UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE |
SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2012
OR
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE |
SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to .
Commission file number 1-5353
TELEFLEX INCORPORATED
(Exact name of registrant as specified in its charter)
Delaware | 23-1147939 | |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. employer identification no.) | |
155 South Limerick Road, Limerick, Pennsylvania | 19468 | |
(Address of principal executive offices) | (Zip Code) |
(610) 948-5100
(Registrants telephone number, including area code)
(None)
(Former Name, Former Address and Former Fiscal Year, If Changed Since Last Report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
Large accelerated filer | x | Accelerated filer | ¨ | |||
Non-accelerated filer | ¨ (Do not check if a smaller reporting company) | Smaller reporting company | ¨ |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No x
The registrant had 40,931,452 shares of common stock, $1.00 par value, outstanding as of October 19, 2012.
TELEFLEX INCORPORATED
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 2012
Page | ||||||
PART I FINANCIAL INFORMATION | ||||||
Item 1: | Financial Statements (Unaudited): |
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2 | ||||||
3 | ||||||
Condensed Consolidated Balance Sheets as of September 30, 2012 and December 31, 2011 |
4 | |||||
5 | ||||||
6 | ||||||
7 | ||||||
Item 2: | Managements Discussion and Analysis of Financial Condition and Results of Operations |
36 | ||||
Item 3: | 48 | |||||
Item 4: | 48 | |||||
PART II OTHER INFORMATION | ||||||
Item 1: | 49 | |||||
Item 1A: | 49 | |||||
Item 2: | 49 | |||||
Item 3: | 49 | |||||
Item 5: | 49 | |||||
Item 6: | 50 | |||||
SIGNATURES | 51 |
1
PART I FINANCIAL INFORMATION
Item 1. | Financial Statements |
TELEFLEX INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, 2012 |
September 25, 2011 |
September 30, 2012 |
September 25, 2011 |
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(Dollars and shares in thousands, except per share) | ||||||||||||||||
Net revenues |
$ | 368,054 | $ | 362,741 | $ | 1,131,953 | $ | 1,089,490 | ||||||||
Cost of goods sold |
187,487 | 187,111 | 582,908 | 570,462 | ||||||||||||
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Gross profit |
180,567 | 175,630 | 549,045 | 519,028 | ||||||||||||
Selling, general and administrative expenses |
114,878 | 101,582 | 332,965 | 313,130 | ||||||||||||
Research and development expenses |
14,760 | 12,316 | 40,015 | 35,802 | ||||||||||||
Goodwill impairment |
| | 332,128 | | ||||||||||||
Restructuring and other impairment charges |
1,088 | (173 | ) | 84 | 3,598 | |||||||||||
Gain on sales of businesses and assets |
| | (332 | ) | | |||||||||||
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Income (loss) from continuing operations before interest, loss on extinguishments of debt and taxes |
49,841 | 61,905 | (155,815 | ) | 166,498 | |||||||||||
Interest expense |
18,493 | 19,177 | 54,944 | 51,108 | ||||||||||||
Interest income |
(340 | ) | (318 | ) | (1,324 | ) | (676 | ) | ||||||||
Loss on extinguishments of debt |
| | | 15,413 | ||||||||||||
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Income (loss) from continuing operations before taxes |
31,688 | 43,046 | (209,435 | ) | 100,653 | |||||||||||
Taxes on income (loss) from continuing operations |
7,237 | 10,125 | 2,961 | 23,134 | ||||||||||||
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Income (loss) from continuing operations |
24,451 | 32,921 | (212,396 | ) | 77,519 | |||||||||||
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Operating income (loss) from discontinued operations (including gain (loss) on disposal of ($38) and $2,226 for the three and nine month periods in 2012, respectively, and ($4) and $52,265 for the three and nine month periods in 2011, respectively) |
(831 | ) | 14,588 | (7,951 | ) | 75,705 | ||||||||||
Taxes (benefit) on income (loss) from discontinued operations |
1,690 | 3,444 | (1,668 | ) | (3,522 | ) | ||||||||||
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Income (loss) from discontinued operations |
(2,521 | ) | 11,144 | (6,283 | ) | 79,227 | ||||||||||
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Net income (loss) |
21,930 | 44,065 | (218,679 | ) | 156,746 | |||||||||||
Less: Income from continuing operations attributable to noncontrolling interest |
188 | 289 | 701 | 770 | ||||||||||||
Income from discontinued operations attributable to noncontrolling interest |
| 125 | | 443 | ||||||||||||
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Net income (loss) attributable to common shareholders |
$ | 21,742 | $ | 43,651 | $ | (219,380 | ) | $ | 155,533 | |||||||
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Earnings per share available to common shareholders: |
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Basic: |
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Income (loss) from continuing operations |
$ | 0.59 | $ | 0.80 | $ | (5.22 | ) | $ | 1.90 | |||||||
Income (loss) from discontinued operations |
(0.06 | ) | 0.27 | (0.15 | ) | 1.95 | ||||||||||
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Net income (loss) |
$ | 0.53 | $ | 1.07 | $ | (5.37 | ) | $ | 3.85 | |||||||
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Diluted: |
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Income (loss) from continuing operations |
$ | 0.58 | $ | 0.80 | $ | (5.22 | ) | $ | 1.88 | |||||||
Income (loss) from discontinued operations |
(0.06 | ) | 0.27 | (0.15 | ) | 1.94 | ||||||||||
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Net income (loss) |
$ | 0.52 | $ | 1.07 | $ | (5.37 | ) | $ | 3.82 | |||||||
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Dividends per common share |
$ | 0.34 | $ | 0.34 | $ | 1.02 | $ | 1.02 | ||||||||
Weighted average common shares outstanding: |
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Basic |
40,890 | 40,684 | 40,831 | 40,426 | ||||||||||||
Diluted |
41,511 | 40,943 | 40,831 | 40,738 | ||||||||||||
Amounts attributable to common shareholders: |
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Income (loss) from continuing operations, net of tax |
$ | 24,263 | $ | 32,632 | $ | (213,097 | ) | $ | 76,749 | |||||||
Income (loss) from discontinued operations, net of tax |
(2,521 | ) | 11,019 | (6,283 | ) | 78,784 | ||||||||||
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Net income (loss) |
$ | 21,742 | $ | 43,651 | $ | (219,380 | ) | $ | 155,533 | |||||||
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The accompanying notes are an integral part of the condensed consolidated financial statements.
2
TELEFLEX INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, 2012 |
September 25, 2011 |
September 30, 2012 |
September 25, 2011 |
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(Dollars in thousands) | ||||||||||||||||
Net income (loss) |
$ | 21,930 | $ | 44,065 | $ | (218,679 | ) | $ | 156,746 | |||||||
Other comprehensive income (loss), net of tax: |
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Foreign currency translation, net of tax ($4,629, $(298), $(4,555), $2,025 for the three and nine month periods, respectively) |
46,056 | (50,486 | ) | 10,348 | (19,555 | ) | ||||||||||
Pension and other postretirement benefits plans adjustment, net of tax ($525, $410, $1,782, $8,505 for the three and nine month periods, respectively) |
872 | 842 | 3,208 | 14,851 | ||||||||||||
Derivatives qualifying as hedges, net of tax ($1,548, $1,245, $4,013, $3,578 for the three and nine month periods, respectively) |
2,706 | 2,183 | 7,012 | 5,508 | ||||||||||||
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Other comprehensive income (loss), net of tax |
49,634 | (47,461 | ) | 20,568 | 804 | |||||||||||
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Comprehensive income (loss) |
71,564 | (3,396 | ) | (198,111 | ) | 157,550 | ||||||||||
Less: comprehensive income attributable to noncontrolling interest |
394 | 252 | 743 | 1,062 | ||||||||||||
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Comprehensive income (loss) attributable to common shareholders |
$ | 71,170 | $ | (3,648 | ) | $ | (198,854 | ) | $ | 156,488 | ||||||
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The accompanying notes are an integral part of the condensed consolidated financial statements.
3
TELEFLEX INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, 2012 |
December 31, 2011 |
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(Dollars in thousands) | ||||||||
ASSETS | ||||||||
Current assets |
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Cash and cash equivalents |
$ | 634,829 | $ | 584,088 | ||||
Accounts receivable, net |
266,947 | 286,226 | ||||||
Inventories, net |
295,611 | 298,775 | ||||||
Prepaid expenses and other current assets |
23,361 | 33,405 | ||||||
Prepaid taxes |
34,745 | 28,846 | ||||||
Deferred tax assets |
29,700 | 41,014 | ||||||
Assets held for sale |
7,861 | 7,902 | ||||||
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Total current assets |
1,293,054 | 1,280,256 | ||||||
Property, plant and equipment, net |
267,392 | 251,912 | ||||||
Goodwill |
1,113,940 | 1,438,542 | ||||||
Intangible assets, net |
930,916 | 879,787 | ||||||
Investments in affiliates |
1,771 | 2,008 | ||||||
Deferred tax assets |
293 | 278 | ||||||
Other assets |
63,423 | 71,320 | ||||||
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Total assets |
$ | 3,670,789 | $ | 3,924,103 | ||||
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LIABILITIES AND EQUITY | ||||||||
Current liabilities |
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Current borrowings |
$ | 4,700 | $ | 4,986 | ||||
Accounts payable |
63,703 | 67,092 | ||||||
Accrued expenses |
63,115 | 74,207 | ||||||
Current portion of contingent consideration |
21,592 | 3,953 | ||||||
Payroll and benefit-related liabilities |
67,606 | 64,386 | ||||||
Derivative liabilities |
957 | 633 | ||||||
Accrued interest |
9,772 | 10,960 | ||||||
Income taxes payable |
11,980 | 21,084 | ||||||
Current liability for uncertain tax positions |
4,201 | 22,656 | ||||||
Deferred tax liabilities |
1,051 | 1,050 | ||||||
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Total current liabilities |
248,677 | 271,007 | ||||||
Long-term borrowings |
962,596 | 954,809 | ||||||
Deferred tax liabilities |
393,192 | 420,833 | ||||||
Pension and postretirement benefit liabilities |
178,764 | 194,984 | ||||||
Noncurrent liability for uncertain tax positions |
63,491 | 61,688 | ||||||
Other liabilities |
68,670 | 37,999 | ||||||
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Total liabilities |
1,915,390 | 1,941,320 | ||||||
Commitments and contingencies |
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Total common shareholders equity |
1,752,956 | 1,980,588 | ||||||
Noncontrolling interest |
2,443 | 2,195 | ||||||
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Total equity |
1,755,399 | 1,982,783 | ||||||
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Total liabilities and equity |
$ | 3,670,789 | $ | 3,924,103 | ||||
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The accompanying notes are an integral part of the condensed consolidated financial statements.
