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8-K - FORM 8-K - TELEFLEX INCd681482d8k.htm

Exhibit 99.1

 

 

LOGO

 

Contact:    Jake Elguicze   
   Treasurer and Vice President of Investor Relations   
   610-948-2836   
FOR IMMEDIATE RELEASE    February 21, 2014

TELEFLEX REPORTS FOURTH QUARTER AND FULL YEAR 2013 RESULTS

Fourth Quarter Revenues Increase 7.5% to $450.5 million; up 6.9% on Constant Currency Basis

Fourth Quarter GAAP Diluted EPS of $0.78; Adjusted Diluted EPS of $1.36 up 18.3%

2014 Guidance Ranges for Constant Currency Revenue Growth of 7% to 9% and Adjusted Diluted EPS of $5.35 to $5.55 Reaffirmed

Limerick, PA — Teleflex Incorporated (NYSE: TFX) today announced financial results for the fourth quarter and full year ended December 31, 2013.

Fourth quarter 2013 net revenues were $450.5 million, an increase of 7.5% over the prior year period. Excluding the impact of foreign currency fluctuations, fourth quarter 2013 net revenues increased 6.9% over the prior year period.

Fourth quarter 2013 GAAP diluted earnings per share from continuing operations were $0.78, as compared to $0.72 in the prior year period. Fourth quarter 2013 adjusted diluted earnings per share from continuing operations were $1.36, as compared to $1.15 in the prior year period, an increase of 18.3%.

“Teleflex delivered a strong finish to 2013, both in terms of constant currency revenue growth and adjusted earnings per share achievement,” said Benson Smith, Chairman, President and Chief Executive Officer. “Our fourth quarter performance was aided by the contribution from the acquisitions of Vidacare and LMA International, an improvement in the average selling price of products, the introduction of new products to the marketplace and one additional shipping day in the quarter as compared to the prior year period.”

Added Mr. Smith, “As we turn to 2014, Teleflex is well-positioned to continue to exceed industry revenue growth rates and expand adjusted operating margin and earnings per share due to recently concluded dealer negotiations, the acquisition of Vidacare, the introduction of new products to the market, and the continued integration of the LMA business.”

FOURTH QUARTER NET REVENUE BY PRODUCT GROUP AND SEGMENT

Product Group Revenues

Critical Care fourth quarter 2013 net revenues were $316.7 million, an increase of 10.6% compared to the prior year period. Excluding the impact of foreign currency fluctuations, fourth quarter 2013 net revenues increased 10.2% compared to the prior year period. The increase in constant currency revenue was due to higher sales of anesthesia, interventional, vascular and urology products. The


growth in sales of anesthesia products was primarily due to the contribution from the LMA International business (“LMA”), which was acquired in October of 2012. The growth in sales of vascular and interventional access products was primarily due to the contribution from the Vidacare Corporation business (“Vidacare”), which was acquired in December of 2013. Constant currency sales growth was partially offset by a decline in sales of respiratory products.

Surgical Care fourth quarter 2013 net revenues were $80.5 million, an increase of 5.2% compared to the prior year period. Excluding the impact of foreign currency fluctuations, fourth quarter 2013 net revenues increased 4.0% compared to the prior year period. The increase in constant currency revenue was due to higher sales of ligation, access and suture products, partially offset by a decline in sales of general surgical instrument and chest drainage products.

Cardiac Care fourth quarter 2013 net revenues were $19.2 million, a decrease of 6.0% compared to the prior year period on both an as-reported and constant currency basis. The decrease in revenue was due to a decline in sales of intra-aortic balloon pumps.

OEM and Development Services (“OEM”) fourth quarter 2013 net revenues were $34.1 million, a decrease of 4.8% compared to the prior year period. Excluding the impact of foreign currency fluctuations, fourth quarter 2013 net revenues decreased 5.7% compared to the prior year period. The decrease in constant currency revenue was primarily due to a decline in sales of catheter and performance fiber products.

