Teledyne Technologies Reports Fourth Quarter Results

  Teledyne Technologies Reports Fourth Quarter Results

Business Wire

THOUSAND OAKS, Calif. -- January 24, 2013

Teledyne Technologies Incorporated (NYSE:TDY):

  *All-time record quarterly sales of $567.4 million, an increase of 19.6%
    over 2011
  *All-time record quarterly earnings per share of $1.17, an increase of
    18.2% over 2011
  *Fourth quarter organic sales growth of 5.1%
  *Record quarterly free cash flow of $99.6 million
  *Record full-year sales and earnings per share from continuing operations
    of $2,127.3 million and $4.33, respectively

Teledyne today reported fourth quarter 2012 sales of $567.4 million, compared
with sales of $474.5 million for the fourth quarter of 2011, an increase of
19.6%. Net income from continuing operations was $43.9 million ($1.17 per
diluted share) for fourth quarter of 2012, compared with net income from
continuing operations of $36.8 million ($0.99 per diluted share) for the
fourth quarter of 2011,  an increase of 19.3%. Net income attributable to
Teledyne, including discontinued operations, was $46.2 million ($1.23 per
diluted share) for the fourth quarter of 2012, compared with $36.8 million
($0.99 per diluted share) for the fourth quarter of 2011.

“We ended 2012 with a very strong quarter. Quarterly and full year sales and
earnings per share were all at record levels,” said Robert Mehrabian,
chairman, president and chief executive officer. “Furthermore, organic revenue
growth in the quarter was 5.1%, driven by a 21.9% increase in organic sales in
our instrumentation segment. Finally, fourth quarter free cash flow of nearly
$100 million was also an all-time record. Throughout 2012, we accelerated our
ongoing transformation into a higher technology company serving industrial
growth markets. Despite continued economic and government funding uncertainty,
we enter 2013 with the strength of our balanced business portfolio, which now
has the greatest proportion of commercial and international sales in our
history.”

Full Year 2012

Sales for 2012 were $2,127.3 million, compared with $1,941.9 million for 2011,
an increase of 9.5%. Net income from continuing operations was $161.8 million
($4.33 per diluted share) for 2012, compared with net income from continuing
operations of $142.1 million ($3.81 per diluted share) for 2011,  an increase
of 13.9%. Net income for 2012 and 2011 also included net tax credits of $5.4
million and $2.4 million, respectively. Net income attributable to Teledyne,
including discontinued operations, was $164.1 million ($4.39 per diluted
share) for 2012 compared with $255.2 million ($6.84 per diluted share) for
2011. On April 19, 2011, Teledyne completed the sale of its piston engines
businesses and recorded a gain on the sale of $113.8 million.

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

Instrumentation

The Instrumentation segment’s fourth quarter 2012 sales were $232.6 million,
compared with $148.9 million, an increase of 56.2%. Fourth quarter 2012
operating profit was $46.7 million, compared with operating profit of $28.2
million, an increase of 65.6%.

The fourth quarter 2012 sales increase primarily resulted from higher sales of
marine and electronic test and measurement instrumentation. The higher sales
of $35.3 million for marine instrumentation products reflected increased sales
of geophysical sensors and interconnect systems used in offshore energy
exploration and production, as well as marine survey systems and autonomous
underwater vehicles. Sales of marine instrumentation included a total of $4.6
million in revenue from the August 2012 acquisition of the parent company of
PDM Neptec Limited (“PDM Neptec”) and the July 2012 acquisition of BlueView
Technologies Inc. (“BlueView”). Increased sales of $46.5 million for
electronic test and measurement instrumentation resulted from the acquisition
of LeCroy Corporation (“LeCroy”) in August 2012. Sales of environmental
instrumentation increased $1.9 million. The increase in operating profit
reflected the impact of higher sales and substantially greater operating
margins for marine and environmental instrumentation.

Digital Imaging

The Digital Imaging segment’s fourth quarter 2012 sales were $102.7 million,
compared with $92.5 million, an increase of 11.0%. Fourth quarter operating
profit was $5.4 million, compared with operating profit of $2.3 million, an
increase of 134.8%.

