Correspondence
|
|
|
![(TELEFEX LOGO)](c25418p2541801.jpg)
Richard A. Meier
Executive Vice President and
Chief Financial Officer
|
|
Teleflex Incorporated
155 South Limerick Road
Limerick, PA 19468 USA
Phone: 610-948-1755
Fax: 610-948-1703
www.teleflex.com |
December 1, 2011
VIA FACSIMILE AND OVERNIGHT MAIL
Kevin L. Vaughn, Accounting Branch Chief
Division of Corporation Finance
Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549
|
|
|
Re: |
|
Teleflex Incorporated
Form 10-K for the Fiscal Year Ended December 31, 2010
Filed February 25, 2011
Form 10-Q for the Quarter Ended September 25, 2011
Filed October 25, 2011
File No. 001-053531102 |
Dear Mr. Vaughn:
This letter responds to your November 16, 2011 letter to Benson F. Smith, which sets forth the
comments of the staff of the Securities and Exchange Commission regarding our annual report on Form
10-K for the fiscal year ended December 31, 2010 and our quarterly report on Form 10-Q for the
quarter ended September 25, 2011. For your convenience, we have included each of the Staffs
comments in italics before the corresponding response.
Form 10-K for the Year Ended December 31, 2010
Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations, page 35
Liquidity and Capital Resources, page 47
|
1. |
|
We note your disclosures on page F-32 that you consider $673.9 million of
undistributed earnings of your subsidiaries outside the United States to be permanently
reinvested. To the extent such amounts could be considered material to an understanding of your liquidity and capital resources, please revise your
future filings to disclose the amounts of the cash and investment amounts held by
your foreign subsidiaries that would not be available for use in the United States.
Please further provide a discussion of any known trends, demands or uncertainties as
a result of this policy that are reasonably likely to have a material effect on the
business as a whole or that may be relevant to your financial flexibility. Refer to
Item 303(a)(1) of Regulation S-K, SEC Release 33-8350, and Financial Reporting
Codification Section 501.03.a. |
Kevin L. Vaughn, Accounting Branch Chief
December 1, 2011
Page 2
Response:
While our actual disclosures in future filings will be based on facts and
circumstances then existing, we intend to include, in the Liquidity and Capital
Resources section of Managements Discussion and Analysis of Financial Condition and
Results of Operations, the following form of disclosure:
At December 31, 2010, of our $208.5 million of cash and cash equivalents,
$185.7 million was held at foreign subsidiaries. We are not aware of any
restrictions on repatriation of these funds and, subject to payment of additional
U.S. income taxes or foreign withholding taxes, these funds could be repatriated, if
necessary. Any additional taxes could be offset, at least in part, by foreign tax
credits. The amount of any taxes, which could be significant, and the application
of tax credits would be determined based on income tax laws at the time of such
repatriation.
Index to Consolidated Financial Statements, page F-1
Consolidated Balance Sheets, page F-5
|
2. |
|
We note here and within your September 25, 2011 Form 10-Q that accrued expenses
were $117 million, $97 million, and $115 million at December 31, 2010, December 31,
2009, and September 25, 2011 respectively. As applicable, please revise future filings
to provide the disclosures required by Rule 5-02(20) and Rule 5-02(24) of Regulation
S-X, to the extent applicable. |
Response:
Rule 5-02(20) of Regulation S-X requires registrants to disclose separately, in
the balance sheet or in a note thereto, any item in excess of five percent of total
current liabilities. Rule 5-02(24) contains the same requirements with respect to
items that exceed five percent of total liabilities. For the information of the
staff, the following components of accrued expenses exceeded five percent of total
current liabilities on the dates indicated (dollars in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
December 31, |
|
|
September 25, |
|
|
|
2009 |
|
|
2010 |
|
|
2011 |
|
Accrued Value Added, |
|
$ |
17.9 |
|
|
|
|
|
|
|
|
|
Sales and Use Taxes
Unrecognized Tax Benefits |
|
|
|
|
|
$ |
28.5 |
|
|
$ |
29.7 |
|
Kevin L. Vaughn, Accounting Branch Chief
December 1, 2011
Page 3
There were no items, not already separately reflected in our balance sheet,
that would have constituted more than five percent of our total liabilities.
In future filings, we will provide the separate disclosures
required by Rule 5-02(20) and Rule 5-02(24) of Regulation S-X, if applicable.
Note 9. Borrowings, page F-20
|
3. |
|
We note your disclosures related to the refinancing transactions that occurred
during fiscal 2010. Please explain to us in more detail why you determined the $200
million repayment of the term loan to be a debt extinguishment and the remaining $400
million of the term loan to be a debt modification. Refer to the guidance in Topic
470-50 of the FASB Accounting Standards Codification. |
Response:
As required by Subtopic 470-50 of the FASB Accounting Standards Codification
(ASC), we performed separate tests for each of the 32 banks participating in the
loan syndicate with respect to our term loan facility that agreed to modify the term
loan to determine the extent to which the modification of the term loan should be
treated as a debt extinguishment or loan modification.
We used the net method in applying the test required by ASC Subtopic 470-50.
The net method compares the cash flows related to the lowest common principal
balance between the original debt instrument and the new or modified debt instrument
and treats the principal in excess of the common amount as a separate debt issuance.
