Overview

We are 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 medical
devices used by hospitals and healthcare providers for common diagnostic and
therapeutic

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procedures in critical care and surgical applications. Approximately 95% of our
net revenues come from single-use medical devices. 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
seek to optimize utilization of our facilities through restructuring initiatives
designed to further reduce our cost base and enhance our competitive position.
In addition, we may continue to explore opportunities to expand the size of our
business and improve our 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).
Our 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. Further, we may identify opportunities to expand our margins
through strategic divestitures of existing businesses and product lines that do
not meet our objectives.

Divestiture

On May 15, 2021, we entered into a definitive agreement to sell certain product
lines within our global respiratory product portfolio (the "Divested respiratory
business") to Medline Industries, Inc. ("Medline") for consideration of $286.0
million, reduced by $12 million in working capital not transferring to Medline,
which is subject to customary post close adjustments (the "Respiratory business
divestiture"). In connection with the Respiratory business divestiture, we also
entered into several ancillary agreements with Medline to help facilitate the
transfer of the business, which provide for transition support, quality, supply
and manufacturing services, including a manufacturing and supply transition
agreement (the "MSTA").

On June 28, 2021, the first day of the third quarter of 2021, we completed the
initial phase of the Respiratory business divestiture, pursuant to which we
received cash proceeds of $259 million. We attributed $33.8 million of the
proceeds to our performance obligations pursuant to the MSTA. The resulting
liability was measured as the excess of the estimated fair value of the services
to be performed over the estimated proceeds we expect to receive over the MSTA
term. It was recorded within Other current liabilities and Other liabilities in
the condensed consolidated balance sheet and the related proceeds will be
recognized in net revenues as the services are performed.

The second phase of the Respiratory business divestiture will occur once we
transfer certain additional manufacturing assets to Medline. Our receipt of
$15.0 million in additional cash proceeds is contingent upon the transfer of
these manufacturing assets and is expected to occur prior to the end of 2023. We
plan to recognize the contingent consideration, and any gain on sale resulting
from the second phase of the divestiture, when it becomes realizable.

Net revenues attributable to our Divested respiratory business recognized prior
to the Respiratory business divestiture are included within each of our
geographic segments and were $60.7 million for the year ended December 31, 2021,
and $138.5 million for the year ended December 31, 2020. For the year ended
December 31, 2021, we recognized $51.1 million in net revenues attributed to
services provided to Medline in accordance with the MSTA, which are presented
within our Americas reporting segment.

COVID-19 pandemic and related economic factors

Beginning in the first half of 2020, the challenges arising from the COVID-19
pandemic have adversely impacted our financial results, mainly as a result of a
decline in demand for certain of our products, and have had an effect on various
aspects of our global operations and employees resulting from precautionary and
preventive measures to reduce the spread of COVID-19. Our business has been
impacted by travel restrictions, border closures and quarantines as they affect
our various sites, including our manufacturing sites. We have also experienced
inefficiencies in our manufacturing operations due to temporary or partial work
stoppages as well as government-mandated and self-imposed restrictions placed
on, and safety measures implemented at, our facilities globally. The challenges
arising from the pandemic have also impacted our contractors, suppliers,
customers and other business partners and have generally had an adverse effect
on macroeconomic conditions across the globe. Accordingly, this has impacted
various aspects of our global supply chain, including causing logistical
transport challenges for our freight transport providers, and has resulted in
cost inflation. While we have not yet experienced
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significant disruptions in the global supply chain for our products that are in
high demand, we have in some cases experienced lengthened delivery times,
resulting in backorders for some of our products. We continue to monitor the
impacts resulting from the pandemic on our operations.

To date, our financial results were most severely impacted by the pandemic
during the second quarter of 2020 due to reduced elective procedure volumes,
partially offset by increased demand for products used in the treatment of
patients with COVID-19. Since the second quarter of 2020, we have experienced
varying levels of continuing recovery across our product lines and geographic
segments from the challenges stemming from the pandemic. We believe that the
COVID-19 pandemic will continue to have an impact on our business, particularly
in the near term, and that such impact would be most significant if the virus
becomes more prevalent, if vaccine immunization rates do not increase and if new
strains of the virus continue to emerge. As a result of the dynamic nature of
the crisis, we cannot accurately predict the extent or duration of the impacts
of the pandemic.

In addition to the impacts of the COVID-19 pandemic, we continue to monitor business and pricing activity, inflation and exchange rate volatility that could impact our financial condition, results of operations or cash.

Operating results

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 businesses (except as noted below with respect to acquired
distributors) generally reflects the impact of the acquisitions within the first
12 months following the date of the acquisition. 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 any elimination of
distributors, either through acquisition or termination of the distributor, from
the sales channel. All dollar amounts in tables are presented in millions unless
otherwise noted.

For a discussion of the comparison of our results of operations for 2020 and 2019, see our Annual Report on Form 10-K for the year ended December 31, 2020 filed on February 25, 2021.

Comparison of 2021 and 2020

Revenues
                  2021           2020
Net Revenues   $ 2,809.6      $ 2,537.2


Net revenues for the year ended December 31, 2021 increased by $272.4 million,
or 10.7%,compared to the prior year, which was primarily attributable to a $94.4
million increase in sales volume of existing products, largely stemming from the
impact that the COVID-19 pandemic had on the prior year, net revenues of $70.4
million generated by acquired businesses, primarily Z-Medica, a $50.0 million
increase in new product sales and $44.9 million of favorable fluctuations in
foreign currency exchange rates.

Gross profit
                             2021            2020

Gross profit             $ 1,549.6       $ 1,324.9
Percentage of revenues        55.2  %         52.2  %


For the year ended December 31, 2021, gross margin increased 300 basis points,
or 5.7%, compared to the prior year period primarily due to higher sales volumes
largely stemming from the impact that the COVID-19 pandemic had on the prior
year, benefits from cost improvement initiatives, price increases and favorable
product mix. The increases in gross margin were partially offset by an increase
in logistics and distribution costs, largely stemming from the enduring impact
of the COVID-19 pandemic.

