TELEFLEX INC - Quarter Report: 2010 March (Form 10-Q)

 

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

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

Commission file number 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 identification no.)
incorporation or organization)

155 South Limerick Road, Limerick, Pennsylvania (Address of principal executive offices)		19468 (Zip Code)

(610) 948-5100
(Registrant’s telephone number, including area code)

(None)
(Former Name, Former Address and Former Fiscal Year,
If Changed Since Last Report)

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 þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filler”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer þ		Accelerated filer o		Non-accelerated filer o		Smaller reporting company o
				(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No þ

On April 16, 2010, 39,913,203 shares of the registrant’s common stock, $1.00 par value, were outstanding.

 

 

TELEFLEX INCORPORATED
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED MARCH 28, 2010

TABLE OF CONTENTS

		Page
PART I — FINANCIAL INFORMATION
Item 1: Financial Statements (Unaudited):
Condensed Consolidated Statements of Income for the three months ended March 28, 2010 and March 29, 2009			2
Condensed Consolidated Balance Sheets as of March 28, 2010 and December 31, 2009			3
Condensed Consolidated Statements of Cash Flows for the three months ended March 28, 2010 and March 29, 2009			4
Condensed Consolidated Statements of Changes in Equity for the three months ended March 28, 2010 and March 29, 2009			5
Notes to Condensed Consolidated Financial Statements			6
Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations			17
Item 3: Quantitative and Qualitative Disclosures About Market Risk			24
Item 4: Controls and Procedures			24
PART II — OTHER INFORMATION
Item 1: Legal Proceedings			25
Item 1A: Risk Factors			25
Item 2: Unregistered Sales of Equity Securities and Use of Proceeds			25
Item 3: Defaults Upon Senior Securities			25
Item 5: Other Information			25
Item 6: Exhibits			26
SIGNATURES			27
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

TELEFLEX INCORPORATED AND SUBSIDIARIES

		Three Months Ended
		March 28,				March 29,
		2010				2009
		(Dollars and shares in thousands,
		except per share)
Net revenues		$	436,460			$	440,068
Materials, labor and other product costs			238,867				251,614
Gross profit			197,593				188,454
Selling, engineering and administrative expenses			117,388				117,133
Research and development expenses			9,560				7,565
Net loss on sales of businesses and assets			—				2,597
Restructuring and other impairment charges			463				2,463
Income from continuing operations before interest and taxes			70,182				58,696
Interest expense			19,034				25,397
Interest income			(218	)			(209	)
Income from continuing operations before taxes			51,366				33,508
Taxes on income from continuing operations			15,433				8,912
Income from continuing operations			35,933				24,596
Operating income from discontinued operations (including gain on disposal of $9,737 and $275,787, respectively)			9,681				301,579
Taxes on income from discontinued operations			7,656				100,568
Income from discontinued operations			2,025				201,011
Net income			37,958				225,607
Less: Net income attributable to noncontrolling interest			286				236
Income from discontinued operations attributable to noncontrolling interest			—				9,860
Net income attributable to common shareholders		$	37,672			$	215,511
Earnings per share available to common shareholders:
Basic:
Income from continuing operations		$	0.90			$	0.61
Income from discontinued operations		$	0.05			$	4.82
Net income		$	0.95			$	5.43
Diluted:
Income from continuing operations		$	0.89			$	0.61
Income from discontinued operations		$	0.05			$	4.79
Net income		$	0.94			$	5.40
Dividends per share		$	0.34			$	0.34
Weighted average common shares outstanding:
Basic			39,791				39,692
Diluted			40,199				39,876
Amounts attributable to common shareholders:
Income from continuing operations, net of tax		$	35,647			$	24,360
Income from discontinued operations, net of tax			2,025				191,151
Net income		$	37,672			$	215,511

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

TELEFLEX INCORPORATED AND SUBSIDIARIES

		March 28,				December 31,
		2010				2009
		(Dollars in thousands)
ASSETS
Current assets
Cash and cash equivalents		$	210,719			$	188,305
Accounts receivable, net			297,445				265,305
Inventories, net			353,775				360,843
Prepaid expenses and other current assets			25,858				21,872
Income taxes receivable			34,643				100,733
Deferred tax assets			58,306				58,010
Assets held for sale			8,521				8,866
Total current assets			989,267				1,003,934
Property, plant and equipment, net			305,525				317,499
Goodwill			1,439,709				1,459,441
Intangibles and other assets, net			1,025,857				1,045,706
Investments in affiliates			13,901				12,089
Deferred tax assets			—				336
Total assets		$	3,774,259			$	3,839,005
LIABILITIES AND EQUITY
Current liabilities
Current borrowings		$	41,460			$	4,008
Accounts payable			86,354				94,983
Accrued expenses			82,023				97,274
Payroll and benefit-related liabilities			62,726				70,537
Derivative liabilities			15,896				16,709
Accrued interest			18,611				22,901
Income taxes payable			12,940				30,695
Deferred tax liabilities			3,355				—
Total current liabilities			323,365				337,107
Long-term borrowings			1,141,280				1,192,491
Deferred tax liabilities			401,341				398,923
Pension and postretirement benefit liabilities			164,215				164,726
Other liabilities			156,436				160,684
Total liabilities			2,186,637				2,253,931
Commitments and contingencies
Total common shareholders’ equity			1,582,821				1,580,241
Noncontrolling interest			4,801				4,833
Total equity			1,587,622				1,585,074
Total liabilities and equity		$	3,774,259			$	3,839,005

