UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): September 30, 2019
Colfax Corporation
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||
(Address of principal executive offices) (Zip Code)
(301 ) 323-9000
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards pursuant to Section 13(a) of the Exchange Act ☐
Introductory Note
On September 30, 2019, pursuant to the previously disclosed purchase agreement, dated as of May 15, 2019, by and among Colfax Corporation, a Delaware corporation (the “Company”) and certain entities affiliated with KPS Capital Partners, LP (collectively, the “Purchaser”), the Company completed the divestiture of certain subsidiaries and assets comprising the Company’s Air & Gas Handling business (the “Business”) for aggregate consideration of $1.8 billion including $1.67 billion paid at closing and the assumption of certain liabilities. The purchase price is subject to certain adjustments pursuant to the Purchase Agreement. The cash proceeds, net of transaction expenses and estimated taxes, will be used to pay down debt.
Item 2.01. Completion of Acquisition or Disposition of Assets.
The disclosure set forth in the Introductory Note of this Current Report on Form 8-K is incorporated herein by reference and is qualified in its entirety by reference to the full text of the Purchase Agreement, which was attached as Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the SEC on May 17, 2019 and is incorporated herein by reference.
Item 7.01. Regulation FD Disclosure.
On September 30, 2019, the Company issued a press release announcing the closing of the transactions contemplated by the Purchase Agreement. A copy of the press release is furnished herewith as Exhibit 99.1. The information contained in Exhibit 99.1 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed by the Company under the Securities Act of 1933, as amended, or the Exchange Act.
Item 9.01. Financial Statements and Exhibits.
(b) Pro Forma Financial Information.
Unaudited pro forma financial information of the Company to give effect to the transactions contemplated by the Purchase Agreement is included in Exhibit 99.2 filed herewith and incorporated by reference into this Item 9.01(b).
EXHIBIT INDEX
(d) Exhibits
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
October 4, 2019
Colfax Corporation | ||
By: | /s/ Douglas J. Pitts | |
Name: | Douglas J. Pitts | |
Title: | Vice President, Controller and Chief Accounting Officer | |
(Principal Accounting Officer) | ||
Exhibit 99.1
Colfax Completes Sale of Air & Gas Handling Business
Annapolis Junction, MD, September 30, 2019 - Colfax Corporation (“Colfax”) (NYSE: CFX), a leading diversified industrial technology company, today announced it completed the sale of its Air & Gas Handling business to an affiliate of KPS Capital Partners, LP for an aggregate consideration of $1.8 billion. The cash proceeds, net of transaction expenses and estimated taxes, of approximately $1.6 billion will be used to pay down debt.
“Colfax has built a much stronger portfolio - less cyclical, higher margin, and with more stable cash generation and an attractive long-term growth outlook,” said Matt Trerotola, Colfax President and CEO. “This is a terrific foundation on which to drive continuous improvement and compound our results by investing in innovation and attractive acquisitions.”
ABOUT COLFAX CORPORATION
Colfax Corporation is a leading diversified technology company that provides orthopedic care and fabrication technology products and services to customers around the world principally under the DJO and ESAB brands. Colfax believes that its brands are among the most highly recognized in each of the markets that it serves. Colfax is traded on the NYSE under the ticker “CFX.” Additional information about Colfax is available at www.colfaxcorp.com.
Investor Contact:
Terry Ross, Vice President
Colfax Corporation
+1 (301) 323-9090
investorrelations@colfaxcorp.com
Exhibit 99.2
Unaudited Pro Forma Condensed Consolidated Financial Information
On September 30, 2019, pursuant to the previously disclosed purchase agreement, dated as of May 15, 2019, by and among Colfax Corporation, a Delaware corporation (the “Company”) and certain entities affiliated with KPS Capital Partners, LP (collectively, the “Purchaser”), the Company completed the divestiture of certain subsidiaries and assets comprising the Company’s Air & Gas Handling business (the “Business”). The aggregate purchase price of $1.8 billion comprised $1.67 billion paid at closing, the assumption of certain liabilities, and is subject to certain adjustments pursuant to the purchase agreement.
The sale of the Business is considered a significant disposition for purposes of Item 2.01 of Form 8-K. As a result, the Company prepared the accompanying unaudited pro forma condensed consolidated financial information in accordance with Article 11 of Regulation S-X.