Selling, general and administrative expenses

                                         2021          2020

Selling, general and administrative expenses $860.1 $743.6
Revenue percentage

                   30.6  %       29.3  %


Selling, general and administrative expenses increased $116.5 million for the year ended December 31, 2021, compared to the previous year. The increase is mainly attributable to the benefit recorded in the previous year

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resulting from the decrease in the estimated fair value of our contingent consideration liabilities arising from the adverse effects of the COVID-19 pandemic, increased sales and marketing expenses in some of our product portfolios, operating expenses incurred by acquired businesses, primarily Z-Medica, and higher performance-related benefit expenses.

Research and development
                              2021          2020

Research and development   $ 130.8       $ 119.7
Percentage of revenues         4.7  %        4.7  %


Research and development expenses increased $11.1 million for the year ended
December 31, 2021, compared to the prior year, which was primarily attributable
to European Union Medical Device Regulation ("EU MDR") related costs partially
offset by lower project spend within certain of our product portfolios.

Restructuring and impairment charges

Respiratory deprivation plan

In 2021, in connection with the Respiratory business divestiture, we committed
to a restructuring plan designed to separate the manufacturing operations that
will be transferred to Medline from those that will remain with Teleflex, which
includes related workforce reductions (the "Respiratory divestiture plan"). The
plan includes expanding certain of our existing locations to accommodate the
transfer of capacity from the sites that will be transferred to Medline and
replicating the manufacturing processes at alternate existing locations. We
expect this plan will be substantially completed by the end of 2023.

We estimate that we will incur aggregate pre-tax restructuring and restructuring
related charges in connection with the Respiratory divestiture plan of $24
million to $30 million and substantially all of these charges will result in
cash outlays, the majority of which will be made in 2022 and 2023. Additionally,
we expect to incur $22 million to $28 million in aggregate capital expenditures
under the plan, which we expect will be incurred mostly in 2022 and 2023.

Restructuring plan 2021

During the first quarter of 2021, we committed to a restructuring plan designed
to streamline various business functions across our segments (the "2021
Restructuring plan"). The plan was substantially completed by the end of 2021
and we expect future restructuring charges associated with the program, if any,
to be nominal. We will achieve annual pre-tax savings of $15 million as a result
of this plan.

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

We have ongoing restructuring programs consisting of the consolidation of our
manufacturing operations (referred to as our 2019, 2018 and 2014 Footprint
realignment plans) in addition to the Respiratory divestiture plan and the 2021
Restructuring plan, both as described above. 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 the 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 the OEM initiative are completed;
(b) the charges incurred through December 31, 2021; and (c) the estimated
charges to be incurred from January 1, 2022 through the last anticipated
completion date of the restructuring programs and the OEM initiative, 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 the OEM initiative
through December 31, 2021; and (c) the estimated additional annual pre-tax
savings to be realized from January 1, 2022 through the last anticipated
completion date of the restructuring programs and the OEM initiative.

Estimated charges and pre-tax savings are subject to change depending on, among other things, the nature and timing of restructuring and similar activities, changes in the scope of restructuring programs and the OEM initiative, unforeseen expenses and other developments, the effect of additional acquisitions or divestitures

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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 may reflect changes
from amounts previously estimated. Additional details, including estimated
charges expected to be incurred in connection with our restructuring programs
and the anticipated completion dates, are described in Note 5 to the
consolidated financial statements included in this Annual Report on Form 10-K.

Pre-tax savings may be realized during, and subsequent to, the completion of the
restructuring programs. Pre-tax savings can also be affected by increases or
decreases in sales volumes generated by the businesses impacted by 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 impacted businesses, although likely to increase manufacturing costs, may
generate additional savings with respect to costs that otherwise would have been
incurred if the manufacturing operations were not consolidated.
                                                                       

Restructuring programs and other similar cost reduction initiatives

                                                                                            Actual results through
                                                   Estimated Total                             December 31, 2021                           Estimated Remaining

Restructuring charges - Restructuring plans
(1)                                                  $102 - $110                                      $99                                       $3 - 

$11

Restructuring charges - Respiratory
divestiture plan                                        5 - 8                                          3                                          2 - 5
Total restructuring charges                           107 - 118                                       102                                        5 - 16
Restructuring related charges - Restructuring
plans (1)                                             128 - 146                                       101                                        27 - 

45

Restructuring related charges - Respiratory
divestiture plan                                       19 - 22                                         3                                         16 - 

19

Total restructuring related charges (2)               147 - 168                                       104                                        43 - 64
Total charges                                        $254 - $286                                     $206                                       $48 - $80

OEM initiative annual pre-tax savings                  $6 - $7                                        $2                                         $4 - 

$5

Pre-tax savings- Restructuring plans (1) (3)           88 - 97                                        55                                         33 - 

42

Total annual pre-tax savings                         $94 - $104                                       $57                                       $37 - 

$47

(1) Restructuring plans include the 2021 restructuring program and the 2019, 2018 and 2014 footprint realignment plans.

(2)Represents charges 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.

(3)The majority of the pre-tax savings are expected to result in reductions to
cost of goods sold. Substantially all of the estimated remaining savings are
expected to be realized between January 1, 2022 and December 31, 2023.

The following discussion provides additional details regarding our significant ongoing restructuring programs:

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
and related workforce reductions (the "2019 Footprint realignment plan"). These
actions are expected to be substantially completed by the end of 2022.

We estimate that we will incur charges totaling $54 million to $60 million under
the plan, of which we estimate that $48 million to $54 million of these charges
will result in future cash outlays. We expect to incur $31 million to $33
million in total capital expenditures under the plan.

We expect to achieve annual pre-tax savings of $20 million for $22 million once the plan is fully implemented.

2018 Footprint Realignment Plan

In May 2018we have embarked on a restructuring plan involving the relocation of certain European production sites

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operations to existing lower-cost locations, the outsourcing of certain European
distribution operations and related workforce reductions (the "2018 Footprint
realignment plan"). These actions are expected to be substantially completed by
the end of 2022.

We estimate that we will incur total charges in connection with the 2018
Footprint realignment plan of $110 million to $128 million, of which, we
estimate that $99 million to $122 million of these charges will result in future
cash outlays. Additionally, we expect to incur $15 million to $16 million in
total capital expenditures under the plan.

