Teleflex - 10-Q quarterly report FY

     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.

      Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2).

      Indicate the number of shares outstanding of each of the issuer’s classes of Common Stock, as of July 20, 2005:

      Teleflex Incorporated (the “Company”) is a diversified industrial company specializing in the design, manufacture and distribution of specialty-engineered products. The Company serves a wide range of customers in niche segments of the commercial, medical and aerospace industries. The Company’s products include: driver controls, motion controls, power and vehicle management systems and fluid management systems for commercial industries; disposable medical products, surgical instruments, medical devices and specialty devices for hospitals and health-care providers; and repair products and services, precision-machined components and cargo-handling systems for commercial and military aviation as well as other industrial markets.

      The accompanying condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and in accordance with the instructions for Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.

      The accompanying financial information is unaudited; however, in the opinion of the Company’s management, all adjustments (consisting of normal recurring adjustments and accruals) necessary for a fair statement of the financial position, results of operations and cash flows for the periods reported have been included. The results of operations for the periods reported are not necessarily indicative of those that may be expected for a full year.

      This quarterly report should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s audited consolidated financial statements presented in the Company’s Annual Report on Form 10-K for the fiscal year ended December 26, 2004 filed with the Securities and Exchange Commission.

      Certain reclassifications have been made to the prior year condensed consolidated financial statements to conform to current period presentation. Certain financial information is presented on a rounded basis, which may cause minor differences.

     Stock-based compensation: Statement of Financial Accounting Standards (“SFAS”) No. 123, “Accounting for Stock-Based Compensation,” encourages, but does not require, companies to record compensation cost for stock-based employee compensation plans at fair value. The Company has chosen to continue to account for stock-based compensation using the intrinsic value method prescribed in Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees,” and related interpretations. Accordingly, compensation expense for stock options and restricted stock issued to employees is measured as the excess, if any, of the quoted market price of the Company’s stock at the date of the grant over the amount an employee must pay to acquire the stock.

      The following table illustrates the pro forma net income and earnings per share for the three and six months ended June 26, 2005 and June 27, 2004 as if compensation expense for stock options issued to employees had been determined consistent with SFAS No. 123:

      The fair value for options granted in 2005 and 2004 was estimated at the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions:

     Variable interest entities: Following the consolidation of certain variable interest entities, the Company has determined that it is appropriate to separately identify and reclassify for all periods presented minority interest and minority interest in equity for all of its consolidated, but not wholly-owned, subsidiaries. The minority interest in consolidated subsidiaries previously included within selling, engineering and administrative expenses totaled $4,764 and $8,876 for the three and six months ended June 27, 2004, respectively. These reclassifications had no impact on previously reported net income.

     American Jobs Creation Act: On October 22, 2004 the American Jobs Creation Act (“the AJCA”) was signed into law. The AJCA includes a deduction of 85% of certain foreign earnings that are repatriated, as defined in the AJCA. The Company may elect to apply the repatriation provision included in the AJCA to certain qualifying earnings that are distributed during its calendar year ending 2005. The Company has started an evaluation of the effects of the repatriation provision; however the Company does not expect to be able to complete this evaluation until after it has concluded on a number of factors. Such factors include, but are not limited to, a final decision with respect to divestiture alternatives currently under consideration and a determination of the distributable reserves position of certain non-U.S. subsidiaries. Further, the Company does not expect to be able to complete its evaluation until after Congress or the Treasury Department provide additional clarifying language on certain elements of the repatriation provision. The Company expects to be

able to complete its evaluation within a reasonable period following the resolution of the outstanding issues and the issuance of clarifying language.

      The deduction is subject to a number of limitations and requirements, including adoption of a specific domestic reinvestment plan for the repatriated funds. Based on a current understanding of the AJCA, the Company believes that it may repatriate from $0 to approximately $400 million in dividends subject to the elective 85% dividends received deduction, generating a corresponding tax expense from $0 to $46 million. The Company expects to confirm its understanding of this provision and may seek the required corporate officer and Board of Directors approvals of the requisite domestic reinvestment plan within the timeframe that the deduction is available.

