false2020Q20000096943--12-31us-gaap:AccountingStandardsUpdate201613Member00000969432020-01-012020-06-28xbrli:shares00000969432020-07-28iso4217:USD00000969432020-03-302020-06-2800000969432019-04-012019-06-3000000969432019-01-012019-06-30iso4217:USDxbrli:shares00000969432020-06-2800000969432019-12-3100000969432018-12-3100000969432019-06-300000096943us-gaap:CommonStockMember2019-12-310000096943us-gaap:AdditionalPaidInCapitalMember2019-12-310000096943us-gaap:RetainedEarningsMember2019-12-310000096943us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-12-310000096943us-gaap:TreasuryStockMember2019-12-310000096943us-gaap:RetainedEarningsMembersrt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2019-12-310000096943srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2019-12-310000096943us-gaap:RetainedEarningsMember2020-01-012020-03-2900000969432020-01-012020-03-290000096943us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-01-012020-03-290000096943us-gaap:CommonStockMember2020-01-012020-03-290000096943us-gaap:AdditionalPaidInCapitalMember2020-01-012020-03-290000096943us-gaap:TreasuryStockMember2020-01-012020-03-290000096943us-gaap:CommonStockMember2020-03-290000096943us-gaap:AdditionalPaidInCapitalMember2020-03-290000096943us-gaap:RetainedEarningsMember2020-03-290000096943us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-03-290000096943us-gaap:TreasuryStockMember2020-03-2900000969432020-03-290000096943us-gaap:RetainedEarningsMember2020-03-302020-06-280000096943us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-03-302020-06-280000096943us-gaap:CommonStockMember2020-03-302020-06-280000096943us-gaap:AdditionalPaidInCapitalMember2020-03-302020-06-280000096943us-gaap:TreasuryStockMember2020-03-302020-06-280000096943us-gaap:CommonStockMember2020-06-280000096943us-gaap:AdditionalPaidInCapitalMember2020-06-280000096943us-gaap:RetainedEarningsMember2020-06-280000096943us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-06-280000096943us-gaap:TreasuryStockMember2020-06-280000096943us-gaap:CommonStockMember2018-12-310000096943us-gaap:AdditionalPaidInCapitalMember2018-12-310000096943us-gaap:RetainedEarningsMember2018-12-310000096943us-gaap:AccumulatedOtherComprehensiveIncomeMember2018-12-310000096943us-gaap:TreasuryStockMember2018-12-310000096943us-gaap:RetainedEarningsMembersrt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2018-12-310000096943srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2018-12-310000096943us-gaap:RetainedEarningsMember2019-01-012019-03-3100000969432019-01-012019-03-310000096943us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-01-012019-03-310000096943us-gaap:CommonStockMember2019-01-012019-03-310000096943us-gaap:AdditionalPaidInCapitalMember2019-01-012019-03-310000096943us-gaap:TreasuryStockMember2019-01-012019-03-310000096943us-gaap:CommonStockMember2019-03-310000096943us-gaap:AdditionalPaidInCapitalMember2019-03-310000096943us-gaap:RetainedEarningsMember2019-03-310000096943us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-03-310000096943us-gaap:TreasuryStockMember2019-03-3100000969432019-03-310000096943us-gaap:RetainedEarningsMember2019-04-012019-06-300000096943us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-04-012019-06-300000096943us-gaap:CommonStockMember2019-04-012019-06-300000096943us-gaap:AdditionalPaidInCapitalMember2019-04-012019-06-300000096943us-gaap:TreasuryStockMember2019-04-012019-06-300000096943us-gaap:CommonStockMember2019-06-300000096943us-gaap:AdditionalPaidInCapitalMember2019-06-300000096943us-gaap:RetainedEarningsMember2019-06-300000096943us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-06-300000096943us-gaap:TreasuryStockMember2019-06-300000096943us-gaap:CostOfSalesMember2020-03-302020-06-280000096943us-gaap:CostOfSalesMember2020-01-012020-06-280000096943srt:RestatementAdjustmentMemberus-gaap:CostOfSalesMember2019-04-012019-06-300000096943us-gaap:SellingGeneralAndAdministrativeExpensesMembersrt:RestatementAdjustmentMember2019-04-012019-06-300000096943srt:RestatementAdjustmentMemberus-gaap:CostOfSalesMember2019-01-012019-06-300000096943us-gaap:SellingGeneralAndAdministrativeExpensesMembersrt:RestatementAdjustmentMember2019-01-012019-06-300000096943srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2020-01-01xbrli:pure0000096943tfx:HospitalsAndHealthcareProvidersMemberus-gaap:CustomerConcentrationRiskMemberus-gaap:SalesRevenueNetMember2020-01-012020-06-280000096943us-gaap:CustomerConcentrationRiskMembertfx:OtherMedicalDeviceManufacturersMemberus-gaap:SalesRevenueNetMember2020-01-012020-06-280000096943us-gaap:CustomerConcentrationRiskMemberus-gaap:SalesRevenueNetMembertfx:HomeCareProvidersMember2020-01-012020-06-280000096943tfx:VascularAccessMember2020-03-302020-06-280000096943tfx:VascularAccessMember2019-04-012019-06-300000096943tfx:VascularAccessMember2020-01-012020-06-280000096943tfx:VascularAccessMember2019-01-012019-06-300000096943tfx:AnesthesiaMember2020-03-302020-06-280000096943tfx:AnesthesiaMember2019-04-012019-06-300000096943tfx:AnesthesiaMember2020-01-012020-06-280000096943tfx:AnesthesiaMember2019-01-012019-06-300000096943tfx:InterventionalMember2020-03-302020-06-280000096943tfx:InterventionalMember2019-04-012019-06-300000096943tfx:InterventionalMember2020-01-012020-06-280000096943tfx:InterventionalMember2019-01-012019-06-300000096943tfx:SurgicalMember2020-03-302020-06-280000096943tfx:SurgicalMember2019-04-012019-06-300000096943tfx:SurgicalMember2020-01-012020-06-280000096943tfx:SurgicalMember2019-01-012019-06-300000096943tfx:InterventionalUrologyMember2020-03-302020-06-280000096943tfx:InterventionalUrologyMember2019-04-012019-06-300000096943tfx:InterventionalUrologyMember2020-01-012020-06-280000096943tfx:InterventionalUrologyMember2019-01-012019-06-300000096943tfx:OemMember2020-03-302020-06-280000096943tfx:OemMember2019-04-012019-06-300000096943tfx:OemMember2020-01-012020-06-280000096943tfx:OemMember2019-01-012019-06-300000096943tfx:OtherMember2020-03-302020-06-280000096943tfx:OtherMember2019-04-012019-06-300000096943tfx:OtherMember2020-01-012020-06-280000096943tfx:OtherMember2019-01-012019-06-300000096943tfx:IWGHighPerformanceConductorsIncMember2020-02-182020-02-180000096943us-gaap:CustomerRelationshipsMembertfx:IWGHighPerformanceConductorsIncMember2020-02-180000096943us-gaap:IntellectualPropertyMembertfx:IWGHighPerformanceConductorsIncMember2020-02-180000096943tfx:IWGHighPerformanceConductorsIncMember2020-02-180000096943tfx:IWGHighPerformanceConductorsIncMember2020-01-012020-06-280000096943us-gaap:OneTimeTerminationBenefitsMembersrt:MinimumMember2020-06-280000096943srt:MaximumMemberus-gaap:OneTimeTerminationBenefitsMember2020-06-280000096943us-gaap:OneTimeTerminationBenefitsMembersrt:MinimumMembertfx:TwoThousandNineteenFootprintRealignmentPlanMember2020-06-280000096943srt:MaximumMemberus-gaap:OneTimeTerminationBenefitsMembertfx:TwoThousandNineteenFootprintRealignmentPlanMember2020-06-280000096943tfx:TwoThousandEighteenFootprintRealignmentPlanMemberus-gaap:OneTimeTerminationBenefitsMembersrt:MinimumMember2020-06-280000096943srt:MaximumMembertfx:TwoThousandEighteenFootprintRealignmentPlanMemberus-gaap:OneTimeTerminationBenefitsMember2020-06-280000096943tfx:TwoThousandFourteenManufacturingFootprintRealignmentMemberus-gaap:OneTimeTerminationBenefitsMembersrt:MinimumMember2020-06-280000096943tfx:TwoThousandFourteenManufacturingFootprintRealignmentMembersrt:MaximumMemberus-gaap:OneTimeTerminationBenefitsMember2020-06-280000096943us-gaap:OtherRestructuringMembersrt:MinimumMembertfx:TwoThousandNineteenFootprintRealignmentPlanMember2020-06-280000096943srt:MaximumMemberus-gaap:OtherRestructuringMembertfx:TwoThousandNineteenFootprintRealignmentPlanMember2020-06-280000096943us-gaap:OtherRestructuringMembertfx:TwoThousandEighteenFootprintRealignmentPlanMembersrt:MinimumMember2020-06-280000096943srt:MaximumMemberus-gaap:OtherRestructuringMembertfx:TwoThousandEighteenFootprintRealignmentPlanMember2020-06-280000096943tfx:TwoThousandFourteenManufacturingFootprintRealignmentMemberus-gaap:OtherRestructuringMembersrt:MinimumMember2020-06-280000096943tfx:TwoThousandFourteenManufacturingFootprintRealignmentMembersrt:MaximumMemberus-gaap:OtherRestructuringMember2020-06-280000096943srt:MinimumMembertfx:SpecialTerminationBenefitAndOtherRestructuringMembertfx:TwoThousandNineteenFootprintRealignmentPlanMember2020-06-280000096943srt:MaximumMembertfx:SpecialTerminationBenefitAndOtherRestructuringMembertfx:TwoThousandNineteenFootprintRealignmentPlanMember2020-06-280000096943tfx:TwoThousandEighteenFootprintRealignmentPlanMembersrt:MinimumMembertfx:SpecialTerminationBenefitAndOtherRestructuringMember2020-06-280000096943srt:MaximumMembertfx:TwoThousandEighteenFootprintRealignmentPlanMembertfx:SpecialTerminationBenefitAndOtherRestructuringMember2020-06-280000096943tfx:TwoThousandFourteenManufacturingFootprintRealignmentMembersrt:MinimumMembertfx:SpecialTerminationBenefitAndOtherRestructuringMember2020-06-280000096943tfx:TwoThousandFourteenManufacturingFootprintRealignmentMembersrt:MaximumMembertfx:SpecialTerminationBenefitAndOtherRestructuringMember2020-06-280000096943srt:MinimumMembertfx:AcceleratedDepreciationAndOtherCostsMembertfx:TwoThousandNineteenFootprintRealignmentPlanMember2020-06-280000096943srt:MaximumMembertfx:AcceleratedDepreciationAndOtherCostsMembertfx:TwoThousandNineteenFootprintRealignmentPlanMember2020-06-280000096943tfx:TwoThousandEighteenFootprintRealignmentPlanMembersrt:MinimumMembertfx:AcceleratedDepreciationAndOtherCostsMember2020-06-280000096943srt:MaximumMembertfx:TwoThousandEighteenFootprintRealignmentPlanMembertfx:AcceleratedDepreciationAndOtherCostsMember2020-06-280000096943tfx:TwoThousandFourteenManufacturingFootprintRealignmentMembersrt:MinimumMembertfx:AcceleratedDepreciationAndOtherCostsMember2020-06-280000096943tfx:TwoThousandFourteenManufacturingFootprintRealignmentMembersrt:MaximumMembertfx:AcceleratedDepreciationAndOtherCostsMember2020-06-280000096943srt:MinimumMembertfx:TwoThousandNineteenFootprintRealignmentPlanMember2020-06-280000096943srt:MaximumMembertfx:TwoThousandNineteenFootprintRealignmentPlanMember2020-06-280000096943tfx:TwoThousandEighteenFootprintRealignmentPlanMembersrt:MinimumMember2020-06-280000096943srt:MaximumMembertfx:TwoThousandEighteenFootprintRealignmentPlanMember2020-06-280000096943tfx:TwoThousandFourteenManufacturingFootprintRealignmentMembersrt:MinimumMember2020-06-280000096943tfx:TwoThousandFourteenManufacturingFootprintRealignmentMembersrt:MaximumMember2020-06-280000096943tfx:TwoThousandNineteenFootprintRealignmentPlanMember2020-01-012020-06-280000096943tfx:TwoThousandEighteenFootprintRealignmentPlanMember2020-01-012020-06-280000096943tfx:TwoThousandFourteenManufacturingFootprintRealignmentMember2020-01-012020-06-280000096943tfx:TwoThousandNineteenFootprintRealignmentPlanMember2020-06-280000096943tfx:TwoThousandEighteenFootprintRealignmentPlanMember2020-06-280000096943tfx:TwoThousandFourteenManufacturingFootprintRealignmentMember2020-06-280000096943tfx:TwoThousandNineteenFootprintRealignmentPlanMember2020-03-302020-06-280000096943tfx:TwoThousandEighteenFootprintRealignmentPlanMember2020-03-302020-06-280000096943tfx:TwoThousandFourteenManufacturingFootprintRealignmentMember2020-03-302020-06-280000096943tfx:SeveranceAndTerminationBenefitsMembertfx:TwoThousandTwentyWorkforceReductionPlanMember2020-03-302020-06-280000096943us-gaap:OtherRestructuringMembertfx:TwoThousandTwentyWorkforceReductionPlanMember2020-03-302020-06-280000096943tfx:TwoThousandTwentyWorkforceReductionPlanMember2020-03-302020-06-280000096943tfx:SeveranceAndTerminationBenefitsMembertfx:TwoThousandNineteenFootprintRealignmentPlanMember2020-03-302020-06-280000096943us-gaap:OtherRestructuringMembertfx:TwoThousandNineteenFootprintRealignmentPlanMember2020-03-302020-06-280000096943tfx:TwoThousandEighteenFootprintRealignmentPlanMembertfx:SeveranceAndTerminationBenefitsMember2020-03-302020-06-280000096943us-gaap:OtherRestructuringMembertfx:TwoThousandEighteenFootprintRealignmentPlanMember2020-03-302020-06-280000096943tfx:OtherrestructuringprogramsMembertfx:SeveranceAndTerminationBenefitsMember2020-03-302020-06-280000096943tfx:OtherrestructuringprogramsMemberus-gaap:OtherRestructuringMember2020-03-302020-06-280000096943tfx:OtherrestructuringprogramsMember2020-03-302020-06-280000096943tfx:SeveranceAndTerminationBenefitsMember2020-03-302020-06-280000096943us-gaap:OtherRestructuringMember2020-03-302020-06-280000096943tfx:SeveranceAndTerminationBenefitsMembertfx:TwoThousandNineteenFootprintRealignmentPlanMember2019-04-012019-06-300000096943us-gaap:OtherRestructuringMembertfx:TwoThousandNineteenFootprintRealignmentPlanMember2019-04-012019-06-300000096943tfx:TwoThousandNineteenFootprintRealignmentPlanMember2019-04-012019-06-300000096943tfx:TwoThousandEighteenFootprintRealignmentPlanMembertfx:SeveranceAndTerminationBenefitsMember2019-04-012019-06-300000096943us-gaap:OtherRestructuringMembertfx:TwoThousandEighteenFootprintRealignmentPlanMember2019-04-012019-06-300000096943tfx:TwoThousandEighteenFootprintRealignmentPlanMember2019-04-012019-06-300000096943tfx:OtherrestructuringprogramsMembertfx:SeveranceAndTerminationBenefitsMember2019-04-012019-06-300000096943tfx:OtherrestructuringprogramsMemberus-gaap:OtherRestructuringMember2019-04-012019-06-300000096943tfx:OtherrestructuringprogramsMember2019-04-012019-06-300000096943tfx:SeveranceAndTerminationBenefitsMember2019-04-012019-06-300000096943us-gaap:OtherRestructuringMember2019-04-012019-06-300000096943tfx:SeveranceAndTerminationBenefitsMembertfx:TwoThousandTwentyWorkforceReductionPlanMember2020-01-012020-06-280000096943us-gaap:OtherRestructuringMembertfx:TwoThousandTwentyWorkforceReductionPlanMember2020-01-012020-06-280000096943tfx:TwoThousandTwentyWorkforceReductionPlanMember2020-01-012020-06-280000096943tfx:SeveranceAndTerminationBenefitsMembertfx:TwoThousandNineteenFootprintRealignmentPlanMember2020-01-012020-06-280000096943us-gaap:OtherRestructuringMembertfx:TwoThousandNineteenFootprintRealignmentPlanMember2020-01-012020-06-280000096943tfx:TwoThousandEighteenFootprintRealignmentPlanMembertfx:SeveranceAndTerminationBenefitsMember2020-01-012020-06-280000096943us-gaap:OtherRestructuringMembertfx:TwoThousandEighteenFootprintRealignmentPlanMember2020-01-012020-06-280000096943tfx:OtherrestructuringprogramsMembertfx:SeveranceAndTerminationBenefitsMember2020-01-012020-06-280000096943tfx:OtherrestructuringprogramsMemberus-gaap:OtherRestructuringMember2020-01-012020-06-280000096943tfx:OtherrestructuringprogramsMember2020-01-012020-06-280000096943tfx:SeveranceAndTerminationBenefitsMember2020-01-012020-06-280000096943us-gaap:OtherRestructuringMember2020-01-012020-06-280000096943tfx:SeveranceAndTerminationBenefitsMembertfx:TwoThousandNineteenFootprintRealignmentPlanMember2019-01-012019-06-300000096943us-gaap:OtherRestructuringMembertfx:TwoThousandNineteenFootprintRealignmentPlanMember2019-01-012019-06-300000096943tfx:TwoThousandNineteenFootprintRealignmentPlanMember2019-01-012019-06-300000096943tfx:TwoThousandEighteenFootprintRealignmentPlanMembertfx:SeveranceAndTerminationBenefitsMember2019-01-012019-06-300000096943us-gaap:OtherRestructuringMembertfx:TwoThousandEighteenFootprintRealignmentPlanMember2019-01-012019-06-300000096943tfx:TwoThousandEighteenFootprintRealignmentPlanMember2019-01-012019-06-300000096943tfx:OtherrestructuringprogramsMembertfx:SeveranceAndTerminationBenefitsMember2019-01-012019-06-300000096943tfx:OtherrestructuringprogramsMemberus-gaap:OtherRestructuringMember2019-01-012019-06-300000096943tfx:OtherrestructuringprogramsMember2019-01-012019-06-300000096943tfx:SeveranceAndTerminationBenefitsMember2019-01-012019-06-300000096943us-gaap:OtherRestructuringMember2019-01-012019-06-300000096943tfx:VascularNorthAmericaMember2019-12-310000096943us-gaap:EMEAMember2019-12-310000096943srt:AsiaMember2019-12-310000096943tfx:OemMember2019-12-310000096943tfx:VascularNorthAmericaMember2020-01-012020-06-280000096943us-gaap:EMEAMember2020-01-012020-06-280000096943srt:AsiaMember2020-01-012020-06-280000096943tfx:OemMember2020-01-012020-06-280000096943tfx:VascularNorthAmericaMember2020-06-280000096943us-gaap:EMEAMember2020-06-280000096943srt:AsiaMember2020-06-280000096943tfx:OemMember2020-06-280000096943us-gaap:CustomerRelationshipsMember2020-06-280000096943us-gaap:CustomerRelationshipsMember2019-12-310000096943us-gaap:InProcessResearchAndDevelopmentMember2020-06-280000096943us-gaap:InProcessResearchAndDevelopmentMember2019-12-310000096943us-gaap:IntellectualPropertyMember2020-06-280000096943us-gaap:IntellectualPropertyMember2019-12-310000096943us-gaap:DistributionRightsMember2020-06-280000096943us-gaap:DistributionRightsMember2019-12-310000096943us-gaap:TradeNamesMember2020-06-280000096943us-gaap:TradeNamesMember2019-12-310000096943us-gaap:NoncompeteAgreementsMember2020-06-280000096943us-gaap:NoncompeteAgreementsMember2019-12-310000096943us-gaap:RevolvingCreditFacilityMember2020-01-012020-06-280000096943us-gaap:RevolvingCreditFacilityMember2020-06-280000096943us-gaap:RevolvingCreditFacilityMember2019-12-310000096943tfx:TermLoanMember2020-01-012020-06-280000096943tfx:TermLoanMember2020-06-280000096943tfx:TermLoanMember2019-12-310000096943us-gaap:SeniorNotesMembertfx:A4.875PercentSeniorNotesDue2026Member2020-06-280000096943us-gaap:SeniorNotesMembertfx:A4.875PercentSeniorNotesDue2026Member2019-12-310000096943us-gaap:SeniorNotesMembertfx:FourPointSixTwoFivePercentSeniorSubordinatedNotesDueTwoThousandTwentySevenMember2020-06-280000096943us-gaap:SeniorNotesMembertfx:FourPointSixTwoFivePercentSeniorSubordinatedNotesDueTwoThousandTwentySevenMember2019-12-310000096943us-gaap:SeniorNotesMembertfx:FourPointTwentyFivePercentSeniorNotesDue2028Member2020-06-280000096943us-gaap:SeniorNotesMembertfx:FourPointTwentyFivePercentSeniorNotesDue2028Member2019-12-310000096943tfx:SecuritizationProgramMember2020-06-280000096943tfx:SecuritizationProgramMember2019-12-310000096943us-gaap:SeniorNotesMembertfx:FourPointTwentyFivePercentSeniorNotesDue2028Member2020-05-270000096943us-gaap:SeniorNotesMembertfx:FourPointTwentyFivePercentSeniorNotesDue2028Member2020-01-012020-06-280000096943srt:MinimumMembertfx:FourPointTwentyFivePercentSeniorNotesDue2028Member2020-01-012020-06-280000096943srt:MaximumMembertfx:FourPointTwentyFivePercentSeniorNotesDue2028Member2020-01-012020-06-280000096943us-gaap:SeniorNotesMembertfx:DebtInstrumentRedemptionPriorToJuneOneTwentyTwentyThreeMembertfx:FourPointTwentyFivePercentSeniorNotesDue2028Member2020-01-012020-06-280000096943tfx:SecuritizationProgramMember2020-03-290000096943tfx:SecuritizationProgramMember2020-03-300000096943us-gaap:ForeignExchangeContractMemberus-gaap:NondesignatedMember2020-03-302020-06-280000096943us-gaap:ForeignExchangeContractMemberus-gaap:NondesignatedMember2020-01-012020-06-280000096943us-gaap:ForeignExchangeContractMemberus-gaap:NondesignatedMember2019-04-012019-06-300000096943us-gaap:ForeignExchangeContractMemberus-gaap:NondesignatedMember2019-01-012019-06-300000096943us-gaap:ForeignExchangeContractMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMember2020-06-280000096943us-gaap:ForeignExchangeContractMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMember2019-12-310000096943us-gaap:ForeignExchangeContractMemberus-gaap:NondesignatedMember2020-06-280000096943us-gaap:ForeignExchangeContractMemberus-gaap:NondesignatedMember2019-12-31tfx:Financial_Institution_Counterparty0000096943us-gaap:CrossCurrencyInterestRateContractMemberus-gaap:DesignatedAsHedgingInstrumentMember2019-03-04iso4217:EUR0000096943us-gaap:CrossCurrencyInterestRateContractMemberus-gaap:DesignatedAsHedgingInstrumentMember2018-10-040000096943us-gaap:CrossCurrencyInterestRateContractMemberus-gaap:CashFlowHedgingMember2020-03-302020-06-280000096943us-gaap:CrossCurrencyInterestRateContractMemberus-gaap:CashFlowHedgingMember2020-01-012020-06-280000096943us-gaap:CrossCurrencyInterestRateContractMemberus-gaap:CashFlowHedgingMember2019-04-012019-06-300000096943us-gaap:CrossCurrencyInterestRateContractMemberus-gaap:CashFlowHedgingMember2019-01-012019-06-300000096943us-gaap:CrossCurrencyInterestRateContractMemberus-gaap:NondesignatedMember2020-03-302020-06-280000096943us-gaap:CrossCurrencyInterestRateContractMemberus-gaap:NondesignatedMember2020-01-012020-06-280000096943us-gaap:CrossCurrencyInterestRateContractMemberus-gaap:NondesignatedMember2019-04-012019-06-300000096943us-gaap:CrossCurrencyInterestRateContractMemberus-gaap:NondesignatedMember2019-01-012019-06-300000096943us-gaap:ForeignExchangeContractMemberus-gaap:PrepaidExpensesAndOtherCurrentAssetsMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMember2020-06-280000096943us-gaap:ForeignExchangeContractMemberus-gaap:PrepaidExpensesAndOtherCurrentAssetsMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMember2019-12-310000096943us-gaap:ForeignExchangeContractMemberus