<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 29, 1996
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 Number 1-5353
TELEFLEX INCORPORATED
-----------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware 23-1147939
- ----------------------- -----------------------------------
(State of Incorporation) (IRS Employer Identification Number)
630 West Germantown Pike, Suite 450
Plymouth Meeting, PA 19462
- -------------------------------------- ----------
(Address of Principal Executive Office) (Zip Code)
(610) 834-6301
-------------------------------------
(Telephone Number Including Area Code)
None
----------------------------------------------------
(Former Name, Former Address and Former Fiscal Year,
If Changed Since Last Report)
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
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
Common Stock as of the latest practicable date.
Class Outstanding at September 29, 1996
- ----------------------------- ---------------------------------
Common Stock, $1.00 Par Value 17,672,416
<PAGE> 2
Teleflex Incorporated
Condensed Consolidated Balance Sheet
(Dollars in Thousands)
<TABLE>
<CAPTION>
Assets
Sept. 29, Dec. 31,
1996 1995
--------- --------
<S> <C> <C>
Current assets
Cash and cash equivalents $115,004 $ 55,654
Accounts receivable less allowance for
doubtful accounts 182,773 186,077
Inventories
Raw materials 68,917 74,281
Work-in-process 31,096 40,694
Finished goods 84,907 77,547
Prepaid expenses 8,318 11,553
-------- --------
491,015 445,806
Property, plant and equipment, at cost,
less accumulated depreciation 260,815 271,786
Investments in affiliates 14,612 13,557
Intangibles and other assets 57,095 54,022
-------- --------
$823,537 $785,171
======== ========
Liabilities and shareholders' equity
Current liabilities
Current portion of borrowings and
demand loans $ 72,035 $ 74,218
Accounts payable and accrued expenses 97,741 101,405
Estimated income taxes payable 16,970 17,532
-------- --------
186,746 193,155
Long-term borrowings 192,811 196,844
Deferred income taxes and other 53,274 39,808
-------- --------
432,831 429,807
Shareholders' equity 390,706 355,364
-------- --------
$823,537 $785,171
======== ========
</TABLE>
<PAGE> 3
Teleflex Incorporated
Condensed Consolidated Statement of Income
(Dollars in Thousands Except Per Share)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------------ ------------------------
Sept. 29, Sept. 24, Sept. 29, Sept. 24,
1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues $215,144 $210,340 $687,986 $671,121
-------- -------- -------- --------
Cost of sales 148,773 145,876 473,173 460,659
Operating expenses 47,597 47,076 142,558 143,978
Interest expense 3,361 4,692 10,845 14,347
-------- -------- -------- --------
199,731 197,644 626,576 618,984
-------- -------- -------- --------
Income before taxes 15,413 12,696 61,410 52,137
Provision for taxes on income 5,364 4,444 21,372 18,248
-------- -------- -------- --------
Net income $ 10,049 $ 8,252 $ 40,038 $ 33,889
======== ======== ======== ========
Earnings per share $ 0.56 $ 0.46 $ 2.23 $ 1.91
Dividends per share $ 0.175 $ 0.155 $ 0.505 $ 0.445
Average number of common and common
equivalent shares outstanding 18,026 17,829 17,974 17,758
</TABLE>
<PAGE> 4
Teleflex Incorporated
Condensed Consolidated Statement of Cash Flows
(Dollars in Thousands)
<TABLE>
<CAPTION>
Nine Months Ended
-------------------------
Sept. 29, Sept. 24,
1996 1995
-------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 40,038 $ 33,889
Adjustments to reconcile net income to cash
flows from operating activities:
Depreciation and amortization 28,900 27,049
(Increase) decrease in accounts receivable (3,391) 4,946
(Increase) in inventories (8,063) (15,947)
Decrease in prepaid expenses 2,537 4,213
(Decrease) in accounts payable
and accrued expenses (2,602) (9,360)
(Decrease) increase in estimated income
taxes payable (340) 7,873
Gain on sale of businesses and assets (2,055)
-------- --------
55,024 52,663
-------- --------
Cash flows from financing activities:
Proceeds from new borrowings 20,030 3,580
Reduction in long-term borrowings (18,817) (15,553)
(Decrease) increase in current borrowings
and demand loans (512) 11,706
Proceeds from stock compensation plans
and distribution of treasury shares 4,167 4,961
Dividends (8,891) (7,742)
-------- --------
(4,023) (3,048)
-------- --------
Cash flows from investing activities:
Expenditures for plant assets 24,134 20,648
Payments for businesses acquired 8,176
Proceeds from sale of businesses and assets (32,140)
Investments in affiliates 444 690
Other, including translation (787) 993
-------- --------
(8,349) 30,507
-------- --------
Net increase in cash
and cash equivalents 59,350 19,108
Cash and cash equivalents at the
beginning of the period 55,654 24,094
-------- --------
Cash and cash equivalents at the
end of the period $115,004 $ 43,202
======== ========
</TABLE>
<PAGE> 5
Teleflex Incorporated
Notes to Condensed Consolidated Financial Statements
Note 1 The accompanying unaudited condensed consolidated financial
statements for the three months ended September 29, 1996 and September
24, 1995 contain all adjustments, consisting only of normal recurring
adjustments, which in the opinion of management are necessary to
present fairly the financial position, results of operations and cash
flows for the periods then ended in accordance with the current
requirements for Form 10-Q.
