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NewsRelease                                  

 


TELEDYNE TECHNOLOGIES REPORTS
SECOND QUARTER RESULTS

 

 

LOS ANGELES – July 26, 2001 – Teledyne Technologies Incorporated (NYSE:TDY) today reported second quarter sales of $184.0 million, compared with sales of $202.3 million for the same period in 2000.  The second quarter net loss of $10.4 million ($0.33 per diluted share), compares to net income of $3.1 million ($0.11 per diluted share) for the same period in 2000.  The loss includes pretax charges related to the following actions:

 

·         Inventory write downs ($5.3 million; $0.10 per share)

·         Formation of Teledyne Energy Systems, Inc. ($0.9 million; $0.02 per share)

 

Net income was $5.5 million ($0.17 per diluted share) for the second quarter 2001, excluding total pretax charges of $26.4 million ($0.50 per diluted share).  The second quarter of 2000 included a pretax charge of $12 million for a piston-engine product recall reserve.  Net income, before product recall reserves was $10.3 million ($0.37 per diluted share) for the second quarter of 2000.

 

“Our second quarter actions reflect Teledyne’s commitment to increase shareholder value,” said Robert Mehrabian, chairman, president and chief executive officer.  “We continue our strategy of exiting non-core or under-performing product lines while capitalizing on our core strengths.  Despite the challenges we are facing this year, our aggressive actions combined with the realignment of our business portfolio significantly reduced Teledyne’s cost structure and will improve earnings growth for the future.

 

“To further pursue opportunities in fuel cell products and systems, the company recently formed Teledyne Energy Systems, Inc.  This transaction is a key step in our effort to take advantage of current market valuations in the energy technologies sector.  Having accelerated our cost-reduction and portfolio management efforts within our electronics businesses, we are now actively pursuing acquisitions with strong brands within these core niche markets.  In our Aerospace Engines and Components segment, our investments over the past 18 months have significantly improved operating performance despite weak market conditions.  In addition, we are exploring strategic alternatives for the product lines in this segment.”

 

Teledyne’s second quarter pretax charge includes plans to exit within 12 months the following non-core product lines from its Electronics and Communications segment:  lighting and display products; industrial solid state relays; and certain microwave switches and filters.  The company’s process control software and sodium iodide crystals product lines within its Systems Engineering Solutions segment were sold in the second quarter of 2001.  Teledyne also plans to exit certain environmental programs within this same segment. 

 

Teledyne recorded pretax charges totaling $26.4 million in the second quarter of 2001.  Charges include the following:

 

·         $8.7 million of restructuring charges, of which $6.1 million is for employee termination benefits.  The company plans to reduce its total workforce by 14% by year-end.  Teledyne reduced headcount by 207 in the second quarter, bringing reductions since January 1, 2001, to 507 employees or 9% of its total workforce.  The company expects an additional workforce reduction in the second half of the fiscal year of 290 employees from its Electronics and Communications segment.  The company’s plan for consolidation and downsizing of manufacturing operations includes actions in Electronics and Communications segment domestic locations as well as in a United Kingdom facility.  The remainder of the restructuring charge is for:  consolidation expenses of $1.2 million; non-cancelable lease expenses of $0.5 million; and $0.9 million of transaction costs for the formation of Teledyne Energy Systems, Inc. 

 

·         $7.4 million of charges for equipment, net of expected sale proceeds, and goodwill related to product lines to be discontinued and the loss on the sale of non-core product lines.

 

·         $10.0 million of charges included in cost of sales for the write off of inventory from discontinued product lines ($4.7 million) and the write down of excess inventory ($5.3 million) resulting from reduced customer demand.

 

·         $0.3 million of charges included in discontinued operations.

 

The $26.4 million pretax charge includes $10.8 million of cash costs, of which $2.5 million has been incurred in the second quarter of 2001.  The company expects annualized savings associated with these actions of approximately $25 million.

 

 

Review of Operations

 

Electronics and Communications

The Electronics and Communications segment’s second quarter sales were $87.1 million, compared to 2000 second quarter sales of $91.4 million.  Second quarter 2001 operating loss was $12.2 million, including pretax charges of $15.9 million, compared to operating income of $10.9 million in the second quarter of 2000. 

