Engineered Systems
The Engineered Systems segment’s second quarter 2015 sales were $68.6 million, compared with $64.6 million, an increase of 6.2%. Operating profit was $4.8 million for the second quarter of 2015, compared with $6.8 million, a decrease of 29.4%.
The second quarter 2015 sales reflected higher sales of engineered products and services of $3.2 million, which primarily reflected higher sales of space and marine manufacturing programs, and higher sales of energy systems products of $3.5 million. Turbine engine sales were lower by $2.7 million. Operating profit in the second quarter of 2015 primarily reflected lower sales of higher margin turbine engines and higher pension expense of $0.5 million.
Additional Financial Information
Cash Flow
Cash provided by operating activities was $59.0 million for the second quarter of 2015, compared with $95.0 million. The lower cash provided by operating activities in the second quarter of 2015 reflected lower net income, $5.8 million in expected change in control severance payments related to the Bolt acquisition and higher income tax payments, partially offset by the receipt of $3.0 million related to a legal settlement. The 2014 amount included the receipt of $10.0 million related to a legal settlement. Free cash flow (cash provided by operating activities less capital expenditures) was $45.4 million for the second quarter of 2015, compared with $86.1 million, and reflected lower cash provided by operating activities and higher capital expenditures. At June 28, 2015, total debt, including capital lease obligations, was $765.3 million, which included $180.0 million outstanding under the $750.0 million credit facility. Cash totaled $61.3 million at June 28, 2015. The company received $8.1 million from the exercise of stock options in the second quarter of 2015, compared with $6.5 million. Capital expenditures for the second quarter of 2015 were $13.6 million, compared with $8.9 million. Depreciation and amortization expense for the second quarter of 2015 was $22.8 million, compared with $23.4 million. In June 2015, Teledyne acquired Industrial Control Machines SA for an initial payment of $21.4 million in cash, net of cash acquired. In April 2015, Teledyne DALSA, Inc. acquired the remaining 49% minority interest in the parent company of Optech Incorporated for $22.0 million in cash. Teledyne funded these acquisitions with cash on hand that was held in foreign jurisdictions.
| Free Cash Flow (a) | Second Quarter | |||||||||||||||||
| (in millions, brackets indicate use of funds) | 2015 | 2014 | ||||||||||||||||
| Cash provided by operating activities | $ | 59.0 | $ | 95.0 | ||||||||||||||
| Capital expenditures for property, plant and equipment | (13.6 | ) | (8.9 | ) | ||||||||||||||
| Free cash flow | $ | 45.4 | $ | 86.1 | ||||||||||||||
| (a) The company defines free cash flow as cash provided by operating activities (a measure prescribed by generally accepted accounting principles) less capital expenditures for property, plant and equipment. The company believes that this supplemental non-GAAP information is useful to assist management and the investment community in analyzing the company’s ability to generate cash flow. |
