 1
TELEFLEX INCORPORATED
FOURTH QUARTER AND FULL YEAR 2013
EARNINGS CONFERENCE CALL
Exhibit 99.1 |
 Conference Call Logistics
The release, accompanying slides, and replay webcast are available online at
www.teleflex.com (click on “Investors”)
Telephone replay available by dialing 888-286-8010 or for international
calls, 617- 801-6888, pass code number 68453301
2 |
 Introductions
Benson Smith
Chairman, President and CEO
Thomas Powell
Executive Vice President and
CFO Jake Elguicze
Treasurer and Vice President of Investor Relations
3 |
 Forward-Looking Statements/Additional Notes
4
This presentation and our discussion contain forward-looking information and statements including,
but not limited to, the expected accretive impact of our acquisition of Mayo Healthcare Pty Ltd.;
forecasted 2014 constant currency revenue growth; the expected contributions of our acquisition
of Vidacare and distributor-to-direct conversions, both completed and planned, to our
2014 constant currency revenue growth; our expectation that 2014 constant currency revenue growth
from new product introductions will be at levels comparable to 2012 and 2013; our expectation that 2014
base volume growth will be modest; our expectation that the majority of pricing improvements in 2014
will result from our distributor-to-direct strategy and that we will be selective with
respect to product pricing opportunities; forecasted 2014 adjusted gross and operating margins;
our expectation that 2014 gross margins for the Vidacare business will remain at approximately
85%; our expectation that distributor-to-direct conversions and manufacturing cost improvements will
contribute to improvements in our 2014 adjusted gross and operating margins; forecasted 2013 adjusted
earnings per share; and other matters which inherently involve risks and uncertainties which
could cause actual results to differ from those projected or implied in the forward–looking
statements. These risks and uncertainties are addressed in our SEC filings, including our most
recent Form 10-K.
This presentation includes certain non-GAAP financial measures, which include revenue growth on a
constant currency basis; adjusted gross profit and margin; adjusted operating income and margins;
and adjusted earnings per share. Adjusted diluted earnings per share excludes, depending on the
period presented, (i) the effect of charges associated with our restructuring programs, as well
as goodwill and other asset impairment charges; (ii) loss on extinguishment of debt; (iii) the
gain or loss on sales of businesses and assets; (iv) losses and other charges related to
acquisition and integration costs, the reversal of liabilities related to certain contingent
consideration arrangements and a previously announced stock keeping unit rationalization program,
a litigation verdict against the Company with respect to a non-operating joint venture, the
establishment of a litigation reserve and facility relocation costs; (v) amortization of the debt
discount on the Company’s convertible notes; (vi) charges associated with the amortization of additional interest
expense related to an interest rate swap terminated in 2011; (vii) intangible amortization expense; and
(viii) tax benefits resulting from the resolution of prior years’ tax matters and the filing
of prior years’ amended tax returns. In addition, the calculation of diluted shares
within adjusted earnings per share gives effect to the anti-dilutive impact of the Company’s
convertible note hedge agreements, which reduce the potential economic dilution that otherwise would
occur upon conversion of the Company’s senior subordinated convertible notes (under GAAP,
the anti-dilutive impact of the convertible note hedge agreements is not reflected in diluted
shares). Constant currency revenue growth excludes the impact of translating the results of
international subsidiaries at different currency exchange rates from period to period.
Adjusted gross profit and margin exclude the impact of certain losses and other charges, primarily
related to acquisition and severance costs. Adjusted operating income and margins exclude
the impact of a goodwill impairment, restructuring and other impairment charges, (gain) loss on
sale of businesses and assets and certain losses and other charges. In addition,
adjusted operating margins exclude the impact of intangible amortization expense. Reconciliation of these
non-GAAP measures to the most comparable GAAP measures is contained within this presentation. Unless otherwise noted, the following slides reflect continuing operations. |
 5
FOURTH QUARTER AND FULL YEAR 2013 HIGHLIGHTS |
 Fourth
Quarter Highlights Strong final two weeks of December and contribution from
Vidacare lead
to
revenue
of
$450.5
million,
up
6.9%
constant
currency
vs.