We expect to achieve annual pre-tax savings of $25 million for $30 million once the plan is fully implemented.

2014 Footprint Realignment Plan

In April 2014, we initiated a restructuring plan involving the consolidation of
operations and a related reduction in workforce at certain facilities, and the
relocation of manufacturing operations from certain higher-cost locations to
existing lower-cost locations (the "2014 Footprint realignment plan"). We expect
the plan will be substantially completed by the end of 2022.

We estimate that we will incur total costs of $53 million for $55 millionwhich we believe will result in disbursements of $43 million for $46 millionand total capital expenditures of $26 million for $27 million under the scheme.

We expect to achieve annual pre-tax savings of $28 million for $30 million once the plan is fully implemented.

The following table provides information regarding restructuring charges we have
incurred with respect to each of our restructuring programs, as well as
impairment charges, for the years ended December 31, 2021, 2020, and 2019. The
restructuring charges listed in the table primarily consist of termination
benefits.
                                      2021        2020

Respiratory deprivation plan $2.7 $ – Restructuring plan 2021

                7.4           -

2020 workforce reduction plan(1) 0.9 8.8 2019 footprint realignment plan 0.3 1.5 2018 footprint realignment plan 2.5 6.0 Footprint realignment plan 2014 0.3 0.6 Other restructuring programs

           0.9         0.2
Impairment charges (2)                 6.7        21.4
Total                               $ 21.7      $ 38.5


(1) During the second quarter of 2020, we committed to a reduction in headcount intended to improve profitability and reduce costs primarily by streamlining certain sales and marketing functions in our EMEA segment and certain manufacturing operations in our OEM segment (the “2020 Workforce Reduction Plan”). The plan was substantially completed by the end of 2020.

(2)For the year ended December 31, 2021, we recorded impairment charges of
$6.7 million related to our decision to abandon intellectual property and other
assets primarily associated with our respiratory product portfolio that was not
transferred to Medline as part of the Respiratory business divestiture. For the
year ended December 31, 2020, we recorded impairment charges of $21.4 million,
related to our decision to abandon certain intellectual property and other
assets associated with our surgical product portfolio.

Interest expense

                                                  2021         2020

Interest expense                                $ 57.0       $ 66.5

Average interest rate on debt during the year 2.2% 2.5%


The decrease in interest expense for the year ended December 31, 2021 compared
to the prior year was primarily due to the redemption of the 4.875% Senior Notes
due 2026 (the "2026 Notes") resulting in a lower average interest rate and lower
average debt outstanding after subsequent debt pay downs using proceeds from the
Respiratory business divestiture and operating cash flows.

Gain on sale of business and assets

                                        2021       2020

Gain on sale of business and assets $91.2 $-

During the year ended December 31, 2021we recognized a gain related to the disposal of the Respiratory business.

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Loss on extinguishment of debt

                                   2021       2020

Loss on extinguishment of debt $13.0 $-


During the year ended December 31, 2021, we prepaid the $400 million aggregate
outstanding principal amount under our 4.875% Senior Notes due 2026 (the "2026
Notes"). In addition to the prepayment of principal, we paid to the holders of
the 2026 Notes a $9.8 million prepayment make-whole amount plus accrued and
unpaid interest. We recorded the prepayment make-whole amount and a $3.2 million
write-off of unamortized debt issuance costs as a loss on extinguishment of
debt.

Income taxes on continuing operations

                              2021       2020

Effective tax rate 13.3% 6.1%


We generate substantial earnings from our non-U.S. operations. A number of the
non-U.S. jurisdictions in which we file tax returns historically have had tax
rates that are lower than the U.S. statutory tax rate; as a result, our
consolidated effective income tax rate for 2021 and earlier years has been
substantially below the U.S. statutory tax rate. The principal non-U.S.
jurisdictions in which the tax rate in 2021 and earlier years was lower than the
U.S. statutory tax rate and from which we derived substantial earnings included
Ireland, Bermuda and Singapore.

The effective income tax rate for 2021 reflects tax expense associated with the
Respiratory business divestiture. The effective tax rate for 2020 reflects
non-taxable contingent consideration adjustments, recognized in connection with
a decrease in the fair value of our contingent consideration liabilities.
Additionally, the effective tax rates for both 2021 and 2020 reflect a net
excess tax benefit related to share-based compensation and a tax benefit
relating to the revaluation of state deferred tax assets and liabilities due to
business integrations and other changes. See Note 15 to the consolidated
financial statements included in this Annual Report on Form 10-K for additional
information.

Segment Results

Segment Net Revenues
                            Year Ended December 31                 % Increase/(Decrease)
                              2021              2020                                          2021 vs 2020

Americas               $    1,659.3          $ 1,465.0                                           13.3
EMEA                          606.8              584.9                                            3.8
Asia                          297.8              267.0                                           11.5
OEM                           245.7              220.3                                           11.5
Segment Net Revenues   $    2,809.6          $ 2,537.2                                           10.7


Segment Operating Profit
                                                         Year Ended December 31,                   % Increase/(Decrease)
                                                          2021                2020                                               2021 vs 2020

Americas                                             $      424.2          $ 401.4                                                      5.7
EMEA                                                         94.9             81.3                                                     16.6
Asia                                                         84.6             51.2                                                     65.2
OEM                                                          56.2             44.9                                                     25.3
Segment Operating Profit (1)                         $      659.9          $ 578.8                                                     14.0


(1)See Note 18 to the consolidated financial statements included in this Annual Report on Form 10-K for a reconciliation of segment operating income to our consolidated income from continuing operations before interest, loss on extinguishment of debt and taxes.

Americas

Americas net revenues for the year ended December 31, 2021 increased $194.3
million, or 13.3%, compared to the prior year, which was primarily attributable
to a $68.9 million increase in sales volumes of existing products largely
stemming from the impact that the COVID-19 pandemic had on the prior year, net
revenues of $60.6 million generated by the Z-Medica acquisition, a $32.9 million
increase in new product sales and, to a lesser extent, price increases.

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Americas operating profit for the year ended December 31, 2021 increased $22.8
million, or 5.7%, compared to the prior year, which was primarily attributable
to an increase in gross profit resulting from higher sales partially offset by a
benefit recognized in the prior year resulting from decreases in the estimated
fair value of our contingent consideration liabilities stemming from the impacts
of the COVID-19 pandemic and expenses incurred by Z-Medica.

