<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
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Washington, D.C. 20549
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Form 10-Q
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(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 28, 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
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TELEFLEX INCORPORATED
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(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
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(Address of Principal Executive Office) (Zip Code)
(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.
Class Outstanding at Sept.28, 1997
- ----------------------------- ----------------------------
Common Stock, $1.00 Par Value 37,012,100
<PAGE> 2
Teleflex Incorporated
Condensed Consolidated Balance Sheet
(Dollars in Thousands)
Assets
<TABLE>
<CAPTION>
Sept. 28, Dec. 29,
1997 1996
------------- -----------
<S> <C> <C>
Current assets
Cash and cash equivalents $32,937 $68,618
Accounts receivable less allowance for
doubtful accounts 233,646 193,587
Inventories 203,951 190,696
Prepaid expenses 5,967 13,120
--------- ---------
476,501 466,021
Property, plant and equipment, at cost,
less accumulated depreciation 317,508 291,787
Investments in affiliates 24,166 17,356
Intangibles and other assets 96,715 82,690
--------- ---------
$914,890 $857,854
========= =========
Liabilities and shareholders' equity
Current liabilities
Current portion of borrowings and
demand loans $70,596 $70,587
Accounts payable and accrued expenses 106,362 108,922
Estimated income taxes payable 22,675 17,157
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199,633 196,666
Long-term borrowings 194,801 195,945
Deferred income taxes and other 69,584 56,067
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464,018 448,678
Shareholders' equity 450,872 409,176
--------- ---------
$914,890 $857,854
========= =========
</TABLE>
<PAGE> 3
Teleflex Incorporated
Condensed Consolidated Statement of Income
(Dollars in Thousands Except Per Share)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------------ ------------------------
Sept. 28, Sept. 29, Sept. 28, Sept. 29,
1997 1996 1997 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenues $281,757 $215,144 $831,364 $687,986
---------- ---------- ---------- ----------
Cost of sales 197,065 148,773 577,146 473,173
Operating expenses 59,833 47,597 168,890 142,558
Interest expense 3,683 3,361 10,517 10,845
---------- ---------- ---------- ----------
260,581 199,731 756,553 626,576
---------- ---------- ---------- ----------
Income before taxes 21,176 15,413 74,811 61,410
Provision for taxes on income 7,348 5,364 25,957 21,372
---------- ---------- ---------- ----------
Net income $13,828 $10,049 $48,854 $40,038
========== ========== ========== ==========
Earnings per share $0.36 $0.28 $1.30 $1.11
Dividends per share $0.100 $0.088 $0.288 $0.253
Average number of common and common
equivalent shares outstanding 37,889 36,052 37,555 35,949
</TABLE>
<PAGE> 4
Teleflex Incorporated
Condensed Consolidated Statement of Cash Flows
(Dollars in Thousands)
<TABLE>
<CAPTION>
Nine Months Ended
------------------------------------
Sept. 28, Sept. 29,
1997 1996
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income $48,854 $40,038
Adjustments to reconcile net income to cash
flows from operating activities:
Depreciation and amortization 35,539 28,900
(Increase) in accounts receivable (32,084) (3,391)
(Increase) in inventories (11,020) (8,063)
Decrease in prepaid expenses 6,959 2,537
(Decrease) in accounts payable
and accrued expenses (8,308) (2,602)
Increase (decrease) in estimated income
taxes payable 5,456 (340)
Gain on disposition of product lines (2,055)
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45,396 55,024
-------- ---------
Cash flows from financing activities:
Proceeds from new borrowings 9,000 20,030
Reduction in long-term borrowings (11,905) (18,817)
Increase (decrease) in current borrowings
and demand loans 5,008 (512)
Proceeds from stock compensation plans 3,053 4,167
Dividends (10,554) (8,891)
-------- ---------
(5,398) (4,023)
-------- ---------
Cash flows from investing activities:
Expenditures for plant assets (52,344) (24,134)
Payments for businesses acquired (14,273)
Proceeds from disposition of product lines
and assets 32,140
Investments in affiliates (7,712) (444)
Other (1,350) 787
-------- ---------
(75,679) 8,349
-------- ---------
Net (decrease) increase in cash
and cash equivalents (35,681) 59,350
Cash and cash equivalents at the
beginning of the period 68,618 55,654
-------- ---------
Cash and cash equivalents at the
end of the period $32,937 $115,004
======== =========
</TABLE>
<PAGE> 5
Teleflex Incorporated
Notes to Condensed Consolidated Financial Statements
Note 1 The accompanying unaudited condensed consolidated financial
statements for the three months ended September 28, 1997 and
September 29, 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 September 28, 1997, 3,406,349 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>
Sept.1997 Dec. 1996
<S> <C> <C>
Raw materials $ 69,774 $ 72,704
Work-in-process 36,780 35,010
Finished goods 97,397 82,982
-------- --------
$203,951 $190,696
======== ========
</TABLE>
<PAGE> 6
Note 5 Business segment information:
<TABLE>
<CAPTION>
Three months ended
(000)
Sept. 28,1997 Sept.29, 1996
<S> <C> <C>
Sales
Commercial Products $119,504 $93,110
Medical Products 78,364 75,524
Aerospace Products 83,889 46,510
-------- --------
Total $281,757 $215,144
======== ========
Operating profit
Commercial Products $11,311 $9,855
Medical Products 8,159 7,811
Aerospace Products 9,234 4,380
------- -------
Total $28,704 $22,046
======= =======
</TABLE>
<TABLE>
<CAPTION>
Nine months ended
(000)
Sept.28, 1997 Sept.29, 1996
<S> <C> <C>
Sales
Commercial Products $367,936 $317,742
Medical Products 239,059 229,095
Aerospace Products 224,369 141,149
-------- -------
Total $831,364 $687,986
======== ========
Operating profit
Commercial Products $45,428 $41,950
Medical Products 24,848 25,533
Aerospace Products 25,732 14,243
------- -------
Total $96,008 $81,726
======= =======
</TABLE>
<PAGE> 7
Management's Analysis of Quarterly Financial Data
Results of Operations:
Revenues increased 31% in the third quarter of 1997 to $281.8 million from
$215.1 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 42%, 28% and 30% of the company's net sales, respectively.
