-----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, C98FXSlrnV0bOMO/E1mib/Ke32xuPaPD1GF8DaXaZ0rt2j5DVa/btUcv51nrIEBq iPOM0vyfmwbAi3itq9RDAA== 0000893220-01-000317.txt : 20010328 0000893220-01-000317.hdr.sgml : 20010328 ACCESSION NUMBER: 0000893220-01-000317 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20001231 FILED AS OF DATE: 20010327 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: 1227 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 001-05353 FILM NUMBER: 1579764 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-K 1 w45905e10-k.txt FORM 10-K, TELEFLEX INCORPORATED 1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 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 NO. 1-5353 ------------------------ TELEFLEX INCORPORATED (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 23-1147939 (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
630 WEST GERMANTOWN PIKE, SUITE 450, PLYMOUTH MEETING, 19462 PENNSYLVANIA (ZIP CODE) (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
Registrant's telephone number, including area code: (610) 834-6301 Securities registered pursuant to Section 12(b) of the Act: Common Stock, par value $1 per share -- New York Stock Exchange Preference Stock Purchase Rights -- New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: NONE Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] 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 __ The aggregate market value of the voting stock held by non-affiliates of the registrant was approximately $1,423,049,800 as of February 1, 2001. The registrant had 38,448,912 Common Shares outstanding as of February 1, 2001. Documents Incorporated by Reference: (a) Annual Report to Shareholders for the fiscal year ended December 31, 2000, incorporated partially in Part I and Part II hereof; and (b) Proxy Statement for the 2001 Annual Meeting of Shareholders, incorporated partially in Part III hereof. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 PART I ITEM 1. BUSINESS Teleflex Incorporated ("the Company") was incorporated in 1943 as a manufacturer of precision mechanical push/pull controls for military aircraft. From this original single market, single product orientation, the Company began to emphasize products and services in a broader range of economically diverse markets to reduce its vulnerability to economic cycles. Since the mid-1970s, the Company's investments have been directed toward specific market niches employing its technical capabilities to provide solutions to specific engineering problems and, toward expanding into medical businesses. The continuing stream of new products and value-added product improvements that have resulted from this strategy have enabled the Company to participate in larger market segments. Several of these new products and product improvements were developed by means of an unusual investment program of the Company called the New Venture Fund. Established in 1972, the Fund directs monies representing one-half percent of sales into the development of new products and services. This concept allows for entrepreneurial risk taking in new areas by encouraging innovation and competition among the Company's managers for funds to pursue new programs and activities independent of their operating budgets. Examples of New Venture projects include the funding of second generation adjustable pedal research, flexible fuel hose and most of the early seed money for certain medical products. The Company's business is separated into three business segments -- Commercial, Medical and Aerospace. COMMERCIAL SEGMENT The Commercial Segment designs and manufactures proprietary mechanical and electrical controls for the automotive market; mechanical, electrical and hydraulic controls, and electronic products for the pleasure marine market; and proprietary products for fluid transfer and industrial applications. Products in the Commercial Segment generally are less complex and are produced in higher unit volume than that of the Company's other two segments. They are manufactured for general distribution as well as custom fabricated to meet individual customer needs. Consumer spending patterns generally influence the market trends for these products. The Commercial Segment consists of three major product lines: Automotive, Marine, and Industrial. The Company is a major supplier of driver control systems to automotive manufacturers worldwide. The principal products in this market are automatic and manual transmission gearshift systems; mechanical and electronic throttle systems; complete pedal box systems including adjustable pedals; and various release cables, general stampings and flexible fluoropolymer hoses. In May 1997, the Company acquired Comcorp Technologies, Inc. a supplier of pedal assemblies and other automotive components and systems. In December 1997, the Company acquired United Parts Group N.V., a European manufacturer of gearshift systems and other components supplying most of the European auto and truck makers. The Truck Systems Division of United Parts was sold in February 1998. The remaining Driver Control Division, with five manufacturing plants throughout Europe, expanded the Company's entrance into the European automotive market. The acquisitions of both Comcorp and United Parts are part of the Company's strategy to integrate cable controls with other automotive components in order to provide systems solutions for customers. Acceptance by the automobile manufacturers of a Company-developed control for use on a new model ordinarily assures the Company a large, but not exclusive, market share for the supply of that control. In 2000, the Company acquired a Tier I supplier of natural gas, propane and hydrogen components and systems to the alternative fuel vehicle market. The Company is a leading domestic producer of mechanical steering systems for pleasure power boats. It also manufactures hydraulic steering systems, engine throttle and shift controls, electrical gauges and instrumentation, GPS-driven navigation systems, autopilots and electronic fishfinders. The Company's marine products are sold principally to boat builders and in the aftermarket with the Humminbird line of electronic fishfinders sold substantially through retail outlets. These products are used principally on pleasure craft but 1 3 also have application on commercial vessels. In 2000, the Company agreed to acquire Morse Controls, a leading supplier of industrial and marine controls, adding $150 million in sales and strong European distribution for industrial products. The deal closed in February 2001. Industrial controls and electrical instrumentation products are also manufactured for use in other applications, including construction and agricultural equipment, leisure vehicles and other on- and off-road vehicles. In addition, the Company produces stainless steel overbraided fluoroplastic hose for fluid transfer in such markets as the chemical, petroleum, food processing, aerospace and automotive industries. MEDICAL SEGMENT The Medical Segment manufactures and distributes a broad range of invasive disposable and reusable devices for the urology, gastroenterology, anesthesiology and respiratory care markets worldwide. It also designs and manufactures a variety of specialty surgical products and provides instrument management services. Products in this segment generally are required to meet exacting standards of performance and have long product life cycles. External economic influences on sales relate primarily to spending patterns in the worldwide medical devices and supplies market. Within the Medical Segment, the Company has two major product lines: Hospital Supply and Surgical Devices. The Company also has extrusion capabilities, which it uses to serve original equipment manufacturers through Teleflex OEM. Teleflex OEM produces standard and custom-designed semi-finished components for other medical device manufacturers using its polymer materials and processing technology. The Hospital Supply product line, operating as Rusch International, has established a manufacturing base and distribution network, primarily in Europe. Acquisitions designed to broaden the Company's product and geographic offerings have been added over the years. During 2000, the Company acquired Medical Marketing Group, a supplier of specialty catheters in the United States home care market. The Hospital Supply product line includes the manufacture and sale of invasive disposable and reusable devices for the urology, gastroenterology, anesthesiology and respiratory care markets worldwide. Product offerings include, among others, catheters, endotracheal tubes, laryngoscopes, face masks, tracheostomy tubes and stents for airway management, fluoropolymer-based precision tubing, components and wire products. Surgical Devices, operating primarily as Pilling and Weck, designs, manufactures and distributes, largely through its own sales force, instruments used in surgical procedures. These products include general and specialized surgical instruments primarily for the cardiovascular; ear, nose and throat; and orthopedic markets; and closure products such as ligation clips, appliers and skin staples. The Company also provides specialized instrument management services. In 1997, the acquisition of a manufacturer with a complementary line of closure products increased the Company's product offerings. During 1998 and 1999, the Company acquired Sterilization Management Group (SMG) and Medical Sterilization, Inc., expanding its instrument management service capabilities. In 1999, the Company extended its mix and distribution of the Surgical Devices product line in the U.S. with the acquisition of Kmedic, an orthopedic instrument company. AEROSPACE SEGMENT The Aerospace Segment serves the commercial aerospace and industrial turbomachinery engine markets. Its businesses design and manufacture precision controls and cargo systems for aviation and provide surface treatments, repair services and manufactured components for users of both flight and land-based turbine engines. Sales are both to original equipment manufacturers and the aftermarket. These products and services, many of which are proprietary, require a high degree of engineering sophistication and are often custom designed. External economic influences on these products and services relate primarily to spending patterns in the worldwide aerospace industry and demand for power generation. Telair International manufactures and distributes cargo handling systems and containers for commercial aircraft and other aircraft controls. The Company's cargo handling systems include patented digitally controlled systems to move and secure containers of cargo inside commercial aircraft. In 1997, the Company acquired Scandinavian Bellyloading Company, a European manufacturer of cargo loading systems for narrow- 2 4 body aircraft, which complemented the Company's existing wide-body cargo handling systems. Cargo handling systems are sold either to aircraft manufacturers as original installations or to airlines and air freight carriers for retrofit of existing systems. The acquisition of Century Aero Products in 1999 and Air Cargo Equipment Corporation in 2000, both domestic manufacturers of cargo containers, complements the Company's cargo handling systems and positions the Company as a full service provider of both wide-body and narrow-body cargo handling systems and components. The Company also designs, manufactures and repairs mechanical and electromechanical components used on both commercial and, to a lesser extent, military aircraft. These other aircraft controls include flight controls, canopy and door actuators, cargo winches and control valves. In addition, the Company supplies spare parts to aircraft operators typically through distributors. This spare parts business extends as long as the particular type of aircraft continues in service. Sermatech International, through a network of facilities in eight countries, provides a variety of sophisticated protective coatings and repair services for ground turbine engine components, highly-specialized repairs for critical components such as fan blades and airfoils for flight-based turbine engines, and manufacturing and high quality dimensional finishing of airfoils and other turbine engine components. The Company has added technologies through acquisition and internal development and now offers a diverse range of technical services and materials technologies to turbine markets throughout the world. The Company formed a joint venture, Airfoil Technologies International LLC (ATI), with General Electric Aircraft Engines to provide fan blade and airfoil repair services for flight-based turbine engine blades. ATI provides a vehicle for the technological and geographic expansion of the Sermatech repairs services business. To further broaden the Company's turbo-machinery technological and manufacturing capabilities and to improve the range of product offerings, the Company, in 1996, acquired Lehr Precision, Inc., an electro-chemical machining manufacturer of turbo-machinery components used on both flight and ground turbines. In 1997, the Company acquired Gas-Path Technology, Inc. to expand its ground turbine repair capabilities within the Sermatech network of facilities. In 2000, the Company acquired an engineering firm, Turbine Technology Services Corporation, which broadens the Company's capabilities and provides a mechanism for expanding the coatings and repairs services. MARKETING In 2000, the percentages of the Company's consolidated net sales represented by its major markets were as follows: commercial -- 49%; medical -- 23%; and aerospace -- 28%. The major portion of the Company's products are sold to original equipment manufacturers. Generally, products sold to the aerospace and automotive markets are sold through the Company's own force of field engineers. Products sold to the marine, medical and general industrial markets are sold both through the Company's own sales forces and through independent representatives and independent distributor networks. For information on foreign operations, export sales, and principal customers, see text under the heading "Business segments and other information" on page 30 of the Company's 2000 Annual Report to Shareholders, which information is incorporated herein by reference. COMPETITION The Company has varying degrees of competition in all elements of its business. None of the Company's competitors offers products for all the markets served by the Company. The Company believes that its competitive position depends on the technical competence and creative ability of its engineering and development personnel, and the know-how and skill of its manufacturing personnel, as well as its plants, tooling and other resources. PATENTS The Company owns a number of patents and has a number of patent applications pending. The Company does not believe that its business is materially dependent on patent protection. 