Exhibit 99
(Logo Omitted)
Teledyne Technologies Incorporated
12333 West Olympic Boulevard
Los Angeles, CA 90064-1021
News Release
NEWSRELEASE
TELEDYNE TECHNOLOGIES REPORTS
THIRD QUARTER RESULTS
LOS ANGELES - October 28, 2004 - Teledyne Technologies Incorporated (NYSE:TDY)
- REVENUES OF $270.0 MILLION INCREASED 25.2% COMPARED TO LAST YEAR
- EARNINGS PER SHARE OF $0.37 INCREASED 23.3% COMPARED TO LAST YEAR
- RAISING 2004 EARNINGS PER SHARE OUTLOOK
- ACQUIRED DEFENSE ELECTRONICS ASSETS OF CELERITEK, INC.
Teledyne Technologies today reported third quarter 2004 sales of $270.0 million,
compared with sales of $215.7 million for the same period in 2003. Net income
for the third quarter of 2004 was $12.5 million ($0.37 per diluted share),
compared with net income of $9.9 million ($0.30 per diluted share) in the third
quarter of 2003. Net income for the third quarter of 2003 was $7.5 million
excluding a $2.4 million income tax benefit that resulted from the reversal of
an income tax contingency reserve. Net income for the third quarter of 2004
included pretax pension expense of $2.2 million, compared with pretax pension
expense of $1.7 million for the same period of 2003.
"This was another outstanding quarter for Teledyne," said Robert Mehrabian,
chairman, president and chief executive officer. "The significant increase in
sales resulted from several complementary acquisitions and double-digit organic
growth. Earnings per share increased over the prior year period for the eleventh
consecutive quarter, driven by strong margins in our Electronics and
Communications and Systems Engineering Solutions business segments, as well as a
payment from Honda Motor Co., Ltd. related to the piston engine business. In
addition, on October 22, we closed the acquisition of the defense electronics
business of Celeritek, Inc. - our fifth acquisition in 2004. During the quarter,
we generated free cash flow of $26.4 million, and given our strong balance sheet
and cash flow, we intend to pursue additional acquisitions in our strategic
businesses."
Third Quarter Earnings Summary
Millions of Dollars Dollars per Diluted Share
-------------------- --------------------------
Third Third Third Third
Quarter Quarter Quarter Quarter Variance
2004 2003 2004 2003 %
-------- -------- -------- -------- --------
Net income (excluding net pension expense and
income tax benefit) $ 13.8 $ 8.5 $ 0.41 $ 0.26 57.7%
Income tax benefit -- 2.4 -- 0.07
Net after-tax pension expense (1.3) (1.0) (0.04) (0.03)
-------- -------- -------- -------- ----
Net income $ 12.5 $ 9.9 $ 0.37 $ 0.30 23.3%
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REVIEW OF OPERATIONS
ELECTRONICS AND COMMUNICATIONS
The Electronics and Communications segment's third quarter 2004 sales were
$155.1 million, compared with third quarter 2003 sales of $115.8 million. Third
quarter 2004 operating profit was $15.5 million, compared with operating profit
of $9.7 million in the third quarter of 2003.
Third quarter 2004 sales, compared with the same period of 2003, reflected
revenue growth in defense electronic products, electronic instruments,
telecommunication subsystems and relay products. This growth was partially
offset by lower sales from electronic manufacturing services, primarily driven
by lower government and medical sales. The revenue growth in defense electronic
products was driven by sales of traveling wave tubes, the acquisition of
Reynolds Industries, Incorporated on July 2, 2004, and the acquisition of assets
of Filtronic Solid State on December 31, 2003. Electronic instruments revenue
was favorably impacted by the acquisition of Isco, Inc. on June 18, 2004, the
acquisition of Leeman Labs' assets on February 27, 2004, increased demand for
geophysical sensors for the petroleum exploration market and increased sales of
other instrument products. The increase in revenue from acquisitions for the
third quarter of 2004, compared with the same period in 2003, was $32.4 million.
Segment operating profit was favorably impacted by acquisitions and organic
sales growth partially offset by an increase in pension expense. Pension expense
was $1.7 million in the third quarter of 2004 compared with pension expense of
$1.2 million in the third quarter of 2003.
SYSTEMS ENGINEERING SOLUTIONS
The Systems Engineering Solutions segment's third quarter 2004 sales were $65.2
million, compared with third quarter 2003 sales of $53.2 million. Third quarter
2004 operating profit was $7.7 million, compared with operating profit of $6.0
million in the third quarter of 2003.
Third quarter 2004 sales, compared with the same period of 2003, reflected
revenue growth in core defense and environmental programs. The higher operating
profit in the third quarter of 2004, compared with the same period of 2003, was
primarily the result of increased sales and improved margins on various time and
material contracts. Segment operating profit in the third quarter of 2004
included no pension expense compared to $0.1 million of pension expense for the
third quarter of 2003. Operating margin is expected to be lower in the fourth
quarter of 2004, compared with the first nine months of 2004, due to contract
mix and higher bid and proposal expenses.
