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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Colfax Corporation | NYSE:CFX | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 39.06 | 0 | 01:00:00 |
FORM
|
10-Q
|
☒
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
Delaware
|
|
54-1887631
|
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification Number)
|
|
|
|
||
420 National Business Parkway,
|
5th Floor
|
|
|
Annapolis Junction,
|
Maryland
|
|
20701
|
(Address of principal executive offices)
|
|
(Zip Code)
|
(301)
|
323-9000
|
(Registrant’s telephone number, including area code)
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
Common Stock, par value $0.001 per share
|
CFX
|
New York Stock Exchange
|
5.75% Tangible Equity Units
|
CFXA
|
New York Stock Exchange
|
|
Page
|
PART I - FINANCIAL INFORMATION
|
|
Item 1. Financial Statements
|
|
Condensed Consolidated Statements of Operations
|
|
Condensed Consolidated Statements of Comprehensive Income (Loss)
|
|
Condensed Consolidated Balance Sheets
|
|
Condensed Consolidated Statements of Equity
|
|
Condensed Consolidated Statements of Cash Flows
|
|
Notes to Condensed Consolidated Financial Statements
|
|
Note 1. General
|
|
Note 2. Recently Issued Accounting Pronouncements
|
|
Note 3. Discontinued Operations
|
|
Note 4. Acquisition
|
|
Note 5. Revenue
|
|
Note 6. Net Income (Loss) Per Share from Continuing Operations
|
|
Note 7. Income Taxes
|
|
Note 8. Equity
|
|
Note 9. Inventories, Net
|
|
Note 10. Debt
|
|
Note 11. Accrued Liabilities
|
|
Note 12. Financial Instruments and Fair Value Measurements
|
|
Note 13. Commitments and Contingencies
|
|
Note 14. Segment Information
|
|
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
|
Item 3. Quantitative and Qualitative Disclosures About Market Risk
|
|
Item 4. Controls and Procedures
|
|
|
|
PART II - OTHER INFORMATION
|
|
Item 1. Legal Proceedings
|
|
Item 1A. Risk Factors
|
|
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
|
|
Item 3. Defaults Upon Senior Securities
|
|
Item 4. Mine Safety Disclosures
|
|
Item 5. Other Information
|
|
Item 6. Exhibits
|
|
|
|
SIGNATURES
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
July 3, 2020
|
|
June 28, 2019
|
|
July 3, 2020
|
|
June 28, 2019
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Net sales
|
$
|
620,360
|
|
|
$
|
908,647
|
|
|
$
|
1,436,716
|
|
|
$
|
1,592,566
|
|
Cost of sales
|
379,274
|
|
|
532,589
|
|
|
847,416
|
|
|
955,495
|
|
||||
Gross profit
|
241,086
|
|
|
376,058
|
|
|
589,300
|
|
|
637,071
|
|
||||
Selling, general and administrative expense
|
235,727
|
|
|
307,939
|
|
|
527,924
|
|
|
555,788
|
|
||||
Restructuring and other related charges
|
10,280
|
|
|
26,585
|
|
|
19,460
|
|
|
37,416
|
|
||||
Operating income (loss)
|
(4,921
|
)
|
|
41,534
|
|
|
41,916
|
|
|
43,867
|
|
||||
Interest expense, net
|
28,284
|
|
|
33,171
|
|
|
53,080
|
|
|
54,992
|
|
||||
Income (loss) from continuing operations before income taxes
|
(33,205
|
)
|
|
8,363
|
|
|
(11,164
|
)
|
|
(11,125
|
)
|
||||
Income tax expense (benefit)
|
(30,063
|
)
|
|
6,151
|
|
|
(16,890
|
)
|
|
8,193
|
|
||||
Net income (loss) from continuing operations
|
(3,142
|
)
|
|
2,212
|
|
|
5,726
|
|
|
(19,318
|
)
|
||||
Loss from discontinued operations, net of taxes
|
(4,905
|
)
|
|
(468,817
|
)
|
|
(8,265
|
)
|
|
(495,289
|
)
|
||||
Net loss
|
(8,047
|
)
|
|
(466,605
|
)
|
|
(2,539
|
)
|
|
(514,607
|
)
|
||||
Less: income attributable to noncontrolling interest, net of taxes
|
427
|
|
|
2,629
|
|
|
1,454
|
|
|
6,650
|
|
||||
Net loss attributable to Colfax Corporation
|
$
|
(8,474
|
)
|
|
$
|
(469,234
|
)
|
|
$
|
(3,993
|
)
|
|
$
|
(521,257
|
)
|
Net income (loss) per share - basic & diluted
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
(0.03
|
)
|
|
$
|
0.01
|
|
|
$
|
0.03
|
|
|
$
|
(0.16
|
)
|
Discontinued operations
|
$
|
(0.04
|
)
|
|
$
|
(3.46
|
)
|
|
$
|
(0.06
|
)
|
|
$
|
(3.70
|
)
|
Consolidated operations
|
$
|
(0.06
|
)
|
|
$
|
(3.45
|
)
|
|
$
|
(0.03
|
)
|
|
$
|
(3.86
|
)
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
July 3, 2020
|
|
June 28, 2019
|
|
July 3, 2020
|
|
June 28, 2019
|
||||||||
Net loss
|
$
|
(8,047
|
)
|
|
$
|
(466,605
|
)
|
|
$
|
(2,539
|
)
|
|
$
|
(514,607
|
)
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation, net of tax expense (benefit) of $(125), $(47), $394 and $(412)
|
71,866
|
|
|
(19,865
|
)
|
|
(100,926
|
)
|
|
6,537
|
|
||||
Unrealized gain (loss) on hedging activities, net of tax benefit of $(3,977), $(2,188), $(104) and $(310)
|
(11,660
|
)
|
|
(3,696
|
)
|
|
(624
|
)
|
|
1,656
|
|
||||
Amounts reclassified from Accumulated other comprehensive loss:
|
|
|
|
|
|
|
|
||||||||
Amortization of pension and other post-retirement net actuarial gain (loss), net of tax expense (benefit) of $185, $207, $437 and $(1,719)
|
796
|
|
|
654
|
|
|
1,662
|
|
|
(8,960
|
)
|
||||
Amortization of pension and other post-retirement prior service cost
|
—
|
|
|
—
|
|
|
—
|
|
|
32
|
|
||||
Other comprehensive income (loss)
|
61,002
|
|
|
(22,907
|
)
|
|
(99,888
|
)
|
|
(735
|
)
|
||||
Comprehensive income (loss)
|
52,955
|
|
|
(489,512
|
)
|
|
(102,427
|
)
|
|
(515,342
|
)
|
||||
Less: comprehensive income (loss) attributable to noncontrolling interest
|
772
|
|
|
516
|
|
|
(795
|
)
|
|
8,656
|
|
||||
Comprehensive income (loss) attributable to Colfax Corporation
|
$
|
52,183
|
|
|
$
|
(490,028
|
)
|
|
$
|
(101,632
|
)
|
|
$
|
(523,998
|
)
|
|
Common Stock
|
Additional Paid-In Capital
|
Retained Earnings
|
Accumulated Other Comprehensive Loss
|
Noncontrolling Interest
|
Total
|
||||||||||||||
|
Shares
|
Amount
|
||||||||||||||||||
Balance at December 31, 2019
|
118,059,082
|
|
$
|
118
|
|
$
|
3,445,597
|
|
$
|
479,560
|
|
$
|
(483,845
|
)
|
$
|
48,198
|
|
$
|
3,489,628
|
|
Cumulative effect of accounting change
|
—
|
|
—
|
|
—
|
|
(4,818
|
)
|
—
|
|
—
|
|
(4,818
|
)
|
||||||
Net income
|
—
|
|
—
|
|
—
|
|
4,481
|
|
—
|
|
1,027
|
|
5,508
|
|
||||||
Distributions to noncontrolling owners
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(8
|
)
|
(8
|
)
|
||||||
Other comprehensive loss, net of tax of $4,644
|
—
|
|
—
|
|
—
|
|
—
|
|
(158,297
|
)
|
(2,593
|
)
|
(160,890
|
)
|
||||||
Common stock-based award activity
|
268,323
|
|
—
|
|
8,344
|
|
—
|
|
—
|
|
—
|
|
8,344
|
|
||||||
Balance at April 3, 2020
|
118,327,405
