Condensed consolidating guarantor financial information

9 Months Ended

Sep. 29, 2019

Condensed Consolidated Guarantor Financial Information [Abstract]

Condensed consolidating guarantor financial information

The Company’s $250 million principal amount of 5.25% Senior Notes due 2024 (the “2024 Notes”), $400 million principal amount of 4.875% Senior Notes due 2026 (the “2026 Notes”) and $500 million principal amount of 4.625% Senior Notes due 2027 (the “2027 Notes," and collectively with the 2024 Notes and the 2026 Notes, the "Senior Notes") are issued by Teleflex Incorporated (the “Parent Company”), and payment of the Parent Company's obligations under the Senior Notes is guaranteed, jointly and severally, by certain of the Parent Company’s subsidiaries (each, a “Guarantor Subsidiary” and collectively, the “Guarantor Subsidiaries”). The 2024 Notes, 2026 Notes and 2027 Notes are guaranteed by the same Guarantor Subsidiaries. The guarantees are full and unconditional, subject to certain customary release provisions. Each Guarantor Subsidiary is directly or indirectly 100% owned by the Parent Company. The Company’s condensed consolidating statements of income and comprehensive income for the three and nine months ended September 29, 2019 and September 30, 2018, condensed consolidating balance sheets as of September 29, 2019 and December 31, 2018 and condensed consolidating statements of cash flows for the nine months ended September 29, 2019 and September 30, 2018, provide consolidated information for:


a.			Parent Company, the issuer of the guaranteed obligations;


b.			Guarantor Subsidiaries, on a combined basis;


c.			Non-Guarantor Subsidiaries (i.e., those subsidiaries of the Parent Company that have not guaranteed payment of the Senior Notes), on a combined basis; and


d.			Parent Company and its subsidiaries on a consolidated basis.

In connection with the Company's entry into the Credit Agreement on April 5, 2019 (as described in Note 9), a subsidiary of the Company (the "Released Subsidiary") that was a guarantor of Parent Company’s obligations under the previously outstanding credit agreement and under the Senior Notes was removed as a guarantor of Parent Company’s obligations under the Credit Agreement. Under the indentures governing the Senior Notes, the removal of the Released Subsidiary as a guarantor under the Credit Agreement automatically resulted in the release of the Released Subsidiary from its guarantees of the Senior Notes. Therefore, as of the date of the Credit Agreement, the Released Subsidiary is no longer a Guarantor Subsidiary. The condensed consolidating statements of income and comprehensive income for the three and nine months ended September 30, 2018, the condensed consolidating balance sheet as of December 31, 2018 and the condensed consolidating statement of cash flows for the nine months ended September 30, 2018 have been restated to exclude the Released Subsidiary from the information relating to the Guarantor Subsidiaries and to include the Released Subsidiary in the information relating to Non-Guarantor Subsidiaries.

The same accounting policies as described in Note 1 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 are used by the Parent Company and each of its subsidiaries in connection with the condensed consolidating financial information, except for the use of the equity method of accounting to reflect ownership interests in subsidiaries, which are eliminated upon consolidation.

Consolidating entries and eliminations in the following condensed consolidated financial statements represent adjustments to (a) eliminate intercompany transactions between or among the Parent Company, the Guarantor Subsidiaries and the Non-Guarantor Subsidiaries, (b) eliminate the investments in subsidiaries and (c) record consolidating entries.

TELEFLEX INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF INCOME AND COMPREHENSIVE INCOME



	Three Months Ended September 29, 2019
	Parent Company		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Condensed Consolidated
	(Dollars in thousands)
Net revenues	$	—	$	449,753	$	338,889	$	(140,323)	$	648,319
Cost of goods sold	—		290,466		112,090		(129,917)		272,639
Gross profit	—		159,287		226,799		(10,406)		375,680
Selling, general and administrative expenses	14,919		140,053		75,421		(497)		229,896
Research and development expenses	334		20,321		7,329		—		27,984
Restructuring and impairment charges	—		661		607		—		1,268
Gain on sale of assets	—		—		(1,089)		—		(1,089)
(Loss) income from continuing operations before interest and taxes	(15,253)		(1,748)		144,531		(9,909)		117,621
Interest, net	25,367		(20,911)		14,619		—		19,075

