Jeff Black - Chairman & Chief Executive Officer Kevin Gordon - Executive Vice President & Chief Financial Officer Jake Elguicze - Senior Director of Investor Relations

David Turkaly - SIG Sean Lavin - Lazard Capital Markets Jim Lucas - Janney Montgomery Scott Christopher Warren - Caris & Co. Paul Mammola - Sidoti & Co.

Taylor Harris - JP Morgan Good day ladies and gentlemen, and welcome to the second quarter 2009 Teleflex Incorporated earnings conference call. My name is Jim and I’ll be your operator today.

At this time all the participants are in a listen-only mode. We will be facilitating a question-and-answer session towards the end of the conference.

(Operator Instructions). I would like to turn the presentation over to your host for today’s call, Mr.

Jake Elguicze, Senior Director of Investor Relations. Please proceed sir.

Good morning everyone. The press release and slides to accompany this call are available on our website at www.teleflex.com, and as a reminder, this call will be available on our website and a replay will be available by dialing 888-286-8010 or for international calls, 617-801-6888, pass code 295-817-42.

Participating on today’s call are Jeff Black, Teleflex Chairman and Chief Executive Officer; and Kevin Gordon, Teleflex Executive Vice President and Chief Financial Officer. Jeff and Kevin will make brief prepared remarks and then we will open up the call to questions.

Before we begin, I’d like to remind you that some of the matters discussed in the conference call will contain forward-looking statements regarding future events as outlined on slide two. We wish to caution you that such statements are in-fact forward-looking in nature and are subject to risks and uncertainties and actual events or results may differ materially.

The factors that could cause actual results or events to differ materially include, but are not limited to factors made in our press release today, as well as our filing with the SEC, including our Form 10-K which can be accessed on our website. In addition, I would like to point out that the results we will be discussing today, include our Power Systems business and continuing operations.

I will now turn the call over to Jeff.

Thanks Jake. Good morning everyone.

We are glad that you joined us this morning as we report our results for the second quarter of 2009. Coming off the mixed first quarter and considering the difficult economic environment that we continue to find ourselves operating in, we are pleased with our second quarter results.

Our medical core revenues improved 5% sequentially from the first quarter of ‘09, with significant improvements in the vascular access, anaesthesia, urology and cardiac care. Although flat overall compared to the prior year quarter, we demonstrated strong core growth in the cardiac care, surgical, urology and anesthesia product lines.

We also continue to expand both our consolidated adjusted gross and operating margins, once again led by our medical segment. Overall, gross margins excluding special charges were up 80 basis points over 2008 and adjusted segment operating margins reached 15%.

A continued higher mix of revenues from the medical segment, along with the incremental synergies from the Arrow acquisition and reduced FDA remediation costs contributed to the overall margin improvement. Operating margins in our medical business approached levels achieved prior to the Arrow acquisition.

Aerospace and commercial margins were disappointing in the low single digits. However, we see improvements in the second half in aerospace and overall commercial margins in the second quarter were approximately 7% excluding the Power systems business.

Our remaining commercial businesses continue to produce good margins, despite the significant revenue challenges. Earnings per share excluding special charges were $0.96, up 17% over the prior year.

Considering overall sales for the company, including the impact on foreign exchange and product line, divestitures were down. We are extremely pleased with our continued ability to generate some strong EPS growth.

As I stated on our first quarter call, this is a testament to our early recognition that sales levels were not going to materialize as originally expected and our ability to act quickly and manage our cost structure; and if you reflect back on our last call, we discussed our dissatisfaction with our adjusted cash flow from continuing operations in the first quarter. I’m pleased to report that excluding the tax payments on the gain on sale of our Airfoil technology business, we generated approximately $83 million of cash flow from continuing operations during the quarter, up 71% compared to prior year quarter; great improvement from our management teams.

Finally, we continue to make progress with our portfolio. On July 20 we announced that we signed a definitive agreement to sell our power systems business to fuel system solutions.

The results that we are reporting today for the second quarter include power in continuing operations. We expect the transaction to close during the third quarter of 2009, at which time power will be reclassified to discontinued operations.

Power was clearly the most cyclical business that remained in our portfolio at times in its history, including the second quarter of 2009 and operating at a loss. Exiting power allows us to further focus on growing our already significant medical technology business.