     Stock-Based Compensation: In December 2004, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 123(R), “Share-Based Payment,” which establishes accounting standards for transactions in which an entity receives employee services in exchange for (a) equity instruments of the entity or (b) liabilities that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of equity instruments. SFAS No. 123(R) requires an entity to recognize the grant-date fair value of stock options and other equity-based compensation issued to employees in the statement of income. The statement also requires that such transactions be accounted for using the fair value based method, thereby eliminating use of the intrinsic value method of accounting in APB No. 25, “Accounting for Stock Issued to Employees,” which was permitted under Statement 123, as originally issued. SFAS No. 123(R) was previously effective as of the beginning of the first interim or annual reporting period that begins after June 15, 2005. However, on April 14, 2005, the Securities and Exchange Commission announced that the statement will now be effective for fiscal years beginning after June 15, 2005. The Company is currently evaluating the impact of Statement 123(R) on the Company’s financial position, results of operations and cash flows.

     Conditional Asset Retirement Obligations: In March 2005, the FASB issued Interpretation (“FIN”) No. 47, “Accounting for Conditional Asset Retirement Obligations,” which clarifies that an entity must record a liability for a conditional asset retirement obligation if the fair value of the obligation can be reasonably estimated. The provisions of FIN No. 47 are effective for fiscal years ending after December 15, 2005. The Company does not expect the provisions of this interpretation to have a material impact on the Company’s financial position, results of operations or cash flows.

     Accounting Changes and Error Corrections: In May 2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections.” SFAS No. 154 replaces APB Opinion No. 20, “Accounting Changes” and SFAS No. 3, “Reporting Accounting Changes in Interim Financial Statements” and changes the requirements of the accounting for and reporting of a change in accounting principle. SFAS No. 154 also provides guidance on the accounting for and reporting of error corrections. The provisions of this statement are applicable for accounting changes and error corrections made in fiscal years beginning after December 15, 2005. The Company does not expect the provisions of this statement to have a material impact on the Company’s financial position, results of operations or cash flows.

     Amortization Period for Leasehold Improvements: In June 2005, the Emerging Issues Task Force (“EITF”) reached a consensus on Issue No. 05-6, “Determining the Amortization Period for Leasehold Improvements,” which requires that leasehold improvements acquired in a business combination or purchased subsequent to the inception of a lease be amortized over the lesser of the useful life of the assets or a term that includes renewals that are reasonably assured at the date of the business combination or purchase. EITF No. 05-6 is effective for periods beginning after June 29, 2005. The Company does not expect the provisions of this consensus to have a material impact on the Company’s financial position, results of operations or cash flows.

      In connection with the acquisition of Hudson Respiratory Care Inc. (“HudsonRCI”) in July 2004, the Company formulated a plan related to the future integration of the acquired entity. The Company finalized the integration plan during the second quarter of 2005, and the integration activities are on going as of June 26, 2005. The Company has accrued estimates for certain costs, related primarily to personnel reductions and facility closings and the termination of certain distribution agreements at the date of acquisition, in accordance with EITF Issue No. 95-3, “Recognition of Liabilities in Connection with a Purchase Business Combination.” Set forth below is a reconciliation of the Company’s future integration cost accrual:

      During the fourth quarter of 2004, the Company announced and commenced implementation of a restructuring and divestiture program designed to improve future operating performance and position the Company for earnings growth in the years ahead. The planned actions include exiting or divesting non-core or low performing businesses, consolidating manufacturing operations and reorganizing administrative functions to enable businesses to share services.

      For the three and six months ended June 26, 2005, the charges, including changes in estimates, associated with the restructuring and divestiture program by segment that are included in restructuring costs were as follows:

      Termination benefits are comprised of severance-related payments for all employees terminated in connection with the restructuring and divestiture program. Contract termination costs relate primarily to the

termination of leases in conjunction with the consolidation of facilities in the Company’s Medical Segment and also include a $531 reduction in the estimated cost associated with a lease termination in conjunction with the consolidation of manufacturing facilities in the Company’s Commercial Segment. Asset impairments relate primarily to machinery and equipment associated with the consolidation of manufacturing facilities. Other restructuring costs include expenses primarily related to the consolidation of manufacturing operations and the reorganization of administrative functions.

