Engineered Systems

The Engineered Systems segment’s fourth quarter 2021 net sales were $100.7 million, compared with $119.3 million, a decrease of 15.6%. Operating income was $11.2 million for the fourth quarter of 2021, compared with $15.4 million, a decrease of 27.3%.

The fourth quarter 2021 net sales primarily reflected lower sales of $11.2 million for engineered products and lower sales of $7.9 million for turbine engines, partially offset by higher sales of $0.5 million for energy systems. The lower sales for engineered products primarily reflected decreased sales from electronic manufacturing services products and space programs. Teledyne exited the cruise missile turbine engine business in the first quarter of 2021.

Additional Financial Information

Cash Flow

Cash provided by operating activities was $295.6 million for the fourth quarter of 2021, compared with $236.4 million. The higher cash flow from operating activities for the fourth quarter of 2021 reflected the impact of higher net income, the cash flow contribution from FLIR and lower income tax payments. At January 2, 2022, net debt was $3,624.7 million comprised of total debt of $4,099.4 million, net of cash and cash equivalents of $474.7 million. At January 3, 2021, net debt was $105.4 million and comprised of total debt of $778.5 million, net of cash and cash equivalents of $673.1 million. The higher net debt at January 2, 2022, included the debt incurred to fund the cash portion of the FLIR acquisition. In 2021, Teledyne repaid $645.0 million against the $1.0 billion Term Loan Credit Agreement, of which $345.0 million was repaid in the fourth quarter, bringing its balance to $355.0 million. At January 2, 2022, approximately $759.2 million was available under the $1,150 million credit facility, after reductions of $125.0 million in borrowings and $265.8 million in outstanding letters of credit. The outstanding letters of credit include a $244.6 million letter of credit to the Swedish Tax Authority, related to a disputed pre-acquisition 2018 tax reassessment issued to a FLIR subsidiary in Sweden. On January 26, 2022, the Administrative Court of Appeal in Stockholm, Sweden generally affirmed a March 2020 ruling of the First Instance Court and determined an estimated tax liability in the amount of SEK 2.8 billion ($303.0 million). Teledyne does not intend to appeal the decision and expects to pay the tax in the first quarter of 2022. At January 2, 2022, $341.0 million was included in accrued liabilities for this tax matter. The Company received $4.0 million from the exercise of stock options in the fourth quarter of 2021 compared with $6.8 million. Capital expenditures for the fourth quarter of 2021 were $34.0 million compared with $19.4 million. Depreciation and amortization expense for the fourth quarter of 2021 was $134.0 million compared with $28.7 million. Depreciation and amortization expense in the fourth quarter of 2021 included non-cash inventory step-up expense related to FLIR of $47.8 million.