What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-11-04 compared with 2021-07-28 · 176 added, 160 removed, 312 unchanged (52% of the section changed)

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The following discussion of the financial condition and results of operations of Colfax Corporation (“Colfax,” “the Company,” “we,” “our,” and “us”) should be read in conjunction with the Condensed Consolidated Financial Statements and related footnotes included in Part I.

“Financial Statements” of this Quarterly Report on Form 10-Q for the quarterly period ended July 2, 2021 (this “Form 10-Q”) and the Consolidated Financial Statements and related footnotes included in Part II.

“Financial Statements” of this Quarterly Report on Form 10-Q for the quarterly period ended October 1, 2021 (this “Form 10-Q”) and the Consolidated Financial Statements and related footnotes included in Part II.

“Financial Statements and Supplementary Data” of our Annual Report on Form 10-K for the year ended December 31, 2020 (the “2020 Form 10-K”) filed with the Securities and Exchange Commission (the “SEC”) on February 18, 2021.

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the intended separation of our fabrication and medical technology businesses into two differentiated, independent publicly traded companies (the “Separation”;

See the section below entitled “The Separation” under “Results of Operations – Items Affecting Comparability of Reported Results” for further description);

the timing and method of the Separation;

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assumptions underlying any of the foregoing;

and any other statements that address activities, events or developments that we intend, expect, project, believe or anticipate will or may occur in the future.

and any other statements that address activities, events or developments that we intend, expect, project, believe or anticipate will or may occur in the future (see Part II.

“Risk Factors” in this form 10-Q for further discussion of risks related to the Separation).

Forward-looking statements may be, but not always, characterized by terminology such as “believe,” “anticipate,” “should,” “would,” “intend,” “plan,” “will,” “expect,” “estimate,” “project,” “positioned,” “strategy,” “targets,” “aims,” “seeks,” “sees,” and similar expressions.

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Internal Revenue Service (“IRS”) ruling, our ability to satisfactorily complete steps necessary for the Separation and related transactions for the Separation to be generally tax-free for U.S.

federal income tax purposes, the ability to satisfy the necessary conditions to complete the Separation on a timely basis, or at all, our ability to realize the anticipated benefits of the Separation, developments related to the impact of the COVID-19 pandemic on the Separation and the financial and operating performance of each company following the Separation, and finally the approval of the Separation by our board of directors;

federal income tax purposes, the ability to satisfy the necessary conditions to complete the Separation on a timely basis, or at all, our ability to realize the anticipated benefits of the Separation, developments related to the impact of the COVID-19 pandemic on the Separation and the financial and operating performance of each company following the Separation, and final approval of the Separation by our board of directors;

• changes in the general economy, as well as the cyclical nature of the markets we serve;

• supply chain constraints and backlogs, including risks affecting raw material, part and component availability, labor shortages and inefficiencies, freight and logistical challenges, and inflation in raw material, part, component, freight and delivery costs;

• volatility in the commodity markets and certain commodity prices, including oil and steel, due to economic disruptions from the COVID-19 pandemic and various geopolitical events;

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• 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;

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• other risks and factors, listed in Item 1A.

“Risk Factors” in Part I of our 2020 Form 10-K and this Form 10-Q.

“Risk Factors” in Part I of our 2020 Form 10-K and Part II.

“Risk Factors” in this Form 10-Q.

The effects of the COVID-19 pandemic, including the rise, prevalence and severity of variants of the virus and actions by governments, businesses and individuals in response to the situation, may give rise or contribute to or amplify the risks associated with many of these factors.

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Items Affecting Comparability of Reported Results

The comparability of our operating results for the three and six months ended July 2, 2021 to the comparable periods in 2020 is affected by the following additional significant items:

The comparability of our operating results for the three and nine months ended October 1, 2021 to the comparable periods in 2020 is affected by the number of selling days for each region and the following other significant items:

Recent Events

During the second quarter of 2021, we used the proceeds from our March 2021 equity offering to redeem all $600 million of our 2024 senior notes and $100 million of outstanding principal on our 2026 senior notes.

We paid an early redemption premium of $24.4 million and recorded a loss on the extinguishment of $29.9 million.

Additionally, we recognized a pension settlement gain of $11.2 million when the independent trustees of a company pension plan agreed to merge that plan with another company pension plan and contribute its surplus assets.

We paid an early redemption premium of $24.4 million and recorded a loss on the extinguishment of debt of $29.9 million.

Additionally, we recognized a pension settlement gain of $11.2 million in the second quarter of 2021 when the independent trustees of a company pension plan agreed to merge that plan with another company pension plan and contribute its surplus assets.

The Separation

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These businesses operate in distinct markets, with unique business opportunities and investment requirements.

On March 4, 2021, we announced the intention to separate these businesses into two differentiated, independent publicly traded companies (the “Separation”).

On March 4, 2021, we announced the intention to separate these businesses into two differentiated, independent publicly traded companies.

The Chairman of our board of directors and co-founder of Colfax, Mitchell P.

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On March 11, 2020, due to worldwide spread of the virus, the World Health Organization characterized COVID-19 as a pandemic.

The COVID-19 global pandemic has resulted in a widespread health crisis, and the resulting impact on governments, businesses and individuals and actions taken by them in response to the situation resulted in widespread economic disruptions in 2020, significantly affecting broader economies, financial markets, and overall demand for our products .

The COVID-19 global pandemic has resulted in a widespread health crisis, and the resulting impact on governments, businesses and individuals and actions taken by them in response to the situation resulted in widespread economic disruptions, significantly affecting broader economies, financial markets, and overall demand for our products .

In an effort to protect the health and safety of our employees, we have taken actions to adopt social distancing policies at our locations around the world, including working from home, reducing the number of people in our sites at any one time, and suspending or restricting employee travel.

In an effort to contain COVID-19 or slow its spread, governments around the world

have enacted measures throughout 2020 and into 2021, including periodically closing businesses not deemed “essential,” isolating residents to their homes, limiting access to healthcare, curtailing activities including sporting events, and practicing social distancing.

However, increased access to vaccinations throughout 2021 has contributed to slowing the spread of COVID-19 in certain jurisdictions and, consequently, some or all restrictions have been lifted in a number of jurisdictions around the world, allowing a return to more normal activity and operational levels.

In an effort to contain COVID-19 or slow its spread, governments around the world have enacted measures throughout 2020 and into 2021, including periodically closing businesses not deemed “essential,”

isolating residents to their homes, limiting access to healthcare, curtailing activities including sporting events, and practicing social distancing.