The Company presented its operations for the Air & Gas Handling business as discontinued operations in its condensed consolidated financial statements included in the Form 10-Q for the three and six months ended June 28, 2019. The accompanying unaudited pro forma condensed consolidated statements of operations for the six months ended June 28, 2019 and for years ended December 31, 2018, 2017, and 2016 give effect to this divestiture as if it had occurred on January 1, 2016. The following unaudited pro forma condensed consolidated balance sheet gives effect to this divestiture as if it had occurred on June 28, 2019, the date of the Company’s most recently filed balance sheet.
The unaudited pro forma condensed consolidated financial information should be read in conjunction with (i) the audited consolidated financial statements and accompanying notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Colfax’s Form 10-K for the year ended December 31, 2018 filed with the SEC on February 21, 2019, and (ii) the unaudited condensed consolidated financial statements and accompanying notes and “Management’s Discussion and Analysis of Financial Conditions and Results of Operations” included in Colfax’s Form 10-Q for the three and six months ended June 28, 2019 filed with the SEC on August 6, 2019.
The unaudited pro forma condensed consolidated financial information is presented based on assumptions, adjustments, and currently available information described in the accompanying notes and is intended for informational purposes only. The unaudited pro forma condensed consolidated financial information is not necessarily indicative of what Colfax’s results of operations or financial condition would have been had the divestiture been completed on the dates assumed. In addition, it is not necessarily indicative of Colfax’s future results of operations or financial condition.
COLFAX CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
June 28, 2019
(Dollars in thousands)
Pro Forma Adjustments | ||||||||||||
Company As Reported | Divestiture of Air & Gas Handling | Company Pro Forma | ||||||||||
ASSETS | ||||||||||||
CURRENT ASSETS: | ||||||||||||
Cash and cash equivalents | $ | 131,925 | $ | — | $ | 131,925 | ||||||
Trade receivables, less allowance for doubtful accounts of $31,678 | 616,263 | — | 616,263 | |||||||||
Inventories, net | 594,800 | — | 594,800 | |||||||||
Other current assets | 171,622 | — | 171,622 | |||||||||
Current portion of assets held for sale | 2,121,983 | (2,121,983 | ) | (a) | — | |||||||
Total current assets | 3,636,593 | (2,121,983 | ) | 1,514,610 | ||||||||
Property, plant and equipment, net | 488,956 | — | 488,956 | |||||||||
Goodwill | 2,822,093 | — | 2,822,093 | |||||||||
Intangible assets, net | 2,314,420 | — | 2,314,420 | |||||||||
Lease asset - right of use | 153,924 | — | 153,924 | |||||||||
Other assets | 483,267 | — | 483,267 | |||||||||
Total assets | $ | 9,899,253 | $ | (2,121,983 | ) | $ | 7,777,270 | |||||
LIABILITIES AND EQUITY | ||||||||||||
CURRENT LIABILITIES: | ||||||||||||
Current portion of long-term debt | $ | 39,524 | $ | — | $ | 39,524 | ||||||
Accounts payable | 399,812 | — | 399,812 | |||||||||
Customer advances and billings in excess of costs incurred | 16,277 | — | 16,277 | |||||||||
Accrued liabilities | 448,558 | — | 448,558 | |||||||||
Current portion of liabilities held for sale | 694,384 | (694,384 | ) | (a) | — | |||||||
Total current liabilities | 1,598,555 | (694,384 | ) | 904,171 | ||||||||
Long-term debt, less current portion | 4,078,232 | (1,652,188 | ) | (c) | 2,426,044 | |||||||
Non-current lease liability | 119,398 | — | 119,398 | |||||||||
Other liabilities | 846,719 | — | 846,719 | |||||||||
Total liabilities | 6,642,904 | (2,346,572 | ) | 4,296,332 | ||||||||
EQUITY: | ||||||||||||
Total Colfax Corporation equity | 3,094,798 | 339,234 | (a) | 3,434,032 | ||||||||
Noncontrolling interest | 161,551 | (114,645 | ) | (b) | 46,906 | |||||||
Total equity | 3,256,349 | 224,589 | 3,480,938 | |||||||||
Total liabilities and equity | $ | 9,899,253 | $ | (2,121,983 | ) | $ | 7,777,270 | |||||
See Notes to unaudited pro forma condensed consolidated financial information.
