UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q



(Mark One)
☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~June 30, 2019~~March 29, 2020



☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission file number 1-5353

TELEFLEX INCORPORATED

(Exact name of registrant as specified in its charter)



~~Delaware~~		~~23-1147939~~
~~(State or other jurisdiction of~~ ~~incorporation or organization)~~	~~(I.R.S. employer~~ ~~identification no.)~~



~~550 E. Swedesford Rd., Suite 400~~Delaware	~~Wayne,~~	PA	~~19087~~23-1147939
(~~Address~~State or other jurisdiction of ~~principal executive offices)~~ incorporation or organization)		(~~Zip Code)~~I.R.S. employer identification no.)

550 E. Swedesford Rd., Suite 400 Wayne, PA 19087

(~~610~~) Address of principal executive offices and zip code)

(610) 225-6800

(Registrant’s telephone number, including area code)

(None)

(Former Name, Former Address and Former Fiscal Year,

If Changed Since Last Report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $1.00 per share

TFX

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

~~Large accelerated filer~~

☒

~~Accelerated filer~~

☐

~~Non-accelerated filer~~

☐

~~Smaller reporting company~~

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The registrant had ~~46,232,846~~46,425,420 shares of common stock, par value $1.00 per share, outstanding as of ~~July 30, 2019.~~April 28, 2020.

TELEFLEX INCORPORATED

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED ~~JUNE 30, 2019~~MARCH 29, 2020

TABLE OF CONTENTS

Page

PART I — FINANCIAL INFORMATION

Item 1:

Financial Statements (Unaudited):

Condensed Consolidated Statements of Income

Condensed Consolidated Statements of Comprehensive Income

Condensed Consolidated Balance Sheets

Condensed Consolidated Statements of Cash Flows

Condensed Consolidated Statements of Changes in Equity

Notes to Condensed Consolidated Financial Statements

Item 2:

Management’s Discussion and Analysis of Financial Condition and Results of Operations

3219

Item 3:

Quantitative and Qualitative Disclosures About Market Risk

4026

Item 4:

Controls and Procedures

4026

PART II — OTHER INFORMATION

Item 1:

Item 1A:

Item 2:

Unregistered Sales of Equity Securities and Use of Proceeds

4129

Item 3:

Defaults Upon Senior Securities

4129

Item 4:

Mine Safety Disclosures

Item 5:

Item 6:

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

TELEFLEX INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)


	Three Months Ended						Six Months Ended							Three Months Ended
	June 30, 2019			July 1, 2018			June 30, 2019			July 1, 2018				March 29, 2020		March 31, 2019
	(Dollars and shares in thousands, except per share)													(Dollars and shares in thousands, except per share)
Net revenues	$	652,507		$	609,866		$	1,266,091		$	1,197,096		Net revenues	$	630,642	$	613,584
Cost of goods sold	279,583			265,088			548,425			521,048			Cost of goods sold	297,018		289,614
Gross profit	372,924			344,778			717,666			676,048			Gross profit	333,624		323,970
Selling, general and administrative expenses	236,186			229,917			463,879			445,254			Selling, general and administrative expenses	147,796		206,921
Research and development expenses	27,595			26,018			54,745			52,045			Research and development expenses	27,396		27,150
Restructuring and impairment charges	1,685			55,353			19,080			58,416			Restructuring and impairment charges	1,346		17,395
Gain on sale of assets	—			—			(2,739		)	—			Gain on sale of assets	—		(2,739)
Income from continuing operations before interest and taxes	107,458			33,490			182,701			120,333			Income from continuing operations before interest and taxes	157,086		75,243
Interest expense	20,758			26,649			43,450			52,592			Interest expense	15,439		22,692
Interest income	(472		)	(183		)	(811		)	(456		)	Interest income	(579)		(339)

Income from continuing operations before taxes	87,172			7,024			140,062			68,197			Income from continuing operations before taxes	142,226		52,890
Taxes on income from continuing operations	3,844			9,576			14,816			15,818			Taxes on income from continuing operations	11,074		10,972
Income (loss) from continuing operations	83,328			(2,552		)	125,246			52,379
Operating income (loss) from discontinued operations	61			94			(1,282		)	1,329
Tax (benefit) on income (loss) from discontinued operations	14			38			(308		)	20
Income (loss) from discontinued operations	47			56			(974		)	1,309
Net income (loss)	$	83,375		$	(2,496	)	$	124,272		$	53,688
Income from continuing operations													Income from continuing operations	131,152		41,918
Operating loss from discontinued operations													Operating loss from discontinued operations	(4)		(1,343)
Tax benefit on operating loss from discontinued operations													Tax benefit on operating loss from discontinued operations	(2)		(322)
Loss from discontinued operations													Loss from discontinued operations	(2)		(1,021)
Net income													Net income	$	131,150	$	40,897
Earnings per share:													Earnings per share:
Basic:													Basic:
Income (loss) from continuing operations	$	1.80		$	(0.06	)	$	2.72		$	1.15
Income (loss) from discontinued operations	0.01			0.01			(0.02		)	0.03
Net income (loss)	$	1.81		$	(0.05	)	$	2.70		$	1.18
Income from continuing operations													Income from continuing operations	$	2.83	$	0.91
Loss from discontinued operations													Loss from discontinued operations	—		(0.02)
Net income													Net income	$	2.83	$	0.89
Diluted:													Diluted:
Income (loss) from continuing operations	$	1.77		$	(0.06	)	$	2.67		$	1.12
Income (loss) from discontinued operations	—			0.01			(0.03		)	0.03
Net income (loss)	$	1.77		$	(0.05	)	$	2.64		$	1.15
Income from continuing operations													Income from continuing operations	$	2.78	$	0.89
Loss from discontinued operations													Loss from discontinued operations	—		(0.02)
Net income													Net income	$	2.78	$	0.87
Weighted average common shares outstanding													Weighted average common shares outstanding
Basic	46,172			45,581			46,111			45,455			Basic	46,382		46,050
Diluted	47,036			45,581			46,989			46,771			Diluted	47,231		46,942

The accompanying notes are an integral part of the condensed consolidated financial statements.

TELEFLEX INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

Three Months Ended Six Months Ended
June 30, 2019 July 1, 2018 June 30, 2019 July 1, 2018
(Dollars in thousands)
Net income (loss) $ 83,375
$ (2,496 ) $ 124,272
$ 53,688
Other comprehensive income (loss), net of tax:
Foreign currency translation, net of tax of $0, $9,378, $0, and $3,505, for the three and six months periods, respectively 12,568
(125,705 ) 12,332
(44,517 )
Pension and other postretirement benefit plans adjustment, net of tax of $(446), $(656), $(836), and $(890) for the three and six months periods, respectively 1,459
2,015
2,688
2,896
Derivatives qualifying as hedges, net of tax of $83, $100, $82, and $(111) for the three and six months periods, respectively 755
(329 ) 158
292
Other comprehensive income (loss), net of tax: 14,782
(124,019 ) 15,178
(41,329 )
Comprehensive income (loss) $ 98,157
$ (126,515 ) $ 139,450
$ 12,359


	Three Months Ended
	March 29, 2020		March 31, 2019
	(Dollars in thousands)
Net income	$	131,150	$	40,897
Other comprehensive income (loss), net of tax:
Foreign currency translation, net of tax of $(7,581) and $(2,056)	(18,199)		(236)
Pension and other postretirement benefit plans adjustment, net of tax of $(522) and $(390)	1,689		1,229
Derivatives qualifying as hedges, net of tax of $372 and $(1)	(3,817)		(597)
Other comprehensive (loss) income, net of tax:	(20,327)		396
Comprehensive income	$	110,823	$	41,293

The accompanying notes are an integral part of the condensed consolidated financial statements.

TELEFLEX INCORPORATED

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


	June 30, 2019		December 31, 2018			March 29, 2020		December 31, 2019
	(Dollars in thousands)					(Dollars in thousands)
ASSETS					ASSETS
Current assets					Current assets
Cash and cash equivalents	$	303,896	$	357,161	Cash and cash equivalents	$	406,477	$	301,083
Accounts receivable, net	382,142		366,286		Accounts receivable, net	441,714		418,673
Inventories, net	461,320		427,778
Inventories					Inventories	488,856		476,557
Prepaid expenses and other current assets	78,477		72,481		Prepaid expenses and other current assets	101,606		97,943
Prepaid taxes	19,306		12,463		Prepaid taxes	8,133		12,076

Total current assets	1,245,141		1,236,169		Total current assets	1,446,786		1,306,332
Property, plant and equipment, net	425,475		432,766		Property, plant and equipment, net	427,452		430,719
Operating lease assets	107,543		—		Operating lease assets	107,290		113,160
Goodwill	2,250,219		2,246,579		Goodwill	2,332,414		2,245,305
Intangible assets, net	2,242,267		2,325,052		Intangible assets, net	2,297,178		2,156,285
Deferred tax assets	3,056		2,446		Deferred tax assets	5,519		5,572
Other assets	40,709		34,979		Other assets	84,925		52,447
Total assets	$	6,314,410	$	6,277,991	Total assets	$	6,701,564	$	6,309,820
LIABILITIES AND EQUITY					LIABILITIES AND EQUITY
Current liabilities					Current liabilities
Current borrowings	$	50,000	$	86,625	Current borrowings	$	53,625	$	50,000
Accounts payable	108,059		106,709		Accounts payable	104,348		102,916
Accrued expenses	87,698		97,551		Accrued expenses	99,804		100,466
Current portion of contingent consideration	119,706		136,877		Current portion of contingent consideration	9,463		148,090
Payroll and benefit-related liabilities	88,888		104,670		Payroll and benefit-related liabilities	73,632		115,981
Accrued interest	6,009		6,031		Accrued interest	16,153		5,514
Income taxes payable	4,448		5,943		Income taxes payable	6,989		6,692
Other current liabilities	29,084		38,050		Other current liabilities	38,286		33,396

Total current liabilities	493,892		582,456		Total current liabilities	402,300		563,055
Long-term borrowings	2,081,372		2,072,200		Long-term borrowings	2,340,892		1,858,943
Deferred tax liabilities	604,856		608,221		Deferred tax liabilities	489,677		439,558
Pension and postretirement benefit liabilities	86,149		92,914		Pension and postretirement benefit liabilities	66,380		82,719
Noncurrent liability for uncertain tax positions	11,029		10,718		Noncurrent liability for uncertain tax positions	12,139		10,294
Noncurrent contingent consideration	71,965		167,370		Noncurrent contingent consideration	23,274		71,818
Noncurrent operating lease liabilities	96,502		—		Noncurrent operating lease liabilities	96,333		101,372
Other liabilities	203,801		204,134		Other liabilities	197,545		202,741
Total liabilities	3,649,566		3,738,013		Total liabilities	3,628,540		3,330,500
Commitments and contingencies					Commitments and contingencies
Total shareholders' equity	2,664,844		2,539,978		Total shareholders' equity	3,073,024		2,979,320
Total liabilities and shareholders' equity	$	6,314,410	$	6,277,991	Total liabilities and shareholders' equity	$	6,701,564	$	6,309,820

The accompanying notes are an integral part of the condensed consolidated financial statements.

TELEFLEX INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Six Months Ended							Three Months Ended
	June 30, 2019			July 1, 2018				March 29, 2020		March 31, 2019
	(Dollars in thousands)							(Dollars in thousands)
Cash flows from operating activities of continuing operations:							Cash flows from operating activities of continuing operations:
Net income	$	124,272		$	53,688		Net income	$	131,150	$	40,897
Adjustments to reconcile net income to net cash provided by operating activities:
Loss (income) from discontinued operations	974			(1,309		)
Adjustments to reconcile net income to net cash (used in) provided by operating activities:							Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Loss from discontinued operations							Loss from discontinued operations	2		1,021
Depreciation expense	31,966			29,527			Depreciation expense	16,842		15,645
Amortization expense of intangible assets	75,285			75,008
Amortization expense of deferred financing costs and debt discount	2,249			2,368
Intangible asset amortization expense							Intangible asset amortization expense	38,911		37,751
Deferred financing costs and debt discount amortization expense							Deferred financing costs and debt discount amortization expense	945		1,179

Gain on sale of assets	(2,739		)	—			Gain on sale of assets	—		(2,739)
Fair value step up of acquired inventory sold							Fair value step up of acquired inventory sold	1,707		—
Changes in contingent consideration	25,456			34,618			Changes in contingent consideration	(46,502)		13,057

Impairment of long-lived assets	6,911			1,865			Impairment of long-lived assets	—		3,030
Stock-based compensation	12,700			10,737			Stock-based compensation	3,522		5,781
Deferred income taxes, net	(5,495		)	4,821			Deferred income taxes, net	679		2,603
Payments for contingent consideration	(26,092		)	—			Payments for contingent consideration	(79,771)		(25,935)
Interest benefit on swaps designated as net investment hedges							Interest benefit on swaps designated as net investment hedges	(4,874)		(3,882)
Other	(4,527		)	(3,669		)	Other	(18,143)		4,536
Changes in assets and liabilities, net of effects of acquisitions and disposals:							Changes in assets and liabilities, net of effects of acquisitions and disposals:
Accounts receivable	(19,747		)	(15,886		)	Accounts receivable	(23,145)		(14,102)
Inventories	(33,970		)	(15,017		)	Inventories	(12,346)		(19,200)
Prepaid expenses and other assets	(6,381		)	(3,611		)	Prepaid expenses and other assets	6,403		(11,524)
Accounts payable, accrued expenses and other liabilities	(6,231		)	38,112			Accounts payable, accrued expenses and other liabilities	(31,488)		8,856
Income taxes receivable and payable, net	(17,347		)	(29,668		)	Income taxes receivable and payable, net	4,651		3,192
Net cash provided by operating activities from continuing operations	157,284			181,584
Net cash (used in) provided by operating activities from continuing operations							Net cash (used in) provided by operating activities from continuing operations	(11,457)		60,166
Cash flows from investing activities of continuing operations:							Cash flows from investing activities of continuing operations:
Expenditures for property, plant and equipment	(56,107		)	(38,004		)	Expenditures for property, plant and equipment	(19,684)		(23,494)
Proceeds from sale of assets	1,178			—			Proceeds from sale of assets	400		991
Payments for businesses and intangibles acquired, net of cash acquired	(1,025		)	(22,450		)	Payments for businesses and intangibles acquired, net of cash acquired	(265,160)		(1,025)
Net interest proceeds on swaps designated as net investment hedges	8,330			—

Net cash used in investing activities from continuing operations	(47,624		)	(60,454		)	Net cash used in investing activities from continuing operations	(284,444)		(23,528)
Cash flows from financing activities of continuing operations:							Cash flows from financing activities of continuing operations:
Proceeds from new borrowings	25,000			—			Proceeds from new borrowings	485,000		—
Reduction in borrowings	(52,500		)	(18,500		)
Debt extinguishment, issuance and amendment fees	(4,703		)	(188		)

Net proceeds from share based compensation plans and the related tax impacts	7,829			9,800			Net proceeds from share based compensation plans and the related tax impacts	(3,022)		2,242
Payments for contingent consideration	(111,928		)	(62,574		)	Payments for contingent consideration	(60,881)		(110,953)
Dividends paid	(31,347		)	(30,938		)	Dividends paid	(15,767)		(15,650)
Net cash used in financing activities from continuing operations	(167,649		)	(102,400		)
Net cash provided by (used in) financing activities from continuing operations							Net cash provided by (used in) financing activities from continuing operations	405,330		(124,361)
Cash flows from discontinued operations:							Cash flows from discontinued operations:
Net cash provided by (used in) operating activities	2,799			(464		)
Net cash provided by (used in) discontinued operations	2,799			(464		)
Net cash (used in) provided by operating activities							Net cash (used in) provided by operating activities	(193)		3,610
Net cash (used in) provided by discontinued operations							Net cash (used in) provided by discontinued operations	(193)		3,610
Effect of exchange rate changes on cash and cash equivalents	1,925			(5,520		)	Effect of exchange rate changes on cash and cash equivalents	(3,842)		(1,836)
Net (decrease) increase in cash and cash equivalents	(53,265		)	12,746
Net increase (decrease) in cash and cash equivalents							Net increase (decrease) in cash and cash equivalents	105,394		(85,949)
Cash and cash equivalents at the beginning of the period	357,161			333,558			Cash and cash equivalents at the beginning of the period	301,083		357,161
Cash and cash equivalents at the end of the period	$	303,896		$	346,304		Cash and cash equivalents at the end of the period	$	406,477	$	271,212

Non cash investing activities of continuing operations:
Property, plant and equipment additions due to build-to-suit lease transaction	$	—		$	28,147

Non cash financing activities of continuing operations:
Acquisition of treasury stock associated with settlement and exchange of convertible note hedge and warrant agreements	$	—		$	36,877

The accompanying notes are an integral part of the condensed consolidated financial statements.

