(Mark One) | |||||
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Or | |||||
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the transition period from to |
(State or other jurisdiction of incorporation or organization) | (I.R.S. employer identification number) |
(Address of principal executive offices) | (Zip code) |
Title of each class | Trading symbol | Name of each exchange on which registered | ||||||
☒ | Accelerated filer | ☐ | ||||||||||||||||||
Non-accelerated filer | ☐ | Smaller reporting company | ||||||||||||||||||
Emerging growth company |
PART I - | FINANCIAL INFORMATION | Page | ||||||
Item 1. | ||||||||
Item 2. | ||||||||
Item 3. | ||||||||
Item 4. | ||||||||
PART II - | OTHER INFORMATION | |||||||
Item 1A. | ||||||||
Item 2. | ||||||||
Item 5. | ||||||||
Item 6. | ||||||||
As of | |||||||||||
March 29, 2024 | December 31, 2023 | ||||||||||
(unaudited) | |||||||||||
ASSETS | |||||||||||
Current assets: | |||||||||||
Cash and equivalents | $ | $ | |||||||||
Accounts receivable less allowance for doubtful accounts of $ | |||||||||||
Inventories: | |||||||||||
Finished goods | |||||||||||
Work in process | |||||||||||
Raw materials | |||||||||||
Inventories | |||||||||||
Prepaid expenses and other current assets | |||||||||||
Total current assets | |||||||||||
Property, plant and equipment, net of accumulated depreciation of $ | |||||||||||
Other assets | |||||||||||
Goodwill | |||||||||||
Other intangible assets, net | |||||||||||
Total assets | $ | $ | |||||||||
LIABILITIES AND EQUITY | |||||||||||
Current liabilities: | |||||||||||
Trade accounts payable | |||||||||||
Accrued expenses and other current liabilities | |||||||||||
Total current liabilities | |||||||||||
Other long-term liabilities | |||||||||||
Long-term debt | |||||||||||
Commitments and Contingencies (Note 9) | |||||||||||
Equity: | |||||||||||
Common stock: $ | |||||||||||
Additional paid-in capital | |||||||||||
Treasury shares, at cost | ( | ( | |||||||||
Retained earnings | |||||||||||
Accumulated other comprehensive loss | ( | ( | |||||||||
Total Fortive stockholders’ equity | |||||||||||
Noncontrolling interests | |||||||||||
Total stockholders’ equity | |||||||||||
Total liabilities and equity | $ | $ |
Three Months Ended | |||||||||||
March 29, 2024 | March 31, 2023 | ||||||||||
Sales of products and software | $ | $ | |||||||||
Sales of services | |||||||||||
Total sales | |||||||||||
Cost of product and software sales | ( | ( | |||||||||
Cost of service sales | ( | ( | |||||||||
Total cost of sales | ( | ( | |||||||||
Gross profit | |||||||||||
Operating costs: | |||||||||||
Selling, general and administrative expenses | ( | ( | |||||||||
Research and development expenses | ( | ( | |||||||||
Gain on sale of property | |||||||||||
Operating profit | |||||||||||
Non-operating income (expense), net: | |||||||||||
Interest expense, net | ( | ( | |||||||||
Other non-operating expense, net | ( | ( | |||||||||
Earnings before income taxes | |||||||||||
Income taxes | ( | ( | |||||||||
Net earnings | $ | $ | |||||||||
Net earnings per share: | |||||||||||
Basic | $ | $ | |||||||||
Diluted | $ | $ | |||||||||
Average common stock and common equivalent shares outstanding: | |||||||||||
Basic | |||||||||||
Diluted | |||||||||||
Three Months Ended | |||||||||||
March 29, 2024 | March 31, 2023 | ||||||||||
Net earnings | $ | $ | |||||||||
Other comprehensive income (loss), net of income taxes: | |||||||||||
Foreign currency translation adjustments | ( | ||||||||||
Pension adjustments | |||||||||||
Total other comprehensive income (loss), net of income taxes | ( | ||||||||||
Comprehensive income | $ | $ |
Common Stock | Additional Paid-In Capital | Treasury Shares | Retained Earnings | Accumulated Other Comprehensive Loss | Noncontrolling Interests | ||||||||||||||||||||||||||||||||||||
Shares Outstanding | Amount | ||||||||||||||||||||||||||||||||||||||||
Balance, December 31, 2023 | $ | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||
Net earnings for the period | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
Dividends to common shareholders | — | — | — | — | ( | — | — | ||||||||||||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | ( | — | ||||||||||||||||||||||||||||||||||
Common stock-based award activity | — | — | — | — | |||||||||||||||||||||||||||||||||||||
Shares withheld for taxes | ( | — | ( | — | — | — | — | ||||||||||||||||||||||||||||||||||
Balance, March 29, 2024 | $ | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||
Common Stock | Additional Paid-In Capital | Treasury Shares | Retained Earnings | Accumulated Other Comprehensive Loss | Noncontrolling Interests | ||||||||||||||||||||||||||||||||||||
Shares Outstanding | Amount | ||||||||||||||||||||||||||||||||||||||||
Balance, December 31, 2022 | $ | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||
Net earnings for the period | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
Dividends to common shareholders | — | — | — | — | ( | — | — | ||||||||||||||||||||||||||||||||||
Other comprehensive income (loss) | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
Common stock-based award activity | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Shares withheld for taxes | ( | — | ( | — | — | — | — | ||||||||||||||||||||||||||||||||||
Change in noncontrolling interest | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
Balance, March 31, 2023 | $ | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||
Three Months Ended | |||||||||||
March 29, 2024 | March 31, 2023 | ||||||||||
Cash flows from operating activities: | |||||||||||
Net earnings | $ | $ | |||||||||
Noncash items: | |||||||||||
Amortization | |||||||||||
Depreciation | |||||||||||
Stock-based compensation expense | |||||||||||
Gain on sale of property | ( | ||||||||||
Change in trade accounts receivable, net | |||||||||||
Change in inventories | ( | ( | |||||||||
Change in trade accounts payable | ( | ||||||||||
Change in prepaid expenses and other assets | ( | ( | |||||||||
Change in accrued expenses and other liabilities | ( | ( | |||||||||
Net cash provided by operating activities | |||||||||||
Cash flows from investing activities: | |||||||||||
Cash paid for acquisitions, net of cash received | ( | ||||||||||
Payments for additions to property, plant and equipment | ( | ( | |||||||||
Proceeds from sale of property | |||||||||||
Net cash used in investing activities | ( | ( | |||||||||
Cash flows from financing activities: | |||||||||||
Net proceeds from (repayments of) commercial paper borrowings | ( | ( | |||||||||
Proceeds from borrowings (maturities greater than 90 days), net of issuance costs | |||||||||||
Repayment of borrowings (maturities greater than 90 days) | ( | ||||||||||
Payment of dividends | ( | ( | |||||||||
All other financing activities | ( | ||||||||||
Net cash provided by (used in) financing activities | ( | ||||||||||
Effect of exchange rate changes on cash and equivalents | ( | ||||||||||
Net change in cash and equivalents | ( | ( | |||||||||
Beginning balance of cash and equivalents | |||||||||||
Ending balance of cash and equivalents | $ | $ |
Foreign currency translation adjustments | Pension & post-retirement plan benefit adjustments (a) | Total | |||||||||||||||
For the Three Months Ended March 29, 2024: | |||||||||||||||||
Balance, December 31,2023 | $ | ( | $ | ( | $ | ( | |||||||||||
Other comprehensive income (loss) before reclassifications, net of income taxes | ( | ( | |||||||||||||||
Amounts reclassified from AOCI into income: | |||||||||||||||||
Increase (decrease) | (b) | ||||||||||||||||
Income tax impact | (c) | ||||||||||||||||
Amounts reclassified from AOCI into income, net of income taxes | |||||||||||||||||
Net current period other comprehensive income (loss), net of income taxes | ( | ( | |||||||||||||||
Balance, March 29, 2024 | $ | ( | $ | ( | $ | ( | |||||||||||
For the Three Months Ended March 31, 2023: | |||||||||||||||||
Balance, December 31, 2022 | $ | ( | $ | ( | $ | ( | |||||||||||
Other comprehensive income (loss) before reclassifications, net of income taxes | |||||||||||||||||
Amounts reclassified from AOCI into income: | |||||||||||||||||
Increase (decrease) | (b) | ||||||||||||||||
Income tax impact | ( | ( | |||||||||||||||
Amounts reclassified from AOCI into income, net of income taxes | |||||||||||||||||
Net current period other comprehensive income (loss), net of income taxes | |||||||||||||||||
Balance, March 31, 2023 | $ | ( | $ | ( | $ | ( | |||||||||||
(a) Includes balances relating to defined benefit plans, supplemental executive retirement plans, and other postretirement employee benefit plans. | |||||||||||||||||
