Teledyne Technologies Reports Third Quarter Results

  Teledyne Technologies Reports Third Quarter Results

Business Wire

THOUSAND OAKS, Calif. -- October 25, 2012

Teledyne Technologies Incorporated (NYSE:TDY):

  *All-time record quarterly sales of $547.4 million, an increase of 10.3%
    over 2011
  *All-time record quarterly earnings per share of $1.14, an increase of
    25.3% over 2011
  *Raising full year 2012 GAAP earnings outlook to $4.22 to $4.26 per share
    from $3.98 to $4.04 per share
  *Third quarter 2012 includes pretax charges of $3.8 million related
    primarily to the acquisition of LeCroy Corporation compared with a pretax
    $4.5 million investment write-off in 2011
  *Third quarter net income includes net tax benefits of $3.1 million
    compared with $2.4 million in the third quarter of 2011
  *Acquired LeCroy Corporation, PDM Neptec Limited and BlueView Technologies
    Inc.

Teledyne today reported third quarter 2012 sales of $547.4 million, compared
with sales of $496.4 million for the third quarter of 2011, an increase of
10.3%. Net income attributable to Teledyne was $42.7 million ($1.14 per
diluted share) for the third quarter of 2012, compared with $34.1 million
($0.91 per diluted share) for the third quarter of 2011, an increase of 25.2%.

“Achieving record sales and earnings in the current economic environment is a
testament to our successful strategy and operating discipline. We continue to
shift our portfolio through acquisitions and internal investments toward
high-technology industrial markets such as offshore energy, high-end digital
imaging and analytical and electronic test and measurement instrumentation.
While we are not immune to the world-wide economic conditions and global
austerity, our balanced sources of revenue have moderated the effects of
regional economic contractions,” said Robert Mehrabian, chairman, president
and chief executive officer. “Year-to-date, we have made four acquisitions in
such strategic areas as marine and electronic test and measurement
instrumentation, as well as a majority investment in Optech Incorporated,
which is part of our Digital Imaging segment. Finally, earlier this week, we
successfully executed $200 million of term loans to provide us availability on
our revolving credit facility and additional financial flexibility.”

Review of Operations (Comparisons are with the third quarter of 2011, unless
noted otherwise.)

Instrumentation

The Instrumentation segment’s third quarter 2012 sales were $193.8 million,
compared with $157.1 million, an increase of 23.4%. Third quarter 2012
operating profit was $29.9 million, compared with operating profit of $32.2
million, a decrease of 7.1%.

The third quarter 2012 sales increase resulted from higher sales of both
marine and electronic test and measurement instrumentation, partially offset
by reduced sales of environmental instrumentation. The higher sales of $6.9
million for marine instrumentation products reflected increased sales of
interconnect systems used in offshore energy production and also included a
total of $3.4 million in revenue from the August 3, 2012 acquisition of the
parent company of PDM Neptec Limited (“PDM Neptec”) and the July 2, 2012
acquisition of BlueView Technologies Inc. (“BlueView”). Increased sales of
$34.2 million for electronic test and measurement instrumentation resulted
from the acquisition of LeCroy Corporation (“LeCroy”) on August 3, 2012. The
decrease in sales of $4.4 million for environmental instrumentation primarily
reflected lower domestic sales. The decrease in operating profit reflected
$3.8 million in acquisition expenses and $1.4 million in additional intangible
asset amortization related to the LeCroy, PDM Neptec and BlueView
transactions, partially offset by the impact of higher sales.

Digital Imaging

The Digital Imaging segment’s third quarter 2012 sales were $108.1 million,
compared with $95.0 million, an increase of 13.8%. Operating profit was $7.6
million for the third quarter of 2012, compared with operating profit of $2.3
million.

The 2012 sales increase included $14.9 million in revenue from the April 2,
2012, acquisition of a majority interest in the parent company of Optech
Incorporated (“Optech”), and also reflected increased sales of specialty image
sensors and production of microelectromechanical systems (“MEMS”), partially
offset by lower sales of industrial machine vision cameras and funded research
activities. The results for 2012 included operating profit of $0.9 million
from the Optech acquisition. The increase in operating profit was impacted by
product mix differences at DALSA.

