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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 26, 1993
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NO. 1-5353
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TELEFLEX INCORPORATED
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 23-1147939
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
630 WEST GERMANTOWN PIKE, SUITE 450, PLYMOUTH 19462
MEETING, PENNSYLVANIA (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
</TABLE>
Registrant's telephone number, including area code: (610) 834-6301
Securities registered pursuant to Section 12(b) of the Act:
Common Stock, par value $1 per share--American Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
NONE
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. /X/
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 X NO
The aggregate market value of the voting stock held by non-affiliates of
the registrant was approximately $527,448,400 as of February 1, 1994.
The registrant had 17,099,289 Common Shares outstanding as of February 1,
1994.
Documents Incorporated by Reference: (a) Annual Report to Shareholders for
the fiscal year ended December 26, 1993, incorporated partially in Part I and
Part II hereof; and (b) Proxy Statement for the 1994 Annual Meeting of
Shareholders, incorporated partially in Part III hereof.
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PART I
ITEM 1. BUSINESS
The Company* was incorporated in 1943 as a manufacturer of precision
mechanical push/pull controls for military aircraft. From this original single
market, single product orientation, the Company began to emphasize products and
services in a broader range of economically diverse markets to reduce its
vulnerability to economic cycles. Since the mid-1970s, the Company's investments
have been directed toward specific market niches employing its technical
capabilities to provide solutions to specific engineering problems. The
continuing stream of new products and value-added product improvements that have
resulted from this strategy have enabled the Company to participate in larger
market segments. Several of these new products and product improvements were
developed by means of an unusual investment program of the Company called the
New Venture Fund. Established in 1972, the Fund directs monies representing
one-half percent of sales into the development of new products and services.
This concept allows for entrepreneurial risk taking in new areas by encouraging
innovation and competition among the Company's managers for funds to pursue new
programs and activities independent of their operating budgets. Examples of New
Venture projects include the initial funding of SermeTel research and most of
the early seed money for certain medical products.
The Company's business is separated into three segments -- Aerospace
Products and Services, Medical Products and Commercial Products.
AEROSPACE PRODUCTS AND SERVICES SEGMENT
The Aerospace Products and Services Segment serves the aerospace, defense
and turbine engine markets. Its businesses design and manufacture precision
controls and systems for both military and commercial applications; provide
sophisticated coating and repair services for turbine engine manufacturers,
operators and overhaulers; and manufacture airfoils for both flight and
land-based turbine engines.
These products and services, many of which are proprietary, require a high
degree of engineering sophistication and are often custom designed. External
economic influences on these products and services relate primarily to spending
patterns in the worldwide aerospace and defense industry. The Aerospace Products
and Services Segment consists of the Aerospace/Defense Group and Sermatech
International.
Within the Aerospace/Defense Group, the Company designs and manufactures
advanced mechanical and electromechanical controls, actuators, valves, control
systems and other components for the aerospace and defense industries for
application on commercial and military aircraft and helicopters, commuter
aircraft, missiles, space vehicles, naval vessels, ground support equipment and
ordnance. Many of these controls and control systems are based on the principle
of mechanically transmitting, by flexible cable, a push-pull or rotary thrust.
By advanced engineering techniques, this simple concept is employed in
components and systems capable of transmitting force with precision to control
and actuate functions at remote locations.
Aircraft controls and control systems include highly complex engine
controls, aerodynamic surface controls and cargo handling systems. The principal
products consist of throttle and thrust-reverser/feedback control systems for
use on various fixed and rotary-wing aircraft and numerous other critical
mechanical and electromechanical control systems. Controls and actuators
designed and manufactured by the Company over the last several years include the
canopy actuators for military fighter aircraft and missile launch components,
specialized mechanical control systems for naval vessels, and alternate flap
actuators and cargo systems for commercial aircraft.
The Company's design engineers work with design personnel from the major
aircraft and jet engine manufacturers in the development of products for use on
new aircraft. In addition, the Company supplies spare parts to aircraft
operators. This spare parts business extends as long as the particular type of
aircraft continues in service.
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* As used herein the "Company" refers to Teleflex Incorporated and its
consolidated subsidiaries.
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In the early 1960s, aircraft manufacturers began to encounter high
temperature lubrication problems in connection with mechanical controls for
aircraft jet engines. Through its subsidiary, Sermatech International, the
Company utilized its aerospace experience and engineering capabilities to
develop a series of formulations of inorganic coatings to solve these high
temperature lubrication problems. These products were further developed by the
Company and sold under the trademark SermeTel(R) to provide anti-corrosion
protection for compressor blades and other airfoils. The Company, through an
international network of Sermatech facilities in five countries, provides a
variety of sophisticated protective coatings and other services for gas turbine
engine components; highly-specialized repairs for critical components such as
fan blades and airfoils; and manufacturing and high quality dimensional
finishing of airfoils.
Through the years the Company has added other technologies through
acquisition and internal development and now offers a diverse range of technical
services and materials technologies to turbine markets throughout the world. In
1993 the Company acquired Mal Tool & Engineering, a manufacturer of fan blades
for flight turbines, and airfoils for both flight and land-based gas turbines
and steam turbines. The acquisition broadens the Company's product offering
including turnkey manufactured and coated airfoils and provides another entree
to major international turbine manufacturers.
MEDICAL PRODUCTS SEGMENT
In the late 1970s, the Company decided to apply its polymer technologies to
the medical market, and began by extruding intravenous catheter tubing which it
sold to original equipment manufacturers. Through the TFX Medical Group, the
Company produces standard and custom-designed semi-finished components for other
medical device manufacturers using polymer materials and processing technology.
Through acquisitions, the Company established the other two product lines of
this segment: hospital supply and surgical devices.
In 1989, the acquisition of Willy Rusch AG and affiliates in Germany
brought with it an established manufacturing base and distribution network,
particularly in Europe. The Company conducts its hospital supply business under
the name of Rusch International. This business includes the manufacture and sale
of invasive disposable and reusable devices for the urological,
gastroenterological and anesthesiological markets worldwide. The Rusch
International product offerings include among others latex catheters,
endotracheal tubes, laryngoscopes, face masks and tracheostomy tubes.
The acquisition of the Pilling Company in 1991 and Edward Weck Incorporated
in December 1993 further expanded the Company's medical device manufacturing and
distribution capabilities. Weck manufactures manual ligation devices and general
surgical instruments and is being consolidated with Pilling Company, a
manufacturer of general and specialty surgical instruments. The combination of
Pilling and Weck significantly expands the product offerings, marketing
opportunities and selling capabilities in the surgical devices market in the
United States; and provides opportunities for increasing international sales.
Pilling Weck manufactures and distributes primarily through its own sales force
instruments used in both traditional (open) and minimally-invasive surgical
procedures including general and specialized surgical instruments such as
scissors, forceps, vascular clamps, needle holders, retractors, ligation clips,
appliers, skin staples and electrosurgery products.
COMMERCIAL PRODUCTS SEGMENT
The Commercial Products Segment involves the design and manufacture of
mechanical, electrical, and hydraulic controls and electronic products for the
pleasure marine market; proprietary mechanical controls for the automotive
market; and certain innovative proprietary products for the fluid transfer and
outdoor power equipment markets.
Products in the Commercial Products Segment are generally produced in
higher unit volume and are manufactured for general distribution and custom
fabricated to meet individual customer needs. Consumer spending patterns
generally influence the market trends for these products.
The Commercial Products Segment consists of three major product lines:
Marine, Automotive and Industrial.
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The Company is a leading domestic producer of mechanical steering systems
for pleasure power boats. It also manufactures hydraulic steering systems,
engine throttle and shift controls, electrical instrumentation and recently has
expanded into electronic navigation, location and communication systems. In 1991
the Company acquired Marinex Industries, Ltd., a British manufacturer of marine
electronics. Its Cetrek autopilots and navigational equipment complement
Teleflex's hydraulic steering products which together can be sold to both the
commercial and pleasure marine markets. The Marinex acquisition also enhanced
the Company's access to the international marine market. Techsonic Industries,
Inc., a manufacturer of marine information systems (electronic navigation,
communication and fish location devices) sold through mass merchandisers under
the Humminbird brand name became a wholly owned subsidiary in 1992. Aside from
the Humminbird products, the Company's marine products are sold principally to
boat builders, in the aftermarket, and are used principally on pleasure craft
but also have application on commercial vessels.
The Company is a major supplier of mechanical controls to the domestic
automotive market. The principal products in this market are accelerator,
transmission, shift, park lock, window regulator controls and a new heat
resistant flexible fuel line. In the mid-1970s the Company initiated development
programs which addressed customer needs for reduced weight and installation
costs and as a result, the Company became a major supplier of mechanical
controls to the domestic automotive market. Acceptance by the automobile
manufacturers of a Company-developed control for use on a new model ordinarily
assures the Company a large, but not exclusive, market share for the supply of
that control. The sales of mechanical automotive controls were $95,516,000,
$123,390,000 and $139,128,000 in 1991, 1992 and 1993, respectively.
Industrial controls and electrical instrumentation products are also
manufactured for use in other applications, including agricultural equipment,
outdoor power equipment, leisure vehicles and other on- and off-road vehicles.
In addition, the Company produces stainless steel overbraided fluoroplastic hose
for fluid transfer in such markets as the chemical, petroleum and food
processing industries.
MARKETING
In 1993, the percentages of the Company's consolidated net sales
represented by its major markets were as follows: aerospace -- 30%;
medical -- 27%; marine and industrial -- 22%; and automotive -- 21%.
The major portion of the Company's products are sold to original equipment
manufacturers. Generally, products sold to the aerospace and automotive markets
are sold through the Company's own force of field engineers. Products sold to
the marine, medical and general industrial markets are sold both through the
Company's own sales forces and through independent representatives and
independent distributor networks.
For information on foreign operations, export sales, and principal
customers, see text under the heading "Business segments and other information"
on page 26 of the Company's 1993 Annual Report to Shareholders, which
information is incorporated herein by reference.
COMPETITION
The Company has varying degrees of competition in all elements of its
business. None of the Company's competitors offers products for all the markets
served by the Company. The Company believes that its competitive position
depends on the technical competence and creative ability of its engineering and
development personnel, the know-how and skill of its manufacturing personnel as
well as its plants, tooling and other resources.
PATENTS
The Company owns a number of patents and has a number of patent
applications pending. The Company does not believe that its business is
materially dependent on patent protection.
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SUPPLIERS
Materials used in the manufacture of the Company's products are purchased
from a large number of suppliers. The Company is not dependent upon any single
supplier for a substantial amount of the materials it uses.
BACKLOG
As of December 26, 1993 the Company's backlog of firm orders for the
Aerospace Products and Services Segment was $94 million, of which it is
anticipated that approximately three-fourths will be filled in 1994. The
Company's backlog for Aerospace Products and Services on December 27, 1992 was
$73 million.
As of December 26, 1993 the Company's backlog of firm orders for the
Medical Products and Commercial Products segments was $23 million and $54
million, respectively. This compares with $15 million and $47 million,
respectively as of December 27, 1992. Substantially all of the December 26, 1993
backlog will be filled in 1994. Most of the Company's medical and commercial
products are sold on orders calling for delivery within no more than a few
months so that the backlog of such orders is not indicative of probable net
sales in any future 12-month period.