(b) This component of AOCI is included in the computation of net periodic pension cost (refer to Note 11 in our most recently filed Form 10-K for additional details). | |||||||||||||||||
(c) The income tax impact amount was rounded to zero. |
Total | ||||||||
Accounts receivable | $ | |||||||
Inventories | ||||||||
Property, plant and equipment | ||||||||
Goodwill | ||||||||
Other intangible assets (customer relationships, technology, and trade names) | ||||||||
Deferred tax liabilities | ( | |||||||
Other assets and liabilities, net | ( | |||||||
Net cash consideration | $ |
Intelligent Operating Solutions | Precision Technologies | Advanced Healthcare Solutions | Total Goodwill | ||||||||||||||||||||
Balance, December 31, 2023 | $ | $ | $ | $ | |||||||||||||||||||
Measurement period adjustments for prior year acquisitions | ( | ( | |||||||||||||||||||||
Attributable to acquisitions | |||||||||||||||||||||||
Foreign currency translation and other | ( | ( | ( | ( | |||||||||||||||||||
Balance, March 29, 2024 | $ | $ | $ | $ |
March 29, 2024 | December 31, 2023 | ||||||||||||||||||||||
Gross Carrying Amount | Accumulated Amortization | Gross Carrying Amount | Accumulated Amortization | ||||||||||||||||||||
Finite-lived intangibles: | |||||||||||||||||||||||
Patents and technology | $ | $ | ( | $ | $ | ( | |||||||||||||||||
Customer relationships and other intangibles | ( | ( | |||||||||||||||||||||
Trademarks and trade names | ( | ( | |||||||||||||||||||||
Total finite-lived intangibles | ( | ( | |||||||||||||||||||||
Indefinite-lived intangibles: | |||||||||||||||||||||||
Trademarks and trade names | — | — | |||||||||||||||||||||
Total intangibles | $ | $ | ( | $ | $ | ( |
Quoted Prices in Active Market (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total | ||||||||||||||||||||
March 29, 2024 | |||||||||||||||||||||||
Deferred compensation liabilities | $ | $ | $ | $ | |||||||||||||||||||
December 31, 2023 | |||||||||||||||||||||||
Deferred compensation liabilities |
March 29, 2024 | December 31, 2023 | ||||||||||||||||||||||
Carrying Amount | Fair Value | Carrying Amount | Fair Value | ||||||||||||||||||||
Long-term debt | $ | $ | $ | $ |
March 29, 2024 | December 31, 2023 | ||||||||||
U.S. dollar-denominated commercial paper | $ | $ | |||||||||
Euro Term Loan due 2025 | |||||||||||
Yen Term Loan due 2025 | |||||||||||
Delayed-Draw Term Loan due 2024 | |||||||||||
Long-term debt, principal amounts | |||||||||||
Less: aggregate unamortized debt discounts, premiums, and issuance costs | |||||||||||
Long-term debt, carrying value | $ | $ | |||||||||
Carrying value (a) | Annual effective rate | Weighted average maturity (in days) | |||||||||||||||
U.S. dollar-denominated commercial paper | $ | % | |||||||||||||||
(a) Net of unamortized debt discount. |
March 29, 2024 | December 31, 2023 | ||||||||||
Deferred revenue - current | $ | $ | |||||||||
Deferred revenue - noncurrent | |||||||||||
Total contract liabilities | $ | $ |
March 29, 2024 | |||||
Intelligent Operating Solutions | $ | ||||
Precision Technologies | |||||
Advanced Healthcare Solutions | |||||
Total remaining performance obligations | $ |
Total | Intelligent Operating Solutions | Precision Technologies | Advanced Healthcare Solutions | ||||||||||||||||||||
Sales: | |||||||||||||||||||||||
Sales of products and software | $ | $ | $ | $ | |||||||||||||||||||
Sales of services | |||||||||||||||||||||||
Total | $ | $ | $ | $ | |||||||||||||||||||
Geographic: | |||||||||||||||||||||||
United States | $ | $ | $ | $ | |||||||||||||||||||
China | |||||||||||||||||||||||
All other (each country individually less than | |||||||||||||||||||||||
Total | $ | $ | $ | $ | |||||||||||||||||||
End markets:(a) | |||||||||||||||||||||||
Direct sales: | |||||||||||||||||||||||
Healthcare | $ | $ | $ | $ | |||||||||||||||||||
Industrial & Manufacturing | |||||||||||||||||||||||
Government | |||||||||||||||||||||||
Utilities & Power | |||||||||||||||||||||||
Communications, Electronics & Semiconductor | |||||||||||||||||||||||
Aerospace & Defense | |||||||||||||||||||||||
Retail & Consumer | |||||||||||||||||||||||
Oil & Gas | |||||||||||||||||||||||
Other | |||||||||||||||||||||||
Total direct sales | |||||||||||||||||||||||
Distributors | |||||||||||||||||||||||
Total | $ | $ | $ | $ | |||||||||||||||||||
(a) Direct sales by end market include sales made through third-party distributors where we have visibility to the end customer. | |||||||||||||||||||||||
Total | Intelligent Operating Solutions | Precision Technologies | Advanced Healthcare Solutions | ||||||||||||||||||||
Sales: | |||||||||||||||||||||||
Sales of products and software | $ | $ | $ | $ | |||||||||||||||||||
Sales of services | |||||||||||||||||||||||
Total | $ | $ | $ | $ | |||||||||||||||||||
Geographic: | |||||||||||||||||||||||
United States | $ | $ | $ | $ | |||||||||||||||||||
China | |||||||||||||||||||||||
All other (each country individually less than | |||||||||||||||||||||||
Total | $ | $ | $ | $ | |||||||||||||||||||
End markets:(a) | |||||||||||||||||||||||
Direct sales: | |||||||||||||||||||||||
Healthcare | $ | $ | $ | $ | |||||||||||||||||||
Industrial & Manufacturing | |||||||||||||||||||||||
Government | |||||||||||||||||||||||
Utilities & Power | |||||||||||||||||||||||
Communications, Electronics & Semiconductor | |||||||||||||||||||||||
Aerospace & Defense | |||||||||||||||||||||||
Retail & Consumer | |||||||||||||||||||||||
Oil & Gas | |||||||||||||||||||||||
Other | |||||||||||||||||||||||
Total direct sales | |||||||||||||||||||||||
Distributors | |||||||||||||||||||||||
Total | $ | $ | $ | $ | |||||||||||||||||||
(a) Direct sales by end market include sales made through third-party distributors where we have visibility to the end customer. |
Three Months Ended | |||||||||||
March 29, 2024 | March 31, 2023 | ||||||||||
Stock Awards: | |||||||||||
Pretax compensation expense | $ | $ | |||||||||
Income tax benefit | ( | ( | |||||||||
Stock Award expense, net of income taxes | |||||||||||
Stock options: | |||||||||||
Pretax compensation expense | |||||||||||
Income tax benefit | ( | ( | |||||||||
Stock option expense, net of income taxes | |||||||||||
Total stock-based compensation: | |||||||||||
Pretax compensation expense | |||||||||||
Income tax benefit | ( | ( | |||||||||
Total stock-based compensation expense, net of income taxes | $ | $ |
Stock Awards | $ | ||||
Stock options | |||||
Total unrecognized compensation cost | $ |
Three Months Ended | |||||||||||
March 29, 2024 | March 31, 2023 | ||||||||||
Numerator | |||||||||||
Net earnings | $ | $ | |||||||||
Denominator | |||||||||||
Weighted average common shares outstanding used in basic earnings per share | |||||||||||
Incremental common shares from: | |||||||||||
Assumed exercise of dilutive options and vesting of dilutive Stock Awards | |||||||||||
Weighted average common shares outstanding used in diluted earnings per share | |||||||||||
Net earnings per common share - Basic | $ | $ | |||||||||
Net earnings per common share - Diluted | $ | $ | |||||||||
Dividend Per Common Share | Amount ($ in millions) | ||||||||||
2024: | |||||||||||
First quarter | $ | $ | |||||||||
Total | $ | $ | |||||||||
2023: | |||||||||||
First quarter | $ | $ | |||||||||
Total | $ | $ | |||||||||
Three Months Ended | |||||||||||
March 29, 2024 | March 31, 2023 | ||||||||||
Sales: | |||||||||||
Intelligent Operating Solutions | $ | $ | |||||||||
Precision Technologies | |||||||||||
Advanced Healthcare Solutions | |||||||||||
Total | $ | $ | |||||||||
Operating Profit: | |||||||||||
Intelligent Operating Solutions | $ | $ | |||||||||
Precision Technologies | |||||||||||
Advanced Healthcare Solutions | |||||||||||
Other | ( | ( | |||||||||
Total Operating Profit | |||||||||||
Interest expense, net | ( | ( | |||||||||
Other non-operating expense, net | ( | ( | |||||||||
Earnings before income taxes | $ | $ |
% Change Three Months Ended March 29, 2024 vs. Comparable 2023 Period | |||||
Total revenue growth (GAAP) | 4.4 | % | |||
Core (Non-GAAP) | 2.5 | % | |||
Acquisitions and divestitures (Non-GAAP) | 2.5 | % | |||
Currency exchange rates (Non-GAAP) | (0.6) | % |
Three Months Ended | |||||||||||
March 29, 2024 | March 31, 2023 | ||||||||||
Intelligent Operating Solutions | $ | 665.7 | $ | 632.1 | |||||||
Precision Technologies | 559.0 | 541.1 | |||||||||
Advanced Healthcare Solutions | 299.8 | 287.5 | |||||||||
Total | $ | 1,524.5 | $ | 1,460.7 |
Three Months Ended | |||||||||||
($ in millions) | March 29, 2024 | March 31, 2023 | |||||||||
Sales | $ | 665.7 | $ | 632.1 | |||||||
Operating profit | 164.1 | 133.5 | |||||||||
Depreciation | 9.7 | 8.4 | |||||||||
Amortization | 47.6 | 46.0 | |||||||||
Operating profit as a % of sales | 24.7 | % | 21.1 | % | |||||||