(Loss) income from continuing operations before taxes	(40,620)		19,163		129,912		(9,909)		98,546
(Benefit) taxes on (loss) income from continuing operations	(13,374)		4,393		(119,578)		(1,824)		(130,383)
Equity in net income of consolidated subsidiaries	256,175		229,630		—		(485,805)		—
Income from continuing operations	228,929		244,400		249,490		(493,890)		228,929
Operating loss from discontinued operations	(9)		—		—		—		(9)
Tax benefit on loss from discontinued operations	(9)		—		—		—		(9)
Income from discontinued operations	—		—		—		—		—
Net income	228,929		244,400		249,490		(493,890)		228,929


Other comprehensive income	(38,594)		(58,995)		(62,882)		121,877		(38,594)
Comprehensive income	$	190,335	$	185,405	$	186,608	$	(372,013)	$	190,335


	Three Months Ended September 30, 2018
	Parent Company		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Condensed Consolidated
	(Dollars in thousands)
Net revenues	$	—	$	398,961	$	322,010	$	(111,299)	$	609,672
Cost of goods sold	—		232,209		146,301		(111,411)		267,099
Gross profit	—		166,752		175,709		112		342,573
Selling, general and administrative expenses	11,347		130,769		72,800		(22)		214,894
Research and development expenses	378		19,482		6,505		—		26,365
Restructuring and impairment charges	—		17,128		2,081		—		19,209

(Loss) income from continuing operations before interest and taxes	(11,725)		(627)		94,323		134		82,105
Interest, net	25,191		(15,391)		17,051		—		26,851


(Loss) income from continuing operations before taxes	(36,916)		14,764		77,272		134		55,254
(Benefit) taxes on (loss) income from continuing operations	(13,449)		1,765		10,385		13		(1,286)
Equity in net income of consolidated subsidiaries	80,007		56,818		372		(137,197)		—
Income from continuing operations	56,540		69,817		67,259		(137,076)		56,540
Operating loss from discontinued operations	(83)		—		—		—		(83)
Tax benefit on loss from discontinued operations	(67)		—		—		—		(67)
Income from discontinued operations	(16)		—		—		—		(16)
Net income	56,524		69,817		67,259		(137,076)		56,524


Other comprehensive loss	17,253		14,107		16,947		(31,054)		17,253
Comprehensive income	$	73,777	$	83,924	$	84,206	$	(168,130)	$	73,777


	Nine Months Ended September 29, 2019
	Parent Company		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Condensed Consolidated
	(Dollars in thousands)
Net revenues	$	—	$	1,304,385	$	987,478	$	(377,453)	$	1,914,410
Cost of goods sold	—		769,639		411,370		(359,945)		821,064
Gross profit	—		534,746		576,108		(17,508)		1,093,346
Selling, general and administrative expenses	45,398		413,380		235,402		(405)		693,775
Research and development expenses	1,414		60,773		20,542		—		82,729
Restructuring and impairment charges	—		6,742		13,606		—		20,348
Gain on sale of assets	—		—		(3,828)		—		(3,828)
(Loss) income from continuing operations before interest and taxes	(46,812)		53,851		310,386		(17,103)		300,322
Interest, net	58,782		(42,756)		45,688		—		61,714

(Loss) income from continuing operations before taxes	(105,594)		96,607		264,698		(17,103)		238,608
(Benefit) taxes on (loss) income from continuing operations	(41,765)		31,643		(102,388)		(3,057)		(115,567)
Equity in net income of consolidated subsidiaries	418,004		330,627		—		(748,631)		—
Income from continuing operations	354,175		395,591		367,086		(762,677)		354,175
Operating loss from discontinued operations	(1,291)		—		—		—		(1,291)
Tax benefit on loss from discontinued operations	(317)		—		—		—		(317)
Loss from discontinued operations	(974)		—		—		—		(974)
Net income	353,201		395,591		367,086		(762,677)		353,201


Other comprehensive income	(23,416)		(43,389)		(48,419)		91,808		(23,416)
Comprehensive income	$	329,785	$	352,202	$	318,667	$	(670,869)	$	329,785