Increased access to vaccinations has contributed to slowing the spread of COVID-19 in certain jurisdictions, resulting in some or all restrictions being lifted in a number of jurisdictions around the world, allowing a return to more normal activity and operational levels during the first half of 2021.

However, the emergence and subsequent spread of COVID-19 variants has led to the reinstatement of certain restrictions, which slowed the pace of recovery during the third quarter of 2021.

During 2020, we implemented a broad range of temporary actions to mitigate the effects of lower sales levels including temporarily reducing salaries, furloughing and laying-off employees, significantly curtailing discretionary expenses, re-phasing of capital expenditures, reducing supplier purchase levels and / or prices, adjusting working capital practices and other measures.

As sales volumes returned to more normal levels in 2021, these measures have been removed.

As sales volumes have improved in 2021, these measures have been removed.

As reflected in the discussions that follow, the pandemic and actions taken in response to it have had a variety of impacts on our results of operations during 2020 and 2021.

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Subsequently, we observed a partial recovery in the second half of 2020.

The surge in COVID-19 cases in the fourth quarter of 2020 contributed to certain jurisdictions putting further restrictions into place, which slowed recovery in the fourth quarter of 2020, and the impact continued into the beginning of the first quarter of 2021, after which sales volumes began to normalize.

Recovery of sales volumes slowed in the third quarter of 2021 due to increased restrictions in certain jurisdictions as a result of the spread of COVID-19 variants.

We continue to monitor the evolving situation and guidance from international and domestic authorities, including national and local public health authorities, and may take additional actions based on their recommendations.

In these circumstances, there may be developments outside our control that require us to further adjust our operations.

In the first half of 2021, we observed a normalization in most countries in which we operate primarily as a result of increased access to COVID-19 vaccines and relaxing of some government-mandated restrictions.

However, given the continued dynamic nature of this situation, including the rise, prevalence and severity of variants of the virus, we cannot reasonably estimate the full impacts of COVID-19 on our financial condition, results of operations or cash flows in the future.

Please see “Part I.

Given the continued dynamic nature of this situation, including the rise, prevalence and severity of variants of the virus, we cannot reasonably estimate the full impacts of COVID-19 on our financial condition, results of operations or cash flows in the future.

COVID-19 and other market dynamics have caused widespread supply chain challenges due to labor, raw material, and component shortages.

As a result, we have experienced supply constraints in our businesses, which have led to cost inflation and logistics delays.

We are taking actions in an effort to mitigate impacts to our supply chain, however, we expect these pressures to continue.

Please see Part II.

“Risk Factors” in our 2020 Form 10-K for a further discussion of some of the risks related to the COVID-19 pandemic.

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Acquisitions can significantly affect our reported results, and we report the change in our Net sales between periods both from existing and acquired businesses.

The change in Net sales due to acquisitions for the three and six months ended July 2, 2021 presented in this filing represents the incremental sales subsequent to the beginning of the prior year periods.

We completed one acquisition in our Fabrication Technology segment and three acquisitions in our Medical Technology segment during the six months ended July 2, 2021 for total consideration, net of cash received, of $215.9 million.

This includes the acquisition of, among another, Trilliant Surgical, a national provider of foot and ankle orthopedic implants, and MedShape, Inc., a provider of innovative surgical solutions for foot and ankle surgeons, for total consideration, net of cash received, of $205.4 million within our Medical Technology segment.

In addition, on June 7, 2021, we entered into a definitive agreement for the acquisition of Mathys AG Bettlach (“Mathys”), a Switzerland-based company that develops and distributes innovative products for artificial joint replacement, synthetic bone graft solutions and sports medicine.

We believe that the acquisition will expand our reconstructive product portfolio with Mathys’ complimentary surgical solutions and customer base.

Total acquisition consideration of approximately $285 million is expected to be financed with Colfax common stock.

The transaction is expected to close on July 28, 2021 subsequent to the filing of this Form 10-Q, subject to the satisfaction of closing conditions.

The change in Net sales due to acquisitions for the three and nine months ended October 1, 2021 presented in this filing represents the incremental sales subsequent to the beginning of the prior year periods.

We completed one acquisition in our Fabrication Technology segment and five acquisitions in our Medical Technology segment during the nine months ended October 1, 2021 for net cash consideration of $208.1 million and equity consideration of $285.7 million.

The largest of these acquisitions were in our Medical Technology segment, which includes Trilliant Surgical, a national provider of foot and ankle orthopedic implants;

MedShape, Inc., a provider of innovative surgical solutions for foot and ankle surgeons;

and Mathys AG Bettlach, a Switzerland-based company that develops and distributes innovative products for artificial joint replacement, synthetic bone graft solutions and sports medicine.

Foreign Currency Fluctuations

A significant portion of our Net sales, approximately 59% and 60% for the three and six months ended July 2, 2021, respectively, were derived from operations outside the U.S., with the majority of those sales denominated in currencies other than the U.S.

A significant portion of our Net sales, approximately 59% for both the three and nine months ended October 1, 2021, were derived from operations outside the U.S., with the majority of those sales denominated in currencies other than the U.S.

Because much of our manufacturing and employee costs are outside the U.S., a significant portion of our costs are also denominated in currencies other than the U.S.

Changes in foreign exchange rates can impact our results of operations and are quantified when significant.

For the six months ended July 2, 2021 compared to the six months ended July 3, 2020, fluctuations in foreign currencies had a favorable impact on the change in Net sales of approximately 3% and affected

Gross profit and Selling, general and administrative expenses by less than 3%.

For the second quarter of 2021 compared to the second quarter of 2020, fluctuations in foreign currencies had a favorable impact on the change in Net sales of approximately 4%, and affected Gross profit and Selling, general and administrative expenses by less than 3%.

The changes in foreign exchange rates since December 31, 2020 also decreased net assets by less than 2% as of July 2, 2021.

For the nine months ended October 1, 2021 compared to the nine months ended October 2, 2020, fluctuations in foreign currencies had a favorable impact on the change in Net sales of approximately 2% and affected Gross profit and Selling, general and administrative expenses by less than 2%.

For the third quarter of 2021 compared to the

third quarter of 2020, fluctuations in foreign currencies had a favorable impact on the change in Net sales of approximately 1%, and affected Gross profit and Selling, general and administrative expenses by less than 1%.

The changes in foreign exchange rates since December 31, 2020 also decreased net assets by approximately 2% as of October 1, 2021.

European operations in our Fabrication Technology segment typically experience a slowdown during the July, August and December vacation seasons.

Sales in our Medical Technology segment typically peak in the fourth quarter.

However, the business impact caused by the COVID-19 pandemic distorted the effects of historical seasonality patterns in 2020.

