<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 30, 1997
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission File Number 1-5353
TELEFLEX INCORPORATED
(Exact Name of Registrant as Specified in its Charter)
Delaware 23-1147939
(State of Incorporation) (IRS Employer Identification Number)
630 West Germantown Pike, Suite 450
Plymouth Meeting, PA 19462
(Address of Principal Executive Office) (Zip Code)
(610) 834-6301
(Telephone Number Including Area Code)
None
(Former Name, Former Address and Former Fiscal Year,
If Changed Since Last Report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
Common Stock as of the latest practicable date.
Class Outstanding at March 30,1997
Common Stock, $1.00 Par Value 18,148,611
<PAGE> 2
Teleflex Incorporated
Condensed Consolidated Balance Sheet
(Dollars in Thousands)
<TABLE>
<CAPTION>
Assets
Mar. 30, Dec. 29,
1997 1996
-------- --------
<S> <C> <C>
Current assets
Cash and cash equivalents $ 67,885 $ 68,618
Accounts receivable less allowance for
doubtful accounts 214,435 193,587
Inventories
Raw materials 74,835 72,704
Work-in-process 30,950 35,010
Finished goods 86,106 82,982
Prepaid expenses 12,237 13,120
-------- --------
486,448 466,021
Property, plant and equipment, at cost,
less accumulated depreciation 291,010 291,787
Investments in affiliates 23,773 17,356
Intangibles and other assets 89,535 82,690
-------- --------
$890,766 $857,854
======== ========
Liabilities and shareholders' equity
Current liabilities
Current portion of borrowings and
demand loans $ 68,900 $ 70,587
Accounts payable and accrued expenses 112,686 108,922
Estimated income taxes payable 23,846 17,157
-------- --------
205,432 196,666
Long-term borrowings 190,042 195,945
Deferred income taxes and other 71,831 56,067
-------- --------
467,305 448,678
Shareholders' equity 423,461 409,176
-------- --------
$890,766 $857,854
======== ========
</TABLE>
<PAGE> 3
Teleflex Incorporated
Condensed Consolidated Statement of Income
(Dollars and Shares in Thousands, Except Per Share)
<TABLE>
<CAPTION>
Three Months Ended
--------------------------------------------
Mar. 30, Mar. 31,
1997 1996
--------------------- -------------------
<S> <C> <C>
Revenues $269,344 $234,448
--------------------- -------------------
Cost of sales 186,139 161,110
Operating expenses 54,271 46,588
Interest expense 3,356 3,934
--------------------- -------------------
243,766 211,632
--------------------- -------------------
Income before taxes 25,578 22,816
Provision for taxes on income 8,901 7,964
--------------------- -------------------
Net income $16,677 $14,852
===================== ===================
Earnings per share $0.90 $0.83
Dividends per share $0.175 $0.155
Average number of common and common
equivalent shares outstanding 18,576 17,907
</TABLE>
<PAGE> 4
Teleflex Incorporated
Condensed Consolidated Statement of Cash Flows
(Dollars in Thousands)
<TABLE>
<CAPTION>
Three Months Ended
---------------------------------------------------
Mar. 30, Mar. 31,
1997 1996
----------------------- -------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $16,677 $14,852
Adjustments to reconcile net income to cash
flows from operating activities:
Depreciation and amortization 11,337 9,067
(Increase) in accounts receivable (21,311) (13,137)
(Increase) decrease in inventory (1,132) 1,380
Decrease in prepaid expenses 707 2,057
Increase (decrease) in accounts payable
and accrued expenses 5,498 (4,635)
Increase in estimated income
taxes payable 6,972 2,611
Gain on sale of businesses and assets (2,055)
----------------------- -------------------------
18,748 10,140
----------------------- -------------------------
Cash flows from financing activities:
Reduction in long-term borrowings (1,393) (2,369)
Increase in current borrowings
and demand loans 4,012 5,766
Proceeds from stock compensation plans
and distribution of treasury shares 1,010 1,754
Dividends (3,222) (2,721)
----------------------- -------------------------
407 2,430
----------------------- -------------------------
Cash flows from investing activities:
Expenditures for plant assets (14,794) (7,230)
Payments for businesses acquired (349)
Proceeds from sale of businesses and assets 32,140
Investments in affiliates (6,650) (160)
Other 1,905 1,531
----------------------- -------------------------
(19,888) 26,281
----------------------- -------------------------
Net (decrease) increase in cash
and cash equivalents (733) 38,851
Cash and cash equivalents at the
beginning of the period 68,618 55,654
----------------------- -------------------------
Cash and cash equivalents at the
end of the period $67,885 $94,505
======================= =========================
</TABLE>
<PAGE> 5
Teleflex Incorporated
Notes to Condensed Consolidated Financial Statements
Note 1 The accompanying unaudited condensed consolidated financial
statements for the three months ended March 30, 1997 and March 31, 1996
contain all adjustments, consisting only of normal recurring
adjustments, which in the opinion of management are necessary to
present fairly the financial position, results of operations and cash
flows for the periods then ended in accordance with the current
requirements for Form 10-Q.
Note 2 At March 30, 1997, 1,848,147 shares of common stock were reserved for
issuance under the company's stock compensation plans.
Note 3 On April 25, 1997, the Board of Directors approved a two-for-one
split of the Company's common stock to be effected in the form of a
100% stock dividend to holders of record at the close of business on
May 23, 1997. The per share data included in this report has not been
adjusted to reflect this prospective stock dividend.
Note 4 Business segment information:
<TABLE>
<CAPTION>
Three months ended
(000)
March 30, 1997 March 31, 1996
<S> <C> <C>
Sales
Commercial Products $122,740 $111,462
Medical Products 79,568 75,834
Aerospace Products 67,036 47,152
-------- --------
Total $269,344 $234,448
======== ========
Operating profit
Commercial Products $16,107 $15,167
Medical Products 8,588 8,554
Aerospace Products 7,736 6,016
------- -------
Total $32,431 $29,737
======= =======
</TABLE>
<PAGE> 6
Management's Analysis of Quarterly Financial Data
Results of Operations:
Revenues increased 15% in the first quarter of 1997 to $269.3 million from
$234.4 million in 1996. The increase resulted from gains in all three segments,
Commercial, Medical and, primarily Aerospace. Nearly one-half of the growth was
the result of acquisitions, primarily in the Aerospace Segment, while the
remainder resulted from increases in the company's existing product lines. The
Commercial, Medical and Aerospace segments comprised 46%, 29% and 25% of the
company's net sales, respectively.
Gross profit margin decreased to 30.9% in 1997 compared with 31.3% in 1996. A
reduction in the proportion of sales from the Medical Segment, which has a
higher gross margin compared with the other segments, resulted in the decrease.
Operating expenses as a percentage of sales increased slightly to 20.1% in 1997
from 19.9% in 1996 as an increase in the Medical and Commercial segments offset
a decline in the Aerospace Segment.
Operating profit increased 9% in the first quarter of 1997 from $29.7 million to
$32.4 million. Excluding the gain of $2.0 million in the first quarter of 1996
from the disposition of product lines in the Aerospace Segment, operating profit
increased 17% and operating margin improved to 12.0% from 11.8%. Operating
profit increased in the Aerospace and Commercial segments while the Medical
Segment operating profit was unchanged from 1996. An increase in the Aerospace
Segment operating margin offset declines in the Commercial and Medical segments.
Industry Segment Review:
Sales in the Commercial Segment increased 10% from $111.5 million in 1996 to
$122.7 million in 1997. The increase resulted from gains in all three product
lines: marine, automotive and industrial. The increase was due in part to sales
from a small acquisition in the fourth quarter of 1996 within the automotive
product line. Operating profit in 1997 of $16.1 million represents a 6% increase
compared with 1996; however, operating margin declined from 13.6% to 13.1% due
to a decrease in the automotive product line. Additional operating expenses in
connection with business expansion efforts and lower margin contribution of the
acquisition, resulted in the operating margin decline.
<PAGE> 7
The Medical Segment sales increased 5% from $75.8 million to $79.6 million in
the first quarter of 1997, compared with 1996 as a result of an increase in the
hospital supply product line. Operating profit remained unchanged from the prior
year while operating margin declined from 11.3% in 1996 to 10.8% in 1997.
Increases in hospital supply operating profit and margin offset declines in
surgical devices. The surgical devices product line is in the process of being
segregated into market-focused business units, one of which contains the
operations of a ligation clip business acquired in the first quarter of 1997.
Both the segregation and integration of the acquisition resulted in additional
expenses which lowered operating profits and margins in the first quarter.
The Aerospace Segment sales increased 42% from $47.2 million in 1996 to $67.0
million in 1997. Sales increased in all product lines in the Segment: cargo
handling systems and the turbo-machinery coatings, repairs and component
manufacturing businesses. The fourth quarter 1996 addition of an
electro-chemical machining company contributed approximately half of the sales
growth in the Segment. Excluding the first quarter 1996 gain on the dispositions
of two product lines, operating profit increased over 90% and operating margin
improved to 11.5% from 8.4%. The increases in both operating profit and margin
are due primarily to the higher volume.
Cash flow from operations increased $8.6 million during the period ended March
30, 1997 compared with 1996 due to higher net income and depreciation and, the
timing of income tax payments. Working capital increased from $269.4 million at
December 29, 1996, to $281.0 million at March 30, 1997. The ratio of current
assets to current liabilities was 2.4 to 1 at both March 30, 1997 and December
29, 1996. Expenditures for plant assets increased $7.6 million in the first
quarter over the same period in 1996. The increase is primarily within the
Aerospace Segment where construction of a turbomachinery repairs facility in
Singapore is beginning, and where additional equipment is necessary to meet the
higher sales volume. Long-term borrowings decreased by $5.9 million from $195.9
million at December 29, 1996, to $190.0 million at March 30, 1997. The decline
was due to the effects of lower foreign currency translation rates and, to a
lesser extent, repayments. The combination of the decline in long-term
borrowings and the increase in shareholders' equity resulted in an improvement
in the ratio of long-term borrowings to total capitalization from 32% at
December 29, 1996 to 31% at March 30, 1997.
<PAGE> 8
Teleflex Incorporated
Part II Other Information
Item 6. Exhibits and Reports on Form 8-K
-----------------------------------------
(A) Reports on form 8-K.
No reports on form 8-K were filed during the quarter.
<PAGE> 9
Teleflex Incorporated
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TELEFLEX INCORPORATED
/s/ Harold L. Zuber, Jr.
------------------------
Harold L. Zuber, Jr.
(Principal Financial and
Accounting Officer)
/s/ Steven K. Chance
------------------------
Steven K. Chance
(Vice President)
May 8, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-28-1997
<PERIOD-START> DEC-30-1996
<PERIOD-END> MAR-30-1997
<CASH> 67,885
<SECURITIES> 0
<RECEIVABLES> 214,435
<ALLOWANCES> 0
<INVENTORY> 191,891
<CURRENT-ASSETS> 486,448
<PP&E> 291,010
<DEPRECIATION> 0
<TOTAL-ASSETS> 890,766
<CURRENT-LIABILITIES> 205,432
<BONDS> 190,042
0
0
<COMMON> 18,149
<OTHER-SE> 405,312
<TOTAL-LIABILITY-AND-EQUITY> 890,766
<SALES> 269,344
<TOTAL-REVENUES> 269,344
<CGS> 186,139
<TOTAL-COSTS> 186,139
<OTHER-EXPENSES> 54,271
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,356
<INCOME-PRETAX> 25,578
<INCOME-TAX> 8,901
<INCOME-CONTINUING> 16,677
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 16,677
<EPS-PRIMARY> .90
<EPS-DILUTED> .90
</TABLE>
