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8-K - FORM 8-K - TELEFLEX INCc14690e8vk.htm
EX-2.1 - EXHIBIT 2.1 - TELEFLEX INCc14690exv2w1.htm
Exhibit 99.1
TELEFLEX INCORPORATED AND SUBSIDIARIES
UNAUDITED PRO FORMA FINANCIAL INFORMATION
On March 22, 2011, Teleflex Incorporated (the “Company”) entered into a Purchase Agreement (the “Purchase Agreement”) with Marine Acquisition Corp. (the “Buyer”), an affiliate of H.I.G. Capital, LLC, and, immediately following execution of the Purchase Agreement, completed the sale of the Company’s business unit which designs, manufactures and distributes steering and throttle controls and engine and drive assemblies for the recreational marine market, heaters that provide cold weather auxiliary heating solutions for commercial vehicles and burner units that provide a heat source for military field feeding appliances (the “Business”), for a purchase price of $123.1 million, consisting of $101.6 million in cash, plus a subordinated promissory note in the amount of $4.5 million (the “Marine Note”) and the assumption by Buyer of approximately $15.5 million in liabilities related to the Business.
The cash portion of the purchase price is subject to possible upward or downward adjustment based on certain provisions in the Purchase Agreement relating to the working capital, cash balance, transaction expenses and liabilities of the Business, measured as of the open of business on the closing date. The Company has made customary representations, warranties and covenants in the Purchase Agreement with respect to the Business.
The foregoing description of the transaction is qualified in its entirety by reference to the full text of the Purchase Agreement, dated March 22, 2011, by and between the Company and Buyer, which is filed as Exhibit 2.1 to this Current Report and is incorporated herein by reference.
The Business, which was previously reported as the Commercial Segment of the Company’s operations, meets the criteria for reporting as a discontinued operation.
The unaudited pro forma consolidated statements of income present the income statements as originally reported and adjust the respective periods to eliminate the results of operations of the Business as if the disposition occurred January 1, 2008. In addition, the pro forma adjustments for the 2010 statement of income include entries to reduce interest expense as a reflection of using a portion of the proceeds from the sale of the Business as if they were used to prepay a portion of the outstanding principal amount of the Company’s senior notes issued in 2004 (the “2004 Senior Notes”) (which were prepaid in their entirety during the first quarter of 2011), to eliminate the amortization of deferred financing fees related to the 2004 Senior Notes, to record interest income on the Marine Note and to record the related tax effects for the adjustments. The pro forma adjustments for 2010 do not include an estimated $6.9 million pre-tax, non-recurring adjustment for the make whole fees on prepayment of the 2004 Senior Notes.
The unaudited pro forma consolidated balance sheet presents the balance sheet as originally reported and eliminates the Business’ assets, liabilities and equity components as if the disposition occurred December 31, 2010. In addition, the pro forma adjustments include entries to record the estimated proceeds from the sale of the Business, to record the Marine Note, to record the prepayment of a portion of the 2004 Senior Notes with a portion of the proceeds from the sale, to eliminate deferred financing fees related to the 2004 Senior Notes, to record the non-recurring estimated make whole fees and the related loss on extinguishment resulting from the prepayment of the 2004 Senior Notes and to record the estimated gain or loss on sale of the Business. The gain or loss on the sale of the Business reported in the unaudited pro forma consolidated balance sheet is based upon estimates and may differ from the actual gain or loss recognized by the Company.
The unaudited pro forma consolidated financial statements described above should be read in conjunction with the historical financial statements of the Company and the related notes thereto. The unaudited pro forma information is not necessarily indicative of the financial position or results of operations that may have actually occurred had the transaction taken place on the dates noted, or the future financial position or operating results of the Company.