However, the business impact caused by the COVID-19 pandemic has distorted the effects of historical seasonality patterns in 2020 and 2021.

Non-GAAP Measures

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Adjusted EBITA, a non-GAAP performance measure, is included in this report because it is a key metric used by our management to assess our operating performance.

Adjusted EBITA excludes from Net income (loss) from continuing operations the effect of restructuring and other related charges, MDR and other costs, acquisition-related intangible asset amortization and other non-cash charges, and strategic transaction costs, as well as income tax expense (benefit), pension settlement gain, debt extinguishment charges and interest expense, net.

Adjusted EBITA excludes from Net income from continuing operations the effect of restructuring and other related charges, MDR and other costs, acquisition-related intangible asset amortization and other non-cash charges, and strategic transaction costs, as well as income tax expense, pension settlement gain, debt extinguishment charges and interest expense, net.

We also present Adjusted EBITA margin, which is subject to the same adjustments as Adjusted EBITA.

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Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measures.

The following tables set forth a reconciliation of Net income (loss) from continuing operations, the most directly comparable GAAP financial measure, to Adjusted EBITA.

Three Months Ended Six Months Ended

July 2, 2021 July 3, 2020 July 2, 2021 July 3, 2020

The following tables set forth a reconciliation of Net income from continuing operations, the most directly comparable GAAP financial measure, to Adjusted EBITA.

Three Months Ended Nine Months Ended

October 1, 2021 October 2, 2020 October 1, 2021 October 2, 2020

(Dollars in millions)

Net income (loss) from continuing operations (GAAP) $ 31.3 $ (3.1) $ 59.0 $ 5.7

Income tax expense (benefit) 8.2 (30.1) 16.1 (16.9)

Net income from continuing operations (GAAP) $ 28.1 $ 16.8 $ 87.2 $ 22.6

Income tax expense 22.3 19.5 38.4 2.6

Pension settlement gain — — (11.2) —

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Adjusted EBITA (non-GAAP) $ 131.6 $ 107.7 $ 368.9 $ 248.2

Net income (loss) margin from continuing operations (GAAP) 3.2 % (0.5) % 3.2 % 0.4 %

Net income margin from continuing operations (GAAP) 2.9 % 2.1 % 3.1 % 1.0 %

Adjusted EBITA margin (non-GAAP) 13.6 % 13.4 % 13.0 % 11.1 %

(1) Restructuring and other related charges includes $0.9 million and $2.7 million of expense classified as Cost of sales on our Condensed Consolidated Statements of Operations for the three and six months ended July 3, 2020, respectively.

(1) Restructuring and other related charges includes $2.2 million and $4.9 million of expense classified as Cost of sales on our Condensed Consolidated Statements of Operations for the three and nine months ended October 2, 2020, respectively.

(2) Primarily related to costs specific to compliance with medical device reporting regulations and other requirements of the European Union MDR.

These costs are classified as Selling, general and administrative expense on our Condensed Consolidated Statements of Operations for all periods presented.

(3) For the three and six months ended July 2, 2021, Strategic transaction costs includes costs related to the Separation.

For the three and six months ended July 3, 2020, Strategic transaction costs includes costs incurred for the acquisition of DJO.

These costs are classified as Selling, general and administrative expense on our Condensed Consolidated Statements of Operations.

(3) For the three and nine months ended October 1, 2021, Strategic transaction costs includes costs related to the Separation and certain transaction and integration costs related to recent acquisitions.

For the three and nine months ended October 2, 2020, Strategic transaction costs includes costs incurred for the acquisition of DJO.

(4) Includes amortization of acquired intangibles and fair value charges on acquired inventory.

The following tables set forth a reconciliation of operating income (loss), the most directly comparable financial statement measure, to Adjusted EBITA by segment for the three and six months ended July 2, 2021 and July 3, 2020.

Three Months Ended July 2, 2021 Six Months Ended July 2, 2021

Three Months Ended October 1, 2021 Nine Months Ended October 1, 2021

Fabrication Technology Medical Technology Corporate and other Total Fabrication Technology Medical Technology Corporate and other Total

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Adjusted EBITA margin (non-GAAP) 16.5 % 12.3 % — % 13.6 % 16.4 % 12.1 % — % 13.0 %

Three Months Ended July 3, 2020 Six Months Ended July 3, 2020

Three Months Ended October 2, 2020 Nine Months Ended October 2, 2020

Fabrication Technology Medical Technology Corporate and other Total Fabrication Technology Medical Technology Corporate and other Total

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Adjusted EBITA margin (non-GAAP) 14.7 % 15.9 % — % 13.4 % 14.1 % 10.7 % — % 11.1 %

Total Company

Net sales for the three and six months ended July 2, 2021 increased as compared with the three and six months ended July 3, 2020.

Net sales for the three and nine months ended October 1, 2021 increased as compared with the three and nine months ended October 2, 2020.

The following table presents the components of changes in our consolidated Net sales.

Three Months Ended Six Months Ended

Three Months Ended Nine Months Ended

Net Sales Change % Net Sales Change %

(Dollars in millions)

For the three and six months ended July 3, 2020 $ 620.4 $ 1,436.7

For the three and nine months ended October 2, 2020 $ 805.9 $ 2,242.6

Components of Change:

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160.0 19.9 % 588.4 26.2 %

For the three and six months ended July 2, 2021 $ 985.9 $ 1,865.1

For the three and nine months ended October 1, 2021 $ 965.9 $ 2,831.0

(1) Excludes the impact of foreign exchange rate fluctuations and acquisitions, thus providing a measure of change due to factors such as price, product mix and volume.

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(3) Represents the difference between prior year sales valued at the actual prior year foreign exchange rates and prior year sales valued at current year foreign exchange rates.

The increase in Net sales during the three and six months ended July 2, 2021 compared to the prior year periods was primarily attributable to the strong recovery from the prior year COVID-related sales downturn in the first half of 2020.

During the three and six months ended July 2, 2021, the existing business sales of our Fabrication Technology segment increased $196.2 million and $231.0 million, respectively, while our Medical Technology segment increased $121.6 million and $121.1 million, respectively.

Our Fabrication Technology segment benefited from new product initiatives in the second quarter and first half of 2021.

Net sales from acquisitions increased during the three and six months ended July 2, 2021 primarily due to acquisitions in our Medical Technology segment that closed in the fourth quarter of 2020 and first half of 2021.

The increase in Net sales during the three and nine months ended October 1, 2021 compared to the prior year periods was primarily attributable to the recovery from the COVID-related sales downturn in 2020, as well as acquisition-related sales and inflation-related pricing increases.

