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SECURITIES AND EXCHANGE COMMISSION

Form 10-Q

þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 28, 2004

OR

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                 to                

Commission file number 1-5353

TELEFLEX INCORPORATED

(610) 948-5100

(None)

     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.

þ     Yes                              o     No

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

þ     Yes                              o     No

      Indicate the number of shares outstanding of each of the issuer’s classes of Common Stock as of the latest practicable date.

TELEFLEX INCORPORATED

CONDENSED CONSOLIDATED BALANCE SHEET

The accompanying notes are an integral part of the condensed consolidated financial statements.

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TELEFLEX INCORPORATED

CONDENSED CONSOLIDATED STATEMENT OF INCOME

The accompanying notes are an integral part of the condensed consolidated financial statements.

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TELEFLEX INCORPORATED

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

The accompanying notes are an integral part of the condensed consolidated financial statements.

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TELEFLEX INCORPORATED

STATEMENT OF COMPREHENSIVE INCOME

The accompanying notes are an integral part of the condensed consolidated financial statements.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

      The accompanying unaudited condensed consolidated financial statements for the three months ended March 28, 2004 and March 30, 2003 contain all adjustments, consisting only of normal recurring adjustments, which in the opinion of management are necessary to present fairly the financial position, results of operations and cash flows for the periods then ended in accordance with the current requirements for Form 10-Q. These financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the company’s Annual Report on Form 10-K for the year ended December 28, 2003.

      The Company has stock-based compensation plans that provide for the granting of incentive and non-qualified options to officers and key employees to purchase shares of common stock at the market price of the stock on the dates options are granted. No stock option based employee compensation cost is reflected in net income. The following table illustrates the effect on net income and earnings per share if the company had applied the fair value recognition provisions of FASB Statement No. 123, “Accounting for Stock-Based Compensation”:

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      The fair value for options granted in 2004 and 2003 was estimated at the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions:

      Variable interest entities. In December 2003, the FASB issued FIN 46R, “Consolidation of Variable Interest Entities, an interpretation of ARB No. 51,” which replaced FASB Interpretation 46, “Consolidation of Variable Interest Entities,” and clarifies the application of Accounting Research Bulletin 51, “Consolidated Financial Statements,” to certain entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support. The disclosure requirements of FIN 46R are effective for financial statements issued after December 31, 2003. The initial recognition provisions of FIN 46R are to be implemented no later than the end of the first reporting period that ends after March 15, 2004. Management has identified four non-consolidated entities as variable interest entities (VIEs) where the company is considered the primary beneficiary. The company’s net investment in these VIEs is $10,000 as of March 28, 2004 and is included in Investments in affiliates. The fair value appraisals of these entities in accordance with the provisions of FIN 46R have not yet been completed, but management does not expect that these fair value assessments will have a material impact on the company’s financial position, results of operations or cash flows.

      Pension and other postretirement benefits. In December 2003, the FASB issued SFAS 132R, “Employers’ Disclosures about Pensions and Other Postretirement Benefits — an amendment of FASB Statements 87, 88, and 106,” which replaced SFAS 132, “Employers’ Disclosures about Pensions and Other Postretirement Benefits.” SFAS 132R retains the disclosure requirements of SFAS 132 and requires additional disclosures about the assets, obligations, cash flows, and net periodic benefit cost of defined benefit pension plans and other defined benefit postretirement plans. The disclosure requirements of SFAS 132R are generally effective for fiscal years ending after December 15, 2003. Disclosure of the estimated future benefit payments and certain information about foreign plans shall be effective for fiscal years ending after June 15, 2004. The interim-period disclosures required by this Statement shall be effective for interim periods beginning after December 15, 2003. Disclosures related to the estimated future benefit payments and foreign plans shall be incorporated into the footnotes to the company’s 2004 financial statements. The adoption of SFAS 132R did not have a material impact on the company’s financial position, results of operations or cash flows.