|
|
$
|
118
|
|
$
|
3,453,941
|
|
$
|
479,223
|
|
$
|
(642,142
|
)
|
$
|
46,624
|
|
$
|
3,337,764
|
|
Net income (loss)
|
—
|
|
—
|
|
—
|
|
(8,474
|
)
|
—
|
|
427
|
|
(8,047
|
)
|
||||||
Distributions to noncontrolling owners
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(3,734
|
)
|
(3,734
|
)
|
||||||
Other comprehensive income, net of tax of $(3,917)
|
—
|
|
—
|
|
—
|
|
—
|
|
60,658
|
|
344
|
|
61,002
|
|
||||||
Common stock-based award activity
|
61,608
|
|
—
|
|
8,591
|
|
—
|
|
—
|
|
—
|
|
8,591
|
|
||||||
Balance at July 3, 2020
|
118,389,013
|
|
$
|
118
|
|
$
|
3,462,532
|
|
$
|
470,749
|
|
$
|
(581,484
|
)
|
$
|
43,661
|
|
$
|
3,395,576
|
|
|
Common Stock
|
Additional Paid-In Capital
|
Retained Earnings
|
Accumulated Other Comprehensive Loss
|
Noncontrolling Interest
|
Total
|
||||||||||||||
|
Shares
|
Amount
|
||||||||||||||||||
Balance at December 31, 2018
|
117,275,217
|
|
$
|
117
|
|
$
|
3,057,982
|
|
$
|
991,838
|
|
$
|
(780,177
|
)
|
$
|
207,186
|
|
$
|
3,476,946
|
|
Cumulative effect of accounting change
|
—
|
|
—
|
|
—
|
|
15,368
|
|
(15,368
|
)
|
—
|
|
—
|
|
||||||
Net income (loss)
|
—
|
|
—
|
|
—
|
|
(52,023
|
)
|
—
|
|
4,021
|
|
(48,002
|
)
|
||||||
Distributions to noncontrolling owners
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(2,170
|
)
|
(2,170
|
)
|
||||||
Noncontrolling interest share repurchase
|
—
|
|
—
|
|
(22,409
|
)
|
—
|
|
(21,372
|
)
|
(48,940
|
)
|
(92,721
|
)
|
||||||
Other comprehensive income, net of tax of $(413)
|
—
|
|
—
|
|
—
|
|
—
|
|
18,053
|
|
4,119
|
|
22,172
|
|
||||||
Issuance of Tangible Equity Units
|
—
|
|
—
|
|
377,814
|
|
—
|
|
—
|
|
—
|
|
377,814
|
|
||||||
Common stock-based award activity
|
283,197
|
|
1
|
|
7,676
|
|
—
|
|
—
|
|
—
|
|
7,677
|
|
||||||
Balance at March 29, 2019
|
117,558,414
|
|
$
|
118
|
|
$
|
3,421,063
|
|
$
|
955,183
|
|
$
|
(798,864
|
)
|
$
|
164,216
|
|
$
|
3,741,716
|
|
Net (loss) income
|
—
|
|
—
|
|
—
|
|
(469,234
|
)
|
—
|
|
2,629
|
|
(466,605
|
)
|
||||||
Distributions to noncontrolling owners
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(2,970
|
)
|
(2,970
|
)
|
||||||
Noncontrolling interest share repurchase
|
—
|
|
—
|
|
(565
|
)
|
—
|
|
410
|
|
(211
|
)
|
(366
|
)
|
||||||
Other comprehensive loss, net of tax of $(1,981)
|
—
|
|
—
|
|
—
|
|
—
|
|
(20,794
|
)
|
(2,113
|
)
|
(22,907
|
)
|
||||||
Common stock-based award activity
|
108,945
|
|
—
|
|
7,481
|
|
—
|
|
—
|
|
—
|
|
7,481
|
|
||||||
Balance at June 28, 2019
|
117,667,359
|
|
$
|
118
|
|
$
|
3,427,979
|
|
$
|
485,949
|
|
$
|
(819,248
|
)
|
$
|
161,551
|
|
$
|
3,256,349
|
|
|
Six Months Ended
|
||||||
|
July 3, 2020
|
|
June 28, 2019
|
||||
|
|
|
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net loss
|
$
|
(2,539
|
)
|
|
$
|
(514,607
|
)
|
Adjustments to reconcile net loss to net cash provided by operating activities:
|
|
|
|
||||
Divestiture impairment loss
|
—
|
|
|
481,000
|
|
||
Depreciation, amortization and other impairment charges
|
120,038
|
|
|
120,469
|
|
||
Stock-based compensation expense
|
14,685
|
|
|
11,169
|
|
||
Non-cash interest expense
|
2,743
|
|
|
3,947
|
|
||
Deferred income tax benefit
|
(19,857
|
)
|
|
(17,412
|
)
|
||
(Gain) loss on sale of property, plant and equipment
|
(3,400
|
)
|
|
878
|
|
||
Pension settlement loss
|
—
|
|
|
43,774
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Trade receivables, net
|
89,231
|
|
|
(6,589
|
)
|
||
Inventories, net
|
352
|
|
|
(39,400
|
)
|
||
Accounts payable
|
(47,436
|
)
|
|
(62,831
|
)
|
||
Income taxes
|
(23,983
|
)
|
|
(33,637
|
)
|
||
Other operating assets and liabilities
|
(36,620
|
)
|
|
23,671
|
|
||
Net cash provided by operating activities
|
93,214
|
|
|
10,432
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Purchases of property, plant and equipment
|
(50,426
|
)
|
|
(63,956
|
)
|
||
Proceeds from sale of property, plant and equipment
|
4,996
|
|
|
3,256
|
|
||
Acquisitions, net of cash received
|
(7,548
|
)
|
|
(3,147,835
|
)
|
||
Net cash used in investing activities
|
(52,978
|
)
|
|
(3,208,535
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from borrowings on term credit facility
|
—
|
|
|
2,725,000
|
|
||
Payments under term credit facility
|
—
|
|
|
(518,125
|
)
|
||
Proceeds from borrowings on revolving credit facilities and other
|
635,678
|
|
|
1,575,486
|
|
||
Repayments of borrowings on revolving credit facilities and other
|
(698,910
|
)
|
|
(865,357
|
)
|
||
Payment of debt issuance costs
|
(4,560
|
)
|
|
(24,280
|
)
|
||
Proceeds from prepaid stock purchase contracts
|
—
|
|
|
377,814
|
|
||
Proceeds from issuance of common stock, net
|
2,250
|
|
|
3,988
|
|
||
Payment for noncontrolling interest share repurchase
|
—
|
|
|
(93,087
|
)
|
||
Deferred consideration and other
|
(11,871
|
)
|
|
(2,417
|
)
|
||
Net cash provided by (used in) financing activities
|
(77,413
|
)
|
|
3,179,022
|
|
||
Effect of foreign exchange rates on Cash and cash equivalents
|
(6,059
|
)
|
|
6,268
|
|
||
Decrease in Cash and cash equivalents
|
(43,236
|
)
|
|
(12,813
|
)
|
||
Cash and cash equivalents, beginning of period
|
109,632
|
|
|
245,019
|
|
||
Cash and cash equivalents, end of period
|
$
|
66,396
|
|
|
$
|
232,206
|
|
Standard
|
|
Description
|
|
Effective Date
|
ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments
|
|
The ASU eliminates the probable initial recognition threshold under current GAAP and broadens the information an entity must consider when developing its expected credit loss estimates to include forward-looking information. The standard applies to most financial assets held at amortized costs, as well as certain other instruments. Under the current expected credit loss (“CECL”) model, entities must estimate losses over the entire contractual term of the asset from the date of initial recognition. In determining expected losses, consideration must be given to historical loss experience, current conditions, and reasonable and supportable forecasts incorporating forward looking information. The Company adopted Topic 326 on January 1, 2020 using a modified retrospective transition method, which requires a cumulative-effect adjustment to the opening balance sheet of retained earnings to be recognized on the date of adoption without restating prior periods. The cumulative-effect adjustment, net of tax, on January 1, 2020 is $4.8 million.