3 5 SUPPLIERS Materials used in the manufacture of the Company's products are purchased from a large number of suppliers. The Company is not dependent upon any single supplier for a substantial amount of the materials it uses. BACKLOG As of December 31, 2000, the Company's backlog of firm orders for the Aerospace Segment was $303 million, of which it is anticipated that more than one-half will be filled in 2001. The Company's backlog for the Aerospace Segment on December 26, 1999 was $295 million. As of December 31, 2000, the Company's backlog of firm orders for the Medical and Commercial segments was $28 million and $139 million, respectively. This compares with $22 million and $144 million, respectively, as of December 26, 1999. Substantially all of the December 31, 2000 backlog will be filled in 2001. Most of the Company's medical and commercial products are sold on orders calling for delivery within no more than a few months so that the backlog of such orders is not indicative of probable net sales in any future 12-month period. EMPLOYEES The Company had approximately 16,600 employees at December 31, 2000. EXECUTIVE OFFICERS The names and ages of all executive officers of the Company as of March 1, 2001 and the positions and offices with the Company held by each such officer are as follows:
POSITIONS AND OFFICES NAME AGE WITH COMPANY - ---- --- --------------------- Lennox K. Black 70 Chairman of the Board, Chief Executive Officer and Director John J. Sickler 58 Vice Chairman Dr. Roy C. Carriker 63 Vice Chairman Jeffrey P. Black 41 President Harold L. Zuber, Jr. 51 Vice President and Chief Financial Officer Steven K. Chance 55 Vice President, General Counsel and Secretary Ronald D. Boldt 58 Vice President -- Human Resources Kevin K. Gordon 38 Vice President -- Corporate Development Janine Dusossoit 47 Vice President -- Investor Relations Thomas M. Byrne 54 Assistant Treasurer Stephen J. Gambone 44 Controller and Chief Accounting Officer
Mr. Sickler was elected Vice Chairman on December 8, 2000. Prior to that date he was a Senior Vice President of the Company. Mr. Carriker was elected Vice Chairman on December 8, 2000. Prior to that date he was President and Chief Operating Officer of TFX Aerospace. Mr. Jeffrey P. Black was elected President of the Company on December 8, 2000. Prior to that date he was President of Teleflex Fluid Systems. Mr. Black is the son of Lennox K. Black. Mr. Gordon was elected Vice President -- Corporate Development on December 8, 2000. Prior to that date he was Director of Business Development. Mr. Lennox K. Black replaced David S. Boyer as Chief Executive Officer on January 31, 2000. Prior to that date he was Chairman of the Board. Mr. Boyer resigned his position as President and Chief Executive Officer on January 31, 2000. 4 6 Mr. Gambone was elected Controller and Chief Accounting Officer on April 24, 1998. Prior to that date he was Manager, Internal Auditing and Reporting. Officers are elected by the Board of Directors for one year terms. ITEM 2. PROPERTIES The Company's operations have approximately 120 owned and leased properties consisting of plants, engineering and research centers, distribution warehouses and other facilities. The properties are maintained in good operating condition. All the plants are suitably equipped and utilized and have space available for the activities currently conducted therein and the increased volume expected in the foreseeable future. The following are the Company's major facilities:
SQUARE OWNED OR EXPIRATION LOCATION FOOTAGE LEASED DATE - -------- ------- -------- ---------- COMMERCIAL SEGMENT Dassel, Germany............................................. 140,000 Owned N/A Van Wert, OH................................................ 130,000 Owned(1) N/A Warren, MI.................................................. 115,000 Leased 2003 Limerick, PA................................................ 110,000 Owned N/A Kendallville, IN............................................ 108,000 Owned N/A Dalstorp, Sweden............................................ 105,000 Owned N/A Hagerstown, MD.............................................. 103,000 Owned(1) N/A Waterbury, CT............................................... 99,000 Leased 2002 Eufaula, AL................................................. 98,000 Owned N/A Haysville, KS............................................... 98,000 Leased 2013 Suffield, CT................................................ 90,000 Leased 2009 Hillsdale, MI............................................... 85,000 Owned(1) N/A Matamoris, Mexico........................................... 85,000 Leased 2006 Sarasota, FL................................................ 82,000 Owned(1) N/A Kitchener, O.N., Canada..................................... 75,000 Owned N/A Shenyang, P.R. China........................................ 70,000 Leased 2010 Willis, TX.................................................. 70,000 Owned(1) N/A Nuevo Laredo, Mexico........................................ 67,000 Leased 2007 Eufaula, AL................................................. 61,000 Owned N/A Birmingham, England......................................... 60,000 Leased 2016 La Clusienne, France........................................ 60,000 Owned N/A Plymouth, MI................................................ 55,000 Leased 2003 Lebanon, VA................................................. 53,000 Owned(1) N/A Lyons, OH................................................... 50,000 Owned N/A Vrable, Slovakia............................................ 49,000 Leased 2001 Selvazzano, Italy........................................... 40,000 Leased 2006 Cremella, Italy............................................. 40,000 Leased 2006 Auburn Hills, MI............................................ 38,000 Owned N/A Goteborg, Sweden............................................ 38,000 Owned N/A Swainsboro, GA.............................................. 37,000 Leased 2004 Richmond, Canada............................................ 35,000 Leased 2001 Pickens, SC................................................. 35,000 Leased 2004 MEDICAL SEGMENT Kernen, Germany............................................. 263,000 Owned N/A Durham, NC.................................................. 144,000 Owned N/A Kernen, Germany............................................. 114,000 Leased 2013 Syosset, NY................................................. 100,000 Leased 2010 Taiping, Malaysia........................................... 85,000 Owned N/A
5 7
SQUARE OWNED OR EXPIRATION LOCATION FOOTAGE LEASED DATE - -------- ------- -------- ---------- Lurgan, Northern Ireland.................................... 80,000 Owned N/A Duluth, GA.................................................. 69,000 Leased 2009 Fort Washington, PA......................................... 65,000 Owned N/A Jaffrey, NH................................................. 60,000 Owned(1) N/A Franiere, Belgium........................................... 59,000 Leased 2005 Decatur, GA................................................. 51,000 Leased 2001 Tampa, FL................................................... 47,000 Leased 2002 Houston, TX................................................. 46,000 Leased 2003 Montevideo, Uruguay......................................... 45,000 Owned N/A Baltimore, MD............................................... 40,000 Leased 2002 Bad Liebenzell, Germany..................................... 36,000 Leased 2001 AEROSPACE SEGMENT Cincinnati, OH.............................................. 160,000 Leased 2004 Oxnard, CA.................................................. 145,000 Owned N/A Rancho Dominguez, CA........................................ 110,000 Leased 2004 Muncie, IN.................................................. 105,000 Leased 2008 Singapore, Asia............................................. 104,000 Owned N/A Mentor, OH.................................................. 90,000 Owned N/A Manchester, CT.............................................. 74,000 Owned N/A Limerick, PA................................................ 70,000 Owned N/A Derbyshire, England......................................... 70,000 Leased 2014 Murray Hill, NJ............................................. 64,000 Leased 2001 Baltimore, MD............................................... 62,000 Leased 2003 Houston, TX................................................. 61,000 Leased 2005 Lincoln, England............................................ 50,000 Leased 2018 Compton, CA................................................. 49,000 Leased 2010 Cincinnati, OH.............................................. 35,000 Owned N/A Tijuana, Mexico............................................. 35,000 Leased 2001
- --------------- (1) The Company is the beneficial owner of these facilities under installment sale or similar financing agreements. In addition to the above, the Company owns or leases approximately 1,500,000 square feet of warehousing, manufacturing and office space located in the United States, Canada, Mexico, Europe and Asia. ITEM 3. LEGAL PROCEEDINGS The Company is subject to numerous federal, state and local environmental laws and regulations including the Resource Conservation and Recovery Act, Comprehensive Environmental Response, Compensation and Liability Act, the Clean Air Act, and the Clean Water Act. Environmental programs are in place throughout the Company, which include training, auditing and monitoring to ensure compliance with such laws and regulations. In addition, the United States Environmental Protection Agency has named the Company as a potentially responsible party at various sites throughout the country. Environmental costs, including liabilities associated with such sites, and the costs of complying with existing environmental regulations are not expected to result in a liability material to the Company's consolidated financial position, results of operations or cash flows. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not applicable. 6 8 PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS See "Price Range and Dividends of Common Stock" on page 40 of the Company's 2000 Annual Report to Shareholders for market price and dividend information. Also see the Note entitled "Borrowings and Leases" on page 29 of such Annual Report for certain dividend restrictions under loan agreements, all of which information is incorporated herein by reference. The Company had approximately 1,300 registered shareholders at February 1, 2001. ITEM 6. SELECTED FINANCIAL DATA See pages 32 and 33 of the Company's 2000 Annual Report to Shareholders, which pages are incorporated herein by reference. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS See the text under the heading "2000 Financial Review" on pages 34 through 39 of the Company's 2000 Annual Report to Shareholders, which information is incorporated herein by reference. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK See the text section entitled "Liquidity, Market Risk and Capital Resources" contained within the "2000 Financial Review" on pages 34 through 39 of the Company's 2000 Annual Report to Shareholders, which information is incorporated herein by reference. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA See pages 25 through 31 of the Company's 2000 Annual Report to Shareholders, which pages are incorporated herein by reference. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT For information with respect to the Company's Directors and Director nominees, see "Election Of Directors", "Nominees For The Board Of Directors" and "Additional Information About The Board Of Directors" on pages 3 through 5 of the Company's Proxy Statement for its 2001 Annual Meeting, which information is incorporated herein by reference. For information with respect to the Company's Executive Officers, see Part I of this report on page 4, which information is incorporated herein by reference. ITEM 11. EXECUTIVE COMPENSATION See "Additional Information About The Board of Directors", "Compensation Committee Report on Executive Compensation", "Five-Year Shareholder Return Comparison" and "Executive Compensation and Other Information" on pages 5 through 11 of the Company's Proxy Statement for its 2001 Annual Meeting, which information is incorporated herein by reference. 