      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 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.

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      Net benefit cost of defined benefit plans consists of the following:

      Basic earnings per share is computed by dividing net income by the 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 of 411 and 1,192 were antidilutive and were therefore not included in the calculation of earnings per share for the three months ended March 28, 2004 and March 30, 2003, respectively.

      At March 28, 2004, 4,830 shares were reserved for issuance under the company’s stock compensation plans.

      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

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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 three months ended March 28, 2004:

      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 has residual value guarantees in the amount of $20,066 at March 28, 2004. 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 March 28, 2004, 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. As currently structured, 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. At March 28, 2004, $44,949 was recorded in demand loans under this program.

      Environmental. The company is also 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 Comprehensive Environmental Response, Compensation and Liability Act (CERCLA, often referred to as Superfund), the 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 March 28, 2004, the company’s consolidated balance sheet included an accrued liability of $3,500 relating to these matters. Considerable uncertainty exists with respect to these costs and, under adverse changes in circumstances, potential liability may range up to two or three times the amount accrued as of March 28, 2004. The time-frame over which the accrued or presently unrecognized 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 contracts, intellectual property and environmental matters. The ultimate effect on future financial results is not subject to reasonable estimation because considerable uncertainty exists as to the final outcome of these lawsuits and claims in the

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opinion of company counsel. However, while the ultimate liabilities resulting from such lawsuits and claims may be significant to results of operations in the period recognized, management does not anticipate they will have a material adverse effect on the company’s consolidated financial position, results of operations, or liquidity.

      On February 13, 2004 the company was notified that a jury sitting in the Federal District Court for the Northern District of Georgia had rendered a verdict against one of its subsidiaries, Rüsch, Inc., in a trademark infringement case in the amount of $2,600 as “reasonable royalty” and an additional $32,200 as “unjust enrichment.” Judgment was not entered on the verdict, and the trial judge held a hearing on February 25, 2004 on the issue of what judgment would be entered by the court. The judge reserved judgment at that hearing pending further briefing by the parties. Under applicable Federal trademark law, the trial judge has the discretion to determine whether and in what amount an award for unjust enrichment should be made. As of April 30, 2004, the date of filing of the company’s March 28, 2004 Form 10-Q, no judgment had been entered on this matter.

      Rüsch, Inc., a manufacturer of health care supply products, is a co-defendant in this case with Medical Marketing Group, Inc. (MMG). The case involves a common law trademark claim arising under 1988 and 1997 contracts between MMG and the plaintiff, which were terminated in 1999. Rüsch, Inc. acquired the business of MMG in February 2000. In connection with the acquisition, the company escrowed a portion of the purchase price, the balance of which approximates the reasonable royalty found by the jury.

      The company cannot predict when judgment will be entered in this case, nor predict what amount, if any, may be awarded for unjust enrichment. Accordingly, other than the amount provided in the escrow noted above, no accrual has been recorded in the accompanying 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.

      Changes in the carrying amount of goodwill for the three months ended March 28, 2004, by operating segment, are as follows:

      The following table reflects the components of intangible assets:

      Amortization expense related to those intangible assets was $2,485 for the three months ended March 28, 2004. Amortization expense is estimated to be $10,648 in 2004, $9,600 in 2005, $8,654 in 2006, $7,931 in 2007 and $7,803 in 2008.

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Note 7.     Inventories

      Inventories consisted of the following:

Note 8.     Business segment information

(*)	Segment operating profit is defined as a segment’s revenues reduced by its cost of sales and its operating expenses. Corporate expenses, gain on asset sale, interest expense and taxes on income are excluded from the measure.

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MANAGEMENT’S ANALYSIS OF QUARTERLY FINANCIAL DATA

Results of Operations:

      Discussion of growth from acquisitions reflects the impact of a purchased company 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 quarter to quarter.

