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| 8-K - FORM 8-K - TELEFLEX INC | d490253d8k.htm |
Exhibit 99.1
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Jake Elguicze Treasurer and Vice President of Investor Relations 610-948-2836 |
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| FOR IMMEDIATE RELEASE |
February 21, 2013 |
TELEFLEX REPORTS FOURTH QUARTER AND FULL YEAR 2012 RESULTS
Fourth Quarter Revenues Rise 4.0% to $419.0 million; up 5.1% on Constant Currency Basis
Fourth Quarter GAAP Diluted EPS of $0.72; Adjusted Diluted EPS of $1.14
Reaffirms 2013 Guidance Ranges for Constant Currency Revenue Growth of 11% to 13% and Adjusted
Diluted EPS of $4.70 to $4.90
Limerick, PA — Teleflex Incorporated (NYSE: TFX) today announced financial results for the fourth quarter and full year ended December 31, 2012.
Fourth quarter 2012 net revenues were $419.0 million, an increase of 4.0% over the prior year period. Excluding the impact of foreign currency fluctuations, fourth quarter 2012 net revenues increased 5.1% over the prior year period.
Fourth quarter 2012 GAAP diluted earnings per share from continuing operations were $0.72, as compared to $1.01 in the prior year period. Fourth quarter 2012 adjusted diluted earnings per share from continuing operations were $1.14, as compared to $1.05 in the prior year period, an increase of 8.6%.
“Teleflex’s fourth quarter operating and financial performance capped off an extremely successful year on many fronts,” said Benson Smith, Chairman, President and CEO. “Our higher than anticipated adjusted earnings growth reflects a better than expected contribution from LMA, as well as the operating leverage in the business as we grow revenue and expand our margins through higher sales volume, new product introductions and the continued implementation of our pricing strategy.”
Added Mr. Smith, “Our goals in 2013 are to build upon our solid operating platform, capture additional share in the markets we serve, and generate revenue growth above the industry average. We believe the actions we have taken over the past two years to invest in innovative technologies, rationalize our cost base, and prudently invest our capital, position us to generate significantly higher revenue growth and increased profitability for our shareholders.”
FOURTH QUARTER NET REVENUE BY PRODUCT GROUP AND SEGMENT
Product Group Revenues
Critical Care fourth quarter 2012 net revenues were $286.1 million, an increase of 6.8% compared to the prior year period. Excluding the impact of foreign currency fluctuations, fourth quarter 2012 net revenues increased 8.1% compared to the prior year period. The increase in constant currency revenue growth was due to higher sales of anesthesia, vascular access and urology products. The growth in sales of anesthesia products was primarily due to the contribution from the LMA International N.V. (“LMA”) acquisition. Constant currency sales growth was partially offset by a decline in sales of respiratory products and the impact of fewer shipping days in the quarter as compared to the fourth quarter of 2011.
Surgical Care fourth quarter 2012 net revenues were $76.3 million, an increase of 4.0% compared to the prior year period. Excluding the impact of foreign currency fluctuations, fourth quarter 2012 net revenues increased 4.8% compared to the prior year period. The increase in constant currency revenue growth was due to higher sales of ligation, endo-fascial, closure and general surgical instrument products, partially offset by a decline in sales of chest drainage products and the impact of fewer shipping days in the quarter as compared to the fourth quarter of 2011.
Cardiac Care fourth quarter 2012 net revenues were $20.9 million, a decrease of 5.3% compared to the prior year period. Excluding the impact of foreign currency fluctuations, fourth quarter 2012 net revenues decreased 3.3% compared to the prior year period. The decrease in constant currency revenue growth was due to a decline in sales of intra-aortic balloon pumps, partially offset by higher sales of intra-aortic balloon catheters.
OEM and Development Services (“OEM”) fourth quarter 2012 net revenues were $35.7 million, a decrease of 8.1% compared to the prior year period. Excluding the impact of foreign currency fluctuations, fourth quarter 2012 net revenues decreased 7.4% compared to the prior year period. The decrease in revenue was primarily due to the impact of fewer shipping days in the quarter as compared to the fourth quarter of 2011.
| Three Months Ended | % Increase/ (Decrease) | |||||||||||||||||||
| December 31, 2012 |
December 31, 2011 |
Constant Currency |
Foreign Currency |
Total Change |
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| (Dollars in millions) | ||||||||||||||||||||
| Critical Care |
$ | 286.1 | $ | 267.9 | 8.1 | % | (1.3 | %) | 6.8 | % | ||||||||||
| Surgical Care |
76.3 | 73.5 | 4.8 | % | (0.8 | %) | 4.0 | % | ||||||||||||
| Cardiac Care |
20.9 | 22.0 | (3.3 | %) | (2.0 | %) | (5.3 | %) | ||||||||||||
| OEM |
35.7 | 38.8 | (7.4 | %) | (0.7 | %) | (8.1 | %) | ||||||||||||
| Other |
— | 0.8 | (99.7 | %) | (0.3 | %) | (100.0 | %) | ||||||||||||
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| Total |
$ | 419.0 | $ | 403.0 | 5.1 | % | (1.1 | %) | 4.0 | % | ||||||||||
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Segment Revenues
Americas fourth quarter 2012 net revenues were $200.1 million, an increase of 8.4% compared to the prior year period. Excluding the impact of foreign currency fluctuations, fourth quarter 2012 net revenues increased 8.1% compared to the prior year period. The increase in constant currency revenue growth was due to incremental sales from our acquisition of LMA, new product introductions and price increases, partially offset by the impact of fewer shipping days in the quarter as compared to the fourth quarter of 2011.
