What drove Teledyne's sales growth in 2003?

The filing attributes the increase to improvement in all four reporting segments. The largest gain was in Electronics and Communications, which reflected both organic growth and acquisitions, including Monitor Labs (acquired September 2002), Tekmar Company (May 2003) and Spirent's Aviation Information Solutions businesses (June 2003). Revenue growth was led by defense electronic products, electronic manufacturing services and avionics, partly offset by weakness in commercial aviation and geophysical sensors.

How much of Teledyne's business depends on U.S. Government contracts?

Sales under contracts with the U.S. Government were approximately 46% of total sales in 2003 and 2002, totaling $387.7 million in 2003 and $352.4 million in 2002. The filing notes that about 44% of U.S. Government sales were under fixed price-type contracts, and that the largest single program, the Boeing Ground-based Midcourse Defense contract, represented 5.8% of 2003 total sales.

What is the outlook for 2004 earnings?

Management expects first-quarter 2004 diluted earnings per share of approximately $0.15 to $0.17 and full-year 2004 EPS from continuing operations of $0.80 to $0.86. The outlook reflects anticipated growth in defense electronics and instrumentation, a slight recovery in some short-cycle electronics and commercial aviation markets, and $0.16 per share of pension expense. Operating margin in the Systems Engineering Solutions segment is expected to be lower than in 2003.

What are the company's main financial risks flagged in the filing?

Key risks cited include dependence on U.S. Government contracts and funding timing, fixed-price contract cost overruns, pension plan underfunding that requires 2004 cash contributions (about $4.0 million after tax), aircraft product liability insurance costs (the current policy expires May 2004 and the previous policy's cost rose about 75%), and the expiration in November 2004 of the $200 million revolving credit agreement, which management said it was replacing. The filing also discloses a False Claims Act lawsuit against the Electronic Safety Products unit that the company intends to vigorously defend.

How did the company finance its 2003 activities and acquisitions?

Cash used in investing activities was $40.3 million in 2003, including $20.2 million of capital expenditures and $19.9 million for acquisitions net of cash acquired. Operating cash flow from continuing operations was $56.8 million. The company carried no long-term debt at year-end 2003 or 2002, and it had $14.2 million available under two uncommitted bank facilities. Stock option exercises provided $2.4 million of financing cash flow. Subsequent to year-end, the company acquired Filtronic's Solid State assets for $12.0 million and Leeman Labs' assets for $8.0 million.

TDY 10-K FY2003 Annual Report — Revenue, Net Income, EPS

01—Abstract

Summary

Summary of the 10-K filed March 4, 2004. Cited figures are marked; the original filing is the authoritative source.

Teledyne Technologies Incorporated, filed as Teledyne Technologies Incorporated, reported fiscal 2003 sales of $840.7 million^a, up from $772.7 million in 2002, and net income of $29.7 million ($0.91 per diluted share), compared with $25.4 million ($0.77 per diluted share) in 2002.

Segment operating profit rose to $61.9 million^b from $57.3 million. Growth reflected improvement in all four segments, with the largest sales increase in Electronics and Communications, which benefited from both organic growth and acquisitions including Tekmar Company, Monitor Labs and the Aviation Information Solutions businesses of Spirent plc. The effective tax rate was 33.3%, including a $2.4 million benefit from reversing a tax contingency reserve; excluding it, the rate would have been 38.7%.

The company ended 2003 with no long-term debt, $37.8 million^c in cash, and $200 million of available committed credit under a revolving facility that terminates in November 2004 and that management said it was in the process of replacing. Cash provided from continuing operations fell to $56.8 million from $74.2 million, reflecting timing of payables, higher aircraft product liability payments and higher receivables. Pension expense rose to $6.9 million from pension income of $2.3 million in 2002, and management expects pension expense of approximately $8.5 million in 2004.

Stockholders' equity increased to $221.0 million^d from $176.8 million. For 2004, management expects diluted earnings per share from continuing operations of $0.80 to $0.86, with first-quarter EPS of $0.15 to $0.17. The company also cites risks including U.S. Government contract exposure (approximately 46% of 2003 sales), fixed-price contract risk, aircraft product liability insurance costs and a May 2004 expiration of its aircraft product liability policy.

02—Key points

Key Highlights

Total sales rose to $840.7 million in 2003 from $772.7 million in 2002, with all four segments reporting higher sales.
Net income was $29.7 million, or $0.91 per diluted share, versus $25.4 million, or $0.77 per diluted share, in 2002.
Segment operating profit increased to $61.9 million from $57.3 million; Electronics and Communications operating profit fell to $33.0 million from $35.9 million.
The effective tax rate was 33.3% in 2003, including a $2.4 million benefit from a reversed tax contingency reserve (38.7% excluding the benefit), compared with 39.7% in 2002.
The company had no long-term debt at year-end 2003, $37.8 million in cash and $200 million of available committed credit.
Pension expense rose to $6.9 million in 2003 from pension income of $2.3 million in 2002; the company expects approximately $8.5 million of pension expense in 2004.
Management's 2004 outlook calls for full-year diluted EPS from continuing operations of $0.80 to $0.86.

03—Questions

Frequently Asked Questions

What drove Teledyne's sales growth in 2003?
The filing attributes the increase to improvement in all four reporting segments. The largest gain was in Electronics and Communications, which reflected both organic growth and acquisitions, including Monitor Labs (acquired September 2002), Tekmar Company (May 2003) and Spirent's Aviation Information Solutions businesses (June 2003). Revenue growth was led by defense electronic products, electronic manufacturing services and avionics, partly offset by weakness in commercial aviation and geophysical sensors.
How much of Teledyne's business depends on U.S. Government contracts?
Sales under contracts with the U.S. Government were approximately 46% of total sales in 2003 and 2002, totaling $387.7 million in 2003 and $352.4 million in 2002. The filing notes that about 44% of U.S. Government sales were under fixed price-type contracts, and that the largest single program, the Boeing Ground-based Midcourse Defense contract, represented 5.8% of 2003 total sales.
What is the outlook for 2004 earnings?
Management expects first-quarter 2004 diluted earnings per share of approximately $0.15 to $0.17 and full-year 2004 EPS from continuing operations of $0.80 to $0.86. The outlook reflects anticipated growth in defense electronics and instrumentation, a slight recovery in some short-cycle electronics and commercial aviation markets, and $0.16 per share of pension expense. Operating margin in the Systems Engineering Solutions segment is expected to be lower than in 2003.
What are the company's main financial risks flagged in the filing?
Key risks cited include dependence on U.S. Government contracts and funding timing, fixed-price contract cost overruns, pension plan underfunding that requires 2004 cash contributions (about $4.0 million after tax), aircraft product liability insurance costs (the current policy expires May 2004 and the previous policy's cost rose about 75%), and the expiration in November 2004 of the $200 million revolving credit agreement, which management said it was replacing. The filing also discloses a False Claims Act lawsuit against the Electronic Safety Products unit that the company intends to vigorously defend.
How did the company finance its 2003 activities and acquisitions?
Cash used in investing activities was $40.3 million in 2003, including $20.2 million of capital expenditures and $19.9 million for acquisitions net of cash acquired. Operating cash flow from continuing operations was $56.8 million. The company carried no long-term debt at year-end 2003 or 2002, and it had $14.2 million available under two uncommitted bank facilities. Stock option exercises provided $2.4 million of financing cash flow. Subsequent to year-end, the company acquired Filtronic's Solid State assets for $12.0 million and Leeman Labs' assets for $8.0 million.

04—Continue

← View all 10-K filings