As stated, when we announced the deal we do not expect the material changed or guidance for EPS excluding special charges or adjusted cash flow from continuing operations as a result of power being reclassified to discontinued operations. Let’s move on to some of the year-to-date highlights.

From a year-to-date standpoint, consolidated core revenues declined 8% principally as a result of reduced revenues from our aerospace and commercial segments, both of which have been severely adversely impacted by the economy. However, consistent with the performance in the second quarter, we delivered both consolidated gross and adjusted operating margin expansion, with gross margins expanding approximately 100 basis points, and adjusted operating margins increasing 80 basis points to 14.7%.

Earnings per share excluding special charges were up 17% over the prior year. While cash flow from continuing operations excluding the tax payment made on the gain of sale of the ATI business increased 4% compared to prior year.

As of today, we have still not been visited by the FDA in connection with the Arrow Corporate warning letter. We were recently notified by the FDA that they intend to inspect one of our Arrow facilities in the Czech Republic early in the fourth quarter.

We remain unsure when the FDA will begin their inspections of the remaining Arrow facilities, but we feel good about our preparations for the pending visits. We’ve engaged industry experts, added internal resources where needed, implemented the necessary process improvements and trained our staff.

We also remain confident that we will meet or exceed the $18 million to $20 million of pretax synergies from the Arrow integration that we outlined on our 2009 outlook call in early January. To date, we have achieved approximately $12 million in synergies this year.

So with six months of 2009 behind us and more streamlined in the focused portfolio businesses, I’d now like to expand on areas where we are investing to grow our business. Over the last few years, we’ve increased our medical R&D as a percentage of revenue by approximately 50 basis points each year.

We expect that to continue in 2009 as well, with the goal of reaching 5% to 6% of medical revenues within the next three to four years. Building on our expertise in anti-microbial technology and infection protection, we are addressing the demands of hospital infection controlled initiatives.

In 2008, we created the center for anti-microbial research as part of our internal research and development effort. This group is charged with core research and working with experts from academia.

We clearly want to stay in the forefront of products designs to help reduce infections. We continue to invest in upgrades to our maximal barrier precautions kit, which is a complete central venous catheter kit that provides comprehensive protection to patients, against likely sources of catheter related blood stream infection.

It’s also designed to reinforce infection precaution and safety best practices, and although the United States market has been the focal point on infection control, especially with last year’s reimbursement changes, we are seeing greater attention to this subject internationally and will continue to invest in expanding both our product offerings and our educational initiatives in other regions around the globe. In addition, we have recently introduced several new pick products, and now have a more complete pick product offering to compete in the market place.

In fact, those new pick product line introductions are already paying dividends as we experience good growth in the second quarter and expect double-digit worldwide pick core revenue growth for the year. We also remain focused on introducing an anti-microbial coated pick to the market in the second quarter of 2010.

Although, we are investing across all of our product lines, you will see more significant investments over the next two years focused on vascular access, anesthesia and urology. We will also continue our strategy of adding to our surgical product offerings as evidenced by our recent introduction this quarter with three Taut universal seal access ports.

With the release of these universal seal ports we now offer a full line of completely bladeless laparoscopic access devices for use in the growing, minimally invasive surgery market. We’ve also increased our investment in the area of clinical education.

Our expanding clinical education program is designed to increase the awareness of our vision, mission, and to support clinicians with educational programs in our areas of expertise. As experts in vascular health, we have an obligation to lean this area, provide forums for key opinion leaders, clinicians and experts in research to discuss and share the latest developments in clinical practice and technology.

Our programs continue to range from large forums of experts to onsite sessions on catheter care and maintenance, to training anesthesiologists and new techniques in regional anesthesia and supporting websites that offer information on best practices. We are creating clinical education program across our entire product range.

Combining the educational programs with increased investment in new product innovation, we expect to enhance the revenue growth opportunities for the company. With that, let me turn it over to Kevin for more details on the Q2 financial results.

Kevin.

Thanks Jeff. Good morning everybody.

Well, I can provide the summary of results from continuing operations noting the adjustments related to special charges in the respective quarters. Revenues for the second quarter were $483.1 million, down 14% over the second quarter last year, down only 8% excluding the impact of foreign currency translation and product line divestitures.