Depreciation as a % of sales | 1.5 | % | 1.3 | % | |||||||
Amortization as a % of sales | 7.2 | % | 7.3 | % |
% Change Three Months Ended March 29, 2024 vs. Comparable 2023 Period | |||||
Total revenue growth (GAAP) | 5.3 | % | |||
Core (Non-GAAP) | 4.6 | % | |||
Acquisitions and divestiture (Non-GAAP) | 1.1 | % | |||
Currency exchange rates (Non-GAAP) | (0.4) | % |
Three Months Ended | |||||||||||
($ in millions) | March 29, 2024 | March 31, 2023 | |||||||||
Sales | $ | 559.0 | $ | 541.1 | |||||||
Operating profit | 149.1 | 123.6 | |||||||||
Depreciation | 8.3 | 6.2 | |||||||||
Amortization | 21.1 | 1.1 | |||||||||
Operating profit as a % of sales | 26.7 | % | 22.8 | % | |||||||
Depreciation as a % of sales | 1.5 | % | 1.1 | % | |||||||
Amortization as a % of sales | 3.8 | % | 0.2 | % |
% Change Three Months Ended March 29, 2024 vs. Comparable 2023 Period | |||||
Total revenue growth (GAAP) | 3.3 | % | |||
Core (Non-GAAP) | (1.5) | % | |||
Acquisitions and divestiture (Non-GAAP) | 5.6 | % | |||
Currency exchange rates (Non-GAAP) | (0.8) | % |
Three Months Ended | |||||||||||
($ in millions) | March 29, 2024 | March 31, 2023 | |||||||||
Sales | $ | 299.8 | $ | 287.5 | |||||||
Operating profit | 27.5 | 15.4 | |||||||||
Depreciation | 5.1 | 4.9 | |||||||||
Amortization | 45.0 | 45.3 | |||||||||
Operating profit as a % of sales | 9.2 | % | 5.4 | % | |||||||
Depreciation as a % of sales | 1.7 | % | 1.7 | % | |||||||
Amortization as a % of sales | 15.0 | % | 15.8 | % |
% Change Three Months Ended March 29, 2024 vs. Comparable 2023 period | |||||
Total revenue growth (GAAP) | 4.3 | % | |||
Core (Non-GAAP) | 5.5 | % | |||
Currency exchange rates (Non-GAAP) | (1.2) | % |
Three Months Ended | |||||||||||
($ in millions) | March 29, 2024 | March 31, 2023 | |||||||||
Sales | $ | 1,524.5 | $ | 1,460.7 | |||||||
Cost of sales | (620.3) | (612.5) | |||||||||
Gross profit | $ | 904.2 | $ | 848.2 | |||||||
Gross profit margin | 59.3 | % | 58.1 | % |
Three Months Ended | |||||||||||
($ in millions) | March 29, 2024 | March 31, 2023 | |||||||||
Sales | $ | 1,524.5 | $ | 1,460.7 | |||||||
Selling, general and administrative (“SG&A”) | 561.0 | 507.7 | |||||||||
Research and development (“R&D”) | 104.1 | 100.1 | |||||||||
SG&A as a % of sales | 36.8 | % | 34.8 | % | |||||||
R&D as a % of sales | 6.8 | % | 6.9 | % |
Three Months Ended | |||||||||||
($ in millions) | March 29, 2024 | March 31, 2023 | |||||||||
Net cash provided by operating activities | $ | 256.7 | $ | 174.4 | |||||||
Cash paid for acquisitions, net of cash received | $ | (1,721.8) | $ | — | |||||||
Payments for additions to property, plant and equipment | (26.4) | (24.8) | |||||||||
Proceeds from sale of property | 10.8 | — | |||||||||
Net cash used in investing activities | $ | (1,737.4) | $ | (24.8) | |||||||
Net proceeds from (repayments of) commercial paper borrowings | $ | (426.8) | $ | (159.3) | |||||||
Proceeds from borrowings (maturities greater than 90 days), net of issuance costs | 1,736.4 | — | |||||||||
Repayment of borrowings (maturities greater than 90 days) | (1,000.0) | — | |||||||||
Payment of dividends | (28.1) | (24.7) | |||||||||
All other financing activities | 25.4 | (3.1) | |||||||||
Net cash provided by (used in) financing activities | $ | 306.9 | $ | (187.1) | |||||||
Exhibit Number | Description | |||||||
3.1 | ||||||||
3.2 | ||||||||
4.1 | ||||||||
4.2 | Supplemental Indenture No.1, dated as of February 13, 2024, between Fortive Corporation, as issuer, and The Bank of New York Mellon Trust Company, N.A., as trustee (incorporated by reference from Exhibit 4.2 to Fortive Corporation’s Current Report on Form 8-K filed on February 13, 2024. Commission File No. 1-37654). | |||||||
31.1 | ||||||||
31.2 | ||||||||
32.1 | ||||||||
32.2 | ||||||||
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101.SCH | Inline XBRL Taxonomy Extension Schema Document (1) | |||||||
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document (1) | |||||||
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document (1) | |||||||
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document (1) | |||||||
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document (1) | |||||||
104 | The cover page from this Quarterly Report on Form 10-Q for the quarter ended March 29, 2024, formatted in Inline XBRL and contained in Exhibit 101 |
FORTIVE CORPORATION: | ||||||||
Date: April 24, 2024 | By: | /s/ Charles E. McLaughlin | ||||||
Charles E. McLaughlin | ||||||||
Senior Vice President and Chief Financial Officer | ||||||||
Date: April 24, 2024 | By: | /s/ Christopher M. Mulhall | ||||||
Christopher M. Mulhall | ||||||||
Chief Accounting Officer | ||||||||
Date: | April 24, 2024 | By: | /s/ James A. Lico | ||||||||
James A. Lico | |||||||||||
President and Chief Executive Officer |
Date: | April 24, 2024 | By: | /s/ Charles E. McLaughlin | ||||||||
Charles E. McLaughlin | |||||||||||
Senior Vice President and Chief Financial Officer |
Date: | April 24, 2024 | By: | /s/ James A. Lico | ||||||||
James A. Lico | |||||||||||
President and Chief Executive Officer |
Date: | April 24, 2024 | By: | /s/ Charles E. McLaughlin | ||||||||
Charles E. McLaughlin | |||||||||||
Senior Vice President and Chief Financial Officer |
Consolidated Condensed Balance Sheets (Parenthetical) - USD ($) $ in Millions |
Mar. 29, 2024 |
Dec. 31, 2023 |
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Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 33.1 | $ 39.2 |
Accumulated depreciation | $ 793.1 | $ 809.0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 2,000,000,000 | 2,000,000,000 |
Common stock, shares issued (in shares) | 365,300,000 | 363,700,000 |
Common stock, shares outstanding (in shares) | 352,000,000.0 | 350,700,000 |
Consolidated Condensed Statements of Comprehensive Income (Loss) - USD ($) $ in Millions |
3 Months Ended | |
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Mar. 29, 2024 |
Mar. 31, 2023 |
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Other comprehensive income (loss), net of income taxes: | ||
Net earnings | $ 207.4 | $ 173.6 |
Foreign currency translation adjustments | (76.5) | 13.4 |
Pension adjustments | 0.1 | 0.0 |
Total other comprehensive income (loss), net of income taxes | (76.4) | 13.4 |
Comprehensive income | $ 131.0 | $ 187.0 |
BUSINESS OVERVIEW |
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Mar. 29, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 provider of essential technologies for connected workflow solutions across a range of attractive end-markets. Our strategic segments - Intelligent Operating Solutions (“IOS”), Precision Technologies (“PT”), and Advanced Healthcare Solutions (“AHS”) - include well-known brands with leading positions in their markets. Our businesses design, develop, manufacture, and service professional and engineered products, software, and services, building upon leading brand names, innovative technologies, and significant market positions. Our research and development, manufacturing, sales, distribution, service, and administrative facilities are located in more than 50 countries around the world. 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 omitted pursuant to such rules and regulations; however, we believe the disclosures are adequate to make the information presented not misleading. The unaudited 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, 2023 and the footnotes (“Notes”) thereto included within our 2023 Annual Report on Form 10-K. In our opinion, the accompanying financial statements contain all adjustments, which consist of only normal, recurring accruals necessary to fairly present our financial position, results of operations, comprehensive income, stockholders’ equity, and cash flows for the periods presented. The results of operations for the three months ended March 29, 2024, are not necessarily indicative of the results for the full year. Segment Realignment In January 2024, we realigned Invetech from the AHS segment to the PT segment, as we explored strategic alternatives for certain products and services of Invetech (the “Segment Realignment”). In March 2024, we entered into a non-binding memorandum of understanding with the management of Invetech, pursuant to which we will transfer ownership of certain product lines of Invetech to its current management team. The products and operations of Invetech that we will retain following such transfer of ownership are more closely aligned with the PT segment than the AHS segment. Prior period segment amounts in Note 3, 6, and 11 have been recast to conform to the revised segment presentation. Accumulated Other Comprehensive Loss Foreign currency translation adjustments are generally not adjusted for income taxes as they relate to indefinite investments in non-U.S. subsidiaries. As of March 29, 2024, our outstanding €500 million Euro-denominated senior unsecured notes due 2026, €700 million Euro-denominated senior unsecured notes due 2029, €275 million Euro-denominated term loan, and ¥14.4 billion Yen-denominated term loan were designated as net investment hedges of our investment in applicable foreign operations. We recognized after-tax foreign currency transaction gains of $8.4 million and losses of $1.7 million during the three-month periods ended March 29, 2024 and March 31, 2023, respectively, on the debt that was deferred in the foreign currency translation component of Accumulated Other Comprehensive Income (Loss) (“AOCI”) as an offset to the foreign currency translation adjustments on our investments in foreign subsidiaries. Any amounts deferred in AOCI will remain until the hedged investment is sold or substantially liquidated. We recorded no ineffectiveness from our net investment hedges during the three-month periods ended March 29, 2024 and March 31, 2023. The changes in AOCI by component are summarized below ($ in millions):
