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Item 8. Financial Statements and Supplementary Data

2022-02-22 compared with 2021-02-18 · 410 added, 450 removed, 1339 unchanged (39% of the section changed)

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INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm – Internal Control Over Financial Reporting 53

Report of Independent Registered Public Accounting Firm – Consolidated Financial Statements 54

Report of Independent Registered Public Accounting Firm – Internal Control Over Financial Reporting ( Ernst & Young LLP , Baltimore, MD , Auditor Firm ID:

Report of Independent Registered Public Accounting Firm – Consolidated Financial Statements ( Ernst & Young LLP , Baltimore, MD , Auditor Firm ID:

Consolidated Statements of Operations 60

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Segment Information 111

Selected Quarterly Data—(unaudited) 105

Subsequent Events 106

Report of Independent Registered Public Accounting Firm

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Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting, appearing in Item 9A.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

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The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Goodwill and Other Indefinite-Lived Intangible Asset Impairment

Description of the Matter At December 31, 2020, the Company’s goodwill allocated to the Fabrication Technology and Medical Technology reporting units was $1.6 billion and $1.8 billion, respectively.

Other indefinite-lived intangible assets were $212 million at December 31, 2020.

As discussed in Note 9 to the consolidated financial statements, goodwill and indefinite-lived intangible assets are not amortized, but rather are subject to an annual impairment review, or more frequent reviews if events and circumstances indicate an impairment exists.

Auditing the Company's goodwill and indefinite-lived intangible asset impairment tests was complex and highly judgmental due to the significant estimation required by management to determine the fair values of the reporting units and indefinite-lived intangible assets.

In particular, the fair value estimates were sensitive to significant assumptions, such as changes in the discount rate, royalty rates, projected revenue and projected operating income that are forward-looking and affected by future economic and market conditions.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of the Company's controls over its annual goodwill and indefinite-lived intangible asset impairment review process, including controls over management’s review of the significant assumptions described above.

Description of the Matter At December 31, 2021, the Company’s goodwill allocated to the Medical Technology reporting unit was $1.9 billion.

As discussed in Note 9 to the consolidated financial statements, goodwill is not amortized, but rather is subject to an annual impairment review, or more frequent reviews if events and circumstances indicate an impairment exists.

Auditing the Company's goodwill impairment test was complex and highly judgmental due to the significant estimation required by management to determine the fair value of the Medical Technology reporting unit.

In particular, the fair value estimate was sensitive to significant assumptions, such as changes in the discount rate, market multiples, projected net sales and projected operating income metrics that are forward-looking and affected by future economic and market conditions.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of the Company's controls over its annual goodwill impairment review process, including controls over management’s review of the significant assumptions described above.

We also tested management’s controls over the completeness and accuracy of the data used in the model.

To test the estimated fair value of the reporting units and certain indefinite-lived intangible assets, we performed audit procedures that included, among others, assessing methodologies and testing the significant assumptions used in the Company’s analyses, as well as testing the completeness and accuracy of the underlying data.

For example, we compared the significant assumptions to current third-party industry data, and to the historical results of the reporting units.

We performed sensitivity analyses of significant assumptions to evaluate the changes in the fair value of the reporting units and indefinite-lived intangible assets that would result from changes in key assumptions.

To test the estimated fair value of the Medical Technology reporting unit, we performed audit procedures that included, among others, assessing methodologies and testing the significant assumptions used in the Company’s analyses, as well as testing the completeness and accuracy of the underlying data.

For example, we compared the significant assumptions to current third-party industry data, and to the historical results of the Medical Technology reporting unit.

We performed sensitivity analyses of significant assumptions to evaluate the changes in the fair value of the Medical Technology reporting unit that would result from changes in key assumptions.

We also involved internal valuation specialists to assist in our evaluation of the methodologies and significant assumptions used by the Company.

In addition, we tested management’s reconciliation of the fair value of both reporting units to the market capitalization of the Company.

Valuation of Acquired Intangible Assets

Description of the Matter During 2021, the Company completed the acquisitions of Trilliant, MedShape and Mathys for net cash consideration of $204 million and equity consideration of $286 million and recognized identifiable intangible assets of $181 million as disclosed in Note 5 to the consolidated financial statements.

These transactions were accounted for as business combinations.

Auditing the Company's purchase accounting for these acquisitions was complex due to the significant estimation required by management to determine the fair value of the acquired intangible assets, which consisted of customer relationships, tradenames and technology.

The estimation complexity was primarily due to the valuation models used to measure the fair value of the intangible assets and the sensitivity of the respective fair values to the significant underlying assumptions.

The significant assumptions used to estimate the fair value of the intangible assets included discount rates, royalty rates, customer attrition, and certain assumptions that form the basis of the forecasted results (e.g., net sales, and operating profit metrics).

These significant assumptions are forward looking and could be affected by future economic and market conditions.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of the Company's controls over its accounting for acquisitions.

For example, we tested controls over the recognition and measurement of intangible assets, including the valuation models and underlying assumptions used to develop such estimates.

We also tested management’s controls over the completeness and accuracy of the data used in the models.

To audit the estimated fair value of the intangible assets, we performed audit procedures that included, among others, evaluating the Company's valuation models and testing the significant assumptions used in the models, as well as testing the completeness and accuracy of the underlying data.

We compared the significant assumptions to current industry, market and economic trends, to the assumptions used to value similar assets in other acquisitions, and to the historical results of the acquired businesses.

We also involved an internal valuation specialist to assist in our evaluation of the significant assumptions and those procedures included the completion of independent calculations of the fair value of the acquired intangible assets.

Asbestos Liability

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Auditing the asbestos liability was complex and highly judgmental due to the significant estimation of numerous variables required in determining the asbestos obligation.

In particular, the estimates were sensitive to significant assumptions such as the period of time over which claims activity can be reasonably predicted, the estimated rate of decline in future asbestos-related claims, the rate at which claims are disposed, the lag between when claims are filed and subsequently settled, and settlement values.

In particular, the estimates were sensitive to significant assumptions such as the period of time over which claims activity can be reasonably predicted, the number of future asbestos-related claims that may be received, the type and severity of disease alleged by each claimant, dismissal rates, the lag time between the filing and the settlement of claims, and settlement values.

These assumptions have a significant effect on the asbestos liability.

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Interest expense, net 72,593 104,262 119,503

Loss on short-term investments — — 10,128

Debt extinguishment charges 29,870 — —

Income from continuing operations before income taxes 165,388 58,029 50,493

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Net income from continuing operations 98,693 64,082 18,863

Income (loss) from discontinued operations, net of taxes ( 18,311 ) ( 536,009 ) 32,601

Loss from discontinued operations, net of taxes ( 22,415 ) ( 18,311 ) ( 536,009 )

Net income (loss) 76,278 45,771 ( 517,146 )

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Other comprehensive income (loss):

Foreign currency translation, net of tax expense of $( 25 ), $ 2,248 and $ 3,018

Foreign currency translation, net of tax expense (benefit) of $ 3,449 , $( 25 ) and $ 2,248

( 114,389 ) 59,880 ( 47,734 )

Unrealized gain (loss) on hedging activities, net of tax expense of $( 9,120 ), $ 1,574 and $ 5,273

Unrealized gain (loss) on hedging activities, net of tax expense (benefit) of $ 6,980 , $( 9,120 ) and $ 1,574

23,247 ( 26,268 ) 5,832

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Amounts reclassified from Accumulated other comprehensive loss:

Amortization of pension and other post-retirement net actuarial gain, net of tax expense (benefit) of $ 883 , $ 779 and $ 805

3,735 2,597 3,623

Amortization of pension and other post-retirement prior service cost, net of tax of $ 0 , $ 0 and $( 411 )

Amortization of pension and other post-retirement net actuarial gain, net of tax expense of $ 1,148 , $ 883 and $ 779

5,025 3,735 2,597

Amortization of pension and other post-retirement prior service cost — — 32

Divestiture-related recognition of foreign currency translation, pension, and other post-retirement cost — — 291,263

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Balance at January 1, 2019 117,275,217 $ 117 $ 3,057,982 $ 991,838 $ ( 780,177 ) $ 207,186 $ 3,476,946

Cumulative effect of accounting change, net of tax of $ 2,808

— — — 5,152 ( 5,152 ) — —

Net income — — — 140,196 — 14,277 154,473

Distributions to noncontrolling owners — — — — — ( 11,172 ) ( 11,172 )

Other comprehensive loss, net of tax of $ 9,051

— — — — ( 200,653 ) ( 22,768 ) ( 223,421 )

Common stock repurchases ( 6,449,425 ) ( 6 ) ( 199,994 ) — — — ( 200,000 )

Common stock-based award activity 478,815 — 29,802 — — — 29,802

Balance at December 31, 2018 117,275,217 117 3,057,982 991,838 ( 780,177 ) 207,186 3,476,946

Cumulative effect of accounting change — — — 15,368 ( 15,368 ) — —

Net income (loss) — — — ( 527,646 ) — 10,500 ( 517,146 )

Net loss — — — ( 527,646 ) — 10,500 ( 517,146 )

Distributions to noncontrolling owners — — — — — ( 12,379 ) ( 12,379 )

Noncontrolling interest share repurchase — — ( 24,037 ) — ( 19,960 ) ( 49,508 ) ( 93,505 )

Other comprehensive income, net of tax of $ 621

Other comprehensive income, net of tax expense of $ 621

— — — — 331,660 ( 107,601 ) 224,059

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Balance at December 31, 2020 118,496,687 118 3,478,008 517,367 ( 452,106 ) 44,487 3,587,874

Net income — — — 71,657 — 4,621 76,278

Distributions to noncontrolling owners — — — — — ( 3,713 ) ( 3,713 )

Other comprehensive income, net of tax expense of $ 14,945

— — — — ( 63,907 ) ( 1,340 ) ( 65,247 )

Common stock offering, net of issuance costs 16,100,000 16 711,323 — — — 711,339

Conversion of tangible equity units into common stock 13,324,464 13 ( 13 ) — — — —

Common stock issued for acquisition, net of issuance costs 6,544,522 7 285,673 — — — 285,680

Common stock-based award activity 1,783,561 2 69,220 — — — 69,222

Balance at December 31, 2021 156,249,234 $ 156 $ 4,544,211 $ 589,024 $ ( 516,013 ) $ 44,055 $ 4,661,433

See Notes to Consolidated Financial Statements.

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Divestiture impairment loss — — 449,000

Impairment of property, plant and equipment — — 7,086

Depreciation, amortization and other impairment charges 262,919 246,229 236,026

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Non-cash interest expense 4,752 5,739 9,937

Loss on short-term investments — — 10,128

Debt extinguishment charges 29,870 — —

Deferred income tax benefit ( 22,188 ) ( 29,218 ) ( 590 )

(Gain) loss on sale of property, plant and equipment ( 2,573 ) ( 491 ) 61

(Gain) loss on sale of business — ( 14,233 ) 4,337

Pension settlement loss (gain) — 77,390 ( 39 )

Gain on sale of business — — ( 14,233 )

Pension settlement (gain) loss ( 11,208 ) — 77,390

Changes in operating assets and liabilities:

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Proceeds from sale of property, plant and equipment 7,033 9,552 7,781

Acquisitions, net of cash received ( 69,846 ) ( 3,151,056 ) ( 290,918 )

Acquisitions, net of cash received, and investments ( 223,272 ) ( 69,846 ) ( 3,151,056 )

Proceeds from sale of business, net — — 1,635,920

Sale of short-term investments, net — — 139,480

Net cash used in investing activities ( 320,476 ) ( 175,079 ) ( 1,632,757 )

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Repayments of borrowings on revolving credit facilities and other ( 417,526 ) ( 938,997 ) ( 2,273,802 )

Proceeds from borrowings on senior unsecured notes — 1,000,000 —

(Repayments of)/Proceeds from borrowings on senior notes ( 700,000 ) — 1,000,000

Payment of debt issuance costs — ( 4,560 ) ( 23,380 )

Proceeds from prepaid stock purchase contracts — 377,814 —

Proceeds from prepaid stock purchase contract — — 377,814

Proceeds from issuance of common stock, net 745,179 3,500 11,879

Payment of debt extinguishment costs ( 24,375 ) — —

Payment for noncontrolling interest share repurchase — — ( 93,505 )

Payments for common stock repurchases — — ( 200,000 )

Deferred consideration payments and other ( 9,866 ) ( 12,275 ) ( 12,095 )

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Effect of foreign exchange rates on Cash and cash equivalents and Restricted Cash ( 2,228 ) ( 3,768 ) ( 3,072 )

Decrease in Cash and cash equivalents and Restricted cash ( 8,563 ) ( 135,387 ) ( 17,000 )

Increase (decrease) in Cash and cash equivalents and Restricted cash 618,301 ( 8,563 ) ( 135,387 )

Cash and cash equivalents and Restricted Cash, beginning of period 101,069 109,632 245,019

Cash and cash equivalents and Restricted Cash, end of period $ 719,370 $ 101,069 $ 109,632

Supplemental Disclosure of Cash Flow Information:

Supplemental disclosures:

Interest payments $ 85,487 $ 104,620 $ 139,268

Income tax payments, net $ 47,188 $ 59,377 $ 134,915

Common stock issued for acquisition, net of issuance costs $ 285,680 $ — $ —

See Notes to Consolidated Financial Statements.

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The Company completed the purchase of DJO Global, Inc.

(“DJO”) on February 22, 2019 becoming a new growth platform for Colfax.

(“DJO”) on February 22, 2019, which became a new growth platform for Colfax.

See Note 5, “Acquisitions”, for further information.

Later that year, Colfax completed the sale of its Air and Gas Handling business on September 30, 2019.

Colfax completed the sale of its Air and Gas Handling business on September 30, 2019.

See Note 4, “Discontinued Operations”, for further information.

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The Company applies the Colfax Business System (“CBS”) to continuously improve and pursue growth in revenues and increase profits and cash flows.

On March 4, 2021, the Company announced its intention to separate its fabrication technology and specialty medical technology businesses into two differentiated, independent, and publicly traded companies (the “Separation”).

The current Colfax entity will retain the specialty medical technology business under a new name, Enovis Corporation.

The fabrication technology business will operate independently under the existing ESAB brand name.

The Separation is intended to be structured in a tax-free manner and is targeted to be completed near the end of the first quarter of 2022.

The assets, liabilities, revenues and expenses of the fabrication technology businesses are included in continuing operations of the Company in the accompanying Consolidated Financial Statements.

Summary of Significant Accounting Policies

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All significant intercompany accounts and transactions have been eliminated.

Equity Method Investments

Investments in joint ventures, where the Company has a significant influence but not a controlling interest, are accounted for using the equity method of accounting.

Investments where the Company has a significant influence but not a controlling interest, are accounted for using the equity method of accounting.

Investments accounted for under the equity method are initially recorded at the amount of the Company’s initial investment and adjusted each period for the Company’s share of the investee’s income or loss and dividends paid.

The Company accounts for equity investments that do not have a readily determinable fair value as cost method investments under the measurement alternative under U.S.

GAAP to the extent such investments are not subject to consolidation or the equity method of accounting as described above.

Under the measurement alternative, these financial instruments are carried at cost, less any impairment, adjusted for changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer.

The Company accounts for investments as a noncurrent asset within Other assets in the Consolidated Financial Statements as the Company does not have the intent and ability to sell such assets within the next twelve months.