 

 


 

TELEFLEX INCORPORATED AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
                             
    Year Ended December 31, 2010  
    As Reported     Disposition     Pro Forma  
    (Dollars and shares in thousands, except per share)  
Net revenues
  $ 1,801,705     $ (194,905 )   A   $ 1,606,800  
Cost of goods sold
    1,007,636       (144,197 )   A     863,439  
 
                     
Gross profit
    794,069       (50,708 )   A     743,361  
Selling, general and administrative expenses
    475,321       (32,124 )   A     443,197  
Research and development expenses
    42,621                 42,621  
Restructuring and other impairment charges
    2,875                 2,875  
Net gain on sales of businesses and assets
    (341 )               (341 )
 
                     
Income from continuing operations before interest, loss on extinguishments of debt and taxes
    273,593       (18,584 )   A     255,009  
Interest expense
    80,031       (6,486 )   B     73,545  
Interest income
    (861 )     56     A        
 
            (434 )   C     (1,239 )
Loss on extinguishments of debt
    46,630                 46,630  
 
                     
Income from continuing operations before taxes
    147,793       (11,720 )         136,073  
Taxes on income from continuing operations
    21,887       2,734     A        
 
            2,516     D     27,137  
 
                     
Income from continuing operations
    125,906       (16,970 )         108,936  
 
                     
 
                           
Less: Net income attributable to noncontrolling interest
    1,361                 1,361  
 
                     
Net income attributable to common shareholders from continuing operations
  $ 124,545     $ (16,970 )       $ 107,575  
 
                     
 
                           
Earnings per share from continuing operations available to common shareholders:
                           
Basic
  $ 3.12     $ (0.43 )   A   $ 2.70  
Diluted
  $ 3.09     $ (0.42 )   A   $ 2.67  
 
                           
Weighted average common shares outstanding:
                           
Basic
    39,906       39,906           39,906  
Diluted
    40,280       40,280           40,280  
Notes to the December 31, 2010 Unaudited Pro Forma Consolidated Statements of Income
(Dollars in thousands)
             
Note A   Reflects the elimination of the operations of the Marine business
Note B   To remove the interest expense and the amortization of debt financing costs related to the prepayment of a portion of the 2004 Senior Notes from the proceeds on the sale of the Business
   
Lower interest expense
  $ 6,283  
   
Lower amortization of debt issuance costs
    203  
   
 
     
   
Total interest expense
  $ 6,486  
   
 
     
Note C  
Interest income on Marine Note
  $ 434  
Note D  
Reflects the tax effect on the adjustments to interest in Note B and Note C
  $ 2,516  
The 2010 pro forma entries do not include an estimated $6.9 million pre-tax, non-recurring adjustment for the make whole fees on prepayment of the 2004 Senior Notes.

 

 


 

TELEFLEX INCORPORATED AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
                             
    Year Ended December 31, 2009  
    As Reported     Disposition     Pro Forma  
    (Dollars and shares in thousands, except per share)  
Net revenues
  $ 1,766,329     $ (168,126 )   A   $ 1,598,203  
Cost of goods sold
    994,179       (124,752 )   A     869,427  
 
                     
Gross profit
    772,150       (43,374 )   A     728,776  
Selling, general and administrative expenses
    454,233       (31,331 )   A     422,902  
Research and development expenses
    36,685                 36,685  
Goodwill impairment
    6,728                 6,728  
Restructuring and other impairment charges
    15,057       (4,710 )   A     10,347  
Net loss on sales of businesses and assets
    2,597       (2,597 )   A      
 
                     
Income from continuing operations before interest and taxes
    256,850       (4,736 )   A     252,114  
Interest expense
    89,463       (5 )   A     89,458  
Interest income
    (2,535 )     25     A     (2,510 )
 
                     
Income from continuing operations before taxes
    169,922       (4,756 )   A     165,166  
Taxes on income from continuing operations
    35,073       948     A     36,021  
 
                     
Income from continuing operations
    134,849       (5,704 )   A     129,145  
 
                     
 
                           
Less: Net income attributable to noncontrolling interest
    1,157                 1,157  
 
                     
Net income attributable to common shareholders from continuing operations
  $ 133,692     $ (5,704 )   A   $ 127,988  
 
                     
 
                           
Earnings per share from continuing operations available to common shareholders:
                           
Basic
  $ 3.37     $ (0.14 )   A   $ 3.22  
Diluted
  $ 3.35     $ (0.14 )   A   $ 3.20  
 
                           
Weighted average common shares outstanding:
                           
Basic
    39,718       39,718           39,718  
Diluted
    39,936       39,936           39,936  
Notes to the December 31, 2009 Unaudited Pro Forma Consolidated Statements of Income
Note A   Reflects the elimination of the operations of the Marine business.