EMPLOYEES
The Company had approximately 8,000 employees at December 26, 1993.
EXECUTIVE OFFICERS
The names and ages of all executive officers of the Company as of March 1,
1994 and the positions and offices with the Company held by each such officer
are as follows:
<TABLE>
<CAPTION>
POSITIONS AND OFFICES
NAME AGE WITH COMPANY
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<S> <C> <C>
Lennox K. Black 63 Chairman of the Board, Chief Executive Officer and Director
David S. Boyer 51 President and Director
John J. Sickler 51 President -- TFX Equities Inc.
Dr. Roy C. Carriker 56 President -- Teleflex Aerospace Products and Services Group
Richard A. Woodfield 51 President -- Teleflex Medical Products Group
Harold L. Zuber, Jr. 44 Vice President, Chief Financial Officer and Controller
Steven K. Chance 48 Vice President, General Counsel and Secretary
Ira Albom 64 Senior Vice President
Louis T. Horvath 55 Vice President -- Quality Management
Ronald D. Boldt 51 Vice President -- Human Resources
Janine Dusossoit 40 Vice President -- Investor Relations
Thomas M. Byrne 47 Assistant Treasurer
</TABLE>
Mr. Boyer was elected as a director on December 6, 1993.
Mr. Sickler was elected Senior Vice President and President of TFX Equities
Inc. on December 3, 1990. Prior to that date he was President and Chief
Operating Officer -- Aerospace/Defense Group.
Dr. Roy C. Carriker was named President -- Teleflex Aerospace Products and
Services Group on January 3, 1994. Prior to that date he was
President -- Sermatech International.
Mr. Woodfield was elected President -- Teleflex Medical Products Group on
March 9, 1992. Prior to that date, he was President of Empire Abrasive Equipment
Corporation.
Mr. Zuber was named to the position of Vice President, Chief Financial
Officer and Controller on February 5, 1990. Prior to that date he was Vice
President and Controller.
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Mr. Chance was elected to the position of Secretary on December 3, 1990. He
was named to the position of General Counsel on September 1, 1989.
Mr. Horvath was named to the position of Vice President -- Quality
Management on January 3, 1989. Prior to that date he was Manager, Corporate
Product Quality Assurance at Eaton Corporation.
Mr. Boldt was named to the position of Vice President -- Human Resources on
March 9, 1992. From October 13, 1989 to March 9, 1992 he was Director of Human
Resources. Prior to that date he was Vice President of Human Resources at First
Pennsylvania Bank.
Ms. Dusossoit was named to the position of Vice President -- Investor
Relations on March 1, 1993. From April 1, 1992 to March 1, 1993 she was Director
of Investor Relations. From June 1, 1989 to April 1, 1992 she was a business
consultant. Prior to that date she was the Director of Corporate Communications
for General Cinema Corporation.
Mr. Byrne was elected Assistant Treasurer on December 3, 1990. Prior to
that date, he was Director of Internal Auditing.
Officers are elected by the Board of Directors for one year terms. No
family relationship exists between any of the executive officers of the Company.
ITEM 2. PROPERTIES
The Company's operations have approximately 85 owned and leased properties
consisting of plants, engineering and research centers, distribution warehouses
and other facilities. The properties are maintained in good operating condition.
All the plants are suitably equipped and utilized, and have space available for
the activities currently conducted therein and the increased volume expected in
the foreseeable future.
The following are the Company's major facilities:
<TABLE>
<CAPTION>
SQUARE OWNED OR EXPIRATION
LOCATION FOOTAGE LEASED DATE
- ------------------------------------------------------------- ------- -------- ----------
<S> <C> <C> <C>
AEROSPACE PRODUCTS AND SERVICES SEGMENT
Spanish Fork, UT............................................. 189,000 Owned N/A
Oxnard, CA................................................... 145,000 Leased 2003
North Wales, PA.............................................. 114,000 Owned N/A
Mentor, OH................................................... 90,000 Leased 1997
Limerick, PA................................................. 70,000 Owned(1) N/A
Derbyshire, England.......................................... 70,000 Leased 1999
Manchester, CT............................................... 63,000 Owned N/A
Windsor, CT.................................................. 59,000 Leased 1995
Compton, CA.................................................. 49,000 Leased 1999
Biddeford, ME................................................ 32,000 Leased 1998
Hausham, Germany............................................. 30,000 Owned N/A
MEDICAL PRODUCTS SEGMENT
Kernen, Germany.............................................. 263,000 Owned N/A
Durham, NC................................................... 144,000 Owned N/A
Kernen, Germany.............................................. 114,000 Leased 2013
Taiping, Malaysia............................................ 85,000 Owned N/A
Lurgan, Northern Ireland..................................... 80,000 Owned N/A
Duluth, GA................................................... 69,000 Leased 1999
Fort Washington, PA.......................................... 65,000 Owned N/A
Jaffrey, NH.................................................. 60,000 Owned(1) N/A
Montevideo, Uruguay.......................................... 45,000 Owned N/A
Bad Liebenzell, Germany...................................... 36,000 Leased 2000
Betschdorf, France........................................... 32,000 Owned N/A
High Wycombe, England........................................ 25,000 Leased 2012
Betschdorf, France........................................... 23,000 Leased 1999
Limerick, Ireland............................................ 16,000 Leased 2020
</TABLE>
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<TABLE>
<CAPTION>
SQUARE OWNED OR EXPIRATION
LOCATION FOOTAGE LEASED DATE
- ------------------------------------------------------------- ------- -------- ----------
<S> <C> <C> <C>
COMMERCIAL PRODUCTS SEGMENT
Van Wert, OH................................................. 110,000 Owned(1) N/A
Limerick, PA................................................. 110,000 Owned N/A
Hagerstown, MD............................................... 103,000 Owned(1) N/A
Waterbury, CT................................................ 99,000 Leased 1998
Eufaula, AL.................................................. 98,000 Owned N/A
Hillsdale, MI................................................ 75,000 Owned(1) N/A
Willis, TX................................................... 65,000 Owned(1) N/A
Woburn, MA................................................... 62,000 Leased 1999
Lebanon, VA.................................................. 52,000 Owned(1) N/A
Suffield, CT................................................. 50,000 Leased 1998
Vancouver, B.C., Canada...................................... 30,000 Owned N/A
Sarasota, FL................................................. 25,000 Owned N/A
Troy, MI..................................................... 20,000 Leased 1994
Poole, England............................................... 20,000 Owned N/A
</TABLE>
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(1) The Company is the beneficial owner of these facilities under installment
sale or similar financing agreements.
In addition to the above, the Company owns or leases approximately 530,000
square feet of warehousing, manufacturing and office space located in the United
States, Canada and Europe.
ITEM 3. LEGAL PROCEEDINGS
Two subsidiaries of the Company have been identified as potentially
responsible parties (PRPs) in connection with the Casmalia Resources Hazardous
Waste Management Facility. The Company has joined a group of other PRPs,
predominately in the aerospace defense industry, to negotiate with the United
States Environmental Protection Agency a good faith offer to take over
responsibility for a program of closure and post-closure care of the site. The
PRPs from the aerospace defense industry are currently engaged in negotiations
with a second PRP group with the aim of providing a common negotiating front
with the Environmental Protection Agency.
In the opinion of the Company's management, based on the current allocation
formula and the facts presently known, the ultimate outcome of this
environmental matter will not result in a liability material to the Company's
consolidated financial condition or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
See "Quarterly Financial Data" on page 27 of the Company's 1993 Annual
Report to Shareholders for market price and dividend information. Also see the
Note entitled "Borrowings and Leases" on page 24 of such Annual Report for
certain dividend restrictions under loan agreements, all of which information is
incorporated herein by reference. The Company had approximately 1,600 registered
shareholders at February 1, 1994.
ITEM 6. SELECTED FINANCIAL DATA
See pages 28 through 31 of the Company's 1993 Annual Report to
Shareholders, which pages are incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
See the text under the heading "Financial Review" on pages 32 through 37 of
the Company's 1993 Annual Report to Shareholders, which information is
incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See pages 19 through 27 of the Company's 1993 Annual Report to
Shareholders, which pages are incorporated herein by reference.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
For information with respect to the Company's Directors and Director
nominees, see "Election Of Directors" and "Additional Information About The
Board Of Directors" on pages 2 through 4 of the Company's Proxy Statement for
its 1994 Annual Meeting, which information is incorporated herein by reference.
For information with respect to the Company's Executive Officers, see Part
I of this report on pages 4 and 5, which information is incorporated herein by
reference.
ITEM 11. EXECUTIVE COMPENSATION
See "Additional Information About The Board of Directors", "Board
Compensation Committee", "Five-Year Shareholder Return Comparison" and
"Executive Compensation and Other Information" on pages 4 through 9 of the
Company's Proxy Statement for its 1994 Annual Meeting, which information is
incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
See "Security Ownership of Certain Beneficial Owners and Management" on
pages 1 and 2 and "Election Of Directors" on pages 2 and 3 of the Company's
Proxy Statement for its 1994 Annual Meeting, which information is incorporated
herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
See "Additional Information About The Board Of Directors", "Board
Compensation Committee" and "Executive Compensation and Other Information" on
pages 4 through 9 of the Company's Proxy Statement for its 1994 Annual Meeting,
which information is incorporated herein by reference.
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) Consolidated Financial Statements:
The index to Consolidated Financial Statements and Schedules is set
forth on page 10 hereof.
(b) Reports on Form 8-K:
A Form 8-K was filed on January 5, 1994, as amended February 24, 1994
in connection with the acquisition of certain assets and the assumption
of certain liabilities of Edward Weck Incorporated.
(c) Exhibits:
The Exhibits are listed in the Index to Exhibits.
For the purposes of complying with the amendments to the rules governing
Form S-8 (effective July 13, 1990) under the Securities Act of 1933, the
undersigned registrant hereby undertakes as follows, which undertaking shall be
incorporated by reference into registrant's Registration Statements on Form S-8
Nos. 2-84148 (filed June 28, 1989), 2-98715 (filed May 11, 1987) and 33-34753
(filed May 10, 1990):
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions,
or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in
the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this Annual Report to be
signed on its behalf by the undersigned, thereunto duly authorized as of the
date indicated below.
TELEFLEX INCORPORATED
By LENNOX K. BLACK
------------------------------------
Lennox K. Black
Chairman of the Board
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and as of the date indicated below.
By LENNOX K. BLACK
------------------------------------
Lennox K. Black
(Principal Executive Officer)
By HAROLD L. ZUBER, JR.
------------------------------------
Harold L. Zuber, Jr.
(Principal Financial and Accounting
Officer)
Pursuant to General Instruction D to Form 10-K, this report has been signed
by Steven K. Chance as Attorney-in-Fact for a majority of the Board of Directors
as of the date indicated below.
