operates in two business segments: Professional Instrumentation and Industrial Technologies. The Professional Instrumentation segment consists of Fortive Corporation's Advanced Instrumentation & Solutions and Sensing Technologies businesses. The Advanced Instrumentation & Solutions business consists of field solutions products and product realization services and products. Field solutions include a variety of compact professional test tools, thermal imaging and calibration equipment for electrical, industrial, electronic and calibration applications, and online condition-based monitoring equipment for critical infrastructure in electrical utility and industrial applications. Product realization services and products help developers and engineers convert concepts into finished products and also include highly-engineered energetic materials components used in specialized vertical applications. The Sensing Technologies business offers devices that sense, monitor and control operational or manufacturing variables, such as temperature, pressure, level, flow, turbidity and conductivity.

The Industrial Technologies segment consists of the Fortive Corporation's Transportation Technologies, Automation & Specialty Components and Franchise Distribution businesses. The Transportation Technologies business is a leading worldwide provider of solutions and services focused on fuel dispensing, remote fuel management, point-of-sale and payment systems, environmental compliance, vehicle tracking and fleet management. The Automation & Specialty Components business consists of automation and engine retarder products. The Franchise Distribution business manufactures and distributes professional tools and a full line of wheel service equipment.

Separation from Danaher Corporation—Fortive Corporation completed its separation from Danaher Corporation ("Danaher" or "Former Parent") on July 2, 2016, the first day of its fiscal third quarter (the "Separation"). The Separation was completed in the form of a pro rata distribution to Danaher stockholders of record on June 15, 2016 of 100 percent of the outstanding shares of Fortive Corporation held by Danaher. Each Danaher stockholder of record as of the close of business on June 15, 2016 received one share of Fortive Corporation common stock for every two shares of Danaher common stock held on the record date. Fortive Corporation's common stock began “regular way” trading on the New York Stock Exchange under the ticker symbol “FTV” on July 5, 2016. Fortive Corporation and the Fortive businesses (for the periods prior to the Separation) are collectively referred to as "Fortive" or "the Company" herein.

Prior to the Separation, the Fortive businesses comprised certain operating units that were included in Danaher’s Test & Measurement segment, Industrial Technologies segment (other than its Product Identification platform) and Retail/Commercial Petroleum platform (collectively the “Fortive Businesses”). On July 1, 2016, Danaher contributed the net assets of the Fortive Businesses to Fortive Corporation, formerly a wholly-owned subsidiary of Danaher. In addition, in connection with the Separation, the Company paid a cash dividend to Danaher in the amount of $3.0 billion and the 100 shares of Fortive common stock held by Danaher were recapitalized into 345,237,561 shares of Fortive common stock held by Danaher 100 percent of which were distributed to Danaher stockholders. Following the Separation, Danaher no longer owned any shares of the Company. Per share amounts in the Consolidated and Combined Condensed Statements of Earnings for periods on or prior to July 1, 2016 have been retroactively adjusted to give effect to this recapitalization.

In connection with the Separation, on July 1, 2016, Danaher and Fortive entered into a separation and distribution agreement as well as various other related agreements (collectively the “Agreements”) that govern the Separation and the relationships between the parties going forward, including a transition services agreement, an employee matters agreement, a tax matters agreement, an intellectual property matters agreement, and a Danaher Business System ("DBS") license agreement.

Prior to the Separation, the Company was dependent upon Danaher for all of its working capital and financing requirements under Danaher’s centralized approach to cash management and financing of operations of its subsidiaries. With the exception of cash, cash equivalents and borrowings clearly associated with Fortive and related to the Separation, including the financial transactions described below, financial transactions relating to the business operations of the Company during the period prior to the Separation were accounted for through the Former Parent's investment, net ("Former Parent's Investment") account of the

These financing activities yielded net proceeds of approximately $3.5 billion (including aggregate commercial paper outstanding as of September 30, 2016 of $527 million), of which $3.0 billion was paid to Danaher in June 2016 as a cash dividend in connection with the Separation. Refer to Note 5 to the Consolidated and Combined Condensed Financial Statements for additional information related to the Company’s financing activities.

