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Business Overview
 9 Months Ended
Sep. 27, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Business Overview
NOTE 1. BUSINESS OVERVIEW
Fortive Corporation (“Fortive,” the “Company,” “we,” “us,” or “our”) is a diversified industrial technology growth company encompassing businesses that are recognized leaders in attractive markets. Our well-known brands hold leading positions in advanced instrumentation and solutions, sensing, transportation technology, and franchise distribution markets. Our businesses design, develop, service, 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.
We prepared the unaudited consolidated condensed financial statements included herein in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) applicable for interim periods. 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, we believe the disclosures are adequate to make the information presented not misleading. The consolidated condensed financial statements included herein should be read in conjunction with the audited annual consolidated financial statements as of and for the year ended December 31, 2018 and the footnotes (“Notes”) thereto included within our 2018 Annual Report on Form 10-K.
In our opinion, the accompanying financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to fairly present our financial position as of September 27, 2019 and December 31, 2018, our results of operations for the three and nine months ended September 27, 2019 and September 28, 2018, and cash flows for the nine months ended September 27, 2019 and September 28, 2018. Reclassification of certain prior year amounts have been made to conform to current year presentation.
On September 4, 2019, we announced our intention to separate into two independent, publicly traded companies, subject to the satisfaction of certain conditions, including obtaining final approval from our Board of Directors. The separation will create (i) an industrial technology company, retaining the Fortive name, with a differentiated portfolio of growth-oriented businesses and (ii) a global industrial company (“NewCo”) focused on the growth opportunities in the rapidly evolving transportation and mobility markets. The separation is expected to be structured in a tax-efficient manner and completed in the second half of 2020. All assets, liabilities, revenues and expenses of NewCo are included in continuing operations of the Company in the accompanying consolidated condensed financial statements.
On July 20, 2019, we completed the combination of the Tektronix Video test and monitoring equipment business (“Tektronix Video Business”) with Telestream, LLC (the “Combined Business”), a portfolio company of Genstar Capital LLC. We recognized a pre-tax gain of $41.2 million upon the combination, and hold a 33% equity stake in the Combined Business. This transaction did not meet the criteria for discontinued operations reporting, and therefore the operating results of the Tektronix Video Business prior to the combination with Telestream are included in continuing operations for all periods presented. Additionally, the equity earnings from our stake in the Combined Business are included in other non-operating expenses, net in the accompanying Consolidated Condensed Statement of Earnings.
On October 1, 2018, we completed the split-off of businesses in our automation and specialty platform (excluding our Hengstler and Dynapar businesses) (the “A&S Business”) and have reported the A&S Business as discontinued operations in our Consolidated Condensed Statements of Earnings, Consolidated Condensed Balance Sheets, and Consolidated Condensed Statements of Cash Flows for all periods presented. Unless otherwise noted, discussion within these notes to the consolidated condensed financial statements relates to continuing operations. Refer to Note 3 for additional information on discontinued operations.
 
Accumulated Other Comprehensive Income (Loss)—Foreign currency translation adjustments are generally not adjusted for income taxes as they relate to indefinite investments in non-U.S. subsidiaries. We have designated our Euro-denominated commercial paper and ¥13.8 billion senior unsecured term facility loan as net investment hedges of our investment in certain foreign operations. Accordingly, foreign currency transaction gains or losses on the debt are deferred in the foreign currency translation component of accumulated other comprehensive income (loss) (“accumulated OCI”) as an offset to the foreign currency translation adjustments on our investments in foreign subsidiaries. We recognized gains of $10.3 million and $10.4 million for the three and nine months ended September 27, 2019, respectively, in other comprehensive income related to the net investment hedge. We recognized gains of $5.1 million and $10.6 million for the three and nine months ended September 28, 2018, respectively, in other comprehensive income related to the net investment hedge. Any amounts deferred in accumulated OCI will remain until the hedged investment is sold or substantially liquidated. We recorded no ineffectiveness from our net investment hedges during the three and nine month periods ended September 27, 2019 and September 28, 2018.
The changes in accumulated other comprehensive income (loss) by component are summarized below ($ in millions):
 
Foreign
currency
translation
adjustments
 
Pension
adjustments (b)
 
Total
For the Three Months Ended September 27, 2019:
 
 
 
 
 
Balance, June 28, 2019
$
(11.3
)
 
$
(56.3
)
 