prior
year
Adjusted gross margin of 50.0%, up 240 bps vs. prior year
Adjusted operating margins of 16.0%, up 50 bps vs. prior year
•
Adjusted
operating
margin
excluding
intangible
amortization
expense
of
19.0%, up 70 bps vs. prior year
Adjusted EPS of $1.36, up 18.3% vs. prior year
6 |
 Fourth
Quarter Highlights Improvement in the average selling prices of products
contribute 86
bps of top-line growth in Q4’13 compared to Q4’12
•
EMEA up 129 bps
•
Asia Pacific up 89 bps
•
Americas up 86 bps
•
OEM down 81 bps
Continue to expand GPO & IDN relationships
•
4 new agreements (2 IDN; 2 GPO)
•
7 renewed agreements (4 IDN; 3 GPO)
New product introductions contribute 102 bps of top-line growth in
Q4’13 compared to Q4’12
7 |
 ISO-Gard®
Mask
with
ClearAir™
Technology
Designed to help reduce hazardous waste
anesthetic gas (WAG) within a nurse’s
breathing zone
Developed in partnership with clinicians and
is the only solution available for “source
control”
of WAG in the recovery room
PRODUCT DESCRIPTION
Fourth Quarter Highlights
PRODUCT UPDATE
8
Community Surgery Center North, part of
Community Health Network in Indianapolis,
Indiana, becomes the first center to
incorporate the device into daily protocols |
 LMA
International N.V. and affiliates •
Contributed revenue of approximately $34.2 million in Q4’13
•
Contributed revenue and gross margin of approximately $134.2 million
and 59%, respectively for full year 2013
•
Integration
of
acquisition
and
financial
performance
during
2013
ahead
of
expectations
Fourth Quarter Highlights
9 |
 Fourth Quarter Highlights
Completed acquisition of Vidacare Corporation
•
Transaction closed on December 2, 2013
•
Q4’13 revenue contribution ahead of initial expectations
•
Integration activities on schedule
10 |
 Mayo
Healthcare Pty Ltd. •
Definitive agreement signed in December 2013 to acquire one of
Australia’s largest medical device distributors
•
Provides high quality products, education services, technical services
and customer support to healthcare institutions throughout Australia
•
Accretive, all-cash transaction was completed in February 2014
•
Represents the major distributor-to-direct conversion assumed in
previously provided 2014 financial guidance
Fourth Quarter Highlights
11 |
 Full
Year Highlights Revenue of $1.696 billion, up 9.0% constant currency vs. prior
year Adjusted gross margin of 49.6%, up 130 bps vs. prior year
Adjusted operating margins of 16.3%, flat vs. prior year primarily due to
medical device excise tax
•
Adjusted
operating
margin
excluding
intangible
amortization
expense
of
19.3%, up 20 bps vs. prior year
Adjusted EPS of $5.03, up 13.5% vs. prior year
12 |
 Full
Year Highlights 13
New product introductions contribute 124 bps of top-line growth in
2013 compared to 2012
Improvement in the average selling prices of products contribute
98
bps of top-line growth in 2013 compared to 2012
•
Americas up 122 bps
•
EMEA up 111 bps
•
Asia Pacific up 66 bps
•
OEM down 30 bps
Solidified
foundation
for
future
growth
through
expansion
of
GPO
&
IDN
relationships
•
25 new agreements (18 IDN; 7 GPO)
•
12 renewed agreements (4 IDN; 8 GPO) |
 Full
Year Highlights 14
Combination of market-share enhancing and technology acquisitions across
multiple product areas positions Company for sustainable revenue
growth
and margin expansion
•
Vidacare Corporation
•
Ultimate Medical Pty. Ltd.