COLFAX CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Six Months Ended June 28, 2019
(Dollars in thousands, except per share amounts)
Pro Forma Adjustments | ||||||||||||
Company As Reported | Divestiture of Air & Gas Handling | Company Pro Forma | ||||||||||
Net sales | $ | 1,592,566 | $ | — | $ | 1,592,566 | ||||||
Cost of sales | 955,495 | — | 955,495 | |||||||||
Gross profit | 637,071 | — | 637,071 | |||||||||
Selling, general and administrative expense | 555,788 | — | 555,788 | |||||||||
Restructuring and other related charges | 37,416 | — | 37,416 | |||||||||
Operating income | 43,867 | — | 43,867 | |||||||||
Interest expense, net | 54,992 | — | 54,992 | |||||||||
Loss from continuing operations before income taxes | (11,125 | ) | — | (11,125 | ) | |||||||
Provision for income taxes | 8,193 | (36 | ) | (g) | 8,157 | |||||||
Net loss from continuing operations | (19,318 | ) | 36 | (19,282 | ) | |||||||
Loss from discontinued operations, net of taxes | (495,289 | ) | 489,899 | (d) | (5,390 | ) | (f) | |||||
Net loss | (514,607 | ) | 489,935 | (24,672 | ) | |||||||
Less: income attributable to noncontrolling interest, net of taxes | 6,650 | (4,430 | ) | (b) | 2,220 | |||||||
Net loss attributable to Colfax Corporation | $ | (521,257 | ) | $ | 494,365 | $ | (26,892 | ) | ||||
Net loss per share - basic | ||||||||||||
Continuing operations | $ | (0.16 | ) | $ | — | $ | (0.16 | ) | ||||
Discontinued operations | $ | (3.70 | ) | $ | 3.66 | $ | (0.04 | ) | ||||
Consolidated operations | $ | (3.86 | ) | $ | 3.66 | $ | (0.20 | ) | ||||
Net loss per share - diluted | ||||||||||||
Continuing operations | $ | (0.16 | ) | $ | — | $ | (0.16 | ) | ||||
Discontinued operations | $ | (3.70 | ) | $ | 3.66 | $ | (0.04 | ) | ||||
Consolidated operations | $ | (3.86 | ) | $ | 3.66 | $ | (0.20 | ) | ||||
Weighted-average shares of common stock outstanding: | ||||||||||||
Basic | 134,991,844 | 134,991,844 | ||||||||||
Diluted | 134,991,844 | 134,991,844 | ||||||||||
See Notes to unaudited pro forma condensed consolidated financial information.
COLFAX CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Year Ended December 31, 2018
(Dollars in thousands, except per share amounts)
Pro Forma Adjustments | ||||||||||||
Company As Reported | Divestiture of Air & Gas Handling (e) | Company Pro Forma | ||||||||||
Net sales | $ | 3,666,812 | $ | (1,473,729 | ) | $ | 2,193,083 | |||||
Cost of sales | 2,533,973 | (1,070,266 | ) | 1,463,707 | ||||||||
Gross profit | 1,132,839 | (403,463 | ) | 729,376 | ||||||||
Selling, general and administrative expense | 818,210 | (269,447 | ) | 548,763 | ||||||||
Restructuring and other related charges | 77,686 | (48,609 | ) | 29,077 | ||||||||
Operating income | 236,943 | (85,407 | ) | 151,536 | ||||||||
Pension settlement (gain) | (39 | ) | — | (39 | ) | |||||||
Interest expense (income), net | 44,052 | 5,031 | 49,083 | |||||||||
Loss on short term investments | 10,128 | — | 10,128 | |||||||||
Income from continuing operations before income taxes | 182,802 | (90,438 | ) | 92,364 | ||||||||
Income tax (benefit) provision | (21 | ) | 1,298 | (g) | 1,277 | |||||||
Net income from continuing operations | 182,823 | (91,736 | ) | 91,087 | ||||||||
Discontinued Operations: | ||||||||||||
Loss from discontinued operations, net of taxes | (28,350 | ) | — | (28,350 | ) | (f) | ||||||
Net income | 154,473 | (91,736 | ) | 62,737 | ||||||||
