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Delaware
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82-2758923
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. employer identification no.)
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Title of each class
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Trading symbol
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Exchange on which registered
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Common Stock, $0.01 par value
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AVTR
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New York Stock Exchange
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6.250% Series A Mandatory Convertible Preferred Stock, $0.01 par value
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AVTR PRA
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New York Stock Exchange
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Page
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Description
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we, us, our
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Avantor, Inc. and its subsidiaries
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Legacy Avantor Plan
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the Avantor Funding, Inc. (f/k/a Avantor, Inc.) Equity Incentive Plan
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Vail Plan
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the Avantor, Inc. (f/k/a Vail Holdco Corp) Equity Incentive Plan
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2019 Plan
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the Avantor, Inc. 2019 Equity Incentive Plan
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AMEA
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Asia, Middle-East and Africa
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AOCI
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accumulated other comprehensive income or loss
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APAC
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Asia Pacific
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BIS
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the Bureau of Industry and Security
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CERCLA
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the Comprehensive Environmental Response Compensation and Liability Act
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cGMP
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Current Good Manufacturing Practice
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DDTC
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Directorate of Defense Trade controls
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DEA
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Drug Enforcement Administration
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DHHS
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Department of Health and Human Service
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EMA
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European Medicines Agency
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EPA
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the U.S. Environmental Protection Agency
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ERP
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enterprise resource planning system
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EU
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European Union
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EURIBOR
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the basic rate of interest used in lending between banks on the European Union interbank market
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FASB
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the Financial Accounting Standards Board of the United States
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FCPA
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the United States Foreign Corrupt Practices Act
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FDA
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United States Food and Drug Administration
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GAAP
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United States generally accepted accounting principles
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GDPR
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the General Data Protection Regulation
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Goldman Sachs
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an investment banking firm and its affiliates
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high single-digit
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7 - 9%
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IPO
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initial public offering
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ISO
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International Organization for Standardization or international equivalents
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ITAR
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the International Traffic In Arms Regulations
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Description
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LIBOR
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the basic rate of interest used in lending between banks on the London interbank market
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low double-digit
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10 - 19%
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low single-digit
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1 - 3%
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Management EBITDA
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earnings before interest, income taxes, depreciation, amortization and certain other items, our segment profitability measurement under GAAP
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MCPS
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6.250% Series A Mandatory Convertible Preferred Stock
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mid single-digit
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4 - 6%
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NCI
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noncontrolling interest
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New Mountain Capital
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a private equity investor and its affiliates
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NuSil
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NuSil Acquisition Corp, NuSil Investments LLC and subsidiaries, a business organization with which we merged in 2016
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NuSil Investors
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NuSil LLC and NuSil 2.0 LLC, former owners of NuSil that are controlled by its former management
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NYSE
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the New York Stock Exchange
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OFAC
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the U.S. Department of The Treasury’s Office of Foreign Assets Control
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OSHA
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the U.S. Occupational Safety & Health Administration
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PSP Investments
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a pension investment manager and its affiliates
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Registration Statement
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our registration statement on Form S-1 (File No. 333-229578), as amended
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RSU
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restricted stock unit
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SAR
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stand alone appreciation right
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SEC
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the United States Securities and Exchange Commission
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SG&A expenses
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selling, general and administrative expenses
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specialty procurement
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product sales related to customer procurement services
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VWR
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VWR Corporation and its subsidiaries, a company we acquired in November 2017
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•
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disruptions to our operations;
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•
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competition from other industry providers;
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•
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our ability to implement our growth strategy;
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•
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our ability to anticipate and respond to changing industry trends;
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•
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adverse trends in consumer, business, and government spending;
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•
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our dependence on sole or limited sources for some essential materials and components;
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•
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our ability to successfully value and integrate acquired businesses;
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•
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our products’ satisfaction of applicable quality criteria, specifications and performance standards;
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•
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our ability to maintain our relationships with key customers;
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•
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our ability to maintain our relationships with distributors;
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•
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our ability to maintain consistent purchase volumes under purchase orders;
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•
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our ability to maintain and develop relationships with drug manufacturers and contract manufacturing organizations;
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•
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the impact of new laws, regulations, or other industry standards;
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•
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changes in the interest rate environment that increase interest on our borrowings;
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•
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adverse impacts from currency exchange rates or currency controls imposed by any government in major areas where we operate or otherwise;
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•
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our ability to implement and improve processing systems and prevent a compromise of our information systems;
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•
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our ability to protect our intellectual property and avoid third-party infringement claims;
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•
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exposure to product liability and other claims in the ordinary course of business;
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•
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our ability to develop new products responsive to the markets we serve;
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•
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the availability of raw materials;
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•
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our ability to avoid negative outcomes related to the use of chemicals;
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•
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our ability to maintain highly skilled employees;
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•
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adverse impact of impairment charges on our goodwill and other intangible assets;
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•
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fluctuations and uncertainties related to doing business outside the United States;
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•
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our ability to obtain and maintain required regulatory clearances or approvals may constrain the commercialization of submitted products;
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our ability to comply with environmental, health and safety laws and regulations, or the impact of any liability or obligation imposed under such laws or regulations;
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our substantial indebtedness could adversely affect our financial condition and prevent us from fulfilling our debt or contractual obligations;
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•
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our ability to generate sufficient cash flows or access sufficient additional capital to meet our debt obligations or to fund our other liquidity needs; and
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•
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our ability to maintain an adequate system of internal control over financial reporting.
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Item 1.
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Business
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•
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Materials & consumables include ultra-high purity chemicals and reagents, lab products and supplies, highly specialized formulated silicone materials, customized excipients, customized single-use assemblies, process chromatography resins and columns, analytical sample prep kits and education and microbiology and clinical trial kits. Some of these are proprietary products that we make while others are created by third-parties.
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Equipment & instrumentation include filtration systems, virus inactivation systems, incubators, analytical instruments, evaporators, ultra-low-temperature freezers, biological safety cabinets and critical environment supplies; and
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Services & specialty procurement include onsite lab and production, clinical, equipment, procurement and sourcing and biopharmaceutical material scale-up and development services.
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acquisitions may have an adverse effect on our business relationships with existing or future suppliers and other business partners, in particular, to the extent we consummate acquisitions that vertically integrate portions of our business;
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we may assume substantial actual or contingent liabilities, known and unknown;
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acquisitions may not meet our expectations of future financial performance;
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we may experience delays or reductions in realizing expected synergies;
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we may incur substantial unanticipated costs or encounter other problems associated with acquired businesses or devote time and capital investigating a potential acquisition and not complete the transaction;
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we may be unable to achieve our intended objectives for the transaction; and
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we may not be able to retain the key personnel, customers and suppliers of the acquired business.
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development of large and sophisticated group purchasing organizations and on-line auction sites that increase competition for and reduce spending on laboratory products;
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consolidation of biopharmaceutical companies resulting in a rationalization of research expenditures;
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increased regulatory scrutiny over drug production requiring safer raw materials;
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customers’ purchasing the products that we supply directly from our suppliers; and
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significant reductions in development and production activities.
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limitations on repatriation of earnings;
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taxes on imports;
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the possibility that unfriendly nations or groups could boycott our products;
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general economic and political conditions in the markets we operate in;
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foreign currency exchange rate fluctuations;
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potential increased costs associated with overlapping tax structures;
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potential increased reliance on third parties within less developed markets;
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potential trade restrictions, tariffs and exchange controls;
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more limited protection for intellectual property rights in some countries;
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difficulties and costs associated with staffing and managing foreign operations;
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unexpected changes in regulatory requirements;
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difficulties in complying with a wide variety of foreign laws and regulations;
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the risk that certain governments may adopt regulations or take other actions that would have a direct adverse impact on our business and market opportunities, including nationalization of private enterprise;
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violations of anti-bribery and anti-corruption laws, such as the FCPA;
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violations of economic sanctions laws, such as the regulations enforced by OFAC;
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longer accounts receivable cycles in certain foreign countries, whether due to cultural differences, exchange rate fluctuation or other factors;
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the credit risk of local customers and distributors;
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limitations on our ability to enforce legal rights and remedies with third parties or partners outside the United States;
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import and export licensing requirements and other restrictions, such as those imposed by OFAC, BIS, DDTC and comparable regulatory agencies and policies of foreign governments; and
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•
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changes to our distribution networks.
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the destruction of or damage to our suppliers’ facilities or their distribution infrastructure;
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work stoppages or strikes by our suppliers’ employees;
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the failure of our suppliers to provide materials of the requisite quality or in compliance with strict specifications;
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the failure of essential equipment at our suppliers’ plants;
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the failure of our suppliers to satisfy U.S. and international import and export control laws for goods that we purchase from them;
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the failure of our suppliers to meet regulatory standards, including cGMP, where applicable;
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the failure, shortage or delay in the delivery of raw materials to our suppliers;
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•
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contractual amendments and disputes with our suppliers; and
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•
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inability of our suppliers to perform as a result of the weakened global economy or otherwise.
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•
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making it more difficult for us to satisfy our debt or contractual obligations;
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•
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exposing us to the risk of increased interest rates as certain of our borrowings, including borrowings under our senior secured credit facilities, are at variable rates of interest;
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•
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restricting us from making strategic acquisitions or causing us to make non-strategic divestitures;
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•
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requiring us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, which would reduce the funds available for working capital, capital expenditures, investments, acquisitions and other general corporate purposes;
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•
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limiting our flexibility in planning for, or reacting to, changes in our business, future business opportunities and the industry in which we operate;
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•
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placing us at a competitive disadvantage compared to any of our less leveraged competitors;
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increasing our vulnerability to a downturn in our business and both general and industry-specific adverse economic conditions; and
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limiting our ability to obtain additional financing at a favorable cost of borrowing, or at all, or to dispose of assets to raise funds, to fund future working capital, capital expenditures, investments, acquisitions or other general corporate requirements.
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•
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incur additional indebtedness and guarantee indebtedness;
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create or incur liens;
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•
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make investments and loans;
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•
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engage in mergers, consolidations or sales of all or substantially all of our assets;
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•
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pay dividends or make other distributions, in respect of, or repurchase or redeem, capital stock;
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prepay, redeem or repurchase certain debt;
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engage in certain transactions with affiliates;
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sell or otherwise dispose of assets;
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sell stock of our subsidiaries;
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enter into agreements restricting our and our subsidiaries ability to pay dividends; and
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amend, modify, waive or supplement certain subordinated indebtedness to the extent such amendments would be materially adverse to lenders.
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•
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results of operations that vary from the expectations of securities analysts and investors;
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results of operations that vary from those of our competitors;
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changes in expectations as to our future financial performance, including financial estimates and investment recommendations by securities analysts and investors;
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•
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changes in economic conditions for companies in our industry;
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•
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changes in market valuations of, or earnings and other announcements by, companies in our industry;
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•
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declines in the market prices of stocks generally, particularly those of companies in our industry;
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•
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additions or departures of key management personnel;
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•
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strategic actions by us or our competitors;
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•
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announcements by us, our competitors or our suppliers of significant contracts, price reductions, new products or technologies, acquisitions, joint marketing relationships, joint ventures, other strategic relationships or capital commitments;
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•
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changes in preference of our customers;
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•
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changes in general economic or market conditions or trends in our industry or the economy as a whole;
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•
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changes in business or regulatory conditions;
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•
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future sales of our common stock or other securities;
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•
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investor perceptions of or the investment opportunity associated with our common stock relative to other investment alternatives;
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•
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the public’s response to press releases or other public announcements by us or third parties, including our filings with the SEC;
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•
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announcements relating to litigation or governmental investigations;
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•
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guidance, if any, that we provide to the public, any changes in this guidance or our failure to meet this guidance;
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•
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the development and sustainability of an active trading market for our stock;
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•
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changes in accounting principles; and
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•
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other events or factors, including those resulting from informational technology system failures and disruptions, natural disasters, war, acts of terrorism or responses to these events.
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•
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investors’ anticipation of the potential resale in the market of a substantial number of additional shares of our common stock received upon conversion of the MCPS;
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•
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possible sales of our common stock by investors who view the MCPS as a more attractive means of equity participation in us than owning shares of our common stock; and
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•
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hedging or arbitrage trading activity that may develop involving the MCPS and our common stock.
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•
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a classified Board of Directors, as a result of which our Board of Directors is divided into three classes, with each class serving for staggered terms, with successors to the class of directors whose term expires at the first and second annual meetings of stockholders following the date of the IPO, as applicable, elected for a term expiring at the third annual meeting of stockholders following the date of the IPO;
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•
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the ability of our Board of Directors to issue one or more series of preferred stock;
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advance notice requirements for nominations of directors by stockholders and for stockholders to include matters to be considered at our annual meetings;
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certain limitations on convening special stockholder meetings;
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the removal of directors either with or without cause and only upon the affirmative vote of the holders of at least 66⅔% of the shares of common stock entitled to vote generally in the election of directors; and
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•
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that certain provisions may be amended only by the affirmative vote of at least 66⅔% in voting power of all outstanding shares of stock entitled to vote generally in the election of directors, voting together as a single class.
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Item 1B.
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Unresolved staff comments
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Item 2.
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Properties
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(in thousands of square feet)
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Size
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Principal use
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Status
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Americas:
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|
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Visalia, California
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503
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Distribution and offices
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Owned
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Phillipsburg, New Jersey
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500
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|
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Manufacturing and offices
|
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Owned
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Paris, Kentucky
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420
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|
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Manufacturing and distribution
|
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Owned
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Bridgeport, New Jersey
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369
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|
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Distribution and offices
|
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Owned
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Batavia, Illinois
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360
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|
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Distribution and offices
|
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Owned
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West Henrietta, New York
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339
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|
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Assembly, distribution and offices
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Owned
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Carpinteria, California
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270
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|
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Manufacturing, research & technology and offices
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Leased
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Solon, Ohio
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255
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Manufacturing, distribution and offices
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Leased
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Rochester, New York
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205
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|
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Assembly and distribution
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Leased
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Sparks, Nevada
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182
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|
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Manufacturing
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Leased
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Sterling, Virginia
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174
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|
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Biostorage, warehousing and offices
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Leased
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Suwanee, Georgia
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169
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|
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Distribution and offices
|
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Leased
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Bakersfield, California
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165
|
|
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Manufacturing and research & technology
|
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Leased
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Leesburg, Virginia
|
155
|
|
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Biostorage and warehousing
|
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Leased
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Radnor, Pennsylvania
|
150
|
|
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Corporate headquarters
|
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Leased
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Buford, Georgia
|
130
|
|
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Customized kitting and distribution
|
|
Leased
|
Manati, Puerto Rico
|
130
|
|
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Distribution and offices
|
|
Owned
|
Denver, Colorado
|
130
|
|
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Distribution
|
|
Leased
|
Missouri City, Texas
|
120
|
|
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Distribution
|
|
Leased
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Irving, Texas
|
118
|
|
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Manufacturing
|
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Leased
|
Mississauga, Ontario, Canada
|
114
|
|
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Distribution and offices
|
|
Leased
|
Mexico City, Mexico
|
100
|
|
|
Manufacturing and distribution
|
|
Owned
|
Overland, Missouri
|
90
|
|
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Manufacturing and distribution
|
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Leased
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Claremont, California
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86
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|
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Customized kitting and distribution
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Leased
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Ecatepec, Mexico
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80
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|
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Manufacturing and distribution
|
|
Leased
|
Devens, Massachusetts
|
70
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|
|
Manufacturing, distribution and offices
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|
Leased
|
Aurora, Ohio
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65
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|
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Manufacturing
|
|
Leased
|
(in thousands of square feet)
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Size
|
|
Principal use
|
|
Status
|
|
Tualatin, Oregon
|
56
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|
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Distribution
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Leased
|
Franklin, Massachusetts
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55
|
|
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Distribution
|
|
Leased
|
Bethlehem, Pennsylvania
|
50
|
|
|
Manufacturing, distribution and offices
|
|
Leased
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Bridgewater, New Jersey
|
36
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|
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Research & technology
|
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Leased
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Chester, Connecticut
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35
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|
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Manufacturing and distribution
|
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Leased
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Chino, California
|
32
|
|
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Equipment design and manufacturing
|
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Leased
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Allentown, Pennsylvania
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12
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|
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Offices
|
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Leased
|
Europe:
|
|
|
|
|
|
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Briare, France
|
303
|
|
|
Distribution, repackaging and mixing
|
|
Owned
|
Bruchsal, Germany
|
219
|
|
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Distribution
|
|
Owned
|
Gliwice, Poland
|
213
|
|
|
Manufacturing and distribution
|
|
Leased
|
Leuven, Belgium
|
207
|
|
|
Distribution and manufacturing
|
|
Owned
|
Lutterworth, United Kingdom
|
185
|
|
|
Distribution
|
|
Leased
|
Karlskoga, Sweden
|
131
|
|
|
Distribution
|
|
Leased
|
Stříbrná Skalice, Czech Republic
|
94
|
|
|
Custom kitting, distribution and offices
|
|
Leased
|
Dublin, Ireland
|
77
|
|
|
Distribution
|
|
Leased
|
Barcelona, Spain
|
73
|
|
|
Distribution
|
|
Leased
|
Debrecen, Hungary
|
68
|
|
|
Distribution
|
|
Leased
|
Søborg, Denmark
|
66
|
|
|
Distribution and offices
|
|
Leased
|
Darmstadt, Germany
|
56
|
|
|
Offices
|
|
Leased
|
Fontenay-Sous-Bois, France
|
56
|
|
|
Offices
|
|
Leased
|
Chorley, United Kingdom
|
27
|
|
|
Distribution, service and offices
|
|
Leased
|
AMEA:
|
|
|
|
|
|
|
Perth, Australia
|
90
|
|
|
Manufacturing, distribution and offices
|
|
Leased
|
Panoli, India
|
80
|
|
|
Manufacturing
|
|
Leased
|
Singapore
|
74
|
|
|
Distribution
|
|
Leased
|
Coimbatore, India
|
63
|
|
|
Service center
|
|
Leased
|
Shanghai, China
|
39
|
|
|
Research & technology and offices
|
|
Leased
|
Hyderabad, India
|
26
|
|
|
Warehouse
|
|
Leased
|
Dehradun, India
|
23
|
|
|
Manufacturing
|
|
Leased
|
Mumbai, India
|
18
|
|
|
Research & technology
|
|
Leased
|
Gurgaon, India
|
15
|
|
|
Offices
|
|
Leased
|
Chubei City, Taiwan
|
14
|
|
|
Research & technology and offices
|
|
Leased
|
Gwanggyo, Korea
|
2
|
|
|
Laboratory
|
|
Leased
|
Seoul, Korea
|
1
|
|
|
Offices
|
|
Leased
|
Item 3.