Basis of Presentation—The accompanying Consolidated and Combined Condensed Financial Statements present the historical financial position, results of operations, changes in equity and cash flows of Fortive in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The combined financial statements for periods prior to the Separation were derived from Danaher's condensed consolidated financial statements and accounting records and prepared in accordance with GAAP for the preparation of carved-out combined financial statements. Through the date of the Separation, all revenues and costs as well as assets and liabilities directly associated with Fortive have been included in the combined financial statements. Prior to the Separation, the combined financial statements also included allocations of certain general, administrative, sales and marketing expenses and cost of sales from Danaher’s corporate office and from other Danaher businesses to the Company and allocations of related assets, liabilities, and the Former Parent’s investment, as applicable. The allocations were determined on a reasonable basis; however, the amounts are not necessarily representative of the amounts that would have been reflected in the financial statements had the Company been an entity that operated independently of Danaher during the applicable periods. Related party allocations prior to the Separation, including the method for such allocation, are discussed further in Note 12.

The Consolidated and Combined Condensed Financial Statements of Fortive may not be indicative of the Company's results had it been a separate stand-alone entity throughout the periods presented, nor are the results stated herein indicative of what the Company's financial position, results of operations and cash flows may be in the future.

All significant transactions between the Company and Danaher have been included in the accompanying Consolidated and Combined Condensed Financial Statements for all periods presented. Cash transactions with Danaher prior to the Separation are reflected in the accompanying Consolidated and Combined Condensed Statements of Changes in Equity as "Net transfers to Former Parent" and "Cash dividend paid to Former Parent" and in the accompanying Consolidated and Combined Condensed Balance Sheets within "Former Parent's investment, net." Former Parent's Investment, which included retained earnings prior to the Separation, represents Danaher's interest in the recorded net assets of the Company prior to the Separation. In addition, the accumulated net effect of intercompany transactions between the Company and Former Parent or Former Parent affiliates for periods prior to the Separation are included in Former Parent’s Investment.

On July 2, 2016, in connection with the Separation, Former Parent's Investment was redesignated within stockholders' equity and allocated between common stock and additional paid-in capital based on the number of shares of the Company's common stock outstanding at the distribution date. The Agreements include a "Wrong-Pockets Provision" that ensures the Separation-related transactions were executed in accordance with the Agreements. In periods subsequent to the Separation the Company and Danaher may make adjustments to balances transferred at the Separation date in accordance with the Wrong-Pockets Provision. Any such adjustments are recorded through the Former Parent’s Investment account. During the three months ended September 30, 2016, the Company recorded net Wrong-Pockets Provision adjustments of approximately $30 million.

The financial statements include the accounts of the Company and its subsidiaries. All intercompany balances and transactions have been eliminated upon consolidation. The Consolidated and Combined Condensed Financial Statements also reflect the impact of non-controlling interests. Non-controlling interests do not have a significant impact on the Company’s consolidated results of operations, therefore net earnings and net earnings per share attributable to non-controlling interests are not presented separately in the Company’s Consolidated and Combined Condensed Statements of Earnings. Net earnings attributable to non-controlling interests have been reflected in selling, general and administrative expenses ("SG&A") and were insignificant in all periods presented.

The Consolidated and Combined Condensed Financial Statements included herein have been prepared by the Company without audit, pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the "SEC"). Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations; however, the Company believes that the disclosures are adequate to make the information presented not misleading. The Consolidated and Combined Condensed Financial Statements included herein should be read in conjunction with the audited annual combined financial statements as of and for the year ended December 31, 2015 and the Notes thereto included within the Company’s Information Statement furnished as Exhibit 99.1 to the Company’s Form 8-K filed with the SEC on June 15, 2016 (the “Information Statement”).

In the opinion of the Company, the accompanying financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position of the Company as of September 30, 2016 and December 31, 2015, and its results of operations for the three and nine months ended September 30, 2016 and October 2, 2015 and its cash flows for each of the nine months then ended.

