-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CJqZ5hmdzqaBdT6ET3jKTVokVXFqzaoVq0Xutgx8of0nlYVL6/qIvF8QiKIhWFMn UKG6Tvfep/dMF3eXEKjCbw== 0000893220-98-001315.txt : 19980812 0000893220-98-001315.hdr.sgml : 19980812 ACCESSION NUMBER: 0000893220-98-001315 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980628 FILED AS OF DATE: 19980810 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: TELEFLEX INC CENTRAL INDEX KEY: 0000096943 STANDARD INDUSTRIAL CLASSIFICATION: SURGICAL & MEDICAL INSTRUMENTS & APPARATUS [3841] IRS NUMBER: 231147939 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-05353 FILM NUMBER: 98680673 BUSINESS ADDRESS: STREET 1: 630 W GERMANTOWN PK STE 450 STREET 2: SUITE 450 CITY: PLYMOUTH MEETING STATE: PA ZIP: 19462 BUSINESS PHONE: 2158346301 MAIL ADDRESS: STREET 1: 630 WEST GERMANTOWN PIKE STREET 2: SUITE 450 CITY: PLYMOUTH MEETING STATE: PA ZIP: 19462 10-Q 1 FORM 10-Q / TELEFLEX INCORPORATED 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 28, 1998 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 June 28, 1998 - ----------------------------- ---------------------------- Common Stock, $1.00 Par Value 37,378,428 2 Teleflex Incorporated Condensed Consolidated Balance Sheet (Dollars in Thousands) Assets ------
June 28, Dec 28, 1998 1997 ---------- ---------- Current assets Cash and cash equivalents $ 65,885 $ 30,702 Accounts receivable less allowance for doubtful accounts 294,312 260,187 Inventories 220,152 218,538 Prepaid expenses 18,521 21,182 Assets held for sale 35,868 ---------- ---------- 598,870 566,477 Property, plant and equipment, at cost, less accumulated depreciation 381,388 364,013 Investments in affiliates 32,705 37,510 Intangibles and other assets 113,672 111,165 ---------- ---------- $1,126,635 $1,079,165 ========== ==========
Liabilities and shareholders' equity ------------------------------------ Current liabilities Current portion of borrowings and demand loans $ 94,710 $ 115,729 Accounts payable and accrued expenses 175,256 158,386 Estimated income taxes payable 24,272 20,792 ---------- ---------- 294,238 294,907 Long-term borrowings 247,986 237,562 Deferred income taxes and other 82,823 82,943 ---------- ---------- 625,047 615,412 Shareholders' equity 501,588 463,753 ---------- ---------- $1,126,635 $1,079,165 ========== ==========
3 Teleflex Incorporated Condensed Consolidated Statement of Income (Dollars and Shares in Thousands, Except Per Share)
Three Months Ended Six Months Ended ----------------------- ----------------------- June 28, June 29, June 28, June 29, 1998 1997 1998 1997 ----------------------- ----------------------- Revenues $363,011 $280,263 $708,771 $549,607 -------- -------- -------- -------- Cost of sales 259,834 193,942 505,569 380,081 Operating expenses 66,383 54,786 131,372 109,057 Interest expense 4,261 3,478 8,746 6,834 -------- -------- -------- -------- 330,478 252,206 645,687 495,972 -------- -------- -------- -------- Income before taxes 32,533 28,057 63,084 53,635 Provision for taxes on income 11,289 9,708 21,982 18,609 -------- -------- -------- -------- Net income $ 21,244 $ 18,349 $ 41,102 $ 35,026 ======== ======== ======== ======== Earnings per share Basic $ 0.57 $ 0.50 $ 1.10 $ 0.96 Diluted $ 0.55 $ 0.49 $ 1.07 $ 0.94 Dividends per share $ 0.115 $ 0.100 $ 0.215 $ 0.188 Average number of common and common equivalent shares outstanding Basic 37,365 36,706 37,285 36,488 Diluted 38,459 37,624 38,390 37,388
4 Teleflex Incorporated Condensed Consolidated Statement of Cash Flows (Dollars in Thousands)
Six Months Ended ------------------------ June 28, June 29, 1998 1997 -------- -------- Cash flows from operating activities: Net income $ 41,102 $ 35,026 Adjustments to reconcile net income to cash flows from operating activities: Depreciation and amortization 29,812 23,346 (Increase) in accounts receivable (25,907) (17,073) Decrease (increase) in inventory 4,400 (3,088) Decrease in prepaid expenses 2,846 1,925 Increase (decrease) in accounts payable and accrued expenses 11,696 (1,915) Increase in estimated income taxes payable 1,026 2,284 -------- -------- 64,975 40,505 -------- -------- Cash flows from financing activities: Proceeds from new borrowings 11,713 9,000 Reduction in long-term borrowings (2,460) (10,754) (Decrease) increase in current borrowings and demand loans (30,904) 2,516 Proceeds from stock compensation plans 2,674 2,089 Dividends (8,008) (6,858) -------- -------- (26,985) (4,007) -------- -------- Cash flows from investing activities: Expenditures for plant assets (35,018) (34,975) Payments for businesses acquired (5,262) (349) Proceeds from sale of businesses and assets 35,868 Investments in affiliates (836) (7,215) Other 2,441 (1,927) -------- -------- (2,807) (44,466) -------- -------- Net increase (decrease) in cash and cash equivalents 35,183 (7,968) Cash and cash equivalents at the beginning of the period 30,702 68,618 -------- -------- Cash and cash equivalents at the end of the period $ 65,885 $ 60,650 ======== ========
5 Teleflex Incorporated Statement of Comprehensive Income
Three Months Ended Six Months Ended ------------------------ ------------------------ June 28, June 29, June 28, June 29, 1998 1997 1998 1997 -------- -------- -------- -------- Net income $ 21,244 $ 18,349 $ 41,102 $ 35,026 Cumulative translation adjustment (664) (891) (212) (2,175) -------- -------- -------- -------- Comprehensive income $ 20,580 $ 17,458 $ 40,890 $ 32,851 ======== ======== ======== ========
During the first quarter of 1998, the company adopted Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income". As presented above, cumulative translation adjustment represents the only element of other comprehensive income. Notes to Condensed Consolidated Financial Statements Note 1 The accompanying unaudited condensed consolidated financial statements for the three months and six months ended June 28, 1998 and June 29, 1997 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 28, 1998, 3,137,599 shares of common stock were reserved for issuance under the company's stock compensation plans. Note 3 Inventories consisted of the following:
June 28, Dec. 28, 1998 1997 -------- -------- Raw materials $ 76,783 $ 72,806 Work-in-process 40,743 40,368 Finished goods 102,626 105,364 -------- -------- $220,152 $218,538 ======== ========
6 Note 4 Business segment information:
Three Months Ended Six Months Ended ----------------------- ----------------------- June 28, June 29, June 28, June 29, 1998 1997 1998 1997 -------- -------- -------- -------- Sales Commercial $170,797 $125,692 $333,391 $248,432 Medical 84,911 81,127 164,255 160,695 Aerospace 107,303 73,444 211,125 140,480 -------- -------- -------- -------- Total $363,011 $280,263 $708,771 $549,607 ======== ======== ======== ======== Operating Profit Commercial $ 18,073 $ 18,010 $ 36,127 $ 34,117 Medical 10,285 8,101 19,782 16,689 Aerospace 12,884 8,762 24,570 16,498 -------- -------- -------- -------- Total $ 41,242 $ 34,873 $ 80,479 $ 67,304 ======== ======== ======== ========
Management's Analysis of Quarterly Financial Data Results of Operations: Revenues increased 30% in the second quarter of 1998 to $363.0 million from $280.3 million in 1997. The increase resulted from gains in the Commercial and Aerospace segments and, to a lesser extent, the Medical Segment. Approximately one-half of the growth was the result of acquisitions, primarily United Parts Group N.V. (United Parts), a European manufacturer of driver control systems purchased at the end of 1997. The other half of the increase in sales resulted from gains in the company's core product lines, principally in the Aerospace Segment. Changes in foreign exchange rates reduced reported sales by 2% compared with the second quarter of 1997. The Commercial, Medical and Aerospace segments comprised 47%, 23% and 30% of the company's net sales, respectively. Despite improvements within the Medical and Aerospace segments, gross profit margin decreased to 28.4% in 1998 compared with 30.8% in 1997. A reduction in the proportion of sales from the Medical Segment, which has a higher gross margin compared with the other segments; and, a lower contribution to gross margin from recent acquisitions resulted in the decrease. Operating expenses as a percentage of sales decreased to 18.3% in 1998 compared with 19.5% in 1997 resulting from the decline in the contribution of sales from the Medical Segment. 