-gaap:PrepaidExpensesAndOtherCurrentAssetsMemberus-gaap:NondesignatedMemberus-gaap:CashFlowHedgingMember2020-06-280000096943us-gaap:ForeignExchangeContractMemberus-gaap:PrepaidExpensesAndOtherCurrentAssetsMemberus-gaap:NondesignatedMemberus-gaap:CashFlowHedgingMember2019-12-310000096943us-gaap:CrossCurrencyInterestRateContractMemberus-gaap:PrepaidExpensesAndOtherCurrentAssetsMemberus-gaap:NondesignatedMemberus-gaap:CashFlowHedgingMember2020-06-280000096943us-gaap:CrossCurrencyInterestRateContractMemberus-gaap:PrepaidExpensesAndOtherCurrentAssetsMemberus-gaap:NondesignatedMemberus-gaap:CashFlowHedgingMember2019-12-310000096943us-gaap:ForeignExchangeContractMemberus-gaap:PrepaidExpensesAndOtherCurrentAssetsMemberus-gaap:CashFlowHedgingMember2020-06-280000096943us-gaap:ForeignExchangeContractMemberus-gaap:PrepaidExpensesAndOtherCurrentAssetsMemberus-gaap:CashFlowHedgingMember2019-12-310000096943us-gaap:CrossCurrencyInterestRateContractMemberus-gaap:NondesignatedMemberus-gaap:CashFlowHedgingMemberus-gaap:OtherAssetsMember2020-06-280000096943us-gaap:CrossCurrencyInterestRateContractMemberus-gaap:NondesignatedMemberus-gaap:CashFlowHedgingMemberus-gaap:OtherAssetsMember2019-12-310000096943us-gaap:CashFlowHedgingMemberus-gaap:OtherAssetsMember2020-06-280000096943us-gaap:CashFlowHedgingMemberus-gaap:OtherAssetsMember2019-12-310000096943us-gaap:CashFlowHedgingMember2020-06-280000096943us-gaap:CashFlowHedgingMember2019-12-310000096943us-gaap:OtherCurrentLiabilitiesMemberus-gaap:ForeignExchangeContractMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMember2020-06-280000096943us-gaap:OtherCurrentLiabilitiesMemberus-gaap:ForeignExchangeContractMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMember2019-12-310000096943us-gaap:OtherCurrentLiabilitiesMemberus-gaap:ForeignExchangeContractMemberus-gaap:NondesignatedMemberus-gaap:CashFlowHedgingMember2020-06-280000096943us-gaap:OtherCurrentLiabilitiesMemberus-gaap:ForeignExchangeContractMemberus-gaap:NondesignatedMemberus-gaap:CashFlowHedgingMember2019-12-310000096943us-gaap:OtherCurrentLiabilitiesMemberus-gaap:ForeignExchangeContractMemberus-gaap:CashFlowHedgingMember2020-06-280000096943us-gaap:OtherCurrentLiabilitiesMemberus-gaap:ForeignExchangeContractMemberus-gaap:CashFlowHedgingMember2019-12-310000096943us-gaap:CashFlowHedgingMember2019-04-012019-06-300000096943us-gaap:CashFlowHedgingMember2020-01-012020-06-280000096943us-gaap:CashFlowHedgingMember2019-01-012019-06-300000096943us-gaap:CashFlowHedgingMember2020-03-302020-06-280000096943us-gaap:FairValueInputsLevel1Member2020-06-280000096943us-gaap:FairValueInputsLevel2Member2020-06-280000096943us-gaap:FairValueInputsLevel3Member2020-06-280000096943us-gaap:FairValueInputsLevel1Member2019-12-310000096943us-gaap:FairValueInputsLevel2Member2019-12-310000096943us-gaap:FairValueInputsLevel3Member2019-12-310000096943us-gaap:ValuationTechniqueDiscountedCashFlowMembertfx:MilestonebasedPaymentMemberus-gaap:MeasurementInputDiscountRateMembersrt:MinimumMember2020-06-280000096943us-gaap:ValuationTechniqueDiscountedCashFlowMembersrt:MaximumMembertfx:MilestonebasedPaymentMemberus-gaap:MeasurementInputDiscountRateMember2020-06-280000096943us-gaap:ValuationTechniqueDiscountedCashFlowMembertfx:MilestonebasedPaymentMemberus-gaap:MeasurementInputDiscountRateMembersrt:WeightedAverageMember2020-06-280000096943us-gaap:MeasurementInputPriceVolatilityMembersrt:MinimumMembertfx:RevenuebasedPaymentMembertfx:ValuationTechniqueMonteCarloSimulationMember2020-06-280000096943srt:MaximumMemberus-gaap:MeasurementInputPriceVolatilityMembertfx:RevenuebasedPaymentMembertfx:ValuationTechniqueMonteCarloSimulationMember2020-06-280000096943us-gaap:MeasurementInputPriceVolatilityMembersrt:WeightedAverageMembertfx:RevenuebasedPaymentMembertfx:ValuationTechniqueMonteCarloSimulationMember2020-06-280000096943us-gaap:ValuationTechniqueDiscountedCashFlowMemberus-gaap:MeasurementInputDiscountRateMembertfx:RevenuebasedPaymentMember2020-06-280000096943tfx:NeoTractIncMember2020-01-012020-06-280000096943us-gaap:StockOptionMember2020-03-302020-06-280000096943us-gaap:StockOptionMember2020-01-012020-06-280000096943us-gaap:StockOptionMember2019-01-012019-06-300000096943us-gaap:StockOptionMember2019-04-012019-06-300000096943us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2019-12-310000096943us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2019-12-310000096943us-gaap:AccumulatedTranslationAdjustmentMember2019-12-310000096943us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2020-01-012020-06-280000096943us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2020-01-012020-06-280000096943us-gaap:AccumulatedTranslationAdjustmentMember2020-01-012020-06-280000096943us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-01-012020-06-280000096943us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2020-06-280000096943us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2020-06-280000096943us-gaap:AccumulatedTranslationAdjustmentMember2020-06-280000096943us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2018-12-310000096943us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2018-12-310000096943us-gaap:AccumulatedTranslationAdjustmentMember2018-12-310000096943us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2019-01-012019-06-300000096943us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2019-01-012019-06-300000096943us-gaap:AccumulatedTranslationAdjustmentMember2019-01-012019-06-300000096943us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-01-012019-06-300000096943us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2019-06-300000096943us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2019-06-300000096943us-gaap:AccumulatedTranslationAdjustmentMember2019-06-300000096943us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMemberus-gaap:ForeignExchangeContractMemberus-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2020-03-302020-06-280000096943us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMemberus-gaap:ForeignExchangeContractMemberus-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2019-04-012019-06-300000096943us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMemberus-gaap:ForeignExchangeContractMemberus-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2020-01-012020-06-280000096943us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMemberus-gaap:ForeignExchangeContractMemberus-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2019-01-012019-06-300000096943us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetUnamortizedGainLossMember2020-03-302020-06-280000096943us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetUnamortizedGainLossMember2019-04-012019-06-300000096943us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetUnamortizedGainLossMember2020-01-012020-06-280000096943us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetUnamortizedGainLossMember2019-01-012019-06-300000096943us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetPriorServiceCostCreditMember2020-03-302020-06-280000096943us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetPriorServiceCostCreditMember2019-04-012019-06-300000096943us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetPriorServiceCostCreditMember2020-01-012020-06-280000096943us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetPriorServiceCostCreditMember2019-01-012019-06-300000096943us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2020-03-302020-06-280000096943us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2019-04-012019-06-300000096943us-gaap:AccruedLiabilitiesMember2020-06-280000096943tfx:OtherLiabilityMember2020-06-280000096943srt:MinimumMember2020-01-012020-06-280000096943srt:MaximumMember2020-01-012020-06-280000096943tfx:VascularNorthAmericaMember2020-03-302020-06-280000096943tfx:VascularNorthAmericaMember2019-04-012019-06-300000096943tfx:VascularNorthAmericaMember2019-01-012019-06-300000096943us-gaap:EMEAMember2020-03-302020-06-280000096943us-gaap:EMEAMember2019-04-012019-06-300000096943us-gaap:EMEAMember2019-01-012019-06-300000096943srt:AsiaMember2020-03-302020-06-280000096943srt:AsiaMember2019-04-012019-06-300000096943srt:AsiaMember2019-01-012019-06-300000096943tfx:OemMember2020-03-302020-06-280000096943tfx:OemMember2019-04-012019-06-300000096943tfx:OemMember2019-01-012019-06-300000096943us-gaap:OperatingSegmentsMembertfx:VascularNorthAmericaMember2020-03-302020-06-280000096943us-gaap:OperatingSegmentsMembertfx:VascularNorthAmericaMember2019-04-012019-06-300000096943us-gaap:OperatingSegmentsMembertfx:VascularNorthAmericaMember2020-01-012020-06-280000096943us-gaap:OperatingSegmentsMembertfx:VascularNorthAmericaMember2019-01-012019-06-300000096943us-gaap:EMEAMemberus-gaap:OperatingSegmentsMember2020-03-302020-06-280000096943us-gaap:EMEAMemberus-gaap:OperatingSegmentsMember2019-04-012019-06-300000096943us-gaap:EMEAMemberus-gaap:OperatingSegmentsMember2020-01-012020-06-280000096943us-gaap:EMEAMemberus-gaap:OperatingSegmentsMember2019-01-012019-06-300000096943srt:AsiaMemberus-gaap:OperatingSegmentsMember2020-03-302020-06-280000096943srt:AsiaMemberus-gaap:OperatingSegmentsMember2019-04-012019-06-300000096943srt:AsiaMemberus-gaap:OperatingSegmentsMember2020-01-012020-06-280000096943srt:AsiaMemberus-gaap:OperatingSegmentsMember2019-01-012019-06-300000096943us-gaap:OperatingSegmentsMembertfx:OemMember2020-03-302020-06-280000096943us-gaap:OperatingSegmentsMembertfx:OemMember2019-04-012019-06-300000096943us-gaap:OperatingSegmentsMembertfx:OemMember2020-01-012020-06-280000096943us-gaap:OperatingSegmentsMembertfx:OemMember2019-01-012019-06-300000096943us-gaap:OperatingSegmentsMember2020-03-302020-06-280000096943us-gaap:OperatingSegmentsMember2019-04-012019-06-300000096943us-gaap:OperatingSegmentsMember2020-01-012020-06-280000096943us-gaap:OperatingSegmentsMember2019-01-012019-06-300000096943us-gaap:MaterialReconcilingItemsMember2020-03-302020-06-280000096943us-gaap:MaterialReconcilingItemsMember2019-04-012019-06-300000096943us-gaap:MaterialReconcilingItemsMember2020-01-012020-06-280000096943us-gaap:MaterialReconcilingItemsMember2019-01-012019-06-30
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
|
|
|
|
|
|
(Mark One) |
|
☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 |
For the quarterly period ended June 28, 2020
OR
|
|
|
|
|
|
☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 |
For the transition period from
to .