|
Legal proceedings
|
Item 4.
|
Mine safety disclosures
|
|
Age
|
|
Position
|
Michael Stubblefield
|
47
|
|
Director, President and Chief Executive Officer
|
Thomas Szlosek
|
56
|
|
Executive Vice President and Chief Financial Officer
|
James Bramwell
|
53
|
|
Executive Vice President, Strategic Partners
|
Gerard Brophy
|
54
|
|
Executive Vice President, Biopharma Production
|
Christophe Couturier
|
54
|
|
Executive Vice President, Services, Strategy and Business Transformation
|
Tanya Foxe
|
48
|
|
Executive Vice President, Global Operations and Supply Chain
|
Sven Henrichwark
|
53
|
|
Executive Vice President, APAC
|
Eric McAllister
|
55
|
|
Executive Vice President and Chief Human Resources Officer
|
Justin Miller
|
53
|
|
Executive Vice President, General Counsel and Secretary
|
Mark Murray
|
49
|
|
Executive Vice President, Biomaterials and Advanced Technologies
|
Devashish Ohri
|
53
|
|
Executive Vice President, IMEA
|
Frederic Vanderhaegen
|
52
|
|
Executive Vice President, Europe
|
Michael Wondrasch
|
51
|
|
Executive Vice President and Chief Information Officer
|
Item 5.
|
Market for registrant’s common equity, related stockholder matters and issuer purchases of equity securities
|
|
Low
|
|
High
|
||||
Third quarter 2019
|
$
|
13.44
|
|
|
$
|
19.59
|
|
Fourth quarter 2019
|
13.33
|
|
|
18.85
|
|
Item 6.
|
Selected financial data
|
(in millions except per share data)
|
Year ended December 31,
|
||||||||||||||||||
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|||||||||||
Statement of operations data:
|
(1,2,3)
|
|
(4)
|
|
(1,3,4,5,6)
|
|
(1,3,6)
|
|
|
||||||||||
Net sales
|
$
|
6,040.3
|
|
|
$
|
5,864.3
|
|
|
$
|
1,247.4
|
|
|
$
|
691.3
|
|
|
$
|
636.9
|
|
Cost of sales
|
4,119.6
|
|
|
4,044.5
|
|
|
814.6
|
|
|
371.6
|
|
|
374.7
|
|
|||||
Gross profit
|
1,920.7
|
|
|
1,819.8
|
|
|
432.8
|
|
|
319.7
|
|
|
262.2
|
|
|||||
Selling, general and administrative expenses
|
1,368.9
|
|
|
1,405.3
|
|
|
449.7
|
|
|
281.5
|
|
|
199.4
|
|
|||||
Fees to New Mountain Capital
|
—
|
|
|
1.0
|
|
|
193.5
|
|
|
28.3
|
|
|
2.5
|
|
|||||
Operating income (loss)
|
551.8
|
|
|
413.5
|
|
|
(210.4
|
)
|
|
9.9
|
|
|
60.3
|
|
|||||
Interest expense
|
(440.0
|
)
|
|
(523.8
|
)
|
|
(200.9
|
)
|
|
(60.4
|
)
|
|
(30.8
|
)
|
|||||
Loss on extinguishment of debt
|
(73.7
|
)
|
|
—
|
|
|
(56.4
|
)
|
|
(19.9
|
)
|
|
—
|
|
|||||
Other income (expense), net
|
2.5
|
|
|
(3.5
|
)
|
|
7.5
|
|
|
(0.2
|
)
|
|
0.3
|
|
|||||
Income (loss) before income taxes
|
40.6
|
|
|
(113.8
|
)
|
|
(460.2
|
)
|
|
(70.6
|
)
|
|
29.8
|
|
|||||
Income tax (expense) benefit
|
(2.8
|
)
|
|
26.9
|
|
|
314.9
|
|
|
(10.1
|
)
|
|
(17.1
|
)
|
|||||
Net income (loss)
|
$
|
37.8
|
|
|
$
|
(86.9
|
)
|
|
$
|
(145.3
|
)
|
|
$
|
(80.7
|
)
|
|
$
|
12.7
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Per share data:
|
|
|
|
|
|
|
|
|
|
||||||||||
(Loss) earnings:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
$
|
(0.84
|
)
|
|
$
|
(2.69
|
)
|
|
$
|
(2.75
|
)
|
|
$
|
(0.28
|
)
|
|
$
|
0.14
|
|
Diluted
|
(0.84
|
)
|
|
(2.69
|
)
|
|
(2.75
|
)
|
|
(0.28
|
)
|
|
0.13
|
|
|||||
Distributions paid
|
—
|
|
|
—
|
|
|
10.02
|
|
|
0.80
|
|
|
—
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance sheet data at period end:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
186.7
|
|
|
$
|
184.7
|
|
|
$
|
185.4
|
|
|
$
|
62.9
|
|
|
$
|
51.9
|
|
Total assets
|
9,773.3
|
|
|
9,911.6
|
|
|
10,446.5
|
|
|
1,135.8
|
|
|
1,150.4
|
|
|||||
Total current liabilities
|
1,074.5
|
|
|
1,096.2
|
|
|
1,104.3
|
|
|
135.9
|
|
|
103.3
|
|
|||||
Total long-term liabilities
|
6,236.6
|
|
|
8,007.8
|
|
|
8,372.6
|
|
|
1,510.5
|
|
|
623.4
|
|
|||||
Total redeemable equity
|
—
|
|
|
3,859.3
|
|
|
3,589.8
|
|
|
—
|
|
|
1,038.0
|
|
|||||
Total stockholders’ equity (deficit)
|
2,462.2
|
|
|
(3,051.7
|
)
|
|
(2,620.2
|
)
|
|
(510.6
|
)
|
|
(614.3
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash flow data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash provided by (used in) operating activities
|
$
|
354.0
|
|
|
$
|
200.5
|
|
|
$
|
(167.5
|
)
|
|
$
|
72.9
|
|
|
$
|
124.6
|
|
Net cash used in investing activities
|
(42.1
|
)
|
|
(23.2
|
)
|
|
(6,676.0
|
)
|
|
(29.9
|
)
|
|
(35.4
|
)
|
|||||
Net cash (used in) provided by financing activities
|
(307.8
|
)
|
|
(170.3
|
)
|
|
6,965.0
|
|
|
(43.5
|
)
|
|
(87.6
|
)
|
|
(1)
|
Earnings or loss per share, redeemable equity, stockholders’ equity or deficit, and net cash provided by or used in financing activities are not comparable across the periods because we recapitalized our equity in 2019 in connection with the IPO, in 2017 in connection with the VWR acquisition and in 2016 in connection with a merger with NuSil. We also raised significant amounts of new capital in 2019 and 2017. See note 14 to the consolidated financial statements beginning on page F-1 of this report.
|
(2)
|
Total assets and total long-term liabilities are not comparable across the periods because on January 1, 2019, we adopted a new lease accounting standard and elected to present comparable periods under the prior lease accounting standard. On the adoption date, we recognized $155.0 million of operating lease assets and $162.5 million of operating lease liabilities. See note 3 to the consolidated financial statements beginning on page F-1 of this report.
|
(3)
|
Interest expense and the loss on extinguishment of debt are not comparable across the periods due to the debt refinancings that occurred in 2019, 2017 and 2016. See note 13 to the consolidated financial statements beginning on page F-1 of this report.
|
(4)
|
Income tax expense or benefit is not comparable across the periods because in 2017, tax reform legislation was enacted in the United States. The new legislation included a significant reduction of the U.S. federal corporate tax rate and a significant one-time transition tax on undistributed foreign earnings and profits. See note 19 to the consolidated financial statements beginning on page F-1 of this report.
|
(5)
|
Most financial data is not comparable across the periods because on November 21, 2017 we acquired VWR. In accordance with GAAP, VWR’s financial results are only included prospectively since the acquisition date.
|
(6)
|
Fees to New Mountain Capital are not comparable across the periods due to a transaction fee of $180.0 million in 2017 related to the VWR acquisition and transaction fees of $12.5 million in 2017 and $27.3 million in 2016 related to debt refinancings.
|
Item 7.
|
Management’s discussion and analysis of financial condition and results of operations
|
•
|
Net sales, gross margin, operating income and net income or loss. These measures are discussed in the section entitled “Results of operations;”
|
•
|
Organic net sales growth, which is a non-GAAP measure discussed in the section entitled “Results of operations.” Organic net sales growth eliminates from our reported net sales the impacts of earnings from any acquired or disposed businesses and changes in foreign currency exchange rates. We believe that this measurement is useful to investors as a way to measure and evaluate our underlying commercial operating performance consistently across our segments and the periods presented. This measurement is used by our management for the same reason. Reconciliations to the change in reported net sales, the most directly comparable GAAP financial measure, are included in the section entitled “Results of operations.”
|
•
|
Adjusted EBITDA and Adjusted EBITDA margin, which are non-GAAP measures discussed in the section entitled “Results of operations.” Adjusted EBITDA is used by investors to measure and evaluate our operating performance exclusive of interest expense, income tax expense, depreciation, amortization and certain infrequently occurring items. Adjusted EBITDA margin is Adjusted EBITDA divided by net sales as determined under GAAP. We believe that these measurements are useful to investors as a way to analyze the underlying trends in our core business consistently across the periods presented. A reconciliation of net income or loss, the most directly comparable GAAP financial measure, to Adjusted EBITDA is included in the section entitled “Reconciliations of non-GAAP measures;”
|
•
|
Management EBITDA, which is a non-GAAP measure discussed in the section entitled “Results of operations.” Management EBITDA is used by our management to measure and evaluate the internal operating performance of our business segments. It is also the basis for calculating management incentive compensation programs. Management EBITDA is our Adjusted EBITDA further adjusted for other items that are not used to measure internal operating performance. We believe that this measurement is useful to investors as a way to analyze the underlying trends in our core business, including at the segment level, consistently across the periods presented and also to evaluate performance under management incentive compensation programs. A reconciliation of net income or loss, the most directly comparable GAAP financial measure, to Management EBITDA is included in the section entitled “Reconciliations of non-GAAP measures;” and
|
•
|
Cash flows from operating activities, which we discuss in the section entitled “Liquidity and capital resources—Historical cash flows.”
|
(dollars in millions)
|
Year ended December 31,
|
|
Change
|
||||||||
2019
|
|
2018
|
|
||||||||
Net sales
|
$
|
6,040.3
|
|
|
$
|
5,864.3
|
|
|
$
|
176.0
|
|
Gross margin
|
31.8
|
%
|
|
31.0
|
%
|
|
80 bps
|
|
|||
Operating income
|
$
|
551.8
|
|
|
$
|
413.5
|
|
|
$
|
138.3
|
|
Net income (loss)
|
37.8
|
|
|
(86.9
|
)
|
|
124.7
|
|
|||
Adjusted EBITDA
|
1,031.2
|
|
|
945.3
|
|
|
85.9
|
|
|||
Adjusted EBITDA margin
|
17.1
|
%
|
|
16.1
|
%
|
|
100 bps
|
|
(in millions)
|
Year ended December 31,
|
|
Reconciliation of net sales growth to organic net sales growth
|
||||||||||||||||
Net sales growth
|
|
Foreign currency impact
|
|
Organic net sales growth
|
|||||||||||||||
2019
|
|
2018
|
|||||||||||||||||
Americas
|
$
|
3,584.8
|
|
|
$
|
3,460.9
|
|
|
$
|
123.9
|
|
|
$
|
(6.5
|
)
|
|
$
|
130.4
|
|
Europe
|
2,102.0
|
|
|
2,095.3
|
|
|
6.7
|
|
|
(113.9
|
)
|
|
120.6
|
|
|||||
AMEA
|
353.5
|
|
|
308.1
|
|
|
45.4
|
|
|
(2.9
|
)
|
|
48.3
|
|
|||||
Total
|
$
|
6,040.3
|
|
|
$
|
5,864.3
|
|
|
$
|
176.0
|
|
|
$
|
(123.3
|
)
|
|
$
|
299.3
|
|
•
|
Biopharma (50%) — Sales grew in the high-single digits. We gained new customers and experienced low double-digit volume growth from customer spending on research and development, as well as mid-single-digit growth from biopharma production.
|
•
|
Healthcare (10%) — We experienced low single-digit contraction due to a less favorable mix of product sales and a challenging comparison to the prior year driven by our proprietary materials.
|
•
|
Education and government (15%) — We experienced low single-digit growth driven by new customer wins, partially offset by a normalization of customized inventory production after a significant ramp-up in 2018 related to a key customer win.
|
•
|
Advanced technologies & applied materials (25%) — Sales were flat year over year, with strength in the aerospace and defense and microelectronics industries that did not overcome the generally flat industrial sector.
|
•
|
Biopharma (40%) — We experienced low double-digit growth broadly across strategic customer accounts and new customer wins. This was driven by lab chemicals, which continued to be a strong driver of growth, our biopharma production capabilities and specialty procurement.
|
•
|
Healthcare (10%) — We experienced mid single-digit growth due to strong sales of proprietary materials. This was partially offset by a contraction in equipment & instrumentation.
|
•
|
Education & government (15%) — Sales were essentially flat due to fewer growth opportunities and increased competitive pressure in the market, specifically in our chemicals offerings.
|
•
|
Advanced technologies & applied materials (35%) — We experienced mid single-digit growth due to growth in third-party chemicals and consumables, which was partially offset by softness in equipment & instrumentation.
|
•
|
Biopharma (45%) — We experienced over 30% growth driven by our chromatography resin products as well as strong growth with key biopharma production customers in Korea, China and India.
|
•
|
Advanced technologies & applied materials (40%) — We experienced mid single-digit growth driven by higher sales of third-party materials & consumables, which was partially offset by a reduction in electronic materials due to a significant order in 2018 that did not repeat.
|
|
Year ended December 31,
|
|
Change
|
||||
2019
|
|
2018
|
|||||
Gross margin
|
31.8
|
%
|
|
31.0
|
%
|
|
80 bps
|
(in millions)
|
Year ended December 31,
|
|
Change
|
||||||||
2019
|
|
2018
|
|||||||||
Gross profit
|
$
|
1,920.7
|
|
|
$
|
1,819.8
|
|
|
$
|
100.9
|
|
Operating expenses
|
1,368.9
|
|
|
1,406.3
|
|
|
(37.4
|
)
|
|||
Operating income
|
$
|
551.8
|
|
|
$
|
413.5
|
|
|
$
|
138.3
|
|
(in millions)
|
Year ended December 31,
|
|
Change
|
||||||||
2019
|
|
2018
|
|||||||||
Operating income
|
$
|
551.8
|
|
|
$
|
413.5
|
|
|
$
|
138.3
|
|
Interest expense
|
(440.0
|
)
|
|
(523.8
|
)
|
|
83.8
|
|
|||
Loss on extinguishment of debt
|
(73.7
|
)
|
|
—
|
|
|
(73.7
|
)
|
|||
Other income (expense), net
|
2.5
|
|
|
(3.5
|
)
|
|
6.0
|
|
|||
Income tax (expense) benefit
|
(2.8
|
)
|
|
26.9
|
|
|
(29.7
|
)
|
|||
Net income (loss)
|
$
|
37.8
|
|
|
$
|
(86.9
|
)
|
|
$
|
124.7
|
|
(in millions)
|
Year ended December 31,
|
|
Change
|
||||||||
2019
|
|
2018
|
|||||||||
Adjusted EBITDA
|
$
|
1,031.2
|
|
|
$
|
945.3
|
|
|
$
|
85.9
|
|
Adjusted EBITDA margin
|
17.1
|
%
|
|
16.1
|
%
|
|
100 bps
|
||||
Management EBITDA:
|
|
|
|
|
|
||||||
Americas
|
726.8
|
|
|
651.6
|
|
|
75.2
|
|
|||
Europe
|
364.6
|
|
|
349.6
|
|
|
15.0
|
|
|||
AMEA
|
85.8
|
|
|
73.8
|
|
|
12.0
|
|
|||
Corporate
|
(77.2
|
)
|
|
(69.0
|
)
|
|
(8.2
|
)
|
|||
Total
|
$
|
1,100.0
|
|
|
$
|
1,006.0
|
|
|
$
|
94.0
|
|
(in millions)
|
Year ended December 31,
|
||||||||||
2019
|
|
2018
|
|
2017
|
|||||||
Net income (loss)
|
$
|
37.8
|
|
|
$
|
(86.9
|
)
|
|
$
|
(145.3
|
)
|
Interest expense(1)
|
440.0
|
|
|
523.8
|
|
|
200.9
|
|
|||
Income tax expense (benefit)(1)
|
2.8
|
|
|
(26.9
|
)
|
|
(314.9
|
)
|
|||
Depreciation and amortization(1)
|
398.9
|
|
|
404.6
|
|
|
99.2
|
|
|||
Net foreign currency loss from financing activities(2)
|
1.9
|
|
|
6.5
|
|
|
5.5
|
|
|||
Gain on derivative instruments(3)
|
—
|
|
|
—
|
|
|
(9.6
|
)
|
|||
Other stock-based compensation expense (benefit)(4)
|
36.8
|
|
|
(0.7
|
)
|
|
26.6
|
|
|||
Restructuring and severance charges(5)
|
24.3
|
|
|
81.2
|
|
|
29.6
|
|
|||
Purchase accounting adjustments(6)
|
(10.7
|
)
|
|
(1.0
|
)
|
|
41.8
|
|
|||
Loss on extinguishment of debt(7)
|
73.7
|
|
|
—
|
|
|
56.4
|
|
|||
Transaction fees to New Mountain Capital(8)
|
—
|
|
|
—
|
|
|
192.5
|
|
|||
VWR transaction, integration and planning expenses(9)
|
22.5
|
|
|
36.2
|
|
|
73.7
|
|
|||
Other(10)
|
3.2
|
|
|
8.5
|
|
|
33.1
|
|
|||
Adjusted EBITDA
|
1,031.2
|
|
|
945.3
|
|
|
289.5
|
|
|||
Ongoing stock-based compensation expense(11)
|
31.1
|
|
|
19.1
|
|
|
21.6
|
|
|||
Write-offs of working capital and other assets(12)
|
29.2
|
|
|
22.1
|
|
|
—
|
|
|||
Long-term incentive plan(13)
|
4.3
|
|
|
9.6
|
|
|
3.2
|
|
|||
Other(14)
|
4.2
|
|
|
9.9
|
|
|
9.7
|
|
|||
Management EBITDA
|
$
|
1,100.0
|
|
|
$
|
1,006.0
|
|
|
$
|
324.0
|
|
|
(1)
|
Represents amounts as determined under GAAP.
