Teledyne Technologies Reports Strong Earnings Following Spin-Off

LOS ANGELES - Jan. 27, 2000 - Teledyne Technologies Incorporated (NYSE: TDY) today reported 1999 fourth quarter sales of $200.4 million, compared with sales of $191.7 million for the same period in 1998. Pro forma net income was $11.7 million ($.44 per diluted share) for the fourth quarter of 1999, compared with pro forma net income of $8.7 million ($.31 per diluted share) for the fourth quarter of 1998. Sales were $803.4 million in 1999, compared with 1998 sales of $780.4 million. Pro forma net income was $40.9 million ($1.50 per diluted share) for 1999, compared with pro forma net income of $39.8 million ($1.41 diluted per share) for 1998.

Teledyne Technologies was spun off from Allegheny Teledyne Incorporated effective November 29, 1999. Pro forma adjustments reflect the estimated expense impacts (primarily interest expense and corporate expenses) that would have been incurred had Teledyne Technologies been operated as a separate company and as currently capitalized for each period presented. Net income, before pro forma adjustments, was $13.1 million ($.49 per diluted share) for the fourth quarter of 1999, compared with net income, before pro forma adjustments, of $10.9 million ($.39 per diluted share) for the fourth quarter of 1998. Net income, before pro forma adjustments, was $49.0 million ($1.79 per diluted share), compared with net income, before pro forma adjustments, of $48.7 million ($1.73 per diluted share).

Dr. Robert Mehrabian, President and Chief Executive Officer, said, "The fourth quarter of 1999 marked our emergence as an independent, publicly traded company. We have recruited a strong management team and our focus is on our new enterprise. I am energized and excited by the opportunity to expand and capitalize on our strong operating and customer base.

"Our 1999 performance showed good growth in sales and profitability in our Aerospace Engines and Component segment, but relatively flat performance in the other two segments: Electronics and Communications, and Systems Engineering Solutions. Overall results in these segments reflected operational and business improvements in several areas, offset by negative industry conditions affecting the marine products sector and weak economic conditions in certain Asian markets during the first half of 1999."

Electronics and Communications
The Electronics and Communications segment fourth quarter sales were $82.0 million in 1999, up 2.2 percent from 1998 fourth quarter sales of $80.2 million. Fourth quarter operating profit rose 18.9 percent to $11.3 million from $9.5 million in the fourth quarter of 1998. For 1999, sales were $340.7 million, essentially unchanged from 1998 sales of $342.1 million. Operating income for 1999 was $42.6 million, even with 1998.

Improved revenue growth and operating profit margins in the second half of 1999 allowed the segment to recover from a weak first half. For the year, sales grew significantly for business and commuter aircraft communication equipment and for medical electronics, while sales of military microelectronic products declined. Profit was further enhanced by operational improvements in various units and the licensing of certain intellectual property.

Systems Engineering Solutions
The Systems Engineering Solutions segment fourth quarter 1999 sales were $60.0 million, up 4.0 percent from 1998 fourth quarter sales of $57.7 million. Operating profit for the fourth quarter improved 9.5 percent to $6.9 million from $6.3 million in the same period last year. For 1999, sales were $226.5 million, up 1.5 percent from 1998 sales of $223.2 million. For the year, 1999 operating income was $20.2 million, down from $20.5 million for 1998.

Fourth quarter and full year sales reflected strong growth in defense systems, space programs, energy systems and environmental solutions. In addition, fourth quarter and full year operating profit was further enhanced by margin improvements in both the energy systems and environmental solutions businesses. However, gains in the majority of our Systems Engineering Solutions businesses were offset by significantly reduced sales of marine instrumentation products sold to the petroleum exploration market.

Aerospace Engines and Components
The Aerospace Engines and Components segment's 1999 fourth quarter sales were $58.4 million, up 8.6 percent from $53.8 million in 1998's fourth quarter. Operating profit improved by 50.0 percent to $6.0 million from $4.0 million in the fourth quarter of 1998. For the year, sales of $236.2 million represented an increase of 9.8 percent from 1998 sales of $215.1 million. For the year, 1999 operating profit rose 6.5 percent to $27.8 million compared with $26.1 million for 1998.

The company's turbine engines business recorded strong sales and profit growth for the year, compared with 1998. While sales grew moderately in the piston engine business, profitability was negatively impacted by a $3.0 million charge taken in the second quarter for a product recall. Sales and operating profit in our Cast Parts business declined from the prior year due to production inefficiencies, difficult market conditions and a shift in product mix.

Additional Financial Information
The financial information before pro forma adjustments includes a corporate allocation from Teledyne Technologies' former parent company for the first 11 months of 1999 and all of 1998. The last month of 1999 includes actual corporate expenses and interest on long-term debt incurred at the time of the spin-off.

Pro forma earnings before interest, taxes, depreciation and amortization (EBITDA) for 1999 was $88.4 million, compared with $86.8 million for 1998. Net pension income for 1999 was $6.6 million, compared with net pension income of $1.7 million for 1998. Capital expenditures for 1999 increased approximately $10 million from 1998, primarily as a result of increased spending in the Aerospace Engines and Components segment.

This press release contains forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995, relating to growth opportunities and strategic plans. Actual results could differ materially from these forward-looking statements. Many factors, including the extent and timing of the required public offering, market, economic and political conditions, and implementation difficulties, could change the anticipated results. 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 Form 10 Registration Statement, as amended.

Teledyne Technologies is a leading provider of sophisticated electronics and communication products, systems engineering solutions and aerospace engines and components. Through Teledyne Electronic Technologies, Teledyne Brown Engineering, Teledyne Continental Motors and Teledyne Cast Parts, the company is a leader in innovation and in the delivery of products to public and private-sector customers who place a premium on precision, reliability and performance.

