Exhibit 99.1
| Contact: | | Jake Elguicze
Vice President Investor Relations
610-948-2836 |
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| | | |
| FOR IMMEDIATE RELEASE | | October 26, 2010 |
TELEFLEX REPORTS THIRD QUARTER 2010 RESULTS
Net revenue of $443 million
Gross margin of 45.8%
Diluted adjusted EPS from continuing operations of $1.11 per share, including tax benefit of $0.13 per share
Diluted GAAP EPS from continuing operations of $0.57 per share
Limerick, PA —Teleflex Incorporated (NYSE: TFX), a global provider of medical technology products that enable healthcare providers to improve patient outcomes, reduce infections and support patient and provider safety, today announced financial results for the third quarter and year to date ended September 26, 2010.
Third Quarter Financial Highlights and Business Segment Commentary
Third quarter 2010 net revenues were $443.0 million, a 1% increase over third quarter revenues of 2009. Core revenues for the quarter increased 4% on a constant currency basis, offset by foreign exchange that negatively impacted sales 2%, and the deconsolidation of an entity that negatively impacted sales 1%.
Third quarter 2010 GAAP income from continuing operations attributable to common shareholders was $23.1 million, or $0.57 per diluted share, a decrease of 32% from the prior year quarter. On an adjusted basis, as detailed in the reconciliation tables below, third quarter 2010 income from continuing operations was $44.7 million, or $1.11 per diluted share, a 30% increase over the same period in the prior year. Third quarter 2010 income from continuing operations includes a favorable tax benefit of $0.13 per share related to the filing of the 2009 federal income tax return, and negative adjustments which included a $20.9 million charge, net of tax, related to the prepayment of indebtedness in connection with refinancing transactions completed during the third quarter.
Third quarter 2010 GAAP net income attributable to common shareholders was $22.2 million compared to $38.3 million in the prior year quarter. These results included a loss from discontinued operations of $0.9 million in the third quarter of 2010, and income from discontinued operations of $4.4 million in the prior year quarter.
“Our third quarter results reflect continued progress towards the achievement of our longer-term growth and profitability objectives,” said Jeffrey P. Black, Chairman and Chief Executive Officer. “Our medical segment core revenue growth was two percent and our gross margins further expanded year-over-year. We continued to invest in research and development and sales and marketing initiatives that we believe will position Teleflex for sustainable, profitable growth in the future.”
Added Black, “A key objective of our product development strategy is to build on our leadership position with products that address infection control and prevention. We demonstrated this in the quarter by achieving 510(k) market clearance from the U.S. Food and Drug Administration (FDA) for our anti-microbial ArrowEVOLUTION™ PICC with Chlorag+ard™ technology, and partnering with Access Scientific to become the U.S. distributor of The PICC WAND™ Safety Introducer with ARROW®peelable sheath. In addition, we received approval of all certificates to foreign governments from the FDA, and continue to actively work with the FDA to obtain closure of the corporate warning letter.”
Medical Segment
Medical Segment revenues in the third quarter of 2010 were $345.1 million as compared to $350.6 million in the prior year period. Core revenue growth of 2% on a constant currency basis was offset by an unfavorable currency impact of 3% and impact of the deconsolidation of an entity of 1%. Core revenue increases in respiratory, urology, anesthesia, surgical, cardiac care and specialty products sold to medical OEM’s were offset by a decline in vascular access sales. The decline in vascular access sales was primarily due to the voluntary recall of custom IV tubing product that was announced in February of 2010.
Medical Segment sales by product group were comprised of the following:
| | | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended | | | % Increase/ (Decrease) | |
| | | September 26, | | | September 27, | | | Core | | | Currency/ | | | Total | |
| | | 2010 | | | 2009 | | | Growth | | | Other* | | | Change | |
| | | (Dollars in millions) | | | | | | | | | | | | | |
| Critical Care | | $ | 226.2 | | | $ | 231.5 | | | | 0 | % | | | (2 | %) | | | (2 | %) |
| Surgical | | | 61.6 | | | | 61.4 | | | | 3 | % | | | (3 | %) | | | 0 | % |
| Cardiac Care | | | 17.4 | | | | 16.9 | | | | 6 | % | | | (3 | %) | | | 3 | % |
| OEM | | | 39.5 | | | | 37.6 | | | | 7 | % | | | (2 | %) | | | 5 | % |
| Other* | | | 0.4 | | | | 3.2 | | | | (18 | %) | | | (70 | %) | | | (88 | %) |
| | | | | | | | | | | | | | | | |
| Total net sales | | $ | 345.1 | | | $ | 350.6 | | | | 2 | % | | | (4 | %) | | | (2 | %) |
| | | | | | | | | | | | | | | | |
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| * | | “Other” represents the impact of the deconsolidation of a variable interest entity as a result of the adoption of Accounting Standards Codification topic 810 “Consolidations.” |
Segment operating profit and margins in the third quarter of 2010 were $66.0 million, or 19.1%, compared to $73.2 million, or 20.9%, in the prior year quarter.