4
TELEFLEX INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended | ||||||||
September 30, 2012 |
September 25, 2011 |
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(Dollars in thousands) | ||||||||
Cash Flows from Operating Activities of Continuing Operations: |
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Net income (loss) |
$ | (218,679 | ) | $ | 156,746 | |||
Adjustments to reconcile net income to net cash provided by operating activities: |
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Loss (income) from discontinued operations |
6,283 | (79,227 | ) | |||||
Depreciation expense |
26,159 | 30,354 | ||||||
Amortization expense of intangible assets |
32,263 | 32,087 | ||||||
Amortization expense of deferred financing costs and debt discount |
10,739 | 10,064 | ||||||
Loss on extinguishments of debt |
| 15,413 | ||||||
Stock-based compensation |
6,170 | 2,479 | ||||||
Impairment of investments in affiliates |
| 3,060 | ||||||
Gain on sales of businesses and assets |
(332 | ) | | |||||
Goodwill impairment |
332,128 | | ||||||
Deferred income taxes, net |
(27,217 | ) | (2,561 | ) | ||||
Other |
(2,442 | ) | (2,263 | ) | ||||
Changes in operating assets and liabilities, net of effects of acquisitions and disposals: |
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Accounts receivable |
1,934 | (41,009 | ) | |||||
Inventories |
(4,619 | ) | (41,649 | ) | ||||
Prepaid expenses and other current assets |
10,144 | (7,423 | ) | |||||
Accounts payable and accrued expenses |
(2,047 | ) | 7,580 | |||||
Income taxes receivable and payable, net |
(31,352 | ) | (23,431 | ) | ||||
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Net cash provided by operating activities from continuing operations |
139,132 | 60,220 | ||||||
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Cash Flows from Investing Activities of Continuing Operations: |
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Expenditures for property, plant and equipment |
(46,092 | ) | (27,308 | ) | ||||
Proceeds from sales of businesses and assets, net of cash sold |
66,605 | 100,905 | ||||||
Payments for businesses and intangibles acquired, net of cash acquired |
(62,627 | ) | (30,570 | ) | ||||
Investments in affiliates |
(80 | ) | | |||||
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Net cash (used in) provided by investing activities from continuing operations |
(42,194 | ) | 43,027 | |||||
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Cash Flows from Financing Activities of Continuing Operations: |
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Proceeds from long-term borrowings |
| 515,000 | ||||||
Repayment of long-term borrowings |
| (455,800 | ) | |||||
Decrease in notes payable and current borrowings |
(706 | ) | | |||||
Proceeds from stock compensation plans |
7,714 | 32,930 | ||||||
Dividends |
(41,661 | ) | (41,278 | ) | ||||
Debt extinguishment, issuance and amendment fees |
| (18,510 | ) | |||||
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Net cash (used in) provided by financing activities from continuing operations |
(34,653 | ) | 32,342 | |||||
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Cash Flows from Discontinued Operations: |
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Net cash (used in) provided by operating activities |
(6,477 | ) | 28,546 | |||||
Net cash used in investing activities |
(2,351 | ) | (1,997 | ) | ||||
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Net cash (used in) provided by discontinued operations |
(8,828 | ) | 26,549 | |||||
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Effect of exchange rate changes on cash and cash equivalents |
(2,716 | ) | 1,109 | |||||
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Net increase in cash and cash equivalents |
50,741 | 163,247 | ||||||
Cash and cash equivalents at the beginning of the period |
584,088 | 208,452 | ||||||
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Cash and cash equivalents at the end of the period |
$ | 634,829 | $ | 371,699 | ||||
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The accompanying notes are an integral part of the condensed consolidated financial statements.
5
TELEFLEX INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Unaudited)
Common Stock | Additional Paid in Capital |
Retained Earnings |
Accumulated Other Comprehensive Income |
Treasury Stock |
Noncontrolling Interest |
Total Equity |
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Shares | Dollars | Shares | Dollars | |||||||||||||||||||||||||||||||||
(Dollars and shares in thousands, except per share) | ||||||||||||||||||||||||||||||||||||
Balance at December 31, 2010 |
42,245 | $ | 42,245 | $ | 349,156 | $ | 1,578,913 | $ | (51,880 | ) | 2,250 | $ | (135,058 | ) | $ | 3,902 | $ | 1,787,278 | ||||||||||||||||||
Net income |
155,533 | 1,213 | 156,746 | |||||||||||||||||||||||||||||||||
Cash dividends ($1.02 per share) |
(41,278 | ) | (41,278 | ) | ||||||||||||||||||||||||||||||||
Other comprehensive income |
955 | (151 | ) | 804 | ||||||||||||||||||||||||||||||||
Distributions to noncontrolling interest shareholders |
(118 | ) | (118 | ) | ||||||||||||||||||||||||||||||||
Shares issued under compensation plans |
657 | 657 | 29,377 | (56 | ) | 3,394 | 33,428 | |||||||||||||||||||||||||||||
Deferred compensation |
(39 | ) | (4 | ) | 176 | 137 | ||||||||||||||||||||||||||||||
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Balance at September 25, 2011 |
42,902 | $ | 42,902 | $ | 378,494 | $ | 1,693,168 | $ | (50,925 | ) | 2,190 | $ | (131,488 | ) | $ | 4,846 | $ | 1,936,997 | ||||||||||||||||||
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Common Stock | Additional Paid in Capital |
Retained Earnings |
Accumulated Other Comprehensive Income |
Treasury Stock |
Noncontrolling Interest |
Total Equity |
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Shares | Dollars | Shares | Dollars | |||||||||||||||||||||||||||||||||
(Dollars and shares in thousands, except per share) | ||||||||||||||||||||||||||||||||||||
Balance at December 31, 2011 |
42,923 | $ | 42,923 | $ | 380,965 | $ | 1,847,106 | $ | (159,353 | ) | 2,183 | $ | (131,053 | ) | $ | 2,195 | $ | 1,982,783 | ||||||||||||||||||
Net income (loss) |
(219,380 | ) | 701 | (218,679 | ) | |||||||||||||||||||||||||||||||
Cash dividends ($1.02 per share) |
(41,661 | ) | (41,661 | ) | ||||||||||||||||||||||||||||||||
Other comprehensive income |
20,525 | 43 | 20,568 | |||||||||||||||||||||||||||||||||
Distributions to noncontrolling interest shareholders |
(496 | ) | (496 | ) | ||||||||||||||||||||||||||||||||
Shares issued under compensation plans |
147 | 147 | 10,221 | (39 | ) | 2,410 | 12,778 | |||||||||||||||||||||||||||||
Deferred compensation |
(10 | ) | (4 | ) | 116 | 106 | ||||||||||||||||||||||||||||||
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Balance at September 30, 2012 |
43,070 | $ | 43,070 | $ | 391,176 | $ | 1,586,065 | $ | (138,828 | ) | 2,140 | $ | (128,527 | ) | $ | 2,443 | $ | 1,755,399 | ||||||||||||||||||
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The accompanying notes are an integral part of the condensed consolidated financial statements.
6
TELEFLEX INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 Basis of presentation
We prepared the accompanying unaudited condensed consolidated financial statements of Teleflex Incorporated on the same basis as our annual consolidated financial statements.
In the opinion of management, our financial statements reflect all adjustments, which are of a normal recurring nature, necessary for a fair statement of financial statements for interim periods in accordance with U.S. generally accepted accounting principles (GAAP) and with Rule 10-01 of SEC Regulation S-X, which sets forth the instructions for financial statements included in Form 10-Q. The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of our financial statements, as well as the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates.
In accordance with applicable accounting standards, the accompanying condensed consolidated financial statements do not include all of the information and footnote disclosures that are required to be included in our annual consolidated financial statements. The year-end condensed balance sheet data was derived from audited financial statements, but, as permitted by Rule 10-01 of SEC Regulation S-X, does not include all disclosures required by GAAP for complete financial statements. Accordingly, our quarterly condensed consolidated financial statements should be read in conjunction with the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2011.
Certain reclassifications of prior year information have been made to conform to the current years presentation. In the first quarter of 2012, the Company changed its segment reporting from a single reportable segment to four reportable segments, three of which are geographically based. As initially changed, the three geographic segments were North America, EMEA (representing the Companys operations in Europe, the Middle East and Africa) and AJLA (representing Asian and Latin America operations). The Companys fourth reportable segment is comprised of the Companys Original Equipment Manufacturer and Development Services (OEM) businesses. In addition, in the first quarter of 2012, the Company changed the number of its reporting units. In 2011, the Company had six reporting units comprised of North America, EMEA, OEM and three reporting units in the AJLA segment. In 2012, the Company changed its North America reporting unit structure from a single reporting unit to five reporting units comprised of Vascular, Anesthesia/Respiratory, Cardiac, Surgical and Specialty. As a result of the change in the North America reporting unit structure, the Company was required to conduct a goodwill impairment test of each of the North American reporting units and determined that the goodwill of three of the reporting units was impaired. As a result, the Company recorded a goodwill impairment charge of $332 million in the first quarter of 2012. See Note 5 for a discussion of the goodwill impairment. During the third quarter of 2012, due to changes in the Companys management and internal reporting structure, the Companys Latin America operations were moved from the AJLA Segment into the North America Segment. As a result of this change, the North America Segment is now referred to as the Americas Segment and the AJLA Segment is now referred to as the Asia Segment. The change did not affect the Companys reporting unit structure. All prior comparative periods have been restated to reflect this change. See Note 14 for a discussion of the Companys segments.
As used in this report, the terms we, us, our, Teleflex and the Company mean Teleflex Incorporated and its subsidiaries, unless the context indicates otherwise. The results of operations for the periods reported are not necessarily indicative of those that may be expected for a full year.
7
TELEFLEX INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 2 New accounting standards
The Company adopted the following new accounting standards as of January 1, 2012, the first day of its 2012 fiscal year:
Amendment to Fair Value Measurement: In May 2011, the Financial Accounting Standards Board (FASB) revised the fair value measurement and disclosure requirements so that the requirements under GAAP and International Financial Reporting Standards (IFRS) are the same. The guidance clarifies the FASBs intent about the application of existing fair value measurements and requires enhanced disclosures, most significantly related to unobservable inputs used in a fair value measurement that is categorized within Level 3 of the fair value hierarchy. The guidance became effective prospectively during interim and annual periods beginning after December 15, 2011.
Amendment to Comprehensive Income: In June 2011, the FASB amended guidance relating to the presentation of comprehensive income within an entitys financial statements. Under the guidance, an entity has the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income in a single continuous statement or in two separate but consecutive statements. The amended guidance eliminates the previously available option of presenting the components of other comprehensive income as part of the statement of changes in equity. In addition, an entity is required to present adjustments on the face of the financial statements for items that are reclassified from other comprehensive income to net income in the statement where the components of net income and the components of other comprehensive income are presented. The amendment became effective for fiscal years beginning after December 15, 2011 and is applied retrospectively, with the exception of the requirement to present reclassification adjustments from other comprehensive income to net income on the face of the financial statements, which has been deferred pending further deliberation by the FASB.
The Company will adopt the following new accounting standard as of January 1, 2013, the first day of its 2013 fiscal year:
Amendment to Intangibles-Goodwill and Other: In July 2012, the FASB issued updated guidance on the periodic testing of indefinite-lived intangible assets, other than goodwill, for impairment. This updated guidance will permit companies to first assess qualitative factors to determine if it is more-likely-than-not that an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform the quantitative impairment test required under current accounting standards. This guidance is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012, with early adoption permitted.
