What changed in this filing

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Item 1. Financial Statements

2022-08-04 compared with 2022-05-10 · 339 added, 320 removed, 293 unchanged (69% of the section changed)

3 unchanged sentences

Dollars in thousands, except per share amounts

Three Months Ended

April 1, 2022 April 2, 2021

Three Months Ended Six Months Ended

July 1, 2022 July 2, 2021 July 1, 2022 July 2, 2021

Net sales $ 395,117 $ 356,124 $ 770,574 $ 667,207

2 unchanged sentences

Selling, general and administrative expense 225,481 197,913 444,747 375,992

Research and development expense 15,661 11,039 30,503 21,402

Insurance settlement gain ( 33,034 ) — ( 33,034 ) —

Restructuring and other related charges 2,245 1,992 4,664 2,963

Operating income 53,118 61,307

Operating income (loss) 5,553 ( 10,351 ) ( 25,074 ) ( 28,482 )

Interest expense, net 4,546 5,689 11,610 18,629

Income from continuing operations before income taxes 38,019 35,647

Income tax expense 18,660 7,917

Net income from continuing operations 19,359 27,730

Loss from discontinued operations, net of taxes ( 3,058 ) ( 7,490 )

Debt extinguishment charges 20,104 29,870 20,104 29,870

Unrealized gain on investment in ESAB Corporation ( 135,537 ) — ( 135,537 ) —

Income (loss) from continuing operations before income taxes 116,440 ( 45,910 ) 78,749 ( 76,981 )

Income tax expense (benefit) ( 4,211 ) ( 3,783 ) ( 3,847 ) ( 3,000 )

Net income (loss) from continuing operations 120,651 ( 42,127 ) 82,596 ( 73,981 )

Income (loss) from discontinued operations, net of taxes ( 43,666 ) 71,829 10,690 123,923

Net income 76,985 29,702 93,286 49,942

income attributable to noncontrolling interest, net of taxes 1,233 1,166

net income attributable to noncontrolling interest from continuing operations - net of taxes 130 355 397 645

net income attributable to noncontrolling interest from discontinued operations - net of taxes — 705 966 1,581

Net income attributable to Enovis Corporation $ 76,855 $ 28,642 $ 91,923 $ 47,716

11 unchanged sentences

Dollars in thousands

Three Months Ended

April 1, 2022 April 2, 2021

Three Months Ended Six Months Ended

July 1, 2022 July 2, 2021 July 1, 2022 July 2, 2021

Net income $ 76,985 $ 29,702 $ 93,286 $ 49,942

2 unchanged sentences

( 30,876 ) 8,784 ( 84,337 ) ( 44,397 )

Unrealized gain on hedging activities, net of tax expense of $ 2,711 and $ 4,243

Unrealized gain on hedging activities, net of tax expense of $ — , $( 737 ), $ 2,711 , $ 3,506

— ( 2,150 ) 9,028 10,231

Amounts reclassified from Accumulated other comprehensive loss:

Amortization of pension and other post-retirement net actuarial gain, net of tax expense of $ 199 and $ 317

Other comprehensive loss ( 43,804 ) ( 39,745 )

Comprehensive loss ( 27,503 ) ( 19,505 )

comprehensive income attributable to noncontrolling interest 895 1,042

Amortization of pension and other post-retirement net actuarial gain, net of tax expense of $ — , $ 314 , $ 199 , $ 631

— 1,045 629 2,100

Other comprehensive income (loss) ( 30,876 ) 7,679 ( 74,680 ) ( 32,066 )

Comprehensive income 46,109 37,381 18,606 17,876

comprehensive income (loss) attributable to noncontrolling interest ( 1,303 ) ( 369 ) ( 408 ) 673

Comprehensive loss attributable to Enovis Corporation $ 47,412 $ 37,750 $ 19,014 $ 17,203

3 unchanged sentences

Dollars in thousands, except share amounts

April 1, 2022 December 31, 2021

July 1, 2022 December 31, 2021

CURRENT ASSETS:

5 unchanged sentences

Other current assets 33,782 29,176

Investment in ESAB Corporation 263,070 —

Total current assets associated with discontinued operations — 956,614

Total current assets 1,078,039 2,303,279

4 unchanged sentences

Other assets 88,224 74,700

Total non-current assets associated with discontinued operations — 2,738,049

Total assets $ 4,503,715 $ 8,515,912

4 unchanged sentences

Accrued liabilities 204,206 225,391

Total current liabilities associated with discontinued operations — 635,284

Total current liabilities 812,801 1,023,584

2 unchanged sentences

Other liabilities 144,243 122,159

Total non-current liabilities associated with discontinued operations — 573,562

Total liabilities 1,012,252 3,854,479

1 unchanged sentence

133,333,333 shares authorized;

54,030,880 and 52,083,078 shares issued and outstanding as of April 1, 2022 and December 31, 2021, respectively

54,111,118 and 52,083,078 shares issued and outstanding as of July 1, 2022 and December 31, 2021, respectively

Additional paid-in capital 2,897,207 4,544,315

19 unchanged sentences

Balance at April 1, 2022 54,030,880 54 4,555,369 604,092 ( 559,479 ) 44,009 4,644,045

Net income — — — 76,855 — 130 76,985

Other comprehensive income, net of tax of $ —

— — — — ( 29,443 ) ( 1,433 ) ( 30,876 )

Distribution of ESAB Corporation — — ( 1,666,732 ) — 499,981 ( 40,510 ) ( 1,207,261 )

Common stock-based award activity 80,238 — 8,570 — — — 8,570

Balance at July 1, 2022 54,111,118 $ 54 $ 2,897,207 $ 680,947 $ ( 88,941 ) $ 2,196 $ 3,491,463

Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Noncontrolling Interest Total

9 unchanged sentences

Balance at April 2, 2021 45,199,110 45 4,201,835 536,441 ( 491,727 ) 44,475 4,291,069

Net income — — — 28,642 — 1,060 29,702

Other comprehensive income (loss), net of tax of $ 473

— — — — 9,108 ( 1,429 ) 7,679

Conversion of tangible equity units into common stock 2,058,000 2 ( 2 ) — — — —

Common stock-based award activity 190,105 — 23,510 — — — 23,510

Balance at July 2, 2021 47,447,215 $ 47 $ 4,225,343 $ 565,083 $ ( 482,619 ) $ 44,106 $ 4,351,960

See Notes to Condensed Consolidated Financial Statements.

2 unchanged sentences

Dollars in thousands

Three Months Ended

April 1, 2022 April 2, 2021

Six Months Ended

July 1, 2022 July 2, 2021

Cash flows from operating activities:

4 unchanged sentences

Non-cash interest expense 1,658 2,676

Unrealized gain on investment in ESAB Corporation ( 135,537 ) —

Debt extinguishment charges 20,104 29,870

Deferred income tax expense (benefit) 2,174 ( 3,865 )

Loss on sale of property, plant and equipment 352 257

(Gain)/Loss on sale of property, plant and equipment 352 ( 1,437 )

Changes in operating assets and liabilities:

10 unchanged sentences

Cash flows from financing activities:

Proceeds from borrowings on revolving credit facilities and other — 179,367

Proceeds from borrowings on term credit facility 450,000 455,641

Payments under term credit facility ( 785,000 ) —

Repayments of borrowings on revolving credit facilities and other ( 607,618 ) ( 383,384 )

Repayments of borrowings on Senior notes ( 300,000 ) ( 700,000 )

Repayments of borrowings on Euro senior notes ( 386,278 ) —

Distribution from ESAB Corporation, net 1,143,369 —

Payment of debt issuance costs ( 2,938 ) —

Proceeds from issuance of common stock, net 1,727 730,002

Payment of debt extinguishment costs ( 12,704 ) ( 24,375 )

Deferred consideration payments and other ( 6,857 ) ( 6,201 )

1 unchanged sentence

Effect of foreign exchange rates on Cash and cash equivalents and Restricted Cash 2,020 ( 1,095 )

(Decrease) increase in Cash and cash equivalents and Restricted cash ( 57,866 ) 662,584

Decrease in Cash and cash equivalents and Restricted cash ( 623,765 ) ( 38,760 )

Cash and cash equivalents and Restricted Cash, beginning of period 719,370 101,069

3 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Enovis Corporation (the “Company” or “Enovis”) was previously Colfax Corporation (“Colfax”) until its separation into two differentiated, independent, and publicly traded companies on April 4, 2022, as discussed further below.

Colfax was a leading diversified technology company that provided fabrication technology and medical device products and services to customers around the world, principally under the ESAB and DJO brands.

The Company conducted its operations through two operating segments, “Fabrication Technology”, which incorporated the operations of ESAB and its related brands, and “Medical Technology”, which incorporated the operations of DJO and its related brands.

