Teledyne Technologies Inc (TDY) 2008 Q2 法說會逐字稿

Ladies and gentlemen, thank you for standing by and welcome to the Teledyne Second Quarter Earnings Conference Call. (Operator Instructions) As a reminder, today's call is being recorded.

With that being said, I will turn the conference now to Mr. Jason VanWees. Please go ahead, sir.

Good morning everyone. This is Jason VanWees, Vice President Corporate Development and Investor Relations at Teledyne Technologies. I'd like to welcome everyone to Teledyne Technologies Second Quarter 2008 Earnings Release Conference Call. We released our earnings earlier this morning before the market opened. Joining me to day are Teledyne Technologies Chairman, President and CEO, Robert Mehrabian, Senior Vice President and CFO, Dale Schnittjer, and Executive Vice President, General Counsel and Secretary, John Kuelbs.

After remarks by Robert and Dale we will ask for your questions. However, before we get started our attorneys have reminded me to tell you that all forward-looking statements made this morning are subject to various assumptions, risks and caveats as noted in the earnings release and our periodic SEC filings and of course actual results may differ materially. Also, in order to avoid potential selective disclosures this call is simultaneous being webcast and a replay both via webcast and dial-in will be available for about one month.

Here is Robert.

Thank you, Jason. I should also note that we have with us three of our segment executives, the Presidents of our various segments, [Red Tross], Rex Geveden and Al Pichelli. We're off site and if there are many very difficult questions I'll pass it on to them.

Before commencing on the specific results of the quarter, I would like to make a couple of introductory comments. In the past we've noted that our mix of government and commercial businesses, many of which are leveraged to energy, environmental and government markets, including defense of course, would position us favorably in uncertain economic and financial markets and I think that's turned out to be the case, at least in this quarter.

Furthermore, our strategic investments in the core markets that I just mentioned to grow both organically and through acquisitions coupled with our consistent emphasis n operational excellence has been rewarding. Today we're quite pleased to report record sales, record operating margin, record earnings per share, especially in this current economic environment.

We don't mean to suggest that Teledyne is immune to economic cycles. In fact, we believe certain markets, including aviation related businesses, could soften due to high cost of fuel, however, revenue from our marine instrumentation businesses, which have grown as you know recently significantly, which also served offshore energy exploration and production markets, now exceeds the revenue generated by all of our commercial aviation businesses.

Let me turn to our results. In the second quarter, Teledyne achieved all time record quarterly sales of $478.8 million driven by overall organic growth of 12.1%, an all time record quarterly earnings of $0.89 per share, which increased 32.8% from last year. This was the 26th consecutive quarterly or a span of over six and a half years of year-over-year growth in earnings per share and it was the 17th or over four years of consecutive quarterly double-digit growth in earnings per share. During the second quarter overall GAAP operating margin increased 76 basis points to 11.7%, which was another record.

I will now elaborate on the operating performance of our business segments followed by Dale Schnittjer, who will discuss in more detail our financial performance and comment on our outlook for the third quarter and the full year 2008. Starting with electronics and communication, second quarter sales in this segment increased 18.9% compared to last year from $266 million to $316.3 million with organic growth of 7.6%. Segment operating profit increased 26% from $37.3 million to $47 million and segment operating margin increased 84 basis points to 14.9 %.

Our electronics and communications businesses generated approximately two-thirds of Teledyne's total sales. In this businesses we have three market categories; first, defense electronics which now represents approximately 40% of the segment; second, electronic instrumentation, which represents approximately another 45% of the segment and third, avionics and other commercial electronics, which represents the remaining 15%.

In the second quarter of 2008 sales of defense electronics increased 17.9% compared to second quarter of 2007. Defense electronics sales growth resulted from organic growth of 9.4% primarily driven by increased sales of imaging sensors, microwave subassemblies and electronic manufacturing services. The remainder of the growth resulted from the acquisitions of Storm Products and Judson Technologies in the first quarter of 2008.

Turning to our electronic instrumentation businesses, in the second quarter of 2008 year-over-year sales increased approximately 31% compared to last year from a $109.9 million to $144 million. This was due to strong organic growth of 11.8% and acquisitions of Impulse Enterprise, Storm Products and TSS International early in the first quarter of 2008.

Organic growth in instrumentation was comprised of approximately 15% organic growth in marine instrumentation, approximately 13% organic growth in environmental monitoring instruments and 2% growth in instrumentation for industrial applications.