Adjusted gross margin for the quarter of 42.7% was up 80 basis points over the second quarter last year, primarily due to improved medical gross margins from synergy achievement and improved marine gross margins resulting from cost containment and facility rationalization initiatives. These improvements were offset by certain factors in our other businesses that I’ll cover in the segment commentaries in a few moments.

Adjusted operating expenses for the quarter were $133.8 million or 27.7% of sales, compared to $154.3 million or 27.6% in the prior year quarter. The decline in operating expenses was due to synergies achieved from the Arrow integration, cost reductions achieved by each of our segments in response to the current end market challenges, reduced corporate spending and a positive impact on foreign currency translation, with an offset from higher pension and other postretirement costs.

Operating income before special charges was $72.5 million, down 10% from the $80.4 million in 2008. However, adjusted operating margins of 15% reflect an increase of 60 basis points compared to last year.

Pretax special charges in the second quarter of 2009 totaled $38.5 million and related to non-cash goodwill and the intangible asset impairments in our commercial and aerospace segment totaling $34.2 and $4.3 million of costs associated with the Arrow integration and the commercial restructuring program. Finally, operating income was $34 million, down 54% from the prior year quarter, primarily due to previously mentioned non-cash goodwill and intangible asset impairment charges recorded in the quarter.

Slide 11 provides a reconciliation of the income and EPS for income from continuing operations before special charges. Excluding special charges, income from continuing operations was $38.5 million or $0.96 per diluted share, compared to $32.7 million or $0.82 per diluted share in 2008, an increase of 18%.

Second quarter of 2009 included lower net interest expense, due principally to reduced outstanding debt and lower interest rates, the special charges noted earlier and $4.3 million of tax adjustment. These tax adjustments represent benefits from the net reduction in income tax reserves and discrete tax benefits, related primarily to the expiration of the statute of limitation for various uncertain tax provisions, the settlement of tax audit and adjustment to previously filed tax returns.

The tax rate increase in the second quarter was due primarily to the non-deductible goodwill charges, partially offset by the above tax adjustments. Restructuring and impairment costs in the second quarter of 2008 totaled $4.1 million net of tax, and were costs primarily related to the Arrow integration.

Now, turning to year-to-date performance; revenues for the first six months were $952.7 million, down 13% over the comparable period in 2008. Excluding the impact of currency translation and product line, divestitures revenues were down 8%.

Adjusted gross margin for the first six months was 42.3%, up 100 basis points over the first six months in 2008. This was primarily due to the higher mix of medical revenues, synergies achieved in our medical segment, significant increase in truck auxiliary power unit buying and the first shipment of the Modern Burner Unit to the US military.

This was offset by many of the items that affected us negatively during the second quarter that I mentioned earlier. Adjusted operating expenses for the first six months were $262.4 million or 27.5% of sales compared to $301.6 million or 27.4% in the prior year.

Once again, the decline in year-to-date operating expenses was attributed to many of the same factors that positively impacted the second quarter. Operating income before special charges was $140.5 million or 14.7% as compared to $153.5 million or 13.9% for the first six months in 2008.

Pre-tax special charges for the first six months in 2009 totaled $44.2 million, related to the non-cash goodwill and intangible asset impairments in our commercial and aerospace segments recorded in the second quarter, and expenses associated with the aero integration program and the commercial segment restructuring. Operating income was $96.3 million compared to $131.3 million in the comparable period of 2008.

For the first six months of 2009, income and earnings per share excluding special charges was $68.7 million or $1.72 per diluted share, compared to $58.4 million or $1.47 per diluted share for the corresponding period in 2008, an 18% increase; a strong showing from continuing operations in the first half. We previously mentioned 2009 special charges as outlined on this slide had a $0.90 per share impact on diluted EPS.

Now, let’s look at the second quarter results for the operating segments. Medical segment revenues for the second quarter decreased 5% to $363.9 million.

The net decline in revenues was attributed to the unfavorable impact of foreign currency translations. As Jeff mentioned earlier, although core revenues were essentially flat in medical, certain pipelines experienced very positive growth.