During the three and nine months ended October 1, 2021, the existing business sales of our Fabrication Technology segment increased $111.5 million and $342.5 million, respectively, while our Medical Technology segment increased $119.8 million during the nine months ended October 1, 2021.

Existing business sales in our Fabrication Technology segment increased in the three months ended October 1, 2021 primarily due to inflation-related pricing increases and, to a lesser extent, new product initiatives and improved sales volume.

During the nine months ended October 1, 2021, existing business sales in our Fabrication Technology segment increased due to strong sales volume, inflation-related pricing increases and new product initiatives.

Net sales from acquisitions increased during the three and nine months ended October 1, 2021 primarily due to acquisitions in our Medical Technology segment that closed in 2021 and in the fourth quarter of 2020.

The weakening of the U.S.

dollar relative to other currencies resulted in $24.1 million and $38.3 million favorable foreign currency translation impacts during the three and six months ended July 2, 2021, respectively.

dollar relative to other currencies resulted in $3.9 million and $42.1 million favorable foreign currency translation impacts during the three and nine months ended October 1, 2021, respectively.

Operating Results

The following table summarizes our results of continuing operations for the comparable periods.

Three Months Ended Six Months Ended

July 2, 2021 July 3, 2020 July 2, 2021 July 3, 2020

Three Months Ended Nine Months Ended

October 1, 2021 October 2, 2020 October 1, 2021 October 2, 2020

(Dollars in millions)

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Selling, general and administrative expense $ 334.4 $ 278.1 $ 977.7 $ 806.0

Operating income (loss) $ 75.9 $ (4.9) $ 137.2 $ 41.9

Operating income (loss) margin 7.7 % (0.8) % 7.4 % 2.9 %

Net income (loss) from continuing operations $ 31.3 $ (3.1) $ 59.0 $ 5.7

Net income (loss) margin from continuing operations 3.2 % (0.5) % 3.2 % 0.4 %

Operating income $ 64.0 $ 61.9 $ 201.2 $ 103.8

Operating income margin 6.6 % 7.7 % 7.1 % 4.6 %

Net income from continuing operations $ 28.1 $ 16.8 $ 87.2 $ 22.6

Net income margin from continuing operations 2.9 % 2.1 % 3.1 % 1.0 %

Adjusted EBITA (non-GAAP) $ 131.6 $ 107.7 $ 368.9 $ 248.2

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Debt extinguishment charges $ — $ — $ 29.9 $ —

Income tax expense (benefit) $ 8.2 $ (30.1) $ 16.1 $ (16.9)

Second Quarter of 2021 Compared to Second Quarter of 2020

Gross profit increased $177.9 million in the second quarter of 2021 compared with the prior year period due to a $78.5 million increase in our Fabrication Technology segment and a $99.4 million increase in our Medical Technology segment.

The Gross profit increase was primarily attributable to the significant rebound from lower sales volumes in the second quarter of 2020 caused by the COVID-19 impact, which created more favorable operating leverage and production efficiencies.

These factors also contributed to the increase in Gross profit margin, which was partially offset by increased supply chain costs and inflation-related pricing and cost increases in our Fabrication Technology segment during the second quarter of 2021.

Selling, general and administrative expense increased $101.9 million in the second quarter of 2021 compared to the prior year period due to increased sales commissions from increased sales levels, the cessation of prior year temporary cost reduction measures that were taken in response to COVID-19, and $17.9 million related to acquired businesses.

Strategic transaction costs increased due to costs incurred related to the Separation.

Restructuring and other related charges decreased due to the completion of certain restructuring programs.

Additionally, during the second quarter of 2021, a pension settlement gain of $11.2 million was recognized when the independent trustees of a company pension plan agreed to merge that plan with another company pension plan and contribute its surplus assets.

Debt extinguishment charges of $29.9 million were recorded in the second quarter of 2021 due to an early redemption of certain senior notes.

Interest expense, net decreased in the second quarter of 2021 compared to the same period in the prior year,

due to a reduction in debt balances in the second quarter of 2021, primarily as a result of the aforementioned redemption of senior notes.

The effective tax rate for Net income (loss) from continuing operations during the second quarter of 2021 was 20.7%, which was slightly lower than the 2021 U.S.

federal statutory tax rate of 21%, mainly due to the net impact of international tax rates, effective settlements on uncertain tax positions and U.S.

tax credits, offset by withholding taxes, U.S.

tax on international operations and other non-deductible expenses.

The effective tax rate for the second quarter of 2020 was 90.5%, which was higher than the 2020 U.S.

federal statutory tax rate of 21% mainly due to the impact of additional U.S.

tax on international operations and taxable foreign exchange gains, offset in part by a discrete tax benefit associated with the enactment of a tax law change in India.

Net income from continuing operations increased in the second quarter of 2021 compared with the prior year period primarily due to the strong recovery from the prior year COVID-related sales downturn and related cost impacts.

The sales-related benefits from this recovery in the second quarter of 2021 were partially offset by increases in expenses attributable to the temporary cost reductions implemented in the second quarter of 2020 in reaction to COVID-driven sales reductions.

In the second quarter of 2021 we incurred higher sales commissions related to higher sales, increased Strategic transaction costs related to the Separation, and debt extinguishment charges in the current year period.

Income tax expense $ 22.3 $ 19.5 $ 38.4 $ 2.6

Third Quarter of 2021 Compared to Third Quarter of 2020

Gross profit increased in the third quarter of 2021 compared with the prior year period due to a $33.0 million increase in our Fabrication Technology segment and a $27.7 million increase in our Medical Technology segment.

The Gross profit increase in our Fabrication Technology segment was primarily attributable to a rebound from lower sales volumes in the third quarter of 2020 caused by the COVID-19 impact.

The Gross profit increase in our Medical Technology segment was due to acquisition growth.

Improved Gross profit in both segments was partially offset by increased supply chain and logistic costs.

Gross profit margin was impacted by the same drivers as Gross profit, but decreased slightly due to inflation-related pricing and cost increases in our Fabrication Technology segment.

Selling, general and administrative expense increased $56.3 million in the third quarter of 2021 compared to the prior year period due to $36.1 million of costs related to acquired businesses, the cessation of prior year temporary cost reduction measures that were taken in response to COVID-19, and a $17.3 million increase in strategic transaction costs due to Separation-related costs.

Interest expense, net decreased in the third quarter of 2021 compared to the prior year period due to a reduction in debt balances, primarily as a result of the redemption of senior notes in the second quarter of 2021.

