<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 June 30, 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 June 30, 1996
- ----------------------------- ----------------------------
Common Stock, $1.00 Par Value 17,643,546
<PAGE> 2
Teleflex Incorporated
Condensed Consolidated Balance Sheet
(Dollars in Thousands)
Assets
<TABLE>
<CAPTION>
June 30, Dec. 31,
1996 1995
---------- ----------
<S> <C> <C>
Current assets
Cash and cash equivalents $115,454 $ 55,654
Accounts receivable less allowance for
doubtful accounts 184,587 186,077
Inventories
Raw materials 69,805 74,281
Work-in-process 34,533 40,694
Finished goods 79,231 77,547
Prepaid expenses 8,254 11,553
-------- --------
491,864 445,806
Property, plant and equipment, at cost,
less accumulated depreciation 262,864 271,786
Investments in affiliates 14,118 13,557
Intangibles and other assets 58,052 54,022
-------- --------
$826,898 $785,171
======== ========
Liabilities and shareholders' equity
Current liabilities
Current portion of borrowings and
demand loans $78,759 $74,218
Accounts payable and accrued expenses 102,921 101,405
Estimated income taxes payable 18,062 17,532
-------- --------
199,742 193,155
Long-term borrowings 195,007 196,844
Deferred income taxes and other 49,490 39,808
-------- --------
444,239 429,807
Shareholders' equity 382,659 355,364
-------- --------
$826,898 $785,171
======== ========
</TABLE>
<PAGE> 3
Teleflex Incorporated
Condensed Consolidated Statement of Income
(Dollars in Thousands Except Per Share)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
----------------------- ----------------------
June 30, June 25, June 30, June 25,
1996 1995 1996 1995
---------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Revenues $238,394 $233,888 $472,842 $460,781
---------- ---------- --------- ----------
Cost of sales 163,290 159,664 324,400 314,783
Operating expenses 48,373 48,896 94,961 96,902
Interest expense 3,550 4,861 7,484 9,655
---------- ---------- --------- ----------
215,213 213,421 426,845 421,340
---------- ---------- --------- ----------
Income before taxes 23,181 20,467 45,997 39,441
Provision for taxes on income 8,044 7,163 16,008 13,804
---------- ---------- --------- ----------
Net income $15,137 $13,304 $29,989 $25,637
========== ========== ========= ==========
Earnings per share $0.84 $0.75 $1.67 $1.45
Dividends per share $0.175 $0.155 $0.330 $0.290
Average number of common and common
equivalent shares outstanding 17,990 17,813 17,949 17,723
</TABLE>
<PAGE> 4
Teleflex Incorporated
Condensed Consolidated Statement of Cash Flows
(Dollars in Thousands)
<TABLE>
<CAPTION>
Six Months Ended
-----------------------
June 30, June 25,
1996 1995
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income $29,989 $25,637
Adjustments to reconcile net income to cash
flows from operating activities:
Depreciation and amortization 18,248 17,947
(Increase) decrease in accounts receivable (5,329) 2,876
(Increase) in inventory (6,846) (12,153)
Decrease in prepaid expenses 2,588 3,676
Increase (decrease) in accounts payable
and accrued expenses 1,232 (6,027)
Increase in estimated income
taxes payable 1,732 4,528
Gain on sale of businesses and assets (2,055)
-------- --------
39,559 36,484
-------- --------
Cash flows from financing activities:
Proceeds from new borrowings 6,600 3,580
Reduction in long-term borrowings (4,062) (12,539)
Increase in current borrowings
and demand loans 6,496 2,310
Proceeds from stock compensation plans
and distribution of treasury shares 3,112 3,729
Dividends (5,803) (5,036)
-------- --------
6,343 (7,956)
-------- --------
Cash flows from investing activities:
Expenditures for plant assets 16,110 14,202
Payments for businesses acquired 3,768
Proceeds from sale of businesses and assets (32,140)
Investments in affiliates 160 577
Other, including translation 1,972 263
-------- --------
(13,898) 18,810
-------- --------
Net increase in cash
and cash equivalents 59,800 9,718
Cash and cash equivalents at the
beginning of the period 55,654 24,094
-------- --------
Cash and cash equivalents at the
end of the period $115,454 $33,812
======== ========
</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 June 30, 1996 and June 25, 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 June 30, 1996, 1,927,297 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)
June 30, 1996 June 25, 1995
<S> <C> <C>
Sales
Commercial Products $113,170 $104,148
Medical Products 77,737 76,301
Aerospace Products and Services 47,487 53,439
-------- --------
Total $238,394 $233,888
======== ========
Operating profit
Commercial Products $16,928 $16,717
Medical Products 9,168 7,867
Aerospace Products and Services 3,847 2,703
------- -------
Total $29,943 $27,287
======= =======
</TABLE>
<TABLE>
<CAPTION>
Six months ended
(000)
June 30, 1996 June 25, 1995
<S> <C> <C>
Sales
Commercial Products $224,632 $211,457
Medical Products 153,571 144,570
Aerospace Products and Services 94,639 104,754
-------- --------
Total $472,842 $460,781
======== ========
Operating profit
Commercial Products $32,095 $33,951
Medical Products 17,722 15,506
Aerospace Products and Services 9,863 4,430
------- -------
Total $59,680 $53,887
======= =======
</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 second quarter
of 1995 of $12 million and $800,000, respectively.