Within critical care, the investments we have made in dedicated anesthesia sales force in North America are beginning to produce results. Mid single digit anesthesia core growth was achieved during the quarter led by the North American and EMEA regions.

Offsetting the positive core growth in critical care was a continued decline in respiratory product sales. Similar to our experience in the first quarter, lower sales of respiratory products in the North American market, more than offset the positive core growth of respiratory sales outside the US.

This is a space where we continue to see distributor inventory issues and a volatile distributor order patterns. Surgical sales were up 5% on a constant currency basis, led by sales of higher margin closure devices.

More revenue growth was achieved in all regions during the quarter. Slightly offsetting the strong core growth in surgical was, lower sales of instruments due to continued hospital capital spending constraints.

Lastly, from a top line perspective, our OEM sales were down 6% on a constant currency basis compared to the second quarter of 2008. The decline in sales was primarily due to continued inventory rebalancing by OEMs and orthopedic sales weakness.

Based upon information from our customers, we continue to expect this business will improve in the second half of 2009. Operating profit excluding special charges was $79.1 million for the quarter, compared to $74.2 million in the prior year quarter.

Improvement in operating profit was due to reduced FDA remediation spending and incremental synergies from the aero acquisition. This was somewhat offset by cost related to product recalls and negative impact from foreign exchange.

Adjusted segment operating margins were 21.7%, up 240 basis points compared to the second quarter of 2008, and up 90 basis points sequentially from the first quarter of 2009. On a year-to-date basis, revenues decreased 7%, principally from the unfavorable impact of foreign currency.

Medical segment adjusted operating margins were 21.3%, up 120 basis points over the first six months in 2008. Moving to aerospace; aerospace revenues for the second quarter were $37 million, down 44% compared with the second quarter of 2008.

This was due to a decline in core revenues of 36% and an unfavorable currency impact of 8%. Somewhere in the first quarter, the decline in core revenues was heavily impacted by lower overall shifts that valued units shipped during the quarter, resulting from the mix of aircraft platforms.

In addition, we completed fewer cargo system conversions in the after market, and saw lower demand for cargo containers and spares from commercial airlines and freight companies, due to the continued weakness in the commercial aviation sector.

Due to the difficult market conditions in which this segment is operating, we performed an interim review of goodwill and intangible assets and determined that the $6.7 million of goodwill in the cargo container operations business was impaired. This non-tax deductible, non-cash charge represented 100% of the goodwill in the aerospace segment.

On a year-to-date basis, revenues decreased 39%, principally from a decline in core revenues. Currency impact was 7%.

Segment operating margins were 5% compared with 9.5% for the first six months of 2008. This was an unusually poor quarter for this segment from a profitability perspective.

We do however still expect the second half of 2009 to improve as compared to the first half of the year, despite the challenges in the end markets. We shipped our first 747-8 Cargo system in the second quarter, and expect increased shipments of this system to Boeing, principally in the fourth quarter and into 2010.

For the expected improved revenues and cost reductions already implemented, full year segment operating margins are expected to be in the upper single digits. On to commercial, second quarter revenues in this segment declined due to significant volume shortfalls of alternative fuel systems, and OEM marine products as compared to prior year.

Revenues for the segment in the quarter were $82.2 million compared to $109.6 million in the prior year. Although marine sales were up sequentially from the first quarter of 2009.

And sales to the after market were flat as compared to the second quarter of 2008, marine core revenues were down approximately 19% compared to the prior year, due to a continued decline in sales to the OEM customers. In addition, divestitures of unprofitable product lines negatively impacted marine revenues by 7%.

We do not expect a turnaround in this market in the near term, and are managing our cost structure accordingly. In the power systems business, we experienced an increase in sales of Truck APUs compared to the second quarter of 2008.

However, that was more than offset by the reduced sales of alternative fuel systems mentioned earlier. Overall, power systems core revenues were down 25% compared to comparable period in 2008.

As Jeff stated earlier, in July we announced the signing of a definitive agreement to sell our power systems business, given the final sales price for this operation was significantly below the carrying value on our balance sheet. Considering the guidance of SFAS 142, we recognized the non-tax deductible, non-cash goodwill impairment charge of approximately $25 million in the quarter.