On April 4, 2022 (the “Distribution Date”), the Company completed the separation of its fabrication technology business (the “Separation”) through a tax-free, pro-rata distribution of 90 % of the outstanding common stock of ESAB Corporation (“ESAB Corp”) to Colfax stockholders.

To affect the Separation, Colfax distributed to its stockholders one share of ESAB Corp common stock for every three shares of Colfax common stock held at the close of business on March 22, 2022, with the Company retaining 10 % of the shares of ESAB Corp common stock immediately following the Separation.

The Company intends to divest its 10 % retained shares in ESAB Corp in a tax-efficient exchange for its outstanding debt no later than 12 months after the Distribution Date.

To affect the Separation, Colfax distributed to its stockholders one share of ESAB common stock for every three shares of Colfax common stock held at the close of business on March 22, 2022, with the Company retaining 10 % of the shares of ESAB common stock immediately following the Separation.

At July 1, 2022, the Company’s investment in ESAB was measured at fair value based on ESAB’s closing stock price, and was valued at $ 263.1 million.

The Company intends to divest its retained stake in ESAB, in a tax-efficient exchange for its outstanding debt no later than 12 months after the Distribution Date.

Upon completion of the Separation, Colfax, which retained the Company’s specialty medical technology business, changed its name to Enovis Corporation.

On April 5, 2022, the Company began trading under the stock symbol “ENOV” on the New York Stock Exchange.

For further information on the Separation, refer to Note 15, “Subsequent Events”.

In connection with the Separation, ESAB Corp issued $ 1.2 billion of new debt securities, the proceeds from which were used to fund a $ 1.2 billion cash distribution to Enovis upon Separation.

The distribution proceeds were used by Enovis in conjunction with $ 450 million of borrowings on a term loan under the new Enovis credit facility, as discussed below, and $ 52.3 million of cash on hand to repay $ 1.4 billion of outstanding debt and accrued interest on its Credit Facility, $ 302.8 million of outstanding debt and accrued interest on its 2026 Notes, as well as a redemption premium at 103.188 % of the principal amount of the 2026 Notes, and other fees and expenses due at closing.

Additionally, on April 7, 2022, the Company also completed the redemption of its Euro Senior Notes representing all of its outstanding € 350 million principal 3.250 % Senior Notes due 2025 at a redemption price of 100.813 % of the principal amount.

For further information on the Separation, refer to Note 15, “Subsequent Events”.

Since the Separation occurred in the second quarter of 2022, Enovis has classified its fabrication technology business as a discontinued operation in its historical financial statements for all periods presented.

Following the completion of the Separation, the Company revised its reporting structure to now conduct its business through two operating segments, “Prevention and Recovery”, which consists of the Company’s bracing, recovery sciences, and footcare product lines, and “Reconstructive”, which includes the Company’s surgical implant product lines.

In connection with the Separation, ESAB issued $ 1.2 billion of new debt securities, the proceeds from which were used to fund a $ 1.2 billion cash distribution to Enovis.

The distribution proceeds were used by Enovis in conjunction with $ 450 million of borrowings on a term loan (the “Enovis Term Loan”) under the new Enovis credit facility (the “Enovis Credit Agreement”), and $ 52.3 million of cash on hand to repay $ 1.4 billion of outstanding debt and accrued interest under the Company’s previous credit agreement, which was legally extinguished upon completion of the Separation, $ 302.8 million of outstanding debt and accrued interest on its 2026 Notes at a redemption price of 103.188 % of the principal amount, and other fees and expenses due at closing.

Additionally, on April 7, 2022, the Company completed a full redemption of its € 350 million principal 3.250 % Euro Senior Notes due 2025 using cash on hand at a redemption price of 100.813 % of the principal amount.

Immediately following the Separation, the Company effected a one-for-three reverse stock split of all issued and outstanding shares of Enovis common stock.

As a result of the reverse stock split, all share and per share figures contained in the accompanying Condensed Consolidated Financial Statements have been retroactively restated as if the reverse stock split occurred at the beginning of the periods presented.

Since the disposition occurred in the second quarter of 2022, Enovis will classify its fabrication technology business as a discontinued operation in its historical financial statements beginning in the second quarter of 2022.

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

As a result of the reverse stock split, prior-period share and per share figures contained in the accompanying Condensed Consolidated Financial Statements have been retroactively restated as if the reverse stock split occurred at the beginning of the periods presented.

The Condensed Consolidated Financial Statements included in this quarterly report have been prepared by the Company in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) and accounting principles generally accepted in the United States of America (“GAAP”) for interim financial statements and reflect, in the opinion of management, all adjustments, which consist solely of normal recurring adjustments, necessary to present fairly the Company’s financial position and results of operations as of and for the periods indicated.

Certain prior period amounts have been reclassified to conform to the current period presentation.

2 unchanged sentences

The Condensed Consolidated Financial Statements included herein should be read in conjunction with the audited financial statements and related footnotes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 (the “2021 Form 10-K”), filed with the SEC on February 22, 2022.

The Condensed Consolidated Financial Statements reflect, in the opinion of management, all adjustments, which consist solely of normal recurring adjustments, necessary to present fairly the Company’s financial position and results of operations as of and for the periods indicated.

Intercompany transactions and accounts are eliminated in consolidation.

The Company makes certain estimates and assumptions in preparing its Condensed Consolidated Financial Statements in accordance with GAAP.

1 unchanged sentence

Actual results may differ from those estimates.

The COVID-19 outbreak, which was characterized as a pandemic by the World Health Organization on March 11, 2020, has caused increased uncertainty in estimates and assumptions affecting the reported amounts of assets and liabilities in the Condensed Consolidated Financial Statements as the extent and period of recovery from the COVID-19 outbreak and related economic disruption are difficult to

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

In the normal course of business, the Company incurs research and development costs related to new product development which are expensed as incurred and included in Selling, general and administrative expense on the Company’s Condensed Consolidated Statements of Operations.

Research and development costs were $ 24.4 million and $ 19.9 million during the three months ended April 1, 2022 and April 2, 2021, respectively.

The results of operations for the three months ended April 1, 2022 are not necessarily indicative of the results of operations that may be achieved for the full year.

Quarterly results are affected by seasonal variations in the Company’s businesses as Medical Technology sales typically peak in the fourth quarter.

General economic conditions may, however, impact future seasonal variations.

In December 2019, a novel coronavirus disease (“COVID-19”) was first reported in China.

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

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

These impacts lessened in 2021 due to broadening access to COVID-19 vaccines and gradual relaxing of some government-mandated restrictions.

However, a surge of COVID-19 cases due to the emergence of certain COVID-19 variants in the third quarter of 2021 led to the reinstatement of restrictions in certain jurisdictions, slowing the overall economic recovery.

Some of these restrictions have been lifted as of the end of the first quarter of 2022.

The COVID-19 outbreak has caused increased uncertainty in estimates and assumptions affecting the reported amounts of assets and liabilities in the Condensed Consolidated Financial Statements as the extent and period of recovery from the COVID-19 outbreak and related economic disruption are difficult to forecast.

Furthermore, the historical seasonality trends have been disrupted by the commercial impacts caused by the COVID-19 pandemic.

Furthermore, historical seasonality trends have been disrupted by the commercial impacts caused by the COVID-19 pandemic.

Recently Issued Accounting Pronouncements

The Company has not adopted any new accounting standards during the three months ended April 1, 2022.

The Company has not adopted any new accounting standards during the six months ended July 1, 2022.

There are no recently issued accounting pronouncements that are expected to have a material effect on the Company’s financial position, results of operations or cash flows.

Discontinued Operations

The Company retained certain asbestos-related contingencies and insurance coverages from divested businesses for which it did not retain an interest in the ongoing operations subject to the contingencies.

In conjunction with the Separation, all asbestos-related contingencies and insurance coverages from its industrial businesses were transferred fully to ESAB Corp.

The Company has classified asbestos-related selling, general and administrative activity in its Condensed Consolidated Statements of Operations as part of Loss from discontinued operations, net of taxes.

Asbestos-related costs, net of taxes were $ 2.5 million and $ 0.9 million during the three months ended April 1, 2022 and April 2, 2021, respectively.

See Note 13, “Commitments and Contingencies” for further information.

The Company also recorded Loss from discontinued operations, net of taxes of $ 0.6 million and $ 6.6 million during the three months ended April 1, 2022 and April 2, 2021, respectively, related to its divested air and gas handling business, including a settlement executed in the first quarter of 2021.

Cash used in operating activities related to discontinued operations for the three months ended April 1, 2022 and April 2, 2021 was $ 5.8 million and $ 7.3 million, respectively.

Separation of Fabrication Technology Business

On April 4, 2022, the Company completed the Separation of its fabrication technology business into an independent, publicly traded company:

ESAB, a global organization that develops, manufactures and supplies consumable welding and cutting products and equipment, as well as gas control equipment, into diversified end markets such as medical and alternative energy.