Note 2 At September 29, 1996, 1,905,947 shares of common stock were reserved
for issuance under the company's stock compensation plans.
Note 3 Business segment information:
<TABLE>
<CAPTION>
Three months ended
(000)
Sept. 29, 1996 Sept. 24, 1995
<S> <C> <C>
Sales
Commercial Products $ 93,110 $ 87,701
Medical Products 75,524 72,612
Aerospace Products and Services 46,510 50,027
-------- --------
Total $215,144 $210,340
======== ========
Operating profit
Commercial Products $ 9,855 $ 10,864
Medical Products 7,811 6,410
Aerospace Products and Services 4,380 2,686
-------- --------
Total $ 22,046 $ 19,960
======== ========
<CAPTION>
Nine months ended
(000)
Sept. 29, 1996 Sept. 24, 1995
<S> <C> <C>
Sales
Commercial Products $317,742 $299,158
Medical Products 229,095 217,182
Aerospace Products and Services 141,149 154,781
-------- --------
Total $687,986 $671,121
======== ========
Operating profit
Commercial Products $ 41,950 $ 44,815
Medical Products 25,533 21,916
Aerospace Products and Services 14,243 7,116
-------- --------
Total $ 81,726 $ 73,847
======== ========
</TABLE>
<PAGE> 6
Management's Analysis of Quarterly Financial Data
Sale of Product Lines:
During the first quarter of 1996, the company sold two product lines in the
Aerospace Segment for $37.5 million ($32 million in cash and $5.5 million in
notes receivable) resulting in a $2 million pre-tax gain or, $.07 per share. The
gain has been reported as a reduction in operating expenses in the Statement of
Income and is included in the Aerospace Segment operating profit. The product
lines had combined sales and operating profit in the third quarter of 1995 of
$13 million and $800,000, respectively.
Results of Operations:
Revenues increased 2% in the third quarter of 1996 to $215.1 million from $210.3
million in 1995. The increase resulted from gains in the Commercial and Medical
segments which offset a decline in the Aerospace Segment. The increase was the
result of internal growth in the company's core businesses, offset partially by
the decline from the sale of two Aerospace product lines in the first quarter of
1996. The increase in sales excluding the 1995 results of the product lines sold
was approximately 9%. The Commercial, Medical and Aerospace segments comprised
43%, 35% and 22% of the company's net sales, respectively.
Gross profit margin increased slightly to 30.8% in 1996 compared with 30.6% in
1995. An increase in the gross profit margin in the Medical and Aerospace
segments was offset by a decline in the Commercial Segment. Operating expenses
as a percentage of sales declined to 22.1% in 1996 from 22.4% in 1995 as an
increase in the Aerospace Segment was more than offset by declines in the
Medical and Commercial segments.
Operating profit increased 10% in the third quarter of 1996 from $20.0 million
to $22.0 million and operating margin increased from 9.5% of sales to 10.2%.
Operating profit and operating margin increases in the Aerospace and Medical
segments offset declines in the Commercial Segment.
