TELEFLEX INCORPORATED AND SUBSIDIARIES UNAUDITED PRO FORMA FINANCIAL INFORMATION
Exhibit 99.1
TELEFLEX INCORPORATED AND SUBSIDIARIES
UNAUDITED PRO FORMA FINANCIAL INFORMATION
UNAUDITED PRO FORMA FINANCIAL INFORMATION
On March 22, 2011, Teleflex Incorporated (the “Company”) entered into a Purchase Agreement (the
“Purchase Agreement”) with Marine Acquisition Corp. (the “Buyer”), an affiliate of H.I.G. Capital,
LLC, and, immediately following execution of the Purchase Agreement, completed the sale of the
Company’s business unit which designs, manufactures and distributes steering and throttle controls
and engine and drive assemblies for the recreational marine market, heaters that provide cold
weather auxiliary heating solutions for commercial vehicles and burner units that provide a heat
source for military field feeding appliances (the “Business”), for a purchase price of $123.1
million, consisting of $101.6 million in cash, plus a subordinated promissory note in the amount of
$4.5 million (the “Marine Note”) and the assumption by Buyer of approximately $15.5 million in
liabilities related to the Business.
The cash portion of the purchase price is subject to possible upward or downward adjustment based
on certain provisions in the Purchase Agreement relating to the working capital, cash balance,
transaction expenses and liabilities of the Business, measured as of the open of business on the
closing date. The Company has made customary representations, warranties and covenants in the
Purchase Agreement with respect to the Business.
The foregoing description of the transaction is qualified in its entirety by reference to the full
text of the Purchase Agreement, dated March 22, 2011, by and between the Company and Buyer, which
is filed as Exhibit 2.1 to this Current Report and is incorporated herein by reference.
The Business, which was previously reported as the Commercial Segment of the Company’s operations,
meets the criteria for reporting as a discontinued operation.
The unaudited pro forma consolidated statements of income present the income statements as
originally reported and adjust the respective periods to eliminate the results of operations of the
Business as if the disposition occurred January 1, 2008. In addition, the pro forma adjustments for
the 2010 statement of income include entries to reduce interest expense as a reflection of using a
portion of the proceeds from the sale of the Business as if they were used to prepay a portion of
the outstanding principal amount of the Company’s senior notes issued in 2004 (the “2004 Senior
Notes”) (which were prepaid in their entirety during the first quarter of 2011), to eliminate the
amortization of deferred financing fees related to the 2004 Senior Notes, to record interest income
on the Marine Note and to record the related tax effects for the adjustments. The pro forma
adjustments for 2010 do not include an estimated $6.9 million pre-tax, non-recurring adjustment for the make whole fees on
prepayment of the 2004 Senior Notes.
The unaudited pro forma consolidated balance sheet presents the balance sheet as originally
reported and eliminates the Business’ assets, liabilities and equity components as if the disposition
occurred December 31, 2010. In addition, the pro forma adjustments include entries to record the
estimated proceeds from the sale of the Business, to record the Marine Note, to record the
prepayment of a portion of the 2004 Senior Notes with a portion of the proceeds from the sale, to
eliminate deferred financing fees related to the 2004 Senior Notes, to record the non-recurring estimated make whole
fees and the related loss on extinguishment resulting from the prepayment of the 2004 Senior Notes
and to record the estimated gain or loss on sale of the Business. The gain or loss on the sale of
the Business reported in the unaudited pro forma consolidated balance sheet is based upon estimates
and may differ from the actual gain or loss recognized by the Company.
The unaudited pro forma consolidated financial statements described above should be read in
conjunction with the historical financial statements of the Company and the related notes thereto.
The unaudited pro forma information is not necessarily indicative of the financial position or
results of operations that may have actually occurred had the transaction taken place on the dates
noted, or the future financial position or operating results of the Company.