Aerospace and Defense Electronics

The Aerospace and Defense Electronics segment’s third quarter 2012 sales were
$164.2 million, compared with $171.2 million, a decrease of 4.1%. Operating
profit was $24.1 million for the third quarter of 2012, compared with
operating profit of $24.8 million, a decrease of 2.8%.

The 2012 sales decrease reflected lower sales of $13.5 million for electronic
manufacturing service products partially offset by higher sales of $2.1
million from avionics products and electronic relays, as well as, $4.4 million
from microwave devices and interconnects, which included $5.8 million in
revenue from the February 2012, acquisition of VariSystems Inc. Operating
profit in 2012 decreased primarily due to the lower sales of electronic
manufacturing service products, partially offset by increased sales of higher
margin avionics and microwave devices.

Engineered Systems

The Engineered Systems segment’s third quarter 2012 sales were $81.3 million,
compared with $73.1 million, an increase of 11.2%. Operating profit was $8.3
million for the third quarter 2012, compared with operating profit of $6.4
million, an increase of 29.7%.

The third quarter 2012 sales increase reflected higher sales of $8.7 million
from engineered products and services, partially offset by slightly lower
sales of energy systems and turbine engines. The higher sales of engineered
products and services primarily reflected higher sales from increased
manufacturing programs and new missile defense contracts, partially offset by
lower sales related to nuclear and environmental programs. Operating profit in
the third quarter of 2012 reflected the impact of higher sales, as well as
higher margins for engineered products and services.

Additional Financial Information

Cash Flow

Cash provided by operating activities was $18.3 million for the third quarter
of 2012, compared with $52.9 million. The lower cash provided by operating
activities in the third quarter of 2012 primarily reflected a voluntary pretax
$42.8 million cash contribution to the domestic pension plan. Free cash flow
(cash provided by operating activities less capital expenditures) was $3.0
million for the third quarter of 2012, compared with $43.2 million and
reflected lower cash provided by operating activities, primarily due to the
$42.8 million pretax pension contribution and higher capital expenditures. At
September 30, 2012, total debt was $647.7 million, which included $250.0
million in senior notes, $367.9 million drawn on the $550.0 million credit
facility, $15.1 million in other debt and $14.7 million in capital lease
obligations. On October 22, 2012, Teledyne entered into $200 million of term
loans with a maturity date of October 22, 2015. The proceeds were applied
against our credit facility. Cash and cash equivalents were $24.2 million at
September 30, 2012. The company received $2.8 million from the exercise of
employee stock options in the third quarter of 2012, compared with $3.3
million. Capital expenditures for the third quarter of 2012 were $15.3
million, compared with $9.7 million. Depreciation and amortization expense for
the third quarter of 2012 was $21.5 million, compared with $16.7 million.

On August 3, 2012, Teledyne acquired LeCroy for $301.3 million, net of cash
acquired and a subsidiary of Teledyne acquired the parent company of PDM
Neptec for $7.4 million, net of cash acquired. On July 2, 2012, a subsidiary
of Teledyne acquired BlueView for $16.3 million in cash. Teledyne funded the
purchases from borrowings under its credit facility and cash on hand.

     Free Cash Flow(a)                         Third Quarter
          (in millions, brackets indicate use of       2012       2011
          funds)
          Cash provided by operating activities        $ 18.3         $ 52.9
          from continuing operations
          Capital expenditures for property,           (15.3  )       (9.7   )
          plant and equipment
          Free cash flow                               3.0            43.2
          Pension contributions, net of tax (b)        27.8          —      
          Adjusted free cash flow                      $ 30.8        $ 43.2 

                The company defines free cash flow as cash provided by
                operating activities (a measure prescribed by generally
                accepted accounting principles) less capital expenditures for
                property, plant and equipment. Adjusted free cash flow
     (a)  eliminates the impact of pension contributions on a net of tax
                basis. The company believes that this supplemental non-GAAP
                information is useful to assist management and the investment
                community in analyzing the company’s ability to generate cash
                flow, including the impact of voluntary and required pension
                contributions.
          (b)   The domestic pension cash contributions were voluntary.
                