In November 2021, the Center for Medicare and Medicaid Services (CMS) published
its Physician Fee Schedule (PFS) and Outpatient Prospective Payment System
(OPPS) rates for calendar year 2022. The rules, among other things, provide for
updates with respect to the rates used to determine the reimbursement amounts
received by healthcare providers across a broad range of healthcare procedures,
including our UroLift System procedure. Specifically, for UroLift procedures
performed in a physician office setting, the reimbursement rates outlined in the
PFS will be reduced by 19-21%, as compared to 2021, and will be phased in over
four years, while the reimbursement rates outlined in the OPPS for UroLift
procedures performed in the hospital outpatient or ambulatory surgical center
setting are 3% higher as compared to 2021. On December 10, 2021, President Biden
signed into law the "Protecting Medicare and American Farmers from Sequester
Cuts Act". Among other things, the law increased the conversion factor in the
PFS by 3% for 2022 versus the final rule issued in November. While it is
uncertain how the changes in reimbursement rates will impact the financial
performance of the Interventional Urology product portfolio over time, we do not
anticipate the changes will have a significant impact on the financial
performance of our Interventional Urology product portfolio in 2022. We
anticipate that this decision may cause our provider community to migrate
patients to the ambulatory surgical center or hospital outpatient setting. Going
forward, we plan to implement strategies to limit any negative impacts on
patient access to safe and effective clinical care in the office setting.

EMEA

EMEA net revenues for the year ended December 31, 2021 increased $21.9 million,
or 3.8%, compared to the prior year, which was primarily attributable to $25.9
million of favorable fluctuations in foreign currency exchange rates partially
offset by a $10.5 million decrease in sales volumes attributed to the
Respiratory business divestiture.

EMEA operating profit for the year ended December 31, 2021 increased $13.6
million, or 16.6%, compared to the prior year, which was primarily attributable
to favorable fluctuations in foreign currency exchange rates and an increase in
gross profit resulting from favorable mix partially offset by an increase in EU
MDR costs within research and development.

Asia

Asia net revenues for the year ended December 31, 2021 increased $30.8 million,
or 11.5%, compared to the prior year, which was primarily attributable to a
$13.1 million net increase in sales volumes of existing products largely
stemming from the impact that the COVID-19 pandemic had on the prior year, $12.4
million of favorable fluctuations in foreign currency exchange rates and $9.3
million in new product sales. The increases in net revenues were partially
offset by a $9.0 million decrease in sales volumes attributed to the Respiratory
business divestiture.

Asia operating profit for the year ended December 31, 2021 increased $33.4
million, or 65.2%, compared to the prior year, which was primarily attributable
to an increase in gross profit resulting from higher sales, favorable
fluctuations in foreign currency exchange rates and a benefit from the reversal
of a contingent liability related to tariffs imposed by Chinese authorities,
which is described further in Note 17 to the consolidated financial statements.
The increases in operating profit were partially offset by an increase in
selling expenses to support higher sales.

OEM

OEM net revenues for the year ended December 31, 2021 increased $25.4 million,
or 11.5% compared to the prior year which was primarily attributable to a $13.7
million increase in sales volumes of existing products largely stemming from the
impact that the COVID-19 pandemic had on the prior year, a $5.8 million increase
in new product sales and net revenues generated by the HPC acquisition.

OEM operating profit for the year ended December 31, 2021 increase $11.3 millionor 25.3%, compared to the previous fiscal year, mainly attributable to an increase in the gross margin resulting from an increase in sales.

Cash and capital resources

We assess our liquidity based on our ability to generate cash to fund our operating, investing and financing activities.

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activities. Our principal source of liquidity is our cash flows provided by
operating activities. Our cash flows provided by operating activities are
reduced by cash used to, among other things, fulfill contractual obligations for
minimum lease payments under noncancellable operating leases, which often extend
beyond one year; the weighted average remaining lease term of our operating
lease portfolio is 7.9 years. Our cash flows provided by operating activities
are also reduced by cash used for unconditional legally binding commitments to
purchase goods or services (i.e. purchase obligations), which primarily related
to inventory expected to be purchased within one year. Our net cash provided by
operating activities was significantly in excess of amounts paid pursuant to
these contractual obligations for the years ended December 31, 2021, 2020 and
2019.

Other significant factors that affect our overall management of liquidity
include contractual obligations such as scheduled principal and interest
payments with respect to outstanding indebtedness, tax on deemed repatriation of
non-U.S. earnings, which will be paid annually over the next four years, and
annual pension funding. We may also be obligated to make payments for contingent
consideration due to past acquisitions, the timing and amount of which may be
uncertain, and the magnitude of which can vary from year to year. Other
significant factors that affect our liquidity include certain actions controlled
by management such as capital expenditures, acquisitions, dividends and
incremental pension and post-retirement benefit payments. See Note 10, Note 12,
Note 15 and Note 16 to the consolidated financial statements included in this
Annual Report on Form 10-K for additional information.

We believe our cash flow from operations, available cash and cash equivalents
and borrowings under our revolving credit facility (which is provided for under
the Credit Agreement) and accounts receivable securitization facility will
enable us to fund our operating requirements, capital expenditures and debt
obligations for the next 12 months and the foreseeable future.

Of our $445.1 million of cash and cash equivalents at December 31, 2021, $352.5
million was held at non-U.S. subsidiaries. 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 December 2021, we executed an intra-company transfer in which certain
intellectual property rights held by several of our subsidiaries were
contributed to a non-U.S. subsidiary. The transfer accelerated certain taxable
income into the year ended December 31, 2021; however, the related current tax
expense of $73.2 million, which is payable in 2022, was substantially offset by
the reversal of existing deferred tax liabilities.