7 9 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT See "Security Ownership of Certain Beneficial Owners and Management" on pages 11 and 12, and "Election Of Directors" and "Nominees For The Board Of Directors" on pages 3 and 4 of the Company's Proxy Statement for its 2001 Annual Meeting, which information is incorporated herein by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS See "Additional Information About The Board Of Directors", "Compensation Committee Report on Executive Compensation", and "Executive Compensation and Other Information" on pages 5 through 11 of the Company's Proxy Statement for its 2001 Annual Meeting, which information is incorporated herein by reference. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a) Consolidated Financial Statements: The index to Consolidated Financial Statements and Schedules is set forth on page 10 hereof. (b) Reports on Form 8-K: None. (c) Exhibits: The Exhibits are listed in the Index to Exhibits. For the purposes of complying with the amendments to the rules governing Form S-8 (effective July 13, 1990) under the Securities Act of 1933, the undersigned registrant hereby undertakes as follows, which undertaking shall be incorporated by reference into registrant's Registration Statements on Form S-8, Nos. 2-84148 (filed June 28, 1989), 2-98715 (filed May 11, 1987), 33-34753 (filed May 10, 1990), 33-53385 (filed April 29, 1994), 333-77601 (filed May 3, 1999), 333-38224 (filed May 31, 2000) and 333-41654 (filed July 18, 2000): Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. 8 10 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized as of the date indicated below. TELEFLEX INCORPORATED By LENNOX K. BLACK ------------------------------------ Lennox K. Black (Chairman of the Board & Principal Executive Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and as of the date indicated below. By HAROLD L. ZUBER, JR. ------------------------------------ Harold L. Zuber, Jr. (Vice President & Principal Financial Officer) By STEPHEN J. GAMBONE ------------------------------------ Stephen J. Gambone (Controller & Principal Accounting Officer) Pursuant to General Instruction D to Form 10-K, this report has been signed by Steven K. Chance as Attorney-in-Fact for a majority of the Board of Directors as of the date indicated below. Lennox K. Black Director Pemberton Hutchinson Director Donald Beckman Director James W. Stratton Director Joseph S. Gonnella, MD Director William R. Cook Director Palmer E. Retzlaff Director Sigismundus W. W. Lubsen Director Patricia C. Barron Director
By STEVEN K. CHANCE ------------------------------------ Steven K. Chance Attorney-in-Fact Dated: March 26, 2001 9 11 TELEFLEX INCORPORATED INDEX TO CONSOLIDATED FINANCIAL STATEMENTS The consolidated financial statements together with the report thereon of PricewaterhouseCoopers LLP dated February 14, 2001 on pages 25 to 33 of the accompanying 2000 Annual Report to Shareholders are incorporated in this Annual Report on Form 10-K. With the exception of the aforementioned information and those portions incorporated by specific reference in this document, the 2000 Annual Report to Shareholders is not to be deemed filed as part of this report. The following Financial Statement Schedule together with the report thereon of PricewaterhouseCoopers LLP dated February 14, 2001 on page 11 should be read in conjunction with the consolidated financial statements in such 2000 Annual Report to Shareholders. Financial Statement Schedules not included in this Form 10-K Annual Report have been omitted because they are not applicable or the required information is shown in the consolidated financial statements or notes thereto. FINANCIAL STATEMENT SCHEDULE Schedule:
PAGE ---- II Valuation and qualifying accounts........................... 12
10 12 REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULE To the Board of Directors of Teleflex Incorporated Our audits of the consolidated financial statements referred to in our report dated February 14, 2001 appearing on page 31 of the 2000 Annual Report to Shareholders of Teleflex Incorporated (which report and consolidated financial statements are incorporated by reference in this Annual Report on Form 10-K) also included an audit of the Financial Statement Schedule listed in Item 14(a) of this Form 10-K. In our opinion, the Financial Statement Schedule presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. PricewaterhouseCoopers LLP Philadelphia, Pennsylvania February 14, 2001 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (No. 2-84148, No. 2-98715, No. 33-34753, No. 33-53385, No. 333-77601, No. 333-38224 and No. 333-41654) of Teleflex Incorporated of our report dated February 14, 2001 appearing on page 31 of the 2000 Annual Report to Shareholders which is incorporated in this Annual Report on Form 10-K. We also consent to the incorporation by reference of our report on the Financial Statement Schedule, which appears above. PricewaterhouseCoopers LLP Philadelphia, Pennsylvania March 26, 2001 11 13 TELEFLEX INCORPORATED SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS ALLOWANCE FOR DOUBTFUL ACCOUNTS
BALANCE AT ADDITIONS DOUBTFUL BALANCE AT BEGINNING CHARGED TO ACCOUNTS END OF FOR THE YEAR ENDED OF YEAR INCOME WRITTEN OFF YEAR - ------------------ ---------- ---------- ----------- ---------- December 31, 2000........................ $4,825,000 $2,460,000 $(1,509,000) $5,776,000 December 26, 1999........................ $4,577,000 $1,613,000 $(1,365,000) $4,825,000 December 27, 1998........................ $5,668,000 $2,190,000 $(3,281,000) $4,577,000
12 14 INDEX TO EXHIBITS
EXHIBIT - ------- 3(a) -- The Company's Articles of Incorporation (except for Article Thirteenth and the first paragraph of Article Fourth) are incorporated herein by reference to Exhibit 3(a) to the Company's Form 10-Q for the period ended June 30, 1985. Article Thirteenth of the Company's Articles of Incorporation is incorporated herein by reference to Exhibit 3 of the Company's Form 10-Q for the period ended June 28, 1987. The first paragraph of Article Fourth of the Company's Articles of Incorporation is incorporated herein by reference to Exhibit 3(a) of the Company's Form 10-K for the year ended December 27, 1998. (b) -- The Company's Bylaws are incorporated herein by reference to Exhibit 3(b) of the Company's Form 10-K for the year ended December 28, 1987. 4 -- The Company's Shareholders' Rights Plan is incorporated herein by reference to the Company's Form 8-K dated December 7, 1998. 10(a) -- The 1982 Stock Option Plan, incorporated herein by reference to the Company's registration statement on Form S-8 (Registration No. 2-84148), as supplemented, with amendments of April 26, 1991, incorporated by reference to the Company's definitive Proxy Statement for the 1991 Annual Meeting of Shareholders. (b) -- The 1990 Stock Compensation Plan, incorporated herein by reference to the Company's registration statement on Form S-8 (Registration No. 33-34753), revised and restated as of December 1, 1997, incorporated by reference to Exhibit 10(b) of the Company's Form 10-K for the year ended December 28, 1997. (c) -- The Salaried Employees' Pension Plan, as amended and restated in its entirety, effective July 1, 1989 and the retirement income plan as amended and restated in its entirety, effective January 1, 1994 and related Trust Agreements, dated July 1, 1994, is incorporated by reference to the Company's Form 10-K for the year ended December 25, 1994. (d) -- Description of deferred compensation arrangements between the Company and its Chairman and Chief Executive Officer, L.K. Black, incorporated by reference to the Company's definitive Proxy Statement for the 2001 Annual Meeting of Shareholders. (e) -- Description of compensation arrangement between the Company and its former President and Chief Executive Officer, David S. Boyer, incorporated by reference to the Company's definitive Proxy Statement for the 2001 Annual Meeting of Shareholders. (f) -- Teleflex Incorporated Deferred Compensation Plan, effective as of January 1, 1995, and amended and restated on Form S-8 (Registration No. 333-77601) is incorporated by reference to Exhibit 10(f) of the Company's Form 10-K for the year ended December 27, 1998. (g) -- Information on the Company's Profit Participation Plan, insurance arrangements with certain officers and deferred compensation arrangements with certain officers, non-qualified supplementary pension plan for salaried employees and compensation arrangements with directors is incorporated by reference to the Company's definitive Proxy Statement for the 1999, 2000 and 2001 Annual Meeting of Shareholders. (h) -- The Company's Voluntary Investment Plan is incorporated by reference to Exhibit 28 of the Company's registration statement on Form S-8 (Registration No. 2-98715). (i) -- The 2000 Stock Compensation Plan, incorporated herein by reference to the Company's registration statement on Form S-8 (Registration No. 333-38224), filed on May 31, 2000. (j) -- The Company's Global Employee Stock Purchase Plan, incorporated herein by reference to the Company's registration statement on Form S-8 (Registration No. 333-41654), filed on July 18, 2000. 13 -- Pages 25 through 40 of the Company's Annual Report to Shareholders for the period ended December 31, 2000. 21 -- The Company's Subsidiaries. 23 -- Consent of Independent Accountant (see page 11 herein). 24 -- Power of Attorney.
13 EX-13 2 w45905ex13.txt TELEFLEX ANNUAL REPORT 1 TELEFLEX INCORPORATED AND SUBSIDIARIES CONSOLIDATED STATEMENT OF INCOME
Year ended - ---------------------------------------------------------------------------------------------------------------------- DECEMBER 31, December 26, December 27, 2000 1999 1998 - ---------------------------------------------------------------------------------------------------------------------- (Dollars in thousands, except per share) REVENUES $1,764,482 $1,601,069 $1,437,578 - ---------------------------------------------------------------------------------------------------------------------- COSTS AND EXPENSES Materials, labor and other product costs 1,274,203 1,155,879 1,029,658 Selling, engineering and administrative expenses 311,278 284,702 266,106 Interest expense, net 20,787 17,732 17,054 - ---------------------------------------------------------------------------------------------------------------------- 1,606,268 1,458,313 1,312,818 - ---------------------------------------------------------------------------------------------------------------------- Income before taxes 158,214 142,756 124,760 Taxes on income 48,990 47,536 42,210 - ---------------------------------------------------------------------------------------------------------------------- NET INCOME $ 109,224 $ 95,220 $ 82,550 - ---------------------------------------------------------------------------------------------------------------------- EARNINGS PER SHARE Basic $2.86 $2.52 $2.21 Diluted $2.83 $2.47 $2.15 - ----------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of the consolidated financial statements. 25 2 TELEFLEX INCORPORATED AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET
Year ended - -------------------------------------------------------------------------------------------------------------------- DECEMBER 31, December 26, 2000 1999 - -------------------------------------------------------------------------------------------------------------------- (Dollars in thousands) ASSETS Current assets Cash and cash equivalents $ 45,139 $ 29,040 Accounts receivable, less allowance for doubtful accounts, 2000 - $5,776; 1999 - $4,825 334,346 324,629 Inventories 259,845 227,486 Prepaid expenses 22,708 23,785 - -------------------------------------------------------------------------------------------------------------------- Total current assets 662,038 604,940 - -------------------------------------------------------------------------------------------------------------------- Plant assets Land and buildings 171,776 162,425 Machinery and equipment 659,288 604,048 - -------------------------------------------------------------------------------------------------------------------- 831,064 766,473 Less accumulated depreciation 341,561 300,572 - -------------------------------------------------------------------------------------------------------------------- Net plant assets 489,503 465,901 Investments in affiliates 39,515 55,749 Intangibles and other assets 210,232 136,854 - -------------------------------------------------------------------------------------------------------------------- $1,401,288 $1,263,444 - -------------------------------------------------------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Demand loans $ 97,040 $ 61,300 Current portion of long-term borrowings 20,997 37,200 Accounts payable 119,221 99,968 Accrued expenses 116,483 104,614 Income taxes payable 30,131 26,330 - -------------------------------------------------------------------------------------------------------------------- Total current liabilities 383,872 329,412 Long-term borrowings 220,557 246,191 Deferred income taxes and other 106,437 85,277 - -------------------------------------------------------------------------------------------------------------------- Total liabilities 710,866 660,880 - -------------------------------------------------------------------------------------------------------------------- Shareholders' equity Common shares, $1 par value Issued: 2000 - 38,344,427 shares; 1999 - 38,018,735 shares 38,344 38,019 Additional paid-in capital 79,546 73,786 Retained earnings 602,544 515,483 Accumulated other comprehensive income (30,012) (24,724) - -------------------------------------------------------------------------------------------------------------------- Total shareholders' equity 690,422 602,564 - -------------------------------------------------------------------------------------------------------------------- $1,401,288 $1,263,444 - --------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of the consolidated financial statements. 26 3 TELEFLEX INCORPORATED AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS
Year ended - -------------------------------------------------------------------------------------------------------------------- DECEMBER 31, December 26, December 27, 2000 1999 1998 - -------------------------------------------------------------------------------------------------------------------- (Dollars in thousands) CASH FLOWS FROM OPERATING ACTIVITIES Net income $109,224 $95,220 $82,550 Adjustments to reconcile net income to cash flows from operating activities: Depreciation and amortization 77,417 67,389 60,105 Deferred income taxes 8,972 4,710 2,702 (Increase) in accounts receivable (6,620) (32,325) (24,745) (Increase) decrease in inventories (18,150) 5,472 (8,626) Decrease (increase) in prepaid expenses 1,030 (4,710) 2,676 Increase (decrease) in accounts payable and accrued expenses 15,297 (4,870) 12,777 Increase in income taxes payable 2,245 3,182 4,188 - -------------------------------------------------------------------------------------------------------------------- 189,415 134,068 131,627 - -------------------------------------------------------------------------------------------------------------------- CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from new borrowings 46,390 50,866 42,868 Reduction in long-term borrowings (64,706) (46,941) (19,670) Increase (decrease) in current borrowings and demand loans 13,902 1,812 (39,029) Proceeds from stock compensation plans 5,258 5,890 5,918 Dividends (22,163) (19,126) (16,628) - -------------------------------------------------------------------------------------------------------------------- (21,319) (7,499) (26,541) - -------------------------------------------------------------------------------------------------------------------- CASH FLOWS FROM INVESTING ACTIVITIES Expenditures for plant assets (80,652) (96,516) (69,063) Payments for businesses acquired (87,846) (43,895) (22,026) Proceeds from disposition of product lines and assets 17,812 -- 35,868 Investments in affiliates (4,423) (22,377) (15,691) Other 3,112 (1,430) 1,813 - -------------------------------------------------------------------------------------------------------------------- (151,997) (164,218) (69,099) - -------------------------------------------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 16,099 (37,649) 35,987 Cash and cash equivalents at the beginning of the year 29,040 66,689 30,702 - -------------------------------------------------------------------------------------------------------------------- Cash and cash equivalents at the end of the year $ 45,139 $29,040 $66,689 - --------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of the consolidated financial statements. 27 4 TELEFLEX INCORPORATED AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
Year ended - -------------------------------------------------------------------------------------------------------------------- DECEMBER 31, December 26, December 27, 2000 1999 1998 - -------------------------------------------------------------------------------------------------------------------- (Dollars in thousands, except per share) COMMON SHARES Balance, beginning of year $ 38,019 $ 37,615 $ 37,118 Shares issued under compensation plans 325 404 497 - -------------------------------------------------------------------------------------------------------------------- Balance, end of year 38,344 38,019 37,615 - -------------------------------------------------------------------------------------------------------------------- ADDITIONAL PAID-IN CAPITAL Balance, beginning of year 73,786 72,080 63,158 Shares issued under compensation plans 5,760 1,706 8,922 - -------------------------------------------------------------------------------------------------------------------- Balance, end of year 79,546 73,786 72,080 - -------------------------------------------------------------------------------------------------------------------- RETAINED EARNINGS Balance, beginning of year 515,483 439,389 373,467 Net income 109,224 95,220 82,550 Cash dividends (22,163) (19,126) (16,628) - -------------------------------------------------------------------------------------------------------------------- Balance, end of year 602,544 515,483 439,389 - -------------------------------------------------------------------------------------------------------------------- ACCUMULATED OTHER COMPREHENSIVE INCOME Cumulative translation adjustment (30,012) (20,875) (14,634) Unrealized loss on securities -- (3,849) -- - -------------------------------------------------------------------------------------------------------------------- Balance, end of year (30,012) (24,724) (14,634) - -------------------------------------------------------------------------------------------------------------------- TOTAL SHAREHOLDERS' EQUITY $ 690,422 $602,564 $534,450 - -------------------------------------------------------------------------------------------------------------------- CASH DIVIDENDS PER SHARE $.58 $.51 $.45 - -------------------------------------------------------------------------------------------------------------------- COMPREHENSIVE INCOME Net income $109,224 $ 95,220 $ 82,550 Cumulative translation adjustment (9,137) (6,241) (4,644) Unrealized holding gain (loss) on securities 5,520 (3,849) -- Reclassification for gain included in net income (1,671) -- -- - -------------------------------------------------------------------------------------------------------------------- Total comprehensive income $103,936 $ 85,130 $ 77,906 - --------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of the consolidated financial statements. 28 5 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share) DESCRIPTION OF BUSINESS Teleflex Incorporated designs, manufactures and distributes engineered products and services for the automotive, marine, industrial, medical and aerospace markets worldwide. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The consolidated financial statements include the accounts of Teleflex Incorporated and its subsidiaries. These consolidated financial statements have been prepared in conformity with generally accepted accounting principles, and include management's estimates and assumptions that affect the recorded amounts. Cash and cash equivalents include funds invested in a variety of liquid short-term investments with an original maturity of three months or less. Inventories are stated principally at the lower of average cost or market and consist of the following:
2000 1999 - -------------------------------------------------------------------------------- Raw materials $108,808 $ 84,490 Work-in-process 36,065 38,690 Finished goods 114,972 104,306 - -------------------------------------------------------------------------------- $259,845 $227,486 - --------------------------------------------------------------------------------
Plant assets include the cost of additions and those improvements which increase the capacity or lengthen the useful lives of the assets. Repairs and maintenance costs are expensed as incurred. With minor exceptions, straight-line composite lives for depreciation of plant assets are as follows: buildings 20 to 40 years; machinery and equipment 8 to 12 years. Intangible assets, principally the excess purchase price of acquisitions over the fair value of net tangible assets acquired, are being amortized over periods not exceeding 30 years. The company periodically reviews the carrying value of intangible assets primarily based on an analysis of cash flows. Assets and liabilities of non-domestic subsidiaries are translated at the rates of exchange at the balance sheet date; income and expenses are translated at the average rates of exchange prevailing during the year. The related translation adjustments are accumulated in shareholders' equity. Investments in companies in which ownership interests range from 20% to 50% and the company exercises significant influence over operating and financial policies are accounted for using the equity method. Unrealized gains and losses on certain securities are accumulated in other comprehensive income, a separate component of shareholders' equity. ACQUISITIONS During 2000 and 1999 the company acquired various smaller businesses across several markets for $87,846 and $43,895 in cash, respectively. For 2000 and 1999 liabilities of $39,237 and $9,924 were assumed in connection with the acquisitions. The assets, liabilities and operating results of these businesses are included in the company's financial statements from their dates of acquisition. BORROWINGS AND LEASES
2000 1999 - -------------------------------------------------------------------------------- Senior Notes at an average fixed rate of 7.2%, due in installments through 2008 $ 83,500 $ 61,000 Term loan notes, primarily Euro, at an average fixed rate of 5.7%, with an average maturity of three years 120,602 127,359 Other debt, mortgage notes and capital lease obligations, at interest rates ranging from 3% to 9% 37,452 95,032 - -------------------------------------------------------------------------------- 241,554 283,391 Current portion of borrowings (20,997) (37,200) - -------------------------------------------------------------------------------- $220,557 $246,191 - --------------------------------------------------------------------------------
The various senior note agreements provide for the maintenance of minimum working capital amounts and ratios and limit the repurchase of the company's stock and payment of cash dividends. Under the most restrictive of these provisions, $174,000 of retained earnings was available for dividends at December 31, 2000. The weighted average interest rate on the $97,040 of demand loans was 6.0% at December 31, 2000. In addition, the company has approximately $250,000 available under several interest rate alternatives in unused lines of credit. Interest expense in 2000, 1999 and 1998 did not differ materially from interest paid, nor did the carrying value of year end long-term borrowings differ materially from fair value. The aggregate amounts of debt, including capital leases, maturing in each of the four years after 2001 are as follows: 2002 - $57,036; 2003 - $22,809; 2004 - $43,361; 2005 - $48,354. The company has entered into certain operating leases which require minimum annual payments as follows: 2001 - $27,659; 2002 - $23,321; 2003 - $19,446; 2004 - - $17,193; 2005 - $13,903. The total rental expense for all operating leases was $29,640, $25,608 and $22,467 in 2000, 1999 and 1998, respectively. 29 6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued (Dollars in thousands, except per share) SHAREHOLDERS' EQUITY AND STOCK COMPENSATION PLANS The authorized capital of the company is comprised of 100,000,000 common shares, $1 par value, and 500,000 preference shares. No preference shares were outstanding during the last three years. Options to purchase common stock are awarded at market price on the date of grant and expire no later than 10 years after that date. No compensation expense has been recognized for stock option plans. Diluted earnings per share would have been reduced $.04 or less in 2000, 1999 and 1998 had compensation expense for stock options been determined based on the fair value at the grant date. The fair value of options granted during 2000, 1999 and 1998 of $10.56, $16.50 and $13.64, respectively, was estimated using the Black-Scholes option-pricing model. Officers and key employees held options for the purchase of 1,976,914 shares of common stock at prices ranging from $14.13 to $45.50 per share with an average exercise price of $29.13 per share and an average remaining contractual life of 7 years. Such options are presently exercisable with respect to 1,035,864 shares at an average exercise price of $25.13. Options to purchase 464,550, 447,750 and 47,000 shares of common stock were granted at average exercise prices of $29.20, $40.97 and $40.59, in 2000, 1999 and 1998, respectively. Options exercised were 282,576, 517,690 and 390,195 at average exercise prices of $16.27, $13.96 and $14.84 in 2000, 1999 and 1998, respectively. Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed in the same manner except that the weighted average number of common shares is increased for dilutive securities. The difference between basic and diluted weighted average common shares results from the assumption that dilutive stock options were exercised. INCOME TAXES The provision for income taxes consisted of the following:
2000 1999 1998 - -------------------------------------------------------------------------------- Current Federal $27,842 $33,978 $32,278 State 3,269 3,335 3,239 Foreign 8,907 5,513 3,991 Deferred 8,972 4,710 2,702 - -------------------------------------------------------------------------------- $48,990 $47,536 $42,210 - --------------------------------------------------------------------------------
The deferred income taxes provided and the balance sheet amounts of $50,722 in 2000 and $41,333 in 1999 related substantially to the methods of accounting for depreciation. Income taxes paid were $36,961, $39,923 and $31,028 in 2000, 1999 and 1998, respectively.