•
Eon Surgical, Ltd. |
 FOURTH QUARTER 2013 FINANCIAL REVIEW
15 |
 Financial Results
Revenue of $450.5 million
•
Up 7.5% vs. prior year period on an as-reported basis
•
Up 6.9% vs. prior year period on a constant currency basis
Adjusted gross margin of 50.0%
•
Up 240 bps vs. prior year period
Research & development spending up 9.9% from prior year period
Adjusted operating margin of 16.0%, up 50 bps vs. prior year period
•
Adjusted operating margin excluding intangible amortization
expense of 19.0%, up 70 bps vs. prior year period
Adjusted EPS of $1.36, up 18.3% vs. prior year period
16 |
 17
FOURTH QUARTER 2013 PRODUCT & SEGMENT REVENUE REVIEW
|
 Product Revenue Review
Q4’13
Q4’12
Constant Currency Revenue Commentary
Critical Care: $316.7 million, up 10.2%
Surgical Care: $80.5 million, up 4.0%
Anesthesia
–
up
16.9%
Vascular
and
interventional
access
–
up
11.3%
Urology
–
up
6.3%
Respiratory
–
down
0.9%
Cardiac Care: $19.2 million, down 6.0%
OEM:
$34.1 million, down 5.7% Note:
Increases and decreases in revenue referred to above are as compared to results
for the fourth quarter of 2012. 18
4%
8%
70%
18%
5%
9%
68%
18%
Critical Care
Cardiac Care
Surgical Care
OEM
Critical Care
Cardiac Care
Surgical Care
OEM |
 Segment Revenue Review
Q4’13
Q4’12
Constant Currency Revenue Commentary
Americas:
$212.4 million, up 6.6%
EMEA: $144.9 million, up
5.2% Asia:
$59.1 million, up
21.6%
OEM: $34.1
million, down 5.7% Note:
Increases and decreases in revenue referred to above are as compared to results
for the fourth quarter of 2012. 19
13%
8%
47%
32%
31%
12%
9%
48%
Americas
Asia
EMEA
OEM
Americas
Asia
EMEA
OEM |
 20
2014 FINANCIAL OUTLOOK |
 2014
Financial Outlook 21
Constant currency revenue growth expected to be between 7% and 9%
•
Full year impact of Vidacare and distributor-to-direct conversions, both
completed and planned to be completed in 2014
•
Growth from new product pipeline comparable to 2012-2013 levels
•
Assumption of modest base volume growth
•
Distributor-to-direct strategy yields majority of pricing gains; product
pricing opportunities will be selective
Adjusted gross margin anticipated to improve by approximately
240bps to 290bps and reach 52.0% to 52.5%
•
Vidacare gross margin expected to remain at current level of ~ 85%
•
Pricing and margin gains from distributor to direct strategy
•
Manufacturing cost improvement programs |
 2014
Financial Outlook 22
Adjusted operating margin excluding intangible amortization expense
expected to be between 20% and 21%
•
Previously provided adjusted operating margin range of 17% to 18% included
approximately 325 bps of intangible amortization expense
•
Year-over-year gross margin gains tempered by investment in
distributor-to- direct strategy and Vidacare’s higher relative
SG&A Adjusted earnings per share anticipated to be between $5.35 and $5.55
per share
•
Represents growth of between 6% and 10% as compared to 2013 adjusted EPS
|
 23
QUESTION & ANSWER |
 24
APPENDICES |
 Appendix A –
Reconciliation of Product Constant Currency Revenue Growth
Dollars in Millions