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

TELEFLEX INCORPORATED AND SUBSIDIARIES

		Three Months Ended
		March 28, 2010				March 29, 2009
		(Dollars in thousands)
Cash Flows from Operating Activities of Continuing Operations:
Net income		$	37,958			$	225,607
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Income from discontinued operations			(2,025	)			(201,011	)
Depreciation expense			12,420				13,771
Amortization expense of intangible assets			11,103				10,918
Amortization expense of deferred financing costs			945				2,641
Stock-based compensation			1,853				2,151
Net loss on sales of businesses and assets			—				2,597
Other			554				717
Changes in operating assets and liabilities, net of effects of acquisitions and disposals:
Accounts receivable			(48,210	)			(16,170	)
Inventories			(1,240	)			(11,004	)
Prepaid expenses and other current assets			(2,654	)			1,830
Accounts payable and accrued expenses			(28,841	)			(34,089	)
Income taxes receivable and payable, net and deferred income taxes			50,337				(5,599	)
Net cash provided by (used in) operating activities from continuing operations			32,200				(7,641	)
Cash Flows from Financing Activities of Continuing Operations:
Proceeds from long-term borrowings			—				10,000
Reduction in long-term borrowings			(51,090	)			(249,178	)
Increase (decrease) in notes payable and current borrowings			39,700				(659	)
Proceeds from stock compensation plans			3,670				367
Payments to noncontrolling interest shareholders			—				(295	)
Dividends			(13,536	)			(13,511	)
Net cash used in financing activities from continuing operations			(21,256	)			(253,276	)
Cash Flows from Investing Activities of Continuing Operations:
Expenditures for property, plant and equipment			(7,159	)			(6,525	)
Proceeds from sales of businesses and assets, net of cash sold			24,750				296,883
Payments for businesses and intangibles acquired, net of cash acquired			(81	)			(1,108	)
Net cash provided by investing activities from continuing operations			17,510				289,250
Cash Flows from Discontinued Operations:
Net cash (used in) provided by operating activities			(1,137	)			20,370
Net cash used in financing activities			—				(11,075	)
Net cash used in investing activities			(189	)			(1,598	)
Net cash (used in) provided by discontinued operations			(1,326	)			7,697
Effect of exchange rate changes on cash and cash equivalents			(4,714	)			(254	)
Net increase in cash and cash equivalents			22,414				35,776
Cash and cash equivalents at the beginning of the period			188,305				107,275
Cash and cash equivalents at the end of the period		$	210,719			$	143,051

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

TELEFLEX INCORPORATED AND SUBSIDIARIES

																		Accumulated
										Additional								Other				Treasury
		Common Stock								Paid in				Retained				Comprehensive				Stock								Noncontrolling				Total				Comprehensive
		Shares				Dollars				Capital				Earnings				Income				Shares				Dollars				Interest				Equity				Income
		(Dollars and shares in thousands, except per share)
Balance at December 31, 2008			41,995			$	41,995			$	268,263			$	1,182,906			$	(108,202	)			2,311			$	(138,507	)		$	39,428			$	1,285,883
Net income															215,511																10,096				225,607			$	225,607
Cash dividends ($0.34 per share)															(13,511	)																			(13,511	)
Financial instruments marked to market, net of tax of $1,541																			4,781																4,781				4,781
Cumulative translation adjustment (“CTA”)																			(46,344	)											(99	)			(46,443	)			(46,443	)
Reclassification of CTA to gain																			(9,365	)															(9,365	)			(9,365	)
Pension liability adjustment, net of tax of $498																			1,061																1,061				1,061
Distributions to noncontrolling interest shareholders																															(295	)			(295	)
Disposition of noncontrolling interest																															(45,019	)			(45,019	)
Comprehensive income																																						$	175,641
Shares issued under compensation plans			10				10				1,596												(12	)			792								2,398
Deferred compensation																							(9	)			343								343
Balance at March 29, 2009			42,005			$	42,005			$	269,859			$	1,384,906			$	(158,069	)			2,290			$	(137,372	)		$	4,111			$	1,405,440
Balance at December 31, 2009			42,033			$	42,033			$	277,050			$	1,431,878			$	(34,120	)			2,278			$	(136,600	)		$	4,833			$	1,585,074
Net income															37,672																286				37,958			$	37,958
Cash dividends ($0.34 per share)															(13,536	)																			(13,536	)
Financial instruments marked to market, net of tax of $462																			835																835				835
Cumulative translation adjustment																			(29,638	)											47				(29,591	)			(29,591	)
Pension liability adjustment, net of tax of $448																			1,309																1,309				1,309
Deconsolidation of VIE															253																(365	)			(112	)
Comprehensive income																																						$	10,511
Shares issued under compensation plans			81				81				4,969												(7	)			395								5,445
Deferred compensation																							(6	)			240								240
Balance at March 28, 2010			42,114			$	42,114			$	282,019			$	1,456,267			$	(61,614	)			2,265			$	(135,965	)		$	4,801			$	1,587,622

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

TELEFLEX INCORPORATED AND SUBSIDIARIES

Note 1 — Basis of presentation

We prepared the accompanying unaudited condensed consolidated financial statements of Teleflex Incorporated on the same basis as our annual consolidated financial statements, with the exception of changes resulting from the adoption of new accounting guidance during the first three months of 2010 as described in Note 2 below.

In the opinion of management, our financial statements reflect all adjustments, which are of a normal recurring nature, necessary for a fair presentation of financial statements for interim periods in accordance with U.S. generally accepted accounting principles (GAAP) and with Rule 10-01 of SEC Regulation S-X, which sets forth the instructions for financial statements included in Form 10-Q. The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of our financial statements, as well as the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates.

In accordance with applicable accounting standards, the accompanying condensed consolidated financial statements do not include all of the information and footnote disclosures that are required to be included in our annual consolidated financial statements. The year-end condensed balance sheet data was derived from audited financial statements, but, as permitted by Rule 10-01 of SEC Regulation S-X does not include all disclosures required by GAAP for complete financial statements. Accordingly, our quarterly condensed financial statements should be read in conjunction with the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2009.

As used in this report, the terms “we,” “us,” “our,” “Teleflex” and the “Company” mean Teleflex Incorporated and its subsidiaries, unless the context indicates otherwise. The results of operations for the periods reported are not necessarily indicative of those that may be expected for a full year.

Note 2 — New accounting standards

The Company adopted the following amendments to accounting standards as of January 1, 2010, the first day of its 2010 fiscal year:

Accounting for Transfers of Financial Assets — an amendment to Transfers and Servicing: In June 2009, the Financial Accounting Standards Board (“FASB”) issued guidance to improve the information that is reported in financial statements about the transfer of financial assets and the effects of transfers of financial assets on financial position, financial performance and cash flows and a transferor’s continuing involvement, if any, with transferred financial assets. In addition, the guidance limits the circumstances in which a financial asset or a portion of a financial asset should be derecognized in the financial statements being presented when the transferor has not transferred the entire original financial asset. Upon the adoption of this guidance in the first quarter of 2010, the $39.7 million of trade receivables under the Company’s accounts receivable securitization program (the “Securitization Program”) that were previously treated as sold and removed from the balance sheet are now included in accounts receivable, net, and the amounts outstanding under the Securitization Program are accounted for as a secured borrowing and reflected as short-term debt on the Company’s balance sheet (which as of March 28, 2010 is $39.7 million.) In addition, while there has been no change in the arrangement under the Securitization Program, the adoption of this amendment reduced cash flow from operations by approximately $39.7 million and resulted in a corresponding increase in cash flow from financing activities.