2000 1999 1998 - -------------------------------------------------------------------------------- Tax at U.S. statutory rate 35.0% 35.0% 35.0% State income taxes 1.3 1.6 1.7 Foreign income taxes (3.9) (1.8) (1.3) Export sales benefit (1.5) (1.5) (1.5) Other .1 -- (.1) - -------------------------------------------------------------------------------- Effective income tax rate 31.0% 33.3% 33.8% - --------------------------------------------------------------------------------
BUSINESS SEGMENTS AND OTHER INFORMATION The company has determined that its reportable segments are Commercial, Medical and Aerospace. This assessment reflects the aggregation of businesses which have similar products and services, manufacturing processes, customers and distribution channels, and is consistent with both internal management reporting and resource and budgetary allocations. Reference is made to pages 32 and 33 for a summary of operations by business segment. A summary of revenues, identifiable assets and operating profit relating to the company's non-domestic operations, substantially European, and export sales is as follows:
2000 1999 1998 - -------------------------------------------------------------------------------- Revenues $675,787 $642,827 $571,587 Identifiable assets $580,756 $539,282 $551,440 Operating profit $ 60,132 $ 50,552 $ 38,537 Export sales $196,500 $181,500 $151,100 - --------------------------------------------------------------------------------
PENSION AND OTHER POSTRETIREMENT BENEFITS The company provides defined benefit pension and postretirement benefit plans to eligible employees. Assumptions used in determining pension expense and benefit obligations reflect a weighted average discount rate of 7.5% in 2000 and 1999, an investment rate of 9% and a salary increase of 5%. Assumptions used in determining other postretirement expense and benefit obligations include a weighted average discount rate of 7.6% in 2000 and 7.3% in 1999 and a health care cost trend rate of 5.5%. Increasing the trend rate by 1% would increase the benefit obligation by $1,452 and would increase the 2000 benefit expense by $159. Decreasing the trend rate by 1% would decrease the benefit obligation by $1,244 and would decrease the 2000 benefit expense by $123. 30 7 The following tables provide net benefit cost, a reconciliation of benefit obligations, plan assets and funded status of the plans:
Pension Other Benefits - -------------------------------------------------------------------------------- 2000 1999 2000 1999 - -------------------------------------------------------------------------------- Service cost $ 4,237 $ 3,603 $ 331 $ 227 Interest cost 6,639 5,761 1,030 886 Actual return (9,649) (631) -- -- Net amortization and deferral 2,103 (7,420) 348 145 Foreign plans 1,269 1,169 -- -- - -------------------------------------------------------------------------------- Net benefit cost $ 4,599 $ 2,482 $ 1,709 $ 1,258 - -------------------------------------------------------------------------------- Benefit obligations, beginning of year $ 90,089 $ 90,070 $ 14,911 $ 13,537 Service cost 4,237 3,603 331 227 Interest cost 6,639 5,761 1,030 886 Amendments 107 1,675 225 (252) Actuarial loss (gain) 975 (2,521) 910 1,326 Acquisitions 1,012 (3,184) -- -- Currency translation (1,034) (2,074) -- -- Benefits paid (4,789) (4,410) (989) (813) Foreign plans 1,269 1,169 -- -- - -------------------------------------------------------------------------------- Benefit obligations, end of year 98,505 90,089 16,418 14,911 - -------------------------------------------------------------------------------- Fair value of plan assets, beginning of year 76,226 77,503 -- -- Actual return 9,649 631 -- -- Acquisitions 446 -- -- -- Contributions 2,525 1,611 -- -- Benefits paid (4,152) (3,519) -- -- - -------------------------------------------------------------------------------- Fair value of plan assets, end of year 84,694 76,226 -- -- - -------------------------------------------------------------------------------- Funded status (13,811) (13,863) (16,418) (14,911) Unrecognized transition (asset) obligation (834) (1,032) 5,022 5,441 Unrecognized net actuarial gain (10,444) (10,205) (370) (1,353) Unrecognized prior service cost 4,129 3,189 638 414 - -------------------------------------------------------------------------------- Accrued benefit cost $(20,960) $(21,911) $(11,128) $(10,409) - --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS [PRICEWATERHOUSE COOPERS LOGO] To the Board of Directors and Shareholders Teleflex Incorporated In our opinion, the consolidated financial statements appearing on pages 25 through 31 of this Annual Report present fairly, in all material respects, the financial position of Teleflex Incorporated and its subsidiaries at December 31, 2000 and December 26, 1999 and the results of their operations and cash flows for each of the three years in the period ended December 31, 2000, in conformity with generally accepted accounting principles in the United States. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. /s/ PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP Philadelphia, Pennsylvania February 14, 2001
QUARTERLY DATA (unaudited) - -------------------------------------------------------------------------------- 2000 FIRST SECOND THIRD FOURTH - -------------------------------------------------------------------------------- Revenues $427,590 $465,553 $420,405 $450,934 Gross profit 121,412 133,713 114,336 120,818 Net income 26,814 29,324 21,722 31,364 Basic earnings per share .70 .77 .57 .82 Diluted earnings per share .70 .76 .56 .81
- -------------------------------------------------------------------------------- 1999 First Second Third Fourth - -------------------------------------------------------------------------------- Revenues $392,190 $421,126 $377,391 $410,362 Gross profit 110,951 121,401 104,637 108,201 Net income 23,054 25,854 18,986 27,326 Basic earnings per share .61 .69 .50 .72 Diluted earnings per share .60 .67 .49 .71 - --------------------------------------------------------------------------------
31 8 TELEFLEX INCORPORATED AND SUBSIDIARIES SELECTED FINANCIAL AND BUSINESS SEGMENT DATA
2000 1999 1998 - --------------------------------------------------------------------------------------------------- Revenues Commercial $ 860,201 $ 757,720 $ 649,644 Medical 411,815 372,282 338,305 Aerospace 492,466 471,067 449,629 Other income(a) -- -- -- - --------------------------------------------------------------------------------------------------- $1,764,482 $1,601,069 $1,437,578 - --------------------------------------------------------------------------------------------------- Operating profit Commercial $ 86,911 $ 75,823 $ 62,010 Medical 56,483 49,551 41,879 Aerospace 53,115 52,940 55,163 - --------------------------------------------------------------------------------------------------- 196,509 178,314 159,052 Interest expense, net 20,787 17,732 17,054 Corporate expenses, net of other income 17,508 17,826 17,238 - --------------------------------------------------------------------------------------------------- Income before taxes 158,214 142,756 124,760 Taxes on income 48,990 47,536 42,210 - --------------------------------------------------------------------------------------------------- Net income $ 109,224 $ 95,220 $ 82,550 - --------------------------------------------------------------------------------------------------- Basic earnings per share $ 2.86 $ 2.52 $ 2.21 Diluted earnings per share $ 2.83 $ 2.47 $ 2.15 Cash dividends per share $ .58 $ .51 $ .45 Average common shares outstanding 38,203 37,857 37,347 Average shares, assuming dilution 38,633 38,525 38,425 Net income as a percent of revenues 6.2% 5.9% 5.7% Average number of employees 15,986 13,980 12,603 Identifiable assets Commercial $ 513,217 $ 451,389 $ 405,347 Medical $ 424,183 $ 388,430 $ 361,282 Aerospace $ 360,123 $ 332,109 $ 324,532 Capital expenditures Commercial $ 35,528 $ 43,623 $ 26,243 Medical $ 19,592 $ 17,751 $ 13,943 Aerospace $ 24,815 $ 33,523 $ 28,561 Depreciation and amortization Commercial $ 28,359 $ 24,875 $ 23,353 Medical $ 24,748 $ 20,574 $ 18,044 Aerospace $ 23,435 $ 21,132 $ 17,852 Long-term borrowings $ 220,557 $ 246,191 $ 275,581 Shareholders' equity $ 690,422 $ 602,564 $ 534,450 Book value per share $18.01 $15.85 $14.21 Return on average shareholders' equity 6.9% 16.7% 16.5% - ---------------------------------------------------------------------------------------------------
32 9
1997 1996 1995 1994 1993 1992 1991 1990 - ----------------------------------------------------------------------------------------------------------------- (Dollars and shares in thousands, except per share and employee data) $ 497,366 $422,443 $403,637 $356,708 $284,106 $210,464 $168,598 $162,646 323,114 307,555 293,341 253,020 180,623 179,376 130,540 115,756 325,293 201,185 215,711 202,944 202,067 177,292 180,399 162,731 -- -- -- -- -- 3,206 3,472 3,080 - ----------------------------------------------------------------------------------------------------------------- $1,145,773 $931,183 $912,689 $812,672 $666,796 $570,338 $483,009 $444,213 - ----------------------------------------------------------------------------------------------------------------- $ 61,562 $ 57,849 $ 59,719 $ 53,324 $ 37,794 $ 25,754 $ 19,996 $ 22,224 35,466 34,630 30,237 32,386 21,486 25,463 19,900 16,183 38,787 21,007 12,683 5,367 14,906 16,100 21,722 20,781 - ----------------------------------------------------------------------------------------------------------------- 135,815 113,486 102,639 91,077 74,186 67,317 61,618 59,188 14,435 13,876 18,632 18,361 14,466 15,482 13,765 12,401 14,975 12,831 10,407 9,725 7,410 3,185 2,519 3,880 - ----------------------------------------------------------------------------------------------------------------- 106,405 86,779 73,600 62,991 52,310 48,650 45,334 42,907 36,333 29,617 24,730 21,795 18,624 16,638 15,527 14,340 - ----------------------------------------------------------------------------------------------------------------- $ 70,072 $ 57,162 $ 48,870 $ 41,196 $ 33,686 $ 32,012(b) $ 29,807 $ 28,567 - ----------------------------------------------------------------------------------------------------------------- $1.91 $1.61 $1.40 $1.20 $.99 $.95(b) $.90 $.87 $1.86 $1.58 $1.37 $1.17 $.98 $.93(b) $.88 $.87 $.39 $.34 $.30 $.26 $.23 $.21 $.20 $.18 36,759 35,482 34,885 34,373 33,958 33,557 33,062 32,667 37,661 36,197 35,574 35,061 34,533 34,264 33,701 32,952 6.1% 6.1% 5.4% 5.1% 5.1% 5.6% 6.2% 6.4% 10,830 9,373 9,553 8,740 7,920 6,920 6,160 5,860 $ 351,345 $227,594 $201,808 $184,971 $158,206 $142,041 $101,187 $ 84,678 $ 333,698 $320,699 $331,349 $311,547 $266,239 $206,562 $194,609 $147,954 $ 276,708 $194,305 $183,636 $188,348 $202,130 $142,523 $141,104 $143,419 $ 22,570 $ 12,821 $ 15,445 $ 13,489 $ 7,967 $ 7,386 $ 7,505 $ 5,581 $ 10,611 $ 10,421 $ 12,107 $ 7,029 $ 7,361 $ 5,316 $ 7,138 $ 4,236 $ 40,992 $ 16,767 $ 2,794 $ 4,538 $ 8,865 $ 6,384 $ 5,585 $ 7,166 $ 14,335 $ 11,907 $ 11,446 $ 9,930 $ 9,251 $ 6,262 $ 5,633 $ 5,369 $ 18,459 $ 16,267 $ 15,087 $ 11,694 $ 8,030 $ 6,505 $ 4,725 $ 3,999 $ 14,440 $ 9,827 $ 10,471 $ 10,771 $ 10,176 $ 8,002 $ 7,366 $ 7,024 $ 237,562 $195,945 $196,844 $190,499 $183,504 $134,600 $119,370 $112,941 $ 463,753 $409,176 $355,364 $309,024 $269,790 $240,467 $211,702 $187,875 $12.49 $11.30 $10.13 $8.94 $7.90 $7.12 $6.37 $5.72 16.1% 15.0% 14.7% 14.2% 13.2% 14.2% 14.9% 16.4% - -----------------------------------------------------------------------------------------------------------------
