Exhibit 99.3
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
The unaudited pro forma condensed combined balance sheet assumes the Hudson
Respiratory Care Inc. transaction occurred on June 27, 2004. The unaudited pro
forma condensed combined statements of income assume the Hudson Respiratory Care
Inc. transaction occurred on December 30, 2002.
For purposes of developing the unaudited pro forma condensed combined balance
sheet as of June 27, 2004, Hudson Respiratory Care Inc.'s assets and liabilities
have been recorded at their estimated fair values and the excess purchase price
has been assigned to goodwill. The fair values assigned in these pro forma
financial statements are preliminary and represent management's best estimate of
current fair values which are subject to revision. A final determination of
required purchase accounting will be made upon completion of a study by Teleflex
Incorporated in conjunction with independent appraisers to determine fair value
of certain of Hudson Respiratory Care Inc.'s assets and liabilities. The actual
financial position and results of operations may differ from the pro forma
amounts reflected.
Teleflex Incorporated and Hudson Respiratory Care Inc. financial statements are
prepared in conformity with generally accepted accounting principles and require
Teleflex Incorporated and Hudson Respiratory Care Inc. management to make
accounting estimates that could affect the financial condition and operating
results of the companies.
The unaudited pro forma condensed combined financial statements reflect neither
the impact of costs to integrate Hudson Respiratory Care Inc. nor the benefit
expected from the synergies. These costs will be part of purchase accounting
once a final plan has been approved and implemented.
Certain costs in the consolidated statements of income for Hudson Respiratory
Care Inc. have been reclassified to conform to the line item presentation in the
pro forma condensed combined statements of income. Certain liability balances of
Hudson Respiratory Care Inc. have been reclassified to conform to the line item
presentation in the pro forma condensed combined balance sheet.
Intercompany sales and purchase transactions have been eliminated in the
unaudited pro forma condensed combined statements of income.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET AS OF JUNE 27, 2004
(DOLLARS IN THOUSANDS)
HISTORICAL HISTORICAL PRO FORMA PRO FORMA
TELEFLEX HUDSON ADJUSTMENTS COMBINED
-------- ------ ----------- --------
ASSETS
Current assets
Cash and cash equivalents $ 81,522 $ 5,835 $ (3,777) A $ 83,580
Accounts receivable less allowance for
doubtful accounts 505,838 26,706 -- 532,544
Inventories 425,139 27,695 3,237 B 456,071
Prepaid expenses 22,718 2,205 12 C 24,935
---------- ---------- ---------- ----------
Total current assets 1,035,217 62,441 (528) 1,097,130
Property, plant and equipment, at cost,
less accumulated depreciation 629,531 38,725 16,722 D 684,978
Goodwill 286,130 39,912 153,383 E 479,425
Intangibles and other assets 114,534 7,021 122,974 F 244,529
Investments in affiliates 32,362 -- -- 32,362
---------- ---------- ---------- ----------
Total assets $2,097,774 $ 148,099 $ 292,551 $2,538,424
========== ========== ========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Current portion of borrowings and demand loans $ 172,326 $ 8,979 $ 77,203 G $ 258,508
Accounts payable and accrued expenses 337,913 26,635 (1,901) H 362,647
Income taxes payable 48,579 507 -- 49,086
---------- ---------- ---------- ----------
Total current liabilities 558,818 36,121 75,302 670,241
Long-term borrowings 205,692 223,738 163,822 G 593,252
Mandatory redeemable preferred stock -- 59,791 (59,791) G --
Deferred income taxes and other 218,385 2,199 (60,532) I 160,052
---------- ---------- ---------- ----------
Total liabilities 982,895 321,849 118,801 1,423,545
Shareholders' equity 1,114,879 (173,750) 173,750 1,114,879
---------- ---------- ---------- ----------
Total liabilities and shareholders' equity $2,097,774 $ 148,099 $ 292,551 $2,538,424
========== ========== ========== ==========
The accompanying notes are an integral part of the unaudited pro forma condensed
combined financial statements.