<TABLE>
<S> <C>
Lennox K. Black Director
Pemberton Hutchinson Director
Lewis E. Hatch, Jr. Director
Palmer E. Retzlaff Director
Donald Beckman Director
John H. Remer Director
Lewis W. Bluemle, Jr., M.D. Director
Sigismundus W. W. Lubsen Director
James W. Stratton Director
David S. Boyer Director
</TABLE>
By STEVEN K. CHANCE
------------------------------------
Steven K. Chance
Attorney-in-Fact
Dated: March 25, 1994
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TELEFLEX INCORPORATED
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
The consolidated financial statements together with the report thereon of
Price Waterhouse dated February 9, 1994 on pages 19 to 27 of the accompanying
1993 Annual Report to Shareholders are incorporated in this Annual Report on
Form 10-K. With the exception of the aforementioned information, and those
portions incorporated by specific reference in this document, the 1993 Annual
Report to Shareholders is not to be deemed filed as part of this report. The
following Financial Statement Schedules together with the report thereon of
Price Waterhouse dated February 9, 1994 on page 11 should be read in conjunction
with the consolidated financial statements in such 1993 Annual Report to
Shareholders. Financial Statement Schedules not included in this Form 10-K
Annual Report have been omitted because they are not applicable or the required
information is shown in the consolidated financial statements or notes thereto.
FINANCIAL STATEMENT SCHEDULES
Schedules:
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
II Amounts receivable from related parties....................................... 12
V Property, plant and equipment................................................. 12
VI Accumulated depreciation of property, plant and equipment..................... 13
VIII Valuation and qualifying accounts............................................. 13
IX Short-term borrowings......................................................... 13
X Supplementary income statement information.................................... 13
</TABLE>
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REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULES
To the Board of Directors
of Teleflex Incorporated
Our audits of the consolidated financial statements referred to in our report
dated February 9, 1994 appearing on page 27 of the 1993 Annual Report to
Shareholders of Teleflex Incorporated (which report and consolidated financial
statements are incorporated by reference in this Annual Report on Form 10-K)
also included an audit of the Financial Statement Schedules listed in Item 14(a)
of this Form 10-K. In our opinion, these Financial Statement Schedules present
fairly, in all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements.
PRICE WATERHOUSE
Thirty South Seventeenth Street
Philadelphia, Pennsylvania 19103
February 9, 1994
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectuses
constituting part of the Registration Statements on Form S-8 (No. 2-84148, No.
2-98715 and No. 33-34753) of Teleflex Incorporated of our report dated February
9, 1994 appearing on page 27 of the 1993 Annual Report to Shareholders which is
incorporated in this Annual Report on Form 10-K. We also consent to the
incorporation by reference of our report on the Financial Statement Schedules,
which appears above.
PRICE WATERHOUSE
Thirty South Seventeenth Street
Philadelphia, Pennsylvania 19103
March 25, 1994
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TELEFLEX INCORPORATED
SCHEDULE II -- AMOUNTS RECEIVABLE FROM RELATED PARTIES
<TABLE>
<CAPTION>
DEDUCTIONS
-----------------------
BALANCE AT AMOUNTS AMOUNTS BALANCE AT
NAME OF DEBTOR BEGINNING OF YEAR ADDITIONS COLLECTED WRITTEN OFF END OF YEAR
- --------------------------------- ----------------- --------- --------- ----------- -----------------
<S> <C> <C> <C> <C> <C>
Nouveau International, Inc.
1993............ $ 1,362,500 $ 564,500 -0- $ (947,000) $ 980,000
1992............ $ 512,500 $ 850,000 -0- -0- $ 1,362,500
1991............ -0- $ 512,500 -0- -0- $ 512,500
</TABLE>
SCHEDULE V -- PROPERTY, PLANT AND EQUIPMENT
FOR THE YEAR ENDED DECEMBER 26, 1993
<TABLE>
<CAPTION>
BALANCE AT RETIREMENTS, BALANCE AT
BEGINNING ADDITIONS AT SALES AND END OF
OF YEAR COST* TRANSLATION EFFECT YEAR
------------ ------------ ------------------ ------------
<S> <C> <C> <C> <C>
Land, buildings and improvements........ $ 87,312,400 $ 8,606,700 $ (452,200) $ 95,466,900
Machinery and equipment................. 192,802,400 77,477,500 (5,999,900) 264,280,000
Furniture and fixtures.................. 17,154,600 5,701,200 (3,000,900) 19,854,900
Work orders in progress................. 3,627,500 1,009,300 (1,429,200) 3,207,600
------------ ------------ ------------------ ------------
$300,896,900 $ 92,794,700 $(10,882,200) $382,809,400
------------ ------------ ------------------ ------------
------------ ------------ ------------------ ------------
</TABLE>
- ---------------
* Includes $64,037,400 in connection with acquisitions.
FOR THE YEAR ENDED DECEMBER 27, 1992
<TABLE>
<CAPTION>
BALANCE AT RETIREMENTS, BALANCE AT
BEGINNING ADDITIONS AT SALES AND END OF
OF YEAR COST* TRANSLATION EFFECT YEAR
------------ ------------ ------------------ ------------
<S> <C> <C> <C> <C>
Land, buildings and improvements........ $ 79,339,500 $ 10,016,400 $ (2,043,500) $ 87,312,400
Machinery and equipment................. 169,332,300 33,147,100 (9,677,000) 192,802,400
Furniture and fixtures.................. 13,718,500 3,471,900 (35,800) 17,154,600
Work orders in progress................. 6,596,100 2,870,800 (5,839,400) 3,627,500
------------ ------------ ------------------ ------------
$268,986,400 $ 49,506,200 $(17,595,700) $300,896,900
------------ ------------ ------------------ ------------
------------ ------------ ------------------ ------------
</TABLE>
- ---------------
* Includes $25,676,200 in connection with acquisitions.
FOR THE YEAR ENDED DECEMBER 29, 1991
<TABLE>
<CAPTION>
BALANCE AT RETIREMENTS, BALANCE AT
BEGINNING ADDITIONS AT SALES AND END OF
OF YEAR COST* TRANSLATION EFFECT YEAR
------------ ------------ ------------------ ------------
<S> <C> <C> <C> <C>
Land, buildings and improvements........ $ 74,493,200 $ 8,559,100 $ (3,712,800) $ 79,339,500
Machinery and equipment................. 147,463,800 27,139,100 (5,270,600) 169,332,300
Furniture and fixtures.................. 11,755,800 2,137,700 (175,000) 13,718,500
Work orders in progress................. 2,001,700 4,570,600 23,800 6,596,100
------------ ------------ ------------------ ------------
$235,714,500 $ 42,406,500 $ (9,134,600) $268,986,400
------------ ------------ ------------------ ------------
------------ ------------ ------------------ ------------
</TABLE>
- ---------------
* Includes $19,457,000 in connection with acquisitions.
12
<PAGE> 14
TELEFLEX INCORPORATED
SCHEDULE VI -- ACCUMULATED DEPRECIATION
OF PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
BALANCE AT RETIREMENTS, BALANCE AT
BEGINNING CHARGED TO SALES AND END OF
FOR THE YEAR ENDED OF YEAR INCOME TRANSLATION EFFECT YEAR
- ---------------------------------- ------------ ----------- ------------------ ------------
<S> <C> <C> <C> <C>
December 26, 1993................. $101,304,600 $26,146,800 $ (6,062,900) $121,388,500
December 27, 1992................. $ 90,187,100 $19,958,100 $ (8,840,600) $101,304,600
December 29, 1991................. $ 76,128,600 $17,473,500 $ (3,415,000) $ 90,187,100
</TABLE>
SCHEDULE VIII -- VALUATION AND QUALIFYING ACCOUNTS
ALLOWANCE FOR DOUBTFUL ACCOUNTS
<TABLE>
<CAPTION>
BALANCE AT ADDITIONS DOUBTFUL BALANCE AT
BEGINNING CHARGED TO ACCOUNTS END OF
FOR THE YEAR ENDED OF YEAR INCOME WRITTEN OFF YEAR
- ----------------------------------------- ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
December 26, 1993........................ $2,701,100 $1,151,100 $(1,499,500) $2,352,700
December 27, 1992........................ $2,418,600 $1,954,700 $(1,672,200) $2,701,100
December 29, 1991........................ $1,849,800 $1,873,600 $(1,304,800) $2,418,600
</TABLE>
SCHEDULE IX -- SHORT-TERM BORROWINGS
<TABLE>
<CAPTION>
WEIGHTED
WEIGHTED MAXIMUM AVERAGE AVERAGE
BALANCE AT INTEREST AMOUNT AMOUNT DURING
END OF RATE AT DURING THE DURING THE THE
YEAR YEAR END YEAR YEAR YEAR*
----------- -------- ----------- ----------- --------
<S> <C> <C> <C> <C> <C>
1993
Bank Demand Loans.............. $55,737,500 6% $55,737,500 $47,509,900 7%
1992
Bank Demand Loans.............. $39,448,000 8% $48,110,000 $41,527,000 8%
1991
Bank Demand Loans.............. $41,880,800 9% $41,880,800 $32,980,600 8%
</TABLE>
- ---------------
* Determined using average of month-end balances.
SCHEDULE X -- SUPPLEMENTARY INCOME STATEMENT INFORMATION
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
----------------------------------------------
DECEMBER 26, DECEMBER 27, DECEMBER 29,
1993 1992 1991
------------ ------------ ------------
<S> <C> <C> <C>
Depreciation of plant assets........................ $ 26,146,800 $ 19,958,100 $ 17,473,500
Taxes, other than income taxes...................... $ 22,780,221 $ 18,788,700 $ 15,865,700
</TABLE>
13
<PAGE> 1
EXHIBIT 13
Teleflex Incorporated and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
Year ended
- --------------------------------------------------------------------------------
DECEMBER 26, December 27, December 29,
1993 1992 1991
- --------------------------------------------------------------------------------
REVENUES $666,796,200 $570,338,100 $483,009,200
- --------------------------------------------------------------------------------
COSTS AND EXPENSES
Materials, labor and other product
costs 459,055,200 381,992,900 330,226,400
Selling, engineering and
administrative expenses 140,964,700 124,212,800 93,683,400
Interest expense 14,466,100 15,482,300 13,765,200
- --------------------------------------------------------------------------------
614,486,000 521,688,000 437,675,000
- --------------------------------------------------------------------------------
Income before taxes 52,310,200 48,650,100 45,334,200
Estimated taxes on income 18,624,000 16,638,000 15,527,000
- --------------------------------------------------------------------------------
Income before cumulative effect of
change in accounting principle 33,686,200 32,012,100 29,807,200
Cumulative effect - change in
accounting for income taxes 860,000
- --------------------------------------------------------------------------------
NET INCOME $ 33,686,200 $ 32,872,100 $ 29,807,200
- --------------------------------------------------------------------------------
EARNINGS PER SHARE
Earnings per share before
cumulative effect of change in
accounting principle $1.95 $1.87 $1.77
Cumulative effect - change in
accounting for income taxes .05
- --------------------------------------------------------------------------------
Earnings per share $1.95 $1.92 $1.77
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of the consolidated financial
statements.
