01—Abstract
Summary
Summary of the 10-K filed March 3, 2011. Cited figures are marked; the original filing is the authoritative source.
Teledyne Technologies Incorporated (TDY) reported fiscal 2010 sales of $1,644.2 milliona, compared with $1,652.1 million in 2009, and net income attributable to Teledyne of $120.5 million, or $3.27 per diluted share, versus $113.3 million ($3.10 per diluted share) in 2009.
Net income excluding discontinued operations was $119.9 millionb ($3.25 per diluted share). Results were supported by a 6.5% sales increase in Instrumentation and a 6.1% increase in Aerospace and Defense Electronics, offset by an 18.0% decline in Engineered Systems and a 3.8% decline in Digital Imaging. The Company describes itself as being transformed into an electronics, instrumentation, digital imaging and engineering focused company following two transactions.
The two transactions are the February 12, 2011 acquisition of DALSA Corporation for approximately CAD $337 millionc, funded by borrowings under its bank credit facility and cash on hand, and the pending sale of its general aviation piston engines businesses to Technify Motor (USA) Ltd. for $186.0 million in cash, which is classified as discontinued operations and expected to close in the first quarter of 2011. On February 25, 2011, the Company replaced its $590.0 million credit facility with a $550.0 million facility, of which $273.0 million was outstanding. Total debt at January 2, 2011 was $250.0 million in senior unsecured notes.
Investors should note the disclosed risk areas: approximately 44% of 2010 sales came from U.S. Government contracts, Engineered Systems sales fell as missile defense and NASA work declined, and the Company is working through an unresolved SEC staff comment on its segment reporting. Cash flow from continuing operations was $127.1 milliond in 2010, and free cash flow was $96.1 million. The Company expects to make a voluntary pension contribution of $37.0 million in the first quarter of 2011, with an additional $32.0 million if the piston engines sale closes.
02—Key points
Key Highlights
- Sales of $1,644.2 million in 2010, down 0.5% from $1,652.1 million in 2009; segment operating profit and other segment income rose 4.3% to $207.3 million.
- Record diluted EPS of $3.27 in 2010 versus $3.10 in 2009; EPS from continuing operations was $3.25.
- Acquired DALSA Corporation on February 12, 2011 for approximately CAD $337 million, the Company's largest acquisition to date, expanding digital imaging capabilities.
- Agreed in December 2010 to sell general aviation piston engines businesses for $186.0 million in cash; these are reported as discontinued operations with $133.7 million of 2010 revenues.
- Refinanced credit facility on February 25, 2011 with a $550.0 million facility maturing in 2016; $250.0 million of 4.04%–5.30% senior notes issued in September 2010.
- U.S. Government sales were approximately 44% of 2010 total sales, with the Engineered Systems segment's sales declining 18.0% to $333.8 million.
- Free cash flow was $96.1 million in 2010, and the Company expects a $37.0 million voluntary pension contribution in 2011 plus $32.0 million if the piston engines sale closes.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2011, Teledyne Technologies kept $0.07.
- Revenue$1.64B100.0%
- Cost of revenue−$1.15B69.8%
- Gross profit$496.1M30.2%
- Operating costs−$317.6M19.3%
- Operating income$178.5M10.9%
- Interest, other & tax−$58.0M3.5%
- Net income$120.5M7.3%
Where FY2011 revenue went
$1.64B- Cost of revenue: $1.15B, 70% of revenue
- SG&A: $317.6M, 19% of revenue
- Net income: $120.5M, 7.3% of revenue
- Interest, other & tax: $58.0M, 3.5% of revenue
Kept 7.3% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2011filed March 3, 2011Financial Statements
FY2011 against FY2010
| Line item | FY2011FY2010 | Change |
|---|---|---|
| Revenue | $1.64B$1.65B | −0.5% |
| Cost of Revenue | $1.15B$1.18B | −2.5% |
| Gross Profit | $496.10M$474.80M | +4.5% |
| SG&A Expenses | $317.60M$303.40M | +4.7% |
| Operating Expenses | $1.47B$1.48B | −1.0% |
| Operating Income | $178.50M$171.40M | +4.1% |
| Interest Expense | $6.90M$5.10M | +35.3% |
| Net Income | $120.50M$113.30M | +6.4% |
| EPS (Basic) | $3.33$3.15 | +5.7% |
| EPS (Diluted) | $3.27$3.10 | +5.5% |
| Shares Outstanding (Basic) | 36.20M36.00M | +0.6% |
| Shares Outstanding (Diluted) | 36.90M36.60M | +0.8% |
05—Questions
Frequently Asked Questions
How did Teledyne perform financially in 2010?
Sales were $1,644.2 million, slightly below 2009's $1,652.1 million. Net income attributable to Teledyne was $120.5 million, or $3.27 per diluted share, compared with $113.3 million, or $3.10 per diluted share, in 2009. Higher sales and operating profit in Instrumentation and Aerospace and Defense Electronics were partly offset by lower Engineered Systems and Digital Imaging results.
What is the significance of the DALSA acquisition?
On February 12, 2011, Teledyne acquired DALSA Corporation, a designer and manufacturer of digital imaging products and semiconductor wafers and components, for approximately CAD $337 million. The filing describes it as the Company's largest acquisition to date and says combined digital imaging technologies should allow development of new infrared and visible light products. DALSA's 2010 sales were CAD $212.3 million, and the acquisition increases the Company's international revenue exposure.
What is the pending sale of the piston engines businesses?
Teledyne agreed in December 2010 to sell its general aviation piston engines businesses, including Teledyne Continental Motors, to Technify Motor (USA) Ltd., a subsidiary of AVIC International Holding Corporation, for $186.0 million in cash. The businesses are classified as discontinued operations, had $133.7 million in 2010 revenues, and the sale is expected to close in the first quarter of 2011, subject to closing conditions.
How much debt does Teledyne carry and how has its credit facility changed?
At January 2, 2011, total debt was $250.0 million in senior unsecured notes, with no amounts outstanding under the $590.0 million credit facility. On February 25, 2011, Teledyne replaced that facility with a $550.0 million facility expiring February 25, 2016, of which $273.0 million was outstanding. A 100 basis point rate increase would raise annual interest expense by approximately $2.7 million on the floating-rate balance.
What risks are most relevant to government-dependent revenue?
About 44% of 2010 sales were derived from U.S. Government contracts, and approximately 54% of U.S. Government prime and subcontract work was fixed-price. The filing notes risks including funding delays from continuing resolutions, contract termination for convenience, and reduced missile defense and NASA programs. Engineered Systems sales fell 18.0% in 2010, and the Company expects continued decline in missile defense and NASA services in 2011.
06—Continue