Exhibit 99
(Logo Omitted)
Teledyne Technologies Incorporated
12333 West Olympic Boulevard
Los Angeles, CA 90064-1021
News Release
TELEDYNE TECHNOLOGIES REPORTS
FOURTH QUARTER RESULTS
LOS ANGELES - January 29, 2004 - Teledyne Technologies Incorporated
(NYSE:TDY)
- REVENUES OF $222.4 MILLION INCREASED 6.1% COMPARED TO LAST YEAR
- EARNINGS PER SHARE OF $0.24 INCREASED 9.1% COMPARED TO LAST YEAR
- EXCLUDING PENSION INCOME AND EXPENSE, EPS INCREASED 28.6%
- RAISING 2004 FULL YEAR EPS OUTLOOK
Teledyne Technologies today reported fourth quarter 2003 sales of $222.4
million, compared with sales of $209.6 million for the same period in 2002. Net
income for the fourth quarter of 2003 was $7.8 million ($0.24 per diluted
share), compared with net income of $7.2 million ($0.22 per diluted share) in
the fourth quarter of 2002. Net income for the fourth quarter of 2003 included
pretax pension expense of $1.8 million, compared with pretax pension income of
$0.6 million for the same period of 2002.
"Earnings per share increased over the prior year period for the eighth
consecutive quarter despite the negative effects of pension expense, increased
aircraft product liability insurance and a challenging environment in our
commercial aviation markets," said Robert Mehrabian, chairman, president and
chief executive officer. "In addition to a robust defense market, I am pleased
that we are starting to see signs of recovery in certain commercial electronics
businesses. For example, we are beginning to receive increased orders for relays
used in semiconductor test, wireless test and computer networking equipment
after three years of market weakness. During the quarter, we announced our fifth
small electronics acquisition, and we closed the deal in the first week of
fiscal 2004. During 2003, we generated free cash flow of $36.5 million. Given
our strong balance sheet and free cash flow, we will continue to pursue
acquisitions in our strategic businesses in 2004."
Fourth Quarter Earnings Summary Millions of Dollars per
Dollars Diluted Share
---------------- ----------------
Fourth Fourth Fourth Fourth
Quarter Quarter Quarter Quarter Variance
2003 2002 2003 2002 %
- ------------------------------- ------- ------- ------- ------- --------
Net income (excluding net $ 8.9 $ 6.8 $ 0.27 $ 0.21 28.6%
pension income (expense))
Net after tax pension income (1.1) 0.4 (0.03) 0.01
(expense)
------- ------- ------- -------
Net income $ 7.8 $ 7.2 $ 0.24 $ 0.22 9.1%
======= ======= ======= ======= ========
FULL YEAR 2003
Sales for 2003 were $840.7 million, compared with $772.7 million for 2002. Net
income for 2003 was $29.7 million ($0.91 per diluted share), compared with $25.4
million ($0.77 per diluted share) for 2002. Net income for 2003 included pretax
pension expense of $6.9 million, compared with pretax pension income of $2.3
million for the same period of 2002. Net income for 2003 included a $2.4 million
one-time income tax benefit, resulting from the reversal of an income tax
contingency reserve in the third quarter.
REVIEW OF OPERATIONS
ELECTRONICS AND COMMUNICATIONS
The Electronics and Communications segment's fourth quarter 2003 sales were
$117.9 million, compared with fourth quarter 2002 sales of $110.7 million.
Fourth quarter 2003 operating profit was $8.4 million, compared with operating
profit of $9.7 million in the fourth quarter of 2002. The fourth quarter of 2002
included $0.2 million in income following the final resolution of charges
recorded in the second quarter of 2001.