As I mentioned earlier, we continue to expand our marine instruments business. Under the Teledyne Marine umbrella, Teledyne provides a number of market leading marine electronics subsystems including acoustic modems, acoustic and inertial navigation systems, acoustic Doppler card profilers and sub sea electrical and optical interconnect solutions.

In addition, the recently completed acquisition of assets of Webb Resource Corporation has added autonomous underwater vehicle systems to our existing capabilities. Adding autonomous vehicles increases the addressable market and the system level visibility of Teledyne Marine. For example, proprietary glider systems offer a platform for Teledyne Marine to provide future sensor payloads for-- payloads for Teledyne Scientific to develop autonomous systems software and for Teledyne Brown Engineering to provide customers with fully integrated autonomous gliders system solutions.

Finally, in our avionics and other commercial businesses, sales collectively decreased 5.8% compared to the second quarter of 2007. 10% organic sales growth in avionic systems was more than offset by continued decline in sales of electronic manufacturing services of medical and other commercial electronics.

Turning to our Engineered Systems segment, in the second quarter of '08, revenue in this segment increased 29.9% organically compared to last year. The strong sales growth primarily resulted from increased manufacturing revenue, much of it related to the $19.4 million gas centrifuge service module contract, which we announced in February of 2008 for which we're manufacturing hardware that will be used to helping reach uranium for use in commercial nuclear power plants.

In addition, in May of 2008 we were awarded a $92 million follow-on contract for additional gas centrifuge service modules. We expect that this contract, which resulted from Teledyne Brown Engineering's capabilities and reputation as a supplier of nuclear quality hardware, would provide for the continuation of such work through 2011.

Segment operating profit increased almost 47% from $6.4 million to $9.4 million and segment operating margin increased 114 basis points to 9.8%. While sales growth and margins were really outstanding in this segment some declines in margins to more normalized levels are possible in the second half of the year.

I will now discuss our aerospace engines and components segment, which as a reminder now solely represents Teledyne Continental Motors, our aircraft piston engine business. Sales in this segment increased 4.1% compared to last year as a result of greater sales to aircraft OEMs as well as increased after market sales. Operating profit declined 18% as a result of legal fees and an unfavorable sales mix compared to last year.

So far in the piston engine general aviation market we have not seen a significant reduction in orders for aftermarket parts or services. Nevertheless, some softness in demand could occur given the current economic conditions. As you know, aftermarket demand is correlated with general aviation flight hours, which can be more economically sensitive than demand for our new aircraft. That being said, we have factored this into our outlook for the remainder of the year.

Finally, in our energy and power system segment revenue in the second quarter of '08 increased 29.5% compared to last year due primarily to higher sales of military turbine engines and government power systems. Operating profit increased 180% to $2.8 million due in part to higher sales. However, the profit increase was also affected from the reversal of an environmental reserve that we had in this segment, which was no longer needed.

To conclude, Teledyne achieved another record quarter in revenue and earnings per share. In a world of high energy prices, heightened pollution concerns, and uncertain financial markets, I believe Teledyne is strategically well positioned with a good mix of government and commercial businesses that produce highly engineered products, which are not easily commoditized. Our revenue run rate has now grown to almost $1.9 billion.

While our government and defense businesses have continued to grow, our acquisitions and growth initiatives in the marine and environmental domains have significantly strengthened our recent performance. Beyond driving growth we appreciate the fact that our marine businesses, which participate in the offshore energy exploration and production market, could help lessen the impact of increased energy costs in our other markets.

I will now turn the call over to Dale Schnittjer.

Thank you, Robert, and good morning. I will first discuss some additional financials for the quarter and full year not covered by Robert. Then I will give an update on pension costs and discuss our 2008 outlook.

In the second quarter, cash provided from operating activities was $38.5 million compared with cash provided from operating activities of $32.4 million for the same period of 2007. The higher operating cash flow was primarily due to greater net income and the contribution from recent acquisitions, partially offset by higher tax payments. Free cash flow for the second quarter was $28.7 million compared to $22.3 million for the same period of 2007.

