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Form 8-K Colfax CORP For: Oct 23

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October 23, 2014 6:06 AM EDT
UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

�Washington, D.C. 20549
�

FORM 8-K
�

CURRENT REPORT
�

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934


Date of Report (Date of earliest event reported): October�23, 2014
�

Colfax Corporation

(Exact name of registrant as specified in its charter)

�
Delaware
001-34045
54-1887631
(State or other jurisdiction
(Commission
(I.R.S. Employer
of incorporation)
File Number)
Identification No.)

�

420 National Business Parkway, 5th Floor
Annapolis Junction, MD 20701
(Address of Principal Executive Offices) (Zip Code)
�
(301) 323-9000
(Registrant's telephone number, including area code)

(Former name or former address, if changed since last report)

�
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

� Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

� Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

� Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

� Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))



Item 2.02. Results of Operations and Financial Condition.

On October�23, 2014, Colfax Corporation issued a press release reporting financial results for the third quarter ended September�26, 2014. A copy of Colfax Corporation's press release is attached to this report as Exhibit�99.1 and is incorporated in this report by reference. Colfax Corporation has scheduled a conference call for 8:00 a.m. EDT on October�23, 2014 to discuss its financial results, and slides for that call are attached to this report as Exhibit 99.2 and are incorporated in this report by reference.





Item 9.01. Financial Statements and Exhibits.

(d)����Exhibits

99.1
Colfax Corporation press release dated October�23, 2014, reporting financial results for the third quarter ended September�26, 2014.

99.2
Colfax Corporation slides for October�23, 2014 conference call reporting financial results for the third quarter ended September�26, 2014.



SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Colfax Corporation�������������������� Date: ����October�23, 2014������������������������By: /s/ C. Scott Brannan
Name: C. Scott Brannan
Title: Senior Vice President, Finance,
Chief Financial Officer and Treasurer

�



EXHIBIT INDEX

99.1
Colfax Corporation press release dated October�23, 2014, reporting financial results for the third quarter ended September�26, 2014.

99.2
Colfax Corporation slides for October�23, 2014 conference call reporting financial results for the third quarter ended September�26, 2014.







COLFAX REPORTS THIRD QUARTER 2014 RESULTS

"
Third quarter net income per dilutive share of $0.59, adjusted net income per share of $0.57
"
Third quarter net sales increased 14.8% (a decrease of 3.8% organically) to $1.164 billion
"
Gas- and fluid-handling finished the period with backlog of $1.507 billion

ANNAPOLIS JUNCTION, MD - October�23, 2014 - Colfax Corporation (NYSE: CFX) today announced its financial results for the third quarter ended September�26, 2014.

For the third quarter of 2014, net income was $73.4 million, or $0.59 per dilutive share. Adjusted net income (as defined below) was $71.3 million, or $0.57 per share.

Net sales were $1.164 billion, in the third quarter, an increase of 14.8% from the prior year. Net sales decreased 3.8% organically compared to the third quarter of 2013. Third quarter operating income was $118.8 million, with adjusted operating income (as defined below) of $127.8 million, an increase of 13.9%.

Third quarter gas- and fluid-handling orders were $539.4 million compared to orders of $533.3 million in Q3 2013, an increase of 1.1% and an organic decrease of 8.3%. Gas- and fluid-handling finished the period with backlog of $1.507 billion.

For the nine months ended September 26, 2014, net income was $290.1 million, or $2.38 per dilutive share. Adjusted net income (as defined below) was $182.5 million, or $1.48 per share. Net sales for the nine months ended September 26, 2014 were $3.418 billion, an increase of 12.6% compared to net sales for the nine months ended September 27, 2013. Operating income for the nine months ended September 26, 2014 was $302.2 million, with adjusted operating income (as defined below) of $330.9 million, an increase of 7.8%.

Adjusted net income, adjusted net income per share, adjusted operating income, organic sales decrease and organic order decrease are not financial measures calculated in accordance with generally accepted accounting principles in the U.S. (GAAP). See below for a description of the measures' usefulness and a reconciliation of these measures to their most directly comparable GAAP financial measures.