All equity investments are reviewed periodically for indications of other-than-temporary impairment, including, but not limited to, significant and sustained decreases in quoted market prices or a series of historic and projected operating losses by investees.

If the decline in fair value is considered to be other-than-temporary, an impairment loss is recorded and the investment is written down to a new carrying value.

Investments in joint ventures acquired in a business combination are recognized in the opening balance sheet at fair value.

Revenue Recognition

The Company recognizes revenue when control of promised goods or services is transferred to the customer.

The amount of revenue recognized reflects the consideration to which the Company expects to be entitled in exchange for transferring the goods or services.

The amount of revenue recognized reflects the consideration to which the Company expects to be entitled in exchange for transferring the

COLFAX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

goods or services.

The nature of the Company’s contracts gives rise to certain types of variable consideration, including rebates and other discounts.

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Any estimates are evaluated on a quarterly basis until the uncertainty is resolved.

Additionally, related to sales of its medical device products and services, the Company maintains provisions for estimated contractual allowances for reimbursement amounts from certain third-party payers based on negotiated contracts, historical experience for non-contracted payers, and the impact of new contract terms or modifications of existing arrangements with these customers.

Additionally, related to sales of its medical device products and services, the Company maintains provisions for estimated contractual allowances for reimbursement amounts from certain third-party payors based on negotiated contracts, historical experience for non-contracted payors, and the impact of new contract terms or modifications of existing arrangements with these customers.

We report these allowances as a reduction to net sales.

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Most of the Company’s contracts consist of a single, distinct performance obligation or promise to transfer goods or services to a customer.

A majority of revenue recognized by the Company relates to contracts with customers for standard or off-the-shelf products.

For contracts that include multiple performance obligations, we allocate the total transaction price to each performance obligation using our best estimate of the stand-alone selling price of each identified performance obligation.

A significant majority of our revenue relates to the shipment of off-the-shelf products that is recognized when control is transferred to the customer.

On a limited basis, we have agreements with customers that have multiple performance obligations.

In determining whether there are multiple performance obligations, we first assess the goods or services promised in the customer arrangement and then consider the guidance in ASC 606, Revenue from Contracts with Customers, to evaluate whether goods and services are capable of being distinct and are considered distinct within the customer arrangement.

To determine whether promised goods or services are separately identifiable (i.e., whether a promise to transfer a good or service is distinct in the context of the contract), we evaluate whether the contract is to deliver (1) multiple promised goods or services or (2) a combined item that comprises the individual goods or services promised in the contract.

Substantially all revenue involving development and application engineering projects consists of a single performance obligation and is recognized at a point in time.

A majority of revenue recognized by the Company relates to contracts with the customers for standard or off-the-shelf products.

As control typically transfers to the customer upon shipment of the product in these circumstances, revenue is generally recognized at that point in time.

Revenue recognition and billing typically occur simultaneously for contracts

COLFAX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

recognized at a point in time.

Revenue recognition and billing typically occur simultaneously for contracts recognized at a point in time.

Therefore, we do not have material revenues in excess of customer billings or billings to customers in excess of recognized revenues.

Refer to Note 6, “Revenue”, and Note 15, “Accrued Liabilities”, for additional information on the Company’s contract liability balances.

For service contracts, the Company recognizes revenue ratably over the period of performance as the customer simultaneously receives and consumes the benefits of the services provided.

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Research and Development Expense

Research and development costs of $ 68.6 million, $ 61.8 million and $ 34.2 million for the years ended December 31, 2020, 2019 and 2018, respectively, are expensed as incurred and are included in Selling, general and administrative expense in the Consolidated Statements of Operations.

Research and development costs of $ 88.8 million, $ 68.6 million and $ 61.8 million fo r the years ended December 31, 2021, 2020 and 2019, respectively, are expensed as incurred and are included in Selling, general and administrative expense in the Consolidated Statements of Operations.

These amounts do not include development and application engineering costs incurred in conjunction with fulfilling customer orders and executing customer projects.

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Interest expense, net includes interest income of $ 1.0 million, $ 3.2 million and $ 3.2 million for the years ended December 31, 2021, 2020 and 2019, respectively, primarily associated with interest bearing deposits of certain foreign subsidiaries.

COLFAX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Cash and Cash Equivalents

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Total cash and cash equivalents and restricted cash $ 719,370 $ 101,069

COLFAX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Trade Receivables

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Estimated credit losses are reviewed periodically by management.

Inventories, net include the cost of material, labor and overhead and are stated at the lower of cost (determined under various methods including average cost, last-in, first-out and first-in, first-out, but predominantly first-in, first-out) or net realizable value.

The value of inventory stated using the last-in, first-out method as of December 31, 2020 and 2019 was $ 105.1 million and $ 121.8 million, respectively.

Inventories, net include the cost of material, labor and overhead and are stated at the lower of cost or net realizable value.

Cost is determined under various methods including average cost, last-in, first-out (“LIFO”) and first-in, first-out, but predominantly first-in, first-out.

The value of inventory stated using the LIFO method as of December 31, 2021 and 2020 was $ 142.4 million and $ 105.1 million, respectively.

The Company periodically reviews its quantities of inventories on hand and compares these amounts to the expected usage of each particular product.

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Repair and maintenance expenditures are expensed as incurred unless the repair extends the useful life of the asset.

The Company capitalizes surgical implant instruments that are provided free of charge to surgeons for use while implanting our surgical products and the related depreciation expense is recorded as a component of Selling, general and administrative expense.

The Company capitalizes surgical implant instruments that are provided free of charge to surgeons for use while implanting its surgical products and the related depreciation expense is recorded as a component of Selling, general and administrative expense.

Impairment of Goodwill and Indefinite-Lived Intangible Assets

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The Company evaluates the recoverability of Goodwill and indefinite-lived intangible assets annually or more frequently if an event occurs or circumstances change in the interim that would more likely than not reduce the fair value of the asset below its carrying amount.

The annual impairment test date elected by the Company is the first day of our fourth quarter.

The annual impairment test date elected by the Company is the first day of its fourth quarter.

Goodwill and indefinite-lived intangible assets are considered to be impaired when the carrying value of a reporting unit or asset exceeds its fair value.

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In the evaluation of goodwill for impairment, the Company first assesses qualitative factors to determine whether it is more likely than not that the fair value of a reporting entity is less than its carrying value.

If the Company determines that it is more likely than not for a reporting unit’s fair value to be greater than its carrying value, a calculation of the fair value is not performed.

If the Company determines that it is more likely than not for a reporting unit’s fair value to be greater than its carrying value, a calculation of the fair value is not

COLFAX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

If the Company determines that it is more likely than not for a reporting unit’s fair value to be less than its carrying value, a calculation of the reporting entity’s fair value is performed and compared to the carrying value of that entity.

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The discounted cash flow models indicate the fair value of the reporting units based on the present value of the cash flows that the reporting units are expected to generate in the future.

Significant estimates in the discounted cash flow models include the weighted average cost of capital, revenue growth rates, long-term rate of growth, profitability of our business, tax rates, and working capital effects.

Significant estimates in the discounted cash flow models include the weighted average cost of capital, revenue growth rates, long-term rate of growth, profitability of the business, tax rates, and working capital effects.

The market valuation approach indicates the fair value of the business based on a comparison against certain market information.

Significant estimates in the market approach model include identifying appropriate peer companies, market multiples and assessing earnings before interest, income taxes, depreciation and amortization.

A quantitative annual impairment test of Goodwill for the Fabrication Technology reporting unit was performed for the year ended December 31, 2020, while qualitative assessments were performed for the years ended December 31, 2019 and 2018, both of which indicated no impairment existed.

A quantitative annual impairment test of Goodwill for the Medical

COLFAX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Technology reporting unit was performed for the year ended December 31, 2020, and a qualitative assessment was performed for the year ended December 31, 2019, both of which indicated no impairment existed.

A qualitative annual impairment test of Goodwill for the Fabrication Technology reporting unit was performed for the years ended December 31, 2021 and 2019, while a quantitative assessment was performed for the year ended December 31, 2020 , all of which indicated no impairment existed.

A quantitative annual impairment test of Goodwill for the Medical Technology reporting unit was performed for the years ended December 31, 2021 and 2020, while a qualitative assessment was performed for the year ended December 31, 2019 , all of which indicated no impairment existed.

In the evaluation of indefinite-lived intangible assets for impairment, the Company first assesses qualitative factors to determine whether it is more likely than not that the fair value of the indefinite-lived intangible asset is less than its carrying value.

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Significant estimates in this approach include projected revenues and royalty and discount rates for each trade name evaluated .

A quantitative impairment test was performed for all the indefinite-lived trade name brands in the Fabrication Technology segment for the year ended December 31, 2020, while a combination of quantitative impairment tests and qualitative assessments were performed for the years ended December 31, 2019 and 2018, all of which indicated no impairment existed.

Quantitative impairment tests were performed for all the indefinite-lived trade name brands in the Fabrication Technology segment for the year ended December 31, 2021 and 2020 while a combination of quantitative impairment tests and qualitative assessments were performed for the year ended December 31, 2019, all of which indicated no impairment existed.

Impairment of Long-Lived Assets Other than Goodwill and Indefinite-Lived Intangible Assets

Intangible assets primarily represent acquired trade names, customer relationships, acquired technology and software license agreements.

A portion of the Company’s acquired customer relationships is being amortized on an accelerated basis over periods ranging from seven to thirty years based on the present value of the future cash flows expected to be generated from the acquired customers.

All other intangible assets are being amortized on a straight-line basis over their estimated useful lives, generally ranging from two to twenty years .

A portion of the Company’s acquired customer relationships is being amortized on an accelerated basis over periods ranging from ten to thirty years based on the present value of the future cash flows expected to be generated from the acquired customers.

All other intangible assets are being amortized on a straight-line basis over their estimated useful lives, generally rang ing from three to twenty years .

The Company assesses its long-lived assets and finite-lived intangible assets for impairment whenever facts and circumstances indicate that the carrying amounts may not be fully recoverable.

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Management determines fair value using the discounted cash flow method or other accepted valuation techniques.

The Company recorded asset impairment losses related to facility closures totaling $ 3.5 million, $ 4.2 million and $ 5.5 million during the years ended December 31, 2020, 2019 and 2018, respectively, as a component of Restructuring and other related charges in the Consolidated Statements of Operations.

The aggregate carrying value of these assets subsequent to impairment was $ 62.5 million, $ 44.6 million and $ 39.8 million as of December 31, 2020, 2019 and 2018, respectively.

The Company recorded asset impairment losses related to facility closures total ing $ 1.3 million, $ 3.5 million and $ 4.2 million during the years ended December 31, 2021, 2020 and 2019, respectively, as a c omponent of Restructuring and other related charges in the Consolidated Statements of Operations.

The aggregate carrying value of these assets subsequent to impairment wa s $ 8.3 million, $ 62.5 million and $ 44.6 million as of December 31, 2021, 2020 and 2019, respectively.

COLFAX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company is subject to foreign currency risk associated with the translation of the net assets of foreign subsidiaries to United States (“U.S.”) dollars on a periodic basis.

On April 19, 2017.

the Company issued senior unsecured notes with an aggregate principal amount of € 350 million (as defined and further discussed in Note 13, “Debt”), which has been designated as a net investment hedge in order to mitigate a portion of its foreign currency risk.

On April 19, 2017, the Company issued senior unsecured notes with an aggregate principal amount of € 350 million (as defined and further discussed in Note 13, “Debt”), which has been designated as a net investment hedge in order to mitigate a portion of its foreign currency risk.

Derivative instruments are generally recognized on a gross basis in the Consolidated Balance Sheets in either Other current assets, Other assets, Accrued liabilities or Other liabilities depending upon their respective fair values and maturity dates.

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The Company does not enter into derivative contracts for speculative purposes.

COLFAX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

See Note 17, “Financial Instruments and Fair Value Measurements” for additional information regarding the Company’s derivative instruments.

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Estimates are established using historical information as to the nature, frequency, and average costs of warranty claims.

The activity in the Company’s warranty liability, which is included in Accrued liabilities and Other liabilities in the Company’s Consolidated Balance Sheets, consisted of the following:

The activity in the Company’s warranty liability, which is included in Accrued liabilities in the Company’s Consolidated Balance Sheets, consisted of the following:

Year Ended December 31,

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Warranty liability, end of period $ 17,457 $ 15,543

COLFAX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Income taxes for the Company are accounted for under the asset and liability method.

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The functional currencies of the Company’s operating subsidiaries are generally the local currencies of the countries in which each subsidiary is located.

Assets and liabilities

COLFAX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

denominated in foreign currencies are translated at rates of exchange in effect at the balance sheet date.

Assets and liabilities denominated in foreign currencies are translated at rates of exchange in effect at the balance sheet date.

The amounts recorded in each year in Foreign currency translation are net of income taxes to the extent the underlying equity balances in the entities are not deemed to be permanently reinvested.

2 unchanged sentences

Differences in exchange rates during the period between the date a transaction denominated in a foreign currency is consummated and the date on which it is either settled or translated for inclusion in the Consolidated Balance Sheets are recognized in Selling, general and administrative expense or Interest expense, net in the Consolidated Statements of Operations for that period.

During the year ended December 31, 2020, the Company recognized net foreign currency transaction gains of $ 2.8 million in Interest expense, net and net foreign currency transaction loss of $ 2.4 million in Selling, general and administrative expense in the Consolidated Statements of Operations.

During the year ended December 31, 2021, the Company recognized net foreign currency transaction gain of $ 0.4 million in Interest expense, net and net foreign currency transaction loss of $ 4.2 million in Selling, general and administrative expense in the Consolidated Statements of Operations.

During the year ended December 31, 2018, the Company recognized net foreign currency transaction loss of $ 1.4 million and $ 7.8 million in Interest expense, net and Selling, general and administrative expense, respectively, in the Consolidated Statements of Operations.

During the year ended December 31, 2020, the Company recognized net foreign currency transaction gain of $ 2.8 million in Interest expense, net and net foreign currency transaction loss o f $ 2.4 million in Selling, general and administrative expense in the Consolidated Statements of Operations.

During the year ended December 31, 2019, the Company recognized net foreign currency transaction gain of $ 0.5 million i n Interest expense, net and net foreign currency transaction loss of $ 0.7 million in Selling, general and administrative expense in the Consolidated Statements of Operations.

COLFAX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Debt Issuance Costs and Debt Discount

9 unchanged sentences

Reclassifications

Certain prior period amounts have been reclassified to conform to current year presentations, including Prepaid expenses on the Company’s Consolidated Balance Sheets and certain items within Note 8, “Income Taxes”.

Certain prior period amounts have been reclassified to conform to current year presentations, including certain items within Note 6, “Revenue” and Note 11, “Inventories, Net”.

COLFAX CORPORATION

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Standards Adopted Description Effective Date

2016-13, Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments The ASU eliminates the probable initial recognition threshold under current GAAP and broadens the information an entity must consider when developing its expected credit loss estimates to include forward-looking information.

The standard applies to most financial assets held at amortized costs, as well as certain other instruments.

Under the current expected credit loss (“CECL”) model, entities must estimate losses over the entire contractual term of the asset from the date of initial recognition.

In determining expected losses, consideration must be given to historical loss experience, current conditions, and reasonable and supportable forecasts incorporating forward looking information.

The Company adopted Topic 326 on January 1, 2020 using a modified retrospective transition method, which requires a cumulative-effect adjustment to the opening balance sheet of retained earnings to be recognized on the date of adoption without restating prior periods.