|
(2)
|
See note 5 to our consolidated financial statements beginning on page F-1 of this report.
|
(3)
|
See note 21 to our consolidated financial statements beginning on page F-1 of this report.
|
(4)
|
Represents expenses primarily related to remeasuring SARs at fair value on a recurring basis, the vesting of performance stock options with the completion of our IPO and the modification of stock-based awards caused by the legal entity restructuring in November 2017.
|
(5)
|
See note 11 to our consolidated financial statements beginning on page F-1 of this report.
|
(6)
|
Represents reversals of the short-term impact of purchase accounting adjustments on earnings. The most significant adjustment in 2019 was a normalization of expense for prepaid customer rebates that were derecognized in purchase accounting. The most
|
(7)
|
See note 13 to our consolidated financial statements beginning on page F-1 of this report.
|
(8)
|
See note 23 to our consolidated financial statements beginning on page F-1 of this report.
|
(9)
|
Represents direct expenses incurred to consummate the acquisition of VWR and other expenses incurred related to the planning and integration of VWR.
|
(10)
|
The following table presents the components of other adjustments to Adjusted EBITDA:
|
(in millions)
|
Year ended December 31,
|
||||||||||
2019
|
|
2018
|
|
2017
|
|||||||
Unconsummated equity offering
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
19.9
|
|
NuSil integration expenses
|
—
|
|
|
—
|
|
|
5.1
|
|
|||
Executive departures
|
—
|
|
|
4.5
|
|
|
—
|
|
|||
Impairment charges
|
—
|
|
|
2.9
|
|
|
5.0
|
|
|||
Debt refinancing fees
|
—
|
|
|
—
|
|
|
3.1
|
|
|||
Other transaction expenses
|
3.2
|
|
|
1.1
|
|
|
—
|
|
|||
Total
|
$
|
3.2
|
|
|
$
|
8.5
|
|
|
$
|
33.1
|
|
(11)
|
Primarily represents expense related to stock options, RSUs and optionholder awards that vest based on continuing employee service.
|
(12)
|
Substantially represents the reduction of inventory to net realizable value in accordance with GAAP, but also includes immaterial write-offs of trade accounts receivable and property, plant and equipment.
|
(13)
|
Represents cost of cash-based compensation programs awarded to key employees that vest at the end of three-year periods through December 31, 2020 with continuing service.
|
(14)
|
Represents expenses related to business performance improvement programs, non-recurring tax payments, customer rebates, non-cash pension charges, consulting projects, advisory fees and other immaterial items.
|
(in millions)
|
December 31, 2019
|
||||||||||
Receivables facility
|
|
Revolving credit facility
|
|
Total
|
|||||||
Unused availability under credit facilities:
|
|
|
|
|
|
||||||
Current availability
|
$
|
250.0
|
|
|
$
|
250.0
|
|
|
$
|
500.0
|
|
Undrawn letters of credit outstanding
|
(12.5
|
)
|
|
(15.3
|
)
|
|
(27.8
|
)
|
|||
Outstanding borrowings
|
(55.5
|
)
|
|
—
|
|
|
(55.5
|
)
|
|||
Unused availability
|
$
|
182.0
|
|
|
$
|
234.7
|
|
|
416.7
|
|
|
Cash and cash equivalents
|
186.7
|
|
|||||||||
Total liquidity
|
$
|
603.4
|
|
(in millions)
|
Year ended December 31,
|
|
Change
|
||||||||
2019
|
|
2018
|
|
||||||||
Operating activities:
|
|
|
|
|
|
||||||
Working capital changes*
|
$
|
(134.9
|
)
|
|
$
|
(95.1
|
)
|
|
$
|
(39.8
|
)
|
All other
|
488.9
|
|
|
295.6
|
|
|
193.3
|
|
|||
Total
|
354.0
|
|
|
200.5
|
|
|
153.5
|
|
|||
Investing activities
|
(42.1
|
)
|
|
(23.2
|
)
|
|
(18.9
|
)
|
|||
Financing activities
|
(307.8
|
)
|
|
(170.3
|
)
|
|
(137.5
|
)
|
|||
Capital expenditures
|
(51.6
|
)
|
|
(37.7
|
)
|
|
(13.9
|
)
|
|
*
|
Working capital includes accounts receivable, inventory and accounts payable.
|
(in millions)
|
Payments due by period
|
||||||||||||||||||
Total
|
|
Less than a year
|
|
1-3 years
|
|
3-5 years
|
|
More than 5 years
|
|||||||||||
Debt:
|
|
|
|
|
|
|
|
|
|
||||||||||
Principal(1)(2)
|
$
|
5,249.4
|
|
|
$
|
93.5
|
|
|
$
|
64.9
|
|
|
$
|
3,040.2
|
|
|
$
|
2,050.8
|
|
Interest(1)
|
1,748.6
|
|
|
347.1
|
|
|
686.7
|
|
|
632.4
|
|
|
82.4
|
|
|||||
Operating leases
|
160.0
|
|
|
39.1
|
|
|
61.7
|
|
|
40.8
|
|
|
18.4
|
|
|||||
Purchase obligations(3)
|
500.5
|
|
|
126.4
|
|
|
246.0
|
|
|
128.1
|
|
|
—
|
|
|||||
Other liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Underfunded defined benefit plans(4)
|
138.7
|
|
|
4.7
|
|
|
10.0
|
|
|
12.0
|
|
|
112.0
|
|
|||||
Transition tax payments(5)
|
65.0
|
|
|
6.2
|
|
|
12.4
|
|
|
27.1
|
|
|
19.3
|
|
|||||
Other
|
9.9
|
|
|
4.1
|
|
|
1.6
|
|
|
0.4
|
|
|
3.8
|
|
|||||
Total
|
$
|
7,872.1
|
|
|
$
|
621.1
|
|
|
$
|
1,083.3
|
|
|
$
|
3,881.0
|
|
|
$
|
2,286.7
|
|
|
(1)
|
Includes finance lease liabilities. To calculate payments for principal and interest, we assumed that variable interest rates, foreign currency exchange rates and outstanding borrowings under credit facilities were unchanged from December 31, 2019 through maturity. For the variable interest rates and principal amounts used, see note 13 to our consolidated financial statements beginning on page F-1 of this report.
|
(2)
|
Our senior secured credit facilities would require us to accelerate our principal repayments should we generate excess cash flows, as defined, in future periods.
|
(3)
|
Purchase obligations for certain products and services are made in the normal course of business to meet operating needs.
|
(4)
|
Represents our obligation to fund defined benefit plans with obligations in excess of plan assets. The total obligation is equal to the aggregate excess of the discounted benefit obligation over the fair value of plan assets for all underfunded plans. The payments due in less than one year are estimated using actuarial methods. The payments due for all other years are estimated by distributing the remaining funding status to future periods in the same way as benefit payments are expected to be made by the plans following actuarial methods.
|
(5)
|
Represents our transition tax obligation due over eight years to transition to the modified territorial tax system under new U.S. income tax legislation.
|
•
|
The qualitative analysis for goodwill and indefinite-lived intangible assets requires us to identify potential factors that may result in an impairment and estimate whether they would warrant performance of a quantitative test;
|
•
|
The quantitative goodwill impairment test requires us to estimate the fair value of our reporting units. We estimate the fair value of each reporting unit using a weighted average of three valuation methods based on discounted cash flows, market multiples and market references. These valuation methods require management to make various assumptions, including, but not limited to, future profitability, cash flows, discount rates, weighting of valuation methods and the selection of comparable publicly traded companies; and
|
•
|
The quantitative test for indefinite-lived intangible assets is determined using a discounted cash flow method that incorporates an estimated royalty rate, an estimated discount rate and certain other assumptions.
|
•
|
A one percent decrease to the rate we used to discount future cash flows would have increased the fair value of finite-lived intangible assets by $580 million and increased annual amortization by $25 million; and
|
•
|
An overall one-year decrease to our estimates of remaining useful lives would have increased annual amortization of our customer relationships by $11 million and annual depreciation of our property, plant and equipment by $17 million.
|
Item 7A.
|
Quantitative and qualitative disclosures about market risk
|
Item 8.
|
Financial statements and supplementary data
|
Item 9.
|
Changes in and disagreements with accountants on accounting and financial disclosure
|
Item 9A.
|
Control and procedures
|
Item 9B.
|
Other information
|
Item 10.
|
Directors, executive officers and corporate governance
|
Item 11.
|
Executive compensation
|
Item 12.
|
Security ownership of certain beneficial owners and management and related stockholder matters
|
Item 13.
|
Certain relationships and related transactions, and director independence
|
Item 14.
|
Principal accounting fees and services
|
Item 15.
|
Exhibits, financial statement schedules
|
Item 16.
|
Form 10-K summary
|
|
Avantor, Inc.
|
||
|
|
||
Date: February 14, 2020
|
By:
|
/s/ Steven Eck
|
|
|
|
Name:
|
Steven Eck
|
|
|
Title:
|
Senior Vice President and Chief Accounting Officer (Principal Accounting Officer)
|
/s/ Michael Stubblefield
|
|
Director, President and Chief Executive Officer
|
|
February 14, 2020
|
Michael Stubblefield
|
|
|
|
|
|
|
|
|
|
/s/ Thomas A. Szlosek
|
|
Executive Vice President and Chief Financial Officer
|
|
February 14, 2020
|
Thomas A. Szlosek
|
|
|
|
|
|
|
|
|
|
/s/ Steven Eck
|
|
Senior Vice President and Chief Accounting Officer
|
|
February 14, 2020
|
Steven Eck
|
|
|
|
Rajiv Gupta
|
Jo Natauri
|
Juan Andres
|
Jonathan Peacock
|
Thomas Connolly
|
Rakesh Sachdev
|
Matthew Holt
|
Christi Shaw
|
Andre Moura
|
|
/s/ Justin Miller
|
Justin Miller, Attorney in fact
|
February 14, 2020
|
Exhibit no.
|
|
Description
|
|
Location of exhibits
|
||||
Form
|
|
Exhibit no.
|
|
Filing date
|
||||
2.1
|
|
|
S-1/A
|
|
2.1
|
|
4/5/2019
|
|
3.1
|
|
|
8-K
|
|
3.1
|
|
5/21/2019
|
|
3.2
|
|
|
8-K
|
|
3.2
|
|
5/21/2019
|
|
3.3
|
|
|
8-K
|
|
3.3
|
|
5/21/2019
|
|
4.1
|
|
|
*
|
|
|
|
|
|
4.2
|
|
|
S-1/A
|
|
4.1
|
|
4/5/2019
|
|
4.3
|
|
|
S-1/A
|
|
4.2
|
|
4/5/2019
|
|
10.1
|
|
|
S-1/A
|
|
10.1
|
|
4/10/2019
|
|
10.2
|
|
|
S-1/A
|
|
10.2
|
|
4/10/2019
|
Exhibit no.
|
|
Description
|
|
Location of exhibits
|
||||
Form
|
|
Exhibit no.
|
|
Filing date
|
||||
10.3
|
|
|
8-K
|
|
10.1
|
|
6/18/2019
|
|
10.4
|
|
|
8-K
|
|
10.1
|
|
1/27/2020
|
|
10.5
|
|
|
S-1/A
|
|
10.3
|
|
4/10/2019
|
|
10.6
|
|
|
S-1/A
|
|
10.4
|
|
4/10/2019
|
Exhibit no.
|
|
Description
|
|
Location of exhibits
|
||||
Form
|
|
Exhibit no.
|
|
Filing date
|
||||
10.7
|
|
|
S-1/A
|
|
10.5
|
|
4/10/2019
|
|
10.8
|
|
|
S-1/A
|
|
10.6
|
|
4/10/2019
|
|
10.9
|
|
|
S-1/A
|
|
10.7
|
|
4/10/2019
|
|
10.10
|
|
|
S-1/A
|
|
10.8
|
|
4/10/2019
|
|
10.11
|
|
|
8-K
|
|
10.1
|
|
5/21/2019
|
|
10.12
|
|
|
S-1/A
|
|
10.10
|
|
4/10/2019
|
|
10.13
|
|
|
S-1/A
|
|
10.11
|
|
4/10/2019
|
|
10.14^
|
|
|
S-1/A
|
|
10.12
|
|
4/5/2019
|
|
10.15^
|
|
|
S-1/A
|
|
10.13
|
|
4/25/2019
|
|
10.16^
|
|
|
S-1/A
|
|
10.14
|
|
4/5/2019
|
|
10.17^
|
|
|
S-1/A
|
|
10.15
|
|
4/25/2019
|
Exhibit no.
|
|
Description
|
|
Location of exhibits
|
||||
Form
|
|
Exhibit no.
|
|
Filing date
|
||||
10.18^
|
|
|
S-1/A
|
|
10.17
|
|
5/3/2019
|
|
10.19^
|
|
|
8-K
|
|
10.2
|
|
5/21/2019
|
|
10.20^
|
|
|
S-1/A
|
|
10.25
|
|
4/25/2019
|
|
10.21^
|
|
|
S-1/A
|
|
10.26
|
|
4/25/2019
|
|
10.22^
|
|
|
S-1/A
|
|
10.27
|
|
4/25/2019
|
|
10.23^
|
|
|
8-K
|
|
10.3
|
|
5/21/2019
|
|
10.24^
|
|
|
S-8
|
|
4.4
|
|
11/14/2019
|
|
10.25^
|
|
|
S-1/A
|
|
10.16
|
|
4/25/2019
|
|
10.26^
|
|
|
S-1/A
|
|
10.17
|
|
4/5/2019
|
|
10.27^
|
|
|
S-1/A
|
|
10.18
|
|
4/5/2019
|
|
10.28^
|
|
|
*
|
|
|
|
|
|
10.29^
|
|
|
*
|
|
|
|
|
|
10.30^
|
|
|
*
|
|
|
|
|
|
10.31^
|
|
|
S-1/A
|
|
10.19
|
|
4/10/2019
|
Exhibit no.
|
|
Description
|
|
Location of exhibits
|
||||
Form
|
|
Exhibit no.
|
|
Filing date
|
||||
10.32^
|
|
|
S-1/A
|
|
10.20
|
|
4/25/2019
|
|
10.33^
|
|
|
S-1/A
|
|
10.21
|
|
4/25/2019
|
|
10.34
|
|
|
S-1/A
|
|
10.23
|
|
4/25/2019
|
|
14
|
|
Code of ethics
|
|
#
|
|
|
|
|
21
|
|
|
*
|
|
|
|
|
|
23
|
|
|
*
|
|
|
|
|
|
24
|
|
|
*
|
|
|
|
|
|
31.1
|
|
|
*
|
|
|
|
|
|
31.2
|
|
|
*
|
|
|
|
|
|
32.1
|
|
|
**
|
|
|
|
|
|
32.2
|
|
|
**
|
|
|
|
|
|
101
|
|
XBRL exhibits
|
|
*
|
|
|
|
|
|
*
|
Filed herewith
|
**
|
Furnished herewith
|
#
|
Our Code of Ethics and Conduct can be found on our website (www.avantorsciences.com) by clicking on “Investors,” “Governance” and then “Code of Ethics.”
|
^
|
Indicates management contract or compensatory plan, contract or arrangement.