| Year Ended December 31, 2010 | ||||||||||||||
| As Reported | Disposition | Pro Forma | ||||||||||||
| (Dollars and shares in thousands, except per share) | ||||||||||||||
Net revenues |
$ | 1,801,705 | $ | (194,905 | ) | A | $ | 1,606,800 | ||||||
Cost of goods sold |
1,007,636 | (144,197 | ) | A | 863,439 | |||||||||
Gross profit |
794,069 | (50,708 | ) | A | 743,361 | |||||||||
Selling, general and administrative expenses |
475,321 | (32,124 | ) | A | 443,197 | |||||||||
Research and development expenses |
42,621 | — | 42,621 | |||||||||||
Restructuring and other impairment charges |
2,875 | — | 2,875 | |||||||||||
Net gain on sales of businesses and assets |
(341 | ) | — | (341 | ) | |||||||||
Income from continuing operations before interest, loss
on extinguishments of debt and taxes |
273,593 | (18,584 | ) | A | 255,009 | |||||||||
Interest expense |
80,031 | (6,486 | ) | B | 73,545 | |||||||||
Interest income |
(861 | ) | 56 | A | ||||||||||
| (434 | ) | C | (1,239 | ) | ||||||||||
Loss on extinguishments of debt |
46,630 | — | 46,630 | |||||||||||
Income from continuing operations before taxes |
147,793 | (11,720 | ) | 136,073 | ||||||||||
Taxes on income from continuing operations |
21,887 | 2,734 | A | |||||||||||
| 2,516 | D | 27,137 | ||||||||||||
Income from continuing operations |
125,906 | (16,970 | ) | 108,936 | ||||||||||
Less: Net income attributable to noncontrolling interest |
1,361 | — | 1,361 | |||||||||||
Net income attributable to common shareholders from
continuing operations |
$ | 124,545 | $ | (16,970 | ) | $ | 107,575 | |||||||
Earnings per share from continuing operations available
to common shareholders: |
||||||||||||||
Basic |
$ | 3.12 | $ | (0.43 | ) | A | $ | 2.70 | ||||||
Diluted |
$ | 3.09 | $ | (0.42 | ) | A | $ | 2.67 | ||||||
Weighted average common shares outstanding: |
||||||||||||||
Basic |
39,906 | 39,906 | 39,906 | |||||||||||
Diluted |
40,280 | 40,280 | 40,280 | |||||||||||
Notes to the December 31, 2010 Unaudited Pro Forma Consolidated Statements of Income
(Dollars in thousands)
(Dollars in thousands)
| Note A | Reflects the elimination of the operations of the Marine business | |||||
| Note B | To remove the interest expense and the amortization of debt financing costs related to the prepayment of a portion of the 2004 Senior Notes from the proceeds on the sale of the Business | |||||
Lower interest expense |
$ | 6,283 | ||||
Lower amortization of debt issuance costs |
203 | |||||
Total interest expense |
$ | 6,486 | ||||
| Note C | Interest income on Marine Note |
$ | 434 | |||
| Note D | Reflects the tax effect on the adjustments to interest in Note B and Note C |
$ | 2,516 | |||
The 2010
pro forma entries do not include an estimated $6.9 million pre-tax, non-recurring adjustment for the make whole fees on
prepayment of the 2004 Senior Notes.
| Year Ended December 31, 2009 | ||||||||||||||
| As Reported | Disposition | Pro Forma | ||||||||||||
| (Dollars and shares in thousands, except per share) | ||||||||||||||
Net revenues |
$ | 1,766,329 | $ | (168,126 | ) | A | $ | 1,598,203 | ||||||
Cost of goods sold |
994,179 | (124,752 | ) | A | 869,427 | |||||||||
Gross profit |
772,150 | (43,374 | ) | A | 728,776 | |||||||||
Selling, general and administrative expenses |
454,233 | (31,331 | ) | A | 422,902 | |||||||||
Research and development expenses |
36,685 | — | 36,685 | |||||||||||
Goodwill impairment |
6,728 | — | 6,728 | |||||||||||
Restructuring and other impairment charges |
15,057 | (4,710 | ) | A | 10,347 | |||||||||
Net loss on sales of businesses and assets |
2,597 | (2,597 | ) | A | — | |||||||||
Income from continuing operations before interest and taxes |
256,850 | (4,736 | ) | A | 252,114 | |||||||||
Interest expense |
89,463 | (5 | ) | A | 89,458 | |||||||||
Interest income |
(2,535 | ) | 25 | A | (2,510 | ) | ||||||||
Income from continuing operations before taxes |
169,922 | (4,756 | ) | A | 165,166 | |||||||||
Taxes on income from continuing operations |
35,073 | 948 | A | 36,021 | ||||||||||
Income from continuing operations |
134,849 | (5,704 | ) | A | 129,145 | |||||||||
Less: Net income attributable to noncontrolling interest |