Allowances for Doubtful Accounts All trade accounts and unbilled receivables are recorded in the Consolidated Condensed Balance Sheets adjusted for any write-offs and net of allowances for credit losses. The allowances for credit losses represent management’s best estimate of the credit losses expected from our unbilled and trade accounts receivable portfolios over the life of the underlying assets. Additions to the allowances are charged to current period earnings, amounts determined to be uncollectible are charged directly against the allowances, while amounts recovered on previously written-off accounts increase the allowances. During the three-month periods ending March 29, 2024 and March 31, 2023, the activity was immaterial. Property Sale On March 14, 2024, we sold land and certain office buildings in our PT segment for $90 million, for which we received $20 million in cash proceeds and a $70 million promissory note secured by a letter of credit, with principal due in August and November 2024. The promissory note is recorded within Prepaid expenses and other current assets. During the three-month period ended March 29, 2024, we recorded a gain on sale of property of $63.1 million in the Consolidated Condensed Statements of Earnings. Concurrently, using a portion of the proceeds from the property sale, we entered into an arm’s length transaction with the Fortive Foundation (the “Foundation”), pledging a charitable contribution of $20 million, which had no donor imposed conditions or restrictions. The Foundation, a not-for-profit entity, is a related party due to certain Fortive executives serving as members of the entity’s board of directors. The charitable contribution is recorded within the “Other non-operating expense, net” line in the Consolidated Condensed Statements of Earnings and the liability related to the pledged donation is recorded within Accrued expenses and other current liabilities in the Consolidated Condensed Balance Sheets. Restructuring We initiated a discrete plan in the first quarter of 2023 that was completed during the fourth quarter of 2023. The nature of these activities were broadly consistent throughout our segments and consist primarily of targeted workforce reductions in response to overall macroeconomic and other external conditions. We incurred these costs to position ourselves to provide superior products and services to customers in a cost-efficient manner, while taking into consideration the impact of broad economic uncertainties. During the three-month period ended March 31, 2023, we incurred charges of $17.6 million. These charges are recorded within Cost of sales and Selling, general, and administrative expenses in the Consolidated Condensed Statements of Earnings. Accrued restructuring costs were $13 million and $26 million as of March 29, 2024 and December 31, 2023 and are recorded within Accrued expenses and other current liabilities in the Consolidated Condensed Balance Sheets. Recently Issued Accounting Standard In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07, Segment Reporting (Topic 280)—Improvements to Reportable Segment Disclosures, which amends the disclosure requirements for reportable segments on the interim and annual basis. This standard is effective for fiscal year ending December 31, 2024 and interim periods within fiscal year ending December 31, 2025, with early adoption permitted. 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 December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740)—Improvements to Income Tax Disclosures, which amends certain disclosure requirements related to income taxes on an annual basis. This standard is effective for fiscal year ending December 31, 2025, with early adoption permitted. The adoption of the standard will not impact our consolidated financial statements. Upon adoption, we will update the applicable annual disclosures to align with the new standard.
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ACQUISITIONS |
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Mar. 29, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combination and Asset Acquisition [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACQUISITIONS | NOTE 2. ACQUISITIONS We continually evaluate potential mergers and acquisitions that align with our business portfolio strategy. We have completed a number of acquisitions that have been accounted for as purchases of businesses and resulted in the recognition of goodwill in our financial statements. This goodwill arises when the purchase price for an acquired business exceeds its identifiable assets, net of liabilities. The purchase price for acquired businesses reflect a number of factors, including the future earnings and cash flow potential of the business, the strategic fit and resulting synergies from the complementary portfolio of the acquired business to our existing operations, industry expertise, and market access. The purchase price allocation is provisional and is subject to further adjustments as we finalize the measurement of the acquired tangible and intangible assets and liabilities, as well as the associated income tax considerations. The preliminary fair value of the net assets acquired was based on several estimates and assumptions. As additional information necessary to complete the valuation is obtained and analyzed, we will make appropriate adjustments to purchase price allocations prior to completion of the applicable measurement period, as required and as soon as practicable. During the three-month period ended March 29, 2024, immaterial adjustments were made to the purchase price allocation of prior year acquisitions. 2024 On January 3, 2024, we acquired EA Elektro-Automatik Holding GmbH (“EA”), a leading supplier of high-power electronic test solutions for energy storage, mobility, hydrogen, and renewable energy applications. The acquisition of EA will bolster our innovative portfolio of products and services for engineers with complementary test and measurement solutions enabling the global energy transition. The total consideration paid was approximately $1.72 billion, net of acquired cash. We funded this transaction with financing activities and available cash. We recorded approximately $1.2 billion of goodwill within our PT segment related to the EA acquisition, which is not tax deductible. For the three-month period ended March 29, 2024, we incurred approximately $27 million of pretax transaction-related costs related to the EA acquisition, which were primarily for banking fees, legal fees, and amounts paid to other third-party advisers. These costs were recorded within Selling, general, and administrative expenses in the Consolidated Condensed Statement of Earnings. The following table summarizes the preliminary estimated acquisition date fair values of the assets acquired and liabilities assumed as of March 29, 2024 ($ in millions):
2023 During 2023, we made four acquisitions (“the 2023 acquisitions”) in our IOS segment for an aggregate cash consideration of $101.4 million, which includes an immaterial deferred payment, net of acquired cash. The 2023 acquisitions are intended to accelerate our strategy and strengthen our product portfolio, providing world-class solutions to our customers. We recorded approximately $55.8 million of goodwill related to the acquisitions, which is not tax deductible, as well as $43.2 million of intangible assets, primarily consisting of customer relationships, technology, and trade names. All other acquired assets and assumed liabilities are immaterial.