|
|
January 1, 2020
|
ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement
|
|
The ASU modified the disclosure requirements for fair value measurements. The adoption of this standard does not result in any changes to the current disclosures, as the requirements modified by the ASU are not applicable or are immaterial for disclosure.
|
|
January 1, 2020
|
Standard
|
|
Description
|
|
Anticipated Impact
|
|
Effective Date
|
ASU 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Topic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans
|
|
The ASU modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans.
|
|
This accounting standard update impacts disclosures only. The Company is currently evaluating the impact of this ASU on its consolidated financial statement disclosures and the timing of adoption.
|
|
January 1, 2021
|
ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes
|
|
The ASU eliminates certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. It also clarifies and simplifies other aspects of accounting for income taxes.
|
|
The Company is currently evaluating the impact of this ASU on its consolidated financial statements and the timing of adoption.
|
|
January 1, 2021
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
July 3, 2020
|
|
June 28, 2019
|
|
July 3, 2020
|
|
June 28, 2019
|
||||||||
|
(In thousands)
|
||||||||||||||
Net sales
|
$
|
—
|
|
|
$
|
336,159
|
|
|
$
|
—
|
|
|
$
|
659,908
|
|
Cost of sales
|
—
|
|
|
231,840
|
|
|
—
|
|
|
458,312
|
|
||||
Selling, general and administrative expense
|
—
|
|
|
61,705
|
|
|
—
|
|
|
129,445
|
|
||||
Restructuring and other related charges
|
—
|
|
|
3,812
|
|
|
—
|
|
|
8,367
|
|
||||
Goodwill impairment charge
|
—
|
|
|
481,000
|
|
|
—
|
|
|
481,000
|
|
||||
Divestiture-related expense(1)
|
4,288
|
|
|
4,656
|
|
|
6,573
|
|
|
7,211
|
|
||||
Operating loss
|
(4,288
|
)
|
|
(446,854
|
)
|
|
(6,573
|
)
|
|
(424,427
|
)
|
||||
Interest expense(2)
|
—
|
|
|
18,820
|
|
|
—
|
|
|
26,120
|
|
||||
Pension settlement loss
|
—
|
|
|
—
|
|
|
—
|
|
|
43,774
|
|
||||
Loss from discontinued operations before income taxes
|
(4,288
|
)
|
|
(465,674
|
)
|
|
(6,573
|
)
|
|
(494,321
|
)
|
||||
Income tax expense (benefit)
|
(753
|
)
|
|
1,198
|
|
|
(1,069
|
)
|
|
(4,422
|
)
|
||||
Loss from discontinued operations, net of taxes
|
$
|
(3,535
|
)
|
|
$
|
(466,872
|
)
|
|
$
|
(5,504
|
)
|
|
$
|
(489,899
|
)
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
July 3, 2020
|
|
June 28, 2019
|
|
July 3, 2020
|
|
June 28, 2019
|
||||||||
|
(Unaudited, in thousands)
|
||||||||||||||
Net sales
|
$
|
620,360
|
|
|
$
|
908,647
|
|
|
$
|
1,436,716
|
|
|
$
|
1,761,732
|
|
Net income (loss) from continuing operations attributable to Colfax Corporation
|
(467
|
)
|
|
51,046
|
|
|
9,648
|
|
|
65,181
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
July 3, 2020
|
|
June 28, 2019
|
|
July 3, 2020
|
|
June 28, 2019
|
||||||||
|
(In thousands)
|
||||||||||||||
Equipment
|
$
|
129,033
|
|
|
$
|
188,614
|
|
|
$
|
285,833
|
|
|
$
|
362,617
|
|
Consumables
|
285,334
|
|
|
404,121
|
|
|
654,071
|
|
|
790,502
|
|
||||
Total
|
$
|
414,367
|
|
|
$
|
592,735
|
|
|
$
|
939,904
|
|
|
$
|
1,153,119
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
July 3, 2020
|
|
June 28, 2019
|
|
July 3, 2020
|
|
June 28, 2019(1)
|
||||||||
|
(In thousands)
|
||||||||||||||
Prevention & Rehabilitation
|
$
|
145,029
|
|
|
$
|
224,936
|
|
|
$
|
346,522
|
|
|
$
|
312,672
|
|
Reconstructive
|
60,964
|
|
|
90,976
|
|
|
150,290
|
|
|
126,775
|
|
||||
Total
|
$
|
205,993
|
|
|
$
|
315,912
|
|
|
$
|
496,812
|
|
|
$
|
439,447
|
|
|
Balance at
Beginning of Period |
|
Charged to Expense, net
|
|
Write-Offs and Deductions
|
|
Foreign
Currency Translation |
|
Balance at
End of Period |
||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||
Six Months Ended July 3, 2020
|
|
|
|
|
|
|
|
|
|
||||||||||
Allowance for credit losses
|
$
|
36,009
|
|
|
$
|
(141
|
)
|
|
$
|
(1,360
|
)
|
|
$
|
(2,132
|
)
|
|
$
|
32,376
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
July 3, 2020
|
|
June 28, 2019
|
|
July 3, 2020
|
|
June 28, 2019
|
||||||||
|
(In thousands, except share and per share data)
|
||||||||||||||
Computation of Net income (loss) per share from continuing operations - basic:
|
|
|
|
|
|
|
|
||||||||
Net income (loss) from continuing operations attributable to Colfax Corporation (1)
|
$
|
(3,569
|
)
|
|
$
|
1,323
|
|
|
$
|
4,272
|
|
|
$
|
(21,537
|
)
|
Weighted-average shares of Common stock outstanding - basic
|
136,756,449
|
|
|
136,025,710
|
|
|
136,677,521
|
|
|
134,991,844
|
|
||||
Net income (loss) per share from continuing operations - basic
|
$
|
(0.03
|
)
|
|
$
|
0.01
|
|
|
$
|
0.03
|
|
|
$
|
(0.16
|
)
|
|
|
|
|
|
|
|
|
||||||||
Computation of Net income (loss) per share from continuing operations - diluted:
|
|
|
|
|
|
|
|
||||||||
Net income (loss) from continuing operations attributable to Colfax Corporation (1)
|
$
|
(3,569
|
)
|
|
$
|
1,323
|
|
|
$
|
4,272
|
|
|
$
|
(21,537
|
)
|
Weighted-average shares of Common stock outstanding - basic
|
136,756,449
|
|
|
136,025,710
|
|
|
136,677,521
|
|
|
134,991,844
|
|
||||
Net effect of potentially dilutive securities - stock options, restricted stock units and tangible equity units
|
—
|
|
|
919,776
|
|
|
2,880,841
|
|
|
—
|
|
||||
Weighted-average shares of Common stock outstanding - diluted
|
136,756,449
|
|
|
136,945,486
|
|
|
139,558,362
|
|
|
134,991,844
|
|
||||
Net income (loss) per share from continuing operations - diluted
|
$
|
(0.03
|
)
|
|
$
|
0.01
|
|
|
$
|
0.03
|
|
|
$
|
(0.16
|
)
|
|
Accumulated Other Comprehensive Loss Components
|
||||||||||||||
|
Net Unrecognized Pension and Other Post-Retirement Benefit Cost
|
|
Foreign Currency Translation Adjustment
|
|
Unrealized Gain on Hedging Activities
|
|
Total
|