Industry Segment Review:
Sales in the Commercial Segment increased 6% from $87.7 million in 1995 to $93.1
million in 1996. The increase resulted from a gain in the Automotive product
line while the Marine and Industrial product lines were essentially flat. Within
the Marine product line, a decline in sales of electronic products was offset by
an increase in sales of marine controls. Operating profit in 1996 of $9.9
million represents a 9% decrease compared
<PAGE> 7
with 1995 and operating margin declined from 12.4% to 10.6% due to decreases in
the marine and industrial product lines.
Medical Segment sales increased 4% from $72.6 million to $75.5 million in the
third quarter of 1996 compared with 1995. Both the hospital supply and surgical
instruments product lines achieved higher volume despite exchange rate
decreases. Operating profit increased 22% from $6.4 million in 1995 to $7.8
million in 1996 and operating margin improved from 8.8% to 10.3% as a result of
improvements in the surgical instruments product line. Operating profit in the
third quarter of 1995 included a $1.2 million pre-tax charge for severance.
The Aerospace Segment sales declined 7% from $50.0 million in 1995 to $46.5
million in 1996. The decline resulted from the sale of two product lines in the
first quarter of 1996 which had combined revenues and operating profit of
approximately $13 million and $800,000, respectively, in the third quarter of
1995. Excluding the dispositions, sales increased over 25% from growth in core
Aerospace product lines, primarily the Sermatech coatings, repairs and blade
manufacturing businesses. Operating profit increased 63% from $2.7 million in
1995 to $4.4 million in 1996 and operating margin increased from 5.4% to 9.4% of
sales. The gains were the result of higher volume in the Sermatech and aerospace
controls product lines.
Cash flow from operations increased $2.4 million during the period ended
September 29, 1996 compared with 1995 due to higher net income and improvements
in working capital levels, offset by the timing of income tax payments. The
increase in the cash balance reflects the $32 million cash proceeds from the
sale of two Aerospace product lines. Working capital increased from $252.7
million at December 31, 1995, to $304.3 million at September 29, 1996. The
ratio of current assets to current liabilities was 2.6 to 1 at September 29,
1996 compared with 2.3 to 1 at December 31, 1995. Long-term borrowings
decreased by $4.0 million from $196.8 million at December 31, 1995, to $192.8
million at September 29, 1996. The decline was due to the effects of lower
foreign currency translation rates which offset an increase in net borrowings.
The combination of the decline in long-term borrowings and the increase in
shareholders' equity resulted in an improvement in the ratio of long-term
borrowings to total capitalization from 36% at December 31, 1995 to 33% at
September 29, 1996.
<PAGE> 8
Teleflex Incorporated
Part II Other Information
Item 6. Exhibits and Reports on Form 8-K
(A) Reports on form 8-K.
No reports on form 8-K were filed during the quarter.
<PAGE> 9
Teleflex Incorporated
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TELEFLEX INCORPORATED
/s/ Harold L. Zuber, Jr.
--------------------------
Harold L. Zuber, Jr.
(Principal Financial and
Accounting Officer)
/s/ Steven K. Chance
--------------------------
Steven K. Chance
(Vice President)
November 7, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-29-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-29-1996
<CASH> 115,004
<SECURITIES> 0
<RECEIVABLES> 182,773
<ALLOWANCES> 0
<INVENTORY> 184,920
<CURRENT-ASSETS> 491,015
<PP&E> 260,815
<DEPRECIATION> 0
<TOTAL-ASSETS> 823,537
<CURRENT-LIABILITIES> 186,746
<BONDS> 192,811
0
0
<COMMON> 17,672
<OTHER-SE> 373,034
<TOTAL-LIABILITY-AND-EQUITY> 823,537
<SALES> 215,144
<TOTAL-REVENUES> 215,144
<CGS> 148,773
<TOTAL-COSTS> 148,773
<OTHER-EXPENSES> 47,597
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,361
<INCOME-PRETAX> 15,413
<INCOME-TAX> 5,364
<INCOME-CONTINUING> 10,049
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,049
<EPS-PRIMARY> .56
<EPS-DILUTED> .56
</TABLE>
