Overview

Teleflex strives to maintain a portfolio of businesses that provide consistency of performance, improved profitability and sustainable growth. To this end, in 2007 we significantly changed the composition of our portfolio through acquisitions and divestitures to improve margins, reduce cyclicality and focus our resources on the development of our core businesses. We continually evaluate the composition of the portfolio of our businesses to ensure alignment with our overall objectives.

We are focused on achieving consistent and sustainable growth through our internal growth initiatives which include the development of new products, expansion of market share, moving existing products into new geographies, and through selected acquisitions which enhance or expedite our development initiatives and our ability to grow market share.

In 2007, the Company completed acquisitions in all three business segments and significant divestitures in both Commercial and Aerospace. These portfolio actions resulted in a significant expansion of our Medical Segment operations and a significant reduction in our Commercial Segment operations. The following bullet points summarize our more significant acquisitions and divestitures in 2007, and the results for the acquired businesses are included in the respective segments. See Notes 3 and 17 to our consolidated financial statements included in this Annual Report on Form 10-K for additional information regarding our significant acquisitions and divestitures.

• October 2007 - Acquired Arrow International, Inc., a leading global supplier of catheter-based medical technology products used for vascular access and cardiac care, with annual revenues of over $500 million, for approximately $2.1 billion.

• April 2007 - Acquired substantially all of the assets of HDJ Company, Inc., providers of engineering and manufacturing services to medical device manufacturers with annual revenues of approximately $15 million, for approximately $25 million.

• December 2007 - Divested business units that design and manufacture automotive and industrial driver controls, motion systems and fluid handling systems (the "GMS Businesses" with 2007 revenues of over $860 million, for $560 million in cash.

• April 2007 - Acquired substantially all of the assets of Southern Wire Corporation, a wholesale distributor of wire rope cables and related hardware with annual revenues of approximately $25 million, for approximately $20 million.

• November 2007 - Acquired Nordisk Aviation Products A/S, a global leader in developing, manufacturing, and servicing containers and pallets for air cargo with annual revenues of approximately $55 million, for approximately $32 million.

• June 2007 - Divested Teleflex Aerospace Manufacturing Group ("TAMG"), precision-machined components business with annual revenues of approximately $130 million, for approximately $134 million in cash.

We incurred significant indebtedness to fund a portion of the consideration for our October 2007 acquisition of Arrow. As of December 31, 2008, our outstanding indebtedness was approximately $1.5 billion,

down from $1.7 billion as of December 31, 2007. For additional information regarding our indebtedness, please see "Liquidity and Capital Resources" below and Note 8 to our consolidated financial statements included in this Annual Report on Form 10-K.

We operated in an increasingly challenging global economic environment in 2008. Recent unprecedented turbulence in the global financial and commodities markets and the downturn in the business cycle have had an adverse impact on market activities including, among other things, failure of financial institutions, falling asset values, diminished liquidity, and reduced demand for products and services, particularly in the fourth quarter of 2008. The impact of the difficult economic environment was felt mostly in the Commercial Segment during 2008 and we adjusted production levels and took new restructuring actions in response to the current environment. Although, on a consolidated basis, the economic conditions have not had a significant adverse impact to our financial position, results of operations or liquidity during 2008, the continuation of the broad economic trends could adversely affect our operations in the future, as described, below. The potential effect of these factors on our current and future liquidity is discussed in "Liquidity and Capital Resources" in this "Management's Discussion and Analysis of Financial Condition and Results of Operations."

• Medical - Our Medical Segment serves a diverse base of hospitals and healthcare providers in more than 140 countries. Healthcare policies and practice trends vary by country and the impact of the global economic downturn appears to have been limited in 2008. However reimbursement changes and cost pressures created by the economic slowdown could adversely effect the financial health of some of our hospital customers in 2009.

Hospitals in some regions of the United States have seen a decline in admissions and a reduction in elective procedures and have limited their capital spending. More than 80 percent of our Medical revenues come from disposable products used in critical care and surgical applications and our sales volume could be negatively impacted by declines in admissions. In addition, a small percentage of our revenues could be impacted by changes in capital spending or a decline in elective procedures.

At the same time, future changes in government funding patterns or regulation could have an impact on our business. In the United States, a number of states have enacted or proposed reduced funding for Medicaid programs and higher rates of unemployment are increasing the percentage of uninsured patients who do not have the ability to pay for care. This could create further cost pressure on hospitals and consequently on our business. Our business could also be impacted by healthcare reform legislation enacted by Congress. Although the impact of the economic downturn on hospitals outside the United States has been less pronounced to date, funding to these healthcare institutions could be affected in the future as governments make further spending adjustments.