|
|
Page
|
(in millions)
|
December 31,
|
||||||
2019
|
|
2018
|
|||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
186.7
|
|
|
$
|
184.7
|
|
Accounts receivable, net of allowances of $18.6 and $10.9
|
988.8
|
|
|
931.2
|
|
||
Inventory
|
711.2
|
|
|
671.1
|
|
||
Other current assets
|
134.8
|
|
|
112.6
|
|
||
Total current assets
|
2,021.5
|
|
|
1,899.6
|
|
||
Property, plant and equipment, net of accumulated depreciation of $307.8 and $225.8
|
557.0
|
|
|
598.6
|
|
||
Other intangible assets, net (see note 10)
|
4,220.2
|
|
|
4,565.7
|
|
||
Goodwill
|
2,769.4
|
|
|
2,784.7
|
|
||
Other assets
|
205.2
|
|
|
63.0
|
|
||
Total assets
|
$
|
9,773.3
|
|
|
$
|
9,911.6
|
|
(in millions)
|
December 31,
|
||||||
2019
|
|
2018
|
|||||
Liabilities and equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Current portion of debt
|
$
|
93.5
|
|
|
$
|
142.4
|
|
Accounts payable
|
560.2
|
|
|
557.4
|
|
||
Employee-related liabilities
|
114.3
|
|
|
144.9
|
|
||
Accrued interest
|
74.2
|
|
|
76.6
|
|
||
Other current liabilities
|
232.3
|
|
|
174.9
|
|
||
Total current liabilities
|
1,074.5
|
|
|
1,096.2
|
|
||
Debt, net of current portion
|
5,023.0
|
|
|
6,782.3
|
|
||
Deferred income tax liabilities
|
785.4
|
|
|
907.5
|
|
||
Other liabilities
|
428.2
|
|
|
318.0
|
|
||
Total liabilities
|
7,311.1
|
|
|
9,104.0
|
|
||
Commitments and contingencies, see note 12
|
|
|
|
||||
Redeemable equity:
|
|
|
|
||||
Series A preferred stock at redemption value, zero and 2.3 shares outstanding
|
—
|
|
|
2,297.3
|
|
||
Junior convertible preferred stock, zero and 1.7 shares outstanding
|
—
|
|
|
1,562.0
|
|
||
Total redeemable equity
|
—
|
|
|
3,859.3
|
|
||
Stockholders’ equity (deficit):
|
|
|
|
||||
Mandatory convertible preferred stock including paid-in capital, 20.7 and 0.0 shares outstanding
|
1,003.7
|
|
|
—
|
|
||
Common stock including paid-in capital, 572.8 and 132.8 shares outstanding
|
1,748.1
|
|
|
(2,746.8
|
)
|
||
Accumulated deficit
|
(203.7
|
)
|
|
(238.4
|
)
|
||
Accumulated other comprehensive loss
|
(85.9
|
)
|
|
(66.5
|
)
|
||
Total stockholders’ equity (deficit)
|
2,462.2
|
|
|
(3,051.7
|
)
|
||
Total liabilities and equity
|
$
|
9,773.3
|
|
|
$
|
9,911.6
|
|
(in millions, except per share data)
|
Year ended December 31,
|
||||||||||
2019
|
|
2018
|
|
2017
|
|||||||
Net sales
|
$
|
6,040.3
|
|
|
$
|
5,864.3
|
|
|
$
|
1,247.4
|
|
Cost of sales
|
4,119.6
|
|
|
4,044.5
|
|
|
814.6
|
|
|||
Gross profit
|
1,920.7
|
|
|
1,819.8
|
|
|
432.8
|
|
|||
Selling, general and administrative expenses
|
1,368.9
|
|
|
1,405.3
|
|
|
449.7
|
|
|||
Fees to New Mountain Capital
|
—
|
|
|
1.0
|
|
|
193.5
|
|
|||
Operating income (loss)
|
551.8
|
|
|
413.5
|
|
|
(210.4
|
)
|
|||
Interest expense
|
(440.0
|
)
|
|
(523.8
|
)
|
|
(200.9
|
)
|
|||
Loss on extinguishment of debt
|
(73.7
|
)
|
|
—
|
|
|
(56.4
|
)
|
|||
Other income (expense), net
|
2.5
|
|
|
(3.5
|
)
|
|
7.5
|
|
|||
Income (loss) before income taxes
|
40.6
|
|
|
(113.8
|
)
|
|
(460.2
|
)
|
|||
Income tax (expense) benefit
|
(2.8
|
)
|
|
26.9
|
|
|
314.9
|
|
|||
Net income (loss)
|
$
|
37.8
|
|
|
$
|
(86.9
|
)
|
|
$
|
(145.3
|
)
|
|
|
|
|
|
|
||||||
Net income (loss)
|
$
|
37.8
|
|
|
$
|
(86.9
|
)
|
|
$
|
(145.3
|
)
|
Net loss attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
(32.6
|
)
|
|||
Net income (loss) attributable to Avantor, Inc.
|
37.8
|
|
|
(86.9
|
)
|
|
(112.7
|
)
|
|||
Accumulation of yield on preferred stock
|
(152.5
|
)
|
|
(269.5
|
)
|
|
(27.8
|
)
|
|||
Adjustments of preferred stock to redemption value
|
(220.4
|
)
|
|
—
|
|
|
(274.4
|
)
|
|||
Net loss available to common stockholders of Avantor, Inc.
|
$
|
(335.1
|
)
|
|
$
|
(356.4
|
)
|
|
$
|
(414.9
|
)
|
Loss per share information, basic and diluted:
|
|
|
|
|
|
||||||
Loss per share
|
$
|
(0.84
|
)
|
|
$
|
(2.69
|
)
|
|
$
|
(2.75
|
)
|
Weighted average shares outstanding
|
401.2
|
|
|
132.7
|
|
|
151.1
|
|
(in millions)
|
Year ended December 31,
|
||||||||||
2019
|
|
2018
|
|
2017
|
|||||||
Net income (loss)
|
$
|
37.8
|
|
|
$
|
(86.9
|
)
|
|
$
|
(145.3
|
)
|
Other comprehensive (loss) income:
|
|
|
|
|
|
||||||
Foreign currency translation — unrealized (loss) gain
|
(3.3
|
)
|
|
(82.7
|
)
|
|
71.0
|
|
|||
Derivative instruments:
|
|
|
|
|
|
||||||
Unrealized (loss) gain
|
(1.4
|
)
|
|
3.0
|
|
|
0.3
|
|
|||
Reclassification of (gain) loss into earnings
|
(0.9
|
)
|
|
(1.9
|
)
|
|
0.1
|
|
|||
Defined benefit plans:
|
|
|
|
|
|
||||||
Unrealized (loss) gain
|
(18.9
|
)
|
|
(16.9
|
)
|
|
2.2
|
|
|||
Reclassification of (gain) loss into earnings
|
(0.6
|
)
|
|
2.3
|
|
|
(3.2
|
)
|
|||
Other comprehensive (loss) income before income taxes
|
(25.1
|
)
|
|
(96.2
|
)
|
|
70.4
|
|
|||
Income tax benefit
|
5.7
|
|
|
3.3
|
|
|
0.1
|
|
|||
Other comprehensive (loss) income
|
(19.4
|
)
|
|
(92.9
|
)
|
|
70.5
|
|
|||
Comprehensive income (loss)
|
18.4
|
|
|
(179.8
|
)
|
|
(74.8
|
)
|
|||
Comprehensive loss attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
(29.4
|
)
|
|||
Comprehensive income (loss) attributable to Avantor, Inc.
|
$
|
18.4
|
|
|
$
|
(179.8
|
)
|
|
$
|
(45.4
|
)
|
(in millions)
|
MCPS including paid-in capital
|
|
Common stock including paid-in capital
|
|
Accumulated deficit
|
|
AOCI
|
|
Total
|
||||||||||||||||
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|||||||||||||||||||
Balance on December 31, 2017
|
—
|
|
|
$
|
—
|
|
|
132.6
|
|
|
$
|
(2,490.3
|
)
|
|
$
|
(156.3
|
)
|
|
$
|
26.4
|
|
|
$
|
(2,620.2
|
)
|
Cumulative effect of adopting new accounting standard, see note 3
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4.8
|
|
|
—
|
|
|
4.8
|
|
|||||
Comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(86.9
|
)
|
|
(92.9
|
)
|
|
(179.8
|
)
|
|||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
—
|
|
|
13.0
|
|
|
—
|
|
|
—
|
|
|
13.0
|
|
|||||
Accumulation of yield on preferred stock
|
—
|
|
|
—
|
|
|
—
|
|
|
(269.5
|
)
|
|
—
|
|
|
—
|
|
|
(269.5
|
)
|
|||||
Exercise of stock options
|
—
|
|
|
—
|
|
|
0.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Balance on December 31, 2018
|
—
|
|
|
—
|
|
|
132.8
|
|
|
(2,746.8
|
)
|
|
(238.4
|
)
|
|
(66.5
|
)
|
|
(3,051.7
|
)
|
|||||
Cumulative effect of adopting new accounting standard, see note 3
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3.1
|
)
|
|
—
|
|
|
(3.1
|
)
|
|||||
Issuances, net of issuance costs
|
20.7
|
|
|
1,003.7
|
|
|
238.1
|
|
|
3,231.9
|
|
|
—
|
|
|
—
|
|
|
4,235.6
|
|
|||||
Conversion of junior convertible preferred stock
|
—
|
|
|
—
|
|
|
194.5
|
|
|
1,562.0
|
|
|
—
|
|
|
—
|
|
|
1,562.0
|
|
|||||
Comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
37.8
|
|
|
(19.4
|
)
|
|
18.4
|
|
|||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
—
|
|
|
64.4
|
|
|
—
|
|
|
—
|
|
|
64.4
|
|
|||||
Accumulation of yield on preferred stock
|
—
|
|
|
—
|
|
|
—
|
|
|
(152.5
|
)
|
|
—
|
|
|
—
|
|
|
(152.5
|
)
|
|||||
Adjustments of preferred stock to redemption value
|
—
|
|
|
—
|
|
|
—
|
|
|
(220.4
|
)
|
|
—
|
|
|
—
|
|
|
(220.4
|
)
|
|||||
Exercise of stock options
|
—
|
|
|
—
|
|
|
0.4
|
|
|
0.7
|
|
|
—
|
|
|
—
|
|
|
0.7
|
|
|||||
Exercise of warrants
|
—
|
|
|
—
|
|
|
7.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Award reclassification, see note 17
|
—
|
|
|
—
|
|
|
—
|
|
|
8.8
|
|
|
—
|
|
|
—
|
|
|
8.8
|
|
|||||
Balance on December 31, 2019
|
20.7
|
|
|
$
|
1,003.7
|
|
|
572.8
|
|
|
$
|
1,748.1
|
|
|
$
|
(203.7
|
)
|
|
$
|
(85.9
|
)
|
|
$
|
2,462.2
|
|
(in millions)
|
Year ended December 31,
|
||||||||||
2019
|
|
2018
|
|
2017
|
|||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net income (loss)
|
$
|
37.8
|
|
|
$
|
(86.9
|
)
|
|
$
|
(145.3
|
)
|
Reconciling adjustments:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
398.9
|
|
|
404.6
|
|
|
99.2
|
|
|||
Stock-based compensation expense
|
67.9
|
|
|
18.4
|
|
|
48.2
|
|
|||
Other restructuring charges (see note 11)
|
10.4
|
|
|
28.4
|
|
|
—
|
|
|||
Provision for accounts receivable and inventory
|
35.1
|
|
|
25.7
|
|
|
5.1
|
|
|||
Deferred income tax benefit
|
(106.7
|
)
|
|
(103.9
|
)
|
|
(430.6
|
)
|
|||
Effect of one-time transition tax
|
—
|
|
|
(35.8
|
)
|
|
107.0
|
|
|||
Amortization of deferred financing costs
|
33.5
|
|
|
41.4
|
|
|
11.7
|
|
|||
Loss on extinguishment of debt
|
73.7
|
|
|
—
|
|
|
56.4
|
|
|||
Changes in assets and liabilities:
|
|
|
|
|
|
||||||
Accounts receivable
|
(68.9
|
)
|
|
(83.4
|
)
|
|
14.1
|
|
|||
Inventory
|
(71.1
|
)
|
|
(41.1
|
)
|
|
19.7
|
|
|||
Accounts payable
|
5.1
|
|
|
29.4
|
|
|
31.8
|
|
|||
Other assets and liabilities
|
(51.7
|
)
|
|
1.3
|
|
|
7.0
|
|
|||
Other, net
|
(10.0
|
)
|
|
2.4
|
|
|
8.2
|
|
|||
Net cash provided by (used in) operating activities
|
354.0
|
|
|
200.5
|
|
|
(167.5
|
)
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Capital expenditures
|
(51.6
|
)
|
|
(37.7
|
)
|
|
(25.2
|
)
|
|||
Cash paid for acquisitions, net of cash acquired
|
—
|
|
|
—
|
|
|
(6,660.7
|
)
|
|||
Other
|
9.5
|
|
|
14.5
|
|
|
9.9
|
|
|||
Net cash used in investing activities
|
$
|
(42.1
|
)
|
|
$
|
(23.2
|
)
|
|
$
|
(6,676.0
|
)
|
(in millions)
|
Year ended December 31,
|
||||||||||
2019
|
|
2018
|
|
2017
|
|||||||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Proceeds from issuance of stock, net of issuance costs
|
4,235.6
|
|
|
—
|
|
|
3,049.0
|
|
|||
Redemption of series A preferred stock
|
(2,630.9
|
)
|
|
—
|
|
|
—
|
|
|||
Debt borrowings
|
1.3
|
|
|
35.7
|
|
|
9,249.5
|
|
|||
Debt repayments
|
(1,878.6
|
)
|
|
(185.5
|
)
|
|
(3,290.6
|
)
|
|||
Cash paid for debt financing costs
|
—
|
|
|
—
|
|
|
(318.6
|
)
|
|||
Payments of dividends on MCPS
|
(31.3
|
)
|
|
—
|
|
|
—
|
|
|||
Distributions
|
—
|
|
|
—
|
|
|
(1,701.9
|
)
|
|||
Payments of contingent consideration
|
(4.6
|
)
|
|
(20.5
|
)
|
|
(22.7
|
)
|
|||
Other
|
0.7
|
|
|
—
|
|
|
0.3
|
|
|||
Net cash (used in) provided by financing activities
|
(307.8
|
)
|
|
(170.3
|
)
|
|
6,965.0
|
|
|||
Effect of currency rate changes on cash
|
(2.5
|
)
|
|
(7.8
|
)
|
|
1.0
|
|
|||
Net change in cash and cash equivalents
|
1.6
|
|
|
(0.8
|
)
|
|
122.5
|
|
|||
Cash, cash equivalents and restricted cash, beginning of year
|
187.7
|
|
|
188.5
|
|
|
66.0
|
|
|||
Cash, cash equivalents and restricted cash, end of year
|
$
|
189.3
|
|
|
$
|
187.7
|
|
|
$
|
188.5
|
|
1.
|
Nature of operations and presentation of financial statements
|
•
|
The fair value of reporting units tested for impairment in note 5;
|
•
|
The valuation allowance on deferred tax assets in note 19;
|
•
|
Assumptions used to measure our defined benefit plans in note 16;
|
•
|
The likelihood of occurrence of loss contingencies in note 12; and
|
•
|
Other accounts measured at fair value based on unobservable inputs in note 21.
|
2.
|
Summary of significant accounting policies
|
•
|
Merchandise inventory purchased by certain U.S. subsidiaries using the LIFO method.
|
•
|
All other merchandise inventory using the first-in, first-out method.
|
•
|
Manufactured inventories using an average cost method.
|
•
|
Employee severance and related — Employee severance programs can be voluntary or involuntary. Voluntary severances are recorded at their reasonably estimated amount when associates accept severance offers. Involuntary severances covered by plan or statute are recorded at estimated amounts when probable and reasonably estimable. Significant judgment is required to determine probability and whether the amount can be reasonably estimated. Involuntary severances requiring continuing service are measured at fair value as of the termination date and recognized on a straight-line basis over the service period. Other involuntary severances are recognized at fair value on the date we notify associates of the severance plan.
|
•
|
Facility closure — On the date we cease using a facility, facility lease assets are tested for impairment in the same way as other long-lived assets.
|
•
|
Other — Other charges may be incurred to write down assets, divest businesses or for other reasons and are accounted for under applicable GAAP as described elsewhere in these policies.
|
•
|
They are recognized as liabilities on our balance sheet if the potential loss is probable and the amount can be reasonably estimated.
|
•
|
They are disclosed if the potential loss is material and considered at least reasonably possible.
|
•
|
MCPS is classified as permanent equity and initially recorded at fair value, net of issuance costs. Accrued but unpaid MCPS dividends are classified as other current liabilities with a corresponding reduction to common stock including paid-in capital.
|
•
|
Common stock is presented at par value plus additional paid-in amounts, net of issuance costs. Distributions are accounted for as reductions to common stock including paid-in capital and are classified as financing activities on the statement of cash flows.
|
•
|
Upon issuance, paid-in capital is allocated among host stock instruments and detachable warrants on a relative fair value basis.
|
•
|
U.S. plans — Two plans based in the United States, one of which we acquired from VWR in 2017. Another plan acquired from VWR was merged with ours in 2018. The U.S. plans are frozen with no accrual of future pension benefits for participating employees.
|
•
|
Non-U.S. plans — Eight plans for our employees around the world that we acquired from VWR in 2017, most of which continue to accrue future pension benefits.
|
•
|
Medical plan — A post-retirement medical plan for certain employees in the United States. The medical plan is frozen with no accrual of future pension benefits for participating employees.
|
•
|
Level 1 — Quoted prices in active markets for identical assets or liabilities
|
•
|
Level 2 — Inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the asset or liability
|
•
|
Level 3 — Inputs that are unobservable for the asset or liability based on our evaluation of the assumptions market participants would use in pricing the asset or liability
|
3.
|
New accounting standards
|
4.
|
Loss per share
|
(in millions)
|
Year ended December 31,
|
|||||||
2019
|
|
2018
|
|
2017
|
||||
MCPS
|
62.9
|
|
|
—
|
|
|
—
|
|
Stock-based awards
|
27.2
|
|
|
21.1
|
|
|
19.6
|
|
Total
|
90.1
|
|
|
21.1
|
|
|
19.6
|
|
5.
|
Risks and uncertainties
|
6.