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET AS OF JUNE 27, 2004
A Record payment of deferred financing costs
B Preliminary fair value adjustment of inventory
C Preliminary adjustment for quarterly fees to bond holder
D Preliminary fair value adjustment of fixed assets
E Preliminary estimate of goodwill
Acquisition goodwill 193,295
Value of Hudson Respiratory Care Inc. goodwill eliminated
in purchase accounting (39,912)
---------
153,383
F Preliminary estimate of intangible and other assets adjustment
Preliminary estimate of intangible assets
Trade names (indefinite life) 74,500
Patents (11.5 year life) 900
Customer relationships (10 year life) 49,700
Net value of Hudson Respiratory Care Inc. deferred financing
costs eliminated in purchase accounting and deferred
financing costs recorded by Teleflex. (2,126)
---------
122,974
G Preliminary estimate of changes in demand loans and
long-term debt
Teleflex debt borrowed as part of the acquisition 463,850
Hudson Respiratory Care Inc. debt outstanding
as of June 30, 2004 and repaid by Teleflex (282,616)
---------
181,234
H Preliminary estimate of accounts payable and
accrued expenses adjustment
Preliminary estimate of a reserve for vendor
debit memos deemed uncollectible. 354
Accrued interest on debt outstanding at June 30, 2004
and repaid by Teleflex (2,255)
--------
(1,901)
I Preliminary estimate of deferred tax benefit. An escrow of
$43,000 was established at settlement in case of impairment.
The deferred tax benefit is a result of Hudson Respiratory
Care Inc's net operating loss carry forward. (46,000)
Preliminary deferred tax adjustment resulting from a difference
in tax basis prior to acquisition (39,000)
Preliminary deferred tax adjustment resulting from the
difference in tax basis of depreciable fixed assets and
intangible step-ups. 24,468
---------
(60,532)
PRELIMINARY ALLOCATION OF PURCHASE PRICE
CASH CONSIDERATION
Cash payments $ 419,585
Escrow in case of deferred tax asset impairment 43,000
Cash received (5,835)
---------
$ 456,750
Transaction costs 1,265
---------
$ 458,015
ASSETS
Inventory $ 26,706
Receivables 30,932
Other current assets 2,217
Property, plant and equipment 55,447
Intangibles 125,100
Deferred tax asset 85,000
Other assets 1,118
---------
$ 326,520
LIABILITIES
Short-term debt assumed $ 5,299
Accounts payable and accrued expenses 24,734
Taxes payable 507
Long-term debt assumed 4,593
Deferred tax liability 24,468
Other liabilities 2,199
---------
61,800
PRELIMINARY ESTIMATE OF NET ASSETS ACQUIRED $ 264,720
Acquisition goodwill $ 193,295
Hudson Respiratory Care Inc. goodwill (39,912)
---------
Goodwill acquisition adjustment $ 153,383
=========
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME FOR THE YEAR ENDED
DECEMBER 28, 2003
(DOLLARS AND SHARES IN THOUSANDS, EXCEPT PER SHARE)
HISTORICAL
----------------------------
HUDSON
RESPIRATORY PRO FORMA COMBINED
TELEFLEX CARE ADJUSTMENTS PRO FORMA
-------- ---- ----------- ---------
Revenues $ 2,282,435 $ 184,595 $ (7) A $ 2,467,023
----------- ----------- ---------- -----------
Cost of sales 1,684,647 102,610 2,404 B 1,789,661
Operating expenses 423,028 53,405 5,048 C 481,481
Loss on early extinguishment of debt -- 573 -- 573
(Gain)/loss on sale of businesses and assets (3,068) 95 -- (2,973)
----------- ----------- ---------- -----------
Total costs and expenses 2,104,607 156,683 7,452 2,268,742
----------- ----------- ---------- -----------
Income before interest and taxes 177,828 27,912 (7,459) 198,281
Interest expense 26,337 24,612 (1,756) D 49,193
----------- ----------- ---------- -----------
Income before taxes 151,491 3,300 (5,703) 149,088
Provision for taxes on income 42,388 1,716 (2,073) E 42,031
----------- ----------- ---------- -----------
Net income $ 109,103 $ 1,584 $ (3,630) $ 107,057
=========== =========== ========== ===========
Earnings per share
Basic $ 2.76 $ 2.70
Diluted $ 2.73 $ 2.68
Average number of common and common equivalent
shares outstanding
Basic 39,598 39,598
Diluted 39,942 39,942
The accompanying notes are an integral part of the unaudited pro forma condensed
combined financial statements.