 

     Three Months Ended      % Increase/ (Decrease)  
     December 31,
2013
     December 31,
2012
     Constant
Currency
    Foreign
Currency
    Total
Change
 
     (Dollars in millions)                     

Critical Care

   $ 316.7       $ 286.5         10.2     0.4     10.6

Surgical Care

     80.5         76.5         4.0     1.2     5.2

Cardiac Care

     19.2         20.4         (6.0 %)      —          (6.0 %) 

OEM

     34.1         35.7         (5.7 %)      0.9     (4.8 %) 
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Total

   $ 450.5       $ 419.1         6.9     0.6     7.5
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Segment Revenues

Americas fourth quarter 2013 net revenues were $212.4 million, an increase of 6.2% compared to the prior year period. Excluding the impact of foreign currency fluctuations, fourth quarter 2013 net revenues increased 6.6% compared to the prior year period. The increase in constant currency revenue was largely due to LMA and Vidacare product sales, new product sales and price increases, partially offset by lower sales volume of existing products as compared to the fourth quarter of 2012.

EMEA fourth quarter 2013 net revenues were $144.9 million, an increase of 9.2% compared to the prior year period. Excluding the impact of foreign currency fluctuations, fourth quarter 2013 net revenues increased 5.2% compared to the prior year period. The increase in constant currency revenue was due to LMA and Vidacare product sales, price increases including the benefit of selling direct to customers in some markets versus selling to a third party distributor and higher sales volume of existing products as compared to the fourth quarter of 2012.

Asia fourth quarter 2013 net revenues were $59.1 million, an increase of 17.1% compared to the prior year period. Excluding the impact of foreign currency fluctuations, fourth quarter 2013 net revenues increased 21.6% compared to the prior year period. The increase in constant currency revenue was due to LMA product sales, higher sales volume of existing products and price increases.


     Three Months Ended      % Increase/ (Decrease)  
     December 31,
2013
     December 31,
2012
     Constant
Currency
    Foreign
Currency
    Total
Change
 
     (Dollars in millions)                     

Americas

   $ 212.4       $ 200.1         6.6     (0.4 %)      6.2

EMEA

     144.9         132.8         5.2     4.0     9.2

Asia

     59.1         50.5         21.6     (4.5 %)      17.1

OEM

     34.1         35.7         (5.7 %)      0.9     (4.8 %) 
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Total

   $ 450.5       $ 419.1         6.9     0.6     7.5
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

FULL YEAR RESULTS

Net revenues for the full year 2013 were $1.696 billion, an increase of 9.4% compared to the prior year period. Excluding the impact of foreign currency fluctuations which had a positive impact of 0.4%, net revenues for 2013 increased 9.0% compared to 2012.

GAAP diluted earnings per share from continuing operations were $3.46 for the full year 2013, as compared to a loss per share of ($4.47) 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 full year of 2013 were $5.03, an increase of 13.5% over the prior year.

OTHER FINANCIAL HIGHLIGHTS AND KEY PERFORMANCE METRICS

Depreciation expense and amortization of intangible assets and deferred financing costs for full year 2013 were $107.9 million compared to $94.9 million for the prior year period.

Cash and cash equivalents at December 31, 2013 were $432.0 million compared to $337.0 million at December 31, 2012.

Net accounts receivable at December 31, 2013 were $295.3 million compared to $298.0 million at December 31, 2012.

Net inventories at December 31, 2013 were $333.6 million compared to $323.3 million at December 31, 2012.

Net debt obligations at December 31, 2013 were $902.7 million compared to $692.7 million at December 31, 2012. During the fourth quarter of 2013, as a result of the Company meeting a contingent conversion threshold related to the Company’s stock price, the Company’s convertible notes have been classified as a current liability as of December 31, 2013. The determination of whether or not the convertible notes are convertible must continue to be performed on a quarterly basis until maturity or conversion. Consequently, the convertible notes may not be convertible in future quarters, and therefore may again be classified as long-term debt, if the contingent conversion threshold is not met in such quarters.

2014 OUTLOOK

The Company reaffirmed full year 2014 financial estimates as follows:

Constant currency revenue growth between 7% and 9% for the full year 2014.


Adjusted diluted earnings per share in the range of $5.35 to $5.55.

