FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1994
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period From ____ to ____
Commission File Number 1-5212
TELEDYNE, INC.
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(Exact Name of Registrant as Specified in its Charter)
Delaware 95-2282626
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
1901 Avenue of the Stars
Los Angeles, California 90067-6046
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number,
Including Area Code (310) 277-3311
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Securities registered pursuant to Section 12(b) of the Act:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
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Common Stock, $1.00 Par Value New York Stock Exchange
Pacific Stock Exchange
7% Subordinated Debentures Due 1999 New York Stock Exchange
10% Subordinated Debentures Due 2004, Series A New York Stock Exchange
10% Subordinated Debentures Due 2004, Series C New York Stock Exchange
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Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
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Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K (X).
At January 19, 1995, Registrant had outstanding 55,480,298 shares of its
Common Stock. The aggregate market value of the Registrant's voting stock held
by non-affiliates at this date was approximately $975.9 million, based on the
closing price of $22 as reported on the Composite Tape. For purposes of the
foregoing calculation, all directors and officers of the Registrant have been
deemed to be affiliates, but the Registrant disclaims that any of such directors
or officers is an affiliate.
Documents Incorporated By Reference
Teledyne, Inc. proxy statement for 1995 - Part III<PAGE>
<PAGE>
PART I
Item 1. Business
(a) Teledyne, Inc. (Registrant) was incorporated in the state of Delaware
in 1960. Registrant is a diversified manufacturing corporation serving
customers worldwide through 18 operating companies focused in four business
segments: Aviation & Electronics; Specialty Metals; Industrial; and Consumer.
Sale of Teledyne Electronic Systems
In January 1995, the Company sold substantially all of the business and
assets of Teledyne Electronic Systems to Litton Industries, Inc. for cash. The
transaction did not include Teledyne Electronic Systems' Lewisburg, Tenn.
operations, its commercial encryption business or any real estate. Teledyne
Electronic Systems is a major designer, developer, manufacturer and integrator
of high-technology electronics systems and subsystems for military, aerospace,
space and commercial applications.
Realignment/Restructure
In July 1993, Teledyne undertook a major realignment for the company which
consolidated its operating companies and eliminated 1,200 management and support
positions. The intent of the realignment was to streamline operations in order
to take full advantage of the opportunities available to the Company, address
the increasingly complex business environment of the 1990's and beyond and
better serve customers through more robust operating units.
The intent of the 1991-1992 restructure plan was to focus on the Company's
technology-based businesses in which it has significant leadership roles.
Included in the plan for sale or closure were certain operations in energy
exploration, drilling and supply, engine manufacture or overhaul, aviation
related components, hydraulic devices and instrumentation, metal forming tools
and equipment, welding systems and equipment, metal, wood and paper businesses,
semiconductors and electrical equipment manufacturing. The restructure plan for
operations which were to be closed or sold has been substantially completed.
Distribution of Unitrin
In 1990, the Registrant distributed to its shareholders all of the
outstanding common stock of Unitrin, Inc. (Unitrin), the parent company of
Registrant's former insurance subsidiaries. The units involved were United
Insurance Company and subsidiaries, Trinity Universal Insurance Company and
subsidiaries and Fireside Securities Corporation and subsidiaries.
(b) and (c)(1)(i) Information regarding business segments is presented in
Note 10 on pages 13-19 through 13-21 in Exhibit 13 - Teledyne, Inc. annual
report to shareholders for the year ended December 31, 1994. Teledyne's
individual divisions are responsible for marketing their products. Additional
information regarding the Company's products and services is presented in the
Outline of Products and Activities on pages 13-38 through 13-44 in Exhibit 13 -
Teledyne, Inc. annual report to shareholders for the year ended December 31,
1994.
(c)(1)(ii) There has been no public announcement about a new product or
industry segment that would require the investment of a material amount of
assets of the Registrant or that otherwise is material.
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Item 1. Business (Continued)
(c)(1)(iii) Substantially all parts and materials required in the
manufacture of Registrant's products are available from more than one supplier
and, in Registrant's opinion, the sources and availability of raw materials
essential to its business are adequate.
(c)(1)(iv) Registrant owns a number of patents and trademarks and is a party
to numerous patent, trademark and technical information license agreements.
Although these have been and are expected to be of value, in the opinion of
Registrant the loss of any single such item or technically related group of such
items would not materially affect the conduct of its business.
(c)(1)(v) and (c)(1)(vi) Not applicable.
(c)(1)(vii) For the year ended December 31, 1994, approximately 32 percent
of Registrant's revenues was attributable to U.S. government business. Sales by
the Registrant to the U.S. government included sales by the aviation and
electronics segment of $605.9 million in 1994, $742.9 million in 1993 and $772.8
million in 1992 and the industrial segment of $99.4 million in 1994, $134.6
million in 1993 and $149.8 million in 1992. Companies engaged in supplying goods
and services to the U.S. government are dependent on congressional
appropriations and administrative allotment of funds, and may be affected by
changes in U.S. government policies resulting from various domestic and
international military and political developments. While Registrant's
subsidiaries perform work on a substantial number of defense contracts, spanning
many defense programs, a material reduction in U.S. government appropriations
for defense may have an adverse effect on the Registrant's business, depending
upon the defense programs affected.
In addition, U.S. government contracts are terminable at the convenience of
the government or for default. In the event of termination, the affected
contractor is entitled to payment for allowable costs incurred through the date
of termination and, in general, to a proportionate share of the profit or fee
for the work done. The U.S. government may terminate a contract for default if
the contractor materially breaches the contract. In the event of a material
breach, traditional contract remedies apply.
Additional information regarding business with the U.S. government is
included in Management's Discussion and Analysis of Financial Condition and
Results of Operations on pages 13-29 through 13-36 in Exhibit 13 - Teledyne,
Inc. annual report to shareholders for the year ended December 31, 1994.
(c)(1)(viii) Registrant's backlog of confirmed orders was approximately $1.4
billion at December 31, 1994 and 1993. During the year ending December 31,
1995, it is anticipated that approximately 90.6 percent of confirmed orders on
hand at December 31, 1994 will be filled. Backlog of confirmed orders of the
aviation and electronics segment was $850.7 million at December 31, 1994 and
$1.0 billion at December 31, 1993. During the year ending December 31, 1995,
it is anticipated that approximately 95.7 percent of the confirmed orders on
hand at December 31, 1994 for this segment will be filled.
(c)(1)(ix) See (c)(1)(vii) above.
(c)(1)(x) Intense competition exists with respect to most of Registrant's
products and services in each of its principal business segments. During the
year ended December 31, 1994, there were no material changes in the competitive
conditions in the various industries in which Registrant competes. In view of
the number and variety of its products and services, Registrant believes that it
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Item 1. Business (Continued)
is not meaningful to state its relative position with respect to the market for
any particular product or service, or group of products or services.
(c)(1)(xi) Research and development is conducted by Registrant at its
various operating locations both for its own account and for customers on a
contract basis. Estimates of the components of research and development,
including bid and proposal costs, for the years ended December 31, 1994, 1993
and 1992 included the following in millions:
1994 1993 1992
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Customer-Sponsored:
Aviation and electronics segment $173.9 $291.6 $295.5
Industrial segment 51.1 85.5 119.1
Other 5.2 1.9 2.1
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230.2 379.0 416.7
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Company-Sponsored:
Aviation and electronics segment 39.7 40.6 40.1
Other 26.2 23.4 29.3
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65.9 64.0 69.4
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Total Research and Development $296.1 $443.0 $486.1
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(c)(1)(xii) Information regarding laws and regulations concerning the
environment is included in Management's Discussion and Analysis of Financial
Condition and Results of Operations on pages 13-35 and 13-36 in Exhibit 13 -
Teledyne, Inc. annual report to shareholders for the year ended December 31,
1994.
(c)(1)(xiii) Registrant and its subsidiaries employ approximately 18,000
persons, 8,000 of whom are employed at companies in the aviation and electronics
segment.
(d)(1) During the years ended December 31, 1994, 1993, and 1992, Registrant
and its subsidiaries did not engage in material manufacturing operations in
foreign countries. Export sales by U.S. operations to customers in foreign
countries represented approximately 16 percent in 1994, 15 percent in 1993 and
17 percent in 1992 of Registrant's sales.
(d)(1)(i) and (d)(1)(ii) Not applicable.
(d)(2) In the opinion of Registrant, there is no significant risk attendant
to its foreign operations.
(d)(3) Not applicable.
Item 2. Properties
Registrant owns manufacturing and research facilities at numerous locations
as follows: aviation and electronics segment (2.3 million square feet),
primarily in California and Alabama; specialty metals segment (3.4 million
square feet), primarily in Oregon, Indiana and North Carolina; industrial
segment (2.4 million square feet), primarily in Michigan and Pennsylvania;
consumer segment (1.2 million square feet), primarily in Colorado and
California.
Registrant leases facilities as follows: aviation and electronics segment
(3.9 million square feet), primarily in Alabama and California; specialty metals
segment (0.8 million square feet), primarily in Massachusetts; industrial
segment (0.1 million square feet); consumer segment (0.2 million square feet).
The terms of these leases range from monthly tenancies to several years, and
many may be renewed for additional periods at the option of Registrant.
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Registrant believes that its property and equipment, most of which is fully
utilized in its operations, are well maintained and in good operating condition.
Item 3. Legal Proceedings
On October 29, 1992, Eugene J. Bass, a shareholder purporting to act
derivatively on behalf of Registrant, commenced an action in the United States
District Court for the Central District of California against certain of
Registrant's directors and executive officers, a former employee of Registrant's
Teledyne Relays unit, and Registrant as a "nominal" defendant. Subsequently,
Herman and Lillian Krangel and Marshall Wolf joined the action as plaintiffs.
On February 26, 1993, plaintiffs filed a consolidated second amended complaint
in the action which alleged, among other things, violations of RICO and the
Securities Exchange Act of 1934, and breaches of fiduciary duty, in connection
with the management and administration of the affairs of Registrant with respect
to its Teledyne Controls, Teledyne Electro-Mechanisms, Teledyne Electronics,
Teledyne Firth Sterling, Teledyne Neosho, Teledyne Relays, Teledyne Ryan
Aeronautical, Teledyne Solid State, Teledyne Systems, Teledyne Thermatics and
Teledyne Wah Chang Albany units, and with respect to Registrant's foreign
military sales effort in Egypt and Saudi Arabia. The action seeks a declaratory
judgment, treble the damages allegedly sustained by Registrant as a result of
the alleged conduct, return of salaries and other remuneration received by the
defendants, a declaration that the election of directors at Registrant's annual
meetings in 1987 through 1992 is null and void, plaintiffs' costs and expenses,
including attorneys' fees, and other appropriate relief. On August 19, 1993,
the Court issued a memorandum decision dismissing plaintiffs' state law claims
without prejudice to refiling in state court, dismissing plaintiffs' RICO and
Securities Exchange Act claims without prejudice, and ordering plaintiffs to
show cause why their RICO and Securities Exchange Act claims should not be
dismissed with prejudice. After briefing by the parties, the Court entered an
order on September 30, 1993, dismissing plaintiffs' RICO and Securities Exchange
Act claims with prejudice. Plaintiffs filed a notice of appeal on October 4,
1993. Management does not believe that the outcome of this action is likely to
have a material adverse effect on Registrant's financial condition.
On December 7, 1993, following dismissal of their consolidated second
amended complaint in the above-described action, Eugene J. Bass, Herman Krangel,
Lillian Krangel and Marshall Wolf, shareholders purporting to act derivatively
on behalf of Registrant, commenced an action in the Superior Court of the State
of California, County of Los Angeles, against certain of Registrant's directors
and executive officers, a former employee of Teledyne Relays, and Registrant as
a "nominal" defendant. The complaint in this action alleges, among other
things, breaches of fiduciary duty and gross mismanagement in connection with
the management and administration of the affairs of Registrant with respect to
its Teledyne Controls, Teledyne Electro-Mechanisms, Teledyne Electronics,
Teledyne Firth Sterling, Teledyne Neosho, Teledyne Relays, Teledyne Ryan
Aeronautical, Teledyne Solid State, Teledyne Systems, Teledyne Thermatics and
Teledyne Wah Chang Albany units, and with respect to Registrant's foreign
military sales effort in Egypt and Saudi Arabia. The action seeks a declaratory
judgment, damages allegedly sustained by Registrant as a result of the alleged
conduct, costs and expenses, including attorneys' fees, and other appropriate
relief. Management does not believe that the outcome of this action is likely to
have a material adverse effect on Registrant's financial condition.
On February 11, 1993, Moise Katz and Harry Lewis, shareholders purporting
to act derivatively on behalf of Registrant, commenced an action in the Superior
Court of the State of California, County of Los Angeles, against certain of
Registrant's directors and Registrant as a "nominal" defendant. The complaint
alleges, among other things, gross negligence and breaches of fiduciary duty in
connection with the management and administration of the affairs of Registrant
with respect to its Teledyne Controls, Teledyne Relays and Teledyne Systems
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units, each of which has been subject to investigation by the U.S. government,
and with respect to Registrant's foreign military sales effort in Egypt and
Saudi Arabia. The complaint seeks damages sustained by Registrant as a result
of the alleged conduct, plaintiffs' costs and expenses, including attorneys'
fees, and other appropriate relief. On February 28, 1994, the Court entered an
order dismissing the complaint with prejudice; plaintiffs filed a notice of
appeal from the order on March 25, 1994. Management does not believe that the
outcome of this action is likely to have a material adverse effect on
Registrant's financial condition.
On December 22, 1994, a putative class of Registrant's shareholders filed
a complaint in the Superior Court of the State of California, County of Los
Angeles, entitled Dominic Pignetti and Irene Pignetti v. William P. Rutledge,
Donald B. Rice, Henry E. Singleton, George Kozmetsky, George A. Roberts, Fayez
Sarofim and Teledyne, Inc., asserting a claim against Registrant and certain of
its directors for breach of fiduciary duty. On January 9, 1995, a second
putative class of Registrant's shareholders filed a virtually identical
complaint in the Superior Court of the State of California, County of Los
Angeles, entitled Michael Shores and Inga Kune v. William P. Rutledge, Donald B.
Rice, Henry E. Singleton, George Kozmetsky, George A. Roberts, Fayez Sarofim and
Teledyne, Inc. Plaintiffs in both actions principally contend that Registrant
and its Board of Directors inappropriately rejected an unsolicited acquisition
proposal from WHX Corporation ("WHX"), failed to negotiate with WHX for a higher
price, and failed to engage in an auction of Registrant. By their complaints,
plaintiffs seek declaratory relief certifying each of their respective cases as
class actions, injunctive relief requiring the directors to announce their
intentions, among other things, to take all steps necessary to enhance the value
of Registrant, to auction Registrant to the highest bidder, and to facilitate an
acquisition of Registrant, and unspecified monetary damages against the
directors. The plaintiffs in both actions also request reimbursement of their
respective costs and attorneys' fees. On December 29, 1994, one of the
individual defendants removed the Pignetti case to the United States District
Court for the CentralDistrict of California. Management does not believe that
the outcome of the claims alleged in these actions is likely to have a material
adverse effect on Registrant's financial condition.
On August 15, 1990, federal agents executed a search warrant on and removed
a number of documents relating to government-furnished materials from
Registrant's former Teledyne Neosho unit. In addition, several Teledyne Neosho
employees received subpoenas to testify before a federal grand jury. As
previously reported, Registrant is further informed that it has been named as a
defendant in a civil action filed pursuant to the False Claims Act in the U.S.
District Court for the Western District of Missouri concerning Teledyne Neosho.
The case remains under seal. Registrant does not possess sufficient information
to determine whether Registrant will sustain a loss in these matters, or to
reasonably estimate the amount of any such loss. Consequently, Registrant has
not been able to identify the existence of a material loss contingency arising
therefrom.
Registrant is defending a civil action filed on behalf of the U.S.
government pursuant to the False Claims Act in the United States District Court
for the Central District of California, entitled United States of America ex
rel. Charlie J. Hill and Charlie J. Hill v. Teledyne, Inc., Teledyne Industries,
Inc., Teledyne Relays Division, Teledyne Solid State Division, Hall & Phillips,
Phillips, Cohen & Goldstein, Hall & Associates, John R. Phillips, Carlyle W.
Hall and Ann Carlson. The original complaint in the matter, filed on
November 21, 1991, alleged generally that the Registrant's Teledyne Relays and
Teledyne Solid State units had used improperly calibrated test equipment in the
manufacture of switching devices. The first amended complaint, filed on
November 10, 1993, adds allegations that Teledyne Relays and Teledyne Solid
State falsified test certifications for switching devices supplied to the
government, and seeks treble the damages allegedly sustained by the United
States together with civil
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penalties of $5,000 to $10,000 for any false certification made. In addition to
the claims alleged under the False Claims Act, the first amended complaint
states three new causes of action for wrongful termination under federal and
state laws. The government intervened in the action on March 4, 1994, and
subsequently filed a second amended complaint alleging that Teledyne Solid State
failed to conform to percent defective allowable ("PDA") testing requirements
for solid state relays delivered to the United States, and raising several other
testing issues reported by Teledyne Solid State to the government following a
self audit in 1991. On July 1, 1994, plaintiff Charlie J. Hill filed a third
amended complaint realleging the claims alleged in the first amended complaint
and the government's second amended complaint, and raising other testing issues
previously reported by Teledyne Solid State to the government. The Court
unsealed the case on July 29, 1994. On October 4, 1994, plaintiff Charlie J.
Hill and Registrant reached a settlement for $1.125 million of the PDA claims
first alleged in the second amended complaint. The government approved the
settlement and subsequently, on December 20, 1994, withdrew from the case.
Based on an internal review, and after consultation with counsel, Registrant
does not possess sufficient information to determine whether it will sustain
a further loss in this matter, or to reasonably estimate the amount of any such
loss. Consequently, Registrant has not been able to identify the existence of a
material loss contingency arising therefrom.
On May 26, 1993, a grand jury impaneled by the United States District Court
for the Southern District of Florida returned an indictment in connection with
a U.S. government investigation of alleged violations of the U.S. export control
laws. The indictment includes charges against the Registrant's Teledyne Wah
Chang Albany unit and two of its employees relating to the sale of zirconium to
a South American industrialist. At an arraignment on June 14, 1993, the
Registrant entered a plea of not guilty. On March 22, 1994, the Court dismissed
five of the seven charges brought against Teledyne Wah Chang Albany. If the
Registrant were found guilty of the remaining two charges, it could face fines
totalling up to $3.55 million.
On July 13, 1994, a grand jury impaneled by the United States District Court
for the District of Columbia returned an indictment against four corporations
and two individuals, including the Registrant's Teledyne Wah Chang Albany unit
and one of its employees. The indictment stems from a U.S. government
investigation of alleged violations of the U.S. export control laws relating to
a 1988 sale of zirconium to Extraco, Ltd., a Greek company. The Registrant
entered a plea of not guilty on August 5, 1994. According to a press release
issued by the government, "the corporate defendants face fines in excess of
$20 million" if convicted of all charges.