25
December 31, 2013
December 31, 2012
Constant Currency
Currency
Total
Critical Care
316.7
$
286.5
$
10.2%
0.4%
10.6%
Surgical Care
80.5
76.5
4.0%
1.2%
5.2%
Cardiac Care
19.2
20.4
(6.0%)
0.0%
(6.0%)
OEM
34.1
35.7
(5.7%)
0.9%
(4.8%)
Net Revenues
450.5
$
419.1
$
6.9%
0.6%
7.5%
Three Months Ended
% Increase / (Decrease) |
 Appendix B –
Reconciliation of Segment Constant Currency Revenue Growth
Dollars in Millions
26
December 31, 2013
December 31, 2012
Constant Currency
Currency
Total
Americas
212.4
$
200.1
$
6.6%
(0.4%)
6.2%
EMEA
144.9
132.8
5.2%
4.0%
9.2%
Asia
59.1
50.5
21.6%
(4.5%)
17.1%
OEM
34.1
35.7
(5.7%)
0.9%
(4.8%)
Net Revenues
450.5
$
419.1
$
6.9%
0.6%
7.5%
Three Months Ended
% Increase / (Decrease) |
 Appendix C –
Reconciliation of Critical Care Product Constant Currency Revenue Growth
Dollars in Millions
27
December 31, 2013
December 31, 2012
Constant Currency
Currency
Total
Vascular & Interventional Access
129.5
$
117.1
$
11.3%
(0.7%)
10.6%
Anesthesia
95.4
81.3
16.9%
0.5%
17.3%
Respiratory
47.1
47.0
(0.9%)
1.0%
0.2%
Urology
44.9
41.2
6.3%
2.6%
8.9%
Critical Care Net Sales
316.7
$
286.5
$
10.2%
0.4%
10.6%
Three Months Ended
% Increase / (Decrease) |
 28
Cost of
goods
sold
Selling,
general and
administrative
expenses
Income
taxes
Net income
(loss)
attributable to
common
shareholders
from
continuing
operations
GAAP Basis
$225.6
$143.8
$17.9
$9.2
$14.2
$4.6
$35.1
$0.78
45,033
Adjustments
Restructuring and
other impairment
charges
Losses and other
charges (A)
Amortization of debt
discount on
convertible notes
Intangible amortization
expense
—
13.5
—
—
—
4.5
9.0
$0.20
—
Tax Adjustment (B)
—
—
—
—
—
1.5
(1.5)
($0.03)
—
Shares due to Teleflex
under note (C)
Adjusted basis
$225.3
$122.0
$17.3
—
$11.3
$15.8
$58.5
$1.36
42,868
Research and
development
expenses
Restructuring
and other
impairment
charges
Interest
expense,
net
Diluted
earnings per
share
available to
common
shareholders
Shares
used in
calculation
of GAAP
and
adjusted
earnings
per share
—
—
—
9.2
—
1.7
7.6
—
2.5
6.5
$0.14
0.3
8.2
0.5
—
$0.04
—
$0.17
—
—
—
—
—
—
—
—
2.9
1.1
1.8
(2,165)
(A) In 2013, losses and other charges include approximately $4.0 million, net
of tax, or $0.09 per share, primarily related to acquisition and integration
costs; $1.9 million, net of tax, or $0.04 per share related to the establishment of a litigation reserve; and $0.6 million, net of tax, or
$0.01 per share related to costs incurred to relocate facilities.
(B) The tax adjustment represents a net benefit resulting from the resolution
of, or the expiration of statute of limitations with respect to, various
prior years’
U.S. federal, state and foreign tax matters.
(C) Adjusted diluted shares are calculated by giving effect to the
anti-dilutive impact of the Company’s convertible note hedge agreements,
which reduce the potential economic dilution that otherwise would occur upon
conversion of our senior subordinated convertible notes. Under GAAP,
the anti-dilutive impact of the convertible note hedge agreements is not reflected in diluted shares.