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
A Represents pro forma adjustment to eliminate sales activity between
Teleflex and Hudson Respiratory Care Inc.
B Represents pro forma adjustment to eliminate sales activity
between Teleflex and Hudson Respiratory Care Inc. (7)
Represents pro forma adjustment to reflect additional depreciation
expense for the fair value increase to property, plant and equipment 2,411
-----
2,404
C Represents pro forma adjustment to reflect amortization of intangible
assets.
D Represents pro forma adjustment to reflect debt incurred to acquire Hudson
Respiratory Care Inc. and retire a portion of its debt outstanding and
net difference in amortization of deferred financing costs.
E Represents the aggregate pro forma income tax effect of notes B, C and D.
Note: The statement of income does not reflect the expected synergies of
the acquisition.
] UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME FOR THE SIX MONTHS
ENDED JUNE 27, 2004
(DOLLARS AND SHARES IN THOUSANDS, EXCEPT PER SHARE)
HISTORICAL
----------------------------
HUDSON
RESPIRATORY PRO FORMA COMBINED
TELEFLEX CARE ADJUSTMENTS PRO FORMA
-------- ---- ----------- ---------
Revenues $ 1,291,429 $ 97,601 $ (4) A $ 1,389,026
----------- ----------- ----------- -----------
Cost of sales 951,817 52,451 1,202 B 1,005,470
Operating expenses 243,391 34,293 2,524 C 280,208
Gain on sale of businesses and assets (5,083) -- -- (5,083)
----------- ----------- ----------- -----------
Total costs and expenses 1,190,125 86,744 3,726 1,280,595
----------- ----------- ----------- -----------
Income before interest and taxes 101,304 10,857 (3,730) 108,431
Interest expense 12,920 14,359 (2,853) D 24,426
----------- ----------- ----------- -----------
Income before taxes 88,384 (3,502) (877) 84,005
Provision for taxes on income 24,747 1,332 (312) E 25,767
----------- ----------- ----------- -----------
Net income $ 63,637 $ (4,834) $ (565) $ 58,238
=========== =========== =========== ===========
Earnings per share
Basic $ 1.59 $ 1.45
Diluted $ 1.57 $ 1.44
Average number of common and common equivalent
shares outstanding
Basic 40,093 40,093
Diluted 40,498 40,498
The accompanying notes are an integral part of the unaudited pro forma condensed
combined financial statements.
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
A Represents pro forma adjustment to eliminate sales activity between
Teleflex and Hudson Respiratory Care Inc.
B Represents pro forma adjustment to eliminate sales activity
between Teleflex and Hudson Respiratory Care Inc. (4)
Represents pro forma adjustment to reflect additional depreciation
expense for the fair value increase to property, plant and equipment 1,206
-----
1,202
C Represents pro forma adjustment to reflect amortization of intangibles
assets
D Represents pro forma adjustment to reflect debt incurred to acquire Hudson
Respiratory Care Inc. and retire a portion of its debt outstanding, and
net difference in amortization of deferred financing costs.
E Represents the aggregate pro forma income tax effect of notes B, C and D
Note: The statement of income does not reflect the expected synergies of
the acquisition.