|
Segment financial information
|
(in millions)
|
Net sales
Year ended December 31,
|
|
Management EBITDA
Year ended December 31,
|
||||||||||||||||||||
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
|
2017
|
|||||||||||||
Americas
|
$
|
3,584.8
|
|
|
$
|
3,460.9
|
|
|
$
|
688.1
|
|
|
$
|
726.8
|
|
|
$
|
651.6
|
|
|
$
|
196.8
|
|
Europe
|
2,102.0
|
|
|
2,095.3
|
|
|
381.4
|
|
|
364.6
|
|
|
349.6
|
|
|
103.4
|
|
||||||
AMEA
|
353.5
|
|
|
308.1
|
|
|
177.9
|
|
|
85.8
|
|
|
73.8
|
|
|
43.3
|
|
||||||
Corporate
|
—
|
|
|
—
|
|
|
—
|
|
|
(77.2
|
)
|
|
(69.0
|
)
|
|
(19.5
|
)
|
||||||
Total
|
$
|
6,040.3
|
|
|
$
|
5,864.3
|
|
|
$
|
1,247.4
|
|
|
$
|
1,100.0
|
|
|
$
|
1,006.0
|
|
|
$
|
324.0
|
|
(in millions)
|
Capital expenditures
Year ended December 31,
|
|
Depreciation and amortization
Year ended December 31,
|
||||||||||||||||||||
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
|
2017
|
|||||||||||||
Americas
|
$
|
32.8
|
|
|
$
|
20.4
|
|
|
$
|
16.5
|
|
|
$
|
249.7
|
|
|
$
|
252.2
|
|
|
$
|
75.4
|
|
Europe
|
12.7
|
|
|
14.0
|
|
|
6.3
|
|
|
141.0
|
|
|
145.7
|
|
|
19.8
|
|
||||||
AMEA
|
6.1
|
|
|
3.3
|
|
|
2.4
|
|
|
8.2
|
|
|
6.7
|
|
|
4.0
|
|
||||||
Total
|
$
|
51.6
|
|
|
$
|
37.7
|
|
|
$
|
25.2
|
|
|
$
|
398.9
|
|
|
$
|
404.6
|
|
|
$
|
99.2
|
|
(in millions)
|
Year ended December 31,
|
||||||||||
2019
|
|
2018
|
|
2017
|
|||||||
Net income (loss)
|
$
|
37.8
|
|
|
$
|
(86.9
|
)
|
|
$
|
(145.3
|
)
|
Interest expense
|
440.0
|
|
|
523.8
|
|
|
200.9
|
|
|||
Income tax expense (benefit)
|
2.8
|
|
|
(26.9
|
)
|
|
(314.9
|
)
|
|||
Depreciation and amortization
|
398.9
|
|
|
404.6
|
|
|
99.2
|
|
|||
Net foreign currency loss from financing activities
|
1.9
|
|
|
6.5
|
|
|
5.5
|
|
|||
Gain on derivative instruments
|
—
|
|
|
—
|
|
|
(9.6
|
)
|
|||
Stock-based compensation expense
|
67.9
|
|
|
18.4
|
|
|
48.2
|
|
|||
Restructuring and severance charges
|
24.3
|
|
|
81.2
|
|
|
29.6
|
|
|||
Purchase accounting adjustments
|
(10.7
|
)
|
|
(1.0
|
)
|
|
41.8
|
|
|||
Loss on extinguishment of debt
|
73.7
|
|
|
—
|
|
|
56.4
|
|
|||
Fees to New Mountain Capital
|
—
|
|
|
1.0
|
|
|
193.5
|
|
|||
VWR integration and planning expenses
|
22.5
|
|
|
36.2
|
|
|
73.7
|
|
|||
Write-offs of working capital and other assets
|
29.2
|
|
|
22.1
|
|
|
—
|
|
|||
Long-term incentive plan
|
4.3
|
|
|
9.6
|
|
|
3.2
|
|
|||
Other
|
7.4
|
|
|
17.4
|
|
|
41.8
|
|
|||
Management EBITDA
|
$
|
1,100.0
|
|
|
$
|
1,006.0
|
|
|
$
|
324.0
|
|
(in millions)
|
Year ended December 31,
|
||||||
2019
|
|
2018
|
|||||
Proprietary materials & consumables
|
$
|
2,008.5
|
|
|
$
|
1,933.9
|
|
Third party materials & consumables
|
2,395.6
|
|
|
2,364.9
|
|
||
Services & specialty procurement
|
735.6
|
|
|
663.5
|
|
||
Equipment & instrumentation
|
900.6
|
|
|
902.0
|
|
||
Total
|
$
|
6,040.3
|
|
|
$
|
5,864.3
|
|
(in millions)
|
Net sales
Year ended December 31,
|
|
Property, plant and equipment, net
December 31,
|
||||||||||||||||
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
|||||||||||
United States
|
$
|
3,330.9
|
|
|
$
|
3,126.5
|
|
|
$
|
631.8
|
|
|
$
|
373.4
|
|
|
$
|
398.5
|
|
Germany
|
464.4
|
|
|
507.6
|
|
|
78.8
|
|
|
19.4
|
|
|
19.8
|
|
|||||
Other countries in Europe
|
1,637.6
|
|
|
1,587.7
|
|
|
299.4
|
|
|
113.1
|
|
|
124.0
|
|
|||||
All other countries
|
607.4
|
|
|
642.5
|
|
|
237.4
|
|
|
51.1
|
|
|
56.3
|
|
|||||
Total
|
$
|
6,040.3
|
|
|
$
|
5,864.3
|
|
|
$
|
1,247.4
|
|
|
$
|
557.0
|
|
|
$
|
598.6
|
|
7.
|
Supplemental disclosures of cash flow information
|
(in millions)
|
December 31,
|
||||||
2019
|
|
2018
|
|||||
Cash and cash equivalents
|
$
|
186.7
|
|
|
$
|
184.7
|
|
Restricted cash classified as other assets
|
2.6
|
|
|
3.0
|
|
||
Total
|
$
|
189.3
|
|
|
$
|
187.7
|
|
(in millions)
|
Year ended December 31,
|
||||||||||
2019
|
|
2018
|
|
2017
|
|||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Cash paid for income taxes, net
|
$
|
112.3
|
|
|
$
|
65.6
|
|
|
$
|
31.5
|
|
Cash paid for interest
|
410.4
|
|
|
481.3
|
|
|
137.2
|
|
|||
Cash paid under operating leases
|
44.1
|
|
|
*
|
|
|
*
|
|
|||
Cash paid under finance leases
|
4.9
|
|
|
*
|
|
|
*
|
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Cash paid under finance leases
|
5.5
|
|
|
*
|
|
|
*
|
|
|
*
|
Disclosures have been provided prospectively since January 1, 2019 in accordance with the new lease standard disclosed in note 3.
|
(in millions)
|
Year ended December 31,
|
||||||||||
2019
|
|
2018
|
|
2017
|
|||||||
Operating activities, other reconciling adjustments
|
$
|
—
|
|
|
$
|
1.9
|
|
|
$
|
1.0
|
|
Financing activities
|
4.6
|
|
|
20.5
|
|
|
22.7
|
|
|||
Total
|
$
|
4.6
|
|
|
$
|
22.4
|
|
|
$
|
23.7
|
|
8.
|
Inventory
|
(dollars in millions)
|
December 31,
|
||||||
2019
|
|
2018
|
|||||
Merchandise inventory
|
$
|
445.2
|
|
|
$
|
409.0
|
|
Finished goods
|
104.4
|
|
|
122.9
|
|
||
Raw materials
|
125.1
|
|
|
105.2
|
|
||
Work in process
|
36.5
|
|
|
34.0
|
|
||
Total
|
$
|
711.2
|
|
|
$
|
671.1
|
|
Inventory under the LIFO method:
|
|
|
|
||||
Percentage of total inventory
|
31
|
%
|
|
32
|
%
|
||
Excess of current cost over carrying value
|
$
|
4.3
|
|
|
$
|
2.4
|
|
9.
|
Property, plant and equipment
|
(in millions)
|
December 31,
|
||||||
2019
|
|
2018
|
|||||
Buildings and related improvements
|
$
|
340.4
|
|
|
$
|
329.1
|
|
Machinery, equipment and other
|
344.3
|
|
|
341.0
|
|
||
Software
|
92.1
|
|
|
77.1
|
|
||
Land
|
45.8
|
|
|
47.2
|
|
||
Assets not yet placed into service
|
42.2
|
|
|
30.0
|
|
||
Property, plant and equipment, gross
|
864.8
|
|
|
824.4
|
|
||
Accumulated depreciation
|
(307.8
|
)
|
|
(225.8
|
)
|
||
Property, plant and equipment, net
|
$
|
557.0
|
|
|
$
|
598.6
|
|
10.
|
Goodwill and other intangible assets
|
(in millions)
|
Year ended December 31, 2019
|
||||||||||||||
Americas
|
|
Europe
|
|
AMEA
|
|
Total
|
|||||||||
Beginning balance, net
|
$
|
1,604.7
|
|
|
$
|
1,150.0
|
|
|
$
|
30.0
|
|
|
$
|
2,784.7
|
|
Currency translation
|
5.8
|
|
|
(17.7
|
)
|
|
(0.3
|
)
|
|
(12.2
|
)
|
||||
Other
|
(0.9
|
)
|
|
(2.2
|
)
|
|
—
|
|
|
(3.1
|
)
|
||||
Ending balance, net
|
1,609.6
|
|
|
1,130.1
|
|
|
29.7
|
|
|
2,769.4
|
|
||||
Accumulated impairment losses
|
21.0
|
|
|
6.7
|
|
|
11.1
|
|
|
38.8
|
|
||||
Ending balance, gross
|
$
|
1,630.6
|
|
|
$
|
1,136.8
|
|
|
$
|
40.8
|
|
|
$
|
2,808.2
|
|
(in millions)
|
Year ended December 31, 2018
|
||||||||||||||||||
Not allocated
|
|
Americas
|
|
Europe
|
|
AMEA
|
|
Total
|
|||||||||||
Beginning balance, net
|
$
|
2,847.3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,847.3
|
|
Reporting unit allocation
|
(2,803.0
|
)
|
|
1,609.4
|
|
|
1,164.0
|
|
|
29.6
|
|
|
—
|
|
|||||
Currency translation
|
(41.9
|
)
|
|
(5.7
|
)
|
|
(14.0
|
)
|
|
0.4
|
|
|
(61.2
|
)
|
|||||
Other
|
(2.4
|
)
|
|
1.0
|
|
|
—
|
|
|
—
|
|
|
(1.4
|
)
|
|||||
Ending balance, net
|
—
|
|
|
1,604.7
|
|
|
1,150.0
|
|
|
30.0
|
|
|
2,784.7
|
|
|||||
Accumulated impairment losses
|
—
|
|
|
21.0
|
|
|
6.7
|
|
|
11.1
|
|
|
38.8
|
|
|||||
Ending balance, gross
|
$
|
—
|
|
|
$
|
1,625.7
|
|
|
$
|
1,156.7
|
|
|
$
|
41.1
|
|
|
$
|
2,823.5
|
|
(in millions)
|
December 31, 2019
|
|
December 31, 2018
|
||||||||||||||||||||
Gross value
|
|
Accumulated amortization
|
|
Carrying value
|
|
Gross value
|
|
Accumulated amortization
|
|
Carrying value
|
|||||||||||||
Customer relationships
|
$
|
4,547.7
|
|
|
$
|
641.3
|
|
|
$
|
3,906.4
|
|
|
$
|
4,572.3
|
|
|
$
|
412.5
|
|
|
$
|
4,159.8
|
|
VWR trade name
|
264.3
|
|
|
123.3
|
|
|
141.0
|
|
|
266.3
|
|
|
65.4
|
|
|
200.9
|
|
||||||
Other
|
182.8
|
|
|
102.3
|
|
|
80.5
|
|
|
194.0
|
|
|
81.3
|
|
|
112.7
|
|
||||||
Total finite-lived
|
$
|
4,994.8
|
|
|
$
|
866.9
|
|
|
4,127.9
|
|
|
$
|
5,032.6
|
|
|
$
|
559.2
|
|
|
4,473.4
|
|
||
Indefinite-lived
|
92.3
|
|
|
|
|
|
|
92.3
|
|
||||||||||||||
Total
|
$
|
4,220.2
|
|
|
|
|
|
|
$
|
4,565.7
|
|
11.
|
Restructuring and severance
|
(in millions)
|
Year ended December 31,
|
||||||||||
2019
|
|
2018
|
|
2017
|
|||||||
2017 restructuring program
|
$
|
23.0
|
|
|
$
|
78.3
|
|
|
$
|
17.5
|
|
Other
|
1.3
|
|
|
2.9
|
|
|
12.1
|
|
|||
Total
|
$
|
24.3
|
|
|
$
|
81.2
|
|
|
$
|
29.6
|
|
(in millions)
|
Year ended December 31,
|
|
December 31, 2019
|
||||||||||||||||||||
|
Charges incurred to date
|
|
Expected remaining charges
|
|
Total expected charges
|
||||||||||||||||||
2019
|
|
2018
|
|
2017
|
|
|
|||||||||||||||||
Employee severance and related
|
$
|
11.7
|
|
|
$
|
48.7
|
|
|
$
|
17.5
|
|
|
$
|
77.9
|
|
|
$
|
12.1
|
|
|
$
|
90.0
|
|
Facility closure
|
0.9
|
|
|
1.2
|
|
|
—
|
|
|
2.1
|
|
|
2.9
|
|
|
5.0
|
|
||||||
Other
|
10.4
|
|
|
28.4
|
|
|
—
|
|
|
38.8
|
|
|
1.2
|
|
|
40.0
|
|
||||||
Total
|
$
|
23.0
|
|
|
$
|
78.3
|
|
|
$
|
17.5
|
|
|
$
|
118.8
|
|
|
$
|
16.2
|
|
|
$
|
135.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Americas
|
$
|
12.1
|
|
|
$
|
37.4
|
|
|
$
|
3.2
|
|
|
$
|
52.7
|
|
|
$
|
8.3
|
|
|
$
|
61.0
|
|
Europe
|
9.8
|
|
|
39.1
|
|
|
1.5
|
|
|
50.4
|
|
|
1.6
|
|
|
52.0
|
|
||||||
AMEA
|
—
|
|
|
0.8
|
|
|
—
|
|
|
0.8
|
|
|
0.2
|
|
|
1.0
|
|
||||||
Corporate
|
1.1
|
|
|
1.0
|
|
|
12.8
|
|
|
14.9
|
|
|
6.1
|
|
|
21.0
|
|
||||||
Total
|
$
|
23.0
|
|
|
$
|
78.3
|
|
|
$
|
17.5
|
|
|
$
|
118.8
|
|
|
$
|
16.2
|
|
|
$
|
135.0
|
|
(in millions)
|
Year ended December 31,
|
||||||||||
2019
|
|
2018
|
|
2017
|
|||||||
Beginning balance
|
$
|
33.6
|
|
|
$
|
15.0
|
|
|
$
|
—
|
|
Charges
|
11.7
|
|
|
48.7
|
|
|
17.5
|
|
|||
Cash payments
|
(29.1
|
)
|
|
(29.2
|
)
|
|
(2.5
|
)
|
|||
Currency translation
|
(0.4
|
)
|
|
(0.9
|
)
|
|
—
|
|
|||
Ending balance
|
$
|
15.8
|
|
|
$
|
33.6
|
|
|
$
|
15.0
|
|
12.
|
Commitments and contingencies
|
13.
|
Debt
|
(dollars in millions)
|
December 31, 2019
|
|
December 31, 2018
|
|||||||||
Interest terms
|
|
Rate
|
|
Amount
|
|
|||||||
Receivables facility
|
LIBOR plus 1.50%
|
|
3.26
|
%
|
|
$
|
55.5
|
|
|
$
|
104.0
|
|
Senior secured credit facilities:
|
|
|
|
|
|
|
|
|||||
Euro term loans
|
EURIBOR plus 3.25%
|
|
3.25
|
%
|
|
391.8
|
|
|
1,078.0
|
|
||
U.S. dollar term loans
|
LIBOR plus 3.00%
|
|
4.70
|
%
|
|
677.2
|
|
|
1,838.9
|
|
||
4.75% secured notes
|
fixed rate
|
|
4.75
|
%
|
|
561.2
|
|
|
572.5
|
|
||
6% secured notes
|
fixed rate
|
|
6.00
|
%
|
|
1,500.0
|
|
|
1,500.0
|
|
||
9% unsecured notes
|
fixed rate
|
|
9.00
|
%
|
|
2,000.0
|
|
|
2,000.0
|
|
||
Finance lease liabilities
|
59.2
|
|
|
66.3
|
|
|||||||
Other
|
4.5
|
|
|
3.2
|
|
|||||||
Total debt, gross
|
5,249.4
|
|
|
7,162.9
|
|
|||||||
Less: unamortized deferred financing costs
|
(132.9
|
)
|
|
(238.2
|
)
|
|||||||
Total debt
|
$
|
5,116.5
|
|
|
$
|
6,924.7
|
|
|||||
Classification on balance sheets:
|
|
|
|
|||||||||
Current portion of debt
|
$
|
93.5
|
|
|
$
|
142.4
|
|
|||||
Debt, net of current portion
|
5,023.0
|
|
|
6,782.3
|
|
(in millions)
|
December 31, 2019
|
||
2020
|
$
|
93.5
|
|
2021
|
32.8
|
|
|
2022
|
32.1
|
|
|
2023
|
31.7
|
|
|
2024
|
3,008.5
|
|
|
Thereafter
|
2,050.8
|
|
|
Total debt, gross
|
$
|
5,249.4
|
|
(in millions)
|
December 31, 2019
|
||||||||||
Receivables facility
|
|
Revolving credit facility
|
|
Total
|
|||||||
Current availability
|
$
|
250.0
|
|
|
$
|
250.0
|
|
|
$
|
500.0
|
|
Undrawn letters of credit outstanding
|
(12.5
|
)
|
|
(15.3
|
)
|
|
(27.8
|
)
|
|||
Outstanding borrowings
|
(55.5
|
)
|
|
—
|
|
|
(55.5
|
)
|
|||
Unused availability
|
$
|
182.0
|
|
|
$
|
234.7
|
|
|
$
|
416.7
|
|
14.
|
Equity
|
Avantor Funding, Inc.
|
Avantor, Inc.
prior to the IPO
|
Avantor, Inc.
following the IPO
|
|||||
|
|
|
|
|
|
|
|
|
November 21, 2017
|
|
May 17, 2019
|
|
|||
|
Legal restructuring and VWR acquisition
|
|
IPO and related events
|
|
(shares in millions)
|
Par value per share
|
|
Shares authorized
|
|||
Undesignated preferred stock
|
$
|
0.01
|
|
|
50.0
|
|
MCPS
|
0.01
|
|
|
25.0
|
|
|
Common stock
|
0.01
|
|
|
750.0
|
|
•
|
Automatically on May 15, 2022;
|
•
|
Following the occurrence of a change of control or certain other defined events, in which case holders are also entitled to receive a make-whole dividend equal to the present value of all remaining dividends that would have accumulated through May 15, 2022; and
|
•
|
At any time at the option of the holder at the minimum conversion rate of 3.0395.
