<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 26, 2000
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)
<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
------------------------------------------------
(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.
[X] Yes [ ] No
Indicate the number of shares outstanding of each of the issuer's classes
of Common Stock as of the latest practicable date.
<TABLE>
<CAPTION>
CLASS OUTSTANDING AT MARCH 26, 2000
- -------------------------------------------- -----------------------------
<S> <C>
Common Stock, $1.00 Par Value 38,117,043
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
TELEFLEX INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEET
--------------------------------------------------------
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
MAR. 26, DEC. 26,
2000 1999
---------- ----------
<S> <C> <C>
ASSETS
- --------------------------------------------------------------------------------------
Current assets
Cash and cash equivalents................................. $ 35,534 $ 29,040
Accounts receivable less allowance for doubtful
accounts............................................... 353,255 324,629
Inventories............................................... 238,064 227,486
Prepaid expenses.......................................... 22,186 23,785
---------- ----------
649,039 604,940
Property, plant and equipment, at cost, less accumulated
depreciation.............................................. 473,123 465,901
Investments in affiliates................................... 51,722 55,749
Intangibles and other assets................................ 171,105 136,854
---------- ----------
$1,344,989 $1,263,444
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
- --------------------------------------------------------------------------------------
Current liabilities
Current portion of borrowings and demand loans............ $ 110,452 $ 98,500
Accounts payable and accrued expenses..................... 225,320 204,582
Income taxes payable...................................... 31,571 26,330
---------- ----------
367,343 329,412
Long-term borrowings........................................ 267,989 246,191
Deferred income taxes and other............................. 87,182 85,277
---------- ----------
722,514 660,880
Shareholders' equity........................................ 622,475 602,564
---------- ----------
$1,344,989 $1,263,444
========== ==========
</TABLE>
F-1
<PAGE> 3
TELEFLEX INCORPORATED
CONDENSED CONSOLIDATED STATEMENT OF INCOME
- -------------------------------------------------------------------------------
(DOLLARS AND SHARES IN THOUSANDS, EXCEPT PER SHARE)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------
MAR. 26, MAR. 28,
2000 1999
-------- --------
<S> <C> <C>
Revenues.................................................... $427,590 $392,190
-------- --------
Cost of sales............................................... 306,178 281,239
Operating expenses.......................................... 76,416 72,020
Interest expense............................................ 5,034 4,316
-------- --------
387,628 357,575
-------- --------
Income before taxes......................................... 39,962 34,615
Provision for taxes on income............................... 13,148 11,561
-------- --------
Net income.................................................. $ 26,814 $ 23,054
======== ========
Earnings per share
Basic..................................................... $ 0.70 $ 0.61
Diluted................................................... $ 0.70 $ 0.60
Dividends per share......................................... $ 0.130 $ 0.115
Average number of common and common equivalent shares
outstanding
Basic..................................................... 38,096 37,637
Diluted................................................... 38,415 38,390
</TABLE>
F-2
<PAGE> 4
TELEFLEX INCORPORATED
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
- --------------------------------------------------------------------------------
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------
MAR. 26, MAR. 28,
2000 1999
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income................................................ $ 26,814 $ 23,054
Adjustments to reconcile net income to cash flows from
operating activities:
Depreciation and amortization.......................... 18,091 15,880
(Increase) in accounts receivable...................... (25,090) (36,284)
(Increase) in inventory................................ (4,550) (1,117)
Decrease (increase) in prepaid expenses................ 1,761 (1,844)
Increase in accounts payable and accrued expenses...... 14,918 9,160
Increase in income taxes payable....................... 4,716 6,123
-------- --------
36,660 14,972
-------- --------
Cash flows from financing activities:
Proceeds from new borrowings.............................. 28,000 7,000
Reduction in long-term borrowings......................... (2,236) (2,219)
Increase in current borrowings and demand loans........... 13,642 4,944
Proceeds from stock compensation plans.................... 1,258 533
Dividends................................................. (4,835) (4,328)
-------- --------
35,829 5,930
-------- --------
Cash flows from investing activities:
Expenditures for plant assets............................. (19,793) (21,208)
Payments for businesses acquired.......................... (48,548) (7,652)
Investments in affiliates................................. 191 (8,238)
Other..................................................... 2,155 (2,103)
-------- --------
(65,995) (39,201)
-------- --------
Net increase (decrease) in cash and cash equivalents........ 6,494 (18,299)
Cash and cash equivalents at the beginning of the period.... 29,040 66,689
-------- --------
Cash and cash equivalents at the end of the period.......... $ 35,534 $ 48,390
======== ========
</TABLE>
F-3
<PAGE> 5
TELEFLEX INCORPORATED
STATEMENT OF COMPREHENSIVE INCOME
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------
MAR. 26, MAR. 28,
2000 1999
-------- --------
<S> <C> <C>
Net income.................................................. $26,814 $23,054
Unrealized holding gain..................................... 235 --
Cumulative translation adjustment........................... (3,915) (2,507)
------- -------
Comprehensive income........................................ $23,134 $20,547
======= =======
</TABLE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 1
The accompanying unaudited condensed consolidated financial statements for
the three months ended March 26, 2000 and March 28, 1999 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 26, 2000, 2,296,514 shares of common stock were reserved for
issuance under the company's stock compensation plans.
