Condensed consolidating guarantor financial information

6 Months Ended

Jun. 30, 2019

Condensed Consolidated Guarantor Financial Information [Abstract]

Condensed consolidating guarantor financial information

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 are 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 six months ended June 30, 2019 and July 1, 2018, condensed consolidating balance sheets as of June 30, 2019 and December 31, 2018 and condensed consolidating statements of cash flows for the six months ended June 30, 2019 and July 1, 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 six months ended July 1, 2018, the condensed consolidating balance sheet as of December 31, 2018 and the condensed consolidating statement of cash flows for the six months ended July 1, 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 June 30, 2019
	Parent Company			Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Eliminations			Condensed Consolidated
	(Dollars in thousands)
Net revenues	$	—		$	439,489		$	327,596	$	(114,578	)	$	652,507
Cost of goods sold	—			244,956			151,423		(116,796		)	279,583
Gross profit	—			194,533			176,173		2,218			372,924
Selling, general and administrative expenses	14,312			141,628			80,512		(266		)	236,186
Research and development expenses	596			20,331			6,668		—			27,595
Restructuring and impairment charges	—			108			1,577		—			1,685
(Loss) income from continuing operations before interest and taxes	(14,908		)	32,466			87,416		2,484			107,458
Interest, net	29,350			(23,439		)	14,375		—			20,286
(Loss) income from continuing operations before taxes	(44,258		)	55,905			73,041		2,484			87,172
(Benefit) taxes on (loss) income from continuing operations	(19,519		)	15,681			7,480		202			3,844
Equity in net income of consolidated subsidiaries	108,067			57,951			—		(166,018		)	—
Income from continuing operations	83,328			98,175			65,561		(163,736		)	83,328
Operating income from discontinued operations	61			—			—		—			61
Tax on income from discontinued operations	14			—			—		—			14
Income from discontinued operations	47			—			—		—			47
Net income	83,375			98,175			65,561		(163,736		)	83,375
Other comprehensive income	14,782			17,107			19,457		(36,564		)	14,782
Comprehensive income	$	98,157		$	115,282		$	85,018	$	(200,300	)	$	98,157

	Three Months Ended July 1, 2018
	Parent Company			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Condensed Consolidated
	(Dollars in thousands)
Net revenues	$	—		$	391,304		$	326,279		$	(107,717	)	$	609,866
Cost of goods sold	—			231,487			143,532			(109,931		)	265,088
Gross profit	—			159,817			182,747			2,214			344,778
Selling, general and administrative expenses	12,430			139,549			77,739			199			229,917
Research and development expenses	489			18,818			6,711			—			26,018
Restructuring and impairment charges	—			2,545			52,808			—			55,353
(Loss) income from continuing operations before interest and taxes	(12,919		)	(1,095		)	45,489			2,015			33,490
Interest, net	24,788			(13,966		)	15,644			—			26,466
(Loss) income from continuing operations before taxes	(37,707		)	12,871			29,845			2,015			7,024
(Benefit) taxes on (loss) income from continuing operations	(13,218		)	11,272			11,459			63			9,576
Equity in net income of consolidated subsidiaries	21,937			13,183			342			(35,462		)	—
(Loss) income from continuing operations	(2,552		)	14,782			18,728			(33,510		)	(2,552		)
Operating income from discontinued operations	94			—			—			—			94
Tax on income from discontinued operations	38			—			—			—			38
Income from discontinued operations	56			—			—			—			56
Net (loss) income	(2,496		)	14,782			18,728			(33,510		)	(2,496		)
Other comprehensive loss	(124,019		)	(114,917		)	(130,725		)	245,642			(124,019		)
Comprehensive loss	$	(126,515	)	$	(100,135	)	$	(111,997	)	$	212,132		$	(126,515	)

	Six Months Ended June 30, 2019
	Parent Company			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Condensed Consolidated
	(Dollars in thousands)
Net revenues	$	—		$	854,632		$	648,589		$	(237,130	)	$	1,266,091
Cost of goods sold	—			479,173			299,280			(230,028		)	548,425
Gross profit	—			375,459			349,309			(7,102		)	717,666
Selling, general and administrative expenses	30,479			273,327			159,981			92			463,879
Research and development expenses	1,080			40,452			13,213			—			54,745
Restructuring and impairment charges	—			6,081			12,999			—			19,080
Gain on sale of assets	—			—			(2,739		)	—			(2,739		)
(Loss) income from continuing operations before interest and taxes	(31,559		)	55,599			165,855			(7,194		)	182,701
Interest, net	33,415			(21,845		)	31,069			—			42,639
(Loss) income from continuing operations before taxes	(64,974		)	77,444			134,786			(7,194		)	140,062
(Benefit) taxes on (loss) income from continuing operations	(28,391		)	27,250			17,190			(1,233		)	14,816
Equity in net income of consolidated subsidiaries	161,829			100,997			—			(262,826		)	—
Income from continuing operations	125,246			151,191			117,596			(268,787		)	125,246
Operating loss from discontinued operations	(1,282		)	—			—			—			(1,282		)
Tax benefit on loss from discontinued operations	(308		)	—			—			—			(308		)
Loss from discontinued operations	(974		)	—			—			—			(974		)
Net income	124,272			151,191			117,596			(268,787		)	124,272
Other comprehensive income	15,178			15,606			14,463			(30,069		)	15,178
Comprehensive income	$	139,450		$	166,797		$	132,059		$	(298,856	)	$	139,450