Amendment to Consolidation: In June 2009, the FASB issued guidance that requires an enterprise to perform an analysis to determine whether the enterprise’s variable interest or interests give it a controlling financial interest in a variable interest entity (which would result in the enterprise being deemed the primary beneficiary of that entity and, therefore, obligated to consolidate the variable interest entity in its financial statements); to require ongoing reassessments of whether an enterprise is the primary beneficiary of a variable interest entity; to revise guidance for determining whether an entity is a variable interest entity; and to require enhanced disclosures that will provide more transparent information about an enterprise’s involvement with a variable interest entity whose revenue was approximately $10 million during 2009. As a result of the adoption of this guidance, the Company deconsolidated a variable interest entity. Refer to the Company’s condensed consolidated statements of changes in equity for the impact of the deconsolidation.

TELEFLEX INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Amendment to Fair Value Measurements and Disclosures: In January 2010, the FASB enhanced and clarified disclosure requirements regarding fair value of financial instruments for interim and annual reporting periods. The guidance requires additional disclosure for transfer activity pertaining to Level 1 and 2 fair value measurements and purchase, sale, issuance, and settlement activity for Level 3 fair value measurements. Additionally, the FASB clarified disclosure requirements related to level of disaggregation, inputs and valuation techniques used to measure fair value. The guidance is effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures related to Level 3 fair value measurement activity which is effective for fiscal years beginning after December 15, 2010.

The Company will adopt the following new accounting standards as of January 1, 2011, the first day of its 2011 fiscal year:

Amendment to Software: In October 2009, the FASB changed the accounting model for revenue arrangements for certain tangible products containing software components and nonsoftware components. The guidance provides direction on how to determine which software, if any, relating to the tangible product is excluded from the scope of the software revenue guidance. The amendment will be effective prospectively for fiscal years beginning on or after June 15, 2010. The Company is currently evaluating this guidance to determine the impact on the Company’s results of operations, cash flows, and financial position.

Amendment to Revenue Recognition: In October 2009, the FASB established the criteria for multiple-deliverable revenue arrangements by establishing new guidance on how to separate deliverables and how to measure and allocate arrangement consideration to one or more units of accounting. Additionally, this requires vendors to expand their disclosures around multiple-deliverable revenue arrangements and will be effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. The Company is currently evaluating the guidance to determine the impact on the Company’s results of operations, cash flows, and financial position.

Note 3 — Integration

Integration of Arrow

In connection with the acquisition of Arrow International, Inc. (“Arrow”) in October 2007, the Company formulated a plan related to the integration of Arrow and the Company’s Medical businesses. The integration plan focuses on the closure of Arrow corporate functions and the consolidation of manufacturing, sales, marketing and distribution functions in North America, Europe and Asia. The Company finalized its estimate of the costs to implement the plan in the fourth quarter of 2008. The Company has accrued estimates for certain costs, related primarily to personnel reductions and facility closures and the termination of certain distribution agreements, at the date of acquisition.

The following table provides information relating to changes in the accrued liability associated with the Arrow integration plan during the three months ended March 28, 2010:

		Balance at								Balance at
		December 31,								March 28,
		2009				Payments				2010
		(Dollars in millions)
Termination benefits		$	0.4			$	—			$	0.4
Facility closure costs			0.5				(0.1	)			0.4
Contract termination costs			2.7				—				2.7
		$	3.6			$	(0.1	)		$	3.5

Contract termination costs represent the termination of a European distributor agreement that is currently in litigation but is expected to be paid in 2010.

In conjunction with the plan for the integration of Arrow and the Company’s Medical businesses, the Company has taken actions that affect employees and facilities of Teleflex. This aspect of the integration plan is explained in Note 4, “Restructuring and other impairment charges.” Costs that affect employees and facilities of Teleflex are charged to earnings and included in restructuring and other impairment charges within the condensed consolidated statement of operations for the periods in which the costs are incurred.

TELEFLEX INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 4 — Restructuring and other impairment charges

The amounts included in restructuring and other impairment charges in the condensed consolidated statement of income for the three months ended March 28, 2010 and March 29, 2009 consisted of the following:

		Three Months Ended
		March 28,				March 29,
		2010				2009
		(Dollars in thousands)
2008 Commercial Segment program		$	—			$	1,138
2007 Arrow integration program			463				1,325
Restructuring and other impairment charges		$	463			$	2,463

2008 Commercial Segment Restructuring Program

In December 2008, the Company began certain restructuring initiatives with respect to the Company’s Commercial Segment. The initiatives involved the consolidation of operations and a related reduction in workforce at certain of the Company’s facilities in North America and Europe. The Company determined to undertake these initiatives as a means to improve operating performance and to better leverage its resources due to weakness in the marine and industrial markets.

By December 31, 2009, the Company had completed the 2008 Commercial Segment restructuring program, and all costs associated with the program were fully paid during 2009. No changes were recorded under this program in 2010.

The charges associated with the 2008 Commercial Segment restructuring program that were included in restructuring and other impairment charges in the condensed consolidated statements of income during the three months ended March 29, 2009 were as follows:

		Three Months Ended
		March 29, 2009
		Commercial
		(Dollars in thousands)
Termination benefits		$	1,138
		$	1,138

Termination benefits were comprised of severance-related payments for all employees terminated in connection with the restructuring program.