FORECASTED 2014 CONSTANT CURRENCY REVENUE GROWTH RECONCILIATION

 

     Low     High  

Forecasted 2014 GAAP revenue growth

     6.0     8.0

Foreign exchange

     1.0     1.0
  

 

 

   

 

 

 

Forecasted 2014 constant currency revenue growth

     7.0     9.0
  

 

 

   

 

 

 

FORECASTED 2014 ADJUSTED EARNINGS PER SHARE RECONCILIATION

 

     Low      High  

Forecasted 2014 diluted earnings per share attributable to common shareholders

   $ 3.60       $ 3.75   

Restructuring, impairment charges and special items, net of tax

   $ 0.65       $ 0.70   

Intangible amortization expense, net of tax

   $ 0.93       $ 0.93   

Amortization of debt discount on convertible notes, net of tax

   $ 0.17       $ 0.17   
  

 

 

    

 

 

 

Forecasted 2014 adjusted diluted earnings per share

   $ 5.35       $ 5.55   
  

 

 

    

 

 

 

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 28, 2014 at 11:59pm (ET), by calling 888-286-8010 (U.S./Canada) or 617-801-6888 (International), Passcode: 68453301.

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 and in the Reconciliation of Consolidated Statement of Income Items set forth below.

NOTES ON NON-GAAP FINANCIAL MEASURES

This press release includes certain non-GAAP financial measures, which include:

Adjusted diluted earnings per share. This measure excludes, depending on the period presented (i) the effect of charges associated with our restructuring programs, as well as goodwill and other asset impairment charges; (ii) loss on extinguishment of debt; (iii) the gain or loss on sales of businesses and assets; (iv) losses and other charges related to acquisition costs, the reversal of liabilities related


to certain contingent consideration arrangements and a previously announced stock keeping unit rationalization program, the establishment of a litigation reserve and a litigation verdict against the Company with respect to a non-operating joint venture; (v) amortization of the debt discount on the Company’s convertible notes; (vi) charges associated with the amortization of additional interest expense related to an interest rate swap terminated in 2011; (vii) intangible amortization expense; and (viii) tax benefits resulting from the resolution of prior years’ tax matters and the filing of prior years’ amended tax returns. In addition, the calculation of diluted shares within adjusted earnings per share gives effect to the anti-dilutive impact of the Company’s convertible note hedge agreements, which reduce the potential economic dilution that otherwise would occur upon conversion of the Company’s senior subordinated convertible notes (under GAAP, the anti-dilutive impact of the convertible note hedge agreements is not reflected in diluted shares).

Constant currency revenue. This measure excludes the impact of translating the results of international subsidiaries at different currency exchange rates from period to period.

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 believes that the calculation of non-GAAP diluted shares is useful to investors because it provides insight into the offsetting economic effect of the convertible note hedge against conversions of the convertible notes. 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.


RECONCILIATION OF CONSOLIDATED STATEMENT OF INCOME ITEMS

Dollars in millions, except per share amounts

 

Quarter Ended – December 31, 2013

 

   

Cost

of

goods
sold

   

Selling,

general and
administrative
expenses

    Research and
development
expenses
    Restructuring
and other
impairment
charges
    Interest
expense,
net
   

Income

taxes

   

Net income

(loss)
attributable to
common
shareholders

from continuing
operations

    Diluted earnings
per share
available to
common
shareholders
    Shares used in
calculation of
GAAP and
adjusted
earnings per
share
 

GAAP Basis

  $ 225.6      $ 143.8      $ 17.9      $ 9.2      $ 14.2      $ 4.6      $ 35.1      $ 0.78        45,033   

Adjustments

                 

Restructuring and other impairment charges

    —          —          —          9.2        —          1.7        7.6      $ 0.17        —     

Losses and other charges (A)

    0.3        8.2        0.5        —          —          2.5        6.5      $ 0.14        —     

Amortization of debt discount on convertible notes

    —          —          —          —          2.9        1.1        1.8      $ 0.04        —     

Intangible amortization expense

    —          13.5        —          —          —          4.5        9.0      $ 0.20        —     

Tax Adjustment (B)

    —          —          —          —          —          1.5        (1.5   ($ 0.03     —     

Shares due to Teleflex under note hedge (C)