We have entered into cross-currency swap agreements with 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, we notionally exchanged in the aggregate $750 million for €653.1
million. The swap agreements, which begin to expire in October 2023, are
designated as net investment hedges and require an exchange of the notional
amounts upon expiration or the earlier termination of the agreements. We and the
counterparties have agreed to effect the exchange through a net settlement. As a
result, we may be required to pay (or be entitled to receive) an amount equal to
the difference, on the expiration or earlier termination dates, between the U.S.
dollar equivalent of the €653.1 million notional amount and the $750 million
notional amount. If, at the expiration or earlier termination of the swap
agreements, the U.S. dollar to euro exchange rate has increased or declined by
10% from the rate in effect at the inception of these agreements, we would
receive from or be required to pay to the counterparties an aggregate of
approximately $75.0 million in respect of the notional settlement. As of
December 31, 2021, we had $21.7 million in current assets and $9.6 million in
non-current assets related to the fair value of our cross-currency swap
agreements. The swap agreements entail risk that the counterparties will not
fulfill their obligations under the agreements. However, we believe the risk is
reduced because we have entered into separate agreements with different
counterparties, all of which are large, well-established financial institutions.

We may at any time, from time to time, repurchase our outstanding debt
securities in open market purchases, via tender offers or in privately
negotiated transactions, exchange transactions or otherwise, at such price or
prices as we deem appropriate. Such purchases or exchanges, if any, will depend
on prevailing market conditions, our liquidity requirements, contractual
restrictions and other factors and may be commenced or suspended at any time.

Summary financial information – group of debtors

The 2027 Notes are issued by Teleflex Incorporated (the "Parent Company"), and
payment of the Parent Company's obligations under the 2027 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
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Guarantor Subsidiaries (collectively, the “group of debtors“) as of and for the year ended December 31, 2021 as following:

                                                                Year Ended December 31, 2021

                                                                                         Obligor Group
                                                                                           (excluding
                                                    Obligor Group      Intercompany      intercompany)
Net revenue                                       $     1,975.5      $       206.1    $         1,769.4
Cost of goods sold                                      1,037.4              145.4                892.0
Gross profit                                              938.1               60.7                877.4
Income from continuing operations                         208.9              203.0                  5.9
Net income                                                209.1              203.0                  6.1



                                                                              December 31, 2021

                                                                                                  Obligor Group
                                                                                                   (excluding
                                                             Obligor Group     Intercompany       intercompany)
Total current assets                                       $        812.5    $        53.6    $            758.9
Total assets                                                      3,084.4          1,419.4               1,665.0
Total current liabilities                                           879.7            523.6                 356.1
Total liabilities                                                 3,541.2            886.8               2,654.4


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, 2021 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 2027
Notes). Obligor investments in non-guarantor subsidiaries and any related
activity are excluded from the financial information presented above. The
summarized financial information presented above for the Obligor Group as of and
for the year ended December 31, 2021 gives effect to the 2028 Notes issued in a
private offering in May 2020.

See “Financing Arrangements” below and Notes 10 and 11 to the consolidated financial statements included with this Annual Report on Form 10-K for more information about our borrowings and financial instruments.

Cash flow

The following table provides a summary of our cash flows for the periods
presented:
                                                                       Year Ended December 31,
                                                                       2021                 2020

Cash flows from continuing operations provided by (used in):
Operating activities                                              $      652.1          $   437.1
Investing activities                                                     156.7             (837.8)
Financing activities                                                    (715.8)             455.2
Cash flows used in discontinued operations                                (0.7)              (0.7)
Effect of exchange rate changes on cash and cash equivalents             (23.1)              21.0
Increase (decrease) in cash and cash equivalents                  $       

69.2 $74.8

Cash flow from operating activities

Net cash provided by operating activities from continuing operations was $652.1
million during 2021, and $437.1 million during 2020. The $215.0 million increase
was primarily attributable to favorable operating results and lower contingent
consideration payments. Net cash provided by operating activities from
continuing operations also reflects $33.8 million of proceeds received from the
Respiratory business divestiture attributed to performance obligations under the
MSTA, which were largely offset by tax payments related to the Respiratory
business divestiture.

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Cash flow from investing activities

Net cash provided by investing activities from continuing operations was $156.7
million during 2021, primarily consisted of $224.0 million in net proceeds from
the Respiratory business divestiture and capital expenditures of $71.6 million.

Cash flow from financing activities

Net cash used in financing activities from continuing operations was $715.8
million during 2021, which primarily consisted of a net reduction in borrowings
of $634.5 million resulting from payments made against our Senior credit
facility using proceeds from the Respiratory business divestiture and operating
cash flows. Our borrowings were also impacted by the redemption of the $400
million 2026 Notes, which was funded using borrowings under the revolving credit
facility. We also made dividend payments of $63.6 million and contingent
consideration payments of $31.4 million.

For a discussion of our cash flow comparison for 2020 and 2019, see our Annual Report on Form 10-K for the year ended December 31, 2020.

Free movement of capital

Free cash flow is a non-GAAP financial measure and is calculated by subtracting
capital expenditures from cash provided by operating activities from continuing
operations. This financial measure is used in addition to and in conjunction
with results presented in accordance with generally accepted accounting
principles in the U.S., or GAAP, and should not be considered a substitute for
net cash provided by operating activities from continuing operations, the most
comparable GAAP financial measure. Management believes that free cash flow is a
useful measure to investors because it facilitates an assessment of funds
available to satisfy current and future obligations, pay dividends and fund
acquisitions. We also use this financial measure for internal managerial
purposes and to evaluate period-to-period comparisons. Free cash flow is not a
measure of cash available for discretionary expenditures since we have certain
non-discretionary obligations, such as debt service, that are not deducted from
the measure. We strongly encourage investors to review our financial statements
and publicly-filed reports in their entirety and not to rely on any single
financial measure. The following is a reconciliation of free cash flow to the
most comparable GAAP measure.
                                                                           2021               2020

Net cash provided by operating activities from continuing operations   $   652.1          $   437.1
Less: Capital expenditures                                                  71.6               90.7
Free cash flow                                                         $   580.5          $   346.4



Financing Arrangements

The following table shows our net debt to total capital ratio:

                                           2021            2020

Net debt includes:
Current borrowings                     $   110.0       $   100.5
Long-term borrowings                     1,740.1         2,377.9

Unamortized debt issuance costs             13.4            19.6
Total debt                               1,863.5         2,498.0
Less: Cash and cash equivalents            445.1           375.9
Net debt                                 1,418.4         2,122.1
Total capital includes:
Net debt                                 1,418.4         2,122.1
Shareholders' equity                     3,754.7         3,336.5
Total capital                          $ 5,173.1       $ 5,458.6

Percentage of net debt to total capital 27.4% 38.9%


Fixed rate debt comprised 53.7% and 56.0% of total debt at December 31, 2021 and
2020, respectively. The slight decline in fixed rate borrowings as a percentage
of total borrowings as of December 31, 2021 compared to the prior year was due
to the redemption of the 2026 Notes.
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Senior credit facility

On April 5, 2019, we entered into a second amended and restated credit agreement
(the "Credit Agreement"), which provides for a $1.0 billion revolving credit
facility and a $700 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 1.25% 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 in each case 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%.