Accordingly, under the net method, the $200 million term loan prepayment was
excluded from the present value calculations described below and was considered a
debt extinguishment.
In accordance with ASC Paragraph 470-50-55-2, portions of the remaining $400
million term loan were deemed to be held by each of the banks participating in the
loan syndicate through a separate debt instrument. We applied the present value
test mandated by ASC Paragraph 470-50-40-10 to determine if each deemed debt
instrument qualified for modification or extinguishment treatment. With respect to
each bank that agreed to the modification of the term loan, we tested the present
value of the cash flows under the terms of the modified debt instrument deemed
applicable to such bank to determine if such cash flows were at least ten percent
different from the present value of the remaining cash flows under the terms of the
original instrument deemed applicable to the bank. In
Kevin L. Vaughn, Accounting Branch Chief
December 1, 2011
Page 4
applying the test to each bank that agreed to modification of the term loan, we
compared the present value of the cash flows on the principal amount of the modified
term loan provided by the bank (applying the then-current three month LIBOR rate of
0.3125% plus 225 basis points and the extended maturity of the loan) to the present
value of the remaining cash flows under the original term loan provided by the bank
(applying the same three month LIBOR rate plus 100 basis points and the original
maturity of the loan). In accordance with ASC Paragraph 470-50-55-2, debt
instruments held by those banks that continued to participate in the loan syndicate
but did not agree to modification of the term loan were not affected.
In the case of each bank, the difference in the present value of the cash flows
was less than ten percent. Accordingly, we treated the remaining $400 term loan as
a debt modification.
Form 10-Q for the Quarterly Period Ended September 25, 2011
Note 14. Business Segment Information, page 18
|
4. |
|
We note your disclosure of revenues by geographic area. Paragraph
280-10-50-41(a) of the FASB Accounting Standards Codification requires separate
disclosure of material revenues attributed to an individual foreign country. Please
explain to us how your current presentation complies with that guidance. |
Response:
We consider revenues of ten percent or more attributable to any individual
country to be material. In this regard, we note that several Commission regulations
and accounting pronouncements reference ten percent of revenue as a disclosure
threshold. See, e.g., Item 101(c)(i) of Regulation S-K (requiring disclosure of the
amount or percentage of consolidated revenue contributed by any class of similar
products or services if total revenue contributed by that class accounts for ten
percent or more of consolidated revenue), Item 101(c)(vii) of Regulation S-K
(requiring disclosure of the name of any customer if sales to the customer equal ten
percent or more of a registrants consolidated revenues and loss of the customer
would have a material adverse effect on the registrant and its subsidiaries taken as
a whole); and ASC Paragraph 280-10-50-12 (requiring separate reporting of an
operating segment if the segments reported revenue is ten percent or more of the
combined revenue of all operating segments).
Other than the United States, revenues equaling at least ten percent of our
total consolidated revenues were not attributable to any individual country during
any of the periods covered by the above-captioned reports. In the event that
revenues attributable to any foreign country ever equal or exceed ten percent of our total consolidated revenues for a reporting period, we will identify the country
in appropriate future filings.
Kevin L. Vaughn, Accounting Branch Chief
December 1, 2011
Page 5
Note 16. Divestiture-Related Activities, page 27
|
5. |
|
Please explain to us why on page 29 you did not re-classify the assets and
liabilities related to your cargo container and cargo systems businesses and five
buildings as assets and liabilities held for sale as of December 31, 2010. Refer to
the guidance in Topic 205-20 of the FASB Accounting Standards Codification. |
Response:
The table on page 29 was intended to provide detail regarding the components of
the Assets held for sale line item in the
September 25, 2011 and December 31, 2010
balance sheets. The $7,959,000 of property, plant and equipment, net held for sale
as of December 31, 2010 constituted the carrying value of four buildings, which
were classified as assets held for sale at December 31, 2010. None of the other
assets reflected as held for sale at September 25, 2011 were classified as held for
sale on the December 31, 2010 balance sheet; accordingly, no detail with respect to
those assets was included in the December 31, 2010 column of the table on page 29.
In this regard, we note that the guidance in ASC Subtopic 205-20 does not require
reclassification of a component of an entity held for sale in balance sheets as of
dates prior to the date upon which the component becomes held for sale.
As requested by the staff, Teleflex Incorporated (the Company) acknowledges the following
with regard to its annual report on Form 10-K for the fiscal year ended December 31, 2010, and its
quarterly report on Form 10-Q for the quarter ended September 25, 2011 (the Filings):
|
|
|
the Company is responsible for the adequacy and accuracy of the disclosure
in the Filings; |
|
|
|
|
staff comments or changes to disclosure in response to staff comments do not
foreclose the Commission from taking any action with respect to the Filings;
and |
|
|
|
|
the Company may not assert staff comments as a defense in any proceeding
initiated by the Commission or any person under the federal securities laws of
the United States. |
Kevin L. Vaughn, Accounting Branch Chief
December 1, 2011
Page 6
If you have any questions or additional comments, please contact the undersigned at (610)
948-1755.
Sincerely,
/s/ Richard A. Meier
Richard A. Meier
Executive Vice President and
Chief Financial Officer