The effective tax rate for Net income from continuing operations during the third quarter of 2021 was 44.3%, which was higher than the 2021 U.S.

federal statutory tax rate of 21%, mainly due to the relative unfavorable increase in U.S.

tax on international operations due to lower U.S.

forecasted income and increased taxable foreign exchange gains as compared to the three months ended July 2, 2021 and nine months ended October 1, 2021.

The effective tax rate for the third quarter of 2020 was 53.7%, which was higher than the 2020 U.S.

federal statutory tax rate of 21% mainly due to the net impact of additional

tax on international operations, withholding taxes, and certain non-deductible expenses.

These unfavorable impacts were partially offset by the impact of U.S.

tax credits, a benefit from U.S.

state tax losses, and the realization of tax benefits associated with effective settlements of uncertain tax positions.

Net income from continuing operations increased in the third quarter of 2021 compared with the prior year period primarily due to the strong recovery from the prior year COVID-related sales downturn and related cost impacts.

The sales-related benefits from this recovery were partially offset by increases in expenses attributable to the cessation of aforementioned temporary cost reductions in place during the third quarter of 2020 in reaction to COVID-driven sales reductions, as well as increased supply chain and logistic costs and higher Selling, general and administrative expenses associated with the Separation.

Net income margin from continuing operations increased by 80 basis points due to the aforementioned factors.

Adjusted EBITA and related margins increased primarily due to the improved sales volumes, partially offset by higher sales commissions and the cessation of second quarter 2020 temporary cost reductions.

Six months ended July 2, 2021 Compared to Six months ended July 3, 2020

Gross profit increased $200.8 million in the six months ended July 2, 2021 compared with the prior year period due to a $89.5 million increase in our Fabrication Technology segment and a $111.3 million increase in our Medical Technology segment.

The Gross profit increase was primarily attributable to higher sales volumes and the related improved production variances compared to the six months ended July 3, 2020, during which sales volumes were negatively impacted by the COVID-19 pandemic.

During the six months ended July 2, 2021, Gross profit also improved due to acquisition growth, new product initiatives and favorable foreign currency impacts.

Gross profit margin increased for the same reasons Gross profit increased, partially offset by inflation-related pricing and cost increases in our Fabrication Technology segment.

Selling, general and administrative expense increased $115.4 million in the six months ended July 2, 2021 compared to the prior year period primarily due to increased sales commissions from increased sales levels, and the cessation of prior year temporary cost reduction measures that were taken in response to COVID-19.

To a lesser extent, acquisition-related expenses and strategic transaction costs related to the Separation also increased Selling, general and administrative expense during the six months ended July 2, 2021.

Adjusted EBITA increased due to the improved sales volumes, partially offset by higher supply chain and logistic costs and the cessation of third quarter 2020 temporary cost reductions.

Adjusted EBITA margin increased for the same reasons Adjusted EBITA increased, partially offset by inflation-related pricing and cost increases in our Fabrication Technology segment, as well as recent acquisitions in our Medical Technology segment which were dilutive to the margin, but are expected to be accretive in future years.

Nine months ended October 1, 2021 Compared to Nine months ended October 2, 2020

Gross profit increased in the nine months ended October 1, 2021 compared with the prior year period due to a $122.5 million increase in our Fabrication Technology segment and a $139.1 million increase in our Medical Technology segment.

The Gross profit increase was primarily attributable to higher sales volumes and the related improved production variances compared to the nine months ended October 2, 2020, during which sales volumes were negatively impacted by the COVID-19 pandemic.

During the nine months ended October 1, 2021, Gross profit also improved due to acquisition growth, new product initiatives and favorable foreign currency impacts, partially offset by increased supply chain and logistic costs in both segments.

Gross profit margin increased for the same reasons, partially offset by inflation-related pricing and cost increases in our Fabrication Technology segment.

Selling, general and administrative expense increased $171.7 million in the nine months ended October 1, 2021 compared to the prior year period, primarily due to a $69.9 million increase in costs associated with acquisitions and the related integration costs from the newly acquired businesses, primarily within our Medical Technology segment, the cessation of prior year temporary cost reduction measures that were taken in response to COVID-19, and increased sales commissions from increased sales levels.

A $24.1 million increase in strategic transaction costs related to the Separation also increased Selling, general and administrative expense during the nine months ended October 1, 2021.

Restructuring and other related charges decreased due to the completion of certain restructuring programs in our Medical Technology segment.

Additionally, during the six months ended July 2, 2021, a pension settlement gain of $11.2 million was recognized when the independent trustees of a company pension plan agreed to merge that plan with another company pension plan and contribute its surplus assets.

Additionally, during the nine months ended October 1, 2021, a pension settlement gain of $11.2 million was recognized when the independent trustees of a company pension plan agreed to merge that plan with another company pension plan and contribute its surplus assets.

Debt extinguishment charges of $29.9 million were recorded in the second quarter of 2021 due to an early redemption of certain senior notes.

Interest expense, net decreased in the six months ended July 2, 2021 compared to the same period in the prior year, primarily due to an overall reduction in debt balances during the current year period as a result of the aforementioned redemption of senior notes.

The effective tax rate for Net income (loss) from continuing operations during the six months ended July 2, 2021 was 21.4%, which was slightly higher than the 2021 U.S.

Interest expense, net decreased in the nine months ended October 1, 2021 compared to the same period in the prior year, primarily due to an overall reduction in debt balances during the current year period as a result of the aforementioned redemption of senior notes.

The effective tax rate for Net income from continuing operations during the nine months ended October 1, 2021 was 30.6%, which was higher than the 2021 U.S.

federal statutory tax rate of 21%, mainly due to withholding taxes, U.S.

tax on international operations, and other non-deductible expenses, offset by the net impact of international tax rates, the realization of tax benefits associated with effective settlements on uncertain tax positions, and U.S.

The effective tax rate for the six months ended July 3, 2020 was 151.3%, which was higher than the 2020 U.S.

federal statutory tax rate of 21% mainly due to the impact of U.S.

tax credits and state taxes on the forecasted rate and discrete tax benefits associated with the filing of timely elected changes to U.S.

Federal tax returns to credit rather than to deduct foreign taxes, the impact of an enacted law change in India, and the realization of tax benefits associated with effective settlements on uncertain tax.

These favorable impacts were offset by the impact of additional U.S.

tax on international operations and taxable foreign exchange gains.

Net income from continuing operations increased in the six months ended July 2, 2021 compared with the prior year period primarily due to the strong recovery from the prior year COVID-related sales downturn and related cost impacts.

The sales-related benefits from this recovery in the six months ended July 2, 2021 were partially offset by increases in expenses attributable to the temporary cost reductions implemented during the six months ended July 3, 2020 in reaction to COVID-driven sales reductions.