Despite a very competitive environment, Teleflex was awarded five GPO (Group Purchasing Organization) contract extensions in the third quarter of 2010, each of which provides continued negotiated access for a combination of surgical instrumentation, chest drainage, respiratory care, endotracheal tubes and nasopharyngeal airway products.
In addition to the medical technology business, Teleflex also has niche businesses that serve segments of the aerospace and commercial markets with specialty engineered products.
Aerospace Segment
Aerospace Segment revenues in the third quarter of 2010 increased 2% to $46.8 million from $45.8 million in the prior year period. Increases in sales of narrow-body cargo handling systems, actuation product, cargo containers and cargo spares and repair sales, more than offset lower sales of wide-body cargo handling systems, resulting in a 5% increase in core revenue during the quarter. This was somewhat offset by an unfavorable currency impact of 3%.
Segment operating profit and margins in the third quarter of 2010 were $8.1 million, or 17.2%, compared to $4.6 million, or 9.9%, in the prior year quarter.
Commercial Segment
Commercial Segment revenues in the third quarter of 2010 increased 15% to $51.1 million from $44.3 million in the same period last year. Core revenue growth of 15% was the result of increased sales of Marine OEM and aftermarket sales.
Segment operating profit and margins in the third quarter of 2010 were $6.2 million, or 12.1%, compared to $4.1 million, or 9.3%, in the prior year quarter.
Balance Sheet Highlights
Cash and cash equivalents on hand at September 26, 2010 were $247.8 million compared to $188.3 million at December 31, 2009, up 32%.
Net accounts receivable at September 26, 2010 were $294.3 million compared to $265.3 million at December 31, 2009, up 11%. Excluding the $39.7 million impact of the adoption of the amendment to Accounting Standards Codification topic 860 “Transfers and Servicing” (“ASC 860”), net accounts receivable declined 4%.
Net inventory at September 26, 2010 was $360.0 million compared to $360.8 million at December 31, 2009.
Net debt at September 26, 2010 was $837.8 million compared to $1,008.2 million at December 31, 2009, a decline of 17%. Excluding the $39.7 million impact of ASC 860, net debt declined 21%.
“During the third quarter 2010, we completed a series of refinancing transactions designed to extend existing maturities and optimize Teleflex’s capital structure by providing financial flexibility and access to additional capital to grow our core medical business while keeping the Company’s cost of capital unchanged,” stated Richard A. Meier, Executive Vice President and Chief Financial Officer.
Year-to-Date Financial Highlights
Net revenues for the first nine months of 2010 increased 2% to $1,325.9 million from $1,295.0 million in 2009. Core revenues increased 3% on a constant currency basis, while the deconsolidation of an entity accounted for a 1% decline in revenues.
GAAP income from continuing operations attributable to common shareholders for the first nine months of 2010 was $100.0 million, or $2.48 per diluted share, an increase of 11% from the first nine months of 2009. On an adjusted basis, as detailed in the reconciliation tables below, income from continuing operations for the first nine months of 2010 was $121.9 million, or $3.03 per diluted share, an increase of 21% from the first nine months of 2009.
GAAP net income attributable to common shareholders for the first nine months of 2010 was $120.0 million compared to $260.3 million in the first nine months of 2009. These results included income from discontinued operations, net of tax of $20.0 million in the first nine months of 2010, and income from discontinued operations, net of tax of $170.4 million in the first nine months of 2009.
GAAP cash flow from continuing operations for the first nine months of 2010 was $146.8 million as compared to $70.7 million in the first nine months of 2009. On an adjusted basis as detailed in the reconciliation tables below, cash flow from continuing operations for the first nine months of 2010 was $127.0 million as compared to $168.3 million in 2009. Cash flow for the third quarter of 2010 was impacted by a $30 million pension contribution which the Company elected to make as a function of its recapitalization and to further improve the quality of the balance sheet.
Business Outlook for 2010
The Company expects its full year 2010 total revenues to be approximately $1.8 billion, and now expects its full year 2010 diluted earnings per share from continuing operations excluding special items to be in the range of $4.00 to $4.10. Special items for 2010 are expected to be approximately $0.55 per diluted share. This compares to the Company’s previous guidance of full year 2010 diluted earnings per share from continuing operations excluding special items guidance range of $3.95 to $4.10, and special items of $0.05 per diluted share. The increase in special items is associated with the net of tax charge incurred in connection with the refinancing transactions completed during the third quarter of 2010.
Core revenue growth in the Medical segment for full year 2010 is now expected to be 2%. This compares to the Company’s previous guidance of full year core revenue growth in the Medical segment of 3%.
Cash flow from continuing operations, exclusive of the impact of the adoption of ASC 860, is now expected to be in the range of $235 to $245 million. This compares to the Company’s previous guidance range of $265 to $270 million. The change in guidance is primarily associated with the previously mentioned pension contribution that was made during the third quarter of 2010.
