Exhibit 99
(Logo Omitted)
Teledyne Technologies Incorporated
12333 West Olympic Boulevard
Los Angeles, CA 90064-1021
News Release
TELEDYNE TECHNOLOGIES REPORTS
SECOND QUARTER RESULTS
LOS ANGELES - July 24, 2003 - Teledyne Technologies Incorporated (NYSE:TDY)
- REVENUES OF $205.4 MILLION INCREASED 9.3% COMPARED TO LAST YEAR
- EARNINGS PER SHARE OF $0.20 INCREASED 5.3% COMPARED TO LAST YEAR
- EXCLUDING PENSION INCOME AND EXPENSE, EARNINGS PER SHARE INCREASED
27.8%
- ACQUIRED EMERSON'S TEKMAR-DOHRMANN AND SPIRENT'S AVIATION
INFORMATION SOLUTIONS BUSINESSES
- RAISING 2003 FULL YEAR EPS OUTLOOK
Teledyne Technologies today reported second quarter 2003 sales of $205.4
million, compared with sales of $188.0 million for the same period in 2002. Net
income for the second quarter of 2003 was $6.5 million ($0.20 per diluted
share), compared with net income of $6.2 million ($0.19 per diluted share) in
the second quarter of 2002. Net income for the second quarter of 2003 included a
$2.0 million pretax charge related to the write off of the company's $2.0
million minority investment in a private company engaged in manufacturing and
development of micro optics and microelectromechanical devices. Net income for
the second quarter of 2003 also included pretax non-cash pension expense of $1.7
million, compared with pretax non-cash pension income of $0.6 million for the
same period of 2002.
"Earnings per share increased over the prior year period for the sixth
consecutive quarter despite the negative effect of non-cash pension expense, a
pretax charge of $2.0 million and a difficult environment in some of our
commercial markets," said Robert Mehrabian, chairman, president and chief
executive officer. "Revenues increased 9.3% and earnings per share, excluding
non-cash pension income and expense, increased 27.8%. Sales growth of 16.3% in
our Electronics and Communications segment resulted from both organic growth and
strategic acquisitions, and we achieved record operating profit in our Systems
Engineering segment. We also completed two acquisitions during the quarter and,
given our strong balance sheet, are continuing to pursue similar acquisitions in
our strategic businesses."
Dollars per
Millions of Dollars Diluted Share
--------------------- ---------------------
Second Second Second Second
Quarter Quarter Quarter Quarter Variance
Second Quarter Earnings Summary 2003 2002 2003 2002 %
- ------------------------------- ---- ---- ---- ---- --------
Net income (excluding net pension
income (expense)) $ 7.5 $ 5.8 $ 0.23 $ 0.18 27.8%
Net after tax pension income
(expense) (1.0) 0.4 (0.03) 0.01
------ ------ -------- --------
Net income $ 6.5 $ 6.2 $ 0.20 $ 0.19 5.3%
====== ====== ======== ======== ===
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REVIEW OF OPERATIONS
ELECTRONICS AND COMMUNICATIONS
The Electronics and Communications segment's second quarter 2003 sales were
$109.6 million, compared with second quarter 2002 sales of $94.2 million. Second
quarter 2003 operating profit was $7.6 million, compared with operating profit
of $9.0 million in the second quarter of 2002.
Second quarter 2003 sales, compared with the same period of 2002, reflected
revenue growth in electronic manufacturing services, electronic instruments,
defense electronic products and commercial lighting products. The revenue growth
in electronic manufacturing services was driven by increased sales to military
and medical markets. The revenue growth in electronic instruments resulted from
the acquisition of Monitor Labs Incorporated at the end of the third quarter of
2002 and the acquisition of Tekmar-Dohrmann on May 16, 2003. The revenue growth
in defense electronic products was driven by traveling wave tubes and military
microelectronics. These sales increases were partially offset by continued
weakness in the commercial aviation market. Operating profit was favorably
impacted by increased sales, partially offset by increased selling expenses and
changes in product mix. Segment operating profit was also negatively impacted by
pension expense of $1.2 million in the second quarter of 2003 compared with
pension income of $0.5 million in the second quarter of 2002.
