Teledyne Technologies Inc. (TDY) filed Quarterly Report for the period ended 2009-09-27.
Teledyne Technologies Inc. is a leading provider of sophisticated electronic and communication products systems engineering solutions and information technology services and aerospace engines and components. The company customers include aerospace prime contractors general aviation companies government agencies and major communications and other commercial companies. Teledyne Technologies Inc. has a market cap of $1.22 billion; its shares were traded at around $33.74 with a P/E ratio of 11.9 and P/S ratio of 0.6. Teledyne Technologies Inc. had an annual average earning growth of 33.2% over the past 5 years.
Highlight of Business Operations:
Teledyne Technologies’ third quarter 2009 sales were $429.4 million, compared with sales of $497.6 million for the same period of 2008, a decrease of 13.7%. Net income attributable to common stockholders for the third quarter of 2009 was $35.1 million ($0.96 per diluted share) compared with net income attributable to common stockholders of $30.9 million ($0.84 per diluted share) for the third quarter of 2008, an increase of 13.6%. The decrease in sales for the 2009 period, compared with the same 2008 period, reflected the impact of the general economic downturn, partially offset by revenue from acquisitions. Net income in the third quarter of 2009 includes research and development tax credits of $8.2 million.
Teledyne Technologies’ sales for the first nine months of 2009 were $1,310.8 million, compared with sales of $1,428.2 million for the same period of 2008, a decrease of 8.2%. Net income attributable to common stockholders for the first nine months of 2009 was $81.1 million ($2.22 per diluted share) compared with net income attributable to common stockholders of $91.4 million ($2.50 per diluted share) for the first nine months of 2008, a decrease of 11.3%. The decrease in sales for the 2009 period, compared with the same 2008 period, reflected the impact of the general economic downturn, partially offset by revenue from acquisitions. Net income in the first nine months of 2009 includes research and development tax credits of $8.2 million, recorded in the third quarter.
The first nine months of 2009 included pension expense of $16.9 million, compared with pension expense of $7.2 million in the first nine months of 2008. The increase in 2009 pension expense primarily reflects the impact of the reduction in pension assets in 2008 due to negative market returns. Pension expense allocated to contracts pursuant to CAS was $9.3 million in the first nine months of 2009, compared with pension expense of $7.1 million in the first nine months of 2008. For the first nine months of 2009 and 2008, we recorded a total of $4.1 million and $5.6 million respectively in stock option compensation expense.
Interest expense, net of interest income, was $3.7 million in the first nine months of 2009, compared with $8.0 million for the first nine months of 2008. The decrease in net interest expense reflected the impact of lower average interest rates, partially offset by higher outstanding debt levels. The Company’s effective tax rate for the first nine months of 2009 was 31.3% compared with 36.9% for the first nine months of 2008. The first nine months of 2009 includes research and development tax credits of $8.2 million following a formal communication from the Internal Revenue Service of a more favorable tax position than the Company’s original measurement in connection with an ongoing audit of the research and development tax credit for prior years. The first nine months also included the reversal of $1.1 million in income tax contingency reserves which were determined to be no longer needed due to the expiration of applicable statutes of limitations and additional income tax expense of $0.3 million, primarily related to the impact of California income tax law changes. Excluding these amounts, the Company’s effective tax rate for the first nine months of 2009 would have been 38.8%. The effective tax rate for the first nine months of 2008 reflects a research and development income tax refund of $1.3 million for the 2007 tax year which was recorded in the first quarter of 2008 and also reflects the third quarter reversal of $0.8 million in income tax contingency reserves which were determined to be no longer needed due to the expiration of applicable statutes of limitations. Excluding these items, the Company’s effective tax rate for the first nine months of 2008 would have been 38.3%.
The first nine months 2009 sales decline resulted from lower sales of other commercial electronics and electronic instrumentation, partially offset by revenue growth in defense electronics. The revenue growth of $10.6 million in defense electronics was primarily driven by acquisitions made in 2008, partially offset by slightly lower organic sales. The revenue decrease in electronic instrumentation of $16.9 million reflected lower organic sales, partially offset by the impact of acquisitions made in 2008. The lower organic sales of electronic instruments reflected reduced sales geophysical sensors for the energy exploration market and environmental instruments for air and water quality monitoring. Lower sales of other commercial electronics of $31.3 million reflected reduced sales of avionics, medical manufacturing services and other electronic components. Revenue in the first nine months of 2009 included revenue from acquisitions made in 2008 of $35.5 million. The decrease in operating profit primarily reflected reduced sales and sales mix differences and higher pension expense, partially offset by a reduction in certain insurance reserves. Operating profit in the first nine months of 2008 was favorably impacted by a settlement of $2.0 million. The incremental operating profit in the first nine months of 2009 from businesses acquired in 2008, including synergies, was $0.7 million. Operating profit included $1.9 million of stock option compensation expense in the first nine months of 2009, compared with $2.7 million for the first nine months of 2008. Operating profit included pension expense of $7.1 million in the first nine months of 2009, compared with $2.6 million for the first nine months of 2008. Pension expense allocated to contracts pursuant to CAS was $1.8 million in the first nine months of 2009, compared with $1.2 million for the first nine months of 2008.
The third quarter 2009 sales reflected lower revenue in manufacturing, aerospace and defense programs of $14.7 million and lower environmental sales of $1.2 million. The sales decrease primarily reflected lower sales of manufactured products including gas centrifuge service modules, as well as reduced aerospace and defense engineering services. Operating profit in the third quarter of 2009 reflected the impact of lower revenue and higher pension expense. Operating profit included pension expense of $2.8 million in the third quarter of 2009, compared with $1.3 million for the third quarter of 2008. Pension expense allocated to contracts pursuant to CAS was $2.4 million in the third quarter of 2009, compared with $2.0 million for the third quarter of 2008.
TDY is in the portfolios of John Keeley of Keeley Fund Management, Kenneth Fisher of Fisher Asset Management, LLC.
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