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GOODWILL AND OTHER INTANGIBLE ASSETS |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GOODWILL AND OTHER INTANGIBLE ASSETS | NOTE 3. GOODWILL AND OTHER INTANGIBLE ASSETS The following is a roll forward of our carrying value of goodwill by segment ($ in millions):
Due to the Segment Realignment, the beginning goodwill balance for PT and AHS have been recast to conform to the revised segment presentation. Refer to Note 1 for further information on the realignment. The increase in the goodwill balance of the PT segment for the three-month period ended March 29, 2024 is a result of the EA acquisition. Refer to Note 2 for more information. The following summarizes the gross carrying value and accumulated amortization for each major category of intangible asset ($ in millions):
Finite-lived intangible assets are amortized over the shorter of their legal or estimated useful lives. During the three-month period ended March 29, 2024, we acquired finite-lived intangible assets, consisting of customer relationships, developed technology, and trade names, with a weighted average life of approximately 9 years as a result of the EA acquisition. Refer to Note 2 for additional information on the intangible assets acquired.
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FAIR VALUE MEASUREMENTS |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE MEASUREMENTS | NOTE 4. 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 liability’s 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 liabilities that are measured at fair value on a recurring basis ($ in millions):
Certain management employees participate in our nonqualified deferred compensation programs that permit such employees to defer a portion of their compensation, on a pretax basis, until after their termination of employment. All amounts deferred under such plans are unfunded, unsecured obligations and are recorded within Other long-term liabilities in the accompanying Consolidated Condensed Balance Sheets. Participants may choose among alternative earning rates for the amounts they defer, which are primarily based on investment options within our defined contribution plans for the benefit of U.S. employees (except that the earnings rates for amounts contributed unilaterally by the Company are entirely based on changes in the value of Fortive common stock). Changes in the deferred compensation liability under these programs are recognized based on changes in the fair value of the participants’ accounts and are recorded within Selling, general and administrative expenses in the Consolidated Condensed Statements of Earnings. Non-recurring Fair Value Measurements Certain non-financial assets, primarily property, plant, and equipment, goodwill, and intangible assets, are not required to be measured at fair value on a recurring basis and are reported at their carrying value. However, these assets are required to be assessed for impairment whenever events or circumstances indicate that their carrying value may not be fully recoverable, and at least annually for goodwill and indefinite-lived intangible assets. We evaluated events or circumstances that may indicate the carrying value of our non-financial assets may not be fully recoverable during the three-month period ended March 29, 2024, and recorded no impairments. Fair Value of Financial Instruments The carrying amount and fair value of financial instruments are as follows ($ in millions):
As of March 29, 2024 and December 31, 2023, the current portion of long-term debt and long-term debt, net of current maturities were categorized as Level 1. The fair value of the long-term borrowings were based on quoted market prices. The difference between the fair value and the carrying amounts of long-term borrowings may be attributable to changes in market interest rates and/or our credit ratings subsequent to the borrowing. The fair value of cash and equivalents, trade accounts receivable, net, trade accounts payable, and commercial paper approximates their carrying amount due to the short-term maturities of these instruments.
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FINANCING |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FINANCING | NOTE 5. FINANCING The components of our debt were as follows ($ in millions):
Refer to Note 10 of our 2023 Annual Report on Form 10-K for further details of our debt financing. Euro-denominated Senior Unsecured Notes Due 2026 and 2029 On February 13, 2024, we completed the registered offering of the following Euro-denominated senior unsecured notes: •€500 million in aggregate principal amount of our 3.7% Euro-denominated senior unsecured notes due 2026 (the “2026 Notes”) issued at 99.928% of their principal amount and bearing interest at 3.7% per annum. The 2026 Notes mature on February 13, 2026 with interest payable in arrears on February 13 of each year, beginning in 2025. •€700 million in aggregate principal amount of our 3.7% Euro-denominated senior unsecured notes due 2029 (the “2029 Notes”) issued at 99.943% of their principal amount and bearing interest at 3.7% per annum. The 2029 Notes mature on August 15, 2029 with interest payable in arrears on August 15 of each year, beginning in 2024. The net proceeds from the offering, after underwriting discounts and commissions and offering expenses, were approximately $1.3 billion based on the currency exchange rates at which the Euro denominated proceeds were converted into U.S. dollars. We used the net proceeds to refinance the $1.0 billion outstanding principal of the Delayed-Draw Term Loan Due 2024, refinance borrowings under the U.S. dollar-denominated commercial paper, and for general corporate purposes. Redemption Provisions and Covenants Applicable to 2026 and 2029 Notes Prior to July 15, 2029 for the 2029 Notes, and prior to maturity for the 2026 Notes, we may redeem the applicable series of notes at our option, in whole or in part, at any time and from time to time, at the applicable make-whole redemption price specified in the indentures. On or after July 15, 2029, we may redeem the 2029 Notes, in whole or in part, at any time and from time to time, at a redemption price equal to 100% of the principal amount of the 2029 Notes being redeemed plus accrued and unpaid interest thereon to, but not including, the redemption date. We may, at our option, redeem the applicable series of notes, in whole but not in part, at a redemption price equal to 100% of the principal amount of such series of notes to be redeemed, together with any accrued and unpaid interest thereon to, but not including, the redemption date, at any time, if as a result of any change in, or amendment to, the laws, regulations, treaties, or rulings of the United States or any political subdivision of or in the United States or any taxing authority thereof or therein affecting taxation, or any change in, or amendment to, the application, official interpretation, administration or enforcement of such laws, regulations, treaties or rulings (including a holding by a court of competent jurisdiction in the United States), which change or amendment is enacted, adopted, announced or become effective, we become or, based upon a written opinion of independent counsel selected by us, will become obligated to pay additional amounts with respect to the applicable series of notes. If a change of control triggering event occurs, we will, in certain circumstances, be required to make an offer to repurchase the notes from each holder at a purchase price equal to 101% of the principal amount of the notes being repurchased, plus accrued and unpaid interest to, but not including the repurchase date. A change of control triggering event is defined as the occurrence of both a change of control and a rating event, each as defined in the indentures. Except in connection with a change of control triggering event, the 2026 Notes and 2029 Notes do not have any credit rating downgrade triggers that would accelerate the maturity of the notes. The 2026 Notes and 2029 Notes contain customary covenants. None of these covenants are considered restrictive to our operations and as of March 29, 2024, we were in compliance with all of our covenants. Delayed-Draw Term Loan due 2024 On January 2, 2024, we drew down an additional $450 million of the Delayed-Draw Term Loan due 2024 as part of the funding for the acquisition of EA, with $1.0 billion outstanding immediately following such additional draw. Refer to Note 2 for additional information regarding the EA acquisition. On February 13, 2024, we used the net proceeds from the 2026 Notes and 2029 Notes to refinance the entire $1.0 billion outstanding principal and accrued interest thereon. Other Liquidity Sources We generally satisfy any short-term liquidity needs that are not met through operating cash flows and available cash primarily through issuances of commercial paper under our U.S. dollar and Euro-denominated commercial paper programs (“Commercial Paper Programs”). Under these programs, we may issue unsecured promissory notes with maturities not exceeding 397 and 183 days, respectively. Interest expense on commercial paper is paid at maturity and is generally based on our credit ratings at the time of issuance and prevailing short-term interest rates. The details of our outstanding Commercial Paper Programs as of March 29, 2024 were as follows ($ in millions):
Credit support for the Commercial Paper Programs is provided by a five-year $2.0 billion senior unsecured revolving credit facility that expires on October 18, 2027 (the “Revolving Credit Facility”) which, to the extent not otherwise providing credit support for our commercial paper programs, can also be used for working capital and other general corporate purposes. As of March 29, 2024, no borrowings were outstanding under the Revolving Credit Facility. We classified our borrowings outstanding under the Commercial Paper Programs as Long-term debt in the accompanying Consolidated Condensed Balance Sheets as we had the intent and ability, as supported by availability under the Revolving Credit Facility, to refinance these borrowings for at least one year from the balance sheet date.