NOTE 3
Inventories consisted of the following:
<TABLE>
<CAPTION>
MAR. 26, DEC. 26,
2000 1999
-------- --------
<S> <C> <C>
Raw materials............................................... $ 90,728 $ 84,490
Work-in-process............................................. 43,807 38,690
Finished goods.............................................. 103,529 104,306
-------- --------
$238,064 $227,486
======== ========
</TABLE>
F-4
<PAGE> 6
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
- -----------------------------------------------------------------------------
NOTE 4
BUSINESS SEGMENT INFORMATION:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------
MAR. 26, MAR. 28, PERCENT
2000 1999 CHANGE
-------- -------- -------
<S> <C> <C> <C>
Sales
Commercial................................................ $218,816 $184,496 19%
Medical................................................... 95,506 88,557 8%
Aerospace................................................. 113,268 119,137 -5%
-------- --------
Total.............................................. $427,590 $392,190 9%
======== ========
Operating Profit
Commercial................................................ $ 24,488 $ 19,619 25%
Medical................................................... 12,209 10,303 18%
Aerospace................................................. 12,681 13,268 -4%
-------- --------
49,378 43,190 14%
-------- --------
Less:
Interest expense.......................................... 5,034 4,316 17%
Corporate expenses........................................ 4,382 4,259 3%
-------- --------
Income before taxes......................................... 39,962 34,615 15%
Taxes on income............................................. 13,148 11,561 14%
-------- --------
Net income.................................................. $ 26,814 $ 23,054 16%
======== ========
</TABLE>
MANAGEMENT'S ANALYSIS OF QUARTERLY FINANCIAL DATA
- ----------------------------------------------------------------------------
RESULTS OF OPERATIONS:
Revenues increased 9% in the first quarter of 2000 to $427.6 million from
$392.2 million in 1999. Approximately one-half of the growth was the result of
acquisitions while the balance was generated internally. Sales increased in the
Commercial and Medical segments by 19% and 8%, respectively, while the Aerospace
Segment decreased by 5%. The Commercial, Medical and Aerospace segments
comprised 51%, 22% and 27% of the company's net sales, respectively.
The gross profit margin increased slightly to 28.4% in 2000 compared with
28.3% in 1999. The increase was due to higher gross profit margins in each of
the three segments offset by reduction in the mix of sales in the Medical
segment, which has higher gross profit margin relative to the other two
segments. Operating expenses as a percentage of sales decreased to 17.9% in 2000
compared with 18.4% in 1999 resulting primarily from the reduction in the mix of
Medical Segment sales.
Operating profit increased 14% in the first quarter from $43.2 million in
1999 to $49.4 million in 2000 resulting from gains in Commercial and Medical
offset by a slight decline in Aerospace. Operating margin increased from 11.0%
in 1999 to 11.5% in 2000 as a result of increases in the Commercial and Medical
segments. The Commercial, Medical and Aerospace segments comprised 49%, 25% and
26% of the company's operating profit, respectively.