The cumulative-effect adjustment, net of tax, on January 1, 2020 was $ 4.8 million.

January 1, 2020

ASU 2018-13, Fair Value Measurement (Topic 820):

Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement The ASU modifies the disclosure requirements for fair value measurements.

The adoption of this standard did not result in any changes to the current disclosures, as the requirements modified by the ASU are not applicable or are immaterial for disclosure.

January 1, 2020

COLFAX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

New Accounting Guidance to be Implemented

Standards Pending Adoption Description Anticipated Impact Effective/Adoption Date

ASU 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Topic 715-20):

Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans

The ASU modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans.

This accounting standard update impacts disclosures only.

The Company is currently evaluating the impact of this ASU on its consolidated financial statement disclosures.

Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans The ASU modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans.

The adoption of this ASU did not have a material impact on the Company’s Consolidated Financial Statements.

January 1, 2021

2 unchanged sentences

It also clarifies and simplifies other aspects of accounting for income taxes.

The Company is currently evaluating the impact of this ASU on its consolidated financial statements.

The Company adopted this ASU as of January 1, 2021 on a prospective basis, and the adoption did not have a material impact on the Company’s Consolidated Financial Statements.

January 1, 2021

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Accordingly, the accompanying Consolidated Financial Statements for all periods presented reflect the Air and Gas Handling business as a discontinued operation.

The total consideration for the sale was $ 1.8 billion, including $ 1.67 billion in cash paid at closing, subject to certain adjustments pursuant to the purchase agreement, and the assumption of certain liabilities and minority interests by the purchaser.

Based on the purchase price and the carrying value of the net assets being sold, the Company recorded an impairment loss of $ 481 million in the second quarter of 2019, which is included in Income (loss) from discontinued operations, net of taxes in the Consolidated Statements of Operations.

The total consideration for the sale was $ 1.8 billion, including $ 1.67 billion in cash paid at closing and the assumption of certain liabilities and minority interests by the purchaser.

Based on the purchase price and the carrying value of the net assets sold, the Company recorded an impairment loss of $ 481 million in the second quarter of 2019, which is included in Loss from discontinued operations, net of taxes in the Consolidated Statements of Operations.

The impairment loss included a $ 449 million goodwill impairment charge and a $ 32 million valuation allowance charge on assets held for sale relating to the initial estimated cost to sell the business.

An accumulated other comprehensive loss of approximately $ 350 million associated with the Air and Gas Handling business was included in the determination of the goodwill impairment charge, which is mostly attributable to the recognition of cumulative foreign currency translation effects from the long-term strengthening of the U.S.

The Company recorded a pre-tax gain on disposal of $ 14.2 million which is included in Income (loss) from discontinued operations, net of taxes in the Consolidated Statements of Operations.

The total divestiture-related expenses incurred for the Air and Gas Handling sale were $ 48.6 million in the year ended December 31, 2019.

The Company recorded a pre-tax gain on disposal of $ 14.2 million which is included in Loss from discontinued operations, net of taxes in the Consolidated Statements of Operations.

In connection with the purchase agreement, the Company entered into various agreements to provide a framework for its relationships after the disposition, including a transition services agreement.

The transition services under the above agreements have been completed and were not material to the Company’s results of operations.

The key components of Income (loss) from discontinued operations, net of taxes related to the Air and Gas Handling business for the years ended December 31, 2020, 2019 and 2018 were as follows:

The key components of Loss from discontinued operations, net of taxes related to the Air and Gas Handling business for the years ended December 31, 2021, 2020 and 2019 were as follows:

Year Ended December 31,

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9,121 9,040 48,640

Operating income (loss) ( 9,040 ) ( 395,794 ) 85,407

Operating loss ( 9,121 ) ( 9,040 ) ( 395,794 )

Interest expense (2)

— 47,553 ( 5,031 )

Pension settlement loss — — 43,774

1 unchanged sentence

Loss from discontinued operations before income taxes ( 9,121 ) ( 9,040 ) ( 472,888 )

Income tax expense (benefit) (3)

Income tax (benefit) expense (3)

( 2,919 ) ( 238 ) 44,062

Income (loss) from discontinued operations, net of taxes (4)

Loss from discontinued operations, net of taxes (4)

$ ( 6,202 ) $ ( 8,802 ) $ ( 516,950 )

(1) Primarily related to professional, consulting, and legal fees associated with the divestiture including seller due diligence and preparation of regulatory filings, as well as other disposition-related activities.

(2) The Company reclassified the portion of its interest expense associated with the mandatory pay down of the Term Loan Facilities using net proceeds from the sale of the business.

(1) For the year ended December 31, 2021, Divestiture-related expenses are primarily related to a settlement executed in the first quarter of 2021.

For the years ended December 31, 2020 and 2019, Divestiture-related expenses are primarily related to professional, consulting, and legal fees associated with the divestiture including seller due diligence and preparation of regulatory filings, as well as other disposition-related activities.

(2) During the year ended December 31, 2019, the Company reclassified the portion of its interest expense associated with the mandatory pay down of the Term Loan Facilities using net proceeds from the sale of the business.

(3) Income tax expense for the year ended December 31, 2019 is largely due to nondeductible items that do not provide a tax benefit on the loss.

(4) Income (loss) from discontinued operations, net of taxes on the Statements of Operations includes the results from retained asbestos-related contingencies attributable to the divested fluid handling business as discussed in the Asbestos Contingencies section below.

(4) Loss from discontinued operations, net of taxes on the Statements of Operations also includes the results from retained asbestos-related contingencies attributable to the divested fluid handling business as discussed in the Asbestos Contingencies section below.

COLFAX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Total income attributable to noncontrolling interest related to the Air and Gas Handling business, net of taxes was $ 5.9 million and $ 13.6 million for the years ended December 31, 2019 and 2018, respectively.

These amounts are presented within Income attributable to noncontrolling interest, net of taxes on the Consolidated Statements of Operations.

Cash used in operating activities related to the discontinued operations of the divested Air and Gas Handling business for the years ended December 31, 2020 and 2019 was $ 9.4 million and $ 18.1 million, respectively.

Cash provided by operating activities related to the discontinued operations of the divested Air and Gas Handling business for the year ended December 31, 2018 was $ 127.8 million.

Cash used in investing activities related to the discontinued operations of the divested Air and Gas Handling business was $ 27.5 million and $ 43.6 million for the years ended December 31, 2019 and 2018, respectively.

Total income attributable to noncontrolling interest related to the Air and Gas Handling business, net of taxes was $ 5.9 million for the year ended December 31, 2019.

This amount is presented within Income attributable to noncontrolling interest, net of taxes on the Consolidated Statements of Operations.

Cash used in operating activities related to the discontinued operations of the divested Air and Gas Handling business for the years ended December 31, 2021, 2020 and 2019 was $ 9.1 million, $ 9.4 million and $ 18.1 million, respectively.

Cash used in investing activities related to the discontinued operations of the divested Air and Gas Handling business was $ 27.5 million for the year ended December 31, 2019.

Asbestos Contingencies

As a result of previous divestitures, the Company retained certain asbestos-related contingencies and insurance coverages.

Income (loss) from discontinued operations, net of taxes on the Statements of Operations for the years ended December 31, 2020, 2019 and 2018 includes a loss from retained asbestos-related contingencies and the 2017 divestiture of the fluid handling business of $ 9.5 million, $ 19.0 million, and $ 28.4 million, respectively.

Net cash outflows related to asbestos claims of divested businesses were $ 2.2 million, $ 3.2 million and $ 5.6 million for the years ended December 31, 2020, 2019 and 2018, respectively.

Loss from discontinued operations, net of taxes on the Statements of Operations for the years ended December 31, 2021, 2020 and 2019 includes a loss from retained asbestos-related contingencies of $ 16.2 million, $ 9.5 million, and $ 19.0 million, respectively.

Net cash inflows related to asbestos claims of divested businesses were $ 0.3 million for the year ended December 31, 2021.

Net cash outflows were $ 2.2 million and $ 3.2 million for the years ended December 31, 2020 and 2019, respectively.

See Note 18, “Commitments and Contingencies” for further information.

The Company completed five acquisitions during the year ended December 31, 2020, which are accounted for under the acquisition method of accounting, and accordingly, the Consolidated Financial Statements include the financial position and results of operations from the respective acquisition date.

The assets acquired and liabilities assumed reported on the Consolidated Balance Sheets represent the Company’s best estimate.

Four of these acquisitions closed in the fourth quarter of 2020 and the Consolidated Balance Sheet at December 31, 2020 reflects our preliminary estimates of fair value and are subject to adjustment.

2021 Acquisitions

The Company completed one acquisition in its Fabrication Technology segment and five acquisitions in its Medical Technology segment in 2021, for net cash consideration of $ 206.5 million and equity consideration of $ 285.7 million.

The acquisitions are accounted for under the acquisition method of accounting, and accordingly, the Consolidated Financial Statements include the financial position and results of operations from the respective acquisition date.

The Consolidated Balance Sheet as of December 31, 2021 reflects our estimates of fair value and are subject to adjustment for certain of the acquisitions as discussed below.

The estimated proforma annual revenues of the acquisitions in the year ended December 31, 2021 are approximately 5 % of Colfax consolidated revenues.

The Company also made three other immaterial investments in medical technology businesses during the year ended December 31, 2020.

For the years ended December 31, 2020, 2019, and 2018, Net sales associated with acquisitions consummated during the period were $ 7.1 million, $ 1,080.4 million, and $ 78.9 million, respectively.

Net Income attributable to Colfax Corporation common shareholders associated with acquisitions consummated during the years ended December 31, 2020 and 2018 was not material for each respective period.

Net Income attributable to Colfax Corporation common shareholders associated with acquisitions consummated during the year ended December 31, 2019 was $ 57.3 million.

Medical Technology

All five acquisitions completed in 2020 were in our Medical Technology segment for total consideration, net of cash received, of $ 67.5 million, subject to certain purchase price adjustments.

The Company also made three investments during the year ended December 31, 2021 for a total of $ 16.8 million.

These investments are carried at cost as they do not have a readily determinable fair value.

On January 19, 2021, the Medical Technology segment acquired Trilliant Surgical (“Trilliant”), a national provider of foot and ankle orthopedic implants.

The product technologies of Trilliant support the Medical Technology segment’s focused expansion into the adjacent foot and ankle market.

Trilliant has a broad product portfolio that covers the full universe of foot reconstructive and fixation procedures, and includes the novel Arsenal Foot Plating System, designed for greater flexibility and speed of implant placement.

On April 23, 2021, the Medical Technology segment acquired MedShape, Inc.

(“MedShape”), a provider of innovative surgical solutions for foot and ankle surgeons using its patented superelastic nickel titanium (NiTiNOL) and shape memory polymer technologies.

The acquisition further expands the Company’s foot and ankle platform.

These two acquisitions were completed for total consideration, net of cash received, of $ 204.1 million, subject to certain adjustments.

Net working capital and intangible assets acquired represent 7.3 % and 36.5 % of the total consideration exchanged for these two acquisitions, respectively, with the residual amount primarily attributable to Goodwill.

The Goodwill acquired in the Trilliant acquisition of $ 30 million is deductible for income tax purposes.

Expected synergies between Trilliant, MedShape, and DJO through this portfolio of foot and ankle products and cross-selling to existing and acquired customers are primary drivers of the acquired Goodwill.

The estimated pro-forma revenues of the Trilliant and MedShape acquisitions are approximately 1 % of Colfax’s consolidated revenues.

The purchase accounting related to the Trilliant and MedShape acquisitions has been completed.

On July 28, 2021, the Medical Technology segment acquired Mathys AG Bettlach (“Mathys”) for total acquisition equity consideration of $ 285.7 million of Colfax Common stock, which included cash acquired of $ 14.7 million.

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

The acquisition expands the Medical Technology segment’s reconstructive product portfolio with Mathys’ complimentary surgical solutions and broadens its international customer base.

The following table summarizes the Company’s best estimate of the aggregate fair value of assets acquired and liabilities assumed at the date of the Mathys acquisition.

These amounts, including inventories, deferred taxes, intangibles assets, useful lives of the intangible assets and property, plant and equipment, are determined based upon certain valuations and studies that

COLFAX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

have yet to be finalized.

Accordingly, the assets acquired and liabilities assumed, as detailed below, are subject to adjustment once the detailed analysis are completed, which could be material.

None of the Goodwill recognized is expected to be deductible for income tax purposes.

Goodwill recognized for the Mathys acquisition is primarily attributable to synergies from cross-selling DJO products with the acquired customers and cost savings through supply chain management.

July 28, 2021

(In thousands)

Trade receivables $ 19,578

Inventories 81,012

Property, plant and equipment 62,925

Other assets 16,822

Goodwill 82,605

Intangible assets 106,000

Accounts payable ( 4,808 )

Accrued and other current liabilities ( 33,254 )

Non-current deferred tax liabilities ( 30,022 )

Non-current pension liabilities ( 25,536 )

Other liabilities ( 4,327 )

Consideration, net of cash acquired $ 270,995

The following table summarizes Intangible assets acquired, excluding Goodwill, as of July 28, 2021:

Intangible Amortization

(In thousands) (Years)

Acquired technology $ 54,000 12

Customer relationships 34,000 16

Trademarks 18,000 20

Intangible assets $ 106,000

2020 Acquisitions

Our Medical Technology segment completed five acquisitions in 2020 for total consideration, net of cash received, of $ 67.5 million.

Total Goodwill acquired through the acquisitions was $ 21.4 million, of which $ 15.9 million is expected to be deductible for income tax purposes.

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Net working capital and intangible assets acquired represent 10 % and 69 % of the total consideration paid, respectively, with the residual amount primarily attributable to Goodwill.

DJO Acquisition in 2019

The Medical Technology segment platform at Colfax was established on February 22, 2019 when Colfax completed the acquisition of DJO.

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During the first quarter of 2020, as part of the fair value adjustments to the assets and liabilities acquired, the Company increased the valuation allowance on U.S.

deferred taxes, presented net within Other liabilities, by $ 51.4 million as of the acquisition date, with a corresponding increase to Goodwill.

As of the end of the

deferred taxes, presented net within Other

COLFAX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

first quarter of 2020, the accounting related to the DJO acquisition was finalized, and the assets and liabilities acquired are no longer subject to adjustment.

The following unaudited proforma financial information presents Colfax’s consolidated financial information assuming the acquisition had taken place on January 1, 2018.

liabilities, by $ 51.4 million as of the acquisition date, with a corresponding increase to Goodwill.

The accounting related to the DJO acquisition was finalized as of the end of the first quarter of 2020.

The following unaudited proforma financial information presents Colfax’s consolidated financial information for the years ended December 31, 2020 and 2019 assuming the acquisition had taken place on January 1, 2019.

These amounts are presented in accordance with U.S.

1 unchanged sentence

Year Ended December 31,

2020 2019 2018

(In thousands)

1 unchanged sentence

Net income from continuing operations attributable to Colfax Corporation 68,039 105,491

Fabrication Technology

During year ended December 31, 2018, the Company completed two acquisitions in our Fabrication Technology segment for total consideration, net of cash received, of $ 245.1 million, subject to certain purchase price adjustments.

These acquisitions expanded the segment’s presence in specialty gas applications and broadened its global presence.

The Company’s Fabrication Technology segment formulates, develops, manufactures and supplies consumable products and equipment.