The spin-off was effected through a pro-rata distribution of 90% of the 60,034,311 outstanding common shares of ESAB to Enovis stockholders of record at the close of business on March 22, 2022 (the “Record Date”).

Enovis stockholders received one share of ESAB for every three shares of Enovis stock they owned on the Record Date.

The carrying value of the assets and liabilities of the Company’s former fabrication technology business’ discontinued operations, other contributed legal entities, discontinued operations containing asbestos, and certain pension assets and liabilities, as of December 31, 2021 were as follows:

December 31, 2021

ASSETS (in thousands)

Cash and cash equivalents $ 39,118

Trade receivables, net 383,742

Inventories, net 420,062

Prepaid expenses 52,140

Other current assets 61,552

Total current assets associated with discontinued operations 956,614

Property, plant and equipment, net 286,278

Goodwill 1,533,037

Other intangibles, net 521,434

Lease asset - right of use 107,944

Other assets 289,356

Total assets associated with discontinued operations (1)

Current portion of long-term debt $ 613

Accounts payable 348,965

Accrued liabilities 285,706

Total current liabilities associated with discontinued operations 635,284

Long-term debt, less current portion 54

Non-current lease liability 88,777

Deferred tax liabilities 116,198

Other liabilities 368,533

Total liabilities associated with discontinued operations (1)

(1) Total assets and liabilities include asbestos-related contingencies and insurance coverages previously reported by Colfax as discontinued operations.

See Asbestos Contingencies section below for more information.

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The financial results of the discontinued operation for the three and six months ended July 1, 2022 and July 2, 2021 include the fabrication technology business through the date of Separation and separation-related costs incurred and are presented as income from discontinued operations, net of income taxes, on the Company’s Consolidated Statements of Operations.

The following table presents the financial results of the fabrication technology business:

Three Months Ended Six Months Ended

July 1, 2022 July 2, 2021 July 1, 2022 July 2, 2021

(in thousands)

Net sales $ — $ 629,803 $ 647,911 $ 1,197,932

Cost of sales — 411,412 423,580 779,746

Selling, general and administrative expense (1)

35,463 130,425 174,664 257,724

Restructuring and other related charges — 3,488 5,304 6,563

Operating loss ( 35,463 ) 84,478 44,363 153,899

Interest expense — 12,117 8,035 24,837

Pension settlement gain — ( 11,208 ) — ( 11,208 )

Income from discontinued operations before income taxes ( 35,463 ) 83,569 36,328 140,270

Income tax (benefit) expense 8,203 11,740 25,638 16,347

Income from discontinued operations, net of taxes $ ( 43,666 ) $ 71,829 $ 10,690 $ 123,923

(1) Selling, general and administrative expenses for the three months ended July 1, 2022 include certain transaction costs incurred to effect the Separation.

Total income attributable to noncontrolling interest related to ESAB, net of taxes was $ 1.0 million for the six months ended July 1, 2022, and $ 0.7 million and $ 1.6 million for the three and six months ended July 2, 2021, respectively.

Cash used in operating activities related to discontinued operations for the six months ended July 1, 2022 was $ 29.6 million.

Cash provided by operating activities related to discontinued operations for the six months ended July 2, 2021 was $ 122.6 million.

Cash used in investing activities related to discontinued operations for the six months ended July 1, 2022 and July 2, 2021 was $ 3.2 million and $ 14.4 million, respectively.

Asbestos Contingencies

The Company retained certain asbestos-related contingencies and insurance coverages from its previously divested businesses for which it did not retain an interest in the ongoing operations except for the contingencies.

The net costs and cash flows associated with these contingencies and coverages were reported by the Company as discontinued operations.

In conjunction with the Separation, all asbestos-related contingencies and insurance coverages from its divested businesses were transferred fully to ESAB.

The Company has classified asbestos-related selling, general and administrative activity through the the date of Separation in its Condensed Consolidated Statements of Operations as part of Loss from discontinued operations, net of taxes.

Subsequent to the Separation, the asbestos-related selling, general and administrative activity and asbestos assets and liabilities are no longer reflected in the Enovis financial statements.

Acquisitions and Investments

The Medical Technology segment completed three transactions during the three months ended April 1, 2022 for $ 13.8 million, one of which is carried at cost as the investment does not have a readily determinable fair value, while the other two are accounted for as asset purchases.

The three investments broaden the platform’s product offering and distribution network.

During the three months ended April 2, 2021, the Company completed one acquisition in its Fabrication Technology segment and two acquisitions in its Medical Technology segment for aggregate net cash consideration of $ 88.7 million.

2022 Acquisitions

During the six months ended July 1, 2022, the Company completed three asset acquisitions, one business acquisition and two investments, which are carried at cost as they do not have a readily determinable fair value.

Two of these transactions were completed by the Company’s Reconstructive segment, and the other four transactions were completed by the Prevention & Recovery segment.

The asset acquisitions broaden the Company’s product offering and distribution network.

Aggregate purchase consideration for the three asset acquisitions was $ 18.2 million, of which $ 8.6 million was paid in cash and $ 9.6 million of deferred and contingent consideration.

The investments were acquired for $ 12.0 million in cash consideration.

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

The Medical Technology segment’s acquisitions in the first quarter of 2021 included Trilliant Surgical (“Trilliant”), a national provider of foot and ankle orthopedic implants, which was acquired for net cash consideration of $ 79.6 million.

The purchase accounting for all acquisitions made in the first quarter of 2021 has been completed.

The Company also made two investments in medical technology businesses during the three months ended April 2, 2021 for a total of $ 14.8 million.

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

During the year ended December 31, 2021, the Company completed one acquisition in its Fabrication Technology segment and five acquisitions in its Medical Technology segment for aggregate net cash consideration of $ 206.5 million and equity consideration of $ 285.7 million.

On May 6, 2022, the Company completed a business acquisition in its Reconstructive segment of KICo Knee Innovation Company Pty Limited and subsidiaries, an Australian private company doing business as 360 Med Care, by acquiring 100 % of its equity interests.

The entity is an Australian medical device distributor that bundles certain computer-assisted surgery and patient experience enhancement programs to add value to its device supply arrangements with surgeons, hospitals, and insurers.

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

The Company paid $ 14.3 million for the acquisition, net of cash received, and recorded estimated contingent consideration at fair value of $ 12.8 million related to certain future revenue targets.

The Company allocated $ 13 million to goodwill and $ 18.2 million to intangible assets acquired.

Purchase accounting procedures are ongoing and revisions to contingent consideration, intangible assets acquired, and adjustments for working capital true-ups may be recorded in future periods during the purchase price allocation period.

The 360 Med Care acquisition broadens our customer base in Australia and adds to our overall product offerings.

As of July 1, 2022, the balance of investments held by the company without readily determinable fair values was $ 31.9 million.

The investments are carried at cost minus impairments, if any, plus adjustments for fair value indicators from observable price changes in orderly transactions for the identical or similar investment of the same issuer.

There have been no impairments or upward adjustments in the current year or since acquisition of the investments.

The Company holds equity securities in ESAB Corporation for total value of $ 263.1 million which are recorded at fair value.

During the three and six months ended July 1, 2022, the Company recorded an unrealized gain of $ 135.5 million over cost basis.

The company does not hold other equity securities measured at fair value.

2021 Acquisitions

During the six months ended July 2, 2021, the Company completed three acquisitions in its Reconstructive segment for aggregate net cash consideration of $ 208.1 million.

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

The purchase accounting for the Mathys AG Bettlach acquisition which was completed in the third quarter of 2021 has yet to be finalized.

The Reconstructive segment acquired Trilliant Surgical (“Trilliant”), a provider of foot and ankle orthopedic implants, in the first quarter of 2021 for net cash consideration of $ 79.6 million.

The Reconstructive segment’s acquisitions in the second quarter of 2021 included MedShape, Inc.

(“MedShape”), a provider of innovative surgical solutions for foot and ankle surgeons, which was acquired for net cash consideration of $ 124.6 million.

The Trilliant and MedShape acquisitions further expand the Company’s U.S.

foot and ankle product lines.

The purchase accounting for all acquisitions made in the six months ended July 2, 2021 has been completed.

The Company also made two investments in medical technology businesses during the six months ended July 2, 2021 for a total of $ 14.8 million.

Both investments were carried at cost as of July 1, 2022, as they do not have a readily determinable fair value.

During the second half of 2021, the Reconstructive segment acquired Mathys AG Bettlach for total acquisition equity consideration of $ 285.7 million, which included cash acquired of $ 14.7 million.

Purchase allocation procedures for this acquisition are ongoing as of July 1, 2022.

For further information on prior year acquisitions and investments, refer to Note 5.

1 unchanged sentence

There have been no material changes to purchase accounting estimates for the prior year acquisitions since the issuance of the Company’s 2021 Form 10-K .