Teleflex
19 Fifty Years
<PAGE> 2
Teleflex Incorporated and Susidiaries
CONSOLIDATED BALANCE SHEET
- -------------------------------------------------------------------------------
DECEMBER 26, December 27,
1993 1992
- -------------------------------------------------------------------------------
ASSETS
Current assets
Cash and cash equivalents $ 11,254,900 $ 36,331,100
Accounts receivable, less allowance for
doubtful accounts, 1993-$2,352,700;
1992-$2,701,100 143,489,400 116,817,900
Inventories
Raw materials and manufactured parts 67,979,400 56,479,400
Work-in-process and finished goods 91,307,800 72,490,900
Prepaid expenses 8,217,600 7,702,100
- ------------------------------------------------------------------------------
Total current assets 322,249,100 289,821,400
- ------------------------------------------------------------------------------
Plant assets
Land and buildings 95,466,900 87,312,400
Machinery and equipment 287,342,500 213,584,500
- ------------------------------------------------------------------------------
382,809,400 300,896,900
Less accumulated depreciation 121,388,500 101,304,600
- ------------------------------------------------------------------------------
Net plant assets 261,420,900 199,592,300
Investments in affiliates 5,296,800 6,697,300
Intangibles and other assets 51,608,700 38,820,100
- ------------------------------------------------------------------------------
$640,575,500 $534,931,100
- ------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Demand loans $55,737,500 $39,448,000
Current portion of long-term borrowings 15,001,000 14,965,900
Accounts payable 44,681,600 36,962,100
Accrued expenses 32,577,400 25,665,900
Estimated income taxes payable 2,855,100 5,976,300
- ------------------------------------------------------------------------------
Total current liabilities 150,852,600 123,018,200
Long-term borrowings 183,504,000 134,599,900
Deferred income taxes and other 36,428,800 36,845,800
- ------------------------------------------------------------------------------
Total liabilities 370,785,400 294,463,900
- ------------------------------------------------------------------------------
Shareholders' equity
Common shares, $1 par value
Issued: 1993 - 17,084,245 shares;
1992 - 16,914,285 shares 17,084,200 16,914,300
Additional paid-in capital 38,604,200 33,117,800
Retained earnings 220,387,700 194,341,300
Cumulative translation adjustment (6,286,000) (3,430,000)
Treasury shares, at cost: 1992 - 38,493
shares (476,200)
- ------------------------------------------------------------------------------
Total shareholders' equity 269,790,100 240,467,200
- ------------------------------------------------------------------------------
$640,575,500 $534,931,100
- ------------------------------------------------------------------------------
The accompanying notes are an integral part of the consolidated financial
statements.
Teleflex
20 Fifty Years
<PAGE> 3
Teleflex Incorporated and Subsidiaries
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Year ended
- --------------------------------------------------------------------------------------------------------------------
DECEMBER 26, December 27, December 29,
1993 1992 1991
- --------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C> <C>
Net Income $33,686,200 $32,872,100 $29,807,200
Adjustments to reconile net income to cash flows
from operating activities:
Depreciation and amortization 28,070,800 21,556,100 18,403,500
Deferred income taxes including cumulative
effect of accounting change in 1992 1,151,000 8,820,000 1,398,000
(Increase) in accounts receivable (19,733,700) (11,365,400) (7,726,500)
(Increase) in inventories (1,015,600) (3,112,900) (8,676,400)
(Increase) decrease in prepaid expenses (359,100) 696,800 (566,600)
Increase (decrease) in accounts payable
and accrued expenses 8,224,300 2,563,800 (2,423,000)
Increase (decrease) in estimated income
taxes payable (3,661,200) (8,361,700) 1,616,000
- --------------------------------------------------------------------------------------------------------------------
46,362,700 43,668,800 31,832,200
- --------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from new borrowings 76,171,000 32,314,000 15,580,000
Reduction in long-term borrowings,
including acquisition debt retired (27,517,400) (34,082,000) (18,898,000)
Increase in current borrowings and
demand loans 12,531,000 1,298,000 7,597,000
Proceeds from stock compensation plans and
distribution of treasury shares 6,132,500 4,686,100 3,608,200
Dividends (7,639,800) (6,961,700) (6,448,900)
- --------------------------------------------------------------------------------------------------------------------
59,677,300 (2,745,600) 1,438,300
- --------------------------------------------------------------------------------------------------------------------
CASH FLOWS FOR INVESTING ACTIVITIES
Expenditures for plant assets 24,400,200 19,339,200 20,351,700
Payments for businesses acquired 103,530,000 5,000,000 28,381,000
Investments in affiliates 1,369,000 5,199,000 3,342,700
Other 1,817,000 (443,300) 959,000
- --------------------------------------------------------------------------------------------------------------------
131,116,200 29,094,900 53,034,400
- --------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (25,076,200) 11,828,300 (19,763,900)
Cash and cash equivalents at the beginning of the year 36,331,100 24,502,800 44,266,700
- --------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at the end of the year $11,254,900 $36,331,100 $24,502,800
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
Teleflex
21 Fifty Years
<PAGE> 4
Teleflex Incorporated and Subsidiaries
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Year ended
- --------------------------------------------------------------------------------------------------------------------------
DECEMBER 26, December 27, December 29,
1993 1992 1991
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON SHARES
Balance, beginning of year $ 16,914,300 $ 16,785,100 $ 11,093,100
Shares issued for compensation plans 169,900 129,200 145,500
Common stock dividend 5,546,500
- --------------------------------------------------------------------------------------------------------------------------
Balance, end of year 17,084,200 16,914,300 16,785,100
- --------------------------------------------------------------------------------------------------------------------------
ADDITIONAL PAID-IN CAPITAL
Balance, beginning of year 33,117,800 28,085,400 25,450,500
Shares issued for compensation plans 5,486,400 3,762,500 2,634,900
Shares issued in connection with acquisition 1,269,900
- --------------------------------------------------------------------------------------------------------------------------
Balance, end of year 38,604,200 33,117,800 28,085,400
- --------------------------------------------------------------------------------------------------------------------------
RETAINED EARNINGS
Balance, beginning of year 194,341,300 168,430,900 150,619,100
Net Income 33,686,200 32,872,100 29,807,200
Cash dividends (7,639,800) (6,961,700) (6,448,900)
Common stock dividend (5,546,500)
- --------------------------------------------------------------------------------------------------------------------------
Balance, end of year 220,387,700 194,341,300 168,430,900
- --------------------------------------------------------------------------------------------------------------------------
CUMULATIVE TRANSLATION ADJUSTMENT
Balance, end of year (6,286,000) (3,430,000) 322,100
- --------------------------------------------------------------------------------------------------------------------------
TREASURY SHARES
Balance, beginning of year (476,200) (1,921,800) (2,749,600)
Distribution of treasury shares 476,200 794,400 827,800
Shares issued in connection with acquisition 651,200
- --------------------------------------------------------------------------------------------------------------------------
Balance, end of year -- (476,200) (1,921,800)
- --------------------------------------------------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY $269,790,100 $240,467,200 $211,701,700
- --------------------------------------------------------------------------------------------------------------------------
CASH DIVIDENDS PER SHARE $.45 $.42 $.39
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
Teleflex
22 Fifty Years
<PAGE> 5
Teleflex Incorporated and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements include the accounts of Teleflex
Incorporated and its subsidiaries.
Cash and cash equivalents include funds invested in a variety of liquid
short-term investments with an original maturity of three months or less.
Inventories are stated principally at the lower of average cost or market.
Plant assets include the cost of additions and those improvements which
increase the capacity or lengthen the useful lives of the assets. Repairs and
maintenance costs are expensed as incurred. With minor exceptions, straight
line composite lives for depreciation of plant assets are as follows:
buildings 20 to 40 years; machinery, equipment and fixtures 8 to 12 years.
Intangible assets, principally the excess purchase price of acquisitions over
the fair value of net tangible assets acquired, are being amortized over
periods not exceeding 30 years.
Assets and liabilities of foreign subsidiaries are translated at the rates of
exchange on the balance sheet date; income and expenses are translated at the
average rates of exchange prevailing during the year. The related translation
adjustments are accumulated in shareholders' equity.
Earnings per share is based on the weighted average number of common and
common equivalent shares outstanding.
The company adopted Statement of Financial Accounting Standards (SFAS) 106,
Employers' Accounting for Postretirement Benefits Other than Pensions in 1993.
SFAS 106 changed the company's accounting for other postretirement benefits
from the cash method to accruing these costs over employees' working lives.
This change resulted in an incremental charge to net income of approximately
$1,000,000, or $.06 per share.
Effective as of the beginning of 1992, the company adopted SFAS 109,
Accounting for Income Taxes. The adoption of SFAS 109 changed the company's
method of accounting for income taxes from the deferred method to the asset and
liability method. The cumulative effect of this change in accounting for
periods prior to January 1992, increased 1992 net income by $860,000, or $.05
per share.
ACQUISITIONS
In December 1993, the company acquired certain assets of Edward Weck
Incorporated (Weck) a manufacturer of surgical devices for $63,500,000 in cash.
The following unaudited pro forma information sets forth the results of the
company's operations as though the purchase of Weck had been made, and the debt
used to finance the acquisition had been incurred, at the beginning of 1992.
This information is not necessarily indicative of the results of operations
which may occur in the future.
<TABLE>
<CAPTION>
1993 1992
- ------------------------------------------------------------
<S> <C> <C>
Revenues $726,481,300 $633,159,100
Net Income $ 36,950,200 $ 34,669,100
Earnings per share
(before accounting
change in 1992) $2.14 $2.02
</TABLE>
In March 1993, the company acquired substantially all of the assets of Mal Tool
& Engineering, a manufacturer of turbine engine airfoils, for $38,400,000 in
cash. Other businesses with a combined purchase price of $1,630,000 were
acquired in 1993.
In 1992, Techsonic Industries, Inc., a manufacturer of electronic marine
accessories, became a wholly-owned subsidiary of the company for cash
consideration of $5,000,000. The company also acquired the remaining 51% of
Aviation Product Support, Inc., which specializes in turnkey repairs in the
aviation turbine engine market, for 52,632 treasury shares valued at
$1,921,100. The combined purchase price was $15,921,100 (including $9,000,000
invested in prior years).
These acquisitions have been accounted for by the purchase method of
accounting. The excess of the purchase price over the fair value of the net
tangible assets acquired was $19,400,000 and $3,696,000 in 1993 and 1992,
respectively. The assets, liabilities and operating results of the
acquisitions are included in the company's financial statements from their
respective dates of acquisition.
Liabilities amounting to $19,900,000 and $30,000,000 were assumed in 1993
and 1992, respectively, in connection with the acquisitions.
Except for Weck as set forth above, results of operations would not have
been materially different had the acquisitions occurred as of the beginning of
the years acquired.
Teleflex
23 Fifty Years
<PAGE> 6
BORROWINGS AND LEASES
<TABLE>
<CAPTION>
1993 1992
- ---------------------------------------------------------------------
<S> <C> <C>
8.5% Senior Notes, due in
installments through 2002 $ 24,000,000 $ 30,000,000
7.4% Senior Notes, due in
installments from 1998
through 2007 30,000,000 30,000,000
6.6% Senior Notes, due in
installments from 1997
through 2008 50,000,000
Mortgage notes secured by
certain assets with a net
book value of $16,924,000 13,068,000 14,675,000
6.5% Deutsche Mark denominated
notes, due in installments
through 1995 40,600,000 48,825,000
Bank term notes, at an average
rate of 5.2% due in
installments through 1998 15,000,000
Other debt and capital lease
obligations, at interest
rates ranging from 3% to 9% 25,837,000 26,065,800
- ---------------------------------------------------------------------
198,505,000 149,565,800
Current portion of borrowings (15,001,000) (14,965,900)
- ---------------------------------------------------------------------
$183,504,000 $134,599,900
- ---------------------------------------------------------------------
</TABLE>
The various note agreements provide for the maintenance of minimum working
capital amounts and ratios and limit the purchase of the company's stock and
payment of cash dividends. Under the most restrictive of these provisions,
$33,000,000 of retained earnings was available for dividends at December 26,
1993.