Commission file number 1-5353
TELEFLEX INCORPORATED
(Exact name of registrant as specified in its charter)
|
|
|
|
|
|
|
|
|
Delaware |
|
23-1147939 |
(State or other jurisdiction of
incorporation or organization) |
|
(I.R.S. employer
identification no.) |
550 E. Swedesford Rd., Suite 400 Wayne, PA 19087
(Address of principal executive offices and zip code)
(610) 225-6800
(Registrant’s telephone number, including area code)
(None)
(Former Name, Former Address and Former Fiscal Year,
If Changed Since Last Report)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities registered pursuant to Section 12(b) of the
Act: |
|
|
|
|
|
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
|
|
Common Stock, par value $1.00 per share |
TFX |
New York Stock Exchange |
|
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes
☒ No ☐
Indicate by check mark whether the registrant has submitted
electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T during the preceding 12
months (or for such shorter period that the registrant was required
to submit such
files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, a
smaller reporting company or an emerging growth company. See the
definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company” and "emerging growth company" in Rule
12b-2 of the Exchange Act.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Large accelerated filer |
☒ |
|
|
Accelerated filer |
☐ |
|
|
|
|
|
|
|
|
Non-accelerated filer |
☐ |
|
|
Smaller reporting company |
☐ |
|
|
|
|
|
|
|
|
|
|
|
|
Emerging growth company |
☐ |
|
If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange
Act.
¨
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange
Act). Yes ☐ No ☒
The registrant had 46,516,030 shares of common stock, par value
$1.00 per share, outstanding as of July 28, 2020.
TELEFLEX INCORPORATED
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED JUNE 28, 2020
TABLE OF CONTENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page |
|
|
|
|
|
|
|
|
|
|
Item 1: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Item 2: |
|
|
|
|
Item 3: |
|
|
|
|
Item 4: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Item 1: |
|
|
|
|
Item 1A: |
|
|
|
|
Item 2: |
|
|
|
|
Item 3: |
|
|
|
|
Item 4: |
|
|
|
|
Item 5: |
|
|
|
|
Item 6: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PART I
—
FINANCIAL INFORMATION
Item 1. Financial Statements
TELEFLEX INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
Six Months Ended |
|
|
|
June 28, 2020 |
|
June 30, 2019 |
|
June 28, 2020 |
|
June 30, 2019 |
|
(Dollars and shares in thousands, except per share) |
|
|
|
|
|
|
Net revenues |
$ |
567,034 |
|
|
$ |
652,507 |
|
|
$ |
1,197,676 |
|
|
$ |
1,266,091 |
|
Cost of goods sold |
288,662 |
|
|
300,269 |
|
|
585,680 |
|
|
589,883 |
|
Gross profit |
278,372 |
|
|
352,238 |
|
|
611,996 |
|
|
676,208 |
|
Selling, general and administrative expenses |
191,193 |
|
|
215,500 |
|
|
338,989 |
|
|
422,421 |
|
Research and development expenses |
29,364 |
|
|
27,595 |
|
|
56,760 |
|
|
54,745 |
|
Restructuring and impairment charges |
19,005 |
|
|
1,685 |
|
|
20,351 |
|
|
19,080 |
|
Gain on sale of assets |
— |
|
|
— |
|
|
— |
|
|
(2,739) |
|
Income from continuing operations before interest and
taxes |
38,810 |
|
|
107,458 |
|
|
195,896 |
|
|
182,701 |
|
Interest expense |
15,682 |
|
|
20,758 |
|
|
31,121 |
|
|
43,450 |
|
Interest income |
(163) |
|
|
(472) |
|
|
(742) |
|
|
(811) |
|
|
|
|
|
|
|
|
|
Income from continuing operations before taxes |
23,291 |
|
|
87,172 |
|
|
165,517 |
|
|
140,062 |
|
Taxes on income from continuing operations |
11,848 |
|
|
3,844 |
|
|
22,922 |
|
|
14,816 |
|
Income from continuing operations |
11,443 |
|
|
83,328 |
|
|
142,595 |
|
|
125,246 |
|
Operating income (loss) from discontinued operations |
22 |
|
|
61 |
|
|
18 |
|
|
(1,282) |
|
Tax benefit (expense) on operating loss from discontinued
operations |
9 |
|
|
14 |
|
|
7 |
|
|
(308) |
|
Income (loss) from discontinued operations |
13 |
|
|
47 |
|
|
11 |
|
|
(974) |
|
Net income |
$ |
11,456 |
|
|
$ |
83,375 |
|
|
$ |
142,606 |
|
|
$ |
124,272 |
|
Earnings per share: |
|
|
|
|
|
|
|
Basic: |
|
|
|
|
|
|
|
Income from continuing operations |
$ |
0.25 |
|
|
$ |
1.80 |
|
|
$ |
3.07 |
|
|
$ |
2.72 |
|
Income (loss) from discontinued operations |
— |
|
|
0.01 |
|
|
— |
|
|
(0.02) |
|
Net income |
$ |
0.25 |
|
|
$ |
1.81 |
|
|
$ |
3.07 |
|
|
$ |
2.70 |
|
Diluted: |
|
|
|
|
|
|
|
Income from continuing operations |
$ |
0.24 |
|
|
$ |
1.77 |
|
|
$ |
3.02 |
|
|
$ |
2.67 |
|
Loss from discontinued operations |
— |
|
|
— |
|
|
— |
|
|
(0.03) |
|
Net income |
$ |
0.24 |
|
|
$ |
1.77 |
|
|
$ |
3.02 |
|
|
$ |
2.64 |
|
Weighted average common shares outstanding |
|
|
|
|
|
|
|
Basic |
46,442 |
|
|
46,172 |
|
|
46,412 |
|
|
46,111 |
|
Diluted |
47,242 |
|
|
47,036 |
|
|
47,237 |
|
|
46,989 |
|
The accompanying notes are an integral part of the condensed
consolidated financial statements.
TELEFLEX INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE
INCOME
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
Six Months Ended |
|
|
|
June 28, 2020 |
|
June 30, 2019 |
|
June 28, 2020 |
|
June 30, 2019 |
|
(Dollars in thousands) |
|
|
|
|
|
|
Net income |
$ |
11,456 |
|
|
$ |
83,375 |
|
|
$ |
142,606 |
|
|
$ |
124,272 |
|
Other comprehensive income (loss), net of tax: |
|
|
|
|
|
|
|
Foreign currency translation, net of tax of $$2,295, $(298),
$(5,286), and $(1,759) for the three and six months periods,
respectively
|
17,654 |
|
|
12,568 |
|
|
(545) |
|
|
12,332 |
|
Pension and other postretirement benefit plans adjustment, net of
tax of $(404), $(446), $(926), and $(836) for the three and six
months periods, respectively
|
1,345 |
|
|
1,459 |
|
|
3,034 |
|
|
2,688 |
|
Derivatives qualifying as hedges, net of tax of $64, $83, $436, and
$82 for the three and six months periods, respectively
|
(1,095) |
|
|
755 |
|
|
(4,912) |
|
|
158 |
|
Other comprehensive income (loss), net of tax: |
17,904 |
|
|
14,782 |
|
|
(2,423) |
|
|
15,178 |
|
Comprehensive income |
$ |
29,360 |
|
|
$ |
98,157 |
|
|
$ |
140,183 |
|
|
$ |
139,450 |
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of the condensed
consolidated financial statements.
TELEFLEX INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
June 28, 2020 |
|
December 31, 2019 |
|
(Dollars in thousands) |
|
|
ASSETS |
|
|
|
Current assets |
|
|
|
Cash and cash equivalents |
$ |
553,535 |
|
|
$ |
301,083 |
|
Accounts receivable, net |
374,886 |
|
|
418,673 |
|
Inventories |
514,755 |
|
|
476,557 |
|
Prepaid expenses and other current assets |
94,381 |
|
|
97,943 |
|
Prepaid taxes |
7,060 |
|
|
12,076 |
|
|
|
|
|
Total current assets |
1,544,617 |
|
|
1,306,332 |
|
Property, plant and equipment, net |
432,401 |
|
|
430,719 |
|
Operating lease assets |
101,982 |
|
|
113,160 |
|
Goodwill |
2,343,561 |
|
|
2,245,305 |
|
Intangible assets, net |
2,260,863 |
|
|
2,156,285 |
|
Deferred tax assets |
5,589 |
|
|
5,572 |
|
Other assets |
76,117 |
|
|
52,447 |
|
Total assets |
$ |
6,765,130 |
|
|
$ |
6,309,820 |
|
LIABILITIES AND EQUITY |
|
|
|
Current liabilities |
|
|
|
Current borrowings |
$ |
83,000 |
|
|
$ |
50,000 |
|
Accounts payable |
107,140 |
|
|
102,916 |
|
Accrued expenses |
103,557 |
|
|
100,466 |
|
Current portion of contingent consideration |
25,243 |
|
|
148,090 |
|
Payroll and benefit-related liabilities |
80,602 |
|
|
115,981 |
|
Accrued interest |
6,887 |
|
|
5,514 |
|
Income taxes payable |
18,340 |
|
|
6,692 |
|
Other current liabilities |
31,846 |
|
|
33,396 |
|
|
|
|
|
Total current liabilities |
456,615 |
|
|
563,055 |
|
Long-term borrowings |
2,328,791 |
|
|
1,858,943 |
|
Deferred tax liabilities |
488,968 |
|
|
439,558 |
|
Pension and postretirement benefit liabilities |
60,866 |
|
|
82,719 |
|
Noncurrent liability for uncertain tax positions |
12,381 |
|
|
10,294 |
|
Noncurrent contingent consideration |
24,036 |
|
|
71,818 |
|
Noncurrent operating lease liabilities |
91,917 |
|
|
101,372 |
|
Other liabilities |
204,154 |
|
|
202,741 |
|
Total liabilities |
3,667,728 |
|
|
3,330,500 |
|
Commitments and contingencies |
|
|
|
Total shareholders' equity |
3,097,402 |
|
|
2,979,320 |
|
Total liabilities and shareholders' equity |
$ |
6,765,130 |
|
|
$ |
6,309,820 |
|
The accompanying notes are an integral part of the condensed
consolidated financial statements.
TELEFLEX INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended |
|
|
|
June 28, 2020 |
|
June 30, 2019 |
|
(Dollars in thousands) |
|
|
Cash flows from operating activities of continuing
operations: |
|
|
|
Net income |
$ |
142,606 |
|
|
$ |
124,272 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
(Income) loss from discontinued operations |
(11) |
|
|
974 |
|
Depreciation expense |
34,461 |
|
|
31,966 |
|
Intangible asset amortization expense |
78,638 |
|
|
75,285 |
|
Deferred financing costs and debt discount amortization
expense |
1,984 |
|
|
2,249 |
|
Gain on sale of assets |
— |
|
|
(2,739) |
|
Fair value step up of acquired inventory sold |
1,707 |
|
|
— |
|
Changes in contingent consideration |
(29,951) |
|
|
25,456 |
|
Impairment of long-lived assets |
— |
|
|
6,911 |
|
Stock-based compensation |
8,482 |
|
|
12,700 |
|
Deferred income taxes, net |
1,055 |
|
|
(5,495) |
|
Payments for contingent consideration |
(79,771) |
|
|
(26,092) |
|
Interest benefit on swaps designated as net investment
hedges |
(9,805) |
|
|
(8,799) |
|
Other |
(18,981) |
|
|
4,272 |
|
Changes in assets and liabilities, net of effects of acquisitions
and disposals: |
|
|
|
Accounts receivable |
45,843 |
|
|
(19,747) |
|
Inventories |
(34,875) |
|
|
(33,970) |
|
Prepaid expenses and other assets |
11,819 |
|
|
(6,381) |
|
Accounts payable, accrued expenses and other
liabilities |
(26,449) |
|
|
(6,231) |
|
Income taxes receivable and payable, net |
7,257 |
|
|
(17,347) |
|
Net cash provided by operating activities from
continuing operations |
134,009 |
|
|
157,284 |
|
Cash flows from investing activities of continuing
operations: |
|
|
|
Expenditures for property, plant and equipment |
(39,052) |
|
|
(56,107) |
|
Proceeds from sale of assets |
400 |
|
|
1,178 |
|
Payments for businesses and intangibles acquired, net of cash
acquired |
(265,895) |
|
|
(1,025) |
|
Net interest proceeds on swaps designated as net investment
hedges |
9,986 |
|
|
8,330 |
|
Net cash used in investing activities from continuing
operations |
(294,561) |
|
|
(47,624) |
|
Cash flows from financing activities of continuing
operations: |
|
|
|
Proceeds from new borrowings |
1,010,000 |
|
|
25,000 |
|
Reduction in borrowings |
(500,000) |
|
|
(52,500) |
|
Debt extinguishment, issuance and amendment fees |
(7,727) |
|
|
(4,703) |
|
Net proceeds from share based compensation plans and the related
tax impacts |
2,668 |
|
|
7,829 |
|
Payments for contingent consideration |
(60,947) |
|
|
(111,928) |
|
Dividends paid |
(31,558) |
|
|
(31,347) |
|
Net cash provided by (used in) financing activities from continuing
operations |
412,436 |
|
|
(167,649) |
|
Cash flows from discontinued operations: |
|
|
|
Net cash (used in) provided by operating activities |
(317) |
|
|
2,799 |
|
Net cash (used in) provided by discontinued operations |
(317) |
|
|
2,799 |
|
Effect of exchange rate changes on cash and cash
equivalents |
885 |
|
|
1,925 |
|
Net increase (decrease) in cash and cash equivalents |
252,452 |
|
|
(53,265) |
|
Cash and cash equivalents at the beginning of the
period |
301,083 |
|
|
357,161 |
|
Cash and cash equivalents at the end of the period |
$ |
553,535 |
|
|
$ |
303,896 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of the condensed
consolidated financial statements.