EMEA fourth quarter 2012 net revenues were $132.7 million, a decrease of 1.6% compared to the prior year period. Excluding the impact of foreign currency fluctuations, fourth quarter 2012 net revenues increased 2.3% compared to the prior year period. The increase in constant currency revenue growth was due to LMA product sales, new product introductions and price increases, partially offset by the impact of fewer shipping days in the quarter as compared to the fourth quarter of 2011.
Asia fourth quarter 2012 net revenues were $50.5 million, an increase of 13.2% compared to the prior year period. Excluding the impact of foreign currency fluctuations, fourth quarter 2012 net revenues increased 12.4% compared to the prior year period. The increase in constant currency revenue growth was due to LMA product sales and price increases.
| Three Months Ended | % Increase/ (Decrease) | |||||||||||||||||||
| December 31, 2012 |
December 31, 2011 |
Constant Currency |
Foreign Currency |
Total Change |
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| (Dollars in millions) | ||||||||||||||||||||
| Americas |
$ | 200.1 | $ | 184.6 | 8.1 | % | 0.3 | % | 8.4 | % | ||||||||||
| EMEA |
132.7 | 135.0 | 2.3 | % | (3.9 | %) | (1.6 | %) | ||||||||||||
| Asia |
50.5 | 44.6 | 12.4 | % | 0.8 | % | 13.2 | % | ||||||||||||
| OEM |
35.7 | 38.8 | (7.4 | %) | (0.7 | %) | (8.1 | %) | ||||||||||||
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| Total |
$ | 419.0 | $ | 403.0 | 5.1 | % | (1.1 | %) | 4.0 | % | ||||||||||
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FULL YEAR RESULTS
Net revenues for the full year 2012 were $1.551 billion, an increase of 3.9% compared to the prior year period. Excluding the impact of foreign currency fluctuations, net revenues for 2012 increased 6.8% compared to 2011.
GAAP loss per share from continuing operations was ($4.47) for the full year 2012, as compared to diluted earnings per share of $2.90 in the prior year period. The financial results for 2012 reflect a goodwill impairment charge of $315.1 million, net of tax, or $7.71 per share, incurred in the first quarter of 2012.
Adjusted diluted earnings per share from continuing operations for the twelve months of 2012 was $4.40, an increase of 14.9% over the prior year period. This increase reflects additional sales volume and the introduction of new products to the marketplace, improved pricing, gross profit expansion, and reduced tax expense. The improvement in profitability was partially offset by investment in sales, marketing and research and development.
OTHER FINANCIAL HIGHLIGHTS AND KEY PERFORMANCE METRICS
Depreciation expense and amortization of intangible assets and deferred financing costs for the twelve months of 2012 were $94.9 million compared to $96.5 million for the prior year period.
Cash and cash equivalents at December 31, 2012 were $337.0 million compared to $584.1 million at December 31, 2011. The decrease in cash and cash equivalents is largely attributable to the acquisition of LMA which was completed on October 23, 2012.
Net accounts receivable at December 31, 2012 were $298.0 million compared to $286.2 million at December 31, 2011.
Net inventories at December 31, 2012 were $323.3 million compared to $298.8 million at December 31, 2011.
Net debt obligations at December 31, 2012 were $692.7 million compared to $445.9 million at December 31, 2011.
2013 OUTLOOK
The Company’s financial estimates for 2013 are as follows:
Constant currency revenue growth between 11% and 13% for full year 2013.
Adjusted diluted earnings per share in the range of $4.70 to $4.90.
2013 OUTLOOK EARNINGS PER SHARE RECONCILIATION
| Low | High | |||||||
| Diluted earnings per share |
$ | 3.20 | $ | 3.40 | ||||
| Restructuring and impairment charges, net of tax |
$ | 0.51 | $ | 0.51 | ||||
| Intangible amortization expense, net of tax |
$ | 0.82 | $ | 0.82 | ||||
| Amortization of debt discount on convertible notes, net of tax |
$ | 0.17 | $ | 0.17 | ||||
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| Adjusted diluted earnings per share |
$ | 4.70 | $ | 4.90 | ||||
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CONFERENCE CALL WEBCAST AND ADDITIONAL INFORMATION
As previously announced, Teleflex will comment on its financial results on a conference call to be held today at 8:00 a.m. (ET). The call will be available live and archived on the company’s website at www.teleflex.com and the accompanying presentation will be posted prior to the call. An audio replay will be available until February 26, 2013, 11:59pm (ET), by calling 888-286-8010 (U.S./Canada) or 617-801-6888 (International), Passcode: 10277897.
ADDITIONAL NOTES
Constant currency revenue and growth exclude the impact of translating the results of international subsidiaries at different currency exchange rates from period to period.