Note 3 Acquisitions
The Company made the following acquisitions during 2012, all of which were accounted for as business combinations:
| On June 22, 2012, the Company acquired Hotspur Technologies, a developer of catheter-based technologies designed to restore blood flow in patients with obstructed vessels. The acquisition of this business complements the dialysis access product line in the Companys Cardiac Care division. The Company paid $15.0 million in cash as initial consideration for the business. |
| On May 22, 2012, the Company acquired Semprus BioSciences, a biomedical company that developed a long-lasting, covalently bonded, non-leaching polymer designed to reduce infections and thrombus related complications. While the Company will explore opportunities to apply this technology to a broad array of its product offerings, the initial focus for the technology will be with respect to vascular devices within the Companys Critical Care division. The Company paid $30.0 million in cash as initial consideration for the business. |
8
TELEFLEX INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
| On May 3, 2012, the Company acquired substantially all of the assets of Axiom Technology Partners, LLC, constituting its EFx laparoscopic fascial closure system, which is designed for the closure of abdominal trocar defects through which access ports and instruments were used during laparoscopic surgeries. The acquisition of this business complements the surgical closure product line in the Companys Surgical Care division. The Company paid $7.5 million in cash as initial consideration for the business. |
| On April 5, 2012, the Company acquired the EZ-Blocker product line, a single-use catheter used to perform lung isolation and one-lung ventilation. The acquisition of this product line complements the Anesthesia product portfolio in the Companys Critical Care division. The Company paid $3.3 million in cash as initial consideration for the business. |
In connection with the acquisitions, the Company agreed to pay contingent consideration based on the achievement of specified objectives, including regulatory approvals and sales targets. The range of undiscounted amounts the Company could be required to pay for contingent consideration arrangements is between $2.0 million to $90.0 million.
The total fair value of consideration for the acquisitions is estimated at $111.6 million, which includes the initial payments of $55.8 million in cash and the estimated fair value of the contingent consideration to be paid to the sellers of $55.8 million. The fair value of each component of contingent consideration was estimated based on the probability of achieving the specified objective using a probability-weighted discounted cash flow model. This fair value measurement is based on significant inputs not observed in the market and thus represents a Level 3 measurement as defined in connection with the fair value hierarchy (see Note 9, Fair value measurements). Any future change in the estimated fair value of the contingent consideration will be recognized in selling, general and administrative expenses in the statement of income for the period in which the estimated fair value changes. A change in fair value of the contingent consideration could have a material effect on the Companys results of operations and financial position for the period in which the change in estimate occurs.
Transaction expenses associated with the acquisitions, which are included in selling, general and administrative expenses on the Condensed Consolidated Statements of Income, were $0.5 million and $1.2 million for the three and nine months ended September 30, 2012, respectively. The Company has recorded an aggregate operating loss of approximately $4.5 million and $6.1 million resulting from the acquisitions for the three and nine months ended September 30, 2012, respectively. The results of operations of the acquired businesses and assets are included in the Condensed Consolidated Statements of Income from their respective acquisition date. Pro forma information is not presented as the operations of the acquired businesses are not significant compared to the overall operations of the Company.
9
TELEFLEX INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The following table presents the purchase price allocation among the assets acquired and liabilities assumed in the acquisitions that occurred during the nine months ended September 30 2012:
(Dollars in millions) | ||||
Assets |
||||
Current assets |
$ | 4.1 | ||
Property, plant and equipment |
1.3 | |||
Intangible assets: |
||||
Intellectual property |
46.9 | |||
In-process research and development (IPR&D) |
45.5 | |||
Goodwill |
29.0 | |||
|
|
|||
Total assets acquired |
126.8 | |||
|
|
|||
Less: |
||||
Current liabilities |
4.8 | |||
Deferred tax liabilities |
10.4 | |||
|
|
|||
Liabilities assumed |
15.2 | |||
|
|
|||
Net assets acquired |
$ | 111.6 | ||
|
|
During the third quarter the Company refined the purchase price allocation, principally with respect to contingent consideration, due to changes in probabilities of achieving specified objectives and changes in discount rates. These changes also impacted the fair values of the acquired intangibles and deferred taxes. The Company is continuing to evaluate the initial purchase price allocation as of the respective acquisition dates. Further adjustments may be necessary as additional information related to the fair values of assets acquired and liabilities assumed is assessed.
Certain assets acquired in the acquisitions qualify for recognition as intangible assets, apart from goodwill, in accordance with FASB guidance related to business combinations. The estimated fair values of intangible assets acquired include intellectual property of $46.9 million and IPR&D of $45.5 million. Intellectual property has useful lives ranging from 15 to 20 years, and IPR&D has an indefinite life and is not amortized until completion and development of the related project, at which time the IPR&D becomes an amortizable asset. If the related project is not completed in a timely manner, the Company may incur an impairment charge related to the IPR&D, calculated as the excess of the assets carrying value over its fair value. The goodwill resulting from the acquisitions primarily reflects the expected revenue growth attributable to anticipated increased market penetration from future products and customers. Goodwill and the step-up in basis of the intangible assets in connection with the acquisitions are not deductible for tax purposes.
10
TELEFLEX INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 4 Restructuring and other impairment charges
The amounts recognized in restructuring and other impairment charges for the three and nine months ended September 30, 2012 and September 25, 2011 consisted of the following:
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, 2012 |
September 25, 2011 |
September 30, 2012 |
September 25, 2011 |
|||||||||||||
(Dollars in thousands) | ||||||||||||||||
2012 restructuring charges |
$ | 1,107 | $ | | $ | 1,978 | $ | | ||||||||
2011 restructuring program |
(60 | ) | | (60 | ) | | ||||||||||
2007 Arrow integration program |
41 | (173 | ) | (1,834 | ) | 537 | ||||||||||
Impairment charges |
| | | 3,061 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Restructuring and other impairment charges |
$ | 1,088 | $ | (173 | ) | $ | 84 | $ | 3,598 | |||||||
|
|
|
|
|
|
|
|
2012 Restructuring Charges
The Company regularly evaluates opportunities to consolidate facilities, lower costs and optimize operating efficiencies. As a result the Company has identified an opportunity to improve its supply chain strategy by consolidating its three North American warehouses into one centralized warehouse. This project will entail termination benefits related to a reduction in force, contract termination costs related to a lease, and facility closure costs. During the three months ended September 30, 2012, the Company incurred restructuring charges of $1.1 million for this project. The Company expects to complete the project over a one year period and anticipates incurring additional charges of $1.6 million related to this initiative. During the nine months ended September 30, 2012, the Company incurred restructuring charges of $2.0 million, primarily related to the warehouse consolidation as noted above and charges related to the termination of certain distributor agreements in Europe.
2011 Restructuring Program
During 2011, the Company initiated a restructuring program at three facilities to consolidate operations and reduce costs. During the third quarter of 2012, the Company reversed $0.1 million of restructuring reserves that were determined to be no longer required. The Company expects to incur additional contract termination costs of approximately $2.7 million when it has completely exited a leased facility. All of the employee termination benefits will be paid in 2012. The payment of the lease contract termination costs will continue until 2015.
11
TELEFLEX INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2007 Arrow Integration Program
In connection with the Companys acquisition of Arrow International, Inc. (Arrow), the Company implemented a program in 2007 to integrate Arrows businesses into the Companys other businesses. The aspects of this program that affect Teleflex employees and facilities (such aspects being referred to as the 2007 Arrow integration program) are charged to earnings and classified as restructuring and impairment charges. The following table provides information relating to the charges associated with the 2007 Arrow integration program that were included in restructuring and other impairment charges in the condensed consolidated statements of income for the periods presented:
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, 2012 |
September 25, 2011 |
September 30, 2012 |
September 25, 2011 |
|||||||||||||
(Dollars in thousands) | ||||||||||||||||
Termination benefits |
$ | | $ | | $ | | $ | 11 | ||||||||
Facility closure costs |
41 | 40 | 189 | 114 | ||||||||||||
Contract termination costs |
| (213 | ) | (2,023 | ) | 412 | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
$ | 41 | $ | (173 | ) | $ | (1,834 | ) | $ | 537 | |||||||
|
|
|
|
|
|
|
|
The following table provides information relating to changes in the accrued liability associated with the 2007 Arrow integration program during the nine months ended September 30, 2012:
Balance at December 31, 2011 |
Subsequent Accruals |
Payments | Translation | Balance at September 30, 2012 |
||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Termination benefits |
$ | 320 | $ | | $ | (4 | ) | $ | (2 | ) | $ | 314 | ||||||||
Facility closure costs |
| 189 | (189 | ) | | | ||||||||||||||
Contract termination costs |
2,133 | (2,023 | ) | | (1 | ) | 109 | |||||||||||||
Other restructuring costs |
21 | | | | 21 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
$ | 2,474 | $ | (1,834 | ) | $ | (193 | ) | $ | (3 | ) | $ | 444 | ||||||||
|
|
|
|
|
|
|
|
|
|
The reduction in the accrual for contract termination costs relates to a revised estimate for the settlement of a dispute involving the termination of a European distributor agreement that was established in connection with the acquisition of Arrow in 2007.
As of September 30, 2012, the Company expects future restructuring expenses associated with the 2007 Arrow integration program, if any, to be nominal.
Impairment Charges
In the second quarter of 2011, the Company recognized impairment charges of $3.1 million related to the decline in value of its investments in affiliates that are considered to be other than temporary. In making this determination, the Company considered multiple factors, including its intent and ability to hold investments, operating losses of investees that demonstrate an inability to recover the carrying value of the investments, the investees liquidity and cash position and level of market acceptance of the investees products and services.
12
TELEFLEX INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 5 Impairment of goodwill
In the first quarter of 2012, the Company changed its North America reporting unit structure from a single reporting unit to five reporting units comprised of Vascular, Anesthesia/Respiratory, Cardiac, Surgical and Specialty. The Company allocated the assets and liabilities of the North America Segment among the new reporting units based on their respective operating activities, and then allocated goodwill among the reporting units using a relative fair value approach, as required by FASB Accounting Standards Codification Topic 350. The fair value of each reporting unit was determined based on a weighted combination of (i) estimation of the discounted cash flows of each of the reporting units based on projected earnings in the future (the income approach) and (ii) analysis of sales of similar assets in actual transactions (the market approach).
Following this allocation, the Company performed goodwill impairment tests on these new reporting units in the first quarter of 2012. As a result of these tests, the Company determined that three of the reporting units in the North America Segment were impaired, and it recorded goodwill impairment charges of $220 million in the Vascular reporting unit, $107 million in the Anesthesia/Respiratory reporting unit and $5 million in the Cardiac reporting unit in the first quarter of 2012.
Note 6 Inventories
Inventories as of September 30, 2012 and December 31, 2011 consisted of the following:
September 30, 2012 |
December 31, 2011 |
|||||||
(Dollars in thousands) | ||||||||
Raw materials |
$ | 84,294 | $ | 87,621 | ||||
Work-in-process |
47,233 | 45,486 | ||||||
Finished goods |
194,290 | 198,587 | ||||||
|
|
|
|
|||||
325,817 | 331,694 | |||||||
Less: Inventory reserve |
(30,206 | ) | (32,919 | ) | ||||
|
|
|
|
|||||
Inventories |
$ | 295,611 | $ | 298,775 | ||||
|
|
|
|
Note 7 Goodwill and other intangible assets
In the first quarter of 2012, the Company changed its reporting structure to four reportable segments, three of which are geographically-based and one of which is comprised of the Companys OEM business. During the third quarter of 2012, due to changes in the Companys management and internal reporting structure, the Companys Latin America operations were moved from the AJLA Segment into the North America Segment. As a result of this change, the North America Segment is now referred to as the Americas Segment and the AJLA Segment is now referred to as the Asia Segment. All prior comparative periods have been restated to reflect this change. See Note 14, Business segment information for additional information on the Companys new reporting structure.