TELEFLEX INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Unaudited)


																									Common Stock							Additional Paid In Capital		Retained Earnings		Accumulated Other Comprehensive Loss	Treasury Stock						Total
	Common Stock			Additional Paid In Capital			Retained Earnings			Accumulated Other Comprehensive Loss				Treasury Stock						Total					Shares			Dollars											Shares			Dollars
	Shares	Dollars				Shares							Dollars						(Dollars and shares in thousands, except per share)
	(Dollars and shares in thousands, except per share)
Balance at December 31, 2018	47,248	$	47,248			$		574,761		$	2,427,599			$	(341,085	)		1,232					$	(168,545	)	$	2,539,978
Balance at December 31, 2019																							Balance at December 31, 2019		47,536			$	47,536	$	616,980	$	2,824,916	$	(344,392)	1,182	$	(165,720)		$	2,979,320
Cumulative effect adjustment resulting from the adoption of new accounting standards							(1,321		)											(1,321		)	Cumulative effect adjustment resulting from the adoption of new accounting standards									(791)								(791)
Net income							40,897													40,897			Net income									131,150								131,150
Cash dividends ($0.34 per share)							(15,650		)											(15,650		)	Cash dividends ($0.34 per share)									(15,767)								(15,767)
Other comprehensive income										396										396			Other comprehensive income											(20,327)						(20,327)
Shares issued under compensation plans	75	75		3,094										(40	)		2,029			5,198			Shares issued under compensation plans		24			24		(3,074)						(37)	1,748			(1,302)
Deferred compensation				127										(4	)		253			380			Deferred compensation							383						(5)	358			741
Balance at March 31, 2019	47,323	47,323		577,982			2,451,525			(340,689		)		1,188			(166,263		)	2,569,878
Net income							83,375													83,375
Cash dividends ($0.34 per share)							(15,697		)											(15,697		)
Other comprehensive income										14,782										14,782
Shares issued under compensation plans	77	77		12,252										(2	)		177			12,506
Balance as of June 30, 2019	47,400	$	47,400	$	590,234		$	2,519,203		$	(325,907	)		1,186			$	(166,086	)	$	2,664,844
Balance at March 29, 2020																							Balance at March 29, 2020		47,560			$	47,560	$	614,289	$	2,939,508	$	(364,719)	1,140	$	(163,614)		$	3,073,024


	Common Stock					Additional Paid In Capital		Retained Earnings		Accumulated Other Comprehensive Loss	Treasury Stock						Total
	Shares	Dollars											Shares			Dollars
	(Dollars and shares in thousands, except per share)
Balance at December 31, 2018	47,248	$	47,248	$	574,761	$	2,427,599	$	(341,085)	1,232	$	(168,545)		$	2,539,978
Cumulative effect adjustment resulting from the adoption of new accounting standards						(1,321)								(1,321)
Net income						40,897								40,897
Cash dividends ($0.34 per share)						(15,650)								(15,650)
Other comprehensive income								396						396
Shares issued under compensation plans	75	75		3,094						(40)	2,029			5,198
Deferred compensation				127						(4)	253			380
Balance at March 31, 2019	47,323	$	47,323	$	577,982	$	2,451,525	$	(340,689)	1,188	$	(166,263)		$	2,569,878

Common Stock Additional
Paid In
Capital Retained
Earnings Accumulated Other Comprehensive Loss Treasury Stock Total
Shares Dollars Shares Dollars
(Dollars and shares in thousands, except per share)
Balance at December 31, 2017 46,871
$ 46,871
$ 591,721
$ 2,285,886
$ (265,091 ) 1,704
$ (228,856 ) $ 2,430,531
Cumulative effect adjustment resulting from the adoption of new accounting standards 3,076
3,076
Net income 56,184
56,184
Cash dividends ($0.34 per share) (15,447 ) (15,447 )
Other comprehensive income 82,690
82,690
Settlements of warrants (17,884 ) (132 ) 17,872
(12 )
Shares issued under compensation plans 97
97
992
(43 ) 3,033
4,122
Deferred compensation (8 ) 322
322
Balance at April 1, 2018 46,968
46,968
574,829
2,329,699
(182,401 ) 1,521
(207,629 ) 2,561,466
Net income (2,496 ) (2,496 )
Cash dividends ($0.34 per share) (15,491 ) (15,491 )
Other comprehensive income (124,019 ) (124,019 )
Settlements of warrants (19,019 ) (140 ) 19,005
(14 )
Shares issued under compensation plans 114
114
13,992
(2 ) 194
14,300
Deferred compensation 235
235
Balance as of July 1, 2018 47,082
$ 47,082
$ 570,037
$ 2,311,712
$ (306,420 ) 1,379
$ (188,430 ) $ 2,433,981

The accompanying notes are an integral part of the condensed consolidated financial statements.

TELEFLEX INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1 — Basis of presentation

The accompanying unaudited condensed consolidated financial statements of Teleflex Incorporated and its subsidiaries (“we,” “us,” ~~“our,”~~“our" and “Teleflex” ~~and the “Company”~~) are prepared on the same basis as its annual consolidated financial statements.

In the opinion of management, the financial statements reflect all adjustments, which are of a normal recurring nature, necessary for the fair ~~presentation~~statement of the financial statements for interim periods in accordance with accounting principles generally accepted in the United States of America ("GAAP") and Rule 10-01 of Securities and Exchange Commission ("SEC") Regulation S-X, which sets forth the instructions for the form and content of presentation of financial statements included in Form 10-Q. The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those ~~estimates.~~estimates particularly as it relates to estimates reliant on forecasts and other assumptions impacted by the COVID-19 pandemic, which are described in more detail in the 'Risks and uncertainties' section below. The results of operations for the periods reported are not necessarily indicative of those that may be expected for a full year.

In accordance with applicable accounting standards and as permitted by Rule 10-01 of Regulation S-X, the accompanying condensed consolidated financial statements do not include all of the information and footnote disclosures that are required to be included in ~~the Company's~~our annual consolidated financial statements. Therefore, ~~the Company's~~our quarterly condensed consolidated financial statements should be read in conjunction with ~~the Company's~~our consolidated financial statements included in ~~its~~our Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019. For the three months ended March 29, 2020 and March 31, 2019, we reclassified intangible asset amortization expense of $20.9 million and $20.8 million, respectively, from selling, general and administrative expenses to cost of goods sold.

Risks and Uncertainties

We are subject to risks and uncertainties as a result of the COVID-19 pandemic. The extent of the impact of the COVID-19 pandemic on our business is highly uncertain and difficult to predict due to the rapidly evolving environment and continued uncertainties created by the COVID-19 pandemic. Among other things, the response to the COVID-19 pandemic has had the effect of reducing the number of elective procedures being carried out by our customers, thereby reducing demand for products used in elective procedures, while creating an increase in demand for products used in the treatment of patients with COVID-19. The COVID-19 pandemic has significantly impacted economic activity and markets around the world. If the pandemic continues and conditions worsen, it could negatively impact our business, results of operations, financial condition and liquidity in numerous ways, including, but not limited to, lower revenues in our product categories dependent on elective procedures; further disruption in the manufacture of our products including increased manufacturing and distribution costs; extended delays in or defaults on payments of outstanding receivables; and increased volatility and pricing in capital markets. Further, the COVID-19 pandemic may cause disruption to our suppliers or their suppliers and/or the distribution of our products, whether through our direct sales force or our distributors.

The severity of the impact of the COVID-19 pandemic on our business will depend on a number of factors, including, but not limited to, the duration and severity of the pandemic and the extent and severity of the impact on our employees, contractors, suppliers, customers and other business partners, all of which are uncertain and cannot be predicted. As of the date of issuance of these condensed consolidated financial statements, the extent to which the COVID-19 pandemic may materially impact our financial condition, liquidity, or results of operations is uncertain.

Note 2 — Recently issued accounting standards

In February 2016, the FASB issued guidance that changes the requirements for accounting for leases. Under the new guidance, in connection with a lease as to which an entity is a lessee, the entity generally must recognize a right-to-use asset and a lease liability on the balance sheet, initially measured as the present value of lease payments under the lease. Under previous guidance, operating leases were not recognized on the balance sheet. The Company adopted the new standard on January 1, 2019 using a modified retrospective transition approach, which requires leases existing at, or entered into after, January 1, 2019 to be recognized and measured in the condensed consolidated balance sheet. The Company recognized additional net lease assets and lease liabilities of $105.3 million and $106.6 million, respectively, upon adoption of the guidance. The difference between the additional lease assets and lease liabilities was recorded as an adjustment to the Company's opening balance of retained earnings. Prior period amounts have not been adjusted and continue to reflect the Company's historical accounting.

As permitted under the new guidance, the Company has made an accounting policy election not to apply the recognition provisions of the new guidance to short term leases (leases with a lease term of 12 months or less that do not include an option to purchase the underlying asset that the lessee is reasonably certain to exercise); instead, the Company will recognize the lease payments for short term leases on a straight-line basis over the lease term. In addition, the Company has elected to apply certain practical expedients available under the new guidance. As a result, and in connection with the transition to the new guidance, the Company did not reassess (i) whether any expired or existing contracts are or contain leases, (ii) the classification of any expired or existing leases, or (iii) initial direct costs for any existing leases. The Company applied the practical expedients described above to its entire lease portfolio at the January 1, 2019 adoption date. Furthermore, as permitted under the new guidance, the Company has made, as a practical expedient, an accounting policy election to not separate lease and non-lease components and instead will account for each separate lease component and the non-lease components associated with that lease component as a single lease component. Additional information and disclosures required by this standard are contained in Note 8.

In February 2018, the FASB issued new guidance to address a narrow-scope financial reporting issue that arose as a consequence of federal tax legislation commonly referred to as the Tax Cuts and Jobs Act ("the TCJA"). Existing guidance requires that deferred tax liabilities and assets be adjusted for a change in tax laws or rates with the effect included in income from continuing operations in the reporting period that includes the enactment date. The guidance is applicable even in situations in which the related income tax effects of items in accumulated other comprehensive income were originally recognized in other comprehensive income (rather than in net income), such as amounts related

~~TELEFLEX INCORPORATED~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)~~

~~(Unaudited)~~

to benefit plans and hedging activity. As a result, the tax effects of items within accumulated other comprehensive income (referred to as stranded tax effects) do not reflect the appropriate tax rate. The new guidance, which was effective January 1, 2019, permits reclassification of these amounts from accumulated other comprehensive income to retained earnings thereby eliminating the stranded tax effects. The new guidance also requires certain disclosures about the stranded tax effects. The Company elected not to reclassify stranded tax effects from accumulated other comprehensive income to retained earnings.

In June 2016, the ~~FASB~~Financial Accounting Standards Board ("FASB") issued new guidance that changes the methodology to be used to measure credit losses for certain financial instruments and financial assets, including trade receivables. Under current guidance, an entity reflects credit losses on financial assets measured on an amortized cost basis only when it is probable that losses have been incurred, generally considering only past events and current conditions in determining the incurred loss. The new guidance requires the recognition of an allowance

TELEFLEX INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

that reflects the current estimate of credit losses expected to be incurred over the life of the financial asset, based not only on historical experience and current conditions, but also on reasonable forecasts. The main objective of the new guidance is to provide financial statement users with more useful information in making decisions about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. We adopted the new standard on January 1, 2020 using a modified retrospective transition approach by recognizing a cumulative-effect adjustment of $0.8 million to reduce our opening balance of retained earnings as of the adoption date. Prior period amounts have not been adjusted and continue to reflect our historical accounting.

In December 2019, the FASB issued new guidance that simplifies various aspects of accounting for income taxes including those related to the step-up in the tax basis of goodwill, intraperiod tax allocations and the interim period effects of changes in tax laws or rates. The new guidance is effective for fiscal years beginning after December 15, ~~2019,~~2020, including interim periods within those fiscal years. Early adoption is permitted. The majority of the modifications under the new guidance will be applied on a modified retrospective basis through a cumulative-effect adjustment to retained earnings ~~as of the beginning of the annual period in which the adoption is effective. The Company is~~on January 1, 2021. We are currently evaluating the impact the guidance will have on ~~its~~our consolidated financial statements and related disclosures.

In March 2020, the SEC adopted final rules that amend the financial disclosure requirements for subsidiary issuers and guarantors of registered debt securities in Rule 3-10 of Regulation S-X. The SEC amended its financial disclosure requirements for companies that conduct registered debt offerings involving subsidiaries as either issuers or guarantors and affiliates whose securities are pledged as collateral. The SEC narrowed the circumstances that require separate financial statements of subsidiary issuers and guarantors and streamlined the alternative disclosures ~~but it is not expected~~required in lieu of those statements. The SEC replaced the requirement for separate financial statements of affiliates whose securities are pledged as collateral for registered securities with requirements similar to ~~have a material effect on~~those adopted for subsidiary issuers and guarantors. The new disclosures may be located, in all cases, outside of the ~~consolidated~~ financial statements. The rule is effective January 4, 2021, but earlier compliance is permitted. We adopted the new rule during the first quarter of 2020. The disclosures are now located within the Liquidity and Capital Resources section of Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations.

From time to time, new accounting guidance is issued by the FASB or other standard setting bodies that is adopted by ~~the Company~~us as of the effective date or, in some cases where early adoption is permitted, in advance of the effective date. ~~The Company has~~We have assessed the recently issued guidance that is not yet effective and, unless otherwise indicated above, believes the new guidance will not have a material impact on the ~~its~~ consolidated results of operations, cash flows or financial position.

Note 3 - Net revenues

~~The Company~~We primarily ~~generates~~generate revenue from the sale of medical devices including single use disposable devices and, to a lesser extent, reusable devices, instruments and capital equipment. Revenue is recognized when obligations under the terms of a contract with ~~the Company’s~~our customer are satisfied; this occurs upon the transfer of control of the products. Generally, transfer of control to the customer occurs at the point in time when ~~the Company’s~~our products are shipped from the manufacturing or distribution facility. For ~~the Company’s~~our Original Equipment and Development Services ("OEM") segment, most revenue is recognized over time because the OEM segment generates revenue from the sale of custom products that have no alternative use and ~~the Company has~~we have an enforceable right to payment to the extent that performance has been completed. ~~The Company markets~~We market and ~~sells~~sell products through ~~its~~our direct sales force and distributors to customers within the following end markets: (1) hospitals and healthcare providers; (2) other medical device manufacturers; and (3) home care providers such as pharmacies, which comprised ~~88%~~86%, ~~10%~~12% and 2% of consolidated net revenues, respectively, for the ~~six~~three months ended ~~June 30, 2019.~~March 29, 2020. Revenue is measured as the amount of consideration ~~the Company expects~~we expect to receive in exchange for transferring goods. With respect to the custom products sold in the OEM segment, revenue is measured using the units produced output method. Payment is generally due 30 days from the date of invoice.

TELEFLEX INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

The following table disaggregates revenue by global product category for the three ~~and six~~ months ended ~~June 30, 2019~~March 29, 2020 and ~~July 1, 2018.~~March 31, 2019.


	Three Months Ended				Six Months Ended					Three Months Ended
	June 30, 2019		July 1, 2018		June 30, 2019		July 1, 2018			March 29, 2020		March 31, 2019
	(Dollars in thousands)									(Dollars in thousands)
Vascular access	$	153,647	$	140,149	$	297,544	$	284,177	Vascular access	$	150,256	$	143,897
Anesthesia	85,723		89,311		165,975		174,233		Anesthesia	75,702		80,252
Interventional	104,785		98,189		207,969		188,331		Interventional	99,931		103,184
Surgical	95,570		90,517		182,289		176,138		Surgical	75,432		86,719
Interventional urology	67,952		47,674		127,683		89,974		Interventional urology	74,194		59,731
OEM	56,428		52,594		110,666		98,448		OEM	63,389		54,238
Other₍₁₎	88,402		91,432		173,965		185,795		Other₍₁₎	91,738		85,563
Net revenues ₍₂₎	$	652,507	$	609,866	$	1,266,091	$	1,197,096	Net revenues ₍₂₎	$	630,642	$	613,584

(1) Revenues in the "Other" category in the table above include revenues generated from sales of ~~the Company’s~~our respiratory and urology products (other than interventional urology products). ~~For~~

(2) The product categories listed above are presented on a global basis, while each of our reportable segments other than the ~~three and six months ended June 30, 2019,~~OEM reportable segment are defined based on the ~~Company reclassified~~geographic location of its ~~cardiac products~~operations; the OEM reportable segment operates globally. Each of the geographically based reportable segments include net revenues from ~~"Other" to "Interventional". The comparative prior year period has been restated to conform to~~each of the ~~current period presentation.~~

~~(2)~~

The product categories listed above are presented on a global basis; in contrast, each of the Company’s reportable segments other than the OEM reportable segment are defined exclusively based on the geographic location of its operations; the OEM reportable segment operates globally. Each of the Company’s geographically based reportable segments include net revenues from each of the non-OEM product categories listed above.

Note 4 — ~~Divestitures~~Acquisitions

On February ~~4, 2019,~~18, 2020, we acquired IWG High Performance Conductors, Inc., a privately-held original equipment manufacturer of minimally invasive medical products and high performance conductors, for $260.0 million. The acquisition, which complements our OEM product portfolio, was financed using borrowings under our revolving credit facility. Based on the ~~Company sold substantially all of~~preliminary purchase price allocation, the assets ~~related to its vein catheter reprocessing business for $12.6~~acquired principally consist of customer relationships of $139.0 million, intellectual property of $40.0 million and goodwill of $107.1 million. The ~~Company recognized~~intangible assets are being amortized over a ~~$2.7 million pre-tax gain on~~useful life of 20 years. Goodwill arising from the ~~sale of assets, which~~acquisition represents the excess of the $9.7 million fair value of consideration received over the carrying value of the assets sold. In connection with the sale, the purchaser of the assets issued a secured promissory notecosts synergies, revenue growth attributable to ~~the Company in the principal amount of $10.5 million. The purchaser's obligations under the notes are secured by a lien on substantially all of the purchaser's assets. The purchaser~~anticipated increased market penetration from acquired products and future customers and is obligated to repay the principal amount of the promissory note in annual installments of $2.1 million through the fifth anniversary of the date of sale. On the date of sale, the fair value of the promissory note was $7.6 million, which the Company calculated by applying a discount rate determined after taking into account the creditworthiness of the purchaser. As of June 30, 2019, the Company had $8.0 million in receivables related to the promissory note, of which $2.0 million and $6.0 million are included in accounts receivable, net and other assets, respectively, within the condensed consolidated balance sheet.not tax deductible.