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

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

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

Three Months Ended

April 1, 2022 April 2, 2021

(In thousands)

Equipment $ 188,348 $ 173,750

Consumables 459,563 394,378

Total $ 647,911 $ 568,128

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.

While the Company’s Medical Technology sales are primarily derived from three sales channels including dealers and distributors, insurance, and direct to consumers and hospitals, substantially all its revenue is recognized at a point in time.

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

Three Months Ended

April 1, 2022 April 2, 2021

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

Substantially all its revenue is recognized at a point in time.

The Company disaggregates its revenue into the following segments:

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Three Months Ended Six Months Ended

July 1, 2022 July 2, 2021 July 1, 2022 July 2, 2021

(In thousands)

Prevention & Recovery $ 244,835 $ 235,238

Prevention and Recovery $ 263,783 $ 266,919 $ 508,618 $ 501,593

Reconstructive 131,334 89,205 261,956 165,614

Total $ 395,117 $ 356,124 $ 770,574 $ 667,207

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 April 1, 2022 is immaterial.

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Given the nature of the Company’s business, the total amount of unsatisfied performance obligations with an original contract duration of greater than one year as of July 1, 2022 is immaterial.

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

2 unchanged sentences

As of December 31, 2021 and 2020, total contract liabilities were $ 9.2 million and $ 15.0 million, respectively.

During the three months ended April 1, 2022 and April 2, 2021, revenue recognized that was included in the contract liability balance at the beginning of the year was $ 12.8 million and $ 14.3 million, respectively.

As of April 1, 2022 and April 2, 2021, total contract liabilities were $ 31.4 million and $ 40.0 million, respectively, and were included in Accrued liabilities on the Company’s Condensed Consolidated Balance Sheets.

The contract liabilities as of April 1, 2022 and December 31, 2021 included $ 2.0 million and $ 4.9 million, respectively, of certain one-time advance payments in the Medical Technology business.

During the three and six months ended July 1, 2022, revenue recognized that was included in the contract liability balance at the beginning of the year was $ 2.6 million and $ 6.2 million, respectively.

During the three and six months ended July 2, 2021, revenue recognized that was included in the contract liability balance at the beginning of the year was $ 2.3 million and $ 3.1 million, respectively.

As of July 1, 2022 and July 2, 2021, total contract liabilities were $ 3.1 million and $ 13.6 million, respectively, and were included in Accrued liabilities on the Company’s Condensed Consolidated Balance Sheets.

The contract liabilities as of December 31, 2021 included $ 4.9 million of certain one-time advance payments.

Allowance for Credit Losses

5 unchanged sentences

A summary of the activity in the Company’s allowance for credit losses included within Trade receivables in the Condensed Consolidated Balance Sheets is as follows:

Three Months Ended April 1, 2022

Six Months Ended July 1, 2022

of Period Charged to Expense, net Write-Offs, Deductions and Other, net Foreign

2 unchanged sentences

Allowance for credit losses $ 6,589 $ 343 $ 1,391 $ ( 141 ) $ 8,182

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Net Income Per Share from Continuing Operations

Net income per share from continuing operations was computed as follows:

Three Months Ended

April 1, 2022 April 2, 2021

Three Months Ended Six Months Ended

July 1, 2022 July 2, 2021 July 1, 2022 July 2, 2021

(In thousands, except share and per share data)

Computation of Net income per share from continuing operations - basic:

Net income from continuing operations attributable to Enovis Corporation (1)

Computation of Net income (loss) per share from continuing operations - basic:

Net income (loss) from continuing operations attributable to Enovis Corporation (1)

$ 120,521 $ ( 42,482 ) $ 82,199 $ ( 74,626 )

1 unchanged sentence

54,080,549 51,291,986 53,969,738 48,902,883

Net income per share from continuing operations – basic

Net income (loss) per share from continuing operations – basic

$ 2.23 $ ( 0.83 ) $ 1.52 $ ( 1.53 )

Computation of Net income per share from continuing operations - diluted:

Net income from continuing operations attributable to Enovis Corporation (1)

Computation of Net income (loss) per share from continuing operations - diluted:

Net income (loss) from continuing operations attributable to Enovis Corporation (1)

$ 120,521 $ ( 42,482 ) $ 82,199 $ ( 74,626 )

4 unchanged sentences

54,521,849 51,291,986 54,458,872 48,902,883

Net income per share from continuing operations – diluted

Net income (loss) per share from continuing operations – diluted

$ 2.21 $ ( 0.83 ) $ 1.51 $ ( 1.53 )

(1) Net income from continuing operations attributable to Enovis Corporation for the respective periods is calculated using Net income from continuing operations less the income attributable to noncontrolling interest, net of taxes, of $ 1.2 million for the three months ended April 1, 2022 and April 2, 2021.

(1) Net income (loss) from continuing operations attributable to Enovis Corporation for the respective periods is calculated using Net income (loss) from continuing operations less the continuing operations component of the income attributable to noncontrolling interest, net of taxes, of $ 0.1 million and $ 0.4 million for the three and six months ended July 1, 2022, respectively, and $ 0.4 million and $ 0.6 million for the three and six months ended July 2, 2021, respectively.

As a result of the reverse stock split following the Separation, prior-period share and per share figures contained in the Condensed Consolidated Financial Statements have been retroactively restated as if the reverse stock split occurred at the beginning of the periods presented.

For the three and six months ended July 1, 2022 and the three and six months ended July 2, 2021, the weighted-average shares of Common stock outstanding - basic includes the impact of 6.1 million shares, as adjusted for the reverse stock split, for the actual or potential issuance of shares from tangible equity unit purchase contracts.

In January 2022, the final remaining amount of tangible equity unit purchase contracts were converted into approximately 1.7 million shares of the Company’s common stock, as adjusted for the reverse stock split.

All issuances of Company common stock related to the tangible equity units were converted at the minimum settlement rate as a result of the increase in the Company’s share price.

All the issued shares are included in the Common stock issued and outstanding as of July 1, 2022.

See Note 8, “Equity” for details.

The weighted-average computation of the dilutive effect of potentially issuable shares of Common stock under the treasury stock method for the three and six months ended July 1, 2022 excludes 0.4 million of outstanding stock-based compensation awards as their inclusion would be anti-dilutive.

The weighted-average computation of the dilutive effect of potentially issuable shares of Common stock under the treasury stock method for the three and six months ended July 2, 2021 excludes 0.5 million and 0.4 million, respectively, of outstanding stock-based compensation awards as their inclusion would be anti-dilutive.

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As a result of the reverse stock split, all share and per share figures contained in the Condensed Consolidated Financial Statements have been retroactively restated as if the reverse stock split occurred at the beginning of the periods presented.

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

During the three months ended April 1, 2022, conversions of the Company’s tangible equity units resulted in the issuance of approximately 1.7 million shares of Company common stock.

All issuances of Company common stock related to the tangible equity units were converted at the minimum settlement rate of 1.33 shares of common stock for each purchase contract as a result of the Company’s share price.

The issued shares are included in the Common stock issued and outstanding as of April 1, 2022.

See Note 8, “Equity” for details.

The weighted-average computation of the dilutive effect of potentially issuable shares of Common stock under the treasury stock method for the three months ended April 1, 2022 and April 2, 2021 excludes 0.5 million of outstanding stock-based compensation awards as their inclusion would be anti-dilutive.

During the three months ended April 1, 2022, Income from continuing operations before income taxes was $ 38.0 million, while income tax expense was $ 18.7 million.

The effective tax rate was 49.1 % for the three months ended April 1, 2022.

The effective tax rate for the three months ended April 1, 2022 differed from the 2021 U.S.

federal statutory rate of 21% mainly due to withholding taxes, taxable foreign exchange gains, U.S.

taxation of international operations, other non-deductible expenses, and various items expensed discretely to the quarter.

During the three months ended April 2, 2021, Income from continuing operations before income taxes was $ 35.6 million, while income tax expense was $ 7.9 million.

The effective tax rate was 22.2 % for the three months ended April 2, 2021.

The effective tax rate for the three months ended April 2, 2021 differed from the 2021 U.S.

federal statutory rate of 21% mainly due to withholding taxes, taxable foreign exchange gains and other non-deductible expenses partially offset by the benefit of U.S.

During the three and six months ended July 1, 2022, Income from continuing operations before income taxes was $ 116.4 million and $ 78.7 million, respectively, while income tax benefit was $ 4.2 million and $ 3.8 million, respectively.

The effective tax rate was ( 3.6 )% and ( 4.9 )% for the three and six months ended July 1, 2022, both of which differed from the 2022 federal statutory rate of 21% mainly due to non-taxable unrealized gains on the investment in ESAB offset by non-deductible costs related to the tax-free separation transaction.

During the three and six months ended July 2, 2021, Loss from continuing operations before income taxes was $ 45.9 million and $ 77.0 million, respectively, while the income tax benefit was $ 3.8 million and $ 3.0 million, respectively.