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SALES | NOTE 6. 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 only subject to the passage of time. Contract assets were $107 million as of March 29, 2024 and $108 million as of December 31, 2023. Contract assets are recorded within Prepaid expenses and other current 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 assets used by our customers in certain service arrangements. As of March 29, 2024 and December 31, 2023, we had $52 million and $51 million, respectively, in net revenue-related contract costs primarily related to certain software contracts. Revenue-related contract costs are recorded within Other assets in our Consolidated Condensed Balance Sheets. These assets have estimated useful lives between and five years. Contract Liabilities — Our contract liabilities consist of deferred revenue generally related to subscription-based software contracts, PCS and extended warranty sales, where we generally receive up-front payment and recognize revenue over the service or support term. We classify deferred revenue as current or noncurrent based on the timing of when we expect to recognize revenue. The current portion of deferred revenue is recorded within Accrued expenses and other current liabilities and the noncurrent portion of deferred revenue is recorded within Other long-term liabilities in our Consolidated Condensed Balance Sheets. Our contract liabilities consisted of the following ($ in millions):
During the three-month period ended March 29, 2024, we recognized revenue related to our contract liabilities at December 31, 2023 of $196 million. The change in our contract liabilities from December 31, 2023 to March 29, 2024 was primarily due to the timing of billings and revenue recognized for subscription-based software contracts, PCS and extended warranty services. Remaining Performance Obligations — Our remaining performance obligations represent the transaction price of firm, non-cancelable orders and the average contract value for software contracts, for which work has not been performed. We have excluded performance obligations with an original expected duration of one year or less from the amounts below. The aggregate remaining performance obligations attributable to each of our segments is as follows ($ in millions):
The majority of remaining performance obligations are related to service and support contracts, which we expect to fulfill approximately 80 percent within the next two years, approximately 95 percent within the next three years, and substantially all within four years. Disaggregation of Revenue We disaggregate revenue from contracts with customers by sales of products and software and services, geographic location, and end market for each of our segments, as we believe it best depicts how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors. Due to the Segment Realignment, prior period segment amounts have been recast to conform to the revised segment presentation. Refer to Note 1 for further information on the realignment. Disaggregation of revenue for the three-month period ended March 29, 2024 is presented as follows ($ in millions):
Disaggregation of revenue for the three-month period ended March 31, 2023 is presented as follows ($ in millions):
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INCOME TAXES |
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Mar. 29, 2024 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 7. INCOME TAXES Our effective tax rates for the three-month period ended March 29, 2024 were 11.4% as compared to 15.7% for the three-month period ended March 31, 2023. The decrease in the effective tax rate for the three-month period ended March 29, 2024 as compared to the three-month period ended March 31, 2023 was primarily related to cash repatriation, resulting in a discrete tax credit in the three-month period ended March 29, 2024 Our effective tax rates for the three-month period ended March 29, 2024, differ from the U.S. federal statutory rate of 21% due primarily to the impact of credits and deductions provided by law and changes in our uncertain tax position reserves.
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STOCK-BASED COMPENSATION |
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STOCK-BASED COMPENSATION | NOTE 8. 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 March 29, 2024, approximately 12 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 15 of our 2023 Annual Report on Form 10-K. Stock-based Compensation Expense 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):
The following summarizes the unrecognized compensation cost for the Stock Plan awards as of March 29, 2024. This compensation cost is expected to be recognized over a weighted average period of approximately two years, representing the remaining service period related to the awards. Future compensation amounts will be adjusted for any changes in estimated forfeitures ($ in millions):
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COMMITMENTS AND CONTINGENCIES |
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Mar. 29, 2024 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 9. COMMITMENTS AND CONTINGENCIES For a description of our litigation and contingencies and additional information about our leases, refer to Note 14 and Note 9, respectively, in our 2023 Annual Report on Form 10-K. Warranty We generally accrue estimated warranty costs at the time of sale. In general, manufactured products are warranted against defects in material and workmanship when properly used for their intended purpose, installed correctly, and appropriately maintained. Warranty period terms depend on the nature of the product and range from 90 days up to the life of the product. The amount of the accrued warranty liability is determined based on historical information such as past experience, product failure rates or number of units repaired, estimated cost of material and labor, and, in certain instances, estimated property damage. The accrued warranty liability is reviewed on a quarterly basis and may be adjusted as additional information regarding expected warranty costs becomes known. During the three-month periods ended March 29, 2024 and March 31, 2023, warranty related activity was immaterial. Leases Operating lease costs for the three-month periods ended March 29, 2024 and March 31, 2023 was $13 million and $12 million, respectively. During both the three-month periods ended March 29, 2024 and March 31, 2023, cash paid for operating leases included in operating cash flows was $12 million. Right-of-use (“ROU”) assets obtained in exchange for operating lease obligations were $4 million during both the three-month periods ended March 29, 2024 and March 31, 2023, respectively. Operating lease ROU assets were $170 million and $155 million as of March 29, 2024 and December 31, 2023, respectively. Operating lease liabilities were $177 million and $164 million as of March 29, 2024 and December 31, 2023, respectively. Operating lease ROU assets and operating lease liabilities are recorded in the Consolidated Condensed Balance Sheets within Other assets, Accrued expenses and other current liabilities, and Other long-term liabilities, respectively. Other Matters We discovered that a subsidiary of ours made certain incorrect representations regarding status as a small business concern as defined by the Small Business Act for certain contracts that it was awarded by the Defense Logistics Agency (“DLA”). As a result, on January 26, 2024, we voluntarily notified the Department of Defense Office of Inspector General (“OIG”) and the DLA of this matter. While we are continuing to investigate, we currently do not expect this matter to have a material adverse effect on our financial condition or results of operations. However, resolution of this matter could subject us to fines or penalties, and we cannot provide assurance as to the timing or outcome of such resolution.
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NET EARNINGS PER SHARE |
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NET EARNINGS PER SHARE | NOTE 10. NET EARNINGS PER SHARE Basic net earnings per share (“EPS”) is calculated by dividing net earnings attributable to common stockholders by the weighted average number of shares of common stock outstanding for the applicable period. Diluted EPS is similarly calculated, except that the calculation includes the dilutive effect of the assumed issuance of shares under stock-based compensation plans under the treasury stock method, except where the inclusion of such shares would have an anti-dilutive impact. Anti-dilutive options excluded from the diluted EPS calculation for the three-month periods ended March 29, 2024 and March 31, 2023 were 1.2 million and 2.9 million, respectively. Information related to the calculation of net earnings per share of common stock is summarized as follows ($ and shares in millions, except per share amounts):
We declared and paid cash dividends per common share for the periods as presented below:
Share Repurchase Program On February 17, 2022, the Company's Board of Directors approved a share repurchase program authorizing the Company to repurchase up to 20 million shares of the Company's outstanding common stock from time to time on the open market or in privately negotiated transactions. There is no expiration date for the repurchase program, and the timing and amount of repurchases under the program are determined by the Company's management based on market conditions and other factors. The repurchase program may be suspended or discontinued at any time by the Board of Directors. As of December 31, 2023, there were 9 million shares remaining for repurchase under the program. On January 23, 2024, the Company’s Board of Directors increased the number of shares authorized under the share repurchase program by an additional 11 million shares. During the three-month periods ended March 29, 2024 and March 31, 2023, respectively, the Company made no repurchases under the plan. As of March 29, 2024, there were 20 million shares remaining for repurchase under the program.
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT INFORMATION | NOTE 11. SEGMENT INFORMATION We report our results in three separate business segments consisting of IOS, PT, and AHS. Our chief operating decision maker (“CODM”) assesses performance and allocates resources based on our operating segments, which are also our reportable segments. Due to the Segment Realignment, prior period segment amounts have been recast to conform to the revised segment presentation. Refer to Note 1 for further information on the realignment. Our IOS segment provides advanced instrumentation, software and services to tens of thousands of customers enabling their mission-critical workflows. These offerings include electrical test & measurement, facility and asset lifecycle software applications, connected worker safety and compliance solutions across a range of vertical end markets, including manufacturing, process industries, healthcare, utilities and power, communications and electronics, among others. Our PT segment helps solve tough technical challenges to speed breakthroughs in a wide range of applications, from food and beverage production and manufacturing to next-generation electric vehicles and clean energy, as our customers seek new test solutions to enable the electrification and connectivity of everything. Our expertise in materials, methods and measurements are reflected in our electrical test & measurement, sensing and material technologies, and cell therapy equipment design and manufacturing offered to a broad set of customers and vertical end markets, including industrial, power and energy, automotive, medical equipment, food and beverage, aerospace and defense, semiconductor, and other general industries. Our AHS segment supplies critical workflow solutions enabling healthcare providers to deliver exceptional patient care more efficiently. Our offerings include instrument sterilization solutions, instrument tracking, biomedical test tools, radiation detection and safety monitoring, and end-to-end clinical productivity software and solutions. Our healthcare offerings help ensure critical safety standards are met, instruments and operating rooms are working at peak performance, and complex procedures are followed accurately in these mission-critical healthcare environments. Our segment results are as follows ($ in millions):
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Pay vs Performance Disclosure - USD ($) $ in Millions |
3 Months Ended | |
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Mar. 29, 2024 |
Mar. 31, 2023 |
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Pay vs Performance Disclosure | ||
Net earnings | $ 207.4 | $ 173.6 |
Insider Trading Arrangements |
3 Months Ended |
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Mar. 29, 2024 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
BUSINESS OVERVIEW (Policies) |
3 Months Ended |
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Mar. 29, 2024 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Segment Realignment | Segment Realignment In January 2024, we realigned Invetech from the AHS segment to the PT segment, as we explored strategic alternatives for certain products and services of Invetech (the “Segment Realignment”). In March 2024, we entered into a non-binding memorandum of understanding with the management of Invetech, pursuant to which we will transfer ownership of certain product lines of Invetech to its current management team. The products and operations of Invetech that we will retain following such transfer of ownership are more closely aligned with the PT segment than the AHS segment.