The weighted average interest rate on the $55,737,500 of demand loans due to
banks was 6.3% at December 26, 1993. In addition, the company has $40,000,000
available under several interest rate alternatives in unused lines of credit.
Interest expense in 1993, 1992, and 1991 did not differ materially from
interest paid, nor does the carrying value of year end long-term borrowings
differ materially from fair value.
The aggregate amounts of debt, including capital leases, maturing in each
of the four years after 1994 are as follows:
1995 - $55,287,200; 1996 - $ 9,287,500;
1997 - $13,845,300; 1998 - $29,350,500.
The company has entered into certain operating leases which require minimum
annual payments as follows:
1994 - $8,770,500; 1995 - $8,442,900; 1996 - $7,690,200;
1997 - $6,733,700; 1998 - $6,128,200. The total rental
expense for all operating leases was $8,460,200, $7,883,600 and
$7,039,000 in 1993, 1992, and 1991, respectively.
SHAREHOLDERS' EQUITY
The authorized capital of the company is comprised of 50,000,000 common shares,
$1 par value and 500,000 preference shares. No preference shares were
outstanding during the last three years.
At December 26, 1993, 1,334,556 shares of common stock were reserved for
issuance under the company's stock compensation plans. During 1993, options to
purchase 91,500 shares of common stock were granted. Officers and key
employees held options for the purchase of 1,086,928 shares of common stock
at prices ranging from $14.00 to $31.50 per share with an average price of
$23.02 per share. Such options are presently exercisable with respect to
651,772 shares and become exercisable with respect to an additional 202,955
shares in 1994. In 1993 and 1992, 169,900 shares and 129,226 shares,
respectively, were issued under the compensation plans.
INCOME TAXES
The provision for income taxes consists of the following:
<TABLE>
<CAPTION>
1993 1992 1991
- ---------------------------------------------------------------------
<S> <C> <C> <C>
Current
Federal $14,133,000 $10,331,000 $ 9,726,000
State 1,711,000 1,395,000 1,262,000
Foreign 1,629,000 (4,768,000) 3,141,000
Deferred 1,151,000 9,680,000 1,398,000
- ---------------------------------------------------------------------
$18,624,000 $16,638,000 $15,527,000
- ---------------------------------------------------------------------
</TABLE>
The deferred income taxes provided and the balance sheet amounts of $24,828,000
in 1993 and $27,070,000 in 1992 related substantially to the methods of
accounting for depreciation. The increase in deferred taxes in 1992 resulted
from the acceleration of deductions in certain foreign jurisdictions. Income
taxes paid were $20,600,000, $12,600,000 and $13,168,000 in 1993, 1992 and
1991, respectively.
Teleflex
24 Fifty Years
<PAGE> 7
A reconcilation of the company's effective tax rate to the U.S. statutory
rate is as follows:
<TABLE>
<CAPTION>
1993 1992 1991
- -------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. statutory rate 35.0% 34.0% 34.0%
State Income taxes 2.0 1.9 1.8
Foreign Income taxes -- 1.8 1.1
Export sales benefit (1.5) (1.6) (1.4)
Other .1 (1.9) (1.2)
- -------------------------------------------------------------------------
Effective Income tax rate 35.6% 34.2% 34.3%
- -------------------------------------------------------------------------
</TABLE>
PENSIONS
The company has defined benefit plans which provide retirement benefits to
eligible employees. Assumptions used in determining the actuarial present
value of domestic benefit obligations reflect a weighted average discount rate
of 7.8%, an investment rate of 9% and a salary increase of 5%. The assumed
discount rate was 6% for foreign plans. Pension expense is summarized as
follows:
<TABLE>
<CAPTION>
1993 1992 1991
- -------------------------------------------------------------------------
<S> <C> <C> <C>
Domestic plans
Service cost - benefits
earned during
the year $1,595,000 $1,426,000 $1,296,000
Interest cost on
projected benefit
obligation 2,673,000 1,687,000 1,325,000
Actual return on
plan assets (1,547,000) (2,379,000) (3,880,000)
Net amortization
and deferral (1,324,000) 522,000 2,461,000
Foreign plans 495,000 525,000 496,000
- -------------------------------------------------------------------------
$1,892,000 $1,781,000 $1,698,000
- -------------------------------------------------------------------------
</TABLE>
The following table sets forth the funded status of the plans and the amounts
shown in the balance sheet at December 26, 1993 and December 27, 1992:
<TABLE>
<CAPTION>
1993 1992
- ----------------------------------------------------------------------
<S> <C> <C>
Domestic
Plan assets at fair value,
primarily common stock
and U.S. Government
obligations $41,763,000 $21,798,000
- ----------------------------------------------------------------------
Actuarial present value of
the benefit obligation
Vested (37,635,000) (17,359,000)
Non-vested (3,536,000) (2,071,000)
- ----------------------------------------------------------------------
Accumulated benefit obligation (41,171,000) (19,430,000)
Projected effect of future salary
increases (6,875,000) (2,948,000)
- ----------------------------------------------------------------------
Total projected benefit obligation (48,046,000) (22,378,000)
- ----------------------------------------------------------------------
Projected benefit obligation
in excess of plan assets (6,283,000) (580,000)
Unrecognized prior service cost 101,000 (54,000)
Unrecognized net loss 5,935,000 809,000
Unrecognized transition asset (1,520,000) (1,655,000)
Unfunded foreign pension amounts (4,260,000) (4,500,000)
- ----------------------------------------------------------------------
Accrued pension liability $(6,027,000) $(5,980,000)
- ----------------------------------------------------------------------
</TABLE>
The discount rate and assumed salary increase were changed to 7.8% and 5%,
respectively, in 1993 from 9% and 6% in 1992. As a result of these changes,
the projected benefit obligation and the unrecognized net loss increased by
approximately $5,000,000 in 1993. The table includes the defined benefit
pension plans assumed by the company in 1993 in connection with acquisitions.
OTHER POSTRETIREMENT BENEFITS
The company provides postretirement medical and other benefits to eligible
employees. Assumptions used in determining the 1993 expense and benefit
obligations include a weighted average discount rate of 7.8% and an initial
health care cost trend rate of 12% declining to 6% over a period of 7 years.
Increasing the health care cost trend rate by one percentage point would
increase the accumulated postretirement benefit obligation by $2,642,000 and
the 1993 postretirement benefit expense by $236,000.
Teleflex
25 Fifty Years
<PAGE> 8
Postretirement benefit expense is summarized as follows:
<TABLE>
<CAPTION>
1993
- ------------------------------------------------------------------
<S> <C>
Service cost-benefits earned during the year $ 312,000
Interest cost on accumulated postretirement
benefit obligation 1,385,000
Net amortization and deferral 783,000
- ------------------------------------------------------------------
$2,480,000
- ------------------------------------------------------------------
</TABLE>
The following table sets forth the accumulated obligation of the plans and the
amounts shown in the balance sheet at December 26, 1993:
<TABLE>
<CAPTION>
1993
- -------------------------------------------------------------------
<S> <C>
Accumulated postretirement benefit obligation:
Retirees $(10,569,000)
Fully eligible active plan participants (3,205,000)
Other active plan participants (7,408,000)
- -------------------------------------------------------------------
(21,182,000)
Unrecognized prior service cost 351,000
Unrecognized transition obligation 15,276,000
Unrecognized actuarial net loss 3,973,000
- -------------------------------------------------------------------
Accrued postretirement liability $ (1,582,000)
- -------------------------------------------------------------------
</TABLE>
BUSINESS SEGMENTS AND OTHER INFORMATION
Reference is made to pages 28 thorugh 31 for a summary of operations by
business segment.
A summary of revenues, identifiable assets and operating profit relating to
the company's foreign operations, substantially European is as follows:
<TABLE>
<CAPTION>
1993 1992 1991
- --------------------------------------------------------------------
<S> <C> <C> <C>
Revenues $187,259,000 $172,618,000 $153,532,000
Identifiable assets $202,593,000 $181,050,000 $179,701,000
Operating profit $ 19,700,000 $ 18,434,000 $ 19,549,000
- --------------------------------------------------------------------
</TABLE>
Export sales from the United States to unaffiliated customers approximated
$69,800,000, $60,500,000 and $49,848,000 for 1993, 1992 and 1991, respectively.
Export sales include $24,000,000, $21,500,000 and $20,405,000 to Canada in
1993, 1992 and 1991, respectively.
Sales to the U.S. Government, directly and as a subcontractor, amounted to
approximately $33,500,000, $52,700,000 and $55,800,000 in 1993, 1992 and 1991,
respectively.
Teleflex
26 Fifty Years
<PAGE> 9
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders
Teleflex Incorporated
In our opinion, the consolidated financial statements appearing on pages 19
through 31 of this Annual Report present fairly, in all material respects, the
financial position of Teleflex Incorporated and its subsidiaries at December
26, 1993 and December 27, 1992 and the results of their operations and their
cash flows for each of the three years in the period ended December 26, 1993,
in conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for the
opinion expressed above.
As discussed on page 23 of the financial statements, the Company changed its
methods of accounting for income taxes and postretirement benefits in 1992 and
1993, respectively.
/S/ PRICE WATERHOUSE
- ----------------------
Philadelphia, Pennsylvania
February 9, 1994
QUARTERLY FINANCIAL DATA
(unaudited)
<TABLE>
<CAPTION>
Quarter Ended
- ------------------------------------------------------------------------------------------------------------------------------------
(000 omitted excepted per share data) March June Sept. Dec.
- ------------------------------------------------------------------------------------------------------------------------------------
1993
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues $157,575 $174,921 $156,878 $177,422
Gross profits 49,257 54,421 47,700 56,363
Income before taxes 13,174 14,250 9,661 15,225
Net income 8,563 9,263 5,904 9,956
Earnings per share .50 .54 .34 .57
Cash dividends per share .105 .115 .115 .115
Price range of common stock 29-33 5/8 27 3/4-32 30 3/4-33 3/8 28-38 1/4
- ------------------------------------------------------------------------------------------------------------------------------------
1992
- ------------------------------------------------------------------------------------------------------------------------------------
Revenues $132,814 $148,835 $138,032 $150,657
Gross profits 42,705 49,167 45,564 50,909
Income before taxes 12,103 13,033 9,400 14,114
Net income 7,958(a) 8,581 6,168 9,305
Earnings per share .47(a) .50 .36 .54
Cash dividends per share .10 .105 .105 .105
Price range of common stock 32 7/8-39 1/2 31 1/8-35 3/4 27 5/8-33 5/8 25-32 7/8
- ------------------------------------------------------------------------------------------------------------------------------------
1991
- ------------------------------------------------------------------------------------------------------------------------------------
Revenues $112,376 $116,957 $115,958 $137,718
Gross profits 34,992 37,929 35,298 44,564
Income before taxes 11,348 11,937 8,995 13,054
Net income 7,490 7,926 5,910 8,481
Earnings per share .45 .47 .35 .50
Cash dividends per share .09 .10 .10 .10
Price range of common stock 19 5/8-29 27 7/8-31 1/2 28 1/4-33 7/8 30 1/2-34 3/8
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Excludes an increase in net income of $860,000, or $.05 per share as a
result of a change in accounting for income taxes.