2007 Arrow Integration Program

The charges associated with the 2007 Arrow integration program that were included in restructuring and other impairment charges for the three months ended March 28, 2010 and March 29, 2009, are as follows:

		Medical
		Three Months Ended				Three Months Ended
		March 28, 2010				March 29, 2009
		(Dollars in thousands)
Termination benefits		$	230			$	1,097
Facility closure costs			425				51
Contract termination costs			(195	)			62
Other restructuring costs			3				115
		$	463			$	1,325

TELEFLEX INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

At March 28, 2010, the accrued liability associated with the 2007 Arrow integration program consisted of the following:

		Balance at																Balance at
		December 31,				Subsequent												March 28,
		2009				Accruals				Payments				Translation				2010
		(Dollars in thousands)
Termination benefits		$	2,183			$	230			$	(1,194	)		$	(64	)		$	1,155
Facility closure costs			302				425				(642	)			(15	)			70
Contract termination costs			687				(195	)			—				(13	)			479
Other restructuring costs			23				3				(3	)			(1	)			22
		$	3,195			$	463			$	(1,839	)		$	(93	)		$	1,726

Termination benefits are comprised of severance-related payments for all employees terminated in connection with the 2007 Arrow integration program. Facility closure costs relate primarily to costs to prepare a facility for closure. Contract termination costs relate primarily to the termination of a European distributor agreement and leases in conjunction with the consolidation of facilities.

As of March 28, 2010, the Company expects to incur the following restructuring expenses associated with the 2007 Arrow integration program in its Medical Segment through December 2010:

		(Dollars in millions)
Termination benefits		$	0.8 – 1.1
Facility closure costs			0.5 – 0.7
Contract termination costs			0.2 – 0.5
Other restructuring costs			0.1 – 0.2
		$	1.6 – 2.5

Note 5 — Inventories

Inventories consisted of the following:

		March 28,				December 31,
		2010				2009
		(Dollars in thousands)
Raw materials		$	145,735			$	150,508
Work-in-process			60,699				53,847
Finished goods			181,607				191,747
			388,041				396,102
Less: Inventory reserve			(34,266	)			(35,259	)
Inventories		$	353,775			$	360,843

Note 6—Goodwill and other intangible assets

Changes in the carrying amount of goodwill, by operating segment, for the three months ended March 28, 2010 are as follows:

		Medical				Commercial				Total
		(Dollars in thousands)
Balance as of December 31, 2009
Goodwill		$	1,444,354			$	15,087			$	1,459,441
Accumulated impairment losses			—				—				—
			1,444,354				15,087				1,459,441
Goodwill related to dispositions			(9,224	)			—				(9,224	)
Translation adjustment			(10,508	)			—				(10,508	)
Balance as of March 28, 2010
Goodwill			1,424,622				15,087				1,439,709
Accumulated impairment losses			—				—				—
		$	1,424,622			$	15,087			$	1,439,709

TELEFLEX INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Intangible assets consisted of the following:

		Gross Carrying Amount								Accumulated Amortization
		March 28, 2010				December 31, 2009				March 28, 2010				December 31, 2009
		(Dollars in thousands)
Customer lists		$	555,792			$	559,207			$	79,960			$	74,047
Intellectual property			207,021				208,247				63,853				59,824
Distribution rights			21,694				22,094				16,972				17,066
Trade names			334,502				336,673				3,828				3,708
		$	1,119,009			$	1,126,221			$	164,613			$	154,645

Amortization expense related to intangible assets was approximately $11.1 million and $10.9 million for the three months ended March 28, 2010 and March 29, 2009, respectively. Estimated annual amortization expense for each of the five succeeding years is as follows (dollars in thousands):

2010		$	44,600
2011			44,400
2012			44,200
2013			43,200
2014			40,300

Note 7 — Financial instruments

The Company uses derivative instruments for risk management purposes. Forward rate contracts are used to manage foreign currency transaction exposure and interest rate swaps are used to reduce exposure to interest rate changes. These derivative instruments are designated as cash flow hedges and are recorded on the balance sheet at fair market value. The effective portion of the gains or losses on derivatives are reported as a component of other comprehensive income and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Gains and losses on the derivative representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current earnings. See Note 8, “Fair Value Measurement” for additional information.

The location and fair values of derivative instruments designated as hedging instruments in the condensed consolidated balance sheet are as follows:

		March 28,				December 31,
		2010				2009
		Fair Value				Fair Value
		(Dollars in thousands)
Asset derivatives:
Foreign exchange contracts:
Other assets — current		$	2,979			$	1,356
Total asset derivatives		$	2,979			$	1,356
Liability derivatives:
Interest rate contracts:
Derivative liabilities — current		$	15,499			$	15,848
Other liabilities — noncurrent			13,145				12,258
Foreign exchange contracts:
Derivative liabilities — current			397				860
Total liability derivatives		$	29,041			$	28,966

TELEFLEX INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The location and amount of the gains and losses for derivatives in cash flow hedging relationships that were reported in other comprehensive income (“OCI”), accumulated other comprehensive income (“AOCI”) and the condensed consolidated statement of income for the three months ended March 28, 2010 and March 29, 2009 are as follows:

		After Tax Gain/(Loss)
		Recognized in OCI
		March 28,				March 29,
		2010				2009
		(Dollars in thousands)
Interest rate contracts		$	(312	)		$	3,098
Foreign exchange contracts			1,147				1,683
Total		$	835			$	4,781

		Pre-Tax (Gain)/Loss Reclassified
		from AOCI into Income
		March 28,				March 29,
		2010				2009
		(Dollars in thousands)
Interest rate contracts:
Interest expense		$	4,580			$	4,357
Foreign exchange contracts
Net revenues			(11	)			799
Materials, labor and other product costs			(735	)			1,616
Income from discontinued operations			—				337
Total		$	3,834			$	7,109

For the three months ended March 28, 2010 and March 29, 2009, there was no ineffectiveness related to the Company’s derivatives.

Note 8 — Fair value measurement

The following tables provide the financial assets and liabilities carried at fair value measured on a recurring basis as of March 28, 2010 and March 29, 2009:

														Significant
		Total carrying				Quoted prices in				Significant other				unobservable
		value at				active markets				observable inputs				inputs
		March 28, 2010				(Level 1)				(Level 2)				(Level 3)
		(Dollars in thousands)
Cash and cash equivalents		$	10,000			$	10,000			$	—			$	—
Deferred compensation assets		$	3,338			$	3,338			$	—			$	—
Derivative assets		$	2,979			$	—			$	2,979			$	—
Derivative liabilities		$	29,041			$	—			$	29,041			$	—

														Significant
		Total carrying				Quoted prices in				Significant other				unobservable
		value at				active markets				observable inputs				inputs
		March 29, 2009				(Level 1)				(Level 2)				(Level 3)
		(Dollars in thousands)
Cash and cash equivalents		$	30,000			$	30,000			$	—			$	—
Deferred compensation assets		$	2,233			$	2,233			$	—			$	—
Derivative assets		$	992			$	—			$	992			$	—
Derivative liabilities		$	48,376			$	—			$	48,376			$	—

The carrying amount reported in the condensed consolidated balance sheet as of March 28, 2010 for long-term debt is $1,141.3 million. Using a discounted cash flow technique that incorporates a market interest yield curve with adjustments for duration, optionality, and risk profile, the Company has determined the fair value of its debt to be $1,116.6 million at March 28, 2010. The Company’s implied credit rating is a factor in determining the market interest yield curve.