Longer-Term Growth and Profitability Objectives
With the portfolio transition to healthcare largely complete, the Company has increased its focus on delivering long-term growth and profitability. As such, the Company is targeting the achievement of the following objectives within the next five years and will provide updates towards the achievement of these targets on an LTM (last twelve months) basis beginning in the fourth quarter of 2010:
| | • | | Consolidated organic revenue growth of approximately 5% |
| | • | | Consolidated gross margins of approximately 55% |
| | • | | Consolidated research and development expense of approximately 5% |
| | • | | Consolidated operating margins of approximately 25% |
In achieving these objectives, we believe revenue growth will be driven by new products and product line extensions, expanding our geographic reach, leveraging our existing distribution channels and further investment in our global sales and marketing groups. Margin expansion will be driven by various initiatives which may include: consolidation of distribution facilities; efficiencies gained from the reduction of third-party vendors; consolidation and productivity improvements of manufacturing locations and customer service; and further rationalization of general and administrative expenses. We also expect some of these benefits to be offset by increases in spending in research and development.
Conference Call Webcast and Additional Information
As previously announced, Teleflex will comment on its third quarter results on a conference call to be held today at 5:00 p.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 November 2, 2010, 12:00pm (ET), by calling 888-286-8010 (U.S./Canada) or 617-801-6888 (International), Passcode: 91604182.
Additional Notes
Core revenue and growth include activity of a purchased company beyond the initial twelve months after the date of acquisition. Core revenue and growth exclude the impact of translating the results of international subsidiaries at different currency exchange rates from period to period, and the activity of companies that have been divested within the most recent twelve month period.
Certain financial information is presented on a rounded basis, which may cause minor differences.
Segment operating profit includes a segment’s net revenues reduced by its materials, labor and other product costs along with the segment’s selling, engineering and administrative expenses and non-controlling interest. Unallocated corporate expenses, gains or losses on sales of assets, restructuring and impairment charges, interest income and expense and taxes on income are excluded from the measure.
Segment commentary excludes the impact of discontinued operations, items included in restructuring and impairment charges, and losses and other charges as disclosed in the condensed consolidated statements of income.
Notes on Non-GAAP Financial Measures
This press release includes financial measures which exclude the effect of charges associated with our restructuring programs and asset impairments, losses and other charges related to refinancing transactions, charges related to the Arrow acquisition, certain tax adjustments, (gain)/loss on sale of assets and other charges, the impact of changes in accounting rules, an income tax refund related to gains on a business divestiture, and intangible amortization expense. Adjusted cash earnings per share from continuing operations is defined as adjusted earnings per share from continuing operations plus intangible amortization expense. 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 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.
Third Quarter and Year to Date Reconciliation of Adjusted Income and Earnings per Share from Continuing Operations
| | | | | | | | | |
| | | Three Months | | | Three Months | |
| | | Ended | | | Ended | |
| | | Sept. 26, 2010 | | | Sept. 27, 2009 | |
| | | (Dollars in thousands, except per share) | |
| Income and diluted earnings per share attributable to common shareholders | | $ | 23,101 | | | $ | 33,917 | |
| | | $ | 0.57 | | | $ | 0.85 | |
| | | | | | | | | |
| Restructuring and impairment charges | | | 1,141 | | | | 1,471 | |
| Tax benefit | | | (380 | ) | | | (357 | ) |
| | | | | | | |
| Restructuring and impairment charges, net of tax | | | 761 | | | | 1,114 | |
| | | | | | | |
| | | $ | 0.02 | | | $ | 0.03 | |
| | | | | | | | | |
| Losses and other charges (A) | | | 32,742 | | | | 643 | |
| Tax benefit | | | (11,866 | ) | | | (235 | ) |
| | | | | | | |
| Losses and other charges net of tax | | | 20,876 | | | | 408 | |
| | | | | | | |
| | | $ | 0.52 | | | $ | 0.01 | |
| | | | | | | | | |
| Tax adjustments (B) | | | — | | | | (1,093 | ) |
| | | | | | | |
| | | | — | | | $ | (0.03 | ) |
| | | | | | | | | |
| Income and diluted earnings per share excluding restructuring and impairment charges, losses and other charges, and tax adjustments | | $ | 44,738 | | | $ | 34,346 | |
| | | | | | | |
| | | $ | 1.11 | | | $ | 0.86 | |
| | | | | | | | | |
| | | Three Months | | | Three Months | |
| | | Ended | | | Ended | |
| | | Sept. 26, 2010 | | | Sept. 27, 2009 | |
| | | (Dollars in thousands, except per share) | |
| Income and diluted earnings per share excluding restructuring and impairment charges, losses and other charges, and tax adjustments | | $ | 44,738 | | | $ | 34,346 | |