As a result of the May 26, 1993, indictment, the United States Department
of State temporarily suspended Teledyne Wah Chang Albany, effective July 26,
1993, from receiving licenses for export of products and services on the
munitions list. This suspension will not have a material adverse affect on the
financial condition of the Registrant. However, in the event of a conviction in
either of the two cases, Teledyne Wah Chang Albany and (although considered
unlikely) conceivably the Registrant would be subject to debarment for a period
of up to three years from receiving licenses for the export of products and
services on the munitions list. In addition, the United States Department of
Commerce could suspend Teledyne Wah Chang Albany and (although considered
unlikely) conceivably the Registrant for up to ten years from eligibility for
commercial export licenses. Finally, should the United States Department of
Defense determine that Teledyne Wah Chang Albany is not a "presently responsible
contractor," Teledyne Wah Chang Albany, and (although again considered unlikely)
conceivably the Registrant, could be temporarily suspended or, in the event of
a conviction, could be debarred for up to three years from receiving new
government contracts or government-approved subcontracts.
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The Registrant has established a reserve in the amount of $13 million in
connection with negotiations for the resolution of the Teledyne Wah Chang
matters. While there is no assurance that the negotiations will be concluded
satisfactorily, management does not believe that additional liability incurred,
if any, in connection with the ultimate outcome of these matters is likely to
have a material adverse effect on the financial condition of the Registrant.
Registrant has concluded its negotiation with the Commonwealth of
Pennsylvania Department of Environmental Resources (DER) for resolution of
alleged violations of Pennsylvania's Solid Waste Management Act and Clean
Streams Law at Registrant's Scottdale, Pennsylvania facility. The settlement,
which is subject to documentation, requires implementation of a groundwater
remediation system, sediment remediation system and the evaluation and possible
remediation of on-site soils. The total cost of the project is expected to be
approximately $3.7 million. A civil penalty of $380,000 will be paid to finally
resolve the matter, together with stipulated penalties of $3,000 annually during
the period of groundwater remediation.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
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PART II
Item 5. Market for the Registrant's Common Equity and Related Stockholder
Matters
This information is presented on pages 13-26 and 13-37 in Exhibit 13 -
Teledyne, Inc. annual report to shareholders for the year ended December 31,
1994.
Item 6. Selected Financial Data
This information is presented on pages 13-27 and 13-28 in Exhibit 13 -
Teledyne, Inc. annual report to shareholders for the year ended December 31,
1994.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operation
This information is presented on pages 13-29 through 13-36 in Exhibit 13 -
Teledyne, Inc. annual report to shareholders for the year ended December 31,
1994.
Item 8. Financial Statements and Supplementary Data
This information is presented on pages 13-1 through 13-26 in Exhibit 13 -
Teledyne, Inc. annual report to shareholders for the year ended December 31,
1994.
Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure
Not applicable.
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PART III
Item 10. Directors and Executive Officers of the Registrant
This information will be included in the Teledyne, Inc. proxy statement for
1995 which will be filed within 120 days of Registrant's year end and is hereby
incorporated by reference to such proxy statement.
Item 11. Executive Compensation
This information will be included in the Teledyne, Inc. proxy statement for
1995 which will be filed within 120 days of Registrant's year end and is hereby
incorporated by reference to such proxy statement.
Item 12. Security Ownership of Certain Beneficial Owners and Management
This information will be included in the Teledyne, Inc. proxy statement for
1995 which will be filed within 120 days of Registrant's year end and is hereby
incorporated by reference to such proxy statement.
Item 13. Certain Relationships and Related Transactions
This information will be included in the Teledyne, Inc. proxy statement for
1995 which will be filed within 120 days of Registrant's year end and is hereby
incorporated by reference to such proxy statement.
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PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a)(1) Consolidated Balance Sheets - December 31, 1994 and 1993
Consolidated Statements of Operations for the Years Ended December 31,
1994, 1993 and 1992
Consolidated Statements of Cash Flows for the Years Ended December 31,
1994, 1993 and 1992
Consolidated Statements of Shareholders' Equity for the Years Ended
December 31, 1994, 1993 and 1992
Report of Independent Public Accountants
Notes to Consolidated Financial Statements
(a)(3) See the exhibit index.
(b) Registrant did not file any reports on Form 8-K during the quarter
ended December 31, 1994
(c) Included in 14(a)(3) above.
(d) Included in 14(a)(2) above.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Registrant has duly caused this annual report to be signed
on its behalf by the undersigned, thereunto duly authorized.
TELEDYNE, INC.
(Registrant)
Date: January 24, 1995 By /S/ William P. Rutledge
_____________________________
William P. Rutledge
Director, Chairman of the Board
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of Registrant
and in the capacities and as of the date indicated.
Date: January 24, 1995 By /S/ William P. Rutledge
____________________________
William P. Rutledge
Director, Chairman of the Board
and Chief Executive Officer
Date: January 24, 1995 By /S/ Donald B. Rice
____________________________
Donald B. Rice
Director, President and Chief
Operating Officer
Date: January 24, 1995 By /S/ George A. Roberts
____________________________
George A. Roberts
Director
Date: January 24, 1995 By /S/ Henry E. Singleton
____________________________
Henry E. Singleton
Director
Date: January 24, 1995 By /S/ Douglas J. Grant
____________________________
Douglas J. Grant
Treasurer
(Principal Financial Officer)
Date: January 24, 1995 By /S/ Dale G. Reid
____________________________
Dale G. Reid
Assistant Treasurer
(Principal Accounting Officer)
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TELEDYNE, INC. AND SUBSIDIARIES
INDEX TO EXHIBITS
Number
------
Restated Certificate of Incorporation of Teledyne, Inc. as amended and 3(i)
previously filed with Securities and Exchange Commission ("Commission")
as Exhibit 3 to the Company's Form 10-K Report for the year ended
December 31, 1991, File No. 1-5212, and incorporated herein by reference.
By-Laws of Teledyne, Inc., as restated and amended and filed with the 3(ii)
Commission as Exhibit 3 to the Company's Form 8-K Report, dated
January 4, 1995, File No. 1-5212, and incorporated herein by reference.
Indenture dated as of June 1, 1969 between Continental Motors 4.1
Corporation and Bank of America National Trust and Savings Association,
as supplemented by First Supplemental Indenture dated as of October 31,
1969 between Continental Motors Corporation and Bank of America National
Trust and Savings Association and Second Supplemental Indenture dated as
of December 16, 1969 between Teledyne, Inc. and Continental Motors
Corporation and Security Pacific National Bank. Third Supplemental
Indenture dated as of July 12, 1994 between Teledyne, Inc. and Bank of
America National Trust and Savings Association to Harris Trust
Company of California.
Indenture dated as of June 1, 1974 between Teledyne, Inc. and Union Bank, 4.2
as supplemented by Second Supplemental Indenture dated as of May 5, 1980
between Teledyne, Inc. and Union Bank, previously filed with the
Commission as Exhibit 4 to the Company's Form 10-K Report for the year
ended Decemnber 31, 1992, File No. 1-5212, and incorporated herein by
reference.
Rights Agreement, dated as of January 4, 1995, between Teledyne, Inc. 4.3
and Chemical Trust Company of California as Rights Agent, which
includes: as Exhibit A thereto, the Form of Certificate of Designation,
Preferences and Rights of Series D Preferred Stock of Teledyne, Inc.;
as Exhibit B thereto, the Form of Right Certificate; and, as Exhibit C
thereto, the Summary of Rights to Purchase Series D Preferred Stock,
filed as Exhibit 4 to the Company's Form 8-K, dated January 4, 1995,
File No. 1-5212, and incorporated herein by reference.
Teledyne, Inc. 1990 Stock Option Plan, previously filed with the 10.1
Commission as Exhibit 10 to the Form 10-K Report for the year ended
December 31, 1990, File No. 1-5212, and incorporated herein by
reference.
Summary of Teledyne, Inc. Executive Deferred Compensation Plan as 10.2
restated effective September 1, 1994.
<PAGE>
Credit Agreement dated July 12, 1994, previously filed with the 10.3
Commission as Exhibit 10.1 to the Company's Form 10-Q Report for the
quarter ended September 30, 1994, File No. 1-5212 and incorporated
Herein by reference.
Teledyne, Inc. 1994 Long-Term Incentive Plan, previously filed with the 10.4
Commission as Exhibit A to the Company's proxy statement for 1994 and
incorporated herein by reference.
Financial information from the Teledyne, Inc. annual report to 13
shareholders for the year ended December 31, 1994.
Subsidiaries of registrant 21
Consent of independent public accountants 23
Financial Data Schedule 27
All other exhibits are not submitted because they are not applicable or not
required or because the required information is included in the consolidated
financial statements of Teledyne, Inc. and subsidiaries or notes thereto.
<PAGE>
EXHIBIT 4.1
TELEDYNE, INC.
and
BANK OF AMERICA NATIONAL TRUST & SAVINGS ASSOCIATION
to
HARRIS TRUST COMPANY OF CALIFORNIA,
as Trustee,
_______________
THIRD SUPPLEMENTAL INDENTURE
Dated as of July 12, 1994
________________
$37,425,000
7% SUBORDINATED DEBENTURES DUE 1999
[CONFORMED COPY]
<PAGE>
THIRD SUPPLEMENTAL INDENTURE dated as of July 12, 1994, among
Teledyne, Inc., a Delaware corporation (hereinafter called "Teledyne"), having
its principal office at 1901 Avenue of the Stars, Los Angeles, California
90067-6046, Bank of America National Trust and Savings Association, a national
banking association duly organized and existing under the laws of the United
States of America (hereinafter called "Bank of America") and Harris Trust
Company of California, a California trust company (hereinafter called the
"Trustee").
RECITALS
Teledyne has heretofore delivered to Trustee a certain Indenture dated as
of June 1, 1969, a First Supplemental Indenture dated as of October 31, 1969,
and a Second Supplemental Indenture dated as of December 16, 1969 (such
instruments hereinafter collectively referred to as the "Indenture"), providing
for the issue of debentures of Continental Motors Corporation and Teledyne,
as the case may be, designated as its 7% Subordinated Debentures Due 1999
(the "Debentures"). Pursuant to the Indenture, Debentures in the
aggregate principal amount of $37,412,100 have been issued, of which
$26,188,470 now are outstanding.
Section 610 of the Indenture provides, in relevant part, that no
resignation or removal of the Trustee and no appointment of a successor
Trustee shall become effective until the acceptance of appointment by
the successor Trustee under Section 611; that the Trustee may resign at any
time by giving written notice thereof to the Company; that if the Trustee shall
resign, the Company, by a Board Resolution, shall promptly appoint a successor
Trustee; that the Company shall give notice of each resignation and each removal
of the Trustee and each appointment of a successor Trustee by mailing written
notice of such event to the Holders of Debentures; and that the appointment of
<PAGE>
a successor Trustee upon resignation of the Trustee will not become effective
until (i) written notice of such appointment is given to the Commissioner of
Corporations of the State of California, and (ii) a period of ten days has
elapsed after service of such notice within which time said Commissioner of
Corporations has not disapproved of such appointment.
Section 611 of the Indenture provides, in relevant part, that every
successor Trustee appointed hereunder shall execute, acknowledge and deliver
to the Company and to the retiring Trustee an instrument accepting such
appointment, and thereupon the resignation of the retiring Trustee shall
become effective and such successor Trustee, without any further act, deed
or conveyance, shall become vested with all the rights, powers, trusts and
duties of the retiring Trustee.
Section 311 of the Indenture provides, in relevant part, that so long as
any of the Debentures remain outstanding there shall be an Authenticating
Agent appointed by the Trustee to act on its behalf in connection with the
authentication of the Debentures, and that such Authenticating Agent
shall be acceptable to the Company.
The Indenture also provides, in relevant part, that the Company may
authorize any person, including the Company, as Paying Agent to pay the
principal of (and premium, if any) or interest on any Debentures on behalf
of the Company.
All acts, conditions and requirements necessary to authorize the execution
and delivery of this Third Supplemental Indenture and to make it a valid,
binding and legal instrument, and a valid, binding and legal amendment of the
provisions of the Indenture have been duly performed and fulfilled.
NOW, THEREFORE, THIS THIRD SUPPLEMENTAL INDENTURE
WITNESSETH:
4.1-2
<PAGE>
For and in consideration of the premises and of other good and valuable
consideration, receipt of which is hereby acknowledged, it is mutually
covenanted and agreed, for the equal and proportionate benefit of all Holders of
the Debentures, as follows:
1. In accordance with the relevant portions of Sections 610 and 611 of
the Indenture, Bank of America has resigned as trustee. Harris Trust Company of
California has been appointed as the successor Trustee effective August 11,
1994, and has accepted such appointment.
2. In accordance with the relevant portions of Section 311 of the
Indenture, the Trustee has initially appointed the Bank of Montreal Trust
Company as Authenticating Agent, and the appointment of the Bank of Montreal
Trust Company as Authenticating Agent is acceptable to the Company.
3. In accordance with the relevant provisions of the Indenture, the
Company has appointed the Trustee as Paying Agent, and has appointed itself
as Paying Agent with respect to unclaimed interest payment funds.
4. The Indenture, except as herein amended, supplemented or modified, is
in all respects ratified and confirmed by this Third Supplemental Indenture, and
the provisions of this Third Supplemental Indenture shall be deemed to be a
part of the Indenture.
5. The date of this Third Supplemental Indenture is intended as and for
a date for the convenient identification of this instrument and is not intended
to indicate that this instrument was executed or delivered on said date, it
being hereby provided and stipulated that this instrument may be executed and
delivered either on said date or before or after said date, and is, in fact,
executed and delivered on the dates of the respective certificates of
acknowledgement hereto attached.
4.1-3
<PAGE>
6. The Trustee executed this instrument solely on the condition that in
addition to any and all rights, powers, privileges and immunities given to
it by this instrument, it also shall have and enjoy with respect to this
instrument all of the rights, powers, privileges and immunities given to it by
the Indenture.
7. This Third Supplemental Indenture may be executed in several
counterparts and all of such counterparts, executed and delivered each as an
original, shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Third Supplemental
Indenture to be duly executed, and their respective corporate seals to be
hereunto affixed and attested, all as of the day and year first above written.
TELEDYNE, INC.
Attest:
By /s/ Judith R. Nelson
--------------------------------------------
/s/ Eileen M. Ogle General Counsel and Secretary
- -------------------------
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
Attest:
By /s/ S. B. Ball
--------------------------------------------
/s/ Linda Verstysp
- -------------------------
HARRIS TRUST COMPANY OF CALIFORNIA
Attest:
By /s/ Esther Cervantes
--------------------------------------------
/s/ Michael O. Goedecke
- ---------------------------
4.1-4
<PAGE>
EXHIBIT 10.2
TELEDYNE, INC.
EXECUTIVE DEFERRED COMPENSATION PLAN
1 Purpose. The Teledyne, Inc. Executive Deferred Compensation
Plan is an unfunded plan maintained for the purpose of providing
deferred compensation for a select group of management or highly
compensated employees, within the meaning of Sections 201(2),
301(a)(3) and 401(a)(1) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA").
2 Definitions.
2.1 "Account" shall mean the bookkeeping account maintained
by the Committee for each Participant that is credited with (1)
the portion of the Participant's Salary that he elects to defer,
(2) the portion of the Participant's Bonus that he elects to
defer, (3) portions of the Participant's account balance under
the Prior Plan and (4) earnings on such amounts.
2.2 "Beneficiary" shall mean the Participant's spouse or,
if the Participant has no spouse or the spouse consents in
writing in the presence of a notary public, the person or
persons, trustee, or other legal entity or entities last
designated by the Participant on a form set forth in Exhibit "A"
attached hereto to receive the benefits specified hereunder in
the event of the Participant's death. If the Participant has not
designated a beneficiary or if no person designated as a
beneficiary survives the Participant, the payment of the
Participant's benefits under this Plan following his death shall
be made (a) to the Participant's spouse, if living, (b) if his
spouse is not then living, to his then living issue by right of
representation, (c) if neither his spouse nor his issue are then
living, to his then living parents, or (d) if none of the above
are then living, to his estate. Notwithstanding the foregoing,
the Beneficiary of an Insurable Participant under the Plan must
be the same as the beneficiary designated with respect to the
benefit provided under Article 8 hereof if the Insurable
Participant dies prior to his Payment Eligibility Date.
2.3 "Bonus" shall mean the award or awards payable under
the Teledyne, Inc. management bonus program (or any successor
program).
2.4 "Chief Operating Officer" shall mean the Chief
Operating Officer of Teledyne, Inc.
2.5 "Code" shall mean the Internal Revenue Code of 1986, as
amended.
10.2-1
<PAGE>
2.6 "Committee" shall mean the administrative committee
appointed pursuant to Section 9.1 of the Plan.
2.7 "Company" shall mean Teledyne, Inc., a Delaware
corporation, and any corporation which is a member of the
controlled group of corporations (within the meaning of Code
Section 414(b)) which includes Teledyne, Inc.
2.8 "Compensation" shall mean the Salary and Bonus paid by
the Company to a Participant.
2.9 "Director of Human Resources" shall mean the Director
of Human Resources of Teledyne, Inc. located at 1901 Avenue of
the Stars, Suite 1800, Los Angeles, California 90067.
2.10 "Effective Date" shall mean September 1, 1994.
2.11 "Eligible Employee" shall mean:
2.11.1 For a Plan Year other than the Plan Years
described in Sections 2.11.2 and 2.11.3, each employee of the
Company who: (a) as of December 1 of the preceding Plan Year
holds the title of president of an operating company; or (b)
received Compensation during the preceding Plan Year at least
equal to the amount specified in Section 414(q)(1)(B) of the
Code, as such amount is adjusted for such preceding Plan Year by
the Secretary of the Treasury for increases in the cost of
living.
2.11.2 For the first Plan Year of the Plan, each
employee of the Company who: (a) as of the Effective Date holds
the title of president of an operating company; or (b) received
or is expected to receive Compensation during calendar year 1994
at least equal to the amount specified in Section 414(q)(1)(B) of
the Code, as such amount is adjusted for such calendar year by
the Secretary of the Treasury for increases in the cost of
living.
2.11.3 For any Plan Year beginning after the Effective
Date which includes an employee's date of hire, each employee of
the Company who: (a) as of the employee's date of hire holds the
title of president of an operating company; or (b) receives
Compensation during such Plan Year at least equal to the amount
specified in Section 414(q)(1)(B) of the Code, as such amount is
adjusted for such Plan Year by the Secretary of the Treasury for
increases in the cost of living. For purposes of this Section
2.11.3 only, Compensation shall include Salary that would be paid
if the employee's Salary were paid for the full Plan Year.
10.2-2
<PAGE>
2.12 "Fund" or "Funds" shall mean one or more of the mutual
funds or contracts selected by the Committee pursuant to Section
4.2.2.
2.13 "Initial Election Period" shall mean the first thirty
days of the first Plan Year during which an employee of the
Company is an Eligible Employee or, in the case of an employee
who is an Eligible Employee on his date of hire after the
Effective Date, the first thirty days after such date of hire.
2.14 "Insurable Participant" shall mean a Participant who
satisfies underwriting standards for the issuance of life
insurance determined by the insurance company selected by the
Company to provide the pre-distribution death benefit described
in Article 8.
2.15 "Interest Rate" shall mean, for each Fund, an amount
equal to the net rate, expressed as a percent, of gain or loss on
the assets of such Fund during a month reduced, with respect to
Funds selected by Insurable Participants, by .0833 percent.
2.16 "Participant" shall mean any Eligible Employee who,
prior to the Effective Date, has not announced his intention to
retire and who (a) elects to defer Compensation in accordance
with Section 4.1, or (b) has an account balance under the Prior
Plan.