—
—
—
$0.06
—
—
Appendix D –
EPS Reconciliation from Continuing Operations
Quarter Ended – December 31, 2013
Dollars in millions, except per share data
|
| 29
Cost of
goods
sold
Selling,
general and
administrative
expenses
Income
taxes
Net income
(loss)
attributable to
common
shareholders
from
continuing
operations
GAAP Basis
$219.9
$121.5
$16.3
$3.0
$14.4
$13.5
$30.4
$0.72
42,007
Adjustments
Restructuring and
other impairment
charges
Losses and other
charges (A)
0.5
3.0
—
—
—
(1.9)
5.4
$0.13
—
Amortization of
debt discount on
convertible notes
Intangible
amortization
expense
—
12.0
—
—
—
4.2
7.8
$0.19
—
Tax adjustment (B)
Shares due to
Teleflex under note
hedge (C)
Adjusted basis
$219.4
$106.5
$16.3
—
$11.7
$17.3
$47.6
$1.15
41,274
Research and
development
expenses
Restructuring
and other
impairment
charges
Interest
expense,
net
Diluted
earnings per
share
available to
common
shareholders
Shares
used in
calculation
of GAAP
and
adjusted
earnings
per share
—
—
—
3.0
—
0.6
2.3
2.7
1.0
1.7
$0.04
—
—
—
—
—
—
$0.06
—
—
—
—
—
—
—
—
—
—
—
(733)
(A)
In
2012,
losses
and
other
charges
include
approximately
$5.4
million,
net
of
tax,
or
$0.13
per
share,
related
to
acquisition
costs.
(B) The tax adjustment represents a net benefit resulting from the resolution
of, or the expiration of statute of limitations with respect to
various
prior
years’
U.S.
federal,
state
and
foreign
tax
matters.
(C) Adjusted diluted shares are calculated by giving effect to the
anti-dilutive impact of the Company’s convertible note hedge agreements,
which reduce the potential economic dilution that otherwise would occur upon
conversion of our senior subordinated convertible notes. Under GAAP,
the anti-dilutive impact of the convertible note hedge agreements is not reflected in diluted shares.
—
—
—
$0.02
—
—
Appendix E –
EPS Reconciliation from Continuing Operations
Quarter Ended – December 31, 2012
Dollars in millions, except per share data
|
 30
Appendix F –
Reconciliation of Teleflex Gross Profit and Margin
December 31, 2013
December 31, 2012
Teleflex gross profit as-reported
224,943
$
199,180
$
Teleflex gross margin
as-reported 49.9%
47.5%
Losses and other charges (A)
253
459
Adjusted Teleflex gross profit
225,196
$
199,639
$
Adjusted Teleflex gross
margin 50.0%
47.6%
Teleflex revenue as-reported
450,539
$
419,056
$
$ thousands
Three Months Ended
A:
In 2013, losses and other charges primarily relate to acquisition and integration
costs. In 2012, losses and other charges relate to acquisition costs.
|
 31
Appendix G –
Reconciliation of Teleflex Operating Profit and Margin
A:
In 2013, losses and other charges primarily relate to acquisition and integration
costs; the establishment of a litigation reserve; and costs incurred to
relocate facilities. In 2012, losses and other charges related to acquisition costs.