| | | | | | | |
| | | $ | 1.11 | | | $ | 0.86 | |
| | | | | | | | | |
| Amortization of debt discount on convertible notes | | | 979 | | | | — | |
| | | | | | | |
| | | $ | 0.02 | | | | — | |
| | | | | | | | | |
| Intangible amortization expense | | | 10,840 | | | | 10,987 | |
| | | | | | | |
| | | $ | 0.27 | | | $ | 0.28 | |
| | | | | | | | | |
| Cash income and diluted earnings per share excluding restructuring and impairment charges, losses and other charges, and tax adjustments | | $ | 56,557 | | | $ | 45,333 | |
| | | | | | | |
| | | $ | 1.41 | | | $ | 1.14 | |
| | | | | | | | | |
| | | Nine Months | | | Nine Months | |
| | | Ended | | | Ended | |
| | | Sept. 26, 2010 | | | Sept. 27, 2009 | |
| | | (Dollars in thousands, except per share) | |
| Income and diluted earnings per share attributable to common shareholders | | $ | 100,037 | | | $ | 89,920 | |
| | | $ | 2.48 | | | $ | 2.25 | |
| | | | | | | | | |
| Restructuring and impairment charges | | | 1,679 | | | | 16,828 | |
| Tax benefit | | | (652 | ) | | | (2,917 | ) |
| | | | | | | |
| Restructuring and impairment charges, net of tax | | | 1,027 | | | | 13,911 | |
| | | | | | | |
| | | $ | 0.03 | | | $ | 0.35 | |
| | | | | | | | | |
| Losses and other charges (A) | | | 32,742 | | | | 4,349 | |
| Tax benefit | | | (11,866 | ) | | | (1,610 | ) |
| | | | | | | |
| Losses and other charges net of tax | | | 20,876 | | | | 2,739 | |
| | | | | | | |
| | | $ | 0.52 | | | $ | 0.07 | |
| | | | | | | | | |
| Tax adjustments (B) | | | — | | | | (5,398 | ) |
| | | | | | | |
| | | | — | | | $ | (0.14 | ) |
| | | | | | | | | |
| Income and diluted earnings per share excluding restructuring and impairment charges, losses and other charges, and tax adjustments | | $ | 121,940 | | | $ | 101,172 | |
| | | | | | | |
| | | $ | 3.03 | | | $ | 2.54 | |
| | | | | | | | | |
| | | Nine Months | | | Nine Months | |
| | | Ended | | | Ended | |
| | | Sept. 26, 2010 | | | Sept. 27, 2009 | |
| | | (Dollars in thousands, except per share) | |
| Income and diluted earnings per share excluding restructuring and impairment charges, losses and other charges, and tax adjustments | | $ | 121,940 | | | $ | 101,172 | |
| | | | | | | |
| | | $ | 3.03 | | | $ | 2.54 | |
| | | | | | | | | |
| Amortization of debt discount on convertible notes | | | 979 | | | | — | |
| | | | | | | |
| | | $ | 0.02 | | | | — | |
| | | | | | | | | |
| Intangible amortization expense | | | 33,101 | | | | 32,512 | |
| | | | | | | |
| | | $ | 0.82 | | | $ | 0.81 | |
| | | | | | | | | |
| Cash income and diluted earnings per share excluding restructuring and impairment charges, losses and other charges, and tax adjustments | | $ | 156,020 | | | $ | 133,684 | |
| | | | | | | |
| | | $ | 3.87 | | | $ | 3.35 | |
| | | |
| (A) | | In 2010, losses and other charges principally related to the prepayment of all of Teleflex’s outstanding senior notes issued in 2007, and related transaction fees and expenses. In 2009, losses and other charges principally related to the loss on sale of assets and restructuring related costs associated with the Arrow acquisition. |
| |
| (B) | | The tax adjustment represents a benefit from the net reduction in income tax reserves and discrete tax benefits related primarily to the resolution of various uncertain tax provisions; the settlement of tax audits; and other adjustments to taxes recorded with respect to prior years, principally resulting from changes to tax law and adjustments to previously filed income tax returns. |
Year to Date Reconciliation of Cash Flow from Operations
| | | | | | | | | |
| | | Nine Months Ended | | | Nine Months Ended | |
| | | Sept. 26, 2010 | | | Sept. 27, 2009 | |
| | | (Dollars in thousands) | |
| | | | | | | | | |
| Cash flow from operations as reported | | $ | 146,776 | | | $ | 70,718 | |
| | | | | | | | | |
| Add: Impact of the adoption of the amendment to Accounting Standards Codification topic 860 “Transfers and Servicing” | | | 39,700 | | | | — | |
| | | | | | | | | |
| Add: Tax payments on gain on sale of ATI business | | | — | | | | 97,536 | |
| | | | | | | | | |
| Less: Tax refund on sale of ATI business | | | 59,499 | | | | — | |
| | | | | | | |
| | | | | | | | | |
| Adjusted cash flow from operations | | $ | 126,977 | | | $ | 168,254 | |
| | | | | | | |
Net Debt Reconciliation
| | | | | | | | | |
| | | Sept. 26, 2010 | | | Dec. 31, 2009 | |
| | | (Dollars in thousands) | |
| | | | | | | | | |
| Note payable and current portion of long-term borrowings | | $ | 181,193 | | | $ | 4,008 | |
| | | | | | | | | |
| Long term borrowings | | | 904,406 | | | | 1,192,491 | |
| | | | | | | |
| | | | | | | | | |
| Total debt | | | 1,085,599 | | | | 1,196,499 | |
| | | | | | | | | |
| Less: cash and cash equivalents | | | 247,757 | | | | 188,305 | |
| | | | | | | |
| | | | | | | | | |
| Net Debt | | $ | 837,842 | | | $ | 1,008,194 | |
| | | | | | | |
About Teleflex Incorporated
Teleflex is a global provider of medical technology products that enable healthcare providers to improve patient outcomes, reduce infections and support patient and provider safety. Teleflex, which employs approximately 12,800 people worldwide, also has niche businesses that serve segments of the aerospace and commercial markets with specialty engineered products. Additional information about Teleflex can be obtained from the Company’s website at www.teleflex.com.