TELEFLEX INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Valuation Techniques

The Company’s cash and cash equivalents valued based upon Level 1 inputs are comprised of overnight investments in money market funds. The funds invest in obligations of the U.S. Treasury, including Treasury bills, bonds and notes. The funds seek to maintain a net asset value of $1.00 per share.

The Company’s financial assets valued based upon Level 1 inputs are comprised of investments in marketable securities held in Rabbi Trusts which are used to pay benefits under certain deferred compensation plan benefits. Under these deferred compensation plans, participants designate investment options to serve as the basis for measurement of the notional value of their accounts. The investment assets of the rabbi trust are valued using quoted market prices multiplied by the number of shares held in the trust.

The Company’s financial assets valued based upon Level 2 inputs are comprised of foreign currency forward contracts. The Company’s financial liabilities valued based upon Level 2 inputs are comprised of an interest rate swap contract and foreign currency forward contracts. The Company has taken into account the creditworthiness of the counterparties in measuring fair value. The Company uses forward rate contracts to manage currency transaction exposure and interest rate swaps to manage exposure to interest rate changes. The fair value of the interest rate swap contract is developed from market-based inputs under the income approach using cash flows discounted at relevant market interest rates. The fair value of the foreign currency forward exchange contracts represents the amount required to enter into offsetting contracts with similar remaining maturities based on quoted market prices. See Note 7, “Financial Instruments” for additional information.

Note 9 —Changes in shareholders’ equity

On June 14, 2007, the Company’s Board of Directors authorized the repurchase of up to $300 million of outstanding Company common stock. Repurchases of Company stock under the Board authorization may be made from time to time in the open market and may include privately-negotiated transactions as market conditions warrant and subject to regulatory considerations. The stock repurchase program has no expiration date and the Company’s ability to execute on the program will depend on, among other factors, cash requirements for acquisitions, cash generation from operations, debt repayment obligations, market conditions and regulatory requirements. In addition, the Company’s senior loan agreements limit the aggregate amount of share repurchases and other restricted payments the Company may make to $75 million per year in the event the Company’s consolidated leverage ratio exceeds 3.5 to 1. Accordingly, these provisions may limit the Company’s ability to repurchase shares under this Board authorization. Through March 28, 2010, no shares have been purchased under this Board authorization.

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

		Three Months Ended
		March 28,				March 29,
		2010				2009
		(Shares in thousands)
Basic			39,791				39,692
Dilutive shares assumed issued			408				184
Diluted			40,199				39,876

Weighted average stock options that were antidilutive and therefore not included in the calculation of earnings per share were approximately 738 thousand and 1,483 thousand for the three months ended March 28, 2010 and March 29, 2009, respectively.

Note 10 — Stock compensation plans

The Company has two stock-based compensation plans under which equity-based awards may be made. The Company’s 2000 Stock Compensation Plan (the “2000 plan”) provides for the granting of incentive and non-qualified stock options and restricted stock awards to directors, officers and key employees. Under the 2000 plan, the Company is authorized to issue up to 4 million shares of common stock, but no more than 800,000 of those shares may be issued as restricted stock. Options granted under the 2000 plan have an exercise price equal to the average of the high and low sales prices of the Company’s common stock on the date of the grant, rounded to the nearest $0.25. Generally, options granted under the 2000 plan are exercisable three to five years after the date of the grant and expire no more than ten years after the grant date. Restricted stock awards generally vest in one to three years. During the first three months of 2010, the Company granted restricted stock awards representing 148,287 shares of common stock under the 2000 plan. The unrecognized compensation for these awards as of the grant date was $8.5 million, which will be recognized over the vesting period of the award.

TELEFLEX INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company’s 2008 Stock Incentive Plan (the “2008 plan”) provides for the granting of various types of equity-based awards to directors, officers and key employees. These awards include incentive and non-qualified stock options, stock appreciation rights, stock awards and other stock-based awards. Under the 2008 plan, the Company is authorized to issue up to 2.5 million shares of common stock, but grants of awards other than stock options and stock appreciation rights may not exceed 875,000 shares. Options granted under the 2008 plan have an exercise price equal to the closing price of the Company’s common stock on the date of grant. Generally, options granted under the 2008 plan are exercisable three years after the date of the grant and expire no more than ten years after the grant date. During the first three months of 2010, the Company granted incentive and non-qualified options to purchase 586,642 shares of common stock under the 2008 plan. The unrecognized compensation for these awards as of the grant date was $7.2 million, which will be recognized over the vesting period of the award.

Note 11 — Pension and other postretirement benefits

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.

In 2009, the Company offered certain qualifying individuals an early retirement program. Based on the individuals that accepted the offer the Company recognized special termination benefits of $402 thousand in pension expense and $395 thousand in postretirement expense in the second quarter of 2009.

The Company and certain of its 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:

		Pension								Other Benefits
		Three Months Ended								Three Months Ended
		March 28,				March 29,				March 28,				March 29,
		2010				2009				2010				2009
		(Dollars in thousands)
Service cost		$	720			$	915			$	235			$	284
Interest cost			4,678				4,150				770				900
Expected return on plan assets			(4,366	)			(3,538	)			—				—
Net amortization and deferral			1,085				1,235				214				220
Settlement gain			(35	)			—				—				—
Net benefit cost		$	2,082			$	2,762			$	1,219			$	1,404

Note 12 — Commitments and contingent liabilities

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 three months ended March 28, 2010 (dollars in thousands):

Balance — December 31, 2009		$	12,085
Accruals for warranties issued in 2010			959
Settlements (cash and in kind)			(1,376	)
Accruals related to pre-existing warranties			175
Effect of translation			(217	)
Balance — March 28, 2010		$	11,626

TELEFLEX INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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. In connection with these operating leases, the Company had residual value guarantees in the amount of approximately $9.7 million at March 28, 2010. The Company’s future payments under the operating leases cannot exceed the minimum rent obligation plus the residual value guarantee amount. The residual value guarantee amounts are based upon the unamortized lease values of the assets under lease, and are payable by the Company if the Company declines to renew the leases or to exercise its purchase option with respect to the leased assets. At March 28, 2010, 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.