The effective tax rate was 8.2 % and 3.9 % for the three and six months ended July 2, 2021, respectively, both of which differed from the 2021 U.S.

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

taxation on international operations and other non-deductible expenses.

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Outstanding shares

As discussed in Note 1, the Company effected a reverse stock split immediately following the Separation on April 4, 2022 and all share and per share figures contained in the accompanying Condensed Consolidated Financial Statements have been retroactively restated as if the reverse stock split occurred at the beginning of the periods presented.

As of December 31, 2021, the outstanding shares for the Company after the reverse stock split were 52,083,078 .

Share Repurchase Program

1 unchanged sentence

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

As of April 1, 2022, the remaining stock repurchase authorization provided by the Board of Directors was $ 100 million.

As of July 1, 2022, the remaining stock repurchase authorization provided by the Board of Directors was $ 100 million.

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

1 unchanged sentence

Accumulated Other Comprehensive Loss

The following tables present the changes in the balances of each component of Accumulated other comprehensive loss including reclassifications out of Accumulated other comprehensive loss for the three months ended April 1, 2022 and April 2, 2021.

All amounts are net of tax and noncontrolling interest, if any.

8 unchanged sentences

Other comprehensive income (loss) before reclassifications 470 ( 83,036 ) 9,028 ( 73,538 )

Amounts reclassified from Accumulated other comprehensive loss 629 — — 629

Amounts reclassified from Accumulated other comprehensive income (loss) 629 — — 629

Net Other comprehensive income (loss) 1,099 ( 83,036 ) 9,028 ( 72,909 )

Balance at April 1, 2022 $ ( 84,460 ) $ ( 528,718 ) $ 53,699 $ ( 559,479 )

Distribution of ESAB Corporation 84,460 469,220 ( 53,699 ) 499,981

Balance at July 1, 2022 $ — $ ( 88,941 ) $ — $ ( 88,941 )

ENOVIS CORPORATION

11 unchanged sentences

Net Other comprehensive income (loss) 2,683 ( 41,351 ) 8,155 ( 30,513 )

Balance at April 2, 2021 $ ( 111,019 ) $ ( 412,542 ) $ 31,834 $ ( 491,727 )

Balance at July 2, 2021 $ ( 110,100 ) $ ( 402,328 ) $ 29,809 $ ( 482,619 )

Tangible equity unit offering

5 unchanged sentences

All the TEU prepaid stock purchase contracts converted at the minimum settlement rate.

Approximately 1.3 million and 0.1 million TEU prepaid stock purchase contracts were settled into approximately 1.7 million and 0.1 million shares of Company common stock as adjusted for the reverse split, during the three months ended April 1, 2022 and April 2, 2021, respectively.

Since the 4.6 million TEU prepaid stock purchase contracts were mandatorily convertible into shares of Company common stock at the minimum settlement rate or greater, 6.1 million shares, as adjusted for the reverse split, are included in basic net income per share calculations for all periods presented.

Approximately 1.3 million and 1.6 million TEU prepaid stock purchase contracts were settled into approximately 1.7 million and 2.2 million shares of Company common stock as adjusted for the reverse split, during the six months ended July 1, 2022 and July 2, 2021, respectively.

Since the 4.6 million TEU prepaid stock purchase contracts were mandatorily converted into shares of Company common stock at the minimum settlement rate or greater, 6.1 million shares, as adjusted for the reverse split, are included in basic net income per share calculations for all periods presented.

See Note 6, “Net Income Per Share from Continuing Operations” for additional information.

1 unchanged sentence

Inventories, net consisted of the following:

April 1, 2022 December 31, 2021

July 1, 2022 December 31, 2021

(In thousands)

3 unchanged sentences

451,799 394,780

LIFO reserve 797 1,129

allowance for excess, slow-moving and obsolete inventory ( 50,947 ) ( 38,547 )

$ 400,852 $ 356,233

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

At April 1, 2022 and December 31, 2021, approximately 17.4 % and 18.3 % of total inventories, respectively, were valued using the LIFO method.

ENOVIS CORPORATION

COLFAX CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Long-term debt consisted of the following:

April 1, 2022 December 31, 2021

July 1, 2022 December 31, 2021

(In thousands)

7 unchanged sentences

Long-term debt $ — $ 2,078,625

Subsequent Event Debt Redemptions

In conjunction with the Separation which occurred on April 4, 2022, the Company repaid its Term loan and Revolver (each as defined below) and entered into a new credit agreement with its banking partners.

Additionally, on March 7, 2022, the Company announced a conditional redemption of its 3.25 % Euro Senior Notes due 2025 and its 6.375 % Senior Notes due 2026.

The Euro Senior Notes and 2026 Notes were redeemed on April 7, 2022 after the completion of the Separation.

In accordance with the redemption notices and subsequent redemption of the debt described above, $ 421.3 million has been reclassified from long-term debt to current maturities.

The amount reflects the debt retired that was not refinanced on a long-term basis.

Refer to Note 15, “Subsequent Events” for further detail of ongoing financing arrangements.

Term Loan and Revolving Credit Facility

The Company’s credit agreement (the “Credit Facility”), which was legally extinguished in conjunction with the Separation on April 4, 2022, consisted 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.

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

Debt Redemptions

In conjunction with the Separation which occurred on April 4, 2022, the Company repaid all obligations under its previous credit agreement and entered into a new credit agreement (the “Enovis Credit Agreement”) with certain of its existing bank lenders.

Additionally, on April 7, 2022 after the completion of the Separation, the Company completed the redemptions of its 3.25 % Euro Senior Notes due 2025 and its 6.375 % Senior Notes due 2026.

As a result of these changes, the Company recorded Debt extinguishment charges of $ 20.1 million in the second quarter of 2022, comprised of $ 12.7 million in redemption premiums and $ 7.4 million in noncash write-offs of original issue discount and deferred financing fees.

Enovis Term Loan and Revolving Credit Facility

The new Enovis Credit Agreement became effective on April 4, 2022 and consists of a $ 900 million revolving credit facility (the “Revolver”) with an April 4, 2027 maturity date and a term loan with an initial aggregate principal amount of $ 450 million and an April 4, 2023 maturity date (the “Enovis Term Loan”).

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

subsidiaries of the Company guarantee the obligations under the Credit Facility.

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

In addition, the Credit Facility contained maximum total leverage ratio and minimum interest coverage ratio financial covenants.

For further description of the Company’s financial covenants as of April 1, 2022, refer to Note 13, “Debt” in the Notes to the Consolidated Financial Statements in the Company’s 2021 Form 10-K.

As of April 1, 2022, the Company was in compliance with the covenants under the Credit Facility.

As of April 1, 2022, the weighted-average interest rate of borrowings under the Credit Facility was 1.74 %, excluding accretion of original issue discount and deferred financing fees, and there was $ 375 million available on the Revolver.

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

In addition, the Enovis Credit Agreement contains financial covenants requiring the Company to maintain (i) a maximum total leverage ratio of not more than 4.50 :1.00, with a step-down to, on the date on which the Company and its subsidiaries have transferred any retained shares of ESAB common stock to one or more unaffiliated third parties, 4.00 :1.00, commencing with the fiscal quarter ending June 30, 2023, 3.75 :1.00 and commencing with the fiscal quarter ending June 30, 2024, 3.50 :1.00, and (ii) a minimum interest coverage ratio of 3.00 :1:00.

The Enovis Credit Agreement contains various events of default (including failure to comply with the covenants under the Enovis Credit Agreement 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 Enovis Term Loan and the Enovis Revolver.

As of July 1, 2022, the Company was in compliance with the covenants under the Enovis Credit Agreement.

For further descriptions of the Company’s financial covenants as of April 1, 2022, refer to Note 13, “Debt” in the Notes to the Consolidated Financial Statements in the Company’s 2021 Form 10-K.

As of July 1, 2022, the weighted-average interest rate of borrowings under the Enovis Credit Agreement was 2.58 %, excluding accretion of original issue discount and deferred financing fees, and there was $ 900 million available on the Revolver.

Euro Senior Notes

The Company had senior unsecured notes with an aggregate principal amount of € 350 million due in May 2025, with an interest rate of 3.25 % (the “Euro Senior Notes”).

The Euro Senior Notes were redeemed on April 7, 2022 after the completion of the Separation.

The Company had senior unsecured notes with an aggregate principal amount of € 350 million due in May 2025, with an interest rate of 3.25 %.

The Euro Senior Notes were redeemed on April 7, 2022 including a 100.813 % redemption premium after the completion of the Separation.

COLFAX CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

TEU Amortizing Notes

The Company had 6.50 % TEU amortizing notes at an initial principal amount of $ 15.6099 per note with equal quarterly cash installments of $ 1.4375 per note representing a payment of interest and partial payment of principal.