Rigging services business, core revenues declined 10% in the quarter, principally due to a sales mix focused more retail versus wholesale customers, competitive pricing pressures and an over 30% reduction in the number of serviceable oil rigs operating in the gulf compared to last year. Commercial segment operating profit in the quarter was $3.2 million or 3.9% as compared to $9.5 million or 8.6% in the second quarter of 2008.

The decline in operating profit was due to the reduced sales volume, higher warranty cost related to Truck APUs and the sale of higher cost inventory in the rigging services business. We completed the activities under the 2008 commercial restructuring plan in the second quarter.

We consolidated three US plans into one and outsourced marine distribution in Europe. We expect to see the benefits of these efforts in the second half of this year and into 2010.

It is important to note that once the transaction closes in the third quarter, the power systems is reclassified to discontinue operations for all of 2009. We expect the overall reported operating margins in the commercial segment to increase.

Finally, on a year-to-date basis, revenues decreased 21%, principally from the decline in core revenues of 16%, and a negative impact on foreign currency translation of 3%. Segment operating margins were 4.7% versus 5.8% for the first six months of 2008.

Let’s now move to cash flow. On the first quarter call we indicated the action plans have been put in place and that we are confident in our ability to generate strong cash flow from operations over the remainder of the year.

Our management teams executed well on these plans in the second quarter, reversing the negative result of the first quarter, and generating cash flow from continuing operations of approximately $78 million on a year-to-date basis, excluding the tax payments totaling $97.5 million associated with the gain on sale of ATI. This represents an increase of approximately 4% over the first six months of 2008.

On adjusted cash flow from continuing operations was approximately $75 million, excluding $90.2 million of tax payments associated with the gain on the sale of our automotive and industrial businesses. Adjusted free cash flow, defined as cash flow from continuing operations less capital expenditures, for the first six months of 2009 was $63 million as compared to $59 million in the fist six months of 2008.

We invested over $15 million in capital expenditures in the first six months of 2009, and expect CapEx to be in the range $40 million for the full year. Turning to our outlook; based on the strong bottom line performance in the first half of 2009, the expectation of accelerated core revenue growth in the medical business in the second half of the year, the revenue and margin increases expected in the cargo systems business, cost reductions implemented in our businesses and the weaker US Dollar, we are raising our EPS excluding special charges guidance to be in the range of $3.40 to $3.60 per diluted share.

We of course expect to experience the normal seasonality of European shutdowns and other seasonal factors in the third quarter and a stronger demand in the fourth quarter for our aerospace products. Special charges related to aero integration, the recently completed commercial group restructuring, the loss on the sales of the Marine-Gauge business in the first quarter and the non-cash goodwill and intangible asset impairments reported in this quarter, are currently forecasted at $1 to $1.5 per share.

Earnings per share from continuing operations available to common shareholders, including special charges are expected to be in the range of $2.35 to $2.50 per share in 2009. It is important to understand that while we do not expect our earning per share excluding special charges guidance to change once the power systems transaction closes and power is reclassified to discontinue operations, our GAAP EPS guidance will be adjusted as the goodwill impairment charge related to power recorded in the second quarter of 2009 will also be reclassified to discontinued operations.

Finally, we continue to expect to generate adjusted cash flow from continuing operations for the full year 2009 of between $210 million and $220 million, including the reclassification of power to discounts. With that, let me turn it back to Jeff.

Thanks Kevin. In summary, considering the macroeconomic environment that we are operating in today, Teleflex performed well in the first half of 2009.

On the positive front, we generated 17% year-over-year growth and EPS before special charges, continue to leverage our cost structure to maximize profitability, made significant reductions in our outstanding debt and improved adjusted free cash flow from operations by 7%. In closing, let me comment on expectations for each of our segments.

For the full year, we expect medical to generate low single digit core revenue growth and adjusted operating margins that will approximate 21% for the year. We also plan to continue to invest in R&D in order to enhance longer-term core growth objectives.

In addition, we remain active on the M&A front, continue to evaluate potential bolt on acquisitions in the medical space. Turning to our aerospace and commercial segments, we expect continued revenue challenges due to increased uncertainty in several of the end markets served.

However, we do expect stronger sales in cargo based on delivery schedules provided by both Boeing and Airbus. The revenue shortfalls in our other businesses are expected to be mitigated through various containment initiatives that are already well underway, and we are raising our EPS excluding special charges guidance based on the strong bottom line results during the first six months of 2009 and our outlook for the second half of this year.

