<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 29, 1997
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 1-5353
TELEFLEX INCORPORATED
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(Exact Name of Registrant as Specified in its Charter)
<TABLE>
<S> <C>
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)
</TABLE>
(610) 834-6301
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(Telephone Number Including Area Code)
None
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(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.
<TABLE>
<S> <C>
Class Outstanding at June 29, 1997
- ----------------------------- ----------------------------
Common Stock, $1.00 Par Value 36,910,496
</TABLE>
<PAGE> 2
Teleflex Incorporated
Condensed Consolidated Balance Sheet
(Dollars in Thousands)
Assets
<TABLE>
<CAPTION>
June 29, Dec. 29,
1997 1996
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<S> <C> <C>
Current assets
Cash and cash equivalents $60,650 $68,618
Accounts receivable less allowance for
doubtful accounts 214,577 193,587
Inventories 196,833 190,696
Prepaid expenses 11,053 13,120
----------- -----------
483,113 466,021
Property, plant and equipment, at cost,
less accumulated depreciation 304,825 291,787
Investments in affiliates 23,975 17,356
Intangibles and other assets 89,474 82,690
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$901,387 $857,854
=========== ===========
Liabilities and shareholders' equity
Current liabilities
Current portion of borrowings and
demand loans $68,730 $70,587
Accounts payable and accrued expenses 108,251 108,922
Estimated income taxes payable 19,718 17,157
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196,699 196,666
Long-term borrowings 195,655 195,945
Deferred income taxes and other 69,257 56,067
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461,611 448,678
Shareholders' equity 439,776 409,176
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$901,387 $857,854
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</TABLE>
<PAGE> 3
Teleflex Incorporated
Condensed Consolidated Statement of Income
(Dollars in Thousands Except Per Share)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
----------------------- -----------------------
June 29, June 30, June 29, June 30,
1997 1996 1997 1996
---------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues $280,263 $238,394 $549,607 $472,842
---------- ----------- ----------- -----------
Cost of sales 193,942 163,290 380,081 324,400
Operating expenses 54,786 48,373 109,057 94,961
Interest expense 3,478 3,550 6,834 7,484
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252,206 215,213 495,972 426,845
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Income before taxes 28,057 23,181 53,635 45,997
Provision for taxes on income 9,708 8,044 18,609 16,008
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Net income $18,349 $15,137 $35,026 $29,989
========== =========== =========== ===========
Earnings per share $0.49 $0.42 $0.94 $0.84
Dividends per share $0.100 $0.088 $0.188 $0.165
Average number of common and common
equivalent shares outstanding 37,624 35,980 37,388 35,897
</TABLE>
<PAGE> 4
Teleflex Incorporated
Condensed Consolidated Statement of Cash Flows
(Dollars in Thousands)
<TABLE>
<CAPTION>
Six Months Ended
-----------------------
June 29, June 30,
1997 1996
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<S> <C> <C>
Cash flows from operating activities:
Net income $35,026 $29,989
Adjustments to reconcile net income to cash
flows from operating activities:
Depreciation and amortization 23,346 18,248
(Increase) in accounts receivable (17,073) (5,329)
(Increase) in inventory (3,088) (6,846)
Decrease in prepaid expenses 1,925 2,588
(Decrease) increase in accounts payable
and accrued expenses (1,915) 1,232
Increase in estimated income
taxes payable 2,284 1,732
Gain on disposition of product lines (2,055)
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40,505 39,559
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Cash flows from financing activities:
Proceeds from new borrowings 9,000 6,600
Reduction in long-term borrowings (10,754) (4,062)
Increase in current borrowings
and demand loans 2,516 6,496
Proceeds from stock compensation plans 2,089 3,112
Dividends (6,858) (5,803)
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(4,007) 6,343
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Cash flows from investing activities:
Expenditures for plant assets (34,975) (16,110)
Payments for businesses acquired (349)
Proceeds from disposition of product lines
and assets 32,140
Investments in affiliates (7,215) (160)
Other (1,927) (1,972)
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(44,466) 13,898
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Net increase in cash
and cash equivalents (7,968) 59,800
Cash and cash equivalents at the
beginning of the period 68,618 55,654
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Cash and cash equivalents at the
end of the period $60,650 $115,454
========== ===========
</TABLE>
<PAGE> 5
Teleflex Incorporated
Notes to Condensed Consolidated Financial Statements
Note 1 The accompanying unaudited condensed consolidated financial statements
for the three months ended June 29, 1997 and June 30, 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 June 29, 1997, 3,511,774 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 effected in the form of a 100% stock
dividend. The dividend was distributed on June 16, 1997 to holders of
record on May 23, 1997. The per share data included in this report have
been adjusted to reflect this stock dividend.