Teleflex
27 Fifty Years
<PAGE> 10
Teleflex Incorporated and Subsidiaries
SELECTED FINANCIAL AND INDUSTRY SEGMENT DATA
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
1993 1992 1991
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SUMMARY OF OPERATIONS
Revenues
Commercial Products $284,106 $210,464 $168,598
Medical Products 180,623 179,376 130,540
Aerospace Products and Services 202,067 177,292 180,399
- --------------------------------------------------------------------------------------------------------------------------
Net sales 666,796 567,132 479,537
Other income(a) -- 3,206 3,472
- --------------------------------------------------------------------------------------------------------------------------
Total revenues $666,796 $570,338 $483,009
- --------------------------------------------------------------------------------------------------------------------------
Operating profit
Commercial Products $ 37,794 $ 25,754 $ 19,996
Medical Products 21,486 25,463 19,900
Aerospace Products and Services 14,906 16,100 21,722
- --------------------------------------------------------------------------------------------------------------------------
74,186 67,317 61,618
Less:
Interest expense 14,466 15,482 13,765
Corporate expenses, net of other income 7,410 3,185 2,519
- --------------------------------------------------------------------------------------------------------------------------
Income before taxes 52,310 48,650 45,334
Estimated taxes on income 18,624 16,638 15,527
- --------------------------------------------------------------------------------------------------------------------------
Net income $ 33,686 $ 32,012(b) $ 29,807
- --------------------------------------------------------------------------------------------------------------------------
Earnings per share $1.95 $1.87(b) $1.77
Cash dividends per share $.45 $.42 $.39
Net income from operations as a percent of revenues 5.1% 5.6% 6.2%
Percent of net sales
Commercial Products 43% 37% 35%
Medical Products 27% 32% 27%
Aerospace Products and Services 30% 31% 38%
Average number of common and common equivalent shares
outstanding 17,267 17,132 16,850
Average number of employees 7,920 6,920 6,160
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
[SALES BY BUSINESS SEGMENT CHART - SEE EDGAR APPENDIX]
Teleflex
28 Fifty Years
<PAGE> 11
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
1990 1989 1988 1987 1986 1985 1984 1983
- ----------------------------------------------------------------------------------------------------------------------------------
(000 omitted except per share and employee data)
<S> <C> <C> <C> <C> <C> <C> <C>
$162,646 $173,957 $153,144 $130,310 $109,811 $101,495 $ 95,871 $ 71,226
115,756 42,406 38,032 25,928 21,314 -- -- --
162,731 139,262 132,413 113,540 83,057 70,321 57,439 58,115
- ---------------------------------------------------------------------------------------------------------------------------------
441,133 355,625 323,589 269,778 214,182 171,816 153,310 129,341
3,080 4,441 4,634 1,988 3,965 3,221 2,426 1,388
- ---------------------------------------------------------------------------------------------------------------------------------
$444,213 $360,066 $328,223 $271,766 $218,147 $175,037 $155,736 $130,729
- ---------------------------------------------------------------------------------------------------------------------------------
$ 22,224 $ 22,025 $ 26,794 $ 25,239 $ 19,993 $ 15,251 $ 13,549 $ 8,725
16,183 5,782 3,755 2,107 168 -- -- --
20,781 20,711 16,548 15,095 14,090 13,470 10,772 11,738
- ---------------------------------------------------------------------------------------------------------------------------------
59,188 48,518 47,097 42,441 34,251 28,721 24,321 20,463
12,401 6,886 6,225 4,886 3,679 1,626 1,396 1,448
3,880 2,395 4,493 5,894 3,642 4,887 3,815 2,914
- ---------------------------------------------------------------------------------------------------------------------------------
42,907 39,237 36,379 31,661 26,930 22,208 19,110 16,101
14,340 12,440 12,370 11,990 10,500 8,900 7,800 6,600
- ---------------------------------------------------------------------------------------------------------------------------------
$ 28,567 $ 26,797 $ 24,009 $ 19,671 $ 16,430 $ 13,308 $ 11,310 $ 9,501
- ---------------------------------------------------------------------------------------------------------------------------------
$1.73 $1.63 $1.48 $1.20 $1.01 $.84 $.72 $.61
$.35 $.31 $.26 $.22 $.18 $.15 $.14 $.12
6.4% 7.4% 7.3% 7.2% 7.5% 7.6% 7.3% 7.3%
37% 49% 47% 48% 51% 59% 63% 55%
26% 12% 12% 10% 10% -- -- --
37% 39% 41% 42% 39% 41% 37% 45%
16,476 16,403 16,243 16,459 16,315 15,902 15,788 15,549
5,860 5,080 4,350 3,760 3,300 2,380 2,060 1,845
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Other income in 1993, which was insignificant, has been reclassified as an
offset to interest expense and corporate expenses.
(b) Excludes an increase in net income of $860,000, or $.05 per share as a
result of a change in accounting for income taxes.
[OPERATING PROFIT BY BUSINESS SEGMENT CHART - SEE EDGAR APPENDIX]
Teleflex
29 Fifty Years
<PAGE> 12
Teleflex Incorporated and Subsidiaries
SELECTED FINANCIAL AND INDUSTRY SEGMENT DATA (continued)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
1993 1992 1991
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FINANCIAL POSITION
Identifiable assets
Commercial Products $158,206 $142,041 $101,187
Medical Products 266,239 206,562 194,609
Aerospace Products and Services 202,130 142,523 141,104
Corporate 14,001 43,805 40,793
- ----------------------------------------------------------------------------------------------------------------------
Total assets $640,576 $534,931 $477,693
- ----------------------------------------------------------------------------------------------------------------------
Capital expenditures
Commercial Products $ 7,967 $ 7,386 $ 7,505
Medical Products $ 7,361 $ 5,316 $ 7,138
Aerospace Products and Services $ 8,865 $ 6,384 $ 5,585
Depreciation and amortization
Commercial Products $ 9,251 $ 6,262 $ 5,633
Medical Products $ 8,030 $ 6,505 $ 4,725
Aerospace Products and Services $ 10,176 $ 8,002 $ 7,366
Long-term borrowings $183,504 $134,600 $119,370
Shareholders' equity $269,790 $240,467 $211,702
Working capital $171,397 $166,803 $131,589
Current ratio 2.1 2.4 2.1
Book value per share $15.79 $14.25 $12.73
Return on average shareholders' equity 13.2% 14.2% 14.9%
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
Teleflex
30 Fifty Years
<PAGE> 13
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
1990 1989 1988 1987 1986 1985 1984 1983
- ----------------------------------------------------------------------------------------------------------------------------------
(000 omitted except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
$ 84,678 $ 90,557 $ 83,601 $ 60,099 $ 51,342 $ 40,790 $ 44,656 $ 40,890
147,954 125,635 34,819 28,997 19,715 -- -- --
143,419 130,762 107,524 108,769 85,173 55,963 41,871 39,734
49,049 19,708 38,172 28,042 28,932 40,134 22,806 19,642
- ---------------------------------------------------------------------------------------------------------------------------------
$425,100 $366,662 $264,116 $225,907 $185,162 $136,887 $109,333 $100,266
- ---------------------------------------------------------------------------------------------------------------------------------
$ 5,581 $ 5,507 $ 8,880 $ 6,065 $ 9,289 $ 3,848 $ 1,692 $ 2,403
$ 4,236 $ 2,373 $ 960 $ 2,360 $ 1,436 -- -- --
$ 7,166 $ 10,701 $ 5,228 $ 6,446 $ 4,722 $ 3,186 $ 4,547 $ 2,937
$ 5,369 $ 4,715 $ 3,675 $ 3,038 $ 2,238 $ 1,816 $ 1,404 $ 1,400
$ 3,999 $ 1,693 $ 1,455 $ 1,097 $ 1,003 -- -- --
$ 7,024 $ 5,777 $ 5,556 $ 5,272 $ 3,682 $ 2,661 $ 2,184 $ 1,854
$112,941 $106,128 $ 57,104 $ 55,013 $ 37,578 $ 23,477 $ 14,112 $ 14,127
$187,875 $160,038 $136,328 $115,517 $100,573 $ 84,312 $ 72,620 $ 63,563
$133,840 $112,325 $ 98,217 $ 90,270 $ 69,723 $ 66,777 $ 56,052 $ 48,472
2.3 2.4 2.6 2.8 2.7 3.6 3.8 3.4
$11.44 $ 9.87 $ 8.49 $ 7.25 $ 6.25 $ 5.36 $ 4.64 $ 4.08
16.4% 18.1% 19.1% 18.2% 17.8% 17.0% 16.6% 18.3%
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Teleflex
31 Fifty Years
<PAGE> 14
1993 FINANCIAL REVIEW
OVERVIEW
The company's major financial objectives are to achieve a 20% growth rate in
revenues and net income and to generate a 20% return on average shareholders'
equity. Over the past five years the growth rates for sales and earnings have
been 16% and 7%, respectively, while the return on shareholders' equity has
averaged 15%. The growth rates have been tempered by the relatively
disappointing economies first in the United States and then in Europe, and the
downward cycle in both the military and commercial aerospace markets.
Additionally, during that time period the company has invested heavily,
primarily through acquisition, to build the Medical Segment.
The company is also committed to maintaining a reasonable balance among its
three segments -- Commercial, Medical and Aerospace. Balance reduces
dependence on any one segment, allows for investment at the bottom of a
segment's operating cycle and gives the company a broader base of markets in
which to grow. Over the past five years, the company's operating profit has
increased despite cyclical downturns in each of the segments.
The company intends to achieve its growth objectives through both internal
development of new products and new markets for existing products as well as
through acquisitions. In general, it is expected that half of the 20% growth
objective will be achieved through internal means and the balance will come
through acquisitions. Internal growth, which has been hampered by the
lackluster worldwide economy, overcapacity in some markets and intensifying
competition, has accounted for only one quarter of the overall company's growth
over the last five years. During the same time, the company invested
approximately $200 million in acquisitions which have contributed the remaining
three quarters of the growth. Acquisitions, while adding initially to sales,
generally do not contribute proportionately to earnings in the early years. In
these years' earnings are reduced by up-front costs such as interest,
depreciation and amortization and in many instances, the expense of integrating
a newly-acquired business into an existing operation.
[REVENUES CHART - SEE EDGAR APPENDIX]
Historically, operations have generated sufficient cash flow to finance the
company's operating requirements while borrowings have been incurred largely to
finance acquisitions. Over the past five years, cash flow from operations has
totalled more than $190 million. This healthy cash flow also provides for the
payment of dividends and enables the company to continue to upgrade its plant
and equipment. While not particularly capital intensive, the company's
businesses spend approximately 4% of net sales on plant and equipment. With
respect to dividends, the company's policy is to pay 20% of trailing twelve
months' earnings. This policy has been adhered to since the first cash
dividend payment was made in 1977.