||||||||
|
(In thousands)
|
||||||||||||||
Balance at January 1, 2020
|
$
|
(106,500
|
)
|
|
$
|
(421,889
|
)
|
|
$
|
44,544
|
|
|
$
|
(483,845
|
)
|
Other comprehensive income (loss) before reclassifications:
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustment
|
554
|
|
|
(68,494
|
)
|
|
(1,276
|
)
|
|
(69,216
|
)
|
||||
Loss on long-term intra-entity foreign currency transactions
|
—
|
|
|
(31,841
|
)
|
|
—
|
|
|
(31,841
|
)
|
||||
Gain on net investment hedges
|
—
|
|
|
—
|
|
|
1,756
|
|
|
1,756
|
|
||||
Other comprehensive income (loss) before reclassifications
|
554
|
|
|
(100,335
|
)
|
|
480
|
|
|
(99,301
|
)
|
||||
Amounts reclassified from Accumulated other comprehensive loss
|
1,662
|
|
|
—
|
|
|
—
|
|
|
1,662
|
|
||||
Net Other comprehensive (loss) income
|
2,216
|
|
|
(100,335
|
)
|
|
480
|
|
|
(97,639
|
)
|
||||
Balance at July 3, 2020
|
$
|
(104,284
|
)
|
|
$
|
(522,224
|
)
|
|
$
|
45,024
|
|
|
$
|
(581,484
|
)
|
|
Accumulated Other Comprehensive Loss Components
|
||||||||||||||
|
Net Unrecognized Pension and Other Post-Retirement Benefit Cost
|
|
Foreign Currency Translation Adjustment
|
|
Unrealized Gain on Hedging Activities
|
|
Total
|
||||||||
|
(In thousands)
|
||||||||||||||
Balance at January 1, 2019
|
$
|
(80,794
|
)
|
|
$
|
(752,989
|
)
|
|
$
|
38,238
|
|
|
$
|
(795,545
|
)
|
Other comprehensive income (loss) before reclassifications:
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustment
|
582
|
|
|
12,802
|
|
|
42
|
|
|
13,426
|
|
||||
Loss on long-term intra-entity foreign currency transactions
|
—
|
|
|
(9,258
|
)
|
|
—
|
|
|
(9,258
|
)
|
||||
Gain on net investment hedges
|
—
|
|
|
—
|
|
|
1,451
|
|
|
1,451
|
|
||||
Unrealized gain on cash flow hedges
|
—
|
|
|
—
|
|
|
205
|
|
|
205
|
|
||||
Other comprehensive income before reclassifications
|
582
|
|
|
3,544
|
|
|
1,698
|
|
|
5,824
|
|
||||
Amounts reclassified from Accumulated other comprehensive loss
|
(8,929
|
)
|
|
—
|
|
|
—
|
|
|
(8,929
|
)
|
||||
Noncontrolling interest share repurchase
|
—
|
|
|
(20,598
|
)
|
|
—
|
|
|
(20,598
|
)
|
||||
Net Other comprehensive income (loss)
|
(8,347
|
)
|
|
(17,054
|
)
|
|
1,698
|
|
|
(23,703
|
)
|
||||
Balance at June 28, 2019
|
$
|
(89,141
|
)
|
|
$
|
(770,043
|
)
|
|
$
|
39,936
|
|
|
$
|
(819,248
|
)
|
|
TEU prepaid stock purchase contracts
|
|
TEU amortizing notes
|
|
Total
|
||||||
|
(In millions, except per unit amounts)
|
||||||||||
Fair value per unit
|
$
|
84.39
|
|
|
$
|
15.61
|
|
|
$
|
100.00
|
|
|
|
|
|
|
|
||||||
Gross proceeds
|
$
|
388.2
|
|
|
$
|
71.8
|
|
|
$
|
460.0
|
|
Less: Issuance costs
|
10.4
|
|
|
1.9
|
|
|
12.3
|
|
|||
Net proceeds
|
$
|
377.8
|
|
|
$
|
69.9
|
|
|
$
|
447.7
|
|
•
|
if the Applicable Market Value of the common stock is greater than the threshold appreciation price of $25.00, the holder will receive 4.0000 shares of common stock for each purchase contract (the “minimum settlement rate”);
|
•
|
if the Applicable Market Value of the common stock is greater than or equal to the reference price of $20.81, but less than or equal to the threshold appreciation price of $25.00, the holder will receive a number of shares of common stock for each purchase contract having a value, based on the Applicable Market Value, equal to $100; and
|
•
|
if the Applicable Market Value of the common stock is less than the reference price of $20.81, the holder will receive 4.8054 shares of common stock for each purchase contract (the “maximum settlement rate”).
|
|
July 3, 2020
|
|
December 31, 2019
|
||||
|
(In thousands)
|
||||||
Raw materials
|
$
|
113,856
|
|
|
$
|
115,587
|
|
Work in process
|
38,844
|
|
|
37,019
|
|
||
Finished goods
|
470,160
|
|
|
475,933
|
|
||
|
622,860
|
|
|
628,539
|
|
||
Less: allowance for excess, slow-moving and obsolete inventory
|
(66,152
|
)
|
|
(56,981
|
)
|
||
Inventories, net
|
$
|
556,708
|
|
|
$
|
571,558
|
|
|
July 3, 2020
|
|
December 31, 2019
|
||||
|
(In thousands)
|
||||||
Term loan
|
$
|
821,126
|
|
|
$
|
822,945
|
|
Euro senior notes
|
389,922
|
|
|
388,925
|
|
||
2024 and 2026 notes
|
990,278
|
|
|
989,236
|
|
||
TEU amortizing notes
|
42,883
|
|
|
54,044
|
|
||
Revolving credit facilities and other
|
3,251
|
|
|
56,676
|
|
||
Total debt
|
2,247,460
|
|
|
2,311,826
|
|
||
Less: current portion
|
(26,530
|
)
|
|
(27,642
|
)
|
||
Long-term debt
|
$
|
2,220,930
|
|
|
$
|
2,284,184
|
|
|
July 3, 2020
|
|
December 31, 2019
|
||||
|
(In thousands)
|
||||||
Accrued compensation and related benefits
|
$
|
74,869
|
|
|
$
|
100,290
|
|
Accrued taxes
|
47,546
|
|
|
55,258
|
|
||
Accrued asbestos-related liability
|
65,792
|
|
|
64,394
|
|
||
Warranty liability - current portion
|
14,312
|
|
|
15,513
|
|
||
Accrued restructuring liability - current portion
|
3,917
|
|
|
6,961
|
|
||
Accrued third-party commissions
|
20,980
|
|
|
30,768
|
|
||
Customer advances and billings in excess of costs incurred
|
33,316
|
|
|
16,009
|
|
||
Lease liability - current portion
|
39,868
|
|
|
40,021
|
|
||
Accrued interest
|
28,924
|
|
|
27,333
|
|
||
Other
|
103,691
|
|
|
113,343
|
|
||
Accrued liabilities
|
$
|
433,215
|
|
|
$
|
469,890
|
|
|
Six Months Ended
|
||||||
|
July 3, 2020
|
|
June 28, 2019
|
||||
|
(In thousands)
|
||||||
Warranty liability, beginning of period
|
$
|
15,528
|
|
|
$
|
12,312
|
|
Accrued warranty expense
|
3,256
|
|
|
4,163
|
|
||
Changes in estimates related to pre-existing warranties
|
528
|
|
|
764
|
|
||
Cost of warranty service work performed
|
(4,547
|
)
|
|
(5,101
|
)
|
||
Acquisition-related liability
|
—
|
|
|
2,113
|
|
||
Foreign exchange translation effect
|
(453
|
)
|
|
30
|
|
||
Warranty liability, end of period
|
$
|
14,312
|
|
|
$
|
14,281
|
|
|
Six Months Ended July 3, 2020
|
||||||||||||||||||
|
Balance at Beginning of Period
|
|
Provisions
|
|
Payments
|
|
Foreign Currency Translation
|
|