December 31, 2013
December 31, 2012
Teleflex income from continuing operations before interest, loss
on extinguishment
of debt and taxes
54,064
$
58,440
$
Teleflex income from continuing operations before interest, loss
on extinguishment
of debt and taxes margin
12.0%
13.9%
Restructuring and other impairment charges
9,247
2,953
Losses and other charges (A)
8,959
3,493
Adjusted Teleflex income from continuing operations before interest, loss on
extinguishment of debt and taxes
72,270
$
64,886
$
Adjusted Teleflex income from continuing operations before interest, loss on
extinguishment of debt and taxes margin
16.0%
15.5%
Intangible amortization expense
13,536
12,001
Adjusted Teleflex income from continuing operations before interest, loss on
extinguishment of debt, taxes and intangible amortization expense
85,806
$
76,887
$
Adjusted Teleflex income from continuing operations before interest, loss on
extinguishment of debt, taxes and intangible amortization expense margin
19.0%
18.3%
Teleflex revenue as-reported
450,539
$
419,056
$
$ thousands
Three Months Ended |
 Appendix H –
Reconciliation of Product Constant Currency Revenue Growth
Dollars in Millions
32
December 31, 2013
December 31, 2012
Constant Currency
Currency
Total
Critical Care
1,182.7
$
1,040.3
$
13.4%
0.3%
13.7%
Surgical Care
306.5
291.1
4.5%
0.8%
5.3%
Cardiac Care
75.9
79.4
(4.1%)
(0.4%)
(4.5%)
OEM
131.2
140.2
(7.0%)
0.5%
(6.5%)
Net Revenues
1,696.3
$
1,551.0
$
9.0%
0.4%
9.4%
Twelve Months Ended
% Increase / (Decrease) |
 33
Appendix I –
Reconciliation of Teleflex Gross Profit and Margin
December 31, 2013
December 31, 2012
Teleflex gross profit as-reported
838,945
$
748,225
$
Teleflex gross margin
as-reported 49.5%
48.2%
Losses and other charges (A)
2,275
459
Adjusted Teleflex gross profit
841,220
$
748,684
$
Adjusted Teleflex gross
margin 49.6%
48.3%
Teleflex revenue as-reported
1,696,271
$
1,551,009
$
$ thousands
Twelve Months Ended
A:
In
2013,
losses
and
other
charges
primarily
relate
to
acquisition
and
integration
costs,
and
a
reserve
reversal
associated
with
a
previously announced stock keeping unit (“SKU”) rationalization charge. In
2012, losses and other charges relate to acquisition costs. |
 34
Appendix J –
Reconciliation of Teleflex Operating Profit and Margin
A:
In 2013, losses and other charges primarily relate to the reversal of contingent
consideration liabilities, acquisition and integration costs, the reserve
reversal associated with a previously announced stock keeping unit (“SKU”) rationalization charge, a litigation verdict against the Company
with respect to a non-operating joint venture; the establishment of a litigation
reserve; and costs incurred to relocate facilities. In 2012, losses and
other charges relate to the reversal of contingent consideration
liabilities and acquisition costs.
December 31, 2013
December 31, 2012
Teleflex income (loss) from continuing operations before interest, loss on
extinguishment of debt and taxes
233,261
$
(97,375)
$
Teleflex income (loss) from continuing operations before interest, loss on
extinguishment of debt and taxes margin
13.8%
-6.3%
Goodwill impairment
-
332,128
Restructuring and other impairment charges
38,452
3,037
Net (gain) loss on sales of businesses and assets
-
(332)
Losses and other charges (A)
4,327
14,640
Adjusted Teleflex income from continuing operations before interest, loss on
extinguishment of debt and taxes
276,040
$
252,098
$
Adjusted Teleflex income from continuing operations before interest, loss on
extinguishment of debt and taxes margin
16.3%
16.3%
Intangible amortization expense
50,608
44,264
Adjusted Teleflex income from continuing operations before interest, loss on
extinguishment of debt, taxes and intangible amortization expense
326,648
$
296,362
$
Adjusted Teleflex income from continuing operations before interest, loss on
extinguishment of debt, taxes and intangible amortization expense margin
19.3%
19.1%
Teleflex revenue as-reported
1,696,271
$
1,551,009
$
$
thousands Twelve Months Ended |
 35
Cost of
goods
sold
Selling,
general and
administrative
expenses
Income
taxes
GAAP Basis
$857.3
$502.2
$65.0
—
$38.5
$23.5
Adjustments
Restructuring and
other impairment
charges
Gain/(loss) on sales
of businesses and
assets
—
—
—
—
—
—
Loss on
extinguishment of
debt
—
—
—
—
—
0.5
Losses and other
charges (A)
Amortization of debt
discount on
convertible notes
Intangible
amortization
expense
—
50.6
—
—
—
17.3
Tax Adjustment (B)
—
—
—
—