For the years ended December 31, 2021, 2020, and 2019, Net sales associated with acquisitions consummated during each period were $ 96.0 million, $ 7.1 million, and $ 1,080.4 million, respectively.

2021 Net loss attributable to current year acquisitions was $ 17.7 million, which includes $ 18.6 million amortization expense for inventory fair value adjustments and acquired intangible assets.

Net Income attributable to Colfax Corporation common shareholders associated with acquisitions consummated during the year ended December 31, 2020 was not material.

Net Income attributable to Colfax Corporation common shareholders associated with the DJO acquisition consummated during the year ended December 31, 2019 was $ 57.3 million.

The Company’s Fabrication Technology segment develops, manufactures and supplies consumable welding and cutting products and equipment as well as gas control equipment.

The segment provides a wide range of products with innovative technologies to solve challenges in a range of industries, including cutting, joining and automated welding.

Substantially all revenue from the Fabrication Technology business is recognized at a point in time.

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Total $ 2,428,115 $ 1,950,069 $ 2,247,026

Contracts with customers in the consumables product grouping generally have a shorter fulfillment period than equipment contracts.

The consumables product grouping generally has less production complexity and shorter production cycles than equipment products.

The Company’s Medical Technology segment provides orthopedic solutions, including products and services spanning the full continuum of patient care, from injury prevention to rehabilitation.

1 unchanged sentence

The Company disaggregates its Medical Technology revenue into the following product groups:

COLFAX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Year Ended December 31,

1 unchanged sentence

(In thousands)

Prevention & Rehabilitation $ 781,007 $ 766,429

Prevention & Recovery $ 1,026,029 $ 863,150 $ 845,890

Reconstructive 400,159 257,550 234,542

1 unchanged sentence

(1) For the year ended December 31, 2019, the Medical Technology segment includes results from the acquisition date of February 22, 2019.

(2) For the years presented, the Prevention & Recovery product group includes bone growth stimulation products, which were previously classified as part of the Reconstructive product group.

Given the nature of the Fabrication Technology and Medical Technology businesses, the total amount of unsatisfied performance obligations with an original contract duration of greater than one year as of December 31, 2021 is immaterial.

COLFAX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The nature of the Company’s contracts gives rise to certain types of variable consideration, including rebates, implicit price

3 unchanged sentences

As of December 31, 2021, 2020 and 2019, total contract liabilities were $ 31.5 million, $ 36.6 million and $ 14.8 million, respectively.

During the years ended December 31, 2020 and 2019, all of the revenue that was included in the contract liability balance at the beginning of the respective year was recognized.

Contract liabilities are included in Accrued liabilities on the Company’s Consolidated Balance Sheets.

During the years ended December 31, 2021 and 2020, revenue recognized that was included in the contract liability balance at the beginning of the year was $ 29.3 million and $ 14.8 million, respectively.

The contract liabilities as of December 31, 2021 and December 31, 2020 included $ 4.9 million and $ 11.8 million, respectively, of certain one-time advance payments in the Medical Technology business.

Allowance for Credit Losses

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Allowance for credit losses $ 37,666 $ 2,546 $ ( 6,680 ) $ ( 1,031 ) $ 32,501

COLFAX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Net Income Per Share from Continuing Operations

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(1) Net income from continuing operations attributable to Colfax Corporation for the respective periods is calculated using Net income from continuing operations less the income attributable to noncontrolling interest, net of taxes, of $ 4.6 million, $ 3.1 million, and $ 4.6 million for the years ended December 31, 2021, 2020 and 2019, respectively.

COLFAX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

For the years ended December 31, 2020 and 2019, the weighted-average shares of Common stock outstanding - basic includes the impact of 18.4 million shares related to the issuance of Colfax’s tangible equity units.

For all periods presented, the weighted-average shares of Common stock outstanding - basic includes the impact of 18.4 million shares related to the issuance of Colfax’s tangible equity units.

During the year ended December 31, 2021, conversions of the Company’s tangible equity units resulted in the issuance of approximately 13.3 million shares of Colfax common stock.

All issuances of Colfax common stock related to the tangible equity units were converted at the minimum settlement rate of 4.0000 shares of common stock for each purchase contract as a result of the Company’s share price.

For the year ended December 31, 2020, the weighted-average shares of Common stock outstanding - diluted includes the impact of an additional 0.9 million potentially issuable dilutive shares related to Colfax’s tangible equity units as a result of the Company’s share price in March 2020.

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The weighted-average computation of the dilutive effect of potentially issuable shares of Common stock under the treasury stock method for the years ended December 31, 2021, 2020 and 2019 excludes 0.8 million, 4.2 million and 4.3 million outstanding stock-based compensation awards, respectively, as their inclusion would be anti-dilutive.

COLFAX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Income from continuing operations before income taxes and Income tax expense (benefit) consisted of the following:

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$ 66,695 $ ( 6,053 ) $ 31,630

See Note 4, “Discontinued Operations” for the income (loss) from discontinued operations before income taxes and related income taxes.

See Note 4, “Discontinued Operations” for the loss from discontinued operations and related income taxes.

On December 22, 2017, the Tax Act was signed into law making significant changes to the Internal Revenue Code which included how the U.S.

imposes income tax on multinational corporations.

Coinciding with the enactment of the Tax Act, the SEC issued Staff Accounting Bulletin No.

118 (“SAB 118”) to address the application of U.S.

GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Act.

SAB 118 allows registrants to include a provisional amount to account for the implications of the Tax Act where a reasonable estimate can be made and requires the completion of the accounting no later than one year from the date of enactment of the Tax Act or December 22, 2018.

The Company filed its 2017 U.S.

income tax return in the fourth quarter of 2018 which changed its tax basis in temporary differences and transition tax estimated as of December 31, 2017, resulting in an adjustment to the tax provision to the re-measurement amount recorded in the financial statements.

As a result of this tax filing, the Company reduced its provisional amount by $ 10.8 million and $ 0.7 million for transition tax and the remeasurement of U.S.

deferred taxes, respectively, for the year ended December 31, 2018.

In addition, in 2020 the Company timely filed changes to U.S.

federal tax returns to credit rather than to deduct foreign taxes and reduced its transition tax further by $ 6.8 million.

In 2020 the Company timely filed changes to U.S.

federal tax returns to credit rather than to deduct foreign taxes and reduced its transition tax by $ 6.8 million.

COLFAX CORPORATION

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Changes in tax reserves 331 1,394 1,119

Tax Act - re-measurement of U.S.

deferred taxes — — ( 667 )

Tax Act - mandatory repatriation taxes — ( 6,766 ) —

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Non-deductible employee compensation 3,016 6,619 714

Capital gains 12,052 — —

Other ( 1,193 ) ( 1,465 ) —

Income tax expense (benefit) $ 66,695 $ ( 6,053 ) $ 31,630

(1) Certain prior period amounts have been reclassified to conform with current year presentation.

The valuation allowance benefit reflected above is predominately the utilization of net operating losses in the current period.

Certain movements of valuation allowance, particularly related to repatriation taxes, foreign tax credits, SubPart F and GILTI, and withholding taxes haven been aggregated with that particular line item within the rate reconciliation.

Certain movements of valuation allowance, particularly related to repatriation taxes, foreign tax credits, SubPart F and GILTI, and withholding taxes have been aggregated with that particular line item within the rate reconciliation.

Deferred income taxes, net reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

10 unchanged sentences

Depreciation and amortization 15,503 6,433

Inventory 3,061 —

Other 73,040 42,881

7 unchanged sentences

Total deferred tax liabilities, net $ ( 129,072 ) $ ( 135,410 )

The Company evaluates the recoverability of its deferred tax assets on a jurisdictional basis by considering whether deferred tax assets will be realized on a more likely than not basis.

The Company evaluates the recoverability of its deferred tax assets on a jurisdictional basis by considering whether deferred tax assets will be realized on a more lik ely than not basis.

To the extent a portion or all of the applicable deferred tax assets do not meet the more likely than not threshold, a valuation allowance is recorded.

During the year ended December 31, 2020, the valuation allowance increased from $ 149.0 million to $ 203.3 million with a net increase of $ 6.2 million recognized in Income tax expense (benefit), $ 48.5 million increase attributed to finalizing our DJO purchase accounting for income taxes in the first quarter of 2020, and a $ 0.4 million decrease related to changes in foreign currency rates.

During the year ended December 31, 2021, the valuation allowance decreased from $ 203.3 million to $ 193.5 million with a net decrease of $ 10.3 million recognized in Income tax expense (benefit), $ 1.3 million increase attributed to acquisitions, and a $ 0.8 million decrease related to changes in foreign currency rates.

Consideration was given to tax planning strategies and, when applicable, future taxable income as to how much of the relevant deferred tax asset could be realized on a more likely than not basis.

2 unchanged sentences

The Company’s ability to use these various carryforwards to offset any taxable income generated in future taxable periods may be limited under Section 382 and other federal tax provisions.

At December 31, 2020, the Company also has $ 581.3 million foreign net operating loss carryforwards primarily in Brazil, Germany, the Netherlands, Sweden, and the United Kingdom that may be subject to local tax restrictive limitations including changes in ownership.

As of December 31, 2021, the Company also has $ 528.1 million foreign net operating loss carryforwards primarily in Brazil, Germany, Sweden, and the United Kingdom that may be subject to local tax limitations including changes in ownership.

The foreign net operating losses can be carried forward indefinitely, except in applicable jurisdictions that make up less than five percent of the available net operating losses.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company records a liability for unrecognized income tax benefits for the amount of benefit included in its previously filed income tax returns and in its financial results expected to be included in income tax returns to be filed for periods through the date of its Consolidated Financial Statements for income tax positions for which it is more likely than not that a tax position will not be sustained upon examination by the respective taxing authority.

The Company records a liability for unrecognized income tax benefits for the amount of benefit included in its previously filed income tax returns and in its financial results expected to be included in income tax returns to be filed for periods through the date of its Consolidated Financial Statements for income tax positions for which it is not more likely than not to be sustained upon examination by the respective taxing authority.

A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows (inclusive of associated interest and penalties):

(In thousands)

Balance, December 31, 2017 $ 41,018

Balance, January 1, 2019 $ 37,621

Acquisitions and divestitures 18,248

Addition for tax positions taken in prior periods 1,441

5 unchanged sentences

Balance, December 31, 2019 55,480

Acquisitions and divestitures 18,248

Addition for tax positions taken in prior periods 5,911

5 unchanged sentences

Balance, December 31, 2020 58,014

Acquisitions and divestitures 4,450

Addition for tax positions taken in prior periods 228

6 unchanged sentences

The Company is routinely examined by tax authorities around the world.

Tax examinations remain in process in multiple countries, including but not limited to the United States, Germany, Indonesia, the Netherlands, Mexico, Brazil, Russia, Italy and various U.S.

Tax examinations remain in process in multiple countries, including but not limited to Brazil, Germany, Italy, Indonesia, Sweden, Switzerland, the United States and various U.S.

The Company files numerous group and separate tax returns in U.S.

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(1) Includes purchase accounting adjustments associated with acquisitions discussed in Note 5, “Acquisitions”.

See Note 4, “Discontinued Operations” for discussion of the Air And Gas segment impairment recorded in 2019 as part of the divestiture, which is presented within Income (loss) from discontinued operations, net of taxes on the Consolidated Statements of Operations.

See Note 4, “Discontinued Operations” for discussion of the impairment on the Air and Gas Handling business recorded in 2019 as part of the divestiture, which is presented within Loss from discontinued operations, net of taxes on the Consolidated Statements of Operations.

The following table summarizes the Company’s Intangible assets, excluding Goodwill:

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$ 2,343,653 $ ( 668,191 ) $ 2,178,232 $ ( 514,786 )

Amortization expense related to intangible assets was included in the Consolidated Statements of Operations as follows:

Year Ended December 31,

2020 2019 2018

(In thousands)

Selling, general and administrative expense $ 158,427 $ 135,769 $ 43,703

Amortization expense related to intangible assets of $ 167.7 million, $ 158.4 million, and $ 135.8 million are included in the Selling, general, and administrative expense in the Consolidated Statements of Operations for the years ended December 31, 2021, 2020, and 2019, respectively.

See Note 2, “Summary of Significant Accounting Policies” for discussion regarding impairment of Intangible assets.

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Expected Amortization Expense

The Company’s expected annual amortization expense for intangible assets for the next five years:

The Company’s expected annual amortization expense for intangible assets for the next five years is as follows:

December 31, 2021

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Accumulated depreciation ( 394,132 ) ( 312,669 )

Property, plant and equipment, net $ 486,960 $ 491,241

$ 521,391 $ 486,960

Depreciation expense for the years ended December 31, 2021, 2020 and 2019, was $ 93.7 million, $ 85.5 million and $ 76.1 million, respectively.

Impairment of fixed assets recorded for the years ended December 31, 2020, 2019 and 2018 was $ 2.1 million, $ 0.5 million and $ 3.1 million, respectively.

Impairment of fixed assets recorded for the years ended December 31, 2021, 2020 and 2019 wa s $ 1.5 million, $ 2.1 million and $ 0.5 million, respectively.

Inventories, Net

Inventories, net consisted of the following:

2021 2020 (1)

(In thousands)

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851,582 618,816

LIFO reserve 1,129 13,851

allowance for excess, slow-moving and obsolete inventory ( 76,416 ) ( 67,845 )

Inventories, net $ 564,822 $ 571,558

$ 776,295 $ 564,822

(1) Certain immaterial classification adjustments were made to enhance conformity with the current year presentation.

The valuation of LIFO inventories is made at the end of the year based on inventory levels and costs at that time.

At December 31, 2021 and 2020, approximately 18.3 % and 18.6 % of total inventories, respectively, were valued using the LIFO method.

COLFAX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company leases certain office spaces, warehouses, facilities, vehicles, and equipment.

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The right-of-use lease asset and lease liability are recorded on the Consolidated Balance Sheet, with the current lease liability being included in Accrued liabilities.

Operating lease expense was $ 45.0 million for the year ended December 31, 2020, and approximated cash paid for leases during the year.

COLFAX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

December 31, 2021

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Operating leases 3.6 %

The Company’s operating leases extend for varying periods and, in some cases, contain renewal options that would extend the existing terms.

During the years ended December 31, 2021, 2020 and 2019, the Company’s net rental expense related to operating leases was $ 43.9 million, $ 38.0 million and $ 34.3 million, respectively.

Long-term debt consisted of the following:

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Long-term debt $ 2,078,679 $ 2,204,169

Term Loan Facilities and Revolving Credit Facility

Term Loan and Revolving Credit Facility

The Company’s credit agreement (the “Credit Facility”) by and among the Company, as the borrower, certain U.S.

subsidiaries of the Company, as guarantors, each of the lenders party thereto, JPMorgan Chase Bank, N.A., as administrative agent, Citizens Bank, N.A., as syndication agent, and the co-documentation agents named therein consists of a $ 975 million revolving credit facility (the “Revolver”) and a Term A-1 loan with an initial aggregate principal amount of $ 825 million (the “Term Loan”), each with a maturity date of December 6, 2024.

COLFAX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

“Term Loan”), each with a maturity date of December 6, 2024.

The Revolver contains a $ 50 million swing line loan sub-facility.

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The Credit Facility contains customary covenants limiting the ability of Colfax and its subsidiaries to, among other things, incur debt or liens, merge or consolidate with others, dispose of assets, make investments or pay dividends.

During the third quarter of 2020, the Company made a voluntary $ 40 million principal payment on the Term Loan.