Fourth quarter 2003 sales, compared with the same period of 2002, reflected
revenue growth in defense electronic products, avionics products, relay products
and commercial lighting products. This growth was partially offset by lower
medical product sales. The revenue growth in defense electronic products was
driven by traveling wave tubes and military microelectronics. Revenue growth in
avionics products resulted from the acquisition of the Aviation Information
Solutions businesses on June 27, 2003. Although electronic instruments revenue
was favorably impacted by the acquisition of Tekmar-Dohrmann on May 16, 2003,
this was offset by reduced demand for geophysical sensors for the petroleum
exploration market and lower sales of other monitoring instruments. Operating
profit was favorably impacted by increased sales and a reduction in LIFO
reserve, which resulted from a reduced inventory level. This was more than
offset by an inventory write-down on certain slow moving products and contract
settlements. Additionally, the fourth quarter of 2002 had a $0.8 million
write-down of certain optoelectronics equipment due to lower than expected
utilization. Segment operating profit was also negatively impacted by pension
expense of $1.4 million in the fourth quarter of 2003 compared with pension
income of $0.5 million in the fourth quarter of 2002.
SYSTEMS ENGINEERING SOLUTIONS
The Systems Engineering Solutions segment's fourth quarter 2003 sales were $52.3
million, compared with fourth quarter 2002 sales of $53.4 million. Fourth
quarter 2003 operating profit was $3.4 million, compared with operating profit
of $4.1 million in the fourth quarter of 2002. The fourth quarter of 2002
included $0.1 million in expense following the final resolution of charges
recorded in the second quarter of 2001.
Fourth quarter 2003 sales, compared with the same period of 2002, reflected a
reduction in revenue for core defense and aerospace programs, partially offset
by increased work in environmental programs. Operating profit, compared to the
fourth quarter of 2002, was unfavorably impacted by lower sales, sales mix and
the recognition of a loss on an office sublease agreement. Segment operating
profit in the fourth quarter of 2003 included no pension income or expense
compared to $0.1 million of pension income in the fourth quarter of 2002.
AEROSPACE ENGINES AND COMPONENTS
The Aerospace Engines and Components segment's fourth quarter 2003 sales were
$47.0 million, compared with fourth quarter 2002 sales of $41.4 million. The
fourth quarter 2003 operating profit was $5.2 million, compared with operating
profit of $2.0 million in the fourth quarter of 2002.
Fourth quarter 2003 sales, compared with the same period of 2002, reflected
revenue growth in OEM piston engines and aftermarket products and services.
Piston engine operating profit was favorably impacted by the sales increase and
a reduction in LIFO reserve, which resulted from a reduced inventory level,
partially offset by an increase in insurance costs. Sales from turbine engines
were favorably impacted by higher revenue from Improved Tactical Air-Launched
Decoy (ITALD) engines, partially offset by lower Harpoon cruise missile engine
sales. Favorable operating profit for turbine engines resulted from increased
sales. Segment operating profit was unfavorably impacted by pension expense of
$0.3 million in the fourth quarter of 2003 compared with pension income of $0.1
million in the fourth quarter of 2002.
ENERGY SYSTEMS
The Energy Systems segment's fourth quarter 2003 sales were $5.2 million,
compared with fourth quarter 2002 sales of $4.1 million. The fourth quarter 2003
operating results were breakeven, compared with operating profit of $0.1 million
in the fourth quarter of 2002.
The increase in fourth quarter 2003 sales resulted from multi-year contracts
which were won, in 2003, for fuel cell and thermoelectric generator work. The
operating profit generated by this revenue was more than offset by the
recognition of a loss on a facility sublease agreement.
ADDITIONAL FINANCIAL INFORMATION
CASH FLOW
Fourth quarter 2003 cash provided by operating activities was $18.2 million,
compared with cash provided by operating activities of $14.4 million for the
same period of 2002. The increase in cash provided by operating activities in
2003, compared with 2002, reflected lower inventory levels and reduced payments
for aircraft product liability settlements, partially offset by higher accounts
receivable for the fourth quarter of 2003 resulting from higher sales in the
quarter. Free cash flow (cash from operating activities less capital
expenditures) was $10.7 million for the fourth quarter of 2003, compared with
free cash flow of $9.0 million for the same period of 2002. Total year 2003 free
cash flow was $36.5 million, compared with free cash flow of $57.9 million for
the same period of 2002. The lower free cash flow for total year 2003, compared
with 2002, was primarily due to higher capital expenditures in 2003, differences
in the cash impact of income taxes and the payment in 2003 for an aircraft
product liability settlement. Capital expenditures for the fourth quarter of
2003 were $7.5 million, compared with $5.4 million for the fourth quarter of
2002. Depreciation and amortization expense for the fourth quarter of 2003 was
$6.0 million, compared with $5.5 million for the same period of 2002.