|
(shares in millions)
|
Par value per share
|
|
Shares authorized
|
|||
Series A preferred stock
|
$
|
0.01
|
|
|
25.0
|
|
Junior convertible preferred stock
|
0.01
|
|
|
5.0
|
|
|
Undesignated preferred stock
|
0.01
|
|
|
10.0
|
|
|
Common stock
|
0.002
|
|
|
2,675.0
|
|
|
Class B stock
|
0.01
|
|
|
0.3
|
|
(in millions)
|
Year ended December 31, 2019
|
|
Year ended
December 31, 2018
|
|
Year ended
December 31, 2017
|
||||||||||||||||
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|||||||||||
Beginning balance
|
2.3
|
|
|
$
|
2,297.3
|
|
|
2.0
|
|
|
$
|
2,027.8
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Issuances, net of issuance costs and warrant value
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.0
|
|
|
1,725.6
|
|
||||
Adjustment to redemption value
|
0.2
|
|
|
220.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
274.4
|
|
||||
Accumulation of yield
|
0.1
|
|
|
113.2
|
|
|
0.3
|
|
|
269.5
|
|
|
—
|
|
|
27.8
|
|
||||
Redemption
|
(2.6
|
)
|
|
(2,630.9
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Ending balance
|
—
|
|
|
$
|
—
|
|
|
2.3
|
|
|
$
|
2,297.3
|
|
|
2.0
|
|
|
$
|
2,027.8
|
|
(in millions)
|
Year ended December 31, 2019
|
|
Year ended
December 31, 2018
|
|
Year ended
December 31, 2017
|
|||||||||||||||
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
||||||||||
Beginning balance
|
1.7
|
|
|
$
|
1,562.0
|
|
|
1.7
|
|
|
$
|
1,562.0
|
|
|
—
|
|
|
$
|
—
|
|
Issuance, net of issuance costs
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.3
|
|
|
1,232.6
|
|
|||
Effects of legal entity restructuring
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.4
|
|
|
329.4
|
|
|||
Conversion
|
(1.7
|
)
|
|
(1,562.0
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Ending balance
|
—
|
|
|
$
|
—
|
|
|
1.7
|
|
|
$
|
1,562.0
|
|
|
1.7
|
|
|
$
|
1,562.0
|
|
•
|
Exchange of legacy common stock and noncontrolling interest — Common shares of Avantor Funding, Inc. and the noncontrolling interest were exchanged for shares of junior convertible preferred stock and common stock of Avantor, Inc. As a result, a legacy noncontrolling interest was derecognized.
|
•
|
Deferred tax effects — We increased common stock including paid-in capital and reduced our deferred income tax liabilities to derecognize the temporary differences related to the
|
|
Avantor, Inc. stockholders’ deficit
|
|
NCI
|
|
Total
|
||||||||||||||||||
(in millions)
|
Common stock including paid-in capital
|
|
Accum-ulated deficit
|
|
AOCI
|
|
Total
|
|
|
||||||||||||||
Exchange of legacy common stock
|
$
|
(329.4
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(329.4
|
)
|
|
$
|
—
|
|
|
$
|
(329.4
|
)
|
Exchange of legacy non-controlling interest
|
(278.6
|
)
|
|
(37.9
|
)
|
|
(10.5
|
)
|
|
(327.0
|
)
|
|
327.0
|
|
|
—
|
|
||||||
Deferred tax effects
|
175.8
|
|
|
—
|
|
|
—
|
|
|
175.8
|
|
|
—
|
|
|
175.8
|
|
||||||
Total
|
$
|
(432.2
|
)
|
|
$
|
(37.9
|
)
|
|
$
|
(10.5
|
)
|
|
$
|
(480.6
|
)
|
|
$
|
327.0
|
|
|
$
|
(153.6
|
)
|
15.
|
Accumulated other comprehensive income or loss
|
(in millions)
|
Foreign currency translation
|
|
Derivative instruments
|
|
Defined benefit plans
|
|
Total
|
||||||||
Balance on December 31, 2016
|
$
|
(47.3
|
)
|
|
$
|
—
|
|
|
$
|
3.2
|
|
|
$
|
(44.1
|
)
|
Unrealized gain
|
71.0
|
|
|
0.3
|
|
|
2.2
|
|
|
73.5
|
|
||||
Reclassification of loss (gain) into earnings
|
—
|
|
|
0.1
|
|
|
(3.2
|
)
|
|
(3.1
|
)
|
||||
(Decrease) increase due to income taxes
|
—
|
|
|
(0.1
|
)
|
|
0.2
|
|
|
0.1
|
|
||||
Balance on December 31, 2017
|
23.7
|
|
|
0.3
|
|
|
2.4
|
|
|
26.4
|
|
||||
Unrealized (loss) gain
|
(82.7
|
)
|
|
3.0
|
|
|
(16.9
|
)
|
|
(96.6
|
)
|
||||
Reclassification of (gain) loss into earnings
|
—
|
|
|
(1.9
|
)
|
|
2.3
|
|
|
0.4
|
|
||||
(Decrease) increase due to income taxes
|
—
|
|
|
(0.3
|
)
|
|
3.6
|
|
|
3.3
|
|
||||
Balance on December 31, 2018
|
(59.0
|
)
|
|
1.1
|
|
|
(8.6
|
)
|
|
(66.5
|
)
|
||||
Unrealized loss
|
(3.3
|
)
|
|
(1.4
|
)
|
|
(18.9
|
)
|
|
(23.6
|
)
|
||||
Reclassification of gain into earnings
|
—
|
|
|
(0.9
|
)
|
|
(0.6
|
)
|
|
(1.5
|
)
|
||||
Increase due to income taxes
|
—
|
|
|
0.7
|
|
|
5.0
|
|
|
5.7
|
|
||||
Balance on December 31, 2019
|
$
|
(62.3
|
)
|
|
$
|
(0.5
|
)
|
|
$
|
(23.1
|
)
|
|
$
|
(85.9
|
)
|
16.
|
Employee benefit plans
|
(in millions)
|
U.S. pension plans
Year ended December 31,
|
|
Non-U.S. pension plans
Year ended December 31,
|
|
U.S. medical plan
Year ended December 31,
|
||||||||||||||||||
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|||||||||||||
Benefit obligation:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Beginning balance
|
$
|
203.3
|
|
|
$
|
221.4
|
|
|
$
|
219.5
|
|
|
$
|
291.0
|
|
|
$
|
16.6
|
|
|
$
|
18.6
|
|
Service cost
|
2.9
|
|
|
3.1
|
|
|
3.7
|
|
|
4.5
|
|
|
0.2
|
|
|
0.3
|
|
||||||
Interest cost
|
8.0
|
|
|
7.7
|
|
|
4.7
|
|
|
5.2
|
|
|
0.6
|
|
|
0.6
|
|
||||||
Employee contributions
|
—
|
|
|
—
|
|
|
1.0
|
|
|
4.2
|
|
|
—
|
|
|
0.1
|
|
||||||
Actuarial loss (gain)
|
29.2
|
|
|
(12.8
|
)
|
|
34.6
|
|
|
(13.3
|
)
|
|
(1.4
|
)
|
|
(1.4
|
)
|
||||||
Benefits paid
|
(14.6
|
)
|
|
(18.5
|
)
|
|
(7.0
|
)
|
|
(5.9
|
)
|
|
(0.5
|
)
|
|
(0.5
|
)
|
||||||
Settlements and curtailments
|
—
|
|
|
—
|
|
|
(0.9
|
)
|
|
(52.1
|
)
|
|
—
|
|
|
—
|
|
||||||
Currency translation
|
—
|
|
|
—
|
|
|
2.9
|
|
|
(11.8
|
)
|
|
—
|
|
|
—
|
|
||||||
Other
|
—
|
|
|
2.4
|
|
|
(0.4
|
)
|
|
(2.3
|
)
|
|
—
|
|
|
(1.1
|
)
|
||||||
Ending balance
|
228.8
|
|
|
203.3
|
|
|
258.1
|
|
|
219.5
|
|
|
15.5
|
|
|
16.6
|
|
||||||
Fair value of plan assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Beginning balance
|
223.2
|
|
|
262.8
|
|
|
132.3
|
|
|
191.2
|
|
|
—
|
|
|
—
|
|
||||||
Return (loss) on plan assets
|
46.9
|
|
|
(21.9
|
)
|
|
13.2
|
|
|
(0.9
|
)
|
|
—
|
|
|
—
|
|
||||||
Employer contributions
|
0.5
|
|
|
0.8
|
|
|
3.8
|
|
|
3.8
|
|
|
0.5
|
|
|
0.5
|
|
||||||
Employee contributions
|
—
|
|
|
—
|
|
|
1.0
|
|
|
4.2
|
|
|
—
|
|
|
—
|
|
||||||
Benefits paid
|
(14.6
|
)
|
|
(18.5
|
)
|
|
(7.0
|
)
|
|
(5.9
|
)
|
|
(0.5
|
)
|
|
(0.5
|
)
|
||||||
Settlements and curtailments
|
—
|
|
|
—
|
|
|
—
|
|
|
(51.9
|
)
|
|
—
|
|
|
—
|
|
||||||
Currency translation
|
—
|
|
|
—
|
|
|
4.4
|
|
|
(7.7
|
)
|
|
—
|
|
|
—
|
|
||||||
Other
|
—
|
|
|
—
|
|
|
(0.5
|
)
|
|
(0.5
|
)
|
|
—
|
|
|
—
|
|
||||||
Ending balance
|
256.0
|
|
|
223.2
|
|
|
147.2
|
|
|
132.3
|
|
|
—
|
|
|
—
|
|
||||||
Funded status at end of year
|
$
|
27.2
|
|
|
$
|
19.9
|
|
|
$
|
(110.9
|
)
|
|
$
|
(87.2
|
)
|
|
$
|
(15.5
|
)
|
|
$
|
(16.6
|
)
|
(in millions)
|
U.S. pension plans
December 31,
|
|
Non-U.S. pension plans
December 31,
|
|
U.S. medical plan
December 31,
|
||||||||||||||||||
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|||||||||||||
Accumulated benefit obligation
|
$
|
222.0
|
|
|
$
|
196.4
|
|
|
$
|
249.6
|
|
|
$
|
211.6
|
|
|
$
|
15.5
|
|
|
$
|
16.6
|
|
Amounts recorded in balance sheet:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Other assets
|
$
|
37.9
|
|
|
$
|
29.6
|
|
|
$
|
1.7
|
|
|
$
|
5.4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Other current liabilities
|
(0.7
|
)
|
|
(0.5
|
)
|
|
(0.4
|
)
|
|
(1.8
|
)
|
|
(0.8
|
)
|
|
(0.8
|
)
|
||||||
Other liabilities
|
(10.0
|
)
|
|
(9.2
|
)
|
|
(112.2
|
)
|
|
(90.8
|
)
|
|
(14.7
|
)
|
|
(15.8
|
)
|
||||||
Funded status
|
$
|
27.2
|
|
|
$
|
19.9
|
|
|
$
|
(110.9
|
)
|
|
$
|
(87.2
|
)
|
|
$
|
(15.5
|
)
|
|
$
|
(16.6
|
)
|
Components of AOCI, excluding tax effects:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Actuarial (loss) gain
|
$
|
(16.9
|
)
|
|
$
|
(22.1
|
)
|
|
$
|
(21.4
|
)
|
|
$
|
4.1
|
|
|
$
|
7.3
|
|
|
$
|
6.7
|
|
Prior service (loss) gain
|
—
|
|
|
—
|
|
|
(0.6
|
)
|
|
(0.1
|
)
|
|
0.6
|
|
|
0.8
|
|
|
U.S. pension plans
December 31, |
|
Non-U.S. pension plans
December 31, |
|
U.S. medical plan
December 31, |
||||||||||||
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|||||||
Discount rate
|
3.3
|
%
|
|
4.4
|
%
|
|
1.4
|
%
|
|
2.3
|
%
|
|
3.3
|
%
|
|
4.2
|
%
|
Annual rate of salary increase
|
—
|
|
|
—
|
|
|
2.4
|
%
|
|
2.5
|
%
|
|
—
|
|
|
—
|
|
Health care cost trends:
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Initial rate
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|
5.8
|
%
|
|
6.8
|
%
|
Ultimate rate
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|
4.5
|
%
|
|
4.5
|
%
|
Year ultimate rate is reached
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|
2037
|
|
|
2031
|
|
(in millions)
|
December 31, 2019
|
||||||||||
U.S. pension plans
|
|
Non-U.S. pension plans
|
|
U.S. medical plan
|
|||||||
2020
|
$
|
14.3
|
|
|
$
|
7.5
|
|
|
$
|
0.8
|
|
2021
|
14.2
|
|
|
7.5
|
|
|
0.8
|
|
|||
2022
|
13.4
|
|
|
7.2
|
|
|
0.9
|
|
|||
2023
|
13.2
|
|
|
8.4
|
|
|
1.0
|
|
|||
2024
|
13.0
|
|
|
7.8
|
|
|
1.0
|
|
|||
2025 – 2029
|
66.3
|
|
|
41.9
|
|
|
5.1
|
|
(in millions)
|
December 31, 2019
|
|
December 31, 2018
|
||||||||||||||||||||||||||||
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|||||||||||||||||
U.S. plans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Cash
|
$
|
3.0
|
|
|
$
|
3.0
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1.2
|
|
|
$
|
1.2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Fixed income
|
215.1
|
|
|
—
|
|
|
215.1
|
|
|
—
|
|
|
153.5
|
|
|
—
|
|
|
153.5
|
|
|
—
|
|
||||||||
Equity
|
37.9
|
|
|
37.9
|
|
|
—
|
|
|
—
|
|
|
68.5
|
|
|
22.9
|
|
|
42.0
|
|
|
3.6
|
|
||||||||
Total
|
$
|
256.0
|
|
|
$
|
40.9
|
|
|
$
|
215.1
|
|
|
$
|
—
|
|
|
$
|
223.2
|
|
|
$
|
24.1
|
|
|
$
|
195.5
|
|
|
$
|
3.6
|
|
Non-U.S. plans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Cash
|
$
|
1.3
|
|
|
$
|
0.1
|
|
|
$
|
1.2
|
|
|
$
|
—
|
|
|
$
|
2.3
|
|
|
$
|
0.9
|
|
|
$
|
1.4
|
|
|
—
|
|
|
Fixed income
|
33.1
|
|
|
—
|
|
|
33.1
|
|
|
—
|
|
|
34.2
|
|
|
—
|
|
|
34.2
|
|
|
—
|
|
||||||||
Equity
|
32.1
|
|
|
—
|
|
|
32.1
|
|
|
—
|
|
|
25.2
|
|
|
—
|
|
|
25.2
|
|
|
—
|
|
||||||||
Other
|
47.1
|
|
|
—
|
|
|
47.1
|
|
|
—
|
|
|
37.0
|
|
|
—
|
|
|
37.0
|
|
|
—
|
|
||||||||
Insurance contracts
|
33.6
|
|
|
—
|
|
|
—
|
|
|
33.6
|
|
|
33.6
|
|
|
—
|
|
|
—
|
|
|
33.6
|
|
||||||||
Total
|
$
|
147.2
|
|
|
$
|
0.1
|
|
|
$
|
113.5
|
|
|
$
|
33.6
|
|
|
$
|
132.3
|
|
|
$
|
0.9
|
|
|
$
|
97.8
|
|
|
$
|
33.6
|
|
(in millions)
|
Year ended December 31,
|
||||||
2019
|
|
2018
|
|||||
Beginning balance
|
$
|
33.6
|
|
|
$
|
82.4
|
|
Purchases
|
3.1
|
|
|
6.4
|
|
||
Actual returns
|
(0.3
|
)
|
|
1.2
|
|
||
Settlements
|
(2.9
|
)
|
|
(54.8
|
)
|
||
Currency translation
|
0.1
|
|
|
(1.6
|
)
|
||
Ending balance
|
$
|
33.6
|
|
|
$
|
33.6
|
|
17.
|
Stock-based compensation
|
(options and intrinsic value in millions)
|
Number of options
|
|
Weighted average exercise price per option
|
|
Aggregate intrinsic value
|
|
Weighted average remaining term
|
|||||
Balance on December 31, 2018
|
21.0
|
|
|
$
|
15.12
|
|
|
|
|
|
||
Granted
|
3.7
|
|
|
14.26
|
|
|
|
|
|
|||
Exercised
|
(0.4
|
)
|
|
1.84
|
|
|
|
|
|
|||
Forfeited
|
(1.6
|
)
|
|
17.28
|
|
|
|
|
|
|||
Balance on December 31, 2019
|
22.7
|
|
|
15.04
|
|
|
$
|
127.0
|
|
|
7.0 years
|
|
Expected to vest
|
7.1
|
|
|
18.41
|
|
|
15.4
|
|
|
8.7 years
|
||
Exercisable
|
15.6
|
|
|
13.51
|
|
|
111.6
|
|
|
6.2 years
|
•
|
Stock options granted in 2018 and late 2017 vest 60% based on service conditions and vested 40% based on performance conditions. The service conditions are vesting in equal annual installments over four years. The performance conditions related to the completion of a qualified initial public offering or a change of control, which was achieved in 2019 upon completion of our IPO. We recognized the entire grant date fair value of those options upon completion of the IPO, resulting in $26.9 million of expense during 2019.
|
•
|
Stock options granted prior to late 2017 generally vested or are vesting in equal annual installments over four years.
|
|
Year ended December 31,
|
||||||||||
2019
|
|
2018
|
|
2017
|
|||||||
Grant date fair value per option
|
$
|
4.85
|
|
|
$
|
5.53
|
|
|
$
|
4.61
|
|
Assumptions used to determine grant date fair value:
|
|
|
|
|
|
||||||
Expected stock price volatility
|
30
|
%
|
|
51
|
%
|
|
45
|
%
|
|||
Risk free interest rate
|
2.1
|
%
|
|
2.9
|
%
|
|
2.2
|
%
|
|||
Expected dividend rate
|
nil
|
|
|
nil
|
|
|
nil
|
|
|||
Expected life of options
|
6.3 years
|
|
|
6.3 years
|
|
|
6.3 years
|
|
(in millions)
|
Year ended December 31,
|
||||||||||
2019
|
|
2018
|
|
2017
|
|||||||
Fair value of options vested
|
$
|
42.4
|
|
|
$
|
47.4
|
|
|
$
|
29.0
|
|
Intrinsic value of options exercised
|
5.4
|
|
|
2.0
|
|
|
83.6
|
|
|||
Tax benefit of options exercised
|
1.3
|
|
|
0.5
|
|
|
33.5
|
|
(awards in millions)
|
Number of awards
|
|
Weighted average grant date fair value per award
|
|||
Balance on December 31, 2018
|
0.1
|
|
|
$
|
11.41
|
|
Granted
|
5.6
|
|
|
14.04
|
|
|
Vested
|
—
|
|
|
11.31
|
|
|
Forfeited
|
(0.5
|
)
|
|
14.01
|
|
|
Balance on December 31, 2019
|
5.2
|
|
|
13.97
|
|
18.