	Six Months Ended July 1, 2018
	Parent Company			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Condensed Consolidated
	(Dollars in thousands)
Net revenues	$	—		$	770,723		$	646,288		$	(219,915	)	$	1,197,096
Cost of goods sold	—			449,091			285,540			(213,583		)	521,048
Gross profit	—			321,632			360,748			(6,332		)	676,048
Selling, general and administrative expenses	21,611			270,218			153,755			(330		)	445,254
Research and development expenses	716			38,186			13,143			—			52,045
Restructuring and impairment charges	—			3,453			54,963			—			58,416
(Loss) income from continuing operations before interest and taxes	(22,327		)	9,775			138,887			(6,002		)	120,333
Interest, net	46,929			(26,015		)	31,222			—			52,136
(Loss) income from continuing operations before taxes	(69,256		)	35,790			107,665			(6,002		)	68,197
(Benefit) taxes on (loss) income from continuing operations	(26,410		)	21,468			21,863			(1,103		)	15,818
Equity in net income of consolidated subsidiaries	96,504			78,607			635			(175,746		)	—
Income from continuing operations	53,658			92,929			86,437			(180,645		)	52,379
Operating income from discontinued operations	50			—			1,279			—			1,329
Taxes on income from discontinued operations	20			—			—			—			20
Income from discontinued operations	30			—			1,279			—			1,309
Net income	53,688			92,929			87,716			(180,645		)	53,688
Other comprehensive loss	(41,329		)	(44,798		)	(43,498		)	88,296			(41,329		)
Comprehensive income	$	12,359		$	48,131		$	44,218		$	(92,349	)	$	12,359

TELEFLEX INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEETS

 

	June 30, 2019
	Parent Company		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Condensed Consolidated
	(Dollars in thousands)
ASSETS
Current assets
Cash and cash equivalents	$	29,891	$	3,540	$	270,465	$	—		$	303,896
Accounts receivable, net	1,779		62,569		312,552		5,242			382,142
Accounts receivable from consolidated subsidiaries	32,698		353,336		407,860		(793,894		)	—
Inventories, net	—		276,761		222,603		(38,044		)	461,320
Prepaid expenses and other current assets	36,874		9,477		28,013		4,113			78,477
Prepaid taxes	11,489		—		7,817		—			19,306
Total current assets	112,731		705,683		1,249,310		(822,583		)	1,245,141
Property, plant and equipment, net	3,098		239,415		182,962		—			425,475
Operating lease assets	13,912		59,711		33,920		—			107,543
Goodwill	—		1,255,536		994,683		—			2,250,219
Intangibles assets, net	80		1,235,058		1,007,129		—			2,242,267
Investments in affiliates	5,632,043		2,127,743		924,450		(8,684,236		)	—
Deferred tax assets	14,543		—		5,440		(16,927		)	3,056
Notes receivable and other amounts due from consolidated subsidiaries	1,892,369		3,192,420		287,713		(5,372,502		)	—
Other assets	19,039		11,802		9,868		—			40,709
Total assets	$	7,687,815	$	8,827,368	$	4,695,475	$	(14,896,248	)	$	6,314,410
LIABILITIES AND EQUITY
Current liabilities
Current borrowings	$	—	$	—	$	50,000	$	—		$	50,000
Accounts payable	3,972		62,664		41,423		—			108,059
Accounts payable to consolidated subsidiaries	259,906		328,596		205,392		(793,894		)	—
Accrued expenses	6,376		33,982		47,340		—			87,698
Current portion of contingent consideration	—		112,329		7,377		—			119,706
Payroll and benefit-related liabilities	16,365		31,763		40,760		—			88,888
Accrued interest	5,978		—		31		—			6,009
Income taxes payable	—		—		5,681		(1,233		)	4,448
Other current liabilities	3,988		13,561		11,535		—			29,084
Total current liabilities	296,585		582,895		409,539		(795,127		)	493,892
Long-term borrowings	2,081,372		—		—		—			2,081,372
Deferred tax liabilities	—		354,208		267,575		(16,927		)	604,856
Pension and postretirement benefit liabilities	43,250		26,800		16,099		—			86,149
Noncurrent liability for uncertain tax positions	1,042		7,329		2,658		—			11,029
Notes payable and other amounts due to consolidated subsidiaries	2,458,281		1,800,913		1,113,308		(5,372,502		)	—
Noncurrent contingent consideration	—		42,647		29,318		—			71,965
Noncurrent operating lease liabilities	11,421		59,065		26,016		—			96,502
Other liabilities	131,020		9,341		63,440		—			203,801
Total liabilities	5,022,971		2,883,198		1,927,953		(6,184,556		)	3,649,566
Total shareholders' equity	2,664,844		5,944,170		2,767,522		(8,711,692		)	2,664,844
Total liabilities and shareholders' equity	$	7,687,815	$	8,827,368	$	4,695,475	$	(14,896,248	)	$	6,314,410