In the six months ended July 2, 2021, we incurred higher sales commissions related to higher sales, and debt extinguishment charges.

tax on international operations, and other non-deductible expenses, offset in part by the effective settlements of uncertain tax positions, a benefit from U.S.

state tax losses, and U.S.

The effective tax rate for the nine months ended October 2, 2020 was 10.5%, which was lower than the 2020 U.S.

federal statutory tax rate of 21% mainly due to the net impact of U.S.

tax credits, a benefit from U.S.

state tax losses, a discrete tax benefit associated with the filing of timely elected changes to U.S.

These favorable impacts were partially offset by the impact of additional U.S.

tax on international operations, withholding taxes, and certain non-deductible expenses.

Net income from continuing operations increased in the nine months ended October 1, 2021 compared with the prior year period primarily due to the strong recovery from the prior year COVID-related sales downturn.

The sales-related benefits from this recovery in the nine months ended October 1, 2021 were partially offset by increases in expenses attributable to the

cessation of aforementioned temporary cost reductions implemented during the nine months ended October 2, 2020 in reaction to COVID-driven sales reductions, as well as increased supply chain and logistic costs.

In the nine months ended October 1, 2021, we incurred higher sales commissions related to greater sales and debt extinguishment charges.

Net income margin from continuing operations increased by 210 basis points due to the aforementioned factors.

Adjusted EBITA increased primarily due to the improved sales volumes, new product initiatives, and benefits from previously-completed restructuring programs, partially offset by the aforementioned sales commission increases, and the cessation of the aforementioned temporary cost reductions.

Adjusted EBITA increased primarily due to the improved sales volumes, new product initiatives, and benefits from previously-completed restructuring programs, partially offset by the aforementioned supply chain and logistic costs and sales commission increases, and the cessation of the aforementioned temporary cost reductions.

Adjusted EBITA margin increased for the same reasons Adjusted EBITA increased, partially offset by inflation-related pricing increases in our Fabrication Technology segment, as well as recent acquisitions in our Medical Technology segment which were dilutive to the margin, but are expected to be accretive in future years.

Business Segments

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The following table summarizes selected financial results for our Fabrication Technology segment:

Three Months Ended Six Months Ended

July 2, 2021 July 3, 2020 July 2, 2021 July 3, 2020

Three Months Ended Nine Months Ended

October 1, 2021 October 2, 2020 October 1, 2021 October 2, 2020

(Dollars in millions)

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Acquisition-related amortization and other non-cash charges $ 8.9 $ 9.1 $ 27.1 $ 26.8

Second Quarter of 2021 Compared to Second Quarter of 2020

Net sales in our Fabrication Technology segment increased $215.4 million in the second quarter of 2021 compared with the prior year period primarily due to the strong recovery from the COVID effects in the second quarter of 2020.

Sales also increased due to new product initiatives, inflation-related pricing impacts of approximately 11% of the sales increase, and an $18.5 million favorable foreign currency impact during the second quarter of 2021.

Gross profit and Gross profit margin increased $78.5 million and 90 basis points, respectively, due to the higher sales volumes and the related improved production efficiencies compared to the prior year period.

The increase in Gross profit margin was partially offset by inflation-related

pricing and cost increases, which compressed the margin.

Selling, general and administrative expense increased primarily due to the cessation of temporary cost reductions implemented during the second quarter of 2020, partially offset by benefits from ongoing restructuring initiatives to structurally reduce costs.

Segment operating income and Adjusted EBITA improved due to increased sales volumes, partially offset by increased Selling, general and administrative expenses.

The related margins increased for the same reasons, partially offset by inflation-related pricing and cost increases during the second quarter of 2021.

Six months ended July 2, 2021 Compared to Six months ended July 3, 2020

Net sales increased $258.0 million in the six months ended July 2, 2021 compared with the prior year period, due to the strong recovery from the COVID effects in the six months ended July 3, 2020, as well as new product initiatives, inflation-related pricing impacts, and a $25.9 million favorable foreign currency translation impact in the current year period.

Gross profit increased $89.5 million during the six months ended July 2, 2021 as a result of improved sales volumes, while Gross profit margin decreased 10 basis points due to inflation-related pricing and cost increases, which compressed the margin.

Third Quarter of 2021 Compared to Third Quarter of 2020

Net sales in our Fabrication Technology segment increased $114.5 million in the third quarter of 2021 compared with the prior year period driven by inflation-related pricing impacts, which comprised approximately 15% of the increase, as well as new product initiatives and improved sales volumes due to continued market recovery from COVID-19.

Gross profit increased $33.0 million due to the higher sales volumes compared to the prior year period.

Gross profit margin decreased 120 basis points due to inflation-related pricing and cost increases, which compressed the margin.

Selling, general and administrative expense increased primarily due to the cessation of temporary cost reductions in place during the third quarter of 2020, partially offset by favorable resolutions of certain trade receivables and other risks.

Segment operating income and Adjusted EBITA improved

due to increased sales volumes, partially offset by increased Selling, general and administrative expenses.

The related margins increased for the same reasons, partially offset by inflation-related pricing and cost increases during the third quarter of 2021.

Nine months ended October 1, 2021 Compared to Nine months ended October 2, 2020

Net sales increased $372.5 million in the nine months ended October 1, 2021 compared with the prior year period due to the strong recovery from the COVID-19 effects in the nine months ended October 2, 2020, as well as new product initiatives, inflation-related pricing impacts, and a $28.4 million favorable foreign currency translation impact.

Gross profit increased $122.5 million during the nine months ended October 1, 2021 as a result of improved sales volumes and production efficiencies, while Gross profit margin decreased 40 basis points due to inflation-related pricing and cost increases, which compressed the margin.

Selling, general and administrative expense increased in the period primarily due to the cessation of temporary cost reductions implemented in the second quarter of 2020, partially offset by benefits from restructuring initiatives.

Segment operating income and Adjusted EBITA increased in the six months ended July 2, 2021 compared to the prior year period due to the improved sales volumes, partially offset by increased Selling, general and administrative costs.

Segment operating income and Adjusted EBITA increased in the nine months ended October 1, 2021 compared to the prior year period due to the improved sales volumes, partially offset by increased Selling, general and administrative costs.

The related margins increased for the same reasons, partially offset by inflation-related pricing and cost increases over the same period.