Steve Simms, President and Chief Executive Officer, stated, While many of the actions we discussed on last quarter's call are progressing as expected, overall results for the third quarter were short of expectations. Demand remains soft in both segments, and margins were below expectations in the fabrication technology sector. Victor Technologies performed strongly, and our gas-handling operations delivered as expected, despite the anticipated lower revenue. Our fluid-handling operations improved significantly over the second quarter. However, based on the demand outlook, the shortfall in fabrication technology's margins this quarter and the impact of a stronger U.S. dollar, we have decreased our sales and earnings guidance for the year.




Non-GAAP Financial Measures and Other Adjustments
Colfax has provided in this press release financial information that has not been prepared in accordance with GAAP. These non-GAAP financial measures are adjusted net income, adjusted net income per share, adjusted operating income, organic sales decrease and organic order decrease. Adjusted net income, adjusted net income per share and adjusted operating income exclude restructuring and other related charges and, for the 2013 periods presented, asbestos coverage litigation expense. Adjusted net income and adjusted net income per share for the nine months ended September�26, 2014 exclude the preferred stock conversion inducement payment. The effective tax rates used to calculate adjusted net income and adjusted net income per share are 29.8% and 29.3% for the three and nine months ended September�26, 2014, respectively. The effective tax rates used to calculate adjusted net income and adjusted net income per share are 21.7% and 26.2% for the third quarter and nine months ended September 27, 2013, respectively. Organic sales decrease and organic order decrease exclude the impact of acquisitions and foreign exchange rate fluctuations. These non-GAAP financial measures assist Colfax in comparing its operating performance on a consistent basis because, among other things, they remove the impact of asbestos insurance coverage issues, restructuring and other related charges, and preferred stock conversion inducement payment.
Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information calculated in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measures. A reconciliation of non-GAAP financial measures presented above to GAAP results has been provided in the financial tables included in this press release.
Conference Call and Webcast
Colfax will host a conference call to provide details about its results on Thursday, October�23, 2014 at 8:00 a.m. EDT. The call will be open to the public through 877-303-7908 (U.S. callers) or 678-373-0875 (international callers) and referencing the conference ID number 18541467, or through webcast via Colfax's website at www.colfaxcorp.com under the Investors section. Access to a supplemental slide presentation can also be found at the Colfax website under the same heading. Both the audio of this call and the slide presentation will be archived on the website later today and will be available until the next quarterly call.
About Colfax Corporation
Colfax Corporation is a diversified global manufacturing and engineering company that provides gas- and fluid-handling and fabrication technology products and services to commercial and governmental customers around the world under the Howden, Colfax Fluid Handling and ESAB brands. Colfax believes that its brands are among the most highly recognized in each of the markets that it serves. Colfax is traded on the NYSE under the ticker "CFX." Additional information about Colfax is available at www.colfaxcorp.com.
CAUTIONARY NOTE CONCERNING FORWARD LOOKING STATEMENTS:
This press release may contain forward-looking statements, including forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Such forward-looking statements include, but are not limited to, statements concerning Colfax's plans, objectives, expectations and intentions and other statements that are not historical or current fact. Forward-looking statements are based on Colfax's current expectations and involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied in such forward-looking statements. Factors that could cause Colfax's results to differ materially from current expectations include, but are not limited to, factors detailed in Colfax's reports filed with the U.S. Securities and Exchange Commission including its 2013 Annual Report on Form 10-K under the caption Risk Factors. In addition, these statements are based on a number of assumptions that are subject to change. This press release speaks only as of the date hereof. Colfax disclaims any duty to update the information herein.
The term Colfax in reference to the activities described in this press release may mean one or more of Colfax's global operating subsidiaries and/or their internal business divisions and does not necessarily indicate activities engaged in by Colfax Corporation.
Contact:
Scott Brannan, Chief Financial Officer
Colfax Corporation
301-323-9000


Colfax Corporation
Condensed Consolidated Statement of Operations Data
Dollars in thousands, except per share data
(Unaudited)

�
Three Months Ended
�
Nine Months Ended
�
September�26, 2014
�
September�27, 2013
�
September�26, 2014
�
September�27, 2013
�
�
�
�
�
�
�
�
Net sales
$
1,164,453