The Company previously had 6.50 % TEU amortizing notes at an initial principal amount of $ 15.6099 per note with equal quarterly cash installments of $ 1.4375 per note representing a payment of interest and partial payment of principal.

The Company paid $ 6.5 million and $ 12.3 million of principal on the TEU amortizing notes in the six months ended July 1, 2022 and July 2, 2021, respectively.

The final installment payment was made on January 15, 2022.

The Company paid $ 6.5 million and $ 6.1 million of principal on the TEU amortizing notes in the three months ended April 1, 2022 and April 2, 2021, respectively.

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company had senior notes with a remaining principal amount of $ 300 million (the “2026 Notes”), which were due on February 15, 2026 and had an interest rate of 6.375 %.

The 2026 Notes were redeemed on April 7, 2022 after the completion of the Separation.

The Company had senior notes with a remaining principal amount of $ 300 million, which were due on February 15, 2026 and had an interest rate of 6.375 %.

The 2026 Notes were redeemed on April 7, 2022 including a 103.188 % redemption premium after the completion of the Separation.

Other Indebtedness

In addition to the debt agreements discussed above, the Company is party to various bilateral credit facilities with a borrowing capacity of $ 168.2 million.

As of April 1, 2022, there were no outstanding borrowings under these facilities.

Subsequent to the end of the first quarter of 2022, the bilateral credit facilities are no longer available to Enovis due to the completion of the Separation as they relate to ESAB Corp or expired.

The Company is party to letter of credit facilities with an aggregate capacity of $ 211.9 million.

Total letters of credit of $ 40.2 million were outstanding as of April 1, 2022.

Subsequent to the end of the first quarter of 2022, substantially all of the letter of credit facilities are no longer available to Enovis due to the completion of the Separation as they relate to ESAB Corp.

In addition to the debt agreements discussed above, the Company is party to bilateral credit facilities with a borrowing capacity of $ 30.0 million.

As of July 1, 2022, there were $ 0.9 million in outstanding borrowings under these facilities.

The Company is party to a letter of credit facility with a capacity of $ 30.0 million.

Total letters of credit of $ 2.3 million were outstanding as of July 1, 2022.

Deferred Financing Fees

In total, the Company had deferred financing fees, including the original issue discount, of $ 11.3 million included in its Condensed Consolidated Balance Sheet as of April 1, 2022, which would be charged to Interest expense, net, primarily using the effective interest method, over the life of the applicable debt agreements.

In conjunction with the Separation and debt redemptions in the second quarter of 2022, the Company expects a net loss on the early extinguishment of debt of approximately $ 17 million, including approximately $ 13 million of redemption premiums on the retired debt instruments and $ 4 million of noncash write-offs of original issue discount and deferred financing fees on the Euro Senior Notes and Senior Notes.

The Company also expects additional charges of approximately $ 7 million in conjunction with entering into the new Enovis Credit Facility and the extinguishment of the prior Credit Facility, which is subject to finalization.

In total, the Company had deferred financing fees of $ 6.2 million included in its Condensed Consolidated Balance Sheet as of July 1, 2022, which will be charged to Interest expense, net, primarily using the effective interest method, over the life of the applicable debt agreements.

In conjunction with the Separation-related debt redemptions and extinguishment of its prior credit facility in the second quarter of 2022, the Company recorded $ 7.4 million of noncash write-offs of original issue discounts and deferred financing fees.

Additionally, the Company deferred $ 2.9 million of financing costs in the second quarter of 2022 in connection with the new Enovis Credit Facility.

Accrued Liabilities

Accrued liabilities in the Condensed Consolidated Balance Sheets consisted of the following:

April 1, 2022 December 31, 2021

July 1, 2022 December 31, 2021

(In thousands)

1 unchanged sentence

Accrued taxes 12,240 12,970

Accrued asbestos-related liability 34,494 30,572

Accrued freight 7,957 5,299

Contingent consideration - current portion 3,975 1,816

Warranty liability 2,539 2,503

Accrued restructuring liability - current portion 9,546 10,221

Accrued restructuring liability 2,589 2,170

Accrued third-party commissions 20,380 22,362

2 unchanged sentences

Accrued interest 596 11,066

Accrued rebates 11,302 12,584

Accrued professional fees 17,094 13,711

Accrued royalties 5,241 5,045

Other 37,683 38,436

$ 204,206 $ 225,391

ENOVIS CORPORATION

COLFAX CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Warranty Liability

The activity in the Company’s warranty liability consisted of the following:

Three Months Ended

April 1, 2022 April 2, 2021

(In thousands)

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

Accrued warranty expense 2,129 2,042

Changes in estimates related to pre-existing warranties 836 589

Cost of warranty service work performed ( 1,112 ) ( 2,472 )

Acquisition-related liability — 321

Foreign exchange translation effect 21 ( 224 )

Warranty liability, end of period $ 19,331 $ 15,799

Accrued Restructuring Liability

1 unchanged sentence

A summary of the activity in the Company’s restructuring liability included in Accrued liabilities and Other liabilities in the Condensed Consolidated Balance Sheets is as follows:

Three Months Ended April 1, 2022

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

Six Months Ended July 1, 2022

Balance at Beginning of Period Provisions Payments Balance at End of Period

(In thousands)

Restructuring and other related charges:

Fabrication Technology:

Termination benefits (1)

2 unchanged sentences

358 2,564 ( 2,922 ) —

8,109 5,267 ( 6,657 ) ( 27 ) 6,692

Non-cash charges (2)

Medical Technology:

Termination benefits (1)

2,470 2,438 ( 1,905 ) ( 9 ) 2,994

Facility closure costs and other (2)

358 233 ( 575 ) — 16

2,828 2,671 ( 2,480 ) ( 9 ) 3,010

Total $ 2,828 4,916 $ ( 5,155 ) $ 2,589

Non-cash charges (2)

Total restructuring liability activity $ 10,937 7,938 $ ( 9,137 ) $ ( 36 ) $ 9,702

Total Non-cash charges 319

Total Provisions (3)

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

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

The Medical Technology segment charges include $ 0.5 million of expense classified as Cost of sales on the Company’s Condensed Consolidated Statements of Operations for the three months ended April 1, 2022.

(3) As of April 1, 2022, $ 9.5 million and $ 0.2 million of the Company’s restructuring liability was included in Accrued liabilities and Other liabilities, respectively.

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(3) For the six months ended July 1, 2022 , $ 3.4 million and $ 2.1 million of the Company’s total provisions were related to the Prevention and Recovery and Reconstructive segments, respectively.

Restructuring and other related charges includes $ 0.8 million of expense classified as Cost of sales on the Company’s Condensed Consolidated Statements of Operations for the six months ended July 1, 2022.

Financial Instruments and Fair Value Measurements

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, which was $ 2.1 billion as of both April 1, 2022 and December 31, 2021, 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, which was $ 0.5 billion and $ 2.1 billion as of July 1, 2022 and December 31, 2021, 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.

A summary of the Company’s assets and liabilities that are measured at fair value for each fair value hierarchy level for the periods presented is as follows:

April 1, 2022

(In thousands)

Cash equivalents $ 5,875 $ — $ — $ 5,875

Foreign currency contracts - not designated as hedges — 1,628 — 1,628

Deferred compensation plans — 13,811 — 13,811

$ 5,875 $ 15,439 $ — $ 21,314

Foreign currency contracts - not designated as hedges $ — $ 2,984 $ — $ 2,984

Deferred compensation plans — 13,811 — 13,811

$ — $ 16,795 $ — $ 16,795

December 31, 2021

(In thousands)

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

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 - not designated as hedges $ — $ 3,044 $ — $ 3,044

Deferred compensation plans — 11,213 — 11,213

$ — $ 14,257 $ — $ 14,257

There were no transfers in or out of Level One, Two or Three during the three months ended April 1, 2022.

ENOVIS CORPORATION

As of July 1, 2022, the Company held $ 25.0 million in Level Three liabilities arising from contingent consideration related to acquisitions.

The fair value of the contingent consideration liabilities is determined using unobservable inputs and the inputs vary based on the nature of the purchase agreements.

These inputs can include the estimated amount and timing of projected cash flows, the risk-adjusted discount rate used to present value the projected cash flows, and the probability of the acquired company attaining certain targets stated within the purchase agreements.

A change in these unobservable inputs to a different amount might result in a significantly higher or lower fair value measurement at the reporting date due to the nature of uncertainty inherent to the estimates.

During the six months ended July 1, 2022, the company recorded contingent consideration of $ 20.0 million in conjunction with current acquisitions.

There were no transfers in or out of Level One, Two or Three during the six months ended July 1, 2022.

Investment in ESAB

On April 4, 2022, the Company completed the Separation and retained 10 % of the shares of ESAB common stock.