 

Second quarter 2001 sales, compared to the same period in 2000, had growth in military microwave products, microelectronic products (including optoelectronics), and business and commuter aircraft communication equipment.  Orders for business and commuter aircraft communications equipment and military microwave products remain strong.  This growth was more than offset by continued weakness in demand for relays used in semiconductor test equipment and communications applications, electronic manufacturing services and other commercial electronic products.  Operating profit reflects the impact of sales differences.  The second quarter of 2001 includes $5.0 million of costs associated with optoelectronics and wireless growth initiatives, compared to $1.7 million in the second quarter of 2000.  The pretax charges of $15.9 million are related to the following actions:  $7.1 million of restructuring costs; $3.7 million of asset impairment charges; and $5.1 million to write off inventory for products to be discontinued and excess inventory.

 

 

Systems Engineering Solutions

The Systems Engineering Solutions segment’s second quarter 2001 sales were $58.5 million, compared to 2000 second quarter sales of $61.0 million.  Second quarter operating loss was $6.0 million, including pretax charges of $9.7 million, compared to operating income of $4.8 million in the second quarter of 2000.

 

The second quarter sales, compared to the same period in 2000, reflected growth in core defense and aerospace programs, offset by reduced work for environmental programs.  Operating profit reflects these sales differences.  The pretax charges of $9.7 million are related to the following actions:  $1.1 million of restructuring costs; asset impairment charges of $3.7 million; and $4.9 million to write off inventory for discontinued products and excess inventory.

 

 

Aerospace Engines and Components

The Aerospace Engines and Components segment’s second quarter 2001 sales were $38.4 million, compared to 2000 second quarter sales of $49.9 million.  Second quarter operating profit was $3.7 million, including a pretax restructuring charge of $0.3 million, compared to a loss of $5.6 million in the second quarter of 2000.  The second quarter of 2000 included a $12.0 million pretax charge for the piston engine product recall reserve.

 

The second quarter 2001 sales, compared with the same period in 2000, reflected reduced orders for piston engine products due to the weakness of the economy.  Turbine engine sales were lower than the same period in 2000 due to reduced spare part sales, since these parts were no longer on the military critical shortage list; reduced foreign demand for HARPOON missiles; and reduced development work.  Operating profit reflects the lower level of sales partially offset by cost reductions implemented in the first quarter of 2001.

 

 

Additional Financial Information

 

Prior to restructuring, asset impairments, and other charges, second quarter 2001 earnings before interest, taxes, depreciation and amortization (EBITDA) from continuing operations was $15.1 million, compared to EBITDA from continuing operations, prior to product recall reserves, of $22.1 million for the same period of 2000.  Net pension income for the second quarter of 2001 was $2.5 million, compared to net pension income of $2.2 million for the same period of 2000.  Capital expenditures for the first six months of 2001 were $17.3 million (including $7.4 million committed in 2000), compared to $9.3 million for the first six months of 2000. 

 

 

Outlook

 

The company expects modest revenue growth in the majority of its government and long-cycle commercial electronics businesses that represent approximately 45% and 20%, respectively, of total revenue.  However, the anticipated divestiture or closure of several non-core product lines will impact future reported revenues for the Electronics and Communications and Systems Engineering Solutions segments.

 

Teledyne continues to see weakness in the semiconductor, telecommunications, and commercial electronic manufacturing services markets affecting its near-term revenue and profit performance in certain short-cycle electronics businesses, which represent approximately 15% of revenue.  Based on a lack of revenue visibility and negative comments by several customers in these markets, the company is forecasting a near-term decline in the demand for its products in several of these short-cycle electronics businesses, such as electronic relays used in semiconductor test equipment and communications applications.

 

Furthermore, reduced demand and order cancellations for optical components continue to affect the near-term outlook for the company’s optoelectronics growth initiative.  Teledyne now expects optoelectronics revenue in 2001 to be approximately $5 million to $10 million, and the company does not expect to achieve break-even operating profit in this product line until 2002.

 

The company currently forecasts flat year-over-year revenue for 2001 for its Electronics and Communications and Systems Engineering Solutions segments. Based on the current level of orders for aircraft piston engines and components, which represent approximately 20% of sales, coupled with the previously announced cyclical trends in the small turbine engine market, Teledyne forecasts a year-over-year revenue decline of 20% to 25% for its Aerospace Engines and Components segment.

 

Based on its current outlook, the company now estimates that third quarter earnings per share and full year 2001 earnings per share, excluding pretax charges, will be in the range of approximately $0.17 to $0.20 and $0.70 to $0.75, respectively.