13
TELEFLEX INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The following table provides information relating to changes in the carrying amount of goodwill, by reportable segment, for the nine months ended September 30, 2012:
Americas Segment |
EMEA Segment |
Asia Segment |
OEM Segment |
Total | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Balance as of December 31, 2011 |
||||||||||||||||||||
Goodwill |
$ | 1,005,021 | $ | 283,362 | $ | 121,983 | $ | 28,176 | $ | 1,438,542 | ||||||||||
Accumulated impairment losses |
| | | | | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
1,005,021 | 283,362 | 121,983 | 28,176 | 1,438,542 | ||||||||||||||||
Goodwill impairment charges |
(332,128 | ) | | | | (332,128 | ) | |||||||||||||
Goodwill related to acquisitions |
28,274 | 687 | | | 28,961 | |||||||||||||||
Goodwill related to dispositions |
| | | (28,176 | ) | (28,176 | ) | |||||||||||||
Translation adjustment |
2,347 | (1,307 | ) | 5,701 | | 6,741 | ||||||||||||||
Transfer of goodwill |
679 | (679 | ) | | | | ||||||||||||||
Balance as of September 30, 2012 |
||||||||||||||||||||
Goodwill |
1,036,321 | 282,063 | 127,684 | | 1,446,068 | |||||||||||||||
Accumulated impairment losses |
(332,128 | ) | | | | (332,128 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
$ | 704,193 | $ | 282,063 | $ | 127,684 | $ | | $ | 1,113,940 | |||||||||||
|
|
|
|
|
|
|
|
|
|
See Note 5 for information relating to the goodwill impairment charges.
The following table provides information, as of September 30, 2012 and December 31, 2011, regarding the gross carrying amount of, and accumulated amortization relating to, intangible assets:
Gross Carrying Amount | Accumulated Amortization | |||||||||||||||
September 30, 2012 |
December 31, 2011 |
September 30, 2012 |
December 31, 2011 |
|||||||||||||
(Dollars in thousands) | ||||||||||||||||
Customer relationships |
$ | 535,923 | $ | 537,094 | $ | (134,989 | ) | $ | (117,505 | ) | ||||||
In-process research and development |
45,494 | | | | ||||||||||||
Intellectual property |
252,654 | 221,171 | (90,749 | ) | (85,402 | ) | ||||||||||
Distribution rights |
16,447 | 16,669 | (13,642 | ) | (13,484 | ) | ||||||||||
Trade names |
319,975 | 322,404 | (197 | ) | (1,160 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
$ | 1,170,493 | $ | 1,097,338 | $ | (239,577 | ) | $ | (217,551 | ) | |||||||
|
|
|
|
|
|
|
|
The increase in intangible assets during the nine months ended September 30, 2012 primarily reflects the effect of the Companys acquisitions. See Note 3 for discussion of Companys acquisitions.
14
TELEFLEX INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Amortization expense related to intangible assets was approximately $11.1 million and $10.7 million for the three months ended September 30, 2012 and September 25, 2011, respectively, and $32.3 million and $32.1 million for the nine months ended September 30, 2012 and September 25, 2011, respectively. Estimated annual amortization expense for the remainder of 2012 and the next four succeeding years is as follows (dollars in thousands):
2012 |
$ | 10,800 | ||
2013 |
44,600 | |||
2014 |
41,900 | |||
2015 |
37,500 | |||
2016 |
37,400 |
Note 8 Financial instruments
The Company uses derivative instruments for risk management purposes. Forward rate contracts are used to manage foreign currency transaction exposure. These derivative instruments are designated as cash flow hedges and are recorded on the balance sheet at fair market value. The effective portion of the gains or losses on derivatives is reported as a component of other comprehensive income and reclassified into earnings in the period or periods during which the hedged transaction affects earnings. Gains and losses on the derivatives representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current earnings. See Note 9, Fair value measurement for additional information.
The following table presents the location and fair values of derivative instruments designated as hedging instruments in the condensed consolidated balance sheet as of September 30, 2012 and December 31, 2011:
September 30, 2012 Fair Value |
December 31, 2011 Fair Value |
|||||||
(Dollars in thousands) | ||||||||
Asset derivatives: |
||||||||
Foreign exchange contracts: |
||||||||
Other assets current |
$ | 447 | $ | 204 | ||||
|
|
|
|
|||||
Total asset derivatives |
$ | 447 | $ | 204 | ||||
|
|
|
|
|||||
Liability derivatives: |
||||||||
Foreign exchange contracts: |
||||||||
Derivative liabilities current |
$ | 957 | $ | 633 | ||||
|
|
|
|
|||||
Total liability derivatives |
$ | 957 | $ | 633 | ||||
|
|
|
|
15
TELEFLEX INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The following table provides information as to the gains and losses attributable to derivatives in cash flow hedging relationships that were reported in other comprehensive income (OCI), and the location and amount of gains and losses attributable to such derivatives that were reclassified from accumulated other comprehensive income (AOCI) in the condensed consolidated statement of income for the three and nine months ended September 30, 2012 and September 25, 2011:
After Tax Gain/(Loss) Recognized in OCI |
||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, 2012 |
September 25, 2011 |
September 30, 2012 |
September 25, 2011 |
|||||||||||||
(Dollars in thousands) | ||||||||||||||||
Interest rate swap |
$ | 2,329 | $ | 2,433 | $ | 7,032 | $ | 5,784 | ||||||||
Foreign exchange contracts |
377 | (250 | ) | (20 | ) | (276 | ) | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ | 2,706 | $ | 2,183 | $ | 7,012 | $ | 5,508 | ||||||||
|
|
|
|
|
|
|
|
Pre-Tax (Gain)/Loss Reclassified from AOCI into Income | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, 2012 |
September 25, 2011 |
September 30, 2012 |
September 25, 2011 |
|||||||||||||
(Dollars in thousands) | ||||||||||||||||
Interest rate swap: |
||||||||||||||||
Interest expense |
$ | 3,663 | $ | 3,978 | $ | 11,057 | $ | 11,633 | ||||||||
Foreign exchange contracts: |
||||||||||||||||
Cost of goods sold |
13 | 183 | (754 | ) | (479 | ) | ||||||||||
Income from discontinued operations |
| 257 | | (511 | ) | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ | 3,676 | $ | 4,418 | $ | 10,303 | $ | 10,643 | ||||||||
|
|
|
|
|
|
|
|
There was no ineffectiveness related to the Companys derivatives for the three and nine months ended September 30, 2012 and September 25, 2011.
During the third quarter of 2012, the Company entered into forward exchange contracts for Singapore dollars and US dollars in anticipation of the acquisition of substantially all of the assets of LMA International N.V. (LMA). In accordance with FASB guidance, a forecasted transaction is not eligible for hedge accounting if the forecasted transaction involves a business combination. Therefore, gains and losses relating to this arrangement were recognized as incurred. The Company realized a pre-tax loss of $7.6 million upon settlement of the forward exchange contracts. See Note 17, Subsequent event for additional information on the LMA acquisition.
In 2011, the Company terminated its interest rate swap covering a notional amount of $350 million designated as a hedge against the variability of the cash flows in the interest payments under the Companys term loan. As of September 30, 2012, all unrealized losses within AOCI associated with this interest rate swap has been reclassified into earnings.
Based on exchange rates at September 30, 2012, approximately $0.2 million of unrealized losses, net of tax, within AOCI are expected to be reclassified from AOCI during the next twelve months. However, the actual amount reclassified from AOCI could vary due to future changes in exchange rates.
16
TELEFLEX INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Concentration of Credit Risk
Concentrations of credit risk with respect to trade accounts receivable are generally limited due to the Companys large number of customers and their diversity across many geographic areas. A portion of the Companys trade accounts receivable outside the United States, however, include sales to government-owned or supported healthcare systems in several countries which are subject to payment delays. Payment is dependent upon the financial stability and creditworthiness of those countries national economies. Deteriorating credit and economic conditions in parts of Europe, particularly in Spain, Italy, Greece and Portugal, may continue to increase the average length of time it takes the Company to collect its account receivable in certain regions within these countries.
The Company evaluates all receivables for potential collection risks. If the financial condition of customers or the countries healthcare systems continue to deteriorate such that their ability to make payments is uncertain, the Company may be required to increase its allowance for doubtful accounts in future periods.
The Companys aggregate accounts receivable, net of the allowance for doubtful accounts, in Spain, Italy, Greece and Portugal as a percent of the Companys total accounts receivable at the end of the period are as follows:
September 30, 2012 | December 31, 2011 | |||||||
(Dollars in thousands) | ||||||||
Accounts receivable, net in Spain, Italy, Greece and Portugal |
102,664 | 108,545 | ||||||
Percentage of total accounts receivable, net |
38 | % | 38 | % |
For the nine months ending September 30, 2012 and September 25, 2011, net revenues to customers in Spain, Italy, Greece and Portugal were $101.4 million and $108.0 million, respectively. During the second quarter of 2012, the Company collected approximately $17.5 million from the Spanish government related to past due receivables. During the third quarter of 2012, the Company collected approximately $6.5 million from the Italian government related to past due receivables.
Note 9 Fair value measurement
For a description of the fair value hierarchy, see Note 10 to the Companys 2011 consolidated financial statements included in its annual report on Form 10-K for the year ended December 31, 2011.
