EX-99.2 4 s001994x1_ex99-2.htm EXHIBIT 99.2
Exhibit 99.2
 
Unaudited Pro Forma Condensed Consolidated Financial Information

On December 11, 2017, Colfax Corporation (the “Company” or “Colfax”) completed the sale of its fluid handling business (“Fluid Handling”) to CIRCOR International, Inc., a Delaware corporation (“CIRCOR”). The initial consideration included cash consideration of $559.4 million, 3.3 million newly-issued shares of CIRCOR common stock with an estimated fair value of $134.9 million and the assumption of certain liabilities, including certain pension liabilities. The final purchase price will include post closing adjustments as defined in the purchase agreement.

The Company presented its operations for the Fluid Handling business as discontinued operations in its condensed consolidated financial statements included in the Form 10-Q for the three and nine months ended September 29, 2017. The accompanying unaudited pro forma condensed consolidated statements of income for the nine months ended September 29, 2017 and for years ended December 31, 2016, 2015 and 2014 give effect to this divestiture as if it had occurred on January 1, 2014. The following unaudited pro forma condensed consolidated balance sheet gives effect to this divestiture as if it had occurred on September 29, 2017, the date of the Company’s most recently filed balance sheet.

The unaudited pro forma condensed consolidated financial statements 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, 2016 filed with the SEC on February 14, 2017, 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 nine months ended September 29, 2017 filed with the SEC on November 6, 2017.

The unaudited pro forma condensed consolidated financial statements are presented based on currently available information and are intended for informational purposes only. These unaudited pro forma condensed consolidated financial statements are 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, they are not necessarily indicative of Colfax’s future results of operations or financial condition.

COLFAX CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEETS
September 29, 2017
(Dollars in thousands)

         
Pro Forma
 Adjustments
        
   
As Reported
    
Divestiture of
Fluid Handling
    
Pro Forma
  
ASSETS
                  
CURRENT ASSETS:
                  
Cash and cash equivalents
  
$
260,414
    
$
559,400
(b)
  
$
819,814
  
Short-term investments
    
—
      
134,850
(b)
    
134,850
  
Trade receivables, less allowance for doubtful accounts of $30,042
    
957,215
      
—
      
957,215
  
Inventories, net
    
414,556
      
—
      
414,556
  
Other current assets
    
188,221
      
12,036
(f)
    
200,257
  
Current portion of assets held for sale
    
494,463
      
(494,463
)(a)
    
—
  
Total current assets
    
2,314,869
      
211,823
      
2,526,692
  
Property, plant and equipment, net
    
512,561
      
—
      
512,561
  
Goodwill
    
2,527,141
      
—
      
2,527,141
  
Intangible assets, net
    
935,804
      
—
      
935,804
  
Other assets
    
547,941
      
(74,206
)(d)
    
473,735
  
Total assets
  
$
6,838,316
    
$
137,617
    
$
6,975,933
  
                         
LIABILITIES AND EQUITY
                        
CURRENT LIABILITIES:
                        
Current portion of long-term debt
  
$
5,861
    
$
—
    
$
5,861
  
Accounts payable
    
543,725
      
10,375
      
554,100
  
Customer advances and billings in excess of costs incurred
    
129,893
      
—
      
129,893
  
Accrued liabilities
    
336,744
      
37,275
(d)
    
374,019
  
Current portion of liabilities held for sale
    
272,407
      
(272,407
)(a)
    
—
  
Total current liabilities
    
1,288,630
      
(224,757
)
    
1,063,873
  
Long-term debt, less current portion
    
1,334,627
      
—
      
1,334,627
  
Other liabilities
    
701,261
      
10,922
(d)
    
712,183
  
Total liabilities
    
3,324,518
      
(213,835
)
    
3,110,683
  
Equity:
                        
Common stock, $0.001 par value; 400,000,000 shares authorized; 123,115,844 issued and outstanding
    
123
      
—
      
123
  
Additional paid-in capital
    
3,220,073
      
—
      
3,220,073
  
Retained earnings
    
833,200
      
174,074
(c)
    
1,007,274
  
Accumulated other comprehensive loss
    
(753,772
)
    
177,378
(a)
    
(576,394
)
Total Colfax Corporation equity
    
3,299,624
      
351,452
      
3,651,076
  
Noncontrolling interest
    
214,174
      
—
      
214,174
  
Total equity
    
3,513,798
      
351,452
      
3,865,250
  
Total liabilities and equity
  
$
6,838,316
    
$
137,617
    
$
6,975,933
  
 
COLFAX CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
Nine Months Ended September 29, 2017
(Dollars in thousands, except share and per share amounts)
 
