01—Abstract
Summary
Summary of the 10-K filed February 29, 2012. Cited figures are marked; the original filing is the authoritative source.
Teledyne Technologies Incorporated reported a strong 2011, with sales of $1,941.9 milliona, up from $1,644.2 million in 2010, an increase of 18.1%.
Net income attributable to Teledyne Technologies was $255.2 millionb ($6.84 per diluted share), compared with $120.5 million ($3.27 per diluted share) in 2010. Income from continuing operations was $142.1 million ($3.81 per diluted share), up 18.4%. The results were driven by the February 2011 acquisition of DALSA Corporation, which contributed $214.0 million of Digital Imaging revenue, and by higher organic growth in every segment except Engineered Systems.
The $113.8 millionc gain on the April 2011 sale of the general aviation piston engine businesses also boosted reported net income. Operating cash flow from continuing operations was $219.5 million, and free cash flow was $177.8 million, compared with $96.1 million in 2010. Total debt rose to $298.0 million at year-end 2011, including $250.0 million of senior notes and $48.0 million drawn under a $550.0 million credit facility.
Total equity increased to $984.1 milliond. Teledyne made a $50.0 million voluntary pension contribution on January 9, 2012, and expects to contribute a further $42.8 million in the third quarter of 2012. Backlog of confirmed orders was $944.6 million at January 1, 2012, and the company expects to fulfill 98% of it during 2012.
Investors should note the company's shift toward commercial markets: about 64% of 2011 sales were commercial, compared with roughly 55% ten years earlier. U.S. Government sales were 36% of total sales, down from 44% in 2010. Risk factors highlighted by the filing include U.S. defense budget reductions under the Budget Control Act of 2011, fixed-price government contract exposure, pension funding, and integration risk from DALSA.
Teledyne does not pay cash dividends and intends to retain earnings to fund growth, including acquisitions. On February 25, 2012, it acquired VariSystems Inc. for $34.3 million in cash.
02—Key points
Key Highlights
- Sales rose 18.1% to $1,941.9 million in 2011, including $249.6 million of incremental sales from acquisitions.
- Net income attributable to Teledyne was $255.2 million ($6.84 per diluted share), which includes a $113.8 million gain on the sale of discontinued operations.
- Income from continuing operations rose 18.4% to $142.1 million ($3.81 per diluted share).
- Digital Imaging sales increased to $349.9 million from $122.5 million, driven by the $339.5 million DALSA acquisition in February 2011.
- Free cash flow was $177.8 million, up from $96.1 million in 2010, and total debt was $298.0 million at year-end 2011.
- Backlog of confirmed orders was $944.6 million at January 1, 2012, compared with $863.8 million a year earlier.
- Commercial customers accounted for about 64% of 2011 sales, versus roughly 55% ten years earlier; U.S. Government sales fell to 36% from 44%.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2012, Teledyne Technologies kept $0.08.
- Revenue$2.13B100.0%
- Cost of revenue−$1.38B64.8%
- Gross profit$748.2M35.2%
- Operating costs−$505.1M23.7%
- Operating income$243.1M11.4%
- Interest, other & tax−$79.0M3.7%
- Net income$164.1M7.7%
Where FY2012 revenue went
$2.13B- Cost of revenue: $1.38B, 65% of revenue
- SG&A: $505.1M, 24% of revenue
- Net income: $164.1M, 7.7% of revenue
- Interest, other & tax: $79.0M, 3.7% of revenue
Kept 7.7% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2012filed February 29, 2012Financial Statements
FY2012 against FY2011
| Line item | FY2012FY2011 | Change |
|---|---|---|
| Revenue | $2.13B$1.64B | +29.4% |
| Cost of Revenue | $1.38B$1.15B | +20.1% |
| Gross Profit | $748.20M$496.10M | +50.8% |
| SG&A Expenses | $505.10M$317.60M | +59.0% |
| Operating Expenses | $1.88B$1.47B | +28.6% |
| Operating Income | $243.10M$178.50M | +36.2% |
| Interest Expense | $18.20M$6.90M | +163.8% |
| Net Income | $164.10M$120.50M | +36.2% |
| EPS (Basic) | $4.47$3.33 | +34.2% |
| EPS (Diluted) | $4.39$3.27 | +34.3% |
| Shares Outstanding (Basic) | 36.70M36.20M | +1.4% |
| Shares Outstanding (Diluted) | 37.40M36.90M | +1.4% |
05—Questions
Frequently Asked Questions
What drove the increase in Teledyne's 2011 revenue?
Sales rose to $1,941.9 million from $1,644.2 million. The filing attributes $249.6 million of the increase to acquisitions, most notably DALSA, which added $214.0 million of Digital Imaging revenue. Every segment except Engineered Systems also grew organically, and Engineered Systems declined 8.7% on lower missile defense, NASA and gas centrifuge sales.
Why did net income rise so sharply in 2011?
Net income attributable to Teledyne was $255.2 million, compared with $120.5 million in 2010. About $113.8 million of this came from the gain on the April 2011 sale of the general aviation piston engine businesses, which was classified as discontinued operations. Net income from continuing operations increased 18.4% to $142.1 million.
How is Teledyne's balance sheet and debt position?
Total debt was $298.0 million at January 1, 2012, consisting of $250.0 million in senior notes and $48.0 million under a $550.0 million credit facility that matures in February 2016. Covenant ratios were well within requirements, with a Net Debt/EBITDA of 0.8 to 1 against a maximum of 3.25 to 1. Available borrowing capacity under the credit facility was $488.5 million.
What risks does the filing highlight for government-related revenue?
U.S. Government sales were about 36% of 2011 sales. Approximately 60% of government prime and subcontracts were fixed-price, meaning cost overruns fall on Teledyne. The filing also cites the Budget Control Act of 2011, which requires mandatory defense spending reductions, and it notes that seven government contracts were terminated for convenience in 2011.
Does Teledyne pay dividends, and what are its pension obligations?
Teledyne does not pay cash dividends and intends to retain earnings to fund growth, including acquisitions. On the pension side, it made a $50.0 million voluntary pretax contribution on January 9, 2012, and expects to contribute another $42.8 million in the third quarter of 2012. The accumulated other comprehensive loss rose to $241.1 million, mainly from the increase in the unfunded pension liability.
06—Continue