$
(67.6
)
Other comprehensive income (loss) before reclassifications, net of income taxes
(52.5
)
 
—

 
(52.5
)
Amounts reclassified from accumulated other comprehensive income (loss):
 
 
 
 
 
Increase
—

 
0.7

(a) 
0.7

Income tax impact
—

 
(0.2
)
(c) 
(0.2
)
Amounts reclassified from accumulated other comprehensive income (loss), net of income taxes
—

 
0.5

 
0.5

Net current period other comprehensive income (loss), net of income taxes
(52.5
)
 
0.5

 
(52.0
)
Balance, September 27, 2019
$
(63.8
)
 
$
(55.8
)
 
$
(119.6
)
 
 
 
 
 
 
For the Three Months Ended September 28, 2018:
 
 
 
 
 
Balance, June 29, 2018
$
0.6

 
$
(70.2
)
 
$
(69.6
)
Other comprehensive income (loss) before reclassifications, net of income taxes
(23.9
)
 
—

 
(23.9
)
Amounts reclassified from accumulated other comprehensive income (loss):
 
 
 
 
 
Increase
—

 
0.9

(a) 
0.9

Income tax impact
—

 
(0.2
)
(c) 
(0.2
)
Amounts reclassified from accumulated other comprehensive income (loss), net of income taxes
—

 
0.7

 
0.7

Net current period other comprehensive income (loss), net of income taxes
(23.9
)
 
0.7

 
(23.2
)
Balance, September 28, 2018
$
(23.3
)
 
$
(69.5
)
 
$
(92.8
)
 
(a) This accumulated other comprehensive income (loss) component is included in the computation of net periodic pension cost (refer to Note 9 for additional details).
(b) Includes balances relating to defined benefit plans, supplemental executive retirement plans and other postretirement employee benefit plans.
(c) We did not elect to reclassify the income tax effects of the Tax Cuts and Jobs Act from accumulated other comprehensive income to retained earnings.
 
Foreign
currency
translation
adjustments
 
Pension
adjustments (b)
 
Total
For the Nine Months Ended September 27, 2019:
 
 
 
 
 
Balance, December 31, 2018
$
(29.3
)
 
$
(57.3
)
 
$
(86.6
)
Other comprehensive income (loss) before reclassifications, net of income taxes
(34.5
)
 
—

 
(34.5
)
Amounts reclassified from accumulated other comprehensive income (loss):
 
 
 
 
 
Increase
—

 
2.1

(a) 
2.1

Income tax impact
—

 
(0.6
)
(c) 
(0.6
)
Amounts reclassified from accumulated other comprehensive income (loss), net of income taxes
—

 
1.5

 
1.5

Net current period other comprehensive income (loss), net of income taxes
(34.5
)
 
1.5

 
(33.0
)
Balance, September 27, 2019
$
(63.8
)
 
$
(55.8
)
 
$
(119.6
)
 
 
 
 
 
 
For the Nine Months Ended September 28, 2018:
 
 
 
 
 
Balance, December 31, 2017
$
64.0

 
$
(71.6
)
 
$
(7.6
)
Other comprehensive income (loss) before reclassifications, net of income taxes
(87.3
)
 
—

 
(87.3
)
Amounts reclassified from accumulated other comprehensive income (loss):
 
 
 
 
 
Increase
—

 
2.7

(a) 
2.7

Income tax impact
—

 
(0.6
)
(c) 
(0.6
)
Amounts reclassified from accumulated other comprehensive income (loss), net of income taxes
—

 
2.1

 
2.1

Net current period other comprehensive income (loss)
(87.3
)
 
2.1

 
(85.2
)
Balance, September 28, 2018
$
(23.3
)
 
$
(69.5
)
 
$
(92.8
)
 
(a) This accumulated other comprehensive income (loss) component is included in the computation of net periodic pension cost (refer to Note 9 for additional details).
(b) Includes balances relating to defined benefit plans, supplemental executive retirement plans and other postretirement employee benefit plans.
(c) We did not elect to reclassify the income tax effects of the Tax Cuts and Jobs Act from accumulated other comprehensive income to retained earnings.

Recently Issued Accounting Standards—In June 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which amends the impairment model by requiring entities to use a forward-looking approach, based on expected losses, to estimate credit losses on certain types of financial instruments, including trade receivables. This standard is effective for us beginning January 1, 2020. We are currently evaluating the impact of this standard on our financial statements.