    —          —          —          —          —          —          —        $ 0.06        (2,165

Adjusted basis

  $ 225.3      $ 122.0      $ 17.3        —        $ 11.3      $ 15.8      $ 58.5      $ 1.36        42,868   

Quarter Ended – December 31, 2012

 

   

Cost

of

goods
sold

   

Selling,

general and
administrative
expenses

    Research and
development
expenses
    Restructuring
and other
impairment
charges
    Interest
expense,
net
   

Income

taxes

   

Net income

(loss)
attributable to
common
shareholders

from continuing
operations

    Diluted earnings
per share
available to
common
shareholders
    Shares used in
calculation of
GAAP and
adjusted
earnings per
share
 

GAAP Basis

  $ 219.9      $ 121.5      $ 16.3      $ 3.0      $ 14.4      $ 13.5      $ 30.4      $ 0.72        42,007   

Adjustments

                 

Restructuring and other impairment charges

    —          —          —          3.0        —          0.6        2.3      $ 0.06        —     

Losses and other charges (A)

    0.5        3.0        —          —          —          (1.9     5.4      $ 0.13        —     

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 (B)

    —          —          —          —          —          —          —          —          —     

Shares due to Teleflex under note hedge (C)

    —          —          —          —          —          —          —        $ 0.02        (733

Adjusted basis

  $ 219.4      $ 106.5      $ 16.3        —        $ 11.7      $ 17.3      $ 47.6      $ 1.15        41,274   


(A) In 2013, losses and other charges include approximately $4.0 million, net of tax, or $0.09 per share, primarily related to acquisition and integration costs; $1.9 million, net of tax, or $0.04 per share related to the establishment of a litigation reserve; and $0.6 million, net of tax, or $0.01 per share related to costs incurred to relocate facilities. In 2012, losses and other charges include approximately $5.4 million, net of tax, or $0.13 per share, related to acquisition costs.
(B) The tax adjustment represents a net benefit resulting from the resolution of, or the expiration of statute of limitations with respect to various prior years’ U.S. federal, state and foreign tax matters.
(C) Adjusted diluted shares are calculated by giving effect to the anti-dilutive impact of the Company’s convertible note hedge agreements, which reduce the potential economic dilution that otherwise would occur upon conversion of our senior subordinated convertible notes. Under GAAP, the anti-dilutive impact of the convertible note hedge agreements is not reflected in diluted shares.


RECONCILIATION OF CONSOLIDATED STATEMENT OF INCOME ITEMS

Dollars in millions, except per share amounts

 

Twelve Months Ended – December 31, 2013

 

   

Cost

of

goods
sold

   

Selling,

general and
administrative
expenses

    Research and
development
expenses
    Goodwill
impairment
    Restructuring
and other
impairment
charges
    Gain/(loss)
on sales of
businesses
and assets
    Loss on
extinguishment
of debt
    Interest
expense,
net
   

Income

taxes

   

Net income

(loss) attributable
to common
shareholders

from continuing
operations

    Diluted
earnings per
share available
to common
shareholders
    Shares used
in calculation
of GAAP and
adjusted
earnings per
share
 

GAAP Basis

  $ 857.3      $ 502.2      $ 65.0        —        $ 38.5        —        $ 1.3      $ 56.3      $ 23.5      $ 151.3      $ 3.46        43,693   

Adjustments

                       

Restructuring and other impairment charges

    —          —          —          —          38.5        —          —          —          7.8        30.7      $ 0.71        —     

Loss on extinguishment of debt

    —          —          —          —          —          —          1.3        —          0.5        0.8      $ 0.02        —     

Losses and other charges (A)

    2.3        1.5        0.5        —          —          —          —          —          4.9        (0.6   ($ 0.02     —     

Amortization of debt discount on convertible notes

    —          —          —          —          —          —          —          11.3        4.1        7.2      $ 0.16        —     

Intangible amortization expense

    —          50.6        —          —          —          —          —          —          17.3        33.4      $ 0.76        —     

Tax Adjustment (D)

    —          —          —          —          —          —          —          —          11.1        (11.1   ($ 0.25     —     

Shares due to Teleflex under note hedge (E)