The Company did not retain a controlling interest in ESAB and, therefore, the fair value of the retained shares is included in the assets of continuing operations on the Company’s Condensed Consolidated Balance Sheet as of July 1, 2022, and the subsequent fair value changes are included in results from continuing operations on the Company’s Condensed Consolidated Statements of Operations for the three and six months ended July 1, 2022.

At July 1, 2022, the Company’s investment in ESAB was measured at fair value based on ESAB’s closing stock price, and it is classified as Level 1 in the fair value hierarchy.

The fair value of the ESAB investment as of July 1, 2022 was $ 263.1 million, and the gain on investment for the three and six months ended July 1, 2022 was $ 135.5 million.

COLFAX CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Foreign Currency Contracts

As of April 1, 2022 and December 31, 2021, the Company had foreign currency contracts related to purchases and sales with notional values of $ 203.6 million and $ 273.2 million, respectively.

The Company recognized the following in its Condensed Consolidated Financial Statements related to its derivative instruments:

Three Months Ended

April 1, 2022 April 2, 2021

(In thousands)

Contracts Designated as Hedges:

Unrealized gain (loss) on net investment hedges (1)

$ 9,028 $ 12,381

Contracts Not Designated in a Hedge Relationship:

Deferred Compensation Plans

The Company maintains deferred compensation plans for the benefit of certain employees and non-executive officers.

As of July 1, 2022 and December 31, 2021 the fair value of these plans were $ 9.7 million and $ 11.2 million, respectively.

These plans are deemed to be Level Two within the fair value hierarchy.

Foreign Currency Contracts

Unrealized gain (loss) ( 1,356 ) ( 2,611 )

Realized gain (loss) ( 14,582 ) 51

(1) The unrealized gain (loss) on net investment hedges is attributable to the change in valuation of Euro denominated debt.

As of July 1, 2022 and December 31, 2021, the Company had foreign currency contracts related to purchases and sales with notional values of $ 4.6 million and $ 7.6 million, respectively.

During the three and six months ended July 1, 2022, the Company recognized unrealized losses of $ 0.1 million and $ 0.2 million, respectively, and realized losses of $ 0.2 million and $ 0.3 million, respectively, on its Condensed Consolidated Statements of Operations related to its derivative instruments.

Commitments and Contingencies

For further description of the Company’s litigation and contingencies, reference is made to Note 18, “Commitments and Contingencies” in the Notes to Consolidated Financial Statements in the Company’s 2021 Form 10-K.

Since the Company did not retain an interest in the ongoing operations of its divested businesses, the retained asbestos-related activity has been classified in its Condensed Consolidated Statements of Operations as a component of Loss from discontinued operations, net of taxes.

In conjunction with the Separation, all asbestos-related contingencies and insurance coverages from the divested industrial businesses were transferred fully to ESAB Corp.

Asbestos Contingencies

Asbestos-related claims activity since December 31 is as follows:

Three Months Ended

April 1, 2022 April 2, 2021

(Number of claims)

Claims unresolved, beginning of period 14,559 14,809

Claims filed (1)

Claims resolved (2)

( 779 ) ( 581 )

Claims unresolved, end of period 14,845 15,295

(1) Claims filed include all asbestos claims for which notification has been received or a file has been opened.

(2) Claims resolved include all asbestos claims that have been settled, dismissed or that are in the process of being settled or dismissed based upon agreements or understandings in place with counsel for the claimants.

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company’s Condensed Consolidated Balance Sheets included the following amounts related to asbestos-related litigation:

April 1, 2022 December 31, 2021

(In thousands)

Long-term asbestos insurance asset (1)

$ 229,215 $ 231,900

Long-term asbestos insurance receivable (1)

17,002 15,421

Accrued asbestos liability (2)

34,494 30,572

Long-term asbestos liability (3)

254,106 261,779

(1) Included in Other assets in the Condensed Consolidated Balance Sheets.

(2) Represents current accruals for probable and reasonably estimable asbestos-related liability costs that the Company believes the subsidiaries will pay, and unpaid legal costs related to defending themselves against asbestos-related liability claims and legal action against the Company’s insurers, which is included in Accrued liabilities in the Condensed Consolidated Balance Sheets.

(3) Included in Other liabilities in the Condensed Consolidated Balance Sheets.

Management’s analyses are based on currently known facts and assumptions.

Projecting future events, such as new claims to be filed each year, the average cost of resolving each claim, coverage issues among layers of insurers, the method in which losses will be allocated to the various insurance policies, interpretation of the effect on coverage of various policy terms and limits and their interrelationships, the continuing solvency of various insurance companies, the amount of remaining insurance available, as well as the numerous uncertainties inherent in asbestos litigation could cause the actual liabilities and insurance recoveries to be higher or lower than those projected or recorded which could materially affect the Company’s financial condition, results of operations or cash flow.

General Litigation

The Company is involved in various other pending legal proceedings arising out of the ordinary course of the Company’s business.

The Company is involved in various pending legal proceedings arising out of the ordinary course of the Company’s business.

None of these legal proceedings are expected to have a material adverse effect on the financial condition, results of operations or cash flow of the Company.

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.

With respect to these proceedings, management of the Company believes that it will either prevail, has adequate insurance coverage or has established appropriate accruals to cover potential liabilities.

Legal costs related to proceedings or claims are recorded as incurred.

1 unchanged sentence

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.

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

In conjunction with the Separation, all asbestos-related contingencies and insurance coverages from the divested industrial businesses were transferred fully to ESAB.

The historical asbestos-related activity and balances are presented in discontinued operations on the Condensed Consolidated Statements of Operations and in assets/liabilities associated with discontinued operations on the Condensed Consolidated Balance Sheets, respectively.

Segment Information

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 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.

Certain amounts not allocated to the two reportable segments and intersegment eliminations are reported under the heading “Corporate and other.” The Company’s management evaluates the operating results of each of its reportable segments based upon Net sales and segment operating income (loss), which represents Operating income (loss) before Restructuring and certain other charges.

The Company conducts its continuing operations through the Prevention and Recovery and Reconstructive operating segments, which also represent the Company’s reportable segments.

▪ Prevention and Recovery - a leader in orthopedic solutions and recovery sciences, providing devices, software and services across the patient care continuum from injury prevention to rehabilitation after surgery, injury, or from degenerative disease.

• Reconstructive - an innovation-driven leader offering a comprehensive suite of reconstructive joint products for the hip, knee, shoulder, elbow, foot, ankle, and finger.

In conjunction with revising its reporting structure, the Company allocated $ 1.1 billion and $ 0.8 billion of goodwill to the Prevention and Recovery and Reconstructive segments, respectively.

The total segment assets as of the beginning of the quarter were $ 2.8 billion and $ 1.8 billion for the Prevention and Recovery and Reconstructive segments, respectively.

There have not been any material changes to the segment assets since the start of the quarter.

COLFAX CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company’s management evaluates the operating results of each of its reportable segments based upon Net sales and Adjusted EBITDA, which excludes the effect of restructuring and other related charges, MDR and related costs, strategic transaction costs, stock-based compensation, depreciation and other amortization charges, amortization of acquired intangibles, insurance settlement gains, and inventory step-up from the operating income of the Company’s operating segments.

The amounts presented below have been recast for the change in operating segments for all periods presented.

The Company’s segment results were as follows:

Three Months Ended

April 1, 2022 April 2, 2021

Three Months Ended Six Months Ended

July 1, 2022 July 2, 2021 July 1, 2022 July 2, 2021

(In thousands)

Fabrication Technology $ 647,911 $ 568,128

Medical Technology 375,457 311,083

Prevention and Recovery $ 263,783 $ 266,919 $ 508,618 $ 501,593

Reconstructive 131,334 89,205 261,956 165,614

$ 395,117 $ 356,124 $ 770,574 $ 667,207

Segment operating income (loss) (1) :

Fabrication Technology $ 95,545 $ 82,305

Medical Technology ( 147 ) 2,162

Corporate and other ( 31,396 ) ( 17,361 )

Segment Adjusted EBITDA (1) :

Prevention and Recovery $ 35,148 $ 33,299 $ 61,518 $ 54,550

Reconstructive 21,042 17,350 42,399 33,349

$ 56,190 $ 50,649 $ 103,917 $ 87,899

(1) The following is a reconciliation of Income from continuing operations before income taxes to segment operating income:

Three Months Ended

April 1, 2022 April 2, 2021

(1) The following is a reconciliation of Income from continuing operations before income taxes to Adjusted EBITDA:

Three Months Ended Six Months Ended

July 1, 2022 July 2, 2021 July 1, 2022 July 2, 2021

(In thousands)

Income from continuing operations before income taxes $ 38,019 $ 35,647

Interest expense, net 15,099 25,660

Operating income (loss) (GAAP) $ 5,553 $ ( 10,351 ) $ ( 25,074 ) $ ( 28,482 )

Restructuring and other related charges (1)

MDR and related costs (2)

Segment operating income $ 64,002 $ 67,106

(1) Restructuring and other related charges includes $ 0.5 million of expense classified as Cost of sales on the Company’s Condensed Consolidated Statements of Operations for the three months ended April 1, 2022.