Capital expenditures were $9.8 million in the second quarter compared to $10.1 million for the same period of 2007. We ended the quarter with $278.7 million of net debt. Our balance sheet remains strong with a net debt to cap ratio of 31.5%. So far we have been largely unaffected by problems in the credit markets. As noted in our Press Release, depreciation and amortization expense for the second quarter of 2008 was $13.1 million compared to depreciation and amortization expense of $8.9 million in the second quarter of 2007.

Moving to pensions, in the second quarter of 2008 SFAS-87 and SFAS-158 pension expense was $2.5 million or a negative earnings per share impact of $0.04. This compares to SFAS-87 and SFAS-158 pension expense of $2.9 million or a negative earnings per share impact of $0.05 in the same period of 2007. Pension expense allocated to contracts pursuant to cost accounting standards or CAS was $2.4 million or a positive earnings per share impact of $0.04 in the second quarter of 2008 compared with $2.6 million or a positive earnings per share impact of $0.04 in the second quarter of 2007. As we have mentioned before, starting January 1st, 2004 new hires have been added to an enhanced, defined contribution plan as opposed to the Company's existing defined benefit plan.

Now moving to stock option compensation expense, in the second quarter of 2008 per the requirements of SFAS No. 123-R, stock option compensation expense was $1.8 million or a negative earnings per share impact of $0.03 compared with $1.8 million or a negative earnings per share impact of approximately $0.03 in the second quarter of 2007.

Before commenting on the outlook for the remainder of the year, I wanted to remind everyone that earnings per share in the second quarter were favorably impacted by $3.3 million or approximately $0.06 per share of settlements. As noted in our earnings release, $2 million was included in the electronics and communications segment and $1.3 million was included in the energy and power systems segment.

Now let me turn to our 2008 outlook. Management currently believes that GAAP earnings per share in the third quarter of 2008 will be in the range of $0.77 to $0.79 cents. The full year 2008 earnings per share are expected to be in the range of approximately $3.20 to $3.25, an increase from our previous outlook of $2.98 to $3.06. Our outlook for the third quarter and full year 2008 reflects an anticipated increase in expenses including intangible asset amortization resulting from the acquisitions completed in early fiscal 2008. We expect full year 2008 capital expenditures of approximately $45 million and total depreciation and amortization expense of approximately $48 million.

For reference, intangible asset amortization is expected to be approximately $16 million in 2008, an increase of almost $10 million or $0.16 per share from the full year of 2007. For the full year of 2008 we anticipate approximately $9.6 million or $0.16 per share in pension expense under FAS 87 and FAS 158 or approximately $0.2 million in net pension expense after recovery of allowable pension cost from our CAS covered government contracts.

Full year 2007 earnings included $11.9 million or $0.21 per share in pension expense under FAS 87 and FAS 158 or $1.7 million, which is $0.03 per share in net pension expense after recovery of allowable pension costs from our CAS covered government contracts. The decrease in full year 2008 net pension expense reflects the return on pension assets as well as pension contributions made in 2007. The Company's 2008 earnings' outlook also reflect $7.8 million or $0.13 per share in stock option compensation expense based on current assumptions regarding stock options issuances during the year and estimated fair value of stock option grants.

I will now pass the call back to Robert.

Thank you, Dale. We would now like to take your questions. Operator, if you're ready to proceed with the questions and answers, please go ahead.

(Operator Instructions) First with the line of Michael Lewis with BB&T Capital Markets, please go ahead.

Good morning, Robert, another excellent quarter and, Robert, I was wondering actually, I think this is a question for Al. Again, another just impressive quarter of margin contribution coming out E and C and I guess my question here is with regard to forward expectations. I mean this, does this look like a top bound or a top range that you're currently witnessing in E and C for the margin, for the EBIT margin contribution here?

Well it may be close to it, at least for the immediate future, partially because we had that $2 million from the settlement, which contributed maybe 50 basis points to the margin. So, if we improve the margins in the subsequent quarters we may get back up to that level without that contribution. So I think there is a little room but this was a little unusual because of that settlement.

So last quarter, Robert, you're saying that if we kind of focus in around the 13% range-- I may be misquoting you here, so I apologize in advance if I am-- but my takeaway was around 13%. It's kind of a safe margin assumption for that segment. Should we continue to kind of look at the 13 to say 13.5 as a possible sustainable margin for this business going forward?

In the quarter it was 13.4. This quarter was 14.9 with those 50 to 60 basis points from the settlement so, Michael, I think around 14 might be a reasonable number, not as low as 13 though.