      As of June 26, 2005, the Company expects to incur the following future restructuring costs in its Commercial and Medical segments over the next four quarters:

      At June 26, 2005, the accrued liability associated with the restructuring and divestiture program consisted of the following and was entirely due within twelve months:

      Inventories consisted of the following:

      Changes in the carrying amount of goodwill, by operating segment, for the six months ended June 26, 2005 are as follows:

      Intangible assets consisted of the following:

      Amortization expense related to intangible assets was $3,583 and $7,368 for the three and six months ended June 26, 2005, respectively, and $2,886 and $5,371 for the three and six months ended June 27, 2004, respectively. Estimated annual amortization expense for each of the five succeeding years is as follows:

      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 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. A reconciliation of basic to diluted weighted average shares outstanding is as follows:

      Weighted average stock options (in thousands) that were antidilutive and therefore not included in the calculation of earnings per share were 213 and 387 for the three and six months ended June 26, 2005, respectively, and 708 and 560 for the three and six months ended June 27, 2004, respectively.

      The following table summarizes the components of comprehensive income:

      The Company has a number of defined benefit pension and postretirement plans covering eligible U.S. and non-U.S. employees. The defined benefit pension plans are primarily noncontributory. The benefits under these plans are based primarily on years of service and employees’ pay near retirement. The Company’s funding policy for U.S. plans is to contribute annually, at a minimum, amounts required by applicable laws and regulations. Obligations under non-U.S. plans are systematically provided for by depositing funds with trustees or by book reserves.

      The parent Company and certain subsidiaries provide medical, dental and life insurance benefits to pensioners and survivors. The associated plans are unfunded and approved claims are paid from Company funds.

      Net benefit cost of pension and postretirement benefit plans consisted of the following:

     Product warranty liability: The Company warrants to the original purchaser of certain of its products that it will, at its option, repair or replace, without charge, such products if they fail due to a manufacturing defect. Warranty periods vary by product. The Company has recourse provisions for certain products that would enable recovery from third parties for amounts paid under the warranty. The Company accrues for product warranties when, based on available information, it is probable that customers will make claims under warranties relating to products that have been sold, and a reasonable estimate of the costs (based on historical claims experience relative to sales) can be made. Set forth below is a reconciliation of the Company’s estimated product warranty liability for the six months ended June 26, 2005:

     Operating leases: The Company uses various leased facilities and equipment in its operations. The terms for these leased assets vary depending on the lease agreement. The Company also has synthetic lease programs that are used primarily for plant and equipment. In connection with the synthetic and other leases, the Company had residual value guarantees in the amount of $10,578 at June 26, 2005. The Company’s future payments cannot exceed the minimum rent obligation plus the residual value guarantee amount. The guarantee amounts are tied to the unamortized lease values of the assets under synthetic lease, and are due should the Company decide neither to renew these leases, nor to exercise its purchase option. At June 26, 2005, the Company had no liabilities recorded for these obligations. Any residual value guarantee amounts paid to the lessor may be recovered by the Company from the sale of the assets to a third party.

     Accounts receivable securitization program: The Company uses an accounts receivable securitization program to gain access to enhanced credit markets and reduce financing costs. The Company sells certain trade receivables on a non-recourse basis to a consolidated company, which in turn sells an interest in those

receivables to a commercial paper conduit. The conduit issues notes secured by that interest to third party investors. These notes are secured by a 364-day liquidity facility provided by a bank. The assets of the special purpose entity are not available to satisfy the obligations of the Company. In accordance with the provisions of SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities,” transfers of assets under the program qualify as sales of receivables. Accordingly, $20,034 of accounts receivable and the related amounts previously recorded in notes payable have been removed from the condensed consolidated balance sheet as of June 26, 2005, with $10,017 removed during the second quarter of 2005.