On May 1, 2020, the Company entered into an amendment to its Credit Facility (the “Amendment”).

The Amendment, among other changes, modified the total leverage ratio by permitting the Company to deduct (subject to certain exceptions) up to $ 125 million of unrestricted cash and cash equivalents from the debt component of the ratio and by increasing the maximum total leverage ratio to 5.75 :1.00 as of June 30, 2020, 6.50 :1.00 as of each fiscal quarter thereafter until March 31, 2021,

COLFAX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

5.25 :1.00 for the quarter ending June 30, 2021, 4.50 :1.00 for the quarter ending September 30, 2021, 4.25 :1.00 for the quarters ending December 31, 2021 and March 31, 2022, 4.00 :1.00 for the quarters ending June 30, 2022 and September 30, 2022, and 3.50 :1.00 as of December 31, 2022 and for each fiscal quarter ending thereafter.

Under the terms of the Amendment the interest coverage ratio remained at 3.00 :1.00 for the quarter ending June 30, 2020, decreased to 2.75 :1.00 for each of the fiscal quarters ending September 30, 2020 until June 30, 2021, and then will increase back to 3.00 :1.00 for the quarters ending September 30, 2021 and thereafter.

The Amendment added a “springing” collateral provision (based upon the Gross Leverage Ratio as defined in the Amendment to the Credit Facility) which requires the obligations under the Amendment to the Credit Facility to be secured by substantially all personal property of Colfax and its U.S.

In addition, the Credit Facility contains financial covenants requiring Colfax to maintain (subject to certain exceptions) (i) a maximum total leverage ratio, calculated as the ratio of Consolidated Net Debt (as defined in the Credit Facility) to EBITDA (as defined in the Credit Facility) of 4.25 :1.00 for the quarters ending December 31, 2021 and March 31, 2022, 4.00 :1.00 for the quarters ending June 30, 2022 and September 30, 2022, and 3.50 :1.00 as of December 31, 2022 and for each fiscal quarter ending thereafter, and (ii) a minimum interest coverage ratio of 3.00 :1.00 for the quarter ending September 30, 2021 and thereafter.

The Credit Facility also includes a “springing” collateral provision (based upon the Gross Leverage Ratio as defined in the Amendment to the Credit Facility) which requires the obligations under the Amendment to the Credit Facility to be secured by substantially all personal property of Colfax and its U.S.

subsidiaries and the equity of its first tier foreign subsidiaries, subject to customary exceptions, in the event Colfax’s Gross Leverage Ratio under the Credit Facility is greater than 5.00 :1.00 as of the last day of any fiscal quarter.

Lastly, the Amendment added a fifth pricing tier in the event the total leverage ratio is greater than 4.50 :1.00 (regardless of the corporate family rating), with pricing at 2.50 %, in the case of the Eurocurrency margin, 1.50 %, in the case of the base rate margin, and 0.50 % when undrawn.

The total commitment and maturity of the Credit Facility remained unchanged.

The Credit Facility contains various events of default (including failure to comply with the covenants under the Credit Facility and related agreements) and upon an event of default the lenders may, subject to various customary cure rights, require the immediate payment of all amounts outstanding under the Term Loan Facilities and the Revolver.

As of December 31, 2021, the Company was in compliance with the covenants under the Credit Facility.

As of December 31, 2020, the weighted-average interest rate of borrowings under the Credit Facility was 1.90 %, excluding accretion of original issue discount and deferred financing fees, and there was $ 975 million available on the Revolver.

As of December 31, 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 $ 375 million undrawn capacity available on the Revolver.

The Company has $ 7.8 million in deferred financing fees recorded in conjunction with the Credit Facility as of December 31, 2021, which is being accreted to Interest expense, net primarily using the effective interest method over the life of the facility.

Euro Senior Notes

On April 19, 2017, the Company issued senior unsecured notes with an aggregate principal amount of € 350 million (the “Euro Notes”).

The Company has senior unsecured notes with an aggregate principal amount of € 350 million (the “Euro Notes”).

The Euro Notes are due in April 2025, have an interest rate of 3.25 % and are guaranteed by certain of our domestic subsidiaries (the “Guarantees”).

The proceeds from the Euro Notes offering were used to repay borrowings under our previous credit facilities totaling € 283.5 million, as well as for general corporate purposes.

In conjunction with the issuance of the Euro notes, the Company recorded $ 6 million of deferred financing fees.

The Euro Notes and the Guarantees have not been, and will not be, registered under the Securities Act of 1933, as amended, or the securities laws of any other jurisdiction.

TEU Amortizing Notes

On January 11, 2019, the Company issued $ 460 million in tangible equity units.

The Company offered 4 million of its 5.75 % tangible equity units at the stated amount of $ 100 per unit and an option to purchase up to an additional 600,000 tangible equity units at the stated amount of $ 100 per unit, which was exercised in full at settlement.

Tangible Equity Unit (“TEU”) Amortizing Notes

On January 11, 2019, the Company issued $ 460 million in TEUs with a 5.75 % interest rate, comprised of 4.6 million units at the stated amount of $ 100 per unit.

Total cash of $ 447.7 million was received upon closing, comprised of $ 377.8 million TEU prepaid stock purchase contracts and $ 69.9 million of TEU amortizing notes due January 2022.

The proceeds were used to finance a portion of the purchase price for the DJO acquisition and for general corporate purposes.

For more information, refer to Note 14, “Equity.”

Refer to Note 14, “Equity” for additional information on the TEU prepaid stock purchase contracts.

Each TEU amortizing note had an initial principal amount of $ 15.6099 , bearing interest at a rate of 6.50 % per annum, and had equal quarterly cash installments of $ 1.4375 per TEU amortizing note with a final installment payment date of January 15, 2022.

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

The company paid $ 25.0 million, $ 23.4 million , and $ 16.9 million of principal on the TEU amortizing notes in the years ended December 31, 2021, 2020, and 2019, respectively.

Subsequent to December 31, 2021, all of the remaining TEU prepaid stock purchase contracts were converted to shares of common stock and the final quarterly cash installment on the TEU Amortizing Notes was paid.

2024 Notes and 2026 Notes

On February 5, 2019, two tranches of senior notes with aggregate principal amounts of $ 600 million (the “2024 Notes”) and $ 400 million (the “2026 Notes”) were issued to finance a portion of the purchase price for the DJO acquisition.

The 2024 Notes are due on February 15, 2024 and have an interest rate of 6.0 %.

The 2024 Notes were due on February 15, 2024 and had an interest rate of 6.0 %.

The 2026 Notes are due on February 15, 2026 and have an interest rate of 6.375 %.

Each tranche of notes is guaranteed by certain domestic subsidiaries of the Company.

The 2026 Notes are guaranteed by certain domestic subsidiaries of the Company.

COLFAX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

On April 24, 2021, the Company used the proceeds from its March 2021 equity offering to redeem all $ 600 million outstanding principal of its 2024 Notes and $ 100 million of the outstanding principal of its 2026 Notes for $ 724.4 million.

The 2024 Notes were redeemed at a redemption price of 103.000 % of their principal amount and the 2026 Notes were redeemed at a redemption price of 106.375 % of their principal amount, plus, in each case, accrued and unpaid interest through the date of redemption.

In the second quarter of 2021, a net loss on the early extinguishment of debt of $ 29.9 million was recorded and included $ 24.4 million of call premium on the retired debt.

COLFAX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Other Indebtedness

In addition to the debt agreements discussed above, the Company is party to various bilateral credit facilities with a borrowing capacity of $ 195.0 million.

In addition to the d ebt agreements discussed above, the Company is party to various bilateral credit facilities with a borrowing capacity of $ 169.0 million.

As of December 31, 2021, there were no outstanding borrowings under these facilities.

1 unchanged sentence

Total letters of credit of $ 36.0 million were outstanding as of December 31, 2021.

COLFAX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

In total, the Company had deferred financing fees of $ 22.6 million included in its Condensed Consolidated Balance Sheet as of December 31, 2020, which will be charged to Interest expense, net, primarily using the effective interest method, over the life of the applicable debt agreements.

The contractual maturities of the Company’s debt as of December 31, 2020 are as follows:

Deferred Financing Fees

In total, the Company had deferred financing fe es of $ 12.3 million i ncluded in its Consolidated Balance Sheet as of December 31, 2021, which will be charged to Interest expense, net, primarily using the effective interest method, over the life of the applicable debt agreements.

Contractual Maturities

The contractual maturities of the Company’s debt are as follows:

December 31, 2021

(In thousands)

2024 1,385,000

Thereafter 400,000

Total contractual maturities 2,094,122

1 unchanged sentence

Total debt $ 2,086,993

COLFAX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

On March 19, 2021, the Company completed the underwritten public offering of 16.1 million shares of Colfax Common stock at a price to the public of $ 46.00 per share, resulting in net proceeds of approximately $ 711.3 million, after deducting offering expenses and underwriters’ discount and commissions.

On July 28, 2021, the Company issued 6.5 million shares of Colfax Common stock to the former shareholders of Mathys for acquisition consideration of $ 285.7 million.

Share Repurchase Program

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During the year ended December 31, 2018, the Company repurchased 6,449,425 shares of our Common stock in open market transactions for $ 200 million.

There were no repurchases made during the years ended December 31, 2020 and 2019.

Since 2018, there have been no repurchases made under this program.

As of December 31, 2021, the remaining stock repurchase authorization by the Company’s Board of Directors was $ 100 million.

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Accumulated Other Comprehensive Loss Components

Net Unrecognized Pension And Other Post-Retirement Benefit Cost Foreign Currency Translation Adjustment Unrealized Gain (Loss) On Hedging Activities Changes in Fair Value of Available-for-Sale Securities Total

Net Unrecognized Pension And Other Post-Retirement Benefit Cost Foreign Currency Translation Adjustment Unrealized Gain (Loss) On Hedging Activities Total

(In thousands)

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Other comprehensive income (loss) before reclassifications:

Net actuarial gain 5,609 — — — 5,609

Net actuarial loss ( 27,931 ) — — ( 27,931 )

Foreign currency translation adjustment ( 404 ) ( 78,468 ) ( 65 ) ( 78,937 )

Loss on long-term intra-entity foreign currency transactions — ( 5,507 ) — — ( 5,507 )

Divestiture-related AOCI write-off — 400,143 — 400,143

Gain on long-term intra-entity foreign currency transactions — 29,385 — 29,385

Gain on net investment hedges — — 6,215 6,215

Unrealized loss on cash flow hedges — — ( 2,153 ) — ( 2,153 )

Unrealized gain on cash flow hedges — — 156 156

Other comprehensive income (loss) before reclassifications ( 28,335 ) 351,060 6,306 329,031

6,754 ( 227,665 ) 14,168 — ( 206,743 )

Amounts reclassified from Accumulated other comprehensive loss (1)

2,629 — — 2,629

Net current period Other comprehensive income (loss) 12,844 ( 227,665 ) 14,168 — ( 200,653 )

Net Other comprehensive income (loss) ( 25,706 ) 351,060 6,306 331,660

Noncontrolling interest share repurchase — ( 19,960 ) — ( 19,960 )

Cumulative effect of accounting change ( 9,300 ) — ( 6,068 ) ( 15,368 )

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Foreign currency translation adjustment ( 1,849 ) 57,623 3,378 59,152

Divestiture-related AOCI write-off — 400,143 — — 400,143

Gain on long-term intra-entity foreign currency transactions — 3,289 — 3,289

Gain on net investment hedges — — 6,215 — 6,215

Unrealized loss on cash flow hedges — — 156 — 156

Loss on net investment hedges — — ( 26,268 ) ( 26,268 )

Other comprehensive income (loss) before reclassifications ( 10,018 ) 60,912 ( 22,890 ) 28,004

( 28,335 ) 351,060 6,306 — 329,031

Amounts reclassified from Accumulated other comprehensive loss (1)

3,735 — — 3,735

Noncontrolling interest share repurchase — ( 19,960 ) — ( 19,960 )

Net current period Other comprehensive income (loss) ( 25,706 ) 331,100 6,306 — 311,700

Cumulative effect of accounting change ( 9,300 ) — ( 6,068 ) — ( 15,368 )

Net Other comprehensive income (loss) ( 6,283 ) 60,912 ( 22,890 ) 31,739

Balance at December 31, 2020 ( 112,783 ) ( 360,977 ) 21,654 ( 452,106 )

Other comprehensive income (loss) before reclassifications:

Net actuarial gain 20,866 — — 20,866

Foreign currency translation adjustment 1,339 ( 146,409 ) ( 230 ) ( 145,300 )

Gain on long-term intra-entity foreign currency transactions — 32,261 — 32,261

Loss on net investment hedges — — ( 26,268 ) — ( 26,268 )

Gain on net investment hedges — — 23,247 23,247

Other comprehensive income (loss) before reclassifications:

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5,019 — — 5,019

Net current period Other comprehensive income (loss) ( 6,283 ) 60,912 ( 22,890 ) — 31,739

Net Other comprehensive income (loss) 27,224 ( 114,148 ) 23,017 ( 63,907 )

Balance at December 31, 2021 $ ( 85,559 ) $ ( 475,125 ) $ 44,671 $ ( 516,013 )

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

During the year ended December 31, 2020, Noncontrolling interest decreased by $ 2.6 million as a result of Other comprehensive income, primarily due to foreign currency translation adjustments.

During the years ended December 31, 2019 and 2018, Noncontrolling interest decreased by $ 107.6 million and $ 22.8 million, respectively, as a result of Other comprehensive income, primarily due to the Howden sale and foreign currency translation adjustment.

During the years ended December 31, 2021, 2020 and 2019, Noncontrolling interest decreased by $ 1.3 million, $ 2.6 million, and $ 107.6 million, respectively, as a result of Other comprehensive income, primarily due to the Howden sale and foreign currency translation adjustment.

Share-Based Payments

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All awards previously granted and outstanding under the prior plans remain subject to the terms of those prior plans.

The 2020 Plan provides the Compensation Committee of the Company’s Board of Directors discretion in creating employee equity incentives.

The 2020 Plan provides the Compensation Committee of the Company’s Board of Directors (“Compensation Committee”) discretion in creating employee equity incentives.

Awards under the 2020 Plan may be made in the form of stock options, stock appreciation rights, restricted stock, restricted stock units, performance-based stock, performance-based stock units, dividend equivalents, and other stock-based awards.

The Company measures and recognizes compensation expense related to share-based payments based on the fair value of the instruments issued.

The Company measures and recognizes compensation expense related to share-based payments based on the fair value of the instruments issued, net of an estimated forfeiture rate.

Stock-based compensation expense is generally recognized as a component of Selling, general and administrative expense in the Consolidated Statements of Operations, as payroll costs of the employees receiving the awards are recorded in the same line item.

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valuation purposes.

Since the Company has limited option exercise history, it has generally elected to estimate the expected life of an award based upon the Securities and Exchange Commission-approved “simplified method” noted under the provisions of Staff Accounting Bulletin No.

The Company has elected to estimate the expected life of an award based upon the Securities and Exchange Commission-approved “simplified method” noted under the provisions of Staff Accounting Bulletin No.

107 with the continued use of this method extended under the provisions of Staff Accounting Bulletin No.

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(In years) Aggregate

Value (1) (In thousands)

(In thousands)

Outstanding at January 1, 2021 4,599,067 $ 33.92

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Restricted Stock Units

Under the 2020 Plan, the Compensation Committee of the Board of Directors may award performance-based restricted stock units (“PRSUs”), the vesting of which is contingent upon meeting service conditions and various performance goals.