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The following table summarizes the selected financial results for our Medical Technology segment:

Three Months Ended Six Months Ended

July 2, 2021 July 3, 2020 July 2, 2021 July 3, 2020

Three Months Ended Nine Months Ended

October 1, 2021 October 2, 2020 October 1, 2021 October 2, 2020

(Dollars in millions)

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Selling, general and administrative expense $ 188.9 $ 152.1 $ 544.1 $ 434.3

Segment operating income (loss) (non-GAAP) $ 18.2 $ (20.8) $ 20.4 $ (17.0)

Segment operating income (loss) margin (non-GAAP) 5.1 % (10.1) % 3.1 % (3.4) %

Segment operating income (non-GAAP) $ 10.8 $ 22.9 $ 31.3 $ 5.9

Segment operating income margin (non-GAAP) 3.0 % 7.3 % 3.0 % 0.7 %

Adjusted EBITA (non-GAAP) $ 44.4 $ 50.0 $ 124.1 $ 87.2

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MDR and other costs $ 1.9 $ 2.6 $ 5.6 $ 4.5

Strategic transaction costs $ 1.1 $ — $ 1.1 $ —

Acquisition-related amortization and other non-cash charges $ 32.4 $ 27.1 $ 91.7 $ 81.3

Second Quarter of 2021 Compared to Second Quarter of 2020

Net sales increased for our Medical Technology segment in the second quarter of 2021 compared with the prior year period primarily due to the strong recovery from COVID-driven lower sales in the second quarter of 2020, as well as acquisition-related sales growth of $22.9 million and a favorable foreign currency translation effect of $5.6 million in the current year

Gross profit and gross profit margins increased in the second quarter of 2021 compared to the second quarter of 2020 primarily due to improved sales volumes and acquisition-related growth, partially offset by increased supply chain costs.

Selling, general and administrative expense increased over the same period primarily due to the cessation of temporary employee cost reductions implemented during the second quarter of 2020, as well as higher sales commissions and acquisition-related expenses, including integration costs from the newly-acquired businesses, in the current year period.

Segment operating income, Adjusted EBITA and the related margins all increased as a result of the aforementioned factors.

Third Quarter of 2021 Compared to Third Quarter of 2020

Net sales increased in our Medical Technology segment in the third quarter of 2021 compared with the prior year period primarily due to acquisition-related sales growth of $45.5 million in the current year period.

Sales from existing business were relatively flat and were unfavorably impacted by approximately $7 million of non-recurring sales of personal protective equipment in the prior year period.

As a result of the surge in cases of COVID-19 variants, certain jurisdictions put further

COVID-19-related restrictions in place during the third quarter of 2021, which decelerated the recovery in elective surgical procedure volumes.

Gross profit and gross profit margins increased in the third quarter of 2021 compared to the third quarter of 2020 primarily due to acquisition-related growth and favorable product mix, partially offset by increased supply chain and logistic costs.

Selling, general and administrative expense increased over the same period primarily due to the cessation of temporary employee cost reductions in place during the third quarter of 2020 and costs associated with acquisitions, including integration costs for the newly-acquired businesses.

Segment operating income and Adjusted EBITA decreased primarily due to the aforementioned cessation of temporary employee cost reductions and increased supply chain and logistic costs.

The related margins decreased for the same reasons, as well as a result of the dilutive impact of recent acquisitions.

Restructuring and other related charges decreased by $1.6 million due to the completion of certain projects in earlier periods.

Six months ended July 2, 2021 Compared to Six months ended July 3, 2020

Net sales increased for our Medical Technology segment in the six months ended July 2, 2021 compared with the prior year period due to a recovery in sales volumes from the decline related to COVID-19 during the six months ended July 3, 2020, as well as continued expansion in the reconstructive product group from key products launched in 2020, acquisition-related sales growth of $36.9 million and a favorable foreign currency translation effect of $12.4 million during the current year period.

While sales volumes early in the first quarter of 2021 were negatively impacted by certain jurisdictions putting further COVID-19-related restrictions in place in response to the surge in COVID-19 cases late in 2020, sales volumes have since normalized.

Gross profit and Gross profit margins increased during the six months ended July 2, 2021 compared to the prior year period due to improved sales volumes and acquisition-related growth, partially offset by increased supply chain costs.

Selling, general and administrative expense also increased primarily due to the cessation of temporary employee cost reductions implemented during the second quarter of 2020 and higher sales commissions in the current year period, as well as costs associated with acquisitions and the related integration costs from the newly acquired businesses during the six months ended July 2, 2021.

Nine months ended October 1, 2021 Compared to Nine months ended October 2, 2020

Net sales increased in our Medical Technology segment in the nine months ended October 1, 2021 compared with the prior year period due to a recovery in sales volumes from the decline related to COVID-19 during the nine months ended October 2, 2020, as well as continued expansion in the reconstructive product group from key products launched in 2020, acquisition-related sales growth of $82.4 million and a favorable foreign currency translation impact of $13.7 million.

After a surge of COVID-19 cases in the fourth quarter of 2020, which negatively impacted sales volumes early in 2021, sales volumes began normalizing late in the first quarter and through the second quarter of 2021.

However, as a result of the aforementioned surge in cases of COVID-19 variants, recovery slowed during the third quarter of 2021, primarily due to a deceleration in elective surgical procedure volumes.

Gross profit and Gross profit margins increased during the nine months ended October 1, 2021 compared to the prior year period due to improved sales volumes and acquisition-related growth, partially offset by increased supply chain and logistic costs.

Selling, general and administrative expense also increased primarily due to costs associated with acquisitions and the related integration costs for the newly-acquired businesses, the cessation of temporary employee cost reductions implemented during the nine months ended October 2, 2020, and higher sales commissions in the current year period.

Segment operating income, Adjusted EBITA, and related margins all increased as a result of the aforementioned factors.

Restructuring and other related charges decreased by $10.3 million due to completing certain projects.

Restructuring and other related charges decreased by $11.9 million due to the completion of certain projects.

Liquidity and Capital Resources

We finance our long-term capital and working capital requirements through a combination of cash flows from operating activities, various borrowings and the issuances of equity.

We expect that our primary ongoing requirements for cash will be for working capital, funding of acquisitions, capital expenditures, restructuring, asbestos-related cash outflows, and debt service and required amortization of principal.

We expect that our primary ongoing requirements for cash will be for working capital, funding of acquisitions, Separation costs, capital expenditures, restructuring, asbestos-related cash outflows, and debt service and required amortization of principal.

We believe we could raise additional funds in the form of debt or equity if it was determined to be appropriate for strategic acquisitions or other corporate purposes.

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No stock repurchases have been made under this plan since the third quarter of 2018.

As of July 2, 2021, the remaining stock repurchase authorization provided by our Board of Directors was $100.0 million.

As of October 1, 2021, the remaining stock repurchase authorization provided by our Board of Directors was $100.0 million.