Certain financial information is presented on a rounded basis, which may cause minor differences.
Product group results and commentary exclude the impact of discontinued operations, items included in restructuring and impairment charges, and losses and other charges set forth in the condensed consolidated statements of income.
NOTES ON NON-GAAP FINANCIAL MEASURES
This press release includes certain non-GAAP financial measures. These measures include (i) adjusted diluted earnings per share, which excludes, depending on the period presented, the effect of charges associated with a goodwill impairment, our restructuring programs and asset impairments, losses and other charges related to acquisition costs, gain/loss on sale of businesses and assets, loss on extinguishment of debt in connection with refinancing transactions, costs associated with severance payments and benefits to be provided to our former chief executive officer, charges relating to a stock keeping unit reduction program, charges associated with the amortization of additional interest expense related to an interest rate swap terminated in 2011, intangible amortization expense, the amortization of debt discount on convertible notes and certain tax adjustments relating to the resolution of various tax matters relating to prior years; and (ii) constant currency revenue and growth, which exclude the impact of translating the results of international subsidiaries at different currency exchange rates from period to period. Consistent with past practice, adjusted diluted earnings per share has not been adjusted to exclude the benefit resulting from the forfeiture of equity awards. Management believes these measures are useful to investors because they eliminate items that do not reflect Teleflex’s day-to-day operations. In addition, management uses these financial measures for internal managerial purposes, when publicly providing guidance on possible future results, and to assist in our evaluation of period-to-period comparisons. These financial measures are presented in addition to results presented in accordance with generally accepted accounting principles (“GAAP”) and should not be relied upon as a substitute for GAAP financial measures. Tables reconciling these non-GAAP measures to the most directly comparable GAAP measures are set forth below. This press release also includes forecasted constant currency revenue growth, which is also a non-GAAP measure. A reconciliation of forecasted constant currency revenue growth to GAAP forecasted growth has not been provided as management is unable to forecast trends in foreign currency exchange rates.
RECONCILIATION OF CONSOLIDATED STATEMENT OF INCOME ITEMS
Dollars in millions, except per share amounts
Quarter Ended
December 31, 2012
| Materials, labor and other product costs |
Selling, general and |
Goodwill impairment |
Restructuring and other |
Gain/(loss) on sales of |
Interest expense |
Loss on extinguishment of debt |
Income taxes |
Net Income (loss) attributable to common from
continuing |
Diluted available to |
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| GAAP Basis |
$ | 219.9 | $ | 121.5 | — | $ | 3.0 | — | $ | 14.6 | — | $ | 13.5 | $ | 30.4 | $ | 0.72 | |||||||||||||||||||||||
| Adjustments |
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| Goodwill impairment |
— | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
| Restructuring and other impairment charges |
— | — | — | 3.0 | — | — | — | 0.6 | 2.3 | $ | 0.06 | |||||||||||||||||||||||||||||
| Losses and other charges (A) |
0.5 | 3.4 | — | — | — | — | — | (1.9 | ) | 5.7 | $ | 0.13 | ||||||||||||||||||||||||||||
| Early termination of interest rate swap (B) |
— | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
| Amortization of debt discount on convertible notes |
— | — | — | — | — | 2.7 | — | 1.0 | 1.7 | $ | 0.04 | |||||||||||||||||||||||||||||
| Intangible amortization expense |
— | 12.0 | — | — | — | — | — | 4.2 | 7.8 | $ | 0.19 | |||||||||||||||||||||||||||||
| Tax adjustment (C) |
— | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
| Adjusted basis |
$ | 219.4 | $ | 106.1 | — | — | — | $ | 11.9 | — | $ | 17.4 | $ | 47.9 | $ | 1.14 | ||||||||||||||||||||||||
Quarter Ended
December 31, 2011
| Materials, labor and other product costs |
Selling, general and administrative |
Goodwill impairment |
Restructuring and other |
Gain/(loss) on sales of and assets |
Interest expense |
Loss on of debt |
Income taxes |
Net Income (loss) from continuing |
Diluted available to |
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| GAAP Basis |
$ | 213.3 | $ | 110.8 | — | $ | 2.4 | ($ | 0.6 | ) | $ | 19.2 | — | $ | 2.6 | $ | 41.6 | $ | 1.01 | |||||||||||||||||||||
| Adjustments |
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| Goodwill impairment |
— | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
| Restructuring and other impairment charges |
— | — | — | 3.0 | — | — | — | 1.1 | 1.8 | $ | 0.05 | |||||||||||||||||||||||||||||
| Losses and other charges (A) |
2.0 | — | — | — | 0.6 | — | — | 0.8 | 1.8 | $ | 0.04 | |||||||||||||||||||||||||||||
| Early termination of interest rate swap (B) |
— | — | — | — | — | (11.1 | ) | — | (4.0 | ) | (7.0 | ) | ($ | 0.17 | ) | |||||||||||||||||||||||||
| Amortization of debt discount on convertible notes |
— | — | — | — | — | 2.5 | — | 0.9 | 1.6 | $ | 0.04 | |||||||||||||||||||||||||||||
| Intangible amortization expense |
— | 10.5 | — | — | — | — | — | 3.9 | 6.6 | $ | 0.16 | |||||||||||||||||||||||||||||
| Tax adjustment (C) |
— | — | — | — | — | — | — | 3.3 | (3.3 | ) | ($ | 0.08 | ) | |||||||||||||||||||||||||||
| Adjusted basis |
$ | 211.3 | $ | 100.2 | — | ($ | 0.6 | ) | — | $ | 27.8 | — | $ | 8.7 | $ | 43.0 | $ | 1.05 | ||||||||||||||||||||||
(A) In 2012, losses and other charges include approximately $5.7 million, net of tax, or $0.13 per share, related to acquisition costs. In 2011, losses and other charges include approximately $0.4 million, net of tax, or $0.01 per share, related to loss on sale of business and assets; and $1.3 million, net of tax, or $0.03 per share, related to a stock keeping unit (“SKU”) rationalization to eliminate SKU’s based on low sales volume or insufficient margins to help improve future profitability.