During the years ended December 31, 2020 and 2019, the Company granted certain employees PRSUs, the vesting of which is fully based on the Company’s total shareholder return (“TSR”) ranking among a peer group over a three-year performance period.

Under the 2020 Plan, the Compensation Committee may award performance-based restricted stock units (“PRSUs”), the vesting of which is contingent upon meeting service conditions and various performance goals.

During the years ended December 31, 2021, 2020 and 2019 , the Company granted certain employees PRSUs, the vesting of which is fully based on the Company’s total shareholder return (“TSR”) ranking among a peer group over a three-yea r performance period.

The awards also have a service requirement that equals the respective performance periods.

During the year ended December 31, 2018, PRSUs were awarded under the 2016 Plan based upon two discrete measures:

a profit performance metric and relative total shareholder return (TSR).

a profit performance metric and relative TSR.

The profit performance metric, which accounts for 50 % of the PRSU award upon issuance, is measured upon the completion of a three-year performance period ending December 31, 2020.

The vesting of the stock units is determined based on whether the Company achieves the applicable performance criteria established by the Compensation Committee of the Board of Directors.

The remaining 50 % of the PRSU award is tied exclusively to relative TSR performance, which will be measured against the three-year TSR of a custom index of companies.

TSR relative to peers is considered a market condition under applicable authoritative guidance, while the profit performance metric is considered a performance condition.

If the market condition or performance goals are achieved, the units may be subject to an additional holding period requirement as determined at the time of grant.

PRSUs with TSR conditions are valued at grant date using a binomial-lattice model (i.e., Monte Carlo simulation model), while PRSUs with a profit performance metric are valued at the market value of a share of Common stock on the date of grant taking into consideration the probability of achieving the specified performance goal.

In the first quarter of 2021, it was determined that 200 % of the profit performance metric was achieved and 78 % of the relative TSR metric was achieved in accordance with the applicable criteria established by the Compensation Committee.

PRSUs with TSR conditions are valued at grant date using a binomial-lattice model (i.e., Monte Carlo simulation model), while PRSUs with a company-specific profit performance metric are valued at the market value of a share of Common stock on the date of grant taking into consideration the probability of achieving the specified performance goal.

The Company estimates the ultimate payout of PRSUs with a profit performance metric and adjusts the cumulative expense based on its estimate and the percent of the requisite service period that has elapsed.

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The related compensation expense for each of the awards is recognized, on a straight-line basis, over the vesting period.

Based on the results of the profit performance metric, 2018 PRSUs are expected to vest above target.

The performance period for the 2018 PRSUs with TSR conditions does not end until March 7, 2021 and they are expected to vest below target

Under the 2020 Plan, the Compensation Committee may also award non-performance-based restricted stock units (“RSUs”) to select executives, employees and outside directors, which typically vest three years after the date of grant.

With limited exceptions, the employee must remain in service until the vesting date.

The Compensation Committee determines the

COLFAX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Under the 2020 Plan, the Compensation Committee of the Board of Directors may also award non-performance-based restricted stock units (“RSUs”) to select executives, employees and outside directors, which typically vest three years after the date of grant.

With limited exceptions, the employee must remain in service until the vesting date.

The Compensation Committee determines the terms and conditions of each award, including the restriction period and other criteria applicable to the awards.

terms and conditions of each award, incl uding the restriction period and other criteria applicable to the awards.

Directors may also elect to defer their annual board fees into RSUs with immediate vesting.

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Tangible equity unit (“TEU”) offering

On January 11, 2019, the Company issued $ 460 million in tangible equity units.

On January 11, 2019, we issued $ 460 million in TEUs with a 5.75 % interest rate, comprised of 4.6 million units at $ 100 per unit.

Total cash of $ 447.7 million was received upon closing.

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Net Proceeds $ 377.8 $ 69.9 $ 447.7

The $ 377.8 million fair value of the prepaid stock purchase contracts was recorded in Additional paid-in capital in the Consolidated Balance Sheets.

The fair value of the $ 69.9 million of TEU amortizing notes due January 2022 has both a short-term and a long-term component.

Upon the issuance of the TEUs, $ 47.3 million was initially recorded in Long-term debt, less current portion, and $ 22.6 million was initially recorded in Current portion of long-term debt in the Consolidated Balance Sheets.

The $ 377.8 million fair value of the prepaid stock purchase contracts was recorded in Additional paid-in capital and the fair value of the $ 69.9 million of TEU amortizing notes due January 2022 was initially recorded in debt in the Consolidated Balance Sheets.

The Company deferred certain debt issuance costs associated with the debt component of the TEUs.

These amounts offset the debt liability balance in the Consolidated Balance Sheets and are being amortized over its term.

As of December 31, 2020, the TEU amortizing notes were recorded with $ 6.5 million in long-term debt and $ 25.0 million in Current portion of long-term debt in the Consolidated Balance Sheets.

These amounts offset the debt liability balance in the Consolidated Balance Sheets and are amortized over its term.

Refer to Note 13, “Debt” for additional information on the TEU amortizing notes.

TEU prepaid stock purchase contracts

During the year ended December 31, 2021, 3.3 million TEU prepaid stock purchase contracts were settled at the holder’s option into approximately 13.3 million shares of Colfax common stock at a conversion rate of 4.0 shares per contact.

For the remaining 1.3 million TEU purchase contracts as of December 31, 2021, based on the arithmetic average of the volume weighted price for the 20 consecutive trading days from December 17, 2021 through January 14, 2022 which was greater than the minimum settlement rate, the Company will deliver 4.0 shares of common stock per contract.

Subsequent to December 31, 2021, the Company settled the remaining purchase contracts per the terms of the agreement and issued approximately 5.1 million shares of Colfax common stock in January 2022.

COLFAX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

TEU prepaid stock purchase contracts

Unless previously settled at the holder’s option, for each purchase contract the Company will deliver to holders on January 15, 2022 (subject to postponement in certain limited circumstances, the “mandatory settlement date”) a number of shares of common stock.

The number of shares of common stock issuable upon settlement of each purchase contract (the “settlement rate”) will be determined using the arithmetic average of the volume average weighted price for the 20 consecutive trading days beginning on, and including, the 21st scheduled trading day immediately preceding January 15, 2022 (“the Applicable Market Value”) with reference to the following settlement rates:

• if the Applicable Market Value of the common stock is greater than the threshold appreciation price of $ 25.00 , then the holder will receive 4.0000 shares of common stock for each purchase contract (the “minimum settlement rate”);

• if the Applicable Market Value of the common stock is greater than or equal to the reference price of $ 20.81 , but less than or equal to the threshold appreciation price of $ 25.00 , then the holder will receive a number of shares of common stock for each purchase contract having a value, based on the Applicable Market Value, equal to $ 100 ;

• if the Applicable Market Value of the common stock is less than the reference price of $ 20.81 , the holder will receive 4.8054 shares of common stock for each purchase contract (the “maximum settlement rate”).

TEU amortizing notes

Each TEU amortizing note has an initial principal amount of $ 15.6099 , bears interest at a rate of 6.50 % per annum and has a final installment payment date of January 15, 2022.

On each January 15, April 15, July 15 and October 15, the Company pays equal quarterly cash installments of $ 1.4375 per TEU amortizing note, which will constitute a payment of interest and a partial repayment of principal, and which cash payment in the aggregate per year will be equivalent to 5.75 % per year with respect to the $ 100 stated amount per unit.

The Company has paid $ 26.5 million representing a partial payment of principal and interest on the TEU amortizing notes in 2020.

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.

Earnings per share

Unless the 4.6 million stock purchase contracts are redeemed by the Company or settled earlier at the unit holder’s option, they are mandatorily convertible into shares of Colfax common stock at not less than 4.0 shares per purchase contract or more than 4.8054 shares per purchase contract on January 15, 2022.

This corresponds to not less than 18.4 million shares and not more than 22.1 million shares at the maximum.

The 18.4 million minimum shares are included in the calculation of weighted-average shares of Common stock outstanding - basic.

The difference between the minimum and maximum shares represents potentially dilutive securities.

The Company includes them in its calculation of weighted-average shares of Common stock outstanding - diluted on a pro rata basis to the extent the average Applicable Market Value is higher than the reference price but is less than the conversion price.

Since the 4.6 million TEU prepaid stock purchase contracts are mandatorily convertible into shares of Colfax common stock the 18.4 million shares are included in our net income per share calculations.

See Note 7, “Net Income Per Share from Continuing Operations” for additional information.

Repurchase of noncontrolling interest shares

During 2019, the Company repurchased all of the noncontrolling interest shares of its South Africa consolidated subsidiary from existing shareholders under a general offer.

As a part of the Air and Gas Handling business, this subsidiary was subsequently sold on September 30, 2019, and its results of operations are included in discontinued operations for all periods presented.

As a part of the Air and Gas Handling business, this subsidiary was subsequently sold on September 30, 2019, and its results of operations are included in Loss from discontinued operations, net of taxes for the year ended December 31, 2019.

COLFAX CORPORATION

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Other 114,940 104,469

Accrued liabilities $ 454,333 $ 469,890

$ 511,097 $ 454,333

COLFAX CORPORATION

10 unchanged sentences

$ 5,336 $ 9,633 $ ( 7,096 ) $ ( 55 ) $ 7,818

Facility closure costs (2)

Facility closure costs and other (2)

591 8,068 ( 8,351 ) ( 17 ) 291

5 unchanged sentences

1,884 4,036 ( 3,441 ) ( 9 ) 2,470

Facility closure costs (2)

Facility closure costs and other (2)

297 4,627 ( 4,566 ) — 358

6 unchanged sentences

(1) Includes severance and other termination benefits, including outplacement services.

(2) Includes the cost of relocating associates, relocating equipment and lease termination expense in connection with the closure of facilities.

During the year ended December 31, 2020, the Company recorded a total of $ 1.9 million and $ 3.0 million non-cash impairment charges for facilities in the Fabrication Technology and Medical Technology segments, respectively, as part of Corporate approved restructuring activities.

Restructuring charges in the Medical Technology segment during the year ended December 31, 2020 include costs related to product and distribution channel transformations, facilities optimization, and integration charges, as well as $ 6.6 million classified as Cost of sales on the Company’s Consolidated Statements of Operations for the year ended December 31, 2020.

(3) As of December 31, 2020, $ 7.9 million and $ 0.2 million of the Company’s restructuring liability was included in Accrued liabilities and Other liabilities, respectively.

(2) Includes the cost of relocating associates, relocating equipment, lease termination expense, and other costs in connection with the closure and optimization of facilities and product lines.

Medical Technology segment charges include $ 5.2 million classified as Cost of sales on the Company’s Consolidated Statements of Operations for the year ended December 31, 2021.

(3) As of December 31, 2021, all of the restructuring liability was included in Accrued liabilities.

In the Accrued liabilities table above, $ 0.4 million and $ 0.3 million of the Company’s restructuring liability is included in Accrued compensation and related benefits and Other, respectively.

COLFAX CORPORATION

1 unchanged sentence

Year Ended December 31, 2020

Balance at Beginning of Period Acquisitions Provisions Payments Foreign Currency Translation Balance at End of Period (3)

Balance at Beginning of Period Provisions Payments Foreign Currency Translation Balance at End of Period (3)

(In thousands)

5 unchanged sentences

1,284 8,358 ( 9,060 ) 9 591

6,156 18,842 ( 21,724 ) ( 352 ) 2,922

Subtotal 2,922 19,739 ( 16,758 ) 24 5,927

Non-cash charges (2)

Fabrication Technology total provisions 21,633

Medical Technology:

3 unchanged sentences

257 17,125 ( 17,085 ) — 297

— 6,394 50,707 ( 52,925 ) — 4,176

Subtotal 4,176 20,409 ( 22,490 ) 86 2,181

Non-cash charges (2)

Medical Technology total provisions 23,394

Total $ 7,098 40,148 $ ( 39,248 ) $ 110 $ 8,108

Non-cash charges (2)

Total Colfax provisions $ 45,027

(1) Includes severance and other termination benefits, including outplacement services.

(2) Includes the cost of relocating associates, relocating equipment and lease termination expense in connection with the closure of facilities.

During the year ended December 31, 2019, the Company recorded a $ 4.2 million non-cash impairment charge for facilities in our Fabrication Technology segment as part of Corporate approved restructuring activities.

Restructuring charges in the Medical Technology segment also include $ 8.5 million classified as Cost of sales on the Company’s Consolidated Statements of Operations for the year ended December 31, 2019.

Medical Technology segment charges include costs related to product and distribution channel transformations, facilities optimization, and integration charges, as well as $ 6.6 million classified as Cost of sales on the Company’s Consolidated Statements of Operations for the year ended December 31, 2020.

(3) As of December 31, 2020, $ 7.9 million and $ 0.2 million of the Company’s restructuring liability was included in Accrued liabilities and Other liabilities, respectively.

2 unchanged sentences

The Company uses December 31 st as the measurement date for all of its employee benefit plans.

In connection with the sale of the Air and Gas Handling business, the purchaser assumed the Air and Gas Handling liability for all defined benefit plans specific to the Air and Gas Handling business.

Net benefit cost for the years ended December 31, 2019 and 2018 for the Air and Gas Handling business is included in Net income (loss) from discontinued operations, net of taxes, within the Consolidated Statements of Operations.

See Note 4, “Discontinued Operations” for further information.

During the year ended December 31, 2019, the Company settled two non-U.S.

pension plans, one in our Fabrication

Technology segment and one in our Air and Gas Handling segment through third-party buyout arrangements.

As a result of these settlements, the Company has no further funding obligations under these two plans and recognized a loss of $ 77.4 million in 2019, which is partly reflected in Pension settlement loss in the Consolidated Statements of Operations.

As the Company divested its Air and Gas Handling segment during the year ended December 31, 2019, the related settlement loss of $ 43.8 million is included in Net income (loss) from discontinued operations, net of taxes, within the Consolidated Statements of Operations.

See Note 4, “Discontinued Operations” for further information.

COLFAX CORPORATION

8 unchanged sentences

Acquisitions (1)

101,312 — — —

Service cost 3,719 1,933 14 8

5 unchanged sentences

Benefits paid ( 22,073 ) ( 24,105 ) ( 812 ) ( 1,170 )

Divestitures — ( 50,468 ) — —

Settlements ( 847 ) ( 418 ) — —

4 unchanged sentences

Fair value of plan assets, beginning of year $ 267,254 $ 251,291 $ — $ —

Acquisitions (1)

Actual return on plan assets 27,554 26,123 — —

2 unchanged sentences

Benefits paid ( 22,073 ) ( 24,105 ) ( 812 ) ( 1,170 )

Divestitures — ( 39,897 ) — —

Settlements (3)

11,272 ( 418 ) — —

Other 5,393 1,727 — —

6 unchanged sentences

Total $ ( 88,247 ) $ ( 112,041 ) $ ( 12,078 ) $ ( 13,344 )

(1) The reported actuarial loss in 2020 is primarily due to the decrease in discount rates in most markets.

The reported actuarial loss in 2019 is primarily due to the settlements of two pension plans and decrease in discount rates in most markets.

(1) Acquisitions in the year ended December 31, 2021 relate to our acquisition of Mathys.

See Note 5, “Acquisitions”, for further information.

(2) The reported actuarial gain in the year ended December 31, 2021 is primarily due to the increase in discount rates in most markets.