    —          —          —          —          —          —          —          —          —          —        $ 0.19        (1,620

Adjusted basis

  $ 855.1      $ 450.1      $ 64.5        —          —          —          —        $ 45.0      $ 69.2      $ 211.6      $ 5.03        42,073   


Twelve Months Ended – December 31, 2012

 

   

Cost

of

goods
sold

   

Selling,

general and
administrative
expenses

    Research and
development
expenses
    Goodwill
impairment
    Restructuring
and other
impairment
charges
    Gain/(loss)
on sales of
businesses
and assets
    Loss on
extinguishment
of debt
    Interest
expense,
net
   

Income

taxes

   

Net income

(loss) attributable
to common
shareholders

from continuing
operations

    Diluted
earnings per
share available
to common
shareholders
    Shares used
in calculation
of GAAP
and adjusted
earnings per
share
 

GAAP Basis

  $ 802.8      $ 454.5      $ 56.3      $ 332.1      $ 3.0      $ 0.3        —        $ 68.0      $ 16.4      ($ 182.7   ($ 4.47     40,859   

Adjustments

                       

Goodwill impairment

    —          —          —          332.1        —          —          —          —          17.0        315.1      $ 7.71        —     

Restructuring and other impairment charges

    —          —          —          —          3.0        —          —          —          0.6        2.5      $ 0.06        —     

Gain/(loss) on sales of businesses and assets

    —          —          —          —          —          (0.3     —          —          —          (0.3   ($ 0.01     —     

Loss on extinguishment of debt

    —          —          —          —          —          —          —          —          —          —          —          —     

Losses and other charges (A)

    0.5        14.2        —          —          —          —          —          —          —          14.6      $ 0.36        —     

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        —     

Anti-dilutive effect on EPS (C)

    —          —          —          —          —          —          —          —          —          —        ($ 0.06     542   

Tax adjustment (D)

    —          —          —          —          —          —          —          —          9.0        (9.0   ($ 0.22     —     

Shares due to Teleflex under note hedge (E)

    —          —          —          —          —          —          —          —          —          —        $ 0.03        (275

Adjusted basis

  $ 802.3      $ 396.0      $ 56.3        —          —          —          —        $ 46.5      $ 66.7      $ 182.2      $ 4.43        41,126   

 

(A) In 2013, losses and other charges include approximately ($12.4) million, net of tax, or ($0.28) per share, related to the reversal of contingent consideration liabilities; $7.8 million, net of tax, or $0.18 per share, primarily related to acquisition and integration costs; ($0.3) million, net of tax, or ($0.01) per share, related to a reserve reversal associated with a previously announced stock keeping unit (“SKU”) rationalization charge; $0.8 million, net of tax, or $0.02 per share, related to a litigation verdict against the Company with respect to a non-operating joint venture; $1.9 million, net of tax, or $0.04 per share related to the establishment of a litigation reserve; and $1.6 million, net of tax, or $0.04 per share related to costs incurred to relocate facilities. In 2012, losses and other charges include approximately $0.2 million, net of tax related to contingent consideration liabilities; and $14.4 million, net of tax, or $0.36 per share, related to acquisition costs.
(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 to the counterparty 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 first nine months of 2012, the impact of the amortization, net of tax, was approximately $7.0 million, or $0.17 per share.
(C) The Company presents per share results using basic weighted average shares, and separately presents diluted per share results, which reflect with the impact of dilution on income. Under applicable accounting guidance, if a company has a net loss from continuing operations, as was the case for the Company in 2012, 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. However, the Company had net income on an adjusted basis in 2012. Therefore, common shares that would have a dilutive effect on adjusted net income are deemed to be outstanding for purposes of the calculation of 2012 adjusted diluted earnings per share.
(D) The tax adjustment represents a net benefit resulting from the resolution of, or the expiration of statutes of limitations with respect to various prior years’ U.S. federal, state and foreign tax matters.
(E) Adjusted diluted shares are calculated by including the anti-dilutive impact of the Company’s convertible note hedge agreements, which reduce the potential economic dilution that otherwise would occur upon conversion of our senior subordinated convertible notes. Under GAAP, the anti-dilutive impact of the convertible note hedge agreements is not reflected in diluted shares.