AT December 31, 2021we have had $141.0 million outstanding loans and $1.8 million in outstanding stand-by letters of credit under our $1.0 billion
Revolving credit facility.

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. As of
December 31, 2021, we were in compliance with the covenants in the Credit
Agreement.

Redemption of senior bonds 2026

On April 29, 2021, we issued a notice of redemption to holders of our
outstanding $400 million aggregate principal amount of the 2026 Notes. Pursuant
to the notice of redemption, the 2026 Notes were redeemed on June 1, 2021 (the
"Redemption Date") using borrowings under the revolving credit facility and cash
on hand at a redemption price equal to 102.438% of the principal amount of the
2026 Notes plus accrued and unpaid interest up to, but not including, the
Redemption Date (the "Redemption Price"). We recognized a loss on extinguishment
of debt of $13.0 million as a result of the redemption of the 2026 Notes.

Senior Bonds 2027 and 2028

As of December 31, 2021, the outstanding principal amount of our 2027 Notes and
2028 Notes (collectively the "Senior Notes") was $500 million, respectively. The
indenture governing the Senior Notes contains covenants that, among other things
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.
The obligations under the Senior Notes are fully and unconditionally guaranteed,
jointly and severally, by each of our existing and future 100% owned domestic
subsidiaries that are a guarantor or other obligor under the Credit Agreement
and by certain of our other 100% owned domestic subsidiaries. As of December 31,
2021, we were in compliance with all of the terms of our Senior Notes.

Securitization of trade receivables

We have an accounts receivable securitization facility under which we sell an
undivided interest in domestic accounts receivable for consideration of up to
$75 million to a commercial paper conduit. As of December 31, 2021 and 2019, we
borrowed the maximum amount available of $75 million under this facility. This
facility is utilized to provide increased flexibility in funding short term
working capital requirements. The agreement governing the accounts receivable
securitization facility contains certain covenants and termination events. An
occurrence of an event of default or a termination event under this facility may
give rise to the right of our counterparty to terminate

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this facility. From December 31, 2021we were in compliance with the covenants and none of the termination events had occurred.

For more information regarding our indebtedness, see Note 10 to the consolidated financial statements included with this Annual Report on Form 10-K.

Significant Accounting Policies and 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
materially from the amounts derived from those estimates and assumptions.

We have identified the following as critical accounting estimates, which are
defined as those that are reflective of significant judgments and uncertainties,
are the most pervasive and 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. The following
discussion should be considered in conjunction with the description of our
accounting policies in Note 1 to the consolidated financial statements in this
Annual Report on Form 10-K.

Provision for credit losses

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.

An allowance for credit losses is maintained for trade accounts receivable based
on the expected collectability of accounts receivable and the losses expected to
be incurred over the life of our receivables. Considerations to determine credit
losses include our historical collection experience, the length of time an
account is outstanding, the financial position of the customer, information
provided by credit rating services as well as the consideration of events or
circumstances indicating historic collection rates may not be indicative of
future collectability. Our allowance for credit losses was $10.8 million and
$12.9 million at December 31, 2021 and 2020, respectively, which constituted
2.6% and 3.0% of gross trade accounts receivable at December 31, 2021 and 2020,
respectively. The current portion of the allowance for credit losses, which was
$6.0 million and $8.1 million as of December 31, 2021 and 2020, respectively,
was recognized as a reduction of accounts receivable, net.

Although we maintain an allowance for credit losses to cover the estimated
losses which may occur when customers cannot make their required payments, we
cannot be assured that the allowances will be sufficient to cover future losses
given the volatility in the worldwide economy and the possibility that other,
unanticipated events may adversely affect collectability of the accounts. If our
allowance for credit losses is insufficient to address receivables we ultimately
determine are uncollectible, we would be required to incur additional charges,
which could materially adversely affect our results of operations. Moreover, our
inability to collect outstanding receivables could adversely affect our
financial condition and cash flow from operations.

Distributor rebate

We offer rebates to certain distributors and record a reserve with respect to
the estimated amount of the rebates as a reduction of revenues at the time of
sale. In estimating rebates, we consider the lag time between the point of sale
and the payment of the distributor's rebate claim, distributor-specific trend
analyses, contractual commitments, including stated rebate rates, historical
experience and other relevant information. When necessary, we adjust the
reserves, with a corresponding adjustment to revenue, to reflect differences
between estimated and actual experience. Historical adjustments to recorded
reserves have not been significant and we do not expect significant revisions to
the estimated rebates in the future. The reserve for estimated rebates was $26.4
million and $28.5 million at December 31, 2021 and 2020, respectively. We expect
to pay amounts subject to the reserve as of December 31, 2021 within 90 days
subsequent to year-end.

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Use of inventory

Inventories are valued at the lower of cost or net realizable value. Factors
utilized in the determination of estimated net realizable value and whether a
reserve is required include (i) current sales data and historical return rates,
(ii) estimates of future demand, (iii) competitive pricing pressures, (iv) new
product introductions, (v) product expiration dates, and (vi) component and
packaging obsolescence.

We review the net realizable value of inventory each reporting period and
adjusted as necessary. We regularly compare inventory quantities on hand against
historical usage or forecasts related to specific items in order to evaluate
obsolescence and excessive quantities. In assessing historical usage, we also
qualitatively assess business trends to evaluate the reasonableness of using
historical information in estimating future usage. Our inventory reserve was
$42.7 million and $42.9 million at December 31, 2021 and 2020, respectively.