TELEFLEX INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

Note 5 — Restructuring and impairment charges ~~(credits)~~

We have ongoing restructuring programs primarily related to the relocation of manufacturing operations to existing lower-cost locations and related workforce reductions (referred to as 2019, 2018 and 2014 Footprint realignment plans). The following tables provide a summary of our cost estimates and other information ~~regarding restructuring~~associated with these ongoing Footprint realignment plans:

2019 Footprint realignment plan

2018 Footprint realignment plan

2014 Footprint realignment plan

Program expense estimates:

(Dollars in millions)

Termination benefits

$19 to $23

$60 to $70

$12 to $13

Other costs₍₁₎

1 to 2

2 to 4

1 to 2

Restructuring charges

20 to 25

62 to 74

13 to 15

Restructuring related charges₍₂₎

36 to 45

40 to 59

34 to 37

Total restructuring and restructuring related charges

$56 to $70

$102 to $133

$47 to $52

Other program estimates:

Expected cash outlays

$53 to $66

$99 to $127

$38 to $43

Expected capital expenditures

$29 to $35

$19 to $23

$25 to $30

Other program information:

Period initiated

February 2019

May 2018

April 2014

Estimated period of substantial completion

2022

2024

2021

Aggregate restructuring charges

$14.6

$54.5

$13.0

Restructuring reserve:

As of March 29, 2020

$12.3

$43.9

$3.6

Restructuring related charges incurred:

For three months ended March 29, 2020

$2.5

$1.2

$0.9

Aggregate restructuring related charges

$9.1

$8.4

$33.1

(1)Includes facility closure, employee relocation, equipment relocation and ~~impairment charges recognized by the Company for the three and six months ended June 30, 2019 and July 1, 2018:~~outplacement costs.

Three Months Ended June 30, 2019
Termination benefits
Other costs ₍₁₎
Total
(Dollars in thousands)
2019 Footprint realignment plan $ (459 ) $ 30
$ (429 )
2018 Footprint realignment plan (2,275 ) 134
$ (2,141 )
Other restructuring programs₍₂₎
62
312
374
Restructuring charges (credits) (2,672 ) 476
(2,196 )
Asset impairment charges —
3,881
3,881
Restructuring and impairment charges (credits) $ (2,672 ) $ 4,357
$ 1,685

Three Months Ended July 1, 2018
Termination benefits
Other costs ₍₁₎
Total
(Dollars in thousands)
2018 Footprint realignment plan $ 52,345
$ 129
$ 52,474
Other restructuring programs ₍₄₎
574
440
1,014
Restructuring charges 52,919
569
53,488
Asset impairment charges —
1,865
1,865
Restructuring and impairment charges $ 52,919
$ 2,434
$ 55,353

Six Months Ended June 30, 2019
Termination Benefits
Other costs ₍₁₎
Total
(Dollars in thousands)
2019 Footprint realignment plan $ 12,516
$ 30
$ 12,546
2018 Footprint realignment plan (1,838 ) 708
(1,130 )
Other restructuring programs₍₂₎
188
565
753
Restructuring charges 10,866
1,303
12,169
Asset impairment charges —
6,911
6,911
Restructuring and impairment charges $ 10,866
$ 8,214
$ 19,080

Six Months Ended July 1, 2018
Termination Benefits
Other costs ₍₁₎
Total
(Dollars in thousands)
2018 Footprint realignment plan $ 52,345
$ 129
$ 52,474
2016 Footprint realignment plan ₍₃₎
2,199
291
2,490
Other restructuring programs ₍₄₎
1,032
555
1,587
Restructuring charges 55,576
975
56,551
Asset impairment charges —
1,865
1,865
Restructuring and impairment charges $ 55,576
$ 2,840
$ 58,416


~~(1)~~	~~Other restructuring costs include facility closure, contract termination and other exit costs.~~


~~(2)~~	~~Includes the Vascular Solutions integration program (initiated in 2017) as well as the 2016 and 2014 Footprint realignment plans.~~

~~(3)~~(2)Restructuring related charges represent costs that are directly related to the programs and principally constitute costs to transfer manufacturing operations to the existing lower-cost locations, project management costs and accelerated depreciation. The ~~2016~~2018 Footprint realignment plan ~~involved the relocation of certain manufacturing operations, the relocation and outsourcing of certain distribution operations and~~also includes a ~~related workforce reduction at certain of the Company's facilities. The program is substantially complete and the Company expects future restructuring expenses~~charge associated with our exit from the ~~program, if any,~~facilities that is expected to be ~~immaterial.~~imposed by the taxing authority in the affected jurisdiction. Excluding this tax charge, substantially all of these charges are expected to be recognized within cost of goods sold.


Three Months Ended March 29, 2020
	Termination benefits		Other costs ₍₁₎		Total
	(Dollars in thousands)
2019 Footprint realignment plan	$	829	$	9	$	838
2018 Footprint realignment plan	314		81		395
Other restructuring programs₍₂₎	(107)		220		113
Restructuring charges	$	1,036	$	310	$	1,346

TELEFLEX INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)


Three Months Ended March 31, 2019
	Termination benefits		Other costs ₍₁₎		Total
	(Dollars in thousands)
2019 Footprint realignment plan	$	12,975	$	—	$	12,975
2018 Footprint realignment plan	437		574		1,011
Other restructuring programs ₍₃₎	126		253		379
Restructuring charges	$	13,538	$	827	$	14,365
Asset impairment charges	—		3,030		3,030
Restructuring and impairment charges	$	13,538	$	3,857	$	17,395

~~(4)~~(1) Other costs include facility closure, contract termination and other exit costs.

(2) Includes program initiated during third quarter of 2019 as well as the 2016 and 2014 Footprint realignment ~~plan,~~plan.

(3) Includes the Vascular Solutions integration program ~~and the EMEA restructuring program~~ (initiated in 2017).

~~2019 Footprint Realignment Plan~~

~~In February 2019,~~ as well as the ~~Company initiated a restructuring plan primarily involving the relocation of certain manufacturing operations to existing lower-cost locations~~2016 and related workforce reductions (the "2019 Footprint realignment plan"). These actions are expected to be substantially completed during 2022. The following table provides a summary of the Company’s cost estimates by major type of expense associated with the 2019 Footprint realignment plan:



~~Type of expense~~	~~Total estimated amount expected to be incurred~~
~~Termination benefits~~	~~$19 million to $23 million~~
~~Other exit costs~~ ₍₁₎	~~$1 million to $2 million~~
~~Restructuring charges~~	~~$20 million to $25 million~~
~~Restructuring related charges~~ ₍₂₎	~~$36 million to $45 million~~
~~Total restructuring and restructuring related charges~~	~~$56 million to $70 million~~


~~(1)~~	~~Includes facility closure, employee relocation, equipment relocation and outplacement costs.~~


~~(2)~~	Restructuring related charges represent costs that are directly related to the 2019 Footprint realignment plan and principally constitute costs to transfer manufacturing operations to existing lower-cost locations, project management costs and accelerated depreciation. Most of these charges are expected to be recognized within cost of goods sold.

In addition to the restructuring charges shown in the tables above, the Company recorded restructuring related charges with respect to the 2019 Footprint realignment plan of $1.0 million and $1.7 million for the three and six months ended June 30, 2019 within cost of goods sold.

~~As of June 30, 2019, the Company has a restructuring reserve of $11.8 million in connection with this plan, all of which relate to termination benefits.~~

~~2018 Footprint Realignment Plan~~

On May 1, 2018, the Company initiated a restructuring plan involving the relocation of certain European manufacturing operations to existing lower-cost locations, the outsourcing of certain of the Company’s European distribution operations and related workforce reductions (the “2018 Footprint realignment plan"). These actions are expected to be substantially completed by the end of 2024.

In addition to the restructuring charges shown in the tables above, the Company recorded restructuring related charges with respect to the 2018 Footprint realignment plan of $0.7 million and $1.3 million for the three and six months ended June 30, 2019 and July 1, 2018, respectively and $1.0 million for each of the three and six months ended July 1, 2018. The restructuring related charges were included within cost of goods sold. The majority of the restructuring related charges in both periods constituted costs arising from the transfer of manufacturing operations to new locations.

The Company estimates that is will incur aggregate pre-tax restructuring and restructuring related charges in connection with the 2018 Footprint realignment plan of approximately $102 million to $133 million. As of June 30, 2019, the Company has incurred aggregate restructuring charges in connection with the 2018 Footprint realignment plan of $53.9 million. In addition, as of June 30, 2019, the Company has incurred aggregate restructuring related charges of $5.4 million with respect to the 2018 Footprint realignment plan, consisting of accelerated depreciation and certain other costs that principally resulted from the transfer of manufacturing operations to new locations. The restructuring related charges primarily were included in cost of goods sold. As of June 30, 2019, the Company has a restructuring reserve of $45.0 million in connection with this plan, all of which related to termination benefits.

~~2014 Footprint Realignment Plan~~

~~In 2014, the Company initiated a restructuring plan (“the~~ 2014 Footprint realignment ~~plan”) involving the consolidation of operations and a related reduction in workforce at certain facilities, and the relocation of manufacturing~~

~~TELEFLEX INCORPORATED~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)~~

~~(Unaudited)~~

~~operations from certain higher-cost locations to existing lower-cost locations. These actions commenced in the second quarter 2014 and are expected to be substantially completed by the end of 2020.~~

The Company recorded restructuring related charges with respect to the 2014 Footprint realignment plan of $0.7 million and $1.3 million for the three and six months ended June 30, 2019, respectively, and $0.6 million and $1.0 million for the three and six months ended July 1, 2018, respectively. The majority of these restructuring related charges in both periods constituted costs arising from the transfer of manufacturing operations to new locations.

plans.

The Company estimates that it will incur aggregate pre-tax restructuring and restructuring related charges in connection with the 2014 Footprint realignment plan of $47 million to $52 million. As of June 30, 2019, the Company has incurred aggregate restructuring charges of $12.8 million in connection with the 2014 Footprint realignment plan. Additionally, as of June 30, 2019, the Company has incurred aggregate restructuring related charges of $30.5 million in connection with the 2014 Footprint realignment plan, consisting of accelerated depreciation and certain other costs that principally resulted from the transfer of manufacturing operations from the existing locations to new locations. These restructuring related charges primarily were included in cost of goods sold. As of June 30, 2019, the Company has a restructuring reserve of $3.8 million in connection with the plan, all of which related to termination benefits.

As the restructuring programs progress, management will reevaluate the estimated expenses and charges set forth above, and may revise its estimates, as appropriate, consistent with GAAP. For additional information related to the Company's restructuring programs, see Note 5 to the Company's consolidated financial statements included in its annual report on Form 10-K for the year ended December 31, 2018.

Note 6 — Inventories ~~net~~

Inventories as of ~~June 30, 2019~~March 29, 2020 and December 31, ~~2018~~2019 consisted of the following:


	March 29, 2020		December 31, 2019
	(Dollars in thousands)
Raw materials	$	125,115	$	114,302
Work-in-process	70,012		71,479
Finished goods	293,729		290,776


Inventories	$	488,856	$	476,557

June 30, 2019 December 31, 2018
(Dollars in thousands)
Raw materials $ 131,252
$ 111,105
Work-in-process 63,465
62,334
Finished goods 266,603
254,339
Inventories, net $ 461,320
$ 427,778

Note 7 — Goodwill and other intangible assets, net

The following table provides information relating to changes in the carrying amount of goodwill by reportable operating segment for the ~~six~~three months ended ~~June 30,~~March 29, 2020:


	Americas		EMEA		Asia		OEM		Total
	(Dollars in thousands)
December 31, 2019	$	1,550,925	$	475,772	$	213,725	$	4,883	$	2,245,305


Goodwill related to acquisitions	—		—		—		107,129		107,129

Currency translation adjustment	(5,095)		(8,224)		(6,701)		—		(20,020)
March 29, 2020	$	1,545,830	$	467,548	$	207,024	$	112,012	$	2,332,414

The gross carrying amount of, and accumulated amortization relating to, intangible assets as of March 29, 2020 and December 31, 2019: were as follows:


	Gross Carrying Amount						Accumulated Amortization
	March 29, 2020		December 31, 2019		March 29, 2020		December 31, 2019
	(Dollars in thousands)
Customer relationships	$	1,161,837	$	1,021,852	$	(378,423)	$	(367,585)
In-process research and development	27,881		27,940		—		—
Intellectual property	1,391,133		1,351,990		(422,454)		(402,340)
Distribution rights	23,352		23,369		(19,115)		(18,859)
Trade names	561,622		563,315		(54,324)		(50,718)
Non-compete agreements	22,497		22,618		(16,828)		(15,297)
	$	3,188,322	$	3,011,084	$	(891,144)	$	(854,799)

Americas EMEA Asia OEM Total
(Dollars in thousands)
December 31, 2018 $ 1,549,534
$ 480,615
$ 211,547
$ 4,883
$ 2,246,579
Goodwill related to acquisitions 174
75
476
—
725
Currency translation adjustment 1,221
196
1,498
—
2,915
June 30, 2019 $ 1,550,929
$ 480,886
$ 213,521
$ 4,883
$ 2,250,219

TELEFLEX INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

~~The Company's gross carrying amount of, and accumulated amortization relating to, intangible assets as of June 30, 2019 and December 31, 2018 were as follows:~~

Gross Carrying Amount Accumulated Amortization
June 30, 2019 December 31, 2018 June 30, 2019 December 31, 2018
(Dollars in thousands)
Customer relationships $ 1,025,516
$ 1,030,194
$ (345,715 ) $ (322,972 )
In-process research and development 28,404
28,457
—
—
Intellectual property 1,359,876
1,363,516
(363,396 ) (322,539 )
Distribution rights 23,455
23,465
(18,397 ) (17,860 )
Trade names 565,434
565,070
(43,644 ) (36,379 )
Non-compete agreements 22,981
23,004
(12,247 ) (8,904 )
$ 3,025,666
$ 3,033,706
$ (783,399 ) $ (708,654 )

Note 8 — ~~Leases~~

The Company has operating leases for various types of properties, consisting of manufacturing plants, engineering and research centers, distribution warehouses, offices and other facilities, and equipment used in operations. Some leases provide the Company with an option, exercisable at the Company's sole discretion, to terminate the lease or extend the lease term for one or more years. When measuring assets and liabilities arising from a lease that provides the Company with an option to extend the lease term, the Company takes into account payments to be made in the optional extension period when it is reasonably certain that the Company will exercise the option. Total lease cost (all of which related to operating leases) was $6.6 million and $12.7 million for the three and six months ended June 30, 2019, respectively.

~~Maturities of lease liabilities~~

June 30, 2019
(Dollars in thousands)
2019 $ 14,045
2020 23,992
2021 21,602
2022 19,924
2023 16,363
2024 and thereafter 42,060
Total lease payments 137,986
Less: interest (21,334 )
Present value of lease liabilities $ 116,652

~~Supplemental information as of and for the six months ended June 30, 2019 (dollars in thousands)~~

Total lease liabilities ₍₁₎
$ 116,652
Cash paid for amounts included in the measurement of lease liabilities within operating cash flows $ 12,636
Right of use assets obtained in exchange for operating lease obligations $ 19,728
Weighted average remaining lease term 6.8 years
Weighted average discount rate 4.4 %

~~(1) The current portion of the operating lease liabilities of $20.1 million is included in Other current liabilities.~~

~~TELEFLEX INCORPORATED~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)~~

~~(Unaudited)~~

~~As of December 31, 2018, minimum lease payments under noncancellable operating leases were expected to be as follows:~~

December 31, 2018
(Dollars in thousands)
2019 $ 25,294
2020 23,216
2021 21,419
2022 19,460
2023 17,403
2024 and thereafter 41,368

~~Note 9 —~~ Borrowings

~~The Company's~~Our borrowings at ~~June 30, 2019~~March 29, 2020 and December 31, ~~2018~~2019 were as follows:


	March 29, 2020		December 31, 2019
	(Dollars in thousands)
Senior Credit Facility:
Revolving credit facility, at a rate of 2.13% at March 29, 2020, due 2024	$	785,000	$	300,000
Term loan facility, at a rate of 2.33% at March 29, 2020, due 2024	673,000		673,000


4.875% Senior Notes due 2026	400,000		400,000
4.625% Senior Notes due 2027	500,000		500,000
Securitization program, at a rate of 1.74% at March 29, 2020	50,000		50,000
	2,408,000		1,923,000
Less: Unamortized debt issuance costs	(13,483)		(14,057)
	2,394,517		1,908,943
Current borrowings	(53,625)		(50,000)

Long-term borrowings	$	2,340,892	$	1,858,943

June 30, 2019 December 31, 2018
(Dollars in thousands)
Senior Credit Facility:
Revolving credit facility, at a rate of 3.90% at June 30, 2019, due 2024 $ 276,000
$ 293,000
Term loan facility, at a rate of 3.90% at June 30, 2019, due 2024 673,000
683,500
5.25% Senior Notes due 2024 250,000
250,000
4.875% Senior Notes due 2026 400,000
400,000
4.625% Senior Notes due 2027 500,000
500,000
Securitization program, at a rate of 3.15% at June 30, 2019 50,000
50,000
2,149,000
2,176,500
Less: Unamortized debt issuance costs (17,628 ) (17,675 )
2,131,372
2,158,825
Current borrowings (50,000 ) (86,625 )
Long-term borrowings $ 2,081,372
$ 2,072,200
On March 30, 2020, we amended our accounts receivable securitization facility to increase the maximum available capacity from $50 million to $75 million.