2.17 "Payment Eligibility Date" shall mean the first day of
the month following the end of the calendar quarter in which a
Participant terminates employment or dies. A Participant
receiving benefits under the Company's short-term disability plan
or on an approved leave of absence shall not be deemed to have
terminated employment for purposes of the Plan.
2.18 "Plan" shall mean the Teledyne, Inc. Executive Deferred
Compensation Plan as set forth herein, or as amended from time to
time.
2.19 "Plan Year" shall mean the calendar year, except that
the initial Plan Year shall be the period from the Effective Date
to December 31, 1994.
2.20 "Prior Plan" shall mean the nonqualified plan or
arrangement maintained by the Company for deferral of bonuses
prior to the Effective Date.
2.21 "Retirement" shall mean the date as of which a
Participant commences to receive a benefit under a pension plan
maintained by the Company, the date as of which a Participant
10.2-3
<PAGE>
commences to receive disability benefits under the Company's
long-term disability plan or, in the case of a Participant who is
not entitled to benefits under the Company's long-term disability
plan, the date the Committee determines is the first date the
Participant satisfies the definition of disability set forth in
that plan.
2.22 "Salary" shall mean the base rate of pay that an
employee is entitled to receive for services rendered to the
Company.
3 Participation. An Eligible Employee who, prior to the
Effective Date, has not announced his intention to retire shall
become a Participant in the Plan on (a) the first day of the
first pay period for which he elects to defer a portion of his
Compensation in accordance with Section 4.1, or (b) the Effective
Date if he has an account balance under the Prior Plan.
4 Deferral Elections.
4.1 Elections to Defer Compensation.
4.1.1 General Rule. An Eligible Employee may elect to
defer up to 50 percent of his Salary and up to 100 percent of his
Bonus; provided, however, that the amount of Salary and/or Bonus
not paid to the Eligible Employee during any Plan Year because of
such election must be at least equal to five percent of the
Eligible Employee's anticipated Salary for that Plan Year; and
provided, further, that the amount of a Participant's Salary
and/or Bonus which may be deferred for a Plan Year shall not
reduce the Participant's Salary and/or Bonus (after taking into
account such deferrals) below the amount necessary to satisfy any
employment or income tax withholding requirements which may be
applicable with respect to the Participant.
4.1.2 Initial Election Period. Each Eligible Employee
may elect to defer Compensation by filing with the Director of
Human Resources an election, on a form provided by the Committee,
no later than the last day of his or her Initial Election Period.
An election to defer Compensation during the Initial Election
Period shall be effective with respect to the Participant's
Salary earned during the first pay period beginning after the
election and with respect to the portion of the Participant's
Bonus attributable to the portion of the calendar year following
the election.
10.2-4
<PAGE>
4.1.3 Elections other than Elections during the
Initial Election Period. Subject to the limitations of Section
4.1.1 above, any Eligible Employee who fails to elect to defer
Compensation during his or her Initial Election Period may
subsequently elect to defer Compensation, and any Eligible
Employee who has terminated a prior Salary deferral election may
elect to again defer Salary, by filing with the Director of Human
Resources an election, on a form provided by the Committee, to
defer Compensation as described in Section 4.1.1 above. An
election to defer Salary payable during a calendar year must be
filed with the Director of Human Resources on or before December
1 of the preceding calendar year. An election to defer Bonus
payable with respect to services rendered during a calendar year
must be filed with the Director of Human Resources on or before
December 1 of the preceding calendar year.
4.1.4 Duration of Salary Deferral Election. Any
Salary deferral election made under Section 4.1.2 or Section
4.1.3 shall remain in effect, notwithstanding any change in the
Participant's Salary, until changed or terminated in accordance
with the terms of this Section 4.1.4; provided, however, that
such election shall terminate for any Plan Year for which the
Participant is not an Eligible Employee. A Participant may
increase, decrease or terminate his or her Salary deferral
election with respect to Salary earned during a calendar year by
filing a new election, in accordance with the terms of this
Section 4.1, with the Director of Human Resources on or before
December 1 of the preceding calendar year.
4.1.5 Duration of Bonus Deferral Election. Any Bonus
deferral election made under Section 4.1.2 or Section 4.1.3 shall
be irrevocable and shall apply only to the Bonus payable with
respect to services performed during the calendar year for which
the election is made. For each subsequent calendar year, an
Eligible Employee must make a new election, subject to the
limitations set forth in this Section 4.1, to defer a percentage
of his or her Bonus. Such election shall be on forms provided by
the Committee and shall be filed with the Director of Human
Resources on or before December 1 of the calendar year preceding
the calendar year in which the services that are to result in the
Bonus are performed.
4.2 Investment Elections.
4.2.1 Investment Options. At the time an Eligible
Employee first becomes a Participant, the Participant shall file
with the Director of Human Resources a form provided by the
Committee designating which of the following types of mutual
funds or contracts the Participant's Account will be deemed to be
10.2-5
<PAGE>
invested in for purposes of determining the amount of earnings to
be credited to such Account:
(1) Emerging Growth Equity Fund
(2) Money Market Fund
(3) Balanced Assets Fund
(4) Capital Growth Bond Fund
In making the designation pursuant to this Section 4.2.1, the
Participant may specify that all or any 10-percent multiple of
his Account be deemed to be invested in one or more of the types
of mutual funds or contracts listed above. Effective as of the
end of any calendar quarter, a Participant may change the
designation made under this Section 4.2.1 by filing with the
Director of Human Resources an election, on a form provided by
the Committee, at least 30 days prior to the end of such quarter.
If a Participant fails to elect a type of fund under this Section
4.2.1, any prior election shall remain in effect or, if there is
no prior election of types of funds, any deferral election made
by the Participant shall be void. If a Participant who receives
allocations to his Account only pursuant to Sections 5.3 and 5.4
fails to elect a type of fund under this Section 4.2.1, he shall
be deemed to have elected the Money Market Fund.
4.2.2 Committee Selection of Funds. Although the
Participant may designate the type of mutual funds in Section
4.2.1, the Committee shall select from time to time, in its sole
discretion, a commercially available fund or contract of each of
the types described in Section 4.2.1 to be the Funds. The
Interest Rate of each such Fund shall be used to determine the
amount of earnings to be credited to Participants' Accounts under
Section 5.4.
5 Participant Accounts. The Committee shall establish and
maintain an Account for each Participant under the Plan. Each
Participant's Account shall be further divided into separate
subaccounts ("mutual fund subaccounts"), each of which
corresponds to a mutual fund or contract elected by the
Participant in accordance with Section 4.2. A Participant's
Account shall be credited as follows:
5.1 Salary Credits. As of the last day of each month, the
Committee shall credit the mutual fund subaccounts of the
Participant's Account with an amount equal to Salary deferred by
the Participant during each pay period ending in that month in
accordance with the Participant's election under Section 4.2;
that is, the portion of the Participant's deferred Salary that
the Participant has elected to be deemed to be invested in a
10.2-6
<PAGE>
certain type of mutual fund shall be credited to the mutual fund
subaccount corresponding to that mutual fund.
5.2 Bonus Credits. As of the last day of the month in
which the Bonus is payable, the Committee shall credit the mutual
fund subaccounts of the Participant's Account with an amount
equal to the portion of the Bonus deferred by the Participant in
accordance with the Participant's election under Section 4.2;
that is, the portion of the Participant's deferred Bonus that the
Participant has elected to be deemed to be invested in a
particular type of mutual fund shall be credited to the mutual
fund subaccount corresponding to that mutual fund.
5.3 Prior Plan Credits. As of the Effective Date, the
Committee shall credit the mutual fund subaccounts of the
Participant's Account with an amount equal to 25 percent of the
10.2-7
<PAGE>
Participant's account balance under the Prior Plan as of the
Effective Date. As of September 1 of each of the following
years, the Committee shall credit the mutual fund subaccounts of
the Participant's Account with an amount equal to the percentage
set forth below of the Participant's account balance under the
Prior Plan as of such date:
1995 33-1/3
1996 50
1997 100
Notwithstanding the foregoing, as of a Participant's Payment
Eligibility Date prior to September 1, 1997, the Committee shall
credit the mutual fund subaccounts of the Participant's Account
with an amount equal to any unpaid balance then remaining in the
Participant's account under the Prior Plan.
5.4 Earnings Credits. As of the last day of each month in
which any amount remains credited to a Participant's Account,
each mutual fund subaccount of a Participant's Account shall be
credited with earnings in an amount equal to that determined by
multiplying the balance credited to such mutual fund subaccount
as of the last day of the preceding month by the Interest Rate
for that month for the corresponding Fund selected by the Company
pursuant to Section 4.2.2.
6 Vesting. A Participant's Account shall be 100 percent
vested at all times.
7 Distributions.
7.1 Amount and Time of Distribution.
7.1.1 Payment as of Payment Eligibility Date. Each
Participant (or, in the case of his death, his Beneficiary) shall
be entitled to receive a distribution of benefits under this Plan
as soon as practicable following his Payment Eligibility Date.
The amount payable to a Participant shall be the amount credited
to the Participant's Account as of his Payment Eligibility Date.
7.1.2 Payment Prior to Payment Eligibility Date. A
Participant may elect by filing with the Director of Human
Resources a form set forth in Exhibit "B" attached hereto to
receive an amount equal to ninety percent of his Account balance
at any time prior to his Payment Eligibility Date. If the
Participant makes an election described in this Section 7.1.2:
the balance of the Participant's Account not distributed to the
10.2-8
<PAGE>
Participant shall be forfeited to the Company; the amount to
which he is entitled under this Section 7.1.2 shall be
distributed to the Participant in a single lump sum within thirty
days following such election; the Participant shall be prohibited
from participating in the Plan for the balance of the Plan Year
in which this distribution is made and the following Plan Year;
and any elections previously made pursuant to Article 4 of this
Plan shall cease to be effective.
7.2 Form of Distribution.
7.2.1 Pre-Retirement Distributions. If a
Participant's Payment Eligibility Date occurs prior to the date
of his Retirement, the Participant's Account shall be paid to
such Participant in a single lump sum.
7.2.2 Post-Retirement Distributions. If a
Participant's Payment Eligibility Date occurs on or after the
date of his Retirement, the Participant's Account shall be paid
to such Participant or, in the event of the Participant's death
on or after his Payment Eligibility Date, his Beneficiary in the
form of sixty quarterly installments. Such installment payments
shall commence on the Participant's Payment Eligibility Date or
as soon thereafter as is practicable and shall continue on the
first day of each of the 59 calendar quarters thereafter.
7.2.3 Election of Optional Form of Distributions.
Notwithstanding the provisions of Section 7.2.2, a Participant
whose Payment Eligibility Date occurs on or after the date of his
Retirement may elect to receive distribution of his Account
balance in a single lump sum, twenty quarterly installments, or
forty quarterly installments provided that at least one year
prior to his Payment Eligibility Date, the Director of Human
Resources receives from the Participant a notice, in the form of
Exhibit "C" attached hereto, that the Participant elects to
receive payment in one of such optional forms. Any such payment
shall be made or commence to be made as of the Participant's
Payment Eligibility Date. Any election made pursuant to this
Section 7.2.3 may be revoked by filing notice of such revocation
with the Director of Human Resources on or before the date which
is one year prior to the Participant's Payment Eligibility Date.
If a Participant's Payment Eligibility Date is January 1, 1995,
April 1, 1995 or July 1, 1995, the Participant may make the
election described in this Section 7.2.3 if the Director of Human
Resources receives from the Participant a notice, in the form of
Exhibit "C" attached hereto, on or before December 31, 1994 and
the Participant may revoke such election by filing notice of such
revocation with the Director of Human Resources on or before
December 31, 1994.
10.2-9
<PAGE>
7.2.4 Method for Calculating Installments. If a
Participant or Beneficiary receives payment of his Account
balance in installments pursuant to Section 7.2.2 or 7.2.3, the
amount of each quarterly installment payable during the Plan Year
which includes the Participant's Payment Eligibility Date shall
equal the Participant's Account balance on the Payment
Eligibility Date divided by the total number of installments the
Participant or Beneficiary is scheduled to receive. The amount
of each quarterly installment payable during each succeeding Plan
Year, other than the last Plan Year in which the Participant or
Beneficiary receives installment payments under the Plan, shall
equal the Participant's Account balance on September 30 of the
preceding Plan Year divided by the number of installments
remaining to be paid after the last day of such preceding Plan
Year. The amount of each quarterly installment payable during
the last Plan Year in which the Participant or Beneficiary
receives installment payments under the Plan shall equal the
Participant's Account balance on the last day of the second
preceding calendar quarter divided by the number of installments
remaining to be paid after the last day of the preceding calendar
quarter, except that the final quarterly installment shall be
equal to the remaining balance in the Participant's Account.
7.2.5 Small Account Balances. Notwithstanding any
other provision of this Section 7.2, if a Participant's Account
balance on his Payment Eligibility Date is $10,000 or less, such
Account balance shall be paid in a single lump sum.
8 Pre-Distribution Death Benefit.
8.1 Amount of Benefit. The Company shall own and maintain
one or more life insurance policies on the life of each Insurable
Participant (collectively, the "Policy"). Until an employee of
the Company (other than a Participant who has already been
determined not to be an Insurable Participant) completes an
application for the Policy, any deferral elections made by the
employee pursuant to Article 4 hereof shall be void. If an
Insurable Participant shall die at least sixty days following the
first day of the month in which allocations pursuant to Article 5
of the Plan are first made to his Account and prior to his
Payment Eligibility Date, his Beneficiary shall receive directly
from the insurance company issuing the Policy in a single lump
sum an amount equal to the greater of:
8.1.1 Ten times the amounts allocated to the Insurable
Participant's Account pursuant to Sections 5.1 and/or 5.2 during
the first twelve months in which the Insurable Participant
receives allocations to his Account; or
10.2-10
<PAGE>
8.1.2 Two times the Insurable Participant's Account
balance as of his date of death if the Insurable Participant has
not attained age 56 at the date of death or, if the Insurable
Participant is age 56 or older at death, 1.5 times the Insurable
Participant's Account balance as of his date of death.
8.2 Other Rules.
8.2.1 Reduction of Account Balance. Notwithstanding
anything contained herein to the contrary, any benefits otherwise
payable with respect to an Insurable Participant under this Plan
shall be reduced by the value of benefits received by the
Insurable Participant's Beneficiary under the Policy.
8.2.2 Death on or After Payment Eligibility Date. If
an Insurable Participant shall die on or after his Payment
Eligibility Date, his Beneficiary shall receive no benefits under
the Policy and any death benefits thereunder shall be paid to the
Company.
8.2.3 Effect of Account Distribution Prior to Payment
Eligibility Date. If an Insurable Participant receives a
distribution pursuant to Section 7.1.2, for purposes of Section
8.1.1., the first twelve months in which he receives allocations
to his Account shall be deemed to be the first Plan Year after
such distribution in which he receives allocations under Section
5.1 or 5.2 and, for purposes of Section 8.1.2, the Insurable
Participant's Account shall include only amounts allocated to the
Insurable Participant's Account following such distribution and
prior to his date of death.
8.2.4 Death Prior to Eligibility for Pre-Distribution
Death Benefit. If a Participant should die before completing the
sixty-day eligibility period for the pre-distribution death
benefit set forth in Section 8.1, his Beneficiary shall receive
only the balance in the Participant's Account as of the
Participant's Payment Eligibility Date.
9 Administration.
9.1 Committee Action. The Plan shall be administered by
the Committee, consisting of at least three members, appointed by
and holding office at the pleasure of the Chief Operating
Officer. The Committee shall act at meetings by an affirmative
vote of a majority of the members of the Committee. Any action
permitted to be taken at a meeting may be taken without a meeting
if a written consent to the action is signed by all members of
10.2-11
<PAGE>
the Committee and such written consent is filed with the minutes
of the proceedings of the Committee. A member of the Committee
shall not vote or act upon any matter which relates solely to
himself as a Participant. The Chairman or any other member or
members of the Committee designated by the Chairman may execute
any certificate or other written direction on behalf of the
Committee.
9.2 Powers and Duties of the Committee. The Committee, on
behalf of the Participants and their Beneficiaries, shall enforce
the Plan in accordance with its terms, shall be charged with the
general administration of the Plan, and shall have all powers
necessary to accomplish its purposes, including, but not by way
of limitation, the following:
9.2.1 To determine all questions relating to the
eligibility of employees to participate;
9.2.2 To construe and interpret the terms and
provisions of this Plan;
9.2.3 To compute and certify to the amount and kind of
benefits payable to Participants and their Beneficiaries;
9.2.4 To maintain all records that may be necessary
for the administration of the Plan;
9.2.5 To provide for the disclosure of all information
and the filing or provision of all reports and statements to
Participants, Beneficiaries or governmental agencies as shall be
required by law;
9.2.6 To make and publish such rules for the
regulation of the Plan and procedures for the administration of
the Plan as are not inconsistent with the terms hereof; and
9.2.7 To appoint a plan administrator or, any other
agent, and to delegate to such person such powers and duties in
connection with the administration of the Plan as the Committee
may from time to time prescribe.
9.3 Construction and Interpretation. The Committee shall
have full discretion to construe and interpret the terms and
provisions of this Plan, which interpretation or construction
shall be final and binding on all parties, including but not
limited to the Company and any Participant or Beneficiary.
The Committee shall administer such terms and provisions in a
uniform and nondiscriminatory manner and in full accordance with
any and all laws applicable to the Plan.
10.2-12
<PAGE>
9.4 Information. To enable the Committee to perform its
functions, the Company shall supply full and timely information
to the Committee on all matters relating to the Compensation of
all Participants, their death or other cause of termination, and
such other pertinent facts as the Committee may require.
9.5 Compensation, Expenses and Indemnity.
9.5.1 The members of the Committee shall serve without
compensation for their services hereunder.
9.5.2 The Committee is authorized at the expense of
the Company to employ such legal counsel as it may deem advisable
to assist in the performance of its duties hereunder. Expenses
and fees in connection with the administration of the Plan shall
be paid by the Company.
9.5.3 The Company shall indemnify and save harmless
the Committee and each member thereof, the Chief Operating
Officer, the Director of Human Resources, and any delegate of the
Committee who is an employee of the Company against any and all
expenses, liabilities and claims, including legal fees to defend
against such liabilities and claims arising out of their
discharge of responsibilities under or incident to the Plan,
other than expenses and liabilities arising out of willful
misconduct. This indemnity shall not preclude such further
indemnities as may be available under insurance purchased by the
Company or provided by the Company under any bylaw, agreement or
otherwise, as such indemnities are permitted under applicable
law.
9.6 Quarterly Statements. Under procedures established by
the Committee, a Participant shall receive quarterly statements
with respect to such Participant's Account.
10 Miscellaneous.
10.1 Unsecured General Creditor. Participants and their
Beneficiaries, heirs, successors, and assigns shall have no legal
or equitable rights, claims, or interest in any specific property
or assets of the Company. No assets of the Company shall be held
in any way as collateral security for the fulfilling of the
obligations of the Company under this Plan. The Company's
obligation under the Plan shall be merely that of an unfunded and
unsecured promise of the Company to pay money in the future, and
the rights of the Participants and Beneficiaries shall be no
greater than those of unsecured general creditors. The Plan is
10.2-13
<PAGE>
intended to be unfunded for tax purposes and for purposes of
Title I of ERISA.