AEROSPACE ENGINES AND COMPONENTS
The Aerospace Engines and Components segment's third quarter 2004 sales were
$44.3 million, compared with third quarter 2003 sales of $43.0 million. The
third quarter 2004 operating profit and other segment income was $2.9 million,
compared with operating loss of $0.4 million in the third quarter of 2003.
Third quarter 2004 sales, compared with the same period of 2003, reflected
revenue growth in OEM piston engines, aftermarket piston engines and parts
sales, partially offset by lower turbine engine sales. Sales from turbine
engines were lower primarily due to reduced revenue from Harpoon cruise missile
engines. Segment operating profit for the third quarter of 2004, compared with
the operating loss for the third quarter of 2003, reflected favorable revenue
growth and lower expenses. In addition, segment operating profit and other
segment income included the receipt of $2.5 million pursuant to an agreement
with Honda Motor Co., Ltd. related to the piston engine business. While the
terms of the piston engine agreement are confidential, the company anticipates
receiving $5.0 million in 2005 and $2.5 million in 2006 under the agreement.
Hurricane Ivan affected third quarter sales and operating profit in the aircraft
piston engine business, whose
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primary facility is located in Mobile, Alabama. While the Mobile facility
experienced downtime, production inefficiencies, water and roof damage, it
sustained no significant damage. Segment operating profit was unfavorably
impacted by pension expense of $0.4 million in the third quarter of 2004
compared with pension expense of $0.4 million in the third quarter of 2003.
ENERGY SYSTEMS
The Energy Systems segment's third quarter 2004 sales were $5.4 million,
compared with third quarter 2003 sales of $3.7 million. Third quarter 2004
operating profit was $0.4 million, compared with break-even results in the third
quarter of 2003.
The increase in third quarter 2004 sales resulted from multi-year government
contracts which were awarded in 2003 for fuel cell and thermoelectric power
generator work. Operating profit was favorably impacted by the growth in sales
and a reduction in research and development costs. Segment operating profit was
unfavorably impacted by pension expense of $0.1 million in the third quarter of
2004 compared with no pension expense in the third quarter of 2003.
ADDITIONAL FINANCIAL INFORMATION
CASH FLOW
Third quarter 2004 cash provided by operating activities was $30.3 million,
compared with cash provided by operating activities of $26.8 million for the
same period of 2003. The increase in cash provided by operating activities in
2004, compared with 2003, is due to improved net income and lower aircraft
product liability settlement payments. Free cash flow (cash from operating
activities less capital expenditures) was $26.4 million for the third quarter of
2004, compared with free cash flow of $20.7 million for the same period of 2003.
In the third quarter of 2004, Teledyne Technologies completed the acquisition of
Reynolds Industries, Incorporated for total consideration of $45.1 million
(including capital lease obligations assumed and net of cash acquired). Of this
amount, approximately $3.7 million is expected to be paid in the fourth quarter
of 2004. The acquisition was funded using available cash as well as borrowings
under the company's $280.0 million revolving credit facility. At September 26,
2004, total debt including $3.9 million in capital lease obligations was $66.8
million, which includes $60.0 million drawn against the credit facility as well
as debt and capital lease obligations assumed in the acquisition of Isco, Inc.
and Reynolds Industries, Incorporated. On October 22, 2004, Teledyne completed
the acquisition of the defense electronics assets of Celeritek, Inc. for $33.0
million. The acquisition was funded primarily with borrowings under the credit
facility. Cash and cash equivalents were $15.7 million at September 26, 2004.
Capital expenditures for the third quarter of 2004 were $3.9 million, compared
with $6.1 million for the third quarter of 2003. Depreciation and amortization
expense was $7.0 million for the third quarter of 2004 and $5.9 million for the
third quarter of 2003.
Free Cash Flow (a)
Third Third
Quarter Quarter
(in millions, brackets indicate use of funds) 2004 2003
- --------------------------------------------- ------- -------
Cash provided by operating activities $ 30.3 $ 26.8
Capital expenditures (3.9) (6.1)
------- -------
Free cash flow $ 26.4 $ 20.7
======= =======
(a) The company defines free cash flow as cash provided by operating
activities (a measure prescribed by generally accepted accounting
principles) less capital expenditures.
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PENSION
Pension expense for the third quarter of 2004 was $2.2 million, compared with
pension expense of $1.7 million for the same period of 2003.