• Aerospace - Sudden and significant increases in fuel costs in mid-2008 resulted in reductions in capacity for passenger and cargo traffic, and accelerated retirement of older, less fuel efficient aircraft. These trends have continued even though fuel prices have decreased from these record levels. The sharp drop in fuel costs toward the end of 2008 has been a positive development for airlines as it has offset somewhat the recession related drop in revenues for both passenger and cargo traffic. Lower traffic overall makes it more difficult to sell cargo containment equipment due to reduced demand, but new aircraft and weight and greenhouse gas reduction objectives create some opportunities in these markets. Lower overall aircraft utilization will reduce demand for spare parts for our installed base of equipment and for our jet engine component repair services. Nevertheless, we are well positioned on certain new Airbus and Boeing airframes and deliveries of cargo handling systems are expected to continue at previously expected levels overall, albeit on a slightly longer time horizon from earlier forecasts.

• Commercial - The markets served by our Commercial Segment are largely affected by the general state of the economy and by consumer confidence. Factors such as housing starts, home values, fuel costs, transportation, environmental and other regulatory matters all affect the market outlook for the businesses in this segment. In 2008, our Commercial Segment experienced a significant decrease in sales of recreational marine products and auxiliary power units sold into the North American truck market due to softness in these markets caused by a weak economic environment during 2008. We expect that growth will be a challenge in our Commercial Segment until there is improvement in consumer confidence and there is a return to global economic growth.

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 impact of the operations of TAMG, the GMS Businesses, and a small medical business which have been presented in our consolidated financial results as discontinued operations (see Note 17 to our consolidated financial statements included in this Annual Report on Form 10-K for discussion of discontinued operations).

Net revenues $ 2,420.9 $ 1,934.3 $ 1,690.8

Net revenues increased approximately 25% to $2.42 billion from $1.93 billion in 2007. Businesses acquired in the past twelve months accounted for all of this increase in revenues as foreign currency translation contributed 1% to revenue growth, while revenues from core business declined 1% compared to 2007. Core revenue growth in the Medical Segment (2%) and Aerospace (2%) was offset by a 9% decline in core revenues in the Commercial Segment, which was primarily due to a significant decrease in sales of recreational marine products and auxiliary power units sold into the North American truck market due to softness in these markets caused by a weak economic environment during 2008.

Revenues increased 14% in 2007 to $1.93 billion from $1.69 billion in 2006, entirely due to acquisitions and foreign currency movements. Overall, there was no core revenue growth in 2007 as compared to 2006. Core growth in our Aerospace Segment was 7%, and our Medical and Commercial segments declined 1% and 5%, respectively year over year.

Gross profit

                                         2008        2007        2006
                                             (Dollars in millions)

                  Gross profit          $ 964.2     $ 680.4     $ 585.2
                  Percentage of sales      39.8 %      35.2 %      34.6 %

Gross profit as a percentage of revenues increased to 39.8% in 2008 from 35.2% in 2007. This trend is driven by increases in the Medical and Aerospace segments as the gross profit percentage in the Commercial Segment was unchanged from 2007. Improved margins in the Medical Segment were largely due to the inclusion of higher margin Arrow critical care product lines for the full year in 2008 compared to only the fourth quarter in 2007 and volume related manufacturing efficiencies in the Medical OEM product line. Improved

margins in the Aerospace Segment are principally due to a shift in sales favoring engine repair services and away from sales of lower margin replacement parts in the engine repairs business.

Gross profit as a percentage of revenues improved to 35.2% in 2007 from 34.6% in 2006, due primarily to cost and productivity improvements in our Medical Segment and the benefits of restructuring initiatives and other cost reduction efforts which offset the negative impact of a $29 million charge related to a fair value adjustment to inventory acquired in the Arrow acquisition, which was sold during 2007.

Selling, engineering and administrative

                                                   2008        2007        2006
                                                       (Dollars in millions)

        Selling, engineering and administrative   $ 596.8     $ 445.3     $ 375.0
        Percentage of sales                          24.7 %      23.0 %      22.2 %

Selling, engineering and administrative expenses (operating expenses) as a percentage of revenues were 24.7% in 2008 compared to 23.0% in 2007, principally due to approximately $25 million higher amortization expense related to the Arrow acquisition and approximately $20 million higher expenses in the Medical Segment related to the remediation of FDA regulatory issues.

Selling, engineering and administrative expenses as a percentage of revenues increased to 23.0% in 2007 compared with 22.2% in 2006, due primarily to approximately $7 million higher amortization expense from the Arrow acquisition.