Okay that's fair. And then just one more quick question and I'll get out of the way here. Can we get an update on the program [High Stair] and I was wondering if you had any idea what kind of contribution this program alone would have over say the next like 12 to 18 months as it starts to gain some more traction?

It's the High Stair program is relatively long term, Michael, as you know having visited us. Its R&D contribution is probably cost-- well, I know it's cost plus so the margins would be in the, oh I would say 7% to 8% range and it's so far it's making smaller contribution in 2008. We hope that the contributions would increase in future years.

The expectation though is that this could potentially be a significant program if the R&D effort goes as planned and milestones are met. Is that a safe assumption to make there?

That's a reasonably good assumption. It would be a significant one four years or so out and be significant for our Teledyne Scientific and Imaging but in terms of all of Teledyne, it would not be that big a contributor.

Okay. That was the key point. You're saying like it's a number of additional years out. Okay, that's great. Thank you very much, appreciate it.

And next go line of Mark Jordan with Noble Financial.

I wanted to talk a little bit about the centrifuge contract, the combination of the two you received, the 92 in May plus the 19 fours about $111 million. Is the-- and the production should be spread out over say 12 quarters. Should we look at this as a $10 million to $11 million sort of level production rate per quarter over the next couple of years in the Engineering Group?

Yes I would take the 92 plus the 19, so let's just say 110 and I would take it out to 2011.

Okay so that would be about, again, 10 to 11 per quarter?

Yes it might be about 30 million a year, 30 million plus a year.

Okay is that a cost plus or is the second contract-- I think the first one was cost plus. Is the second contract fixed price or is there any opportunity-- what's the margin opportunity here.

It's got a-- it's a cost plus fixed fee. I think the fee is about 10%, Mark. By the way, I have, as I mentioned before, I have Rex Geveden here and who heads up one of the segments he heads is that engineers, engineered systems segment, and I'll let him just make one comment about this. We've been fortunate to keep our ASME nuclear certifications for manufacturing and we're planning to put more emphasis in that domain. Rex?

Yes Teledyne Brown has actually an interesting history in nuclear manufacturing and Robert mentioned that we have maintained our American Society of Mechanical Engineer certifications, ASME certifications, for nuclear manufacturing. We have three stamps, so called stamps; an N stamp, which is a nuclear pressure vessel stamp; an NPT, which is for secondary structures and a U stamp, which is a standard pressure vessel type manufacturing cert. These certifications are required for nuclear manufacturing and we possess those, just in fact completed another of the triennial audits required for that, so we stand well poised to capitalize on the nuclear market as it re-emerges.

Thank you, Rex.

Yes clearly I guess the question is how do you leverage that? I mean you're clearly with $30 million to $40 million a year in business you've got an infrastructure that you could build upon. What is the-- what do you view it would be the catalyst to allow you to materially expand beyond that run rate? I mean, do we have to go back to building nuclear plants or is there the capability to leverage this now that you've got in place more quickly?

I will try and just take a longer-term view here, Mark. I think obviously there are nuclear plants going up in other parts of the world. I am not sure if we'll be able to leverage those because of the cost of transport of such large components but it's possible. But there's no question, at least in some people's mind, that sooner or later as a nation we are going to have to address this issue once more and I think what Rex and his folks have done is position us well for that time. And, by the way, at the same time they have also been building canisters, stainless canisters manufacturing them for the nuclear waste and so right now we have the nuclear waste canister production and the fuel production portion and, of course, in the future we're talking about potentially being active if power generation comes along.

The Webb acquisition that you just completed, I've heard that there might be a large DOD contract for gliders that would be awarded later this year for as-- you know, potentially in the $20 million range. Do you believe that Webb is well positioned for that and is since it's a SPAWAR contract you're teaming with or agreement with Scripps position you better for that competition?

We believe so. Of course, you know competition is by its nature undetermined on who is going to win but we are bidding on it. We have our first Webb but just as importantly we have all of our marine group's sensors that would be brought to that enterprise. Just as importantly we have Teledyne Scientific that does autonomously eco modeling, software modeling, and we have Brown Engineering that is pulling all of these together because they are our systems house and systems integrator. So while it's important contract for us and we have bid on it and we have some really good outstanding partners with us in that, but it's not a make or break contract for us. We think of Webb, Webb is the premier producer of gliders and with our association with Scripps we think we are fairly well positioned for whatever platforms that come along.

