Teleflex Reports Third Quarter 2002 Results: Revenues Increased 9%; Net Income Up 19%
PLYMOUTH MEETING, Pa.--Oct. 16, 2002--Teleflex Incorporated today reported revenues in the third quarter ended September 29, 2002 increased 9% to $508.2 million compared to $466.0 million for the year-ago quarter. Net income in the quarter was $26.3 million and diluted earnings per share were 66 cents. Results included a benefit from income tax settlements which contributed $3.1 million to net income, or 8 cents per diluted share in the third quarter.Revenues in the first nine months of 2002 increased 9% to $1.6 billion compared to $1.4 billion last year. Net income in the first nine months, including the tax settlements, was $90.2 million compared to $83.1 million for the same period in 2001. Diluted earnings per share increased to $2.27 compared to $2.12 per share for the same period a year ago.
Jeffrey P. Black, president and chief executive officer, said, "Strong volume gains this quarter in our Commercial Segment businesses coupled with increased sales in our Medical Segment offset a decline in demand for Aerospace products and services. We see these trends continuing into the final quarter of the year, and, as a result, we now anticipate that earnings for 2002 will be in the range of $3.10 per share. Cash flow from operations in the first nine months was $151 million, well ahead of last year."
The Commercial Segment reported a 20% increase in sales in the quarter with gains in all three product lines, Automotive, Marine and Industrial, as a result of strong market demand and new products. These businesses account for 52% of total corporate revenues. Operating profits grew as a result of higher volumes.
Medical Segment sales increased 7% in the third quarter. Operating profit improved slightly as gains in the Hospital Supply product line more than compensated for unfavorable product mix in the Surgical Devices product line. Medical represents 22% of total corporate revenues.
Aerospace Segment sales declined 7% in the quarter reflecting ongoing weakness in both the commercial aerospace and the industrial gas turbine markets. Sales were down in all four product lines, as demand from OEM and aftermarket customers continued to be soft. Operating profit fell sharply as a result of pricing pressure and the lower sales volume.
In accordance with the adoption of SFAS 142, Teleflex stopped amortizing goodwill as of December 31, 2001. Excluding goodwill amortization in the third quarter of 2001, net income improved 7% compared to the third quarter of last year and diluted earnings per share increased 6%. 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 third quarter of 2001 was $3.2 million pre-tax, or 6 cents per share after tax. The pre-tax impact on third quarter 2001 operating earnings by segment is as follows: Commercial $740,000; Medical $2,142,000; Aerospace $347,000.
As previously announced, Teleflex will comment on third quarter 2002 results on a conference call to be held Thursday, October 17th, at 11:15 a.m. (ET). The call can be accessed by dialing (888) 634-9566, or by logging on to the company's website at www.teleflex.com. The figures are as follows:
COMPARATIVE SUMMARY OF REVENUES AND EARNINGS
(Unaudited)
Percent
Three Months Ended September 29, 2002 September 30, 2001 Change
Sales
Commercial Products $262,116,000 $218,253,000 20%
Medical Products 112,223,000 104,537,000 7%
Aerospace Products 133,899,000 143,224,000 (7%)
----------- -----------
Total $508,238,000 $466,014,000 9%
Operating Profit
Commercial Products $18,742,000 $14,788,000 27%
Medical Products 17,617,000 17,380,000 1%
Aerospace Products 7,954,000 15,396,000 (48%)
--------- ----------
Total $44,313,000 $47,564,000(1) (7%)
Less:
Interest expense 6,280,000 7,263,000 (14%)
Corporate expenses 4,893,000 4,807,000 2%
Goodwill amortization --- 3,229,000(1) --
---------- ---------
Income before taxes 33,140,000 32,265,000 3%
Taxes on income 6,860,000 10,163,000 (33%)
--------- ----------
Net income $26,280,000 $22,102,000 19%
=========== ===========
Earnings per share
Basic $.67 $.57 18%
Diluted $.66 $.56 18%
Average shares outstanding
Basic 39,341,000 38,847,000
Diluted 39,820,000 39,379,000
Percent
Nine Months Ended September 29, 2002 September 30, 2001 Change
Sales
Commercial Products $819,516,000 $687,669,000 19%
Medical Products 332,999,000 318,307,000 5%
Aerospace Products 410,425,000 433,776,000 (5%)
----------- -----------
Total $1,562,940,000 $1,439,752,000 9%
Operating Profit
Commercial Products $74,130,000 $66,496,000 11%
Medical Products 53,378,000 52,113,000 2%
Aerospace Products 30,271,000 48,267,000 (37%)
----------- -----------
Total $157,779,000 $166,876,000(1) (5%)
Less:
Interest expense 18,555,000 21,352,000 (13%)
Corporate expenses 14,076,000 14,100,000 --
Goodwill amortization --- 9,657,000(1) --
----------- ---------
Income before taxes 125,148,000 121,767,000 3%
Taxes on income 34,914,000 38,623,000 (10%)
---------- ----------
Net income $90,234,000 $83,144,000 9%
=========== ===========
Earnings per share
Basic $2.30 $2.15 7%
Diluted $2.27 $2.12 7%
Average shares outstanding
Basic 39,207,000 38,700,000
Diluted 39,809,000 39,258,000
(1) Goodwill amortization in 2001 has been reclassified from operating
profit to a corporate expense item to facilitate comparison with
the current period's operating results.
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)
September 29, 2002 December 30, 2001
Assets
Current assets
Cash and cash
equivalents $54,429,000 $46,900,000
Accounts
receivable, net 398,411,000 363,674,000
Inventories 363,006,000 308,775,000
Prepaid expenses 25,121,000 28,128,000
---------- ----------
840,967,000 747,477,000
Property, plant and
equipment, net 591,465,000 565,695,000
Goodwill 249,130,000 223,911,000
Intangibles and
other assets 69,378,000 56,444,000
Investments in
affiliates 44,758,000 41,493,000
---------- ----------
$1,795,698,000 $1,635,020,000
============== ==============
Liabilities and
shareholders' equity
Current liabilities
Current borrowings $232,855,000 $212,122,000
Accounts payable
and accrued expenses 274,830,000 251,805,000
Income taxes payable 45,917,000 31,499,000
---------- ----------
553,602,000 495,426,000
Long-term borrowings 220,414,000 228,180,000
Deferred income taxes
and other 145,735,000 133,271,000
----------- -----------
919,751,000 856,877,000
Shareholders' equity 875,947,000 778,143,000
----------- -----------
$1,795,698,000 $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 may cause actual results to differ from those contemplated in the statements. These factors are discussed in the company's Securities and Exchange Commission filings.