         
Pro Forma
Adjustments
        
   
As Reported
    
Divestiture of
Fluid Handling
 (a)
    
Pro Forma
  
Net sales
  
$
2,426,101
    
$
—
    
$
2,426,101
  
Cost of sales
    
1,664,309
      
—
      
1,664,309
  
Gross profit
    
761,792
      
—
      
761,792
  
Selling, general and administrative expense
    
533,550
      
—
      
533,550
  
Restructuring and other related charges
    
23,131
      
—
      
23,131
  
Operating income
    
205,111
      
—
      
205,111
  
Interest expense
    
29,106
      
—
      
29,106
  
Income from continuing operations before income taxes
    
176,005
      
—
      
176,005
  
Provision for income taxes
    
46,128
      
643
      
46,771
  
Net income from continuing operations
    
129,877
      
(643
)
    
129,234
  
Discontinued Operations:
    
 
              
—
  
Income from discontinued operations, net of taxes
    
21,790
      
(26,508
)(e)
    
(4,718
)
Net income
    
151,667
      
(27,151
)
    
124,516
  
Less: income attributable to noncontrolling interest, net of taxes
    
13,867
      
—
      
13,867
  
Net income attributable to Colfax Corporation
  
$
137,800
    
$
(27,151
)
  
$
111,292
  
Net income per share - basic
                        
Continuing operations
  
$
0.94
    
$
—
    
$
0.94
  
Discontinued operations
  
$
0.18
    
$
(0.22
)
  
$
(0.04
)
Consolidated operations
  
$
1.12
    
$
(0.22
)
  
$
0.90
  
Net income per share - diluted
                        
Continuing operations
  
$
0.94
    
$
—
    
$
0.94
  
Discontinued operations
  
$
0.18
    
$
(0.21
)
  
$
(0.04
)**
Consolidated operations
  
$
1.11
*
  
$
(0.21
)
  
$
0.90
  
Weighted-average shares of common stock outstanding:
                        
Basic
    
123,187,447
      
123,187,447
      
123,187,447
  
Diluted
    
123,947,762
      
123,947,762
      
123,947,762
  
 
*
Net income per share does not add due to rounding.
 
 
**
Net income per share does not cross add due to rounding.

See the accompanying Notes to the Unaudited Pro Forma Consolidated Condensed Financial Statements.
COLFAX CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
Year Ended December 31, 2016
(Dollars in thousands, except share and per share amounts)

         
Pro Forma
 Adjustments
        
   
As Reported
    
Divestiture of
Fluid Handling
 (a)
    
Pro Forma
  
Net sales
  
$
3,647,047
    
$
(461,294
)
  
$
3,185,753
  
Cost of sales
    
2,501,396
      
(308,025
)
    
2,193,371
  
Gross profit
    
1,145,651
      
(153,269
)
    
992,382
  
Selling, general and administrative expense
    
825,240
      
(115,516
)(e)
    
709,724
  
Asbestos coverage adjustment
    
8,226
      
—
      
8,226
  
Restructuring and other related charges
    
74,170
      
(15,674
)
    
58,496
  
Operating income
    
238,015
      
(22,079
)
    
215,936
  
Interest expense, net
    
30,016
      
260
      
30,276
  
Income before income taxes
    
207,999
      
(22,339
)
    
185,660
  
Provision for (benefit from) income taxes
    
62,808
      
(20,666
)
    
42,142
  
Net income
    
145,191
      
(1,673
)
    
143,518
  
Less: income attributable to noncontrolling interest, net of taxes
    
17,080
      
—
      
17,080
  
Net income attributable to Colfax Corporation
    
128,111
      
(1,673
)
    
126,438
  
Net income per share:
                        
Basic
  
$
1.04
    
$
(0.01
)
  
$
1.03
  
Diluted
  
$
1.04
    
$
(0.01
)
  
$
1.03
  
Weighted-average shares of common stock outstanding:
                        
Basic
    
122,911,581
      
122,911,581
      
122,911,581
  
Diluted
    
123,198,726
      
123,198,726
      
123,198,726
  
 
See the accompanying Notes to the Unaudited Pro Forma Consolidated Condensed Financial Statements.

