Teleflex Reports Second Quarter 2002 Results; Revenues Increase 9%, Net Income Up 8% Over Last Year
PLYMOUTH MEETING, Pa.--July 17, 2002--Teleflex Incorporated today reported that revenues increased 9% to $546.3 million in the second quarter ended June 30, 2002 from $503.0 million for the same period last year. Net income in the quarter was $33.5 million and diluted earnings per share were 84 cents.Revenues in the first six months of 2002 increased 8% to $1,054.7 million compared to $973.7 million last year. Net income was $64.0 million in the first six months compared with $61.0 million for the same period a year ago. Diluted earnings per share increased to $1.61 from $1.56 per share for the same period in 2001.
Jeffrey P. Black, president and chief executive officer, said, "Our Commercial and Medical segments both reported higher sales in the second quarter, which more than offset weak demand for Aerospace products, a reflection of softness in the commercial aerospace industry. Our strategy of balance and diversification once again enabled Teleflex to grow because of the differing business cycles in the markets we serve." In the second quarter, core businesses contributed approximately one-third of the growth in sales and acquisitions contributed approximately two-thirds.
Mr. Black said that while demand for aerospace products is likely to remain soft in the second half of the year, he expects the medical, automotive, marine and industrial product lines to continue to grow. "Based on current economic conditions, we remain comfortable with our previously-stated guidance of $3.20 to $3.30 for full year 2002," said Mr. Black.
The Commercial Segment increased sales 18% in the second quarter with gains in all three product lines. The Segment contributed 53% of total corporate revenues. Sales of adjustable pedal systems expanded to additional automotive platforms. Strong core growth in light duty cables and marine products was supplemented by acquisitions. Operating profit increased but pricing pressures and severance connected with the curtailment of a plant affected Segment margins adversely.
Medical Segment sales increased 6% in the quarter and accounted for 21% of total revenues. Both the surgical devices and the hospital supply product lines reported solid growth. A majority of the growth was from core operations, including the success of a new program that ensures quick delivery of the most frequently-ordered surgical products. Acquisitions added modestly to sales and operating margins remained relatively the same compared to a year ago.
Aerospace Segment sales declined 5% from the second quarter of 2001. Revenues declined in all four product lines, reflecting continuing weakness in the commercial aerospace industry. The Aerospace Segment accounted for 26% of corporate revenues. Operating profit declined as a result of lower volume as well as expenses related to the development and launch of new cargo products.
In accordance with the adoption of SFAS 142, Teleflex stopped amortizing goodwill as of December 31, 2001. Excluding goodwill amortization in the second quarter of 2001, net income remained even with the second quarter of last year and diluted earnings per share declined 1%. To facilitate comparisons of segment operating results, prior year goodwill amortization in the accompanying financial summary has been reclassified as a corporate rather than a segment expense. Goodwill amortization expense in the second quarter of 2001 was $3.2 million pre-tax, or 6 cents per share after tax. The pre-tax impact on second quarter 2001 operating earnings by segment is as follows: Aerospace $346,000; Medical $2,142,000; Commercial $740,000.