~~Credit Agreement~~

On April 5, 2019, the Company amended and restated its existing credit agreement by entering into a Second Amended and Restated Credit Agreement (the "Credit Agreement"), which provides for a five-year revolving credit facility of $1.0 billion and a term loan facility of $700.0 million. The Company's obligations under the Credit Agreement are guaranteed (subject to certain exceptions and limitations) by substantially all of the material domestic subsidiaries of the Company. The obligations under the Credit Agreement are secured, subject to certain exceptions and limitations, by a lien on substantially all of the assets owned by the Company and each guarantor. The maturity date of the revolving credit facility and the term loan facility under the Credit Agreement is April 5, 2024.

At the Company’s option, loans under the Credit Agreement will bear interest at a rate equal to adjusted LIBOR plus an applicable margin ranging from 1.125% to 2.00% or at an alternate base rate, which generally is defined as the highest of (i) the “Prime Rate” in the U.S. last quoted by The Wall Street Journal, (ii) 0.50% above the greater of the federal funds rate and the rate comprised of both overnight federal funds and overnight eurodollar borrowings and (iii) 1.00% above adjusted LIBOR for a one month interest period, plus an applicable margin ranging from 0.125% to 1.00%, in each case subject to adjustments based on the Company’s consolidated total net leverage ratio. Overdue loans will bear interest at the rate otherwise applicable to such loans plus 2.00%.

The Credit Agreement contains customary representations and warranties and covenants that, in each case, subject to certain exceptions, qualifications and thresholds, (a) place limitations on the Company and its subsidiaries regarding the incurrence of additional indebtedness, additional liens, fundamental changes, dispositions of property, investments and acquisitions, dividends and other restricted payments, transactions with affiliates, restrictive

~~TELEFLEX INCORPORATED~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)~~

~~(Unaudited)~~

agreements, changes in lines of business and swap agreements, and (b) require the Company and its subsidiaries to comply with sanction laws and other laws and agreements, to deliver financial information and certain other information and give notice of certain events, to maintain their existence and good standing, to pay their other obligations, to permit the administrative agent and the lenders to inspect their books and property, to use the proceeds of the Credit Agreement only for certain permitted purposes and to provide collateral in the future. Subject to certain exceptions, the Company is required to maintain a maximum consolidated total net leverage ratio of 4.50 to 1.00. The Company is further required to maintain a minimum consolidated interest coverage ratio of 3.50 to 1.00.

~~The Company capitalized $3.9 million related to transactions fees, including underwrites' discounts and commissions incurred in connection with the Credit Agreement.~~

Note 109 — Financial instruments

Foreign currency forward contracts

~~The Company uses~~We use derivative instruments for risk management purposes. Foreign currency forward contracts designated as cash flow hedges are used to manage ~~exposure related to~~ foreign currency ~~transactions.~~transaction exposure. Foreign currency forward contracts not designated as hedges for accounting purposes are used to manage exposure related to near term foreign currency denominated monetary assets and liabilities. ~~The Company enters~~We enter into the non-designated foreign currency forward contracts for periods consistent with ~~its~~our currency translation exposures, which generally approximate one month. For the three ~~and six~~ months ended ~~June 30, 2019, the Company~~March 29, 2020 we recognized a gain of $1.5 million and a loss of $1.6 million, respectively, related to non-designated foreign currency forward contracts. For the three and six months ended July 1, 2018, the Company recognized a lossgains related to non-designated foreign currency forward contracts of ~~$1.4~~$1.6 million, and ~~$0.7 million, respectively.~~for the three months ended March 31, 2019 we recognized losses related to non-designated foreign currency forward contracts of $3.0 million.

The total notional amount for all open foreign currency forward contracts designated as cash flow hedges as of ~~June 30, 2019~~March 29, 2020 and December 31, ~~2018~~2019 was ~~$118.1~~$130.7 million and ~~$115.3~~$63.4 million, respectively. The total notional amount for all open non-designated foreign currency forward contracts as of ~~June 30, 2019~~March 29, 2020 and December 31, ~~2018~~2019 was ~~$147.5~~$148.6 million and ~~$125.9~~$132.8 million, respectively. All open foreign currency forward contracts as of ~~June 30, 2019~~March 29, 2020 have durations of ~~twelve~~12 months or less.

Cross-currency interest rate swaps

~~On March 4,~~During 2019, ~~the Company~~we entered into cross-currency swap agreements with ~~five~~5 different financial institution counterparties to hedge against the effect of variability in the U.S. dollar to euro exchange rate. Under the terms of the cross-currency swap agreements, ~~the Company has~~we have notionally exchanged $250 million at an annual interest rate of 4.8750% for €219.2 million at an annual interest rate of 2.4595%. The swap agreements are designed as net investment hedges and expire on March 4, 2024.

~~On October 4,~~During 2018, ~~the Company~~we entered into cross-currency swap agreements with ~~six~~6 different financial institution counterparties to hedge against the effect of variability in the U.S. dollar to euro exchange rate. Under the terms of the cross-currency swap agreements, ~~the Company has~~we have notionally exchanged $500 million at an annual interest rate of 4.625% for €433.9 million at an annual interest rate of 1.942%. The swap agreements are designed as net investment hedges and expire on October 4, 2023.

TELEFLEX INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

The swap agreements described above require an exchange of the notional amounts upon expiration or earlier termination of the agreements. We and the counterparties have agreed to effect the exchange through a net settlement.

The cross-currency swaps are marked to market at each reporting date and any changes in fair value are recognized as a component of accumulated other comprehensive income (loss) ("AOCI"). For the three ~~and six~~ months ended ~~June 30,~~March 29, 2020 and March 31, 2019, ~~the Company~~we recognized foreign exchange ~~loss~~gains of ~~$0.7~~$25.0 million and ~~gain of $9.8~~$6.6 million, respectively, within AOCI related to the cross-currency swaps.

~~TELEFLEX INCORPORATED~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)~~

~~(Unaudited)~~

For the three months ended March 29, 2020 and March 31, 2019, we recognized $4.9 million and $3.9 million, respectively, in interest benefit related to the cross-currency swaps.

Balance sheet presentation

The following table presents the locations in the condensed consolidated balance sheet and fair value of derivative financial instruments as of ~~June 30, 2019~~March 29, 2020 and December 31, ~~2018:~~2019:

June 30, 2019 December 31, 2018
Fair Value
(Dollars in thousands)
Asset derivatives:
Designated foreign currency forward contracts $ 1,344
$ 1,216
Non-designated foreign currency forward contracts 159
106
Cross-currency interest rate swap 21,156
14,728
Prepaid expenses and other current assets 22,659
16,050
Total asset derivatives $ 22,659
$ 16,050
Liability derivatives:
Designated foreign currency forward contracts $ 992
$ 524
Non-designated foreign currency forward contracts 131
264
Other current liabilities 1,123
788
Cross-currency interest rate swap 6,152
7,793
Other liabilities 6,152
7,793
Total liability derivatives $ 7,275
$ 8,581


	March 29, 2020		December 31, 2019
	Fair Value
	(Dollars in thousands)
Asset derivatives:
Designated foreign currency forward contracts	$	2,144	$	1,659
Non-designated foreign currency forward contracts	1,682		192
Cross-currency interest rate swaps	26,764		21,575
Prepaid expenses and other current assets	30,590		23,426
Cross-currency interest rate swaps	45,347		13,066
Other assets	45,347		13,066
Total asset derivatives	$	75,937	$	36,492
Liability derivatives:
Designated foreign currency forward contracts	$	6,030	$	1,285
Non-designated foreign currency forward contracts	1,380		102
Other current liabilities	7,410		1,387


Total liability derivatives	$	7,410	$	1,387

See Note 1211 for information on the location and amount of gains and losses attributable to derivatives that were reclassified from AOCI to expense (income), net of tax.

There was no0 ineffectiveness related to ~~the Company’s~~our cash flow hedges during the three ~~and six~~ months ended ~~June 30, 2019~~March 29, 2020 and ~~July 1, 2018.~~March 31, 2019.

Trade receivables

~~The~~In the ordinary course of business, we grant non-interest bearing trade credit to our customers on normal credit terms. In an effort to reduce our credit risk, we (i) establish credit limits for all of our customer relationships, (ii) perform ongoing credit evaluations of our customers’ financial condition, (iii) monitor the payment history and aging of our customers’ receivables, and (iv) monitor open orders against an individual customer’s outstanding receivable balance.

Our allowance for ~~doubtful~~credit losses is maintained for trade accounts ~~as of June 30, 2019 and December 31, 2018 was $9.9 million and $9.3 million, respectively. The current portion of~~receivable based on the ~~allowance for doubtful accounts, which was $5.2 million and $4.4 million as of June 30, 2019 and December 31, 2018, respectively, was recognized as a reduction~~expected collectability of accounts receivable, ~~net.~~

~~Note 11 — Fair value measurement~~

~~For a description~~after considering our historical collection experience, the length of time an account is outstanding, the financial position of the ~~fair value hierarchy, see Note 11~~customer, information provided by credit rating services in addition to new requirements under the ~~Company’s consolidated financial statements included in its Annual Report on Form 10-K~~accounting guidance, effective January 1, 2020, that includes the consideration of events or circumstances indicating historic collection rates may not be indicative of future collectability, for example, potential customer liquidity concerns resulting from COVID-19, that may impact the ~~year ended December 31, 2018.~~

~~The following tables provide information regarding~~collectability of our receivables as well as our estimate of credit losses expected to be incurred over the ~~Company's financial assets and liabilities that are measured at fair value on a recurring basis as~~life of ~~June 30, 2019 and December 31, 2018:~~our receivables. To date, we have not experienced significant payment defaults by, or identified other significant collectability concerns with, our

Total carrying
value at
June 30, 2019 Quoted prices in active
markets (Level 1) Significant other
observable
Inputs (Level 2) Significant
unobservable
Inputs (Level 3)
(Dollars in thousands)
Investments in marketable securities $ 10,034
$ 10,034
$ —
$ —
Derivative assets 22,659
—
22,659
—
Derivative liabilities 7,275
—
7,275
—
Contingent consideration liabilities 191,671
—
—
191,671

TELEFLEX INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

customers. The assumptions utilized in our current estimates may change due to changes in circumstances, additional future developments and the resolution of other contingencies.

Total carrying
value at
December 31, 2018 Quoted prices in active
markets (Level 1) Significant other
observable
Inputs (Level 2) Significant
unobservable
Inputs (Level 3)
(Dollars in thousands)
Investments in marketable securities $ 8,671
$ 8,671
$ —
$ —
Derivative assets 16,050
—
16,050
—
Derivative liabilities 8,581
—
8,581
—
Contingent consideration liabilities 304,248
—
—
304,248

~~There were no transfers~~The allowance for credit losses as of March 29, 2020 and December 31, 2019 was $11.0 million and $9.1 million, respectively. The current portion of the allowance for credit losses, which was $6.9 million and $5.3 million as of March 29, 2020 and December 31, 2019, respectively, was recognized as a reduction of accounts receivable, net.

Note 10 — Fair value measurement

The following tables provide information regarding our financial assets orand liabilities ~~reported~~measured at fair value ~~among Level 1, Level 2 or Level 3 within the fair value hierarchy during the six months ended June 30, 2019.~~on a recurring basis as of March 29, 2020 and December 31, 2019:


	Total carrying value at March 29, 2020		Quoted prices in active markets (Level 1)		Significant other observable Inputs (Level 2)		Significant unobservable Inputs (Level 3)
	(Dollars in thousands)
Investments in marketable securities	$	9,020	$	9,020	$	—	$	—
Derivative assets	75,937		—		75,937		—
Derivative liabilities	7,410		—		7,410		—
Contingent consideration liabilities	32,737		—		—		32,737


	Total carrying value at December 31, 2019		Quoted prices in active markets (Level 1)		Significant other observable Inputs (Level 2)		Significant unobservable Inputs (Level 3)
	(Dollars in thousands)
Investments in marketable securities	$	10,926	$	10,926	$	—	$	—
Derivative assets	36,492		—		36,492		—
Derivative liabilities	1,387		—		1,387		—
Contingent consideration liabilities	219,908		—		—		219,908

Valuation Techniques

~~The Company’s~~Our financial assets valued based upon Level 1 inputs are comprised of investments in marketable securities held in trust, which are available to satisfy benefit obligations under ~~Company~~our benefit plans and other arrangements. The investment assets of the trust are valued using quoted market prices.

~~The Company’s~~Our financial assets and liabilities valued based upon Level 2 inputs are comprised of foreign currency forward contracts and cross-currency interest rate swap agreements. ~~The Company uses~~We use foreign currency ~~forward contracts~~forwards and cross-currency interest rate ~~swap agreements~~swaps to manage foreign currency transaction exposure, as well as exposure to foreign currency denominated monetary assets and ~~liabilities and exposure to the effect of variability in the U.S. dollar to euro exchange rate. The Company measures~~liabilities. We measure the fair value of the foreign currency ~~forward~~forwards and cross-currency ~~swap agreements~~swaps by calculating the amount required to enter into offsetting contracts with similar remaining maturities, based on quoted market prices, and taking into account the creditworthiness of the counterparties.

~~The Company’s~~Our financial liabilities valued based upon Level 3 inputs (inputs that are not observable in the market) are comprised of contingent consideration arrangements pertaining to ~~the Company’s~~our acquisitions, which are discussed immediately below.

Contingent consideration

Contingent consideration liabilities, which primarily consist of payment obligations that are contingent upon the achievement of revenue-based goals, but also can be based on other milestones such as regulatory approvals, are remeasured to fair value each reporting period using assumptions including estimated revenues (based on internal operational budgets and long-range strategic plans), discount rates, probability of payment and projected payment dates.

~~The Company determines~~

TELEFLEX INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

We determine the fair value of the contingent consideration liabilities related to the NeoTract and Essential Medical acquisitions, which represent most of our contingent consideration liabilities as of March 29, 2020 and December 31, 2019, using a Monte Carlo simulation (which involves a simulation of future revenues during the ~~earn out-period~~earn-out period using management's best estimates) ~~or a probability-weighted discounted cash flow analysis.~~. Increases in projected revenues, estimated cash flows and probabilities of payment may result in significantly higher fair value measurements; decreases in these items may have the opposite effect. Increases in the discount rates in periods prior to payment may result in significantly lower fair value measurements and decreases in the discount rates may have the opposite effect.

~~TELEFLEX INCORPORATED~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)~~

~~(Unaudited)~~

The table below provides additional information regarding the valuation technique and inputs used in determining the fair value of contingent consideration.

Contingent Consideration Liability

Valuation Technique

Unobservable Input

Range (Weighted average)

Milestone-based payments

Discounted cash flow

Discount rate

6.2% - 6.3% (6.3%)

Projected year of payment

2021 - 2023

Revenue-based payments

Monte Carlo simulation

Revenue volatility

19.1% - 23.4% (20.4%)

Risk free rate

Cost of debt structure

Projected year of payment

2020 - 2022

~~Contingent Consideration Liability~~

~~Valuation Technique~~

~~Unobservable Input~~

~~Range~~

~~Milestone-based payments~~

Discounted cash flow

Discount rate

~~3.7% - 4.3%~~10.0%

Projected year of payment

~~2019~~2020 - ~~2023~~2029

~~Revenue-based payments~~

~~Monte Carlo simulation~~

~~Revenue volatility~~

~~19.0% - 24.3%~~

~~Risk free rate~~

~~Cost of debt structure~~

~~Projected year of payment~~

~~2020 - 2022~~

~~Discounted cash flow~~

~~Discount rate~~

~~10.0%~~

~~Projected year of payment~~

~~2019 - 2029~~

The following table provides information regarding changes in the ~~Company's~~ contingent consideration liabilities during the ~~six~~three months ended ~~June 30, 2019:~~March 29, 2020:

Contingent consideration
2019
(Dollars in thousands)
Balance - December 31, 2018 $ 304,248
Payments ₍₁₎
(138,020 )
Revaluations 25,456
Translation adjustment (13 )
Balance - June 30, 2019 $ 191,671


	Contingent consideration

	(Dollars in thousands)
Balance - December 31, 2019	$	219,908

Payments ₍₁₎	(140,652)
Revaluations₍₂₎	(46,502)
Translation adjustment	(17)
Balance - March 29, 2020	$	32,737

(1) Consists mainly of a ~~$106.8~~$140.6 million payment associated with ~~the Company's~~our acquisition of NeoTract, Inc. ~~and~~ resulting from the achievement of a ~~sales~~revenue-based goal for the period from January 1, ~~2018~~2019 to December 31, ~~2018~~2019.

(2) The decrease, which is included within selling, general and ~~$30.0 million of payments associated with the Company's acquisition of Essential Medical, Inc. and~~administrative expenses, is mainly due to adverse financial projections resulting from ~~achievement of a regulatory goal.~~

the COVID-19 pandemic.

Note 1211 — Shareholders’ equity

Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed in the same manner except that the weighted average number of shares is increased to include dilutive securities. The following table provides a reconciliation of basic to diluted weighted average number of common shares outstanding:

Three Months Ended Six Months Ended
June 30, 2019 July 1, 2018 June 30, 2019 July 1, 2018
(Shares in thousands)
Basic 46,172
45,581
46,111
45,455
Dilutive effect of share-based awards 864
—
878
1,052
Dilutive effect of convertible warrants —
—
—
264
Diluted 47,036
45,581
46,989
46,771


	Three Months Ended
	March 29, 2020	March 31, 2019
	(Shares in thousands)
Basic	46,382	46,050
Dilutive effect of share-based awards	849	892

Diluted	47,231	46,942

The weighted average number of shares that were antidilutive and therefore excluded from the calculation of earnings per share were ~~0.2~~0.1 million ~~for the three and six months ended June 30, 2019 and 2.0 million (inclusive of 1.2 million potentially dilutive shares that were excluded because of the net loss~~ for the three months ended ~~July 1, 2018)~~March 29, 2020 and ~~0.7 million for the three and six months ended July 1, 2018, respectively.~~March 31, 2019.