 

 


 

TELEFLEX INCORPORATED AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
                             
    Year Ended December 31, 2008  
    As Reported     Disposition     Pro Forma  
    (Dollars and shares in thousands, except per share)  
Net revenues
  $ 1,912,080     $ (212,350 )   A   $ 1,699,730  
Cost of goods sold
    1,110,560       (163,311 )   A     947,249  
 
                     
Gross profit
    801,520       (49,039 )   A     752,481  
Selling, general and administrative expenses
    502,559       (34,722 )   A     467,837  
Research and development expenses
    32,598                 32,598  
Restructuring and other impairment charges
    27,701       (2,755 )   A     24,946  
Net gain on sales of businesses and assets
    (296 )               (296 )
 
                     
Income from continuing operations before interest and taxes
    238,958       (11,562 )   A     227,396  
Interest expense
    121,589       (13 )   A     121,576  
Interest income
    (2,272 )     72     A     (2,200 )
 
                     
Income from continuing operations before taxes
    119,641       (11,621 )   A     108,020  
Taxes on income from continuing operations
    37,933       (5,043 )   A     32,890  
 
                     
Income from continuing operations
    81,708       (6,578 )   A     75,130  
 
                     
 
                           
Less: Net income attributable to noncontrolling interest
    747                 747  
 
                     
Net income attributable to common shareholders from continuing operations
  $ 80,961     $ (6,578 )   A   $ 74,383  
 
                     
 
                           
Earnings per share from continuing operations available to common shareholders:
                           
Basic
  $ 2.05     $ (0.17 )   A   $ 1.88  
Diluted
  $ 2.03     $ (0.17 )   A   $ 1.87  
 
                           
Weighted average common shares outstanding:
                           
Basic
    39,584       39,584           39,584  
Diluted
    39,832       39,832           39,832  
Notes to the December 31, 2008 Unaudited Pro Forma Consolidated Statements of Income
Note A   Reflects the elimination of the operations of the Marine business.

 

 


 

TELEFLEX INCORPORATED AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET
(Unaudited)
                             
    December 31, 2010  
    As Reported     Disposition     Pro Forma  
    (Dollars and shares in thousands)  
ASSETS
Current assets
                           
Cash and cash equivalents
  $ 208,452     $ 97,582     A        
 
            (91,928 )   B   $ 214,106  
Accounts receivable, net
    294,196       (19,990 )   A     274,206  
Inventories, net
    338,598       (29,814 )   A     308,784  
Prepaid expenses and other current assets
    28,831       (987 )   A     27,844  
Income taxes receivable
    3,888                 3,888  
Deferred tax assets
    39,309       (1,809 )   A     37,500  
Assets held for sale
    7,959                 7,959  
 
                     
Total current assets
    921,233       (46,946 )         874,287  
Property, plant and equipment, net
    287,705       (14,291 )   A     273,414  
Goodwill
    1,442,411       (7,489 )   A     1,434,922  
Intangibles assets, net
    918,522       (15,215 )   A     903,307  
Investments in affiliates
    4,899                 4,899  
Deferred tax assets
    358                 358  
Other assets
    68,027       (115 )   A        
 
            4,450     A        
 
            (450 )   B     71,912  
 
                     
 
 
Total assets
  $ 3,643,155     $ (80,056 )       $ 3,563,099  
 
                     
LIABILITIES AND EQUITY
Current liabilities
                           
Notes payable
  $ 31,211     $         $ 31,211  
Current portion of long-term debt
    72,500       (37,168 )   B     35,332  
Accounts payable
    84,846       (10,159 )   A     74,687  
Accrued expenses
    117,488       (3,658 )   A        
 