     Environmental: The Company is subject to contingencies pursuant to environmental laws and regulations that in the future may require the Company to take further action to correct the effects on the environment of prior disposal practices or releases of chemical or petroleum substances by the Company or other parties. Much of this liability results from the U.S. Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), often referred to as Superfund, the U.S. Resource Conservation and Recovery Act (“RCRA”) and similar state laws. These laws require the Company to undertake certain investigative and remedial activities at sites where the Company conducts or once conducted operations or at sites where Company-generated waste was disposed.

      Remediation activities vary substantially in duration and cost from site to site. These activities, and their associated costs, depend on the mix of unique site characteristics, evolving remediation technologies, diverse regulatory agencies and enforcement policies, as well as the presence or absence of potentially responsible parties. At June 26, 2005, the Company’s condensed consolidated balance sheet included an accrued liability of $4,467 relating to these matters. Considerable uncertainty exists with respect to these costs and, under adverse changes in circumstances, potential liability may exceed the amount accrued as of June 26, 2005. The time-frame over which the accrued amounts may be paid out, based on past history, is estimated to be 15-20 years.

     Litigation: The Company is a party to various lawsuits and claims arising in the normal course of business. These lawsuits and claims include actions involving product liability, intellectual property, employment and environmental matters. Based on information currently available, advice of counsel, available insurance coverage, established reserves and other resources, the Company does not believe that any such actions are likely to be, individually or in the aggregate, material to its business, financial condition, results of operations or liquidity. However, in the event of unexpected further developments, it is possible that the ultimate resolution of these matters, or other similar matters, if unfavorable, may be materially adverse to the Company’s business, financial condition, results of operations or liquidity.

      In February 2004, a jury verdict of $34,800 was rendered against one of the Company’s subsidiaries in a trademark infringement action. In February 2005, the trial judge entered an order rejecting the jury award in its entirety. Both parties have filed notice to appeal on various grounds. While the Company cannot predict the outcome of the appeals, it will continue to vigorously contest this litigation. No accrual has been recorded in the Company’s condensed consolidated financial statements.

     Other: The Company has various purchase commitments for materials, supplies and items of permanent investment incident to the ordinary conduct of business. In the aggregate, such commitments are not at prices in excess of current market.

      As part of the Company’s previously announced restructuring and divestiture program, the Company determined that assets totaling $18,100 met the criteria for held for sale during the second quarter of 2005. The assets are comprised primarily of land and buildings that are no longer being used in the Company’s operations. The Company determined that the carrying value of each asset held for sale did not exceed the estimated fair value of the asset less costs to sell and therefore did not adjust the carrying value of the asset in the second quarter. The Company is actively marketing the assets and approximately $11,500 had been disposed of by the date of this filing.

      Assets and liabilities held for sale are comprised of the following:

      All statements made in this Quarterly Report on Form 10-Q, other than statements of historical fact, are forward-looking statements. The words “anticipate”, “believe”, “estimate”, “expect”, “intend”, “may”, “plan”, “will”, “would”, “should”, “guidance”, “potential”, “continue”, “project”, “forecast”, “confident”, “prospects”, and similar expressions typically are used to identify forward-looking statements. Forward-looking statements are based on the expectations, beliefs, assumptions, estimates and forecasts about our business and the industry and markets in which we operate. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or implied by these forward-looking statements. Factors which may affect our business, financial condition and operating results include changes in business relationships with and purchases by or from major customers or suppliers, including delays or cancellations in shipments; demand for and market acceptance of new and existing products; our ability to integrate acquired businesses into our operations, realize planned synergies and operate such businesses profitably in accordance with expectations; our ability to effectively execute our restructuring and divestiture program; competitive market conditions and resulting effects on revenues and pricing; increases in raw material costs that cannot be recovered in product pricing; and global economic factors, including currency exchange rates, difficulties entering new markets and general economic conditions such as interest rates, as well as other factors described in our reports filed with the Securities and Exchange Commission, including the information under “Risk Factors” in Item 1 of our Annual Report on Form 10-K for the fiscal year ended December 26, 2004. We expressly disclaim any intent or obligation to update these forward-looking statements, except as otherwise specifically stated by us.