The 2012 sales increase primarily reflected $12.8 million in revenue from the
April 2012 acquisition of a majority interest in the parent company of Optech
Incorporated (“Optech”), greater sales of medical imaging sensors, partially
offset by lower sales of industrial machine vision cameras and government
funded research activities. The increase in operating profit resulted from
improved operating margins throughout the segment and also included operating
profit of $0.8 million from the Optech acquisition.

Aerospace and Defense Electronics

The Aerospace and Defense Electronics segment’s fourth quarter 2012 sales were
$162.8 million, compared with $163.1 million, a decrease of 0.2%. Operating
profit was $18.8 million for the fourth quarter of 2012, compared with
operating profit of $23.1 million, a decrease of 18.6%.

The 2012 sales decrease reflected lower sales of $2.5 million for electronic
manufacturing service products partially offset by higher sales of $0.7
million from avionics products and electronic relays, as well as greater sales
of $1.5 million from microwave devices and interconnects, which included $4.7
million in revenue from the February 2012 acquisition of VariSystems Inc.
Operating profit in 2012 reflected reduced margins, as well as $1.7 million of
severance and relocation costs, within certain electronic manufacturing
service businesses.

Engineered Systems

The Engineered Systems segment’s fourth quarter 2012 sales were $69.3 million,
compared with $70.0 million, a decrease of 1.0%. Operating profit was $6.6
million for the fourth quarter 2012, compared with operating profit of $6.5
million, an increase of 1.5%.

The fourth quarter 2012 sales decrease reflected lower sales of $1.3 million
from energy systems, mostly offset by higher sales for engineered products and
services. Operating profit in the fourth quarter of 2012 increased slightly
and reflected higher margins for energy systems.

Additional Financial Information

Cash Flow

Cash provided by operating activities was $121.9 million for the fourth
quarter of 2012, compared with $79.8 million. The higher cash provided by
operating activities in the fourth quarter of 2012 reflected the impact of
higher net income and lower income tax payments. Free cash flow (cash provided
by operating activities less capital expenditures) was $99.6 million for the
fourth quarter of 2012, compared with $65.7 million and reflected higher cash
provided by operating activities, which reflected the impact of higher net
income and lower income tax payments, partially offset by higher capital
expenditures. At December 30, 2012, total debt was $558.2 million, which
included $250.0 million in senior notes, $79.1 million drawn on the $550.0
million credit facility, $200.0 million in term loans, $14.8 million in other
debt and $14.3 million in capital lease obligations. On October 22, 2012,
Teledyne entered into $200.0 million of term loans with a maturity date of
October 22, 2015. The proceeds were applied against our credit facility. In
the first quarter of 2013, the company made an $83.0 million pretax cash
contribution to its domestic pension plan. Cash and cash equivalents were
$45.8 million at December 30, 2012. The company received $7.7 million from the
exercise of employee stock options in the fourth quarter of 2012, compared
with $3.9 million. Capital expenditures for the fourth quarter of 2012 were
$22.3 million, compared with $14.1 million. Depreciation and amortization
expense for the fourth quarter of 2012 was $21.9 million, compared with $16.8
million.

                                                            
Free Cash Flow(a)          Fourth        Fourth        Total         Total
                           Quarter       Quarter       Year          Year
(in millions, brackets     2012          2011          2012          2011
indicate use of funds)
                                                                             
Cash provided by
operating activities       $ 121.9       $ 79.8        $ 189.5       $ 219.5
from continuing
operations
Capital expenditures
for property, plant         (22.3 )      (14.1 )      (65.3 )      (41.7 )
and equipment
Free cash flow               99.6          65.7          124.2         177.8
Pension contributions,      —           —           60.3        44.0  
net of tax (b)
Adjusted free cash         $ 99.6       $ 65.7       $ 184.5      $ 221.8 
flow

        The company defines free cash flow as cash provided by operating
        activities from continuing operations (a measure prescribed by
        generally accepted accounting principles) less capital expenditures
        for property, plant and equipment. Adjusted free cash flow eliminates
(a)   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 $1.6 million for the fourth quarter of 2012 compared with
$1.5 million. Pension expense allocated to contracts pursuant to U.S.
Government Cost Accounting Standards (“CAS”) was $3.7 million for the fourth
quarter of 2012 compared with $3.7 million.