Less: income attributable to noncontrolling interest, net of taxes | 14,277 | (13,616 | ) | (b) | 661 | |||||||
Net income attributable to Colfax Corporation | $ | 140,196 | $ | (78,120 | ) | $ | 62,076 | |||||
Net income (loss) per share - basic | ||||||||||||
Continuing operations | $ | 1.40 | $ | (0.65 | ) | $ | 0.75 | |||||
Discontinued operations | $ | (0.24 | ) | $ | — | $ | (0.24 | ) | ||||
Consolidated operations | $ | 1.16 | $ | (0.65 | ) | $ | 0.52 | * | ||||
Net income (loss) per share - diluted | ||||||||||||
Continuing operations | $ | 1.40 | $ | (0.65 | ) | $ | 0.75 | |||||
Discontinued operations | $ | (0.24 | ) | $ | — | $ | (0.24 | ) | ||||
Consolidated operations | $ | 1.16 | $ | (0.65 | ) | $ | 0.51 | |||||
Weighted-average shares of common stock outstanding: | ||||||||||||
Basic | 120,288,297 | 120,288,297 | ||||||||||
Diluted | 120,795,056 | 120,795,056 | ||||||||||
* Net income per share does not foot due to rounding
See Notes to unaudited pro forma condensed consolidated financial information.
COLFAX CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Year Ended December 31, 2017
(Dollars in thousands, except per share amounts)
Pro Forma Adjustments | ||||||||||||
Company As Reported | Divestiture of Air & Gas Handling (e) | Company Pro Forma | ||||||||||
Net sales | $ | 3,300,184 | $ | (1,362,902 | ) | $ | 1,937,282 | |||||
Cost of sales | 2,270,709 | (1,005,006 | ) | 1,265,703 | ||||||||
Gross profit | 1,029,475 | (357,896 | ) | 671,579 | ||||||||
Selling, general and administrative expense | 732,340 | (231,692 | ) | 500,648 | ||||||||
Restructuring and other related charges | 68,351 | (33,018 | ) | 35,333 | ||||||||
Goodwill and intangible asset impairment charge | 152,700 | (152,700 | ) | — | ||||||||
Operating income | 76,084 | 59,514 | 135,598 | |||||||||
Pension settlement loss | 46,933 | — | 46,933 | |||||||||
Interest expense, net | 41,137 | (1,031 | ) | 40,106 | ||||||||
(Loss) income from continuing operations before income taxes | (11,986 | ) | 60,545 | 48,559 | ||||||||
Income tax provision (benefit) | 42,554 | (63,997 | ) | (g) | (21,443 | ) | ||||||
Net (loss) income from continuing operations | (54,540 | ) | 124,542 | 70,002 | ||||||||
Discontinued Operations: | ||||||||||||
Income from discontinued operations, net of taxes | 224,047 | — | 224,047 | (f) | ||||||||
Net income (loss) | 169,507 | 124,542 | 294,049 | |||||||||
Less: income attributable to noncontrolling interest, net of taxes | 18,417 | (16,844 | ) | (b) | 1,573 | |||||||
Net income attributable to Colfax Corporation | $ | 151,090 | $ | 141,386 | $ | 292,476 | ||||||
Net (loss) income per share - basic | ||||||||||||
Continuing operations | $ | (0.59 | ) | $ | 1.15 | $ | 0.56 | |||||
Discontinued operations | $ | 1.82 | $ | — | $ | 1.82 | ||||||
Consolidated operations | $ | 1.23 | $ | 1.15 | $ | 2.37 | * | |||||
Net (loss) income per share - diluted | ||||||||||||
Continuing operations | $ | (0.59 | ) | $ | 1.14 | $ | 0.55 | |||||
Discontinued operations | $ | 1.81 | (h) | $ | — | $ | 1.81 | |||||
Consolidated operations | $ | 1.22 | $ | 1.14 | $ | 2.36 | ||||||
Weighted-average shares of common stock outstanding: | ||||||||||||
Basic | 123,229,806 | 123,229,806 | ||||||||||
Diluted | 123,229,806 | (h) | 123,996,201 | |||||||||
* Net income per share does not foot due to rounding
See Notes to unaudited pro forma condensed consolidated financial information.