The reported actuarial loss in the year ended December 31, 2020 is primarily due to the decrease in discount rates in most markets.

(3) Settlements includes $ 11.2 million classified as Pension settlement gain on the Company’s Consolidated Statements of Operations for the year ended December 31, 2021, when independent trustees of a company pension plan agreed to merge that plan with another company pension plan and contribute its surplus assets.

For pension plans with accumulated benefit obligations in excess of plan assets, the accumulated benefit obligation and fair value of plan assets were $ 171.4 million and $ 82.1 million, respectively, as of December 31, 2021 and $ 367.4 million and $ 259.1 million, respectively, as of December 31, 2020.

For pensions plans with projected benefit obligations in excess of plan assets, the projected benefit obligation and fair value of plan assets were $ 376.0 million and $ 263.9 million, respectively, as of December 31, 2020 and $ 359.5 million and $ 249.6 million, respectively, as of December 31, 2019.

For pension plans with projected benefit obligations in excess of plan assets, the projected benefit obligation and fair value of plan assets were $ 185.0 million and $ 87.5 million, respectively, as of December 31, 2021 and $ 376.0 million and $ 263.9 million, respectively, as of December 31, 2020.

COLFAX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The projected benefit obligation increased by $ 77.3 million in the year ended December 31, 2021 compared to an increase of $ 18.1 million in the year ended December 31, 2020.

In the year ended December 31, 2021, the single largest driver was an increase of $ 101.3 million from the Mathys acquisition.

This was offset by benefits paid of $ 22.1 million, a foreign exchange gain of $ 6.6 million, and an actuarial gain of $ 11.2 million, of which approximately $ 7.8 million related to domestic pension plans and $ 3.4 million related to foreign pension plans.

The following table summarizes the changes in the Company’s foreign pension benefit obligation, which is determined based upon an employee’s expected date of separation, and plan assets, included in the table above, and includes a statement of the plans’ funded status:

8 unchanged sentences

Plan amendments 911 95

Actuarial loss (1)

Actuarial loss (gain) (2)

( 3,449 ) 5,778

1 unchanged sentence

Benefits paid ( 7,122 ) ( 8,795 )

Divestitures — ( 50,468 )

Settlements ( 847 ) ( 418 )

9 unchanged sentences

Benefits paid ( 7,122 ) ( 8,795 )

Divestitures — ( 39,897 )

Settlements (3)

11,272 ( 418 )

Other 5,393 1,727

1 unchanged sentence

Funded status, end of year $ ( 87,178 ) $ ( 84,081 )

(1) The reported actuarial loss in 2020 is primarily due to the decrease in discount rates in most markets.

The reported actuarial loss in 2019 is primarily due to the settlements of two pension plans and decrease in discount rates in most markets.

(1) Acquisitions in the year ended December 31, 2021 relate to our acquisition of Mathys.

See Note 5, “Acquisitions”, for further information.

(2) The reported actuarial gain in the year ended December 31, 2021 is primarily due to the increase in discount rates in most markets.

The reported actuarial loss in the year ended December 31, 2020 is primarily due to the decrease in discount rates in most markets.

(3) Settlements includes $ 11.2 million classified as Pension settlement gain on the Company’s Consolidated Statements of Operations for the year ended December 31, 2021.

Expected contributions to the Company’s pension and other post-employment benefit plans for the year ending December 31, 2022, related to plans as of December 31, 2021, are $ 8.6 million.

16 unchanged sentences

The asset allocation is monitored and rebalanced as required, as frequently as on a quarterly basis in some instances.

The plan assets are planned to have a higher allocation to fixed income to account for the improvement in funded status during 2021.

The following are the actual and target allocation percentages for the Company’s pension plan assets:

19 unchanged sentences

Cash and cash equivalents (2)

$ — $ 1,699 $ — $ — $ 1,699

Equity securities:

15 unchanged sentences

These investments are able to be redeemed in the near-term.

(2) The weighted-average interest crediting rates received in Cash and cash equivalents of U.S plans are immaterial relative to total plan assets.

(3) Represents diversified portfolio funds, reinsurance contracts and money market funds.

3 unchanged sentences

Cash and cash equivalents (2)

$ — $ 1,752 $ — $ — $ 1,752

Equity securities:

11 unchanged sentences

$ 178,433 $ 40,790 $ 48,031 $ — $ 267,254

(1) Certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient (the “NAV”) have not been classified in the fair value hierarchy.

These investments, consisting primarily of common/collective trusts, are valued using

COLFAX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

the NAV provided by the Trustee.

These investments, consisting primarily of common/collective trusts, are valued using the NAV provided by the Trustee.

The NAV is based on the underlying investments held by the fund, that are traded in an active market, less its liabilities.

These investments are able to be redeemed in the near-term.

(2) The weighted-average interest crediting rates received in Cash and cash equivalents of U.S plans are immaterial relative to total plan assets.

(3) Represents diversified portfolio funds, reinsurance contracts and money market funds.

The following table sets forth the components of net periodic benefit cost (income) and Other comprehensive income of the Company’s defined benefit pension plans and other post-retirement employee benefit plans:

The following table sets forth the components of Net periodic benefit (income) cost and Other comprehensive (gain) loss of the Company’s defined benefit pension plans and other post-retirement employee benefit plans:

Pension Benefits Other Post-Retirement Benefits

2 unchanged sentences

(In thousands)

Components of Net Periodic Benefit Cost (Income):

Components of Net Periodic Benefit (Income) Cost:

Service cost $ 3,719 $ 1,933 $ 2,462 $ 14 $ 8 $ 5

1 unchanged sentence

Amortization 5,953 4,960 3,385 ( 109 ) ( 231 ) ( 255 )

Settlement loss (gain) 99 77,390 ( 39 ) — — —

Settlement (gain) loss ( 11,157 ) 99 77,390 — — —

Divestitures gain — — ( 4,354 ) — — —

1 unchanged sentence

Expected return on plan assets ( 12,819 ) ( 12,773 ) ( 19,774 ) — — —

Net periodic benefit cost (income) $ 1,816 $ 75,744 $ ( 1,177 ) $ 90 $ 195 $ 443

Change in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income:

Net periodic benefit (income) cost $ ( 9,660 ) $ 1,816 $ 75,744 $ 94 $ 90 $ 195

Change in Plan Assets and Benefit Obligations Recognized in Other Comprehensive (Gain) Loss:

Current year net actuarial (gain) loss $ ( 27,385 ) $ 10,379 $ 113,995 $ ( 651 ) $ 1,143 $ ( 380 )

Current year prior service cost — 74 464 — — 15

Less amounts included in net periodic benefit cost:

Less amounts included in net periodic benefit (income) cost:

Amortization of net (gain) loss ( 5,899 ) ( 4,914 ) ( 3,285 ) 109 231 270

Settlement/divestiture/other (gain) loss ( 177 ) ( 83,602 ) 39 — — —

Settlement/divestiture/other gain ( 51 ) ( 177 ) ( 83,602 ) — — —

Amortization of prior service cost ( 65 ) ( 46 ) ( 100 ) — — ( 15 )

Total recognized in Other comprehensive income $ 5,316 $ 27,472 $ ( 12,259 ) $ 1,374 $ ( 110 ) $ ( 695 )

Net periodic benefit cost (income) of $ 44.4 million and $( 1.4 ) million for the years ended December 31, 2019 and 2018, respectively, are included in Income (loss) from discontinued operations, net of taxes.

Net periodic benefit cost included in loss from discontinued operations for the year ended December 31, 2019 includes $ 43.8 million in settlement loss related to the Air and Gas Handling segment.

Each component of Net periodic benefit cost from continuing operations, with the exception of Settlement loss, is included in Selling, general and administrative expense.

The following table sets forth the components of net periodic benefit cost and Other comprehensive loss (gain) of the foreign defined benefit pension plans, included in the table above:

Total recognized in Other comprehensive (gain) loss $ ( 33,400 ) $ 5,316 $ 27,472 $ ( 542 ) $ 1,374 $ ( 110 )

Net periodic benefit income of $ 11.2 million for the year ended December 31, 2021 is recorded in Pension settlement (gain) loss on the Company’s Consolidated Statements of Operations.

Net periodic benefit cost of $ 44.4 million for the year ended December 31, 2019 is included in Loss from discontinued operations, net of taxes.

Net periodic benefit cost included in loss from discontinued operations for the year ended December 31, 2019 includes $ 43.8 million in settlement loss related to the Air and Gas Handling business.

Each component of Net periodic benefit (income) cost from continuing operations, with the exception of Pension settlement (gain) loss, is included in Selling, general and administrative expense.

The following table sets forth the components of Net periodic benefit (income) cost and Other comprehensive (gain) loss of the foreign defined benefit pension plans, included in the table above:

COLFAX CORPORATION

4 unchanged sentences

(In thousands)

Components of Net Periodic Benefit Cost:

Components of Net Periodic Benefit (Income) Cost:

Service cost $ 3,719 $ 1,933 $ 2,340

1 unchanged sentence

Amortization 1,223 747 334

Settlement loss (gain) 99 77,390 ( 39 )

Settlement (gain) loss ( 11,157 ) 99 77,390

Divestitures gain — — ( 4,354 )

1 unchanged sentence

Expected return on plan assets ( 3,015 ) ( 2,397 ) ( 9,092 )

Net periodic benefit cost $ 2,840 $ 76,073 $ 49

Change in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Loss:

Current year net actuarial loss (gain) $ 6,226 $ 122,667 $ ( 31,854 )

Net periodic benefit (income) cost $ ( 7,487 ) $ 2,840 $ 76,073

Change in Plan Assets and Benefit Obligations Recognized in Other Comprehensive (Gain) Loss:

Current year net actuarial (gain) loss $ ( 7,577 ) $ 6,226 $ 122,667

Current year prior service cost — 74 464

Less amounts included in net periodic benefit cost:

Amortization of net loss ( 701 ) ( 234 ) ( 1,087 )

Settlement/divestiture/other (gain) loss ( 177 ) ( 83,602 ) 39

Less amounts included in net periodic benefit (income) cost:

Amortization of net (gain) loss ( 1,169 ) ( 701 ) ( 234 )

Settlement/divestiture/other gain ( 51 ) ( 177 ) ( 83,602 )

Amortization of prior service cost ( 65 ) ( 46 ) ( 100 )

Total recognized in Other comprehensive loss $ 5,376 $ 39,195 $ ( 29,054 )

The components of net unrecognized pension and other post-retirement benefit cost included in Accumulated other comprehensive loss in the Consolidated Balance Sheets that have not been recognized as a component of net periodic benefit cost are as follows:

Total recognized in Other comprehensive (gain) loss $ ( 8,862 ) $ 5,376 $ 39,195

The components of net unrecognized pension and other post-retirement benefit cost included in Accumulated other comprehensive income (loss) in the Consolidated Balance Sheets that have not been recognized as a component of Net periodic benefit (income) cost are as follows:

Pension Benefits Other Post-Retirement

7 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The components of net unrecognized pension and other post-retirement benefit cost included in Accumulated other comprehensive loss in the Consolidated Balance Sheet that are expected to be recognized as a component of net periodic benefit cost during the year ending December 31, 2021 are as follows:

Pension Benefits Other Post-

(In thousands)

Net actuarial loss (gain) $ 5,929 $ ( 74 )

Prior service cost 55 —

Total $ 5,984 $ ( 74 )

The key economic assumptions used in the measurement of the Company’s pension and other post-retirement benefit obligations are as follows:

6 unchanged sentences

Weighted-average rate of increase in compensation levels for active foreign plans 0.9 % 0.6 % — % — %

The key economic assumptions used in the computation of net periodic benefit cost are as follows:

The key economic assumptions used in the computation of Net periodic benefit (income) cost are as follows:

Pension Benefits Other Post-Retirement Benefits

14 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

A one-percentage point change in assumed health care cost trend rates would have the following pre-tax effects:

1% Increase 1% Decrease

(In thousands)

Effect on total service and interest cost components for the year ended December 31, 2020 $ 17 $ ( 14 )

Effect on post-retirement benefit obligation at December 31, 2020 695 ( 591 )

The Company maintains defined contribution plans covering certain union and non-union employees.

The Company’s expense for the years ended December 31, 2021, 2020 and 2019 was $ 8.5 million, $ 10.2 million and $ 6.9 million, respectively.

Total expense included in Income (loss) income from discontinued operations, net of taxes for the years ended December 31, 2019 and 2018 was $ 4.2 million and $ 5.9 million, respectively.

Financial Instruments and Fair Value Measurements

7 unchanged sentences

The carrying values of financial instruments, including Trade receivables, other receivables and Accounts payable, approximate their fair values due to their short-term maturities.

The estimated fair value of the Company’s debt of $ 2.3 billion as of December 31, 2020 and 2019 was based on current interest rates for similar types of borrowings and is in Level Two of the fair value hierarchy.

The estimated fair value of the Company’s debt of $ 2.1 billion $ 2.3 billion as of December 31, 2021 and 2020, respectively, was based on current interest rates for similar types of borrowings and is in Level Two of the fair value hierarchy.

The estimated fair values may not represent actual values of the financial instruments that could be realized as of the balance sheet date or that will be realized in the future.

3 unchanged sentences

Cash equivalents $ 8,133 $ — $ — $ 8,133

Foreign currency contracts related to sales - not designated as hedges — 1,897 — 1,897

Foreign currency contracts related to purchases - not designated as hedges — 297 — 297

Foreign currency contracts - not designated as hedges — 2,607 — 2,607

Deferred compensation plans — 11,213 — 11,213

$ 8,133 $ 13,820 $ — $ 21,953

Foreign currency contracts related to sales - not designated as hedges $ — $ 1,313 $ — $ 1,313

Foreign currency contracts related to purchases - designated as hedges — 468 — 468

Foreign currency contracts - not designated as hedges $ — $ 3,044 $ — $ 3,044

Deferred compensation plans — 11,213 — 11,213

5 unchanged sentences

Cash equivalents $ 7,420 $ — $ — $ 7,420

Foreign currency contracts related to sales - not designated as hedges — 74 — 74

Foreign currency contracts related to purchases - not designated as hedges — 408 — 408

Foreign currency contracts - not designated as hedges — 2,194 — 2,194

Deferred compensation plans — 10,881 — 10,881

$ 7,420 $ 13,075 $ — $ 20,495

Foreign currency contracts related to sales - not designated as hedges $ — $ 328 $ — $ 328

Foreign currency contracts related to purchases - not designated as hedges — 853 — 853

Foreign currency contracts - not designated as hedges $ — $ 1,781 $ — $ 1,781

Deferred compensation plans — 10,881 — 10,881

7 unchanged sentences

As a result, the Company enters into foreign currency swaps and forward contracts to mitigate this exchange rate risk.

Additionally, to mitigate a portion of the foreign exchange risk associated with the translation of the net assets of foreign subsidiaries, the Company has senior unsecured notes denominated in Euro which has been designated as a net investment hedge.

See Note 13, “Debt”, for details.

5 unchanged sentences

The Company primarily uses foreign currency contracts to mitigate the risk associated with customer forward sale agreements denominated in currencies other than the applicable local currency, and to match costs and expected revenues where production facilities have a different currency than the selling currency.