(a) Beginning in 1993, other income, which was insignificant, has been reclassified as an offset to interest expense and corporate expenses. (b) Excludes an increase in net income of $860, or $.03 per share as a result of a change in accounting for income taxes. 33 10 TELEFLEX INCORPORATED AND SUBSIDIARIES 2000 FINANCIAL REVIEW REVENUES (in millions) [REVENUES BAR CHART] OVERVIEW The company's major financial objectives are to achieve a 15% to 20% annual growth rate in revenues and net income, to generate a 20% return on average shareholders' equity and to pay dividends of 20% of trailing twelve months' earnings. Over the last five years the company has met its target for net income as it has grown by a compounded rate of 17% while revenues have grown by 14% over that same time period. The year 2000 was the seventh consecutive year of 15% or higher growth in net income. Return on average shareholders' equity was 16.9% for 2000 and has improved in each of the last seven years. Finally, the company has paid dividends of 20% or more of trailing twelve months' earnings since the first cash dividend payment was made in 1977. The company is committed to maintaining a balance among its three segments: Commercial, Medical and Aerospace. Balance among the three segments reduces the company's risk of changes in the business cycle of any one segment, thus enabling the company to consistently achieve its growth objectives. Diversification gives the company the opportunity to invest in all stages of a segment's market cycle and provides a broader base of markets in which to grow. The company also diversifies within each Segment by entering into new geographic areas and different sectors within a market and, by extending products to additional markets. As a result, despite cyclical downturns within each of the segments, the company's total operating profit has continued to increase. The company intends to achieve its growth objectives through a combination of core growth, development of new products and new markets for existing products and, acquisitions. Over the past five years the company's core growth has accounted for approximately one-half of its overall growth. During the same time the company has invested cash of nearly $300 million for acquisitions to supplement core growth. During 1999 and 2000, the company purchased twenty businesses with annualized sales of approximately $200 million, $115 million of which is included in 2000 revenues. These acquisitions fit strategically within the company's businesses and bring new technologies, capabilities and market opportunities that will supplement future growth. In February 2001, the company acquired for $135 million in cash, Morse Controls, a supplier of industrial and marine products with annual sales of approximately $150 million. Acquisitions, while adding initially to revenues, may not contribute proportionately to earnings in the early years. In these years, earnings are generally reduced by up-front costs such as interest, depreciation and amortization, and, in many instances, the expenses of integrating a newly acquired business into an existing operation. Additionally, many of the acquisitions include new technologies and products that require incremental investment to enhance their growth prospects. The company has maintained a conservative capital structure with long-term debt ranging from 24% to 40% of total capitalization. This provides the flexibility to increase borrowings should growth opportunities arise. Under these circumstances it is conceivable that debt may increase to as much as 50% of capitalization for a period of time. The use of debt financing enables the company to maintain a lower cost of capital thus further enhancing value for shareholders. The company finances non-domestic operations primarily in their local currencies, thus reducing exposure to exchange rate fluctuations. Historically, operations have generated sufficient cash flow to finance the company's core growth while borrowings have been incurred largely to finance acquisitions. Over the past five years cash flow from operations has totaled over $600 million. This operating cash flow is reinvested in the company's core businesses, provides for the payment of dividends and enables the company to continue to upgrade and expand its plant and equipment. The company, while not particularly capital intensive, has spent approximately 5% of sales annually on plant and equipment. 34 11 RESULTS OF OPERATIONS 2000 VS. 1999 Revenues increased 10% in 2000 to $1.76 billion from $1.60 billion in 1999 resulting from gains in each of the company's three segments. Acquisitions accounted for half of the company's increase in revenue. Non-domestic operations comprised 38% of the company's revenues and increased 5% over 1999. The company's overall revenues were reduced as a result of weaker foreign currencies, mainly in the Medical Segment. The Commercial, Medical and Aerospace segments accounted for 49%, 23% and 28% of the company's revenues, respectively. Gross profit margin remained at 27.8% in 2000 resulting from increases in the Commercial and Aerospace segments which offset a decline in the Medical Segment. Selling, administrative and engineering expenses as a percentage of sales declined slightly in 2000 to 17.6% resulting from a reduction in the Medical Segment which offset increases in the Commercial and Aerospace segments. Operating profit increased 10% to $196.5 million from $178.3 million as all three segments gained. Operating margin remained at 11.1% resulting from a higher Medical Segment offsetting a lower Aerospace Segment while the Commercial Segment remained flat. The Commercial, Medical and Aerospace segments represented 44%, 29% and 27% of the company's operating profit, respectively. Interest expense increased from higher interest rates and lower invested cash balances, as total borrowings declined slightly. Interest expense as a percentage of sales increased to 1.2% in 2000 from 1.1% in 1999. The effective income tax rate declined to 31.0% in 2000 compared with 33.3% in 1999 due to a higher proportion of income earned in 2000 in countries with relatively lower tax rates. In addition, for 2000 the company's effective tax rate was lower from a decrease in deferred taxes resulting from a reduction in the German statutory tax rate enacted in the fourth quarter. Net income increased 15% in 2000 to $109.2 million from $95.2 million and diluted earnings per share also increased 15% to $2.83. Basic earnings per share increased 13% to $2.86. 1999 VS. 1998 Revenues increased 11% in 1999 to $1.60 billion from $1.44 billion in 1998. The increase was attributable to gains in each of the company's three segments. Acquisitions accounted for 40% of the increase in revenues. Non-domestic operations, which comprised 40% of the company's revenues, increased 12% over 1998 and were reduced slightly by currency exchange rates. For 1999 the Commercial, Medical and Aerospace segments comprised 47%, 23% and 30% of the company's net sales, respectively. Gross profit margin decreased in 1999 resulting from a decline in the Commercial and Aerospace segments, offset by an increase in the Medical Segment. Selling, engineering and administrative expenses as a percent of sales decreased in 1999 due to a reduction in the Commercial Segment, which was nearly offset by an increase in the Aerospace Segment. Operating profit increased 12% in 1999 to $178.3 million from $159.1 million in 1998. The increase was due to gains in the Commercial and Medical segments which offset a decline in the Aerospace Segment. Operating margin remained unchanged at 11.1% as an increase in the Medical and Commercial segments offset a decline in the Aerospace Segment. For 1999 the Commercial, Medical and Aerospace segments represented 42%, 28% and 30% of the company's operating profit, respectively. Interest expense increased as a result of higher interest rates and lower invested cash balances. Interest expense as a percentage of sales decreased to 1.1% in 1999 from 1.2% in 1998. The effective income tax rate declined to 33.3% in 1999 compared with 33.8% in 1998 because a higher proportion of income was earned in 1999 in countries with relatively lower tax rates. Net income in 1999 increased 15% to $95.2 million while diluted earnings per share increased 15% to $2.47. Basic earnings per share increased 14% to $2.52. NET INCOME (in millions) [NET INCOME BAR CHART] 35 12 2000 FINANCIAL REVIEW continued COMMERCIAL SEGMENT The Commercial Segment designs and manufactures proprietary mechanical and electrical controls for the automotive market; mechanical, electrical and hydraulic controls, and electronic products for the pleasure marine market; and proprietary products for fluid transfer and industrial applications. OPERATING PROFIT (in millions) [OPERATING PROFIT BAR CHART] 2000 VS. 1999 Sales in the Commercial Segment increased 14% in 2000 to $860.2 million from $757.7 million in 1999. All three product lines, Automotive, Marine and Industrial, reported sales gains with approximately one-half the growth coming from acquisitions. The increase in the Automotive product line was the result of a strong automotive market in North America and increased sales of new products including the adjustable pedal system. Within the Marine product line the increase was largely due to sales of new products. Sales in the Industrial product line benefited from acquisitions and new applications for light-duty cables. Operating profit rose 15% in 2000 to $86.9 million from $75.8 million while operating margin increased from 10.0% to 10.1%. Operating profit and margin increased in the Automotive product line from the additional volume despite product development expenses and plant start up for the adjustable pedal system. Within Industrial, operating profit increased on the additional volume but operating margin declined from lower margins of the acquired businesses and expenses associated with their integration. Marine operating profit and margin were lower from new product development expenses for integrated electronic engine systems and the adjustable pedal for the truck and bus market. Assets increased in 2000 due to acquisitions in the Industrial product line. Return on average assets increased to 18.0% in 2000 from 17.7% in 1999 as operating profit gains in the Automotive product line offset a lower return from acquisitions. 1999 VS. 1998 Sales in the Commercial Segment increased 17% in 1999 to $757.7 million from $649.6 million in 1998. All three product lines, Automotive, Marine and Industrial, reported sales gains as a result of new products. New products, such as the adjustable pedal system, along with the continued strength of the North American automotive market resulted in higher Automotive product line sales. Sales increased in the Marine product line due to a stronger marine market and new products including the modern burner unit sold to non-marine markets. Sales in the Industrial product line benefited from new products and increased volume of light-duty cable including an acquisition. Operating profit rose 22% in 1999 to $75.8 million from $62.0 million in 1998 and operating margin increased to 10.0% from 9.5%. Operating profit in all three product lines increased due to the additional volume. In the Automotive product line, increased volumes moved operating profits higher but operating margins were reduced by additional engineering, product launch and new plant start up expenses for the adjustable pedal system. The operating margin in the Industrial product line was lower than the prior year due to the expenses of integrating an acquisition. In the Marine product line the higher volumes had a favorable impact on operating margin. Total assets in this Segment grew by $46 million in 1999 as a result of spending on new manufacturing facilities and equipment for new products, and capacity expansion in the Automotive and Industrial product lines. Return on average assets increased in 1999 to 17.7% from 16.4% in 1998 due to improved operating profits in the Marine product line. 36 13 CAPITAL EXPENDITURES (in millions) [CAPITAL EXPENDITURES BAR CHART] MEDICAL SEGMENT The Medical Segment manufactures and distributes a broad range of invasive disposable and reusable devices for the urology, gastroenterology, anesthesiology and respiratory care markets worldwide. It also designs and manufactures a variety of specialty surgical products, and provides instrument management services. 