      We are focused on achieving consistent and sustainable growth through the continued development of our core businesses and carefully selected acquisitions. During the second quarter and first six months of 2005, our results were affected by the contribution from the third quarter 2004 acquisition of Hudson Respiratory Care Inc., or HudsonRCI, a leading provider of disposable medical products for respiratory care and anesthesia. Our internal growth initiatives include the development of new products, moving existing products into market adjacencies in which we already participate with other products and the expansion of market share. Our core revenue growth in the second quarter and first six months of 2005 as compared to 2004, excluding the impacts of currency, acquisitions and divestitures, was 4% and 3%, respectively.

      During the second quarter of 2005, we adopted a plan to sell a small medical business. We are actively marketing this business. Also during the second quarter of 2005, we determined that assets totaling $18.1 million, which are comprised primarily of land and buildings that are no longer being used in our operations, met the criteria for held for sale. During the first six months of 2005, we reported additional product and business line divestitures associated with our ongoing portfolio review program. On February 28, 2005, we completed the sale of Sermatech International, a surface-engineering/specialty coatings business, and recorded a gain on the sale of $36.1 million. For the second quarter and first six months of 2005 and comparable periods, the small medical and Sermatech businesses have been presented in our condensed consolidated financial statements as discontinued operations. The Sermatech business was previously reported as part of our Aerospace Segment. In January and February 2005, we also completed the sale of two small product lines in our Medical Segment and an industrial cables business in our Commercial Segment.

      During the fourth quarter of 2004, we announced and commenced implementation of our restructuring and divestiture program designed to improve future operating performance and position us for earnings growth in the years ahead. The planned actions include exiting or divesting of non-core or low performing businesses, consolidating manufacturing operations and reorganizing administrative functions to enable businesses to share services. The charges associated with the restructuring and divestiture program for continuing operations that are included in restructuring costs during the second quarter of 2005 totaled $6.7 million, of which 25% was Commercial, 69% Medical and 6% Aerospace. The charges associated with the restructuring and

divestiture program for continuing operations that are included in restructuring costs during the first six months of 2005 totaled $13.9 million, of which 15% was Commercial, 63% Medical and 22% Aerospace.

      During 2004, we adopted the provisions of the Financial Accounting Standards Board, or FASB, Interpretation, or FIN, No. 46(R), “Consolidation of Variable Interest Entities, an interpretation of ARB No. 51.” As a result, beginning with the third quarter of 2004, we consolidated four small entities which had previously not been consolidated. These entities are reported in our Medical and Commercial segments. We also determined that it is appropriate to separately identify and reclassify for all periods presented minority interest for all of our consolidated, but not wholly-owned, subsidiaries. The minority interest in consolidated subsidiaries previously included within selling, engineering and administrative expenses totaled $4.8 million and $8.9 million for the second quarter and first six months of 2004, respectively. These reclassifications had no impact on previously reported net income.

      Discussion of growth from acquisitions reflects the impact of a purchased company up to twelve months beyond the date of acquisition. Activity beyond the initial twelve months is considered core growth. Core growth excludes the impact of translating the results of international subsidiaries at different currency exchange rates from year to year and the comparable activity of divested companies within the most recent twelve-month period. The following comparisons exclude the impact of the automotive pedal systems, Sermatech International and small medical businesses, which have been presented in our condensed consolidated financial results as discontinued operations.