Balance at End of Period(3)
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
Restructuring and other related charges:
|
|
|
|
|
|
|
|
|
|
||||||||||
Fabrication Technology:
|
|
|
|
|
|
|
|
|
|
||||||||||
Termination benefits(1)
|
$
|
1,638
|
|
|
$
|
3,272
|
|
|
$
|
(3,581
|
)
|
|
$
|
(38
|
)
|
|
$
|
1,291
|
|
Facility closure costs(2)
|
1,284
|
|
|
3,884
|
|
|
(4,935
|
)
|
|
—
|
|
|
233
|
|
|||||
|
2,922
|
|
|
7,156
|
|
|
(8,516
|
)
|
|
(38
|
)
|
|
1,524
|
|
|||||
Non-cash charges
|
|
|
1,736
|
|
|
|
|
|
|
|
|||||||||
|
|
|
8,892
|
|
|
|
|
|
|
|
|||||||||
Medical Technology:
|
|
|
|
|
|
|
|
|
|
||||||||||
Termination benefits(1)
|
3,919
|
|
|
1,958
|
|
|
(3,704
|
)
|
|
12
|
|
|
2,185
|
|
|||||
Facility closure costs(2)
|
257
|
|
|
11,336
|
|
|
(11,346
|
)
|
|
—
|
|
|
247
|
|
|||||
|
4,176
|
|
|
13,294
|
|
|
(15,050
|
)
|
|
12
|
|
|
2,432
|
|
|||||
Non-cash charges
|
|
|
—
|
|
|
|
|
|
|
|
|||||||||
|
|
|
13,294
|
|
|
|
|
|
|
|
|||||||||
Total Colfax Corporation:
|
|
|
|
|
|
|
|
|
|
||||||||||
Total restructuring liability activity
|
$
|
7,098
|
|
|
$
|
20,450
|
|
|
$
|
(23,566
|
)
|
|
$
|
(26
|
)
|
|
$
|
3,956
|
|
Total Non-cash charges
|
|
|
1,736
|
|
|
|
|
|
|
|
|||||||||
|
|
|
$
|
22,186
|
|
|
|
|
|
|
|
|
July 3, 2020
|
||||||||||||||
|
Level
One |
|
Level
Two |
|
Level
Three |
|
Total
|
||||||||
|
(In thousands)
|
||||||||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash equivalents
|
$
|
4,118
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,118
|
|
Foreign currency contracts related to sales - not designated as hedges
|
—
|
|
|
1,794
|
|
|
—
|
|
|
1,794
|
|
||||
Foreign currency contracts related to purchases - not designated as hedges
|
—
|
|
|
1,857
|
|
|
—
|
|
|
1,857
|
|
||||
Deferred compensation plans
|
—
|
|
|
9,125
|
|
|
—
|
|
|
9,125
|
|
||||
|
$
|
4,118
|
|
|
$
|
12,776
|
|
|
$
|
—
|
|
|
$
|
16,894
|
|
|
|
|
|
|
|
|
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Foreign currency contracts related to sales - not designated as hedges
|
$
|
—
|
|
|
$
|
1,523
|
|
|
$
|
—
|
|
|
$
|
1,523
|
|
Foreign currency contracts related to purchases - not designated as hedges
|
—
|
|
|
615
|
|
|
—
|
|
|
615
|
|
||||
Deferred compensation plans
|
—
|
|
|
9,125
|
|
|
—
|
|
|
9,125
|
|
||||
|
$
|
—
|
|
|
$
|
11,263
|
|
|
$
|
—
|
|
|
$
|
11,263
|
|
|
December 31, 2019
|
||||||||||||||
|
Level
One |
|
Level
Two |
|
Level
Three |
|
Total
|
||||||||
|
(In thousands)
|
||||||||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash equivalents
|
$
|
13,125
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
13,125
|
|
Foreign currency contracts related to sales - not designated as hedges
|
—
|
|
|
74
|
|
|
—
|
|
|
74
|
|
||||
Foreign currency contracts related to purchases - not designated as hedges
|
—
|
|
|
408
|
|
|
—
|
|
|
408
|
|
||||
Deferred compensation plans
|
—
|
|
|
8,870
|
|
|
—
|
|
|
8,870
|
|
||||
|
$
|
13,125
|
|
|
$
|
9,352
|
|
|
$
|
—
|
|
|
$
|
22,477
|
|
|
|
|
|
|
|
|
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Foreign currency contracts related to sales - not designated as hedges
|
$
|
—
|
|
|
$
|
328
|
|
|
$
|
—
|
|
|
$
|
328
|
|
Foreign currency contracts related to purchases - not designated as hedges
|
—
|
|
|
853
|
|
|
—
|
|
|
853
|
|
||||
Deferred compensation plans
|
—
|
|
|
8,870
|
|
|
—
|
|
|
8,870
|
|
||||
|
$
|
—
|
|
|
$
|
10,051
|
|
|
$
|
—
|
|
|
$
|
10,051
|
|
|
July 3, 2020
|
|
December 31, 2019
|
||||
|
(In thousands)
|
||||||
Foreign currency contracts sold - not designated as hedges
|
$
|
91,302
|
|
|
$
|
28,718
|
|
Foreign currency contracts purchased - not designated as hedges
|
119,039
|
|
|
107,090
|
|
||
Total foreign currency derivatives
|
$
|
210,341
|
|
|
$
|
135,808
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
July 3, 2020
|
|
June 28, 2019
|
|
July 3, 2020
|
|
June 28, 2019
|
||||||||
|
(In thousands)
|
||||||||||||||
Contracts Designated as Hedges:
|
|
|
|
||||||||||||
Unrealized gain (loss) on net investment hedges(1)
|
$
|
(10,424
|
)
|
|
$
|
(4,002
|
)
|
|
$
|
1,756
|
|
|
$
|
1,451
|
|
Contracts Not Designated in a Hedge Relationship:
|
|
|
|
|
|
|
|
||||||||
Foreign Currency Contracts - related to customer sales contracts:
|
|
|
|
|
|
|
|
||||||||
Unrealized gain (loss)
|
883
|
|
|
(179
|
)
|
|
532
|
|
|
(208
|
)
|
||||
Realized gain (loss)
|
40
|
|
|
(409
|
)
|
|
(905
|
)
|
|
(1,067
|
)
|
||||
Foreign Currency Contracts - related to supplier purchases contracts:
|
|
|
|
|
|
|
|
||||||||
Unrealized gain (loss)
|
(927
|
)
|
|
1,006
|
|
|
1,841
|
|
|
651
|
|
||||
Realized gain (loss)
|
(997
|
)
|
|
187
|
|
|
(249
|
)
|
|
454
|
|
|
Six Months Ended
|
||||
|
July 3, 2020
|
|
June 28, 2019
|
||
|
(Number of claims)
|
||||
Claims unresolved, beginning of period
|
16,299
|
|
|
16,417
|
|
Claims filed(1)
|
1,869
|
|
|
2,239
|
|
Claims resolved(2)
|
(1,310
|
)
|
|
(2,132
|
)
|
Claims unresolved, end of period
|
16,858
|
|
|
16,524
|
|
|
July 3, 2020
|
|
December 31, 2019
|
||||
|
(In thousands)
|
||||||
Current asbestos insurance receivable(1)
|
$
|
4,474
|
|
|
$
|
4,474
|
|
Long-term asbestos insurance asset(2)
|
278,412
|
|
|
281,793
|
|
||
Long-term asbestos insurance receivable(2)
|
36,633
|
|
|
41,629
|
|
||
Accrued asbestos liability(3)
|
65,792
|
|
|
64,394
|
|
||
Long-term asbestos liability(4)
|
277,303
|
|
|
286,105
|
|
▪
|
Fabrication Technology - a global supplier of consumable products and equipment for cutting, joining, and automated welding, as well as gas control equipment, providing a wide range of products with innovative technologies to solve challenges in virtually any industry.
|
•
|
Medical Technology - a global leader in orthopedic solutions, providing orthopedic devices, reconstructive implants, software and services spanning the full continuum of patient care, from injury prevention to rehabilitation.