Finally, I’d like to take the opportunity to thank of all the employees of our power systems business for their hard work and dedication over the years. We really did appreciate your contributions and wish you the best in the future.

Thanks again for joining us. I’ll turn it back over to Jake for questions.

Operator, we’d like to take questions now.

When you talked about the synergies on the medical side, I think you said 12 of the 18 to 20 have been recognized this year, and I was just trying to get a handle on, when we’re looking at SG&A and R&D, maybe some increased investment in R&D, where do we think those margins could go on the operating side, let’s say over the next couple of years.

Yes, I think David you hit it on the head. While we are investing in certain parts of our business, clearly we are trying to manage our overall cost structure.

I would say that, I think we’ve been pretty open, that we believe with the additional synergies that we will obtain in 2010, plus continuing to drive a more efficient backend of our business, our goal for the company is to try to move our operating margins for our medical business up into the mid 20s over the longer term. I think you are looking at three to four years.

If we weren’t in the investment mode in both R&D, RAQA and into the sales force, we could probably accelerate that, but again I think it’s a target that we think we actually will be able to achieve, even making the investments to grow our business.

Can you remind us, did you quantify what the synergies in 2010 for just a medical business alone could be? Have you done that?

David, as we’ve said from the offset, we expected to achieve $70 million to $75 million over the three year period. With the 18 to 20 we expect to get this year, we should be a little over $60 million.

So there’s another 10 to 12 or so that should come in next year.

But clearly David, I think we have a larger target internally than what we provided to our investors and we’ll see how that goes going forward.

Then lastly on the FDA inspection. I know that the letter I think covered a number of facilities, do you guys have any kind of a more clarity from them in terms of how many inspections may need to occur before we kind of get a green light from them to move forward?

No, I don’t think so David. If you remember, it really covered the Arrow organization, so you’ve got ten facilities there.

I think our take on the whole process is, again, with the FDA being very concerned over the corporate warning letter, I would expect they are probably going to be in most of those facilities before we get a green light. So again, giving us notice that they are coming into one of our facilities, we are not sure how to interpret.

Otherwise, it could be part of their overall plan, but we just don’t know.

I guess we could take potentially the rebound on the cardiac side to at least indicate that from an operational standpoint things are pose the recall, better.

Clearly, we’ve gotten through most of the recall issues associated with the cardiac business.

First off congratulation on the strong earnings today. I just wanted to ask a couple of things about the medical business.

First is, if we look at your medical segment, you’re predicting that revenue would grow low single digits this year, yet it’s been down a couple of percent so far, and I was wondering if you could kind of walk us through how you get to this for the rest of the year?

Sure Sean. I think we started out with a particularly weak first quarter.

As you know, we are down about 4% in that quarter. We saw sequential growth this quarter that was about in the 5% range over the first quarter, so I think on a year-to-date basis we’ve improved that down to about a 1% negative.

As we said, the seasonality of Q3, probably doesn’t provide us as much of a sequential pick-up that the second quarter did, but looking ahead to the fourth quarter in our product segments, with the expectation obviously, respiratory improves particularly in the fourth quarter. Heading into a flu season, we feel pretty good about those projections.

My second question has to do with critical care business. I think in the past you’ve talked about Teleflex taking share in the antimicrobial coated lines.

I guess the full critical care business has been relatively flat this year, so I was wondering if you could offer some color here, and if you think that critical care will grow going forward.

Yes, we certainly expect critical care to grow going forward. I think as you may have picked up on the call, it’s respiratory that seems to be, North American respiratory business in particular, that’s having a negative impact on that growth rate in the critical care area.

We have launched a number of tech products as you know, with the Triple Lumen and the pressure injectable and so forth, and we actually saw growth rates in that product line that were on the 18% range in the second quarter year-over-year. So we have some new products coming in that will assist in the critical care side, but we do need to see some turn around in the respiratory business.

So you still feel comfortable the antimicrobials are taking share in that business.

Absolutely.

Absolutely.

Back on the medical margin outlook, Jeff in your response you talked about with the increased investment in R&D and then a couple of other areas such as RAQ as well, but going forward isn’t this the R&D rate we should look for?