10.2 Restriction Against Assignment. The Company shall pay
all amounts payable hereunder only to the person or persons
designated by the Plan and not to any other person or
corporation. No part of a Participant's Account shall be liable
for the debts, contracts, or engagements of any Participant, his
Beneficiary, or successors in interest, nor shall a Participant's
Account be subject to execution by levy, attachment, or
garnishment or by any other legal or equitable proceeding, nor
shall any such person have any right to alienate, anticipate,
commute, pledge, encumber, or assign any benefits or payments
hereunder in any manner whatsoever.
10.3 No Right to Continued Employment. Neither an
employee's participation in the Plan, nor his rights to his
Account shall confer upon such employee any right with respect to
continuance of employment by or receipt of Bonuses from the
Company, nor shall such items interfere in any way with the right
of the Company to terminate such employee's employment or alter
such employee's Compensation at any time.
10.4 Withholding. There shall be deducted from each
payment made under the Plan or, if such payment is not large
enough, from any other funds payable to the Participant, all
taxes which the Company determines are required to be withheld
with respect to such payment under the Plan. The Company shall
have the right to reduce any payment by the amount of cash
sufficient to provide the amount of said taxes.
10.5 Amendment, Modification, Suspension or Termination.
The Chief Operating Officer may at any time amend, modify,
suspend or terminate the Plan in whole or in part, except that no
amendment, modification, suspension or termination shall reduce
any amounts then credited to a Participant's Account. The
Company shall provide notice of such action to all Participants
and Beneficiaries of deceased Participants.
10.6 Governing Law. Except to the extent that it is
preempted by federal law, this Plan shall be construed, governed
and administered in accordance with the laws of the State of
California.
10.7 Receipt or Release. Any payment to a Participant or
the Participant's Beneficiary in accordance with the provisions
of the Plan, including but not limited to any payment from an
insurance company, shall, to the extent thereof, be in full
satisfaction of all claims under the Plan against the Committee
10.2-14
<PAGE>
and the Company. Any payment, whether by the Company or an
insurance company, to a Participant or the Participant's
Beneficiary of an amount described in Section 5.3 shall, to the
extent thereof, be in full satisfaction of all claims to such
amount which the Participant or his Beneficiary or any
beneficiary designated in accordance with the Prior Plan may have
against the Company or any other person under the Prior Plan.
The Committee may require such Participant or Beneficiary, as a
condition precedent to such payment, to execute a receipt and
release to such effect.
10.8 Payments on Behalf of Minors. In the event that any
amount becomes payable under the Plan to a minor or a person who,
in the sole judgment of the Committee, is considered by reason of
physical or mental condition to be unable to give a valid receipt
therefore, the Committee may direct that such payment be made
only to the conservator or the guardian of the estate of such
person appointed by a court of competent jurisdiction or such
other person or in such other manner as the Committee determines
is necessary to assure that the payment will legally discharge
the Plan's obligation to such person. Any payment made pursuant
to such determination shall constitute a full release and
discharge of the Committee and the Company.
10.9 Miscellaneous. All pronouns and any variations
thereof contained herein shall be deemed to refer to masculine or
feminine, singular or plural, as the identity of the person or
persons may require. The headings used in this Plan are for
convenience only and shall not be construed in interpreting this
Plan.
IN WITNESS WHEREOF, the Company has caused this document to
be executed by its duly authorized officer on this ___ day of
___________, 1994.
TELEDYNE, INC.
By______________________
10.2-15
<PAGE>
EXHIBIT A
BENEFICIARY DESIGNATION
I hereby designate the following individual or entity to
receive any benefits to which I am entitled under the Teledyne,
Inc. Executive Deferred Compensation Plan if such benefits become
payable after my death:
Name: __________________________________________________________
Address: _______________________________________________________
Relationship: __________________________________________________
Social Security or Tax Identification Number: __________________
I understand and acknowledge that if I am married on the date of
my death and I have designated above someone other than the
individual who is my spouse on the date of my death, such
designation shall not be effective unless such spouse consents in
writing as set forth on the following page in the presence of a
notary.
___________________ ________________________
Date Signature
________________________
Printed Name
10.2-16
<PAGE>
SPOUSAL CONSENT TO BENEFICIARY DESIGNATION
I am the spouse of _______________ . I hereby consent to the
designation made by my spouse of ____________ as the beneficiary
under the Teledyne, Inc. Executive Deferred Compensation Plan. I
understand that this consent is valid only with respect to the
naming of the beneficiary indicated on the prior page and that
the designation of any other beneficiary will not be valid unless
I consent in writing to such designation.
This consent is being voluntarily given, and no undue
influence or coercion has been exercised in connection with my
consent to the designation made by my spouse of the beneficiary
named on the prior page rather than myself as the beneficiary
under the Teledyne, Inc. Executive Deferred Compensation Plan.
___________________ ________________________
Date Spouse's Signature
________________________
Print Spouse's Name
State of _________________
County of ________________
On ___________ (date) before me __________________ (name, title)
personally appeared ___________________________ (name of spouse)
___ personally known to me (or)
___ proved to me on the basis of satisfactory evidence
to be the person whose name is subscribed to the within
instrument and acknowledged to me that he/she executed the same
in his/her authorized capacity, and that by his/her signature on
the instrument the person executed the instrument.
WITNESS my hand and official seal.
_________________________
Signature of Notary
10.2-17
<PAGE>
EXHIBIT B
DISTRIBUTION PRIOR TO PAYMENT ELIGIBILITY DATE
Pursuant to Section 7.1.2 of the Teledyne, Inc. Executive
Deferred Compensation Plan (the "Plan"), I hereby elect to
receive distribution of ninety percent (90%) of my account
balance under the Plan within thirty days of the receipt of this
election by the Director of Human Resources of Teledyne, Inc.
I understand and acknowledge that as a result of this
election:
1. The balance of my account under the Plan not distributed
to me shall be forfeited to Teledyne, Inc.;
2. I shall be prohibited from participating in the Plan for
the balance of the Plan Year in which this distribution is made
and the following Plan Year;
3. Any deferral elections previously made pursuant to
Article 4 of the Plan shall cease to be effective; and
4. The pre-distribution death benefit provided under the
Plan shall cease to be available to my beneficiary following this
distribution. If I resume participation in the Plan to the
extent permitted by the Plan in accordance with paragraph 2
above, my beneficiary may again be eligible to receive a death
benefit under the Plan but such death benefit shall be computed
only with respect to allocations to my account under the Plan
following such distribution and prior to my date of death.
___________________ ________________________
Date Signature
________________________
Printed Name
Received by Teledyne, Inc.
on______________________
by______________________
10.2-18
<PAGE>
EXHIBIT C
ELECTION OF FORM OF DISTRIBUTION
Pursuant to Section 7.2.3 of the Teledyne, Inc. Executive
Deferred Compensation Plan (the "Plan"), I hereby notify
Teledyne, Inc. that instead of receiving distribution of my
Account balance under the Plan in sixty quarterly installments, I
hereby elect that my Account balance under the Plan be paid to me
in one of the following forms:
______ forty quarterly installments;
______ twenty quarterly installments; or
______ a single lump sum.
I understand that in order for this election to be
effective:
1. This notice must be received by Teledyne, Inc., c/o the
Director of Human Resources, 1901 Avenue of the Stars, Los
Angeles, California 90067, at least one year prior to my Payment
Eligibility Date, as that term is defined in the Plan, unless my
Payment Eligibility Date is January 1, 1995, April 1, 1995 or
July 1, 1995, in which case this notice must be received by
Teledyne, Inc., c/o the Director of Human Resources, at the above
address on or before December 31, 1994; and
2. My Payment Eligibility Date, as that term is defined in
the Plan, must occur on or after the date as of which I commence
to receive a benefit under a pension plan maintained by Teledyne,
Inc. or a subsidiary, the date as of which I commence to receive
disability benefits under the long-term disability plan of
Teledyne, Inc. or a subsidiary, or, if I am not entitled to
benefits under the long-term disability plan of Teledyne, Inc. or
a subsidiary, the date the Administrative Committee of the Plan
determines is the first date I satisfy the definition of
disability set forth in such disability plan.
___________________ ________________________
Date Signature
________________________
Printed Name
Received by Teledyne, Inc.
on______________________
by______________________
10.2-19
<PAGE>
EXHIBIT 13
TELEDYNE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, 1994 and 1993
(In millions except share and per share amounts)
1994 1993
-------- --------
ASSETS
Current Assets:
Cash and marketable securities $ 29.7 $ 155.0
Receivables 409.8 332.4
Inventories 196.9 172.6
Deferred income taxes 104.9 123.0
Prepaid expenses 16.5 20.5
-------- --------
Total current assets 757.8 803.5
Property and Equipment 304.3 318.8
Prepaid Pension Cost 332.7 280.3
Deferred Income Taxes 0.8 24.0
Other Assets 82.1 51.2
-------- --------
$1,477.7 $1,477.8
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 162.0 $ 106.9
Accrued liabilities 303.6 341.4
-------- --------
Total current liabilities 465.6 448.3
Long-Term Debt 356.6 356.6
Accrued Postretirement Benefits 275.9 277.5
Other Long-Term Liabilities 106.6 114.9
-------- --------
1,204.7 1,197.3
-------- --------
Shareholders' Equity:
Common stock, $1.00 par value, 100,000,000 shares
authorized, 55,462,298 shares in 1994 and 55,439,048
shares in 1993 issued and outstanding 55.5 55.4
Additional paid-in capital 35.3 34.9
Retained earnings 178.3 186.7
Other 3.9 3.5
-------- --------
Total shareholders' equity 273.0 280.5
-------- --------
$1,477.7 $1,477.8
======== ========
The accompanying notes are an integral part of these statements.
13-1
<PAGE>
TELEDYNE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended December 31, 1994, 1993 and 1992
(In millions except per share amounts)
1994 1993 1992
--------- --------- ---------
Sales $ 2,391.2 $ 2,491.7 $ 2,887.6
--------- --------- ---------
Costs and Expenses:
Cost of sales 1,787.8 1,917.9 2,243.2
Selling and administrative expenses 576.3 468.5 530.2
Interest expense 43.5 45.1 56.2
--------- --------- ---------
2,407.6 2,431.5 2,829.6
--------- --------- ---------
Earnings before Other Income (16.4) 60.2 58.0
Other Income, Net 12.7 53.1 29.0
--------- --------- ---------
Income (Loss) before Income Taxes,
Extraordinary Loss and Cumulative Effect
of Accounting Changes* (3.7) 113.3 87.0
Provision for Income Taxes 4.7 40.5 41.1
--------- --------- ---------
Income (Loss) before Extraordinary Loss and
Cumulative Effect of Accounting Changes (8.4) 72.8 45.9
Extraordinary Loss on Redemption of Debt - (3.7) (2.7)
Cumulative Effect of Accounting Changes - (185.6) (10.0)
--------- --------- ---------
Net Income (Loss) $ (8.4) $ (116.5) $ 33.2
========= ========= =========
Income (Loss) Per Share:
Income (loss) before extraordinary loss
and cumulative effect of accounting
changes $ (0.15) $ 1.32 $ 0.83
Extraordinary loss on redemption of debt - (0.07) (0.05)
Cumulative effect of accounting changes - (3.35) (0.18)
--------- --------- ---------
Net Income (Loss) Per Share $ (0.15) $ (2.10) $ 0.60
========= ========= =========
*Includes non-cash pension income of $79.1 million in 1994, $66.2 million in
1993 and $37.9 million in 1992.
The accompanying notes are an integral part of these statements.
13-2
<PAGE>
TELEDYNE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1994, 1993 and 1992
(In millions)
1994 1993 1992
-------- ------- -------
Operating activities:
Net income (loss) $ (8.4) $(116.5) $ 33.2
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating
activities:
Decrease (increase) in receivables (82.3) 17.4 77.9
Depreciation and amortization 70.2 72.7 79.1
Increase in prepaid pension cost (52.4) (58.2) (47.3)
Decrease (increase) in deferred income taxes 41.0 (57.1) 59.0
Decrease in accounts payable and accrued
liabilities (29.9) (53.9) (91.7)
Decrease (increase) in inventories (26.8) 21.8 29.5
Increase (decrease) in accrued
postretirement benefits (1.6) 299.2 -
Gain on sale of Litton common stock - (40.4) -
Decrease in accrued income taxes - - (17.9)
Other, net (28.3) (1.7) (6.3)
-------- ------- -------
Net cash provided by (used in)
operating activities (118.5) 83.3 115.5
-------- ------- -------
Investing activities:
Sale of marketable securities 121.4 163.5 54.4
Net decrease (increase) in
short-term investments 11.0 28.5 (41.5)
Purchases of marketable securities (8.0) (70.4) (47.2)
-------- ------- -------
Net sale (purchase) of marketable securities 124.4 121.6 (34.3)
Purchases of property and equipment (64.5) (81.2) (69.6)
Proceeds from the sales of businesses 7.2 9.2 95.8
Collection of notes receivable from the
sales of businesses 2.9 17.1 -
Other, net 1.6 (5.9) 7.3
-------- ------- -------
Net cash provided by (used in)
investing activities 71.6 60.8 (0.8)
-------- ------- -------
Financing activities:
Increase (decrease) in checks outstanding 51.7 7.9 (8.9)
Reduction of long-term debt (4.2) (101.6) (60.0)
Cash dividends - (44.3) (44.4)
Other, net 0.4 0.5 0.3
-------- ------- -------
Net cash provided by (used in)
financing activities 47.9 (137.5) (113.0)
-------- ------- -------
Increase in cash $ 1.0 $ 6.6 $ 1.7
======== ======= =======
Non cash transactions:
Receivables from the sales of businesses $ - $ 4.2 $ 19.0
======== ======= =======
Income taxes paid (received) $ 0.9 $ (2.6) $ 26.5
======== ======= =======
Interest paid on long-term debt $ 40.1 $ 41.7 $ 50.7
======== ======= =======
The accompanying notes are an integral part of these statements.
13-3
<PAGE>
TELEDYNE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
For the Years Ended December 31, 1994, 1993 and 1992
(In millions except per share amounts)
<TABLE>
<CAPTION>
Additional Currency Net
Common Paid-In Retained Translation Unrealized Shareholders'
Stock Capital Earnings Adjustment Appreciation Equity
------ ---------- -------- ----------- ------------- ------------
<C> <C> <C> <C> <C> <C>
Balance, December 31, 1991 $ 55.4 $34.5 $ 358.7 $ 5.3 $ - $ 453.9
Net income - - 33.2 - - 33.2
Cash dividends ($0.80 per share) - - (44.4) - - (44.4)
Currency translation adjustment - - - (1.6) - (1.6)
------ ----- ------- ----- ----- -------
Balance, December 31, 1992 55.4 34.5 347.5 3.7 - 441.1
Net loss - - (116.5) - - (116.5)
Cash dividends ($0.80 per share) - - (44.3) - - (44.3)
Exercise of stock options - 0.4 - - - 0.4
Currency translation adjustment - - - (0.2) - (0.2)
------ ----- ------- ----- ----- -------
Balance, December 31, 1993 55.4 34.9 186.7 3.5 - 280.5
Net loss - - (8.4) - - (8.4)
Exercise of stock options 0.1 0.4 - - - 0.5
Net unrealized appreciation - - - - 0.5 0.5
Currency translation adjustment - - - (0.1) - (0.1)
------ ----- ------- ----- ----- -------
Balance, December 31, 1994 $ 55.5 $35.3 $ 178.3 $ 3.4 $ 0.5 $ 273.0
====== ===== ======= ===== ===== =======
</TABLE>
The accompanying notes are an integral part of these statements.
13-4
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors of Teledyne, Inc.:
We have audited the accompanying consolidated balance sheets of Teledyne, Inc.
(a Delaware corporation) and subsidiaries (the Company) as of December 31, 1994
and 1993 and the related consolidated statements of operations, shareholders'
equity and cash flows for each of the three years in the period ended
December 31, 1994. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Teledyne, Inc.
and subsidiaries as of December 31, 1994 and 1993, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1994 in conformity with generally accepted accounting principles.
As explained in Note 8 to the consolidated financial statements, the
Company adopted Statement of Financial Accounting Standards (SFAS) No. 106 in
1993.
Arthur Andersen LLP
Los Angeles, California
January 19, 1995
13-5
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Summary of Significant Accounting Policies -
Principles of Consolidation. The consolidated financial statements of Teledyne,
Inc. include the accounts of all its subsidiaries. All material intercompany
accounts and transactions have been eliminated. Certain amounts for 1993 and
1992 have been reclassified to conform with the 1994 presentation.
Receivables. Receivables are presented net of a reserve for doubtful accounts
of $6.3 million at December 31, 1994 and $9.2 million at December 31, 1993.
Inventories. Inventories are stated at the lower of cost (last-in, first-out
and first-in, first-out methods) or market, less progress payments. Costs
include direct material, direct labor and applicable manufacturing and
engineering overhead, and other direct costs. Any foreseeable losses are
charged to income when determined.
Cost in Excess of Net Assets of Purchased Businesses. Other assets include cost
in excess of net assets of purchased businesses of $24.7 million at December 31,
1994 and $25.6 million at December 31, 1993. Substantially all of this cost is
not being amortized.
Financial Instruments. The fair value of financial instruments, except for long-
term debt, approximated their carrying values at December 31, 1994. Fair values
have been determined through information obtained from quoted market sources and
management estimates.
In 1994, the Company changed its accounting for investments in debt and
equity securities to comply with the provisions of Statement of Financial
Accounting Standards No. 115. The statement requires that these investments be
classified as either held-to-maturity, trading or available-for-sale. The
Company's investments in debt and equity securities are classified as available-
for-sale and are reported at fair value, with net unrealized appreciation and
depreciation on investments reported as a separate component of shareholders'
equity.
Revenue Recognition. Commercial sales and revenue from U.S. government fixed-
price type contracts are generally recorded as deliveries are made or as
services are rendered. For certain fixed-price type contracts that require
substantial performance over a long time period before deliveries begin, sales
are recorded based upon attainment of scheduled performance milestones. Sales
under cost-reimbursement contracts are recorded as costs are incurred and fees
are earned.
Depreciation and Amortization. Buildings and equipment are depreciated
primarily on declining balance methods over their estimated useful lives.
Leasehold improvements are amortized on a straight-line basis over the life of
the lease. Maintenance and repair costs are charged to income as incurred,
and betterments and major renewals are capitalized. Cost and accumulated
depreciation of property sold, retired or fully depreciated are removed from the
accounts, and any resultant gain or loss is included in income.
13-6
<PAGE>
Note 1. Summary of Significant Accounting Policies - (Continued)
Research and Development. Company-funded research and development costs, which
include bid and proposal costs, ($65.9 million in 1994, $64.0 million in 1993
and $69.4 million in 1992) are expensed as incurred. Costs related to
customer-funded research and development contracts are charged to costs and
expenses as the related sales are recorded. A portion of the costs incurred for
company-funded research and development is recoverable through overhead cost
allowances on government contracts.
Environmental. Costs that mitigate or prevent future environmental contamination
or extend the life, increase the capacity or improve the safety or efficiency of
property utilized in current operations are capitalized. Other costs that
relate to current operations or an existing condition caused by past operations
are expensed. Liabilities are recorded when the Company's liability is probable
and the costs are reasonably estimable. Liabilities are estimated and evaluated
independently of possible recoveries, if any, from insurance carriers and other
third parties. The measurement of environmental liabilities by the Company is
based on currently available facts, existing technology and presently enacted
laws and regulations taking into consideration the Company's prior experience in
site remediation and data concerning clean-up costs available from other
companies and regulatory authorities.