Income Taxes

The effective tax rate for the fourth quarter of 2012 was 29.4% compared with
31.0%. The decrease reflected $1.1 million in net tax benefits in the fourth
quarter of 2012, primarily due to the expiration of the statute of
limitations. Excluding this amount, the effective tax rate for the fourth
quarter of 2012 would have been 31.1%. Excluding any tax credits and other
adjustments, the effective tax rate was 31.0% for fiscal year 2012.

Stock Option Compensation Expense

For the fourth quarter of 2012, the company recorded a total of $2.1 million
in stock option expense, of which $0.6 million was recorded as corporate
expense and $1.5 million was recorded in the operating segment results. For
the fourth quarter of 2011, the company recorded a total of $1.5 million in
stock option expense, of which $0.6 million was recorded as corporate expense
and $0.9 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 $5.2 million for the fourth
quarter of 2012, compared with $3.8 million, and reflected higher debt levels.
Corporate expense was $9.9 million for the fourth quarter of 2012, compared
with $6.3 million and reflected compensation accruals and higher professional
fees expense. Other income and expense reflected income of $0.7 million for
the fourth quarter of 2012, compared with income of $3.1 million. Other income
and expense for the fourth quarter of 2011 included income of $2.3 million
related to the reduction of an environmental reserve no longer needed. The
fourth quarter of 2012 includes income of $2.3 million from discontinued
operations related to the finalization of income tax benefits on the sale of
the piston engines businesses.

Outlook

Based on its current outlook, the company’s management believes that first
quarter 2013 earnings per diluted share will be in the range of approximately
$0.97 to $1.00. The full year 2013 earnings per diluted share is expected to
be in the range of approximately $4.42 to $4.46.

In the first half of 2013, the company expects additional severance and
relocation costs associated with certain electronic manufacturing services
businesses. The company’s effective tax rate for 2013 is expected to be 31.0%,
excluding retroactive adjustments. For the company's domestic pension plan,
the assumed discount rate for 2013 will decrease to 4.40% from 5.50%.

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, product sales, capital expenditures, pension matters, stock
option compensation expense, interest expense, severance and relocation costs,
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 fourth quarter earnings conference call will be
held at 11:00 a.m. (Eastern) on Thursday, January 24, 2013. 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, January 24,
2013.

                                                              
                                                                   
TELEDYNE TECHNOLOGIES INCORPORATED

CONSOLIDATED STATEMENTS OF INCOME

FOR THE FOURTH QUARTER AND TWELVE MONTHS ENDED

DECEMBER 30, 2012 AND JANUARY 1, 2012

(Unaudited, - in millions, except per share amounts)
                                                                   
                                                                   
                             Fourth      Fourth      Twelve        Twelve
                             Quarter     Quarter     Months        Months
                            2012        2011        2012          2011
Net sales                    $ 567.4     $ 474.5     $ 2,127.3     $ 1,941.9
Costs and expenses:
Costs of sales               359.0       315.7       1,379.1       1,290.7
Selling, general and         140.8      105.0      505.1        424.0     
administrative expenses
Total costs and expenses     499.8      420.7      1,884.2      1,714.7   
Income before other income   67.6        53.8        243.1         227.2
and income taxes
Other income, net            0.7         3.1         2.9           0.6
Interest and debt expense,   (5.2    )   (3.8    )   (17.8     )   (16.2     )
net
Income from continuing
operations before income     63.1        53.1        228.2         211.6
taxes
Provision for income taxes   18.6       16.4       65.4         69.5      
Net income from continuing
operations including         44.5        36.7        162.8         142.1
noncontrolling interest
Discontinued operations      2.3        —          2.3          113.1     
Net income                   46.8        36.7        165.1         255.2
Less: Net (income) loss
attributable to              (0.6    )   0.1        (1.0      )   —         
noncontrolling interest
Net income attributable to   $ 46.2     $ 36.8     $ 164.1      $ 255.2   
Teledyne
                                                                   
Diluted earnings per
common share:
Continuing operations (a)    $ 1.17      $ 0.99      $ 4.33        $ 3.81
Discontinued operations      0.06       —          0.06         3.03      
Net income attributable to   $ 1.23     $ 0.99     $ 4.39       $ 6.84    
Teledyne
Weighted average diluted     37.6       37.3       37.4         37.3      
common shares outstanding
(a) Excluding
noncontrolling interest
                                                                             