OTHER
The third quarter of 2003 included an income tax benefit of $2.4 million due to
the reversal of an income tax contingency reserve which was determined to be no
longer needed during the third quarter of 2003. Other income for the third
quarter of 2004 included the receipt of $2.5 million pursuant to an agreement
with Honda Motor Co., Ltd. which is included as part of the Aerospace Engines
and Components segment operating profit and other segment income for segment
reporting purposes.
OUTLOOK
Based on its current outlook, the company's management believes that fourth
quarter 2004 earnings per share will be in the range of approximately $0.27 to
$0.30. The full year 2004 earnings per share outlook is expected to be in the
range of approximately $1.12 to $1.15, an increase from prior guidance of $1.00
to $1.05.
The company's 2004 outlook reflects anticipated revenue growth in the company's
defense electronics and instrumentation businesses, primarily due to the
acquisitions completed during fiscal 2004. The company's outlook also includes
an expected recovery in some of the company's short cycle electronics markets.
Operating margin in the company's Systems Engineering Solutions segment is
expected to be lower in the fourth quarter of 2004, compared with the first nine
months of 2004, due to contract mix and higher bid and proposal expenses.
Full year 2003 earnings included $6.9 million or $0.13 per share in pension
expense. The company currently expects approximately $8.7 million or $0.16 per
share of pension expense in 2004. The increase in pension expense reflects, in
part, a reduction in the discount rate assumption for the company's defined
benefit plan. The company's assumed discount rate is 6.5% in 2004, compared with
7.0% in 2003. As of January 1, 2004, new hires participate in an enhanced
defined contribution plan as opposed to the company's existing defined benefit
plan. Currently, Teledyne Technologies anticipates making an after-tax cash
contribution of approximately $3.0 million to its pension plan in 2004. Also,
under one of its spin-off agreements, after November 29, 2004, the company will
be able to charge pension costs to the U.S. Government under various government
contracts.
EARNINGS PER SHARE SUMMARY
(Diluted earnings per common share)
2004 Full Year Outlook 2003 Results 2002 Results
------------------------- ----------- -----------
Low High Actual Actual
----------- ----------- ------------ ------------
Earnings per share (excluding net pension
income (expense) and income tax $ 1.28 $ 1.31 $ 0.97 $ 0.73
benefit)
Net pension income (expense) (0.16) (0.16) (0.13) 0.04
----------- ----------- ------------ ------------
Earnings per share (excluding income tax
benefit) 1.12 1.15 0.84 0.77
Income tax benefit -- -- 0.07 --
----------- ----------- ------------ ------------
Earnings per share $ 1.12 $ 1.15 $ 0.91 $ 0.77
=========== =========== ============ ============
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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, capital expenditures, pension matters 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,
communications and commercial aviation markets, funding, continuation and award
of government programs, changes in insurance expense, customers' acceptance of
piston engine price increases, continued liquidity of our customers (including
commercial airline customers) and economic and political conditions, could
change the anticipated results. In addition, stock market fluctuations affect
the value of the company's pension assets.
Global responses to terrorism and other perceived threats increase uncertainties
associated with forward-looking statements about our businesses. Various
responses to terrorism and perceived threats could realign government programs,
and affect the composition, funding or timing of our programs. Reinstatement of
flight restrictions would negatively impact the market for general aviation
aircraft piston engines and components.
The company continues to take action to assure compliance with the internal
controls, disclosure controls and other requirements of the Sarbanes-Oxley Act
of 2002. While the company believes its control systems are effective, there are
inherent limitations in all control systems, and misstatements due to error or
fraud may occur and not be detected.
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, including recent acquisitions of the
defense electronics assets of Celeritek, Inc., Reynolds Industries, Incorporated
and Isco, Inc., involve various inherent risks, such as, among others, our
ability to integrate acquired businesses and to achieve identified financial and
operating synergies.
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 2003 Annual Report on Form 10-K and Quarterly
Reports on Form 10-Q. The company assumes no duty to update forward-looking
statements.
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A live webcast of Teledyne Technologies' third quarter earnings conference call
will be held at 11:00 a.m. (Eastern) on Thursday, October 28, 2004. 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 12:00 p.m. (Eastern) on Thursday, October
28, 2004.