Goodwill impairment and in-process R&D charge

                                           2008          2007      2006
                                              (Dollars in millions)

                  Goodwill impairment     $     -       $ 18.9     $ 1.0
                  In-process R&D charge   $     -       $ 30.0     $   -

In 2007, during our annual test for goodwill impairment we determined $16.4 million of goodwill attributable to our businesses that manufacture and sell auxiliary power units in the North American heavy truck and rail markets, as well as components and systems for use of alternative fuels in industrial vehicles and passenger cars was impaired. Softness in certain of these markets at that time negatively impacted the valuation of goodwill resulting in the impairment charge. The remaining $2.5 million goodwill impairment is related to a write-down to the agreed selling price of one our variable interest entities in the Commercial Segment.

The $30.0 million write-off of in-process research and development costs is related to in-process R&D projects acquired in the Arrow acquisition which we determined had no alternative future use in their current state.

Interest income and expense

                                                       2008        2007        2006
                                                          (Dollars in millions)

      Interest expense                                $ 121.6     $  74.9     $ 41.2
      Average interest rate on debt during the year      6.13 %      6.33 %     7.20 %
      Interest income                                 $  (2.6 )   $ (10.5 )   $ (6.3 )

Interest expense increased significantly in 2008 compared to 2007 principally as a result of the full year impact of the debt incurred in connection with the Arrow acquisition in October 2007. Interest income decreased in 2008 compared to 2007 primarily due to lower amounts of invested funds combined with lower average interest rates.

Interest expense increased from $41.2 million to $74.9 million in 2007 principally as a result of higher debt levels since October 1, 2007 incurred in connection with the Arrow acquisition. Interest income increased in 2007 compared to 2006 primarily due to higher average cash balances during the first three quarters of 2007.

Taxes on income from continuing operations

2008 2007 2006

Effective income tax rate 23.6 % 112.3 % 21.6 %

The effective tax rate in 2007 was 112.3% compared to 23.6% in 2008 and 21.6% in 2006. Taxes on income from continuing operations of $122.8 million in 2007 include discrete income tax charges incurred in connection with the Arrow acquisition. Specifically, in connection with funding the acquisition of Arrow, the Company (i) repatriated approximately $197.0 million of cash from foreign subsidiaries which had previously been deemed to be permanently reinvested in the respective foreign jurisdictions; and (ii) changed its position with respect to certain additional previously untaxed foreign earnings to treat these earnings as no longer permanently reinvested. These items resulted in a discrete income tax charge in 2007 of approximately $91.8 million. The Company did not incur similar charges in 2008 or 2006.

Restructuring and other impairment charges

                                                      2008        2007       2006
                                                        (Dollars in millions)

       2008 Commercial restructuring program        $    1.9     $    -     $    -
       2007 Arrow integration program                   22.1        0.9          -
       2006 restructuring programs                         -        3.4        3.5
       2004 restructuring and divestiture program          -        0.7       10.4
       Impairment charges                                3.7        6.3        7.4

       Total                                        $   27.7     $ 11.3     $ 21.3

In December 2008, we began certain restructuring initiatives that affect the Commercial Segment. These initiatives involve 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. These costs amounted to approximately $1.9 million during 2008. As of December 31, 2008, we estimate that the aggregate of future restructuring charges that we will incur in connection with this program are approximately $3.3 - $4.5 million in 2009. Of this amount, $2.8 - $3.1 million relates to employee termination costs, $0.2 - $1.0 million to facility closure costs and $0.3 - $0.4 million to contract termination costs, primarily relating to leases. We expect to have realized annual pre-tax savings of between $4 - $5 million in 2010 when these restructuring actions are complete.

In connection with the acquisition of Arrow during 2007, we formulated a plan related to the future integration of Arrow and our other 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. Costs related to actions that affect employees and facilities of Arrow have been included in the allocation of the purchase price of Arrow. Costs related to actions that affect employees and facilities of Teleflex are charged to earnings and included in restructuring and impairment charges within the consolidated statement of operations. These costs amounted to approximately $22.1 million during 2008. As of December 31, 2008, we estimate that the aggregate of future restructuring and impairment charges that we will incur in connection with the Arrow integration plan are approximately $18.0 - $21.0 million in 2009 and 2010. Of this amount, $7.5 - $8.5 million relates to employee termination costs, $1.2 - $1.7 million relates to facility closure costs, $9.2 - $10.5 million relates to contract termination costs associated with the termination of leases and certain distribution agreements and $0.1 - $0.3 million relates to other restructuring costs. We also have incurred restructuring related costs in the Medical Segment which do not qualify for

classification as restructuring costs. In 2008 these costs amounted to $7.0 million and are reported in the Medical Segment's operating results in selling, engineering and administrative expenses. We expect to have realized annual pre-tax savings of between $70-75 million in 2010 when these integration and restructuring actions are complete.

In June 2006, we began certain restructuring initiatives that affected all three of our operating segments. These initiatives involved the consolidation of operations and a related reduction in workforce at several of our facilities in Europe and North America. We took these initiatives as a means to improving operating performance and to better leverage our existing resources and these activities are now complete.