A final question if I may, in your opening remarks that you re-aggregated revenues in a little bit different manner and just talked about the relative end market sizes that you address, defense, marine electronics and commercial aviation being the three largest specific markets. Could you quantify those as you see them again because they do cross segment boundaries?

Let me start with defense electronics. Defense electronics is about 26% of our total in dollars. Instruments, which includes both marine instruments and our other instruments, comprises about 30%. Marine is about 17% of the total and when I talk about total I am talking about total revenue of the Company. Avionics and other commercial electronics are about 10%, so when you aggregate that up you end up with acquisitions that we've made and you add those numbers up, you end up with about 66% of our total revenue coming from electronics and communications.

Aviation, now if you took some of the aviation or avionics that we do in electronics and then you took the piston engine businesses that we have and you combine those together you could say that's about 16%, so I don't know if that's been helpful, Mark.

Yes thank you.

John Harmon with Needham & Company.

Robert, you were-- you addressed this sort of indirectly so let me see if I can ask you to put it all together. The question just is how you know news we've been hearing about commercial aircraft order cancellations, how that's affecting your avionics' business? You said it was down a bit year-over-year but you didn't really talk about it in that light.

Yes what I did, John, I hope I haven't-- I didn't confuse people because I had lumped avionics and other commercial electronics together because that's the third part of electronics and communication. I said those combined were down 5.8%. The avionics itself, which as you know, is data acquisition systems and wireless ground links and so on that are going commercial aircraft that was actually up year-over-year about 10%.

Now we don't think that's sustainable because of what's happening in that whole domain but, having said that, as you well know the Boeing and Airbus aircraft production deliveries for this year are going to be about 8% and 9% above last year respectively and business jets are going to be up about 8, regional aircraft up about 9 and so we see some upside for us there and the flip side is that on the domestic passenger airlines our exposure is less than 5% of our business. It's about $5 million, so we may see some declines there.

Okay thank you and well, in that same category you've talked about your strategy to get more into defense areas of electronic manufacturing. In other words you're not taking on any more medical business. When could that business sort of bottom out and start to grow again?

Well, we have actually-- we have been fortunate with the outsource, outsourcing that's coming our way from the primes. We have launched about 30 products in Q2 in our electronic manufacturing services in the defense area. Now we have good orders and anticipate that we will in the second half we should be ramping that up. We have record backlog in that area. We're reasonably well positioned.

In the medical domain we have obviously, as we've said, that's an area that we expect to decline over time and we've said that repeatedly and we did have some comparables that were down year-over-year. I think last year Q2 we did about $6.6 million in medical, EMS and medical micro. This year I think we did more like 4 so while we ramp one down we're ramping the other up.

Thank you and just finally more of a financial question, your guidance did call for sequentially lower earnings in the second half and in the third quarter. Is that a function of just having made so many acquisitions in the first quarter or are any of them especially dilutive?

No, no I can tell you that our acquisitions have not so far been dilutive. It's just that in second quarter we had about, as Dale mentioned, we had about $0.06 contributions from various settlements, so if you take that out and then we have a little concern obviously, as we've mentioned about the aviation market with the gas prices where they are so we're taking a little haircut there to make sure that we are, as you well know, we are always relatively conservative and Dale just pointed out to me that we don't expect that the margins in our engineered systems group will continue at the high level of that we enjoyed in the second quarter, so settlements, a little lower margin in TBE and potentially a little downturn in our avionics businesses and aerospace and avionics business. Those three I think are contributing and I would remind you that last year second quarter we had a $0.13 tax, one-time tax, R&D tax credit that we took so if you take that out of last year's second quarter and look year-over-year the guidance is pretty strong. I'm sorry, third quarter-- I meant third quarter, not second. Thank you.

Ryan Rackley with Raymond James.

Robert, looking at organic growth for electronic instrumentation obviously another strong quarter. Are you thinking now that you guys may come in above your previous estimate of 8% to 9% organic growth for the year?

Well, right now this quarter I think our electronics segment organic growth was about 11% in instruments, 7%-- I think going forward it's going to go down a little bit. We don't think we can keep it up at the rate that it's been going.

Okay and for the defense business, defense electronics, are you looking at 6% to 7% range for the year organically?

Yes that's a good range.

Great and-- actually that does it for me. Thank you, guys.

