01—Abstract
Summary
Summary of the 10-K filed February 26, 2009. Cited figures are marked; the original filing is the authoritative source.
Teledyne Technologies Incorporated (TDY) reported 2008 sales of $1,893.0 milliona, up 16.7% from $1,622.3 million in 2007, and net income of $111.3 million ($3.05 per diluted share), up 13.0% from $98.5 million ($2.72 per diluted share).
Growth was led by the Electronics and Communications segment, which grew sales 19.1% to $1,276.6 millionb, and was supported by nine acquisitions totaling $246.1 million net of cash acquired. Segment operating profit rose 12.1% to $218.5 million, but the Aerospace Engines and Components segment swung to an operating loss of $9.7 million, reflecting an $18.0 million charge for a voluntary recall of aircraft piston engine cylinders. Cash flow and balance sheet items were pressured by pension funding and acquisitions.
Net cash provided by operations fell to $120.4 millionc from $166.7 million, and free cash flow was $78.5 million. Long-term debt rose to $332.1 million, with $326.0 million outstanding under the $590.0 million credit facility, and the company made an $80.0 million voluntary pension contribution in February 2009. Accrued pension obligation increased to $227.9 million, and accumulated other comprehensive loss widened to $205.8 million.
Management expects Aerospace Engines and Components sales to decline further in 2009 and expects marine instrument sales to contract in the second half of 2009. Investors should weigh the strong acquisition-driven growth against the weaker Aerospace Engines and Components results, the rising pension and debt burden, and the company's stated intention to retain earnings rather than pay dividends. The board also approved a repurchase program of up to 1,500,000 shares on February 24, 2009.
02—Key points
Key Highlights
- Sales grew 16.7% to $1,893.0 million in 2008, and diluted EPS rose to $3.05 from $2.72.
- Electronics and Communications delivered sales of $1,276.6 million (68% of total) with operating profit up 27.8% to $183.0 million.
- Aerospace Engines and Components posted an operating loss of $9.7 million, including an $18.0 million product recall charge for piston engine cylinders.
- Nine acquisitions in 2008 cost $246.1 million net of cash acquired, all within the Electronics and Communications segment.
- Operating cash flow declined to $120.4 million from $166.7 million, mainly due to $58.7 million in pension contributions and higher aircraft product defense payments.
- Long-term debt increased to $332.1 million, and the company made an $80.0 million voluntary pension contribution in February 2009.
- Backlog of confirmed orders reached $842.8 million at December 28, 2008, up from $707.2 million a year earlier, and 98% is expected to be fulfilled in 2009.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2008, Teledyne Technologies kept $0.06.
- Revenue$1.72B100.0%
- Cost of revenue−$1.21B70.0%
- Gross profit$516.1M30.0%
- Operating costs−$317.5M18.4%
- Operating income$198.6M11.5%
- Interest, other & tax−$87.3M5.1%
- Net income$111.3M6.5%
Where FY2008 revenue went
$1.72B- Cost of revenue: $1.21B, 70% of revenue
- SG&A: $317.5M, 18% of revenue
- Net income: $111.3M, 6.5% of revenue
- Interest, other & tax: $87.3M, 5.1% of revenue
Kept 6.5% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2008filed February 26, 2009Financial Statements
05—Questions
Frequently Asked Questions
How did Teledyne perform financially in 2008?
Sales reached $1,893.0 million, up 16.7% from $1,622.3 million in 2007. Net income was $111.3 million ($3.05 per diluted share), compared with $98.5 million ($2.72 per diluted share), an increase of 13.0%. Growth reflected organic expansion and acquisitions, particularly in Electronics and Communications.
What caused the decline in Aerospace Engines and Components?
The segment reported an operating loss of $9.7 million in 2008, compared with operating income of $19.2 million in 2007. The decline reflected an estimated $18.0 million charge for a voluntary product recall and replacement program for aircraft piston engine cylinders produced since November 2007, along with lower sales. Management currently expects sales in this segment to decrease further in 2009.
How much debt does Teledyne carry and what are the liquidity considerations?
At December 28, 2008, total outstanding indebtedness was $333.2 million, including $326.0 million under the $590.0 million credit facility that expires in July 2011. On February 24, 2009, $403.6 million was outstanding under that facility. Available borrowing capacity was $254.8 million at year-end 2008. The company stated that operating cash flow and credit facility borrowings are expected to meet its anticipated requirements.
What are the pension obligations and how might they affect investors?
The accrued pension obligation rose to $227.9 million at year-end 2008 from $74.3 million, and pension assets fell in value with a reported actual return of negative 28.2% in 2008. The company made a $80.0 million voluntary contribution in February 2009 and anticipates about $37.1 million more in 2009. Total anticipated pretax pension contributions in 2009 are approximately $117.1 million before recovery from the U.S. Government.
Does Teledyne pay dividends or have a share repurchase program?
Teledyne does not anticipate paying cash dividends in the foreseeable future and intends to retain earnings to fund growth, including acquisitions. On February 24, 2009, the board approved a repurchase program for up to 1,500,000 shares through February 28, 2010, to be funded with cash on hand and credit facility borrowings.
06—Continue