The timing, amount, and method of shares repurchased is determined by management based on its evaluation of market conditions and other factors.

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Refer to Note 10, “Debt” in the accompanying Notes to the Condensed Consolidated Financial Statements for more information.

As of July 2, 2021, we are in compliance with the covenants under the Credit Facility.

As of July 2, 2021, the weighted-average interest rate of borrowings under the Credit Facility was 1.84%, excluding accretion of original issue discount and deferred financing fees, and there was $890 million available on the Revolver.

As of October 1, 2021, we are in compliance with the covenants under the Credit Facility.

As of October 1, 2021, the weighted-average interest rate of borrowings under the Credit Facility was 1.59%, excluding accretion of original issue discount and deferred financing fees, and there was $850 million available on the Revolver.

Euro Senior Notes

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The quarterly cash installment constitutes a payment of interest and a partial repayment of principal.

We paid $12.3 million and $11.5 million of principal on the TEU amortizing notes in the six months ended July 2, 2021 and July 3, 2020, respectively.

We paid $18.6 million and $17.4 million of principal on the TEU amortizing notes in the nine months ended October 1, 2021 and October 2, 2020, respectively.

The TEU amortizing notes are the direct, unsecured and unsubordinated obligations of the Company and rank equally with all of the existing and future other unsecured and unsubordinated indebtedness of the Company.

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In addition, we are party to various bilateral credit facilities with a borrowing capacity of $170.0 million.

As of July 2, 2021, there were no outstanding borrowings under these facilities.

As of October 1, 2021, there were no outstanding borrowings under these facilities.

We are also party to letter of credit facilities with an aggregate capacity of $292.9 million.

Total letters of credit of $70.1 million were outstanding as of July 2, 2021.

Total letters of credit of $34.6 million were outstanding as of October 1, 2021.

We believe that our sources of liquidity are adequate to fund our operations for the next twelve months.

As of July 2, 2021, we had $62.3 million of Cash and cash equivalents, a decrease of $38.8 million from the balance as of December 31, 2020 of $101.1 million, which included $4.0 million of Restricted cash.

As of October 1, 2021, we had $177.5 million of Cash and cash equivalents, an increase of $76.4 million from the balance as of December 31, 2020 of $101.1 million, which included $4.0 million of Restricted cash.

The following table summarizes the change in Cash and cash equivalents during the periods indicated:

Six Months Ended

July 2, 2021 July 3, 2020

Nine Months Ended

October 1, 2021 October 2, 2020

(Dollars in millions)

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Net cash used in investing activities (293.6) (84.1)

Proceeds (repayments) from borrowings, net (627.7) (63.2)

Repayments from borrowings, net (594.3) (116.1)

Proceeds from issuance of common stock, net 738.2 2.9

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Effect of foreign exchange rates on Cash and cash equivalents (1.7) (6.6)

Decrease in Cash and cash equivalents $ (38.8) $ (43.2)

Cash flows from operating activities can fluctuate significantly from period to period due to changes in working capital and the timing of payments for items such as pension funding, asbestos-related costs and restructuring program funding.

Increase (decrease) in Cash and cash equivalents $ 76.4 $ (43.2)

Changes in significant operating cash flow items are discussed below.

• During the six months ended July 2, 2021 and July 3, 2020, cash payments of $10.2 million and $23.6 million, respectively, were made related to our restructuring initiatives.

• Year-to-date 2021 results include $47.6 million of outflows from working capital as a result of business growth.

Results in the comparable prior year period provided cash of $59.8 million due to a decrease in receivables, partially offset by a decrease in accounts payable due to COVID-related declines.

• During the nine months ended October 1, 2021 and October 2, 2020, cash payments of $15.1 million and $31.4 million, respectively, were made related to our restructuring initiatives.

• During the nine months ended October 1, 2021, cash payments of $6.3 million were made related to the Separation.

• Year-to-date 2021 results include $69.0 million of outflows from working capital as a result of business growth and supply chain challenges, which have caused certain increases in inventory levels.

Results in the comparable prior year

period provided cash of $44.6 million due to decreases in receivables and inventories, partially offset by a decrease in accounts payable due to COVID-related declines.

• Year-to-date 2021 net cash provided by operating activities also included a cash inflow from a $36.0 million U.S.

federal tax refund received in the first quarter of 2021.

• Cash used in operating activities related to discontinued operations for the six months ended July 2, 2021 was $4.6 million, primarily due to a settlement related to a disposed business, partially offset by net asbestos inflows.

Cash used in operating activities related to discontinued operations for the six months ended July 3, 2020 was $7.9 million.

Cash flows used in investing activities during the six months ended July 2, 2021 increased due to cash paid for acquisitions and investments in our Medical Technology segment of $225.7 million, as well as an acquisition outlay in our Fabrication Technology segment of $5.0 million.

Cash flows provided by financing activities for the six months ended July 2, 2021 included the $711.3 million net proceeds from the public offering of 16.1 million shares of Colfax Common stock on March 19, 2021.

• Cash used in operating activities related to discontinued operations for the nine months ended October 1, 2021 was $7.2 million, primarily due to a settlement related to a disposed business, partially offset by net asbestos inflows.

Cash used in operating activities related to discontinued operations for the nine months ended October 2, 2020 was $18.4 million, which included $11.2 million of asbestos outflows and $7.2 million related to our divested air and gas handling business.

Cash flows used in investing activities during the nine months ended October 1, 2021 increased due to cash paid for acquisitions and investments in our Medical Technology segment of $218.0 million, as well as an acquisition outlay in our Fabrication Technology segment of $5.0 million.

Cash flows provided by financing activities for the nine months ended October 1, 2021 included the $711.3 million net proceeds from the public offering of 16.1 million shares of Colfax Common stock on March 19, 2021.

The net proceeds were used in the $600 million full redemption of our 2024 Notes and the $100 million partial redemption of our 2026 Notes.

Cash flows from financing activities reflects a net borrowing on our Revolver in 2021 and a net repayment on our Revolver in 2020.

Our Cash and cash equivalents as of July 2, 2021 include $50.6 million held in jurisdictions outside the U.S., an increase of $7.4 million in the second quarter of 2021.

Cash flows from financing activities includes net borrowings on our Revolver of $125 million in 2021 and net repayments of $50.0 million and $40.0 million on our Revolver and Term A-1 loan, respectively, in 2020.

Our Cash and cash equivalents as of October 1, 2021 include $44.6 million held in jurisdictions outside the U.S., a decrease of $6.0 million in the third quarter of 2021.

Cash repatriation of non-U.S.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis