Teledyne Technologies Reports First Quarter Results

 

LOS ANGELES – April 24, 2002 – Teledyne Technologies Incorporated (NYSE:TDY)

 

·         Revenues of $183.3 million

·         Earnings per share of $0.16

·         Cash flow from operations of $8.5 million

 

Teledyne Technologies Incorporated (NYSE:TDY) today reported first quarter 2002 sales of $183.3 million, compared with sales of $189.7 million for the same period in 2001.  Net income for the first quarter of 2002 was $5.1 million ($0.16 per diluted share), compared with net income of $4.8 million ($0.15 per diluted share) in the first quarter of 2001.

 

“The benefits of the multiple cost reduction efforts undertaken in 2001 are clearly reflected in the improved financial performance of our company,” said Robert Mehrabian, chairman, president and chief executive officer.  “Excluding non-cash pension income, pre-tax income in the first quarter of 2002 increased 44% compared with the first quarter of 2001.  Furthermore, management of working capital helped the company achieve positive cash flow from operations of $8.5 million in the first quarter of 2002, compared with a cash usage of $25.9 million in the first quarter of 2001.  Given the weak commercial economic environment, we are especially pleased with the performance of our Electronics and Communications segment.  Excluding non-cash pension income, operating margin in this segment was at the highest level since the second quarter of 2000.  We continue to believe that the company is better positioned to achieve sustainable earnings growth when the commercial markets that we serve rebound.”

 

 

Review of Operations

 

Electronics and Communications

The Electronics and Communications segment’s first quarter 2002 sales were $90.5 million, compared with first quarter 2001 sales of $91.8 million.  First quarter 2002 operating profit was $8.3 million, compared with operating profit of $6.2 million in the first quarter of 2001. 

 

First quarter 2002 sales, compared with the same period of 2001, reflected revenue growth in electronic instruments, defense electronic products and military and medical microelectronics.  The revenue growth in electronic instruments was partially driven by the acquisition of Advanced Pollution Instrumentation in the fourth quarter of 2001.  First quarter 2002 sales and operating profit, compared with the same period of 2001, were negatively impacted by reduced sales of relays used in semiconductor test equipment and communications applications and a decrease in electronic manufacturing services, as well as weakness in the commercial aviation market.  The significant improvement in operating profit, despite a $1.2 million reduction in non-cash pension income, reflected reduced workforce and decreased administrative expenses, as well as lower expenses in the company’s broadband growth initiatives.

 

 

Systems Engineering Solutions

The Systems Engineering Solutions segment’s first quarter 2002 sales were $46.9 million, compared with first quarter 2001 sales of $55.2 million.  First quarter 2002 operating profit was $3.8 million, compared with operating profit of $4.2 million in the first quarter of 2001.

 

First quarter 2002 sales, compared with the same period of 2001, reflected flat revenue in core aerospace and defense programs and were negatively impacted by reduced work for environmental programs, primarily chemical weapons demilitarization.  Operating profit reflected the mix and timing of certain government programs and was negatively impacted by a $0.2 million reduction in non-cash pension income.

 

 

Aerospace Engines and Components

The Aerospace Engines and Components segment’s first quarter 2002 sales were $41.9 million, compared with first quarter 2001 sales of $38.8 million.  First quarter 2002 operating profit was $0.7 million, compared with operating profit of $0.9 million in the first quarter of 2001.

 

First quarter 2002 sales, compared with the same period of 2001, reflected revenue growth in OEM piston engines and aftermarket products.  Operating profit in the piston engine business increased due to higher revenues but was partially offset by higher aircraft liability reserves and crankshaft litigation costs of $1.8 million.  Sales in the turbine engine business were negatively impacted by reduced development phase work and no shipments of HARPOON cruise missile engines, partially offset by higher revenues of spare parts for Air Force training aircraft.  In addition, operating profit was negatively impacted by a $0.3 million reduction in non-cash pension income.

 

 

Energy Systems

The Energy Systems segment’s first quarter 2002 sales were $4.0 million, compared with first quarter 2001 sales of $3.9 million.  The first quarter 2002 operating loss was $0.3 million, compared with operating income of $0.2 million in the first quarter of 2001. 

 

First quarter 2002 sales were consistent with the same period of 2001.  First quarter 2002 operating profit reflected additional research and development expenditures for fuel cell programs.  In addition, operating profit was lower due to a $0.1 million reduction in non-cash pension income.

 


Additional Financial Information

 

First quarter 2002 earnings before interest, taxes, depreciation and amortization (EBITDA) were $13.9 million, compared with EBITDA of $13.6 million for the same period of 2001.  Non-cash pension income for the first quarter of 2002 was $0.6 million, compared with non-cash pension income of $2.4 million for the same period of 2001.  Depreciation and amortization expense for the first quarter of 2002 was $5.1 million, compared to $5.4 million for the same period of 2001.  First quarter and full year 2001 depreciation and amortization included goodwill amortization of $0.2 million and $0.6 million, respectively.  In accordance with SFAS 142, goodwill is no longer subject to amortization in 2002.  First quarter 2002 cash from operating activities was $8.5 million, compared with a cash usage of $25.9 million for the same period in 2001.  Free cash flow (cash from operating activities less capital expenditures) was $5.0 million for the first quarter of 2002, compared with a cash usage $35.3 million for the same period of 2001.  Capital expenditures for the first quarter of 2002 were $3.5 million, compared with $9.4 million for the first quarter of 2001.  The first quarter of 2001 included $5.3 million of capital expenditures that were committed in 2000.