7 Operating profit increased 18% in the second quarter of 1998 from $34.9 million to $41.2 million. Operating margin declined from 12.4% in 1997 to 11.4% of sales in 1998. Operating profit increased in the Medical and Aerospace segments while the Commercial Segment was flat compared with the same period in 1997. An increase in the operating margin in the Medical Segment and, to a lesser extent, the Aerospace Segment was offset by a decline in the Commercial Segment. Industry Segment Review: - ------------------------ Sales in the Commercial Segment increased 36% from $125.7 million in 1997 to $170.8 million in 1998. The increase resulted from gains in the automotive and industrial product lines while the marine product line sales remained steady. The majority of the increase in sales in the Commercial Segment was the result of acquisitions in the prior year, primarily United Parts in December 1997. Operating profit in 1998 of $18.1 million remained steady compared with 1997; however, operating margin declined from 14.3% to 10.6% due primarily to a decrease in the automotive product line as a result of lower margins from recently acquired businesses. The General Motors strike, which began in June, reduced operating profits in the quarter by $1.4 million, or 2 cents per share. The Medical Segment sales increased 5% from $81.1 million in 1997 to $84.9 million in 1998 as both the surgical devices product line and the hospital supply product line showed improvements. The sales increased despite a negative impact from weaker foreign currencies. Operating profit increased 27% from $8.1 million to $10.3 million and operating margin improved from 10.0% to 12.1%. The improvement in operating profit and margin is the result of gains made in the surgical devices product line. The prior-year results were affected by expenses associated with the realignment of surgical devices sales and manufacturing and by the integration of an acquisition of a ligation clip manufacturer. The Aerospace Segment sales increased 46% from $73.4 million in 1997 to $107.3 million in 1998. Sales increased in all product lines in this Segment: cargo systems, coatings, repair services and turbine component manufacturing. The majority of the growth came from turbine component manufacturing which, along with other product lines in this Segment, has been affected by the favorable conditions in the commercial aviation market. Operating profit increased 47% due to the sales increase and operating margin improved slightly from 11.9% to 12.0%. 8 Cash flow from operations increased $24.5 million during the period ended June 28, 1998 compared with 1997 due to higher net income, depreciation and working capital improvements. During the first quarter of 1998 certain non-strategic assets of United Parts, acquired in December 1997, were sold for $35.9 million in cash which proceeds were used to repay related current borrowings. Long-term borrowings increased by $10.4 million from $237.6 million at December 28, 1997, to $248.0 million at June 28, 1998. The increase was the result of additional long-term borrowings incurred to finance the construction of a facility in Singapore offset by the effects of lower foreign currency translation rates and, to a lesser extent, repayments. The increase in shareholders' equity, primarily due to higher net income, resulted in an improvement in the ratio of long-term borrowings to total capitalization from 34% at December 28, 1997 to 33% at June 28, 1998. 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. 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. Vice President and Chief Financial Officer /s/ Stephen J. Gambone ---------------------- Stephen J. Gambone Controller and Chief Accounting Officer August 7, 1998 EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 6-MOS DEC-27-1998 MAR-02-1998 JUN-28-1998 65,885 0 294,312 0 220,152 598,870 381,388 0 1,126,635 294,238 247,986 0 0 37,378 464,210 1,126,635 363,011 363,011 259,834 259,834 66,383 0 4,261 32,533 11,289 21,244 0 0 0 21,244 .57 .55
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