01—Abstract
Summary
Summary of the 10-K filed March 2, 2010. Cited figures are marked; the original filing is the authoritative source.
Teledyne Technologies Incorporated (TDY) reported 2009 sales of $1,765.2 milliona, down 6.8% from $1,893.0 million in 2008, while net income attributable to Teledyne rose to $113.3 million ($3.10 per diluted share) from $111.3 million ($3.05) in 2008.
The decline in sales reflected lower sales in every segment, with Aerospace Engines and Components falling 33.9% on weak general aviation demand. Segment operating profit and other segment income fell to $193.3 millionb from $218.5 million, but the effective tax rate dropped to 29.4% from 36.4%, helped by $14.3 million of prior-year R&D tax credits. Electronics and Communications remained the dominant segment at 70% of 2009 sales.
Cash flow and balance sheet items were a focus for the year. Net cash provided by operating activities was $154.9 millionc, and free cash flow was $118.7 million. The company made voluntary after-tax pension contributions of $71.1 million, and pretax contributions totaled $117.0 million.
Long-term debt fell to $240.0 milliond under a $590.0 million credit facility that expires in July 2011, and total equity rose to $667.4 million from $506.9 million. The company stated it expects to refinance the facility before maturity at higher interest rates. The filing highlights a heavy dependence on government business: U.S. Government sales were about 44% of 2009 sales, and about 50% of U.S. Government prime and subcontract work was fixed-price.
Backlog of confirmed orders stood at $831.0 million at January 3, 2010. The company also flagged risks including missile defense budget reductions, delays in JASSM production funding, the general aviation downturn, and product liability exposure, including a $17.2 million annual self-insured retention for general aviation aircraft liabilities. The company does not pay cash dividends and intends to retain earnings for growth and acquisitions.
02—Key points
Key Highlights
- Sales fell 6.8% to $1,765.2 million, with declines in all four segments; Aerospace Engines and Components dropped 33.9% to $113.1 million.
- Net income attributable to Teledyne rose 1.8% to $113.3 million, or $3.10 per diluted share, helped by a 29.4% effective tax rate versus 36.4% in 2008.
- Segment operating profit and other segment income declined to $193.3 million from $218.5 million; Electronics and Communications was 70% of total sales.
- Operating cash flow was $154.9 million and free cash flow $118.7 million, despite $117.0 million of pretax pension contributions.
- Long-term debt was reduced to $240.0 million from $326.0 million, with $336.3 million of available credit; the $590.0 million facility expires July 2011.
- U.S. Government sales were approximately 44% of total sales, and backlog of confirmed orders was $831.0 million at January 3, 2010.
- Key risks include declining missile defense (GMD) revenues, delays in JASSM production funding, general aviation weakness, and product liability exposure with a $17.2 million self-insured retention.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2010, Teledyne Technologies kept $0.07.
- Revenue$1.65B100.0%
- Cost of revenue−$1.18B71.3%
- Gross profit$474.8M28.7%
- Operating costs−$303.4M18.4%
- Operating income$171.4M10.4%
- Interest, other & tax−$58.1M3.5%
- Net income$113.3M6.9%
Where FY2010 revenue went
$1.65B- Cost of revenue: $1.18B, 71% of revenue
- SG&A: $303.4M, 18% of revenue
- Net income: $113.3M, 6.9% of revenue
- Interest, other & tax: $58.1M, 3.5% of revenue
Kept 6.9% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2010filed March 2, 2010Financial Statements
| Revenue | $1.65B |
| Cost of Revenue | $1.18B |
| Gross Profit | $474.80M |
| SG&A Expenses | $303.40M |
| Operating Expenses | $1.48B |
| Operating Income | $171.40M |
| Interest Expense | $5.10M |
| Net Income | $113.30M |
| EPS (Basic) | $3.15 |
| EPS (Diluted) | $3.10 |
| Shares Outstanding (Basic) | 36.00M |
| Shares Outstanding (Diluted) | 36.60M |
05—Questions
Frequently Asked Questions
Why did Teledyne's sales decline in 2009 while net income increased?
Sales fell 6.8% to $1,765.2 million from $1,893.0 million, reflecting lower sales in every segment. Net income attributable to Teledyne rose 1.8% to $113.3 million, primarily because the effective tax rate fell to 29.4% from 36.4%, which included $14.3 million of prior-year research and development tax credits.
How strong is Teledyne's exposure to U.S. Government spending?
Sales under U.S. Government contracts were approximately 44% of total sales in 2009, compared with 40% in 2008. About 50% of U.S. Government prime contracts and subcontracts were fixed-price type, and seven U.S. Government contracts were terminated for convenience in 2009.
What happened to the company's debt and pension obligations in 2009?
Long-term debt declined to $240.0 million from $326.0 million, and the company had $336.3 million of available credit at year-end. Teledyne made pretax pension contributions of $117.0 million in 2009, and its accrued pension obligation fell to $79.8 million from $227.9 million. The company expects a voluntary pretax contribution of about $37.0 million in 2010.
Does Teledyne pay dividends or repurchase shares?
No cash dividends were paid, and the company does not anticipate paying dividends in the foreseeable future, intending instead to retain earnings for growth and acquisitions. Under its February 2009 repurchase program, the company repurchased 36,239 shares for $0.8 million before the program expired on February 28, 2010.
What are the main risks to Teledyne's aerospace and missile defense businesses?
Teledyne Brown Engineering's GMD revenues fell from about $45 million in 2007 to $31 million in 2009 and are expected to decline below $20 million per year in 2010 and 2011. The Aerospace Engines and Components segment faces weak general aviation demand and product liability exposure, including a $17.2 million annual self-insured retention and a product recall costing $18.0 million in 2008.
06—Continue