2000 vs. 1999 In 2000 Medical Segment sales increased by 11% to $411.8 million from $372.3 million in 1999 resulting from gains in both the Hospital Supply and Surgical Devices product lines. Excluding a decline in currency exchange rates, sales would have gained another 6%. The increase in the Hospital Supply product line resulted from core growth and the acquisition of a manufacturer of urological products and an Italian distributor. Within the Surgical Devices product line, growth from sales of new closure and instrument products resulted in the sales increase. Operating profit increased 14% in 2000 to $56.5 million and operating margin improved to 13.7% from 13.3%. The increases in operating profit and margin are the result of the volume gains in both Hospital Supply and Surgical Devices. Within Hospital Supply, the operating margin improvement resulted from the shift of production to low cost manufacturing facilities and increased sales of higher margin products. Assets increased due to the acquisitions and additional capital expenditures within Surgical Devices related to instrument management services. Return on average assets increased to 13.9% in 2000 from 13.2% in 1999 resulting from the gain in operating profit which more than offset the increase in assets. 1999 vs. 1998 In 1999 the Medical Segment sales increased by 10% to $372.3 million from $338.3 million in 1998 as a result of acquisitions in both product lines of this Segment, Hospital Supply and Surgical Devices. In the Hospital Supply product line a European distributor was acquired, while in Surgical Devices an instrument management services business and a North American distributor of specialty surgical instruments were added. Operating profit rose 18% in 1999 to $49.6 million from $41.9 million in 1998 and operating margin increased to 13.3% from 12.4% as a result of improvements in both product lines. The gains were due to increased volume and sales of higher margin products. Assets increased in 1999 as a result of the acquisitions, which offset the effects of currency translation. Return on average assets increased to 13.2% from 12.1% due to the increase in operating profit combined with a relatively smaller increase in the asset base. AEROSPACE SEGMENT The Aerospace Segment serves the commercial aerospace and industrial turbomachinery markets. Its businesses design and manufacture cargo systems and containers for aviation; provide surface treatments, repair services and manufactured components for users of both flight and ground-based turbine engines. Sales are both to original equipment manufacturers (OEMs) and the aftermarket. DIVIDENDS PER SHARE [DIVIDENDS PER SHARE BAR CHART] 37 14 2000 FINANCIAL REVIEW continued 2000 vs. 1999 Sales in the Aerospace Segment increased 5% in 2000 to $492.5 million from $471.1 million in 1999. Sales increases in cargo systems due to increased market share, in industrial gas turbine services due to a strong market and in repair services offset a decline in manufactured components. The acquisition of a manufacturer of containers for aircraft added to the growth in cargo systems and the purchase of an engineering services firm contributed to the increase in industrial gas turbine services. The decline in the build rate for aircraft resulted in reduced manufactured component sales. Operating profit increased slightly to $53.1 million in 2000 from $52.9 million in 1999 while operating margin declined to 10.8% in 2000 from 11.2% in 1999. Operating profit gains due to the sales increases in cargo systems, industrial gas turbine services and repair services offset a decline from manufactured components. Expenses associated with the combination of facilities in both cargo systems and industrial gas turbine services and the closing of two component manufacturing plants lowered operating margin in 2000. The increase in assets in 2000 was due to the acquisitions. Return on average assets declined to 15.3% from 16.1% due to lower component manufacturing operating profit and a reduced return from acquisitions. 1999 vs. 1998 Sales in the Aerospace Segment grew by 5% in 1999 to $471.1 million from $449.6 million in the prior year. Sales increased in repair services and industrial gas turbine services due to growth in the aftermarket sector of the aerospace market. This increase was partially offset by reduced volume in component manufacturing resulting from softening of the OEM sector of the market. Operating profit declined 4% in 1999 to $52.9 million from $55.2 million in 1998 and operating margin decreased to 11.2% from 12.3%. The lower operating profit resulted from the decline in sales primarily in component manufacturing and from additional expenses associated with cost reduction programs designed to improve profitability. A higher proportion of sales in repair services also reduced the Segment's operating margin since a portion of its profits are shared with a joint venture partner. Assets increased in 1999 by $8 million due primarily to the start up of an operation in Korea. Return on average assets declined to 16.1% in 1999 from 18.3% in 1998 due to the decrease in operating profit. CASH FLOW FROM OPERATIONS (in millions) [CASH FLOW FROM OPERATIONS BAR CHART] LIQUIDITY, MARKET RISK AND CAPITAL RESOURCES The company generated significant levels of cash from operations in 2000. Cash flows from operating activities grew to $189.4 million compared to $134.1 million in 1999 and $131.6 million in 1998. The increase in 2000 resulted from higher net income and non-cash depreciation and amortization and, from improvements in working capital. The 1999 results were from higher net income and depreciation and amortization offset by working capital requirements, primarily accounts receivable related to incremental sales volume. In addition to the cash generated from operations the company has approximately $250 million in committed and uncommitted unused lines of credit available which provide the ability to pursue strategic growth opportunities. These lines were drawn down by approximately $125 million for the February 2001 acquisition of Morse Controls. Total borrowings for the company decreased $6 million in 2000 and long-term debt to total capitalization improved to 24% from 29% in 1999 and 34% in 1998. The declines were the result of net repayments and currency exchange rate changes offset by additional borrowings to finance acquisitions. Approximately 65% of the company's total borrowings of $339 million are denominated in currencies other than the US dollar, principally Euro, providing a natural hedge against fluctuations in the value of non-domestic assets. In addition to the natural hedge positions for translation risk, the company occasionally uses forward rate contracts to manage currency transaction exposure and interest rate caps 38 15 and swaps for exposure to interest rate changes. The company does not enter into these arrangements for trading purposes, but rather to limit the impact of movements in financial markets on its cash flows. The Financial Accounting Standards Board issued Statement of Financial Accounting Standard No. 133, "Accounting for Derivative Instruments and Hedging Activities" (SFAS 133) which will be effective for the company in the first quarter of 2001. Under the provisions of this statement all derivative financial instruments will be recorded on the balance sheet at fair market value. Subsequent changes in value will be recognized in the statement of income or as part of comprehensive income. The company's use of derivative instruments is not significant at December 31, 2000 and the effect of adoption of SFAS 133 effective January 1, 2001 will not be material to financial position or results of operations. In summary, the company's financial condition remains strong. The company believes that cash flows from operations and access to additional funds through available credit facilities provide adequate resources to fund operating requirements, capital expenditures and additional acquisition opportunities to meet its strategic and financial goals. ENVIRONMENTAL MATTERS The company is subject to numerous federal, state and local environmental laws and regulations including the Resource Conservation and Recovery Act, Comprehensive Environmental Response, Compensation and Liability Act, the Clean Air Act and, the Clean Water Act. Environmental programs are in place throughout the company which include training, auditing and monitoring to ensure compliance with such laws and regulations. In addition, the company has been named as a Potentially Responsible Party by the Environmental Protection Agency at various sites throughout the country. Environmental costs, including liabilities associated with such sites, and the costs of complying with existing environmental regulations are not expected to result in a liability material to the company's consolidated financial position or results of operations. CAPITALIZATION (in millions) [CAPITALIZATION BAR CHART] 39 16 TELEFLEX INCORPORATED AND SUBSIDIARIES INVESTOR INFORMATION ANNUAL MEETING The Annual Meeting of shareholders will take place on April 27, 2001 at the: JEFFERSON HOUSE RESTAURANT (IN THE BALLROOM) 2519 DEKALB PIKE (RTE. 202) NORRISTOWN, PENNSYLVANIA The meeting will convene at 10:00 a.m. All shareholders are cordially invited to attend. [TELEFLEX LOGO] MARKET AND OWNERSHIP OF COMMON STOCK New York Stock Exchange Trading Symbol: TFX As of December 31, 2000, the company's fiscal year, the approximate number of shareholders of record was 1,251. INVESTOR RELATIONS Security analysts and portfolio managers seeking information about the company should contact: Janine Dusossoit Vice President, Investor Relations (610) 834-6301 Investors may also obtain financial and product information about Teleflex on the company's Web site at WWW.TELEFLEX.COM. A copy of the Annual Report as filed with the Securities and Exchange Commission on Form 10-K and interim reports Form 10-Q can be accessed on the company's Web site, or can be mailed upon request to: Communications Department Teleflex Incorporated 155 South Limerick Road Limerick, Pennsylvania 19468 (610) 948-2811 E-Mail: pcarr@teleflex.com TRANSFER AGENT AND REGISTRAR Questions concerning transfer requirements, lost certificates, dividends, duplicate mailings, change of address, or other stockholder matters should be addressed to the Transfer Agent: American Stock Transfer & Trust Company 40 Wall Street, 46th Floor New York, New York 10005 (800) 937-5449 DIVIDENDS Quarterly dividends customarily are mailed to reach shareholders on or about the 15th of March, June, September and December. Shareholders may have dividends deposited into their savings or checking account at the financial institution of their choice. To participate in this service and to obtain a "Direct Deposit Authorization Agreement" contact American Stock Transfer & Trust Company. PRICE RANGE AND DIVIDENDS OF COMMON STOCK
2000 High Low Last Dividends - -------------------------------------------------------------------------------- First Quarter $36 1/8 $26 1/8 $35 1/2 $.13 Second Quarter $38 15/16 $32 15/16 $35 3/4 $.15 Third Quarter $39 1/2 $32 7/8 $34 3/8 $.15 Fourth Quarter $45 3/8 $31 13/16 $44 3/16 $.15
1999 High Low Last Dividends - -------------------------------------------------------------------------------- First Quarter $45 1/8 $33 5/8 $34 1/16 $.115 Second Quarter $46 3/8 $33 7/16 $43 7/16 $.13 Third Quarter $50 7/16 $38 5/16 $39 7/16 $.13 Fourth Quarter $40 3/16 $28 7/8 $31 5/16 $.13
DIVIDEND REINVESTMENT PLAN Teleflex Incorporated offers an automatic dividend reinvestment plan which enables holders of Teleflex common stock to reinvest their dividends and purchase additional shares free of service fees or brokerage commissions. Contact the company's transfer agent, American Stock Transfer & Trust Company, for further information. INDEPENDENT ACCOUNTANTS PricewaterhouseCoopers LLP Philadelphia, Pennsylvania FORWARD-LOOKING STATEMENTS In accordance with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, the Company notes that certain statements contained in this report are forward-looking in nature. These forward-looking statements include matters such as business strategies, market potential, future financial performance, product deployments and other future-oriented matters. Such matters inherently involve many risks and uncertainties (including risks and uncertainties associated with changes in competitive and market conditions, changes in regulation and technology, policies of suppliers and customer acceptance of new products), which can cause actual results to differ materially from those projected in the forward-looking statements. For additional information, please refer to the Company's Securities and Exchange Commission filings including its most recent Form 10-K. 40 EX-21 3 w45905ex21.txt THE COMPANY'S SUBSIDIARIES 1 EXHIBIT 21 TELEFLEX INCORPORATED SUBSIDIARIES