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
July 3, 2020
|
|
June 28, 2019
|
|
July 3, 2020
|
|
June 28, 2019(1)
|
||||||||
|
(In thousands)
|
||||||||||||||
Net sales:
|
|
|
|
|
|
||||||||||
Fabrication Technology
|
$
|
414,367
|
|
|
$
|
592,735
|
|
|
$
|
939,904
|
|
|
$
|
1,153,119
|
|
Medical Technology
|
205,993
|
|
|
315,912
|
|
|
496,812
|
|
|
439,447
|
|
||||
|
$
|
620,360
|
|
|
$
|
908,647
|
|
|
$
|
1,436,716
|
|
|
$
|
1,592,566
|
|
Segment operating income (loss)(2):
|
|
|
|
|
|
|
|
||||||||
Fabrication Technology
|
$
|
43,609
|
|
|
$
|
80,970
|
|
|
$
|
112,645
|
|
|
$
|
151,575
|
|
Medical Technology
|
(20,796
|
)
|
|
4,605
|
|
|
(16,992
|
)
|
|
15,287
|
|
||||
Corporate and other
|
(15,573
|
)
|
|
(17,456
|
)
|
|
(29,651
|
)
|
|
(85,579
|
)
|
||||
|
$
|
7,240
|
|
|
$
|
68,119
|
|
|
$
|
66,002
|
|
|
$
|
81,283
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
July 3, 2020
|
|
June 28, 2019
|
|
July 3, 2020
|
|
June 28, 2019
|
||||||||
|
(In thousands)
|
||||||||||||||
Income (loss) from continuing operations before income taxes
|
$
|
(33,205
|
)
|
|
$
|
8,363
|
|
|
$
|
(11,164
|
)
|
|
$
|
(11,125
|
)
|
Interest expense, net
|
28,284
|
|
|
33,171
|
|
|
53,080
|
|
|
54,992
|
|
||||
Restructuring and other related charges(1)
|
11,161
|
|
|
26,585
|
|
|
22,186
|
|
|
37,416
|
|
||||
MDR costs
|
1,000
|
|
|
$
|
—
|
|
|
$
|
1,900
|
|
|
$
|
—
|
|
|
Segment operating income
|
$
|
7,240
|
|
|
$
|
68,119
|
|
|
$
|
66,002
|
|
|
$
|
81,283
|
|
•
|
risks related to the impact of the COVID-19 global pandemic, including actions by governments, businesses and individuals in response to the situation, such as the scope and duration of the outbreak, the nature and effectiveness of government actions and restrictive measures implemented in response, material delays and cancellations of medical procedures, supply chain disruptions, the impact on creditworthiness and financial viability of customers, and other impacts on the Company’s business and ability to execute business continuity plans;
|
•
|
changes in the general economy, as well as the cyclical nature of the markets we serve;
|
•
|
the significant turmoil in the commodity markets and decline in certain commodity prices, including oil, due to economic disruptions from the COVID-19 pandemic and various geopolitical events;
|
•
|
our ability to identify, finance, acquire and successfully integrate attractive acquisition targets;
|
•
|
our exposure to unanticipated liabilities resulting from acquisitions;
|
•
|
our ability and the ability of our customers to access required capital at a reasonable cost;
|
•
|
our ability to accurately estimate the cost of or realize savings from our restructuring programs;
|
•
|
the amount of and our ability to estimate our asbestos-related liabilities;
|
•
|
the solvency of our insurers and the likelihood of their payment for asbestos-related costs;
|
•
|
material disruptions at any of our manufacturing facilities;
|
•
|
noncompliance with various laws and regulations associated with our international operations, including anti-bribery laws, export control regulations and sanctions and embargoes;
|
•
|
risks associated with our international operations, including risks from trade protection measures and other changes in trade relations;
|
•
|
risks associated with the representation of our employees by trade unions and work councils;
|
•
|
our exposure to product liability claims;
|
•
|
potential costs and liabilities associated with environmental, health and safety laws and regulations;
|
•
|
failure to maintain, protect and defend our intellectual property rights;
|
•
|
the loss of key members of our leadership team;
|
•
|
restrictions in our principal credit facility that may limit our flexibility in operating our business;
|
•
|
impairment in the value of intangible assets;
|
•
|
the funding requirements or obligations of our defined benefit pension plans and other postretirement benefit plans;
|
•
|
significant movements in foreign currency exchange rates;
|
•
|
availability and cost of raw materials, parts and components used in our products;
|
•
|
new regulations and customer preferences reflecting an increased focus on environmental, social and governance issues, including new regulations related to the use of conflict minerals;
|
•
|
service interruptions, data corruption, cyber-based attacks or network security breaches affecting our information technology infrastructure;
|
•
|
risks arising from changes in technology;
|
•
|
the competitive environment in our industry;
|
•
|
changes in our tax rates or exposure to additional income tax liabilities, including the effects of the COVID-19 global pandemic and the U.S. Tax Cuts and Jobs Act and the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”);
|
•
|
our ability to manage and grow our business and execution of our business and growth strategies;
|
•
|
the level of capital investment and expenditures by our customers in our strategic markets;
|
•
|
our financial performance;
|
•
|
difficulties and delays in integrating the DJO acquisition or fully realizing projected cost savings and benefits of the DJO acquisition; and
|
•
|
other risks and factors, listed in Item 1A. “Risk Factors” in Part I of our 2019 Form 10-K and in our subsequent quarterly reports on Form 10-Q, including this Form 10-Q.
|
•
|
Fabrication Technology - a global supplier of consumable products and equipment for cutting, joining, and automated welding, as well as gas control equipment, providing a wide range of products with innovative technologies to solve challenges in virtually any industry.
|
•
|
Medical Technology - a leading provider of orthopedic solutions, providing orthopedic devices, software and services spanning the full continuum of patient care, from injury prevention to joint replacement to rehabilitation.
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
July 3, 2020
|
|
June 28, 2019
|
|
July 3, 2020
|
|
June 28, 2019
|
||||||||
|
(Dollars in millions)
|
||||||||||||||
Net income (loss) from continuing operations (GAAP)
|
$
|
(3.1
|
)
|
|
$
|
2.2
|
|
|
$
|
5.7
|
|
|
$
|
(19.3
|
)
|
Income tax expense (benefit)
|
(30.1
|
)
|
|
6.2
|
|
|
(16.9
|
)
|
|
8.2
|
|