The company generally has maintained conservative levels of long-term debt
ranging from 30% to 40% of total capitalization. However, it is not
inconceivable that debt may range up to 50% of capitalization to finance an
acquisition. The company finances foreign operations and acquisitions to a
large degree in their local currencies, thus reducing the overall risk of
exchange rate fluctuations. As a result, approximately 40% of the company's
short and long-term debt is denominated in currencies other than the U.S.
dollar. In summary, the company believes its strong financial position,
healthy cash flows from operations, and unused debt capacity allow it the
financial flexibility to pursue its long-term strategic growth objectives.
Teleflex
32 Fifty Years
<PAGE> 15
RESULTS OF OPERATIONS
1993 VS. 1992: Revenues increased 17% to $666.8 million compared to $570.3
million in 1992. The increase was a result of gains in the Commercial and
Aerospace segments as the Medical Segment was virtually unchanged. For 1993 the
Commercial, Medical and Aerospace segments comprised 43%, 27% and 30% of the
company's net sales, respectively. Acquisitions accounted for a substantial
portion of the growth in the Aerospace Segment and approximately one-half of the
growth in the Commercial Segment. The balance of the growth in the Commercial
Segment was generated through improved market conditions and the development of
both new products and new applications of existing products. Revenues from
foreign operations increased 8% and accounted for 28% of total revenues
compared with 30% in 1992.
The overall gross product margin decreased as a percentage of sales from
33% in 1992 to 31% in 1993. The decrease was attributable to declines in the
Medical and Aerospace segments which were partially offset by an increase in
the Commercial Segment. Selling, engineering and administrative expenses
decreased slightly as a percentage of sales because of the lower proportionate
volume of the Medical Segment which has higher sales and distribution costs
relative to the other segments. Other income was negligible in 1993 compared to
prior years where there were significant interest income and licensing
revenues.
Operating profit increased 10% to $74.2 million in 1993 compared with
$67.3 million in 1992. Strong gains in the Commercial Segment more than offset
declines in the Medical and Aerospace segments. Operating profit as a
percentage of sales (operating margin) declined as a result of declines in both
the Medical and Aerospace segments despite an increase in the Commercial
Segment.
Net income before adjustment for the change in accounting for income taxes
increased 5% to $33.7 million in 1993 from $32.0 million in 1992 and earnings
per share grew to $1.95 in 1993 from $1.87 in 1992. Earnings per share for 1993
was affected negatively by the adoption of Statement of Financial Accounting
Standard (SFAS) 106 which changed the company's accounting for retiree health
care costs from a cash method to accruing these costs over the employees'
working lives. The incremental charge to earnings was $.06 per share. Also,
earnings per share in 1992 increased $.05 due to a one-time adjustment for the
cumulative effect of adopting SFAS 109 which changed the company's method of
accounting for deferred income taxes.
1992 VS 1991: Revenues increased to $570.3 million, an increase of 18% over
1991. The increase was a result of gains in the Commercial and Medical
segments as the Aerospace Segment declined slightly. For 1992, the Commercial,
Medical and Aerospace segments comprised 37%, 32% and 31% of the company's net
sales, respectively. Approximately 60% of the revenue growth came through
acquisitions while the remainder was generated internally through the
development of new products or new markets for existing products. Revenues from
foreign operations increased 12% in 1992 and accounted for 30% of total
revenues compared to 32% in 1991.
The overall gross product margin increased as a percentage of sales from
32% in 1991 to 33% in 1992. The increase resulted from volume gains in the
Commercial Segment and also from a larger mix of higher-margin medical
products. Selling, engineering and administrative expenses increased as a
percentage of sales in 1992 because of the greater proportionate volume in the
Medical Segment which has higher sales and distribution costs relative to the
other segments.
Operating profit increased 9% to $67.3 million compared to $61.6 million
in the prior year. Strong gains in the Commercial and Medical segments more
than offset a decline in the Aerospace Segment. Operating margin declined in
1992 primarily as a result of the reduction in Aerospace Segment margins.
Net income for 1992, before adjustment for the change in accounting for
income taxes, increased to $32.0 million, or 7% over 1991 and earnings per
share gained 6% to $1.87.
[OPERATING PROFIT CHART - SEE EDGAR APPENDIX]
Teleflex
33 Fifty Years
<PAGE> 16
COMMERCIAL PRODUCTS SEGMENT
The Commercial Products Segment involves the design and manufacture of
mechanical, electrical and hydraulic controls, and electronics products for the
pleasure marine market; proprietary mechanical controls for the automotive
market; and certain innovative proprietary products for the fluid transfer and
outdoor power equipment markets.
Products in the Commercial Segment generally are less complex and are
produced in higher unit volume, are manufactured for general distribution and
custom fabricated to meet individual customer needs. Consumer spending
patterns generally influence the market trends for these products.
1993 VS. 1992: Sales in the Commercial Segment increased 35% in 1993 to $284.1
million from $210.5 million as sales in all three product lines, Automotive,
Marine and Industrial registered gains. Over one-half of the gain in the
segment was attributable to the Marine product line where improved market
conditions, new products and the acquisition of Techsonic Industries, Inc.,
contributed to the increase. Stronger market conditions and improved market
share in the Automotive product line and improved market conditions and new
products in the industrial product line comprised the remainder of the increase.
Operating profit increased 47% from $25.8 million in 1992 to $37.8 million in
1993 as all three product lines gained, generally as a result of increased
volume. Operating margins improved as a result of increased volume in the
Automotive and Industrial product lines while Marine operating margins were
reduced by expenses associated with the design and start-up of an entirely new
line of electronics products.
Assets increased in 1993 due primarily to higher accounts receivable
resulting from greater volume, particularly in the fourth quarter. Also
contributing to the increase was an investment in new tooling and inventory in
connection with the introduction of a new line of marine electronics products.
[NET INCOME CHART -- SEE EDGAR APPENDIX]
1992 VS. 1991: Sales in the Commercial Segment increased to $210.5 million in
1992, a 25% increase over the prior year. All three product lines, Automotive,
Marine and Industrial, contributed to the increase. The largest gain was in the
Automotive product line due to a strengthening in the market and new products,
including controls for light duty trucks. The Marine product line increase
resulted from a rebound in the market, sales of new products and an improved
market share. Industrial sales, although adversely affected by weakness in
certain markets, grew on the strength of new products.
Operating profit increased by 29% from $20.0 million in 1991 to $25.8 million
in 1992. The increase was attributable to volume in the Automotive and, to a
lesser extent, the Marine product lines. Operating margin remained relatively
constant as volume-driven increases in the Automotive product line were offset
by a decline in the Industrial product line. Operating margin in the
Industrial product line lagged as a result of investments made to expand into
the international market.
Assets increased in 1992 due primarily to an acquisition and to higher
accounts receivable and inventory related to volume.
Teleflex
34 Fifty Years
<PAGE> 17
MEDICAL PRODUCTS SEGMENT
The Medical Products Segment includes the manufacture and distribution of a
broad range of invasive disposable and reusable devices for the urological,
gastroenterolgical and anesthesiological markets worldwide. It also
manufactures general and specialized surgical instruments used in both
traditional (open) and minimally-invasive surgical procedures.
These products generally are required to meet exacting standards of
performance and have long product life cycles. External economic influences on
the sales of these products relate primarily to spending patterns in the
worldwide medical equipment and device market.
1993 VS. 1992: In 1993 Medical Segment sales of $180.6 million were virtually
unchanged from 1992. Gains in the North American market, primarily in surgical
devices, were offset by declines in the hospital supply product line in Europe
stemming from the recession. In addition, Medical Segment sales were
negatively affected by weaker foreign currencies.
Operating profit declined by 16% from $25.5 million in 1992 to $21.5
million in 1993. The decline was attributable to the European hospital supply
business where lower volume and severance charges associated with a cost
reduction program depressed profits. These declines were partially offset by
increased surgical device sales and margins in the North American market.
At the end of 1993 the company purchased certain assets of Edward Weck
Incorporated (Weck), a manufacturer of surgical devices, for $63.5 milllion in
cash. The acquisition of Weck, with approximate annual revenues of $60
million, in combination with the existing Medical business, will result in a
significant increase in Medical Segment volume and an improvement in operating
profits for 1994.
Assets increased in 1993 due primarily to the acquisition of Weck which
included $32.0 million in plant and equipment. Additional expenditures for
plant and equipment were made, primarily in Germany, to consolidate
manufacturing processes, improve efficiencies and meet current and expected
future regulatory requirements.
1992 VS. 1991: In 1992 Medical Segment sales increased by 37% to $179.4
million from $130.5 million in 1991. Approximately 80% of the increase was a
result of the acquisition of Pilling Company in the fourth quarter of 1991.
The remaining increase was due to a moderate gain in sales in the European
market. The impact of currency fluctuations on Medical Segment sales, over
one-half of which are foreign based, was negligible during 1992.
Operating profit increased 28% from $19.9 million in 1991 to $25.5 million
in 1992 largely as a result of the acquisition of Pilling Company. Operating
margin declined slightly as a result of additional expenses incurred to
integrate the Pilling and Rusch operations and start-up costs associated with a
plant expansion in Malaysia.
Assets increased in 1992 over 1991 due primarily to higher accounts
receivable and inventory related to the European hospital supply business.
[DIVIDENDS PER SHARE CHART - SEE EDGAR APPENDIX]
Teleflex
35 Fifty days
<PAGE> 18
AEROSPACE PRODUCTS AND SERVICES SEGMENT
The Aerospace Products and Services Segment serves the aerospace, defense and
turbine engine markets. Its businesses design and manufacture precision
controls and systems for both military and commercial application; provide
sophisticated coating and repair services for turbine engine manufacturers,
operators and overhaulers; and manufacture airfoils for both flight and
land-based turbine engines.
These products and services, many of which are proprietary, require a high
degree of engineering sophistication, and often are custom designed. External
economic influences on these products and services relate primarily to spending
patterns in the worldwide aerospace and defense industries.
1993 VS. 1992: Sales in the Aerospace Segment increased 14% from $177.3 in 1992
to $202.1 in 1993. The gain was due primarily to the acquisition of Mal Tool
and Engineering (Mal); a manufacturer of turbine engine airfoils, and an
increase in Sermatech product line volume including gains in airline repairs
and ground turbine business. The increases more than offset a decline in the
Aerospace controls product line which resulted from a significant reduction in
defense related sales.
Operating profit decreased 7% from $16.1 to $14.9 as increases in the
Sermatech product line and the contribution from the acquisition of Mal did not
fully offset declines in the Aerospace controls product line. Operating margin
declined in 1993 due to lower volume in Aerospace controls product line sales
and significant expenses associated with development of cargo systems products.
The growth in longer term profitability of this segment will be dependent on
successfully countering the decline in the traditional aerospace controls
product line by introducing new products such as cargo handling systems and
further improving the cost structure.
Assets increased in 1993 due primarily to the acquisition of Mal which
included $27.8 million of plant and equipment. Additions to cargo product line
inventories in connection with several new contracts also contributed to the
increase in segment assets.
1992 VS. 1991: Sales in the Aerospace Segment declined by 2% in 1992 to $177.3
million. An increase in the Sermatech product line was offset by a larger
decline in the Aerospace controls product line. The Sermatech increase was
solely attributable to the acquisition of the remaining 51% of Aviation Product
Support, Inc. in the first quarter of 1992. Aside from the acquisition, volume
declined slightly as gains in the ground turbine repairs and coatings market
nearly offset lower volume with airline customers. Sales in the Aerospace
controls product line declined approximately 8% as a result of a decline in
both government and airline customer sales.
