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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
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 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 NO. 1-5353
------------------------
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--New York 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. [ ]
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 $746,464,241 as of February 1, 1997.
The registrant had 18,128,211 Common Shares outstanding as of February 1,
1997.
Documents Incorporated by Reference: (a) Annual Report to Shareholders for
the fiscal year ended December 29, 1996, incorporated partially in Part I and
Part II hereof; and (b) Proxy Statement for the 1997 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 and, over the
last ten years toward expanding into medical businesses. 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(R) research and most of the
early seed money for certain medical products.
The Company's business is separated into three segments -- Commercial,
Medical and Aerospace.
COMMERCIAL SEGMENT
The Commercial Segment designs and manufactures proprietary mechanical
controls for the automotive market; mechanical, electrical and hydraulic
controls, and electronic products for the pleasure marine market; and
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 than those of the Company's other two segments.
They are manufactured both for general distribution as well as custom fabricated
to meet individual customer needs. Consumer spending patterns generally
influence the market trends for these products.
The Commercial Segment consists of three major product lines: Marine,
Automotive and Industrial.
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 and electrical instrumentation and 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. 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. In 1994, the Company
acquired TX Controls, a Swedish manufacturer of mechanical and hydraulic
steering systems, engine control systems and cables for application on marine
craft and industrial vehicles. The acquisition of TX Controls, along with
Marinex, enhanced the Company's access to the international marine market. Aside
from the Humminbird products, the Company's marine products are sold principally
to boat builders and in the aftermarket. These products 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 heat resistant
flexible fuel line. In 1995 the Company acquired the cable controls businesses
of Handy & Harmon Automotive Group. This acquisition broadened the automotive
product line by adding a park brake and provided a manufacturing plant in
Mexico. In 1996 the Company acquired a U.K. manufacturer of cable
- ---------------
* As used herein the "Company" refers to Teleflex Incorporated and its
consolidated subsidiaries.
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control products which establishes the Company's automotive cable operations in
Europe. 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 $164,500,000, $193,361,000 and $217,904,000 in 1994,
1995 and 1996, 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.
MEDICAL SEGMENT
The Medical Segment manufactures and distributes a broad range of invasive
disposable and reusable devices for the urology, gastroenterology,
anesthesiology and respiratory care markets worldwide. It also manufactures
general and specialized surgical instruments and provides instrument management
services. Products in this segment generally are required to meet exacting
standards of performance and have long product life cycles. External economic
influences on sales relate primarily to spending patterns in the worldwide
medical devices and supplies market.
Within the Medical Segment, the Company operates three major businesses:
TFX OEM, Hospital Supply and Surgical Devices. 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 TFX OEM, the Company produces standard and
custom-designed semi-finished components for other medical device manufacturers
using its polymer materials and processing technology. Through acquisitions the
Company established the other two product lines of this segment.
In 1989, the acquisition of Willy Rusch AG and affiliates in Germany
brought with it an established manufacturing base and distribution network,
primarily in Europe. This and other smaller acquisitions designed to broaden the
Company's product offerings form the base of the hospital supply business. 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 urology, gastroenterology,
anesthesiology and respiratory care markets worldwide. The Rusch International
product offerings include, among others, latex catheters, endotracheal tubes,
laryngoscopes, face masks and tracheostomy tubes.
The acquisitions of the Pilling Company in 1991 and Edward Weck
Incorporated in 1993 became the foundation of the surgical devices business. The
Weck acquisition was assimilated during 1994 into the existing surgical device
operations. The combination of Pilling and Weck significantly expanded the
product offerings, marketing opportunities and selling capabilities in the
surgical devices market in the United States; and provides opportunities for
increasing international sales. During 1994 and 1995, smaller acquisitions were
made to balance the Company's product offerings in Europe. In 1996 it was
decided that Pilling Weck will focus on three distinct markets; surgical
instruments, instrument services and surgical closure products. Each market is
served by a division with a separate sales force and management team dedicated
to each market with certain administrative functions shared among the three
divisions. Surgical Devices 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 and
retractors; closure products such as ligation clips, appliers and skin staples;
and, provides specialized instrument management services.
AEROSPACE SEGMENT
The Aerospace Segment serves the commercial aerospace and turbine engine
markets. Its businesses design and manufacture precision controls and cargo
systems for aviation and provide coating and repair services and blade
manufacturing for users of 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 industry.
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In 1995 and in the first quarter of 1996 the Company sold product lines as
part of a structural realignment within the Aerospace Segment. These businesses
produced a variety of mechanical and electromechanical controls for commercial
and military aircraft, ordnance and space vehicles. The sale of these product
lines effectively ended most of the Company's involvement in the
military/defense sector of the aerospace industry. Telair will focus on cargo
handling systems for commercial aircraft and other aircraft controls. The
Company's cargo handling systems include patented digitally controlled systems
to move and secure containers of cargo inside commercial aircraft. These systems
are sold either to aircraft manufacturers as original installations or to
airlines and air freight carriers for retrofit of existing systems. The Company
also designs, manufactures and repairs mechanical and electromechanical
components used on both commercial and, to a lesser extent military aircraft.
These other aircraft controls include flight controls, canopy and door
actuators, cargo winches and control valves. The Company's design engineers work
with design personnel from the major aircraft manufacturers in the development
of controls for use on new aircraft. In addition, the Company supplies spare
parts to aircraft operators typically through distributors. This spare parts
business extends as long as the particular type of aircraft continues in
service.
In the early 1960s, aircraft manufacturers began to encounter high
temperature lubrication problems in connection with mechanical controls for
aircraft jet engines. Through 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. Sermatech International, through a network of
facilities in five countries, provides a variety of sophisticated protective
coatings and other services for turbine engine components; highly-specialized
repairs for critical components such as fan blades and airfoils; and
manufacturing and high quality dimensional finishing of airfoils and other
turbine engine components. The Company has added 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. This acquisition broadened the Company's product offering
including turnkey manufactured and coated airfoils and provided another entree
to major international turbine manufacturers. During the fourth quarter of 1995
the Company formed a joint venture, Airfoil Technologies International LLC
(ATI), with General Electric Aircraft Engines to provide fan blade and airfoil
repair services. The Sermatech repair operations were contributed to ATI which
is owned 51% by the Company. ATI provides a vehicle for the technological and
geographic expansion of the Sermatech repairs services business. To further
broaden the Company's turbo-machinery technological and manufacturing
capabilities, and improve the range of product offerings, a subsidiary of the
Company, in the fourth quarter of 1996 merged with Lehr Precision, Inc., an
electro-chemical machining manufacturer of turbo-machinery components used on
both flight and industrial turbines.
MARKETING
In 1996, the percentages of the Company's consolidated net sales
represented by its major markets were as follows: aerospace -- 22%;
medical -- 33%; marine and industrial -- 22%; and automotive -- 23%.
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 27 of the Company's 1996 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
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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.
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 29, 1996 the Company's backlog of firm orders for the
Aerospace Segment was $180 million, of which it is anticipated that over
three-fourths will be filled in 1997. The Company's backlog for the Aerospace
segment on December 31, 1995 was $81 million. The increase in the backlog in
1996 compared with 1995 is due primarily to the merger with Lehr Precision, Inc.
in the fourth quarter of 1996.
As of December 29, 1996 the Company's backlog of firm orders for the
Medical and Commercial segments was $21 million and $88 million, respectively.
This compares with $24 million and $84 million, respectively, as of December 31,
1995. Substantially all of the December 29, 1996 backlog will be filled in 1997.
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 9,700 employees at December 29, 1996.
EXECUTIVE OFFICERS
The names and ages of all executive officers of the Company as of March 1,
1997 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
- ------------------------ --- -------------------------------------------------------------
<S> <C> <C>
Lennox K. Black 66 Chairman of the Board and Director
David S. Boyer 54 President, Chief Executive Officer and Director
John J. Sickler 54 President -- TFX Equities Inc.
Dr. Roy C. Carriker 59 President and Chief Operating Officer -- TFX Aerospace
Harold L. Zuber, Jr. 47 Vice President, Chief Financial Officer and Controller
Steven K. Chance 51 Vice President, General Counsel and Secretary
Ira Albom 67 Senior Vice President
Louis T. Horvath 58 Vice President -- Quality and Productivity
Ronald D. Boldt 54 Vice President -- Human Resources
Janine Dusossoit 43 Vice President -- Investor Relations
Thomas M. Byrne 50 Assistant Treasurer
</TABLE>
Mr. Boyer was elected President and Chief Executive Officer on April 28,
1995. Prior to that date he was President.
Dr. Carriker was named President and Chief Operating Officer -- TFX
Aerospace on January 3, 1994. Prior to that date he was President -- Sermatech
International.
Mr. Horvath was named to the position of Vice President -- Quality and
Productivity on January 4, 1996. Prior to that date he was Vice
President -- Quality Management.
Mr. Boldt was named to the position of Vice President -- Human Resources on
March 9, 1992. Prior to that date he was Director of Human Resources.
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.
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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 90 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>
COMMERCIAL SEGMENT
Van Wert, OH................................................. 130,000 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
Haysville, KS................................................ 98,000 Leased 2002
Suffield, CT................................................. 90,000 Leased 2000
Hillsdale, MI................................................ 85,000 Owned(1) N/A
Nuevo Laredo, Mexico......................................... 67,000 Leased 1998
Willis, TX................................................... 70,000 Owned(1) N/A
Eufaula, AL.................................................. 61,000 Owned N/A
Birmingham, England.......................................... 60,000 Leased 2016
Lebanon, VA.................................................. 52,000 Owned(1) N/A
Goteborg, Sweden............................................. 37,000 Owned N/A
Swainsboro, GA............................................... 37,000 Leased 2004
Vancouver, B.C., Canada...................................... 30,000 Owned N/A
Troy, MI..................................................... 29,000 Leased 2003
Sarasota, FL................................................. 25,000 Leased 1997
Selmer, TN................................................... 24,000 Leased 2005
Poole, England............................................... 20,000 Owned N/A
MEDICAL 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
Franiere, Belgium............................................ 59,000 Leased 2005
Montevideo, Uruguay.......................................... 45,000 Owned N/A
Bourg-en-Bresse, France...................................... 38,000 Leased 1999
Bad Liebenzell, Germany...................................... 36,000 Leased 2000
Betschdorf, France........................................... 32,000 Owned N/A
High Wycombe, England........................................ 25,000 Leased 2012
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>
AEROSPACE SEGMENT
Spanish Fork, UT............................................. 189,000 Owned N/A
Cincinnati, OH............................................... 160,000 Leased 2001
Oxnard, CA................................................... 145,000 Owned N/A
Mentor, OH................................................... 90,000 Owned N/A
Manchester, CT............................................... 74,000 Owned N/A
Limerick, PA................................................. 70,000 Owned N/A
Derbyshire, England.......................................... 70,000 Leased 1999
Compton, CA.................................................. 49,000 Leased 1999
Biddeford, ME................................................ 32,000 Leased 1998
Hausham, Germany............................................. 30,000 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 600,000
square feet of warehousing, manufacturing and office space located in the United
States, Canada, Europe and Asia.
ITEM 3. LEGAL PROCEEDINGS
Two subsidiaries of the Company were identified as potentially responsible
parties (PRPs) in connection with the Casmalia Hazardous Waste Management
Facility in 1994. The Company and other PRPs have negotiated with the United
States Environmental Protection Agency (EPA) a good faith offer and have taken
over certain closure and post-closure activities. These activities will take
place over the next three years.
In addition, the Company has been named as a PRP by the EPA at various
sites throughout the country.
In the opinion of the Company's management, based on current allocation
formulas and the facts presently known, the ultimate outcome of these
environmental matters 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 29 of the Company's 1996 Annual
Report to Shareholders for market price and dividend information. Also see the
Note entitled "Borrowings and Leases" on pages 25 and 26 of such Annual Report
for certain dividend restrictions under loan agreements, all of which
information is incorporated herein by reference. The Company had approximately
1,400 registered shareholders at February 1, 1997.
ITEM 6. SELECTED FINANCIAL DATA
See pages 30 through 33 of the Company's 1996 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 34 through 39 of
the Company's 1996 Annual Report to Shareholders, which information is
incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See pages 21 through 29 of the Company's 1996 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 1997 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 8 of the
Company's Proxy Statement for its 1997 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, "Section 16(a) Beneficial Ownership Reporting Compliance" on page
2 and "Election Of Directors" on pages 2 and 3 of the Company's Proxy Statement
for its 1997 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 8 of the Company's Proxy Statement for its 1997 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:
No reports on Form 8-K have been filed during the last quarter of the
period covered by this report.
(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), 33-34753
(filed May 10, 1990) and 33-53385 (filed April 29, 1994):
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 DAVID S. BOYER
------------------------------------
David S. Boyer
(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>
John H. Remer Director
Lewis E. Hatch, Jr. Director
Palmer E. Retzlaff Director
Sigismundus W. W. Lubsen Director
David S. Boyer Director
Lennox K. Black Director
Pemberton Hutchinson Director
Donald Beckman Director
James W. Stratton Director
Joseph S. Gonnella, MD Director
</TABLE>
By STEVEN K. CHANCE
------------------------------------
Steven K. Chance
Attorney-in-Fact
Dated: March 21, 1997
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<PAGE> 11
TELEFLEX INCORPORATED
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
The consolidated financial statements together with the report thereon of
Price Waterhouse LLP dated February 12, 1997 on pages 21 to 28 of the
accompanying 1996 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 1996
Annual Report to Shareholders is not to be deemed filed as part of this report.
The following Financial Statement Schedule together with the report thereon of
Price Waterhouse LLP dated February 12, 1997 on page 11 should be read in
conjunction with the consolidated financial statements in such 1996 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 SCHEDULE
Schedule:
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
VIII Valuation and qualifying accounts............................................. 12
</TABLE>
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<PAGE> 12
REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULE
To the Board of Directors
of Teleflex Incorporated
Our audits of the consolidated financial statements referred to in our report
dated February 12, 1997 appearing on page 28 of the 1996 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 Schedule listed in Item 14(a)
of this Form 10-K. In our opinion, the Financial Statement Schedule presents
fairly, in all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements.
PRICE WATERHOUSE LLP
PRICE WATERHOUSE LLP
Thirty South Seventeenth Street
Philadelphia, Pennsylvania 19103
February 12, 1997
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8
(No. 2-84148, No. 2-98715, No. 33-34753, and No. 33-53385) of Teleflex
Incorporated of our report dated February 12, 1997 appearing on page 28 of the
1996 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 Schedule, which appears above.
PRICE WATERHOUSE LLP
PRICE WATERHOUSE LLP
Thirty South Seventeenth Street
Philadelphia, Pennsylvania 19103
March 21, 1997
11
<PAGE> 13
TELEFLEX INCORPORATED
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 29, 1996........................ $3,797,000 $2,026,000 $(1,713,000) $4,110,000
December 31, 1995........................ $3,036,900 $1,333,600 $ (573,500) $3,797,000
December 25, 1994........................ $2,352,700 $1,251,800 $ (567,600) $3,036,900
</TABLE>
12
<PAGE> 14
MARCH 21, 1997
INDEX TO EXHIBITS
EXHIBIT
- -------
3 (a) - The Company's Articles of Incorporation (except for Article Thirteenth
and the first paragraph of Article Fourth) are incorporated herein by reference
to Exhibit 3(a) to the Company's Form 10-Q for the period ended June 30, 1985.
Article Thirteenth of the Company's Articles of Incorporation is incorporated
herein by reference to Exhibit 3 of the Company's Form 10-Q for the period ended
June 28, 1987. The first paragraph of Article Fourth of the Company's Articles
of Incorporation is incorporated herein by reference to Exhibit 3 of the
Company's Form 10-Q for the period ended June 25, 1989 (filed with Form 8,
dated August 23, 1989).
(b) - The Company's Bylaws are incorporated herein by reference to Exhibit
3(b) of the Company's Form 10-K for the year ended December 28, 1987.
10 (a) - The 1982 Stock Option Plan, incorporated herein by reference to the
Company's registration statement on Form S-8 (Registration No. 2-84148), as
supplemented, with amendments of April 26, 1991 incorporated by reference to the
Company's definitive Proxy Statement for the 1991 Annual Meeting of
Shareholders.
(b) - The 1990 Stock Compensation Plan, incorporated herein by reference to
the Company's registration statement on Form S-8 (Registration No. 33-34753),
with amendments of April 28, 1995 incorporated by reference to the Company's
definitive Proxy Statement for the 1995 Annual Meeting of Shareholders.
(c) - The Salaried Employees' Pension Plan, as amended and restated in its
entirety, effective July 1, 1989 and the retirement income plan as amended and
restated in its entirety effective January 1, 1994 and related Trust
Agreements, dated July 1, 1994 is incorporated by reference to the company's
Form 10-K for the year ended December 25, 1994.
(d) - Description of deferred compensation arrangements between the Company
and its Chairman, L. K. Black, incorporated by reference to the Company's
definitive Proxy Statement for the 1996 Annual Meeting of Shareholders.
<PAGE> 15
INDEX TO EXHIBITS . . . PAGE 2
(e) - Description of compensation arrangement between the company and its
President and Chief Executive Officer, David S. Boyer, incorporated by
reference to the company's definitive Proxy Statement for the 1996 Annual
Meeting of Shareholders.
(f) - Teleflex Incorporated Deferred Compensation Plan entered into as of
January 1, 1995, incorporated by reference to the company's Form 10-K for the
year ended December 31, 1995.
(g) - Information on the Company's Profit Participation Plan, insurance
arrangements with certain officers and deferred compensation arrangements with
certain officers, non-qualified supplementary pension plan for salaried
employees and compensation arrangements with directors is incorporated by
reference to the Company's definitive Proxy Statement for the 1995, 1996 and
1997 Annual Meeting of Shareholders.
(h) - The Company's Voluntary Investment Plan is incorporated by reference
to Exhibit 28 of the Company's registration statement on Form S-8 (Registration
No. 2-98715).
13 - Pages 21 through 33 of the Company's Annual Report to Shareholders for the
period ended December 29, 1996.
21 - The Company's Subsidiaries.
24 - Consent of Independent Accountants (see page 11 herein).
25 - Power of Attorney.
<PAGE> 1
Exhibit 13
Teleflex Incorporated and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
Year ended
- ----------------------------------------------------------------------------------------------
DECEMBER 29, December 31, December 25,
1996 1995 1994
- ----------------------------------------------------------------------------------------------
(Dollars in thousands, except per share)
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUES $931,183 $912,689 $812,672
- ----------------------------------------------------------------------------------------------
COSTS AND EXPENSES
Materials, labor and other product costs 640,187 628,027 557,391
Selling, engineering and administrative expenses 190,341 192,430 173,929
Interest expense, net 13,876 18,632 18,361
- ----------------------------------------------------------------------------------------------
844,404 839,089 749,681
- ----------------------------------------------------------------------------------------------
Income before taxes 86,779 73,600 62,991
Estimated taxes on income 29,617 24,730 21,795
- ----------------------------------------------------------------------------------------------
NET INCOME $ 57,162 $ 48,870 $ 41,196
- ----------------------------------------------------------------------------------------------
EARNINGS PER SHARE $ 3.16 $ 2.75 $ 2.35
- ----------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
21
<PAGE> 2
Teleflex Incorporated and Subsidiaries
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
DECEMBER 29, December 31,
1996 1995
- ------------------------------------------------------------------------------------------------
(Dollars in thousands)
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 68,618 $ 55,654
Accounts receivable, less allowance for doubtful
accounts, 1996 - $4,110; 1995 - $3,797 193,587 186,077
Inventories 190,696 192,522
Prepaid expenses 13,120 11,553
- ------------------------------------------------------------------------------------------------
Total current assets 466,021 445,806
- ------------------------------------------------------------------------------------------------
Plant assets
Land and buildings 110,379 104,339
Machinery and equipment 375,277 344,171
- ------------------------------------------------------------------------------------------------
485,656 448,510
Less accumulated depreciation 193,869 176,724
- ------------------------------------------------------------------------------------------------
Net plant assets 291,787 271,786
Investments in affiliates 17,356 13,557
Intangibles and other assets 82,690 54,022
- ------------------------------------------------------------------------------------------------
$ 857,854 $ 785,171
- ------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Demand loans $ 57,168 $ 61,487
Current portion of long-term borrowings 13,419 12,731
Accounts payable 53,728 47,569
Accrued expenses 55,194 53,836
Estimated income taxes payable 17,157 17,532
- ------------------------------------------------------------------------------------------------
Total current liabilities 196,666 193,155
Long-term borrowings 195,945 196,844
Deferred income taxes and other 56,067 39,808
- ------------------------------------------------------------------------------------------------
Total liabilities 448,678 429,807
- ------------------------------------------------------------------------------------------------
Shareholders' equity
Common shares, $1 par value
Issued: 1996 - 18,111,321 shares; 1995 - 17,536,967 shares 18,111 17,537
Additional paid-in capital 58,941 49,999
Retained earnings 336,173 291,067
Cumulative translation adjustment (4,049) (3,239)
- ------------------------------------------------------------------------------------------------
Total shareholders' equity 409,176 355,364
- ------------------------------------------------------------------------------------------------
$ 857,854 $ 785,171
- ------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
22
<PAGE> 3
Teleflex Incorporated and Subsidiaries
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Year ended
- ------------------------------------------------------------------------------------------------------
DECEMBER 29, December 31, December 25,
1996 1995 1994
- ------------------------------------------------------------------------------------------------------
(Dollars in thousands)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 57,162 $ 48,870 $ 41,196
Adjustments to reconcile net income to cash flows
from operating activities:
Depreciation and amortization 38,751 37,740 33,019
Deferred income taxes (711) 1,061 2,050
(Increase) decrease in accounts receivable (9,131) 411 (32,269)
(Increase) in inventories (3,964) (9,266) (4,003)
(Increase) in prepaid expenses (2,191) (2,142) (704)
(Decrease) increase in accounts payable
and accrued expenses (5,056) (13,179) 11,641
(Decrease) increase in estimated income
taxes payable (1,198) 7,320 6,776
Gain on disposition of product lines (2,055) -- --
- ------------------------------------------------------------------------------------------------------
71,607 70,815 57,706
- ------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from new borrowings 30,824 34,941 14,131
Reduction in long-term borrowings,
including acquisition debt retired (39,114) (35,693) (17,054)
(Decrease) increase in current borrowings and
demand loans (3,671) 6,130 (13,840)
Proceeds from stock compensation plans 5,523 7,011 4,837
Dividends (12,056) (10,453) (8,934)
- ------------------------------------------------------------------------------------------------------
(18,494) 1,936 (20,860)
- ------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Expenditures for plant assets (40,500) (30,708) (25,325)
Payments for businesses acquired (26,599) (9,202) (4,485)
Proceeds from disposition of product lines and assets 32,140 5,038 6,700
Investments in affiliates (2,568) (4,172) (3,251)
Other (2,622) (2,147) 2,354
- ------------------------------------------------------------------------------------------------------
(40,149) (41,191) (24,007)
- ------------------------------------------------------------------------------------------------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 12,964 31,560 12,839
Cash and cash equivalents at the beginning of the year 55,654 24,094 11,255
- ------------------------------------------------------------------------------------------------------
Cash and cash equivalents at the end of the year $ 68,618 $ 55,654 $ 24,094
- ------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
23
<PAGE> 4
Teleflex Incorporated and Subsidiaries
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Year ended
- -----------------------------------------------------------------------------------------
DECEMBER 29, December 31, December 25,
1996 1995 1994
- -----------------------------------------------------------------------------------------
(Dollars in thousands, except per share)
<S> <C> <C> <C>
COMMON SHARES
Balance, beginning of year $ 17,537 $ 17,277 $ 17,084
Shares issued under compensation plans 174 260 193
Shares issued in a merger 400 -- --
- -----------------------------------------------------------------------------------------
Balance, end of year 18,111 17,537 17,277
- -----------------------------------------------------------------------------------------
ADDITIONAL PAID-IN CAPITAL
Balance, beginning of year 49,999 43,248 38,604
Shares issued under compensation plans 5,349 6,751 4,644
Shares issued in a merger 3,593 -- --
- -----------------------------------------------------------------------------------------
Balance, end of year 58,941 49,999 43,248
- -----------------------------------------------------------------------------------------
RETAINED EARNINGS
Balance, beginning of year 291,067 252,650 220,388
Net income 57,162 48,870 41,196
Cash dividends (12,056) (10,453) (8,934)
- -----------------------------------------------------------------------------------------
Balance, end of year 336,173 291,067 252,650
- -----------------------------------------------------------------------------------------
CUMULATIVE TRANSLATION ADJUSTMENT
Balance, end of year (4,049) (3,239) (4,151)
- -----------------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY $ 409,176 $ 355,364 $ 309,024
- -----------------------------------------------------------------------------------------
CASH DIVIDENDS PER SHARE $.68 $.60 $.52
- -----------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
24
<PAGE> 5
Teleflex Incorporated and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share)
DESCRIPTION OF BUSINESS
Teleflex Incorporated designs, manufactures and distributes engineered products
and services for the automotive, marine, industrial, medical and aerospace
markets worldwide.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements include the accounts of Teleflex
Incorporated and its subsidiaries. These consolidated financial statements have
been prepared in conformity with generally accepted accounting principles, and
include management's estimates and assumptions that affect the recorded amounts.
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 and
consisted of the following:
<TABLE>
<CAPTION>
1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C>
Raw materials $ 72,704 $ 74,281
Work-in-process 35,010 40,694
Finished goods 82,982 77,547
- --------------------------------------------------------------------------------
$190,696 $192,522
- --------------------------------------------------------------------------------
</TABLE>
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 and equipment 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 at 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.
ACQUISITIONS, DISPOSITIONS AND JOINT VENTURE
During 1996 the company paid $26,599 to acquire the net assets of various
businesses including $15,525 as an advance payment for a 1997 acquisition. In
addition, the company issued 400,000 shares of common stock in the fourth
quarter of 1996 for all of the outstanding shares of an electro-chemical
machining company in a merger accounted for as a pooling of interests. In 1995,
$9,202 was paid to purchase the net assets of various businesses. Liabilities of
$32,116 and $8,400 were assumed in 1996 and 1995, respectively, in connection
with the acquisitions. The assets, liabilities and operating results of these
businesses are included in the company's financial statements from their dates
of acquisition. Financial position and results of operations would not have been
materially different had the acquisitions occurred as of the beginning of the
years acquired or had the financial statements been restated for the pooling of
interests in 1996.
During the first quarter of 1996 the company disposed of two product lines for
total proceeds of $37,640 including a $5,500 note receivable due in 2003. A
pre-tax gain on these dispositions of $2,055 or, $.07 per share after tax has
been reported as a reduction of operating expenses in the Consolidated Statement
of Income and is included in the Aerospace Segment operating profit. The product
lines had sales and operating profit in 1995 of $50,000 and $3,000,
respectively.
In 1995 the company contributed certain assets of the Sermatech repairs
business into Airfoil Technologies International LLC, a 51% owned joint venture
providing fan blade and airfoil repair services.
BORROWINGS AND LEASES
<TABLE>
<CAPTION>
1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C>
Senior Notes at an average
rate of 6.9% due in installments
through 2008 $ 80,000 $ 98,000
Deutsche Mark denominated
notes at an average rate
of 6.0% due in installments
through 2001 78,496 73,710
Other debt, mortgage notes and capital
lease obligations, at interest rates
ranging from 3% to 9% 50,868 37,865
- --------------------------------------------------------------------------------
209,364 209,575
Current portion of borrowings (13,419) (12,731)
- --------------------------------------------------------------------------------
$ 195,945 $ 196,844
- --------------------------------------------------------------------------------
</TABLE>
The various senior 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,
$65,000 of retained earnings was available for dividends at December 29, 1996.
25
<PAGE> 6
Teleflex Incorporated and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share)
The weighted average interest rate on the $57,168
of demand loans due to banks was 5.8% at December 29, 1996. In addition, the
company has approximately $200,000 available under several interest rate
alternatives in unused lines of credit.
Interest expense in 1996, 1995 and 1994 did not differ materially from
interest paid, nor did 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 1997 are as follows: 1998 - $46,429; 1999 - $23,093; 2000 -
$30,387; 2001 - $44,212.
The company has entered into certain operating leases which require minimum
annual payments as follows: 1997 - $13,792; 1998 - $12,036; 1999 - $9,994; 2000
- - $8,991; 2001 - $7,554. The total rental expense for all operating leases was
$13,288, $11,855 and $9,418 in 1996, 1995 and 1994, respectively.
SHAREHOLDERS' EQUITY AND STOCK COMPENSATION PLANS
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.
Options to purchase common stock are awarded at market price on the date of
grant and expire no later than 10 years after that date. No compensation expense
has been recognized for stock option plans. Earnings per share would have been
reduced less than $.02 in both 1996 and 1995 had compensation expense for stock
options been determined based on the fair value at the grant date. The weighted
average fair value of options granted during 1996 and 1995 of $13.02 and $10.76,
respectively, was estimated using the Black-Scholes option-pricing model.
Officers and key employees held options for the purchase of 1,190,846 shares
of common stock at prices ranging from $14.00 to $49.25 per share with a
weighted average exercise price of $31.55 per share and a weighted average
remaining contractual life of 6 years. Such options are presently exercisable
with respect to 724,446 shares at a weighted average exercise price of $26.21.
Options to purchase 20,000, 383,000 and 225,500 shares of common stock were
granted at weighted average exercise prices of $49.25, $40.69, and $38.58, in
1996, 1995 and 1994, respectively. Options exercised were 125,665, 205,613 and
116,979 at weighted average exercise prices of $26.98, $21.38 and $20.87 in
1996, 1995 and 1994, respectively.
INCOME TAXES
The provision for income taxes consisted of the following:
<TABLE>
<CAPTION>
1996 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Current
Federal $ 22,534 $ 17,323 $ 13,274
State 2,438 2,177 1,759
Foreign 5,356 4,169 4,712
Deferred (711) 1,061 2,050
- --------------------------------------------------------------------------------
$ 29,617 $ 24,730 $ 21,795
- --------------------------------------------------------------------------------
</TABLE>
The deferred income taxes provided and the balance sheet amounts of $31,971 in
1996 and $28,310 in 1995 related substantially to the methods of accounting for
depreciation. Income taxes paid were $28,210, $16,565 and $13,300 in 1996, 1995
and 1994, respectively.
A reconciliation of the company's effective tax rate to the U.S. statutory
rate is as follows:
<TABLE>
<CAPTION>
1996 1995 1994
- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
Tax at U.S. statutory rate 35.0% 35.0% 35.0%
State income taxes 1.8 1.9 1.9
Foreign income taxes (.5) (1.0) .1
Export sales benefit (1.7) (1.7) (1.6)
Other (.5) (.6) (.8)
- ---------------------------------------------------------------------------------
Effective income tax rate 34.1% 33.6% 34.6%
- ---------------------------------------------------------------------------------
</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 7.7%
in 1996 and 1995, 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>
1996 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Domestic plans
Service cost --
benefits earned
during the year $ 2,485 $ 2,554 $ 2,825
Interest cost on
projected ben-
efit obligation 3,921 3,766 3,718
Actual return on
plan assets (9,250) (7,285) 664
Net amortization
and deferral 4,653 3,755 (4,356)
Foreign plans 360 420 440
- --------------------------------------------------------------------------------
$ 2,169 $ 3,210 $ 3,291
- --------------------------------------------------------------------------------
</TABLE>
26
<PAGE> 7
Teleflex Incorporated and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share)
The following table sets forth the funded status of the plans and the amounts
shown in the balance sheet:
<TABLE>
<CAPTION>
1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C>
Domestic
Plan assets at fair value,
primarily common stock
and U.S. Government
obligations $ 58,530 $ 49,194
- --------------------------------------------------------------------------------
Actuarial present value of
the benefit obligation
Vested (52,135) (44,358)
Non-vested (2,330) (2,266)
- --------------------------------------------------------------------------------
Accumulated benefit
obligation (54,465) (46,624)
Projected effect of future
salary increases (6,270) (5,733)
- --------------------------------------------------------------------------------
Total projected benefit
obligation (60,735) (52,357)
- --------------------------------------------------------------------------------
Projected benefit obligation
in excess of plan assets (2,205) (3,163)
Unrecognized --
Prior service cost 661 (366)
Net (gain) loss (4,106) 1,585
Transition asset (894) (1,249)
Unfunded foreign pension amounts (5,200) (5,500)
- --------------------------------------------------------------------------------
Accrued pension liability $(11,744) $ (8,693)
- --------------------------------------------------------------------------------
</TABLE>
In addition to the pension expense in 1996 the company recognized a
curtailment expense of $3,840 in connection with the disposition of product
lines.
OTHER POSTRETIREMENT BENEFITS
The company provides postretirement medical and other benefits to eligible
employees. Assumptions used in determining the expense and benefit obligations
include a weighted average discount rate of 7.7% in 1996 and 1995 and an initial
health care cost trend rate of 10%, declining to 6% over a period of 5 years.
Increasing the health care cost trend rate by one percentage point would
increase the accumulated postretirement benefit obligation by $1,201 and would
increase the 1996 postretirement benefit expense by $129.
Postretirement benefit expense is summarized as follows:
1996 1995 1994
- -----------------------------------------------------------------
Service cost -- benefits
earned during the year $ 148 $ 250 $ 399
Interest cost on accumulated
postretirement benefit obligation 805 1,127 1,402
Net amortization and deferral 104 566 776
- -----------------------------------------------------------------
$1,057 $1,943 $2,577
- -----------------------------------------------------------------
The following table sets forth the accumulated obligation of the plans and the
amounts shown in the balance sheet:
<TABLE>
<CAPTION>
1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C>
Accumulated postretirement
benefit obligation:
Retirees $ (8,639) $ (7,840)
Fully eligible active plan
participants (1,306) (869)
Other active plan participants (3,360) (3,048)
- --------------------------------------------------------------------------------
(13,305) (11,757)
Unrecognized --
Prior service cost (541) (547)
Transition obligation 6,698 10,900
Actuarial net gain (2,705) (3,824)
- --------------------------------------------------------------------------------
Accrued postretirement liability $ (9,853) $ (5,228)
- --------------------------------------------------------------------------------
</TABLE>
In addition to the postretirement benefit expense in 1996 the company
recognized a curtailment expense of $4,471 in connection with the disposition of
product lines.
BUSINESS SEGMENTS AND OTHER INFORMATION
Reference is made to pages 30 through 33 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>
1996 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues $314,141 $283,892 $221,145
Identifiable assets $326,993 $281,429 $249,000
Operating profit $ 28,408 $ 27,053 $ 22,600
- --------------------------------------------------------------------------------
</TABLE>
Export sales from the United States to unaffiliated customers approximated
$98,500, $90,200 and $92,200 for 1996, 1995 and 1994, respectively. Export sales
included $41,200, $39,900 and $30,600 to Canada in 1996, 1995 and 1994,
respectively.
27
<PAGE> 8
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders
Teleflex Incorporated
In our opinion, the consolidated financial statements appearing on pages 21
through 33 of this Annual Report present fairly, in all material respects, the
financial position of Teleflex Incorporated and its subsidiaries at December 29,
1996 and December 31, 1995 and the results of their operations and their cash
flows for each of the three years in the period ended December 29, 1996, 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.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
Philadelphia, Pennsylvania
February 12, 1997
28
<PAGE> 9
QUARTERLY FINANCIAL DATA
(unaudited)
<TABLE>
<CAPTION>
Quarter ended
- ------------------------------------------------------------------------------------------
(Dollars in thousands, except per share)
March June Sept. Dec.
- ------------------------------------------------------------------------------------------
1996
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues $234,448 $238,394 $215,144 $243,197
Gross profit 73,338 75,104 66,371 76,183
Income before taxes 22,816 23,181 15,413 25,369
Net income 14,852 15,137 10,049 17,124
Earnings per share .83 .84 .56 .93
Cash dividends per share .155 .175 .175 .175
Price range of common stock 39 1/2-46 3/4 42 1/2-48 5/8 44-50 46 3/4-52
- ------------------------------------------------------------------------------------------
1995
- ------------------------------------------------------------------------------------------
Revenues $226,893 $233,888 $210,340 $241,568
Gross profit 71,774 74,224 64,464 74,200
Income before taxes 18,974 20,467 12,696 21,463
Net income 12,333 13,304 8,252 14,981
Earnings per share .70 .75 .46 .84
Cash dividends per share .135 .155 .155 .155
Price range of common stock 40 3/8-40 1/2 39 5/8-45 3/4 38 1/4-45 5/8 38-44 7/8
- ------------------------------------------------------------------------------------------
1994
- ------------------------------------------------------------------------------------------
Revenues $191,084 $209,456 $193,367 $218,765
Gross profit 58,508 64,765 59,765 72,243
Income before taxes 15,330 17,194 11,380 19,087
Net income 9,965 11,176 7,397 12,658
Earnings per share .57 .64 .42 .72
Cash dividends per share .115 .135 .135 .135
Price range of common stock 36 1/8-40 32 1/8-37 32 3/8-39 3/4 31 3/4-40 1/4
- ------------------------------------------------------------------------------------------
</TABLE>
29
<PAGE> 10
Teleflex Incorporated and Subsidiaries
SELECTED FINANCIAL AND INDUSTRY SEGMENT DATA
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
1996 1995 1994
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SUMMARY OF OPERATIONS
Revenues
Commercial $422,443 $403,637 $356,708
Medical 307,555 293,341 253,020
Aerospace 201,185 215,711 202,944
- ----------------------------------------------------------------------------------------------
Net sales 931,183 912,689 812,672
Other income(a) -- -- --
- ----------------------------------------------------------------------------------------------
Total revenues $931,183 $912,689 $812,672
- ----------------------------------------------------------------------------------------------
Operating profit
Commercial $ 57,849 $ 59,719 $ 53,324
Medical 34,630 30,237 32,386
Aerospace 21,007 12,683 5,367
- ----------------------------------------------------------------------------------------------
113,486 102,639 91,077
Less:
Interest expense, net 13,876 18,632 18,361
Corporate expenses, net of other income 12,831 10,407 9,725
- ----------------------------------------------------------------------------------------------
Income before taxes 86,779 73,600 62,991
Estimated taxes on income 29,617 24,730 21,795
- ----------------------------------------------------------------------------------------------
Net income $ 57,162 $ 48,870 $ 41,196
- ----------------------------------------------------------------------------------------------
Earnings per share $ 3.16 $ 2.75 $ 2.35
Cash dividends per share $ .68 $ .60 $ .52
Net income from operations as a percent of revenues 6.1% 5.4% 5.1%
Percent of net sales
Commercial 45% 44% 44%
Medical 33% 32% 31%
Aerospace 22% 24% 25%
Average number of common and common equivalent
shares outstanding 18,099 17,787 17,530
Average number of employees 9,373 9,553 8,740
- ----------------------------------------------------------------------------------------------
</TABLE>
SALES BY BUSINESS SEGMENT
(millions)
<TABLE>
<CAPTION>
Aerospace Medical Commercial Total
--------- ------- ---------- -----
<S> <C> <C> <C> <C>
1985 70.3 0.0 101.5 171.8
1986 83.1 21.3 109.8 214.2
1987 113.5 26.0 130.3 269.8
1988 132.4 38.0 153.2 323.6
1989 139.2 42.4 174.0 355.6
1990 162.7 115.8 162.6 441.1
1991 180.4 130.5 168.6 479.5
1992 177.3 179.4 210.4 567.1
1993 202.1 180.6 284.1 666.8
1994 202.9 253.0 356.7 812.6
1995 215.7 293.4 403.6 912.7
1996 201.2 307.6 422.4 931.2
</TABLE>
30
<PAGE> 11
Teleflex Incorporated and Subsidiaries
SELECTED FINANCIAL AND INDUSTRY SEGMENT DATA (continued)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
1993 1992 1991 1990
- --------------------------------------------------------------------------------------------------------------------
(Dollars and shares in thousands, except per share and employee data)
<S> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
Revenues
Commercial $284,106 $210,464 $168,598 $162,646
Medical 180,623 179,376 130,540 115,756
Aerospace 202,067 177,292 180,399 162,731
- --------------------------------------------------------------------------------------------------------------------
Net sales 666,796 567,132 479,537 441,133
Other income(a) -- 3,206 3,472 3,080
- --------------------------------------------------------------------------------------------------------------------
Total revenues $666,796 $570,338 $483,009 $444,213
- --------------------------------------------------------------------------------------------------------------------
Operating profit
Commercial $ 37,794 $ 25,754 $ 19,996 $ 22,224
Medical 21,486 25,463 19,900 16,183
Aerospace 14,906 16,100 21,722 20,781
- --------------------------------------------------------------------------------------------------------------------
74,186 67,317 61,618 59,188
Less:
Interest expense, net 14,466 15,482 13,765 12,401
Corporate expenses, net of other income 7,410 3,185 2,519 3,880
- --------------------------------------------------------------------------------------------------------------------
Income before taxes 52,310 48,650 45,334 42,907
Estimated taxes on income 18,624 16,638 15,527 14,340
- --------------------------------------------------------------------------------------------------------------------
Net income $ 33,686 $ 32,012(b) $ 29,807 $ 28,567
- --------------------------------------------------------------------------------------------------------------------
Earnings per share $ 1.95 $ 1.87(b) $ 1.77 $ 1.73
Cash dividends per share $ .45 $ .42 $ .39 $ .35
Net income from operations as a percent of revenues 5.1% 5.6% 6.2% 6.4%
Percent of net sales
Commercial 43% 37% 35% 37%
Medical 27% 32% 27% 26%
Aerospace 30% 31% 38% 37%
Average number of common and common equivalent
shares outstanding 17,267 17,132 16,850 16,476
Average number of employees 7,920 6,920 6,160 5,860
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
1989 1988 1987 1986
- --------------------------------------------------------------------------------------------------------------------
(Dollars and shares in thousands, except per share and employee data)
<S> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
Revenues
Commercial $173,957 $153,144 $130,310 $109,811
Medical 42,406 38,032 25,928 21,314
Aerospace 139,262 132,413 113,540 83,057
- --------------------------------------------------------------------------------------------------------------------
Net sales 355,625 323,589 269,778 214,182
Other income(a) 4,441 4,634 1,988 3,965
- --------------------------------------------------------------------------------------------------------------------
Total revenues $360,066 $328,223 $271,766 $218,147
- --------------------------------------------------------------------------------------------------------------------
Operating profit
Commercial $ 22,025 $ 26,794 $ 25,239 $ 19,993
Medical 5,782 3,755 2,107 168
Aerospace 20,711 16,548 15,095 14,090
- --------------------------------------------------------------------------------------------------------------------
48,518 47,097 42,441 34,251
Less:
Interest expense, net 6,886 6,225 4,886 3,679
Corporate expenses, net of other income 2,395 4,493 5,894 3,642
- --------------------------------------------------------------------------------------------------------------------
Income before taxes 39,237 36,379 31,661 26,930
Estimated taxes on income 12,440 12,370 11,990 10,500
- --------------------------------------------------------------------------------------------------------------------
Net income $ 26,797 $ 24,009 $ 19,671 $ 16,430
- --------------------------------------------------------------------------------------------------------------------
Earnings per share $ 1.63 $ 1.48 $ 1.20 $ 1.01
Cash dividends per share $ .31 $ .26 $ .22 $ .18
Net income from operations as a percent of revenues 7.4% 7.3% 7.2% 7.5%
Percent of net sales
Commercial 49% 47% 48% 51%
Medical 12% 12% 10% 10%
Aerospace 39% 41% 42% 39%
Average number of common and common equivalent
shares outstanding 16,403 16,243 16,459 16,315
Average number of employees 5,080 4,350 3,760 3,300
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Beginning in 1993, other income, which was insignificant, has been
reclassified as an offset to interest expense and corporate expenses.
(b) Excludes an increase in net income of $860, or $.05 per share as a result of
a change in accounting for income taxes.
31
<PAGE> 12
OPERATING PROFIT BY BUSINESS SEGMENT
(millions)
<TABLE>
<CAPTION>
Aerospace Medical Commercial Total
--------- ------- ---------- -----
<S> <C> <C> <C> <C>
1985 13.5 0.0 15.2 28.7
1986 14.1 0.2 20.0 34.3
1987 15.1 2.1 25.2 42.4
1988 16.5 3.8 26.8 47.1
1989 20.7 5.8 22.0 48.5
1990 20.8 16.2 22.2 59.2
1991 21.7 19.9 20.0 61.6
1992 16.1 25.5 25.7 67.3
1993 14.9 21.5 37.8 74.2
1994 5.4 32.4 53.3 91.1
1995 12.7 30.2 59.7 102.6
1996 21.0 34.6 57.9 113.5
</TABLE>
Teleflex Incorporated and Subsidiaries
SELECTED FINANCIAL AND INDUSTRY SEGMENT DATA (continued)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1996 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
FINANCIAL POSITION
Identifiable assets
Commercial $227,594 $201,808 $184,971
Medical 320,699 331,349 311,547
Aerospace 194,305 183,636 188,348
Corporate 115,256 68,378 25,923
- --------------------------------------------------------------------------------
Total assets $857,854 $785,171 $710,789
- --------------------------------------------------------------------------------
Capital expenditures
Commercial $ 12,821 $ 15,445 $ 13,489
Medical $ 10,421 $ 12,107 $ 7,029
Aerospace $ 16,767 $ 2,794 $ 4,538
Depreciation and amortization
Commercial $ 11,907 $ 11,446 $ 9,930
Medical $ 16,267 $ 15,087 $ 11,694
Aerospace $ 9,827 $ 10,471 $ 10,771
Long-term borrowings $195,945 $196,844 $190,499
Shareholders' equity $409,176 $355,364 $309,024
Working capital $269,355 $252,651 $220,544
Current ratio 2.4 2.3 2.3
Book value per share $ 22.59 $ 20.26 $ 17.89
Return on average shareholders' equity 15.0% 14.7% 14.2%
- --------------------------------------------------------------------------------
</TABLE>
32
<PAGE> 13
Teleflex Incorporated and Subsidiaries
SELECTED FINANCIAL AND INDUSTRY SEGMENT DATA (continued)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
1993 1992 1991 1990 1989 1988 1987 1986
- ----------------------------------------------------------------------------------------------------------------------------------
(Dollars in thousands, except per share)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FINANCIAL POSITION
Identifiable assets
Commercial $158,206 $142,041 $101,187 $ 84,678 $ 90,557 $ 83,601 $ 60,099 $ 51,342
Medical 266,239 206,562 194,609 147,954 125,635 34,819 28,997 19,715
Aerospace 202,130 142,523 141,104 143,419 130,762 107,524 108,769 85,173
Corporate 14,001 43,805 40,793 49,049 19,708 38,172 28,042 28,932
- ----------------------------------------------------------------------------------------------------------------------------------
Total assets $640,576 $534,931 $477,693 $425,100 $366,662 $264,116 $225,907 $185,162
- ----------------------------------------------------------------------------------------------------------------------------------
Capital expenditures
Commercial $ 7,967 $ 7,386 $ 7,505 $ 5,581 $ 5,507 $ 8,880 $ 6,065 $ 9,289
Medical $ 7,361 $ 5,316 $ 7,138 $ 4,236 $ 2,373 $ 960 $ 2,360 $ 1,436
Aerospace $ 8,865 $ 6,384 $ 5,585 $ 7,166 $ 10,701 $ 5,228 $ 6,446 $ 4,722
Depreciation and amortization
Commercial $ 9,251 $ 6,262 $ 5,633 $ 5,369 $ 4,715 $ 3,675 $ 3,038 $ 2,238
Medical $ 8,030 $ 6,505 $ 4,725 $ 3,999 $ 1,693 $ 1,455 $ 1,097 $ 1,003
Aerospace $ 10,176 $ 8,002 $ 7,366 $ 7,024 $ 5,777 $ 5,556 $ 5,272 $ 3,682
Long-term borrowings $183,504 $134,600 $119,370 $112,941 $106,128 $ 57,104 $ 55,013 $ 37,578
Shareholders' equity $269,790 $240,467 $211,702 $187,875 $160,038 $136,328 $115,517 $100,573
Working capital $171,397 $166,803 $131,589 $133,840 $112,325 $ 98,217 $ 90,270 $ 69,723
Current ratio 2.1 2.4 2.1 2.3 2.4 2.6 2.8 2.7
Book value per share $ 15.79 $ 14.25 $ 12.73 $ 11.44 $ 9.87 $ 8.49 $ 7.25 $ 6.25
Return on average shareholders' equity 13.2% 14.2% 14.9% 16.4% 18.1% 19.1% 18.2% 17.8%
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
33
<PAGE> 14
Teleflex Incorporated and Subsidiaries
1996 FINANCIAL REVIEW
OVERVIEW
The company's major financial objectives are to achieve a 15% to 20% growth rate
in revenues and net income and to generate a 20% return on average shareholders'
equity. Over the past five years the compounded growth rates for both sales and
net income have been 14% and return on shareholders' equity has averaged 14%.
While the revenue growth objective was not achieved in 1996 net income was
within or above the 15% to 20% growth rate target for the third consecutive year
and return on average shareholders' equity showed a fractional improvement to
15%. In 1994 and prior, the growth rates were tempered by the relatively weak
economy 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 invested heavily, primarily through acquisition, to
build the Medical Segment.
The company is also committed to maintaining a reason-able 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. As a
result, the company's total operating profit has increased in each of the past
five years despite cyclical downturns in 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 external means. It is expected that half of the growth over time will be
achieved internally through growth of core product lines and the remainder
externally, primarily through acquisitions. Over the past five years, the
company's internal growth accounted for less than half of its overall growth.
During the same time, the company invested approximately $250 million in
acquisitions which have contributed the remainder of the growth.
Acquisitions, while adding initially to sales, generally do not contribute
proportionately to earnings in the early years. In these years, earnings
generally are reduced by up-front costs such as interest, depreciation and
amortization and, in many instances, the expenses of integrating a
newly-acquired business into an existing operation.
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
totaled nearly $300 million. This healthy cash flow also provides for the
payment of dividends and enables the company to continue to upgrade plant and
equipment. While not particularly capital intensive, the company's businesses
spend approximately 4% of net sales annually 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 followed since the first cash dividend
payment was made in 1977.
REVENUES
(millions)
<TABLE>
<S> <C>
1991 483.0
1992 570.3
1993 666.8
1994 812.7
1995 912.7
1996 931.2
</TABLE>
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 for a limited
period in order to finance acquisitions. The company finances foreign operations
and acquisitions mostly in their local currencies, thus reducing the overall
risk of exchange rate fluctuations. As a result, approximately 60% 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 provide it with
adequate financial resources and flexibility to pursue its long-term strategic
growth objectives.
RESULTS OF OPERATIONS
1996 VS. 1995: Revenues increased 2% in 1996 to $931.2 million from $912.7
million in 1995. The increase was the result of gains in the Commercial and
Medical segments which offset a decline in the Aerospace Segment brought about
by several product line dispositions. Excluding the dispositions, sales
increased 8% in 1996 of which acquisitions accounted for less than half. For
1996 the Commercial, Medical and Aerospace segments comprised 45%, 33% and 22%
of the company's net sales, respectively. Foreign operations represented 34% of
the company's revenues, increased 11% over 1995 and were not significantly
affected by changes in foreign currency exchange rates.
34
<PAGE> 15
Gross profit margin remained relatively flat in 1996 as increases in the
Aerospace Segment and, to a lesser extent, the Medical Segment offset a decline
in the Commercial Segment. Selling, engineering and administrative expenses
declined from 21% of sales in 1995 to 20% of sales in 1996 resulting from
improvements in all three segments, particularly Aerospace.
Operating profit increased 11% in 1996 to $113.5 million from $102.6 million
in 1995 and operating profit as a percentage of sales (operating margin)
increased to 12% from 11%. Increases in both operating profit and margins in the
Aerospace Segment and, to a lesser extent, the Medical Segment more than offset
declines in the Commercial Segment. For 1996, the Commercial, Medical and
Aerospace segments comprised 51%, 31% and 18% of the company's operating profit,
respectively.
Net income in 1996 increased 17% to $57.2 million and earnings per share
increased 15% to $3.16 from $2.75 in 1995. The Aerospace product line
dispositions resulted in a $.07 increase in earnings per share in 1996.
1995 VS. 1994: Revenues increased 12% in 1995 to $912.7 million from $812.7
million in 1994. The increase was attributable to gains in each of the company's
three segments. For 1995, the Commercial, Medical and Aerospace segments
comprised 44%, 32% and 24% of the company's net sales, respectively. Growth in
the company's core businesses accounted for approximately 60% of the increase in
sales, while acquisitions in the Commercial and Medical segments contributed the
remainder. Foreign operations represented 31% of the company's revenues and
increased 28% over 1994. The increase in foreign sales resulted from internal
growth, acquisitions, and to a much lesser extent, stronger foreign currencies.
Gross profit margin remained relatively flat in 1995 as the gain in the
Aerospace Segment offset slight declines in the Medical and Commercial segments.
Selling, engineering and administrative expenses decreased slightly as a
percentage of sales due primarily to a reduction of expenses combined with an
increase in sales in the Aerospace Segment.
Operating profit increased 13% in 1995 to $102.6 million from $91.1 million in
1994. Increases in the Aerospace and Commercial segments more than offset the
decline in the Medical Segment. For 1995 the Commercial, Medical and Aerospace
segments comprised 58%, 30% and 12% of the company's operating profit,
respectively. In 1995 operating margin remained unchanged as the increase in the
Aerospace Segment offset a decline in the Medical Segment.
Net income in 1995 increased 19% to $48.9 million while earnings per share
increased 17% to $2.75 from $2.35 in 1994.
INTEREST EXPENSE AND INCOME TAX EXPENSE
Interest expense which is presented net of interest income, declined in 1996 due
to lower interest rates on total borrowings and increased interest income on
higher cash balances during the year. Interest expense increased slightly in
1995 resulting from additional borrowings, incurred primarily to support foreign
operations, offset by lower rates. Interest expense as a percent of sales
decreased in 1996 to 1.5% from 2% in 1995.
The effective income tax rate was 34.1% in 1996 compared with 33.6% in 1995
and 34.6% in 1994. Both the increase in 1996 over 1995 and the decrease in 1995
from 1994 are attributable to changes in the mix of the company's foreign
income.
COMMERCIAL SEGMENT
The Commercial Segment designs and manufactures proprietary mechanical controls
for the automotive market; mechanical, electrical and hydraulic controls, and
electronic products for the pleasure marine market; and 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 than those of the company's other two segments. They are
manufactured both for general distribution as well as custom fabricated to meet
individual customer needs. Consumer spending patterns generally influence the
market trends for these products.
OPERATING PROFIT
(millions)
<TABLE>
<S> <C>
1991 61.6
1992 67.3
1993 74.2
1994 91.1
1995 102.6
1996 113.5
</TABLE>
35
<PAGE> 16
1996 VS. 1995: Sales in the Commercial Segment increased 5% in 1996 from $403.6
million to $422.4 million reflecting an increase in the Automotive product line
which more than offset a decline in the Marine product line while Industrial
product line sales were flat. The Automotive product line sales increased from
acquisitions in both 1995 and the fourth quarter of 1996 and, to a lesser
extent, from internal growth generated by additional volume to North American
based original equipment manufacturers. Within the Marine product line, a
decrease in sales of marine electronic products was nearly offset by an increase
in sales of controls and by sales of new products. Sales were flat in 1996
compared with 1995 in the Industrial product line as increased sales of flexible
hose offset declines in volume of light-duty cable controls brought about by
weakness in the outdoor power equipment market.
Operating profit decreased 3% in 1996 to $57.8 million from $59.7 million and
operating margin declined to 14% from 15%. Operating profit and operating margin
were lower in all product lines in this Segment with the exception of the
Automotive product line which increased its operating profit. The increased
operating profit in the Automotive product line resulted from the acquisitions
while operating margin declined because of the continued downward pressure on
prices and the integration of the acquisitions into the existing business.
Within the Marine product line the declines were the result of the reduced
volume of marine electronic products and additional expenses associated with
investments in new products. The decreases in the Industrial product line were
the result of start-up costs incurred in connection with customer focused
manufacturing facilities in the U.K. and Tennessee.
Assets increased in 1996 due primarily to a fourth quarter acquisition of a
U.K. manufacturer of automotive cable controls.
1995 VS. 1994: Sales in the Commercial Segment increased 13% in 1995 from $356.7
million to $403.6 million. All three product lines, Marine, Automotive, and
Industrial reported higher sales with the largest gain coming from the
Automotive product line. Internal growth, primarily from increased market
penetration, and acquisitions in each of the product lines, contributed equally
to the increase.
Operating profit increased 12% to $59.7 million in 1995 from $53.3 million in
1994 generally as a result of volume improvements in all three product lines.
Operating margin remained relatively constant in 1995 as an increase in the
Marine product line, due in part to lower manufacturing costs of electronic
products, was offset by declines in the Automotive product line from a very
strong 1994 and, to a lesser extent, the Industrial product line. In the
Automotive product line, productivity improvements have not yet fully offset the
costs of integrating a 1995 acquisition into the existing operations nor the
downward pressure on sales prices. In the Industrial product line, slightly
lower operating margins were the result of expansion costs incurred to support
future sales growth in flexible hose and light-duty cable products.
NET INCOME
(millions)
<TABLE>
<S> <C>
1991 29.8
1992 32.0
1993 33.7
1994 41.2
1995 48.9
1996 57.2
</TABLE>
The Commercial Segment's assets increased 9% in 1995 due to the acquisitions,
capital expenditures, and an increase in inventory related to volume, offset by
a decline in accounts receivable.
MEDICAL SEGMENT
The Medical Segment manufactures and distributes a broad range of invasive
disposable and reusable devices for the urology, gastroenterology,
anesthesiology and respiratory care markets worldwide. It also manufactures
general and specialized surgical instruments, and provides instrument management
services.
Products in the Medical Segment generally are required to meet exacting
standards of performance and have long product life cycles. External economic
influences on sales relate primarily to spending patterns in the worldwide
medical devices and supplies market. The hospital supply product line conducts
its business primarily outside the United States and accordingly, its sales and
profits are subject to changes from foreign exchange rate movements. The
surgical devices product line operates mostly within the United States and
conducts its business primarily in U.S. dollars.
36
<PAGE> 17
1996 VS. 1995: In 1996 the Medical Segment sales increased 5% to $307.6 million
from $293.3 million from geographic expansion of hospital supply sales in
certain European markets and, to a lesser extent, sales of new products. Sales
in the surgical devices product line were unchanged from the prior year while
sales in the OEM product line improved modestly.
Operating profit increased 15% in 1996 to $34.6 million from $30.2 million and
operating margin improved to 11% from 10%. The operating profit and operating
margin of both the hospital supply and surgical devices product lines increased
in 1996. Higher volume and lower manufacturing costs in hospital supply, cost
reduction efforts initiated during the prior year in surgical devices and a
reduction of administrative expenses in both product lines resulted in the
improvements. Future improvement in the Medical Segment operating margin is
primarily dependent on the success of the company's ongoing programs to
integrate several acquisitions and to increase productivity in both product
lines.
Assets decreased in 1996 due to a reduction of inventory primarily in the
surgical devices product line and weaker foreign currencies.
1995 VS. 1994: In 1995 the Medical Segment sales increased 16% to $293.3 million
from $253.0 million. The gain was spread equally among internal growth,
acquisitions made over the past fifteen months and the effects of stronger
foreign currencies. The internal growth primarily resulted from increased market
penetration in the hospital supply product line in Europe and to expansion of
the surgical devices product line sales in the Asia Pacific region.
Operating profit declined 7% in 1995 to $30.2 million compared with $32.4
million in 1994 and operating margin was also lower. Slower than expected
improvement in businesses acquired over the last several years, development and
start up costs of new products which had not contributed significantly to sales
volume, costs associated with changing to a direct selling approach in several
markets and, a $1.2 million severance charge combined to result in the
reduction.
Assets increased in 1995 due to the effects of stronger foreign currencies,
higher inventory in the hospital supply product line related to volume and
support of the direct selling effort.
AEROSPACE SEGMENT
The Aerospace Segment serves the commercial aerospace and turbine engine
markets. Its businesses design and manufacture precision controls and cargo
systems for aviation; provide coatings, repair services and manufactured
components for users of both flight and land-based turbine engines. Sales are
both to original equipment manufacturers and the aftermarket.
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 industry.
1996 VS. 1995: During the first quarter of 1996, the company disposed of two
product lines in the Aerospace Segment for proceeds of $37.6 million resulting
in a $2.1 million pre-tax gain. The gain has been reported as a reduction of
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 1995 of $50.0 million and $3.0 million, respectively. The dispositions
were part of the structural realignment in the Aerospace Segment which began in
1995.
Sales in the Aerospace Segment decreased 7% from $215.7 million in 1995 to
$201.2 million in 1996. Excluding the dispositions, sales increased 21% in 1996.
The increase resulted from gains in all product lines including air cargo
systems, aerospace controls and more significantly, the
DIVIDENDS PER SHARE
(dollars)
<TABLE>
<S> <C>
1991 0.39
1992 0.42
1993 0.45
1994 0.52
1995 0.60
1996 0.68
</TABLE>
37
<PAGE> 18
Sermatech product lines which include coatings, repairs and manufactured
components. The increase in sales of manufactured components which includes both
flight and ground based turbine engine products was aided by the fourth quarter
merger with an electro-chemical machining company with sales of approximately
$24.0 million in 1995. This merger in the fourth quarter of 1996 and the
formation in 1995 of a joint venture in the repairs product line are part of the
strategy within the Aerospace Segment to redeploy assets to selected markets,
primarily in the air cargo and Sermatech product lines. Sales are expected to
increase in 1997 as a result of the merger and the expansion of the commercial
aerospace market.
Operating profit in 1996 increased 66% from $12.7 million to $21.0 million and
operating margin increased from 6% to 10%. These gains were the result of the
volume increases, improvements in the repairs product line, the ongoing cost
reduction and productivity improvement efforts and the gain on disposition of
the product lines. Operating profit and operating margin in the Aerospace
Segment have improved significantly from their 1994 lows of $5.4 million and 3%,
respectively. Although this Segment will continue to emphasize profit and margin
improvement, future gains in operating margin are expected to be more modest as
costs, including those to assimilate acquisitions, are incurred in connection
with additional investments in aerospace markets.
Assets increased in 1996 from the merger and additional inventory related to
the repairs product line partially offset by the sale of assets associated with
the divested product lines.
1995 VS. 1994: Sales in the Aerospace Segment increased 6% from $202.9 million
in 1994 to $215.7 million in 1995. The gain resulted from increased sales of air
cargo systems in the aftermarket and higher sales in the aerospace controls
product line. Within the Sermatech product lines, increased sales of coatings
and manufactured components were offset by declines in repairs.
Operating profit more than doubled in 1995 to $12.7 million from $5.4 million
in 1994 and operating margin improved from 3% to 6%. The gains resulted from
increased volume, cost reduction and productivity improvement efforts made over
the past two years and, a reduction in the level of selling, engineering and
administrative expenses.
Assets declined in 1995 due to lower capital expenditures and the sale of
assets associated with two divested product lines. The decline was partially
offset by inventory increases in the Sermatech product lines.
LIQUIDITY AND CAPITAL RESOURCES
The company continued to generate high levels of cash from operations. In 1996,
cash flows from operating activities were $71.6 million compared with $70.8
million in 1995 and $57.7 million in 1994. The increase in 1996
CAPITAL EXPENDITURES
(millions)
<TABLE>
<CAPTION>
Aerospace Medical Commercial Total
--------- ------- ---------- -----
<S> <C> <C> <C> <C>
1991 5.6 7.1 7.5 20.2
1992 6.4 5.3 7.4 19.1
1993 8.9 7.3 8.0 24.2
1994 4.5 7.1 13.5 25.1
1995 2.8 12.1 15.4 30.3
1996 16.8 10.4 12.8 40.0
</TABLE>
is due to higher net income offset by the timing of working capital needs
primarily accounts receivable related to volume and the non-cash gain on
disposition of product lines. The increase in 1995 was due to higher net income
and non-cash depreciation and amortization. In addition to cash from operations,
the company has unused credit lines of approximately $200 million to meet its
short-term working capital and long-term strategic growth objectives. Also, the
company has a favorable debt to total capitalization ratio which provides
additional borrowing capacity for future growth. The combination of lower
long-term borrowings and the increase in shareholders' equity resulted in an
improvement in the company's debt to total capitalization from 36% in 1995 to
32% in 1996.
Historically the most significant investment of cash has been payments for
businesses acquired. Although minimal during 1996 and 1995, one-half of the
company's future growth is expected to come from acquisitions. These
investments, including liabilities assumed, over the last five years were
approximately $250 million and generally have been financed through fixed-rate,
long-term borrowings.
38
<PAGE> 19
Capital expenditures were $40.5 million, $30.7 million and $25.3 million in
1996, 1995 and 1994, respectively, and are adequate to support the ongoing
requirements of the company. The expenditures in 1996 are within the company's
historical spending pattern of approximately 4% of sales. In 1996 the
expenditures were related primarily to capacity expansion efforts in the
Aerospace Segment which during the prior two years had a relatively low level of
capital additions. The increasing capital expenditures trend in the Aerospace
Segment will continue into 1997. The construction of a new plant in Singapore to
serve the repairs product line and ongoing capacity expansion projects will
result in capital expenditure levels which could be higher than the historical
spending pattern. Capital expenditures in the Commercial and Medical segments in
1996 were related to new product tooling and productivity improvements. The 1995
expenditures were primarily for machinery and equipment related to improving
productivity within the Medical Segment and increasing capacity in the
Commercial Segment.
In 1996 dividends per share were increased 13% over 1995 to $.68 and
aggregated $12.1 million. Dividends per share in 1995 increased 15% to $.60 per
share and totaled $10.5 million. Cash dividends have been paid since 1977 and
have increased every year since inception of the payment.
CASH FLOW
FROM OPERATIONS
(millions)
<TABLE>
<S> <C>
1991 31.8
1992 43.7
1993 46.4
1994 57.7
1995 70.8
1996 71.6
</TABLE>
CAPITALIZATION
(millions)
<TABLE>
<CAPTION>
Equity Long Term Debt Total
------ -------------- -----
<S> <C> <C> <C>
1991 211.7 119.4 331.1
1992 240.5 134.6 375.1
1993 269.8 183.5 453.3
1994 309.0 190.5 499.5
1995 355.4 196.8 552.2
1996 409.2 195.9 605.1
</TABLE>
The company's policy has been to use cash from operations to finance capital
expenditures and dividend payments and borrowings to finance acquisitions. The
combination of cash flows from operations, unused lines of credit and strong
financial position provide the company with adequate liquidity for meeting the
company's operating and strategic growth needs.
SHAREHOLDERS' EQUITY
Shareholders' equity increased 15% to $409.2 million
at December 29, 1996 compared with $355.4 million at December 31, 1995. The book
value per share at December 29, 1996 increased to $22.59 compared with $20.26 at
December 31, 1995.
ENVIRONMENTAL MATTERS
The company is subject to numerous federal, state and local environmental laws
and regulations including the Resource Conservation and Recovery Act,
Comprehensive Environmental Response, Compensation and Liability Act, the Clean
Air Act and, the Clean Water Act. Environmental programs are in place throughout
the company which include training, auditing and monitoring to ensure compliance
with such laws and regulations. In addition, the company has been named as a
Potentially Responsible Party by the Environmental Protection Agency at various
sites throughout the country. Environmental costs, including liabilities
associated with such sites, and the costs of complying with existing
environmental regulations are not expected to result in a liability material to
the company's consolidated financial position or results of operations.
39
<PAGE> 1
Exhibit 21
TELEFLEX INCORPORATED
SUBSIDIARIES
<TABLE>
<CAPTION>
SUBSIDIARY JURISIDICTION PARENT PERCENTAGE
OF INCORP.
<S> <C> <C> <C>
924593 Ontario Limited Ontario Pilling Weck (PA) 100
Airfoil Technologies International LLC Delaware TFX Equities 51 (1)
Access Medical S.A. France TFX International S.A. 100
Airfoil Management Company Delaware Sermatech 100
Airfoil Management Limited UK Sermatech (U.K.) Limited 100
American General Aircraft Holding Co., Inc. Delaware Teleflex 74
Asept Inmed S.A. France TFX International S.A. 100
Asid Bonz GmbH Germany Willy Rusch AG 100
Astraflex Limited UK TFX Group Ltd. 100
Aunic Engineering Limited UK Sermatech (U.K.) Limited 100
Aviation Product Support, Inc. Delaware Teleflex 100
Avtech Systems, Inc. Utah Telair International (CA) 100
Bavaria Avionik Technologie GmbH Germany Telair Cargo Electronic Systems 100
Bavaria Cargo Technologie GmbH Germany Telair International GmbH 100
Capro de Mexico, S.A. de C.V. Mexico TFX International Corp. 99.99 (2)
Capro Inc. Texas Teleflex 100
Cepco Precision Company of Canada, Inc. Canada Sermatech Engineering 100
Cetrek Engineering Ltd. UK Cetrek Ltd. 100
Cetrek Inc. Massachusetts Teleflex 100
Cetrek Limited UK TFX International Ltd. 100
Chemtronics International Ltd. UK Sermatech (U.K.) Limited 100
Endoscopy Specialists Incorporated Delaware TFX Equities 100
Entech, Inc. New Jersey TFX Equities 100
Europe Medical, S.A. France TFX International S.A. 100
Flexible Flyer, Inc. Delaware Teleflex 100
Franklin Medical Ltd. UK TFX Group Ltd. 100
G-Tel Aviation Limited UK Sermatech (U.K.) Limited 50
Gator-Gard Incorporated Delaware Sermatech 100
Inmed (Malaysia) Holdings Sdn. Berhad Malaysia Willy Rusch AG 100
Inmed Acquisition, Inc. Delaware Teleflex 100 (3)
Inmed Corporation (4) Georgia Inmed Acquisition 100
Inmed Corporation (U.K.) Ltd. UK TFX Group Ltd. 100
</TABLE>
3/11/97
Page 1
<PAGE> 2
<TABLE>
<CAPTION>
Teleflex Incorporated
Subsidiaries
<S> <C> <C> <C>
Kordial S.A. France TFX International S.A. 100
Lehr Precision, Inc. Ohio Teleflex 100
Lipac Liebinzeller Verpackungs-GmbH Germany Willy Rusch AG 100
Machine Tool Leasing, Inc. Nevada Teleflex 100
Mal Tool & Engineering Limited UK TFX Group Ltd. 100
Mal Tool & Engineering S.A.R.L. France TFX International S. A. 100
Meddig Medizintechnik Vertriebs-GmbH Germany Rusch G B 87.5
Medical Service Vertriebs-GmbH Germany Willy Rusch AG 100
Norland Plastics Company Delaware TFX Equitites 100
Phosphor Products Co. Limited UK TFX International Ltd. 100
Pilling Weck Chiurgische Produkte GmbH Germany TFX Holding GmbH 100
Pilling Weck Incorporated Delaware Teleflex 100
Pilling Weck Incorporated Pennsylvania Teleflex 100
Pilling Weck n.v. Belgium TFX International S.A. 100
Rigel Compasses Limited UK TFX International Ltd. 100
Rusch Asia Pacific Sdn. Berhad Malaysia Inmed (Malaysia) Holdings 100
Rusch AVT Medical Private Limited India TFX Equities 50
Rusch (UK) Ltd. UK TFX Group 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 Italia S.A.R.L. Italy Willy Rusch AG 100
Rusch Manufacturing (UK) Ltd. UK TFX Group Ltd. 100
Rusch Manufacturing Sdn. Berhad Malaysia Inmed (Malaysia) Holdings 96.5
Rusch Sdn. Berhad Malaysia Inmed (Malaysia) Holdings 96.5
Rusch Uruguay Ltda. Uruguay Rusch G B 60
Rusch-Pilling (Asia) PTE Ltd. Singapore Pilling Weck (PA) 99.99
Rusch-Pilling Inc. Canada 924593 Ontario 50.5 (5)
Rusch-Pilling S.A. France TFX International S.A. 100
S. Asferg Hospitalsartikler ApS Denmark Teleflex 100
Sermatech (Canada) Inc. Canada Sermatech 100
Sermatech Engineering Group, Inc. Delaware Teleflex 100
Sermatech (Germany) GmbH Germany TFX Holding GmbH 100
Sermatech International Incorporated PA Teleflex 100
Sermatech Repair Services Limited UK Sermatech (U.K.) Limited 100
</TABLE>
Page 2
<PAGE> 3
TELEFLEX INCORPORATED
SUBSIDIARIES
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Sermatech (U.K.) Limited UK TFX Group Ltd. 100
SermaTel Technical Services (STS) GmbH Germany TFX Holding GmbH 100
Simal S.A. Belgium TFX International S.A. 100
Technology Holding Company Delaware TFX Equities 100
Technology Holding Company II Delaware Technology Holding Company III 100
Technology Holding Company III Delaware Techsonic Industries, Inc. 86 (6)
Techsonic Industries, Inc. Alabama Teleflex 100
Telair Cargo Electronic Systems GmbH Germany Bavaria Cargo Technologie 100
Telair International GmbH Germany TFX Holding GmbH 100
Telair International Incorporated (7) California Teleflex 100
Telair International Incorporated Delaware Teleflex 100
Teleflex (Canada) Limited Canada (B.C.) Teleflex 100
Teleflex Automotive de Mexico S.A. de C.V. Mexico TFX Equities 99.9 (8)
Teleflex Automotive Manufacturing
Corporation Delaware Teleflex 100
Teleflex Control Systems, Inc. Pennsylvania 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 Incorporated Delaware Teleflex 100
TFX Foreign Sales Corporation Virgin Is. Teleflex 100
TFX Group Limited UK TFX International Corp. 100
TFX Holding GmbH Germany Teleflex 100
TFX International Corporation Delaware Teleflex 100
TFX International Limited UK TFX Group Ltd. 100
TFX International S. A. France Teleflex 100
TFX Marine Incorporated Delaware Teleflex 100
TFX Medical Incorporated Delaware Teleflex 100
TFX Medical Wire Products, Inc. Delaware TFX Equities 100
Top Surgical GmbH Germany PW Chiurgische Produkte GmbH 100
TX Controls AB Sweden Teleflex 100
Victor Huber GmbH Germany Teleflex 100
Weck Closure Systems LLC Delaware Pilling Weck Incorporated (DE) 81 (9)
Willy Rusch AG Germany TFX Holding GmbH 100
</TABLE>
Page 3
<PAGE> 4
TELEFLEX INCORPORATED
SUBSIDIARIES
Willy Rusch Grundstucks und
Beteiligungs AG ("Rusch G B") Germany Willy Rusch AG 99.8 (10)
1. 49% owned by General Electric Company
2. One share (.002%) is owned by TFX Equities
3. Except for nominee shares.
4. Trades under name "Rusch Inc."
5. 49.5% owned by Rusch G B.
6. 14% owned by six other subsidiary companies
7. Formerly The Talley Corporation. Trades under name "Teleflex Control
Systems."
8. One share (.001%) is owned by TFX International Corporation
9. 19% owned by Horizon Surgical Incorporated
10. Two shares (.2%) are owned by Inmed Corporation.
Page 4
<PAGE> 1
EXHIBIT 25
POWER OF ATTORNEY
Each of the undersigned Directors of Teleflex 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 to execute, on behalf of the undersigned, the
Company's Annual Report on Form 10-K for the fiscal year ended December 29,
1996.
IN WITNESS WHEREOF, this Power of Attorney is executed this 10th day of
February, 1997.
/s/ DONALD BECKMAN /s/ LENNOX K. BLACK
- ----------------------------- -----------------------------
Donald Beckman Lennox K. Black
/s/ DAVID S. BOYER /s/ JOSEPH S. GONNELLA
- ----------------------------- -----------------------------
David S. Boyer Joseph S. Gonnella
/s/ PEMBERTON HUTCHINSON /s/ LEWIS E. HATCH, JR.
- ----------------------------- -----------------------------
Pemberton Hutchinson Lewis E. Hatch, Jr.
/s/ SIGISMUNDUS W. W. LUBSEN /s/ PALMER E. RETZLAFF
- ----------------------------- -----------------------------
Sigismundus W. W. Lubsen Palmer E. Retzlaff
/s/ JOHN H. REMER /s/ JAMES W. STRATTON
- ----------------------------- -----------------------------
John H. Remer James W. Stratton
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-29-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-29-1996
<CASH> 68,618
<SECURITIES> 0
<RECEIVABLES> 193,587
<ALLOWANCES> 0
<INVENTORY> 190,696
<CURRENT-ASSETS> 466,021
<PP&E> 485,656
<DEPRECIATION> 193,869
<TOTAL-ASSETS> 857,854
<CURRENT-LIABILITIES> 196,666
<BONDS> 195,945
0
0
<COMMON> 18,111
<OTHER-SE> 391,065
<TOTAL-LIABILITY-AND-EQUITY> 857,854
<SALES> 931,183
<TOTAL-REVENUES> 931,183
<CGS> 640,187
<TOTAL-COSTS> 640,187
<OTHER-EXPENSES> 190,341
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13,876
<INCOME-PRETAX> 86,779
<INCOME-TAX> 29,617
<INCOME-CONTINUING> 57,162
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 57,162
<EPS-PRIMARY> 3.16
<EPS-DILUTED> 3.16
</TABLE>