(B) In 2011, the Company terminated an interest rate swap that, at the date of termination, had a notional amount of $350 million. The interest rate swap was designated as a cash flow hedge against the term loan under our senior credit facility. At the date of termination, the interest rate swap was in a liability position resulting in a cash payment by the Company of approximately $14.8 million, which included $3.1 million of accrued interest. In accordance with
GAAP, the Company amortized this amount as additional interest expense over the remainder of the original term of the interest rate swap, which expired in September 2012. In the fourth quarter of 2011, the net of tax impact was approximately $7.0 million, or $0.17 per share.
(C) The tax adjustment represents a net benefit resulting from (i) the resolution (including the expiration of statutes of limitations) of various prior years’ U.S. federal, state and foreign tax matters, and (ii) the filing of amended prior years’ tax returns.
RECONCILIATION OF CONSOLIDATED STATEMENT OF INCOME ITEMS
Dollars in millions, except per share amounts
Full Year Ended
December 31, 2012
| Materials, labor and other product costs |
Selling, general and administrative expenses |
Goodwill impairment |
Restructuring and other impairment charges |
Gain/(loss) on sales of |
Interest expense |
Loss on extinguishment of debt |
Income taxes |
Net Income (loss) attributable to common shareholders from continuing operations |
Diluted Earnings per share available to common shareholders |
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| GAAP Basis |
$ | 802.8 | $ | 454.5 | $ | 332.1 | $ | 3.0 | $ | 0.3 | $ | 69.6 | — | $ | 16.4 | ($ | 182.7 | ) | ($ | 4.47 | ) | |||||||||||||||||||
| Adjustments |
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| Goodwill impairment |
— | — | 332.1 | — | — | — | — | 17.0 | 315.1 | $ | 7.71 | |||||||||||||||||||||||||||||
| Restructuring and other impairment charges |
— | — | — | 3.0 | — | — | — | 0.6 | 2.5 | $ | 0.06 | |||||||||||||||||||||||||||||
| Losses and other charges (A) |
0.5 | 13.8 | — | — | (0.3 | ) | — | — | (0.1 | ) | 14.1 | $ | 0.34 | |||||||||||||||||||||||||||
| Early termination of interest rate swap (B) |
— | — | — | — | — | 11.1 | — | 4.0 | 7.0 | $ | 0.17 | |||||||||||||||||||||||||||||
| Amortization of debt discount on convertible notes |
— | — | — | — | — | 10.5 | — | 3.8 | 6.7 | $ | 0.16 | |||||||||||||||||||||||||||||
| Intangible amortization expense |
— | 44.3 | — | — | — | — | — | 16.0 | 28.3 | $ | 0.69 | |||||||||||||||||||||||||||||
| Tax adjustment (C) |
— | — | — | — | — | — | — | 9.0 | (9.0 | ) | ($ | 0.22 | ) | |||||||||||||||||||||||||||
| Anti-dilutive effect of EPS (D) |
— | — | — | — | — | — | — | — | — | ($ | 0.06 | ) | ||||||||||||||||||||||||||||
| Adjusted basis |
$ | 802.3 | $ | 396.4 | — | — | — | $ | 48.0 | — | $ | 66.6 | $ | 182.0 | $ | 4.40 | ||||||||||||||||||||||||
Full Year Ended
December 31, 2011
| Materials, labor and other product costs |
Selling, general and administrative expenses |
Goodwill impairment |
Restructuring and other impairment charges |
Gain/(loss) on sales of |
Interest expense |
Loss on extinguishment of debt |
Income taxes |
Net Income (loss) attributable to common shareholders from continuing operations |
Diluted Earnings per share available to common shareholders |
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| GAAP Basis |
$ | 783.8 | $ | 423.9 | — | $ | 6.0 | ($ | 0.6 | ) | $ | 70.3 | $ | 15.4 | $ | 25.8 | $ | 118.3 | $ | 2.90 | ||||||||||||||||||||
| Adjustments |
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| Goodwill impairment |
— | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
| Restructuring and other impairment charges |
— | — | — | 3.7 | — | — | — | 1.4 | 2.3 | $ | 0.06 | |||||||||||||||||||||||||||||
| Losses and other charges (A) |
2.0 | 5.5 | — | — | 0.6 | — | 15.4 | 8.4 | 15.1 | $ | 0.37 | |||||||||||||||||||||||||||||
| Early termination of interest rate swap (B) |
— | — | — | — | — | (11.1 | ) | — | (4.0 | ) | (7.0 | ) | ($ | 0.17 | ) | |||||||||||||||||||||||||
| Amortization of debt discount on convertible notes |
— | — | — | — | — | 9.7 | — | 3.5 | 6.2 | $ | 0.15 | |||||||||||||||||||||||||||||
| Intangible amortization expense |
— | 42.6 | — | — | — | — | — | 15.6 | 27.0 | $ | 0.66 | |||||||||||||||||||||||||||||
| Tax adjustment (C) |
— | — | — | — | — | — | — | 5.5 | (5.5 | ) | ($ | 0.13 | ) | |||||||||||||||||||||||||||
| Anti-dilutive effect of EPS (D) |
— | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
| Adjusted basis |
$ | 781.8 | $ | 375.8 | — | $ | 2.3 | — | $ | 71.7 | — | $ | 56.2 | $ | 156.3 | $ | 3.83 | |||||||||||||||||||||||