      Revenues increased 11% in the second quarter of 2005 to $658.0 million from $593.1 million in the second quarter of 2004. This increase was due to increases of 8% from acquisitions, 4% from core growth, 2% from currency and 1% from the consolidation of variable interest entities, offset, in part, by a decrease of 4% from dispositions. Revenues increased 9% in the first six months of 2005 to $1.28 billion from $1.17 billion in the first six months of 2004. This increase was due to increases of 8% from acquisitions, 3% from core growth, 2% from currency and 1% from the consolidation of variable interest entities, offset, in part, by a decrease of 5% from dispositions. The Commercial, Medical and Aerospace segments comprised 48%, 33% and 19% of our second quarter 2005 revenues, respectively, and 48%, 34% and 18% of our revenues for the first six months of 2005, respectively.

      Materials, labor and other product costs as a percentage of revenues decreased slightly to 71.0% in the second quarter of 2005 compared to 71.4% in the second quarter of 2004. The decrease was due primarily to improvements in the Aerospace Segment, offset, in part, by the impact of acquired businesses, which have lower margins. Materials, labor and other product costs as a percentage of revenues increased slightly to 71.6% in the first six months of 2005 compared to 71.5% in the first six months of 2004. The increase was due primarily to certain inventory adjustments resulting from the restructuring and divestiture program and increases in raw material commodity prices in the Commercial and Medical segments, offset, in part, by savings from the restructuring program and other productivity programs. Selling, engineering and administrative expenses (operating expenses) as a percentage of revenues declined to 17.7% and 18.1% in the second quarter and first six months of 2005, respectively, compared with 19.2% in both the second quarter and first six months of 2004 due primarily to the continuing reduction of facilities and supporting infrastructure costs relative to higher revenues in the Medical and Aerospace segments.

      Interest expense increased in the second quarter and first six months of 2005 principally from higher acquisition related debt balances. The effective income tax rate was 23.8% and 24.0% in the second quarter and first six months of 2005, respectively, compared with 24.9% and 24.4% in the second quarter and first six months of 2004. The lower rates in the second quarter and first six months of 2005 were primarily the result of a higher proportion of income in the second quarter and first six months of 2005 earned in countries with relatively lower tax rates. Net income for the second quarter of 2005 was $29.0 million, a decrease of 15% from the second quarter of 2004, due primarily to the cost of restructuring and discontinued operations in the

second quarter of 2005 and a gain on the sale of businesses and assets in the second quarter of 2004. Net income for the first six months of 2005 was $67.7 million, an increase of 6% from the first six months of 2004, due primarily to the gain on the sale of the Sermatech business. Diluted net earnings per share for the second quarter of 2005 decreased 16% to $0.71, and includes the cost of restructuring and discontinued operations. Diluted earnings per share for the first six months of 2005 increased 5% to $1.66.

      Minority interest in consolidated subsidiaries increased $0.4 million and $1.0 million in the second quarter and first six months of 2005, respectively, due to increased profits from our entities that are not wholly-owned.

      For the second quarter and first six months of 2005, the charges, including changes in estimates, associated with the restructuring and divestiture program by segment that are included in restructuring costs were as follows:

      Termination benefits are comprised of severance-related payments for all employees terminated in connection with the restructuring and divestiture program. Contract termination costs relate primarily to the termination of leases in conjunction with the consolidation of facilities in our Medical Segment and also include a $0.5 million reduction in the estimated cost associated with a lease termination in conjunction with the consolidation of manufacturing facilities in our Commercial Segment. Asset impairments relate primarily to machinery and equipment associated with the consolidation of manufacturing facilities. Other restructuring costs include expenses primarily related to the consolidation of manufacturing operations and the reorganization of administrative functions.

      As of June 26, 2005, we expect to incur the following future restructuring costs in our Commercial and Medical segments over the next four quarters:

      The following is a discussion of our segment operating results.

      Products in the Commercial Segment generally are produced in higher unit volume than those of our other two segments. They are manufactured for broad distribution as well as custom fabricated to meet individual customer needs. Consumer spending patterns influence the market trends for products sold to the automotive and marine markets.

      Automotive cable and shifter products are manufactured primarily for automotive OEMs. Discussion of marine and industrial product lines below includes the manufacturing and distribution of driver controls, motion controls, power and vehicle management systems and fuel management systems to the automotive supply, marine and industrial markets.