RECONCILIATION OF NET DEBT OBLIGATIONS

 

     December 31, 2013      December 31, 2012  
     (Dollars in thousands)  

Note payable and current portion of long-term borrowings

   $ 356,287       $ 4,700   

Long term borrowings

     930,000         965,280   

Unamortized debt discount

     48,413         59,720   
  

 

 

    

 

 

 

Total debt obligations

     1,334,700         1,029,700   

Less: cash and cash equivalents

     431,984         337,039   
  

 

 

    

 

 

 

Net debt obligations

   $ 902,716       $ 692,661   
  

 

 

    

 

 

 

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 11,400 people worldwide and serves healthcare providers in more than 150 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 2014 GAAP and constant currency revenue growth and GAAP and adjusted diluted earnings per share and the anticipated expansion of operating margins and earnings per share as a result of recently concluded dealer negotiations, the acquisition of Vidacare, the introduction of new products to the market and the continued integration of the LMA business. 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,
2013
    December 31,
2012
 
     (Dollars and shares in thousands,
except per share)
 

Net revenues

   $ 450,539      $ 419,056   

Cost of goods sold

     225,596        219,876   
  

 

 

   

 

 

 

Gross profit

     224,943        199,180   

Selling, general and administrative expenses

     143,756        121,524   

Research and development expenses

     17,876        16,263   

Restructuring and other impairment charges

     9,247        2,953   
  

 

 

   

 

 

 

Income from continuing operations before interest and taxes

     54,064        58,440   

Interest expense

     14,339        14,621   

Interest income

     (166     (247
  

 

 

   

 

 

 

Income from continuing operations before taxes

     39,891        44,066   

Taxes on income from continuing operations

     4,589        13,452   
  

 

 

   

 

 

 

Income from continuing operations

     35,302        30,614   
  

 

 

   

 

 

 

Operating loss from discontinued operations (including loss on disposal of $21 in 2012)

     (459     (1,256

Tax benefit on loss from discontinued operations

     (223     (219
  

 

 

   

 

 

 

Loss from discontinued operations

     (236     (1,037
  

 

 

   

 

 

 

Net income

     35,066        29,577   

Less: Income from continuing operations attributable to noncontrolling interest

     238        254   
  

 

 

   

 

 

 

Net income attributable to common shareholders

   $ 34,828      $ 29,323   
  

 

 

   

 

 

 

Earnings per share available to common shareholders:

    

Basic:

    

Income from continuing operations

   $ 0.85      $ 0.74   

Loss from discontinued operations

     —          (0.02
  

 

 

   

 

 

 

Net income

   $ 0.85      $ 0.72   
  

 

 

   

 

 

 

Diluted:

    

Income from continuing operations

   $ 0.78      $ 0.72   

Loss from discontinued operations

     (0.01     (0.02
  

 

 

   

 

 

 

Net income

   $ 0.77      $ 0.70   
  

 

 

   

 

 

 

Dividends per common share

   $ 0.34      $ 0.34   

Weighted average common shares outstanding:

    

Basic

     41,161        40,945   

Diluted

     45,033        42,007   

Amounts attributable to common shareholders:

    

Income from continuing operations, net of tax

   $ 35,064      $ 30,360   

Loss from discontinued operations, net of tax

     (236     (1,037
  

 

 

   

 

 

 

Net income

   $ 34,828      $ 29,323   
  

 

 

   

 

 

 


TELEFLEX INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (LOSS)

 

     Twelve Months Ended  
     December 31,
2013
    December 31,
2012
 
     (Dollars and shares in thousands,
except per share)
 

Net revenues

   $ 1,696,271      $ 1,551,009   

Cost of goods sold

     857,326        802,784   
  

 

 

   

 

 

 

Gross profit

     838,945        748,225   

Selling, general and administrative expenses

     502,187        454,489   

Research and development expenses

     65,045        56,278   

Goodwill impairment

     —          332,128   

Restructuring and other impairment charges

     38,452        3,037   

Gain on sales of businesses and assets

     —          (332
  

 

 

   

 

 

 