SYSTEMS ENGINEERING SOLUTIONS
The Systems Engineering Solutions segment's second quarter 2003 sales were $54.6
million, compared with second quarter 2002 sales of $51.5 million. Second
quarter 2003 operating profit was $8.1 million, compared with operating profit
of $5.7 million in the second quarter of 2002.
Second quarter 2003 sales, compared with the same period of 2002, reflected
revenue growth in core defense and aerospace programs and increased work in
environmental programs. Operating profit was favorably impacted by increased
sales, timing of certain government programs, profit improvement due to booking
rate adjustments for the Ground-based Midcourse Defense contract and $2.5
million of award and incentive fees related to the finalization of actual fee
negotiations for the Ground-based Midcourse Defense and International Space
Station contracts. Additionally, segment operating profit was unfavorably
impacted by pension expense of $0.1 million in the second quarter of 2003
compared with no pension cost in 2002.
AEROSPACE ENGINES AND COMPONENTS
The Aerospace Engines and Components segment's second quarter 2003 sales were
$37.7 million, compared with second quarter 2002 sales of $39.0 million. Second
quarter 2003 operating profit was $1.1 million, compared with operating profit
of $0.1 million in the second quarter of 2002.
Second quarter 2003 sales, compared with the same period of 2002, reflected
revenue growth in OEM piston engines offset by reduced sales of aftermarket
products and services. Operating profit in the piston engine business was
positively impacted by an improved cost structure, productivity improvements and
a reduction in LIFO reserve, which resulted from a reduction in inventory. Sales
from turbine engines were unfavorably impacted by lower revenue from spare parts
for Air Force training aircraft, partially offset by favorable Joint
Air-to-Surface Standoff Missile (JASSM) sales. Operating profit for turbine
engines was lower in the second quarter of 2003, compared with the second
quarter of 2002, and resulted from lower sales and margins. Additionally,
segment operating profit was unfavorably impacted by pension expense of $0.3
million in the second quarter of 2003 compared with pension income of $0.2
million in the second quarter of 2002.
Page 5
ENERGY SYSTEMS
The Energy Systems segment's second quarter 2003 sales were $3.5 million,
compared with second quarter 2002 sales of $3.3 million. The second quarter 2003
operating loss was $0.2 million, compared with an operating loss of $0.9 million
in the second quarter of 2002.
Second quarter 2003 sales reflected revenue growth in hydrogen generators and
fuel cell test stations, partially offset by lower government sales. The second
quarter 2003 reduction in operating loss, compared with the same period of 2002,
resulted from an improved overhead cost structure and lack of program cost
adjustments that impacted 2002.
ADDITIONAL FINANCIAL INFORMATION
CASH FLOW
Second quarter 2003 cash provided by operating activities was $13.5 million,
compared with cash provided by operating activities of $25.3 million for the
same period of 2002. The higher cash flow in 2002, compared with 2003, reflected
the receipt of a federal income tax refund of $5.7 million in April 2002 and an
increase in working capital in 2003 primarily driven by higher accounts
receivable for the second quarter of 2003 resulting from higher sales in the
quarter. Free cash flow (cash from operating activities less capital
expenditures) was $9.8 million for the second quarter of 2003, compared with
free cash flow of $21.8 million for the same period of 2002. Capital
expenditures for the second quarter of 2003 were $3.7 million, compared with
$3.5 million for the second quarter of 2002. Depreciation and amortization
expense for the second quarter of 2003 was $5.6 million, compared with $5.7
million for the same period of 2002. On May 16, 2003, the company acquired
Tekmar Company from Emerson Electric Co. for $13.5 million in cash. On June 27,
2003, the company acquired the Aviation Information Solutions businesses of
Spirent plc for $6.85 million in cash.
Free Cash Flow (a)
Second Second
Quarter Quarter
(in millions, brackets indicate use of funds) 2003 2002
--------------------------------------------- ---- ----
Cash provided by operating
activities $ 13.5 $ 25.3
Capital expenditures (3.7) (3.5)
--------- ----------
Free cash flow $ 9.8 $ 21.8
========= ==========
(a) The company defines free cash flow as cash provided by operating
activities (a measure prescribed by generally accepted accounting
principles) less capital expenditures.
PENSION
Non-cash pension expense for the second quarter of 2003 was $1.7 million,
compared with non-cash pension income of $0.6 million for the same period of
2002.