| (A) | In 2012, losses and other charges include approximately $14.4 million, net of tax, or $0.35 per share, related to acquisition costs; and ($0.3) million, net of tax, or ($0.01) per share related to a gain on sale of businesses and assets. In 2011, losses and other charges include approximately $9.8 million, net of tax, or $0.24 per share, related to loss on extinguishment of debt; $3.5 million, net of tax, or $0.09 per share, in charges related to severance payments and benefits provided to our former chief executive officer; $0.4 million, net of tax, or $0.01 per share, related to a loss on sale of businesses and assets; and $1.3 million, net of tax, or $0.03 per share, related to a stock keeping unit (“SKU”) rationalization to eliminate SKU’s based on low sales volume or insufficient margins to help improve future profitability. |
| (B) | In 2011, the Company terminated an interest rate swap that, at the date of termination, had a notional amount of $350 million. The interest rate swap was designated as a cash flow hedge against the term loan under our senior credit facility. At the date of termination, the interest rate swap was in a liability position resulting in a cash payment by the Company of approximately $14.8 million, which included $3.1 million of accrued interest. In accordance with GAAP, the Company amortized this amount as additional interest expense over the remainder of the original term of the interest rate swap, which expired in September 2012. During 2012, the non-cash, net of tax impact was approximately $7.0 million, or $0.17 per share. |
| (C) | The tax adjustment represents a net benefit resulting from (i) the resolution (including the expiration of statutes of limitations) of various prior years’ U.S. federal, state and foreign tax matters, and (ii) the filing of amended prior years’ tax returns. |
| (D) | The Company has presented results using basic weighted average shares with the impact of dilution on adjusted income, separately. Under applicable accounting guidance, if a company has a net loss from continuing operations, no common shares that potentially may be issued are included in the computation of diluted per-share amounts because such inclusion would result in an anti-dilutive per share amount. |
RECONCILIATION OF NET DEBT OBLIGATIONS
| December 31, 2012 | December 31, 2011 | |||||||
| (Dollars in thousands) | ||||||||
| Note payable and current portion of long-term borrowings |
$ | 4,700 | $ | 4,986 | ||||
| Long term borrowings |
965,280 | 954,809 | ||||||
| Unamortized debt discount |
59,720 | 70,191 | ||||||
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| Total debt obligations |
1,029,700 | 1,029,986 | ||||||
| Less: cash and cash equivalents |
337,039 | 584,088 | ||||||
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| Net debt obligations |
$ | 692,661 | $ | 445,898 | ||||
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ABOUT TELEFLEX INCORPORATED
Teleflex is a leading global provider of specialty medical devices for a range of procedures in critical care and surgery. Our mission is to provide solutions that enable healthcare providers to improve outcomes and enhance patient and provider safety. Headquartered in Limerick, PA, Teleflex employs approximately 11,600 people worldwide and serves healthcare providers in more than 140 countries. For additional information about Teleflex please refer to www.teleflex.com.
CAUTION CONCERNING FORWARD-LOOKING INFORMATION
This press release contains forward-looking statements, including, but not limited to, forecasted 2013 constant currency revenue growth and adjusted earnings per share. Actual results could differ materially from those in the forward-looking statements due to, among other things, conditions in the end markets we serve, customer reaction to new products and programs, our ability to achieve sales growth, price increases or cost reductions; changes in the reimbursement practices of third party payors; our ability to realize efficiencies and to execute on our strategic initiatives; changes in material costs and surcharges; market acceptance and unanticipated difficulties in connection with the introduction of new products and product line extensions; product recalls; unanticipated difficulties in connection with the consolidation of manufacturing and administrative functions; unanticipated difficulties, expenditures and delays in complying with government regulations applicable to our businesses; the impact of government healthcare reform legislation; our ability to meet our debt obligations; changes in general and international economic conditions; and other factors described or incorporated in our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2012.