Caution Concerning Forward-looking Information
This press release contains forward-looking statements, including, but not limited to, statements relating to our positioning Teleflex for sustainable, profitable growth through investments in research and development and sales and marketing initiatives; 2010 forecast of total revenues; forecasted diluted earnings per share from continuing operations excluding special items; forecasted cash flow from continuing operations, excluding the impact of Accounting Standards Codification Topic 860 “Transfers and Servicing;” expected restructuring and other special charges for 2010; and forecasted full year core revenue growth in the Medical Segment. 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, including unanticipated costs and difficulties in connection with the resolution of issues related to the FDA corporate warning letter issued to Arrow; 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 in our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K.
TELEFLEX INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
| | | | | | | | | |
| | | Three Months Ended | |
| | | September 26, | | | September 27, | |
| | | 2010 | | | 2009 | |
| | | (Dollars and shares in thousands, | |
| | | except per share) | |
| | | | | | | | | |
| Net revenues | | $ | 442,993 | | | $ | 440,741 | |
| Cost of goods sold | | | 239,926 | | | | 244,408 | |
| | | | | | | |
| Gross profit | | | 203,067 | | | | 196,333 | |
| Selling, general and administrative expenses | | | 123,441 | | | | 113,633 | |
| Research and development expenses | | | 11,013 | | | | 9,618 | |
| Net gain on sales of businesses and assets | | | (183 | ) | | | — | |
| Goodwill impairment | | | — | | | | — | |
| Restructuring and other impairment charges | | | 1,141 | | | | 4,783 | |
| | | | | | | |
| Income from continuing operations before interest, loss on extinguishments of debt and taxes | | | 67,655 | | | | 68,299 | |
| Interest expense | | | 20,090 | | | | 21,074 | |
| Interest income | | | (243 | ) | | | (233 | ) |
| Loss on extinguishments of debt | | | 30,354 | | | | — | |
| | | | | | | |
| Income from continuing operations before taxes | | | 17,454 | | | | 47,458 | |
| (Benefit) taxes on income from continuing operations | | | (5,986 | ) | | | 13,236 | |
| | | | | | | |
| Income from continuing operations | | | 23,440 | | | | 34,222 | |
| | | | | | | |
| Operating loss from discontinued operations (including loss on disposal of $3,480 in 2009) | | | — | | | | (2,886 | ) |
| Taxes (benefit) on income from discontinued operations | | | 905 | | | | (7,281 | ) |
| | | | | | | |
| (Loss) income from discontinued operations | | | (905 | ) | | | 4,395 | |
| | | | | | | |
| Net income | | | 22,535 | | | | 38,617 | |
| Less: Net income attributable to noncontrolling interest | | | 339 | | | | 305 | |
| | | | | | | |
| Net income attributable to common shareholders | | $ | 22,196 | | | $ | 38,312 | |
| | | | | | | |
| | | | | | | | | |
| Earnings per share available to common shareholders: | | | | | | | | |
| Basic: | | | | | | | | |
| Income from continuing operations | | $ | 0.58 | | | $ | 0.85 | |
| (Loss) income from discontinued operations | | $ | (0.02 | ) | | $ | 0.11 | |
| | | | | | | |
| Net income | | $ | 0.56 | | | $ | 0.96 | |
| | | | | | | |
| | | | | | | | | |
| Diluted: | | | | | | | | |
| Income from continuing operations | | $ | 0.57 | | | $ | 0.85 | |
| (Loss) income from discontinued operations | | $ | (0.02 | ) | | $ | 0.11 | |
| | | | | | | |
| Net income | | $ | 0.55 | | | $ | 0.96 | |
| | | | | | | |
| | | | | | | | | |
| Dividends per share | | $ | 0.34 | | | $ | 0.34 | |
| | | | | | | | | |
| Weighted average common shares outstanding: | | | | | | | | |
| Basic | | | 39,933 | | | | 39,724 | |
| Diluted | | | 40,254 | | | | 39,932 | |
| | | | | | | | | |
| Amounts attributable to common shareholders: | | | | | | | | |
| Income from continuing operations, net of tax | | $ | 23,101 | | | $ | 33,917 | |
| (Loss) income from discontinued operations, net of tax | | | (905 | ) | | | 4,395 | |