Pension

Pension expense was $1.7 million for the third quarter of 2012 compared with
$1.5 million. Pension expense allocated to contracts pursuant to U.S.
Government Cost Accounting Standards (“CAS”) was $3.1 million for the third
quarter of 2012 compared with $2.9 million.

Income Taxes

The effective tax rate for the third quarter of 2012 was 24.5% compared with
30.9%. The decrease reflected $3.1 million in net tax benefits in the third
quarter of 2012, due to the expiration of the statute of limitations, compared
with $2.4 million, as well as a change in the proportion of domestic and
international income.

Stock Option Compensation Expense

For the third quarter of 2012, the company recorded a total of $2.3 million in
stock option expense, of which $0.7 million was recorded as corporate expense
and $1.6 million was recorded in the operating segment results. For the third
quarter of 2011, the company recorded a total of $1.5 million in stock option
expense, of which $0.5 million was recorded as corporate expense and $1.0
million was recorded in the operating segment results. The lower amount in
2011 primarily reflected the absence of employee stock option grants in 2009.

Other

Interest expense, net of interest income, was $4.5 million for the third
quarter of 2012, compared with $3.7 million, and reflected higher debt levels.
Corporate expense was $9.6 million for the third quarter of 2012, compared
with $8.9 million and reflected higher employee related costs. Other income
and expense reflected income of $1.2 million for the third quarter of 2012,
compared with expense of $3.8 million. Other income and expense in 2011
included a $4.5 million pretax charge to write off the company's minority
investment in a private company.

Outlook

Based on its current outlook, the company’s management believes that fourth
quarter 2012 earnings per diluted share, including acquisition related
expenses, will be in the range of approximately $1.06 to $1.10. The full year
2012 earnings per diluted share outlook, including acquisition related
expenses, is expected to be in the range of approximately $4.22 to $4.26. The
total year outlook includes $7.1 million in acquisition related expenses,
primarily from the LeCroy acquisition.

Total year pension expense is expected to be flat in 2012, compared with 2011,
primarily due to plan amendments and the impact of voluntary cash
contributions to the domestic pension plan, offset by a reduction in the
discount rate to 5.50% from 6.15% to measure the benefit obligation. Interest
expense is expected to be higher in 2012, primarily due to higher debt levels
due to acquisitions. Stock option expense is expected to be approximately $8.7
million in 2012, compared with $5.8 million for 2011. The lower amount in 2011
primarily reflected the absence of employee stock option grants in 2009.
Including the recent and pending acquisitions, capital expenditures are
projected to be approximately $76.0 million in 2012.

Forward-Looking Statements Cautionary Notice

This press release contains forward-looking statements, as defined in the
Private Securities Litigation Reform Act of 1995, relating to earnings, growth
opportunities, pending acquisitions, product sales, capital expenditures,
pension matters, stock option compensation expense, interest expense, taxes,
and strategic plans. Forward-looking statements are generally accompanied by
words such as “estimate”, “project”, “predict”, “believes” or “expect”, that
convey the uncertainty of future events or outcomes. All statements made in
this press release that are not historical in nature should be considered
forward-looking.

Actual results could differ materially from these forward-looking statements.
Many factors could change the anticipated results, including: disruptions in
the global economy; changes in demand for products sold to the defense
electronics, instrumentation, digital imaging, energy exploration and
production, commercial aviation, semiconductor and communications markets;
funding, continuation and award of government programs; and cuts to defense
spending resulting from future deficit reduction measures and including
potential automatic cuts to defense spending that have been triggered by the
Budget Control Act of 2011. Increasing fuel costs could negatively affect the
markets of our commercial aviation businesses. Lower oil and natural gas
prices, as well as instability in the Middle East or other oil producing
regions, and new regulations or restrictions relating to energy production,
including with respect to hydraulic fracturing, could negatively affect the
company’s businesses that supply the oil and gas industry. In addition,
financial market fluctuations affect the value of the company’s pension
assets.

Changes in the policies of U.S.and foreign governments could result, over
time, in reductions and realignment in defense or other government spending
and further changes in programs in which the company participates.