As previously announced, Teleflex will comment on second quarter 2002 results on a conference call to be held Thursday, July 18th, at 11:15 a.m. (ET). The figures are as follows:
COMPARATIVE SUMMARY OF REVENUES AND EARNINGS
(Unaudited)
Percent
Three Months Ended June 30, 2002 July 1, 2001 Change
Sales
Commercial Products $291,648,000 $246,598,000 18%
Medical Products 113,473,000 107,366,000 6%
Aerospace Products 141,185,000 149,040,000 (5%)
-------------- --------------
Total $546,306,000 $503,004,000 9%
Operating Profit
Commercial Products $29,684,000 $26,638,000 11%
Medical Products 18,394,000 17,658,000 4%
Aerospace Products 10,888,000 16,436,000 (34%)
-------------- --------------
Total $58,966,000 $60,732,000(a) (3%)
Less:
Interest expense 6,239,000 7,378,000 (15%)
Corporate expenses 4,613,000 4,649,000 (1%)
Goodwill amortization -- 3,228,000(a) --
-------------- --------------
Income before taxes 48,114,000 45,477,000 6%
Taxes on income 14,578,000 14,416,000 1%
-------------- --------------
Net income $33,536,000 $31,061,000 8%
============== ==============
Earnings per share
Basic $.85 $.80 6%
Diluted $.84 $.79 6%
Average shares outstanding
Basic 39,241,000 38,755,000
Diluted 39,968,000 39,359,000
Percent
Six Months Ended June 30, 2002 July 1, 2001 Change
Sales
Commercial Products $557,400,000 $469,416,000 19%
Medical Products 220,776,000 213,770,000 3%
Aerospace Products 276,526,000 290,552,000 (5%)
-------------- --------------
Total $1,054,702,000 $973,738,000 8%
Operating Profit
Commercial Products $55,388,000 $51,708,000 7%
Medical Products 35,761,000 34,733,000 3%
Aerospace Products 22,317,000 32,871,000 (32%)
-------------- --------------
Total $113,466,000 $119,312,000(a) (5%)
Less:
Interest expense 12,275,000 14,089,000 (13%)
Corporate expenses 9,183,000 9,293,000 (1%)
Goodwill amortization -- 6,428,000(a) --
----------- -----------
Income before taxes 92,008,000 89,502,000 3%
Taxes on income 28,054,000 28,460,000 (1%)
----------- -----------
Net income $63,954,000 $61,042,000 5%
=========== ===========
Earnings per share
Basic $1.63 $1.58 3%
Diluted $1.61 $1.56 3%
Average shares outstanding
Basic 39,140,000 38,626,000
Diluted 39,803,000 39,198,000
(a) Goodwill amortization has been reclassified from operating
profit to a corporate expense item to facilitate comparison
with the current period's results.
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)
June 30, 2002 December 30, 2001
Assets
Current assets
Cash and cash equivalents $45,762,000 $46,900,000
Accounts receivable, net 418,162,000 363,674,000
Inventories 353,956,000 308,775,000
Prepaid expenses 28,576,000 28,128,000
-------------- --------------
846,456,000 747,477,000
Property, plant and equipment, net 585,290,000 565,695,000
Goodwill 240,047,000 223,911,000
Intangibles and other assets 60,214,000 56,444,000
Investments in affiliates 43,860,000 41,493,000
-------------- --------------
$1,775,867,000 $1,635,020,000
============== ==============
Liabilities and shareholders'
equity
Current liabilities
Current borrowings $222,228,000 $212,122,000
Accounts payable and
accrued expenses 279,845,000 251,805,000
Income taxes payable 40,649,000 31,499,000
-------------- --------------
542,722,000 495,426,000
Long-term borrowings 226,521,000 228,180,000
Deferred income taxes and other 145,619,000 133,271,000
-------------- --------------
914,862,000 856,877,000
Shareholders' equity 861,005,000 778,143,000
-------------- --------------
$1,775,867,000 $1,635,020,000
============== ==============
Teleflex At A Glance:
Teleflex is a diversified industrial company with annual revenues of approximately $2 billion. The company designs, manufactures and distributes quality engineered products and services for the aerospace, medical, automotive, marine and industrial markets worldwide. Teleflex employs more than 17,000 people worldwide who focus on providing innovative solutions for customers. Additional information about Teleflex, including a recent archived conference call with analysts and investors, can be obtained from the company's Web site on the Internet at www.teleflex.com.
Forward-looking information:
Statements in this news release, other than historical data, are considered forward-looking statements under the Private Securities Litigation Reform Act of 1995. These statements are subject to various risks and uncertainties that could cause actual results to differ from those contemplated in the statements. These factors are discussed in the company's Securities and Exchange Commission filings.