TELEFLEX INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
| Three Months Ended | ||||||||
| December 31, 2012 |
December 31, 2011 |
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| (Dollars and shares in thousands, except per share) |
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| Net revenues |
$ | 419,056 | $ | 403,038 | ||||
| Cost of goods sold |
219,876 | 213,288 | ||||||
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| Gross profit |
199,180 | 189,750 | ||||||
| Selling, general and administrative expenses |
121,524 | 110,779 | ||||||
| Research and development expenses |
16,263 | 12,910 | ||||||
| Restructuring and other impairment charges |
2,953 | 2,407 | ||||||
| Net loss on sales of businesses and assets |
— | 582 | ||||||
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|
|
|||||
| Income from continuing operations before interest, loss on extinguishments of debt and taxes |
58,440 | 63,072 | ||||||
| Interest expense |
14,621 | 19,209 | ||||||
| Interest income |
(247 | ) | (584 | ) | ||||
|
|
|
|
|
|||||
| Income from continuing operations before taxes |
44,066 | 44,447 | ||||||
| Taxes on income from continuing operations |
13,452 | 2,644 | ||||||
|
|
|
|
|
|||||
| Income from continuing operations |
30,614 | 41,803 | ||||||
|
|
|
|
|
|||||
| Operating income (loss) from discontinued operations (including gain (loss) on disposal of $(21) and $218,365, respectively) |
(1,256 | ) | 216,978 | |||||
| Taxes (benefit) on income (loss) from discontinued operations |
(219 | ) | 90,560 | |||||
|
|
|
|
|
|||||
| Income (loss) from discontinued operations |
(1,037 | ) | 126,418 | |||||
|
|
|
|
|
|||||
| Net income |
29,577 | 168,221 | ||||||
| Less: Income from continuing operations attributable to noncontrolling interest |
254 | 251 | ||||||
| Income from discontinued operations attributable to noncontrolling interest |
— | 174 | ||||||
|
|
|
|
|
|||||
| Net income attributable to common shareholders |
$ | 29,323 | $ | 167,796 | ||||
|
|
|
|
|
|||||
| Earnings per share available to common shareholders: |
||||||||
| Basic: |
||||||||
| Income from continuing operations |
$ | 0.74 | $ | 1.02 | ||||
| Income (loss) from discontinued operations |
(0.02 | ) | 3.10 | |||||
|
|
|
|
|
|||||
| Net income |
$ | 0.72 | $ | 4.12 | ||||
|
|
|
|
|
|||||
| Diluted: |
||||||||
| Income from continuing operations |
$ | 0.72 | $ | 1.01 | ||||
| Income (loss) from discontinued operations |
(0.02 | ) | 3.09 | |||||
|
|
|
|
|
|||||
| Net income |
$ | 0.70 | $ | 4.10 | ||||
|
|
|
|
|
|||||
| Dividends per common share |
$ | 0.34 | $ | 0.34 | ||||
| Weighted average common shares outstanding: |
||||||||
| Basic |
40,945 | 40,727 | ||||||
| Diluted |
42,007 | 40,965 | ||||||
| Amounts attributable to common shareholders: |
||||||||
| Income from continuing operations, net of tax |
$ | 30,360 | $ | 41,552 | ||||
| Income (loss) from discontinued operations, net of tax |
(1,037 | ) | 126,244 | |||||
|
|
|
|
|
|||||
| Net income |
$ | 29,323 | $ | 167,796 | ||||
|
|
|
|
|
|||||
TELEFLEX INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
| Twelve Months Ended | ||||||||
| December 31, 2012 |
December 31, 2011 |
|||||||
| (Dollars and shares in thousands, except per share) |
||||||||
| Net revenues |
$ | 1,551,009 | $ | 1,492,528 | ||||
| Cost of goods sold |
802,784 | 783,750 | ||||||
|
|
|
|
|
|||||
| Gross profit |
748,225 | 708,778 | ||||||
| Selling, general and administrative expenses |
454,489 | 423,909 | ||||||
| Research and development expenses |
56,278 | 48,712 | ||||||
| Goodwill impairment |
332,128 | — | ||||||
| Restructuring and other impairment charges |
3,037 | 6,005 | ||||||
| Net (gain) loss on sales of businesses and assets |
(332 | ) | 582 | |||||
|
|
|
|
|
|||||
| Income (loss) from continuing operations before interest, loss on extinguishments of debt and taxes |
(97,375 | ) | 229,570 | |||||
| Interest expense |
69,565 | 70,317 | ||||||
| Interest income |
(1,571 | ) | (1,260 | ) | ||||
| Loss on extinguishments of debt |
— | 15,413 | ||||||
|
|
|
|
|
|||||
| Income (loss) from continuing operations before taxes |
(165,369 | ) | 145,100 | |||||
| Taxes on income (loss) from continuing operations |