Income (loss) from continuing operations before interest, loss on extinguishments of debt and taxes

     233,261        (97,375

Interest expense

     56,905        69,565   

Interest income

     (624     (1,571

Loss on extinguishments of debt

     1,250        —     
  

 

 

   

 

 

 

Income (loss) from continuing operations before taxes

     175,730        (165,369

Taxes on income (loss) from continuing operations

     23,547        16,413   
  

 

 

   

 

 

 

Income (loss) from continuing operations

     152,183        (181,782
  

 

 

   

 

 

 

Operating loss from discontinued operations (including gain on disposal of $2,205 in 2012)

     (2,205     (9,207

Tax benefit on loss from discontinued operations

     (1,770     (1,887
  

 

 

   

 

 

 

Loss from discontinued operations

     (435     (7,320
  

 

 

   

 

 

 

Net income (loss)

     151,748        (189,102

Less: Income from continuing operations attributable to noncontrolling interest

     867        955   
  

 

 

   

 

 

 

Net income (loss) attributable to common shareholders

   $ 150,881      $ (190,057
  

 

 

   

 

 

 

Earnings per share available to common shareholders:

    

Basic:

    

Income (loss) from continuing operations

   $ 3.68      $ (4.47

Loss from discontinued operations

     (0.01     (0.18
  

 

 

   

 

 

 

Net income (loss)

   $ 3.67      $ (4.65
  

 

 

   

 

 

 

Diluted:

    

Income (loss) from continuing operations

   $ 3.46      $ (4.47

Loss from discontinued operations

     (0.01     (0.18
  

 

 

   

 

 

 

Net income (loss)

   $ 3.45      $ (4.65
  

 

 

   

 

 

 

Dividends per common share

   $ 1.36      $ 1.36   

Weighted average common shares outstanding:

    

Basic

     41,105        40,859   

Diluted

     43,693        40,859   

Amounts attributable to common shareholders:

    

Income (loss) from continuing operations, net of tax

   $ 151,316      $ (182,737

Loss from discontinued operations, net of tax

     (435     (7,320
  

 

 

   

 

 

 

Net income (loss)

   $ 150,881      $ (190,057
  

 

 

   

 

 

 


TELEFLEX INCORPORATED AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

 

     December 31,
2013
    December 31,
2012
 
     (Dollars in thousands)  
ASSETS     

Current assets

    

Cash and cash equivalents

   $ 431,984     $ 337,039  

Accounts receivable, net

     295,290       297,976  

Inventories, net

     333,621       323,347  

Prepaid expenses and other current assets

     39,810       28,712  

Prepaid taxes

     36,504        27,160   

Deferred tax assets

     52,917       51,025   

Assets held for sale

     10,428       7,963  
  

 

 

   

 

 

 

Total current assets

     1,200,554       1,073,222  

Property, plant and equipment, net

     325,900       297,945  

Goodwill

     1,354,203       1,238,452  

Intangible assets, net

     1,255,597       1,058,792  

Investments in affiliates

     1,715       2,066  

Deferred tax assets

     943        1,347  

Other assets

     70,095        61,863   
  

 

 

   

 

 

 

Total assets

   $ 4,209,007     $ 3,733,687  
  

 

 

   

 

 

 
LIABILITIES AND EQUITY     

Current liabilities

    

Notes payable

   $ 356,287     $ 4,700   

Accounts payable

     71,967       75,165   

Accrued expenses

     74,868       65,064   

Current portion of contingent consideration

     4,131        23,693   

Payroll and benefit-related liabilities

     73,090        74,586   

Accrued interest

     8,725        9,418   

Income taxes payable

     23,821       16,895   

Other current liabilities

     22,231        5,779   
  

 

 

   

 

 

 

Total current liabilities

     635,120       275,300   

Long-term borrowings

     930,000       965,280   

Deferred tax liabilities

     514,715       418,874   

Pension and postretirement benefit liabilities

     109,498        170,946   

Noncurrent liability for uncertain tax positions

     55,152        61,979   

Other liabilities

     48,506        59,771   
  

 

 

   

 

 

 

Total liabilities

     2,292,991       1,952,150   
  

 

 

   

 

 

 