During the fourth quarter of 2004, we commenced implementation of a restructuring and divestiture program designed to improve future operating performance and position us for future earnings growth. The actions included exiting or divesting non-core or low performing businesses, consolidating manufacturing operations and reorganizing administrative functions to enable businesses to share services and these activities are now complete.

For additional information regarding our restructuring programs, see Note 4 to our consolidated financial statements included in this Annual Report on Form 10-K.

Impairment charges in 2008 are composed of $2.7 million related to five of our minority held investments precipitated by the deteriorating economic conditions in the fourth quarter of 2008, $0.8 million impairment of an intangible asset in the Commercial Segment that was identified during the annual impairment testing process, and a $0.2 million reduction in the carrying value of a building held for sale. In 2007, we determined that two minority-held investments, certain intangible assets and a building held for sale were impaired and recorded an aggregate charge of $6.4 million. In 2006, we determined that three minority-held investments and a building held for sale were impaired and recorded an aggregate charge of $7.4 million.

Segment Review


                                           Year Ended December 31                        % Increase/(Decrease)
                                     2008           2007           2006          2008 vs 2007            2007 vs 2006
                                            (Dollars in millions)

Segment data:
Medical                            $ 1,499.1      $ 1,041.3      $   858.7                  44                       21
Aerospace                              511.2          451.8          405.4                  13                       11
Commercial                             410.6          441.2          426.7                  (7 )                      3

Net revenues                       $ 2,420.9      $ 1,934.3      $ 1,690.8                  25                       14

Medical                            $   286.3      $   182.6      $   161.7                  57                       13
Aerospace                               61.8           47.0           40.2                  32                       17
Commercial                              27.5           23.0           30.5                  19                      (25 )

Segment operating profit           $   375.6      $   252.6      $   232.4                  49                        9

The percentage increases or (decreases) in revenues during the years ended December 31, 2008 and 2007 compared to the respective prior years were due to the following factors:

                                                              % Increase/ (Decrease)
                                      2008 vs 2007                                              2007 vs 2006
                   Medical      Aerospace       Commercial       Total       Medical      Aerospace       Commercial       Total

Core growth               2              2               (9 )        (1 )          (1 )            7               (5 )         -
Currency impact           2              1                1           1             4              1                3           3
Acquisitions             40             10                1          25            18              3                5          11

Total Change             44             13               (7 )        25            21             11                3          14

The following is a discussion of our segment operating results. Additional information regarding our segments, including a reconciliation of segment operating profit to income from continuing operations before interest, taxes and minority interest, is presented in Note 16 to our consolidated financial statements included in this Annual Report on Form 10-K.

Medical

Medical Segment net revenues grew 44% in 2008 to $1,499.1 million, from $1,041.3 million in 2007. The acquisition of Arrow accounted for 40% of this increase in revenues. Of the remaining 4% increase in net revenues, 2% was due to foreign currency fluctuations and 2% was due to core revenue growth. Medical Segment core revenue growth in 2008 reflects higher sales volume for critical care and surgical products in Europe and Asia/Latin America of approximately $13 million and $8 million, respectively, and a $17 million increase in sales of specialty medical devices to OEMs, partially offset by $23 million lower sales volumes for critical care and surgical products in North America.

Net sales by product group are comprised of the following:

                         Year Ended December 31                   % Increase/(Decrease)
                     2008          2007         2006        2008 vs 2007          2007 vs 2006
                                              (Dollars in millions)

   Critical Care   $   957.1     $   578.1     $ 485.9                 66                    19
   Surgical            296.0         294.5       235.0                  1                    25
   Cardiac Care         72.9          18.2           -                300                   100
   OEM                 158.3         138.1       137.8                 15                     -
   Other                14.8          12.4           -                 19                   100

   Net Revenues    $ 1,499.1     $ 1,041.3     $ 858.7                 44                    21

The following table sets forth the percentage of net revenues by end market for the Medical Segment.

                                                     2008      2007

                  Hospitals / Healthcare Providers      84 %      78 %
                  Medical Device Manufacturers          10 %      13 %
                  Home Health                            6 %       9 %

Medical Segment's net revenues are geographically comprised of the following:

                                                    2008      2007

                   North America                       53 %      54 %
                   Europe, Middle East and Africa      37 %      38 %
                   Asia and Latin America              10 %       8 %

The increase in critical care product sales during 2008 compared to 2007 was almost entirely due to the acquisition of Arrow in the fourth quarter of 2007, which expanded our vascular access and regional anesthesia product lines and contributed an incremental $360 million of sales to the critical care category in 2008 over 2007. Favorable currency fluctuations added $14 million to sales and higher sales of vascular access products in Europe contributed another $5 million in core revenue growth.

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