||||
Interest expense, net(1)
|
28.3
|
|
|
33.2
|
|
|
53.1
|
|
|
55.0
|
|
||||
Restructuring and other related charges(2)
|
11.2
|
|
|
26.6
|
|
|
22.2
|
|
|
37.4
|
|
||||
MDR costs(3)
|
1.0
|
|
|
—
|
|
|
1.9
|
|
|
—
|
|
||||
Strategic transaction costs(4)
|
1.7
|
|
|
2.5
|
|
|
2.6
|
|
|
55.8
|
|
||||
Acquisition-related amortization and other non-cash charges(5)
|
36.1
|
|
|
56.6
|
|
|
71.9
|
|
|
80.4
|
|
||||
Adjusted EBITA (non-GAAP)
|
$
|
45.1
|
|
|
$
|
127.2
|
|
|
$
|
140.6
|
|
|
$
|
217.4
|
|
Net income (loss) margin from continuing operations (GAAP)
|
(0.5
|
)%
|
|
0.2
|
%
|
|
0.4
|
%
|
|
(1.2
|
)%
|
||||
Adjusted EBITA margin (non-GAAP)
|
7.3
|
%
|
|
14.0
|
%
|
|
9.8
|
%
|
|
13.7
|
%
|
|
Three Months Ended July 3, 2020
|
|
Six Months Ended July 3, 2020
|
||||||||||||||||||||||||||||
|
Fabrication Technology
|
|
Medical Technology
|
|
Corporate and other
|
|
Total
|
|
Fabrication Technology
|
|
Medical Technology
|
|
Corporate and other
|
|
Total
|
||||||||||||||||
|
(Dollars in millions)
|
||||||||||||||||||||||||||||||
Operating income (loss) (GAAP)
|
$
|
37.5
|
|
|
$
|
(26.9
|
)
|
|
$
|
(15.6
|
)
|
|
$
|
(4.9
|
)
|
|
$
|
103.8
|
|
|
$
|
(32.2
|
)
|
|
$
|
(29.6
|
)
|
|
$
|
41.9
|
|
Restructuring and other related charges(1)
|
6.1
|
|
|
5.1
|
|
|
—
|
|
|
11.2
|
|
|
8.9
|
|
|
13.3
|
|
|
—
|
|
|
22.2
|
|
||||||||
MDR costs
|
—
|
|
|
1.0
|
|
|
—
|
|
|
1.0
|
|
|
—
|
|
|
1.9
|
|
|
—
|
|
|
1.9
|
|
||||||||
Segment operating income (loss) (non-GAAP)
|
43.6
|
|
|
(20.8
|
)
|
|
(15.6
|
)
|
|
7.2
|
|
|
112.6
|
|
|
(17.0
|
)
|
|
(29.6
|
)
|
|
66.0
|
|
||||||||
Strategic transaction costs
|
—
|
|
|
—
|
|
|
1.7
|
|
|
1.7
|
|
|
—
|
|
|
—
|
|
|
2.6
|
|
|
2.6
|
|
||||||||
Acquisition-related amortization and other non-cash charges
|
8.8
|
|
|
27.3
|
|
|
—
|
|
|
36.1
|
|
|
17.7
|
|
|
54.2
|
|
|
—
|
|
|
71.9
|
|
||||||||
Adjusted EBITA (non-GAAP)
|
$
|
52.4
|
|
|
$
|
6.5
|
|
|
$
|
(13.8
|
)
|
|
$
|
45.1
|
|
|
$
|
130.3
|
|
|
$
|
37.2
|
|
|
$
|
(27.0
|
)
|
|
$
|
140.6
|
|
Segment operating income (loss) margin (non-GAAP)
|
10.5
|
%
|
|
(10.1
|
)%
|
|
—
|
%
|
|
1.2
|
%
|
|
12.0
|
%
|
|
(3.4
|
)%
|
|
—
|
%
|
|
4.6
|
%
|
||||||||
Adjusted EBITA margin (non-GAAP)
|
12.6
|
%
|
|
3.2
|
%
|
|
—
|
%
|
|
7.3
|
%
|
|
13.9
|
%
|
|
7.5
|
%
|
|
—
|
%
|
|
9.8
|
%
|
|
Three Months Ended June 28, 2019
|
|
Six Months Ended June 28, 2019
|
||||||||||||||||||||||||||||
|
Fabrication Technology
|
|
Medical Technology
|
|
Corporate and other
|
|
Total
|
|
Fabrication Technology
|
|
Medical Technology(1)
|
|
Corporate and other
|
|
Total
|
||||||||||||||||
|
(Dollars in millions)
|
||||||||||||||||||||||||||||||
Operating income (loss) (GAAP)
|
$
|
76.9
|
|
|
$
|
(17.9
|
)
|
|
$
|
(17.5
|
)
|
|
$
|
41.5
|
|
|
$
|
143.2
|
|
|
$
|
(13.8
|
)
|
|
$
|
(85.6
|
)
|
|
$
|
43.9
|
|
Restructuring and other related charges
|
4.1
|
|
|
22.5
|
|
|
—
|
|
|
26.6
|
|
|
8.4
|
|
|
29.0
|
|
|
—
|
|
|
37.4
|
|
||||||||
Segment operating income (loss) (non-GAAP)
|
81.0
|
|
|
4.6
|
|
|
(17.5
|
)
|
|
68.1
|
|
|
151.6
|
|
|
15.3
|
|
|
(85.6
|
)
|
|
81.3
|
|
||||||||
Strategic transaction costs
|
—
|
|
|
—
|
|
|
2.5
|
|
|
2.5
|
|
|
—
|
|
|
—
|
|
|
55.8
|
|
|
55.8
|
|
||||||||
Acquisition-related amortization and other non-cash charges
|
8.9
|
|
|
47.7
|
|
|
—
|
|
|
56.6
|
|
|
17.6
|
|
|
62.7
|
|
|
—
|
|
|
80.4
|
|
||||||||
Adjusted EBITA (non-GAAP)
|
$
|
89.9
|
|
|
$
|
52.3
|
|
|
$
|
(14.9
|
)
|
|
$
|
127.2
|
|
|
$
|
169.2
|
|
|
$
|
78.0
|
|
|
$
|
(29.8
|
)
|
|
$
|
217.4
|
|
Segment operating income margin (non-GAAP)
|
13.7
|
%
|
|
1.5
|
%
|
|
—
|
%
|
|
7.5
|
%
|
|
13.1
|
%
|
|
3.5
|
%
|
|
—
|
%
|
|
5.1
|
%
|
||||||||
Adjusted EBITA margin (non-GAAP)
|
15.2
|
%
|
|
16.5
|
%
|
|
—
|
%
|
|
14.0
|
%
|
|
14.7
|
%
|
|
17.7
|
%
|
|
—
|
%
|
|
13.7
|
%
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||
|
Net Sales(1)
|
|
%
|
|
Net Sales(1)
|
|
%
|
||||||
|
(Dollars in millions)
|
||||||||||||
For the three and six months ended June 28, 2019
|
$
|
908.6
|
|
|
|
|
$
|
1,592.6
|
|
|
|
||
Components of Change:
|
|
|
|
|
|
|
|
||||||
Existing Businesses(2)
|
(253.2
|
)
|
|
(27.9
|
)%
|
|
(296.5
|
)
|
|
(18.6
|
)%
|
||
Acquisitions(3)
|
—
|
|
|
—
|
%
|
|
199.5
|
|
|
12.5
|
%
|
||
Foreign Currency Translation(4)
|
(35.0
|
)
|
|
(3.9
|
)%
|
|
(58.9
|
)
|
|
(3.7
|
)%
|
||
|
(288.2
|
)
|
|
(31.8
|
)%
|
|
(155.9
|
)
|
|
(9.8
|
)%
|
||
For the three and six months ended July 3, 2020
|
$
|
620.4
|
|
|
|
|
$
|
1,436.7
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
July 3, 2020
|
|
June 28, 2019
|
|
July 3, 2020
|
|
June 28, 2019
|
||||||||
|
(Dollars in millions)
|
||||||||||||||
Gross profit
|
$
|
241.1
|
|
|
$
|
376.1
|
|
|
$
|
589.3
|
|
|
$
|
637.1
|
|
Gross profit margin
|
38.9
|
%
|
|
41.4
|
%
|
|
41.0
|
%
|
|
40.0
|
%
|
||||
Selling, general and administrative expense
|
$
|
235.7
|
|
|
$
|
307.9
|
|
|
$
|
527.9
|
|
|
$
|
555.8
|
|
Operating income (loss)
|
$
|
(4.9
|
)
|
|
$
|
41.5
|
|
|
$
|
41.9
|
|
|
$
|
43.9
|
|
Operating income (loss) margin
|
(0.8
|
)%
|
|
4.6
|
%
|
|
2.9
|
%
|
|
2.8
|
%
|
||||
Net income (loss) from continuing operations
|
$
|
(3.1
|
)
|
|
$
|
2.2
|
|
|
$
|
5.7
|
|
|
$
|
(19.3
|
)
|
Net income (loss) margin from continuing operations
|
(0.5
|
)%
|
|
0.2
|
%
|
|
0.4
|
%
|
|
(1.2
|
)%
|
||||
Adjusted EBITA (non-GAAP)
|
$
|
45.1
|
|
|
$
|
127.2
|
|
|
$
|
140.6
|
|
|
$
|
217.4
|
|
Adjusted EBITA Margin (non-GAAP)
|
7.3
|
%
|
|
14.0
|
%
|
|
9.8
|
%
|
|
13.7
|
%
|
||||
Items excluded from Adjusted EBITA:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Restructuring and other related charges(1)
|
$
|
11.2
|
|
|
$
|
26.6
|
|
|
$
|
22.2
|
|
|
$
|
37.4
|
|
MDR costs
|
$
|
1.0
|
|
|
$
|
—
|
|
|
$
|
1.9
|
|
|
$
|
—
|
|
Strategic transaction costs
|
$
|
1.7
|
|
|
$
|
2.5
|
|
|
$
|
2.6
|
|
|
$
|
55.8
|
|
Acquisition-related amortization and other non-cash charges
|
$
|
36.1
|
|
|
$
|
56.6
|
|
|
$
|
71.9
|
|
|
$
|
80.4
|
|
Interest expense, net
|
$
|
28.3
|
|
|
$
|
33.2
|
|
|
$
|
53.1
|
|
|
$
|
55.0
|
|
Income tax expense (benefit)
|
$
|
(30.1
|
)
|
|
$
|
6.2
|
|
|
$
|
(16.9
|
)
|
|
$
|
8.2
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
July 3, 2020
|
|
June 28, 2019
|
|
July 3, 2020
|
|
June 28, 2019
|
||||||||
|
(Dollars in millions)
|