Common shareholders’ equity

    

Common shares, $1 par value Issued: 2013 — 43,243 shares; 2012 — 43,102 shares

     43,243        43,102   

Additional paid-in capital

     409,338        394,384   

Retained earnings

     1,696,424        1,601,460   

Accumulated other comprehensive loss

     (110,855     (132,048
  

 

 

   

 

 

 
     2,038,150        1,906,898   

Less: Treasury stock, at cost

     124,623        127,948   
  

 

 

   

 

 

 

Total common shareholders’ equity

     1,913,527        1,778,950   
  

 

 

   

 

 

 

Noncontrolling interest

     2,489        2,587   
  

 

 

   

 

 

 

Total equity

     1,916,016        1,781,537   
  

 

 

   

 

 

 

Total liabilities and equity

   $ 4,209,007     $ 3,733,687  
  

 

 

   

 

 

 


TELEFLEX INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

     Twelve Months Ended  
     December 31,
2013
    December 31,
2012
 
     (Dollars in thousands)  

Cash Flows from Operating Activities of Continuing Operations:

    

Net income (loss)

   $ 151,748     $ (189,102

Adjustments to reconcile net income to net cash provided by operating activities:

    

Loss from discontinued operations

     435        7,320   

Depreciation expense

     42,368        36,204   

Amortization expense of intangible assets

     50,608        44,264   

Amortization expense of deferred financing costs and debt discount

     14,959        14,416   

Loss on extinguishments of debt

     1,250        —     

Impairment of long-lived assets

     3,460        —     

In-process research and development impairment

     7,381        —     

Change in contingent consideration

     (12,642     263   

Stock-based compensation

     11,871        8,623   

Gain on sales of businesses and assets

     —          (332

Goodwill impairment

     —          332,128   

Deferred income taxes, net

     (8,925     (39,178

Other

     (8,700     (3,776

Changes in operating assets and liabilities, net of effects of acquisitions and disposals:

    

Accounts receivable

     (1,294     (2,932

Inventories

     (8,931     (1,970

Prepaid expenses and other current assets

     (5,926     9,595   

Accounts payable and accrued expenses

     (684     (1,412

Income taxes receivable and payable, net

     (7,107     (20,258
  

 

 

   

 

 

 

Net cash provided by operating activities from continuing operations

     229,871        193,853   
  

 

 

   

 

 

 

Cash Flows from Investing Activities of Continuing Operations:

    

Expenditures for property, plant and equipment

     (63,580     (65,394

Payments for businesses and intangibles acquired, net of cash acquired

     (309,008     (369,444

Proceeds from sales of businesses and assets, net of cash sold

     —          66,660   

Investments in affiliates

     (50     (80
  

 

 

   

 

 

 

Net cash used in investing activities from continuing operations

     (372,638     (368,258
  

 

 

   

 

 

 

Cash Flows from Financing Activities of Continuing Operations:

    

Proceeds from long-term borrowings

     680,000        —     

Repayment of long-term borrowings

     (375,000     —     

Debt extinguishment, issuance and amendment fees

     (6,400     —     

Decrease in notes payable and current borrowings

     —          (706

Proceeds from stock compensation plans

     7,609        9,003   

Payments to noncontrolling interest shareholders

     (736     —     

Payments for contingent consideration

     (16,958     (17,596

Dividends

     (55,917     (55,589
  

 

 

   

 

 

 

Net cash provided by (used in) financing activities from continuing operations

     232,598        (64,888
  

 

 

   

 

 

 

Cash Flows from Discontinued Operations:

    

Net cash used in operating activities

     (3,327     (7,799

Net cash used in investing activities

     —          (2,351
  

 

 

   

 

 

 

Net cash used in discontinued operations

     (3,327     (10,150
  

 

 

   

 

 

 

Effect of exchange rate changes on cash and cash equivalents

     8,441        2,394   
  

 

 

   

 

 

 

Net increase (decrease) increase in cash and cash equivalents

     94,945        (247,049

Cash and cash equivalents at the beginning of the period

     337,039        584,088   
  

 

 

   

 

 

 

Cash and cash equivalents at the end of the period

   $ 431,984      $ 337,039