|
Other income or expense, net
|
(in millions)
|
Year ended December 31,
|
||||||||||
2019
|
|
2018
|
|
2017
|
|||||||
Net foreign currency loss from financing activities
|
$
|
(1.9
|
)
|
|
$
|
(6.5
|
)
|
|
$
|
(5.5
|
)
|
Income related to defined benefit plans
|
5.1
|
|
|
3.4
|
|
|
3.4
|
|
|||
Net gain on settlement of derivatives, see note 21
|
—
|
|
|
—
|
|
|
9.6
|
|
|||
Other
|
(0.7
|
)
|
|
(0.4
|
)
|
|
—
|
|
|||
Other income (expense), net
|
$
|
2.5
|
|
|
$
|
(3.5
|
)
|
|
$
|
7.5
|
|
19.
|
Income taxes
|
(in millions)
|
Year ended December 31,
|
||||||||||
2019
|
|
2018
|
|
2017
|
|||||||
Income (loss) before income taxes:
|
|
|
|
|
|
||||||
United States
|
$
|
26.0
|
|
|
$
|
(78.4
|
)
|
|
$
|
(441.8
|
)
|
Foreign
|
14.6
|
|
|
(35.4
|
)
|
|
(18.4
|
)
|
|||
Total
|
$
|
40.6
|
|
|
$
|
(113.8
|
)
|
|
$
|
(460.2
|
)
|
Current income tax expense:
|
|
|
|
|
|
||||||
Federal
|
$
|
(36.6
|
)
|
|
$
|
(25.4
|
)
|
|
$
|
(101.1
|
)
|
State
|
(15.3
|
)
|
|
(5.4
|
)
|
|
(0.3
|
)
|
|||
Foreign
|
(57.6
|
)
|
|
(46.2
|
)
|
|
(14.3
|
)
|
|||
Subtotal
|
$
|
(109.5
|
)
|
|
$
|
(77.0
|
)
|
|
$
|
(115.7
|
)
|
Deferred income tax benefit:
|
|
|
|
|
|
||||||
Federal
|
$
|
28.9
|
|
|
$
|
64.5
|
|
|
$
|
349.8
|
|
State
|
19.4
|
|
|
3.7
|
|
|
22.9
|
|
|||
Foreign
|
58.4
|
|
|
35.7
|
|
|
57.9
|
|
|||
Subtotal
|
106.7
|
|
|
103.9
|
|
|
430.6
|
|
|||
Income tax (expense) benefit
|
$
|
(2.8
|
)
|
|
$
|
26.9
|
|
|
$
|
314.9
|
|
(in millions)
|
Year ended December 31,
|
||||||||||
2019
|
|
2018
|
|
2017
|
|||||||
Income (loss) before income taxes
|
$
|
40.6
|
|
|
$
|
(113.8
|
)
|
|
$
|
(460.2
|
)
|
United States federal corporate rate
|
21
|
%
|
|
21
|
%
|
|
35
|
%
|
|||
Income tax (expense) benefit at federal corporate rate
|
(8.5
|
)
|
|
23.9
|
|
|
161.1
|
|
|||
State income taxes, net of federal benefit
|
3.3
|
|
|
(2.3
|
)
|
|
15.8
|
|
|||
Transaction costs
|
—
|
|
|
—
|
|
|
(16.1
|
)
|
|||
Rate changes related to U.S. tax reform
|
—
|
|
|
(21.5
|
)
|
|
285.5
|
|
|||
Rate changes related to foreign jurisdictions
|
14.0
|
|
|
—
|
|
|
53.5
|
|
|||
Effect of one-time transition tax under U.S. tax reform
|
—
|
|
|
51.0
|
|
|
(158.8
|
)
|
|||
Foreign taxes
|
(3.1
|
)
|
|
—
|
|
|
(4.1
|
)
|
|||
Valuation allowance
|
(7.6
|
)
|
|
(23.7
|
)
|
|
(12.8
|
)
|
|||
Changes to uncertain tax positions
|
(3.7
|
)
|
|
(5.6
|
)
|
|
0.8
|
|
|||
Foreign-derived intangible income
|
5.0
|
|
|
3.7
|
|
|
—
|
|
|||
Other, net
|
(2.2
|
)
|
|
1.4
|
|
|
(10.0
|
)
|
|||
Income tax (expense) benefit
|
$
|
(2.8
|
)
|
|
$
|
26.9
|
|
|
$
|
314.9
|
|
(in millions)
|
December 31,
|
||||||
2019
|
|
2018
|
|||||
Deferred tax assets:
|
|
|
|
||||
Reserves and accrued expenses
|
$
|
54.0
|
|
|
$
|
50.1
|
|
Pension, postretirement, and environmental liabilities
|
18.1
|
|
|
16.6
|
|
||
Net operating loss and research and development carryforwards
|
312.8
|
|
|
291.6
|
|
||
Other
|
14.8
|
|
|
13.3
|
|
||
Deferred tax assets, gross
|
399.7
|
|
|
371.6
|
|
||
Less: valuation allowances
|
(193.9
|
)
|
|
(197.8
|
)
|
||
Deferred tax assets, net
|
205.8
|
|
|
173.8
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Intangibles
|
(927.2
|
)
|
|
(1,014.8
|
)
|
||
Property, plant and equipment
|
(56.3
|
)
|
|
(57.6
|
)
|
||
Other
|
—
|
|
|
—
|
|
||
Deferred tax liabilities
|
(983.5
|
)
|
|
(1,072.4
|
)
|
||
Net deferred tax liability
|
$
|
(777.7
|
)
|
|
$
|
(898.6
|
)
|
Classification on balance sheets:
|
|
|
|
||||
Other assets
|
$
|
7.7
|
|
|
$
|
8.9
|
|
Deferred income tax liabilities
|
(785.4
|
)
|
|
(907.5
|
)
|
(in millions)
|
Year ended December 31,
|
||||||||||
2019
|
|
2018
|
|
2017
|
|||||||
Beginning balance
|
$
|
84.3
|
|
|
$
|
79.6
|
|
|
$
|
10.7
|
|
Additions:
|
|
|
|
|
|
||||||
Acquisitions
|
—
|
|
|
—
|
|
|
64.3
|
|
|||
Tax positions related to the current year
|
3.1
|
|
|
6.9
|
|
|
6.4
|
|
|||
Tax positions related to prior years
|
2.5
|
|
|
0.5
|
|
|
0.1
|
|
|||
Currency translation
|
—
|
|
|
—
|
|
|
0.5
|
|
|||
Reductions:
|
|
|
|
|
|
||||||
Tax positions related to prior years
|
(4.4
|
)
|
|
(0.2
|
)
|
|
(0.6
|
)
|
|||
Settlements with taxing authorities
|
(0.3
|
)
|
|
—
|
|
|
(0.6
|
)
|
|||
Lapse of statutes of limitations
|
(1.4
|
)
|
|
(1.3
|
)
|
|
(1.2
|
)
|
|||
Currency translation
|
(0.2
|
)
|
|
(1.2
|
)
|
|
—
|
|
|||
Ending balance
|
$
|
83.6
|
|
|
$
|
84.3
|
|
|
$
|
79.6
|
|
20.
|
Business combinations
|
(in millions)
|
Year ended December 31, 2017
|
||
VWR
|
$
|
6,579.8
|
|
Other
|
80.9
|
|
|
Total
|
$
|
6,660.7
|
|
(in millions)
|
November 21, 2017
|
||
Accounts receivable
|
$
|
784.9
|
|
Inventory
|
585.3
|
|
|
Other current assets
|
24.3
|
|
|
Property, plant and equipment
|
457.1
|
|
|
Goodwill
|
2,581.3
|
|
|
Other intangible assets
|
4,534.1
|
|
|
Other assets
|
69.3
|
|
|
Accounts payable
|
(455.1
|
)
|
|
Other current liabilities
|
(295.8
|
)
|
|
Finance lease liabilities
|
(67.9
|
)
|
|
Deferred income tax liabilities
|
(1,486.0
|
)
|
|
Other liabilities
|
(151.7
|
)
|
|
Total
|
$
|
6,579.8
|
|
•
|
Customer relationships were valued using the income approach, a level 3 measurement that assumed a weighted-average discount rate of 9.9% and a customer retention rate of 98%.
|
•
|
The VWR trade name was valued using the relief-from-royalty method, a level 3 measurement that assumed a weighted-average royalty rate of 2.2%.
|
•
|
Other identifiable intangible assets were valued primarily using a replacement cost method, a level 3 measurement.
|
(dollars in millions)
|
Fair value
|
|
Weighted average estimated life
|
||
Customer relationships
|
$
|
4,160.0
|
|
|
20.0 years
|
VWR trade name
|
270.0
|
|
|
6.4 years
|
|
Other
|
104.1
|
|
|
7.9 years
|
|
Total
|
$
|
4,534.1
|
|
|
18.9 years
|
(in millions)
|
Year ended December 31, 2017
|
||
Net sales
|
$
|
5,398.7
|
|
Net loss
|
(120.8
|
)
|
21.
|
Financial instruments and fair value measurements
|
(in millions)
|
December 31, 2019
|
|
December 31, 2018
|
||||||||||||
Gross amount
|
|
Fair value
|
|
Gross amount
|
|
Fair value
|
|||||||||
Receivables facility
|
$
|
55.5
|
|
|
$
|
55.5
|
|
|
$
|
104.0
|
|
|
$
|
104.0
|
|
Senior secured credit facilities:
|
|
|
|
|
|
|
|
||||||||
Euro term loans
|
391.8
|
|
|
397.4
|
|
|
1,078.0
|
|
|
1,063.2
|
|
||||
U.S. dollar term loans
|
677.2
|
|
|
685.2
|
|
|
1,838.9
|
|
|
1,786.0
|
|
||||
4.75% secured notes
|
561.2
|
|
|
599.7
|
|
|
572.5
|
|
|
581.2
|
|
||||
6% secured notes
|
1,500.0
|
|
|
1,603.2
|
|
|
1,500.0
|
|
|
1,467.8
|
|
||||
9% unsecured notes
|
2,000.0
|
|
|
2,241.7
|
|
|
2,000.0
|
|
|
1,998.5
|
|
||||
Finance lease liabilities
|
59.2
|
|
|
59.2
|
|
|
66.3
|
|
|
66.3
|
|
||||
Other
|
4.5
|
|
|
4.5
|
|
|
3.2
|
|
|
3.2
|
|
||||
Total
|
$
|
5,249.4
|
|
|
$
|
5,646.4
|
|
|
$
|
7,162.9
|
|
|
$
|
7,070.2
|
|
(in millions)
|
Year ended December 31,
|
||||||
2019
|
|
2018
|
|||||
Beginning balance
|
$
|
4.4
|
|
|
$
|
25.7
|
|
Acquisitions
|
—
|
|
|
—
|
|
||
Changes to estimated fair value
|
—
|
|
|
1.5
|
|
||
Cash payments
|
(4.6
|
)
|
|
(22.4
|
)
|
||
Currency translation
|
0.2
|
|
|
(0.4
|
)
|
||
Ending balance
|
$
|
—
|
|
|
$
|
4.4
|
|
•
|
Hedges of forecasted debt extinguishment — In 2017, we entered into foreign currency forward contracts to partially hedge foreign currency risks associated with the anticipated repayment of VWR’s euro-denominated debt in connection with our acquisition of VWR;
|
•
|
Economic hedges — We experience foreign currency exchange rate effects on our euro-denominated term loans and notes that move oppositely from a portfolio of euro-denominated intercompany loans. The currency effects for these non-derivative instruments are recorded through earnings in the period of change and significantly offset one another; and
|
•
|
Other hedging activities — Some of our subsidiaries hedge short-term foreign-denominated business transactions and intercompany financing transactions using foreign currency forward contracts. These activities were not material to our consolidated financial statements.
|
(in millions)
|
Income statement classification
|
|
Year ended December 31, 2017
|
||
Foreign currency forward contracts
|
Other income or expense, net
|
|
$
|
9.6
|
|
22.
|
Leases
|
(in millions)
|
Classification
|
|
December 31, 2019
|
||
Operating leases:
|
|
|
|
||
Lease assets
|
Other assets
|
|
$
|
132.3
|
|
Current portion of liabilities
|
Other current liabilities
|
|
33.1
|
|
|
Liabilities, net of current portion
|
Other liabilities
|
|
106.6
|
|
|
Finance leases:
|
|
|
|
||
Lease assets
|
Property, plant and equipment, net
|
|
53.6
|
|
|
Current portion of liabilities
|
Current portion of debt
|
|
2.8
|
|
|
Liabilities, net of current portion
|
Debt, net of current portion
|
|
56.4
|
|
(in millions)
|
Year ended December 31,
|
||||||||||
2019
|
|
2018
|
|
2017
|
|||||||
|
(1,2)
|
|
(3)
|
|
(3)
|
||||||
Operating lease expense
|
$
|
55.1
|
|
|
$
|
48.4
|
|
|
$
|
13.4
|
|
Finance lease expense
|
10.3
|
|
|
|
|
|
|||||
Total
|
$
|
65.4
|
|
|
|
|
|
|
(1)
|
Operating lease expense for 2019 includes $5.3 million classified as cost of sales and $49.8 million classified as SG&A expenses.
|
(2)
|
Finance lease expense consists primarily of amortization of finance lease assets that is classified as SG&A expenses.
|
(3)
|
Operating lease expense for 2018 and 2017 is presented in accordance with the prior lease accounting standard, see note 3.
|
|
December 31, 2019
|
|
Weighted average remaining lease term:
|
|
|
Operating leases
|
5.3 years
|
|
Finance leases
|
16.5 years
|
|
Weighted average discount rate:
|
|
|
Operating leases
|
5.3
|
%
|
Finance leases
|
8.3
|
%
|
(in millions)
|
December 31, 2019
|
||||||
Operating leases
|
|
Finance leases
|
|||||
2020
|
$
|
39.1
|
|
|
$
|
7.8
|
|
2021
|
34.4
|
|
|
6.8
|
|
||
2022
|
27.3
|
|
|
6.0
|
|
||
2023
|
23.2
|
|
|
5.5
|
|
||
2024
|
17.6
|
|
|
5.5
|
|
||
Thereafter
|
18.4
|
|
|
87.1
|
|
||
Total undiscounted lease payments
|
160.0
|
|
|
118.7
|
|
||
Difference between undiscounted and discounted lease payments
|
(20.3
|
)
|
|
(59.5
|
)
|
||
Lease liabilities
|
$
|
139.7
|
|
|
$
|
59.2
|
|
(in millions)
|
December 31, 2018
|
||||||
Operating leases
|
|
Finance leases
|
|||||
2019
|
$
|
44.2
|
|
|
$
|
9.2
|
|
2020
|
34.1
|
|
|
8.0
|
|
||
2021
|
29.2
|
|
|
7.1
|
|
||
2022
|
25.7
|
|
|
6.3
|
|
||
2023
|
20.9
|
|
|
5.4
|
|
||
Thereafter
|
58.9
|
|
|
92.5
|
|
||
Total payments
|
$
|
213.0
|
|
|
128.5
|
|
|
Imputed interest
|
(62.2
|
)
|
|||||
Present value of payments
|
$
|
66.3
|
|
23.
|
Related party disclosures
|
|
Became related party
|
|
Ceased to be related party
|
New Mountain Capital
|
August 2010
|
|
ongoing
|
Goldman Sachs
|
November 2017
|
|
ongoing
|
NuSil Investors
|
September 2016
|
|
November 2017
|
PSP Investments
|
November 2017
|
|
May 2019
|
(in millions)
|
Year ended December 31,
|
||||||
2018
|
|
2017
|
|||||
Annual advisory fees
|
$
|
1.0
|
|
|
$
|
1.0
|
|
Transaction fees:
|
|
|
|
||||
VWR acquisition
|
—
|
|
|
180.0
|
|
||
Debt refinancings
|
—
|
|
|
12.5
|
|
||
Total
|
$
|
1.0
|
|
|
$
|
193.5
|
|
•
|
Goldman Sachs served as our financial advisor for the VWR acquisition and the financial structuring to fund the acquisition. For the financial advisory and structuring services provided, Goldman Sachs was paid fees totaling $165.0 million. We also agreed to offer Goldman Sachs the right to act as (i) a lead book-running manager in the event of a future initial public offering or (ii) a financial advisor in the case of another type of sale or disposition. In accordance with that arrangement, we offered, and Goldman Sachs accepted our offer, to become a co-lead book-running manager for the initial public offering described in note 14.
|
•
|
Goldman Sachs acted as placement agent, initial purchaser and joint lead arranger, joint book runner and administrative agent in connection with the issuance of our junior convertible preferred stock, our series A preferred stock and our secured and unsecured notes as well as with the establishment of our senior secured credit facilities, respectively. For these services, Goldman Sachs was paid underwriting, commitment, placement and other fees of $88.5 million.
|
24.
|
Unaudited quarterly financial information
|
(in millions, except per share information)
|
First quarter
|
|
Second quarter
|
|
Third quarter
|
|
Fourth quarter
|
||||||||
Year ended December 31, 2019:
|
|
|
(1,2)
|
|
(3)
|
|
|
||||||||
Net sales
|
$
|
1,480.1
|
|
|
$
|
1,532.4
|
|
|
$
|
1,503.8
|
|
|
$
|
1,524.0
|
|
Gross profit
|
475.2
|
|
|
491.1
|
|
|
474.0
|
|
|
480.4
|
|
||||
Net (loss) income
|
(6.2
|
)
|
|
(48.7
|
)
|
|
22.1
|
|
|
70.6
|
|
||||
Net (loss) income available to common stockholders
|
(78.0
|
)
|
|
(317.3
|
)
|
|
5.7
|
|
|
54.5
|
|
||||
(Loss) earnings per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
(0.59
|
)
|
|
(0.98
|
)
|
|
0.01
|
|
|
0.10
|
|
||||
Diluted
|
(0.59
|
)
|
|
(0.98
|
)
|
|
0.01
|
|
|
0.09
|
|
||||
Year ended December 31, 2018:
|
|
|
|
|
|
|
|
||||||||
Net sales
|
1,418.3
|
|
|
1,477.9
|
|
|
1,494.2
|
|
|
1,473.9
|
|
||||
Gross profit
|
440.3
|
|
|
468.0
|
|
|
478.7
|
|
|
432.8
|
|
||||
Net (loss) income
|
(41.2
|
)
|
|
(26.9
|
)
|
|
34.5
|
|
|
(53.3
|
)
|
||||
Net loss available to common stockholders
|
(104.5
|
)
|
|
(93.1
|
)
|
|
(34.4
|
)
|
|
(124.4
|
)
|
||||
Loss per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
(0.79
|
)
|
|
(0.70
|
)
|
|
(0.26
|
)
|
|
(0.94
|
)
|
||||
Diluted
|
(0.79
|
)
|
|
(0.70
|
)
|
|
(0.26
|
)
|
|
(0.94
|
)
|
|
(1)
|
Net loss, net loss available to common stockholders and loss per share in the second quarter of 2019 included: (i) $70.2 million of the total $73.7 million loss on extinguishment of debt incurred during 2019 (see note 13); and (ii) $26.9 million of expense for performance-based stock options (see note 17); which were partially offset by (iii) related income tax benefits.