Investor Contact: Jason VanWees
(310) 893-1642
Media Contact: Robyn Choi
(310) 893-1640
###
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TELEDYNE TECHNOLOGIES INCORPORATED
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE AND NINE MONTH PERIODS ENDED
SEPTEMBER 26, 2004 AND SEPTEMBER 28, 2003
(Unaudited - In millions, except per share amounts)
Third Third Nine Nine
Quarter Quarter Months Months
2004 2003 2004 2003
------- ------- ------- -------
Net sales $ 270.0 $ 215.7 $ 728.5 $ 618.3
Costs and expenses:
Costs of sales 194.6 163.1 541.2 468.2
Selling, general and administrative expenses 56.9 40.7 142.5 116.4
------- ------- ------- -------
Income before other income (expense) and taxes 18.5 11.9 44.8 33.7
Other income (expense)(a) 2.7 0.5 3.0 (1.3)
Interest expense, net 0.6 0.2 1.0 0.5
------- ------- ------- -------
Income before income taxes 20.6 12.2 46.8 31.9
Provision for income taxes(b) 8.1 2.3 18.5 10.0
------- ------- ------- -------
Net income $ 12.5 $ 9.9 $ 28.3 $ 21.9
======= ======= ======= =======
Diluted earnings per common share $ 0.37 $ 0.30 $ 0.85 $ 0.67
======= ======= ======= =======
Weighted average diluted common shares outstanding 33.6 32.7 33.4 32.6
======= ======= ======= =======
(a) The third quarter and first nine months of 2004 includes the receipt of
$2.5 million pursuant to an agreement with Honda Motor Co., Ltd. related
to the piston engine business.
(b) The third quarter and first nine months of 2003 provision for taxes
includes a $2.4 million income tax benefit from the reversal of an income
tax contingency reserve which was determined to be no longer needed during
the third quarter of 2003.
TELEDYNE TECHNOLOGIES INCORPORATED
SUMMARY OF SEGMENT NET SALES AND OPERATING PROFIT
FOR THE THREE AND NINE MONTH PERIODS ENDED
SEPTEMBER 26, 2004 AND SEPTEMBER 28, 2003
(Unaudited - In millions)
Third Third Nine Nine
Quarter Quarter Months Months
2004 2003 2004 2003
------- ------- ------- -------
Net sales:
Electronics and Communications $ 155.1 $ 115.8 $ 406.1 $ 329.0
Systems Engineering Solutions 65.2 53.2 177.4 160.2
Aerospace Engines and Components 44.3 43.0 128.5 118.5
Energy Systems 5.4 3.7 16.5 10.6
------- ------- ------- -------
Total net sales $ 270.0 $ 215.7 $ 728.5 $ 618.3
======= ======= ======= =======
Operating profit (loss) and other segment income:
Electronics and Communications $ 15.5 $ 9.7 $ 37.7 $ 24.6
Systems Engineering Solutions 7.7 6.0 20.9 19.8
Aerospace Engines and Components(a) 2.9 (0.4) 1.3 1.2
Energy Systems 0.4 -- 0.9 (0.7)
------- ------- ------- -------
Segment operating profit and other segment income $ 26.5 $ 15.3 $ 60.8 $ 44.9
Corporate expense (5.5) (3.4) (13.5) (11.2)
Other income (expense) 0.2 0.5 0.5 (1.3)
Interest expense, net 0.6 0.2 1.0 0.5
------- ------- ------- -------
Income before income taxes(b) 20.6 12.2 46.8 31.9
Provision for income taxes 8.1 2.3 18.5 10.0
------- ------- ------- -------
Net income $ 12.5 $ 9.9 $ 28.3 $ 21.9
======= ======= ======= =======
(a) The third quarter and first nine months of 2004 segment operating profit
includes the receipt of $2.5 million pursuant to an agreement with Honda
Motor Co., Ltd. related to the piston engine business. This amount is
included as part of other income on the income statement table on the
prior page.
(b) The third quarter and first nine months of 2003 provision for taxes
includes a $2.4 million income tax benefit from the reversal of an income
tax contingency reserve which was determined to be no longer needed during
the third quarter of 2003.
TELEDYNE TECHNOLOGIES INCORPORATED
CONSOLIDATED CONDENSED BALANCE SHEETS AS OF
SEPTEMBER 26, 2004 AND DECEMBER 28, 2003
(Current period unaudited - In millions of dollars)
SEPTEMBER 26, December 28,
2004 2003
------------- ------------
ASSETS
Cash and cash equivalents $ 15.7 $ 37.8
Accounts receivable, net 149.2 121.3
Inventories, net 87.9 63.6
Deferred income taxes, net 24.9 22.7
Prepaid expenses and other assets 6.9 7.1
------------- ------------
Total current assets 284.6 252.5
Property, plant and equipment, net 87.5 76.0
Deferred income taxes, net 7.6 14.2
Goodwill, net 137.4 56.2
Other assets, net 62.4 29.2
------------- ------------
Total assets $ 579.5 $ 428.1
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LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 63.0 $ 48.1
Accrued liabilities 92.7 74.9
Current portion of long-term debt and capital leases 2.9 --
------------- ------------
Total current liabilities 158.6 123.0
Long-term debt 60.1 --
Long-term capital leases 3.8 --
Other long-term liabilities 102.1 84.1
------------- ------------
Total liabilities 324.6 207.1
Total stockholders' equity 254.9 221.0
------------- ------------
Total liabilities and stockholders' equity $ 579.5 $ 428.1
============= ============