TELEFLEX INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

The following tables provide information relating to the changes in accumulated other comprehensive loss, net of tax, for the ~~six~~three months ended ~~June 30, 2019~~March 29, 2020 and ~~July 1, 2018:~~March 31, 2019:


	Cash Flow Hedges		Pension and Other Postretirement Benefit Plans		Foreign Currency Translation Adjustment		Accumulated Other Comprehensive (Loss) Income
	(Dollars in thousands)
Balance as of December 31, 2019	$	735	$	(138,810)	$	(206,317)	$	(344,392)
Other comprehensive (loss) income before reclassifications	(3,760)		263		(18,199)		(21,696)
Amounts reclassified from accumulated other comprehensive income	(57)		1,426		—		1,369
Net current-period other comprehensive (loss) income	(3,817)		1,689		(18,199)		(20,327)

Balance as of March 29, 2020	$	(3,082)	$	(137,121)	$	(224,516)	$	(364,719)

Cash Flow Hedges Pension and Other Postretirement Benefit Plans Foreign Currency Translation Adjustment Accumulated Other Comprehensive (Loss) Income
(Dollars in thousands)
Balance as of December 31, 2018 $ 807
$ (131,380 ) $ (210,512 ) $ (341,085 )
Other comprehensive income (loss) before reclassifications 429
(13 ) 12,332
12,748
Amounts reclassified from accumulated other comprehensive income (271 ) 2,701
—
2,430
Net current-period other comprehensive income (loss) 158
2,688
12,332
15,178
Balance as of June 30, 2019 $ 965
$ (128,692 ) $ (198,180 ) $ (325,907 )

Cash Flow Hedges Pension and Other Postretirement Benefit Plans Foreign Currency Translation Adjustment Accumulated Other Comprehensive (Loss) Income
(Dollars in thousands)
Balance as of December 31, 2017 $ 340
$ (138,808 ) $ (126,623 ) $ (265,091 )
Other comprehensive (loss) before reclassifications 1,103
188
(44,517 ) (43,226 )
Amounts reclassified from accumulated other comprehensive loss (811 ) 2,708
—
1,897
Net current-period other comprehensive income 292
2,896
(44,517 ) (41,329 )
Balance as of July 1, 2018 $ 632
$ (135,912 ) $ (171,140 ) $ (306,420 )


	Cash Flow Hedges		Pension and Other Postretirement Benefit Plans		Foreign Currency Translation Adjustment		Accumulated Other Comprehensive (Loss) Income
	(Dollars in thousands)
Balance as of December 31, 2018	$	807	$	(131,380)	$	(210,512)	$	(341,085)
Other comprehensive (loss) income before reclassifications	(434)		(122)		(236)		(792)
Amounts reclassified from accumulated other comprehensive loss	(163)		1,351		—		1,188
Net current-period other comprehensive (loss) income	(597)		1,229		(236)		396

Balance as of March 31, 2019	$	210	$	(130,151)	$	(210,748)	$	(340,689)

~~TELEFLEX INCORPORATED~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)~~

~~(Unaudited)~~

The following table provides information relating to the location in the statements of operations and amount of reclassifications of losses/(gains) in accumulated other comprehensive (loss) income into expense/(income), net of tax, for the three ~~and six~~ months ended ~~June 30, 2019~~March 29, 2020 and ~~July 1, 2018:~~March 31, 2019:


	Three Months Ended						Six Months Ended							Three Months Ended
	June 30, 2019			July 1, 2018			June 30, 2019			July 1, 2018				March 29, 2020		March 31, 2019
	(Dollars in thousands)													(Dollars in thousands)
(Gains) losses on foreign exchange contracts:													(Gains) losses on foreign exchange contracts:
Cost of goods sold	$	(179	)	$	(118	)	$	(365	)	$	(951	)	Cost of goods sold	$	(66)	$	(186)
Total before tax	(179		)	(118		)	(365		)	(951		)	Total before tax	(66)		(186)
Taxes (benefit)	71			27			94			140
Net of tax	(108		)	(91		)	(271		)	(811		)
Losses (gains) on cross-currency swaps (net investment hedge):
Interest expense	(4,917		)	$	—		(8,799		)	$	—
Total before tax	(4,917		)	—			(8,799		)	—
Tax expense	1,111			—			2,040			—
Taxes													Taxes	9		23
Net of tax	(3,806		)	$	—		(6,759		)	$	—		Net of tax	$	(57)	$	(163)
Amortization of pension and other postretirement benefit items ₍₁₎:	Amortization of pension and other postretirement benefit items ₍₁₎:												Amortization of pension and other postretirement benefit items ₍₁₎:
Actuarial losses	1,738			1,734			3,478			3,480			Actuarial losses	$	1,852	$	1,740
Prior-service costs	22			23			44			47			Prior-service costs	8		22

Total before tax	1,760			1,757			3,522			3,527			Total before tax	1,860		1,762
Tax benefit	(410		)	(408		)	(821		)	(819		)	Tax benefit	(434)		(411)
Net of tax	1,350			1,349			2,701			2,708			Net of tax	$	1,426	$	1,351
Total reclassifications, net of tax	$	(2,564	)	$	1,258		$	(4,329	)	$	1,897		Total reclassifications, net of tax	$	1,369	$	1,188

(1) These accumulated other comprehensive (loss) income components are included in the computation of net benefit expense for pension and other postretirement benefit plans.

TELEFLEX INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

Note 1312 — Taxes on income from continuing operations

Three Months Ended Six Months Ended
June 30, 2019 July 1, 2018 June 30, 2019 July 1, 2018
Effective income tax rate 4.4% 136.3% 10.6% 23.2%

Three Months Ended

March 29, 2020

March 31, 2019

Effective income tax rate

7.8%

20.7%

The effective income tax rate for the three ~~and six~~ months ended ~~June 30,~~March 29, 2020 and March 31, 2019 was ~~4.4%~~7.8% and ~~10.6%~~20.7%, ~~respectively and 136.3% and 23.2% for the three and six months ended July 1, 2018,~~ respectively.The effective income tax ~~rates~~rate for the three ~~and six~~ months ended ~~June 30,~~March 29, 2020, as compared to the prior year period, reflects a non-taxable contingent consideration adjustment recognized in connection with a decrease in the fair value of our contingent consideration liabilities. The effective income tax rate for the three months ended March 31, 2019 reflects significant non-deductible termination benefits incurred in connection with the 2019 Footprint realignment plan. In addition, the effective tax rates for both the three months ended March 29, 2020 and March 31, 2019 reflect a net excess tax benefit related to share-based ~~compensation, partially offset, with respect~~compensation.

In April 2020, we became aware of a new interpretation of a non-U.S. tax law that could apply to ~~the six months ended June 30, 2019, by~~certain of our previous and current intercompany transactions. We are evaluating this new information and the effect, if any, on our tax positions. The amount of ~~non-deductible costs related~~any potential impact on our financial statements is not yet estimable at this time but could be material to the 2019 Footprint realignment plan, as described in Note 5. The effective tax rates for the three and six months ended July 1, 2018, reflect non-deductible costs related to the 2018 Footprint realignment plan, as described in Note 5, and a non-deductible contingent consideration expense recognized in connection with an increase in the fair valueour results of ~~the NeoTract contingent consideration liability.~~

~~Effective July 3, 2019, the Company merged two of its non-U.S. subsidiaries. The Company is currently evaluating the tax impact of this merger, but it is likely~~operations. We do not expect any additional liability to result in a ~~reduction of approximately $130 million~~material impact to ~~deferred tax liabilities within 12 months of the effective date of the merger.~~our liquidity or overall financial position.

Note 1413 — Commitments and contingent liabilities

Environmental: ~~The Company is~~We are subject to contingencies as a result of environmental laws and regulations that in the future may require ~~the Company~~us to take further action to correct the effects on the environment of prior disposal

~~TELEFLEX INCORPORATED~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)~~

~~(Unaudited)~~

practices or releases of chemical or petroleum substances by ~~the Company~~us or other parties. Much of this liability results from the U.S. Comprehensive Environmental Response, Compensation and Liability Act, often referred to as Superfund, the U.S. Resource Conservation and Recovery Act and similar state laws. These laws require ~~the Company~~us to undertake certain investigative and remedial activities at sites where ~~the Company conducts~~we conduct or once conducted operations or at sites where Company-generated waste was disposed.

Remediation activities vary substantially in duration and cost from site to site. These activities, and their associated costs, depend on the mix of unique site characteristics, evolving remediation technologies, the regulatory agencies involved and their enforcement policies, as well as the presence or absence of other potentially responsible parties. At ~~June 30, 2019, the Company has~~March 29, 2020, we have recorded ~~$0.9~~$0.7 million and ~~$6.4~~$6.0 million in accrued liabilities and other liabilities, respectively, relating to these matters. Considerable uncertainty exists with respect to these liabilities and, if adverse changes in circumstances occur, the potential liability may exceed the amount accrued as of ~~June 30, 2019.~~March 29, 2020. The time frame over which the accrued amounts may be paid out, based on past history, is estimated to be 10-15 years.

Litigation: ~~The Company is~~We are a party to various lawsuits and claims arising in the normal course of business. These lawsuits and claims include actions involving product liability, product warranty, commercial disputes, intellectual property, contract, employment, environmental and other matters. As of ~~June 30, 2019, the Company has~~March 29, 2020, we have recorded accrued liabilities of ~~$0.2~~$0.3 million in connection with such contingencies, representing ~~its~~our best estimate of the cost within the range of estimated possible losses that will be incurred to resolve these matters.

Based on information currently available, advice of counsel, established reserves and other resources, ~~the Company does~~we do not believe that the outcome of any outstanding litigation and claims is likely to be, individually or in the aggregate, material to ~~its~~our business, financial condition, results of operations or liquidity. However, in the event of unexpected further developments, it is possible that the ultimate resolution of these matters, or other similar matters, if unfavorable, may be materially adverse to ~~the Company’s~~our business, financial condition, results of operations or liquidity. Legal costs such as outside counsel fees and expenses are charged to selling, general and administrative expenses in the period incurred.

Tax audits and examinations: ~~The Company and its subsidiaries~~We are routinely subject to tax examinations by various tax authorities. As of ~~June 30, 2019,~~March 29, 2020, the most significant tax examination in process is in Germany. ~~The Company~~We may establish reserves with

TELEFLEX INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

respect to ~~its~~our uncertain tax positions, after ~~which it adjusts~~we adjust the reserves to address developments with respect to ~~its~~our uncertain tax positions, including developments in this tax examination. Accordingly, developments in tax audits and examinations, including resolution of uncertain tax positions, could result in increases or decreases to ~~the Company’s~~our recorded tax liabilities, which could impact ~~the Company’s~~our financial results.

~~Other:~~ The Company has various purchase commitments for materials, supplies and other items occurring in the ordinary conduct of its business. On average, such commitments are not at prices in excess of current market prices.

Note 1514 — Segment information

During the first quarter 2019, the chief operating decision maker, or CODM, (the Company's Chief Executive Officer) changed the manner in which he reviews financial information for purposes of assessing business performance and allocating resources by focusing on the geographic location of all non-OEM operations. As a result, the Company changed its segment presentation. Specifically, the Vascular North America, Interventional North America, Anesthesia North America, Surgical North America, Interventional Urology North America, Respiratory North America and Latin America operating segments were combined into a new Americas segment. The Company now has four segments: Americas, EMEA (Europe, Middle East and Africa), Asia and OEM. All prior comparative periods presented have been restated to reflect these changes.

~~TELEFLEX INCORPORATED~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)~~

~~(Unaudited)~~

The following tables present ~~the Company’s~~our segment results for the three ~~and six~~ months ended ~~June 30, 2019~~March 29, 2020 and ~~July 1, 2018:~~March 31, 2019:


	Three Months Ended
	March 29, 2020		March 31, 2019
	(Dollars in thousands)



Americas	$	358,002	$	344,024
EMEA	156,124		154,545
Asia	53,129		60,777
OEM	63,387		54,238

Net revenues	$	630,642	$	613,584


										Three Months Ended
										March 29, 2020		March 31, 2019
										(Dollars in thousands)
	Three Months Ended				Six Months Ended
	June 30, 2019		July 1, 2018		June 30, 2019		July 1, 2018
	(Dollars in thousands)
Americas	$	373,804	$	331,444	$	717,828	$	654,706	Americas	$	140,969	$	65,599
EMEA	147,047		153,415		301,592		313,285		EMEA	20,419		27,023
Asia	75,228		72,413		136,005		130,657		Asia	10,232		9,979
OEM	56,428		52,594		110,666		98,448		OEM	15,099		13,321
Net revenues	$	652,507	$	609,866	$	1,266,091	$	1,197,096

Total segment operating profit ₍₁₎									Total segment operating profit ₍₁₎	186,719		115,922
Unallocated expenses ₍₂₎									Unallocated expenses ₍₂₎	(29,633)		(40,679)
Income from continuing operations before interest and taxes									Income from continuing operations before interest and taxes	$	157,086	$	75,243

Three Months Ended Six Months Ended
June 30, 2019 July 1, 2018 June 30, 2019 July 1, 2018
(Dollars in thousands)
Americas $ 82,509
$ 47,315
$ 148,108
$ 106,205
EMEA 20,827
26,535
47,850
58,305
Asia 19,260
20,746
29,239
34,114
OEM 13,884
13,552
27,205
22,568
Total segment operating profit ₍₁₎
136,480
108,148
252,402
221,192
Unallocated expenses ₍₂₎
(29,022 ) (74,658 ) (69,701 ) (100,859 )
Income from continuing operations before interest and taxes $ 107,458
$ 33,490
$ 182,701
$ 120,333

~~(1)~~

(1)Segment operating profit includes segment net revenues from external customers reduced by the segment's standard cost of goods sold, adjusted for fixed manufacturing cost absorption variances, selling, general and administrative expenses, research and development expenses and an allocation of corporate expenses. Corporate expenses are allocated among the segments in proportion to the respective amounts of one of several items (such as net revenues, numbers of employees, and ~~amount of time spent), depending on the category of expense involved.~~


~~(2)~~	~~Unallocated expenses primarily include manufacturing variances other than fixed manufacturing cost absorption variances, restructuring charges and gain on sale of assets.~~

~~TELEFLEX INCORPORATED~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)~~

~~(Unaudited)~~

~~Note 16 — Condensed consolidating guarantor financial information~~

~~The Company’s $250 million principal~~ amount of ~~5.25% Senior Notes due 2024 (the “2024 Notes”)~~time spent), ~~$400 million principal amount~~depending on the category 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~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)~~

~~(Unaudited)~~

~~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

~~TELEFLEX INCORPORATED~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)~~

~~(Unaudited)~~

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 )

~~TELEFLEX INCORPORATED~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)~~

~~(Unaudited)~~

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

~~TELEFLEX INCORPORATED~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)~~

~~(Unaudited)~~

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

expense involved.

(2)Unallocated expenses primarily include manufacturing variances other than fixed manufacturing cost absorption variances, restructuring charges and gain on sale of assets.

~~TELEFLEX INCORPORATED~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)~~

~~(Unaudited)~~

~~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

~~TELEFLEX INCORPORATED~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)~~

~~(Unaudited)~~

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~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)~~

~~(Unaudited)~~

~~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

~~TELEFLEX INCORPORATED~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)~~

~~(Unaudited)~~

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

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

~~Forward-Looking Statements~~

All statements made in this Quarterly Report on Form 10-Q, other than statements of historical fact, are forward-looking statements. The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “will,” “would,” “should,” “guidance,” “potential,” “continue,” “project,” “forecast,” “confident,” “prospects” and similar expressions typically are used to identify forward-looking statements. Forward-looking statements are based on the then-current expectations, beliefs, assumptions, estimates and forecasts about our business and the industry and markets in which we operate. These statements are not guarantees of future performance and are subject to risks and uncertainties, which are difficult to predict. Therefore, actual outcomes and results may differ materially from those expressed or implied by these forward-looking statements due to a number of factors, including changes in business relationships with and purchases by or from major customers or suppliers; delays or cancellations of shipments; demand for and market acceptance of new and existing products; our inability to provide products to our customers, which may be due to, among other things, events that impact key distributors; our inability to integrate acquired businesses into our operations, realize planned synergies and operate such businesses profitably in accordance with our expectations; our inability to effectively execute our restructuring plans and programs; our inability to realize anticipated savings from restructuring plans and programs; the impact of enacted healthcare reform legislation and proposals to amend, replace or repeal the legislation; changes in Medicare, Medicaid and third party coverage and reimbursements; the impact of tax legislation and related regulations; competitive market conditions and resulting effects on revenues and pricing; increases in raw material costs that cannot be recovered in product pricing; global economic factors, including currency exchange rates, interest rates, trade disputes, sovereign debt issues and the impact of the United Kingdom’s pending departure from the European Union, commonly known as "Brexit"; difficulties in entering new markets; and general economic conditions. For a further discussion of the risks relating to our business, see Item 1A, "Risk Factors," in our Annual Report on Form 10-K for the year ended December 31, 2018. We expressly disclaim any obligation to update these forward-looking statements, except as otherwise specifically stated by us or as required by law or regulation.

Overview

Teleflex Incorporated (“we,” “us,” “our" and “Teleflex”) is a global provider of medical technology products focused on enhancing clinical benefits, improving patient and provider safety and reducing total procedural costs. We primarily design, develop, manufacture and supply single-use medical devices used by hospitals and healthcare providers for common diagnostic and therapeutic procedures in critical care and surgical applications. We market and sell our products worldwide through a combination of our direct sales force and distributors. Because our products are used in numerous markets and for a variety of procedures, we are not dependent upon any one end-market or procedure. We are focused on achieving consistent, sustainable and profitable growth by increasing our market share and improving our operating efficiencies.