16,413 | 25,778 | ||||||
|
|
|
|
|
|||||
| Income (loss) from continuing operations |
(181,782 | ) | 119,322 | |||||
|
|
|
|
|
|||||
| Operating income (loss) from discontinued operations (including gain on disposal of $2,205 and $270,630, respectively) |
(9,207 | ) | 292,683 | |||||
| Taxes (benefit) on income (loss) from discontinued operations |
(1,887 | ) | 87,038 | |||||
|
|
|
|
|
|||||
| Income (loss) from discontinued operations |
(7,320 | ) | 205,645 | |||||
|
|
|
|
|
|||||
| Net income (loss) |
(189,102 | ) | 324,967 | |||||
| Less: Income from continuing operations attributable to noncontrolling interest |
955 | 1,021 | ||||||
| Income from discontinued operations attributable to noncontrolling interest |
— | 617 | ||||||
|
|
|
|
|
|||||
| Net income (loss) attributable to common shareholders |
$ | (190,057 | ) | $ | 323,329 | |||
|
|
|
|
|
|||||
| Earnings per share available to common shareholders: |
||||||||
| Basic: |
||||||||
| Income (loss) from continuing operations |
$ | (4.47 | ) | $ | 2.92 | |||
| Income (loss) from discontinued operations |
(0.18 | ) | 5.06 | |||||
|
|
|
|
|
|||||
| Net income (loss) |
$ | (4.65 | ) | $ | 7.98 | |||
|
|
|
|
|
|||||
| Diluted: |
||||||||
| Income (loss) from continuing operations |
$ | (4.47 | ) | $ | 2.90 | |||
| Income (loss) from discontinued operations |
(0.18 | ) | 5.02 | |||||
|
|
|
|
|
|||||
| Net income (loss) |
$ | (4.65 | ) | $ | 7.92 | |||
|
|
|
|
|
|||||
| Dividends per common share |
$ | 1.36 | $ | 1.36 | ||||
| Weighted average common shares outstanding: |
||||||||
| Basic |
40,859 | 40,501 | ||||||
| Diluted |
40,859 | 40,801 | ||||||
| Amounts attributable to common shareholders: |
||||||||
| Income (loss) from continuing operations, net of tax |
$ | (182,737 | ) | $ | 118,301 | |||
| Income (loss) from discontinued operations, net of tax |
(7,320 | ) | 205,028 | |||||
|
|
|
|
|
|||||
| Net income (loss) |
$ | (190,057 | ) | $ | 323,329 | |||
|
|
|
|
|
|||||
TELEFLEX INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
| December 31, 2012 |
December 31, 2011 |
|||||||
| (Dollars in thousands) | ||||||||
| ASSETS |
||||||||
| Current assets |
||||||||
| Cash and cash equivalents |
$ | 337,039 | $ | 584,088 | ||||
| Accounts receivable, net |
297,976 | 286,226 | ||||||
| Inventories, net |
323,347 | 298,775 | ||||||
| Prepaid expenses and other current assets |
28,712 | 33,405 | ||||||
| Prepaid taxes |
27,160 | 28,846 | ||||||
| Deferred tax assets |
46,882 | 41,014 | ||||||
| Assets held for sale |
7,963 | 7,902 | ||||||
|
|
|
|
|
|||||
| Total current assets |
1,069,079 | 1,280,256 | ||||||
| Property, plant and equipment, net |
297,945 | 251,912 | ||||||
| Goodwill |
1,249,456 | 1,438,542 | ||||||
| Intangible assets, net |
1,058,792 | 879,787 | ||||||
| Investments in affiliates |
2,066 | 2,008 | ||||||
| Deferred tax assets |
296 | 278 | ||||||
| Other assets |
61,863 | 71,320 | ||||||
|
|
|
|
|
|||||
| Total assets |
$ | 3,739,497 | $ | 3,924,103 | ||||
|
|
|
|
|
|||||
| LIABILITIES AND EQUITY |
||||||||
| Current liabilities |
||||||||
| Notes payable |
$ | 4,700 | $ | 4,986 | ||||
| Accounts payable |
75,165 | 67,092 | ||||||
| Accrued expenses |
65,064 | 74,207 | ||||||
| Current portion of contingent consideration |
23,693 | 3,953 | ||||||
| Payroll and benefit-related liabilities |
74,586 | 64,386 | ||||||
| Derivative liabilities |
598 | 633 | ||||||
| Accrued interest |
9,418 | 10,960 | ||||||
| Income taxes payable |
15,573 | 21,084 | ||||||
| Current liability for uncertain tax positions |
4,684 | 22,656 | ||||||
| Deferred tax liabilities |
924 | 1,050 | ||||||
|
|
|
|
|
|||||
| Total current liabilities |
274,405 | 271,007 | ||||||
| Long-term borrowings |
965,280 | 954,809 | ||||||
| Deferred tax liabilities |
419,266 | 420,833 | ||||||
| Pension and postretirement benefit liabilities |
170,946 | 194,984 | ||||||
| Noncurrent liability for uncertain tax positions |
68,292 | 61,688 | ||||||
| Other liabilities |
59,771 | 37,999 | ||||||
|
|
|
|
|
|||||
| Total liabilities |
1,957,960 | 1,941,320 | ||||||
|
|
|
|
|
|||||
| Commitments and contingencies |
||||||||
| Common Shareholders’ equity |
||||||||
| Common shares, $1 par value Issued: 2012 — 43,102 shares; 2011 — 42,923 shares |