Teledyne Technologies employs approximately 5,800 persons in the United States, the United Kingdom and Mexico. For more information, visit Teledyne Technologies' website at http://www.teledyne.com.

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TELEDYNE TECHNOLOGIES INCORPORATED

PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS AND YEARS ENDED JANUARY 2, 2000 AND JANUARY 3, 1999

(Amounts in millions, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

Fourth

 

 

Fourth

 

 

Total

 

 

Total

 

 

 

 

Quarter

 

 

Quarter

 

 

Year

 

 

Year

 

 

 

 

1999

 

 

1998

 

 

1999

 

 

1998

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

200.4

 

$

191.7

 

$

803.4

 

$

780.4

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs of sales

 

 

145.5

 

 

139.8

 

 

587.7

 

 

572.1

 

Selling, general and administrative expenses

 

 

34.4

 

 

35.8

 

 

140.2

 

 

134.1

 

Income before other income and expense and taxes

 

 

20.5

 

 

16.1

 

 

75.5

 

 

74.2

 

Other income

 

 

.2

 

 

.7

 

 

1.0

 

 

1.6

 

Interest expense

 

 

2.1

 

 

2.0

 

 

8.1

 

 

8.0

 

Income before taxes

 

 

18.6

 

 

14.8

 

 

68.4

 

 

67.8

 

Provision for taxes

 

 

6.9

 

 

6.1

 

 

27.5

 

 

28.0

 

Net income

 

$

11.7

 

$

8.7

 

$

40.9

 

$

39.8

 

Diluted earnings per common share

 

$

.44

 

$

.31

 

$

1.50

 

$

1.41

 

Weighted average common shares outstanding

 

 

26.8

 

 

28.1

 

 

27.3

 

 

28.1

 

The pro forma financial information has been presented for informational purposes only and may not reflect the results of operations or financial position of Teledyne Technologies that would have occurred had Teledyne Technologies operated as a separate, independent company for the periods presented. The pro forma financial information should not be relied upon as being indicative of future results. Pro forma adjustments reflect the estimated expense impacts (primarily interest expense and corporate expenses) that would have been incurred had Teledyne Technologies been operated as a separate company as of the beginning of each year and as currently capitalized for each period presented. As part of the spin-off, Teledyne Technologies incurred $100 million in long-term debt and Allegheny Teledyne (its former parent) retained the proceeds. Pro forma income includes pro forma interest expense on the long-term debt as if it was outstanding for all periods presented. Pro forma income adjusts corporate expenses to an annual level of $15 million from the amount previously allocated which was lower.

 

TELEDYNE TECHNOLOGIES INCORPORATED

HISTORICAL CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS AND YEARS ENDED JANUARY 2, 2000 AND JANUARY 3, 1999

(Amounts in millions, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

Fourth

 

 

Fourth

 

 

Total

 

 

Total

 

 

 

 

Quarter

 

 

Quarter

 

 

Year

 

 

Year

 

 

 

 

1999

 

 

1998

 

 

1999

 

 

1998

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

200.4

 

$

191.7

 

$

803.4

 

$

780.4

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs of sales

 

 

145.6

 

 

139.8

 

 

587.7

 

 

572.1

 

Selling, general and administrative expenses

 

 

33.4

 

 

34.0

 

 

133.9

 

 

126.9

 

Income before other income and expense and taxes

 

 

21.4

 

 

17.9

 

 

81.8

 

 

81.4

 

Other income

 

 

.3

 

 

.7

 

 

1.0

 

 

1.6

 

Interest expense

 

 

.8

 

 

 

 

.8

 

 

 

Income before taxes

 

 

20.9

 

 

18.6

 

 

82.0

 

 

83.0

 

Provision for taxes

 

 

7.8

 

 

7.7

 

 

33.0

 

 

34.3

 

Net income

 

$

13.1

 

$

10.9

 

$

49.0

 

$

48.7

 

Diluted earnings per common share

 

$

.49

 

$

.39

 

$

1.79

 

$

1.73

 

Weighted average common shares outstanding

 

 

26.8

 

 

28.1

 

 

27.3

 

 

28.1

 


 

TELEDYNE TECHNOLOGIES INCORPORATED

SUMMARY OF SEGMENT NET SALES AND OPERATING PROFIT

FOR THE THREE MONTHS AND YEARS ENDED JANUARY 2, 2000 AND JANUARY 3, 1999

(Amounts in millions)

 

 

 

 

 

 

 

 

 

 

 

Fourth

 

 

Fourth

 

 

Total

 

 

Total

 

 

 

 

Quarter

 

 

Quarter

 

 

Year

 

 

Year

 

 

 

 

1999

 

 

1998

 

 

1999

 

 

1998

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET SALES:

 

 

 

 

 

 

 

 

 

 

 

 

 

Electronics and Communications

 

$

82.0

 

$

80.2

 

$

340.7

 

$

342.1

 

Systems Engineering Solutions

 

 

60.0

 

 

57.7

 

 

226.5

 

 

223.2

 

Aerospace Engines and Components

 

 

58.4

 

 

53.8

 

 

236.2

 

 

215.1

 

Total net sales

 

$

200.4

 

$

191.7

 

$

803.4

 

$

780.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING PROFIT:

 

 

 

 

 

 

 

 

 

 

 

 

 

Electronics and Communications

 

$

11.3

 

$

9.5

 

$

42.6

 

$

42.6

 

Systems Engineering Solutions

 

 

6.9

 

 

6.3

 

 

20.2

 

 

20.5

 

Aerospace Engines and Components

 

 

6.0

 

 

4.0

 

 

27.8

 

 

26.1

 

Total operating profit

 

$

24.2

 

$

19.8

 

$

90.6

 

$

89.2