      Commercial Segment revenues declined 2% in the second quarter of 2005 to $314.7 million from $322.6 million in the second quarter of 2004. The decline was due to a 5% decrease from dispositions, offset, in part, by increases of 2% from currency and 1% from core growth. Commercial Segment revenues declined 3% in the first six months of 2005 to $618.5 million from $635.9 million in the first six months of 2004. The decline was due to an 8% decrease from dispositions, offset, in part, by increases of 3% from core growth and 2% from currency. The segment benefited from continued strength in its industrial OEM markets and the contribution of new driver controls and power and vehicle management system products. Slower sales of power and vehicle management system products, particularly into marine and recreational markets resulted in a slight decline in revenues for these markets when compared with the prior year periods.

      Commercial Segment operating profit declined 30% in the second quarter of 2005 to $25.4 million from $36.2 million in the second quarter of 2004 and declined 26% in the first six months of 2005 to $50.2 million from $67.9 million in the first six months of 2004. These declines primarily reflect the impact of higher than expected costs incurred during the introduction of certain products in the recreational and industrial markets, the impact of customer price reductions, material and other cost increases in the Tier 1 automotive business that began in the second quarter of 2004, volume related contributions from marine markets and the impact of divestitures made in 2004. Operating profit as a percent of revenues declined to 8.1% in the second quarter of 2005 from 11.2% in the second quarter of 2004 and declined to 8.1% in the first six months of 2005 from 10.7% in the first six months of 2004.

      Products in the Medical Segment generally are required to meet exacting standards of performance and have long product life cycles. Economic influences on revenues relate primarily to spending patterns in the worldwide medical devices and hospital supply market.

      Medical Segment revenues increased 40% in the second quarter of 2005 to $218.9 million from $156.8 million in the second quarter of 2004. This increase was due to increases of 32% from acquisitions, 4% from core growth, 3% from currency and 2% from the consolidation of variable interest entities, offset, in part, by a decrease of 1% from dispositions. Medical Segment revenues increased 40% in the first six months of 2005 to $429.8 million from $305.9 million in the first six months of 2004. This increase was due to increases of 31% from acquisitions, 6% from core growth, 2% from currency and 2% from the consolidation of variable interest entities, offset, in part, by a decrease of 1% from dispositions. Medical Segment revenues increased primarily as a result of the increased sale of disposable medical products, particularly related to the third quarter 2004 acquisition of HudsonRCI, a provider of respiratory care products. Sales were especially strong for the disposable medical products business in Europe. Sales of surgical instruments and medical

devices increased primarily as a result of new product sales and volume increases for specialty devices sold to medical device manufacturers.

      Medical Segment operating profit increased 62% in the second quarter of 2005 to $43.4 million from $26.7 million in the second quarter of 2004 and increased 54% in the first six months of 2005 to $76.5 million from $49.8 million in the first six months of 2004. These increases were driven by the HudsonRCI acquisition, seasonally high volume in Europe and significant improvements in the core business as benefits of the restructuring program began to be recognized. Operating profit as a percent of revenues increased to 19.8% in the second quarter of 2005 from 17.0% in the second quarter of 2004 and increased to 17.8% in the first six months of 2005 from 16.3% in the first six months of 2004.

      Products and services in the Aerospace Segment, many of which are proprietary, require a high degree of engineering sophistication and are often custom-designed. Economic influences on these products and services relate primarily to spending patterns in the worldwide aerospace industry and to demand for power generation.

      Aerospace Segment revenues increased 9% in the second quarter of 2005 to $124.3 million from $113.7 million in the second quarter of 2004. This growth was primarily attributable to strong core growth. Aerospace Segment revenues increased 2% in the first six months of 2005 to $234.2 million from $229.4 million in the first six months of 2004. Core growth in repair products and services, growth in sales of both narrow-body cargo loading systems and wide-body cargo system conversions and growth in sales of precision-machined components for aircraft engines were offset by the phase out of industrial gas turbine aftermarket services.