The following tables provide information regarding the financial assets and liabilities carried at fair value measured on a recurring basis as of September 30, 2012 and September 25, 2011:
Total carrying value at September 30, 2012 |
Quoted prices in active markets (Level 1) |
Significant other observable inputs (Level 2) |
Significant unobservable inputs (Level 3) |
|||||||||||||
(Dollars in thousands) | ||||||||||||||||
Investments in marketable securities |
$ | 4,781 | $ | 4,781 | $ | | $ | | ||||||||
Derivative assets |
447 | | 447 | | ||||||||||||
Derivative liabilities |
957 | | 957 | | ||||||||||||
Contingent consideration liabilities |
58,885 | | | 58,885 |
17
TELEFLEX INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Total carrying value at September 25, 2011 |
Quoted prices in active markets (Level 1) |
Significant other observable inputs (Level 2) |
Significant unobservable inputs (Level 3) |
|||||||||||||
(Dollars in thousands) | ||||||||||||||||
Cash and cash equivalents |
$ | 45,004 | $ | 45,004 | $ | | $ | | ||||||||
Investments in marketable securities |
3,762 | 3,762 | | | ||||||||||||
Bonds foreign government |
4,976 | | 4,976 | | ||||||||||||
Derivative assets |
66 | | 66 | | ||||||||||||
Derivative liabilities |
15,566 | | 15,566 | | ||||||||||||
Contingent consideration liabilities |
9,566 | | | 9,566 |
The following table provides information regarding changes in Level 3 financial liabilities during the periods ended September 30, 2012 and September 25, 2011:
Contingent consideration | ||||||||
2012 | 2011 | |||||||
(Dollars in thousands) | ||||||||
Beginning balance |
$ | 9,676 | $ | | ||||
Initial estimate upon acquisition |
55,773 | 15,400 | ||||||
Payment |
(7,000 | ) | (6,000 | ) | ||||
Revaluations |
461 | 166 | ||||||
Translation adjustment |
(25 | ) | | |||||
|
|
|
|
|||||
Ending balance |
$ | 58,885 | $ | 9,566 | ||||
|
|
|
|
The carrying amount of long-term debt reported in the condensed consolidated balance sheet as of September 30, 2012 is $962.6 million. The Company uses a discounted cash flow technique that incorporates a market interest yield curve with adjustments for duration, optionality, and risk profile to determine the fair value of its debt. The Companys implied credit rating is a factor in determining the market interest yield curve. The following table provides the fair value of the Companys debt by fair value hierarchy level as of September 30, 2012:
Fair value of debt | ||||
(Dollars in thousands) | ||||
Level 1 |
$ | 773,404 | ||
Level 2 |
381,678 | |||
|
|
|||
Total |
$ | 1,155,082 | ||
|
|
In the first quarter of 2012, the Company recorded a goodwill impairment charge of $332 million based on Level 3 inputs. See Note 5 for a discussion of the goodwill impairment.
Valuation Techniques
The Companys financial assets valued based upon Level 1 inputs are comprised of investments in marketable securities held in trust, which are available to pay benefits under certain deferred compensation plans and other compensatory arrangements. The investment assets of the trust are valued using quoted market prices.
The Companys financial assets valued based upon Level 2 inputs are comprised of foreign currency forward contracts. The Companys financial liabilities valued based upon Level 2 inputs are comprised of foreign currency forward contracts and, at September 25, 2011, an interest rate swap contract. The Company uses
18
TELEFLEX INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
forward rate contracts to manage currency transaction exposure and used interest rate swap to manage exposure to interest rate changes. The fair value of the foreign currency forward exchange contracts represents the amount required to enter into offsetting contracts with similar remaining maturities based on quoted market prices. The fair value of the interest rate swap contract was developed from market-based inputs under the income approach using cash flows discounted at relevant market interest rates. The Company has taken into account the creditworthiness of the counterparties in measuring fair value. The decrease in the Companys derivative liabilities in 2012 is due to the termination of its interest rate swap agreement. See Note 8, Financial instruments for additional information.
The Companys financial liabilities valued based upon Level 3 inputs are comprised of contingent consideration arrangements pertaining to the Companys acquisitions. The Company accounts for contingent consideration in accordance with applicable guidance provided within the business combination rules. The Company is contractually obligated to pay certain contingent consideration upon the achievement of specified objectives, including regulatory approvals, sales targets and, in some instances, the passage of time, referred to as milestone payments, and therefore recorded contingent consideration liabilities at the time of the acquisitions. As a result, the Company is required to update its assumptions each reporting period based on new developments and record such amounts at fair value until such consideration is satisfied through payment upon the achievement of the specified objectives or failure to achieve the specified objectives.
It is estimated that the payments of the various milestones may occur as early as 2012 and extend as far as 2018 or later. As of September 30, 2012, the range of undiscounted amounts the Company could be required to pay for contingent consideration arrangements is between $7.0 million and $107.0 million. The Company has determined the fair value of the liabilities for the contingent consideration based on a probability-weighted discounted cash flow analysis. This fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement within the fair value hierarchy. The fair value of the contingent consideration liability associated with future milestone payments was based on several factors including:
| estimated cash flows projected from the success of market launches; |
| the estimated time and resources needed to complete the development of the acquired technologies; |
| the uncertainty of obtaining regulatory approvals within the required time periods; and |
| the risk adjusted discount rate for fair value measurement. |
As of September 30, 2012, of the $58.9 million of total contingent consideration, the Company has recorded approximately $21.6 million in current contingent consideration and the remaining $37.3 million in other liabilities.
Note 10 Changes in shareholders equity
In 2007, the Companys Board of Directors authorized the repurchase of up to $300 million of outstanding Company common stock. Repurchases of Company stock under the Board authorization may be made from time to time in the open market and may include privately-negotiated transactions as market conditions warrant and subject to regulatory considerations. The stock repurchase program has no expiration date and the Companys ability to execute on the program will depend on, among other factors, cash requirements for acquisitions, cash generated from operations, debt repayment obligations, market conditions and regulatory requirements. In addition, under the Companys senior credit agreements, the Company is subject to certain restrictions relating to its ability to repurchase shares in the event the Companys consolidated leverage ratio (generally, the ratio of Consolidated Total Indebtedness to Consolidated EBITDA, as defined in the senior credit agreements) exceeds certain levels, which may limit the Companys ability to repurchase shares under this Board authorization. Through September 30, 2012, no shares have been purchased under this Board authorization.
19
TELEFLEX INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The following table provides a reconciliation of basic to diluted weighted average shares outstanding:
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, 2012 |
September 25, 2011 |
September 30, 2012 |
September 25, 2011 |
|||||||||||||
(Shares in thousands) | ||||||||||||||||
Basic |
40,890 | 40,684 | 40,831 | 40,426 | ||||||||||||
Dilutive shares assumed issued |
621 | 259 | | 312 | ||||||||||||
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|
|
|
|
|
|||||||||
Diluted |
41,511 | 40,943 | 40,831 | 40,738 | ||||||||||||
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|
|
|
|
|
|
|
Weighted average stock options that were antidilutive and therefore not included in the calculation of earnings per share were approximately 8,403 thousand and 9,007 thousand for the three and nine month periods ended September 30, 2012, respectively, and approximately 8,785 thousand and 8,866 thousand for the three and nine month periods ended September 25, 2011, respectively.
The following tables provide information relating to the changes in accumulated other comprehensive income (loss), net of tax, for the nine months ended September 30, 2012 and September 25, 2011:
Cash Flow Hedges |
Pension and Other Postretirement Benefit Plans |
Foreign Currency Translation Adjustment |
Accumulated Other Comprehensive Income (Loss) |
|||||||||||||
(Dollars in thousands) | ||||||||||||||||
Balance at December 31, 2011 |
$ | (7,257 | ) | $ | (134,548 | ) | $ | (17,548 | ) | $ | (159,353 | ) | ||||
Current-period other comprehensive income |
7,012 | 3,208 | 10,305 | 20,525 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Balance at September 30, 2012 |
$ | (245 | ) | $ | (131,340 | ) | $ | (7,243 | ) | $ | (138,828 | ) | ||||
|
|
|
|
|
|
|
|
Cash Flow Hedges |
Pension and Other Postretirement Benefit Plans |
Foreign Currency Translation Adjustment |
Accumulated Other Comprehensive Income (Loss) |
|||||||||||||
(Dollars in thousands) | ||||||||||||||||
Balance at December 31, 2010 |
$ | (15,262 | ) | $ | (95,746 | ) | $ | 59,128 | $ | (51,880 | ) | |||||
Current-period other comprehensive income |
5,508 | 6,423 | 11,866 | 23,797 | ||||||||||||
Divestiture of Marine |
| 8,427 | (33,424 | ) | (24,997 | ) | ||||||||||
Discontinued operations |
| 1 | 2,154 | 2,155 | ||||||||||||
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|
|
|
|
|
|||||||||
Balance at September 25, 2011 |
$ | (9,754 | ) | $ | (80,895 | ) | $ | 39,724 | $ | (50,925 | ) | |||||
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|
|
|
|
|
Note 11 Taxes on income from continuing operations
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, 2012 |
September 25, 2011 |
September 30, 2012 |
September 25, 2011 |
|||||||||||||
Effective income tax rate |
22.8 | % | 23.5 | % | (1.4 | )% | 23.0 | % |
The effective income tax rate for the three months and nine months ended September 30, 2012 was 22.8% and (1.4)%, respectively, compared to 23.5% and 23.0% for the three months and nine months ended September 25, 2011, respectively. The decrease in the effective tax rate for the nine months ended September 30, 2012 was
20
TELEFLEX INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
impacted by the Companys ability to deduct only $45 million of the $332 million goodwill impairment charge recorded in the first quarter of 2012. Accordingly, the reduction in the tax rate for the nine months ended September 30, 2012 reflects the Companys ability to realize only a limited tax benefit related to this charge.
Note 12 Pension and other postretirement benefits
The Company has a number of defined benefit pension and postretirement plans covering eligible U.S. and non-U.S. employees. The defined benefit pension plans are noncontributory. The benefits under these plans are based primarily on years of service and employees pay near retirement. The Companys funding policy for U.S. plans is to contribute annually, at a minimum, amounts required by applicable laws and regulations. Obligations under non-U.S. plans are systematically provided for by depositing funds with trustees or by book reserves. In 2008 the Company amended the Teleflex Retirement Income Plan (TRIP) to cease future benefit accruals for all employees, other than those subject to a collective bargaining agreement, and amended its Supplemental Executive Retirement Plans (SERP) for all executives to cease future benefit accruals for both employees and executives as of December 31, 2008. The Company replaced the non-qualified defined benefits provided under the SERP with a non-qualified defined contribution arrangement under the Companys Deferred Compensation Plan, effective January 1, 2009. In addition, in 2008, the Companys postretirement benefit plans were amended to eliminate future benefits for employees, other than those subject to a collective bargaining agreement, who had not attained age 50 and whose age plus service was less than 65.
The Company and certain of its subsidiaries provide medical, dental and life insurance benefits to pensioners and survivors. The associated plans are unfunded and approved claims are paid from Company funds.
Net benefit cost of pension and postretirement benefit plans consisted of the following:
Pension Three Months Ended |
Postretirement Benefits Three Months Ended |
Pension Nine Months Ended |
Postretirement Benefits Nine Months Ended |
|||||||||||||||||||||||||||||
September 30, 2012 |
September 25, 2011 |
September 30, 2012 |
September 25, 2011 |
September 30, 2012 |
September 25, 2011 |
September 30, 2012 |
September 25, 2011 |
|||||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||||||||
Service cost |
$ | 696 | $ | 531 | $ | 159 | $ | (37 | ) | $ | 2,085 | $ | 1,723 | $ | 475 | $ | 359 | |||||||||||||||
Interest cost |
4,115 | 4,387 | 473 | 441 | 12,366 | 12,973 | 1,419 | 1,541 | ||||||||||||||||||||||||
Expected return on Plan assets |
(5,043 | ) | (5,160 | ) | | | (15,128 | ) | (15,003 | ) | | | ||||||||||||||||||||
Net amortization and deferral |
1,604 | 987 | 123 | (172 | ) | 4,814 | 3,018 | 368 | (34 | ) | ||||||||||||||||||||||
Settlement charge |
| | | | (124 | ) | | | | |||||||||||||||||||||||
Curtailment charge |
| | | | 111 | | | | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Net benefit cost |
$ | 1,372 | $ | 745 | $ | 755 | $ | 232 | $ | 4,124 | $ | 2,711 | $ | 2,262 | $ | 1,866 | ||||||||||||||||
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|
|
The increase in net amortization expense for the pension and postretirement benefit plans reflects the loss due to actuarial changes in benefit obligation recorded at December 31, 2011.