 

 

Outlook

 

Teledyne maintains a balanced portfolio of approximately 45% government and 55% commercial businesses.  In its government and defense businesses as a whole, the company expects modest revenue growth in 2002, primarily driven by demand for defense electronics products.  Given the current state of the commercial aviation market, Teledyne expects sales of avionics equipment to decline in 2002; however, the company expects revenue growth in its commercial instrumentation businesses to offset the sales decline in avionics.

 

Orders and sales for several of the company’s short cycle electronics product lines, which include relays sold to the semiconductor and communications markets, increased slightly compared to the fourth quarter of 2001.  Teledyne currently expects orders and revenues in these businesses to be flat in the second quarter of 2002, relative to first quarter 2002.  However, the company anticipates that orders and revenues will improve slightly in the second half of 2002.

 

A weak economic environment and temporary restrictions on general aviation airspace significantly impacted the 2001 performance of the company’s Continental Motors aircraft piston engine business.  However, orders and sales of aftermarket aviation products increased in the first quarter of 2002 relative to the first and fourth quarters of 2001.  Nonetheless, given the current state of the economy, rising fuel costs, and the company’s dependence on aftermarket aviation sales, the company expects 2002 sales for the Aerospace Engines and Components segment to be flat relative to 2001.  In addition, as Teledyne continues to pursue the crankshaft litigation against its suppliers, with a trial expected in the second quarter, the company expects to incur additional legal expenses in 2002.  Given the more stable market outlook in its Aerospace Engines and Components segment, the company is exploring strategic alternatives for the product lines in this segment.

 

Full year 2001 earnings included $9.5 million or $0.18 per share in non-cash pension income.  The company currently expects approximately $2.3 million or $0.04 per share of non-cash pension income in 2002.  The reduction in non-cash pension income reflected the completion of income associated with FAS 87 transition asset amortization as well as the decline in the value of the company’s pension assets during 2000 and 2001.  The company continues to anticipate approximately $10 million of additional cost savings in 2002 relative to 2001, which should offset the reduction in non-cash pension income.

 

Based on its current outlook, the company estimates that second quarter and full year 2002 earnings per share will be in the range of approximately $0.15 to $0.18 and $0.66 to $0.78, respectively, including approximately $0.04 per share of non-cash pension income for the full year 2002.  Full year 2001 earnings per share from continuing operations of $0.69 (excluding asset impairment, restructuring and other charges) would have been $0.51 per share, excluding $0.18 per share in non-cash pension income.

 

 

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, cost-savings, growth opportunities, capital expenditures and strategic plans.  Actual results could differ materially from these forward-looking statements.  Many factors, including changes in demand for products sold to the semiconductor and communications markets, timely development of acceptable and competitive fuel cell products and systems, funding, continuation and award of government programs, the outcome of the crankshaft litigation, and economic and political conditions, could change the anticipated results. 

 

The September 11 terrorist attacks and subsequent events increase uncertainties associated with forward-looking statements about the company’s business.  For example, flight restrictions negatively impact the market for general aviation aircraft piston engine and components.  In addition, reduced shipments of commercial aviation aircraft, as well as the liquidity of major airlines, could negatively affect the company’s Electronics and Communications segment. 

 

While Teledyne Technologies’ growth strategy includes possible acquisitions, the company 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, the company’s ability to integrate acquired businesses and to achieve identified financial and operating synergies.  Also, the company may not be able to sell or exit timely or on acceptable terms its remaining non-core or under-performing product lines, particularly given the current economic environment.

 

Additional information concerning factors that could cause actual results to differ materially from those projected in the forward-looking statements is contained in Teledyne Technologies’ periodic filings with the Securities and Exchange Commission, including its 2001 Annual Report on Form 10-K.

 

Teledyne Technologies is a leading provider of sophisticated electronic components, instruments and communication products, systems engineering solutions, aerospace engines and components and on-site gas and power generation systems.  Teledyne Technologies has operations in the United States, the United Kingdom and Mexico.  For more information, visit Teledyne Technologies’ website at www.teledyne.com.


 

 

A live webcast of Teledyne Technologies’ first quarter earnings conference call will be held at 10:00 a.m. (Eastern) on Wednesday, April 24.  To access the call, go to www.companyboardroom.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 1:00 p.m. (Eastern) on Wednesday, April 24.