| | | | | | | |
| Net income | | $ | 22,196 | | | $ | 38,312 | |
| | | | | | | |
TELEFLEX INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
| | | | | | | | | |
| | | Nine Months Ended | |
| | | September 26, | | | September 27, | |
| | | 2010 | | | 2009 | |
| | | (Dollars and shares in thousands, | |
| | | except per share) | |
| | |
| Net revenues | | $ | 1,325,867 | | | $ | 1,295,021 | |
| Cost of goods sold | | | 719,650 | | | | 716,080 | |
| | | | | | | |
| Gross profit | | | 606,217 | | | | 578,941 | |
| Selling, general and administrative expenses | | | 357,748 | | | | 344,271 | |
| Research and development expenses | | | 30,927 | | | | 27,725 | |
| Net (gain) loss on sales of businesses and assets | | | (183 | ) | | | 2,597 | |
| Goodwill impairment | | | — | | | | 6,728 | |
| Restructuring and other impairment charges | | | 1,679 | | | | 13,412 | |
| | | | | | | |
| Income from continuing operations before interest, loss on extinguishments of debt and taxes | | | 216,046 | | | | 184,208 | |
| Interest expense | | | 58,709 | | | | 68,470 | |
| Interest income | | | (637 | ) | | | (1,901 | ) |
| Loss on extinguishments of debt | | | 30,354 | | | | — | |
| | | | | | | |
| Income from continuing operations before taxes | | | 127,620 | | | | 117,639 | |
| Taxes on income from continuing operations | | | 26,580 | | | | 26,876 | |
| | | | | | | |
| Income from continuing operations | | | 101,040 | | | | 90,763 | |
| | | | | | | |
| Operating income from discontinued operations (including gain on disposal of $38,562 in 2010 and $272,307 in 2009) | | | 41,301 | | | | 275,500 | |
| Taxes on income from discontinued operations | | | 21,322 | | | | 95,267 | |
| | | | | | | |
| Income from discontinued operations | | | 19,979 | | | | 180,233 | |
| | | | | | | |
| Net income | | | 121,019 | | | | 270,996 | |
| Less: Net income attributable to noncontrolling interest | | | 1,003 | | | | 843 | |
| Income from discontinued operations attributable to noncontrolling interest | | | — | | | | 9,860 | |
| | | | | | | |
| Net income attributable to common shareholders | | $ | 120,016 | | | $ | 260,293 | |
| | | | | | | |
| | | | | | | | | |
| Earnings per share available to common shareholders: | | | | | | | | |
| Basic: | | | | | | | | |
| Income from continuing operations | | $ | 2.51 | | | $ | 2.26 | |
| Income from discontinued operations | | $ | 0.50 | | | $ | 4.29 | |
| | | | | | | |
| Net income | | $ | 3.01 | | | $ | 6.55 | |
| | | | | | | |
| | | | | | | | | |
| Diluted: | | | | | | | | |
| Income from continuing operations | | $ | 2.48 | | | $ | 2.25 | |
| Income from discontinued operations | | $ | 0.50 | | | $ | 4.27 | |
| | | | | | | |
| Net income | | $ | 2.98 | | | $ | 6.52 | |
| | | | | | | |
| | | | | | | | | |
| Dividends per share | | $ | 1.02 | | | $ | 1.02 | |
| | | | | | | | | |
| Weighted average common shares outstanding: | | | | | | | | |
| Basic | | | 39,879 | | | | 39,711 | |
| Diluted | | | 40,269 | | | | 39,910 | |
| | | | | | | | | |
| Amounts attributable to common shareholders: | | | | | | | | |
| Income from continuing operations, net of tax | | $ | 100,037 | | | $ | 89,920 | |
| Income from discontinued operations, net of tax | | | 19,979 | | | | 170,373 | |
| | | | | | | |
| Net income | | $ | 120,016 | | | $ | 260,293 | |
| | | | | | | |
TELEFLEX INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
| | | | | | | | | |
| | | September 26, | | | December 31, | |
| | | 2010 | | | 2009 | |
| | | (Dollars in thousands) | |
ASSETS | | | | | | | | |
| Current assets | | | | | | | | |
| | | | | | | | | |
| Cash and cash equivalents | | $ | 247,757 | | | $ | 188,305 | |
| Accounts receivable, net | | | 294,285 | | | | 265,305 | |
| Inventories, net | | | 359,967 | | | | 360,843 | |
| Prepaid expenses and other current assets | | | 21,170 | | | | 21,872 | |
| Income taxes receivable | | | 49,541 | | | | 100,733 | |
| Deferred tax assets | | | 58,733 | | | | 58,010 | |
| Assets held for sale | | | 11,259 | | | | 8,866 | |
| | | | | | | |
| Total current assets | | | 1,042,712 | | | | 1,003,934 | |