 

 

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 the extent and timing of acceptance of fiber optic and other products by customers (including service providers), resumption of and increased outsourced manufacturing of optoelectronic products, the extent and timing of additional workforce reductions and facility consolidations, timely development of acceptable and competitive fuel cell products and systems, funding and continuation of government programs and economic and political conditions, could change the anticipated results.  Also, the company may not be able to sell or exit timely or on acceptable terms non-core or under-performing product lines. 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 2000 Annual Report on Form 10-K and its Forms 10-Q.

 

Teledyne Technologies is a leading provider of sophisticated electronics and communication products, systems engineering solutions and aerospace engines and components.  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’ second quarter earnings conference call will be held at 5:00 p.m. (Eastern) on Thursday, July 26.  To access the call, go to www.streetfusion.com or www.teledyne.com approximately five minutes before the scheduled start time.  A replay will also be available at these same sites from Thursday, July 26, 6:00 p.m. (Eastern).

 

 

Investor Contact:

 

 

Media Contact:

Jason VanWees
(310) 551-4342

Robyn Choi

(310) 551-4340

 

###
TELEDYNE TECHNOLOGIES INCORPORATED

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE AND SIX MONTHS ENDED JULY 1, 2001

AND FOR THE THREE AND SIX MONTHS ENDED JULY 2, 2000

(Unaudited - In millions, except per share amounts)

 

 

 

Second

 

 

Second

 

 

Six

 

 

Six

 

 

 

Quarter

 

 

Quarter

 

 

Months

 

 

Months

 

 

 

2001(a)

 

 

2000(b)

 

 

2001(a)

 

 

2000(b)

 

 

 

 

 

 

 

 

 

 

        Net sales

 

$

184.0

 

$

202.3

 

$

373.7

 

$

397.7

        Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

             Costs of sales

 

 

147.9

 

 

146.9

 

 

294.2

 

 

287.4

             Selling, general and administrative expenses

 

 

37.9

 

 

49.3

 

 

73.2

 

 

85.4

             Asset impairment charge

 

 

7.4

 

 

—

 

 

7.4

 

 

—

             Restructuring and other charges

 

 

8.7

 

 

—

 

 

8.7

 

 

—

        Income before other income and expense and taxes

 

 

(17.9

)

 

6.1

 

 

(9.8

)

 

24.9

             Other income

 

 

1.8

 

 

0.3

 

 

1.9

 

 

0.4

             Interest expense, net

 

 

0.8

 

 

1.8

 

 

1.1

 

 

3.6

        Income (loss) before taxes

 

 

(16.9

)

 

4.6

 

 

(9.0

)

 

21.7

             Provision (benefit) for taxes

 

 

(6.7

)

 

1.8

 

 

(3.6

)

 

8.6

        Income (loss) from continuing operations

 

 

(10.2

)

 

2.8

 

 

(5.4

)

 

13.1

                Discontinued operations, net

 

 

(0.2

)

 

0.3

 

 

(0.2

)

 

0.2

        Net income (loss)

 

$

(10.4

)

$

3.1

 

$

(5.6

)

$

13.3

Diluted earnings (loss) per common share(c):

 

 

 

 

 

 

 

 

 

 

 

 

        Income (loss) from continuing operations

 

$

(0.32

)

$

0.10

 

$

(0.17

)

$

0.48

        Discontinued operations, net

 

 

(0.01

)

 

0.01

 

 

(0.01

)

 

0.01

Diluted earnings (loss) per common share

 

$

(0.33

)

$

0.11

 

$

(0.18

)

$

0.49

Weighted average basic common shares outstanding

 

 

31.6

 

 

26.9

 

 

31.6

 

 

26.9

Weighted average diluted common shares outstanding

 

 

31.6

 

 

27.6

 

 

31.6

 

 

27.3

 

 

 

 

 

 

 

 

 

 

EBITDA-continuing operations(d)

 

$

15.1

 

$

22.1

 

$

28.7

 

$

45.1

(a)      The second quarter and first six months of 2001 results include pretax charges of $26.4 million for asset impairments and restructuring and other charges, of which, a pretax charge of $0.3 million is included in discontinued operations. 

(b)      The second quarter and first six months of 2000 results include pretax charges of $12 million for product recall reserves.

(c)      For the second quarter and first six months of 2001, fully diluted earnings per share were calculated excluding the effect of employee stock options because the impact was antidilutive as a result of the Company’s loss for the respective periods.

(d)    The second quarter and first six months of 2001 results exclude pretax charges of $26.1 million for asset impairments and restructuring and other charges.  The second quarter and first six months of 2000 results exclude pretax charges of $12 million for product recall reserves.