Income Taxes. Provision for income taxes includes federal, state and foreign
income taxes. Deferred income taxes are provided for temporary differences in
the recognition of income and expenses. Deferred tax assets or liabilities are
computed based on the difference between the financial statement and income tax
bases of assets and liabilities using the enacted marginal tax rate in effect
for the year in which the differences are expected to reverse. Deferred income
tax expenses or credits are based on the changes in the financial statement and
tax bases of assets and liabilities and tax rates, if any, from period to
period.
Net Income (Loss) Per Share. The weighted average number of shares of common
stock used in the computation of net income per share was 55,446,296 in 1994,
55,420,654 in 1993 and 55,412,845 in 1992. The potential dilution of common
stock equivalents is not material and, therefore, is not included in the
computation of per share data.
13-7
<PAGE>
Note 2. Inventories -
Inventories at December 31, 1994 and 1993 were as follows (in millions):
1994 1993
------- -------
Raw materials and work-in-process $ 301.9 $ 257.1
Finished goods 47.2 49.0
------- -------
349.1 306.1
Progress payments (152.2) (133.5)
------- -------
$ 196.9 $ 172.6
======= =======
Inventories, before progress payments, determined on the last-in, first-out
method were $234.8 million at December 31, 1994 and $233.1 million at
December 31, 1993. The remainder of the inventories was determined using the
first-in, first-out method. Inventories stated on the last-in, first-out basis
were $189.2 million and $184.0 million less than their first-in, first-out
values at December 31, 1994 and 1993, respectively. These first-in, first-out
values do not differ materially from current cost.
During 1994, 1993 and 1992, inventory usage resulted in liquidations of
last-in, first-out inventory quantities. These inventories were carried at the
lower costs prevailing in prior years as compared with the cost of current
purchases. The effect of these last-in, first-out inventory liquidations was to
increase net income by $8.0 million in 1994, $11.4 million in 1993 and $11.5
million in 1992.
Inventories, before progress payments, related to long-term contracts were
$163.4 million and $129.3 million at December 31, 1994 and 1993, respectively.
Progress payments related to long-term contracts were $136.9 million and $116.0
million at December 31, 1994 and 1993, respectively.
13-8
<PAGE>
Note 3. Long-Term Debt -
Long-term debt at December 31, 1994 and 1993 was as follows (in millions):
1994 1993
------ ------
10% Subordinated Debentures, due 2004, Series A and C
(net of unamortized discount of $27.8 in 1994 and $30.9
in 1993) $332.2 $329.1
7% Subordinated Debentures, due 1999, $1.9 payable annually 23.9 26.7
Other 2.6 4.1
------ ------
358.7 359.9
Current portion (2.1) (3.3)
------ ------
$356.6 $356.6
====== ======
At December 31, 1994, the estimated fair value of the Company's long-term debt
was $384.5 million.
In 1994, the Company settled with the U.S. government two civil cases
relating to its Teledyne Relays and Systems units. In connection with the
settlement, the Company paid the U.S. government $56.25 million in the second
quarter of 1994 and agreed to pay an additional $56.25 million in two
installments in March and September 1995. The deferred payments, evidenced by
promissory notes, incurred interest at 6.75% and were secured by irrevocable
letters of credit. In the 1994 fourth quarter, the Company prepaid the $56.25
million due in 1995.
Long-term debt payable is $2.1 million in 1995, $2.7 million in 1996, $2.2
million in 1997, $2.2 million in 1998 and $17.4 million in 1999.
During 1994, the Company entered into credit agreements providing a total
commitment of $148.0 million for up to three years which the Company may use for
borrowings or letters of credit ($75.0 million letters of credit sublimit).
Borrowings under the credit agreements, at the Company's election, bear interest
at either a floating rate generally based on a defined prime rate or a fixed
rate based on an interbank offered rate. A fee is charged on the amount of the
unused commitment. The agreements contain restrictive covenants including those
relating to net worth, investments, asset sales and material changes in lines of
business. No amounts were borrowed under these lines during 1994. Commitments
under separate standby letters of credit outstanding were $86.2 million at
December 31, 1994.
In 1993, the Company redeemed at par $100 million of its 10% Subordinated
Debentures due 2004, Series C resulting in an extraordinary loss of $6.0 million
or $3.7 million, net of tax. In 1992, the Company redeemed at par $50 million
($46.7 million, net of treasury) of its 10% Subordinated Debentures due 2004,
Series A resulting in an extraordinary loss of $4.4 million, or $2.7 million,
net of tax.
13-9
<PAGE>
Note 4. Supplemental Balance Sheet Information -
Cash and marketable securities at December 31, 1994 and 1993 were as follows (in
millions):
1994 1993
------- -------
Cash $ 15.7 $ 14.7
Repurchase agreements, at cost which approximates market 14.0 25.0
United States Treasury notes, at amortized cost
(market: 1993-$119.0) - 115.3
------- -------
$ 29.7 $ 155.0
======= =======
In 1993, the Company sold its investment in Litton common stock resulting in a
$40.4 million gain, included in other income.
Property and equipment at December 31, 1994 and 1993 were as follows (in
millions):
1994 1993
------- -------
Land $ 28.9 $ 30.2
Buildings 229.8 233.4
Equipment and leasehold improvements 597.2 563.7
------- -------
855.9 827.3
Accumulated depreciation and amortization (551.6) (508.5)
------- -------
$ 304.3 $ 318.8
======= =======
Accounts payable included $73.8 million at December 31, 1994 and $22.1 million
at December 31, 1993 for checks outstanding in excess of cash balances.
Accrued liabilities at December 31, 1994 and 1993 were as follows (in
millions):
1994 1993
------- -------
Salaries and wages $ 68.6 $ 66.5
Advances and billings in excess of costs 34.4 61.7
Other 200.6 213.2
------- -------
$ 303.6 $ 341.4
======= =======
13-10
<PAGE>
Note 5. Shareholders' Equity -
The Company is authorized to issue 15 million shares of preferred stock, $1 par
value. No preferred shares were issued or outstanding. In 1988, the Board of
Directors authorized the purchase of up to five million shares of the Company's
common stock. As of December 31, 1994, the Company had purchased and
subsequently retired 1,432,000 shares.
The Company has compensation plans which allow for issuance of restricted
stock, stock options and stock appreciation rights covering an aggregate of
5,000,000 shares of the Company's common stock. Under the plans, options to
purchase shares of the Company's common stock may be granted to certain key
employees and may be incentive stock options or non-qualified stock options. If
incentive stock options are granted, the exercise price of the options is the
fair market value of the shares on the date of the grant. Non-qualified stock
options may be granted with an exercise price below the fair market value of the
shares on the date of the grant. Options are generally nontransferable and are
exercisable in installments.
Stock option activity for the year ended December 31, 1994 was as follows:
Number Exercise
Of Shares Price Per Share
--------- -----------------
Outstanding at December 31, 1993 2,393,500 $19.625 - $26.875
Granted 1,082,000 $16.375
Exercised (23,250) $16.375 - $19.625
Canceled (175,875) $16.375 - $26.875
---------
Outstanding at December 31, 1994 3,276,375 $16.375 - $25.125
=========
The options granted to date are exercisable in installments beginning one and
two years from the date of grant and expiring 10 or 11 years from the date of
grant. As of December 31, 1994, options for 1,673,375 common shares were
available for future grant and 1,077,000 of the stock options were exercisable.
In 1994, the exercise price of certain options granted to employees other than
the executive officers of the Company to purchase 1,171,500 shares of the
Company's common stock was amended to $16.375 per share, which was the fair
market value on the date of the amendment.
In 1994, the Company's Board of Directors approved, subject to shareholder
approval and New York Stock Exchange listing, the 1995 Non-Employee Director
Stock Option Plan (the Stock Option Plan). The Stock Option Plan, which is
available only to non-employee directors of the Company, allows for the issuance
of stock options covering an immaterial number of shares of the Company's common
stock.
13-11
<PAGE>
Note 6. Income Taxes -
The components of the net deferred tax asset at December 31, 1994 and 1993, were
as follows (in millions):
1994 1993
------- -------
Pension income $(124.0) $(100.3)
Postretirement benefits 116.1 117.2
Long-term contracts 29.0 28.8
Inventory valuations 21.7 20.1
Self-insurance reserves 14.3 16.9
Vacation benefits 10.1 12.0
Other deferred assets 66.9 72.9
Other deferred liabilities (28.4) (20.6)
------- -------
$ 105.7 $ 147.0
======= =======
Provision (credit) for income taxes for the years ended December 31, 1994, 1993
and 1992 was as follows (in millions):
1994 1993 1992
------ ------ ------
Current - Federal $(41.1) $(20.1) $ (6.3)
- State 2.9 0.4 4.2
- Foreign 2.0 1.5 0.8
------ ------ ------
- Total (36.2) (18.2) (1.3)
------ ------ ------
Deferred - Federal 40.3 49.3 36.1
- State 0.6 9.4 6.3
------ ------ ------
- Total 40.9 58.7 42.4
------ ------ ------
Provision for income taxes $ 4.7 $ 40.5 $ 41.1
====== ====== ======
Income (loss) before income taxes, extraordinary loss and cumulative effect of
accounting changes included income (loss) from domestic operations of $(9.3)
million in 1994, $113.7 million in 1993 and $86.7 million in 1992.
In 1992, the Company changed its method of accounting for income taxes to
comply with the provisions of SFAS No. 109. As a result, net income for 1992
included a charge of $10.0 million or $0.18 per share for the cumulative effect
of accounting change.
13-12
<PAGE>
Note 6. Income Taxes (Continued) -
Differences between the provision for income taxes and income taxes at the
statutory federal income tax rate for the years ended December 31, 1994, 1993
and 1992 were as follows (in millions):
1994 1993 1992
------ ------ ------
Income tax at statutory federal rate $ (1.3) $ 39.6 $ 29.6
Non-deductible settlement expenses 4.7 0.5 6.0
State and local income taxes,
net of federal income tax effect 2.3 6.4 6.9
Foreign sales corporation exemption (1.9) (2.5) (2.4)
Effect of tax rate change - (4.6) -
Other, net 0.9 1.1 1.0
------ ------ ------
Provision for income taxes $ 4.7 $ 40.5 $ 41.1
====== ====== ======
The Omnibus Budget Reconciliation Act of 1993 increased the corporate federal
income tax rate to 35 percent in 1993 from 34 percent in 1992. The tax law
change resulted in the recognition of additional income by the Company due
primarily to revaluing the Company's net deferred tax asset.
13-13
<PAGE>
Note 7. Pension Benefits
The Company sponsors defined benefit pension plans covering substantially all of
its employees. Benefits are generally based on years of service and/or final
average pay. The Company funds the pension plans in accordance with the
requirements of the Employee Retirement Income Security Act of 1974, as amended.
Components of pension expense (income) for the years ended December 31, 1994,
1993 and 1992 included the following (in millions):
Expense (Income)
-----------------------------
1994 1993 1992
------ ------ ------
Service cost - benefits earned during the year $ 31.2 $ 29.6 $ 42.6
Interest cost on benefits earned in prior years 64.2 68.4 67.6
Expected return on plan assets (111.8) (106.1) (102.6)
Net amortization of unrecognized amounts (59.8) (58.9) (41.8)
------ ------ ------
Pension income for defined benefit plans (76.2) (67.0) (34.2)
Other (2.9) 0.8 (3.7)
------ ------ ------
Pension income $(79.1) $(66.2) $(37.9)
====== ====== ======
Actual return on plan assets was $(44.8) million in 1994, $174.1 million in 1993
and $136.3 million in 1992. Actuarial assumptions used to develop the
components of pension expense (income) for the years ended December 31, 1994,
1993 and 1992 were as follows:
1994 1993 1992
---- ---- ----
Discount rate 7.00% 8.00% 6.75%
Rate of increase in future compensation levels 4.50% 4.50% 4.50%
Expected long-term rate of return on assets 6.00% 6.00% 6.00%
13-14
<PAGE>
Note 7. Pension Benefits (Continued) -
Plan assets in excess of projected benefit obligation at December 31, 1994 and
1993 were as follows (in millions):
1994 1993
-------- --------
Plan assets at fair value $1,761.8 $1,893.2
-------- --------
Actuarial present value of benefit obligations:
Vested benefit obligation 750.8 893.8
Non-vested benefit obligation 5.0 8.6
-------- --------
Accumulated benefit obligation 755.8 902.4
Additional benefits related to future
compensation levels 78.1 133.6
-------- --------
Projected benefit obligation 833.9 1,036.0
-------- --------
Plan assets in excess of projected benefit obligation $ 927.9 $ 857.2
======== ========
Plan assets in excess of projected benefit obligation:
Included in balance sheet:
Prepaid pension cost $ 332.7 $ 280.3
Other long-term liabilities (12.5) (25.3)
Not included in balance sheet:
Unrecognized net gain due to experience different from
that assumed and changes in the discount rate 400.5 353.4
Unrecognized net asset at adoption of SFAS No. 87,
net of amortization 234.5 273.5
Unrecognized prior service cost (27.3) (24.7)
-------- --------
Plan assets in excess of projected benefit obligation $ 927.9 $ 857.2
======== ========
Any reversion of pension plans' assets to the Company would be subject to
federal and state income taxes, substantial excise tax and other possible
claims.
At December 31, 1994 and 1993, the plans' assets, which consisted primarily
of fixed maturities, included debt obligations of the Company (primarily
Teledyne 10% Subordinated Debentures) with a market value of $76.7 million and
$81.0 million, respectively.
A discount rate of 8.50 percent at December 31, 1994 and 7.00 percent at
December 31, 1993 and a rate of increase in future compensation levels of 4.50
percent at December 31, 1994 and 1993 were used for the valuation of pension
obligations.
13-15
<PAGE>
Note 8. Postretirement Benefits -
The Company provides postretirement health care and life insurance benefits,
which are paid as incurred, to certain employees and their dependents meeting
eligibility requirements. Most of the plans are of a defined benefit nature and
are subject to deductibles, co-payment provisions and other limitations. Retiree
contributions to the premium cost are generally required based on coverage type,
plan and medicare eligibility. In many plans, company contributions toward
premiums are capped based on the cost as of a certain date thereby creating a
defined contribution. The Company generally reserves the right to change or
eliminate the plans. Non-represented employees who commenced employment after
January 1, 1986 and union represented employees who commence employment after
the most recently negotiated labor agreement are not eligible for medical
benefits upon retirement.
Effective January 1, 1993, the Company changed its method of accounting for
postretirement health care and life insurance benefits, as required by SFAS No.
106. This statement requires that the expected cost of providing postretirement
health care and life insurance benefits be charged to expense during the years
that the employees render service. Prior to 1993, the Company expensed the cost
of these benefits as they were paid. The annual expense was $23.0 million in
1992 which has not been restated. As a result of adopting SFAS No. 106, the
Company recorded a charge of $301.7 million or $185.6 million, net of tax, to
recognize the accumulated postretirement benefit obligation at the date of
adoption. The new accounting method has no effect on the Company's cash outlays
for postretirement health care benefits.
In 1994, $15.0 million of cash from excess pension assets were transferred
under Section 420 of the Internal Revenue Code from the Company's defined
benefit pension plans to the Company for reimbursement of 1994 retiree health
care benefits. This cash transfer had no effect on operating results.
Components of postretirement expense for the years ended December 31, 1994
and 1993 included the following (in millions):
Expense (Income)
------------------
1994 1993
------ ------
Service cost - benefits earned during the year $ 0.9 $ 1.3
Interest cost on benefits earned in prior years 21.3 23.4
Net amortization of unrecognized amounts (2.1) -
Other - (1.8)
------ ------
Postretirement expense $ 20.1 $ 22.9
====== ======
The assumed health care cost trend rate used in measuring the accumulated
postretirement benefit obligation was 11.0 percent in 1994, gradually declining
to 6.5 percent in the year 2011 and remaining at that level thereafter. A one
percentage point increase in the assumed health care cost trend rate for each
year would increase the accumulated postretirement benefit obligation by $33.5
million and the 1994 postretirement benefit expense by $2.5 million. A discount
rate of 7.0 percent in 1994 and 8.0 percent in 1993 was used in determining the
postretirement expense. A discount rate of 8.5 percent at December 31, 1994 and
7.0 percent at December 31, 1993 was used to determine the postretirement
benefit obligation.
13-16
<PAGE>
Note 8. Postretirement Benefits - (Continued)
Accumulated postretirement benefit obligations at December 31, 1994 and
1993 were as follows (in millions):
1994 1993
------ ------
Accumulated present value of benefit obligations:
Retirees $248.7 $278.1
Other fully eligible plan participants 13.2 30.2
Other active plan participants 11.6 27.7
------ ------
Accumulated benefit obligation $273.5 $336.0
====== ======
Accumulated benefit obligation:
Included in balance sheet:
Current portion included in accrued liabilities $ 22.5 $ 21.7
Accrued postretirement benefits 275.9 277.5
Not included in balance sheet:
Unrecognized net loss (gain) due to experience different
from that assumed and changes in the discount rate (24.9) 36.8
----- ------
Accumulated benefit obligation $273.5 $336.0
====== ======
13-17
<PAGE>
Note 9. Realignment/Restructure -
In 1993, Teledyne undertook a major realignment which consolidated its operating
companies. The realignment built on the 1991-1992 restructure which focused the
Company on those businesses in which it has significant leadership roles. The
1991-1992 restructure consisted of the sale, closure or transfer of certain
operations. The cost of restructuring included the estimated loss for those
operations where the disposal or transfer was expected to result in a loss. For
those operations where the disposal was expected to result in a gain, no gain
was recognized until realized. The net effect of realignment/restructure, which
is included in other income, was income of $2.5 million in 1994, a charge of
$1.4 million in 1993 and income of $24.4 million in 1992.
13-18
<PAGE>
Note 10. Business Segments -
Teledyne is a diversified corporation comprised of companies which manufacture
a wide variety of products. The Company's major business segments include
aviation and electronics, specialty metals, industrial and consumer.
Companies in the aviation and electronics segment produce piston and
turbine engines for aircraft and land based vehicle applications, airframe
structures, unmanned aerial vehicles, target drone systems, and equipment and
subsystems for spacecraft and avionics. Other activities in this segment
include the manufacture of electronic equipment, aircraft-monitoring and control
systems for military and commercial applications, relays and other related
products and systems. Products in the specialty metals segment include
zirconium, titanium, high temperature nickel based alloys, high-speed and tool
steels, tungsten and molybdenum. Other operations in this segment consist of
processing, casting, rolling and forging metals. The industrial segment is
comprised of companies that are involved in the design and/or manufacture of
combat vehicles, diesel engines, crash fire rescue vehicles, material handling
equipment, machine tools, dies and consumable tooling. The consumer segment
manufactures oral hygiene products, shower massages, water and air purification
systems, swimming pool and spa heaters, and provides other products and
services.