Environmental: The Company is subject to contingencies as a result of 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 other potentially responsible parties. At March 28, 2010, the Company’s condensed consolidated balance sheet included an accrued liability of approximately $8.3 million relating to these matters. Considerable uncertainty exists with respect to these costs and, if adverse changes in circumstances occur, potential liability may exceed the amount accrued as of March 28, 2010. The time frame over which the accrued amounts may be paid out, based on past history, is estimated to be 15-20 years.

Regulatory matters: On October 11, 2007, the Company’s subsidiary, Arrow International, Inc. (“Arrow”), received a corporate warning letter from the U.S. Food and Drug Administration (FDA). The letter cites three site-specific warning letters issued by the FDA in 2005 and subsequent inspections performed from June 2005 to February 2007 at Arrow’s facilities in the United States. The letter expresses concerns with Arrow’s quality systems, including complaint handling, corrective and preventive action, process and design validation, inspection and training procedures. It also advises that Arrow’s corporate-wide program to evaluate, correct and prevent quality system issues has been deficient. Limitations on pre-market approvals and certificates for foreign governments had previously been imposed on Arrow based on prior inspections and the corporate warning letter did not impose additional sanctions that are expected to have a material financial impact on the Company.

In connection with its acquisition of Arrow, completed on October 1, 2007, the Company developed an integration plan that included the commitment of significant resources to correct these previously-identified regulatory issues and further improve overall quality systems. Senior management officials from the Company have met with FDA representatives, and a comprehensive written corrective action plan was presented to FDA in late 2007. At the end of 2009, the FDA began its reinspections of the Arrow facilities covered by the corporate warning letter. These inspections have been completed, and the FDA has issued certain written observations to Arrow as a result of those inspections. Arrow has responded in writing to those observations and is communicating with the FDA regarding resolution of all outstanding issues.

While the Company continues to believe it has substantially remediated the issues raised in the corporate warning letter through the corrective actions taken to date, and that it has responded thoroughly and comprehensively to each of the observations resulting from the recent inspections, there can be no assurance that these matters have been resolved to the satisfaction of the FDA. If the Company’s remedial actions are not satisfactory to the FDA, the Company may have to devote additional financial and human resources to its efforts, and the FDA may take further regulatory actions against the Company.

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, 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. Legal costs such as outside counsel fees and expenses are charged to expense in the period incurred.

TELEFLEX INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Tax Audit and Examinations: In an April 12, 2010 notice to our subsidiary Arrow International CR, the taxing authority in the Czech Republic has questioned the transfer pricing Arrow International CR utilized for certain products sold during 2006. The notice requests additional information and states that if the tax authority is not satisfied with our response, they intend to challenge certain tax incentives received by Arrow International CR for the 2001-2006 years in their entirety. We have consulted with external advisors and believe the transfer pricing policy of Arrow International CR met the essential requirements of the tax incentive program. If the taxing authority were to ultimately prevail in disallowing the entire tax incentive benefit, the cost, including penalties and interest, would not have a material adverse effect on the Company. The tax incentive program expired in 2006 in accordance with its intended term, therefore any loss of the tax incentives benefit would not have an impact on current or future operations.

In addition, the Company and its subsidiaries are routinely subject to income tax examinations by various taxing authorities. As of March 28, 2010, the most significant tax examinations in process are in the jurisdictions of the United States, Czech Republic, Germany, Italy, and France.  It is uncertain as to when these examinations may be concluded and the ultimate outcome of such examinations.  As a result of the uncertain outcome of these ongoing examinations, future examinations, or the expiration of statutes of limitation for certain jurisdictions, it is reasonably possible that the related unrecognized tax benefits for tax positions taken could materially change from those recorded as liabilities at March 28, 2010. Due to the potential for resolution of certain foreign and U.S. examinations, and the expiration of various statutes of limitation, it is reasonably possible that the Company’s unrecognized tax benefits may change within the next twelve months by a range of zero to $23 million.

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

Note 13 — Business segment information

Information about continuing operations by business segment is as follows:

		Three Months Ended
		March 28,				March 29,
		2010				2009
		(Dollars in thousands)
Segment data:
Medical		$	343,537			$	334,785
Aerospace			36,873				43,729
Commercial			56,050				61,554
Segment net revenues		$	436,460			$	440,068
Medical		$	73,498			$	69,412
Aerospace			1,744				3,037
Commercial			3,060				2,036
Segment operating profit			78,302				74,485
Less: Corporate expenses			7,943				10,965
Net loss on sales of businesses and assets			—				2,597
Restructuring and impairment charges			463				2,463
Noncontrolling interest			(286	)			(236	)
Income from continuing operations before interest and taxes		$	70,182			$	58,696

Note 14 — Divestiture-related activities

When dispositions occur in the normal course of business, gains or losses on the sale of such businesses or assets are recognized in the income statement line item Net loss on sales of businesses and assets.

The following table provides the amount of Net loss on sales of businesses and assets for the three months ended March 28, 2010 and March 29, 2009:

		Three Months Ended
		March 28,				March 29,
		2010				2009
		(Dollars in thousands)
Net loss on sales of businesses and assets		$	—			$	2,597

During the first quarter of 2009, the Company realized a loss of $2.6 million on the sale of a product line in its Marine business.

Assets Held for Sale

Assets held for sale at March 28, 2010 and December 31, 2009 consists of four buildings which the Company is actively marketing.

TELEFLEX INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Discontinued Operations

On March 2, 2010, the Company completed the sale of its SSI Surgical Services Inc. business (“SSI”), a reporting unit within its Medical Segment, to a privately-owned multi-service line healthcare company for approximately $25 million and realized a gain of $2.1 million, net of tax.

During the third quarter of 2009, the Company completed the sale of its Power Systems operations to Fuel Systems Solutions, Inc. for $14.5 million and realized a loss of $3.3 million, net of tax. During the second quarter, the Company recognized a non-cash goodwill impairment charge of $25.1 million to adjust the carrying value of these operations to their estimated fair value. In the third quarter of 2009, the Company reported the Power Systems operations, including the goodwill impairment charge, in discontinued operations.