	Nine Months Ended September 30, 2018
	Parent Company		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Condensed Consolidated
	(Dollars in thousands)
Net revenues	$	—	$	1,169,684	$	968,298	$	(331,214)	$	1,806,768
Cost of goods sold	—		681,300		431,841		(324,994)		788,147
Gross profit	—		488,384		536,457		(6,220)		1,018,621
Selling, general and administrative expenses	32,958		400,987		226,555		(352)		660,148
Research and development expenses	1,094		57,668		19,648		—		78,410
Restructuring and impairment charges	—		20,581		57,044		—		77,625

(Loss) income from continuing operations before interest and taxes	(34,052)		9,148		233,210		(5,868)		202,438
Interest, net	72,120		(41,406)		48,273		—		78,987


(Loss) income from continuing operations before taxes	(106,172)		50,554		184,937		(5,868)		123,451
(Benefit) taxes on (loss) income from continuing operations	(39,859)		23,233		32,248		(1,090)		14,532
Equity in net income of consolidated subsidiaries	176,511		135,425		1,007		(312,943)		—
Income from continuing operations	110,198		162,746		153,696		(317,721)		108,919
Operating (loss) income from discontinued operations	(33)		—		1,279		—		1,246
Tax benefit on income (loss) from discontinued operations	(47)		—		—		—		(47)
Income from discontinued operations	14		—		1,279		—		1,293
Net income	110,212		162,746		154,975		(317,721)		110,212


Other comprehensive loss	(24,076)		(30,691)		(26,551)		57,242		(24,076)
Comprehensive income	$	86,136	$	132,055	$	128,424	$	(260,479)	$	86,136

TELEFLEX INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEETS


	September 29, 2019
	Parent Company		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Condensed Consolidated
	(Dollars in thousands)
ASSETS
Current assets
Cash and cash equivalents	$	34,196	$	518	$	222,830	$	—	$	257,544
Accounts receivable, net	3,228		69,322		318,375		5,738		396,663
Accounts receivable from consolidated subsidiaries	33,739		469,533		511,784		(1,015,056)		—
Inventories, net	—		296,136		224,660		(48,202)		472,594
Prepaid expenses and other current assets	40,513		10,387		26,518		4,113		81,531
Prepaid taxes	19,518		—		9,760		—		29,278

Total current assets	131,194		845,896		1,313,927		(1,053,407)		1,237,610
Property, plant and equipment, net	2,889		246,496		180,183		—		429,568
Operating lease assets	13,136		68,830		33,227		—		115,193
Goodwill	—		1,255,976		975,354		—		2,231,330
Intangibles assets, net	75		1,214,148		961,450		—		2,175,673
Investments in affiliates	5,824,869		2,138,760		924,448		(8,888,077)		—
Deferred tax assets	6,850		—		5,298		(9,196)		2,952
Notes receivable and other amounts due from consolidated subsidiaries	1,959,149		3,407,412		287,571		(5,654,132)		—
Other assets	42,666		12,017		10,173		—		64,856
Total assets	$	7,980,828	$	9,189,535	$	4,691,631	$	(15,604,812)	$	6,257,182
LIABILITIES AND EQUITY
Current liabilities
Current borrowings	$	—	$	—	$	50,000	$	—	$	50,000
Accounts payable	3,004		61,106		36,520		—		100,630
Accounts payable to consolidated subsidiaries	284,386		428,967		301,703		(1,015,056)		—
Accrued expenses	6,287		33,398		51,884		—		91,569
Current portion of contingent consideration	—		124,789		10,379		—		135,168
Payroll and benefit-related liabilities	19,772		35,171		44,888		—		99,831
Accrued interest	19,658		—		28		—		19,686
Income taxes payable	—		—		6,356		(3,057)		3,299
Other current liabilities	4,049		14,849		11,282		—		30,180
Total current liabilities	337,156		698,280		513,040		(1,018,113)		530,363
Long-term borrowings	1,949,068		—		—		—		1,949,068
Deferred tax liabilities	—		345,670		132,471		(9,196)		468,945
Pension and postretirement benefit liabilities	30,594		25,887		15,535		—		72,016
Noncurrent liability for uncertain tax positions	1,162		7,382		2,540		—		11,084
Notes payable and other amounts due to consolidated subsidiaries	2,673,870		1,860,819		1,119,443		(5,654,132)		—
Noncurrent contingent consideration	—		44,137		27,575		—		71,712
Noncurrent operating lease liabilities	10,616		68,167		25,353		—		104,136
Other liabilities	125,386		9,619		61,877		—		196,882
Total liabilities	5,127,852		3,059,961		1,897,834		(6,681,441)		3,404,206