Information on the Company's business segments for the years ended
December 31, 1994, 1993 and 1992 was as follows (in millions):
1994 1993 1992
-------- -------- --------
Sales:
Aviation and electronics:
Continuing $ 899.4 $ 976.4 $1,045.5
Discontinued 148.5 180.6 311.5
-------- -------- --------
1,047.9 1,157.0 1,357.0
-------- -------- --------
Specialty metals:
Continuing 683.6 626.3 628.7
Discontinued 1.7 8.0 24.1
-------- -------- --------
685.3 634.3 652.8
-------- -------- --------
Industrial:
Continuing 322.8 338.7 311.7
Discontinued 18.9 48.6 243.1
-------- -------- --------
341.7 387.3 554.8
-------- -------- --------
Consumer:
Continuing 316.3 313.1 303.0
Discontinued - - 20.0
-------- -------- --------
316.3 313.1 323.0
-------- -------- --------
Total:
Continuing 2,222.1 2,254.5 2,288.9
Discontinued 169.1 237.2 598.7
-------- -------- --------
$2,391.2 $2,491.7 $2,887.6
======== ======== ========
The Company's backlog of confirmed orders was approximately $1.4 billion at
December 31, 1994 and 1993. Backlog of the aviation and electronics segment was
$850.7 million at December 31, 1994 and $1.0 billion at December 31, 1993.
13-19
<PAGE>
Note 10. Business Segments (Continued) -
The Company's sales to the U.S. government were $775.2 million in 1994,
$961.0 million in 1993 and $1.0 billion in 1992, including direct sales as prime
contractor and indirect sales as subcontractor. Most of these sales were in the
aviation and electronics segment. Sales by operations in the United States to
customers in other countries were $381.3 million in 1994, $371.3 million in 1993
and $492.3 million in 1992. Sales between business segments, which were not
material, generally were priced at prevailing market prices.
1994 1993 1992
-------- ------- --------
Income (Loss) before Taxes, Extraordinary Loss
and Cumulative Effect of Accounting Changes:
Aviation and electronics:
Continuing $ (2.2) $ 49.5 $ 56.0
Discontinued (35.8) (13.6) 39.3
Pension income 15.9 14.0 (1.1)
-------- ------- --------
(22.1) 49.9 94.2
-------- ------- --------
Specialty metals:
Continuing 28.6 33.9 28.0
Discontinued 1.4 4.0 (6.9)
Pension income 17.0 9.7 3.9
-------- ------- --------
47.0 47.6 25.0
-------- ------- --------
Industrial:
Continuing 13.5 15.1 11.6
Discontinued (0.9) 1.6 9.5
Pension income 42.5 38.8 34.1
-------- ------- --------
55.1 55.5 55.2
-------- ------- --------
Consumer:
Continuing 22.2 21.5 27.5
Discontinued (2.8) 2.0 3.8
Pension income 0.3 0.5 (0.6)
-------- ------- --------
19.7 24.0 30.7
-------- ------- --------
Total:
Continuing 62.1 120.0 123.1
Discontinued (38.1) (6.0) 45.7
-------- ------- --------
24.0 114.0 168.8
-------- ------- --------
Corporate expense:
Salaries and benefits (21.2) (23.9) (23.6)
Other (52.3) (52.4) (44.5)
Interest expense (43.5) (45.1) (56.2)
Pension income 79.1 66.2 37.9
Other income 10.2 54.5 4.6
-------- ------- --------
$ (3.7) $ 113.3 $ 87.0
======== ======= ========
Discontinued results include the estimated realignment/restructure cost, before
pension income, and results of operations sold at a gain, as well as those
gains. As a result of the January 1995 sale of Teledyne Electronic Systems,
sales and operating results for the unit have been reclassified and are
presented in discontinued results of the aviation and electronics segment.
Operating results of continuing operations for the aviation and electronics
segment included income of approximately $6 million and charges of approximately
$16 million in 1993 and $25 million in 1992 on fixed-price development and
initial production contracts. Discontinued results included provision for
13-20
<PAGE>
Note 10. Business Segments (Continued) -
losses on fixed-price development and initial production contracts of
approximately $12 million in 1994 and $4 million in 1993.
Operating results of continuing operations for the aviation and electronics
segment were adversely impacted by charges of $88.8 million in 1994, $3.6
million in 1993 and $19.7 million in 1992 to resolve certain U.S. government
contracting matters. Discontinued results for the aviation and electronics
segment included charges of $35.0 million in 1994 and $13.0 million in 1993 to
resolve certain U.S. government contracting matters. Operating results of
continuing operations for the specialty metals segment included a charge of
$13.0 million in 1994 related to U.S. government export investigations as
discussed in Note 11 to the accompanying consolidated financial statements.
Teledyne's non-cash pension income results primarily from the amortization
into income of the excess of plan assets over the estimated obligation. The
amount recorded reflects the extent to which this non-cash income exceeds the
current year's net cost of providing benefits.
1994 1993 1992
-------- ------- --------
Depreciation and Amortization:
Aviation and electronics $ 19.1 $ 22.0 $ 23.3
Specialty metals 28.3 27.9 28.5
Industrial 8.1 9.0 12.8
Consumer 7.7 6.9 6.8
Corporate 7.0 6.9 7.7
-------- ------- --------
$ 70.2 $ 72.7 $ 79.1
======== ======= ========
Capital Expenditures:
Aviation and electronics $ 15.8 $ 22.8 $ 20.5
Specialty metals 26.6 35.0 29.3
Industrial 6.2 5.2 8.8
Consumer 11.1 9.9 7.8
Corporate 4.8 8.3 3.2
-------- ------- --------
$ 64.5 $ 81.2 $ 69.6
======== ======= ========
Identifiable Assets:
Aviation and electronics $ 299.7 $ 284.6 $ 296.2
Specialty metals 315.6 288.0 283.6
Industrial 114.1 113.1 145.3
Consumer 117.1 105.4 100.8
Corporate 631.2 686.7 710.0
-------- -------- --------
$1,477.7 $1,477.8 $1,535.9
======== ======== ========
13-21
<PAGE>
Note 11. Commitments and Contingencies -
Rental expense under operating leases was $26.8 million in 1994, $27.0 million
in 1993 and $27.9 million in 1992. Future minimum rental commitments under
operating leases with non-cancelable terms of more than one year as of
December 31, 1994, are as follows: $17.6 million in 1995, $14.9 million in
1996, $11.5 million in 1997, $10.3 million in 1998, $8.8 million in 1999 and
$45.5 million thereafter.
On August 15, 1990, federal agents executed a search warrant on and removed
a number of documents relating to government-furnished materials from the
Company's former Teledyne Neosho unit. In addition, several Teledyne Neosho
employees received subpoenas to testify before a federal grand jury. As
previously reported, the Company is further informed that it has been named as
a defendant in a civil action filed pursuant to the False Claims Act in the U.S.
District Court for the Western District of Missouri concerning Teledyne Neosho.
The case remains under seal. The Company does not possess sufficient information
to determine whether the Company will sustain a loss in these matters, or to
reasonably estimate the amount of any such loss. Consequently, the Company has
not been able to identify the existence of a material loss contingency arising
therefrom.
The Company is defending a civil action filed on behalf of the U.S.
government pursuant to the False Claims Act alleging generally that the
Company's Teledyne Relays and Teledyne Solid State units falsified test
certifications for switching devices supplied to the government. The plaintiff
seeks treble the damages allegedly sustained by the United States together with
civil penalties of $5,000 to $10,000 for any false certification made. In
addition to the claims alleged under the False Claims Act, plaintiff alleges
three causes of action for wrongful termination under federal and state laws.
The government intervened in the action on March 4, 1994, and the matter was
unsealed on July 29, 1994. On October 4, 1994, plaintiff Charlie J. Hill
and the Company reached a partial settlement of the matter for $1.125 million.
The government approved the partial settlement and subsequently, on
December 20, 1994, withdrew from the case. Based on an internal review,
and after consultation with counsel, the Company does not possess sufficient
information to determine whether it will sustain a further
loss in this matter, or to reasonably estimate the amount of any such loss.
Consequently, the Company has not been able to identify the existence of a
material loss contingency arising therefrom.
On May 26, 1993, a grand jury impaneled by the United States District Court
for the Southern District of Florida returned an indictment in connection with
a U.S. government investigation of alleged violations of the U.S. export control
laws. The indictment includes charges against the Company's Teledyne Wah Chang
Albany unit and two of its employees relating to the sale of zirconium to a
South American industrialist. At an arraignment on June 14, 1993, the Company
entered a plea of not guilty. On March 22, 1994, the Court dismissed five of
the seven charges brought against Teledyne Wah Chang Albany. If the Company
were found guilty of the remaining two charges, it could face fines totalling up
to $3.55 million.
On July 13, 1994, a grand jury impaneled by the United States District
Court for the District of Columbia returned an indictment against four
corporations and two individuals, including the Company's Teledyne Wah Chang
Albany unit and one of its employees. The indictment stems from a U.S.
government investigation of alleged violations of the U.S. export control laws
relating to a 1988 sale of zirconium to Extraco, Ltd., a Greek company. The
Company entered a plea of not guilty on August 5, 1994. According to a press
13-22
<PAGE>
release issued by the government, "the corporate defendants face fines in excess
of $20 million" if convicted of all charges.
As a result of the May 26, 1993, indictment, the United States Department
of State temporarily suspended Teledyne Wah Chang Albany, effective July 26,
1993, from receiving licenses for export of products and services on the
munitions list. This suspension will not have a material adverse affect on the
financial condition of the Company. However, in the event of a conviction in
either of the two cases, Teledyne Wah Chang Albany and (although considered
unlikely) conceivably the Company would be subject to debarment for a period of
up to three years from receiving licenses for the export of products and
services on the munitions list. In addition, the United States Department of
Commerce could suspend Teledyne Wah Chang Albany and (although considered
unlikely) conceivably the Company for up to ten years from eligibility for
commercial export licenses. Finally, should the United States Department of
Defense determine that Teledyne Wah Chang Albany is not a "presently responsible
contractor," Teledyne Wah Chang Albany, and (although again considered unlikely)
conceivably the Company, could be temporarily suspended or, in the event of a
conviction, could be debarred for up to three years from receiving new
government contracts or government-approved subcontracts.
The Company has established a reserve in the amount of $13 million in
connection with negotiations for the resolution of the Teledyne Wah Chang
matters. While there is no assurance that the negotiations will be concluded
satisfactorily, management does not believe that additional liability incurred,
if any, in connection with the ultimate outcome of these matters is likely to
have a material adverse effect on the financial condition of the Company.
The Company has made voluntary disclosures to the U.S. government of
government contracting irregularities discovered in certain of its current or
former business units. The Company has cooperated with the government in the
investigation of these matters, and management does not believe that the outcome
of these matters is likely to have a material adverse effect on the financial
condition of the Company.
The Company learns from time to time that it has been named as a defendant
in lawsuits which are filed under seal pursuant to the False Claims Act. These
matters remain under seal, and management does not possess sufficient
information to determine whether the Company will sustain a loss in these
matters, or to reasonably estimate the amount of any such loss.
Consequently, the Company has not been able to identify the existence of a
material loss contingency arising therefrom.
For further information concerning government contract matters, and for a
discussion of environmental matters, see Management's Discussion and Analysis of
Financial Condition and Results of Operation .
13-23
<PAGE>
Note 12. Subsequent Events -
On January 4, 1995, the Company's Board of Directors adopted a Stockholder
Rights Plan (the Plan). In accordance with the Plan, the Board of Directors
declared a dividend of one purchase right for each outstanding common share.
These rights have no current value and their distribution is not taxable to
stockholders. If a person or group, without the prior approval of the Company's
Board of Directors, becomes the beneficial owner of 15 percent or more of the
Company's outstanding common stock, each right, except any such rights held by
the non-approved acquiror (or its affiliates or transferees), will entitle
the holder to purchase a number of shares of the Company's common stock that
has a then-current market value of twice the exercise price of the right,
which is $75 (subject to adjustment). In addition, if, after such an event, the
Company is involved in a business combination with, or sells 50 percent or
more of its assets or earning power to, the non-approved acquiror (or any other
person if the transaction does not treat all stockholders alike), each right,
except any such rights held by the non-approved acquiror (or its affiliates
or transferees), will entitle the holder to buy a number of shares of the
voting stock of the other party to the transaction that has a then-current
market value of twice the exercise price. The Plan and the rights will expire
on January 4, 2005. The rights may be redeemed by the Board of Directors for
$0.01 per right at any time prior to the occurrence of the first triggering
event described above or prior to the expiration of the rights.
On January 6, 1995, the Company sold substantially all of the business and
assets of Teledyne Electronic Systems to Litton Industries, Inc. for cash. The
transaction did not include Teledyne Electronic Systems' Lewisburg, Tenn.
operations, its commercial encryption business or any real estate. The
transaction, which will result in an after-tax gain of approximately $30
million, will be recorded in the Company's first quarter 1995 results.
13-24
<PAGE>
SELECTED QUARTERLY FINANCIAL DATA
(In millions except per share and share amounts)
Quarterly financial data for 1994 and 1993 were as follows:
Quarter Ended
----------------------------------------------------
March 31 June 30 September 30 December 31
---------- ---------- ------------ -----------
1994 -
Sales $ 572.9 $ 595.8 $ 578.1 $ 644.4
========== ========== ========== ==========
Gross profit $ 137.8 $ 144.3 $ 146.3 $ 175.0
========== ========== ========== ==========
Net income (loss) $ (55.1) $ 11.0 $ 19.3 $ 16.4
========== ========== ========== ==========
Net income (loss)
per share $ (0.99) $ 0.19 $ 0.35 $ 0.30
========== ========== ========== ==========
Average shares
outstanding 55,441,455 55,442,048 55,446,334 55,455,347
========== ========== ========== ==========
1993 -
Sales $ 636.5 $ 624.4 $ 597.9 $ 632.9
========== ========== ========== ==========
Gross profit $ 144.6 $ 146.2 $ 138.4 $ 144.6
========== ========== ========== ==========
Income, after tax, before
extraordinary loss and
cumulative effect
of accounting change $ 33.8 $ 8.1 $ 15.2 $ 15.7
Extraordinary loss on
redemption of debt (3.7) - - -
Cumulative effect of
accounting change (185.6) - - -
---------- ---------- ---------- ----------
Net income (loss) $ (155.5) $ 8.1 $ 15.2 $ 15.7
========== ========== ========== ==========
Income (loss) per share:
Income, after tax, before
extraordinary loss and
cumulative effect of
accounting change $ 0.61 $ 0.15 $ 0.27 $ 0.28
Extraordinary loss on
redemption of debt (0.07) - - -
Cumulative effect of
accounting change (3.35) - - -
---------- ---------- --------- ----------
Net income (loss)
per share $ (2.81) $ 0.15 $ 0.27 $ 0.28
========== ========== ========== ==========
Average shares
outstanding 55,412,889 55,413,845 55,418,265 55,437,619
========== ========== ========== ==========
13-25
<PAGE>
SELECTED QUARTERLY FINANCIAL DATA
The results for 1994 were adversely affected by charges of $112.5 million in the
first quarter, $11.3 million in the second quarter and $13.0 million in the
fourth quarter, to resolve certain U.S. government investigations.
Operating profit before tax for 1994 included provisions for losses of
approximately $6 million for the year and income of $9 million for the fourth
quarter on fixed-price development and initial production contracts.
Non-cash pension income before tax increased to $19.0 million in the 1994
first quarter from $16.8 million in 1993, $18.7 million in the 1994 second
quarter from $16.8 million in 1993, $18.9 million in the 1994 third quarter from
$15.9 million in 1993, and $22.5 million in the 1994 fourth quarter from $16.7
million in 1993 due primarily to a reduction in the number of employees during
1993 and an increased expected return on pension assets, partially offset by a
decrease in the discount rate, to seven from eight percent, used to calculate
the pension benefit obligation.
During the first quarter of 1993, the Company redeemed at par $100 million
of its 10% Subordinated Debentures resulting in an extraordinary loss of $3.7
million.
During the first quarter of 1993, the Company changed its method of
accounting for post-retirement health care and life insurance benefits to comply
with the provisions of SFAS No. 106. The cumulative effect of the accounting
change resulted in a charge to net income of $185.6 million, or $3.35 per share.
Net loss for the first quarter of 1993 includes a gain on sale of Litton
common stock of $24.2 million.
Operating profit before tax for 1993 included a realignment/restructure
charge of $8.2 million in the second quarter and income of $6.8 million in the
fourth quarter.
Operating profit before tax for the second and fourth quarters of 1993 was
reduced by a charge of $10.0 million and $5.1 million, respectively, to resolve
certain U.S. government contracting matters.
The Omnibus Budget Reconciliation Act of 1993, enacted in the third quarter
retroactive to January 1, 1993, increased the corporate federal income tax rate
to 35 percent from 34 percent. The tax law change resulted in the recognition
in the 1993 third quarter of $3.9 million of additional income by the Company
due primarily to revaluing the Company's net deferred tax asset.
For 1993, operating profit before tax included provisions for losses on
fixed-price development and initial production contracts of approximately $20
million, of which $15 million was recorded in the fourth quarter.
The Company paid cash dividends of $0.20 per share for each quarter in
1993.
13-26
<PAGE>
SELECTED FINANCIAL DATA
For the Five Years Ended December 31, 1994
(In millions except per share amounts)
1994 1993 1992 1991 1990
-------- --------- -------- -------- --------
Sales:
Continuing $2,222.1 $ 2,254.5 $2,288.9 $2,298.3 $2,357.7
Discontinued 169.1 237.2 598.7 908.5 1,088.1
-------- --------- -------- -------- --------
$2,391.2 $ 2,491.7 $2,887.6 $3,206.8 $3,445.8
======== ========= ======== ======== ========
Income (loss), after tax,
before extraordinary loss,
cumulative effect of
accounting changes and
discontinued insurance
operations $ (8.4) $ 72.8 $ 45.9 $ (25.4) $ 69.2
Extraordinary loss on
redemption of debt - (3.7) (2.7) - -
Cumulative effect of
accounting changes - (185.6) (10.0) - -
Income of discontinued
insurance operations - - - - 25.6
-------- --------- -------- -------- --------
Net income (loss) $ (8.4) $ (116.5) $ 33.2 $ (25.4) $ 94.8
======== ========= ======== ======== ========
Income (loss) per share:
Income (loss), after tax,
before extraordinary
loss, cumulative effect
of accounting changes
and discontinued
insurance operations $ (0.15) $ 1.32 $ 0.83 $ (0.46) $ 1.25
Extraordinary loss on
redemption of debt - (0.07) (0.05) - -
Cumulative effect of
accounting changes - (3.35) (0.18) - -
Discontinued insurance
operations - - - - 0.46
-------- --------- -------- -------- --------
Net income (loss)
per share $ (0.15) $ (2.10) $ 0.60 $ (0.46) $ 1.71
======== ========= ======== ======== ========
Working capital $ 292.2 $ 355.2 $ 488.2 $ 505.0 $ 601.8
======== ========= ======== ======== ========
Long-term debt $ 356.6 $ 356.6 $ 449.7 $ 497.1 $ 510.6
======== ========= ======== ======== ========
Assets $1,477.7 $ 1,477.8 $1,535.9 $1,719.4 $1,676.3
======== ========= ======== ======== ========
Shareholders' equity $ 273.0 $ 280.5 $ 441.1 $ 453.9 $ 523.5
======== ========= ======== ======== ========
13-27
<PAGE>
SELECTED FINANCIAL DATA (Continued)
Net income (loss) included non-cash pension income after tax of $47.9 million in
1994, $40.1 million in 1993, $23.3 million in 1992, $17.3 million in 1991 and
$14.3 million in 1990.