As of December 31, 2020 and 2019, the Company had foreign currency contracts with the following notional values:

(In thousands)

Foreign currency contracts sold - not designated as hedges $ 152,504 $ 28,718

Foreign currency contracts purchased - not designated as hedges 97,897 107,090

Total foreign currency derivatives $ 250,401 $ 135,808

As of December 31, 2021 and 2020, the Company had foreign currency contracts related to purchases and sales with notional values of $ 273.2 million and $ 250.4 million, respectively.

COLFAX CORPORATION

7 unchanged sentences

Contracts Not Designated in a Hedge Relationship:

Foreign Currency Contracts - related to customer sales contracts:

Unrealized gain 704 ( 395 ) 890

Realized gain (loss) 941 ( 1,565 ) ( 1,083 )

Foreign Currency Contracts - related to supplier purchases contracts:

Foreign Currency Contracts:

Unrealized gain (loss) ( 438 ) 1,411 ( 611 )

4 unchanged sentences

Concentrations of credit risk are considered to exist when there are amounts collectible from multiple counterparties with similar characteristics, which could cause their ability to meet contractual obligations to be similarly impacted by economic or other conditions.

The Company performs credit evaluations of its customers prior to delivery or commencement of services and normally does not require collateral.

The Company performs credit evaluations of its customers prior to delivery or commencement of servic es and normally does not require collateral.

Letters of credit are occasionally required when the Company deems necessary.

2 unchanged sentences

Asbestos and Other Product Liability Contingencies

Certain subsidiaries are each one of many defendants in a large number of lawsuits that claim personal injury as a result of exposure to asbestos from products manufactured with components that are alleged to have contained asbestos.

Certain subsidiaries are each one of many defendants in a large number of lawsuits that claim personal injury as a result of exposure to asbestos from products manufactured or used with components that are alleged to have contained asbestos.

Such components were acquired from third-party suppliers, and were not manufactured by any of the Company’s subsidiaries nor were the subsidiaries producers or direct suppliers of asbestos.

The manufactured products that are alleged to have contained asbestos generally were provided to meet the specifications of the subsidiaries’ customers, including the U.S.

The manufactured products that are alleged to have contained or used asbestos generally were provided to meet the specifications of the subsidiaries’ customers, including the U.S.

The subsidiaries settle asbestos claims for amounts the Company considers reasonable given the facts and circumstances of each claim.

3 unchanged sentences

Pursuant to the purchase agreement from the Fluid Handling business divestiture, the Company retained its asbestos-related contingencies and insurance coverages.

However, as the Company does not retain an interest in the ongoing operations of the business subject to the contingencies, asbestos-related activity is classified as part of Income (loss) from discontinued operations, net of taxes in its Consolidated Statements of Operations.

However, as the Company does not retain an interest in the ongoing operations of the business subject to the contingencies, asbestos-related activity is classified as part of Loss from discontinued operations, net of taxes in its Consolidated Statements of Operations.

COLFAX CORPORATION

16 unchanged sentences

The Nicholson methodology is a standard approach used by experts and has been accepted by numerous courts.

It is the Company’s policy to record a liability for asbestos-related liability costs for the longest period of time that it can reasonably estimate.

It is Colfax’s policy to record a liability for asbestos-related liability costs for the longest period of time that Colfax management can reasonably estimate.

The Company believes that it can reasonably estimate the asbestos-related liability for pending and future claims that will be resolved in the next 15 years and has recorded that liability as its best estimate.

1 unchanged sentence

Accordingly, no accrual has been recorded for any costs which may be paid after the next 15 years.

Defense costs associated with asbestos-related liabilities as well as costs incurred related to litigation against the subsidiaries’ insurers are expensed as incurred.

Defense costs associated with asbestos-related liabilities as well as costs incurred related to efforts to recover insurance from the subsidiaries’ insurers are expensed as incurred.

Each subsidiary has separate insurance coverage acquired prior to Company ownership of each independent entity.

The Company has evaluated the insurance assets for each subsidiary based upon the applicable policy language and allocation methodologies, and law pertaining to the affected subsidiary’s insurance policies.

One of the subsidiaries was notified in 2010 by the primary and umbrella carrier who had been fully defending and indemnifying the subsidiary for 20 years that the limits of liability of its primary and umbrella layer policies had been exhausted.

One of the subsidiaries was notified in 2010 by the primary and umbrella carrier who had been fully defending and indemnifying the subsidiary for 20 years th at the limits of liability of its primary and umbrella layer policies had been exhausted.

The subsidiary has sought coverage from certain excess layer insurers whose coverage obligations were disputed in Delaware state court, and were the subject of various rulings, including a September 12, 2016 ruling on certain appealed issues by the Delaware Supreme Court.

2 unchanged sentences

The Court also largely affirmed but reversed in part some of the prior lower court rulings on defense obligations and whether payment of defense costs erode policy limits or are payable in addition to policy limits.

Based upon these rulings, the Company currently estimates that the subsidiary’s future expected recovery percentage is 90.7 % of asbestos-related costs, with the subsidiary expected to be responsible for 9.3 % of its future asbestos-related costs.

Since approximately mid-2011, the Company had funded $ 173.4 million of the subsidiary’s asbestos-related defense and indemnity costs through December 31, 2020, which it expects to recover from insurers.

Final judgment in the case was entered in May 2021.

Based upon the final judgment, the Company currently estimates that the subsidiary’s future expected recovery percentage is 90.4 % of asbestos-related costs, with the subsidiary expected to be responsible for 9.6 % of its future asbestos-related costs.

Since approximately mid-2011, the Company had funded $ 174.8 million of the subsidiary’s asbestos-related defense and indemnity costs through December 31, 2021, which it has recovered or expects to recover from insurers.

Based on the above-referenced court rulings, the Company requested that its insurers reimburse all of the $ 94.9 million that remained outstanding at the time of the ruling, and the Company currently has received substantially all of that amount.

The subsidiary also has requested that certain

The subsidiary has requested

COLFAX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

excess insurers provide ongoing coverage for future asbestos-related defense and/or indemnity costs.

To the extent any disagreements concerning excess insurers’ payment obligations under the Delaware Supreme Court’s rulings remain, they are expected to be resolved by Delaware court action, which is still pending and has been remanded to the Delaware Superior Court for any further proceedings.

that certain excess insurers provide ongoing coverage for future asbestos-related defense and/or indemnity costs.

In the interim, and while not impacting the results of operations, the Company’s cash funding for future asbestos-related defense and indemnity costs for which it expects reimbursement from insurers could range up to $ 10 million per quarter.

3 unchanged sentences

In 2015, the New Jersey Supreme Court refused to grant certification of the appeals, effectively ending the matter.

The subsidiary expects to be responsible for 22.2 % of all future asbestos-related costs.

During the year ended December 31, 2018, the Company recorded a $ 5.9 million increase in asbestos-related liabilities due to the rate of filings and higher settlement values per claim, relating to timing of the mix of claims resolved.

The related insurance asset was accordingly increased $ 4.8 million, resulting in a net pre-tax charge of $ 1.1 million.

The subsidiary expects to be responsible for 26.8 % of all future projected asbestos-related costs.

During the year ended December 31, 2021, the Company recorded a $ 9.5 million increase in asbestos-related liabilities due to a revision in forecast assumptions for filing rates and resolution values.

Th e related insurance asset was accordingly increased $ 4.6 million, resul ting in a net pre-tax cha rge of $ 4.9 million.

During the year ended December 31, 2020, the Company recorded a $ 11.6 million increase in asbestos-related liabilities due to a revision in forecast assumptions for filing rates and resolution values.

The related insurance asset was accordingly increased $ 3.9 million, resulting in a net pre-tax charge of $ 7.7 million.

1 unchanged sentence

The related insurance asset was accordingly increased $ 15.1 million, resulting in a net pre-tax charge of $ 13.3 million.

For all periods, the net pre-tax charge is included in Income (loss) from discontinued operations, net of taxes in the Consolidated Statements of Operations.

Fo r all periods, the net pre-tax charge is included in Loss from discontinued operations, net of taxes in the Consolidated Statements of Operations.

The Company’s Consolidated Balance Sheets included the following amounts related to asbestos-related litigation:

21 unchanged sentences

With respect to these proceedings and the litigation and claims described in the preceding paragraphs, management of the Company believes that it will either prevail, has adequate insurance coverage or has established appropriate accruals to cover potential liabilities.

Any costs that management estimates may be paid related to these proceedings or claims are accrued when the liability is considered probable and the amount can be reasonably estimated.

Legal costs related to proceedings or claims are recorded when incurred.

Other costs that management estimates may be paid related to the claims are accrued when the liability is considered probable and the amount can be reasonably estimated.

There can be no assurance, however, as to the ultimate outcome of any of these matters, and if all or substantially all of these legal proceedings were to be determined adverse to the Company, there could be a material adverse effect on the financial condition, results of operations or cash flow of the Company.

Minimum Lease Obligations

The Company’s minimum obligations under non-cancelable operating leases are as follows:

December 31, 2020

(In thousands)

2021 $ 42,516

Thereafter 71,838

Total $ 208,059

The Company’s operating leases extend for varying periods and, in some cases, contain renewal options that would extend the existing terms.

During the years ended December 31, 2020, 2019 and 2018, the Company’s net rental expense related to operating leases was $ 38.0 million, $ 34.3 million and $ 26.6 million, respectively.

Off-Balance Sheet Arrangements

4 unchanged sentences

The Company conducts its continuing operations through the Fabrication Technology and Medical Technology operating segments, which also represent the Company’s reportable segments.

• Fabrication Technology - a leading global supplier of consumable products and equipment for use in the cutting, joining and automated welding, as well as gas control equipment, providing a wide range of products with innovative technologies to solve challenges in a wide range of industries.

• Fabrication Technology - a leading global supplier of consumable products and equipment for use in cutting, joining and automated welding, as well as gas control equipment, providing a wide range of products with innovative technologies to solve challenges in a wide range of industries.

• Medical Technology - a leader in orthopedic solutions, providing devices, software and services spanning the full continuum of patient care, from injury prevention to joint replacement to rehabilitation.

22 unchanged sentences

Total capital expenditures $ 104,237 $ 114,785 $ 101,839

(1) The following is a reconciliation of Income (loss) before income taxes to segment operating income:

(1) The following is a reconciliation of Income from continuing operations before income taxes to segment operating income:

Year Ended December 31,

1 unchanged sentence

Income from continuing operations before income taxes $ 165,388 $ 58,029 $ 50,493

Loss on short-term investments — — 10,128

Pension settlement loss (gain) ( 11,208 ) — 33,616

Interest expense, net 72,593 104,262 119,503

Debt extinguishment charges 29,870 — —

Restructuring and other related charges (1)

1 unchanged sentence

MDR and other costs (2)

7,949 6,932 —

Segment operating income $ 297,460 $ 214,250 $ 277,359

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(1) Restructuring and other related charges includes $ 6.6 million and $ 8.5 million of expense classified as Cost of sales on the Company’s Consolidated Statements of Operations for the years ended December 31, 2020 and 2019, respectively.

(2) Primarily related to costs specific to compliance with medical device reporting regulations and other requirements of the European Union Medical Device Regulation of 2017.

(1) Restructuring and other related charges includes $ 5.2 million, $ 6.6 million and $ 8.5 million of expense classified as Cost of sales on the Company’s Consolidated Statements of Operations for the years ended December 31, 2021, 2020 and 2019, 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 Consolidated Statements of Operations.

(In thousands)

20 unchanged sentences

United States $ 217,209 $ 221,549

Switzerland 65,683 664

Czech Republic 63,273 65,188

India 37,349 39,612

United Kingdom 20,181 20,097

Russia 19,490 23,149

Mexico 18,805 18,468

Other foreign locations 119,072 141,479

1 unchanged sentence

(1) As the Company does not allocate all long-lived assets (specifically intangible assets) to each individual country, evaluation of long-lived assets in total is impracticable.

COLFAX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Selected Quarterly Data—(unaudited)

Provided below is selected unaudited quarterly financial data for the years ended December 31, 2020 and 2019.

Quarter Ended

2020 December 31,

2020 (2)(3)(4)

(In thousands, except per share data)

Net sales $ 816,356 $ 620,360 $ 805,931 $ 828,122

Gross profit 348,214 241,086 344,120 354,685

Net income (loss) from continuing operations 8,868 ( 3,142 ) 16,836 41,520

Loss from discontinued operations, net of taxes ( 3,360 ) ( 4,905 ) ( 2,641 ) ( 7,405 )

Net income (loss) attributable to Colfax Corporation 4,481 ( 8,474 ) 13,406 33,212

Net income (loss) per share - basic

Continuing operations $ 0.06 $ ( 0.03 ) $ 0.12 $ 0.30

Discontinued operations $ ( 0.02 ) $ ( 0.04 ) $ ( 0.02 ) $ ( 0.05 )

Consolidated operations $ 0.03 $ ( 0.06 ) $ 0.10 $ 0.24

Net income (loss) per share - diluted

Continuing operations $ 0.06 $ ( 0.03 ) $ 0.12 $ 0.29

Discontinued operations $ ( 0.02 ) $ ( 0.04 ) $ ( 0.02 ) $ ( 0.05 )

Consolidated operations $ 0.03 $ ( 0.06 ) $ 0.10 $ 0.24

(1) The results for the quarter ended April 3, 2020 include the impact of six additional days as compared to the quarter ended March 29, 2019 due to our accounting close schedule and leap year.

(2) The results for the quarter ended December 31, 2020 include the impact of five fewer days as compared to the quarter ended December 31, 2019 due to our accounting close schedule.

(3) The sum of the net income (loss) per share amounts may not add due to rounding.

(4) The results from continuing operations includes the impact from discrete income tax benefits mainly associated with internal entity structural changes and finalization of tax return filing positions.

Quarter Ended

2019 June 28,

2019 September 27,

2019 December 31,

(In thousands, except per share data)

Net sales $ 683,919 $ 908,647 $ 846,519 $ 888,373

Gross profit 261,013 376,058 368,142 395,843

Net income (loss) from continuing operations ( 21,530 ) 2,212 3,770 34,411

Income (loss) from discontinued operations, net of taxes

( 26,472 ) ( 468,817 ) 9,024 ( 49,744 )

Net income (loss) attributable to Colfax Corporation ( 52,023 ) ( 469,234 ) 10,474 ( 16,863 )

Net income (loss) per share - basic

Continuing operations $ ( 0.17 ) $ 0.01 $ 0.02 $ 0.24

Discontinued operations $ ( 0.22 ) $ ( 3.46 ) $ 0.06 $ ( 0.36 )

Consolidated operations $ ( 0.39 ) $ ( 3.45 ) $ 0.08 $ ( 0.12 )

Net income (loss) per share - diluted

Continuing operations $ ( 0.17 ) $ 0.01 $ 0.02 $ 0.24

Discontinued operations $ ( 0.22 ) $ ( 3.46 ) $ 0.06 $ ( 0.36 )

Consolidated operations $ ( 0.39 ) $ ( 3.45 ) $ 0.08 $ ( 0.12 )

COLFAX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Subsequent Events

On January 19, 2021, the Company, through its wholly-owned subsidiary, DJO, acquired Trilliant Surgical (“Trilliant”), a national provider of foot and ankle orthopedic implants, for $ 82.0 million cash consideration.

The leading product technologies of Trilliant support the Medical Technology segment’s focused expansion into the adjacent high-growth $1 billion U.S.

foot and ankle market.

The estimated proforma annual revenues of the Trilliant acquisition are approximately 1% of Colfax consolidated revenues.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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-K

Item 8. Financial Statements and Supplementary Data