Note 4 Inventories consisted of the following:
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Raw materials $ 67,025 $ 72,704
Work-in-process 37,828 35,010
Finished goods 91,980 82,982
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$196,833 $190,696
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</TABLE>
<PAGE> 6
Note 5 Business segment information:
<TABLE>
<CAPTION>
Three months ended
(000)
June 29, 1997 June 30, 1996
<S> <C> <C>
Sales
Commercial Products $125,692 $113,170
Medical Products 81,127 77,737
Aerospace Products 73,444 47,487
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Total $280,263 $238,394
======== ========
Operating profit
Commercial Products $18,010 $16,928
Medical Products 8,101 9,168
Aerospace Products 8,762 3,847
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Total $34,873 $29,943
======= =======
</TABLE>
<TABLE>
<CAPTION>
Six months ended
(000)
June 29, 1997 June 30, 1996
<S> <C> <C>
Sales
Commercial Products $248,432 $224,632
Medical Products 160,695 153,571
Aerospace Products 140,480 94,639
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Total $549,607 $472,842
======== ========
Operating profit
Commercial Products $34,117 $32,095
Medical Products 16,689 17,722
Aerospace Products 16,498 9,863
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Total $67,304 $59,680
======= =======
</TABLE>
<PAGE> 7
Management's Analysis of Quarterly Financial Data
Results of Operations:
Revenues increased 18% in the second quarter of 1997 to $280.3 million from
$238.4 million in 1996. The increase resulted from gains in all three segments,
Commercial, Medical and Aerospace, approximately one-half of which resulted
from acquisitions. The Commercial, Medical and Aerospace segments comprised
45%, 29% and 26% of the company's net sales, respectively.
Gross profit margin declined to 30.8% in 1997 compared with 31.5% in 1996.
Increases in the gross profit margins in the Commercial and Aerospace segments
were offset by a decline in the Medical segment. Operating expenses as a
percentage of sales declined to 19.5% in 1997 from 20.3% in 1996 as declines in
the Medical and Aerospace segments offset an increase in the Commercial
Segment.
Operating profit increased 16% in the second quarter of 1997 from $29.9 million
to $34.9 million while operating margin decreased slightly from 12.6% of sales
to 12.4%. Increases in the Aerospace and Commercial segments operating profit
offset a decline in the Medical Segment while the increase in operating margin
in the Aerospace Segment did not offset declines in the Commercial and Medical
segments.
Industry Segment Review:
Sales in the Commercial Segment increased 11% from $113.2 million in 1996 to
$125.7 million in 1997 as all three product lines, Automotive, Marine and
Industrial improved. Operating profit in 1997 of $18.0 million represents a 6%
increase compared with 1996 while operating margin declined from 15.0% to 14.3%
due to a decrease in the Automotive product line, in part as a result of recent
acquisitions.