TELEFLEX INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
|
|
Additional
Paid In
Capital |
|
Retained
Earnings |
|
Accumulated Other Comprehensive Loss |
|
Treasury Stock |
|
|
|
Total |
|
Shares |
|
Dollars |
|
|
|
|
|
|
|
Shares |
|
Dollars |
|
|
|
(Dollars and shares in thousands, except per share) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2019 |
47,536 |
|
|
$ |
47,536 |
|
|
$ |
616,980 |
|
|
$ |
2,824,916 |
|
|
$ |
(344,392) |
|
|
1,182 |
|
|
$ |
(165,720) |
|
|
$ |
2,979,320 |
|
Cumulative effect adjustment resulting from the adoption of new
accounting standards |
|
|
|
|
|
|
(791) |
|
|
|
|
|
|
|
|
(791) |
|
Net income |
|
|
|
|
|
|
131,150 |
|
|
|
|
|
|
|
|
131,150 |
|
Cash dividends ($0.34 per share)
|
|
|
|
|
|
|
(15,767) |
|
|
|
|
|
|
|
|
(15,767) |
|
Other comprehensive loss |
|
|
|
|
|
|
|
|
(20,327) |
|
|
|
|
|
|
(20,327) |
|
Shares issued under compensation plans |
24 |
|
|
24 |
|
|
(3,074) |
|
|
|
|
|
|
(37) |
|
|
1,748 |
|
|
(1,302) |
|
Deferred compensation |
|
|
|
|
383 |
|
|
|
|
|
|
(5) |
|
|
358 |
|
|
741 |
|
Balance at March 29, 2020 |
47,560 |
|
|
47,560 |
|
|
614,289 |
|
|
2,939,508 |
|
|
(364,719) |
|
|
1,140 |
|
|
(163,614) |
|
|
3,073,024 |
|
Net income |
|
|
|
|
|
|
11,456 |
|
|
|
|
|
|
|
|
11,456 |
|
Cash dividends ($0.34 per share)
|
|
|
|
|
|
|
(15,791) |
|
|
|
|
|
|
|
|
(15,791) |
|
Other comprehensive income |
|
|
|
|
|
|
|
|
17,904 |
|
|
|
|
|
|
17,904 |
|
Shares issued under compensation plans |
35 |
|
|
35 |
|
|
10,516 |
|
|
|
|
|
|
(3) |
|
|
175 |
|
|
10,726 |
|
Deferred compensation |
|
|
|
|
— |
|
|
|
|
|
|
(1) |
|
|
83 |
|
|
83 |
|
Balance at June 28, 2020 |
47,595 |
|
|
$ |
47,595 |
|
|
$ |
624,805 |
|
|
$ |
2,935,173 |
|
|
$ |
(346,815) |
|
|
1,136 |
|
|
$ |
(163,356) |
|
|
$ |
3,097,402 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
|
|
Additional
Paid In
Capital |
|
Retained
Earnings |
|
Accumulated Other Comprehensive Loss |
|
Treasury Stock |
|
|
|
Total |
|
Shares |
|
Dollars |
|
|
|
|
|
|
|
Shares |
|
Dollars |
|
|
|
(Dollars and shares in thousands, except per share) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2018
|
47,248 |
|
|
$ |
47,248 |
|
|
$ |
574,761 |
|
|
$ |
2,427,599 |
|
|
$ |
(341,085) |
|
|
1,232 |
|
|
$ |
(168,545) |
|
|
$ |
2,539,978 |
|
Cumulative effect adjustment resulting from the adoption of new
accounting standards |
|
|
|
|
|
|
(1,321) |
|
|
|
|
|
|
|
|
(1,321) |
|
Net income
|
|
|
|
|
|
|
40,897 |
|
|
|
|
|
|
|
|
40,897 |
|
Cash dividends ($0.34 per share)
|
|
|
|
|
|
|
(15,650) |
|
|
|
|
|
|
|
|
(15,650) |
|
Other comprehensive income
|
|
|
|
|
|
|
|
|
396 |
|
|
|
|
|
|
396 |
|
Shares issued under compensation plans
|
75 |
|
|
75 |
|
|
3,094 |
|
|
|
|
|
|
(40) |
|
|
2,029 |
|
|
5,198 |
|
Deferred compensation
|
|
|
|
|
127 |
|
|
|
|
|
|
(4) |
|
|
253 |
|
|
380 |
|
Balance at March 31, 2019
|
47,323 |
|
|
47,323 |
|
|
577,982 |
|
|
2,451,525 |
|
|
(340,689) |
|
|
1,188 |
|
|
(166,263) |
|
|
2,569,878 |
|
Net income |
|
|
|
|
|
|
83,375 |
|
|
|
|
|
|
|
|
83,375 |
|
Cash dividends ($0.34 per share)
|
|
|
|
|
|
|
(15,697) |
|
|
|
|
|
|
|
|
(15,697) |
|
Other comprehensive income |
|
|
|
|
|
|
|
|
14,782 |
|
|
|
|
|
|
14,782 |
|
Shares issued under compensation plans |
77 |
|
|
77 |
|
|
12,252 |
|
|
|
|
|
|
(2) |
|
|
177 |
|
|
12,506 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of June 30, 2019 |
47,400 |
|
|
$ |
47,400 |
|
|
$ |
590,234 |
|
|
$ |
2,519,203 |
|
|
$ |
(325,907) |
|
|
1,186 |
|
|
$ |
(166,086) |
|
|
$ |
2,664,844 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of the condensed
consolidated financial statements.
TELEFLEX INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 — Basis of presentation
The accompanying unaudited condensed consolidated financial
statements of Teleflex Incorporated and its subsidiaries (“we,”
“us,” “our" and “Teleflex”) are prepared on the same basis as its
annual consolidated financial statements.
In the opinion of management, the financial statements reflect all
adjustments, which are of a normal recurring nature, necessary for
the fair statement of the financial statements for interim periods
in accordance with accounting principles generally accepted in the
United States of America ("GAAP") and Rule 10-01 of Securities and
Exchange Commission ("SEC") Regulation S-X, which sets forth the
instructions for the form and content of presentation of financial
statements included in Form 10-Q. The preparation of condensed
consolidated financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial
statements, as well as the reported amounts of revenue and expenses
during the reporting period. Actual results could differ from those
estimates particularly as it relates to estimates reliant on
forecasts and other assumptions impacted by the COVID-19 pandemic,
which are described in more detail in the 'Risks and uncertainties'
section below. The results of operations for the periods reported
are not necessarily indicative of those that may be expected for a
full year.
In accordance with applicable accounting standards and as permitted
by Rule 10-01 of Regulation S-X, the accompanying condensed
consolidated financial statements do not include all of the
information and footnote disclosures that are required to be
included in our annual consolidated financial statements.
Therefore, our quarterly condensed consolidated financial
statements should be read in conjunction with our consolidated
financial statements included in our Annual Report on Form 10-K for
the year ended December 31, 2019. For the three and six months
ended June 28, 2020 intangible asset amortization expense of
$21.1 million and $42.0 million, respectively, is included
within costs of good sold. For the three and six months ended
June 30, 2019, we reclassified intangible asset amortization
expense of $20.7 million and $41.5 million, respectively,
from selling, general and administrative expenses to cost of goods
sold for comparability.
Risks and Uncertainties
We are subject to risks and uncertainties as a result of the
COVID-19 pandemic. The extent of the impact of the COVID-19
pandemic on our business is highly uncertain and difficult to
predict due to the rapidly evolving environment and continued
uncertainties created by the COVID-19 pandemic. Among other things,
the response to the COVID-19 pandemic has had the effect of
reducing the number of elective procedures being carried out by our
customers, thereby reducing demand for products used in elective
procedures, while creating an increase in demand for products used
in the treatment of patients with COVID-19. The COVID-19 pandemic
has significantly impacted economic activity and markets around the
world through government-mandated and self-imposed shut-downs in
many countries, which were implemented to protect individuals and
control the spread of COVID-19. If the pandemic continues and
conditions worsen, it could negatively impact our business, results
of operations, financial condition and liquidity in numerous ways,
including, but not limited to, lower revenues in our product
categories dependent on elective procedures; further disruption in
the manufacture of our products including increased manufacturing
and distribution costs; extended delays in or defaults on payments
of outstanding receivables; and increased volatility and pricing in
capital markets. Further, the COVID-19 pandemic may cause
disruption to our suppliers or their suppliers and/or the
distribution of our products, whether through our direct sales
force or our distributors.
The severity of the impact of the COVID-19 pandemic on our business
will depend on a number of factors, including, but not limited to,
the duration and severity of the pandemic and the extent and
severity of the impact on our employees, contractors, suppliers,
customers and other business partners, all of which are uncertain
and cannot be predicted. As of the date of issuance of these
condensed consolidated financial statements, the extent to which
the COVID-19 pandemic may materially impact our financial
condition, liquidity, or results of operations is
uncertain.
Note 2 — Recently issued accounting standards
In
June 2016, the Financial Accounting Standards Board ("FASB")
issued new guidance that changes the methodology to be used to
measure credit losses for certain financial instruments and
financial assets, including trade receivables. The new guidance
requires the recognition of an allowance that reflects the current
estimate of
TELEFLEX INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -
(Continued)
(Unaudited)
credit losses expected to be incurred over the life of the
financial asset, based not only on historical experience and
current conditions, but also on reasonable forecasts. The main
objective of the new guidance is to provide financial statement
users with more useful information in making decisions about the
expected credit losses on financial instruments and other
commitments to extend credit held by a reporting entity at each
reporting date. Under previous guidance, an entity reflects credit
losses on financial assets measured on an amortized cost basis only
when it is probable that losses have been incurred, generally
considering only past events and current conditions in determining
the incurred loss. We adopted the new standard on January 1, 2020
using a modified retrospective transition approach by recognizing a
cumulative-effect adjustment of $0.8 million to reduce our
opening balance of retained earnings as of the adoption date. Prior
period amounts have not been adjusted and continue to reflect our
historical accounting.
In December 2019, the FASB issued new guidance that simplifies
various aspects of accounting for income taxes including those
related to the step-up in the tax basis of goodwill, intraperiod
tax allocations and the interim period effects of changes in tax
laws or rates. The new guidance is effective for fiscal years
beginning after December 15, 2020, including interim periods within
those fiscal years. Early adoption is permitted. The majority of
the modifications under the new guidance will be applied on a
modified retrospective basis through a cumulative-effect adjustment
to retained earnings on January 1, 2021. We are currently
evaluating the impact the guidance will have on our consolidated
financial statements and related disclosures.