Total shareholders' equity	2,852,976		6,129,574		2,793,797		(8,923,371)		2,852,976


Total liabilities and shareholders' equity	$	7,980,828	$	9,189,535	$	4,691,631	$	(15,604,812)	$	6,257,182


	December 31, 2018
	Parent Company		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Condensed Consolidated
	(Dollars in thousands)
ASSETS
Current assets
Cash and cash equivalents	$	49,523	$	1,701	$	305,937	$	—	$	357,161
Accounts receivable, net	5,885		54,013		301,054		5,334		366,286
Accounts receivable from consolidated subsidiaries	32,036		1,122,107		366,033		(1,520,176)		—
Inventories, net	—		266,073		192,659		(30,954)		427,778
Prepaid expenses and other current assets	30,458		9,673		28,237		4,113		72,481
Prepaid taxes	7,029		—		5,434		—		12,463


Total current assets	124,931		1,453,567		1,199,354		(1,541,683)		1,236,169
Property, plant and equipment, net	3,385		253,037		176,344		—		432,766
Goodwill	—		1,254,848		991,731		—		2,246,579
Intangibles assets, net	90		1,277,462		1,047,500		—		2,325,052
Investments in affiliates	5,984,566		1,625,464		837,899		(8,447,929)		—
Deferred tax assets	—		—		4,822		(2,376)		2,446
Notes receivable and other amounts due from consolidated subsidiaries	2,337,737		3,347,815		13,242		(5,698,794)		—
Other assets	17,180		5,776		12,023		—		34,979
Total assets	$	8,467,889	$	9,217,969	$	4,282,915	$	(15,690,782)	$	6,277,991
LIABILITIES AND EQUITY
Current liabilities
Current borrowings	$	36,625	$	—	$	50,000	$	—	$	86,625
Accounts payable	3,448		62,764		40,497		—		106,709
Accounts payable to consolidated subsidiaries	1,058,008		292,093		170,075		(1,520,176)		—
Accrued expenses	5,659		41,873		50,019		—		97,551
Current portion of contingent consideration	—		106,514		30,363		—		136,877
Payroll and benefit-related liabilities	17,156		44,982		42,532		—		104,670
Accrued interest	5,995		—		36		—		6,031
Income taxes payable	—		—		5,943		—		5,943
Other current liabilities	843		34,916		2,291		—		38,050
Total current liabilities	1,127,734		583,142		391,756		(1,520,176)		582,456
Long-term borrowings	2,072,200		—		—		—		2,072,200
Deferred tax liabilities	87,671		257,522		265,404		(2,376)		608,221
Pension and postretirement benefit liabilities	49,290		27,454		16,170		—		92,914
Noncurrent liability for uncertain tax positions	801		7,212		2,705		—		10,718
Notes payable and other amounts due to consolidated subsidiaries	2,451,784		2,222,580		1,024,430		(5,698,794)		—
Noncurrent contingent consideration	—		131,563		35,807		—		167,370
Other liabilities	138,431		8,204		57,499				204,134
Total liabilities	5,927,911		3,237,677		1,793,771		(7,221,346)		3,738,013


Total shareholders' equity	2,539,978		5,980,292		2,489,144		(8,469,436)		2,539,978


Total liabilities and shareholders' equity	$	8,467,889	$	9,217,969	$	4,282,915	$	(15,690,782)	$	6,277,991