�
$
1,014,570

�
$
3,418,120

�
$
3,035,831

Cost of sales
791,258

�
694,276

�
2,331,122

�
2,086,990

Gross profit
373,195

�
320,294

�
1,086,998

�
948,841

Selling, general and administrative expense
245,441

�
208,759

�
756,052

�
644,636

Restructuring and other related charges
8,948

�
8,737

�
28,734

�
17,428

Operating income
118,806

�
102,798

�
302,212

�
286,777

Interest expense
14,935

�
17,536

�
40,881

�
58,879

Income before income taxes
103,871

�
85,262

�
261,331

�
227,898

Provision for (benefit from) income taxes(1)
22,568

�
19,787

�
(73,153
)
�
62,948

Net income(1)
81,303

�
65,475

�
334,484

�
164,950

Income�attributable to noncontrolling interest, net of taxes
7,914

�
10,000

�
22,520

�
23,448

Net income attributable to Colfax Corporation(1)
73,389

�
55,475

�
311,964

�
141,502

Dividends on preferred stock


�
5,086

�
2,348

�
15,254

Preferred stock conversion inducement payment


�


�
19,565

�


Net income available to Colfax Corporation common shareholders(1)
$
73,389

�
$
50,389

�
$
290,051

�
$
126,248

Net income per share- basic(1)
$
0.59

�
$
0.49

�
$
2.41

�
$
1.25

Net income per share- diluted(1)
$
0.59

�
$
0.48

�
$
2.38

�
$
1.23


�
(1) Benefit from income taxes for the nine months ended September 26, 2014 was significantly impacted by the reassessment of the realizability of certain deferred tax assets as a result of the effect of the Victor Acquisition on expected future income which resulted in a decrease in the Company's valuation allowance against U.S. deferred tax assets.





Colfax Corporation
Reconciliation of GAAP to Non-GAAP Financial Measures
Dollars in thousands, except per share data
(Unaudited)
�
Three Months Ended
�
Nine Months Ended
�
September�26, 2014
�
September�27, 2013
�
September�26, 2014
�
September�27, 2013
Adjusted Operating Income
�
�
�
�
�
�
�
Operating income
$
118,806

�
$
102,798

�
$
302,212

�
$
286,777

Restructuring and other related charges
8,948

�
8,737

�
28,734

�
17,428

Asbestos coverage litigation expense


�
627

�


�
2,801

Adjusted operating income
$
127,754

�
$
112,162

�
$
330,946

�
$
307,006

Adjusted operating income margin
11.0
%
�
11.1
%
�
9.7
%
�
10.1
%
�
Three Months Ended
�
Nine Months Ended
�
September�26, 2014
�
September�27, 2013
�
September�26, 2014
�
September�27, 2013
Adjusted Net Income
�
�
�
�
�
�
�
Net income attributable to Colfax Corporation
$
73,389

�
$
55,475

�
$
311,964

�
$
141,502

Restructuring and other related charges
8,948

�
8,737

�
28,734

�
17,428

Asbestos coverage litigation expense


�
627

�


�
2,801

Tax adjustment(1)
(11,032
)
�
(714
)
�
(158,154
)
�
(2,068
)
Adjusted net income
$
71,305

�
$
64,125

�
$
182,544

�
$
159,663

Adjusted net income margin
6.1
%
�
6.3
%
�
5.3
%
�
5.3
%
�
�
�
�
�
�
�
�
Adjusted Net Income Per Share
�
�
�
�
�
�
�
Net income available to Colfax Corporation common shareholders
$
73,389

�
$
50,389

�
$
290,051

�
$
126,248

Restructuring and other related charges
8,948

�
8,737

�
28,734

�
17,428

Asbestos coverage litigation expense


�
627

�


�
2,801

Preferred stock conversion inducement payment


�


�
19,565

�


Tax adjustment(1)
(11,032
)
�
(714
)
�
(158,154
)
�
(2,068
)
Adjusted net income available to Colfax Corporation common shareholders
71,305

�
59,039

�
180,196

�
144,409

Dividends on preferred stock


�
5,086

�
2,348

�


Less: adjusted net income attributable to participating securities(2)