1,157 | — | 1,157 | |||||||||||
Net income attributable to common shareholders from
continuing operations |
$ | 133,692 | $ | (5,704 | ) | A | $ | 127,988 | ||||||
Earnings per share from continuing operations available to
common shareholders: |
||||||||||||||
Basic |
$ | 3.37 | $ | (0.14 | ) | A | $ | 3.22 | ||||||
Diluted |
$ | 3.35 | $ | (0.14 | ) | A | $ | 3.20 | ||||||
Weighted average common shares outstanding: |
||||||||||||||
Basic |
39,718 | 39,718 | 39,718 | |||||||||||
Diluted |
39,936 | 39,936 | 39,936 | |||||||||||
Notes to the December 31, 2009 Unaudited Pro Forma Consolidated Statements of Income
| Note A | Reflects the elimination of the operations of the Marine business. |
| Year Ended December 31, 2008 | ||||||||||||||
| As Reported | Disposition | Pro Forma | ||||||||||||
| (Dollars and shares in thousands, except per share) | ||||||||||||||
Net revenues |
$ | 1,912,080 | $ | (212,350 | ) | A | $ | 1,699,730 | ||||||
Cost of goods sold |
1,110,560 | (163,311 | ) | A | 947,249 | |||||||||
Gross profit |
801,520 | (49,039 | ) | A | 752,481 | |||||||||
Selling, general and administrative expenses |
502,559 | (34,722 | ) | A | 467,837 | |||||||||
Research and development expenses |
32,598 | — | 32,598 | |||||||||||
Restructuring and other impairment charges |
27,701 | (2,755 | ) | A | 24,946 | |||||||||
Net gain on sales of businesses and assets |
(296 | ) | — | (296 | ) | |||||||||
Income from continuing operations before interest and taxes |
238,958 | (11,562 | ) | A | 227,396 | |||||||||
Interest expense |
121,589 | (13 | ) | A | 121,576 | |||||||||
Interest income |
(2,272 | ) | 72 | A | (2,200 | ) | ||||||||
Income from continuing operations before taxes |
119,641 | (11,621 | ) | A | 108,020 | |||||||||
Taxes on income from continuing operations |
37,933 | (5,043 | ) | A | 32,890 | |||||||||
Income from continuing operations |
81,708 | (6,578 | ) | A | 75,130 | |||||||||
Less: Net income attributable to noncontrolling interest |
747 | — | 747 | |||||||||||
Net income attributable to common shareholders from
continuing operations |
$ | 80,961 | $ | (6,578 | ) | A | $ | 74,383 | ||||||
Earnings per share from continuing operations available to
common shareholders: |
||||||||||||||
Basic |
$ | 2.05 | $ | (0.17 | ) | A | $ | 1.88 | ||||||
Diluted |
$ | 2.03 | $ | (0.17 | ) | A | $ | 1.87 | ||||||
Weighted average common shares outstanding: |
||||||||||||||
Basic |
39,584 | 39,584 | 39,584 | |||||||||||
Diluted |
39,832 | 39,832 | 39,832 | |||||||||||
Notes to the December 31, 2008 Unaudited Pro Forma Consolidated Statements of Income
| Note A | Reflects the elimination of the operations of the Marine business. |
| December 31, 2010 | ||||||||||||||
| As Reported | Disposition | Pro Forma | ||||||||||||
| (Dollars and shares in thousands) | ||||||||||||||
| ASSETS |
||||||||||||||
Current assets |
||||||||||||||
Cash and cash equivalents |
$ | 208,452 | $ | 97,582 | A | |||||||||
| (91,928 | ) | B | $ | 214,106 | ||||||||||
Accounts receivable, net |
294,196 | (19,990 | ) | A | 274,206 | |||||||||
Inventories, net |
338,598 | (29,814 | ) | A | 308,784 | |||||||||
Prepaid expenses and other current assets |
28,831 | (987 | ) | A | 27,844 | |||||||||
Income taxes receivable |
3,888 | — | 3,888 | |||||||||||
Deferred tax assets |
39,309 | (1,809 | ) | A | 37,500 | |||||||||
Assets held for sale |
7,959 | — | 7,959 | |||||||||||
Total current assets |
921,233 | (46,946 | ) | 874,287 | ||||||||||
Property, plant and equipment, net |
287,705 | (14,291 | ) | A | 273,414 | |||||||||
Goodwill |
1,442,411 | (7,489 | ) | A | 1,434,922 | |||||||||
Intangibles assets, net |
918,522 | (15,215 | ) | A | 903,307 | |||||||||
Investments in affiliates |
4,899 | — | 4,899 | |||||||||||
Deferred tax assets |
358 | — | 358 | |||||||||||
Other assets |
68,027 | (115 | ) | A | ||||||||||
| 4,450 | A | |||||||||||||
| (450 | ) | B | 71,912 | |||||||||||
Total assets |
$ | 3,643,155 | $ | (80,056 | ) | $ | 3,563,099 | |||||||
| LIABILITIES AND EQUITY |
||||||||||||||
Current liabilities |
||||||||||||||
Notes payable |
$ | 31,211 | $ | — | $ | 31,211 | ||||||||