You are talking of the current quarterly rates?

I just want to delve a little bit further into your response of why you specifically cited an increased investment in R&D, and how is it different today than what it should be going forward?

Jim, I would expect to continue to see a 50 basis points investment going forward as we look at it. Even a 3.4%, I don’t think that’s where we need to be, especially if antimicrobials really take off and you get into the infection control.

So, we are still away from our target, but again clearly we’re trying to get some returns on some of the investments we’ve made in R&D, but I don’t see a problem with 50 to 60 basis points of additional investment a year of really detracting from our overall margins in medical.

Okay. Thanks on that one, just wanted to get the clarification.

Staying on the topic of R&D, how are you going to be measuring the effectiveness of the dollars you are spending?

Well, clearly as most healthcare companies do, you try to get your vitality index, and we’re still working through some of that Jim. Again, people actually define it differently, but I would expect over the next few quarters that we’ll be more comfortable with our vitality index, and putting it out there as a benchmark to show both what we are getting from a return standpoint.

Clearly, I would say that it’s low now, but I think our goal is to continue to add both in the R&D spent, as well as continue to bring in some new products that we may license or find other avenues to get some new products into our portfolio.

Can you give us a ballpark of where you are now and what the long-term goal is?

For?

For the vitality index?

Yes. Well, I can tell you we’re probably down into the upper single digits, and I think for a world class, and I do mean world class company, we’re probably in the 20 plus percent range, so I mean, we are on the lower end.

I think we openly said that when we took our people off of R&D, and it’s now 20 months ago that we knew we were going to be sacrificing some R&D revenues out there for some time. So I think that was a decision that we made and quite frankly it put us in a much better position to be prepared for the FDA audits upcoming.

Okay. On the FDA, originally you had laid out some timelines; if we saw resolution by the end of 2009, which does not appear that maybe likely.

As you look out to 2010 with this still overhanging the warning letter out there, what does that portend for any potential revenue hits in 2010?

Jim, I’ll take it; it’s Kevin. We’ve done that analysis as we look at registrations at where we might have to have renewals or new registrations.

The way you look at that impact today is about a $20 million potential impact. Of course it depends on timing as to when the FDA comes in, but there’s also some mitigation opportunities for us on that, whether it’s shipping a bit earlier to get product in, getting extensions which looks like a number of the countries that we’ve already approached have offered some extensions to mitigate that impact.

So, it looks like at the moment, worst cases in the $20 million to $25 million range, but we expect it to be less than that.

Okay. With the tax benefit in the second quarter, as you look out to the second half of the year, where do you see the tax rate?

Well, you see that the tax rate in the second quarter was over 50%.

Well, adjusted tax rate, I’m sorry.

Okay, and finally on the topic of acquisitions. You guys have done a very admirable job in terms of reducing the debt and cash flow and of course, build some opportunities with working capital levels where they are.

How are you thinking about acquisitions today, in terms of size and what are you seeing in the pricing environment?

Yes Jim, I still think we’re looking at the smaller bolt-ons. I think for us, $75 million down in revenue that are out there, I think clearly we’ve seem some opportunities, but I think at this point, we are trying to really have to take a step back and say, what does it really do for the company short term or long term.

The last thing we want to do is add more complexity to the organization until we get through the FDA. So I think if you see us do deals, they will be smaller, they will be easier for us to bring into the portfolio, but clearly even at today’s evaluations, the evaluations have come down from their highs, but I would say from a medical standpoint, they’re still fairly elevated, but again, I think we’re evaluating all aspects.

I wanted to ask a question on the medical side of the business about I guess second half guidance, and specifically does that include any impact from a potential barred competitive launch in the maximal barrier kit area?

Well, certainly I think a lot of their maximal barrier kits are outside of the CVC product line, which is our major focus on maximal barrier protection. We kit most of our products regardless of what it is.

I think as far as talking about a different offering similarly named interestingly enough, we certainly have factored that in Chris.

Excellent. Then just to turn to the respiratory bit, I know it’s a bit of a weak quarter and there’s some ongoing destockings.

Could you maybe be a bit granular on specific product lines. Are there sub-segments within the respiratory product lines that are doing okay.