COLFAX CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Year Ended December 31, 2016
(Dollars in thousands, except per share amounts)
Pro Forma Adjustments | ||||||||||||
As Reported | Divestiture of Air & Gas Handling (e) | Pro Forma | ||||||||||
Net sales | $ | 3,185,753 | $ | (1,385,261 | ) | $ | 1,800,492 | |||||
Cost of sales | 2,193,371 | (1,014,827 | ) | 1,178,544 | ||||||||
Gross profit | 992,382 | (370,434 | ) | 621,948 | ||||||||
Selling, general and administrative expense | 696,800 | (220,304 | ) | 476,496 | ||||||||
Restructuring and other related charges | 58,496 | (26,808 | ) | 31,688 | ||||||||
Goodwill and intangible asset impairment charge | 238 | — | 238 | |||||||||
Operating income | 236,848 | (123,322 | ) | 113,526 | ||||||||
Pension settlement loss | 48 | — | 48 | |||||||||
Interest expense (income), net | 30,276 | 569 | 30,845 | |||||||||
Income from continuing operations before income taxes | 206,524 | (123,891 | ) | 82,633 | ||||||||
Income tax provision | 51,772 | (41,562 | ) | (g) | 10,210 | |||||||
Net income from continuing operations | 154,752 | (82,329 | ) | 72,423 | ||||||||
Discontinued Operations: | ||||||||||||
Loss from discontinued operations, net of taxes | (9,561 | ) | — | (9,561 | ) | (e) | ||||||
Net income | 145,191 | (82,329 | ) | 62,862 | ||||||||
Less: income (loss) attributable to noncontrolling interest, net of taxes | 17,080 | (17,173 | ) | (b) | (93 | ) | ||||||
Net income attributable to Colfax Corporation | $ | 128,111 | $ | (65,156 | ) | $ | 62,955 | |||||
Net income (loss) per share - basic | ||||||||||||
Continuing operations | $ | 1.12 | $ | (0.53 | ) | $ | 0.59 | |||||
Discontinued operations | $ | (0.08 | ) | $ | — | $ | (0.08 | ) | ||||
Consolidated operations | $ | 1.04 | $ | (0.53 | ) | $ | 0.51 | |||||
Net income (loss) per share - diluted | ||||||||||||
Continuing operations | $ | 1.12 | $ | (0.53 | ) | $ | 0.59 | |||||
Discontinued operations | $ | (0.08 | ) | $ | — | $ | (0.08 | ) | ||||
Consolidated operations | $ | 1.04 | $ | (0.53 | ) | $ | 0.51 | |||||
Weighted-average shares of common stock outstanding: | ||||||||||||
Basic | 122,911,581 | 122,911,581 | ||||||||||
Diluted | 123,198,726 | 123,198,726 | ||||||||||
See Notes to unaudited pro forma condensed consolidated financial information.
COLFAX CORPORATION
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
(a) | Adjustment reflects the assets and liabilities of the Air & Gas Handling business, which were previously classified as held for sale, and the related equity. |
(b) | Adjustment represents noncontrolling interests in subsidiaries which were historically part of the Air & Gas Handling business. |
(c) | Adjustment reflects the use of the cash proceeds from the sale of the Air & Gas Handling business, net of transaction expenses and estimated taxes, to pay down debt. |
(d) | Adjustment reflects the historical loss from discontinued operations, net of tax, associated with the Air & Gas Handling business. |
(e) | Adjustment reflects the discontinued operations of the Air & Gas Handling business, except as otherwise noted. |
(f) | The income (loss) from discontinued operations, net of tax, remaining after removing the Air & Gas Handling business, relates to the historical Fluid Handling discontinued operations including the Company's retained asbestos-related activities and gain on disposal associated with the Fluid Handling business. |
(g) | Adjustment represents the tax effects of the Air & Gas Handling business divestiture to achieve the pro forma tax for the continuing operations of Colfax. |
(h) | The weighted-average shares of common stock outstanding used in the diluted net income per share from discontinued operations for the year ended December 31, 2017 includes an additional 0.8 million potentially dilutive securities. |