On March 20, 2009, the Company completed the sale of its 51 percent share of Airfoil Technologies International — Singapore Pte. Ltd. (“ATI Singapore”) to GE Pacific Private Limited for $300 million in cash. ATI Singapore, which provides engine repair products and services for critical components of flight turbines, was part of a joint venture between General Electric Company (“GE”) and the Company. In December 2009, the Company completed the transfer of its ownership interest in the remaining ATI business to GE.

The following table presents the operating results for the three months ended March 28, 2010 and March 29, 2009 of the operations that have been treated as discontinued operations:

		Three Months Ended
		March 28, 2010				March 29, 2009
		(Dollars in thousands)
Net revenues		$	3,198			$	97,328
Costs and other expenses			3,254				71,536
Gain on disposition			(9,737	)			(275,787	)
Income from discontinued operations before income taxes			9,681				301,579
Provision for income taxes			7,656				100,568
Income from discontinued operations			2,025				201,011
Less: Income from discontinued operations attributable to noncontrolling interest			—				9,860
Income from discontinued operations attributable to common shareholders		$	2,025			$	191,151

Net assets and liabilities sold in 2010 in relation to the discontinued operations were comprised of the following:

		(Dollars in thousands)
Net assets		$	18,403
Net liabilities			3,147
		$	15,256

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

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 then-current 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 are subject to 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 due to a number of factors, including our ability to resolve, to the satisfaction of the U.S. Food and Drug Administration (FDA), the issues identified in the corporate warning letter issued to Arrow International; 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 programs; 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 and interest rates; difficulties entering new markets; and general economic conditions. For a further discussion of the risks relating to our business, see Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2009. We expressly disclaim any obligation to update these forward-looking statements, except as otherwise specifically stated by us or as required by law or regulation.

Overview

Teleflex is principally a global provider of medical technology products that enable healthcare providers to improve patient outcomes, reduce infections and enhance patient and provider safety. We primarily develop, manufacture and supply single-use medical devices used by hospitals and healthcare providers for common diagnostic and therapeutic procedures in critical care and surgical applications. We serve hospitals and healthcare providers in more than 140 countries.

We provide a broad-based platform of medical products, which we categorize into four groups: Critical Care, Surgical Care, Cardiac Care and OEM and Development Services. Critical care, representing our largest product group, includes medical devices used in vascular access, anesthesia, urology and respiratory care applications; surgical care includes surgical instruments and devices; and cardiac care includes cardiac assist devices and equipment. We also design and manufacture instruments and devices for other medical device manufacturers.

In addition to our medical business, we also have businesses that serve niche segments of the aerospace and commercial markets with specialty engineered products. Our aerospace products include cargo-handling systems, containers, and pallets for commercial air cargo, and military aircraft actuators. Our commercial products include driver controls, engine assemblies and drive parts for the marine industry and rigging products and services for commercial industries.

Over the past several years, we have engaged in an extensive acquisition and divestiture program to improve margins, reduce cyclicality and focus our resources on the development of our healthcare business. We have significantly changed the composition of our portfolio of businesses, expanding our presence in the medical device industry, while divesting many of our businesses serving the aerospace and industrial markets. The most significant of these transactions occurred in 2007 with our acquisition of Arrow International, a leading global supplier of catheter-based medical technology products used for vascular access and cardiac care, and the divestiture of our automotive and industrial businesses. Our acquisition of Arrow significantly expanded our disposable medical product offerings for critical care, enhanced our global footprint and added to our research and development capabilities.

We continually evaluate the composition of the portfolio of our products and businesses to ensure alignment with our overall objectives. We strive to maintain a portfolio of products and businesses that provide consistency of performance, improved profitability and sustainable growth.

On March 2, 2010, we completed the sale of our SSI Surgical Services Inc. business (“SSI”), a reporting unit within our Medical Segment, to a privately-owned multi-service line healthcare company for approximately $25 million. We realized a gain of $2.1 million, net of tax, on this transaction.

During the third quarter of 2009, we completed the sale of our Power Systems operations to Fuel Systems Solutions, Inc. for $14.5 million and realized a loss of $3.3 million, net of tax. During the second quarter of 2009, we recognized a non-cash goodwill impairment charge of $25.1 million to adjust the carrying value of the Power Systems operations to their estimated fair value.

On March 20, 2009, we completed the sale of our 51 percent ownership interest in ATI Singapore to GE Pacific Private Limited for $300 million in cash. ATI Singapore, which provides engine repair products and services for critical components of flight turbines, was part of a joint venture between General Electric Company (“GE”) and us. In December 2009, we completed the transfer of our ownership interest in the remaining ATI business (together with ATI Singapore, the “ATI businesses”) to GE for a nominal amount.

The Medical, Aerospace and Commercial segments comprised 79%, 8% and 13% of our revenues, respectively, for the three months ended March 28, 2010 and comprised 76%, 10% and 14% of our revenues, respectively, for the same period in 2009.

Health Care Reform

On March 23, 2010 the Patient Protection and Affordable Care Act was signed into law. This legislation will have a significant impact on our business. For medical device companies such as Teleflex, the expansion of medical insurance coverage should lead to greater utilization of the products we manufacture, but this legislation also contains provisions designed to contain the cost of healthcare, which could negatively affect pricing we receive from the sale of our products. In addition, commencing in 2013, the legislation imposes a 2.3% excise tax on sales of medical devices. As this new law is implemented over the next 2-3 years, we will be in a better position to ascertain its impact on our business. We currently estimate the impact of the medical device excise tax will be approximately $16 million annually, beginning in 2013. We also evaluated the change in the tax regulations related to the Medicare Part D subsidy as currently outlined in the new legislation and determined that it did not have a significant impact on our financial position or results of operations.

Results of Operations

Discussion of growth from acquisitions reflects the impact of a purchased company for 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 operations of SSI, Power Systems and the ATI businesses which have been presented in our consolidated financial results as discontinued operations (see Note 14 to our condensed consolidated financial statements included in this report for discussion of discontinued operations).