Free Cash Flow(a) Fourth Fourth Total Total
Quarter Quarter Year Year
(in millions, brackets indicate use of funds) 2003 2002 2003 2002
- --------------------------------------------- ------- ------- ------ ------
Cash provided by operating activities $ 18.2 $ 14.4 $ 56.7 $ 73.3
Capital expenditures (7.5) (5.4) (20.2) (15.4)
------- ------- ------ ------
Free cash flow $ 10.7 $ 9.0 $ 36.5 $ 57.9
======= ======= ====== ======
(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
Pension expense for the fourth quarter of 2003 was $1.8 million, compared with
pension income of $0.6 million for the same period of 2002. In the fourth
quarter of 2002, Teledyne recorded a $23.2 million non-cash charge to
stockholders' equity, in accordance with accounting standard SFAS No. 87. SFAS
No. 87 requires that a minimum pension liability be recorded if the value of
pension assets is less than the accumulated pension benefit obligation (ABO). In
the fourth quarter of 2003, Teledyne reduced the $23.2 million equity adjustment
by $11.1 million to $12.1 million based on the year end value of pension assets
and the ABO. These adjustments did not affect net income and the balance will be
reversed should the value of the pension assets exceed the ABO as of a future
measurement date.
OUTLOOK
Although 2004 earnings visibility is limited, based on its current outlook, the
company's management believes that first quarter and full year 2004 earnings per
share will be in the range of approximately $0.15 to $0.17 and $0.80 to $0.86,
respectively.
The company's 2004 outlook reflects anticipated growth in the company's defense
electronics and instrumentation businesses, a slight recovery in some of the
company's short cycle electronics and commercial aviation markets and $0.16 per
share of pension expense for the full year 2004. Given the finalization of
actual fee negotiations for work performed on certain contracts in prior
periods, operating margin in the company's Systems Engineering Solutions segment
is expected to be lower in 2004, compared with 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%. The company's current
aircraft product liability policy will expire in May 2004, and the company is
currently reviewing its alternatives.
Full year 2003 earnings included $6.9 million or $0.13 per share in pension
expense. The company currently expects approximately $8.5 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 and a change in the company's retirement benefits for new hires.
The company's assumed discount rate will be 6.5% in 2004, compared to 7.0% in
2003. As of January 1, 2004, new hires will be added to 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 $4.0 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 from continuing operations)
2004 Full Year 2003 2002
Outlook Results Results
---------------- ------- -------
Low High Actual Actual
------- ------- ------- -------
Earnings per share (excluding net pension $ 0.96 $ 1.02 $ 0.97 $ 0.73
income (expense) and income tax benefit
Net pension income (expense) (0.16) (0.16) (0.13) 0.04
------- ------- ------- -------
Earnings per share (excluding income tax
benefit) 0.80 0.86 0.84 0.77
Tax benefit -- -- 0.07 --
------- ------- ------- -------
Earnings per share $ 0.80 $ 0.86 $ 0.91 $ 0.77
======= ======= ======= =======
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, changes in insurance costs, 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. 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 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 the recent acquisition of
certain assets of the Filtronic Solid State business from Filtronic plc.,
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 2002 Annual Report on Form 10-K and Forms
10-Q. The company assumes no duty to update forward-looking statements.
A live webcast of Teledyne Technologies' fourth quarter earnings conference call
will be held at 11:00 a.m. (Eastern) on Thursday, January 29. 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, January
29.