                                                                             

                                                                           
                                                                                  
TELEDYNE TECHNOLOGIES INCORPORATED

SUMMARY OF SEGMENT NET SALES AND OPERATING PROFIT

FOR THE FOURTH QUARTER AND TWELVE MONTHS ENDED

DECEMBER 30, 2012 AND JANUARY 1, 2012

(Unaudited, - in millions)
                                                                                  
                                                                                  
                  Fourth      Fourth                  Twelve        Twelve
                  Quarter     Quarter                 Months        Months
                 2012        2011        % Change    2012          2011          % Change
Net sales:
Instrumentation   $ 232.6     $ 148.9     56.2    %   $ 749.4       $ 616.6       21.5    %
Digital Imaging   102.7       92.5        11.0    %   415.9         349.9         18.9    %
Aerospace and
Defense           162.8       163.1       (0.2  ) %   660.6         670.8         (1.5  ) %
Electronics
Engineered        69.3       70.0       (1.0  ) %   301.4        304.6        (1.1  ) %
Systems
Total net sales   $ 567.4    $ 474.5    19.6    %   $ 2,127.3    $ 1,941.9    9.5     %
                                                                                  
Operating
profit and
other segment
income:
Instrumentation   $ 46.7      $ 28.2      65.6    %   $ 136.2       $ 122.8       10.9    %
Digital Imaging   5.4         2.3         134.8   %   24.8          16.1          54.0    %
Aerospace and
Defense           18.8        23.1        (18.6 ) %   90.3          93.9          (3.8  ) %
Electronics
Engineered        6.6        6.5        1.5     %   28.5         28.1         1.4     %
Systems
Segment
operating
profit and        77.5        60.1        29.0    %   279.8         260.9         7.2     %
other

segment income
Corporate         (9.9    )   (6.3    )   57.1    %   (36.7     )   (33.7     )   8.9     %
expense
Other income,     0.7         3.1         (77.4 ) %   2.9           0.6           *
net
Interest and
debt expense,     (5.2    )   (3.8    )   36.8    %   (17.8     )   (16.2     )   9.9     %
net
Income from
continuing
operations        63.1        53.1        18.8    %   228.2         211.6         7.8     %
before income
taxes
Provision for     18.6       16.4       13.4    %   65.4         69.5         (5.9  ) %
income taxes
Net income from
continuing
operations
                  44.5        36.7        21.3    %   162.8         142.1         14.6    %
including
noncontrolling
interest
Discontinued      2.3        —          *           2.3          113.1        *
operations
Net income        46.8        36.7        27.5    %   165.1         255.2         (35.3 ) %
Less: Net
(income) loss
attributable to   (0.6    )   0.1        *           (1.0      )   —            *

noncontrolling
interest
Net income
attributable to   $ 46.2     $ 36.8     25.5    %   $ 164.1      $ 255.2      (35.7 ) %
Teledyne
* percentage change not meaningful
                                                                                          
                                                                                          

                                                            
                                                               
TELEDYNE TECHNOLOGIES INCORPORATED

CONSOLIDATED CONDENSED BALANCE SHEETS

(Current period unaudited – in millions)
                                                               
                                                               
                                          December 30, 2012   January 1, 2012
                                                               
ASSETS
Cash and cash equivalents                  $   45.8            $    49.4
Accounts receivable, net                   350.3               270.0
Inventories, net                           281.2               219.4
Deferred income taxes, net                 41.0                35.1
Prepaid expenses and other assets          27.7               28.8
Total current assets                       746.0               602.7
                                                               
Property, plant and equipment, net         349.5               254.6
Goodwill and acquired intangible assets,   1,255.9             899.2
net
Other assets, net                          56.3               69.6
Total assets                               $   2,407.7        $    1,826.1
                                                               
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable                           $   148.6           $    102.0
Accrued liabilities                        257.8               230.8
Current portion of long-term debt and      2.0                1.4
capital leases
Total current liabilities                  408.4               334.2
                                                               
Long-term debt and capital lease           556.2               311.4
obligations
Other long-term liabilities                237.6              196.4
Total liabilities                          1,202.2             842.0
Total stockholders’ equity                 1,205.5            984.1
                                                               
Total liabilities and stockholders’        $   2,407.7        $    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.