In March 2020, the SEC adopted final rules that amend the financial
disclosure requirements for subsidiary issuers and guarantors of
registered debt securities in Rule 3-10 of Regulation S-X. The SEC
amended its financial disclosure requirements for companies that
conduct registered debt offerings involving subsidiaries as either
issuers or guarantors and affiliates whose securities are pledged
as collateral. The SEC narrowed the circumstances that require
separate financial statements of subsidiary issuers and guarantors
and streamlined the alternative disclosures required in lieu of
those statements. The SEC replaced the requirement for separate
financial statements of affiliates whose securities are pledged as
collateral for registered securities with requirements similar to
those adopted for subsidiary issuers and guarantors. The new
disclosures may be located, in all cases, outside of the financial
statements. The rule is effective January 4, 2021, but earlier
compliance is permitted. We adopted the new rule during the first
quarter of 2020. The disclosures are now located within the
Liquidity and Capital Resources section of Item 2 - Management's
Discussion and Analysis of Financial Condition and Results of
Operations.
From time to time, new accounting guidance is issued by the FASB or
other standard setting bodies that is adopted by us as of the
effective date or, in some cases where early adoption is permitted,
in advance of the effective date. We have assessed the recently
issued guidance that is not yet effective and, unless otherwise
indicated above, believes the new guidance will not have a material
impact on the consolidated results of operations, cash flows or
financial position.
Note 3 - Net revenues
We primarily generate revenue from the sale of medical devices
including single use disposable devices and, to a lesser extent,
reusable devices, instruments and capital equipment. Revenue is
recognized when obligations under the terms of a contract with our
customer are satisfied; this occurs upon the transfer of control of
the products. Generally, transfer of control to the customer occurs
at the point in time when our products are shipped from the
manufacturing or distribution facility. For our Original Equipment
and Development Services ("OEM") segment, most revenue is
recognized over time because the OEM segment generates revenue from
the sale of custom products that have no alternative use and we
have an enforceable right to payment to the extent that performance
has been completed. We market and sell products through our direct
sales force and distributors to customers within the following end
markets: (1) hospitals and healthcare providers; (2) other medical
device manufacturers; and (3) home care providers such as
pharmacies, which comprised 86%, 11% and 3% of consolidated net
revenues, respectively, for the six months ended June 28,
2020. Revenue is measured as the amount of consideration we expect
to receive in exchange for transferring goods. With respect to the
custom products sold in the OEM segment, revenue is measured using
the units produced output method. Payment is generally due 30 days
from the date of invoice.
TELEFLEX INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -
(Continued)
(Unaudited)
The following table disaggregates revenue by global product
category for the three and six months ended June 28, 2020 and
June 30, 2019.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
Six Months Ended |
|
|
|
June 28, 2020 |
|
June 30, 2019 |
|
June 28, 2020 |
|
June 30, 2019 |
|
(Dollars in thousands) |
|
|
|
|
|
|
Vascular access |
$ |
164,958 |
|
|
$ |
153,647 |
|
|
$ |
315,214 |
|
|
$ |
297,544 |
|
Anesthesia |
64,867 |
|
|
85,723 |
|
|
140,569 |
|
|
165,975 |
|
Interventional |
82,594 |
|
|
104,785 |
|
|
182,525 |
|
|
207,969 |
|
Surgical |
67,275 |
|
|
95,570 |
|
|
142,707 |
|
|
182,289 |
|
Interventional urology |
40,094 |
|
|
67,952 |
|
|
114,286 |
|
|
127,683 |
|
OEM |
55,832 |
|
|
56,428 |
|
|
119,219 |
|
|
110,666 |
|
Other
(1)
|
91,414 |
|
|
88,402 |
|
|
183,156 |
|
|
173,965 |
|
Net revenues
(2)
|
$ |
567,034 |
|
|
$ |
652,507 |
|
|
$ |
1,197,676 |
|
|
$ |
1,266,091 |
|
(1) Revenues in the "Other" category in the table above include
revenues generated from sales of our respiratory and urology
products (other than interventional urology products).
(2) The product categories listed above are presented on a global
basis, while each of our reportable segments other than the OEM
reportable segment are defined based on the geographic location of
its operations; the OEM reportable segment operates globally. Each
of the geographically based reportable segments include net
revenues from each of the non-OEM product categories listed
above.
Note 4 — Acquisitions
On February 18, 2020, we acquired IWG High Performance Conductors,
Inc. (HPC), a privately-held original equipment manufacturer of
minimally invasive medical products and high performance
conductors, for $260.0 million. The acquisition, which
complements our OEM product portfolio, was financed using
borrowings under our revolving credit facility. Based on the
preliminary purchase price allocation, the assets acquired
principally consist of customer relationships of
$139.0 million, intellectual property of $40.0 million
and goodwill of $107.1 million. The intangible assets are
being amortized over a useful life of 20 years. Goodwill arising
from the acquisition represents costs synergies, revenue growth
attributable to anticipated increased market penetration from
acquired products and future customers and is not tax
deductible.
Note 5 — Restructuring and impairment
charges
2020 Workforce reduction plan
During the second quarter of 2020, we committed to a workforce
reduction designed to improve profitability and reduce cost
primarily by streamlining certain sales and marketing functions in
our EMEA segment and certain manufacturing operations in our OEM
segment. The workforce reduction was initiated to further align the
business with our high growth strategic objectives. We estimate
that we will incur aggregate pre-tax restructuring charges of
$10 million to $13 million, consisting primarily of
termination benefits, and will result in future cash outlays. This
program will be substantially complete during 2020 and as a result
most of these charges are expected to be incurred prior to the end
of 2020.
TELEFLEX INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -
(Continued)
(Unaudited)
Footprint realignment plans
We have ongoing restructuring programs primarily related to the
relocation of manufacturing operations to existing lower-cost
locations and related workforce reductions (referred to as 2019,
2018 and 2014 Footprint realignment plans). The following tables
provide a summary of our cost estimates and other information
associated with these ongoing Footprint realignment
plans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2019 Footprint realignment plan
(3)
|
|
2018 Footprint realignment plan |
|
2014 Footprint realignment plan
(4)
|
Program expense estimates: |
(Dollars in millions) |
|
|
|
|
Termination benefits |
$16 to $20
|
|
$60 to $70
|
|
$12 to $13
|
Other costs
(1)
|
2 to 2
|
|
2 to 4
|
|
1 to 2
|
Restructuring charges |
18 to 22
|
|
62 to 74
|
|
13 to 15
|
Restructuring related charges
(2)
|
40 to 45
|
|
40 to 59
|
|
38 to 40
|
Total restructuring and restructuring related charges |
$58 to $67
|
|
$102 to $133
|
|
$51 to $55
|
Other program estimates: |
|
|
|
|
|
Expected cash outlays |
$55 to $63
|
|
$99 to $127
|
|
$42 to $46
|
Expected capital expenditures |
$27 to $33
|
|
$19 to $23
|
|
$25 to $26
|
Other program information: |
|
|
|
|
|
Period initiated |
February 2019 |
|
May 2018 |
|
April 2014 |
Estimated period of substantial completion |
2022 |
|
2022
(5)
|
|
2022 |
Aggregate restructuring charges |
$15.0 |
|
$62.1 |
|
$13.4 |
Restructuring reserve: |
|
|
|
|
|
Balance as of June 28, 2020 |
$12.4 |
|
$50.5 |
|
$3.7 |
Restructuring related charges incurred: |
|
|
|
|
|
Three Months Ended June 28, 2020 |
$3.9 |
|
$1.5 |
|
$0.8 |
Six Months Ended June 28, 2020 |
$6.4 |
|
$2.7 |
|
$1.7 |
Aggregate restructuring related charges |
$13.0 |
|
$9.9 |
|
$33.9 |
(1)Includes
facility closure, employee relocation, equipment relocation and
outplacement costs.
(2)Restructuring
related charges represent costs that are directly related to the
programs and principally constitute costs to transfer manufacturing
operations to the existing lower-cost locations, project management
costs and accelerated depreciation. The 2018 Footprint realignment
plan also includes a charge associated with our exit from the
facilities that is expected to be imposed by the taxing authority
in the affected jurisdiction. Excluding this tax charge,
substantially all of the restructuring related charges are expected
to be recognized within cost of goods sold.
(3)We
refined the disclosed ranges for the program expense and other
program estimates in consideration of the progress made to date as
well as the actions remaining.
(4)We
delayed the timing of substantial completion from our prior
estimate of 2021 due to an extension in the development and
qualification timeline, identified during the second quarter of
2020, for a component to be included in certain of our kits sold by
our anesthesia business in North America. The shift in timing also
resulted in an increase in the total program cost estimate and
related cash outlays and as a result, we increased the high end of
the ranges by $3 million. With respect to capital
expenditures, we have also refined the range.
(5)We
accelerated the timing of substantial completion from our prior
estimate of 2024 to take advantage of an opportunity we identified
during the second quarter of 2020 to accelerate the recognition of
estimated savings.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 28, 2020 |
|
|
|
|
|
|
Termination benefits |
|
Other costs
(1)
|
|
Total |
|
(Dollars in thousands) |
|
|
|
|
2020 Workforce reduction plan |
$ |
10,564 |
|
|
$ |
— |
|
|
$ |
10,564 |
|
2019 Footprint realignment plan |
323 |
|
|
82 |
|
|
405 |
|
2018 Footprint realignment plan |
7,545 |
|
|
52 |
|
|
7,597 |
|
Other restructuring programs
(2)
|
169 |
|
|
270 |
|
|
439 |
|
Restructuring charges |
$ |
18,601 |
|
|
$ |
404 |
|
|
$ |
19,005 |
|
|
|
|
|
|
|
|
|
|
|
|
|
TELEFLEX INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -
(Continued)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2019 |
|
|
|
|
|
|
|
|
|
|
Termination benefits |
|
|
|
|
|
Other costs
(1)
|
|
Total |
|
(Dollars in thousands) |
|
|
|
|
|
|
|
|
2019 Footprint realignment plan |
$ |
(459) |
|
|
|
|
|
|
$ |
30 |
|
|
$ |
(429) |
|
2018 Footprint realignment plan |
(2,275) |
|
|
|
|
|
|
134 |
|
|
(2,141) |
|
Other restructuring programs
(3)
|
62 |
|
|
|
|
|
|
312 |
|
|
374 |
|
Restructuring charges (credits) |
(2,672) |
|
|
|
|
|
|
476 |
|
|
(2,196) |
|
Asset impairment charges |
— |
|
|
|
|
|
|
3,881 |
|
|
3,881 |
|
Restructuring and impairment charges |
$ |
(2,672) |
|
|
|
|
|
|
$ |
4,357 |
|
|
$ |
1,685 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 28, 2020 |
|
|
|
|
|
|
Termination benefits |
|
Other costs
(1)
|
|
Total |
|
(Dollars in thousands) |
|
|
|
|
2020 Workforce reduction plan |
$ |
10,564 |
|
|
$ |
— |
|
|
$ |
10,564 |
|
2019 Footprint realignment plan |
1,152 |
|
|
91 |
|
|
1,243 |
|
2018 Footprint realignment plan |
7,859 |
|
|
133 |
|
|
7,992 |
|
Other restructuring programs
(2)
|
62 |
|
|
490 |
|
|
552 |
|
Restructuring charges |
$ |
19,637 |
|
|
$ |
714 |
|
|
$ |
20,351 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2019 |
|
|
|
|
|
|
Termination benefits |
|
Other costs
(1)
|
|
Total |
|
(Dollars in thousands) |
|
|
|
|
2019 Footprint realignment plan |
$ |
12,516 |
|
|
$ |
30 |
|
|
$ |
12,546 |
|
2018 Footprint realignment plan |
(1,838) |
|
|
708 |
|
|
(1,130) |
|
Other restructuring programs
(3)
|
188 |
|
|
565 |
|
|
753 |
|
Restructuring charges |
10,866 |
|
|
1,303 |
|
|
12,169 |
|
Asset impairment charges |
— |
|
|
6,911 |
|
|
6,911 |
|
Restructuring and impairment charges |
$ |
10,866 |
|
|
$ |
8,214 |
|
|
$ |
19,080 |
|
(1) Other costs include facility closure, contract termination and
other exit costs.