TELEFLEX INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS


	Nine Months Ended September 29, 2019
	Parent Company		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Condensed Consolidated
	(Dollars in thousands)
Net cash (used in) provided by operating activities from continuing operations	$	(72,369)	$	342,912	$	272,115	$	(253,491)	$	289,167
Cash flows from investing activities of continuing operations:
Expenditures for property, plant and equipment	(460)		(57,131)		(26,206)		—		(83,797)
Proceeds from sale of assets and investments	2,362		2,046		1,089		(2,362)		3,135
Payments for businesses and intangibles acquired, net of cash acquired	—		(1,025)		(240)		—		(1,265)
Net interest proceeds on swaps designated as net investment hedges	8,330		—		—		—		8,330
Investments in affiliates	—		(146)		—		146		—
Net cash provided by (used in) investing activities from continuing operations	10,232		(56,256)		(25,357)		(2,216)		(73,597)
Cash flows from financing activities of continuing operations:
Proceeds from new borrowings	25,000		—		—		—		25,000
Reduction in borrowings	(185,500)		—		—		—		(185,500)
Debt extinguishment, issuance and amendment fees	(4,964)		—		—		—		(4,964)
Net proceeds from share based compensation plans and the related tax impacts	14,014		—		—		—		14,014

Payments for contingent consideration	—		(15,122)		(96,884)		—		(112,006)
Proceeds from issuance of shares	—		—		146		(146)		—

Dividends paid	(47,071)		—		—		—		(47,071)
Intercompany transactions	242,049		(272,773)		28,362		2,362		—
Intercompany dividends paid	—		—		(253,491)		253,491		—
Net cash provided by (used in) financing activities from continuing operations	43,528		(287,895)		(321,867)		255,707		(310,527)
Cash flows from discontinued operations:
Net cash provided by (used in) operating activities	3,282		—		(631)		—		2,651
Net cash provided by (used in) discontinued operations	3,282		—		(631)		—		2,651
Effect of exchange rate changes on cash and cash equivalents	—		—		(7,311)		—		(7,311)
Net (decrease) increase in cash and cash equivalents	(15,327)		(1,239)		(83,051)		—		(99,617)
Cash and cash equivalents at the beginning of the period	49,523		1,757		305,881		—		357,161
Cash and cash equivalents at the end of the period	$	34,196	$	518	$	222,830	$	—	$	257,544


	Nine Months Ended September 30, 2018
	Parent Company		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Condensed Consolidated
	(Dollars in thousands)
Net cash (used in) provided by operating activities from continuing operations	$	(202,209)	$	321,389	$	329,390	$	(145,626)	$	302,944
Cash flows from investing activities of continuing operations:
Expenditures for property, plant and equipment	(1,524)		(23,686)		(30,541)		—		(55,751)
Proceeds from sale of assets	28,239		—		—		(28,239)		—
Payments for businesses and intangibles acquired, net of cash acquired	(100)		—		(22,450)		—		(22,550)


Net cash provided by (used in) investing activities from continuing operations	26,615		(23,686)		(52,991)		(28,239)		(78,301)
Cash flows from financing activities of continuing operations:

Reduction in borrowings	(98,500)		—		—		—		(98,500)
Debt extinguishment, issuance and amendment fees	(188)		—		—		—		(188)
Net proceeds from share based compensation plans and the related tax impacts	18,666		—		—		—		18,666

Payments for contingent consideration	—		(10,748)		(62,404)		—		(73,152)


Dividends paid	(46,526)		—		—		—		(46,526)
Intercompany transactions	312,806		(294,600)		(46,445)		28,239		—
Intercompany dividends paid	—		—		(145,626)		145,626		—
Net cash provided by (used in) financing activities from continuing operations	186,258		(305,348)		(254,475)		173,865		(199,700)
Cash flows from discontinued operations:
Net cash used in operating activities	(701)		—		—		—		(701)
Net cash used in discontinued operations	(701)		—		—		—		(701)
Effect of exchange rate changes on cash and cash equivalents	—		—		(1,524)		—		(1,524)
Net increase (decrease) in cash and cash equivalents	9,963		(7,645)		20,400		—		22,718
Cash and cash equivalents at the beginning of the period	37,803		8,933		286,822		—		333,558
Cash and cash equivalents at the end of the period	$	47,766	$	1,288	$	307,222	$	—	$	356,276