The Company is required to make minimum pension contributions totaling $19.5 million during 2012, of which $3.9 million and $15.2 million were made during the three and nine months ended September 30, 2012, respectively.
Note 13 Commitments and contingent liabilities
Product warranty liability: The Company warrants to the original purchasers of certain of its products that it will, at its option, repair or replace such products, without charge, if they fail due to a manufacturing defect. Warranty periods vary by product. The Company has recourse provisions for certain products that would enable recovery from third parties for amounts paid under the warranty. The Company accrues for product warranties when, based on available information, it is probable that customers will make claims under warranties relating to products that have
21
TELEFLEX INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
been sold, and a reasonable estimate of the costs (based on historical claims experience relative to sales) can be made. The following table provides information regarding changes in the Companys product warranty liability accruals for the nine months ended September 30, 2012 (dollars in thousands):
Balance December 31, 2011 |
$ | 7,935 | ||
Accruals for warranties issued in 2012 |
72 | |||
Settlements (cash and in kind)(a) |
(6,305 | ) | ||
Accruals related to pre-existing warranties(a) |
(1,255 | ) | ||
Translation |
(20 | ) | ||
|
|
|||
Balance September 30, 2012 |
$ | 427 | ||
|
|
(a) | Including those related to divested businesses. See Note 16, Divestiture-related activities for additional information. |
Operating leases: The Company uses various leased facilities and equipment in its operations. The terms for these leased assets vary depending on the lease agreement. At September 30, 2012, the Company had no residual value guarantees related to its operating leases.
Environmental: The Company is subject to contingencies as a result of environmental laws and regulations that in the future may require the Company to take further action to correct the effects on the environment of prior disposal practices or releases of chemical or petroleum substances by the Company or other parties. Much of this liability results from the U.S. Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), often referred to as Superfund, the U.S. Resource Conservation and Recovery Act (RCRA) and similar state laws. These laws require the Company to undertake certain investigative and remedial activities at sites where the Company conducts or once conducted operations or at sites where Company-generated waste was disposed.
Remediation activities vary substantially in duration and cost from site to site. These activities, and their associated costs, depend on the mix of unique site characteristics, evolving remediation technologies, the regulatory agencies involved and their enforcement policies, as well as the presence or absence of other potentially responsible parties. At September 30, 2012, the Company has recorded approximately $2.6 million in accrued liabilities and approximately $6.3 million in other liabilities relating to these matters. Considerable uncertainty exists with respect to these liabilities and, if adverse changes in circumstances occur, potential liability may exceed the amount accrued as of September 30, 2012. The time frame over which the accrued amounts may be paid out, based on past history, is estimated to be 15-20 years.
Litigation: The Company is a party to various lawsuits and claims arising in the normal course of business. These lawsuits and claims include actions involving product liability, intellectual property, employment and environmental matters. Based on information currently available, advice of counsel, established reserves and other resources, the Company does not believe that any such actions are likely to be, individually or in the aggregate, material to its business, financial condition, results of operations or liquidity. However, litigation is subject to many uncertainties, and the outcome of litigation is not predictable with assurance. An adverse outcome in current or future litigation could have a material adverse effect on the Companys business, financial condition, results of operations or liquidity. Legal costs such as outside counsel fees and expenses are charged to expense in the period incurred.
Tax audits and examinations: The Company and its subsidiaries are routinely subject to tax examinations by various taxing authorities. As of September 30, 2012, the most significant tax examinations in process are in Canada, the Czech Republic, France and Austria. In conjunction with these examinations and as a regular and routine practice, the Company may determine a need to establish certain reserves or to adjust existing reserves
22
TELEFLEX INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
with respect to uncertain tax positions. Accordingly, developments occurring with respect to these examinations, including resolution of uncertain tax positions, could result in increases or decreases to the Companys recorded tax liabilities, which could impact the Companys financial results.
Other: The Company has various purchase commitments for materials, supplies and items of permanent investment incident to the ordinary conduct of its business. On average, such commitments are not at prices in excess of current market.
Note 14 Business segment information
In the first quarter of 2012, as a result of a reorganization of the Companys internal business unit reporting structure and related internal financial reporting, the Company changed its segment reporting from a single operating segment to four operating segments. During the third quarter of 2012, due to changes in the Companys management and internal reporting structure, the Companys Latin America operations were moved from the AJLA Segment into the North America Segment. As a result of this change, the North America Segment is now referred to as the Americas Segment and the AJLA Segment is now referred to as the Asia Segment. The change did not affect the Companys reporting unit structure. All prior comparative periods have been restated to reflect this change.
An operating segment is a component of the Company (a) that engages in business activities from which it may earn revenues and incur expenses, (b) whose operating results are regularly reviewed by the Companys chief operating decision maker to make decisions about resources to be allocated to the segment and to assess its performance, and (c) for which discrete financial information is available. Based on these criteria, the Company has identified four operating segments, which also comprise its four reportable segments.
Three of the four reportable segments are geographically based: Americas (representing the Companys operations in North America and Latin America), EMEA (representing the Companys operations in Europe, the Middle East and Africa) and Asia. The fourth reportable segment is OEM.
The Companys geographically based segments design, manufacture and distribute medical devices primarily used in critical care, surgical applications and cardiac care and generally serve two end markets: hospitals and healthcare providers, and home health. The products of the geographically based segments are most widely used in the acute care setting for a range of diagnostic and therapeutic procedures and in general and specialty surgical applications. The Companys OEM Segment designs, manufactures and supplies devices and instruments for other medical device manufacturers.
The following tables present the Companys segment results for the three and nine months ended September 30, 2012 and September 25, 2011:
Three Months Ended September 30, 2012 | ||||||||||||||||||||
Americas | EMEA | Asia | OEM | Totals | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Segment Results | ||||||||||||||||||||
Segment net revenues from external customers |
$ | 169,548 | $ | 116,015 | $ | 45,592 | $ | 36,899 | $ | 368,054 | ||||||||||
Segment depreciation and amortization |
16,439 | 5,249 | 967 | 1,058 | 23,713 | |||||||||||||||
Segment operating profit(1) |
17,476 | 5,318 | 18,718 | 9,417 | 50,929 | |||||||||||||||
Segment expenditures for property, plant and equipment |
9,253 | 3,248 | 43 | 2,052 | 14,596 | |||||||||||||||
Intersegment revenues |
38,874 | 17,136 | | 94 |
23
TELEFLEX INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Three Months Ended September 25, 2011 | ||||||||||||||||||||
Americas | EMEA | Asia | OEM | Totals | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Segment Results | ||||||||||||||||||||
Segment net revenues from external customers |
$ | 167,271 | $ | 127,121 | $ | 35,114 | $ | 33,235 | $ | 362,741 | ||||||||||
Segment depreciation and amortization |
16,440 | 5,875 | 970 | 877 | 24,162 | |||||||||||||||
Segment operating profit(1) |
21,526 | 20,900 | 12,258 | 7,048 | 61,732 | |||||||||||||||
Segment expenditures for property, plant and equipment |
7,565 | 3,299 | 234 | 1,068 | 12,166 | |||||||||||||||
Intersegment revenues |
41,245 | 17,036 | | 129 |
Nine Months Ended September 30, 2012 | ||||||||||||||||||||
Americas | EMEA | Asia | OEM | Totals | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Segment Results | ||||||||||||||||||||
Segment net revenues from external customers |
$ | 526,685 | $ | 377,513 | $ | 123,205 | $ | 104,550 | $ | 1,131,953 | ||||||||||
Segment depreciation and amortization |
47,482 | 16,096 | 2,561 | 3,022 | 69,161 | |||||||||||||||
Segment operating profit(1) |
64,975 | 46,706 | 41,500 | 22,884 | 176,065 | |||||||||||||||
Segment assets |
1,784,773 | 767,995 | 268,669 | 38,835 | 2,860,272 | |||||||||||||||
Segment expenditures for property, plant and equipment |
20,870 | 9,620 | 105 | 8,545 | 39,140 | |||||||||||||||
Intersegment revenues |
114,562 | 52,235 | | 382 |
Nine Months Ended September 25, 2011 | ||||||||||||||||||||
Americas | EMEA | Asia | OEM | Totals | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Segment Results | ||||||||||||||||||||
Segment net revenues from external customers |
$ | 503,394 | $ | 390,332 | $ | 104,957 | $ | 90,807 | $ | 1,089,490 | ||||||||||
Segment depreciation and amortization |
49,365 | 17,565 | 2,864 | 2,711 | 72,505 | |||||||||||||||
Segment operating profit(1) |
63,699 | 55,960 | 34,576 | 15,861 | 170,096 | |||||||||||||||
Segment assets |
2,079,348 | 821,659 | 206,230 | 77,932 | 3,185,169 | |||||||||||||||
Segment expenditures for property, plant and equipment |
16,163 | 7,283 | 563 | 3,135 | 27,144 | |||||||||||||||
Intersegment revenues |
115,418 | 48,547 | 1 | 362 |
(1) | Segment operating profit includes a segments net revenues from external customers reduced by its cost of goods sold, selling, general and administrative expenses, and an allocation of corporate expenses. Segment operating profit excludes goodwill impairment charges, restructuring and impairment charges, gain on sales of businesses and assets, interest income and expense, loss on extinguishment of debt and taxes on income. |
The following tables present reconciliations of segment results to the Companys condensed consolidated results for the three and nine months ended September 30, 2012 and September 25, 2011:
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, 2012 |
September 25, 2011 |
September 30, 2012 |
September 25, 2011 |
|||||||||||||
(Dollars in thousands) | ||||||||||||||||
Reconciliation of Segment Operating Profit to Income (Loss) from Continuing Operations Before Interest, Loss on Extinguishments of Debt and Taxes |
||||||||||||||||
Segment operating profit |
$ | 50,929 | $ | 61,732 | $ | 176,065 | $ | 170,096 | ||||||||
Goodwill impairment |
| | (332,128 | ) | | |||||||||||
Restructuring and other impairment charges |
(1,088 | ) | 173 | (84 | ) | (3,598 | ) | |||||||||
Gain on sales of businesses and assets |
| | 332 | | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Income (loss) from continuing operations before interest, loss on extinguishments of debt and taxes |
$ | 49,841 | $ | 61,905 | $ | (155,815 | ) | $ | 166,498 | |||||||
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|
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|
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24
TELEFLEX INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
September 30, 2012 |
September 25, 2011 |
|||||||
(Dollars in thousands) | ||||||||
Reconciliation of Segment Assets to Condensed Consolidated Total Assets |
||||||||
Segment assets(1) |
$ | 2,860,272 | $ | 3,185,169 | ||||
Corporate assets(2) |
802,656 | 565,249 | ||||||
Assets of businesses divested(3) |
| 106,591 | ||||||
Assets held for sale |
7,861 | 11,702 | ||||||
|
|
|
|
|||||
Total assets |
$ | 3,670,789 | $ | 3,868,711 | ||||
|
|
|
|
(1) | Segment assets for the 2011 period include assets of the orthopedic business of the Companys OEM Segment, which, as of September 30, 2012, had been disposed in connection with the sale of the business. |
(2) | Increase in corporate assets from the prior period reflects higher cash balances as a result of the sale of businesses in the fourth quarter of 2011. |
(3) | Assets of businesses divested were previously reported as assets held for sale in 2011. |
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, 2012 |
September 25, 2011 |
September 30, 2012 |
September 25, 2011 |
|||||||||||||
(Dollars in thousands) | ||||||||||||||||
Reconciliation of Segment Expenditures for Property, Plant and Equipment to Condensed Consolidated Total Expenditures for Property, Plant and Equipment |
||||||||||||||||
Segment expenditures for property, plant and equipment |
$ | 14,596 | $ | 12,166 | $ | 39,140 | $ | 27,144 | ||||||||
Corporate expenditures for property, plant and equipment |
2,603 | 10 | 6,952 | 164 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total expenditures for property, plant and equipment |
$ | 17,199 | $ | 12,176 | $ | 46,092 | $ | 27,308 | ||||||||
|
|
|
|
|
|
|
|
Note 15 Condensed consolidated guarantor financial information
In June 2011, Teleflex Incorporated (referred to below as Parent Company) issued $250 million of 6.875% senior subordinated notes through a registered public offering. The notes are guaranteed, jointly and severally, by certain of the Parent Companys subsidiaries (each, a Guarantor Subsidiary and collectively, the Guarantor Subsidiaries). The guarantees are full and unconditional, subject to certain customary release provisions. Each Guarantor Subsidiary is 100% owned by the Parent Company. The Companys condensed consolidated statements of income and comprehensive income for the three and nine month periods ended September 30, 2012 and September 25, 2011, condensed consolidated balance sheets as of September 30, 2012 and December 31, 2011 and condensed consolidated statements of cash flows for the nine month periods ended September 30, 2012 and September 25, 2011, each of which are set forth below, provide consolidated information for:
a. | Parent Company, the issuer of the guaranteed obligations; |
b. | Guarantor Subsidiaries, on a combined basis; |
c. | Non-guarantor subsidiaries, on a combined basis; and |
d. | Parent Company and its subsidiaries on a consolidated basis. |
The same accounting policies as described in Note 1 to the consolidated financial statements included in the Companys Annual Report on Form 10-K for the year ended December 31, 2011 are used by each entity in the condensed consolidated financial information, except for the use by the Parent Company and Guarantor Subsidiaries of the equity method of accounting to reflect ownership interests in subsidiaries which are eliminated upon consolidation.