      Revenues increased 17% in the first quarter of 2004 to $638.0 million from $546.2 million in 2003. The 17% increase in revenues was comprised of 6% from acquisitions, 6% from currency translation and 5% from core growth. All three segments, Commercial, Medical and Aerospace, reported overall and core revenue increases. The Commercial, Medical and Aerospace segments comprised 55%, 24% and 21% of the company’s net revenues, respectively.

      Cost of sales as a percentage of revenues decreased to 73.7% in 2004 compared to 74.0% in 2003. A decline in the Medical Segment offset increases in the Commercial and Aerospace segments. Operating expenses as a percentage of revenues increased to 18.8% in 2004 compared with 17.8% in 2003 as increases in the Medical and Commercial segments were partially offset by a decline in the Aerospace Segment. In addition, higher corporate expenses added to the increase in operating expenses. In the first quarter of 2003, the company sold an investment, resulting in a pre-tax gain of $3.1 million, $0.05 cents per share after tax.

      Interest expense increased in 2004 primarily as higher debt outstanding was only partially offset by lower average interest rates. The effective income tax rate was 28.0% in the first quarter of 2004 compared with 29.6% in 2003. The lower rate in 2004 was the result of a higher proportion of income in 2004 earned in countries with relatively lower tax rates. Net income for the quarter was $29.5 million, an increase of 1% from the first quarter of 2003. Diluted earnings per share declined 1% to $0.73.

Industry Segment Review:

      Commercial Segment revenues gained 17% from $299.8 million in 2003 to $350.8 million in 2004. All three product lines reported double digit gains. Overall, core growth and stronger foreign currencies each contributed 6% of the increase, while acquisitions throughout 2003 contributed 5% to the top line improvement. In the Automotive product line, stronger foreign currencies comprised slightly over one-half of the gain with core growth in Europe and Asia providing a majority of the remainder. Industrial product line sales benefited from prior year acquisitions, which accounted for over two-thirds of the revenue improvement. Marine sales improved as a result of higher volume to both marine original equipment manufacturers and to the aftermarket. Commercial Segment operating profit improved from $29.1 million in 2003 to $29.8 million in 2004 and, as a result, operating profit as a percent of revenues decreased to 8.5% from 9.7%. A volume driven operating profit gain in the Marine product line was partially offset by additional launch costs related to a new global automotive platform in Europe and costs of integrating prior year acquisitions in the alternative fuel systems and light duty cable businesses.

      Revenues in the Medical Segment increased 27% to $150.6 million in 2004 from $118.1 million in 2003. Revenues gained 15% from acquisitions, 8% from foreign currency changes and 4% from core growth. In Health Care Supply, nearly two-thirds of the revenue gain came from currency translation with the remainder from core growth in urology, anesthesia and specialty device products. Surgical Devices improved primarily as a result of the cardiothoracic devices acquisition in July 2003. Operating profit increased to $22.9 million in 2004 from $19.0 million in 2003 on volume gains in Health Care Supply coupled with the acquisition contribution in Surgical Devices. Operating profit as a percent of revenues declined from 16.1% in 2003 to 15.2% in 2004 as a result of adverse product mix.

      Aerospace Segment revenues increased 6% to $136.6 million in 2004 from $128.3 million in 2003. Increased revenue from lower margin products in the Repair Product and Services and Manufactured Components product lines offset declines in Industrial Gas Turbine (IGT) and to a lesser extent Cargo Systems. Operating profit declined 16% to $1.6 million from $1.9 million. Results in the first quarter of 2003

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Cash Flows from Operations and Liquidity:

      Cash flows from operating activities in the first quarter of 2004 were $18.5 million, compared to $27.2 million in the prior year comparable period. Increased working capital demand, particularly in accounts receivable and accounts payable, was partially offset by higher depreciation, amortization and net income. Increased accounts receivable was primarily a function of higher revenues, as accounts receivable as a percent of first quarter annualized revenues remained constant. Accounts payable dropped in part due to the initiatives to source materials using long-term contracts, resulting in favorable pricing and improved payment terms. Proceeds from stock compensation plans increased by $9.7 million as options for 290,000 shares of stock were exercised in the three months ended March 28, 2004 versus 20,000 in the prior year comparable period. Total borrowings increased by $0.1 million to $456.1 million at March 28, 2004 as compared to $456.0 million at December 28, 2003. The increase was due to $7.0 million of increased current borrowings offset by scheduled debt repayments of $4.9 million and a $2.0 million reduction due to weaker foreign currencies from year end. The ratio of total debt to total capitalization was 30% at March 28, 2004 and December 28, 2003.

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 quarterly report, other written reports and oral statements 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 involve risks and uncertainties which can cause actual results to differ materially from those projected in the forward-looking statements and include, but are not limited to:

	•	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;
	•	the ability to integrate acquired businesses into the company’s operations, realize planned synergies and operate such businesses profitably in accordance with expectations;
	•	competitive market conditions and resulting effects on sales 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.

      The company undertakes no obligation to update or publicly revise these forward-looking statements to reflect events or circumstances that arise after the date of this report.

      The company’s annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports will be made available free of charge through the Investor Relations section of the Company’s Internet website (http://www.teleflex.com) as soon as practicable after such material is electronically filed with, or furnished to, the Securities and Exchange Commission.

      As of the end of the quarter ended March 28, 2004, our Chief Executive Officer and Chief Financial Officer have reviewed and evaluated the effectiveness of our disclosure controls and procedures, which included inquiries made to certain other of our employees. Based on their evaluation, our Chief Executive Officer and Chief Financial Officer have each concluded that our disclosure controls and procedures are

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PART II OTHER INFORMATION

      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 Comprehensive Environmental Response, Compensation and Liability Act (CERCLA, often referred to as Superfund), the 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. The time-frame over which the accrued or presently unrecognized amounts may be paid out, based on past history, is estimated to be 15-20 years.

      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 contracts, intellectual property and environmental matters. The ultimate effect on future financial results is not subject to reasonable estimation because considerable uncertainty exists as to the final outcome of these lawsuits and claims in the opinion of company counsel. However, while the ultimate liabilities resulting from such lawsuits and claims may be significant to results of operations in the period recognized, management does not anticipate they will have a material adverse effect on the company’s consolidated financial position, results of operations, or liquidity.

      The company was notified in February 2004 that a jury had rendered a verdict against one of its subsidiaries. A judgment on the verdict has not yet been entered as of April 30, 2004 pending further consideration by the court. See Note 5 to the condensed consolidated financial statements for a further discussion of this matter.

      1.     Exhibits:

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      2.     During the quarter ended March 28, 2004, the Company filed the following reports on Form 8-K:

	On January 5, 2004 Teleflex Incorporated filed a report on Form 8-K dated January 5, 2004, to file as an exhibit a press release announcing the acquisition of Hendersons Automotive Inc., based in Westland, Michigan, and Hendersons Lumbar Division, based in Geelong Victoria, Australia.
	On February 12, 2004 Teleflex Incorporated filed a report on Form 8-K dated February 12, 2004, to file as an exhibit a press release announcing earnings for the quarter and year ended December 28, 2003.
	On March 3, 2004 Teleflex Incorporated filed a report on Form 8-K dated March 2, 2004, to file as an exhibit a press release announcing that on February 13, 2004 the company was notified that a jury sitting in the Federal District Court for the Northern District of Georgia had rendered a verdict against one of its subsidiaries, Rüsch, Inc., in a trademark infringement case.

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TELEFLEX INCORPORATED

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

	TELEFLEX INCORPORATED
	/s/ JOHN J. SICKLER
	John J. Sickler
	Vice Chairman and Interim Chief Financial Officer
	(principal financial officer) and duly authorized officer

April 30, 2004

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EXHIBIT INDEX