2,555 1,992 5,508 2,963

MDR and other costs (2)

4,421 1,919 7,048 3,672

Strategic transaction costs 12,707 4,037 24,403 4,418

Stock-based compensation 7,821 6,793 14,529 12,747

Depreciation and other amortization 19,450 16,350 37,950 33,242

Amortization of acquired intangibles 31,824 29,504 62,610 57,042

Insurance settlement gain (3)

( 33,034 ) — ( 33,034 ) —

Inventory step-up 4,893 405 9,977 2,297

Adjusted EBITDA (non-GAAP) $ 56,190 $ 50,649 $ 103,917 $ 87,899

(1) Restructuring and other related charges includes $ 0.3 million and $ 0.8 million of expense classified as Cost of sales on the Company’s Condensed Consolidated Statements of Operations for the three and six months ended July 1, 2022, respectively.

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

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

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Subsequent Events

As discussed in Note 1, “General”, the Company completed the separation of its fabrication technology business on April 4, 2022 through a tax-free, pro-rata distribution of 90 % of the outstanding common stock of ESAB Corp to the Company’s stockholders.

In connection with the Separation, ESAB Corp and Enovis entered into various agreements to affect the Separation and provide a framework for Enovis’ relationship with ESAB Corp after the Separation, including a separation and distribution agreement, stockholders’ and registration rights agreement, employee matters agreement, tax matters agreement, transition services agreement, ESAB Business Excellence System (“EBS”) license agreement, and intellectual property matters agreement.

These agreements will govern the Separation between Enovis and ESAB Corp of the assets, employees, liabilities and obligations (including its investments, property and employee benefits and tax-related assets and liabilities) of Enovis and its subsidiaries attributable to periods prior to, at and after the Separation and will govern certain relationships between Enovis and ESAB Corp after the Separation.

In connection with the Separation, ESAB Corp issued $ 1.2 billion of new debt securities, the proceeds from which were used to fund a $ 1.2 billion cash distribution to Enovis upon Separation.

Additionally, on April 7, 2022, the Company completed the redemption of its Euro Senior Notes representing all of its outstanding € 350 million principal 3.250 % Senior Notes due 2025 consisting of $ 392.1 million outstanding debt and accrued interest as well as a redemption premium of 100.813 % of the principal amount.

In the second quarter of 2022, the Company expects a net loss on the early extinguishment of debt of approximately $ 17 million, including approximately $ 13 million of redemption premiums on the retired debt instruments and $ 4 million of noncash write-offs of original issue discount and deferred financing fees on the Euro Senior Notes and Senior Notes.

In accordance with the redemption notices and subsequent redemption of the debt described above, $ 421.3 million has been reclassified from long-term debt to current maturities.

The amount reflects the debt retired that was not refinanced on a long-term basis.

The Company retained 10 % of the shares of ESAB Corp common stock as part of the Separation.

The Company intends to divest its 10 % retained shares in ESAB Corp in a tax-efficient exchange for its outstanding debt under the new Enovis credit facility no later than 12 months after the Distribution Date.

The retained stake in ESAB Corp, based on the initial opening share price, is approximately $ 300 million on a fair value basis and will be marked-to-market each reporting period.

Immediately following the Separation, the Company effected a one-for-three reverse stock split of all issued and outstanding shares of Enovis common stock.

On April 4, 2022, the Company entered into a new credit agreement (the “Enovis Credit Agreement”) which replaces the Company’s prior credit agreement and concurrently terminated all indebtedness of the Company outstanding thereunder being repaid on such date with proceeds of the Enovis Credit Agreement and other funds of the Company.

The Enovis Credit Agreement consists of a revolving credit facility that totals $ 900 million in commitments with a maturity date of April 4, 2027 (the “Enovis Revolver”) and a term loan in an aggregate amount of $ 450 million with a maturity date of April 4, 2023 (the “Enovis Term Loan”, and together with the Enovis Revolver, the “Enovis Credit Facilities”).

The Enovis Revolver includes a $ 50 million swingline loan sub-facility.

The Enovis Revolver will be used to provide funds for the Company’s ongoing working capital requirements and for general corporate purposes.

The Enovis Term Loan bears interest, at the election of the Company, at either the base rate (as defined in the Enovis Credit Agreement) or at the term Secured overnight financing rate (“SOFR”) plus an adjustment (as defined in the Enovis Credit Agreement), in each case, plus the applicable interest rate margin.

The Enovis Revolver bears interest, at the election of the Company, at either the base rate or, in the case of loans denominated in dollars, the term SOFR rate plus an adjustment or the daily simple SOFR plus an adjustment, in the case of loans denominated in euros, the adjusted EURIBOR rate and, in the case of loans denominated in sterling, SONIA plus an adjustment (as all such rates are defined in the Enovis Credit Agreement), in each case, plus the applicable interest rate margin.

Initially, the applicable interest rate margin will be 1.500 % or, in the case

ENOVIS CORPORATION

(3) Insurance settlement gain is related to the 2019 acquisition of DJO.

COLFAX CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

of base rate loans, 0.500 %, and in future quarters it may change based upon the Company’s total leverage ratio (ranging from 1.125 % to 1.750 % or in the case of the base rate margin, 0.125 % to 0.750 %).

Each swing line loan denominated in dollars will bear interest at the base rate plus the applicable interest rate margin.

subsidiaries of the Company have agreed to guarantee the obligations of the Company under the Enovis Credit Agreement.

Related Party Transactions

Related Party Agreements

On April 4, 2022, in connection with the Separation, the Company entered into several agreements with ESAB that govern the Separation and provide a framework for the future relationship between the parties, including a separation and distribution agreement, a transition services agreement (the “Separation Agreement”), tax matters agreement, employee matters agreements, a stockholder’s and registration rights agreement, and an intellectual property matters agreement.

The Separation and Distribution Agreement

The Company entered into the Separation Agreement with ESAB immediately prior to the distribution of ESAB’s common stock to Enovis stockholders.

The Separation Agreement sets forth the Company’s agreements with ESAB regarding the principal actions to be taken in connection with the Separation.

The Separation agreement contains provisions that, among other things, relate to (i) assets, liabilities and contracts to be transferred, assumed and assigned to each of ESAB and Enovis as part of the Separation;

(ii) the cash distribution made to Enovis in partial consideration of the transfer of ESAB Assets in connection with the Separation;

and, (iii) cross-indemnities principally designed to place financial responsibility for obligations and liabilities with either Enovis or ESAB, depending on the responsible party.

Transition Services Agreement

The transition services agreement ("TSA") sets forth the terms and conditions pursuant to which the Company and its subsidiaries and ESAB’s and its subsidiaries will provide various services to each other.

The services to be provided include human resources, payroll, certain information technology services, treasury services and financial reporting services.

The charges for the transition services generally are expected to allow the providing company to fully recover all actual internal and external costs and expenses in connection with providing the service (including a reasonable allocation of overhead) provided in the manner and at a level substantially consistent with that provided by the respective providing company

immediately preceding the Separation.

Tax Matters Agreement

The tax matters agreement governs the Company’s and ESAB’s respective rights, responsibilities and obligations after the Separation with respect to tax liabilities and benefits, tax attributes, the preparation and filing of tax returns, the control of audits and other tax proceedings and certain other matters regarding taxes.

Employee Matters Agreement

The employee matters agreement sets forth, among other things, the allocation of assets, liabilities and responsibilities relating to employee compensation and benefit plans, and programs and other related matters in connection with the Separation, including the treatment of outstanding equity and other incentive awards and certain retirement and welfare benefit obligations.

Stockholders and Registration Rights Agreement

The stockholders and registration rights agreement sets forth the terms and conditions pursuant to which ESAB has granted Company and its affiliates certain registration rights with respect to the shares of ESAB common stock owned by the Company.

Upon the request of the Company or certain subsequent transferees as further defined in the agreement, ESAB will use its reasonable best efforts to effect the registration under applicable federal and state securities laws of any shares of ESAB common stock retained by the Company.

Under the agreement, the Company has agreed to vote any shares of ESAB common stock retained by it immediately after the Separation in proportion to the votes cast by ESAB’s other stockholders.

Intellectual Property Matters Agreement

The intellectual property matters agreement sets forth the terms and conditions pursuant to which, among other things, the Company and ESAB have granted each other a non-exclusive, royalty-free, fully paid-up, irrevocable, sublicenseable (subject to certain limitations) and worldwide license to use certain intellectual property rights retained by the other party.

The term of the intellectual property matters agreement is perpetual .

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

What changed 10-Q

Item 1. Financial Statements