Consolidating entries and eliminations in the following consolidated financial statements represent adjustments to (a) eliminate intercompany transactions between or among the Parent Company, the Guarantor Subsidiaries and the Non-guarantor subsidiaries, (b) eliminate the investments in subsidiaries and (c) record consolidating entries.
25
TELEFLEX INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
TELEFLEX INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
Three Months Ended September 30, 2012 | ||||||||||||||||||||
Parent Company |
Guarantor Subsidiaries |
Non-Guarantor Subsidiaries |
Eliminations | Condensed Consolidated |
||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Net revenues |
$ | | $ | 232,155 | $ | 196,675 | $ | (60,776 | ) | $ | 368,054 | |||||||||
Cost of goods sold |
| 130,840 | 115,381 | (58,734 | ) | 187,487 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Gross profit |
| 101,315 | 81,294 | (2,042 | ) | 180,567 | ||||||||||||||
Selling, general and administrative expenses |
11,114 | 61,505 | 42,030 | 229 | 114,878 | |||||||||||||||
Research and development expenses |
| 13,184 | 1,576 | | 14,760 | |||||||||||||||
Restructuring and other impairment charges |
| 1,070 | 18 | | 1,088 | |||||||||||||||
(Gain) loss on sales of businesses and assets |
1 | (150,310 | ) | | 150,309 | | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Income (loss) from continuing operations before interest and taxes |
(11,115 | ) | 175,866 | 37,670 | (152,580 | ) | 49,841 | |||||||||||||
Interest expense |
36,105 | (19,488 | ) | 1,876 | | 18,493 | ||||||||||||||
Interest income |
(107 | ) | | (233 | ) | | (340 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Income (loss) from continuing operations before taxes |
(47,113 | ) | 195,354 | 36,027 | (152,580 | ) | 31,688 | |||||||||||||
Taxes (benefit) on income (loss) from continuing operations |
(16,624 | ) | 17,739 | 6,811 | (689 | ) | 7,237 | |||||||||||||
Equity in net income of consolidated subsidiaries |
52,627 | 21,946 | | (74,573 | ) | | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Income from continuing operations |
22,138 | 199,561 | 29,216 | (226,464 | ) | 24,451 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Operating income (loss) from discontinued operations |
(1,089 | ) | 258 | | | (831 | ) | |||||||||||||
Taxes (benefit) on income (loss) from discontinued operations |
(693 | ) | 2,649 | (266 | ) | | 1,690 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Income (loss) from discontinued operations |
(396 | ) | (2,391 | ) | 266 | | (2,521 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net income |
21,742 | 197,170 | 29,482 | (226,464 | ) | 21,930 | ||||||||||||||
Less: Income from continuing operations attributable to noncontrolling interests |
| | 188 | | 188 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net income attributable to common shareholders |
21,742 | 197,170 | 29,294 | (226,464 | ) | 21,742 | ||||||||||||||
Other comprehensive income attributable to common shareholders |
49,428 | 50,393 | 41,277 | (91,670 | ) | 49,428 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Comprehensive income attributable to common shareholders |
$ | 71,170 | $ | 247,563 | $ | 70,571 | $ | (318,134 | ) | $ | 71,170 | |||||||||
|
|
|
|
|
|
|
|
|
|
26
TELEFLEX INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Three Months Ended September 25, 2011 | ||||||||||||||||||||
Parent Company |
Guarantor Subsidiaries |
Non-Guarantor Subsidiaries |
Eliminations | Condensed Consolidated |
||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Net revenues |
$ | | $ | 233,294 | $ | 196,399 | $ | (66,952 | ) | $ | 362,741 | |||||||||
Cost of goods sold |
| 140,745 | 111,184 | (64,818 | ) | 187,111 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Gross profit |
| 92,549 | 85,215 | (2,134 | ) | 175,630 | ||||||||||||||
Selling, general and administrative expenses |
8,997 | 54,057 | 38,235 | 293 | 101,582 | |||||||||||||||
Research and development expenses |
| 10,581 | 1,735 | | 12,316 | |||||||||||||||
Restructuring and other impairment charges |
| (172 | ) | (1 | ) | | (173 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Income (loss) from continuing operations before interest, loss on extinguishments of debt and taxes |
(8,997 | ) | 28,083 | 45,246 | (2,427 | ) | 61,905 | |||||||||||||
Interest expense |
31,613 | (12,632 | ) | 196 | | 19,177 | ||||||||||||||
Interest income |
(133 | ) | (14 | ) | (171 | ) | | (318 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Income (loss) from continuing operations before taxes |
(40,477 | ) | 40,729 | 45,221 | (2,427 | ) | 43,046 | |||||||||||||
Taxes (benefit) on income (loss) from continuing operations |
(14,712 | ) | 12,195 | 13,548 | (906 | ) | 10,125 | |||||||||||||
Equity in net income of consolidated subsidiaries |
70,034 | 38,641 | | (108,675 | ) | | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Income from continuing operations |
44,269 | 67,175 | 31,673 | (110,196 | ) | 32,921 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Operating income (loss) from discontinued operations |
(1,106 | ) | 1,089 | 14,605 | | 14,588 | ||||||||||||||
Taxes (benefit) on income (loss) from discontinued operations |
(488 | ) | 940 | 2,992 | | 3,444 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Income (loss) from discontinued operations |
(618 | ) | 149 | 11,613 | | 11,144 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net income |
43,651 | 67,324 | 43,286 | (110,196 | ) | 44,065 | ||||||||||||||
Less: Income from continuing operations attributable to noncontrolling interests |
| | 289 | | 289 | |||||||||||||||
Income from discontinued operations attributable to noncontrolling interest |
| | 125 | | 125 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net income attributable to common shareholders |
43,651 | 67,324 | 42,872 | (110,196 | ) | 43,651 | ||||||||||||||
Other comprehensive loss attributable to common shareholders |
(47,299 | ) | (47,078 | ) | (48,503 | ) | 95,581 | (47,299 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Comprehensive income (loss) attributable to common shareholders |
$ | (3,648 | ) | $ | 20,246 | $ | (5,631 | ) | $ | (14,615 | ) | $ | (3,648 | ) | ||||||
|
|
|
|
|
|
|
|
|
|
27
TELEFLEX INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Nine Months Ended September 30, 2012 | ||||||||||||||||||||
Parent Company |
Guarantor Subsidiaries |
Non-Guarantor Subsidiaries |
Eliminations | Condensed Consolidated |
||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Net revenues |
$ | | $ | 705,703 | $ | 606,381 | $ | (180,131 | ) | $ | 1,131,953 | |||||||||
Cost of goods sold |
| 409,801 | 349,003 | (175,896 | ) | 582,908 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Gross profit |
| 295,902 | 257,378 | (4,235 | ) | 549,045 | ||||||||||||||
Selling, general and administrative expenses |
39,683 | 182,882 | 109,861 | 539 | 332,965 | |||||||||||||||
Research and development expenses |
| 35,103 | 4,912 | | 40,015 | |||||||||||||||
Goodwill impairment |
| 331,779 | 349 | | 332,128 | |||||||||||||||
Restructuring and other impairment charges |
| (580 | ) | 664 | | 84 | ||||||||||||||
Gain on sales of businesses and assets |
(116,193 | ) | (150,310 | ) | (332 | ) | 266,503 | (332 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Income (loss) from continuing operations before interest and taxes |
76,510 | (102,972 | ) | 141,924 | (271,277 | ) | (155,815 | ) | ||||||||||||
Interest expense |
109,206 | (59,728 | ) | 5,466 | | 54,944 | ||||||||||||||
Interest income |
(360 | ) | (8 | ) | (956 | ) | | (1,324 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Income (loss) from continuing operations before taxes |
(32,336 | ) | (43,236 | ) | 137,414 | (271,277 | ) | (209,435 | ) | |||||||||||
Taxes (benefit) on income (loss) from continuing operations |
(51,685 | ) | 34,932 | 21,306 | (1,592 | ) | 2,961 | |||||||||||||
Equity in net income of consolidated subsidiaries |
(238,187 | ) | 100,706 | | 137,481 | | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Income (loss) from continuing operations |
(218,838 | ) | 22,538 | 116,108 | (132,204 | ) | (212,396 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Operating income (loss) from discontinued operations |
(1,180 | ) | (9,171 | ) | 2,400 | | (7,951 | ) | ||||||||||||
Benefit on income (loss) from discontinued operations |
(638 | ) | (935 | ) | (95 | ) | | (1,668 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Income (loss) from discontinued operations |
(542 | ) | (8,236 | ) | 2,495 | | (6,283 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net income (loss) |
(219,380 | ) | 14,302 | 118,603 | (132,204 | ) | (218,679 | ) | ||||||||||||
Less: Income from continuing operations attributable to noncontrolling interests |
| | 701 | | 701 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net income (loss) attributable to common shareholders |
(219,380 | ) | 14,302 | 117,902 | (132,204 | ) | (219,380 | ) | ||||||||||||
Other comprehensive income attributable to common shareholders |
20,525 | 7,136 | 6,510 | (13,646 | ) | 20,525 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Comprehensive income (loss) attributable to common shareholders |
$ | (198,855 | ) | $ | 21,438 | $ | 124,412 | $ | (145,850 | ) | $ | (198,855 | ) | |||||||
|
|
|
|
|
|
|
|
|
|
28