||||||||||||||
Net sales
|
$
|
414.4
|
|
|
$
|
592.7
|
|
|
$
|
939.9
|
|
|
$
|
1,153.1
|
|
Gross profit
|
$
|
139.9
|
|
|
$
|
206.2
|
|
|
328.7
|
|
|
$
|
400.2
|
|
|
Gross profit margin
|
33.8
|
%
|
|
34.8
|
%
|
|
35.0
|
%
|
|
34.7
|
%
|
||||
Selling, general and administrative expense
|
$
|
96.3
|
|
|
$
|
125.2
|
|
|
$
|
216.1
|
|
|
$
|
248.6
|
|
Segment operating income
|
$
|
43.6
|
|
|
$
|
81.0
|
|
|
$
|
112.6
|
|
|
$
|
151.6
|
|
Segment operating income margin
|
10.5
|
%
|
|
13.7
|
%
|
|
12.0
|
%
|
|
13.1
|
%
|
||||
Adjusted EBITA (Non-GAAP)
|
$
|
52.4
|
|
|
$
|
89.9
|
|
|
$
|
130.3
|
|
|
$
|
169.2
|
|
Adjusted EBITA Margin (Non-GAAP)
|
12.6
|
%
|
|
15.2
|
%
|
|
13.9
|
%
|
|
14.7
|
%
|
||||
Items excluded from Adjusted EBITA:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Restructuring and other related charges
|
$
|
6.1
|
|
|
$
|
4.1
|
|
|
$
|
8.9
|
|
|
$
|
8.4
|
|
Acquisition-related amortization and other non-cash charges
|
$
|
8.8
|
|
|
$
|
8.9
|
|
|
$
|
17.7
|
|
|
$
|
17.6
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
July 3, 2020
|
|
June 28, 2019
|
|
July 3, 2020
|
|
From February 22, 2019 to June 28, 2019
|
||||||||
|
(Dollars in millions)
|
||||||||||||||
Net sales
|
$
|
206.0
|
|
|
$
|
315.9
|
|
|
$
|
496.8
|
|
|
$
|
439.4
|
|
Gross profit
|
$
|
101.2
|
|
|
$
|
169.9
|
|
|
$
|
260.6
|
|
|
$
|
236.9
|
|
Gross profit margin
|
49.1
|
%
|
|
53.8
|
%
|
|
52.5
|
%
|
|
53.9
|
%
|
||||
Selling, general and administrative expense
|
$
|
123.9
|
|
|
$
|
165.3
|
|
|
$
|
282.2
|
|
|
$
|
221.6
|
|
Segment operating income (loss)
|
$
|
(20.8
|
)
|
|
$
|
4.6
|
|
|
$
|
(17.0
|
)
|
|
$
|
15.3
|
|
Segment operating income (loss) margin
|
(10.1
|
)%
|
|
1.5
|
%
|
|
(3.4
|
)%
|
|
3.5
|
%
|
||||
Adjusted EBITA (Non-GAAP)
|
$
|
6.5
|
|
|
$
|
52.3
|
|
|
$
|
37.2
|
|
|
$
|
78.0
|
|
Adjusted EBITA Margin (Non-GAAP)
|
3.2
|
%
|
|
16.5
|
%
|
|
7.5
|
%
|
|
17.7
|
%
|
||||
Items excluded from Adjusted EBITA:
|
|
|
|
|
|
|
|
||||||||
Restructuring and other related charges(1)
|
$
|
5.1
|
|
|
$
|
22.5
|
|
|
$
|
13.3
|
|
|
$
|
29.0
|
|
MDR costs
|
$
|
1.0
|
|
|
$
|
—
|
|
|
$
|
1.9
|
|
|
$
|
—
|
|
Acquisition-related amortization and other non-cash charges
|
$
|
27.3
|
|
|
$
|
47.7
|
|
|
$
|
54.2
|
|
|
$
|
62.7
|
|
|
Six Months Ended
|
||||||
|
July 3, 2020
|
|
June 28, 2019
|
||||
|
(Dollars in millions)
|
||||||
Net cash provided by operating activities
|
$
|
93.2
|
|
|
$
|
10.4
|
|
Purchases of property, plant and equipment
|
(50.4
|
)
|
|
(64.0
|
)
|
||
Proceeds from sale of property, plant and equipment
|
5.0
|
|
|
3.3
|
|
||
Acquisitions, net of cash received
|
(7.5
|
)
|
|
(3,147.8
|
)
|
||
Net cash used in investing activities
|
(53.0
|
)
|
|
(3,208.5
|
)
|
||
Proceeds (repayments) from borrowings, net
|
(67.8
|
)
|
|
2,892.7
|
|
||
Payment for noncontrolling interest share repurchase
|
—
|
|
|
(93.1
|
)
|
||
Proceeds from prepaid stock purchase contracts
|
—
|
|
|
377.8
|
|
||
Other
|
(9.6
|
)
|
|
1.6
|
|
||
Net cash provided by (used in) financing activities
|
(77.4
|
)
|
|
3,179.0
|
|
||
Effect of foreign exchange rates on Cash and cash equivalents
|
(6.1
|
)
|
|
6.3
|
|
||
Decrease in Cash and cash equivalents
|
$
|
(43.2
|
)
|
|
$
|
(12.8
|
)
|
•
|
Net cash received or paid for asbestos-related costs, net of insurance proceeds, including the disposition of claims, defense costs and legal expenses related to litigation against our insurers, creates variability in our operating cash flows. During the six months ended July 3, 2020, we had net asbestos cash outflows of $1.5 million. During the six months ended June 28, 2019, we had net asbestos cash outflows of $12.5 million.
|
•
|
During the six months ended July 3, 2020 and June 28, 2019, cash payments of $25.5 million and $49.2 million, respectively, were made for our restructuring initiatives.
|
•
|
Changes in net working capital also affected the operating cash flows for the periods presented. We define working capital as Trade receivables, net and Inventories, net reduced by Accounts payable and customer advances and billings in excess of costs incurred. During the six months ended July 3, 2020, net working capital provided cash of $59.8 million, excluding the impact of foreign exchange, due to lower sales and spending related to COVID-19. During the six months ended June 28, 2019, net working capital consumed cash of $82.0 million, excluding the impact of foreign exchange. The use of cash included an estimated $40 million one-time effort to bring DJO suppliers into payment terms consistent with our normal practices, as well as to eliminate a DJO accounts receivable factoring program. The remaining cash usage primarily related to increase in Net sales from existing businesses.
|
•
|
material delays and cancellations of elective medical procedures; orthopedic clinics and physical therapy centers operating at reduced capacity and only serving critical patients; and cancellation of professional, college, high school and youth sports programs impacting our Medical Technology business
|
•
|
reductions in levels of new capital investment and maintenance expenditures or a sustained industrial downturn impacting our Fabrication Technology business.
|
***
|
Incorporated by reference to Exhibit 10.1 to Colfax Corporation’s Form 8-K (File No. 001-34045) as filed with the SEC on April 9, 2020.
|
|
|
****
|
Incorporated by reference to Exhibit 10.1 to Colfax Corporation’s Form 8-K (File No. 001-34045) as filed with the SEC on May 27, 2020.
|
|
|
*****
|
Incorporated by reference to Exhibit 10.1 to Colfax Corporation’s Form 8-K (File No. 001-34045) as filed with the SEC on May 7, 2020.
|
/s/ Matthew L. Trerotola
|
|
President and Chief Executive Officer
|
|
|
Matthew L. Trerotola
|
|
(Principal Executive Officer)
|
|
August 6, 2020
|
|
|
|
|
|
/s/ Christopher M. Hix
|
|
Executive Vice President, Finance
|
|
|
Christopher M. Hix
|
|
Chief Financial Officer
|
|
August 6, 2020
|
|
|
(Principal Financial Officer)
|
|
|
|
|
|
|
|
/s/ Douglas J. Pitts
|
|
Vice President
|
|
|
Douglas J. Pitts
|
|
Controller and Chief Accounting Officer
|
|
August 6, 2020
|
|
|
(Principal Accounting Officer)
|
|
|
1 Year Colfax Chart |
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