 

TELEDYNE TECHNOLOGIES INCORPORATED

SUMMARY OF SEGMENT NET SALES AND OPERATING PROFIT

FOR THE THREE AND SIX MONTHS ENDED JULY 1, 2001

AND FOR THE THREE AND SIX MONTHS ENDED JULY 2, 2000

(Unaudited - In millions of dollars)

 

 

 

Second

 

 

Second

 

 

Six

 

 

Six

 

 

 

Quarter

 

 

Quarter

 

 

Months

 

 

Months

 

 

 

2001

 

 

2000

 

 

2001

 

 

2000

 

 

 

 

 

 

 

 

 

 

        Net Sales:

 

 

 

 

 

 

 

 

 

 

 

 

        Electronics and Communications

 

$

87.1

 

$

91.4

 

$

176.2

 

$

177.1

        Systems Engineering Solutions

 

 

58.5

 

 

61.0

 

 

120.3

 

 

118.2

        Aerospace Engines and Components

 

 

38.4

 

 

49.9

 

 

77.2

 

 

102.4

             Total Net Sales

 

$

184.0

 

$

202.3

 

$

373.7

 

$

397.7

       

 

 

 

 

 

 

 

 

 

 

 

 

        Operating Profit:

 

 

 

 

 

 

 

 

 

 

 

 

        Electronics and Communications(a)

 

$

3.7

 

$

10.9

 

$

9.8

 

$

20.4

        Systems Engineering Solutions(b)

 

 

3.7

 

 

4.8

 

 

8.2

 

 

10.4

        Aerospace Engines and Components(c)

 

 

4.0

 

 

6.4

 

 

4.9

 

 

14.0

             Total Operating Profit

 

$

11.4

 

$

22.1

 

$

22.9

 

$

44.8

(a)      The second quarter and first six months of 2001 results exclude pretax charges of $15.9 million for asset impairments and restructuring and other charges.

(b)      The second quarter and first six months of 2001 results exclude pretax charges of $9.7 million for asset impairments and restructuring and other charges. 

(c)      The second quarter and first six months of 2001 results exclude pretax charges of $342 thousand for employee termination costs.  The second quarter and first six months of 2000 results exclude pretax charges of $12 million for product recall reserves.

 

TELEDYNE TECHNOLOGIES INCORPORATED

BALANCE SHEETS AS OF

JULY 1, 2001 AND DECEMBER 31, 2000

(Current period unaudited - In millions of dollars)

 

 

 

 

 

 

 

 

 

 

 

 

     July 1,

December 31,

 

 

 

 

2001

 

 

2000

 

 

 

 

 

 

 

 

        ASSETS

 

 

 

 

 

 

 

 

        Cash and cash equivalents

 

$

5.2

 

$

14.9

 

 

        Accounts receivable, net

 

 

112.0

 

 

118.5

 

 

        Inventories, net

 

 

72.1

 

 

65.2

 

 

        Deferred income taxes, net

 

 

23.8

 

 

16.9

 

 

        Prepaid income taxes, expenses and other assets

 

 

17.1

 

 

7.3

 

 

             Total Current Assets

 

 

230.2

 

 

222.8

 

 

 

 

 

 

 

 

 

 

 

        Property, plant and equipment, net

 

 

79.1

 

 

74.0

 

 

        Deferred income taxes, net

 

 

23.9

 

 

27.0

 

 

        Cost in excess of net assets acquired, net

 

 

5.8

 

 

7.6

 

 

        Other assets

 

 

25.2

 

 

19.5

 

 

             Total Assets

 

$

364.2

 

$

350.9

 

 

 

 

 

 

 

 

 

 

 

        LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

        Accounts payable

 

$

47.2

 

$

58.7

 

 

        Accrued liabilities

 

 

61.1

 

 

56.5

 

 

             Total Current Liabilities

 

 

108.3

 

 

115.2

 

 

 

 

 

 

 

 

 

 

 

        Long-term debt

 

 

38.0

 

 

—

 

 

        Other long-term liabilities

 

 

58.9

 

 

72.6

 

 

             Total Liabilities

 

 

205.2

 

 

187.8

 

 

 

 

 

 

 

 

             Total Stockholders’ Equity

 

 

159.0

 

 

163.1

 

 

 

 

 

 

 

 

              Total Liabilities and Stockholders’ Equity

 

$

364.2

 

$

350.9