We evaluate our portfolio of products and businesses on an ongoing basis to ensure alignment with our overall objectives. Based on our evaluation, we may identify opportunities to divest businesses and product lines that do not meet our objectives. In addition, we may seek to optimize utilization of our facilities through restructuring initiatives designed to further improve our cost structure and enhance our competitive position. We also may continue to explore opportunities to expand the size of our business and improve operating margins through a combination of acquisitions and distributor to direct sales conversions, which generally involve our elimination of a distributor from the sales channel, either by acquiring the distributor or terminating the distributor relationship (in some instances, particularly in Asia, the conversions involve our acquisition or termination of a master distributor and the continued sale of our products through sub-distributors or through new distributors). Distributor to direct sales conversions are designed to facilitate improved product pricing and more direct access to the end users of our products within the sales channel.

~~On February 19, 2019,~~COVID-19 pandemic

We continue to experience the effects of the global pandemic caused by the COVID-19 novel strain of coronavirus. Among other things, the response to the COVID-19 pandemic has had the effect of reducing the number of elective procedures being carried out, which has impacted and continues to impact some of our product categories, including our interventional urology, interventional and surgical products, which have experienced and continue to experience decreased demand. For the three months ended March 29, 2020, we ~~initiated~~experienced increased demand in our respiratory and vascular access product categories. We continue to experience increased demand primarily in our respiratory product category. From a ~~restructuring plan involving~~segment perspective, our Americas segment was negatively impacted, primarily due to the ~~relocation~~reduction in elective procedures, and our EMEA segment benefited due to increased demand for our products used in the treatment of patients with COVID-19. Conversely, our Asia segment was negatively impacted, in part, due to government mandated shut-downs in certain countries. The COVID-19 pandemic is impacting other elements of our operations, as well as our employees, contractors, suppliers, customers and other business partners. To date, we have not experienced significant disruptions in the global supply chain for our products that are in high demand, but delivery times have lengthened.

In addition, there have been and continues to be impacts on our cost structure resulting from measures that we and other businesses are taking or will take, in accordance with governmental requirements and otherwise, to protect our employees and business partners. We continue to assess the impact on our business (including our employees, customers and suppliers) of travel restrictions, border closures and quarantines as they affect our various sites, including our 35 manufacturing sites located in various countries. In most jurisdictions, our manufacturing and distribution sites remain open because we are considered an essential business. During the three months ended March 29, 2020, we experienced, and we continue to experience, some inefficiencies in our manufacturing operations due to ~~existing lower-cost~~government restrictions placed on facilities in certain locations primarily in Asia. Additionally, we have experienced and continue to experience a higher than normal level of absenteeism across our global manufacturing sites. From an operating expense perspective, we have experienced and continue to experience net decreases in selling, general and administrative expenses as a result of the COVID-19 pandemic due to cost mitigation efforts implemented to control discretionary spending such as certain employee-related costs as well as travel and related ~~workforce reductions (the "2019 Footprint realignment plan"). See "Results~~expenses. Notwithstanding the above described impacts of ~~Operations - Restructuring~~the COVID-19 pandemic, the crisis did not have a material adverse effect on our results of operations for the three months ended March 29, 2020. Overall, we believe that the COVID-19 pandemic will continue to negatively affect our revenues and ~~impairment charges" below~~operations, at least over the near-term, and ~~Note 5~~ tobecause of the ~~condensed consolidated financial statements included in this report for additional information.~~dynamic nature of the crisis, we cannot accurately predict the extent or duration of the impacts of the COVID-19 pandemic.

~~Change in Reportable Segments~~

During the first quarter 2019, the chief operating decision maker, or CODM, (our Chief Executive Officer) changed the manner in which he reviews financial information for purposes of assessing business performance and allocating resources by focusing on the geographic location of all non-OEM (Original Equipment and Development Services) segment operations. As a result, the Company changed its segment presentation. Specifically, the former Vascular North America, Interventional North America, Anesthesia North America, Surgical North America, Interventional Urology

North America, Respiratory North America and Latin America operating segments were combined into a new Americas segment. The Company now has four segments: Americas, EMEA (Europe, Middle East and Africa), Asia and OEM. All prior period comparative information has been restated to reflect the change in segment presentation.

Results of Operations

As used in this discussion, "new products" are products for which commercial sales have commenced within the past 36 months, and “existing products” are products for which commercial sales commenced more than 36 months ago. Discussion of results of operations items that reference the effect of one or more acquired and/or divested businesses or assets (except as noted below with respect to acquired distributors) generally reflects the impact of the acquisitions and/or divestitures within the first 12 months following the date of the acquisition and/or divestiture. In addition to increases and decreases in the per unit selling prices of our products to our customers, our discussion of the impact of product price increases and decreases also reflects the impact on the pricing of our products resulting from the elimination of the distributor, either through acquisition or termination of the distributor, from the sales channel.

Certain financial information is presented on a rounded basis, which may cause minor differences.

Net ~~Revenues~~revenues

Three Months Ended Six Months Ended
June 30, 2019 July 1, 2018 June 30, 2019 July 1, 2018
(Dollars in millions)
Net Revenues $ 652.5
$ 609.9
$ 1,266.1
$ 1,197.1


	Three Months Ended
	March 29, 2020		March 31, 2019
	(Dollars in millions)
Net revenues	$	630.6	$	613.6

Net revenues for the three months ended ~~June 30, 2019~~March 29, 2020 increased ~~$42.6~~$17.0 million, or ~~7.0%~~2.8%, compared to the prior year period. The increase iswas primarily attributable to a ~~$44.9~~$15.7 million increase in sales volumes of existing products, and to a lesser extent, an increase in new product ~~sales.~~sales and net revenues generated by the acquisition of IWG High Performance Conductors, Inc. (HPC). These increases were partially offset by unfavorable fluctuations in foreign currency exchange rates of ~~$14.6 million.~~$7.4 million and a decrease in revenue caused by the COVID-19 pandemic.

~~Net revenues~~Gross profit


	Three Months Ended
	March 29, 2020			March 31, 2019
	(Dollars in millions)
Gross profit	$	333.6		$	324.0
Percentage of sales	52.9		%	52.8		%

Gross margin for the ~~six~~three months ended ~~June 30, 2019~~March 29, 2020 increased ~~$69.0 million,~~10 basis points, or ~~5.8%~~0.2%, compared to the prior year period. The increase isin gross margin was primarily attributable to ~~a $75.0 million increase in sales volumes~~benefits from cost improvement initiatives and the impact of ~~existing products and, to a lesser extent, an increase in new product sales. These increases were partially offset by unfavorable~~favorable fluctuations in foreign currency exchange ~~rates of $31.6 million.~~

~~Gross profit~~

Three Months Ended Six Months Ended
June 30, 2019 July 1, 2018 June 30, 2019 July 1, 2018
(Dollars in millions)
Gross profit $ 372.9
$ 344.8
$ 717.7
$ 676.0
Percentage of sales 57.1 % 56.5 % 56.7 % 56.5 %

Gross margin for the three months ended June 30, 2019 increased 60 basis points, or 1.1%, compared to the prior year period, primarily due to increased sales volumes and favorable product mix partiallyrates. These increases were largely offset by ~~higher logistics~~the unfavorable impacts of the COVID-19 pandemic and ~~distribution costs and inflation.~~

~~Gross margin for~~ the six months ended June 30, 2019 increased 20 basis points, or 0.4%, compared to the prior year period, which is primarily attributable to increased sales volumes and favorable product mix partially offset by higher logistics and distribution costs, theadverse impact of ~~unfavorable fluctuations~~the step-up in ~~foreign currency exchange rates and incremental tariffs.~~

carrying value of inventory recognized in connection with our HPC acquisition.

Selling, general and administrative

Three Months Ended Six Months Ended
June 30, 2019 July 1, 2018 June 30, 2019 July 1, 2018
(Dollars in millions)
Selling, general and administrative $ 236.2
$ 229.9
$ 463.9
$ 445.3
Percentage of sales 36.2 % 37.7 % 36.6 % 37.2 %


	Three Months Ended
	March 29, 2020			March 31, 2019
	(Dollars in millions)
Selling, general and administrative	$	147.8		$	206.9
Percentage of sales	23.4		%	33.7		%

Selling, general and administrative expenses for the three months ended ~~June 30, 2019 increased $6.3~~March 29, 2020 decreased $59.1 million compared to the prior year period. The ~~increase is~~decrease was primarily attributable to ~~increases in selling and marketing expenses, principally with respect to our interventional urology products, and higher administrative costs. The increases were partially offset by~~ a ~~decrease in contingent consideration expense resulting from a change in the estimated fair value of our contingent consideration liabilities.~~

~~Selling, general and administrative expenses for the six months ended June 30, 2019 increased $18.6~~$59.5 million compared to the prior year period. The increase is primarily attributable to expenses incurred by our acquired businesses, an increase in selling and marketing expenses, principally with respect to our interventional urology products, and higher administrative costs. The increases were partially offset by a decrease in contingent consideration expense resulting from a changereduction in the estimated fair value of our contingent consideration liabilities, which largely relate to revenue-based milestone payments, due to adverse financial projections resulting from the COVID-19 pandemic. Additionally, for the three months ended March 29, 2020 there were net decreases to selling, general and administrative expenses resulting from the ~~impact~~COVID-19 pandemic, which were largely offset by increases in normal operating expenses inclusive of ~~favorable fluctuations in foreign currency exchange rates.~~selling expenses.

Research and development


	Three Months Ended						Six Months Ended							Three Months Ended
	June 30, 2019			July 1, 2018			June 30, 2019			July 1, 2018				March 29, 2020			March 31, 2019
	(Dollars in millions)													(Dollars in millions)
Research and development	$	27.6		$	26.0		$	54.7		$	52.0		Research and development	$	27.4		$	27.2
Percentage of sales	4.2		%	4.4		%	4.3		%	4.3		%	Percentage of sales	4.3		%	4.4		%

The increase in research and development expenses for the three ~~and six~~ months ended ~~June 30, 2019~~March 29, 2020 compared to the prior year period iswas primarily attributable to ~~expenses incurred in connection with~~European Union Medical Device Regulation ("EU MDR") related costs partially offset by lower project spend across several of our ~~interventional products.~~product portfolios.

Restructuring and impairment charges

Anticipated charges and pre-tax savings related to restructuring programs and other similar cost savings initiatives

We have ongoing restructuring programs primarily related to the consolidation of our manufacturing operations (referred to as our 2019, 2018 and 2014 Footprint realignment plans). We also have similar ongoing activities to relocate certain manufacturing operations within our OEM segment (the "OEM initiative") that do not meet the criteria for a restructuring program under applicable accounting guidance; nevertheless, the activities should result in cost savings (we expect only minimal costs to be incurred in connection with the OEM initiative). With respect to our currently ongoing restructuring programs and the OEM initiative, the table below summarizes charges incurred or estimated to be incurred and estimated annual pre-tax savings to be realized as follows: (1) with respect to charges (a) the estimated total charges that will have been incurred once the restructuring programs and OEM initiative are completed; (b) the charges incurred through December 31, ~~2018;~~2019; and (c) the estimated charges to be incurred from January 1, ~~2019~~2020 through the last anticipated completion date of the restructuring programs and OEM initiative, December 31, 2026 and (2) with respect to estimated annual pre-tax savings, (a) the estimated total annual pre-tax savings to be realized once the restructuring programs and OEM initiative are completed; (b) the estimated annual pre-tax savings realized based on the progress of the restructuring programs and OEM initiative through December 31, ~~2018;~~2019; and (c) the estimated additional annual pre-tax savings to be realized from January 1, ~~2019~~2020 through the last anticipated completion date of the restructuring programs and the OEM ~~initiative.~~

initiative, December 31, 2026.

Estimated charges and pre-tax savings are subject to change based on, among other things, the nature and timing of restructuring activities and similar activities, changes in the scope of restructuring programs and the OEM initiative, unanticipated expenditures and other developments including the uncertainties created by the COVID-19 pandemic, the effect of additional acquisitions or dispositions, the failure to realize anticipated savings from a supply contract related to a component included in certain kits sold by our Americas segment and other factors that were not reflected in the assumptions made by management in previously estimating restructuring and restructuring related charges and estimated pre-tax savings. Moreover, estimated pre-tax savings constituting efficiencies with respect to increased costs that otherwise would have resulted from business acquisitions involve, among other things, assumptions regarding the cost structure and integration of businesses that previously were not administered by our management, which are subject to a particularly high degree of risk and uncertainty. It is likely that estimates of charges and pre-tax savings will change from time to time, and the table below reflects changes from amounts previously estimated. In addition, the table below does not include estimated charges and pre-tax savings related to substantially completed programs. For example, the 2017 Vascular Solutions integration program, the 2017 EMEA program, the 2016 Footprint realignment plan and other 2016 restructuring programs are excluded from the table below because they were substantially completed during 2019. Additional details, including

estimated charges expected to be incurred in connection with ~~the~~our restructuring programs, are described in Note 5 to the condensed consolidated financial statements included in this report.

Pre-tax savings also can be affected by increases or decreases in sales volumes generated by the businesses subject to the consolidation of manufacturing operations; such variations in revenues can increase or decrease pre-tax savings generated by the consolidation of manufacturing operations. For example, an increase in sales volumes generated by the affected businesses, although likely increasing manufacturing costs, may generate additional savings with respect to costs that otherwise would have been incurred if the manufacturing operations were not consolidated.

Ongoing restructuring programs and other similar cost savings initiatives

Estimated Total

Actual results through
December 31, 2019

Estimated remaining from January 1, 2020 through
December 31, 2026

(Dollars in millions)

Restructuring charges

$95 - 114

$83

$12 - $31

Restructuring related charges ₍₁₎

110 - 141

64 - 95

Total charges

$205 - $255

$129

$76 - 126

~~Ongoing restructuring programs and other similar cost savings initiatives~~

~~Estimated Total~~

~~Actuals through~~

~~December 31, 2018~~

~~Estimated remaining from January 1, 2019 through~~

~~December 31, 2026~~

~~(Dollars in millions)~~

~~Restructuring charges~~

~~$95 - $114~~

~~$68~~

~~$27 - $46~~

~~Restructuring related charges~~ ₍₁₎

~~$110 - $141~~

~~$34~~

~~$76 - $107~~

~~Total charges~~

~~$205 - $255~~

~~$102~~

~~$103 - $153~~

OEM initiative annual pre-tax savings

$6 - $7

$5 - $6

~~Ongoing restructuring programs annual pre-tax~~Pre-tax savings₍₂₎

$63 - ~~$73~~73

~~$21~~25

~~$42~~38 - ~~$52~~48

Total annual pre-tax savings

$69 - $80

$2226

$4743 - ~~$58~~$54

~~(1)~~

~~Restructuring related charges represent costs that are directly related to the~~

(1)Restructuring related charges represent costs that are directly related to restructuring programs and principally constitute costs to transfer manufacturing operations to existing lower-cost locations, project management costs and accelerated depreciation, as well as a charge that is expected to be imposed by a taxing authority as a result of our exit from facilities in the authority's jurisdiction. Most of these charges (other than the tax charge) are expected to be recognized as cost of goods sold.

~~(2)~~

Substantially all the pre-tax savings are expected to result in reductions to cost of goods sold. As previously disclosed, during 2016, in connection with our execution of the 2014 Footprint realignment plan, we implemented changes to medication delivery devices included in certain of our kits, which are expected to result in increased product costs (and therefore reduce the annual savings we anticipated at the inception of the program). However, we also expect to achieve improved pricing on these kits that will offset the increased costs, resulting in estimated annual increased revenues of $3 million to $4 million, which is not reflected in the table above. Since 2017, we have realized an aggregate benefit of $2.4 million resulting from this incremental pricing. More recently, during the fourth quarter of 2017, we entered into an agreement with an alternate provider for the development and supply of a component to be included in certain kits sold by our Americas segment. The agreement will result in increased development costs but is expected to reduce the cost of the component supply, once the supply becomes commercially available, as compared to the costs incurred with respect to our current suppliers. Therefore, we anticipate a net savings from the agreement, which is reflected in the table above.

~~2019 Footprint realignment plan~~

~~In February 2019, we initiated a restructuring plan primarily involving the relocation of certain~~ manufacturing operations to existing lower-cost locations, project management costs and ~~related workforce reductions (the “2019 Footprint realignment plan"). These actions~~accelerated depreciation, as well as a charge that is expected to be imposed by a taxing authority as a result of our exit from facilities in the authority's jurisdiction. Most of these charges (other than the tax charge) are expected to be ~~substantially completed during 2022.~~recognized as cost of goods sold.

We estimate that we will incur aggregate pre-tax restructuring and restructuring related charges in connection with the 2019 Footprint realignment plan of $56 million to $70 million, of which, we expect $21 million to $26 million to be incurred in 2019 and most(2)Substantially all of the ~~balance is~~pre-tax savings are expected to ~~be incurred prior to the end of 2021. We estimate that $53 million to $66 million of these charges will~~ result in ~~cash outlays,~~reductions to cost of which, $8 million to $9 million is expected to be made in 2019 and most of the balance is expected to be made by the end of 2021. Additionally, we expect to incur $29 million to $35 million in aggregate capital expenditures under the plan, of which, $23 million to $25 million is expected to be incurred during 2019 and most of the balance is expected to be incurred by the end of 2021.

We expect to begin realizing plan-related savings in 2021 and expect to achieve annual pre-tax savings of $12 million to $14 million once the plan is fully implemented, which will benefit all of our segments except OEM.

goods sold.