Net loss for 1994 included charges of $88.0 million in 1994, $10.7 million
in 1993 and $19.0 million in 1992 to resolve certain U.S. government
investigations.
Net loss for 1993 included a charge of $185.6 million or $3.35 per share
for the cumulative effect of a change in accounting for postretirement health
care and life insurance benefits and a gain on sale of Litton common stock of
$24.2 million.
During 1993, the Company redeemed at par $100 million of its 10%
Subordinated Debentures resulting in an extraordinary loss of $3.7 million. In
1992, the Company redeemed at par $50 million ($46.7 million net of treasury) of
its 10% Subordinated Debentures resulting in an extraordinary loss of $2.7
million.
In 1991, the Company announced a restructuring plan that included the sale,
closure or transfer of certain operations. Income before tax included income of
$24.4 million in 1992 and a charge of $107.6 million in 1991 for the effect of
restructuring.
Effective January 1, 1992, the Company changed its method of accounting for
income taxes to comply with the provisions of SFAS No. 109. The cumulative
effect of the accounting change was a charge of $10.0 million or $0.18 per
share. Prior year financial statements have not been restated.
In 1990, Teledyne distributed to its shareholders all of the outstanding
common stock of Unitrin, Inc., the parent company of Teledyne's former insurance
and finance subsidiaries.
The Company paid cash dividends of $0.80 per share for all years presented
prior to 1994.
13-28
<PAGE>
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Teledyne is a diversified manufacturing corporation serving customers worldwide
through 18 operating companies focused in four business segments: Aviation and
Electronics; Specialty Metals; Industrial; and Consumer.
Results of Operations
Sales and operating profit for the Company's four business segments are
presented separately in the tables below for continuing results, discontinued
results and pension income (in millions):
Aviation and Electronics
1994 1993 1992
---------- ---------- ----------
Sales:
Continuing $ 899.4 $ 976.4 $ 1,045.5
Discontinued 148.5 180.6 311.5
---------- ---------- ----------
$ 1,047.9 $ 1,157.0 $ 1,357.0
========== ========== ==========
Operating Profit (Loss):
Continuing $ (2.2) $ 49.5 $ 56.0
Discontinued (35.8) (13.6) 39.3
Pension income 15.9 14.0 (1.1)
---------- ---------- ----------
$ (22.1) $ 49.9 $ 94.2
========== ========== ==========
Sales from continuing operations decreased $77.0 million in 1994 and $69.1
million in 1993 but increased $24.5 million in 1992. Sales decreased in 1994 as
a result of declining orders due to reduced government spending for defense, and
the winding down and restructuring of certain military programs. These 1994
sales declines primarily affected systems engineering contracts, airframe
structures, ground power generators, unmanned aerial vehicles and other military
hardware. Increased sales of aircraft engines for the general aviation market,
tents for the U.S. armed forces and electronic countermeasure equipment for the
international market partially offset the 1994 sales declines. Sales declined
in 1993 primarily as a result of winding down of certain U.S. and foreign
military programs, declining orders due to reduced defense spending and softness
in non-military markets. Sales increased in 1992 primarily due to sales of
unmanned aerial vehicles and airframe structures.
Excluding charges of $88.8 million in 1994, $3.6 million in 1993 and $19.7
million in 1992 to resolve certain U.S. government contracting matters,
operating profit from continuing operations increased $33.5 million for 1994,
decreased $22.6 million for 1993 and increased $54.5 million for 1992.
Operating results from continuing operations on fixed-priced development and
initial production contracts for 1994 included income of approximately $6
million primarily due to the partial reversal of estimated losses as a result
of termination of certain contracts by the U.S. government. In addition,
operating results for 1994 were positively affected by increased earnings on
general aviation engine rebuilds and electronic components and subsystems. The
increase in 1994 profit was partially offset by the decline in sales. Operating
profit from continuing operations decreased in 1993 primarily due to the
decrease in sales discussed above and higher costs related to government
contracting issues. For 1992, operating profit from continuing operations
increased due primarily to improved performance on fixed-price development and
initial production contracts and the sales increases discussed above. Operating
results of continuing operations included charges of approximately $16 million
in 1993 and $25 million in 1992 on fixed-price development and initial
production contracts.
13-29
<PAGE>
In January 1995, the Company sold substantially all of the business and
assets of Teledyne Electronic Systems to Litton Industries, Inc. Sales and
operating results for the unit, including charges to resolve government
contracting issues, have been reclassified and are presented in discontinued
results of the aviation and electronics segment. Discontinued results for 1994
and 1993 included charges of $35.0 million and $13.0 million, respectively, to
resolve certain U.S. government contracting matters. Discontinued results
included provision for losses on fixed-price development and initial production
contracts of approximately $12 million in 1994 and $4 million in 1993.
Specialty Metals
1994 1993 1992
---------- ---------- ----------
Sales:
Continuing $ 683.6 $ 626.3 $ 628.7
Discontinued 1.7 8.0 24.1
---------- ---------- ----------
$ 685.3 $ 634.3 $ 652.8
========== ========== ==========
Operating Profit (Loss):
Continuing $ 28.6 $ 33.9 $ 28.0
Discontinued 1.4 4.0 (6.9)
Pension income 17.0 9.7 3.9
---------- ---------- ----------
$ 47.0 $ 47.6 $ 25.0
========== ========== ==========
Sales from continuing operations increased $57.3 million in 1994. The
improvement in sales was primarily due to the general recovery in the economy
particularly in the land-based transportation, aerospace and power generation
markets. Sales declined $2.4 million in 1993 primarily due to the depressed
aerospace market partially offset by improved sales of zirconium for a naval
ship propulsion program and increased sales at start-up facilities. For 1992,
sales declined $63.9 million primarily as a result of a decline in sales of
tungsten carbide products and the general economic slowdown.
Excluding a charge of $13.0 million related to U.S. government export
investigations, operating profit from continuing operations increased $7.7
million in 1994 due primarily to the improved sales performance discussed above,
improved margins for high speed and tool steels and strong performance of
tungsten-based and thin rolled products. Improved operating profit for 1994 was
reduced by approximately $4 million due to increased environmental costs. In
addition, lower margins on zirconium and nickel-based products, and costs
associated with increasing titanium production capacity adversely affected
operating profit. Despite the decline in sales, operating profit improved $5.9
million in 1993 primarily as a result of improved performance at start-up
facilities and increased sales of zirconium. Operating profit declined $30.7
million in 1992 due primarily to the decline in sales discussed above and
increased start-up costs of new plants.
Industrial
1994 1993 1992
---------- ---------- ----------
Sales:
Continuing $ 322.8 $ 338.7 $ 311.7
Discontinued 18.9 48.6 243.1
---------- ---------- ----------
$ 341.7 $ 387.3 $ 554.8
========== ========== ==========
Operating Profit (Loss):
Continuing $ 13.5 $ 15.1 $ 11.6
Discontinued (0.9) 1.6 9.5
Pension income 42.5 38.8 34.1
---------- ---------- ----------
$ 55.1 $ 55.5 $ 55.2
========== ========== ==========
13-30
<PAGE>
Management's Discussion and Analysis of Financial Condition and Results of
Operations (Continued)
Sales from continuing operations decreased $15.9 million in 1994 primarily due
to lower sales related to military vehicle development and pressure relief
valves. However, sales related to crash fire rescue vehicles, nitrogen cylinder
systems for the metal stamping industry, material handling equipment for major
retailers and distributors, and tank engines increased in 1994. Sales increased
$27.0 million in 1993 due primarily to increased sales of tank engines and sales
related to military vehicle development. In addition, both nitrogen cylinder
systems and materials handling equipment provided strong performance in 1993.
The $34.0 million sales increase for 1992 primarily resulted from increased
sales related to military vehicle development.
Operating profit from continuing operations decreased $1.6 million in 1994
due primarily to the decline in sales of pressure relief valves, bid and
proposal costs on a new land vehicle program, cost overruns on the crash fire
rescue vehicle program and plant rationalization expenses. Operating profit
related to nitrogen cylinder systems and tank engines increased in 1994.
Operating profit from continuing operations increased $3.5 million in 1993
primarily as a result of the changes in sales discussed above. For 1992,
operating profit from continuing operations decreased $6.2 million due to the
effects of the general economic slowdown partially offset by increased sales of
lower margin products.
Consumer
1994 1993 1992
---------- ---------- ----------
Sales:
Continuing $ 316.3 $ 313.1 $ 303.0
Discontinued - - 20.0
---------- ---------- ----------
$ 316.3 $ 313.1 $ 323.0
========== ========== ==========
Operating Profit (Loss):
Continuing $ 22.2 $ 21.5 $ 27.5
Discontinued (2.8) 2.0 3.8
Pension income 0.3 0.5 (0.6)
---------- ---------- ----------
$ 19.7 $ 24.0 $ 30.7
========== ========== ==========
Sales from continuing operations increased $3.2 million in 1994 and $10.1
million in 1993 but decreased $4.0 million in 1992. Sales in 1994 increased in
shower, pool heater and commercial heating systems products, but decreased in
heating elements sold to original equipment manufacturers and were impacted by
the completion in 1993 of a distribution arrangement to sell engines for an
operation sold in 1992. Sales improved in 1993 primarily due to increased sales
of pool heaters, residential and commercial heating systems, promotional
drinkware and filtration products. For 1992, sales declines were primarily
experienced in oral health and metal tube products.
Operating profit from continuing operations for 1994 was comparable to 1993
and was impacted by the sales variances discussed above. In addition, operating
profit for 1994 was adversely impacted by new product development costs on oral
health and water filtration products and plant rationalization expenses.
Operating profit from continuing operations decreased $6.0 million for 1993
primarily due to new product start-up costs and increased promotional expenses.
Operating profit from continuing operations for 1992 was comparable with 1991.
13-31
<PAGE>
Management's Discussion and Analysis of Financial Condition and Results of
Operations (Continued)
Discontinued Results
Discontinued results include the estimated cost of realignment/restructure,
discussed below, before pension income and results of operations sold at a gain,
as well as those gains.
Corporate Expense
Corporate expense for salaries and benefits decreased $2.7 million in 1994 and
increased $0.6 million in 1993 and $0.5 million in 1992.
Other corporate expense for 1994 was comparable to 1993 and increased $7.7
million in 1993 and 1992. For 1994, corporate expenses for legal, contract
compliance audits and insurance declined, offset by insurance recoveries
received in 1993 related to environmental matters. In 1993, increased
insurance, legal, international marketing and contract compliance audit expenses
partially offset recoveries from insurance carriers for environmental matters.
For 1992, increased legal and international marketing expenses were partially
offset by a decline in insurance costs.
Pension Income
Teledyne's non-cash pension income results primarily from the amortization into
income of the excess of plan assets over the estimated obligation. The amount
recorded reflects the extent to which this non-cash income exceeds the current
year's net cost of providing benefits. Pension income before tax increased to
$79.1 million in 1994 from $66.2 million in 1993 and $37.9 million for 1992. The
increase in 1994 was a result of a reduction in the number of employees during
1993 and an increased expected return on pension assets, partially offset by a
decrease in the discount rate, to seven from eight percent, used to calculate
the pension benefit obligation. The increase in 1993 was due primarily to a
change in the discount rate used to calculate the pension benefit obligation.
Any reversion of pension plans' assets to the Company would be subject to
federal and state income taxes, substantial excise tax and other possible
claims.
In 1994, $15.0 million of cash from excess pension assets were transferred
under Section 420 of the Internal Revenue Code from the Company's defined
benefit pension plans to the Company for reimbursement of 1994 health care
benefits. This cash transfer had no effect on operating results.
Litton Gain
In 1993, the Company sold its investment in Litton common stock resulting in a
$40.4 million gain, included in other income.
Realignment/Restructure
In 1993, Teledyne undertook a major realignment which consolidated its operating
companies and eliminated 1,200 management and support positions. The
realignment builds on the 1991-1992 restructure which focused the Company on
those businesses in which it has significant leadership roles. The 1991-1992
restructure consisted of the sale, closure or transfer of certain operations.
The net effect of realignment/restructure, which is included in other income,
was income of $2.5 million in 1994, a charge of $1.4 million in 1993, income of
$24.4 million in 1992 and a charge of $107.6 million in 1991.
13-32
<PAGE>
Management's Discussion and Analysis of Financial Condition and Results of
Operations (Continued)
Provision (Credit) for Income Taxes
The Company's effective income tax rate increased in 1994 and 1992 primarily as
a result of government settlement expenses, which were not deductible for tax
purposes.
The Omnibus Budget Reconciliation Act of 1993 increased the corporate
federal income tax rate to 35 percent in 1993 from 34 percent in 1992. The tax
law change resulted in the recognition of additional income of $4.6 million in
1993 by the Company due primarily to revaluing the Company's net deferred tax
asset.
In 1992, the Company changed its method of accounting for income taxes to
comply with the provisions of Statement of Financial Accounting Standards (SFAS)
No. 109. As a result, net income for 1992 included a charge of $10.0 million
for the cumulative effect of the accounting change. Prior year consolidated
financial statements were not restated.
The Company has determined, based on its history of operating earnings,
available carrybacks, expectations of future operating earnings and potential
tax planning strategies, as well as the extended period of time over which the
postretirement benefits obligation will be paid, that it is more likely than not
that the deferred tax assets at December 31, 1994 will be realized.
Postretirement Benefits
Effective January 1, 1993, the Company changed its method of accounting for
postretirement health care and life insurance benefits, as required by SFAS No.
106. This statement required that the expected cost of providing postretirement
health care and life insurance benefits be charged to expense during the years
that the employees render service. Prior to 1993, the Company expensed the cost
of these benefits as they were paid. As a result of adopting SFAS No. 106, the
Company recorded a charge in 1993 of $301.7 million or $185.6 million, net of
tax, to recognize the accumulated postretirement benefit obligation at the date
of adoption. The new accounting method has no effect on the Company's cash
outlays for postretirement health care and life insurance benefits.
Financial Condition
Shareholders' equity decreased $7.5 million in 1994 as a result of the net loss
of $8.4 million and decreased $160.6 million in 1993 as a result of the net loss
of $116.5 million and cash dividends of $44.3 million. Shareholders' equity
decreased in 1992 primarily as a result of cash dividends in excess of net
income. The Company has been able to meet all cash requirements during the past
five years with cash generated from operations or through borrowings, and is not
aware of any impending cash requirements or capital commitments which could not
be met by internally generated funds or the utilization of existing credit
lines. During 1994, the Company entered into credit agreements providing a
total commitment of $148.0 million for up to three years which the Company may
use for borrowings or letters of credit ($75.0 million letters of credit
sublimit). The agreements contain restrictive covenants including those
relating to net worth, investments, asset sales and material changes in lines of
business. No amounts were borrowed under these lines during 1994. The Company
redeemed at par $100 million in 1993 and $50 million in 1992 of its 10%
Subordinated Debentures.
13-33
<PAGE>
Management's Discussion and Analysis of Financial Condition and Results of
Operations (Continued)
In 1994, the Company settled with the U.S. government two civil cases
relating to its Teledyne Relays and Systems units. In connection with the
settlement, the Company paid the U.S. government $56.25 million in the second
quarter of 1994 and agreed to pay an additional $56.25 million in two
installments in March and September 1995. The deferred payments, evidenced by
promissory notes, incurred interest at 6.75% and were secured by irrevocable
letters of credit. In the 1994 fourth quarter, the Company prepaid the $56.25
million due in 1995.
On January 6, 1995, the Company received cash of $60.1 million on the sale
of substantially all of the business and assets of Teledyne Electronic Systems
to Litton Industries, Inc. The transaction will result in a 1995 first quarter
gain of approximately $30 million.
Other Matters
Government Contracts
Company subsidiaries perform work on a substantial number of defense contracts
with the U.S. government. Many of these contracts include price redetermination
clauses, and most are terminable at the convenience of the government. Certain
of these contracts are fixed-price or fixed-price incentive development
contracts. There is substantial risk on such contracts that costs may exceed
those expected when the contracts were negotiated. Absent modification of these
contracts, any costs incurred in excess of the fixed or ceiling prices must be
borne by the Company. In addition, virtually all defense programs are subject
to curtailment or cancellation due to the annual nature of the government
appropriations and allocations process. A material reduction in U.S. government
appropriations for defense programs may have an adverse effect on the Company's
business, depending upon the specific defense programs affected by any such
reduction.
As a result of contract funding constraints and reprioritization of defense
programs, certain of the Company's defense contracts have either been terminated
or reduced in scope. The Company has significant claims for cost reimbursement
in connection with two of these contracts which, net of revisions to estimates
to complete, will total approximately $32 million. However, there is no
assurance that these matters will be resolved in favor of the Company.
The Company, like other government contractors, has been and is subject from
time to time to various audits, reviews and investigations relating to the
Company's compliance with federal and state laws. Generally, claims arising out
of these government inquiries are resolved without resort to litigation.
However, should the unit involved be charged with wrongdoing, or should the U.S.
government determine that the unit is not a "presently responsible contractor,"
that unit, and conceivably the Company, could be temporarily suspended or, in
the event of a conviction, could be debarred for up to three years from
receiving new government contracts or government-approved subcontracts.
Given the extent of the Company's business with the U.S. government, a
suspension or debarment of the Company could have a material adverse effect
on the future operating results and consolidated financial condition of the
Company. However, although the outcome of government inquiries cannot be
predicted with certainty, management does not believe there is any audit,
review or investigation currently pending against the Company that is likely
to result in suspension or debarment of the Company, or
13-34
<PAGE>
Management's Discussion and Analysis of Financial Condition and Results of
Operations (Continued)
that is otherwise likely to have a material adverse effect on the Company's
financial condition.
For additional discussion of government contract matters, see Note 11 to the
accompanying consolidated financial statements.
Environmental
The Company is subject to various federal, state and local laws and regulations
concerning the environment, and is currently involved in the investigation and
remediation of a number of sites under these laws. It is difficult to estimate
the timing and ultimate amount of environmental costs which may be incurred by
the Company in connection with these proceedings due to uncertainties with
respect to the availability of information concerning each site and the status
of the law, regulations and technology. Accordingly, estimates of probable and
reasonably possible remediation costs to be incurred by the Company are based on
currently available facts, present laws and regulations, and current technology.
Such estimates take into consideration the Company's prior experience in site
investigation and remediation, the data concerning cleanup costs available from
other companies and regulatory authorities, and the professional judgment of the
Company's environmental experts in consultation with outside environmental
specialists, when necessary. The estimates also reflect an assessment of the
likelihood that other companies which have been designated potentially
responsible parties will have the financial resources to fulfill their
obligations at Superfund sites where they and the Company may be jointly and
severally liable.
As discussed in Note 1 to the accompanying consolidated financial
statements, the Company accrues for losses associated with environmental
remediation obligations when such losses are probable and reasonably estimable,
but generally not later than completion of the remedial feasibility study. The
accruals are reviewed quarterly and, as the investigation and remediation of
each site progresses, adjustments are made as necessary. Many of the
investigations are in a preliminary stage, and future adjustments may be
substantial as more information, such as the nature and extent of site
contamination and the scope of required remediation, becomes available.
Accruals for losses from environmental remediation obligations do not consider
the effects of inflation, and the costs of future expenditures are not
discounted to their present value. Recoveries of environmental remediation
costs from other parties are recorded as assets when their receipt is deemed
probable and the amounts are reasonably estimable.