Revision of Prior Periods—In order to correct immaterial errors in the prior periods presented and thereby facilitate period-to-period comparison, the management of the Company has revised the Combined Condensed Statements of Earnings (the “Carved-Out Earnings Statements”) for the three and nine months ended October 2, 2015 (the “October Periods”) and for the three months and year ended December 31, 2015 (the “December Periods”) of the Fortive Businesses that had been prepared prior to the Separation on a carved-out basis in accordance with GAAP. In preparing the Carved-Out Earnings Statements for the October Periods prior to the Separation, both sales and SG&A included over-allocations from Danaher, in each case, by $14.4 million, which error was corrected prior to the Separation in the Carved-Out Earnings Statements for the December Periods. In effectuating such correction during the December Periods, cost of sales included over-allocations from Danaher and SG&A included under-allocations from Danaher by, in each case, $4.7 million. Both Danaher, prior to the Separation, and the management of the Company, after the Separation, have analyzed the errors both quantitatively and qualitatively, and concluded that they were not material to the periods affected.



	Three Months Ended October 2, 2015									Nine Months Ended October 2, 2015
	Previously Reported ^(a)			Corrections			As Revised			Previously Reported			Corrections			As Revised
Sales	$	1,539.0		$	(14.4	)	$	1,524.6		$	4,617.4		$	(14.4	)	$	4,603.0
Cost of sales	(777.4		)	—			(777.4		)	(2,360.3		)	—			(2,360.3		)
Gross profit	761.6			(14.4		)	747.2			2,257.1			(14.4		)	2,242.7
Operating costs:
Selling, general and administrative expenses	(364.1		)	14.4			(349.7		)	(1,038.8		)	14.4			(1,024.4		)
Research and development expenses	(95.7		)	—			(95.7		)	(286.7		)	—			(286.7		)
Operating profit	$	301.8		$	—		$	301.8		$	931.6		$	—		$	931.6

Net earnings	$	196.6		$	—		$	196.6		$	627.7		$	—		$	627.7



	Three Months Ended December 31, 2015									Year Ended December 31, 2015
	Previously Reported ^(a)			Corrections			As Revised			Previously Reported			Corrections			As Revised
Sales	$	1,561.4		$	14.4		$	1,575.8		$	6,178.8		$	—		$	6,178.8
Cost of sales	(823.2		)	4.7			(818.5		)	(3,183.5		)	4.7			(3,178.8		)
Gross profit	738.2			19.1			757.3			2,995.3			4.7			3,000.0
Operating costs:
Selling, general and administrative expenses	(309.1		)	(19.1		)	(328.2		)	(1,347.9		)	(4.7		)	(1,352.6		)
Research and development expenses	(91.0		)	—			(91.0		)	(377.7		)	—			(377.7		)
Operating profit	$	338.1		$	—		$	338.1		$	1,269.7		$	—		$	1,269.7

Net earnings	$	236.1		$	—		$	236.1		$	863.8		$	—		$	863.8

^(a) The Carved-out Earnings Statement for the three months ended October 2, 2015 and December 31, 2015 were previously reported in filings with the SEC only to the extent incorporated into the Carved-out Earnings Statements for the nine months ended October 2, 2015 and the year ended December 31, 2015, respectively.

Accumulated Other Comprehensive Income (Loss)—The changes in accumulated other comprehensive income (loss) by component are summarized below ($ in millions). Foreign currency translation adjustments are generally not adjusted for income taxes as they relate to indefinite investments in non-U.S. subsidiaries.



	Foreign currency translation adjustments			Pension & post- retirement plan benefit adjustments			Total
For the Three Months Ended September 30, 2016:
Balance, July 1, 2016	$	62.7		$	(63.5	)	$	(0.8	)
Other comprehensive income (loss) before reclassifications, net of income taxes	(25.7		)	—			(25.7		)
Amounts reclassified from accumulated other comprehensive income (loss):
Increase (decrease)	—			1.3			1.3
Income tax impact	—			(0.3		)	(0.3		)
Amounts reclassified from accumulated other comprehensive income (loss), net of income taxes	—			1.0			1.0
Net current period other comprehensive income (loss)	(25.7		)	1.0			(24.7		)
Balance, September 30, 2016	$	37.0		$	(62.5	)	$	(25.5	)