Restructuring and impairment charges incurred

Three Months Ended Six Months Ended
June 30, 2019 July 1, 2018 June 30, 2019 July 1, 2018
(Dollars in millions)
Restructuring and impairment charges $ 1.7
$ 55.4
$ 19.1
$ 58.4


	Three Months Ended
	March 29, 2020		March 31, 2019
	(Dollars in millions)
Restructuring and impairment charges	$	1.3	$	17.4

Restructuring and impairment charges for the three months ended ~~June 30,~~March 29, 2020 and March 31, 2019 primarily consisted of ~~a $3.9 million impairment charge~~termination benefits related to our decision to abandon certain intellectual property and other related assets associated with our interventional product portfolio. The impairment charge was partially offset by net restructuring credits of $2.2 million, which was primarily related to changes in estimates with respect to termination benefits.

~~Restructuring and impairment charges for the six months ended June 30,~~ 2019 primarily related to $10.9 million in net termination benefit costs and $6.9 million in impairment charges related to our decision to abandon certain intellectual property and other assets associated with our interventional product portfolio.Footprint realignment plan.

Interest expense


	Three Months Ended						Six Months Ended							Three Months Ended
	June 30, 2019			July 1, 2018			June 30, 2019			July 1, 2018				March 29, 2020			March 31, 2019
	(Dollars in millions)													(Dollars in millions)
Interest expense	$	20.8		$	26.6		$	43.5		$	52.6		Interest expense	$	15.4		$	22.7
Average interest rate on debt	3.6		%	4.4		%	3.7		%	4.3		%	Average interest rate on debt	2.7		%	3.9		%

The decrease in interest expense for the three ~~and six~~ months ended ~~June 30, 2019~~March 29, 2020 compared to the ~~respective~~ prior year period was primarily due to a ~~reduction~~lower average interest rate resulting from decreases in interest rates associated with our variable interest rate debt instruments and as ~~a result of~~well as our cross-currency swap ~~agreements.~~agreement that we executed in the latter part of the first quarter of 2019.

Taxes on income from continuing operations


	Three Months Ended
	March 29, 2020		March 31, 2019
Effective income tax rate	7.8	%	20.7	%

Three Months Ended Six Months Ended
June 30, 2019 July 1, 2018 June 30, 2019 July 1, 2018
Effective income tax rate 4.4 % 136.3 % 10.6 % 23.2 %

The effective income tax rate for the three ~~and six~~ months ended ~~June 30, 2019~~March 29, 2020 was ~~4.4%~~7.8%, and ~~10.6%, respectively, and 136.3% and 23.2%~~20.7% for the three ~~and six~~ months ended ~~July 1, 2018,~~March 31, 2019, respectively.The effective income tax ~~rates~~rate for the three ~~and six~~ months ended ~~June 30,~~March 29, 2020, as compared to the prior year period, reflects a non-taxable contingent consideration adjustment recognized in connection with a decrease in the fair value of our contingent consideration liabilities. The effective income tax rate for the three months ended March 31, 2019 reflects significant non-deductible termination benefits incurred in connection with the 2019 Footprint realignment plan. In addition, the effective tax rates for both the three months ended March 29, 2020 and March 31, 2019 reflect a net excess tax benefit related to share-based ~~compensation, partially offset, with respect~~compensation.

could be material to our results of operations. We do not expect any additional liability to result in ~~this report. The effective tax rates for the three and six months ended July 1, 2018, reflect non-deductible costs related~~a material impact to ~~the 2018 Footprint realignment plan described in~~our liquidity or overall financial position.

Segment Financial Information


Segment net revenues
	Three Months Ended
	March 29, 2020		March 31, 2019		% Increase/ (Decrease)
	(Dollars in millions)



Americas	$	358.0	$	344.0	4.1
EMEA	156.1		154.6		1.0
Asia	53.1		60.8		(12.6)
OEM	63.4		54.2		16.9

Segment net revenues	$	630.6	$	613.6	2.8

Segment operating profit
	Three Months Ended
	March 29, 2020		March 31, 2019		% Increase/ (Decrease)
	(Dollars in millions)



Americas	$	141.0	$	65.6	114.9
EMEA	20.4		27.0		(24.4)
Asia	10.2		10.0		2.5
OEM	15.1		13.3		13.3

Segment operating profit ₍₁₎	$	186.7	$	115.9	61.1

(1)See Note 514 to ~~the~~our condensed consolidated financial statements included in this report ~~and~~for a ~~non-deductible contingent consideration expense recognized in connection with an increase in the fair value~~reconciliation of ~~the NeoTract contingent consideration liability.~~

~~Effective July 3, 2019, we merged two of our non-U.S. subsidiaries. We are currently evaluating the tax impact of this merger, but it is likely to result in a reduction of approximately $130 million~~segment operating profit to our ~~deferred tax liabilities within 12 months~~condensed consolidated income from continuing operations before interest, loss on extinguishment of ~~the effective date of the merger.~~debt and taxes.

~~Segment Financial Information~~

Segment net revenues
Three Months Ended Six Months Ended
June 30, 2019 July 1, 2018 % Increase/
(Decrease) June 30, 2019 July 1, 2018 % Increase/
(Decrease)

(Dollars in millions) (Dollars in millions)
Americas $ 373.8
$ 331.5
12.8
$ 717.8
$ 654.8
9.6
EMEA 147.1
153.4
(4.2 ) 301.6
313.3
(3.7 )
Asia 75.2
72.4
3.9
136.0
130.6
4.1
OEM 56.4
52.6
7.3
110.7
98.4
12.4
Segment net revenues $ 652.5
$ 609.9
7.0
$ 1,266.1
$ 1,197.1
5.8

Segment operating profit
Three Months Ended Six Months Ended
June 30, 2019 July 1, 2018 % Increase/
(Decrease) June 30, 2019 July 1, 2018 % Increase/
(Decrease)

(Dollars in millions)
(Dollars in millions)
Americas $ 82.5
$ 47.3
74.4
$ 148.1
$ 106.1
39.5
EMEA 20.8
26.5
(21.5 ) 47.9
58.3
(17.9 )
Asia 19.3
20.8
(7.2 ) 29.2
34.2
(14.3 )
OEM 13.9
13.6
2.4
27.2
22.6
20.5
Segment operating profit ₍₁₎
$ 136.5
$ 108.2
26.2
$ 252.4
$ 221.2
14.1


~~(1)~~	See Note 15 to our condensed consolidated financial statements included in this report for a reconciliation of segment operating profit to our condensed consolidated income from continuing operations before interest, loss on extinguishment of debt and taxes.

Comparison of the three ~~and six~~ months ended ~~June 30,~~March 29, 2020 and March 31, 2019 ~~and July 1, 2018~~

Americas

Americas net revenues for the three months ended ~~June 30, 2019~~March 29, 2020 increased ~~$42.3~~$14.0 million, or ~~12.8%~~4.1%, compared to the prior year period. The increase iswas primarily attributable to a $12.7 million increase in sales volume of existing products, mostly in interventional urology, as well as an increase in new product sales, ~~volumes of existing products.~~which were partially offset by a decrease in revenues caused by the COVID-19 pandemic.

Americas ~~net revenues~~operating profit for the ~~six~~three months ended ~~June 30, 2019~~March 29, 2020 increased ~~$63.0~~$75.4 million, or ~~9.6%~~114.9%, compared to the prior year period. The increase iswas primarily attributable to a decrease in the fair value of our contingent consideration liabilities and, to a lesser extent, an increase ~~of $51.1~~in gross profit resulting from higher sales.

EMEA

EMEA net revenues for the three months ended March 29, 2020 increased $1.5 million, or 1.0%, compared to the prior year period. The increase was primarily attributable to a $6.1 million increase in sales volumes of existing products, ~~and an increase~~inclusive of a benefit from the COVID-19, partially offset by unfavorable fluctuations in ~~new products sales.~~foreign currency exchange rates of $4.2 million.

~~Americas~~EMEA operating profit for the three months ended ~~June 30, 2019 increased $35.2~~March 29, 2020 decreased $6.6 million, or ~~74.4%~~24.4%, compared to the prior year period. The decrease was primarily attributable to unfavorable fluctuations in foreign currency exchange rates and an increase in research and development expenses inclusive of higher EU MDR related costs. The decreases in operating profit were partially offset by lower general and administrative expenses.

Asia

Asia net revenues for the three months ended March 29, 2020 decreased $7.7 million, or 12.6%, compared to the prior year period. The decrease was primarily attributable to a $7.3 million decrease in sales volumes of existing products, inclusive of the negative impact from the COVID-19 pandemic, and unfavorable fluctuations in foreign currency exchange rates.

Asia operating profit for the three months ended March 29, 2020 increased $0.2 million, or 2.5%, compared to the prior year period. The increase was primarily attributable to lower general and administrative expenses partially offset by the impact of unfavorable fluctuations in foreign currency exchange rates and a decrease in gross profit resulting from lower sales.

OEM

OEM net revenues for the three months ended March 29, 2020 increased $9.2 million, or 16.9%, compared to the prior year period. The increase was primarily attributable to net revenues of $5.0 million generated from our acquisition of HPC and a $4.2 million increase in sales volumes of existing products.

OEM operating profit for the three months ended March 29, 2020 increased $1.8 million, or 13.3% compared to the prior year period. The increase was primarily attributable to an increase in gross profit resulting from higher sales ~~and lower contingent consideration expense~~ partially offset by ~~higher selling expenses.~~expenses incurred in connection with the HPC acquisition.

Americas operating profit for the six months ended June 30, 2019 increased $42.0 million, or 39.5%, compared to the prior year period. The increase was primarily attributable to an increase in gross profit resulting from higher sales and lower contingent consideration expense partially offset by higher selling expenses as well as an increase in general and administrative costs.

~~EMEA~~

EMEA net revenues for the three months ended June 30, 2019 decreased $6.3 million, or 4.2%, compared to the prior year period. The decrease is primarily attributable to unfavorable fluctuations in foreign currency exchange rates of $9.2 million partially offset by an increase in new product sales and revenues generated by acquired businesses.

EMEA net revenues for the six months ended June 30, 2019 decreased $11.7 million, or 3.7%, compared to the prior year period. The decrease is primarily attributable to unfavorable fluctuations in foreign currency exchange rates of $21.1 million partially offset by an increase in new product sales and an increase in sales volumes of existing products.

EMEA operating profit for the three months ended June 30, 2019 decreased $5.7 million, or 21.5%, compared to the prior year period. The decrease was primarily attributable to unfavorable fluctuations in foreign currency exchange rates and higher operating expenses partially offset by the gross profit generated by higher sales.

EMEA operating profit for the six months ended June 30, 2019 decreased $10.4 million, or 17.9%, compared to the prior year period. The decrease was primarily attributable to higher operating expenses and unfavorable fluctuations in foreign currency exchange rates partially offset by gross profit generated by higher sales.

~~Asia~~

Asia net revenues for the three months ended June 30, 2019 increased $2.8 million, or 3.9%, compared to the prior year period. The increase is primarily attributable to a $3.7 million increase in sales volumes of existing products and, to a lesser extent, an increase in new product sales and revenue generated by an acquired business. These increases were partially offset by unfavorable fluctuations in foreign currency exchange rates of $4.0 million.

Asia net revenues for the six months ended June 30, 2019 increased $5.4 million, or 4.1%, compared to the prior year period. The increase is primarily attributable to a $7.0 million increase in sales volumes of existing products and, to a lesser extent, an increase in new product sales and revenue generated by an acquired business. These increases were partially offset by unfavorable fluctuations in foreign currency exchange rates of $7.5 million.

Asia operating profit for the three months ended June 30, 2019 decreased $1.5 million, or 7.2%, compared to the prior year period. The decrease was primarily attributable to unfavorable fluctuations in foreign currency exchange rates and higher operating expenses partially offset by an increase in gross profit resulting from higher sales.

Asia operating profit for the six months ended June 30, 2019 decreased $5.0 million, or 14.3%, compared to the prior year period. The decrease was primarily attributable to higher operating expenses and unfavorable fluctuations in foreign currency exchange rates partially offset by an increase in gross profit resulting from higher sales.

~~OEM~~

OEM net revenues for the three and six months ended June 30, 2019 increased $3.8 million, or 7.3%, and $12.3 million, or 12.4%, respectively, compared to the prior year periods. The increases in both periods are primarily attributable to an increase in sales volumes of existing products.

OEM operating profit for the three months ended June 30, 2019 increased $0.3 million, or 2.4%, compared to the prior year period primarily reflecting an increase in gross profit resulting from higher sales.

OEM operating profit for the six months ended June 30, 2019 increased $4.6 million, or 20.5%, compared to the prior year period primarily reflecting an increase in gross profit resulting from higher sales and, to a lesser extent, favorable product mix partially offset by an increase in general and administrative expenses.

Liquidity and Capital Resources

WeWhile the potential economic impact resulting from the COVID-19 pandemic and the duration of the pandemic's impact are difficult to assess or predict, the impact of the COVID-19 pandemic on the global financial markets may reduce our ability to access capital, which could negatively impact our short-term and long-term liquidity.In consideration of the significant uncertainty created by the COVID-19 pandemic, we are continuing to assess our liquidity and anticipated capital requirements. Notwithstanding the significant uncertainty created by the COVID-19 pandemic, we believe our cash flow from operations, available cash and cash equivalents and borrowings under our revolving credit facility will enable us to fund our operating requirements, capital expenditures and debt obligations for the next 12 months and the foreseeable future. We have net cash provided by United States based operating activities as well as non-United States sources of cash available to help fund our debt service requirements in the United States. We manage our worldwide cash requirements by monitoring the funds available among our subsidiaries and determining the extent to which we can access those funds on a cost effective basis.

In consideration of the COVID-19 pandemic, we are closely monitoring our receivables and payables.To date, we have not experienced significant payment defaults by, or identified other collectability concerns with, our customers, and we have sufficient lending commitments in place to enable us to fund our anticipated additional operating needs.

Cash Flows

~~Cash flows from~~Net cash used in operating activities from continuing operations ~~provided net cash of approximately $157.3~~was $11.5 million for the ~~six~~three months ended ~~June 30, 2019~~March 29, 2020 as compared to ~~$181.6~~net cash provided by operating activities of $60.2 million for the ~~six~~three months ended ~~July 1, 2018.~~March 31, 2019. The ~~$24.3~~$71.7 million decrease iswas primarily attributable to an increase in contingent consideration payments. Additionally, for the three months ended March 29, 2020, we made a $10.0 million pension contribution and had an increase in payroll and benefit related payments ~~of $26.1 million.~~as compared to the prior year period.

Net cash used in investing activities from continuing operations was ~~$47.6~~$284.4 million for the ~~six~~three months ended ~~June 30, 2019,~~March 29, 2020, which included a $260.0 million payment for the acquisition of HPC as well as capital expenditures of ~~$56.1~~$19.7 million.

Net cash provided by financing activities from continuing operations was $405.3 million ~~partially offset~~for the three months ended March 29, 2020, which reflected a net increase in borrowings of $485.0 million. The cash received from the increase in borrowings was utilized to fund the $260.0 million acquisition of HPC; to increase our available cash on hand by ~~proceeds from swaps designated~~$150.0 million to strengthen our liquidity as ~~net investment hedges of $8.3 million.~~

a precautionary measure in response to the COVID-19 pandemic; and to help fund the NeoTract contingent consideration payment. Net cash used in financing activities ~~from continuing operations was $167.6 million~~ for the ~~six~~three months ended ~~June 30, 2019, which included~~March 29, 2020 also reflects contingent consideration payments of ~~$111.9~~$60.9 million and dividend payments of ~~$31.3 million and a net decrease in borrowings of~~ ~~$27.5 million~~.

$15.8 million.

Borrowings

On ~~April 5, 2019,~~March 30, 2020, we ~~entered into an amended and restated credit agreement (the "Credit Agreement"), which provides for a $1.0 billion revolving credit~~increased our borrowing capacity related to our accounts receivable securitization facility ~~and a $700~~from $50 million term loan facility, each of which matures on April 5, 2024. The Credit Agreement replaces a previous credit agreement under which we were provided a $1.0 billion credit facility and a $750 million term loan facility, due 2022 (the “prior term loan”). The $700 million term loan facility under the Credit Agreement principally was applied against the remaining $675 million principal balance of the prior term loan.

~~At our option, loans under the Credit Agreement will bear interest at a rate equal~~ to adjusted LIBOR plus an applicable margin ranging from 1.125% to 2.00% or at an alternate base rate, which is defined as the highest of (i) the “Prime Rate” in the U.S. last quoted by The Wall Street Journal, (ii) 0.50% above the greater of the federal funds rate and the rate comprised of both overnight federal funds and overnight eurodollar borrowings and (iii) 1.00% above adjusted LIBOR for a one month interest period, plus an applicable margin ranging from 0.125% to 1.00%, in each case subject to adjustments based on our consolidated total net leverage ratio (generally, Consolidated Total Funded Indebtedness (which is net of “Qualified Cash”), as defined in the Credit Agreement on the date of determination to Consolidated EBITDA, as defined in the Credit Agreement, for the four most recent fiscal quarters ending on or preceding the date of determination). Overdue loans will bear interest at the rate otherwise applicable to such loans plus 2.00%. The Credit Agreement is described in more detail in Note 9 to the condensed consolidated financial statements included in this report.

$75 million.