—
11.1
Shares due to
Teleflex under note
hedge (C)
Adjusted basis
$855.1
$450.1
$64.5
—
—
$69.2
Gain/(loss) on sales of
businesses and
assets
Loss on
extinguishment
of debt
Interest
expense, net
Research and
development
expenses
Goodwill
impairment
Restructuring
and other
impairment
charges
Diluted earnings per
share available to
common
shareholders
Shares used in calculation
of GAAP and adjusted
earnings per share
$56.3
$151.3
Net income (loss) attributable to
common shareholders from
continuing operations
$3.46
43,693
—
$1.3
—
—
—
—
$0.71
—
38.5
—
—
—
—
—
7.8
30.7
—
—
—
1.3
—
0.8
$0.02
—
—
—
2.3
1.5
0.5
—
—
—
—
—
4.9
(0.6)
($0.02)
—
—
—
—
—
$0.16
—
—
—
—
11.3
—
33.4
4.1
7.2
$0.76
—
—
—
—
(11.1)
($0.25)
—
—
—
—
—
—
—
—
—
—
—
—
—
$0.19
(1,620)
(C) Adjusted diluted shares are calculated by including the anti-dilutive impact of the
Company’s convertible note hedge agreements, which reduce the potential economic dilution that otherwise would occur upon conversion of our senior
subordinated convertible notes. Under GAAP, the anti-dilutive impact of the convertible note
hedge agreements is not reflected in diluted shares. (B) The tax adjustment represents a
net benefit resulting from the resolution of, or the expiration of statutes of limitations with respect to various prior years’ U.S. federal, state and foreign tax matters.
$5.03
42,073
(A) In 2013, losses and other charges include approximately ($12.4) million, net of tax, or
($0.28) per share, related to the reversal of contingent consideration liabilities; $7.8 million, net of tax, or $0.18 per share, primarily related to acquisition and
integration costs; ($0.3) million, net of tax, or ($0.01) per share, related to a reserve reversal
associated with a previously announced stock keeping unit (“SKU”) rationalization charge; $0.8 million, net of tax, or $0.02 per share, related to a litigation
verdict against the Company with respect to a non-operating joint venture; $1.9 million, net of
tax, or $0.04 per share related to the establishment of a litigation reserve; and $1.6 million, net of tax, or $0.04 per share related to costs incurred to relocate
facilities.
—
—
$45.0
$211.6
Appendix K –
EPS Reconciliation from Continuing Operations
Year Ended – December
31, 2013 Dollars in millions, except per share data |
 36
Cost of
goods
sold
Selling,
general and
administrative
expenses
Income
taxes
GAAP Basis
$802.8
$454.5
$56.3
$332.1
$3.0
$16.4
Adjustments
Goodwill impairment
—
—
—
332.1
—
17.0
Restructuring and
other impairment
charges
Gain/(loss) on sales
of businesses and
assets
—
—
—
—
—
—
Loss on
extinguishment of
debt
Losses and other
charges (A)
0.5
14.2
—
—
—
—
Early termination of
interest rate swap (B)
—
—
—
—
—
4.0
Amortization of debt
discount on
convertible notes
Intangible amortization
expense
—
44.3
—
—
—
16.0
Anti-dilutive effect on
EPS (C)
—
—
—
—
—
—
Tax adjustment (D)
Shares due to
Teleflex under note
hedge (E)
Adjusted basis
$802.3
$396.0
$56.3
—
—
$66.7
Gain/(loss) on sales of
businesses and
assets
Loss on
extinguishment of
debt
Interest
expense, net
Research
and
development
expenses
Goodwill
impairment
Restructuring
and other
impairment
charges
Diluted earnings per
share available to
common
shareholders
Shares used in
calculation of GAAP
and adjusted earnings
per share
$68.0
($182.7)
Net income (loss) attributable to
common shareholders from
continuing operations
($4.47)
40,859
$0.3
—
—
—
—
315.1
$7.71
—
—
—
—
—
3.0
—
—
—
0.6
2.5
$0.06
—
(0.3)
—
—
(0.3)
—
—
—
—
—
—
—
—
—
—
($0.01)
—
—
14.6
—
—
$0.36
—
—
—
11.1
7.0
$0.17
—
—
—
—
—
—
—
$0.16
—
—
—
—
10.5
—
28.3
3.8
6.7
$0.69
—
—
—
—
—
($0.06)
542
—
—
—
—
—
—
—
—
—
—
9.0
(9.0)
($0.22)
—
—
—
—
—
(275)
—
—
—
—
$182.2
—
—
$0.03
(C) The Company presents per share results using basic weighted average shares, and separately
presents diluted per share results, which reflect with the impact of dilution on income. Under applicable accounting guidance, if a company
has a net loss from continuing operations, as was the case for the Company in 2012, no common shares
that potentially may be issued are included in the computation of diluted per-share amounts because such inclusion would result in an
anti-dilutive per share amount. However, the Company had net income on an adjusted basis in
2012. Therefore, common shares that would have a dilutive effect on adjusted net income are deemed to be outstanding for purposes of the
calculation of 2012 adjusted diluted earnings per share.