Long-lived assets

We assess the remaining useful life and recoverability of long-lived assets
whenever events or circumstances indicate the carrying value of an asset may not
be recoverable. For example, such an assessment may be initiated if, as a result
of a change in expectations, we believe it is more likely than not that the
asset will be sold or disposed of significantly before the end of its useful
life or if an adverse change occurs in the business employing the
asset. Significant judgments in this area involve determining whether such
events or circumstances have occurred and determining the appropriate asset
group requiring evaluation. The recoverability evaluation is based on various
analyses, including undiscounted cash flow projections, which involve
significant management judgment. Any impairment loss, if indicated, equals the
amount by which the carrying amount of the asset exceeds the estimated fair
value of the asset.

Good will and other intangible assets

Intangible assets include indefinite-lived assets (such as goodwill, certain
trade names and in-process research and development ("IPR&D")), as well as
finite-lived intangibles (such as trade names that do not have indefinite lives,
customer relationships, intellectual property, distribution rights and
non-competition agreements) and are, generally, obtained through acquisition.
Intangible assets acquired in a business combination are measured at fair value
and we allocate any excess purchase price over the fair value of the net
tangible and intangible assets acquired in a business combination to goodwill.
Considerable management judgment is necessary in making the assumptions used in
the estimated fair value of intangible assets acquired in a business
combination.

The costs of finite-lived intangibles are amortized to expense over their
estimated useful life. Determining the useful life of an intangible asset
requires considerable judgment as different types of intangible assets typically
will have different useful lives. Goodwill and other indefinite-lived intangible
assets are not amortized; we test these assets annually for impairment during
the fourth quarter, using the first day of the quarter as the measurement date,
or earlier upon the occurrence of certain events or substantive changes in
circumstances that indicate an impairment may have occurred. Such conditions may
include an economic downturn in a geographic market or a change in the
assessment of future operations.

Good will

Goodwill impairment assessments are performed at a reporting unit level. For
purposes of this assessment, our reporting units are our operating segments, or,
in certain cases, a business one level below our operating segments. As the fair
values of our reporting units are more likely than not greater than the carrying
values, no impairment was recorded as a result of the annual goodwill impairment
testing performed during the fourth quarter of 2021.

In applying the goodwill impairment test, we may assess qualitative factors to
determine whether it is more likely than not that the fair value of a reporting
unit is less than its carrying value. Qualitative factors may include, but are
not limited to, macroeconomic conditions, industry conditions, the competitive
environment, changes in the market for our products and services, regulatory and
political developments, and entity specific factors such as strategies and
financial performance. If, after completing the qualitative assessment, we
determine it is more likely than not that the fair value of a reporting unit is
less than its carrying value, we proceed to a quantitative impairment test
described below. Alternatively, we may test goodwill for impairment through the
quantitative impairment test without conducting the qualitative analysis.

Under a quantitative impairment test we compare the fair value of a reporting
unit to the carrying value. We calculate the fair value of the reporting unit
using a combination of two methods; one which estimates the discounted cash
flows of the reporting unit based on projected earnings in the future (the
Income Approach) and
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one which is based on revenue and EBITDA of similar businesses to those of the
reporting unit in actual transactions (the Market Approach). If the fair value
of the reporting unit exceeds the carrying value, there is no impairment. If the
reporting unit carrying value exceeds the fair value, we recognize an impairment
loss based on the amount the carrying value of the reporting unit exceeds its
fair value.

The more significant judgments and assumptions in determining fair value using
in the Income Approach include (1) the amount and timing of expected future cash
flows, which are based primarily on our estimates of future sales, operating
income, industry trends and the regulatory environment of the individual
reporting units, (2) the expected long-term growth rates for each of our
reporting units, which approximate the expected long-term growth rate of the
global economy and of the medical device industry, and (3) the discount rates
that are used to estimate present value of the future cash flows, which are
based on an assessment of the risk inherent in the future cash flows of the
respective reporting units along with various market based inputs. The more
significant judgments and assumptions used in the Market Approach include (1)
determination of appropriate revenue and EBITDA multiples used to estimate a
reporting unit's fair value and (2) the selection of appropriate comparable
companies to be used for purposes of determining those multiples. There were no
changes to the underlying methods used in 2021 as compared to the valuations of
our reporting units in the past several years.

Our expected future growth rates estimated for purposes of the goodwill
impairment test are based on our estimates of future sales, operating income and
cash flow and are consistent with our internal budgets and business plans, which
reflect a modest amount of core revenue growth coupled with the successful
launch of new products each year; the effect of these growth indicators more
than offset volume losses from products that are expected to reach the end of
their life cycle. Changes in assumptions underlying the Income Approach could
cause a reporting unit's carrying value to exceed its fair value. While we
believe our assumed growth rates of sales and cash flows are reasonable, the
possibility remains that the revenue growth of a reporting unit may not be as
high as expected, and, as a result, the estimated fair value of that reporting
unit may decline. In this regard, if our strategy and new products are not
successful and we do not achieve anticipated core revenue growth in the future
with respect to a reporting unit, the goodwill in the reporting unit may become
impaired and, in such case, we may incur material impairment charges. Moreover,
changes in revenue and EBITDA multiples in actual transactions from those
historically present could result in an assessment that a reporting unit's
carrying value exceeds its fair value, in which case we also may incur material
impairment charges.

Other Intangible Assets

Intangible assets are assets acquired that lack physical substance and that meet
the specified criteria for recognition apart from goodwill. Management tests
indefinite-lived intangible assets for impairment annually, and more frequently
if events or changes in circumstances indicate that an impairment may have
occurred. Similar to the goodwill impairment test process, we may assess
qualitative factors to determine whether it is more likely than not that the
fair value of an indefinite-lived intangible asset is less than its carrying
value. If, after completing the qualitative assessment, we determine it is more
likely than not that the fair value of the indefinite-lived intangible asset is
greater than its carrying amount, the asset is not impaired. If we conclude it
is more likely than not that the fair value of the indefinite-lived intangible
asset is less than the carrying value, we then proceed to a quantitative
impairment test, which consists of a comparison of the fair value of the
intangible asset to its carrying amount. Alternatively, we may elect to forgo
the qualitative analysis and test the indefinite-lived intangible asset for
impairment through the quantitative impairment test.