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Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss Foreign currency translation adjustments are generally not adjusted for income taxes as they relate to indefinite investments in non-U.S. subsidiaries. As of March 29, 2024, our outstanding €500 million Euro-denominated senior unsecured notes due 2026, €700 million Euro-denominated senior unsecured notes due 2029, €275 million Euro-denominated term loan, and ¥14.4 billion Yen-denominated term loan were designated as net investment hedges of our investment in applicable foreign operations. We recognized after-tax foreign currency transaction gains of $8.4 million and losses of $1.7 million during the three-month periods ended March 29, 2024 and March 31, 2023, respectively, on the debt that was deferred in the foreign currency translation component of Accumulated Other Comprehensive Income (Loss) (“AOCI”) as an offset to the foreign currency translation adjustments on our investments in foreign subsidiaries. Any amounts deferred in AOCI will remain until the hedged investment is sold or substantially liquidated. We recorded no ineffectiveness from our net investment hedges during the three-month periods ended March 29, 2024 and March 31, 2023.
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Allowances for Doubtful Accounts | Allowances for Doubtful Accounts All trade accounts and unbilled receivables are recorded in the Consolidated Condensed Balance Sheets adjusted for any write-offs and net of allowances for credit losses. The allowances for credit losses represent management’s best estimate of the credit losses expected from our unbilled and trade accounts receivable portfolios over the life of the underlying assets. Additions to the allowances are charged to current period earnings, amounts determined to be uncollectible are charged directly against the allowances, while amounts recovered on previously written-off accounts increase the allowances. During the three-month periods ending March 29, 2024 and March 31, 2023, the activity was immaterial.
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Restructuring | Restructuring We initiated a discrete plan in the first quarter of 2023 that was completed during the fourth quarter of 2023. The nature of these activities were broadly consistent throughout our segments and consist primarily of targeted workforce reductions in response to overall macroeconomic and other external conditions. We incurred these costs to position ourselves to provide superior products and services to customers in a cost-efficient manner, while taking into consideration the impact of broad economic uncertainties. During the three-month period ended March 31, 2023, we incurred charges of $17.6 million. These charges are recorded within Cost of sales and Selling, general, and administrative expenses in the Consolidated Condensed Statements of Earnings. Accrued restructuring costs were $13 million and $26 million as of March 29, 2024 and December 31, 2023 and are recorded within Accrued expenses and other current liabilities in the Consolidated Condensed Balance Sheets.
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Recently Issued Accounting Standard | Recently Issued Accounting Standard In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07, Segment Reporting (Topic 280)—Improvements to Reportable Segment Disclosures, which amends the disclosure requirements for reportable segments on the interim and annual basis. This standard is effective for fiscal year ending December 31, 2024 and interim periods within fiscal year ending December 31, 2025, with early adoption permitted. 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 December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740)—Improvements to Income Tax Disclosures, which amends certain disclosure requirements related to income taxes on an annual basis. This standard is effective for fiscal year ending December 31, 2025, with early adoption permitted. The adoption of the standard will not impact our consolidated financial statements. Upon adoption, we will update the applicable annual disclosures to align with the new standard.
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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 liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement in its entirety.
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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 only subject to the passage of time. Contract assets were $107 million as of March 29, 2024 and $108 million as of December 31, 2023. Contract assets are recorded within Prepaid expenses and other current 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 assets used by our customers in certain service arrangements. As of March 29, 2024 and December 31, 2023, we had $52 million and $51 million, respectively, in net revenue-related contract costs primarily related to certain software contracts. Revenue-related contract costs are recorded within Other assets in our Consolidated Condensed Balance Sheets. These assets have estimated useful lives between and five years. Contract Liabilities — Our contract liabilities consist of deferred revenue generally related to subscription-based software contracts, PCS and extended warranty sales, where we generally receive up-front payment and recognize revenue over the service or support term. We classify deferred revenue as current or noncurrent based on the timing of when we expect to recognize revenue. The current portion of deferred revenue is recorded within Accrued expenses and other current liabilities and the noncurrent portion of deferred revenue is recorded within Other long-term liabilities in our Consolidated Condensed Balance Sheets. Remaining Performance Obligations — Our remaining performance obligations represent the transaction price of firm, non-cancelable orders and the average contract value for software contracts, for which work has not been performed. We have excluded performance obligations with an original expected duration of one year or less from the amounts below.
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BUSINESS OVERVIEW (Tables) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Reclassification of Accumulated Other Comprehensive Income | The changes in AOCI by component are summarized below ($ in millions):
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ACQUISITIONS (Tables) |
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Mar. 29, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combination and Asset Acquisition [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value Assets Acquired and Liabilities Assumed | The following table summarizes the preliminary estimated acquisition date fair values of the assets acquired and liabilities assumed as of March 29, 2024 ($ in millions):
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GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Goodwill | The following is a roll forward of our carrying value of goodwill by segment ($ in millions):
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Schedule of Finite Lived Intangible Assets | The following summarizes the gross carrying value and accumulated amortization for each major category of intangible asset ($ in millions):
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Schedule of Indefinite Lived Intangible Assets | The following summarizes the gross carrying value and accumulated amortization for each major category of intangible asset ($ in millions):
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FAIR VALUE MEASUREMENTS (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value, Liabilities Measured on Recurring Basis | Below is a summary of financial liabilities that are measured at fair value on a recurring basis ($ in millions):
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Schedule of Carrying Amounts and Fair Values of Financial Instruments | The carrying amount and fair value of financial instruments are as follows ($ in millions):
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FINANCING (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Components of Debt | The components of our debt were as follows ($ in millions):
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Schedule of Short-Term Debt | The details of our outstanding Commercial Paper Programs as of March 29, 2024 were as follows ($ in millions):
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SALES (Tables) |
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Mar. 29, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Contract Liabilities | Our contract liabilities consisted of the following ($ in millions):
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||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Remaining Performance Obligations | The aggregate remaining performance obligations attributable to each of our segments is as follows ($ in millions):
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Schedule of Disaggregation of Revenue | Disaggregation of revenue for the three-month period ended March 29, 2024 is presented as follows ($ in millions):
Disaggregation of revenue for the three-month period ended March 31, 2023 is presented as follows ($ in millions):
|
STOCK-BASED COMPENSATION (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 29, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Stock-Based Compensation Costs | The following summarizes the components of our stock-based compensation expense under the Stock Plan ($ in millions):
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Schedule of Future Compensation | Future compensation amounts will be adjusted for any changes in estimated forfeitures ($ in millions):
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NET EARNINGS PER SHARE (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 29, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share | Information related to the calculation of net earnings per share of common stock is summarized as follows ($ and shares in millions, except per share amounts):
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Schedule of Dividends Declared | We declared and paid cash dividends per common share for the periods as presented below:
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SEGMENT INFORMATION (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 29, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting Information | Our segment results are as follows ($ in millions):
|
BUSINESS OVERVIEW - General Narrative (Details) $ in Millions |
3 Months Ended |
---|---|
Mar. 29, 2024
USD ($)
country
| |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of countries in which entity operates (more than) | country | 50 |
Proceeds from pledged charitable contribution | $ | $ 20 |
BUSINESS OVERVIEW - Accumulated Other Comprehensive Income Loss Narrative (Details) $ in Millions |
3 Months Ended | |||
---|---|---|---|---|
Mar. 29, 2024
USD ($)
|
Mar. 31, 2023
USD ($)
|
Mar. 29, 2024
EUR (€)
|
Mar. 29, 2024
JPY (¥)
|
|
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
After-tax foreign currency transaction gain (loss) from foreign currency translation | $ | $ 8.4 | $ (1.7) | ||
Euro-denominated senior unsecured notes due 2026 | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Principal amount | € 500,000,000 | |||
Euro-denominated senior unsecured notes due 2029 | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Principal amount | 700,000,000 | |||
Euro Term Loan | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Principal amount | € 275,000,000 | |||
Yen Term Loan | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Principal amount | ¥ | ¥ 14,400,000,000 |
BUSINESS OVERVIEW - Property Sale (Details) - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 14, 2024 |
Mar. 29, 2024 |
Mar. 31, 2023 |
|
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Gain on sale of property | $ 63.1 | $ 0.0 | |
Proceeds from pledged charitable contribution | 20.0 | ||
Office Building | Precision Technologies | |||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Consideration from sale of business | $ 90.0 | ||
Proceeds from sale of property and certain office buildings | 20.0 | ||
Gain on sale of property | $ 63.1 | ||
Office Building | Precision Technologies | Letter of Credit | |||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Maximum borrowing capacity | $ 70.0 |
BUSINESS OVERVIEW - Restructuring Narrative (Details) - Facility exit and other related - Discrete Restructuring Plan - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2023 |
Mar. 29, 2024 |
Dec. 31, 2023 |
|
Restructuring Cost and Reserve [Line Items] | |||
Restructuring costs | $ 17.6 | ||
Accrued restructuring costs | $ 13.0 | $ 26.0 |
ACQUISITIONS - Schedule of Fair Value of the Assets Acquired and Liabilities (Details) - USD ($) $ in Millions |
Mar. 29, 2024 |
Dec. 31, 2023 |
---|---|---|
Business Acquisition [Line Items] | ||
Goodwill | $ 10,234.6 | $ 9,121.7 |
EA Elektro-Automatik Holding GmbH | ||
Business Acquisition [Line Items] | ||
Accounts receivable | 21.5 | |
Inventories | 35.6 | |
Property, plant and equipment | 18.7 | |
Goodwill | 1,167.0 | |
Other intangible assets (customer relationships, technology, and trade names) | 681.2 | |
Deferred tax liabilities | (183.3) | |
Other assets and liabilities, net | (22.5) | |
Net cash consideration | $ 1,718.2 |
GOODWILL AND OTHER INTANGIBLE ASSETS - Narrative (Details) |
3 Months Ended |
---|---|
Mar. 29, 2024 | |
Customer Relationships, Developed Technology and Trade Names | |
Finite-Lived Intangible Assets [Line Items] | |
Weighted average life | 9 years |
FAIR VALUE MEASUREMENTS - Fair Value Liabilities Measured on Recurring Basis (Details) - Fair Value, Measurements, Recurring - USD ($) $ in Millions |
Mar. 29, 2024 |
Dec. 31, 2023 |
---|---|---|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Deferred compensation liabilities | $ 43.2 | $ 39.9 |
Quoted Prices in Active Market (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Deferred compensation liabilities | 0.0 | 0.0 |
Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Deferred compensation liabilities | 43.2 | 39.9 |
Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Deferred compensation liabilities | $ 0.0 | $ 0.0 |
FAIR VALUE MEASUREMENTS - Narrative (Details) |
3 Months Ended |
---|---|
Mar. 29, 2024
USD ($)
| |
Fair Value Disclosures [Abstract] | |
Loss on impairment of equity investment | $ 0 |
FAIR VALUE MEASUREMENTS - Carrying Amounts and Fair Values of Financial Instruments (Details) - USD ($) $ in Millions |
Mar. 29, 2024 |
Dec. 31, 2023 |
---|---|---|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Long-term debt | $ 3,941.7 | $ 3,646.2 |
Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Long-term debt | 3,941.7 | 3,646.2 |
Long-term debt, net of current maturities fair value | $ 3,835.4 | $ 3,539.4 |
FINANCING - Outstanding Paper Programs (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 29, 2024 |
Dec. 31, 2023 |
|
Short-term Debt [Line Items] | ||
Carrying value (a) | $ 3,941.7 | $ 3,646.2 |
U.S. dollar-denominated commercial paper | Commercial Paper | ||
Short-term Debt [Line Items] | ||
Carrying value (a) | $ 818.4 | |
Annual effective rate | 5.56% | |
Weighted average maturity (in days) | 28 days |
SALES - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 29, 2024 |
Mar. 31, 2023 |
Dec. 31, 2023 |
|
Capitalized Contract Cost [Line Items] | |||
Contract assets | $ 107 | $ 108 | |
Net revenue-related contract assets | 52 | $ 51 | |
Contract liabilities, revenue recognized | $ 196 | $ 196 | |
Minimum | |||
Capitalized Contract Cost [Line Items] | |||
Useful life | 3 years | ||
Maximum | |||
Capitalized Contract Cost [Line Items] | |||
Useful life | 5 years |
SALES - Contract liabilities (Details) - USD ($) $ in Millions |
Mar. 29, 2024 |
Dec. 31, 2023 |
---|---|---|
Revenue from Contract with Customer [Abstract] | ||
Deferred revenue - current | $ 540.1 | $ 544.6 |
Deferred revenue - noncurrent | 45.4 | 45.8 |
Total contract liabilities | $ 585.5 | $ 590.4 |
SALES - Remaining Performance Obligation, Expected Timing (Details) - Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-03-30 |
Mar. 29, 2024 |
---|---|
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation, percentage | 100.00% |
Period One | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation, percentage | 80.00% |
Remaining performance obligation, expected timing | 2 years |
Period Two | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation, percentage | 95.00% |
Remaining performance obligation, expected timing | 3 years |
Period Three | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation, expected timing | 4 years |
INCOME TAXES (Details) |
3 Months Ended | |
---|---|---|
Mar. 29, 2024 |
Mar. 31, 2023 |
|
Income Tax Disclosure [Abstract] | ||
Effective tax rate (as a percent) | 11.40% | 15.70% |
STOCK-BASED COMPENSATION - Narrative (Details) shares in Millions |
3 Months Ended |
---|---|
Mar. 29, 2024
shares
| |
Share-Based Payment Arrangement [Abstract] | |
Shares of common stock reserved for issuance under the stock plan (in shares) | 12 |
Remaining service period related to the awards | 2 years |
STOCK-BASED COMPENSATION - Stock Based Compensation (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 29, 2024 |
Mar. 31, 2023 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Pretax compensation expense | $ 28.9 | $ 26.7 |
Income tax benefit | (3.7) | (3.8) |
Total stock-based compensation expense, net of income taxes | 25.2 | 22.9 |
Stock Awards | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Pretax compensation expense | 21.5 | 18.1 |
Income tax benefit | (2.6) | (2.6) |
Total stock-based compensation expense, net of income taxes | 18.9 | 15.5 |
Stock options | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Pretax compensation expense | 7.4 | 8.6 |
Income tax benefit | (1.1) | (1.2) |
Total stock-based compensation expense, net of income taxes | $ 6.3 | $ 7.4 |
STOCK-BASED COMPENSATION - Unrecognized Compensation Cost (Details) $ in Millions |
Mar. 29, 2024
USD ($)
|
---|---|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Total unrecognized compensation cost | $ 226.9 |
Stock Awards | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Total unrecognized compensation cost | 64.1 |
Stock options | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Total unrecognized compensation cost | $ 162.8 |
COMMITMENTS AND CONTINGENCIES - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 29, 2024 |
Mar. 31, 2023 |
Dec. 31, 2023 |
|
Commitments and Contingencies Disclosure [Abstract] | |||
Warranty period - minimum | 90 days | ||
Operating lease cost | $ 13 | $ 12 | |
Cash paid for operating leases | 12 | 12 | |
ROU assets obtained in exchange for operating lease obligations | 4 | $ 4 | |
Operating lease, right-of-use asset | 170 | $ 155 | |
Total lease liabilities | $ 177 | $ 164 |
NET EARNINGS PER SHARE - Antidilutive Securities Narrative (Details) - shares shares in Millions |
3 Months Ended | |
---|---|---|
Mar. 29, 2024 |
Mar. 31, 2023 |
|
Stock options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 1.2 | 2.9 |
NET EARNINGS PER SHARE - Share Repurchase Program Narrative (Details) - shares |
Mar. 29, 2024 |
Jan. 23, 2024 |
Dec. 31, 2023 |
Feb. 17, 2022 |
---|---|---|---|---|
Earnings Per Share [Abstract] | ||||
Number of shares authorized to be repurchased (in shares) | 11,000,000 | 20,000,000 | ||
Number of remaining shares authorized to be repurchased (in shares) | 20,000,000 | 9,000,000 |
NET EARNINGS PER SHARE - Earnings per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 29, 2024 |
Mar. 31, 2023 |
|
Numerator | ||
Net earnings | $ 207.4 | $ 173.6 |
Denominator | ||
Weighted average common shares outstanding used in basic earnings per share (in shares) | 351.7 | 353.6 |
Incremental common shares from: | ||
Assumed exercise of dilutive options and vesting of dilutive stock awards (in shares) | 4.3 | 2.9 |
Weighted average common shares outstanding used in diluted earnings per share (in shares) | 356.0 | 356.5 |
Net earnings per common share - Basic (in dollars per share) | $ 0.59 | $ 0.49 |
Net earnings per common share - Diluted (in dollars per share) | $ 0.58 | $ 0.49 |
NET EARNINGS PER SHARE - Dividends Declared and Paid (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 29, 2024 |
Mar. 31, 2023 |
|
Earnings Per Share [Abstract] | ||
Dividend Per Common Share (in dollars per share) | $ 0.08 | $ 0.07 |
Amount ($ in millions) | $ 28.1 | $ 24.7 |
SEGMENT INFORMATION - Narrative (Details) |
3 Months Ended |
---|---|
Mar. 29, 2024
segment
| |
Segment Reporting [Abstract] | |
Number of operating segments | 3 |
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