            626     A     114,456  
Payroll and benefit-related liabilities
    71,418       (4,469 )   A     66,949  
Derivative liabilities
    15,634                 15,634  
Accrued interest
    18,347                 18,347  
Income taxes payable
    4,886       7,209     A        
 
            (2,682 )   B     9,413  
Deferred tax liabilities
    4,433                 4,433  
 
                     
Total current liabilities
    420,763       (50,301 )         370,462  
Long-term borrowings
    813,409       (47,832 )   B     765,577  
Deferred tax liabilities
    370,819       6,667     A     377,486  
Pension and postretirement benefit liabilities
    141,769       (15,420 )   A     126,349  
Noncurrent liability for uncertain tax positions
    62,602                 62,602  
Other liabilities
    46,515       (30 )   A     46,485  
 
                     
Total liabilities
    1,855,877       (106,916 )         1,748,961  
Commitments and contingencies
                           
Common shareholders’ equity
                           
 
 
Common shares, $1 par value Issued: 42,245 shares
    42,245                 42,245  
Additional paid-in capital
    349,156                 349,156  
Retained earnings
    1,578,913       56,546   A        
 
            (4,696 )   B     1,630,763  
Accumulated other comprehensive income (loss)
    (51,880 )     (24,990 )   A     (76,870 )
 
                     
 
    1,918,434       26,860           1,945,294  
Less: Treasury stock, at cost
    135,058                 135,058  
 
                     
Total common shareholders’ equity
    1,783,376       26,860           1,810,236  
 
                     
Noncontrolling interest
    3,902                 3,902  
 
                     
Total equity
    1,787,278       26,860           1,814,138  
 
                     
Total liabilities and equity
  $ 3,643,155     $ (80,056 )       $ 3,563,099  
 
                     

 

 


 

Notes to the December 31, 2010 Unaudited Pro Forma Consolidated Balance Sheet
(Dollars in thousands)
             
Note A   Reflects the proceeds from the sale of the Business, the Marine Note, an estimate of the taxes on the sale of the Business, the elimination of the assets, liabilities and equity components and the adjustments to record the sale of the Business.
   
Cash and cash equivalents — proceeds from sale of the Business
  $ 101,600  
   
Cash and cash equivalents — sales related closing costs
    (4,018 )
   
Other assets — Marine Note
    4,450  
   
Accrued expenses — professional fees
    (626 )
   
Income taxes payable — taxes on sale of the Business
    (7,209 )
   
Net assets and liabilities of the Business sold
    (62,641 )
   
Accumulated Other Comprehensive Income — pension and other post-retirement
    (8,427 )
   
Cumulative translation related to the Business sold included in the gain
    33,417  
   
 
     
   
Retained earnings — after tax gain on sale of the Business
  $ 56,546  
   
 
     
   
 
       
   
Accumulated Other Comprehensive Income — pension and other post-retirement
  $ 8,427  
   
Cumulative translation related to the Business sold included in the gain
    (33,417 )
   
 
     
   
Accumulated Other Comprehensive Income (loss)
  $ (24,990 )
   
 
     
   
 
       
Note B   Reflects a partial prepayment of the 2004 Senior Notes with a portion of the proceeds from the sale of the Business, the write-off of the 2004 Senior Notes deferred financing fees in proportion to the repayment of the notes, a non-recurring estimated make-whole fee related to the prepayment of the 2004 Senior Notes and the related tax effects associated with these activities.
   
Cash and cash equivalents
  $ (91,928 )
   
Other assets — deferred financing fees
    (450 )
   
Current portion of long-term borrowings — 2004 Senior Notes
    (37,168 )
   
Income taxes payable — on deferred financing fee write-off and a non-recurring estimated make-whole fee
    (2,682 )
   
Long-term borrowings — 2004 Senior Notes
    (47,832 )
   
Retained earnings — after tax deferred financing fee write-off and a non-recurring estimated make-whole fee
    (4,696 )