(2) Includes program initiated during third quarter of 2019 as well
as the 2016 and 2014 Footprint realignment plans.
(3) Includes the Vascular Solutions integration program (initiated
in 2017) as well as the 2016 and 2014 Footprint realignment
plans.
Note 6 — Inventories
Inventories as of June 28, 2020 and December 31, 2019
consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
June 28, 2020 |
|
December 31, 2019 |
|
(Dollars in thousands) |
|
|
Raw materials |
$ |
137,231 |
|
|
$ |
114,302 |
|
Work-in-process |
72,526 |
|
|
71,479 |
|
Finished goods |
304,998 |
|
|
290,776 |
|
|
|
|
|
|
|
|
|
Inventories |
$ |
514,755 |
|
|
$ |
476,557 |
|
TELEFLEX INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -
(Continued)
(Unaudited)
Note 7 — Goodwill and other intangible assets
The following table provides information relating to changes in the
carrying amount of goodwill by reportable operating segment for the
six months ended June 28, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas |
|
|
|
|
|
|
|
EMEA |
|
Asia |
|
OEM |
|
|
|
Total |
|
(Dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2019 |
$ |
1,550,925 |
|
|
|
|
|
|
|
|
$ |
475,772 |
|
|
$ |
213,725 |
|
|
$ |
4,883 |
|
|
|
|
$ |
2,245,305 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill related to acquisitions |
— |
|
|
|
|
|
|
|
|
— |
|
|
— |
|
|
107,127 |
|
|
|
|
107,127 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Currency translation adjustment |
(4,125) |
|
|
|
|
|
|
|
|
(2,618) |
|
|
(2,128) |
|
|
— |
|
|
|
|
(8,871) |
|
June 28, 2020 |
$ |
1,546,800 |
|
|
|
|
|
|
|
|
$ |
473,154 |
|
|
$ |
211,597 |
|
|
$ |
112,010 |
|
|
|
|
$ |
2,343,561 |
|
The gross carrying amount of, and accumulated amortization relating
to, intangible assets as of June 28, 2020 and
December 31, 2019 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Carrying Amount |
|
|
|
Accumulated Amortization |
|
|
|
June 28, 2020 |
|
December 31, 2019 |
|
June 28, 2020 |
|
December 31, 2019 |
|
(Dollars in thousands) |
|
|
|
|
|
|
Customer relationships |
$ |
1,164,518 |
|
|
$ |
1,021,852 |
|
|
$ |
(393,057) |
|
|
$ |
(367,585) |
|
In-process research and development |
28,109 |
|
|
27,940 |
|
|
— |
|
|
— |
|
Intellectual property |
1,392,124 |
|
|
1,351,990 |
|
|
(443,927) |
|
|
(402,340) |
|
Distribution rights |
23,419 |
|
|
23,369 |
|
|
(19,455) |
|
|
(18,859) |
|
Trade names |
563,070 |
|
|
563,315 |
|
|
(58,035) |
|
|
(50,718) |
|
Non-compete agreements |
22,768 |
|
|
22,618 |
|
|
(18,671) |
|
|
(15,297) |
|
|
$ |
3,194,008 |
|
|
$ |
3,011,084 |
|
|
$ |
(933,145) |
|
|
$ |
(854,799) |
|
Note 8 — Borrowings
Our borrowings at June 28, 2020 and December 31, 2019
were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
June 28, 2020 |
|
December 31, 2019 |
|
(Dollars in thousands) |
|
|
Senior Credit Facility: |
|
|
|
Revolving credit facility, at a rate of 1.55% at June 28,
2020, due 2024
|
$ |
285,000 |
|
|
$ |
300,000 |
|
Term loan facility, at a rate of 1.55% at June 28, 2020, due
2024
|
673,000 |
|
|
673,000 |
|
|
|
|
|
4.875% Senior Notes due 2026
|
400,000 |
|
|
400,000 |
|
4.625% Senior Notes due 2027
|
500,000 |
|
|
500,000 |
|
4.25% Senior Notes due 2028
|
500,000 |
|
|
— |
|
Securitization program, at a rate of 0.93% at June 28,
2020
|
75,000 |
|
|
50,000 |
|
|
2,433,000 |
|
|
1,923,000 |
|
Less: Unamortized debt issuance costs |
(21,209) |
|
|
(14,057) |
|
|
2,411,791 |
|
|
1,908,943 |
|
Current borrowings |
(83,000) |
|
|
(50,000) |
|
|
|
|
|
Long-term borrowings |
$ |
2,328,791 |
|
|
$ |
1,858,943 |
|
4.25% Senior Notes due 2028
On May 27, 2020, we issued $500.0 million of 4.25% Senior
Notes due 2028 (the "2028 Notes"). We will pay interest on the 2028
Notes semi-annually on June 1 and December 1, commencing on
December 1, 2020, at a rate of 4.25% per year. The 2028 Notes
mature on June 1, 2028 unless earlier redeemed at our option, as
described below, or purchased at the holder’s option under
specified circumstances following a Change of Control or Event
of
TELEFLEX INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -
(Continued)
(Unaudited)
Default (each as defined in the indenture related to the 2028
Notes), coupled with a downgrade in the ratings of the 2028 Notes,
or upon our election to exercise its optional redemption rights, as
described below. We incurred transaction fees of $8.4 million,
including underwriters’ discounts and commissions, in connection
with the offering of the 2028 Notes, which were recorded on the
consolidated balance sheet as a reduction to long-term borrowings
and are being amortized over the term of the 2028 Notes. We used
the net proceeds from the offering to repay borrowings under our
revolving credit facility.
Our obligations under the 2028 Notes are fully and unconditionally
guaranteed, jointly and severally, by each of our existing and
future 100% owned domestic subsidiaries that is a guarantor or
other obligor under the Credit Agreement and by certain of our
other 100% owned domestic subsidiaries.
At any time on or after June 1, 2023, we may, on one or more
occasions, redeem some or all of the 2028 Notes at a redemption
price of 102.125% of the principal amount of the 2028 Notes subject
to redemption, declining, in annual increments of 1.0625%, to 100%
of the principal amount on June 1, 2025, plus accrued and unpaid
interest. In addition, at any time prior to June 1, 2023, we may,
on one or more occasions, redeem some or all of the 2028 Notes at a
redemption price equal to 100% of the principal amount of the 2028
Notes redeemed, plus a “make-whole” premium and any accrued and
unpaid interest. The “make-whole” premium is the greater of (a)
1.0% of the principal amount of the 2028 Notes subject to
redemption or (b) the excess, if any, over the principal amount of
the 2028 Notes, of the present value, on the redemption date, of
the sum of (i) the June 1, 2023, optional redemption price plus
(ii) all required interest payments on the 2028 Notes through June
1, 2023, (other than accrued and unpaid interest to the redemption
date), generally computed using a discount rate equal to the yield
to maturity of U.S. Treasury securities with a constant maturity
for the period most nearly equal to the period from the redemption
date to June 1, 2023 (unless the period is less than one year, in
which case the weekly average yield on traded U.S. Treasury
securities adjusted to a constant maturity of one year will be
used), plus 50 basis points.
In addition, at any time prior to June 1, 2023, we may, on one or
more occasions, redeem up to 40% of the aggregate principal amount
of the 2028 Notes, using the proceeds of specified types of our
equity offerings and subject to specified conditions, at a
redemption price equal to 104.25% of the principal amount of the
Notes redeemed, plus accrued and unpaid interest.
The indenture relating to the 2028 Notes contains covenants that,
among other things, limit or restrict our ability, and the ability
of our subsidiaries, to create liens; merge, consolidate, sell or
otherwise dispose of all or substantially all of our assets; and
enter into sale leaseback transactions.
Securitization program
On March 30, 2020, we amended our accounts receivable
securitization facility to increase the maximum available capacity
from $50 million to $75 million.
Note 9 — Financial instruments
Foreign currency forward contracts
We use derivative instruments for risk management purposes. Foreign
currency forward contracts designated as cash flow hedges are used
to manage foreign currency transaction exposure. Foreign currency
forward contracts not designated as hedges for accounting purposes
are used to manage exposure related to near term foreign currency
denominated monetary assets and liabilities. We enter into the
non-designated foreign currency forward contracts for periods
consistent with our currency translation exposures, which generally
approximate one month. For the three and six
months ended June 28, 2020 we recognized a loss of $0.8
million and a gain of $0.8 million, respectively, related to
non-designated foreign currency forward contract. For the three and
six months ended June 30, 2019 we recognized a gain of $1.5
million and a loss of $1.6 million, respectively, related to
non-designated foreign currency forward contracts.
The total notional amount for all open foreign currency forward
contracts designated as cash flow hedges as of June 28, 2020
and December 31, 2019 was $126.6 million and $132.0 million,
respectively. The total notional amount for all open non-designated
foreign currency forward contracts as of June 28, 2020 and
December 31, 2019
TELEFLEX INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -
(Continued)
(Unaudited)
was $153.3 million and $145.1 million, respectively. All open
foreign currency forward contracts as of June 28, 2020 have
durations of 12 months or less.
Cross-currency interest rate swaps
During 2019, we entered into cross-currency swap agreements with
five different financial institution counterparties to hedge
against the effect of variability in the U.S. dollar to euro
exchange rate. Under the terms of the cross-currency swap
agreements, we have notionally exchanged $250 million at an annual
interest rate of 4.875% for €219.2 million at an annual interest
rate of 2.4595%. The swap agreements are designed as net investment
hedges and expire on March 4, 2024.
During 2018, we entered into cross-currency swap agreements with
six different financial institution counterparties to hedge against
the effect of variability in the U.S. dollar to euro exchange rate.
Under the terms of the cross-currency swap agreements, we have
notionally exchanged $500 million at an annual interest rate of
4.625% for €433.9 million at an annual interest rate of 1.942%. The
swap agreements are designed as net investment hedges and expire on
October 4, 2023.
The swap agreements described above require an exchange of the
notional amounts upon expiration or earlier termination of the
agreements. We and the counterparties have agreed to effect the
exchange through a net settlement.
The cross-currency swaps are marked to market at each reporting
date and any changes in fair value are recognized as a component of
accumulated other comprehensive income (loss) ("AOCI"). For the
three and six months ended June 28, 2020, we recognized
foreign exchange a loss of $7.4 million and a gain of $17.6
million, respectively, within AOCI related to the cross-currency
swaps. For the three and six months ended June 30, 2019, we
recognized foreign exchange loss of $0.7 million and gain of
$9.8 million, respectively, within AOCI related to the
cross-currency swaps. For the three and six months ended
June 28, 2020, we recognized $4.9 million and
$9.8 million, respectively, in interest benefit related to the
cross-currency swaps. For the three and six months ended
June 30, 2019, we recognized $4.9 million and
$8.8 million, respectively, in interest benefit related to the
cross-currency swaps.
Balance sheet presentation
The following table presents the locations in the condensed
consolidated balance sheet and fair value of derivative financial
instruments as of June 28, 2020 and December 31,
2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
June 28, 2020 |
|
December 31, 2019 |
|
|
|
|
|
(Dollars in thousands) |
|
|
Asset derivatives: |
|
|
|
Designated foreign currency forward contracts |
$ |
995 |
|
|
$ |
1,659 |
|
Non-designated foreign currency forward contracts |
105 |
|
|
192 |
|
Cross-currency interest rate swaps |
21,652 |
|
|
21,575 |
|
Prepaid expenses and other current assets |
22,752 |
|
|
23,426 |
|
Cross-currency interest rate swaps |
35,701 |
|
|
13,066 |
|
Other assets |
35,701 |
|
|
13,066 |
|
Total asset derivatives |
$ |
58,453 |
|
|
$ |
36,492 |
|
Liability derivatives: |
|
|
|
Designated foreign currency forward contracts |
$ |
3,391 |
|
|
$ |
1,285 |
|
Non-designated foreign currency forward contracts |
187 |
|
|
102 |
|
Other current liabilities |
3,578 |
|
|
1,387 |
|
|
|
|
|
|
|
|
|
Total liability derivatives |
$ |
3,578 |
|
|
$ |
1,387 |
|
See Note 11 for information on the location and amount of gains and
losses attributable to derivatives that were reclassified from AOCI
to expense (income), net of tax.