|
(2)
|
Net loss available to common stockholders and loss per share in the second quarter of 2019 included a $220.4 million adjustment of series A preferred stock to redemption value (see note 14).
|
(3)
|
Net income, net loss available to common stockholders and loss per share in the third quarter of 2018 included $48.8 million of the total $51.0 million benefit for 2018 to adjust the provisional accounting for U.S. tax reform legislation (see note 19).
|
25.
|
Condensed unconsolidated financial information of Avantor, Inc.
|
(in millions)
|
December 31,
|
||||||
2019
|
|
2018
|
|||||
Assets
|
|
|
|
||||
Investment in unconsolidated subsidiaries
|
$
|
2,462.2
|
|
|
$
|
807.6
|
|
Total assets
|
$
|
2,462.2
|
|
|
$
|
807.6
|
|
Equity
|
|
|
|
||||
Redeemable equity:
|
|
|
|
||||
Series A preferred stock at redemption value, zero and 2.3 shares outstanding
|
$
|
—
|
|
|
$
|
2,297.3
|
|
Junior convertible preferred stock, zero and 1.7 shares outstanding
|
—
|
|
|
1,562.0
|
|
||
Total redeemable equity
|
—
|
|
|
3,859.3
|
|
||
Stockholders’ equity (deficit):
|
|
|
|
||||
Mandatory convertible preferred stock including paid-in capital, 20.7 and 0.0 shares outstanding
|
1,003.7
|
|
|
—
|
|
||
Common stock including paid-in capital, 572.8 and 132.8 shares outstanding
|
1,748.1
|
|
|
(2,746.8
|
)
|
||
Accumulated deficit
|
(203.7
|
)
|
|
(238.4
|
)
|
||
Accumulated other comprehensive loss
|
(85.9
|
)
|
|
(66.5
|
)
|
||
Total stockholders’ equity (deficit)
|
2,462.2
|
|
|
(3,051.7
|
)
|
||
Total equity
|
$
|
2,462.2
|
|
|
$
|
807.6
|
|
(in millions)
|
Year ended December 31, 2019
|
|
Forty days ended December 31, 2017
|
||||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from issuance of stock, net of issuance costs
|
$
|
4,235.6
|
|
|
$
|
3,049.0
|
|
Redemption of series A preferred stock
|
(2,630.9
|
)
|
|
—
|
|
||
Payments of dividends on MCPS
|
(31.3
|
)
|
|
—
|
|
||
Contribution to unconsolidated subsidiaries
|
(1,574.1
|
)
|
|
(3,049.0
|
)
|
||
Other
|
0.7
|
|
|
—
|
|
||
Net cash from financing activities
|
—
|
|
|
—
|
|
||
Cash, cash equivalents and restricted cash at beginning of period
|
—
|
|
|
—
|
|
||
Cash, cash equivalents and restricted cash at end of period
|
$
|
—
|
|
|
$
|
—
|
|
26.
|
Valuation and qualifying accounts
|
(in millions)
|
Allowance for doubtful accounts receivable
|
|
Valuation allowances on deferred tax assets
|
||||
Balance on December 31, 2016
|
$
|
7.3
|
|
|
$
|
2.8
|
|
Acquisitions
|
—
|
|
|
81.2
|
|
||
Charged to costs and expenses
|
0.8
|
|
|
99.9
|
|
||
Deductions(1)
|
(0.9
|
)
|
|
—
|
|
||
Currency translation
|
0.1
|
|
|
—
|
|
||
Balance on December 31, 2017
|
7.3
|
|
|
183.9
|
|
||
Charged to costs and expenses
|
3.6
|
|
|
18.8
|
|
||
Other additions(1)
|
0.6
|
|
|
—
|
|
||
Currency translation
|
(0.6
|
)
|
|
(4.9
|
)
|
||
Balance on December 31, 2018
|
10.9
|
|
|
197.8
|
|
||
Charged to costs and expenses
|
5.9
|
|
|
—
|
|
||
Other additions(1)
|
2.0
|
|
|
—
|
|
||
Deductions
|
—
|
|
|
(0.5
|
)
|
||
Currency translation
|
(0.2
|
)
|
|
(3.4
|
)
|
||
Balance on December 31, 2019
|
$
|
18.6
|
|
|
$
|
193.9
|
|
|
(1)
|
For the allowance for doubtful accounts, deductions represent bad debts charged off, net of recoveries, and other additions represent recoveries, net of bad debts charged off.
|
•
|
the designation of the series;
|
•
|
the number of shares of the series, which our Board of Directors may, except where otherwise provided in the preferred stock designation, increase (but not above the total number of authorized shares of the class) or decrease (but not below the number of shares then outstanding);
|
•
|
whether dividends, if any, will be cumulative or non-cumulative and the dividend rate of the series;
|
•
|
the dates at which dividends, if any, will be payable;
|
•
|
the redemption rights and price or prices, if any, for shares of the series;
|
•
|
the terms and amounts of any sinking fund provided for the purchase or redemption of shares of the series;
|
•
|
the amounts payable on shares of the series in the event of any voluntary or involuntary liquidation, dissolution or winding-up of the affairs of our company;
|
•
|
whether the shares of the series will be convertible into shares of any other class or series, or any other security, of our company or any other corporation, and, if so, the specification of the other class or series or other security, the conversion price or prices or rate or rates, any rate adjustments, the date or dates as of which the shares will be convertible and all other terms and conditions upon which the conversion may be made;
|
•
|
restrictions on the issuance of shares of the same series or of any other class or series; and
|
•
|
the voting rights, if any, of the holders of the series.
|
•
|
if the Applicable Market Value (as defined below) of our common stock is greater than $16.45 (the “Threshold Appreciation Price”), then the Conversion Rate will be 3.0395 shares of our common stock per share of the Mandatory Convertible Preferred Stock (the “Minimum Conversion Rate”), which is approximately equal to $50.00 divided by the Threshold Appreciation Price;
|
•
|
if the Applicable Market Value of our common stock is less than or equal to the Threshold Appreciation Price but equal to or greater than $14.00 (the “Initial Price”), then the Conversion Rate will be equal to $50.00 divided by the Applicable Market Value of our common stock, rounded to the nearest ten-thousandth of a share; or
|
•
|
if the Applicable Market Value of our common stock is less than the Initial Price, then the Conversion Rate will be 3.5714 shares of our common stock per share of the Mandatory Convertible Preferred Stock (the “Maximum Conversion Rate”), which is approximately equal to $50.00 divided by the Initial Price.
|
•
|
prior to such time, our Board of Directors approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder;
|
•
|
upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of our voting stock outstanding at the time the transaction commenced, excluding certain shares; or
|
•
|
at or subsequent to that time, the business combination is approved by our Board of Directors and by the affirmative vote of holders of at least 662/3% of the outstanding voting stock that is not owned by the interested stockholder.
|
•
|
the provision requiring a 662/3% supermajority vote for stockholders to amend our amended and restated bylaws;
|
•
|
the provisions providing for an initial classification of our Board of Directors (the election and term of our directors);
|
•
|
the provisions regarding resignation and removal of directors;
|
•
|
the provisions regarding entering into business combinations with interested stockholders;
|
•
|
the provisions regarding stockholder action by written consent;
|
•
|
the provisions regarding calling special meetings of stockholders;
|
•
|
the provisions regarding filling vacancies on our Board of Directors and newly created directorships;
|
•
|
the provisions eliminating monetary damages for breaches of fiduciary duty by a director; and
|
•
|
the amendment provision requiring that the above provisions be amended only with a 662/3% supermajority vote.
|
Re:
|
Avantor, Inc. Equity Incentive Plan (originally adopted by Avantor
|
|
Very truly yours,
|
||
|
|||
AVANTOR, INC.
|
|||
|
|||
By:
|
/s/ Justin M. Miller
|
||
|
Name:
|
Justin M. Miller
|
|
Title:
|
EVP & General Counsel
|
December 31, 2019
|
/s/ Bjorn Hofman
|
|
Participant’s Signature
|
Re:
|
Avantor, Inc. Equity Incentive Plan
|
|
Very truly yours,
|
||
|
|||
AVANTOR, INC.
|
|||
|
|||
By:
|
/s/ Justin M. Miller
|
||
|
Name:
|
Justin M. Miller
|
|
Title:
|
EVP & General Counsel
|
December 31, 2019
|
/s/ Bjorn Hofman
|
|
Participant’s Signature
|
Re:
|
Avantor, Inc. (f/k/a Vail HoldCo Corp) Equity Incentive Plan
|
|
Very truly yours,
|
||
|
|||
AVANTOR, INC.
|
|||
|
|||
By:
|
/s/ Justin M. Miller
|
||
|
Name:
|
Justin M. Miller
|
|
Title:
|
EVP & General Counsel
|
December 31, 2019
|
/s/ Bjorn Hofman
|
|
Participant’s Signature
|
|
Jurisdiction of incorporation
|
United States:
|
|
Applied Silicone Company LLC
|
California
|
Morehouse Cowles LLC
|
California
|
SiTech Nusil, LLC
|
California
|
Therapak, LLC
|
California
|
Avantor Funding, Inc.
|
Delaware
|
Avantor Performance Materials International, LLC
|
Delaware
|
Jencons (Scientific) LLC
|
Delaware
|
Nusil Acquisition Corp.
|
Delaware
|
Nusil Investments LLC
|
Delaware
|
Nusil Technology LLC
|
Delaware
|
Reliable Biopharmaceutical, LLC
|
Delaware
|
Vail Holdco Sub LLC
|
Delaware
|
VWR Corporation
|
Delaware
|
VWR Funding, Inc.
|
Delaware
|
VWR Global Holdings, Inc.
|
Delaware
|
VWR International, LLC
|
Delaware
|
VWR International Holdings, Inc.
|
Delaware
|
VWR Lux Holdco LLC
|
Delaware
|
VWR Management Services, LLC
|
Delaware
|
VWR Receivables Funding, LLC
|
Delaware
|
MESM, LLC
|
Florida
|
Avantor Fluid Handling, LLC
|
Massachusetts
|
Avantor Performance Materials, LLC
|
New Jersey
|
VWR Chemicals, LLC
|
New York
|
Puritan Products, Inc.
|
Pennsylvania
|
BioExpress, LLC
|
Utah
|
EPL Pathology Archives, LLC
|
Virginia
|
Other jurisdictions:
|
|
Klen International (74) Pty Ltd.
|
Australia
|
VWR International Holdings Pty Ltd
|
Australia
|
VWR International GmBH Austria
|
Austria
|
VWR International SRL
|
Barbados
|
VWR International BVBA
|
Belgium
|
|
Jurisdiction of incorporation
|
VWR International Europe BVBA
|
Belgium
|
Anachemia Canada Co.
|
Canada
|
Avantor Services Canada Co.
|
Canada
|
Seastar Chemicals ULC
|
Canada
|
VWR International Co.
|
Canada
|
Avantor Performance Materials Cayman Ltd.
|
Cayman Islands
|
Vail International Holdings Ltd
|
Cayman Islands
|
Comercial y Servicios Anachemia Science Limitada
|
Chile
|
Avantor Performance Materials Trading (Shanghai) Co. Ltd.
|
China
|
VWR (Shanghai) Co. Ltd.
|
China
|
VWR International China Co., Ltd.
|
China
|
VWR International CR Limitada
|
Costa Rica
|
VWR International Limitada
|
Costa Rica
|
VWR International Europe Services s.r.o.
|
Czech Republic
|
VWR International s.r.o.
|
Czech Republic
|
VWR International A/S
|
Denmark
|
VWR International Oy
|
Finland
|
EPL Archives, SAS
|
France
|
Nusil Technology Europe S.a.r.l.
|
France
|
VWR International S.A.S.
|
France
|
Clemens GmbH
|
Germany
|
Varietal Management Services GmbH
|
Germany
|
VWR International Mgmt Services GmbH & Co. KG
|
Germany
|
VWR International GmBH
|
Germany
|
VWR International Immobilien GmbH
|
Germany
|
VWR International Investors Europe GmbH
|
Germany
|
VWR International Lab Services GmbH
|
Germany
|
VWR International Verwaltung-GmbH
|
Germany
|
VWR International KFT.
|
Hungary
|
Avantor Performance Materials India Limited
|
India
|
VWR Lab Products Private Ltd.
|
India
|
Halmahera Ltd.
|
Ireland
|
Puritan Products Limited
|
Ireland
|
VWR International Ltd. Ireland
|
Ireland
|
Basan Italy S.r.l.
|
Italy
|
VWR International S.r.l.
|
Italy
|
Avantor Performance Materials Korea Limited
|
Korea
|
Avantor Performance Materials Holdings S.a.r.l.
|
Luxembourg
|
|
Jurisdiction of incorporation
|
VWR International North America S.a.r.l.
|
Luxembourg
|
VWR International Europe S.a.r.l.
|
Luxembourg
|
VWR International South America S.a.r.l.
|
Luxembourg
|
Avantor Performance Materials Sdn. Bhd.
|
Malaysia
|
Basan Cleanroom Malaysia Sdn. Bhd.
|
Malaysia
|
Avantor Performance Materials Mauritius II Limited
|
Mauritius
|
VWR Europe Services, Ltd
|
Mauritius
|
VWR International Services, Ltd
|
Mauritius
|
VWR NA Services, Ltd
|
Mauritius
|
Avantor Performance Materials S.A. de C.V.
|
Mexico
|
Sevicos Cientificos Especializados, S. de R.L. de C.V.
|
Mexico
|
VWR International, S. de R.L de C.V.
|
Mexico
|
Avantor Holdings B.V.
|
Netherlands
|
Avantor Fluid Handling B.V
|
Netherlands
|
VWR International B.V.
|
Netherlands
|
VWR International (N. Ireland) Ltd.
|
Northern Ireland
|
VWR International AS
|
Norway
|
Avantor Performance Materials Poland S.A.
|
Poland
|
Linares Investments Sp z.o.o.
|
Poland
|
VWR International SP Zoo
|
Poland
|
VWR International Material de Laboratio, Lda
|
Portugal
|
VWR Advanced Instruments, LLC
|
Puerto Rico
|
VWR International Europe Services SRL
|
Romania
|
Avantor Performance Materials Singapore Pte. Ltd.
|
Singapore
|
Nusil Technology Asia Pte. Ltd.
|
Singapore
|
VWR International Holdings CH Pte. Ltd.
|
Singapore
|
VWR International Holdings G.P Pte. Ltd.
|
Singapore
|
VWR International Holdings Pte. Ltd.
|
Singapore
|
VWR Singapore Pte. Ltd.
|
Singapore
|
VWR International s.r.o.
|
Slovakia
|
VWR International Eurolab, S.L.
|
Spain
|
KEBO Lab AB
|
Sweden
|
VWR International AB
|
Sweden
|
VWR International GmBH Switzerland
|
Switzerland
|
Avantor Performance Materials Taiwan Co Ltd.
|
Taiwan
|
VWR International FZ-LLC
|
United Arab Emirates
|
Advanced Chromatography Technologies Ltd
|
United Kingdom
|
Hichrom Limited
|
United Kingdom
|
|
Jurisdiction of incorporation
|
Jencons (Scientific) Ltd.
|
United Kingdom
|
Medical Equipment Supplies & Management Holdings Ltd
|
United Kingdom
|
Medical Equipment Supplies & Management Ltd.
|
United Kingdom
|
Mserv Global Ltd
|
United Kingdom
|
Therapak Pharma Services Ltd.
|
United Kingdom
|
VWR Holdco Ltd.
|
United Kingdom
|
VWR International Ltd.
|
United Kingdom
|
VWR Jencons USA, Ltd.
|
United Kingdom
|
VWR Lab Services Ltd.
|
United Kingdom
|
/s/ Rajiv Gupta
|
|
/s/ Juan Andres
|
Rajiv Gupta
|
|
Juan Andres
|
|
|
|
/s/ Thomas Connolly
|
|
/s/ Matthew Holt
|
Thomas Connolly
|
|
Matthew Holt
|
|
|
|
/s/ Andre Moura
|
|
/s/ Jo Natauri
|
Andre Moura
|
|
Jo Natauri
|
|
|
|
/s/ Jonathan Peacock
|
|
/s/ Rakesh Sachdev
|
Jonathan Peacock
|
|
Rakesh Sachdev
|
|
|
|
/s/ Christi Shaw
|
|
|
Christi Shaw
|
|
|
1.
|
I have reviewed this Annual Report on Form 10-K of Avantor, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
c)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: February 14, 2020
|
By:
|
/s/ Michael Stubblefield
|
|
|
|
Name:
|
Michael Stubblefield
|
|
|
Title:
|
President and Chief Executive Officer
|
1.
|
I have reviewed this Annual Report on Form 10-K of Avantor, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
c)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: February 14, 2020
|
By:
|
/s/ Thomas A. Szlosek
|
|
|
|
Name:
|
Thomas A. Szlosek
|
|
|
Title:
|
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: February 14, 2020
|
By:
|
/s/ Michael Stubblefield
|
|
|
|
Name:
|
Michael Stubblefield
|
|
|
Title:
|
President and Chief Executive Officer
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: February 14, 2020
|
By:
|
/s/ Thomas A. Szlosek
|
|
|
|
Name:
|
Thomas A. Szlosek
|
|
|
Title:
|
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
|