While the company’s growth strategy includes possible acquisitions, we cannot
provide any assurance as to when, if or on what terms any acquisitions will be
made. Acquisitions involve various inherent risks, such as, among others, our
ability to integrate acquired businesses, retain customers and achieve
identified financial and operating synergies. There are additional risks
associated with acquiring, owning and operating businesses internationally,
including those arising from U.S.and foreign policy changes and exchange rate
fluctuations.

While the company believes its internal and disclosure control systems are
effective, there are inherent limitations in all control systems, and
misstatements due to error or fraud may occur and may not be detected.

Readers are urged to read the company’s periodic reports filed with the
Securities and Exchange Commission (“SEC”) for a more complete description of
the company, its businesses, its strategies and the various risks that the
company faces. Various risks are identified in Teledyne’s 2011 Annual Report
on Form 10-K and subsequent Quarterly Reports on Form 10-Q. Readers,
particularly those interested in investing in Teledyne, should read these risk
factors. The company assumes no duty to publicly update or revise any
forward-looking statements, whether as a result of new information or
otherwise.

A live webcast of Teledyne’s third quarter earnings conference call will be
held at 11:00 a.m. (Eastern) on Thursday, October 25, 2012. To access the
call, go to www.earnings.com or www.teledyne.com approximately ten minutes
before the scheduled start time. A replay will also be available for one month
at these same sites starting at 12:00 p.m. (Eastern) on Thursday, October 25,
2012.


TELEDYNE TECHNOLOGIES INCORPORATED

CONSOLIDATED STATEMENTS OF INCOME

FOR THE THIRD QUARTER AND NINE MONTHS ENDED

SEPTEMBER 30, 2012 AND OCTOBER 2, 2011

(Unaudited, - in millions, except per share amounts)
                                                          
                       Third         Third         Nine            Nine
                       Quarter       Quarter       Months          Months
                      2012          2011          2012            2011
Net sales              $ 547.4       $ 496.4       $ 1,559.9       $ 1,467.4
Costs and
expenses:
Costs of sales         349.0         331.3         1,020.1         975.0
Selling, general
and administrative     138.1        108.3        364.3          319.0     
expenses
Total costs and        487.1        439.6        1,384.4        1,294.0   
expenses
Income before
other                  60.3          56.8          175.5           173.4
income/(expense)
and income taxes
Other
income/(expense),      1.2           (3.8    )     2.2             (2.5      )
net
Interest and debt      (4.5    )     (3.7    )     (12.6     )     (12.4     )
expense, net
Income from
continuing             57.0          49.3          165.1           158.5
operations before
income taxes
Provision for          13.9         15.2         46.8           53.1      
income taxes
Net income from
continuing
operations             43.1          34.1          118.3           105.4
including
noncontrolling
interest
Loss from
discontinued           —             —             —               (0.7      )
operations
Gain on sale of
discontinued           —            —            —              113.8     
operations
Net income             43.1          34.1          118.3           218.5
Less: Net income
attributable to        (0.4    )     —            (0.4      )     (0.1      )
noncontrolling
interest
Net income
attributable to        $ 42.7       $ 34.1       $ 117.9        $ 218.4   
Teledyne
                                                                   
Diluted earnings
per common share:
Continuing             $ 1.14        $ 0.91        $ 3.16          $ 2.82
operations (a)
Loss from
discontinued           —             —             —               (0.02     )
operations
Gain on sale of
discontinued           —            —            —              3.05      
operations
Net income
attributable to        $ 1.14       $ 0.91       $ 3.16         $ 5.85    
Teledyne
Weighted average
diluted common         37.4         37.4         37.3           37.3      
shares outstanding
(a) Includes
noncontrolling
interest
                                                                             

TELEDYNE TECHNOLOGIES INCORPORATED

SUMMARY OF SEGMENT NET SALES AND OPERATING PROFIT

FOR THE THIRD QUARTER AND NINE MONTHS ENDED

SEPTEMBER 30, 2012 AND OCTOBER 2, 2011

(Unaudited, - in millions)
                                                                                  