TELEFLEX INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -
(Continued)
(Unaudited)
There was no ineffectiveness related to our cash flow hedges during
the three and six months ended June 28, 2020 and June 30,
2019.
Trade receivables
In the ordinary course of business, we grant non-interest bearing
trade credit to our customers on normal credit terms. In an effort
to reduce our credit risk, we (i) establish credit limits for all
of our customer relationships, (ii) perform ongoing credit
evaluations of our customers’ financial condition, (iii) monitor
the payment history and aging of our customers’ receivables, and
(iv) monitor open orders against an individual customer’s
outstanding receivable balance.
Our allowance for credit losses is maintained for trade accounts
receivable based on the expected collectability of accounts
receivable, after considering our historical collection experience,
the length of time an account is outstanding, the financial
position of the customer, information provided by credit rating
services in addition to new requirements under the accounting
guidance, effective January 1, 2020, that includes the
consideration of events or circumstances indicating historic
collection rates may not be indicative of future collectability,
for example, potential customer liquidity concerns resulting from
COVID-19, that may impact the collectability of our receivables as
well as our estimate of credit losses expected to be incurred over
the life of our receivables. To date, we have not experienced
significant payment defaults by, or identified other significant
collectability concerns with, our customers. The assumptions
utilized in our current estimates may change due to changes in
circumstances, additional future developments and the resolution of
other contingencies.
The allowance for credit losses as of June 28, 2020 and
December 31, 2019 was $11.6 million and $9.1 million,
respectively. The current portion of the allowance for credit
losses, which was $7.3 million and $5.3 million as of June 28,
2020 and December 31, 2019, respectively, was recognized as a
reduction of accounts receivable, net.
Note 10 — Fair value measurement
The following tables provide information regarding our financial
assets and liabilities measured at fair value on a recurring basis
as of June 28, 2020 and December 31, 2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total carrying value at
June 28, 2020
|
|
Quoted prices in active
markets (Level 1) |
|
Significant other
observable
Inputs (Level 2) |
|
Significant
unobservable
Inputs (Level 3) |
|
(Dollars in thousands) |
|
|
|
|
|
|
Investments in marketable securities |
$ |
10,557 |
|
|
$ |
10,557 |
|
|
$ |
— |
|
|
$ |
— |
|
Derivative assets |
58,453 |
|
|
— |
|
|
58,453 |
|
|
— |
|
Derivative liabilities |
3,578 |
|
|
— |
|
|
3,578 |
|
|
— |
|
Contingent consideration liabilities |
49,279 |
|
|
— |
|
|
— |
|
|
49,279 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total carrying
value at December 31, 2019 |
|
Quoted prices in active
markets (Level 1) |
|
Significant other
observable
Inputs (Level 2) |
|
Significant
unobservable
Inputs (Level 3) |
|
(Dollars in thousands) |
|
|
|
|
|
|
Investments in marketable securities |
$ |
10,926 |
|
|
$ |
10,926 |
|
|
$ |
— |
|
|
$ |
— |
|
Derivative assets |
36,492 |
|
|
— |
|
|
36,492 |
|
|
— |
|
Derivative liabilities |
1,387 |
|
|
— |
|
|
1,387 |
|
|
— |
|
Contingent consideration liabilities |
219,908 |
|
|
— |
|
|
— |
|
|
219,908 |
|
TELEFLEX INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -
(Continued)
(Unaudited)
Valuation Techniques
Our financial assets valued based upon Level 1 inputs are
comprised of investments in marketable securities held in trust,
which are available to satisfy benefit obligations under our
benefit plans and other arrangements. The investment assets of the
trust are valued using quoted market prices.
Our financial assets and liabilities valued based upon Level 2
inputs are comprised of foreign currency forward contracts and
cross-currency interest rate swap agreements. We use foreign
currency forwards and cross-currency interest rate swaps to manage
foreign currency transaction exposure, as well as exposure to
foreign currency denominated monetary assets and liabilities. We
measure the fair value of the foreign currency forwards and
cross-currency swaps by calculating the amount required to enter
into offsetting contracts with similar remaining maturities, based
on quoted market prices, and taking into account the
creditworthiness of the counterparties.
Our financial liabilities valued based upon Level 3 inputs
(inputs that are not observable in the market) are comprised of
contingent consideration arrangements pertaining to our
acquisitions, which are discussed immediately below.
Contingent consideration
Contingent consideration liabilities, which primarily consist of
payment obligations that are contingent upon the achievement of
revenue-based goals, but also can be based on other milestones such
as regulatory approvals, are remeasured to fair value each
reporting period using assumptions including estimated revenues
(based on internal operational budgets and long-range strategic
plans), discount rates, probability of payment and projected
payment dates.
We determine the fair value of the contingent consideration
liabilities related to the NeoTract and Essential Medical
acquisitions, which represent most of our contingent consideration
liabilities as of June 28, 2020 and December 31, 2019, using a
Monte Carlo simulation (which involves a simulation of future
revenues during the earn-out period using management's best
estimates). Increases in projected revenues, estimated cash flows
and probabilities of payment may result in significantly higher
fair value measurements; decreases in these items may have the
opposite effect. Increases in the discount rates in periods prior
to payment may result in significantly lower fair value
measurements and decreases in the discount rates may have the
opposite effect.
The table below provides additional information regarding the
valuation technique and inputs used in determining the fair value
of contingent consideration.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contingent Consideration Liability |
|
Valuation Technique |
|
Unobservable Input |
|
Range (Weighted average) |
Milestone-based payments |
|
|
|
|
|
|
|
|
Discounted cash flow |
|
Discount rate |
|
3.3% - 4.3% (3.7%)
|
|
|
|
|
Projected year of payment |
|
2021 - 2023 |
Revenue-based payments |
|
|
|
|
|
|
|
|
Monte Carlo simulation |
|
Revenue volatility |
|
19.5% - 24.2% (21.9%)
|
|
|
|
|
Risk free rate |
|
Cost of debt structure |
|
|
|
|
Projected year of payment |
|
2020 - 2022 |
|
|
|
|
|
|
|
|
|
Discounted cash flow |
|
Discount rate |
|
10.0%
|
|
|
|
|
Projected year of payment |
|
2020 - 2029 |
|
|
|
|
|
|
|
TELEFLEX INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -
(Continued)
(Unaudited)
The following table provides information regarding changes in the
contingent consideration liabilities during the six months ended
June 28, 2020:
|
|
|
|
|
|
|
Contingent consideration |
|
|
|
(Dollars in thousands) |
Balance - December 31, 2019
|
$ |
219,908 |
|
|
|
Payments
(1)
|
(140,718) |
|
Revaluations
(2)
|
(29,951) |
|
Translation adjustment
|
40 |
|
Balance - June 28, 2020
|
$ |
49,279 |
|
(1) Consists mainly of a $140.6 million payment associated
with our acquisition of NeoTract, Inc. resulting from the
achievement of a revenue-based goal for the period from January 1,
2019 to December 31, 2019.
(2) The decrease, which is included within selling, general and
administrative expenses, is mainly due to adverse financial
projections resulting from the COVID-19 pandemic.
Note 11 — Shareholders’ equity
Basic earnings per share is computed by dividing net income by the
weighted average number of common shares outstanding during the
period. Diluted earnings per share is computed in the same manner
except that the weighted average number of shares is increased to
include dilutive securities. The following table provides a
reconciliation of basic to diluted weighted average number of
common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
Six Months Ended |
|
|
|
June 28, 2020 |
|
June 30, 2019 |
|
June 28, 2020 |
|
June 30, 2019 |
|
(Shares in thousands) |
|
|
|
|
|
|
Basic |
46,442 |
|
|
46,172 |
|
|
46,412 |
|
|
46,111 |
|
Dilutive effect of share-based awards |
800 |
|
|
864 |
|
|
825 |
|
|
878 |
|
|
|
|
|
|
|
|
|
Diluted |
47,242 |
|
|
47,036 |
|
|
47,237 |
|
|
46,989 |
|
The weighted average number of shares that were antidilutive and
therefore excluded from the calculation of earnings per share were
0.2 million and 0.1 million for the three and six months ended
June 28, 2020, respectively, and 0.2 million for the
three and six months ended June 30, 2019.
The following tables provide information relating to the changes in
accumulated other comprehensive loss, net of tax, for the six
months ended June 28, 2020 and June 30,
2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flow Hedges |
|
Pension and Other Postretirement Benefit Plans |
|
Foreign Currency Translation Adjustment |
|
Accumulated Other Comprehensive (Loss) Income |
|
(Dollars in thousands) |
|
|
|
|
|
|
Balance as of December 31, 2019 |
$ |
735 |
|
|
$ |
(138,810) |
|
|
$ |
(206,317) |
|
|
$ |
(344,392) |
|
Other comprehensive (loss) income before
reclassifications |
(4,189) |
|
|
183 |
|
|
(545) |
|
|
(4,551) |
|
Amounts reclassified from accumulated other
comprehensive income |
(723) |
|
|
2,851 |
|
|
— |
|
|
2,128 |
|
Net current-period other comprehensive (loss) income |
(4,912) |
|
|
3,034 |
|
|
(545) |
|
|
(2,423) |
|
|
|
|
|
|
|
|
|
Balance as of June 28, 2020 |
$ |
(4,177) |
|
|
$ |
(135,776) |
|
|
$ |
(206,862) |
|
|
$ |
(346,815) |
|
TELEFLEX INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -
(Continued)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flow Hedges |
|
Pension and Other Postretirement Benefit Plans |
|
Foreign Currency Translation Adjustment |
|
Accumulated Other Comprehensive (Loss) Income |
|
(Dollars in thousands) |
|
|
|
|
|
|
Balance as of December 31, 2018 |
$ |
807 |
|
|
$ |
(131,380) |
|
|
$ |
(210,512) |
|
|
$ |
(341,085) |
|
Other comprehensive income (loss) before
reclassifications |
429 |
|
|
(13) |
|
|
12,332 |
|
|
12,748 |
|
Amounts reclassified from accumulated other
comprehensive loss |
(271) |
|
|
2,701 |
|
|
— |
|
|
2,430 |
|
Net current-period other comprehensive income |
158 |
|
|
2,688 |
|
|
12,332 |
|
|
15,178 |
|
|
|
|
|
|
|
|
|
Balance as of June 30, 2019 |
$ |
965 |
|
|
$ |
(128,692) |
|
|
$ |
(198,180) |
|
|
$ |
(325,907) |
|
The following table provides information relating to the location
in the statements of operations and amount of reclassifications of
losses/(gains) in accumulated other comprehensive (loss) income
into expense/(income), net of tax, for the three and six months
ended June 28, 2020 and June 30, 2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
Six Months Ended |
|
|
|
June 28, 2020 |
|
June 30, 2019 |
|
June 28, 2020 |
|
June 30, 2019 |
|
(Dollars in thousands) |
|
|
|
|
|
|
(Gains) losses on foreign exchange contracts: |
|
|
|
|
|
|
|
Cost of goods sold |
$ |
(685) |
|
|
$ |
(179) |
|
|
$ |
(751) |
|
|
$ |
(365) |
|
Total before tax |
(685) |
|
|
(179) |
|
|
(751) |
|
|
(365) |
|
Taxes |
19 |
|
|
71 |
|
|
28 |
|
|
94 |
|
Net of tax |
$ |
(666) |
|
|
$ |
(108) |
|
|
$ |
(723) |
|
|
$ |
(271) |
|
|