| Property, plant and equipment, net | | | 292,294 | | | | 317,499 | |
| Goodwill | | | 1,438,997 | | | | 1,459,441 | |
| Intangibles assets, net | | | 928,906 | | | | 971,576 | |
| Investments in affiliates | | | 13,288 | | | | 12,089 | |
| Deferred tax assets | | | — | | | | 336 | |
| Other assets | | | 81,658 | | | | 74,130 | |
| | | | | | | |
| Total assets | | $ | 3,797,855 | | | $ | 3,839,005 | |
| | | | | | | |
| | | | | | | | | |
LIABILITIES AND EQUITY | | | | | | | | |
| | | | | | | | | |
| Current liabilities | | | | | | | | |
| Current borrowings | | $ | 181,193 | | | $ | 4,008 | |
| Accounts payable | | | 91,588 | | | | 94,983 | |
| Accrued expenses | | | 84,157 | | | | 97,274 | |
| Payroll and benefit-related liabilities | | | 71,693 | | | | 70,537 | |
| Derivative liabilities | | | 15,355 | | | | 16,709 | |
| Accrued interest | | | 12,592 | | | | 22,901 | |
| Income taxes payable | | | 1,901 | | | | 30,695 | |
| Deferred tax liabilities | | | 6,648 | | | | — | |
| | | | | | | |
| Total current liabilities | | | 465,127 | | | | 337,107 | |
| Long-term borrowings | | | 904,406 | | | | 1,192,491 | |
| Deferred tax liabilities | | | 416,939 | | | | 398,923 | |
| Pension and postretirement benefit liabilities | | | 134,431 | | | | 164,726 | |
| Noncurrent liability for uncertain tax positions | | | 110,935 | | | | 109,912 | |
| Other liabilities | | | 48,740 | | | | 50,772 | |
| | | | | | | |
| Total liabilities | | | 2,080,578 | | | | 2,253,931 | |
| Commitments and contingencies | | | | | | | | |
| Total common shareholders’ equity | | | 1,713,231 | | | | 1,580,241 | |
| Noncontrolling interest | | | 4,046 | | | | 4,833 | |
| | | | | | | |
| Total equity | | | 1,717,277 | | | | 1,585,074 | |
| | | | | | | |
| Total liabilities and equity | | $ | 3,797,855 | | | $ | 3,839,005 | |
| | | | | | | |
TELEFLEX INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| | | | | | | | | |
| | | Nine Months Ended | |
| | | September 26, | | | September 27, | |
| | | 2010 | | | 2009 | |
| | | (Dollars in thousands) | |
| Cash Flows from Operating Activities of Continuing Operations: | | | | | | | | |
| Net income | | $ | 121,019 | | | $ | 270,996 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | | |
| Income from discontinued operations | | | (19,979 | ) | | | (180,233 | ) |
| Depreciation expense | | | 36,856 | | | | 41,058 | |
| Amortization expense of intangible assets | | | 33,101 | | | | 32,512 | |
| Amortization expense of deferred financing costs | | | 4,425 | | | | 4,556 | |
| Loss on extinguishments of debt | | | 30,354 | | | | — | |
| Gain on call options and warrants | | | (407 | ) | | | — | |
| Debt modification costs | | | 2,795 | | | | — | |
| Impairment of long-lived assets | | | — | | | | 5,788 | |
| Impairment of goodwill | | | — | | | | 6,728 | |
| Stock-based compensation | | | 7,769 | | | | 6,611 | |
| Net (gain) loss on sales of businesses and assets | | | (183 | ) | | | 2,597 | |
| Deferred income taxes, net | | | 28,670 | | | | 36,888 | |
| Other | | | (28,809 | ) | | | 160 | |
| Changes in operating assets and liabilities, net of effects of acquisitions and disposals: | | | | | | | | |
| Accounts receivable | | | (45,343 | ) | | | 5,467 | |
| Inventories | | | (15,375 | ) | | | 1,882 | |
| Prepaid expenses and other current assets | | | 526 | | | | 2,087 | |
| Accounts payable and accrued expenses | | | (12,147 | ) | | | (37,562 | ) |
| Income taxes receivable and payable, net | | | 3,504 | | | | (128,817 | ) |
| | | | | | | |
| Net cash provided by operating activities from continuing operations | | | 146,776 | | | | 70,718 | |
| | | | | | | |
| | | | | | | | | |
| Cash Flows from Investing Activities of Continuing Operations: | | | | | | | | |
| Expenditures for property, plant and equipment | | | (23,796 | ) | | | (20,257 | ) |
| Proceeds from sales of businesses and assets, net of cash sold | | | 75,943 | | | | 314,513 | |
| Payments for businesses and intangibles acquired, net of cash acquired | | | (82 | ) | | | (643 | ) |
| | | | | | | |