SUBSIDIARY JURISDICTION PARENT PERCENTAGE OF INCORPORATION 1950 Williams Drive, LLC Delaware TFX Equities 100 924593 Ontario Limited Ontario Teleflex 81 (1) Advanced Thermodynamics Corporation Ontario 924593 Ontario 100 Access Medical S.A. France TFX International S.A. 100 AeroForge Corporation Indiana TFX Equities 100 Air Cargo Equipment Corporation Delaware Telair (CA) 100 Airfoil Management Company Delaware TFX Equities 100 Airfoil Management Limited UK Sermatech (U.K.) Limited 100 Airfoil Technologies (Florida), Inc. Delaware Aviation Product Support, Inc. 51 (2) Airfoil Technologies International LLC Delaware TFX Equities 51 (3) Airfoil Technologies Singapore PTE LTD Singapore Airfoil Technologies Internat'l 100 American General Aircraft Holding Co., Inc. Delaware Teleflex 74 Asept Inmed S.A. France TFX International S.A. 100 Astraflex BVBA Belgium TFX Group Ltd. 99 (4) Astraflex Limited UK TFX Group Ltd. 100 Aunic Engineering Limited UK Sermatech (U.K.) Limited 100 Aviation Product Support, Inc. Delaware Airfoil Technologies Internat'l 60 (5) Bavaria Cargo Technologie GmbH Germany Telair International GmbH 100 Blue Armor International, Ltd. Maryland Sermatech 100 Capro de Mexico, S.A. de C.V. Mexico TFX International Corp. 99.99 (6) Capro Inc. Texas Teleflex 100 Capro-Casiraghi S.r.l. Italy Capro 80 (7) CCT De'Couper Industries, Inc. Michigan Comcorp Technologies, Inc. 100 CCT Plymouth Stamping Company Michigan Comcorp Technologies, Inc. 100 CCT Thomas Die & Stamping, Inc. Michigan CCT De'Couper Industries, Inc. 100 Cepco Precision Company of Canada, Inc. Canada Sermatech Engineering 100 Cetrek Engineering Ltd. UK Cetrek Ltd. 100 Cetrek Inc. Massachusetts Teleflex 100 Cetrek Limited UK TFX International Ltd. 100 Chemtronics International Ltd. UK Sermatech (U.K.) Limited 100 Claes Johansson Automotive AB Sweden Teleflex 30 (8) Claes Johansson Components AB Sweden Claes Johansson Automotive AB 100 Comcorp Inc. Michigan Teleflex 100 Comcorp Technologies, Inc. Michigan Teleflex 100 Comfort Pedals, Inc. Michigan Comcorp, Inc. 100 Compart Automotive B.V. The Netherlands United Parts Group N.V. 100 Entech, Inc. New Jersey TFX Equities 100 Franklin Medical Ltd. UK TFX Group Ltd. 100 G-Tel Aviation Limited UK Sermatech (U.K.) Limited 50 Gamut Technology, Inc. Texas Capro 100 Gas-Path Technology, Inc. Delaware Teleflex 100 Gator-Gard Incorporated Delaware Sermatech 100 GFI Control Systems, Inc. Ontario 924593 Ontario 100 Inmed (Malaysia) Holdings Sdn. Berhad Malaysia Willy Rusch AG 100 Inmed Acquisition, Inc. Delaware Teleflex 100 Inmed Corporation (9) Georgia Teleflex 100 Inmed Corporation (U.K.) Ltd. UK TFX Group Ltd. 100 Intelligent Applications Limited UK TFX Group Ltd. 100 Kaufman Industries Limited Maryland Sermatech 100 Kordial S.A. France TFX International S.A. 100 Lehr Precision, Inc. Ohio Teleflex 100 Lipac Liebinzeller Verpackungs-GmbH Germany Willy Rusch AG 100 Mal Tool & Engineering Limited UK TFX Group Ltd. 100 Meddig Medizintechnik Vertriebs-GmbH Germany Rusch G B 87.5 Medical Service Vertriebs-GmbH Germany Willy Rusch AG 100
Page 1 2 EXHIBIT 21 TELEFLEX INCORPORATED SUBSIDIARIES
SUBSIDIARY JURISDICTION PARENT PERCENTAGE OF INCORPORATION Mediland Rusch Care S.r.l. Italy Rusch Italia S.A.R.L. 100 Norland Plastics Company Delaware TFX Equities 100 Phosphor Products Co. Limited UK TFX International Ltd. 100 Pilling Weck Chiurgische Produkte GmbH Germany TFX Holding GmbH 100 Pilling Weck Incorporated Delaware Teleflex 100 Pilling Weck Incorporated Pennsylvania Teleflex 100 Pilling Weck (Asia) PTE Ltd. (10) Singapore Pilling Weck (PA) 99.99 Pilling Weck (Canada)Inc. Canada 924593 Ontario 50.5 (11) Pilling Weck n.v. Belgium TFX International S.A. 100 Primaklimat AB Sweden Claes Johansson Components AB 100 Rigel Compasses Limited UK TFX International Ltd. 100 Rusch Asia Pacific Sdn. Berhad Malaysia Inmed (Malaysia) Holdings 100 Rusch AVT Medical Private Limited India TFX Equities 50 Rusch (UK) Ltd. UK TFX Group Ltd. 100 Rusch Austria Ges.mbH Austria Teleflex Holding GmbH (Austria) 100 Rusch France S.A.R.L. France Rusch G B 100 Rusch Inc. Delaware Rusch G B 100 Rusch Hospital (12) Germany Willy Rusch AG 100 Rusch Hospital S.r.l. Italy Rusch Italia S.A.R.L. 100 Rusch Italia S.A.R.L. Italy Willy Rusch AG 100 Rusch Manufacturing (UK) Ltd. UK TFX Group Ltd. 100 Rusch Manufacturing Sdn. Berhad Malaysia Inmed (Malaysia) Holdings 96.5 Rusch Medical, S.A. (13) France TFX International S.A. 100 Rusch Mexico, S.A. de C.V. Mexico Teleflex 99 (14) Rusch Sdn. Berhad Malaysia Inmed (Malaysia) Holdings 96.5 Rusch Uruguay Ltda. Uruguay Rusch G B 60 Rusch-Pilling Limited Canada Willy Rusch AG 50.5 (15) Rusch-Pilling S.A. France TFX International S.A. 100 S. Asferg Hospitalsartikler ApS Denmark Teleflex 100 Scandinavian Bellyloading Company AB Sweden Telair International GmbH 100 Scandinavian Bellyloading Internat'l, Inc. California Teleflex 100 Sermatech (Canada) Inc. Canada 924593 Ontario 100 Sermatech de Mexico s. de R.L. de C.V. Mexico Sermatech 100 Sermatech Engineering Group, Inc. Delaware Teleflex 100 Sermatech Gas-Path (Asia) Ltd. Thailand Sermatech 100 Sermatech (Germany) GmbH Germany TFX Holding GmbH 100 Sermatech International Incorporated PA Teleflex 100 Sermatech Korea, Ltd. Korea Sermatech 51% (16) Sermatech-Mal Tool SARL France TFX International S.A. 100 (17) Sermatech Repair Services Limited UK Airfoil Technologies Internat'l 60 (18) Sermatech-Tourolle S.A. France TFX International S.A. 100 Sermatech (U.K.) Limited UK TFX Group Ltd. 100 SermeTel Technical Services (STS) GmbH Germany TFX Holding GmbH 100 Simal S.A. Belgium TFX International S.A. 100 SSI Surgical Services, Inc. (19) New York TFX Equities 85 Technology Holding Company Delaware TFX Equities 100 Technology Holding Company II Delaware Technology Holding Company III 100 Technology Holding Company III Delaware Techsonic Industries, Inc. 66 (20) Techsonic Industries, Inc. Alabama Teleflex 100 Telair International GmbH Germany TFX Holding GmbH 100 Telair International Incorporated(21) California Teleflex 100 Telair International Incorporated Delaware Teleflex 100 Telair International Services GmbH (22) Germany Bavaria Cargo Technologie 100 Telair International Services PTE LTD Singapore Telair (CA) 70.5 (23) Teleflex (Canada) Limited Canada(B.C.) 924593 Ontario 100
Page 2 3 EXHIBIT 21 TELEFLEX INCORPORATED SUBSIDIARIES
SUBSIDIARY JURISDICTION PARENT PERCENTAGE OF INCORPORATION Teleflex Automotive de Mexico S.A. de C.V. Mexico TFX Equities 99.9 (24) Teleflex Automotive Manufacturing Corporation Delaware Teleflex 100 Teleflex do Brasil S.A. Brasil TFX Equities 80% (25) Teleflex Fluid Systems, Inc. Connecticut Teleflex 100 Teleflex Holding GmbH (Austria) Austria Teleflex Incorporated 59 (26) Teleflex Machine Products, Inc. Delaware Teleflex Fluid 100 TFX Acquisition, Inc. Delaware Teleflex 100 TFX Automotive LTD (27) UK TFX Group Ltd. 100 TFX Engineering Ltd. Bermuda Teleflex Holding GmbH (Austria) 100 TFX Equities Incorporated Delaware Teleflex 100 TFX Financial Services (UK) UK TFX Engineering Ltd. (Bermuda) 100 TFX Foreign Sales Corporation Barbados TFX International Corp. 100 TFX Group Limited UK Teleflex Holding GmbH (Austria) 100 TFX Holding GmbH Germany Teleflex Holding GmbH (Austria) 100 TFX International Corporation Delaware Teleflex 100 TFX International Limited UK TFX Group Ltd. 100 TFX International S. A. France Teleflex 100 TFX Marine Incorporated Delaware Teleflex 100 TFX Medical Incorporated Delaware Teleflex 100 TFX Medical Wire Products, Inc. Delaware TFX Equities 100 TFX Scandinavia AB (28) Sweden Teleflex 100 The ISPA Company Maryland Sermatech 100 Top Surgical GmbH Germany PW Chiurgische Produkte GmbH 100 Turbine Technology Services Corporation New York Sermatech 100 United Parts Automotive Engineering GmbH Germany UPDC Systems (Holding) GmbH 100 United Parts Driver's Control Systems AB Sweden Telair International GmbH 100 United Parts Driver Control Systems B.V. The Netherlands United Parts Group N.V. 100 United Parts Driver Control Systems (UK) Ltd. UK TFX Group Ltd. 100 United Parts Driver Control Systems (Holding) GmbH Germany United Parts Group N.V. 94 (29) United Parts de Mexico SA de CV Mexico United Parts Group N.V. 99.998 (30) United Parts France S.A. France TFX International S.A. 100 United Parts Group N.V. The Netherlands Telair International GmbH 100 United Parts FHS Automobile Systeme GmbH Germany UPDC Systems (Holding) GmbH 99.9 (31) United Parts s.a. France TFX International s.a. 100 United Parts Slovakia sro Slovakia UPDC Systems BV 100 Victor Huber GmbH Germany Teleflex 100 Weck Closure Systems LLC Delaware Pilling Weck Incorporated (DE) 100 Willy Rusch AG Germany TFX Holding GmbH 100 Willy Rusch Grundstucks und Beteiligungs AG + Co KG ("Rusch G B") Germany Willy Rusch AG 99.8 (32)
1. 14% owned by Sermatech and 5% owned by Pilling Weck (PA). 2. 49% owned by Sermatech International Incorporated. 3. 49% owned by General Electric Company 4. 1% owned by Teleflex Fluid Systems, Inc. 5. 40% owned by TFX Equities 6. One share (.002%) is owned by TFX Equities 7. 20% owned by Alberto Casiraghi. 8. 60.59% owned by On-Invest AB, 8.01% owned by Wirab Innovation AB, 1.40% owned by Thomas Lojdquist (see On-Invest Agreement) 9. Trades under name "Rusch Inc." 10. Formerly Rusch-Pilling (Asia) PTE LTD. -- 13 shares owned by Eric Cheong Pak Koon, 27 shares owned by Jim Yoncheck 11. 49.5% owned by Rusch G B. 12. Formerly Asid Bonz GmbH 13. Formerly Europe Medical, S.A. Page 3 4 EXHIBIT 21 TELEFLEX INCORPORATED SUBSIDIARIES
SUBSIDIARY JURISDICTION PARENT PERCENTAGE OF INCORPORATION
14. 1% owned by Rusch Inc. 15. 49.5% owned by 924593 Ontario. 16. 49% owned by Aerospace Industries Ltd. 17. Formerly Mal Tool & Engineering SARL. 18. 40% owned by TFX Equities. 19. Formerly Medical Sterilization, Inc. 20. 34% owned by ten other subsidiary companies. 21. Formerly The Talley Corporation. Trades under name "Teleflex Control Systems." 22. Formerly Telair Cargo Electronic Systems GmbH. 23. 29.5% owned by TPA PTE LTD & Mr. Chan. 24. One share (.001%) is owned by TFX International Corporation 25. 20% owned by Fania-Fabrica Nacional de Instrumentos Para Auto Veiculos ("Fania") 26. 16% owned by TFX International Corporation, 9% by Inmed Corporation, 7% by TFX Equities Incorporated, 6% by Telair International Incorporated (DE), and 3% by Sermatech International Incorporated 27. Formerly S.J. Clark (Cables) Limited. Trades under name "Clarks Cables". 28. Formerly TX Controls AB. 29. 6% owned by Compart Automotive B.V. 30. 0.002% owned by Compart Automotive B.V. 31. 0.1% owned by Arminium Treuhand. 32. Two shares (.2%) are owned by Inmed Corporation. Page 4 EX-24 4 w45905ex24.txt POWERS OF ATTORNEY 1 POWER OF ATTORNEY Each of the undersigned Directors of Teleflex Incorporated, a Delaware corporation (the "Company"), hereby appoints Lennox K. Black, Harold L. Zuber, Jr. and Steven K. Chance, and each of them, with full power of substitution, to act as his attorney-in-fact to execute, on behalf of the undersigned, the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2000. IN WITNESS WHEREOF, this Power of Attorney is executed this 29th day of January, 2001. /s/ Patricia Barron /s/ L.K. Black - ----------------------------- ------------------------ Patricia Barron Lennox K. Black /s/ Donald Beckman /s/ William R. Cook - ----------------------------- ------------------------ Donald Beckman William R. Cook /s/ Joseph S. Gonnella /s/ Pemberton Hutchinson - ----------------------------- ------------------------ Joseph S. Gonnella Pemberton Hutchinson /s/ Sigismundus W. W. Lubsen /s/ Palmer E. Retzlaff - ----------------------------- ------------------------ Sigismundus W. W. Lubsen Palmer E. Retzlaff /s/ James W. Stratton - ----------------------------- James W. Stratton -----END PRIVACY-ENHANCED MESSAGE-----