 

 

Investor Contact:

 

 

Media Contact:

Jason VanWees
(310) 893-1642

Robyn Choi

(310) 893-1640

 

###


TELEDYNE TECHNOLOGIES INCORPORATED

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE QUARTERLY PERIODS ENDED MARCH 31, 2002 AND APRIL 1, 2001

(Unaudited - In millions, except per share amounts)

 

 

 

 

 

 

 

 

First

 

 

First

 

 

 

 

Quarter

 

 

Quarter

 

 

 

 

2002

 

 

2001

 

       

 

 

 

 

 

 

 

Net sales

 

$

183.3

 

$

189.7

 

Costs and expenses:

 

 

 

 

 

 

 

     Costs of sales

 

 

139.0

 

 

146.3

 

     Selling, general and administrative expenses

 

 

35.7

 

 

35.3

 

Income before other income and expense and taxes

 

 

8.6

 

 

8.1

 

     Other income

 

 

0.2

 

 

0.1

 

     Interest expense, net

 

 

0.3

 

 

0.3

 

Income before taxes

 

 

8.5

 

 

7.9

 

     Provision for taxes

 

 

3.4

 

 

3.1

 

Net Income

 

$

5.1

 

$

4.8

 

 

 

 

 

 

 

 

 

Diluted earnings per common share

 

$

0.16

 

$

0.15

 

Weighted average diluted common shares outstanding

 

 

32.5

 

 

32.5

 

EBITDA

 

$

13.9

 

$

13.6

 

 

 

TELEDYNE TECHNOLOGIES INCORPORATED

SUMMARY OF SEGMENT NET SALES AND OPERATING PROFIT

FOR THE QUARTERLY PERIODS ENDED MARCH 31, 2002 AND APRIL 1, 2001

(Unaudited - In millions)

 

 

 

 

 

 

 

 

 

First

 

 

First

 

 

 

 

 

Quarter

 

 

Quarter

 

 

 

 

 

2002

 

 

2001(a)

 

 

       

 

 

 

 

 

 

 

 

        NET SALES:

 

 

 

 

 

 

 

 

        Electronics and Communications

 

$

90.5

 

$

91.8

 

 

        Systems Engineering Solutions

 

 

46.9

 

 

55.2

 

 

        Aerospace Engines and Components

 

 

41.9

 

 

38.8

 

 

        Energy Systems

 

 

4.0

 

 

3.9

 

 

 

            Total net sales

 

$

183.3

 

$

189.7

 

       

 

 

 

 

 

 

 

 

        OPERATING PROFIT(LOSS):

 

 

 

 

 

 

 

 

        Electronics and Communications

 

$

8.3

 

$

6.2

 

 

        Systems Engineering Solutions

 

 

3.8

 

 

4.2

 

 

        Aerospace Engines and Components

 

 

0.7

 

 

0.9

 

 

        Energy Systems

 

 

(0.3

)

 

0.2

 

 

           Total operating profit

 

$

12.5

 

$

11.5

 

 

(a)         Previously reported 2001 results were restated to reflect a realignment of the company’s business units, which included a change in the business units reporting structure.

 


 

TELEDYNE TECHNOLOGIES INCORPORATED

BALANCE SHEET AS OF

MARCH 31, 2002 AND DECEMBER 30, 2001

(Current period unaudited - In millions of dollars)

 

 

 

 

 

 

 

 

 

 

 

 

  March 31,

December 30,

 

 

 

 

2002

 

 

2001

 

 

 

 

 

 

 

 

        ASSETS

 

 

 

 

 

 

 

 

        Cash and cash equivalents

 

$

7.0

 

$

11.9

 

 

        Accounts receivable, net

 

 

120.1

 

 

108.7

 

 

        Inventories, net

 

 

55.0

 

 

56.1

 

 

        Deferred income taxes, net

 

 

15.4

 

 

18.4

 

 

        Prepaid income taxes, expenses and other assets

 

 

14.7

 

 

14.2

 

 

             Total Current Assets

 

 

212.2

 

 

209.3

 

 

 

 

 

 

 

 

 

 

 

        Property, plant and equipment, net

 

 

79.1

 

 

80.2

 

 

        Deferred income taxes, net

 

 

7.5

 

 

7.9

 

 

        Goodwill, net

 

 

26.2

 

 

26.2

 

 

        Other assets, net

 

 

26.2

 

 

25.7

 

 

             Total Assets

 

$

351.2

 

$

349.3

 

 

 

 

 

 

 

 

 

 

 

        LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

        Accounts payable

 

$

42.4

 

$

36.9

 

 

        Accrued liabilities

 

 

58.7

 

 

57.1

 

 

             Total Current Liabilities

 

 

101.1

 

 

94.0

 

 

 

 

 

 

 

 

 

 

 

        Long-term debt

 

 

19.5

 

 

30.0

 

 

        Other long-term liabilities

 

 

51.8

 

 

52.3

 

 

             Total Liabilities

 

 

172.4

 

 

176.3

 

 

 

 

 

 

 

 

             Total Stockholders’ Equity

 

 

178.8

 

 

173.0

 

 

 

 

 

 

 

 

              Total Liabilities and Stockholders’ Equity

 

$

351.2

 

$

349.3