| Net cash provided by investing activities from continuing operations | | | 52,065 | | | | 293,613 | |
| | | | | | | |
| | | | | | | | | |
| Cash Flows from Financing Activities of Continuing Operations: | | | | | | | | |
| Proceeds from long-term borrowings | | | 400,000 | | | | 10,018 | |
| Reduction in long-term borrowings | | | (460,770 | ) | | | (300,268 | ) |
| Increase (decrease) in notes payable and current borrowings | | | 34,402 | | | | (836 | ) |
| Proceeds from stock compensation plans | | | 8,470 | | | | 750 | |
| Payments to noncontrolling interest shareholders | | | (1,463 | ) | | | (702 | ) |
| Dividends | | | (40,704 | ) | | | (40,521 | ) |
| Debt and equity issuance and amendment fees | | | (48,041 | ) | | | — | |
| Purchase of call options | | | (88,000 | ) | | | — | |
| Proceeds from sale of warrants | | | 59,400 | | | | — | |
| | | | | | | |
| Net cash used in financing activities from continuing operations | | | (136,706 | ) | | | (331,559 | ) |
| | | | | | | |
| | | | | | | | | |
| Cash Flows from Discontinued Operations: | | | | | | | | |
| Net cash (used in) provided by operating activities | | | (680 | ) | | | 24,861 | |
| Net cash used in investing activities | | | (189 | ) | | | (3,488 | ) |
| Net cash used in financing activities | | | — | | | | (11,075 | ) |
| | | | | | | |
| Net cash (used in) provided by discontinued operations | | | (869 | ) | | | 10,298 | |
| | | | | | | |
| | | | | | | | | |
| Effect of exchange rate changes on cash and cash equivalents | | | (1,814 | ) | | | 8,444 | |
| | | | | | | |
| Net increase in cash and cash equivalents | | | 59,452 | | | | 51,514 | |
| Cash and cash equivalents at the beginning of the period | | | 188,305 | | | | 107,275 | |
| | | | | | | |
| Cash and cash equivalents at the end of the period | | $ | 247,757 | | | $ | 158,789 | |
| | | | | | | |
Information about continuing operations by business segment is as follows:
| | | | | | | | | |
| | | Three Months Ended | |
| | | September 26, | | | September 27, | |
| | | 2010 | | | 2009 | |
| | | (Dollars in thousands) | |
| Segment data: | | | | | | | | |
| Medical | | $ | 345,041 | | | $ | 350,576 | |
| Aerospace | | | 46,836 | | | | 45,847 | |
| Commercial | | | 51,116 | | | | 44,318 | |
| | | | | | | |
| Segment net revenues | | $ | 442,993 | | | $ | 440,741 | |
| | | | | | | |
| Medical | | $ | 66,047 | | | $ | 73,159 | |
| Aerospace | | | 8,076 | | | | 4,554 | |
| Commercial | | | 6,162 | | | | 4,104 | |
| | | | | | | |
| Segment operating profit | | | 80,285 | | | | 81,817 | |
| Less: Corporate expenses | | | 12,011 | | | | 9,040 | |
| Net gain on sales of businesses and assets | | | (183 | ) | | | — | |
| Restructuring and impairment charges | | | 1,141 | | | | 4,783 | |
| Noncontrolling interest | | | (339 | ) | | | (305 | ) |
| | | | | | | |
| Income from continuing operations before interest, loss on extinguishments of debt and taxes | | $ | 67,655 | | | $ | 68,299 | |
| | | | | | | |
| | | | | | | | | |
| | | Nine Months Ended | |
| | | September 26, | | | September 27, | |
| | | 2010 | | | 2009 | |
| | | (Dollars in thousands) | |
| Segment data: | | | | | | | | |
| Medical | | $ | 1,047,005 | | | $ | 1,043,639 | |
| Aerospace | | | 131,704 | | | | 126,537 | |
| Commercial | | | 147,158 | | | | 124,845 | |
| | | | | | | |
| Segment net revenues | | $ | 1,325,867 | | | $ | 1,295,021 | |
| | | | | | | |
| Medical | | $ | 213,012 | | | $ | 220,363 | |
| Aerospace | | | 17,381 | | | | 8,611 | |
| Commercial | | | 15,623 | | | | 7,740 | |
| | | | | | | |
| Segment operating profit | | | 246,016 | | | | 236,714 | |
| Less: Corporate expenses | | | 29,477 | | | | 30,612 | |
| Net (gain) loss on sales of businesses and assets | | | (183 | ) | | | 2,597 | |
| Goodwill impairment | | | — | | | | 6,728 | |
| Restructuring and impairment charges | | | 1,679 | | | | 13,412 | |
| Noncontrolling interest | | | (1,003 | ) | | | (843 | ) |
| | | | | | | |
| Income from continuing operations before interest, loss on extinguishments of debt and taxes | | $ | 216,046 | | | $ | 184,208 | |
| | | | | | | |
###