OTHER
Other expense in the second quarter of 2003 included a $2.0 million write off of
the company's remaining minority investment in a private company engaged in
manufacturing and development of micro optics and microelectromechanical
devices.
Page 6
OUTLOOK
Based on its current outlook, the company's management believes that full year
2003 earnings per share will be in the range of approximately $0.68 to $0.74,
including higher aircraft product liability insurance costs, lower anticipated
margins in the second half of 2003 in the company's Systems Engineering
Solutions segment and approximately $0.13 per share of non-cash pension expense
for the full year 2003.
The company's previous aircraft product liability policy expired in May 2003. As
of June 1, 2003, the total cost of the company's aircraft product liability
insurance increased approximately $1.0 million per month or approximately 75%.
In addition, given the finalization of actual fee negotiations for work
performed in prior periods for certain contracts, operating margin in the
company's Systems Engineering Solutions segment is expected to be lower in the
second half of 2003, compared with the first half of 2003.
Full year 2002 earnings included $2.3 million or $0.04 per share in non-cash
pension income. The company currently expects approximately $7.0 million or
$0.13 per share of non-cash pension expense in 2003. The reduction in non-cash
pension income reflects the decline in the value of the company's pension assets
through 2002 and reductions in the expected rate of return and discount rate
assumptions for the company's defined benefit plan. The company's assumed
expected rate of return is currently 8.5%, compared to 9.0% in 2002, and its
assumed discount rate is currently 7.0%, compared to 7.5% in 2002. Based on the
company's current pension assumptions and the value of its pension assets as of
June 30, 2003, the company expects that non-cash pension expense in 2004 will be
approximately $10.0 million or $0.18 per share. Currently, Teledyne Technologies
does not anticipate making cash contributions to its pension plan until 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 from continuing operations)
2003 Full Year Outlook
---------------------- 2002 2001
Low High Actual Actual
--- ---- ------ ------
Earnings per share (excluding net
pension income (expense) and
restructuring and other charges) $ 0.81 $ 0.87 $ 0.73 $ 0.51
Net pension income (expense) (0.13) (0.13) 0.04 0.18
-------- -------- -------- ---------
Earnings per share (excluding
restructuring and other charges) 0.68 0.74 0.77 0.69
Restructuring and other charges -- -- -- (0.48)
-------- -------- -------- ---------
Earnings per share $ 0.68 $ 0.74 $ 0.77 $ 0.21
======== ======== ======== =========
Page 7
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, timely development of acceptable
and competitive fuel cell products and systems, funding, continuation and award
of government programs, customers' acceptance of piston engine insurance-related
price increases, continued liquidity of our customers (including commercial
airline customers) and economic and political conditions, could change the
anticipated results.
Global responses to terrorism and other perceived threats increase uncertainties
associated with forward-looking statements about our businesses. Various
responses 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.
September 11th and various public company governance issues have had adverse
impacts on the insurance markets greatly increasing insurance costs including
the company's recent renewal of its aircraft product liability insurance policy.
Our directors and officers policy expires in November 2003. In addition, stock
market fluctuations affect the value of the company's pension assets. Absent
significant further improvement in market conditions, the company will be
required to make a contribution to its pension plan in 2004.
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, we
cannot provide any assurance as to when, if or on what terms any acquisitions
will be made. Acquisitions, including the recent acquisitions of Tekmar Company
and the Aviation Information Solutions businesses, involve various inherent
risks, such as, among others, our ability to integrate acquired businesses and
to achieve identified financial and operating synergies. Also, we may not be
able to sell or exit timely or on acceptable terms our 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 2002 Annual Report on Form 10-K and Form
10-Q. The company assumes no duty to update forward-looking statements.
Page 8
A live webcast of Teledyne Technologies' second quarter earnings conference call
will be held at 11:00 a.m. (Eastern) on Thursday, July 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 12:00 p.m. (Eastern) on Thursday, July 24.