      The Aerospace Segment had an operating profit of $6.6 million in the second quarter of 2005 compared to a loss of $5.5 million in the second quarter of 2004 and had an operating profit of $8.5 million in the first six months of 2005 compared to a loss of $4.1 million in the first six months of 2004. Significant reductions in the cost structures of the precision-machined components and the cargo systems businesses contributed to the improvement as did a reduction in losses resulting from the exit of the industrial gas turbine aftermarket services. Operating profit as a percent of revenues increased to 5.3% in the second quarter of 2005 from (4.9)% in the second quarter of 2004 and increased to 3.6% in the first six months of 2005 from (1.8)% in the first six months of 2004.

      Operating activities provided net cash of approximately $162.9 million during the first six months of 2005. Changes in our operating assets and liabilities during the first six months of 2005 resulted in a net cash inflow of $35.4 million, the most significant of which was a decrease in accounts receivable, which was primarily due to improved cash collection practices including the sale of certain receivables under a non-recourse securitization program. Our financing activities during the first six months of 2005 consisted primarily of a reduction in long-term borrowings of $69.8 million and the decrease in notes payable and current borrowings of $53.5 million, driven by improved operating cash flow, proceeds from the disposition of businesses and lower capital spending. Our investing activities during the first six months of 2005 consisted primarily of proceeds from the sale of businesses and assets of $88.9 million. Net cash used in discontinued operations was $4.7 million in the first six months of 2005.

      The following table provides our net debt to total capital ratio:

      The decline in our percent of net debt to total capital for June 26, 2005 as compared to December 26, 2004 is primarily due to the receipt of proceeds from the sale of businesses and improved management of working capital.

      On July 25, 2005, the Company’s Board of Directors authorized the repurchase of up to $140 million of outstanding Teleflex common stock over the next twelve months. Under the approved plan, repurchases of Teleflex stock will be made from time to time, at the Company’s discretion, in the open market and through privately negotiated transactions.

      We believe that our cash flow from operations and our ability to access additional funds through credit facilities will enable us to fund our operating requirements, capital expenditures and additional acquisition opportunities.

      There have been no significant changes in market risk for the quarter ended June 26, 2005. See the information set forth in Part II, Item 7A of the Company’s Annual Report on Form 10-K for the fiscal year ended December 26, 2004.

      (a) Evaluation of Disclosure Controls and Procedures

      Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures as of the end of the period covered by this report are functioning effectively to provide reasonable assurance that the information required to be disclosed by us in reports filed under the Securities Exchange Act of 1934 is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding disclosure. A controls system cannot provide absolute assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

      (b) Change in Internal Control over Financial Reporting

      No change in our internal control over financial reporting occurred during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

      We are a party to various lawsuits and claims arising in the normal course of business. These lawsuits and claims include actions involving product liability, intellectual property, employment and environmental matters. Based on information currently available, advice of counsel, available insurance coverage, established reserves and other resources, we do not believe that any such actions are likely to be, individually or in the aggregate, material to our business, financial condition, results of operations or liquidity. However, in the event of unexpected further developments, it is possible that the ultimate resolution of these matters, or other similar matters, if unfavorable, may be materially adverse to our business, financial condition, results of operations or liquidity.

      In February 2004, a jury verdict of $34.8 million was rendered against one of our subsidiaries in a trademark infringement action. In February 2005, the trial judge entered an order rejecting the jury award in its entirety. Both parties have filed notice to appeal on various grounds. While the Company cannot predict the outcome of the appeals, we will continue to vigorously contest this litigation. No accrual has been recorded in our condensed consolidated financial statements.

      None.

      None.

      At the Company’s 2005 Annual Meeting of Stockholders held on April 29, 2005, each of the following board nominees was elected to the Company’s Board of Directors to serve a three-year term expiring in 2008:

      In addition, the Company’s stockholders ratified the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 25, 2005, as follows:

      None.

      The following exhibits are filed as part of this report:

      Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: July 27, 2005