For the Three Months Ended October 2, 2015:
Balance, July 3, 2015	$	93.0		$	(71.4	)	$	21.6
Other comprehensive income (loss) before reclassifications:
Increase (decrease)	(9.9		)	(8.9		)	(18.8		)
Income tax impact	—			3.4			3.4
Other comprehensive income (loss) before reclassifications, net of income taxes	(9.9		)	(5.5		)	(15.4		)
Amounts reclassified from accumulated other comprehensive income (loss):
Increase (decrease)	—			1.6			1.6
Income tax impact	—			(0.4		)	(0.4		)
Amounts reclassified from accumulated other comprehensive income (loss), net of income taxes	—			1.2			1.2
Net current period other comprehensive income (loss)	(9.9		)	(4.3		)	(14.2		)
Balance, October 2, 2015	$	83.1		$	(75.7	)	$	7.4



	Foreign currency translation adjustments			Pension & post- retirement plan benefit adjustments			Total
For the Nine Months Ended September 30, 2016:
Balance, December 31, 2015	$	51.2		$	(65.6	)	$	(14.4	)
Other comprehensive income (loss) before reclassifications, net of income taxes	(14.2		)	—			(14.2		)
Amounts reclassified from accumulated other comprehensive income (loss):
Increase (decrease)	—			4.1			4.1
Income tax impact	—			(1.0		)	(1.0		)
Amounts reclassified from accumulated other comprehensive income (loss), net of income taxes	—			3.1			3.1
Net current period other comprehensive income (loss)	(14.2		)	3.1			(11.1		)
Balance, September 30, 2016	$	37.0		$	(62.5	)	$	(25.5	)

For the Nine Months Ended October 2, 2015:
Balance, December 31, 2014	$	182.9		$	(83.4	)	$	99.5
Other comprehensive income (loss) before reclassifications:
Increase (decrease)	(99.8		)	5.2			(94.6		)
Income tax impact	—			(1.3		)	(1.3		)
Other comprehensive income (loss) before reclassifications, net of income taxes	(99.8		)	3.9			(95.9		)
Amounts reclassified from accumulated other comprehensive income (loss):
Increase	—			5.0			5.0
Income tax impact	—			(1.2		)	(1.2		)
Amounts reclassified from accumulated other comprehensive income (loss), net of income taxes	—			3.8			3.8
Net current period other comprehensive income (loss)	(99.8		)	7.7			(92.1		)
Balance, October 2, 2015	$	83.1		$	(75.7	)	$	7.4

New Accounting Standards - In August 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which clarifies the classification and presentation of eight specific cash flow issues in the statement of cash flows. For the Company, this standard is effective beginning January 1, 2018, with early adoption permitted. The standard should be adopted using a retrospective transition approach, unless impracticable. Management has not yet completed its assessment of the impact of the new standard on the Company’s financial statements.

In March 2016, the FASB issued ASU No. 2016-09, Compensation—Stock Compensation (Topic 718), which aims to simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, classification of certain items on the statement of cash flows and accounting for forfeitures. The Company intends to adopt this standard beginning January 1, 2017 on a prospective basis. Management believes the impact of this standard on the Company's future financial statements is inherently uncertain and dependent primarily on the timing and relative value realized for future share-based transactions, and this may cause volatility in earnings after the adoption date.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which will require, among other items, lessees to recognize a right-of-use asset and a lease liability for most leases. Extensive quantitative and qualitative disclosures, including significant judgments made by management, will be required to provide greater insight into the extent of revenue and expense recognized and expected to be recognized from existing contracts. The accounting applied by a lessor is largely unchanged from that applied under the current standard. The standard must be adopted using a modified retrospective transition approach and provides for certain practical expedients. For the Company, this standard is effective beginning January 1, 2019, with early

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which impacts virtually all aspects of an entity’s revenue recognition. The core principle of Topic 606 is that revenue should be recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In July 2015, the FASB deferred the effective date of the standard by one year which results in the new standard being effective for the Company beginning January 1, 2018. In addition, during March, April and May 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net), ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing and ASU 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients, respectively, which clarified the guidance on certain items such as reporting revenue as a principal versus agent, identifying performance obligations, accounting for intellectual property licenses, assessing collectability and presentation of sales taxes. The Company is currently assessing the impact that the adoption of the new standard will have on its consolidated financial statements and related disclosures, including possible transition alternatives, and expects to adopt this standard in 2018.