Investor Contact: Jason VanWees
(310) 893-1642
Media Contact: Robyn Choi
(310) 893-1640
###
Page 9
TELEDYNE TECHNOLOGIES INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 29, 2003
AND FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2002
(Unaudited - In millions, except per share amounts)
Second Second Six Six
Quarter Quarter Months Months
2003 2002(a) 2003 2002(a)
---- ------- ---- -------
Net sales $ 205.4 $ 188.0 $ 402.6 $ 371.3
Costs and expenses:
Costs of sales 153.5 141.7 305.1 280.7
Selling, general and administrative
expenses 39.3 36.6 75.7 72.3
Restructuring and other charges -- (0.6) -- (0.6)
---------- ---------- --------- ---------
Income before other income and expense and
taxes 12.6 10.3 21.8 18.9
Other income (expense) (1.7) 0.2 (1.8) 0.4
Interest expense, net 0.2 0.2 0.3 0.5
---------- ---------- ---------- ----------
Income before taxes 10.7 10.3 19.7 18.8
Provision for taxes 4.2 4.1 7.7 7.5
---------- ---------- ---------- ----------
Net income $ 6.5 $ 6.2 $ 12.0 $ 11.3
========== ========== ========== ==========
Diluted earnings per common share $ 0.20 $ 0.19 $ 0.37 $ 0.35
========== ========== ========== ==========
Weighted average diluted common shares
outstanding 32.5 32.9 32.5 32.7
========== ========== ========== ==========
(a) The second quarter and first six months of 2002 reflect the revised income
statement classification of second quarter 2001 charges. The resulting
classification increased cost of sales by $0.6 million and decreased
restructuring and other charges by $0.6 million but had no impact on
income before taxes in 2002.
TELEDYNE TECHNOLOGIES INCORPORATED
SUMMARY OF SEGMENT NET SALES AND OPERATING PROFIT
FOR THE THREE AND SIX MONTHS ENDED JUNE 29, 2003
AND FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2002
(Unaudited - In millions)
Second Second Six Six
Quarter Quarter Months Months
2003 2002 2003 2002
---- ---- ---- ----
Net sales:
Electronics and Communications $ 109.6 $ 94.2 $ 213.2 $ 184.7
Systems Engineering Solutions 54.6 51.5 107.0 98.4
Aerospace Engines and Components 37.7 39.0 75.5 80.9
Energy Systems 3.5 3.3 6.9 7.3
--------- --------- --------- ---------
Total net sales $ 205.4 $ 188.0 $ 402.6 $ 371.3
========= ========= ========= =========
Operating Profit (Loss):
Electronics and Communications $ 7.6 $ 9.0 $ 14.9 $ 17.3
Systems Engineering Solutions 8.1 5.7 13.8 9.5
Aerospace Engines and Components 1.1 0.1 1.6 0.8
Energy Systems (0.2) (0.9) (0.7) (1.2)
--------- --------- --------- ---------
Segment operating profit $ 16.6 $ 13.9 $ 29.6 $ 26.4
Corporate expense (4.0) (3.6) (7.8) (7.5)
Other income (expense) (1.7) 0.2 (1.8) 0.4
Interest expense, net 0.2 0.2 0.3 0.5
--------- --------- --------- ---------
Income before income taxes 10.7 10.3 19.7 18.8
Provision for income taxes 4.2 4.1 7.7 7.5
--------- --------- --------- ---------
Net income $ 6.5 6.2 $ 12.0 11.3
========= ========= ========= =========
TELEDYNE TECHNOLOGIES INCORPORATED
CONSOLIDATED CONDENSED BALANCE SHEETS AS OF
JUNE 29, 2003 AND DECEMBER 29, 2002
(Current period unaudited - In millions of dollars)
JUNE 29, December 29,
2003 2002
---- ----
ASSETS
Cash and cash equivalents $ 4.9 $ 19.0
Accounts receivable, net 115.1 109.2
Inventories, net 80.3 66.8
Deferred income taxes, net 22.4 18.9
Prepaid income taxes, expenses and other assets 5.2 8.0
--------- ---------
Total current assets 227.9 221.9
Property, plant and equipment, net 73.0 74.7
Deferred income taxes, net 26.6 22.2
Goodwill, net 61.7 44.3
Other assets, net 26.3 28.0
--------- ---------
Total assets $ 415.5 $ 391.1
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 47.9 $ 53.1
Accrued liabilities 82.2 66.2
--------- ---------
Total current liabilities 130.1 119.3
Other long-term liabilities 94.8 95.0
--------- ---------
Total liabilities 224.9 214.3
Total stockholders' equity 190.6 176.8
--------- ---------
Total liabilities and stockholders' equity $ 415.5 $ 391.1
========= =========