In connection with intangible assets acquired in a business combination and
quantitative impairment tests, we determine the estimated fair value using
various methods under the Income Approach. The more significant judgments and
assumptions used in the valuation of intangible assets may include revenue
growth rates, royalty rate, discount rate, attrition rate, and EBITDA
margin. Each of these factors and assumptions can significantly impact the value
of the intangible asset.

During the year ended December 31, 2021, we recorded impairment charges of
$6.7 million related to our decision to abandon intellectual property and other
assets primarily associated with our respiratory product portfolio that was not
transferred to Medline as part of the Respiratory business divestiture. See
"Restructuring and impairment charges" within "Result of Operations" above as
well as Note 4 to the consolidated financial statements included in this Annual
Report on Form 10-K for additional information on these charges.

Stock-based compensation

We estimate the fair value of share-based awards at the grant date and expense the value of the portion of the award that is expected to ultimately vest over the required service periods. Based on sharing

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compensation expense related to stock options is measured using a Black-Scholes
option pricing model that takes into account subjective and complex assumptions
with respect to the expected life of options, volatility, risk-free interest
rate and expected dividend yield. The expected life of options granted
represents the period of time that options are expected to be outstanding, which
is derived from the vesting period of the award, as well as historical exercise
behavior. Expected volatility is based on a blend of historical volatility and
implied volatility derived from publicly traded options to purchase our common
stock, which we believe is more reflective of market conditions and a better
indicator of expected volatility than solely using historical volatility. The
risk-free interest rate is the implied yield currently available on
U.S. Treasury zero-coupon issues with a remaining term equal to the expected
life of the option. Share-based compensation expense related to non-vested
restricted stock units is measured based on the market price of the underlying
stock on the grant date discounted for the risk free interest rate and the
present value of expected dividends over the vesting period. Share based
compensation expense for 2021 and 2020 was $22.9 million and $20.7 million,
respectively.

Contingent consideration liabilities

In connection with an acquisition, we may be required to pay future
consideration that is contingent upon the achievement of specified objectives,
such as receipt of regulatory approval, commercialization of a product or
achievement of sales targets. As of the acquisition date, we record a contingent
liability representing the estimated fair value of the contingent consideration
we expect to pay. We determined the fair value of the contingent consideration
liabilities using a discounted cash flow analysis. Significant judgment is
required in determining the assumptions used to calculate the fair value of the
contingent consideration. Increases in projected revenues and probabilities of
payment may result in significantly higher fair value measurements; decreases in
these items may have the opposite effect. Increases in discount rates in the
periods prior to payment may result in significantly lower fair value
measurements; decreases may have the opposite effect. See Note 12 to the
consolidated financial statements included in this Annual Report on Form 10-K
for additional information.

We remeasure our contingent consideration liabilities each reporting period and
recognize the change in the liabilities' fair value within selling, general and
administrative expenses in our consolidated statement of income. As of
December 31, 2021 and 2020, we accrued $9.8 million and $36.6 million of
contingent consideration, respectively.

Income taxes

Our annual provision for income taxes and determination of the deferred tax
assets and liabilities require management to assess uncertainties, make
judgments regarding outcomes and utilize estimates. The difficulties inherent in
such assessments, judgments and estimates are particularly challenging because
we conduct a broad range of operations around the world, subjecting us to
complex tax regulations in numerous international jurisdictions. As a result, we
are at times subject to tax audits, disputes with tax authorities and potential
litigation, the outcome of which is uncertain. In connection with its estimates
of our tax assets and liabilities, management must, among other things, make
judgments about the outcome of these uncertain matters.

Deferred tax assets and liabilities are measured and recorded using currently
enacted tax rates that are expected to apply to taxable income in the years in
which differences between the financial statement carrying amounts of existing
assets and liabilities and their tax bases are recovered or settled. The
likelihood of a material change in our expected realization of these assets is
dependent on future taxable income, our ability to use foreign tax credit
carryforwards and carrybacks, final U.S. and non-U.S. tax settlements, changes
in tax law, and the effectiveness of our tax planning strategies in the various
relevant jurisdictions. While management believes that its judgments and
interpretations regarding income taxes are appropriate, significant differences
in actual experience may require future adjustments to our tax assets and
liabilities, which could be material.

In assessing the realizability of our deferred tax assets, we evaluate positive
and negative evidence and use judgments regarding past and future events,
including results of operations and available tax planning strategies that could
be implemented to realize the deferred tax assets. Based on this assessment, we
determine when it is more likely than not that all or some portion of our
deferred tax assets may not be realized, in which case we apply a valuation
allowance to offset the amount of such deferred tax assets. To the extent facts
and circumstances change in the future, adjustments to the valuation allowances
may be required. The valuation allowance for deferred tax assets of $143.2
million and $155.0 million at December 31, 2021 and 2020, respectively, relates
principally to the uncertainty of the utilization of tax loss and credit
carryforwards in various jurisdictions.

Significant judgment is required in determining income tax provisions and in
evaluating tax positions. We establish additional provisions for income taxes
when, despite the belief that tax positions are supportable, there
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remain certain positions that do not meet the minimum probability threshold,
which is a tax position that is more likely than not to be sustained upon
examination by the applicable taxing authority. In the normal course of
business, we are examined by various federal, state and non-U.S. tax
authorities. We regularly assess the potential outcomes of these examinations
and any future examinations for the current or prior years in determining the
adequacy of our provision for income taxes. We adjust the income tax provision,
the current tax liability and deferred taxes in any period in which we become
aware of facts that necessitate an adjustment. We are currently under
examination in Ireland and Germany. The ultimate outcome of these examinations
could result in increases or decreases to our recorded tax liabilities, which
would affect our financial results. See Note 15 to the consolidated financial
statements in this Annual Report on Form 10-K for additional information
regarding our uncertain tax positions.

New accounting standards

See Note 2 to the consolidated financial statements included in this Annual
Report on Form 10-K for a discussion of recently issued accounting standards,
including estimated effects, if any, of the adoption of those standards on our
consolidated financial statements.

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