COLFAX CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
Year Ended December 31, 2015
(Dollars in thousands, except share and per share amounts)

         
Pro Forma
 Adjustments
        
   
As Reported
    
Divestiture of
Fluid Handling
 (a)
    
Pro Forma
  
Net sales
  
$
3,967,053
    
$
(532,701
)
  
$
3,434,352
  
Cost of sales
    
2,715,279
      
(352,613
)
    
2,362,666
  
Gross profit
    
1,251,774
      
(180,088
)
    
1,071,686
  
Selling, general and administrative expense
    
905,952
      
(140,637
)(e)
    
765,315
  
Restructuring and other related charges
    
61,177
      
(4,355
)
    
56,822
  
Operating income
    
284,645
      
(35,096
)
    
249,549
  
Interest expense, net
    
47,743
      
(241
)
    
47,502
  
Income before income taxes
    
236,902
      
(34,855
)
    
202,047
  
Provision for (benefit from) income taxes
    
49,724
      
(14,884
)
    
34,840
  
Net income
    
187,178
      
(19,971
)
    
167,207
  
Less: income attributable to noncontrolling interest, net of taxes
    
19,439
      
—
      
19,439
  
Net income attributable to Colfax Corporation
  
$
167,739
    
$
(19,971
)
  
$
147,768
  
Net income per share:
                        
Basic
  
$
1.35
    
$
(0.16
)
  
$
1.19
  
Diluted
  
$
1.34
    
$
(0.16
)
  
$
1.18
  
Weighted-average shares of common stock outstanding:
                        
Basic
    
124,101,033
      
124,101,033
      
124,101,033
  
Diluted
    
124,869,649
      
124,869,649
      
124,869,649
  
 
See the accompanying Notes to the Unaudited Pro Forma Consolidated Condensed Financial Statements.

COLFAX CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
Year Ended December 31, 2014
(Dollars in thousands, except share and per share amounts)

         
Pro Forma
 Adjustments
        
   
As Reported
    
Divestiture of
Fluid Handling
 (a)
    
Pro Forma
  
Net sales
  
$
4,624,476
    
$
(653,417
)
  
$
3,971,059
  
Cost of sales
    
3,145,631
      
(436,024
)
    
2,709,607
  
Gross profit
    
1,478,845
      
(217,393
)
    
1,261,452
  
Selling, general and administrative expense
    
1,011,171
      
(163,446
)(e)
    
847,725
  
Restructuring and other related charges
    
58,121
      
(6,988
)
    
51,133
  
Operating income
    
409,553
      
(46,959
)
    
362,594
  
Interest expense, net
    
51,305
      
2,513
      
53,818
  
Income before income taxes
    
358,248
      
(49,472
)
    
308,776
  
Provision for (benefit from) income taxes
    
(62,025
)
    
(20,310
)(g)
    
(82,335
)
Net income
    
420,273
      
(29,162
)
    
391,111
  
Less: income attributable to noncontrolling interest, net of taxes
    
28,175
      
—
      
28,175
  
Net income attributable to Colfax Corporation
    
392,098
      
(29,162
)
    
362,936
  
Dividends on preferred stock
    
2,348
      
—
      
2,348
  
Preferred stock conversion inducement payment
    
19,565
      
—
      
19,565
  
Net income attributable to Colfax Corporation common shareholders
  
$
370,185
    
$
(29,162
)
  
$
341,023
  
Net income per share:
                        
Basic
  
$
3.06
    
$
(0.24
)
  
$
2.82
  
Diluted
  
$
3.02
    
$
(0.24
)
  
$
2.78
  
Weighted-average shares of common stock outstanding:
                        
Basic
    
121,143,790
      
121,143,790
      
121,143,790
  
Diluted
    
122,666,292
      
122,666,292
      
122,666,292
  
 
See the accompanying Notes to the Unaudited Pro Forma Consolidated Condensed Financial Statements.

COLFAX CORPORATION
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(a)
Adjustment reflects the assets, liabilities, equity and operations of Fluid Handling.
   
(b)
Adjustment represents the receipt of cash consideration and CIRCOR common stock at closing. The CIRCOR common stock received is valued based on the CIRCOR share price as of the close of trading on December 8, 2017.
   
(c)
This adjustment reflects the gain arising from the sale net of tax effects. No adjustment has been made to the cash consideration to give effect to any potential post-closing adjustments under the terms of the purchase agreement.
   
(d)
Adjustment represents tax effects of the divestiture.
   
(e)
Adjustment does not include asbestos-related expense. Pursuant to the purchase agreement, Colfax will retain the Fluid Handling’s asbestos-related contingencies and insurance coverages.
   
(f)
Adjustment represent Cash and cash equivalents on Fluid Handling's books as of September 29, 2017.
   
(g)
The income tax provision adjustment for any gain on the disposal of Fluid Handling does not consider any changes in judgment as to the realizability of deferred tax assets.