	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

	Six Months Ended June 30, 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	$	(60,841	)	$	180,717		$	129,863		$	(92,455	)	$	157,284
Cash flows from investing activities of continuing operations:
Expenditures for property, plant and equipment	(327		)	(37,981		)	(17,799		)	—			(56,107		)
Proceeds from sale of assets and investments	2,362			1,178			—			(2,362		)	1,178
Payments for businesses and intangibles acquired, net of cash acquired	—			(1,025		)	—			—			(1,025		)
Net interest proceeds on swaps designated as net investment hedges	8,330			—			—			—			8,330
Net cash provided by (used in) investing activities from continuing operations	10,365			(37,828		)	(17,799		)	(2,362		)	(47,624		)
Cash flows from financing activities of continuing operations:
Proceeds from new borrowings	25,000			—			—			—			25,000
Reduction in borrowings	(52,500		)	—			—			—			(52,500		)
Debt extinguishment, issuance and amendment fees	(4,703		)	—			—			—			(4,703		)
Net proceeds from share based compensation plans and the related tax impacts	7,829			—			—			—			7,829
Payments for contingent consideration	—			(15,044		)	(96,884		)	—			(111,928		)
Dividends paid	(31,347		)	—			—			—			(31,347		)
Intercompany transactions	83,135			(126,062		)	40,565			2,362			—
Intercompany dividends paid	—			—			(92,455		)	92,455			—
Net cash provided by (used in) financing activities from continuing operations	27,414			(141,106		)	(148,774		)	94,817			(167,649		)
Cash flows from discontinued operations:
Net cash provided by (used in) operating activities	3,430			—			(631		)	—			2,799
Net cash provided by (used in) discontinued operations	3,430			—			(631		)	—			2,799
Effect of exchange rate changes on cash and cash equivalents	—			—			1,925			—			1,925
Net (decrease) increase in cash and cash equivalents	(19,632		)	1,783			(35,416		)	—			(53,265		)
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	$	29,891		$	3,540		$	270,465		$	—		$	303,896

	Six Months Ended July 1, 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	$	(165,764	)	$	254,769		$	162,952		$	(70,373	)	$	181,584
Cash flows from investing activities of continuing operations:
Expenditures for property, plant and equipment	(795		)	(16,602		)	(20,607		)	—			(38,004		)
Proceeds from sale of assets	22,944			—			—			(22,944		)	—
Payments for businesses and intangibles acquired, net of cash acquired	—			—			(22,450		)	—			(22,450		)
Net cash provided by (used in) investing activities from continuing operations	22,149			(16,602		)	(43,057		)	(22,944		)	(60,454		)
Cash flows from financing activities of continuing operations:
Reduction in borrowings	(18,500		)	—			—			—			(18,500		)
Debt extinguishment, issuance and amendment fees	(188		)	—			—			—			(188		)
Net proceeds from share based compensation plans and the related tax impacts	9,800			—			—			—			9,800
Payments for contingent consideration	—			(170		)	(62,404		)	—			(62,574		)
Dividends paid	(30,938		)	—			—			—			(30,938		)
Intercompany transactions	196,888			(234,304		)	14,472			22,944			—
Intercompany dividends paid	—			—			(70,373		)	70,373			—
Net cash provided by (used in) financing activities from continuing operations	157,062			(234,474		)	(118,305		)	93,317			(102,400		)
Cash flows from discontinued operations:
Net cash used in operating activities	(464		)	—			—			—			(464		)
Net cash used in discontinued operations	(464		)	—			—			—			(464		)
Effect of exchange rate changes on cash and cash equivalents	—			—			(5,520		)	—			(5,520		)
Net increase (decrease) in cash and cash equivalents	12,983			3,693			(3,930		)	—			12,746
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	$	50,786		$	12,626		$	282,892		$	—		$	346,304