The Medical Segment sales increased 4% from $77.7 million to $81.1 million in
the second quarter of 1997 compared with 1996. Improved sales of hospital
supply products in Europe and sales from a 1997 acquisition in the surgical
devices product line offset a decline from the effects of the stronger dollar
against major European currencies. Operating profit decreased 12% from $9.2
million in 1996 to $8.1 million in 1997 and operating margin declined from
11.8% in 1996 to 10.0% in 1997. The decline is the result of the stronger
dollar on the primarily European - based hospital supply product line and
additional expenses in the surgical devices product line in connection with
integrating the 1997 acquisition.
<PAGE> 8
The Aerospace Segment sales increased 55% from $47.5 million in 1996 to $73.4
million in 1997 primarily from gains in the turbo-machinery coatings, repairs
and component manufacturing businesses. The addition of an electro-chemical
machining company contributed nearly one-half of the sales growth in the
segment. Operating profit increased over 100% from $3.8 million in 1996 to $8.8
million in 1997 and operating margin improved from 8.1% in 1996 to 11.9% in
1997. The increases in both operating profit and operating margin resulted
primarily from the increased sales volume in the turbo-machinery businesses.
Cash flow from operations increased approximately $1.0 million in the second
quarter of 1997 compared with 1996 as increased net income and depreciation
offset the effects of increased working capital, primarily accounts receivable.
Working capital increased from $269.4 million at December 29, 1996, to $286.4
million at June 29, 1997. The ratio of current assets to current liabilities
was 2.5 to 1 at June 29, 1997 compared with 2.4 to 1 at December 29, 1996.
Expenditures for plant assets increased $18.9 million over the same period in
1996. The increase is primarily within the Aerospace Segment where construction
of a turbomachinery repairs facility in Singapore is ongoing and where
additional equipment is necessary to meet the higher sales volume. Long-term
borrowings at June 29, 1997 of $195.7 million remained constant compared with
December 29, 1996. An increase from additional borrowings was offset by
repayments and lower foreign currency translation rates. 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 June
29, 1997.
<PAGE> 9
Teleflex Incorporated
Part II Other Information
Item 4. Submission of Matters to a Vote of Security Holders
At the company's Annual Meeting of Shareholders held on April 25, 1997,
the following were elected to the Board of Directors of the company for a term
expiring in 1999:
<TABLE>
<CAPTION>
Name Votes For Withheld
---- --------- --------
<S> <C> <C>
David S. Boyer 31,615,564 369,856
Sigismundus W.W. Lubsen 31,612,844 372,576
James W. Stratton 31,615,298 370,122
</TABLE>
Item 6. Exhibits and Reports on Form 8-K
(A) Reports on form 8-K.
No reports on form 8-K were filed during the quarter.
<PAGE> 10
Teleflex Incorporated
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TELEFLEX INCORPORATED
/s/ Harold L. Zuber, Jr.
------------------------
Harold L. Zuber, Jr.
(Principal Financial and
Accounting Officer)
/s/ Steven K. Chance
------------------------
Steven K. Chance
(Vice President)
August 7, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-28-1997
<PERIOD-START> DEC-30-1996
<PERIOD-END> JUN-29-1997
<CASH> 60,650
<SECURITIES> 0
<RECEIVABLES> 214,577
<ALLOWANCES> 0
<INVENTORY> 196,833
<CURRENT-ASSETS> 483,113
<PP&E> 304,825
<DEPRECIATION> 0
<TOTAL-ASSETS> 901,387
<CURRENT-LIABILITIES> 196,699
<BONDS> 195,655
0
0
<COMMON> 36,910
<OTHER-SE> 402,866
<TOTAL-LIABILITY-AND-EQUITY> 901,387
<SALES> 280,263
<TOTAL-REVENUES> 280,263
<CGS> 193,942
<TOTAL-COSTS> 193,942
<OTHER-EXPENSES> 54,786
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,478
<INCOME-PRETAX> 28,057
<INCOME-TAX> 9,708
<INCOME-CONTINUING> 18,349
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 18,349
<EPS-PRIMARY> .49
<EPS-DILUTED> .49
</TABLE>