Revenues

		Three Months Ended
		March 28, 2010				March 29, 2009
		(Dollars in millions)
Net revenues		$	436.5			$	440.1

Net revenues for the first quarter of 2010 decreased approximately 1% to $436.5 million from $440.1 million in the first quarter of 2009. Core revenues for the quarter declined 3%, offset by foreign currency translation which favorably impacted sales 3%. The disposition of a product line in the Commercial Segment during the first quarter of 2009 accounted for a 1% decline in revenues. Core revenues were down in the Aerospace Segment (20%), due to softness in commercial aviation markets and in the Commercial Segment (6%), as weak global economic conditions continue to negatively impact the markets served by our rigging services products but the Marine market is showing signs of recovery. Core revenues in the Medical Segment were unchanged from the first quarter of 2009 as the negative impact from a voluntary recall of a product in our critical care product group and lower sales of surgical products and orthopedic devices sold to medical original equipment manufacturers, or OEMs, was offset by higher sales of other critical care products.

Gross profit

		Three Months Ended
		March 28, 2010				March 29, 2009
		(Dollars in millions)
Gross profit		$	197.6			$	188.5
Percentage of sales			45.3	%			42.8	%

Gross profit as a percentage of revenues for the first quarter of 2010 increased to 45.3% from 42.8% in 2009. Gross profit as a percentage of revenues increased in the Medical and Commercial segments, due mainly to lower raw material and manufacturing costs. Gross profit as a percentage of revenues decreased in the Aerospace Segment due to lower sales volume of cargo containers and a shift in sales mix away from higher margin wide body cargo system spare components and repairs and towards lower margin single deck wide body cargo loading systems.

Selling, engineering and administrative

		Three Months Ended
		March 28, 2010				March 29, 2009
		(Dollars in millions)
Selling, engineering and administrative		$	117.4			$	117.1
Percentage of sales			26.9	%			26.6	%

Selling, engineering and administrative expenses (operating expenses) as a percentage of revenues for the first quarter of 2010 increased to 26.9% from 26.6% in 2009. Foreign currency movements increased selling, engineering and administrative expenses approximately $3 million during the period, but was offset by a net $3 million reduction principally related to cost reduction initiatives throughout the Company, including lower spending on remediation of FDA regulatory issues.

Research and development

		Three Months Ended
		March 28, 2010				March 29, 2009
		(Dollars in millions)
Research and development		$	9.6			$	7.6
Percentage of sales			2.2	%			1.7	%

Higher levels of research and development expenses reflect increased investments related to antimicrobial technologies and the establishment of an innovation center in Malaysia.

Interest expense

		Three Months Ended
		March 28, 2010				March 29, 2009
		(Dollars in millions)
Interest expense		$	19.0			$	25.4
Average interest rate on debt			5.7	%			5.7	%

Interest expense decreased in the first quarter of 2010 compared to the same period of 2009 due to a reduction of approximately $280 million in average outstanding debt.

Taxes on income from continuing operations

		Three Months Ended
		March 28, 2010				March 29, 2009
Effective income tax rate			30.0	%			26.6	%

The effective income tax rate for the three months ended March 28, 2010 was 30.0% compared to 26.6% for the three months ended March 29, 2009. The increase in the effective tax rate is due to a larger inclusion of foreign income taxable in the United States previously excluded under tax regulations prior to 2010 and an increase in discrete tax charges in 2010 compared to 2009. These increases were partly offset by a larger benefit from lower foreign taxes.

Restructuring and other impairment charges

		Three Months Ended
		March 28, 2010				March 29, 2009
		(Dollars in millions)
2008 Commercial restructuring program		$	—			$	1.2
2007 Arrow integration program			0.5				1.3
Total		$	0.5			$	2.5

In December 2008, we began certain restructuring initiatives that affected the Commercial Segment. These initiatives involved the consolidation of operations and a related reduction in workforce at three of our facilities in Europe and North America. We determined to undertake these initiatives to improve operating performance and to better leverage our existing resources in light of expected weakness in the marine and industrial markets. By December 31, 2009, we had completed the 2008 Commercial Segment restructuring program and all costs associated with the program were fully paid during 2009. Therefore, no charges were recorded under this program in 2010. We expect to realize annual pre-tax savings of between $3.5 — $4.5 million in 2010 as a result of actions taken in connection with this program.

In connection with the acquisition of Arrow in 2007, we formulated a plan related to the integration of Arrow and our other Medical businesses. The integration plan focused on the closure of Arrow corporate functions and the consolidation of manufacturing, sales, marketing and distribution functions in North America, Europe and Asia. Costs related to actions that affected employees and facilities of Arrow have been included in the allocation of the purchase price of Arrow. Costs related to actions that affected employees and facilities of Teleflex are charged to earnings and included in restructuring and impairment charges within the condensed consolidated statement of operations. These costs amounted to approximately $0.5 million during the three months ended March 28, 2010. As of March 28, 2010, we estimate that, for the remainder of 2010, the aggregate of future restructuring and impairment charges that we will incur in connection with the Arrow integration plan are approximately $1.6 — $2.5 million. Of this amount, $0.8 — $1.1 million relates to employee termination costs, $0.5 — $0.7 million relates to facility closure costs, $0.2 - $0.5 million relates to contract termination costs associated with the termination of leases and certain distribution agreements and $0.1 — $0.2 million relates to other restructuring costs. We expect to have realized aggregate annual pre-tax savings of between $70 — $75 million after these integration and restructuring actions are complete.

For additional information regarding our restructuring programs, see Note 4 to our condensed consolidated financial statements included in this report.

Segment Reviews

		Three Months Ended
										% Increase/
		March 28, 2010				March 29, 2009				(Decrease)
		(Dollars in millions)
Medical		$	343.5			$	334.8				3
Aerospace			36.9				43.7				(16	)
Commercial			56.1				61.6				(9	)
Segment net revenues		$	436.5			$	440.1				(1	)
Medical		$	73.5			$	69.4				6
Aerospace			1.7				3.1				(43	)
Commercial			3.1				2.0				50
Segment operating profit (1)		$	78.3			$	74.5				5

The percentage changes in net revenues during the three months ended March 28, 2010 compared to the same period in 2009 are due to the following factors:

		% Increase / (Decrease)
		2010 vs. 2009
		Medical				Aerospace				Commercial				Total
Core growth			—				(20	)			(6	)			(3	)
Currency impact			3				4				1				3
Dispositions			—				—				(4	)			(1	)
Total change			3				(16	)			(9	)			(1	)