TELEFLEX INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Nine Months Ended September 25, 2011 | ||||||||||||||||||||
Parent Company |
Guarantor Subsidiaries |
Non-Guarantor Subsidiaries |
Eliminations | Condensed Consolidated |
||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Net revenues |
$ | | $ | 688,620 | $ | 585,860 | $ | (184,990 | ) | $ | 1,089,490 | |||||||||
Cost of goods sold |
| 417,464 | 333,309 | (180,311 | ) | 570,462 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Gross profit |
| 271,156 | 252,551 | (4,679 | ) | 519,028 | ||||||||||||||
Selling, general and administrative expenses |
28,321 | 173,004 | 110,918 | 887 | 313,130 | |||||||||||||||
Research and development expenses |
| 30,014 | 5,788 | | 35,802 | |||||||||||||||
Restructuring and other impairment charges |
11 | 1,686 | 1,901 | | 3,598 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Income (loss) from continuing operations before interest, loss on extinguishments of debt and taxes |
(28,332 | ) | 66,452 | 133,944 | (5,566 | ) | 166,498 | |||||||||||||
Interest expense |
89,697 | (39,002 | ) | 413 | | 51,108 | ||||||||||||||
Interest income |
(247 | ) | (55 | ) | (374 | ) | | (676 | ) | |||||||||||
Loss on extinguishments of debt |
15,413 | | | | 15,413 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Income (loss) from continuing operations before taxes |
(133,195 | ) | 105,509 | 133,905 | (5,566 | ) | 100,653 | |||||||||||||
Taxes (benefit) on income (loss) from continuing operations |
(49,333 | ) | 36,784 | 37,621 | (1,938 | ) | 23,134 | |||||||||||||
Equity in net income of consolidated subsidiaries |
265,907 | 150,761 | | (416,668 | ) | | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Income from continuing operations |
182,045 | 219,486 | 96,284 | (420,296 | ) | 77,519 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Operating income (loss) from discontinued operations |
(52,424 | ) | 40,678 | 87,451 | | 75,705 | ||||||||||||||
Taxes (benefit) on income (loss) from discontinued operations |
(25,912 | ) | 6,523 | 15,867 | | (3,522 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Income (loss) from discontinued operations |
(26,512 | ) | 34,155 | 71,584 | | 79,227 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net income |
155,533 | 253,641 | 167,868 | (420,296 | ) | 156,746 | ||||||||||||||
Less: Income from continuing operations attributable to noncontrolling interests |
| | 770 | | 770 | |||||||||||||||
Income from discontinued operations attributable to noncontrolling interest |
| | 443 | | 443 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net income attributable to common shareholders |
155,533 | 253,641 | 166,655 | (420,296 | ) | 155,533 | ||||||||||||||
Other comprehensive income (loss) attributable to common shareholders |
955 | (20,172 | ) | (19,592 | ) | 39,764 | 955 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Comprehensive income attributable to common shareholders |
$ | 156,488 | $ | 233,469 | $ | 147,063 | $ | (380,532 | ) | $ | 156,488 | |||||||||
|
|
|
|
|
|
|
|
|
|
29
TELEFLEX INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
TELEFLEX INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, 2012 | ||||||||||||||||||||
Parent Company |
Guarantor Subsidiaries |
Non-Guarantor Subsidiaries |
Eliminations | Condensed Consolidated |
||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
ASSETS | ||||||||||||||||||||
Current assets |
||||||||||||||||||||
Cash and cash equivalents |
$ | 123,254 | $ | | $ | 511,575 | $ | | $ | 634,829 | ||||||||||
Accounts receivable, net |
335 | 755,506 | 386,375 | (875,269 | ) | 266,947 | ||||||||||||||
Inventories, net |
| 188,158 | 121,247 | (13,794 | ) | 295,611 | ||||||||||||||
Prepaid expenses and other current assets |
4,896 | 3,425 | 15,040 | | 23,361 | |||||||||||||||
Prepaid taxes |
20,949 | | 13,794 | 2 | 34,745 | |||||||||||||||
Deferred tax assets |
3,642 | 19,697 | 6,361 | | 29,700 | |||||||||||||||
Assets held for sale |
| 2,738 | 5,123 | | 7,861 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total current assets |
153,076 | 969,524 | 1,059,515 | (889,061 | ) | 1,293,054 | ||||||||||||||
Property, plant and equipment, net |
7,146 | 159,313 | 100,933 | | 267,392 | |||||||||||||||
Goodwill |
| 670,358 | 443,582 | | 1,113,940 | |||||||||||||||
Intangibles assets, net |
| 764,153 | 166,763 | | 930,916 | |||||||||||||||
Investments in affiliates |
5,127,455 | 1,253,393 | 20,234 | (6,399,311 | ) | 1,771 | ||||||||||||||
Deferred tax assets |
71,933 | | 2,405 | (74,045 | ) | 293 | ||||||||||||||
Other assets |
34,557 | 2,656,306 | 679,530 | (3,306,970 | ) | 63,423 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total assets |
$ | 5,394,167 | $ | 6,473,047 | $ | 2,472,962 | $ | (10,669,387 | ) | $ | 3,670,789 | |||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
LIABILITIES AND EQUITY | ||||||||||||||||||||
Current liabilities |
||||||||||||||||||||
Current borrowings |
$ | | $ | | $ | 4,700 | $ | | $ | 4,700 | ||||||||||
Accounts payable |
79,776 | 839,834 | 22,255 | (878,162 | ) | 63,703 | ||||||||||||||
Accrued expenses |
15,582 | 16,507 | 31,026 | | 63,115 | |||||||||||||||
Current portion of contingent consideration |
| 20,171 | 1,421 | | 21,592 | |||||||||||||||
Payroll and benefit-related liabilities |
31,790 | 9,651 | 26,165 | | 67,606 | |||||||||||||||
Derivative liabilities |
957 | | | | 957 | |||||||||||||||
Accrued interest |
9,768 | | 4 | | 9,772 | |||||||||||||||
Income taxes payable |
| | 11,980 | | 11,980 | |||||||||||||||
Current liability for uncertain tax positions |
| | 4,201 | | 4,201 | |||||||||||||||
Deferred tax liabilities |
| | 1,051 | | 1,051 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total current liabilities |
137,873 | 886,163 | 102,803 | (878,162 | ) | 248,677 | ||||||||||||||
Long-term borrowings |
962,596 | | | | 962,596 | |||||||||||||||
Deferred tax liabilities |
| 411,849 | 55,388 | (74,045 | ) | 393,192 | ||||||||||||||
Pension and other postretirement benefit liabilities |
130,096 | 33,826 | 14,842 | | 178,764 | |||||||||||||||
Noncurrent liability for uncertain tax positions |
14,469 | 18,679 | 30,343 | | 63,491 | |||||||||||||||
Other liabilities |
2,396,177 | 37,317 | 945,946 | (3,310,770 | ) | 68,670 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total liabilities |
3,641,211 | 1,387,834 | 1,149,322 | (4,262,977 | ) | 1,915,390 | ||||||||||||||
Total common shareholders equity |
1,752,956 | 5,085,213 | 1,321,197 | (6,406,410 | ) | 1,752,956 | ||||||||||||||
Noncontrolling interest |
| | 2,443 | | 2,443 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total equity |
1,752,956 | 5,085,213 | 1,323,640 | (6,406,410 | ) | 1,755,399 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total liabilities and equity |
$ | 5,394,167 | $ | 6,473,047 | $ | 2,472,962 | $ | (10,669,387 | ) | $ | 3,670,789 | |||||||||
|
|
|
|
|
|
|
|
|
|
30
TELEFLEX INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2011 | ||||||||||||||||||||
Parent Company |
Guarantor Subsidiaries |
Non-Guarantor Subsidiaries |
Eliminations | Condensed Consolidated |
||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
ASSETS | ||||||||||||||||||||
Current assets |
||||||||||||||||||||
Cash and cash equivalents |
$ | 114,531 | $ | | $ | 469,557 | $ | | $ | 584,088 | ||||||||||
Accounts receivable, net |
269 | 304,813 | 464,834 | (483,690 | ) | 286,226 | ||||||||||||||
Inventories, net |
| 201,147 | 107,188 | (9,560 | ) | 298,775 | ||||||||||||||
Prepaid expenses and other current assets |
7,203 | 3,675 | 22,527 | | 33,405 | |||||||||||||||
Prepaid taxes |
24,006 | | 4,869 | (29 | ) | 28,846 | ||||||||||||||
Deferred tax assets |
8,659 | 26,886 | 5,883 | (414 | ) | 41,014 | ||||||||||||||
Assets held for sale |
| 2,738 | 5,164 | | 7,902 | |||||||||||||||
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Total current assets |
154,668 | 539,259 | 1,080,022 | (493,693 | ) | 1,280,256 | ||||||||||||||
Property, plant and equipment, net |
8,208 | 149,300 | 94,404 | | 251,912 | |||||||||||||||
Goodwill |
| 1,001,353 | 437,189 | | 1,438,542 | |||||||||||||||
Intangibles assets, net |
| 711,962 | 167,825 | | 879,787 | |||||||||||||||
Investments in affiliates |
5,244,275 | 922,208 | 20,327 | (6,184,802 | ) | 2,008 | ||||||||||||||
Deferred tax assets |
65,400 | | 2,387 | (67,509 | ) | 278 | ||||||||||||||
Other assets |
42,183 | 2,534,124 | 164,662 | (2,669,649 | ) | 71,320 | ||||||||||||||
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Total assets |
$ | 5,514,734 | $ | 5,858,206 | $ | 1,966,816 | $ | (9,415,653 | ) | $ | 3,924,103 | |||||||||
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LIABILITIES AND EQUITY | ||||||||||||||||||||
Current liabilities |
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Current borrowings |
$ | | $ | | $ | 4,986 | $ | | $ | 4,986 | ||||||||||
Accounts payable |
101,907 | 387,612 | 64,694 | (487,121 | ) | 67,092 | ||||||||||||||
Accrued expenses |
23,208 | 21,454 | 29,545 | | 74,207 | |||||||||||||||
Current portion of contingent consideration |
| 3,953 | | | 3,953 | |||||||||||||||
Payroll and benefit-related liabilities |
24,031 | 13,867 | 26,488 | | 64,386 | |||||||||||||||
Derivative liabilities |
633 | | | | 633 | |||||||||||||||
Accrued interest |
10,948 | | 12 | | 10,960 | |||||||||||||||
Income taxes payable |
| | 21,113 | (29 | ) | 21,084 | ||||||||||||||
Current liability for uncertain tax positions |
| | 22,656 |