Also on the other side, is there a one particular product that’s particularly weak?

I think it’s relatively broad Chris. I think there is a lot of destocking that’s happened early in the year, and we’ve commented on our first quarter call that we saw order rates kind of returning back to the normalized levels, but you probably heard me remark the volatility of distributor order patterns; they just seem to be jumping around a little bit with not a lot of warning.

So there’s possibility that I think it comes back stronger in the fourth quarter related to flu season, but we are cautious in the short term there.

Excellent, and one last question on the medical side, having to do with cost synergies from Aero. I think in the second half, maybe you guys will need to decide whether to go after the aero facilities or maybe go after some legacy Teleflex medical facilities.

Any update on the thinking of which to attack first in order to deliver savings?

Yes, clearly we have one schedule for one of the Arrow facilities, we’ve already provided notice there, so that one will move forward accordingly and should be done by year end Chris. Quite frankly, I think that is the only one that we have scheduled that provides synergies at year end.

Chris, let me just touch base; that’s on the Arrow side On the Teleflex side, we do have one facility that we are in the midst of shutting and moving and that’s down in Riley.

Is there any FDA spent to the back half given the change in your plans?

Yes, there is some plan Paul, I’ll tell you it’s less than $1 million in the plan; however, depending upon what happens when they do business or if they do visit here in the second half of the year, that could ramp up some, but right now we do have some plan.

Okay. Did I understand you correctly Kevin that the impact from CFGs is in the $20 to $25 million range in a worst case scenario?

That’s what our analysis shows us today in ‘10, that’s right.

Okay. Could you give a little color around that recent patent loss surrounding the hemodialysis catheter?

Sure, I’d love to. There seems to be probably a little bit of misunderstanding on that.

This particular suit was something that was already in process at the time that we acquired Arrow, so it was a suit that was filed before the acquisition. One of the things that’s important to note is, both Arrow and Teleflex, when we look at our intellectual property we defend it pretty vigorously, but you should look at this case from an extremely immaterial standpoint.

We have moved to the next generation of hemodialysis catheter anyway, so this IPS isn’t something necessarily that we were using at this point and as we understand, the infringed revenue was about somewhere between $1 million and $3 million. So, it was something that continued from pre-acquisition and does not have any material impact on revenue.

Then finally, on your initial analysis of a potential healthcare reform domestically, is it your understanding that patients could potentially be directed away from emergency rooms and pushed towards primary care doctors or is it too early to tell. I mean obviously we’re early on in this?

I think to be honest, it’s too early to tell. There’s so many different signals coming out of D.C..

I think our approach is like we’re preparing for it; we are not exactly sure what that’s going to mean at the end of the day, but quite frankly I think it’s going to be interesting to see what comes out of it. At the end, we still feel pretty comfortable that with our portfolio and our market position, not just here but around the globe, that we’re still going to have plenty of opportunity to continue to grow our business.

Following-up on the respiratory question, I just want to make sure, do you think the primary issue there is the distributor pull backs or can you tell if the market growth has actually been negative this year?

That’s a very good question. Certainly there is pressure in the market I think Taylor, with what’s happening with some of the competitions in the pricing area, but at this point I think the biggest negative we have has been really that rebalancing or setting inventory levels much lower, whether it be at the hospital, at the distributor and what they are carrying versus what they are ordering.

So, we think that happened pretty significantly in the first, early in the second, now we are just trying to get comfortable with normal order patterns.

Then in the access business, you obviously had a very good pick number this quarter. Bard had talked about there being some weakness in the pick market due to hospitals cutting back on the pick nursing teams.

So, I’m curious if you saw that, and if you did I would think that you might have seen a pick up in your central venous business, so perhaps comment on that as well.

I would say that as I said earlier, our pick product line sales grew 18% in the quarter year-over-year. We have to keep probably in mind in light of that is our base is significantly lower than Bard’s no doubt as a starting point.

So, we right now, I can’t comment much about the pull backs that were commented on by them, because we just see that as a large market for us to attack with our new products.

Sure. How about your central venous business, are you seeing any change in growth rates?

I would say no, not at this point.

Thank you for joining us today. That concludes the Teleflex Incorporated second quarter 2009 conference call.

Thank you everyone.