                    Third         Third                       Nine            Nine
                    Quarter       Quarter                     Months          Months
                   2012          2011          % Change      2012            2011            % Change
Net sales:
Instrumentation     $ 193.8       $ 157.1       23.4   %     $ 516.8         $ 467.7         10.5   %
Digital Imaging     108.1         95.0          13.8   %     313.2           257.4           21.7   %
Aerospace and
Defense             164.2         171.2         (4.1  ) %     497.8           507.7           (1.9  ) %
Electronics
Engineered          81.3         73.1         11.2   %     232.1          234.6          (1.1  ) %
Systems
Total net sales     $ 547.4      $ 496.4      10.3   %     $ 1,559.9      $ 1,467.4      6.3    %
                                                                                                      
Operating profit
and other segment
income:
Instrumentation     $ 29.9        $ 32.2        (7.1  ) %     $ 89.5          $ 94.6          (5.4  ) %
Digital Imaging     7.6           2.3           230.4  %     19.4            13.8            40.6   %
Aerospace and
Defense             24.1          24.8          (2.8  ) %     71.5            70.8            1.0    %
Electronics
Engineered          8.3          6.4          29.7   %     21.9           21.6           1.4    %
Systems
Segment operating
profit and other    69.9          65.7          6.4    %     202.3           200.8           0.7    %

segment income
Corporate expense   (9.6    )     (8.9    )     7.9    %     (26.8     )     (27.4     )     (2.2  ) %
Other
income/(expense),   1.2           (3.8    )     *             2.2             (2.5      )     *
net
Interest and debt   (4.5    )     (3.7    )     21.6   %     (12.6     )     (12.4     )     1.6    %
expense, net
Income from
continuing          57.0          49.3          15.6   %     165.1           158.5           4.2    %
operations before
income taxes
Provision for       13.9         15.2         (8.6  ) %     46.8           53.1           (11.9 ) %
income taxes
Net income from
continuing
operations
                    43.1          34.1          26.4   %     118.3           105.4           12.2   %
including
noncontrolling
interest
Loss from
discontinued        —             —             *             —               (0.7      )     *      
operations
Gain on sale of
discontinued        —            —            *             —              113.8          *
operations
Net income          43.1          34.1          26.4   %     118.3           218.5           (45.9 ) %
Less: Net income
attributable to
                    (0.4    )     —            *             (0.4      )     (0.1      )     *     
noncontrolling
interest
Net income
attributable to     $ 42.7       $ 34.1       25.2   %     $ 117.9        $ 218.4        (46.0 ) %
Teledyne
* percentage change not meaningful


TELEDYNE TECHNOLOGIES INCORPORATED

CONSOLIDATED CONDENSED BALANCE SHEETS

(Current period unaudited – in millions)
                                                          
                                       September 30, 2012     January 1, 2012
                                                               
ASSETS
Cash and cash equivalents               $    24.2              $    49.4
Accounts receivable, net                349.5                  270.0
Inventories, net                        287.6                  219.4
Deferred income taxes, net              43.3                   35.1
Prepaid expenses and other assets       30.4                  28.8
Total current assets                    735.0                  602.7
                                                               
Property, plant and equipment, net      343.1                  254.6
Goodwill and acquired intangible        1,267.7                899.2
assets, net
Other assets, net                       88.2                  69.6
Total assets                            $    2,434.0          $    1,826.1
                                                               
LIABILITIES AND STOCKHOLDERS’
EQUITY
Accounts payable                        $    152.5             $    102.0
Accrued liabilities                     239.7                  230.8
Current portion of long-term debt       2.1                   1.4
and capital leases
Total current liabilities               394.3                  334.2
                                                               
Long-term debt and capital lease        645.6                  311.4
obligations
Other long-term liabilities             195.2                 196.4
Total liabilities                       1,235.1                842.0
Total stockholders’ equity              1,198.9               984.1
                                                               
Total liabilities and stockholders’     $    2,434.0          $    1,826.1
equity

Contact:

Teledyne Technologies Incorporated
Investor Contact:
Jason VanWees
(805) 373-4542
or
Media Contact:
Robyn McGowan
(805) 373-4540
 
Press spacebar to pause and continue. Press esc to stop.