Net income and diluted earnings per share for the quarter were $26.8
million and $0.70, which represent increases of 16% and 17%, respectively,
compared with 1999. Interest expense increased in 2000 as a result of an
increase in average debt and slightly higher interest rates. The effective
income tax rate was 32.9% in 2000 compared with 33.4% in 1999. The decline
resulted from a higher proportion of income in 2000 earned in countries with
relatively lower tax rates.
F-5
<PAGE> 7
INDUSTRY SEGMENT REVIEW:
- ------------------------
Sales in the Commercial Segment gained 19% from $184.5 million in 1999 to
$218.8 million in 2000 resulting from increases in all three product lines,
Automotive, Marine and Industrial. New products, such as the adjustable pedal,
and increased market share coupled with the continued strength of the domestic
automotive market contributed to the gain. Operating profit increased 25% from
$19.6 million in 1999 to $24.5 million in 2000 as a result of the sales
increase. Operating margin improved from 10.6% to 11.2% primarily from an
increase in the Automotive product line.
The Medical Segment sales increased 8% from $88.6 million in 1999 to $95.5
million in 2000 from gains in both the Hospital Supply and Surgical Devices
product lines. The gains were the result of growth in core product offerings and
two acquisitions designed to add additional products and distribution channels.
Operating profit increased 18% from $10.3 million to $12.2 million from the
sales increases. Operating margin improved to 12.8% from 11.6% due to a
combination of increased sales of higher margin products and cost reductions.
The Aerospace Segment sales decreased 5% from $119.1 million in 1999 to
$113.3 million in 2000 primarily from a decline in manufactured components,
which offset gains in cargo systems and turbo-machinery. Operating profit
decreased 4% as a result of the sales decline in manufactured components.
Operating margin was relatively flat as an improved product mix in the repairs
product line, along with cost reduction efforts, helped to offset the
volume-based decline in manufactured components.
CASH FLOWS FROM OPERATIONS AND LIQUIDITY:
- -----------------------------------------
Cash flows from operating activities increased $21.7 million to $36.7
million during the quarter ended March 26, 2000 due to working capital
improvements, as well as higher net income and depreciation. Long-term
borrowings increased by $21.8 million to $268.0 million at March 26, 2000 as
compared to $246.2 million at December 26, 1999. The increase was due to
borrowings incurred to finance acquisitions offset by declines from currency
exchange rate changes. This increase in long-term borrowings resulted in an
increase in the ratio of long-term borrowings to total capitalization from 29%
at December 26, 1999 to 30% at March 26, 2000.
FORWARD-LOOKING STATEMENTS:
- ---------------------------
This quarterly report includes the company's current plans and expectations
and is based on information available to it. It relies on a number of
assumptions and estimates which could be inaccurate and which are subject to
risks and uncertainties.
F-6
<PAGE> 8
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.
II-1
<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.
Vice President and Chief
Financial Officer
/s/ STEPHEN J. GAMBONE
--------------------------------------
Stephen J. Gambone
Controller and Chief
Accounting Officer
May 8, 2000
II-2
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> DEC-27-1999
<PERIOD-END> MAR-26-2000
<CASH> 35,534
<SECURITIES> 0
<RECEIVABLES> 353,255
<ALLOWANCES> 0
<INVENTORY> 238,064
<CURRENT-ASSETS> 649,039
<PP&E> 783,067
<DEPRECIATION> 309,944
<TOTAL-ASSETS> 1,344,989
<CURRENT-LIABILITIES> 367,343
<BONDS> 267,989
0
0
<COMMON> 38,117
<OTHER-SE> 584,358
<TOTAL-LIABILITY-AND-EQUITY> 1,344,989
<SALES> 427,590
<TOTAL-REVENUES> 427,590
<CGS> 306,178
<TOTAL-COSTS> 306,178
<OTHER-EXPENSES> 76,416
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,034
<INCOME-PRETAX> 39,962
<INCOME-TAX> 13,148
<INCOME-CONTINUING> 26,814
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 26,814
<EPS-BASIC> .70
<EPS-DILUTED> .70
</TABLE>