�


�


�
4,571

�
$
71,305

�
$
64,125

�
$
182,544

�
$
139,838

Weighted-average shares outstanding - diluted
125,380,566

�
115,384,669

�
123,624,735

�
99,281,670

Adjusted net income per share
$
0.57

�
$
0.56

�
$
1.48

�
$
1.41

�
�
�
�
�
�
�
�
Net income per share  diluted (in accordance with GAAP)
$
0.59

�
$
0.48

�
$
2.38

�
$
1.23

_________
(1) The effective tax rates used to calculate adjusted net income and adjusted net income per share are 29.8% and 29.3% for the third quarter and nine months ended September 26, 2014, respectively, and 21.7% and 26.2% for the third quarter and nine months ended September 27, 2013, respectively.

(2) Adjusted net income per share for periods prior to April 23, 2013 was calculated consistently with the two-class method in accordance with GAAP as the Series A Perpetual Convertible Preferred Stock were considered participating securities. Subsequent to April 23, 2013 and prior to February 12, 2014, adjusted net income per share was calculated consistently with the if-converted method in accordance with GAAP until the Series A Perpetual Convertible Preferred Stock were no longer participating securities. Adjusted net income per share for the nine months ended September 26, 2014 excludes the impact of 12,173,291 common stock equivalent shares as their inclusion would be anti-dilutive. On February 12, 2014, the Series A Perpetual Convertible Preferred Stock were converted to common stock and the Company paid a $19.6 million conversion inducement to the holders of the Series A Perpetual Convertible Preferred Stock.


Colfax Corporation
Change in Sales, Orders and Backlog
Dollars in millions
(Unaudited)


�
Net Sales
�
Orders
�
�
�
$
�
%
�
$
�
%
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
For the three months ended September 27, 2013
$
1,014.6

�
�
�
$
533.3

�
�
�
�
�
�
Components of Change:
�
�
�
�
�
�
�
�
�
�
�
Existing Businesses
(38.9
)
�
(3.8
)%
�
(44.3
)
�
(8.3
)%
�
�
�
�
Acquisitions(1)
201.8

�
19.9
�%
�
49.6

�
9.3
�%
�
�
�
�
Foreign Currency Translation
(13.0
)
�
(1.3
)%
�
0.8

�
0.1
�%
�
�
�
�
Total
149.9

�
14.8
�%
�
6.1

�
1.1
�%
�
�
�
�
For the three months ended September 26, 2014
$
1,164.5

�
�
�
$
539.4

�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
�
Net Sales
�
Orders
�
Backlog at Period End
�
$
�
%
�
$
�
%
�
$
�
%
�
�
�
�
�
�
�
�
�
�
�
�
As of and for the nine months ended September 27, 2013
$
3,035.8

�
�
�
$
1,513.6

�
�
�
$
1,446.9

�
�
Components of Change:
�
�
�
�
�
�
�
�
�
�
�
Existing Businesses
(38.9
)
�
(1.3
)%
�
(11.0
)
�
(0.7
)%
�
(94.0
)
�
(6.5
)%
Acquisitions(1)
479.2

�
15.8
�%
�
211.2

�
14.0
�%
�
211.1

�
14.6
�%
Foreign Currency Translation
(58.0
)
�
(1.9
)%
�
2.8

�
0.1
�%
�
(57.5
)
�
(4.0
)%
Total
382.3

�
12.6
�%
�
203.0

�
13.4
�%
�
59.6

�
4.1
�%
As of and for the nine months ended September 26, 2014
$
3,418.1

�
�
�
$
1,716.6

�
�
�
$
1,506.5

�
�

�
(1) Represents the incremental sales, orders and order backlog as a result of our acquisitions of Clarus Fluid Intelligence, LLC, CKD Kompressory a.s., the global industrial and industry division of Flakt Woods Group, TLT-Babcock Inc., Alphair Ventilating Systems Inc., and Sistemas Centrales de Lubrication S.A. de C.V. ("Sicelub"), and incremental sales as a result of our acquisition of Victor Technologies Holdings, Inc.



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