(Operator Instructions) Steve Levenson with Stifel Nicolaus.

Thanks for all the detailed disclosure in your Press Release and on the call so far. In terms of nuclear power are you particularly tied to one reactor design, one producer's design like the Westinghouse or the Ariva or GE, for example, or do you have opportunities across the board?

Yes I don't think we are tied to any one because we would essentially with having the nuclear stamps that Rex mentioned our capability would be to produce whatever our customers would need. So far obviously we focused on what business that was available, which was the waste canisters and the fuel part of the reactors. Power generation is not something that people are addressing at this point but we are not limited to any one design.

On the assumption that there will be some reactors going in, as some of your peers who make other parts have already received some orders, do you have the capacity available should you get the call or is there anything you're going to have to do to-- anything you're going to have to spend to prepare to manufacturing of those items?

Well, it depends on the items. Right now we do have a 240,000 square foot new facility that Rex has built and it's fairly well equipped for the purposes and right now I think we have the capacity but the long-term potential still, as you well know, depends on what happens to the various permits that everybody has been applying for.

Second, is there's some solicitations out there for third generation thermal imaging engines and that would seem like something you're in a pretty good spot to provide. Can you give us a little information on what you see for Teledyne there please?

Yes we have already delivered two prototypes, two colored infrared cameras to the US Army for field demonstration and our efforts I can tell you were very successful and we expect that we would compete for that solicitation going forward. So, all in all, I think in our infrared imaging business we have-- we are going to be a player in that domain. We have that flip side, as you well know, Steve, there's a lot of competition for that one program and they're only going to choose one contractor, at least that's what we hear.

And last is on the acquisitions pipeline or what's your wish list? Are you looking for more on the sensor side or more away from that?

No I think we have repeatedly said that we've expanded that domain a little bit. We have defense electronics obviously. Our instrumentation, we did an acquisition last quarter in the imaging, Johnson Technologies that we bought, the commercial imaging, and we could if we found something in our other segments that made sense to us whether it's in the engineer systems or even in our piston engine business we would get it if it made sense if it increased our market share and if-- and the flip side of that is, of course, you know prices have moderated a bit and because of the credit crunch and strategic buyers like us are in a better position now.

Sounds good; thanks very much.

[Robert Kirkpatrick] with Cardinal Capital.

Congratulations as well. Could you go into a little bit more of the new products on the contract manufacturing side that you're starting to produce and that you expect to ramp in the second half and why you've been particularly successful at offering those services?

Overall let me-- Rob, let me start by saying that if you look at our contract manufacturing in terms of its contribution to our overall business, it's not that big so let me start there. Probably I would say on the order of 5 to 10% of our total sales broadly, so with that as background you know what happened is that a lot of the primes are no longer producing component and subsystems and we do have both printed circuit capabilities as well as box level capabilities and rigid flex capabilities and we had-- we're getting orders in electronic counter measures, radar systems, in secure communication, some anti-jamb navigations systems and interestingly there's a second element that's happening. Historically we had really been doing only build to print manufacturing. We're getting now some development orders, which are helping us a lot so we can do some development and do the manufacturing and so that's helpful to us.

Are the development orders that you're receiving from the primes or are they directly from the government?

Primes generally. For example, we do have some of our electronic warfare and communication capabilities that we have include some design capabilities that we're able to make more integrated components because of the increase that we've enjoyed in our microwave businesses. We are over-- I would say over $150 million, $160 million of microwave capability right now in the Company, so that's helping us.

And is this a potential large opportunity for Teledyne?

Well you know I would say the higher margin businesses for Teledyne are when we make our own products and sell them versus doing contract manufacturing. The beauty of having contract manufacturing is that you enjoy using more of your assets in your factories and so you spread your costs across a broader range of products that you make, your fixed costs, and but generally we'd prefer to make our own products because they are usually higher margin. But they do make a contribution to our overall profitability.

And with no further questions, I'll turn it back to the presenters for any closing comments.

Thank you, operator. I would like to ask Jason to conclude our conference call.

Thanks, Robert, and again thanks everyone for joining us this morning. If you have any follow-up questions please call me at the number listed on the earnings' release. As always, all news releases are available on our website, Teledyne.com. Operator, if you could please conclude today's conference call? Thanks.

Certainly and, ladies and gentlemen, that does conclude your conference call for today. Thank you for your participation. You may now disconnect.