Results of Operations:
Revenues increased 2% in the second quarter of 1996 to $238.4 million from
$233.9 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 and
acquisitions primarily in the Commercial Segment, 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 7%. The Commercial, Medical and Aerospace segments
comprised 47%, 33% and 20% of the company's net sales, respectively.
Gross profit margin declined slightly to 31.5% in 1996 compared with 31.7% in
1995. An increase in the gross profit margin in the Aerospace and Medical
segments was offset by a decline in the Commercial Segment. Operating expenses
as a percentage of sales declined to 20.3% in 1996 from 20.9% in 1995 as all
three segments improved.
Operating profit increased 10% in the second quarter of 1996 from $27.3 million
to $29.9 million and operating margin increased from 11.7% of sales to 12.6%.
Operating profit and operating margin increases in the Aerospace and Medical
segments offset a decline in the operating margin of the Commercial Segment.
The Commercial Segment's operating profit increased slightly.
Industry Segment Review:
Sales in the Commercial Segment increased 9% from $104.2 million in 1995 to
$113.2 million in 1996. Increases in the Automotive product line, partially
from a 1995 acquisition, and the Industrial product line offset a decline in
the Marine product line. Operating profit in 1996 of $16.9 million represents
a 1% increase compared with 1995 and operating margin declined from
<PAGE> 7
16.1% to 15% due primarily to a decline in the Marine product line.
The Medical Segment sales increased 2% from $76.3 million to $77.7 million in
the second quarter of 1996 compared with 1995. Improved sales of hospital
supply products in European and Asian markets offset a decline from the effects
of foreign exchange rates. Operating profit increased 17% from $7.9 million in
1995 to $9.2 million in 1996 and operating margin improved from 10.3% to 11.8%
as a result of improvements in the hospital supply and surgical devices product
lines.
The Aerospace Segment sales declined 11% from $53.4 million in 1995 to $47.5
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 $12 million and $800,000, respectively, in the second quarter of
1995. Excluding the dispositions, sales increased approximately 15% from
growth in core Aerospace product lines, primarily the Sermatech coatings,
repairs and blade manufacturing businesses. Operating profit increased 42%
from $2.7 million in 1995 to $3.8 million in 1996 and operating margin
increased from 5.1% to 8.1% of sales. The gains were the result of higher
volume in the Sermatech and aerospace controls product lines.
Cash flow from operations increased $3.1 million during the period ended June
30, 1996 compared with 1995 due primarily to improvements in working capital
levels. 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 $292.1 million at June
30, 1996. The ratio of current assets to current liabilities was 2.5 to 1 at
June 30, 1996 compared with 2.3 to 1 at December 31, 1995. Long-term
borrowings decreased by $1.8 million from $196.8 million at December 31, 1995,
to $195.0 million at June 30, 1996. The decline was due primarily to the
effects of lower foreign currency translation rates. 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 34% at June 30, 1996.
<PAGE> 8
Teleflex Incorporated
Part II Other Information
Item 4. Submission of Matters to a Vote of Security Holders
At the company's Annual Meeting of Shareholders held on April
26, 1996, the following were elected to the Board of Directors of the
company for a term expiring in 1999:
<TABLE>
<CAPTION>
Name Votes For Withheld
---- --------- --------
<S> <C> <C>
Lennox K. Black 15,161,808 396,923
Lewis E. Hatch, Jr. 15,006,319 552,412
James W. Stratton 15,165,620 396,111
</TABLE>
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)
August 7, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-29-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 115,454
<SECURITIES> 0
<RECEIVABLES> 184,587
<ALLOWANCES> 0
<INVENTORY> 183,569
<CURRENT-ASSETS> 491,864
<PP&E> 262,864
<DEPRECIATION> 0
<TOTAL-ASSETS> 826,898
<CURRENT-LIABILITIES> 199,742
<BONDS> 195,007
0
0
<COMMON> 17,643
<OTHER-SE> 365,016
<TOTAL-LIABILITY-AND-EQUITY> 826,898
<SALES> 238,394
<TOTAL-REVENUES> 238,394
<CGS> 163,290
<TOTAL-COSTS> 163,290
<OTHER-EXPENSES> 48,373
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,550
<INCOME-PRETAX> 23,181
<INCOME-TAX> 8,044
<INCOME-CONTINUING> 15,137
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15,137
<EPS-PRIMARY> .84
<EPS-DILUTED> .84
</TABLE>