Current portion of long-term debt |
72,500 | (37,168 | ) | B | 35,332 | |||||||||
Accounts payable |
84,846 | (10,159 | ) | A | 74,687 | |||||||||
Accrued expenses |
117,488 | (3,658 | ) | A | ||||||||||
| 626 | A | 114,456 | ||||||||||||
Payroll and benefit-related liabilities |
71,418 | (4,469 | ) | A | 66,949 | |||||||||
Derivative liabilities |
15,634 | — | 15,634 | |||||||||||
Accrued interest |
18,347 | — | 18,347 | |||||||||||
Income taxes payable |
4,886 | 7,209 | A | |||||||||||
| (2,682 | ) | B | 9,413 | |||||||||||
Deferred tax liabilities |
4,433 | — | 4,433 | |||||||||||
Total current liabilities |
420,763 | (50,301 | ) | 370,462 | ||||||||||
Long-term borrowings |
813,409 | (47,832 | ) | B | 765,577 | |||||||||
Deferred tax liabilities |
370,819 | 6,667 | A | 377,486 | ||||||||||
Pension and postretirement benefit liabilities |
141,769 | (15,420 | ) | A | 126,349 | |||||||||
Noncurrent liability for uncertain tax positions |
62,602 | — | 62,602 | |||||||||||
Other liabilities |
46,515 | (30 | ) | A | 46,485 | |||||||||
Total liabilities |
1,855,877 | (106,916 | ) | 1,748,961 | ||||||||||
Commitments and contingencies |
||||||||||||||
Common shareholders’ equity |
||||||||||||||
Common shares, $1 par value Issued: 42,245 shares |
42,245 | — | 42,245 | |||||||||||
Additional paid-in capital |
349,156 | — | 349,156 | |||||||||||
Retained earnings |
1,578,913 | 56,546 | A | |||||||||||
| (4,696 | ) | B | 1,630,763 | |||||||||||
Accumulated other comprehensive income (loss) |
(51,880 | ) | (24,990 | ) | A | (76,870 | ) | |||||||
| 1,918,434 | 26,860 | 1,945,294 | ||||||||||||
Less: Treasury stock, at cost |
135,058 | — | 135,058 | |||||||||||
Total common shareholders’ equity |
1,783,376 | 26,860 | 1,810,236 | |||||||||||
Noncontrolling interest |
3,902 | — | 3,902 | |||||||||||
Total equity |
1,787,278 | 26,860 | 1,814,138 | |||||||||||
Total liabilities and equity |
$ | 3,643,155 | $ | (80,056 | ) | $ | 3,563,099 | |||||||
Notes to the December 31, 2010 Unaudited Pro Forma Consolidated Balance Sheet
(Dollars in thousands)
(Dollars in thousands)
| Note A | Reflects the proceeds from the sale of the Business, the Marine Note, an estimate of the taxes on the sale of the Business, the elimination of the assets, liabilities and equity components and the adjustments to record the sale of the Business. | |||||
Cash and cash equivalents — proceeds from sale of the Business |
$ | 101,600 | ||||
Cash and cash equivalents — sales related closing costs |
(4,018 | ) | ||||
Other assets — Marine Note |
4,450 | |||||
Accrued expenses — professional fees |
(626 | ) | ||||
Income taxes payable — taxes on sale of the Business |
(7,209 | ) | ||||
Net assets and liabilities of the Business sold |
(62,641 | ) | ||||
Accumulated Other Comprehensive Income — pension and other post-retirement |
(8,427 | ) | ||||
Cumulative translation related to the Business sold included in the gain |
33,417 | |||||
Retained earnings — after tax gain on sale of the Business |
$ | 56,546 | ||||
Accumulated Other Comprehensive Income — pension and other post-retirement |
$ | 8,427 | ||||
Cumulative translation related to the Business sold included in the gain |
(33,417 | ) | ||||
Accumulated Other Comprehensive Income (loss) |
$ | (24,990 | ) | |||
| Note B | Reflects a partial prepayment of the 2004 Senior Notes with a portion of the proceeds from the sale of the Business, the write-off of the 2004 Senior Notes deferred financing fees in proportion to the repayment of the notes, a non-recurring estimated make-whole fee related to the prepayment of the 2004 Senior Notes and the related tax effects associated with these activities. | |||||
Cash and cash equivalents |
$ | (91,928 | ) | |||
Other assets — deferred financing fees |
(450 | ) | ||||
Current portion of long-term borrowings — 2004 Senior Notes |
(37,168 | ) | ||||
Income taxes payable — on deferred financing fee write-off and a non-recurring estimated make-whole fee |
(2,682 | ) | ||||
Long-term borrowings — 2004 Senior Notes |
(47,832 | ) | ||||
Retained earnings — after tax deferred financing fee write-off and a non-recurring estimated make-whole fee |
(4,696 | ) | ||||