The Company is party to a number of proceedings brought under the
Comprehensive Environmental Response, Compensation and Liability Act, commonly
known as Superfund, or similar state statutes. The Company has been identified
as a potentially responsible party (PRP) at approximately 55 Superfund sites to
date, including those at which it believes it has no future liability. The
Company's involvement is very limited or de minimus at approximately 45 of these
sites. In addition, the Company is remediating, or has begun environmental
engineering studies to determine cleanup requirements at certain of its current
and former operating sites. The Company has accrued approximately $52 million in
connection with environmental investigation and remediation liabilities at
Superfund sites and at the Company's current and former operating sites. These
costs will likely be incurred over a period of several years. Based on
currently available information and analyses, management does not believe that
costs in
13-35
<PAGE>
Management's Discussion and Analysis of Financial Condition and Results of
Operations (Continued)
excess of those accrued for these matters will have a material adverse
effect on the Company.
Other
On November 28, 1994, WHX Corporation (WHX) made an unsolicited merger
proposal in which Teledyne's stockholders would receive $22 per share in a
combination of cash of $11 per share, and the balance on a tax-free basis in a
WHX convertible preferred stock. In a letter dated December 19, 1994, WHX was
advised that the Board of Directors of Teledyne, Inc. had conducted a careful
evaluation of factors and circumstances it considered relevant, including its
view that there is no significant value to Teledyne stockholders associated with
the proposed merger, and that the Board had unanimously concluded that it has no
interest in pursuing the proposed merger. On December 21, 1994, WHX announced
it was filing a notification form under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 seeking clearance, which it subsequently received, to
purchase up to but less than 15 percent of Teledyne's outstanding common stock.
On January 4, 1995, the Company's Board of Directors adopted a Stockholder
Rights Plan (the Plan) as further discussed in Note 12 to the accompanying
consolidated financial statements. The Plan is intended to deter coercive and
unfair takeover tactics and to give the Company's Board of Directors the
ability to respond, on the basis of the best interests of Teledyne, its
stockholders and other relevant constituencies, to any unsolicited takeover
attempts.
13-36
<PAGE>
Common Stock Price
1994
- --------------------------------------------------------------------------------
Quarters 1st 2nd 3rd 4th
- --------------------------------------------------------------------------------
High $26 5/8 $18 5/8 $18 7/8 $21 1/8
Low $16 5/8 $14 1/4 $15 3/8 $15 1/2
- --------------------------------------------------------------------------------
1993
- --------------------------------------------------------------------------------
Quarters 1st 2nd 3rd 4th
- --------------------------------------------------------------------------------
High $23 1/8 $22 3/4 $27 3/4 $27 3/8
Low $18 1/8 $18 1/2 $20 1/2 $24 3/8
- --------------------------------------------------------------------------------
Teledyne, Inc. common stock is listed on the New York and Pacific Stock
Exchanges. As of December 31, 1994, there were approximately 13,000 record
holders of common stock.
- --------------------------------------------------------------------------------
13-37
<PAGE>
OUTLINE OF PRODUCTS AND
ACTIVITIES
Aviation and Electronics: Products in the closely related fields
of aviation and electronics range from the microscopic world of
semiconductor devices to full-scale air frames and complete
aircraft.
Teledyne's hybrid microcircuits are widely used in military,
space, industrial and medical applications. These compact and
complex electronic building blocks combine multiple transistors
and integrated circuits in multi-chip modules where small
packaging sizes, reliability and light weight are of paramount
importance. Thousands of these microcircuits, the size of
postage stamps, have been produced, and are providing the precise
control required for heart pacemakers and interplanetary
missions, as well as many other uses.
Using the latest microcircuit technology and encryption
algorithms, Teledyne is developing equipment to provide
cryptographic security for commercial wideband telecommunications
applications.
On a still larger scale are Teledyne's high power traveling
wave tubes, used to simultaneously transmit thousands of
telephone conversations or a dozen television channels around the
world via satellite networks.
Similar types of traveling wave tubes are used in the latest
airborne and ground-based electronic countermeasure equipment.
In the microwave industry, Teledyne is a leading supplier of
ferrite components and switching devices, as well as filters,
oscillators and integrated subsystems. Monolithic microwave
integrated circuits are provided for both commercial and military
applications. A wireless local area network is being produced
for commercial applications.
Other components include operational amplifiers, digital-
analog converters, miniature relays, hybrid switching devices,
radar augmenters, lower power microwave tubes, flexible printed-
circuit interconnections, high reliability wire and cable,
switches, terminals and a line of aircraft, tank and truck
batteries.
Teledyne's aerospace legacy has included supplying the on-
board computers which successfully controlled the launching of
dozens of spacecraft, including both Viking missions to Mars.
Additionally, doppler radar systems produced by Teledyne were
used on 24 successful space landings and guided each Apollo
lander to the surface of the moon. Teledyne currently produces
equipment for electronic countermeasures, for telemetering data
from remote sources, and for information processing, as well as
the aircraft integrated data systems used by dozens of major
13-38
<PAGE>
airlines to record in-flight performance and maintenance data on
their jumbo jets.
Teledyne produces a broad range of instrumentation products
which provide high precision measurement and control capabilities
for diverse customers.
The revolutionary 3DQ Discovery ion trap mass spectrometer
offers portability, compactness, cost-effectiveness and parts-
per-trillion sensitivity for petrochemical, industrial,
pharmaceutical, biotechnical, and environmental applications.
Sensors, analyzers (on-line and portable), and custom-
engineered systems incorporate a broad range of principles of
measurement, including electrochemical, electrolytic diffusion,
chemiluminescence, absorption photometry, thermal conductivity,
flame ionization, and catalytic oxidation.
Oxygen sensors from this line set industry standards for
accuracy, sensitivity, rugged reliability, and application
versatility. Photometric detectors for specific chemicals cover
the complete spectrum of absorption analysis, from ultraviolet to
visible to infrared wave-lengths. Polarographic sensors for
carbon monoxide and hydrogen sulfide gas analysis also monitor
chlorine, fluorine, and reducing gases.
Teledyne produces equipment which supports geophysical
exploration and analysis for oil and gas exploration surveys and
the measurement of seismic earth motion. A family of hydrophones
based on piezoelectric ceramics is among the most advanced in the
world. For over a half century, precise seismometers developed
and manufactured by Teledyne have set the standard for detecting
natural and man-made earth motion. The innovation continues in
smaller and more sensitive instruments and microprocessor-based,
portable systems to quickly extract and analyze seismic
information.
Teledyne also performs systems engineering and integration
for ballistic missile defense, space defense, shuttle payloads,
computer software, and designs and produces military airborne
training and evaluation systems. Cargo tracking software has
been developed for use by freight forwarders.
Among Teledyne's many non-electronic products for aviation
are controlled explosive devices that precisely time, sequence
and actuate aircraft escape systems, and similar pyrotechnic
devices used to separate the stages of space vehicles and to
eject or deploy instrument packages. This technology is being
used in automobile airbag development systems. Teledyne also
produces parachute delivery systems for accurate air-drop of
military cargo or emergency supplies.
Continental's piston engines have been powering airplanes
for 60 years, and today about half of the general aviation piston
13-39
<PAGE>
engines produced in the United States are built by Teledyne and
used worldwide. Teledyne turbine engines also power remotely
piloted aircraft, military trainers and in small, expendable
versions provide power for the Harpoon and other cruise missiles.
The Company's expertise in airframe manufacture goes back to
Charles Lindbergh's Spirit of St. Louis which was built by Ryan
Airlines, Inc., forerunner of today's Teledyne Ryan Aeronautical.
More than 25 types of remotely piloted aircraft usually called
Unmanned Air Vehicles (UAVs) have been built by Teledyne, in both
supersonic and subsonic versions. These recoverable and reusable
vehicles are used for sophisticated military missions, such as
reconnaissance, with the pilots safely flying them from remote
control centers. Through the production of sophisticated UAVs,
Teledyne has also developed broad expertise in the use of
advanced materials such as graphite composites, and has
facilities for the numerically controlled machining of airfoils
from honeycomb materials.
Teledyne also builds the airframe for the Army's Apache
attack helicopter and has produced thousands of feet of tapered,
roll-formed stringers used in wide-body aircraft.
Teledyne's participation in all these diverse areas of
aviation, space and electronics has given the Company highly
developed expertise in some of the most advanced technologies of
our time.
Specialty Metals: The products of this business segment are
representative of the practical application of metallurgical
science and technology as it is known and practiced throughout
the world. Their unique characteristics are derived from the
nature of the metals produced, the particular properties of the
alloys melted, and the various processes, methods, forms, shapes
and end products manufactured.
In specialty metals, Teledyne is the most diversified
producer of reactive and refractory metals in the United States.
Teledyne produces all of the larger volume, commercially
important metals and their alloys. Reactive metals production
includes titanium, zirconium and hafnium; refractory metals
consist of tungsten, molybdenum, niobium, tantalum and vanadium.
Teledyne is the leading U.S. producer of zirconium, a highly
corrosion-resistant metal that is transparent to neutrons. It is
used for fuel tubes and structural parts in nuclear power
reactors and for corrosion-resistant chemical industry
applications. Hafnium, derived as a by-product of zirconium, is
used for control rods in nuclear reactors due to its ability to
absorb neutrons.
Teledyne is a producer of tungsten, starting from a large
number of different tungsten-bearing raw materials resulting in
tungsten and tungsten carbide powders and mill products.
13-40
<PAGE>
Previously used cemented carbide parts are also recycled into
tungsten carbide powder. Wrought or ductile tungsten products
are used in diverse applications including light bulb filaments,
inert gas welding electrodes, electrical contacts and aircraft
counterweights.
Molybdenum, a sister metal to tungsten that also has a very
high melting point, is produced by Teledyne in powder form and
then shaped into solid forms through powder metallurgy
techniques. It is an important alloying element for steels and
is used for plasma arc spraying of piston rings for electrodes
in glass melting and for structural parts in high temperature
furnaces.
Niobium, also known as columbium, is a high technology metal
produced by Teledyne in various forms and alloys. It is used as
an alloying element in the manufacture of many steels. The
higher quality grades produced by Teledyne are used in
superalloys for jet engines and special alloys for aerospace
applications such as rocket nozzles. When alloyed with titanium,
niobium is used in applications requiring superconducting
characteristics for high-strength magnets. This area includes
medical devices for body-scanning, accelerators for high-energy
physics and fusion energy projects for future generation of
electricity.
Tantalum, one of the most corrosion resistant metals, is
produced by Teledyne for medical implants, chemical process
equipment, and aerospace engine components.
Specialty metals also include the special alloys that are
central to the production of virtually every modern metal product
available today.
Teledyne high-speed steels provide the high temperature
hardness required for lathe bits, drills, milling cutters, taps
and dies and other cutting tools. Related alloy steels,
including a cobalt-free maraging grade, are produced for
bearings, gears, special aerospace hardware and high-strength
applications.
For the metalworking, mining and other industries requiring
tools with extra hardness, Teledyne produces a line of sintered
tungsten carbide products, made from tungsten carbide and various
other metals under heat, to produce a material that approaches
diamond in hardness. These cemented carbide products are used as
super-hard cutters in the high-speed machining and cutting of
steel and other applications where hardness and wear resistance
are important. Technical developments related to ceramics,
coatings and other disciplines are incorporated in these
products.
With a state-of-the-art computer-controlled bar and rod
rolling mill, Teledyne is able to produce a wide range of premium
13-41
<PAGE>
grade, nickel-base, cobalt-base and titanium alloys that are used
worldwide to meet the high performance requirements of the
aircraft, aerospace, gas turbine, nuclear energy and chemical
process industries. These products, in various forms, are
engineered to retain exceptional strength and corrosion
resistance at temperatures through 2,000 degrees F and are used
in critical, high-stress applications. Notably, this
manufacturing facility installed one of the largest high-
precision rotary forging presses in the U.S. for more efficient
working of these products.
Teledyne also processes metals by a variety of methods,
including casting, forging, rolling, drawing and extruding, into
finished forms used in a diverse number of industries. With the
latest screw-type forging presses, the Company is a major U.S.
producer of carbon and alloy steel forging in sizes ranging from
one pound to more that 200 pounds. The Company has the ability
to forge the more difficult alloys which are used in aerospace
and other critical applications.
For example, Teledyne is a specialist in the cold rolling of
thin and ultra-thin metal strip in over 60 different metals and
alloys for applications ranging from watch springs to aerospace
honeycomb materials and camera products.
Teledyne also casts a variety of metals into forms ranging
from diesel locomotive engine blocks to lightweight aluminum and
magnesium aircraft parts. Housings and parts are made for
business machines, tools and automobiles. Cold-drawn stainless
and custom fabricated tubing is also produced.
Other Teledyne companies are involved in roll-forming
metals, forging heavy parts for construction and earth moving
machinery and precision investment casting of difficult-to-
produce parts.
Industrial: Engines of many sorts air and liquid cooled,
gasoline and diesel fueled are products in this category.
Teledyne engines include heavy-duty turbo-charged diesel engines
approaching 1,750 horsepower for use in tanks, and engines for
aircraft ground support.
Another category of industrial products includes machine
tools, dies and consumable tooling of all types. These include a
great variety of machines designed for the high-speed production
of precision machine threads by cutting, grinding and roll-
forming methods, and a variety of similar equipment for the
production of precision roll-formed gears.
Included in the industrial product category are nitrogen
pressure systems which are resistant force components used in the
metal forming industry and a series of valve products. Hydraulic
and pneumatic valves and pumps serve the transportation and
aerospace industries, and pressure relief valves are used in
13-42
<PAGE>
process industries such as the petrochemical and pharmaceutical
industries.
Material handling is another industrial category with a
number of Teledyne products. Teledyne has developed and recently
purchased a series of specialty forklifts that ride as outriggers
on delivery trucks. This saves valuable cargo space, and the
product's stability makes it an asset at rough construction
sites. A version of this same product line also has applications
in agriculture. Another series of products within the material
handling category provides protective structures such as cabs,
ROPS and FOPS for off-highway equipment. Teledyne also builds
components for, and installs, structures for service vehicle
outfitting. Teledyne manufactures a broad range of rugged, high-
performance equipment for the quarry, mining and construction
industries, including hydraulic breakers and mobile mining
equipment for underground quarries and mines.
Consumer: The Teledyne name is widely represented through its
consumer products.
Teledyne's best known consumer products are sold under the
brand name of Teledyne Water Pik. The Water Pik oral hygiene
appliance line includes a family of dental hygiene devices for
use in the home, including oral irrigators, electric
toothbrushes, an oral hygiene center combining both products, as
well as the SenSonic Plaque Removal Instrument, engineered with
breakthrough sonic brushing technology.
Teledyne Water Pik also manufactures and markets a complete
line of showerheads, including the Shower Massage line of
invigorating, pulsating showerheads and the Super Saver line of
water-saving, multi-mode spray showerheads.
The Instapure line includes both faucet-mounted and under-
the-counter water filters for improving the quality of water used
in the home, as well as a line of air filtration appliances for
the home and office that utilize a patented, low-temperature
catalyst material to remove carbon monoxide and other noxious
gases from the air. The WATERFRESH disposable water filter for
home water filtration removes up to 99 percent of the chlorine,
sediment, bad taste and odor from residential water, employing a
filter which is made up of 100 percent natural ingredients and is
biodegradable. Teledyne's water filtration product line is one
of the few that can be adapted for most of the water delivery
systems throughout the world.
In an entirely different consumer area are Teledyne Laars
swimming pool and spa heaters. The Hi-E line of swimming pool
heaters is up to 97 percent efficient and produces very low
environmental emissions. Teledyne Laars manufactures a variety
of heating and water treatment systems for residential and
commercial swimming pools and spas, including a sanitizing system
for pools that uses advanced ozone technology. The Company also
13-43
<PAGE>
produces a full line of water heating equipment that provides hot
water for commercial, residential and industrial space heating.
Teledyne also makes supplies and equipment for dentists and
dental laboratories. Among these are dental cements, impression
compounds, filling materials, air and electric drills,
articulators and prophy products. Teledyne has a line of
consumer products which includes denture adhesive, oral
analgesics and toothpaste, private labeled for major drug and
grocery chains.
Teledyne produces collapsible metal tubes, injection molded
closures and laminate tubes.
Products often sold directly to consumers are plastic cups
and containers.
13-44
<PAGE>
EXHIBIT 21
TELEDYNE, INC. AND SUBSIDIARIES
SUBSIDIARIES OF REGISTRANT
December 31, 1994
The following table shows the name and place of incorporation of each
subsidiary, except those subsidiaries which, when considered in the aggregate,
would not constitute a significant subsidiary. Unless otherwise indicated, each
subsidiary is wholly-owned as to voting securities. Also shown are the names
under which each subsidiary does business.
Name and Place of Incorporation Names Under Which Subsidiaries Do Business
- --------------------------------- ------------------------------------------
Teledyne Industries, Inc. Teledyne Air Centers
(California) subsidiary of Teledyne Advanced Materials
Teledyne, Inc. Teledyne Aircraft Products
Teledyne Allvac
Teledyne Brown Engineering
Teledyne Casting Service
Teledyne Continental Motors
Teledyne Controls
Teledyne Coordinators
Teledyne Economic Development
Teledyne Electronic Technologies
Teledyne Fluid Systems
Teledyne International Offices
Teledyne Laars
Teledyne Minerals
Teledyne Packaging
Teledyne Portland Forge
Teledyne Rodney Metals
Teledyne Ryan Aeronautical
Teledyne Specialty Equipment
Teledyne Vehicle Systems
Teledyne Wah Chang
Teledyne Water Pik
Teledyne Canada, Limited (Ontario) Teledyne Advanced Materials-
subsidiary of Teledyne, Firth Sterling Canada
Industries Canada Limited Teledyne Harfac Welding Products
(Ontario) Teledyne Specialty Equipment
Teledyne Electronic Systems, Inc. Teledyne Electronic Systems
subsidiary of Teledyne Systems
Company, Inc.
Teledyne Industries Canada Limited Teledyne Fluid Systems-Farris Engineering
(Ontario) subsidiary of Teledyne Laars-Still Man Products
Teledyne, Inc. Teledyne Water Pik Canada
Teledyne Princeton Inc. Teledyne Specialty Equipment-
subsidiary of Teledyne Canada, Princeton Products
Limited
21-1
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation of our report, incorporated by reference in this Form
10-K, into the Company's previously filed Registration Statements
File No.'s 2-52617, 33-41372, 33-47219 and 33-58583.
ARTHUR ANDERSEN LLP
Los Angeles, California
January 19, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Teledyne, Inc. 10-K for the Fiscal Year Ended December 31, 1994
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 15,700
<SECURITIES> 14,000
<RECEIVABLES> 416,100
<ALLOWANCES> 6,300
<INVENTORY> 196,900
<CURRENT-ASSETS> 757,800
<PP&E> 855,900
<DEPRECIATION> 551,600
<TOTAL-ASSETS> 1,477,700
<CURRENT-LIABILITIES> 465,600
<BONDS> 356,600
<COMMON> 55,500
0
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<OTHER-SE> 217,500
<TOTAL-LIABILITY-AND-EQUITY> 1,477,700
<SALES> 2,391,200
<TOTAL-REVENUES> 2,391,200
<CGS> 1,787,800
<TOTAL-COSTS> 1,787,800
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 43,500
<INCOME-PRETAX> (3,700)
<INCOME-TAX> 4,700
<INCOME-CONTINUING> (8,400)
<DISCONTINUED> 0
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