[CAPITAL EXPENDITURES BY BUSINESS SEGMENT CHART - SEE EDGAR APPENDIX]
Operating profit declined 26% from $21.7 million in 1991 to $16.1 million
in 1992 as both the Sermatech and the Aerospace controls product line
contributed to the decrease. Generally, while both businesses have reduced
costs, operating margin was adversely affected by the inherent lag between the
volume decline and the corresponding cost reduction. Operating margin also was
affected negatively by the cost of consolidation of facilities and the
continued development of new products, including cargo systems.
Assets in this segment increased slightly in 1992 from 1991 as increases
from the purchase of Aviation Product Support, Inc. were offset by lower
investments in accounts receivable and inventory related to the decline in
aerospace controls volume.
Teleflex
36 Fifty Years
<PAGE> 19
INTEREST EXPENSE
Interest expense in 1993 remained relatively constant as lower rates,
particularly in the foreign currency based loans, offset the expense of
borrowings associated with acquisitions. For 1992 interest expense increased
primarily due to borrowings incurred to finance acquisitions. Interest expense
declined to 2.2% of sales in 1993 compared to 2.7% of sales in 1992.
INCOME TAX EXPENSE
The effective tax rate was 35.6% in 1993 compared with 34.2% in 1992. The
change was due to the increase in the U.S. federal rate including the
cumulative impact of the rate increase on the beginning deferred tax balance.
This was partially offset by lower foreign earnings in countries with higher tax
rates.
CASH FLOWS
In 1993 the company generated cash from operations of $46.4 million compared to
$43.7 million in 1992 and $31.8 million in 1991. For 1993 the increase was
attributable to net income and non-cash items along with an improvement in the
changes in current liability accounts mainly related to the timing of payments.
Accounts receivable increased because of higher sales volume primarily in the
fourth quarter. The increse in cash provided by operations in 1992 was due to
higher net income and slower growth in inventories, which were partially offset
by accounts receivable increases related to volume.
[CASH FLOWS FROM OPERATIONS CHART - SEE EDGAR APPENDIX]
Capital expenditures were $24.4 million, $19.3 million and $20.4 million
in 1993, 1992 and 1991, respectively. These expenditures have generally been
financed from internally-generated funds. Payments for businesses acquired,
which were over $100 million in 1993 and approximately $140 million over the
last three years, have been the most significant investment of cash. These
amounts have generally been financed through long-term borrowings. In 1993 the
company issued $50 million in 6.6% Senior Notes and incurred additional debt of
$25 million to finance a significant portion of 1993 acquisitions. As a result
of the increase in borrowings, the company's debt to total capitalization
increased to 40% in 1993 from 36% in 1992.
[CAPITALIZATION CHART - SEE EDGAR APPENDIX]
Dividends for 1993 increased 7% to $.45 per share and totalled $7.6
million. In 1992 dividends were increased 8% over 1991 to $.42 per share and
aggregated $7.0 million. Dividends have been paid since 1977 and have
increased every year since inception of the payment.
SHAREHOLDERS' EQUITY
Shareholder's equity increased 12% to $269.8 million at December 26, 1993
compared with $240.5 million at December 27, 1992. The book value per share at
December 26, 1993 increased to $15.79 compared with $14.25 at December 27,
1992. Currency translation adjustments decreased shareholders' equity $2.9
million due to weaker foreign currencies.
Teleflex
37 Fifty Years
<PAGE> 1
EXHIBIT 22
<TABLE>
<CAPTION>
Jurisdiction
Subsidiary of Incorp. Parent Percentage
<S> <C> <C> <C>
Access Medical S.A. France TFX Equities 80
Airfoil Management Company Delaware Sermatech 100
Airfoil Management Limited UK Sermatech (U.K.) Limited 100
Astraflex Limited UK TFX Group Ltd. 100
Aunic Engineering Limited UK Sermatech (U.K.) Limited 100
Aviation Product Suppport, Inc.(1) Delaware Teleflex 100
Avtech Systems, Inc. Utah The Talley Corporation 100
Bavaria Cargo Technologie GmbH Germany EPI 100
Capro Inc. Texas Teleflex 100
Cepco Precision Company of Canada, Inc. Canada Sermatech Engineering 100
Cetrek Engineering Ltd. UK Cetrek Ltd. 100
Cetrek Inc. Mass. Teleflex 100
Cetrek Limited UK Marinex 100
Chemtronics International Ltd. UK Sermatech (U.K.) Limited 100
ECT Inc. Delaware Sermatech 50
Ediscom S.A.R.L. France Rusch International, S.A. 100
Electro-Pneumatic International GmbH Germany Telair Int'l Cargo Systems 100
Entech, Inc. New Jersey TFX Equities 100
Flexible Flyer, Inc. Delaware Teleflex 100
Franklin Medical Limited UK TFX Group Ltd. 100
G-Tel Aviation Limited UK Sermatech (U.K.) Limited 50
Gator-Gard Incorporated Delaware Sermatech 100
Hutson Aerospace, Inc. Texas Teleflex 100
Inmed (Malaysia) Holdings Sdn. Berhad Malaysia Willy Rusch AG 100
Inmed Acquisition, Inc. (2) Delaware Teleflex 100(2)
Inmed Corporation (3) Georgia Inmed Acquisition 100
Inmed Corporation (U.K.) Ltd. UK Inmed 100
Insultab, Inc. Mass. TFX Equities Inc. 100
Lipac Liebinzeller Verpackungs-GmbH Germany Willy Rusch AG 100
Machine Tool Leasing, Inc. Utah Teleflex 100
Mal Tool & Engineering Limited UK TFX Group Ltd. 100
Mal Tool & Engineering S.A.R.L. France Sermatech Engineering 100
Marinex Industries Limited UK TFX Group Ltd. 100
Meddig Medizintechnik Vertriebs-GmbH Germany Rusch G B 87.5
Medical Service Vertriebs-GmbH Germany Willy Rusch AG 100
Phosphor Products Co Limited UK Marinex 100
</TABLE>
<PAGE> 2
<TABLE>
<S> <C> <C> <C>
Pilling Co. Pennsylvania Teleflex 100
Pilling Weck Incorporated Delaware Teleflex 100
Rigel Compasses Limited UK Marinex 100
Rusch (UK) Limited UK TFX Holdings Ltd. 100
Rusch Austria Ges.mbH Austria Teleflex 100
Rusch France S.A.R.L. France Rusch G B 100
Rusch Inc. Delaware Rusch G B 100
Rusch International S. A. France Teleflex 100
Rusch Manufacturing (UK) Limited UK TFX Group Ltd. 100
Rusch Manufacturing Sdn. Berhad Malaysia Inmed (Malaysia) Holdings 96.5
Rusch-Pilling (Asia) PTE Ltd. Singapore Pilling Co. 99.99
Rusch-Pilling Inc. Canada 924593 Ontario 50.5 (4)
Rusch-Pilling S.A. France Rusch International S. A. 100
Rusch Sdn. Berhad Malaysia Inmed (Malaysia) Holdings 96.5
Rusch Uruguay Ltda. Uruguay Rusch G B 60
S. Asferg Hospitalsartikler Aps Denmark Teleflex 100
Sermatech Acquisition, Inc. Delaware Sermatech 100
Sermatech Canada Inc. Ontario Sermatech 100
Sermatech Engineering Group, Inc. Delaware Sermatech 100
Sermatech International Incorporated PA Teleflex 100
Sermatech (Germany) GmbH Germany Sermatech 100
Sermatech (U.K.) Limited UK TFX Group Limited 100
SermeTel Repair Services Limited UK Sermatech (U.K.) Limited 100
SermeTel Technical Services (STS) GmbH Germany Sermatech 100
Technology Holding Company(5) Delaware TFX Equities Inc. 100
Techsonic Industries, Inc. Alabama Teleflex 100
Telair International Cargo Systems, Inc. Delaware Teleflex 100
Teleflex (Canada) Limited Canada(B.C.) Teleflex 100
Teleflex Automotive Manufacturing
Corporation (6) Delaware Teleflex 100
Teleflex Control Systems Incorporated PA Teleflex 100
Teleflex Fluid Systems, Inc. Connecticut Teleflex 100
Teleflex Precision Casting Company Utah Teleflex 100
TFX Automotive Incorporated Delaware Teleflex 100
TFX Engineering Ltd. Bermuda Teleflex 100
TFX Equities Inc. Delaware Teleflex 100
TFX Foreign Sales Corporation Virgin Is. Teleflex 100
TFX Group Limited UK Teleflex 100
TFX Holdings Ltd. Delaware TFX Group Ltd. 100
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C> <C>
TFX International Corporation Delaware Teleflex 100
TFX Marine Incorporated Delaware Teleflex 100
TFX Medical Incorporated Delaware Teleflex 100
The Talley Corporation(7) California Teleflex 100
Victor Huber GmbH Germany Willy Rusch AG 100
Willy Rusch AG Germany Teleflex 100
Willy Rusch Grundstucks- und
Beteiligungs AG ("Rusch G B") (8) Germany Willy Rusch AG 99.8 (8)
924593 Ontario Limited Ontario Pilling 100
</TABLE>
1. Trades under name "APS".
2. Except for nominee shares.
3. Trades under name "Rusch Inc."
4. 49.5% Owned by Rusch G B., a 99.8% owned subsidiary.
5. Formerly "Aries Medical Inc."
6. Formerly "Mattatuck Manufacturing Corporation".
7. Trades under names "Teleflex Defense Systems" and "Teleflex Control
Systems".
8. Two shares (.2%) are owned by Inmed Corporation.
3/10/94
<PAGE> 1
POWER OF ATTORNEY
Each of undersigned Directors of Telefex Incorporated, a Delaware
corporation (the "Company"), hereby appoints Lennox K. Black, Harold L. Zuber,
Jr. and Steven K. Chance, and each of them, with full power of substitution, to
act as his attorney-in-fact and to execute, on behalf of the undersigned, the
Company's Annual Report on Form 10-K for the fiscal year ended December 26,
1993.
IN WITNESS WHEREOF, this Power of Attorney is executed this 7th day of
March, 1994.
/s/ DONALD BECKMAN /s/ LENNOX K. BLACK
- --------------------------------- ---------------------------------
Donald Beckman Lennox K. Black
/s/ LEWIS W. BLUEMLE, JR. /s/ DAVID S. BOYER
- --------------------------------- ---------------------------------
Lewis W. Bluemle, Jr. David S. Boyer
/s/ LEWIS E. HATCH, JR. /s/ PEMBERTON HUTCHINSON
- --------------------------------- ---------------------------------
Lewis E. Hatch, Jr. Pemberton Hutchinson
/s/ SIGISMUNDUS W. W. LUBSEN /s/ JOHN H. REMER
- --------------------------------- ---------------------------------
Sigismundus W. W. Lubsen John H. Remer
/s/ PALMER E. RETZLAFF /s/ JAMES W. STRATTON
- --------------------------------- ---------------------------------
Palmer E. Retzlaff James W. Stratton