Gross profit margin declined to 30.1% in 1997 compared with 30.8% in 1996 and
operating expenses as a percentage of sales declined to 21.2% in 1997 from
22.1%. The decreases are due primarily to the reduction in the proportion of
sales from the Medical Segment which has a higher gross profit margin and
operating expense to sales percentage relative to the other two segments.
Operating profit increased 30% in the third quarter of 1997 from $22.0 million
to $28.7 million while operating margin remained constant at 10.2%. While
operating profit increased in all three segments, operating margin increases in
Aerospace and, to a lesser extent, Medical offset a decline in the Commercial
Segment.
Industry Segment Review:
Sales in the Commercial Segment increased 28% from $93.1 million in 1996 to
$119.5 million in 1997 due to increases in the Automotive and Industrial
product lines while Marine product line sales remained flat. Operating profit
increased 15% from $9.9 million in 1996 to $11.3 million in 1997 while
operating margin declined from 10.6% to 9.5% due to a decrease in the
Automotive product line, in part as a result of recent acquisitions.
The Medical Segment sales increased 4% from $75.5 million to $78.4 million in
the third quarter of 1997 compared with 1996. Improved sales of Hospital Supply
products 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 increased 5% from $7.8 million in 1996 to $8.2
million in 1997 and operating margin increased slightly from 10.3% in 1996 to
10.4% in 1997. The improvement is due to the substantial completion of
manufacturing plant realignments and a reduction in expenses in the surgical
devices product line in connection with integrating the 1997 acquisition.
<PAGE> 8
The Aerospace Segment sales increased 80% from $46.5 million in 1996 to $83.9
million in 1997 primarily from gains in the turbo-machinery, repairs and
component manufacturing businesses and from an acquisition. Operating profit
increased over 100% from $4.4 million in 1996 to $9.2 million in 1997 and
operating margin improved from 9.4% in 1996 to 11.0% in 1997. The increases in
both operating profit and operating margin resulted primarily from the
increased sales volume.
Cash flow from operations decreased $9.6 million in the third quarter of 1997
compared with 1996 as increased net income and depreciation were offset by the
effects of increased working capital, primarily accounts receivable as a result
of increased sales. Working capital increased from $269.4 million at December
29, 1996, to $276.9 million at September 28, 1997. The ratio of current assets
to current liabilities was 2.4 to 1 at both September 28, 1997 and December
29, 1996. Expenditures for plant assets increased $28.2 million over the same
period in 1996. The expenditures, approximately 60% of which are in the
Aerospace Segment, including construction of a plant in Singapore are being
made to meet the increased sales demand. Long-term borrowings at September 28,
1997 of $194.8 million declined by $1.1 million 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 30% at September 28, 1997.
<PAGE> 9
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> 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)
November 7, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-28-1997
<PERIOD-START> DEC-30-1996
<PERIOD-END> SEP-28-1997
<CASH> 32,937
<SECURITIES> 0
<RECEIVABLES> 233,646
<ALLOWANCES> 0
<INVENTORY> 203,951
<CURRENT-ASSETS> 476,501
<PP&E> 317,508
<DEPRECIATION> 0
<TOTAL-ASSETS> 941,890
<CURRENT-LIABILITIES> 199,633
<BONDS> 194,801
0
0
<COMMON> 37,012
<OTHER-SE> 413,860
<TOTAL-LIABILITY-AND-EQUITY> 914,890
<SALES> 281,757
<TOTAL-REVENUES> 281,757
<CGS> 197,065
<TOTAL-COSTS> 197,065
<OTHER-EXPENSES> 59,833
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,683
<INCOME-PRETAX> 21,176
<INCOME-TAX> 7,348
<INCOME-CONTINUING> 13,828
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13,828
<EPS-PRIMARY> .36
<EPS-DILUTED> .36
</TABLE>