Investor Contact: Jason VanWees
(310) 893-1642
Media Contact: Robyn Choi
(310) 893-1640
###
TELEDYNE TECHNOLOGIES INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS AND FISCAL YEARS ENDED
DECEMBER 28, 2003 AND DECEMBER 29, 2002
(Unaudited - In millions, except per share amounts)
Fourth Fourth Total Total
Quarter Quarter Year Year
2003 2002(a) 2003 2002(a)
- ---------------------------------------- ------- ------- ------- -------
Net sales $ 222.4 $ 209.6 $ 840.7 $ 772.7
Costs and expenses:
Costs of sales 168.5 160.6 636.7 584.9
Selling, general and administrative
expenses 40.6 36.6 157.0 145.6
Restructuring and other charges -- (0.1) -- (0.7)
------- ------- ------- -------
Income before other income and
expense and taxes 13.3 12.5 47.0 42.9
Other income (expense) (0.3) (0.5) (1.6) (0.2)
Interest expense, net 0.3 0.1 0.8 0.6
------- ------- ------- -------
Income before taxes 12.7 11.9 44.6 42.1
Provision for taxes 4.9 4.7 14.9(b) 16.7
------- ------- ------- -------
Net income $ 7.8 $ 7.2 $ 29.7 $ 25.4
======= ======= ======= =======
Diluted earnings per common share $ 0.24 $ 0.22 $ 0.91 $ 0.77
======= ======= ======= =======
Weighted average diluted common shares
outstanding 32.9 32.8 32.7 32.9
======= ======= ======= =======
(a) The 2002 total year results reflect the revised income statement
classification and final resolution of the second quarter 2001 pretax
charges of $26.4 million for asset impairments and restructuring and other
charges. The Company utilized $26.3 million of the second quarter 2001
charge of $26.4 million. The fourth quarter and total year 2002 income
before taxes include the benefit of the $0.1 million that was not used.
The 2002 total year impact of these changes increased cost of sales by
$0.6 million and decreased restructuring and other charges by $0.7
million.
(b) The 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 MONTHS AND FISCAL YEARS ENDED
DECEMBER 28, 2003 AND DECEMBER 29, 2002
(Unaudited - In millions)
Fourth Fourth Total Total
Quarter Quarter Year Year
2003 2002 2003 2002
- -------------------------------- ------- ------- ------- -------
Net sales:
Electronics and Communications $ 117.9 $ 110.7 $ 446.9 $ 388.0
Systems Engineering Solutions 52.3 53.4 212.5 206.7
Aerospace Engines and Components 47.0 41.4 165.5 162.9
Energy Systems 5.2 4.1 15.8 15.1
------- ------- ------- -------
Total net sales $ 222.4 $ 209.6 $ 840.7 $ 772.7
======= ======= ======= =======
Operating Profit (Loss):
Electronics and Communications $ 8.4 $ 9.7 $ 33.0 $ 35.9
Systems Engineering Solutions 3.4 4.1 23.2 20.6
Aerospace Engines and Components 5.2 2.0 6.4 2.7
Energy Systems -- 0.1 (0.7) (1.9)
------- ------- ------- -------
Segment operating profit $ 17.0 $ 15.9 $ 61.9 $ 57.3
Corporate expense (3.7) (3.4) (14.9) (14.4)
Other income (expense) (0.3) (0.5) (1.6) (0.2)
Interest expense, net 0.3 0.1 0.8 0.6
------- ------- ------- -------
Income before income taxes 12.7 11.9 44.6 42.1
Provision for income taxes 4.9 4.7 14.9(a) 16.7
------- ------- ------- -------
Net income $ 7.8 $ 7.2 $ 29.7 $ 25.4
======= ======= ======= =======
(a) The 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
DECEMBER 28, 2003 AND DECEMBER 29, 2002
(Current period unaudited - In millions of dollars)
DECEMBER 28, December 29,
2003 2002
- ----------------------------------------------- ------------ ------------
ASSETS
Cash and cash equivalents $ 37.8 $ 19.0
Accounts receivable, net 121.3 109.2
Inventories, net 63.6 66.8
Deferred income taxes, net 22.7 18.9
Prepaid income taxes, expenses and other assets 7.1 8.0
------------ ------------
Total current assets 252.5 221.9
Property, plant and equipment, net 76.0 74.7
Deferred income taxes, net 14.2 22.2
Goodwill and acquired intangibles, net 61.5 44.3
Other assets, net 23.9 28.0
------------ ------------
Total assets $ 428.1 $ 391.1
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LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 48.1 $ 53.1
Accrued liabilities 74.9 66.2
------------ ------------
Total current liabilities 123.0 119.3
Other long-term liabilities 84.1 95.0
------------ ------------
Total liabilities 207.1 214.3
Total stockholders' equity 221.0 176.8
------------ ------------
Total liabilities and stockholders' equity $ 428.1 $ 391.1
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