The Credit Agreement contains covenants that, among other things and subject to certain exceptions, place limitations on our ability, and the ability of our subsidiaries, to incur additional indebtedness; create additional liens; enter into a merger, consolidation or amalgamation or other defined "fundamental changes," dispose of certain assets, make certain investments or acquisitions, pay dividends, or make other restricted payments, enter into swap agreements or enter into transactions with our affiliates. Additionally, the Credit Agreement contains financial covenants that, subject to specified exceptions, require us to maintain a consolidated total net leverage ratio of not more than 4.50 to 1.00 and a consolidated interest coverage ratio (generally, Consolidated EBITDA for the four most recent fiscal quarters ending on or preceding the date of determination to Consolidated Interest Expense, as defined in the Credit Agreement, paid in cash for such period) of not less than 3.50 to 1.00.

~~The indentures governing our 5.25% Senior Notes due 2024 (the “2024 Notes”) and~~ 4.875% Senior Notes due 2026 (the "2026 Notes") contain covenants that, among other things and subject to certain exceptions, limit or restrict our ability, and the ability of our subsidiaries, to incur additional debt or

issue preferred stock or other disqualified stock, create liens, merge, consolidate, or dispose of certain assets, pay dividends, make investments or make other restricted payments, or enter into transactions with our ~~affiliates..~~affiliates. The indenture governing our 4.625% Senior Notes due 2027 (the “2027 Notes”) contains covenants that, among other things and subject to certain exceptions, limit or restrict our ability, and the ability of our subsidiaries, to create liens; consolidate, merge or dispose of certain assets; and enter into sale leaseback transactions.

As of ~~June 30, 2019,~~March 29, 2020, we were in compliance with these requirements. The obligations under the Credit Agreement, ~~the 2024 Notes,~~ the 2026 Notes and the 2027 Notes are guaranteed (subject to certain exceptions) by substantially all of our material domestic subsidiaries, and the obligations under the Credit Agreement are (subject to certain exceptions and limitations) secured by a lien on substantially all of the assets owned by us and each guarantor.

Summarized Financial Information – Obligor Group

Our $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 together with 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 an enumerated group of the Parent Company’s subsidiaries (each, a “Guarantor Subsidiary” and collectively, the “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. Summarized financial information for the Parent and Guarantor Subsidiaries (collectively, the “Obligor Group”) as of March 29, 2020 and December 31, 2019 and for the three months ended March 29, 2020 is as follows:


	Three Months Ended
	March 29, 2020
	(Dollars in millions)
	Obligor Group		Intercompany		Obligor Group (excluding Intercompany)

Net revenue	$	444.2	$	55.5	$	388.7
Cost of goods sold	260.7		73.5		187.2
Gross profit	183.5		(18.0)		201.5
Income from continuing operations	81.9		2.3		79.6
Net income	81.9		2.3		79.6



	March 29, 2020										December 31, 2019
	(Dollars in millions)
	Obligor Group		Intercompany		Obligor Group (excluding Intercompany)		Obligor Group		Intercompany		Obligor Group (excluding Intercompany)

Total current assets	$	864.2	$	63.9	$	800.3	$	735.8	$	51.8	$	684.0
Total assets	5,116.3		1,389.0		3,727.3		4,847.9		1,237.7		3,610.2
Total current liabilities	707.8		515.4		192.4		852.5		500.8		351.7
Total liabilities	3,963.5		797.9		3,165.6		3,659.5		752.4		2,907.1

The same accounting policies as described in Note 1 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2019 are used by the Parent Company and each of its subsidiaries in connection with the summarized financial information presented above. The Intercompany column in the table above represents transactions between and among the Obligor Group and non-guarantor subsidiaries (i.e. those subsidiaries of the Parent Company that have not guaranteed payment of the Senior Notes). Obligor investments in non-guarantor subsidiaries and any related activity are excluded from the financial information presented above.

Critical Accounting Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and assumptions.

In our Annual Report on Form 10-K for the year ended December 31, ~~2018,~~2019, we provided disclosure regarding our critical accounting estimates, which are reflective of significant judgments and uncertainties, are important to the presentation of our financial condition and results of operations and could potentially result in materially different results under different assumptions and conditions.

New Accounting Standards

See Note 2 to the condensed consolidated financial statements included in this report for a discussion of recently issued accounting guidance, including estimated effects, if any, of adoption of the guidance on our financial statements.

Forward-Looking Statements

All statements made in this Quarterly Report on Form 10-Q, other than statements of historical fact, are forward-looking statements. The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “will,” “would,” “should,” “guidance,” “potential,” “continue,” “project,” “forecast,” “confident,” “prospects” and similar expressions typically are used to identify forward-looking statements. Forward-looking statements are based on the then-current expectations, beliefs, assumptions, estimates and forecasts about our business and the industry and markets in which we operate. These statements are not guarantees of future performance and are subject to risks and uncertainties, which are difficult to predict. Therefore, actual outcomes and results may differ materially from those expressed or implied by these forward-looking statements due to a number of factors, including the adverse economic conditions associated with the COVID-19 global health pandemic and the associated financial crisis, stay-at-home and other orders, which could cause material delays and cancellations of elective procedures, curtailed or delayed spending by customers and result in disruptions to our supply chain, closure of our facilities, delays in product launches or diversion of management and other resources to respond to the COVID-19 pandemic; the impact of global and regional economic and credit market conditions on healthcare spending; the risk that the COVID-19 pandemic disrupts local economies and causes economies to enter prolonged recessions; changes in business relationships with and purchases by or from major customers or suppliers; delays or cancellations of shipments; demand for and market acceptance of new and existing products; our inability to provide products to our customers, which may be due to, among other things, events that impact key distributors, suppliers and vendors that sterilize our products; our inability to integrate acquired businesses into our operations, realize planned synergies and operate such businesses profitably in accordance with our expectations; our inability to effectively execute our restructuring plans and programs; our inability to realize anticipated savings from restructuring plans and programs; the impact of enacted healthcare reform legislation and proposals to amend, replace or repeal the legislation; changes in Medicare, Medicaid and third party coverage and reimbursements; the impact of tax legislation and related regulations; competitive market conditions and resulting effects on revenues and pricing; increases in raw material costs that cannot be recovered in product pricing; global economic factors, including currency exchange rates, interest rates, trade disputes and sovereign debt issues; difficulties in entering new markets; and general economic conditions. For a further discussion of the risks relating to our business, see Item 1A, "Risk Factors," in our Annual Report on Form 10-K for the year ended December 31, 2019. We expressly disclaim any obligation to update these forward-looking statements, except as otherwise specifically stated by us or as required by law or regulation.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes to the information set forth in Part II, Item 7A of ~~the Company’s~~our Annual Report on Form 10-K for the year ended December 31, ~~2018 and in Part I, Item 3 of the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31,~~ 2019.

Item 4. Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures as of the end of the period covered by this report are functioning effectively to provide reasonable assurance that the information required to be disclosed by us in reports filed under the Securities Exchange Act of 1934 is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding disclosure. A controls system cannot provide

absolute assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

(b) Change in Internal Control over Financial Reporting

No change in our internal control over financial reporting occurred during our most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

We are party to various lawsuits and claims arising in the normal course of business. These lawsuits and claims include actions involving product liability and product warranty, commercial disputes, intellectual property, contract, employment, environmental and other matters. As of ~~June 30, 2019~~March 29, 2020 and December 31, ~~2018,~~2019, we have accrued liabilities of approximately ~~$0.2~~$0.3 million and ~~$0.6~~$0.4 million, respectively, in connection with these matters, representing our best estimate of the cost within the range of estimated possible loss that will be incurred to resolve these matters. Based on information currently available, advice of counsel, established reserves and other resources, we do not believe that the outcome of any outstanding lawsuits or claims is likely to be, individually or in the aggregate, material to our business, financial condition, results of operations or liquidity. However, in the event of unexpected further developments, it is possible that the ultimate resolution of these matters, or other similar matters, if unfavorable, may be materially adverse to our business, financial condition, results of operations or liquidity.

Item 1A. Risk Factors

See the information set forth in Part I, Item 1A of ~~the Company’s~~our Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019. There have been no significant changes in risk factors for the quarter ended ~~June 30,~~March 29, 2020 except as set forth below. The risk factor set forth below replaces in its entirety the risk factor in our Annual Report on Form 10-K with the title “Our results of operations and financial condition may be adversely affected by public health epidemics, including the novel coronavirus reported to have originated in Wuhan, China”:

Our results of operations and financial condition may be adversely affected by public health epidemics, including the ongoing COVID-19 global health pandemic.

On March 11, 2020, the World Health Organization declared the global outbreak of COVID-19 to be a pandemic. The COVID-19 pandemic has significantly impacted economic activity and markets around the world. If the pandemic continues and conditions worsen, it could negatively impact our business, results of operations, financial condition and liquidity in numerous ways, including, but not limited to, those outlined below:

•It has resulted, and we expect it will continue to result, in lower revenues in certain of our product categories, including our interventional urology (which revenues are primarily concentrated in our Americas segment), interventional and surgical product categories, in which we sell products largely utilized in elective procedures, which have been significantly reduced or suspended due to the pandemic.

•It has resulted in higher revenues in our respiratory product category. However, we are unable to predict how long this sustained demand will last or how significant it will be.

•It may cause disruptions in the manufacture of our products. We currently rely on our 35 manufacturing sites, with major manufacturing operations located in the Czech Republic, Germany, Malaysia, Mexico and the U.S., to manufacture our products. The COVID-19 pandemic, and/or the governmental or regulatory actions taken in response to COVID-19 pandemic, may interfere with our ability, or that of our employees or suppliers to perform our and their respective responsibilities and obligations relative to the conduct of our business and create a risk to our ability to manufacture our products in a timely manner, or at all. We have experienced and expect to continue to experience inefficiencies in our manufacturing operations due to government restrictions placed on facilities in certain locations primarily in Asia. Additionally, we have experienced and continue to experience a higher than normal level of absenteeism across our global manufacturing sites. In an effort to increase the wider availability of needed medical device products, we may elect to, or the government may require us to, allocate manufacturing capacity (for example, pursuant to the U.S. Defense Production Act) in a way that adversely affects our regular operations and financial results, results in differential treatment of customers and/or adversely affects our customer relationships and reputation.

•While we have not experienced significant payment defaults by, or identified other significant collectability concerns with, our customers to date, we may be adversely impacted by delays in payments of outstanding receivables if our customers experience financial difficulties or are unable to borrow money to fund their operations, which may adversely impact their ability to pay for our products on a timely basis, if at all.

•The COVID-19 pandemic, including related illness, border closures, travel restrictions, quarantines, lockdowns or other workforce disruptions, could disrupt our suppliers or our suppliers’ suppliers and/or the distribution of our products, whether through our direct sales force or our distributors. These disruptions, or our failure to

respond to them, could increase manufacturing or distribution costs or cause delays in delivering, or an inability to deliver, products to our customers.

•The COVID-19 pandemic has increased volatility and pricing in the capital markets, and volatility if likely to continue. We might not be able to continue to access preferred sources of liquidity when we would like, and our borrowing costs could increase.

These and other impacts of the COVID-19 pandemic, or other pandemics or epidemics, could have the effect of heightening many of the other risks described in the Risk Factors section of our Annual Report on Form 10-K for the year ended December 31, 2019. We might not be able to predict or respond to all impacts on a timely basis to prevent near- or long-term adverse impacts to our results. The severity, magnitude and duration of the COVID-19 pandemic is uncertain, rapidly changing and hard to predict. We do not yet know the full extent of potential delays or impacts on our business, our results of operations or financial condition or on healthcare systems or the global economy as a whole. However, these effects could have an adverse impact on our liquidity, capital resources, operations and business and those of the third parties on which we rely, and such impact could be material.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Not applicable.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

Item 6. Exhibits

The following exhibits are filed as part of, or incorporated by reference into, this report:



Exhibit No.		Description

*+10.1	—	~~Amended~~Employment Contract, dated October 16, 2018, by and ~~Restated Credit~~between the Company and Mario Wijker.
+10.2	—	Letter Agreement, dated ~~April 5,~~January 2, 2019, ~~among~~by and between the Company ~~JPMorgan Chase Bank, N.A., as administrative agent, Bank~~and Mario Wijker.
+10.3	—	Contract of ~~America, N.A., PNC Bank, National Association, Wells Fargo Bank, National Association~~Employment, dated March 24, 2020, by and ~~HSBC~~between the Company and James Winters.
+10.4	—	Senior Executive Officer Severance Agreement, dated March 24, 2020, by and between the Company and James Winters.
+10.5	—	Executive Change In Control Agreement, dated March 24, 2020, by and between the Company and James Winters.
22	—	Subsidiary Guarantors of Guaranteed Securities (USA), as co-syndication agents, the guarantors party thereto, the lenders party thereto and each other party thereto (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on April 10, 2019).
31.1	—	Certification of Chief Executive Officer, pursuant to Rule 13a–14(a) under the Securities Exchange Act of 1934.
31.2	—	Certification of Chief Financial Officer, pursuant to Rule 13a–14(a) under the Securities Exchange Act of 1934.
32.1	—	Certification of Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	—	Certification of Certification of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.1	—	The following materials from ~~the Company’s~~our Quarterly Report on Form 10-Q for the quarter ended ~~June 30, 2019,~~March 29, 2020, formatted in inline XBRL (eXtensible Business Reporting Language): (i) Cover Page; (ii) the Condensed Consolidated Statements of Income for the three ~~and six~~ months ended ~~June 30, 2019~~March 29, 2020 and ~~July 1, 2018;~~March 31, 2019; (iii) the Condensed Consolidated Statements of Comprehensive Income for the three ~~and six~~ months ended ~~June 30, 2019~~March 29, 2020 and ~~July 1, 2018;~~March 31, 2019; (iv) the Condensed Consolidated Balance Sheets as of ~~June 30, 2019~~March 29, 2020 and December 31, ~~2018;~~2019; (v) the Condensed Consolidated Statements of Cash Flows for the ~~six~~three months ended ~~June 30, 2019~~March 29, 2020 and ~~July 1, 2018;~~March 31, 2019; (vi) the Condensed Consolidated Statements of Changes in Equity for the ~~six~~three months ended ~~June 30, 2019~~March 29, 2020 and ~~July~~March 31, ~~2018;~~2019; and (vii) Notes to Condensed Consolidated Financial Statements.
104.1	—	The cover page of the Company's Quarterly Report on Form 10-Q for the quarter ended March 29, 2020, formatted in inline XBRL (included in Exhibit 101.1).

* Each such exhibit has previously been

+ Indicates management contract or compensatory plan or arrangement required to be filed ~~with the Securities and Exchange Commission as part~~pursuant to Item 15(b) of ~~the filing indicated and is incorporated herein by reference.~~

this report.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

TELEFLEX INCORPORATED

By:

/s/ Liam J. Kelly

Liam J. Kelly

President and Chief Executive Officer

(Principal Executive Officer)

By:

/s/ Thomas E. Powell

Thomas E. Powell

Executive Vice President and Chief Financial Officer

(Principal Financial Officer)

Dated: ~~August 1, 2019~~April 30, 2020



Three Months Ended June 30, 2019
	Termination benefits			Other costs ₍₁₎		Total
	(Dollars in thousands)
2019 Footprint realignment plan	$	(459	)	$	30	$	(429	)
2018 Footprint realignment plan	(2,275		)	134		$	(2,141	)
Other restructuring programs₍₂₎	62			312		374
Restructuring charges (credits)	(2,672		)	476		(2,196		)
Asset impairment charges	—			3,881		3,881
Restructuring and impairment charges (credits)	$	(2,672	)	$	4,357	$	1,685



Three Months Ended July 1, 2018
	Termination benefits		Other costs ₍₁₎		Total
	(Dollars in thousands)
2018 Footprint realignment plan	$	52,345	$	129	$	52,474
Other restructuring programs ₍₄₎	574		440		1,014
Restructuring charges	52,919		569		53,488
Asset impairment charges	—		1,865		1,865
Restructuring and impairment charges	$	52,919	$	2,434	$	55,353



Six Months Ended June 30, 2019
	Termination Benefits			Other costs ₍₁₎		Total
	(Dollars in thousands)
2019 Footprint realignment plan	$	12,516		$	30	$	12,546
2018 Footprint realignment plan	(1,838		)	708		(1,130		)
Other restructuring programs₍₂₎	188			565		753
Restructuring charges	10,866			1,303		12,169
Asset impairment charges	—			6,911		6,911
Restructuring and impairment charges	$	10,866		$	8,214	$	19,080



Six Months Ended July 1, 2018
	Termination Benefits		Other costs ₍₁₎		Total
	(Dollars in thousands)
2018 Footprint realignment plan	$	52,345	$	129	$	52,474
2016 Footprint realignment plan ₍₃₎	2,199		291		2,490
Other restructuring programs ₍₄₎	1,032		555		1,587
Restructuring charges	55,576		975		56,551
Asset impairment charges	—		1,865		1,865
Restructuring and impairment charges	$	55,576	$	2,840	$	58,416



	June 30, 2019
	(Dollars in thousands)
2019	$	14,045
2020	23,992
2021	21,602
2022	19,924
2023	16,363
2024 and thereafter	42,060
Total lease payments	137,986
Less: interest	(21,334		)
Present value of lease liabilities	$	116,652



Total lease liabilities ₍₁₎	$	116,652
Cash paid for amounts included in the measurement of lease liabilities within operating cash flows	$	12,636
Right of use assets obtained in exchange for operating lease obligations	$	19,728
Weighted average remaining lease term	6.8 years
Weighted average discount rate	4.4		%



	Total carrying value at June 30, 2019		Quoted prices in active markets (Level 1)		Significant other observable Inputs (Level 2)		Significant unobservable Inputs (Level 3)
	(Dollars in thousands)
Investments in marketable securities	$	10,034	$	10,034	$	—	$	—
Derivative assets	22,659		—		22,659		—
Derivative liabilities	7,275		—		7,275		—
Contingent consideration liabilities	191,671		—		—		191,671



	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