43,102 | 42,923 | ||||||
| Additional paid-in capital |
394,384 | 380,965 | ||||||
| Retained earnings |
1,601,460 | 1,847,106 | ||||||
| Accumulated other comprehensive income (loss) |
(132,048 | ) | (159,353 | ) | ||||
|
|
|
|
|
|||||
| 1,906,898 | 2,111,641 | |||||||
| Less: Treasury stock, at cost |
127,948 | 131,053 | ||||||
|
|
|
|
|
|||||
| Total common shareholders’ equity |
1,778,950 | 1,980,588 | ||||||
|
|
|
|
|
|||||
| Noncontrolling interest |
2,587 | 2,195 | ||||||
|
|
|
|
|
|||||
| Total equity |
1,781,537 | 1,982,783 | ||||||
|
|
|
|
|
|||||
| Total liabilities and equity |
$ | 3,739,497 | $ | 3,924,103 | ||||
|
|
|
|
|
|||||
TELEFLEX INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
| Twelve Months Ended | ||||||||
| December 31, 2012 |
December 31, 2011 |
|||||||
| (Dollars in thousands) | ||||||||
| Cash Flows from Operating Activities of Continuing Operations: |
||||||||
| Net income (loss) |
$ | (189,102 | ) | $ | 324,967 | |||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Loss (income) from discontinued operations |
7,320 | (205,645 | ) | |||||
| Depreciation expense |
36,204 | 40,336 | ||||||
| Amortization expense of intangible assets |
44,264 | 42,634 | ||||||
| Amortization expense of deferred financing costs and debt discount |
14,416 | 13,526 | ||||||
| Loss on extinguishments of debt |
— | 15,413 | ||||||
| Interest rate swap buyout |
— | (11,695 | ) | |||||
| Stock-based compensation |
8,623 | 4,532 | ||||||
| Net (gain) loss on sales of businesses and assets |
(332 | ) | 582 | |||||
| Impairment of investments in affiliates |
— | 2,499 | ||||||
| Goodwill impairment |
332,128 | — | ||||||
| Deferred income taxes, net |
(39,178 | ) | (14,067 | ) | ||||
| Other |
(3,468 | ) | (2,447 | ) | ||||
| Changes in operating assets and liabilities, net of effects of acquisitions and disposals: |
||||||||
| Accounts receivable |
(2,932 | ) | (43,561 | ) | ||||
| Inventories |
(1,970 | ) | (33,819 | ) | ||||
| Prepaid expenses and other current assets |
9,595 | (8,473 | ) | |||||
| Accounts payable and accrued expenses |
(1,457 | ) | (1,616 | ) | ||||
| Income taxes receivable and payable, net |
(20,258 | ) | (28,809 | ) | ||||
|
|
|
|
|
|||||
| Net cash provided by operating activities from continuing operations |
193,853 | 94,357 | ||||||
|
|
|
|
|
|||||
| Cash Flows from Investing Activities of Continuing Operations: |
||||||||
| Expenditures for property, plant and equipment |
(65,394 | ) | (44,582 | ) | ||||
| Payments for businesses and intangibles acquired, net of cash acquired |
(387,040 | ) | (30,570 | ) | ||||
| Proceeds from sales of businesses and assets, net of cash sold |
66,660 | 376,025 | ||||||
| Investments in affiliates |
(80 | ) | (150 | ) | ||||
|
|
|
|
|
|||||
| Net cash (used in) provided by investing activities from continuing operations |
(385,854 | ) | 300,723 | |||||
|
|
|
|
|
|||||
| Cash Flows from Financing Activities of Continuing Operations: |
||||||||
| Proceeds from long-term borrowings |
— | 515,000 | ||||||
| Repayment of long-term borrowings |
— | (455,800 | ) | |||||
| Debt and equity issuance and amendment fees |
— | (18,518 | ) | |||||
| Decrease in notes payable and current borrowings |
(706 | ) | (24,714 | ) | ||||
| Proceeds from stock compensation plans |
9,003 | 34,009 | ||||||
| Dividends |
(55,589 | ) | (55,136 | ) | ||||
|
|
|
|
|
|||||
| Net cash used in financing activities from continuing operations |
(47,292 | ) | (5,159 | ) | ||||
|
|
|
|
|
|||||
| Cash Flows from Discontinued Operations: |
||||||||
| Net cash (used in) provided by operating activities |
(7,799 | ) | 121 | |||||
| Net cash used in investing activities |
(2,351 | ) | (2,875 | ) | ||||
|
|
|
|
|
|||||
| Net cash used in discontinued operations |
(10,150 | ) | (2,754 | ) | ||||
|
|
|
|
|
|||||
| Effect of exchange rate changes on cash and cash equivalents |
2,394 | (11,531 | ) | |||||
|
|
|
|
|
|||||
| Net (decrease) increase in cash and cash equivalents |
(247,049 | ) | 375,636 | |||||
| Cash and cash equivalents at the beginning of the period |
584,088 | 208,452 | ||||||
|
|
|
|
|
|||||
| Cash and cash equivalents at the end of the period |
$ | 337,039 | $ | 584,088 | ||||
|
|
|
|
|
|||||