(D) The tax adjustment represents a net benefit resulting from the resolution of, or the
expiration of statutes of limitations with respect to various prior years’ U.S. federal, state and foreign tax matters.
(E) Adjusted diluted shares are calculated by including the anti-dilutive impact of the
Company’s convertible note hedge agreements, which reduce the potential economic dilution that otherwise would occur upon conversion of our senior
subordinated convertible notes. Under GAAP, the anti-dilutive impact of the convertible note
hedge agreements is not reflected in diluted shares. $4.43
41,126
(A) In 2012, losses and other charges include approximately $0.2 million, net of tax related to
contingent consideration liabilities; and $14.4 million, net of tax, or $0.36 per share, related to acquisition costs.
(B) In 2011, the Company terminated an interest rate swap that, at the date of termination, had a
notional amount of $350 million. The interest rate swap was designated as a cash flow hedge against the term loan under our senior credit
facility. At the date of termination, the interest rate swap was in a liability position
resulting in a cash payment by the Company to the counterparty of approximately $14.8 million, which included $3.1 million of accrued interest. In accordance with
GAAP, the Company amortized this amount as additional interest expense over the remainder of the
original term of the interest rate swap, which expired in September 2012. In the first nine months of 2012, the impact of the amortization, net of
tax, was approximately $7.0 million, or $0.17 per share.
—
—
$46.5
Appendix L –
EPS Reconciliation from Continuing Operations
Year Ended – December
31, 2012 Dollars in millions, except per share data |
 Appendix M –
Reconciliation of 2014 Constant Currency Revenue Growth Guidance
37
Low
High
Full Year 2014 Forecasted GAAP Revenue Growth
6.0%
8.0%
Foreign Exchange
1.0%
1.0%
Full Year 2014 Forecasted Constant Currency
Revenue Growth
7.0%
9.0% |
 Appendix N –
Reconciliation of 2014 Gross Margin Guidance
38
2014 Forecast
GAAP Gross Margin
52.0%
52.5%
Losses and other charges
-
-
Adjusted Gross Margin
52.0%
52.5% |
 Appendix O –
Reconciliation of 2014 Operating Margin
39
2014 Forecast
GAAP Operating Margin
16.1%
17.0%
Losses and other charges
0.4%
0.5%
Adjusted Operating Margin
16.5%
17.5%
Intangible amortization expense
3.5%
3.5%
Adjusted Operating Margin Excluding Intangible Amortization Expense
20.0%
21.0% |
 Appendix P –
Reconciliation of 2014 Adjusted Earnings per Share Guidance
40
Low
High
Diluted earnings per share attributable to common
shareholders
$3.60
$3.75
Restructuring, impairment charges, and special items,
net of tax
$0.65
$0.70
Intangible amortization expense, net of tax
$0.93
$0.93
Amortization of debt discount on convertible notes,
net of tax
$0.17
$0.17
Adjusted diluted earnings per share
$5.35
$5.55 |