Capital Allocation and Financial Overview
Teledyne Technologies Incorporated
Reconciliation of Non-GAAP Financial Measures
Teledyne reports its financial results in accordance with U.S. GAAP. However, management believes that, in order to more fully understand our short-term and long-term financial
and operational trends, investors may wish to consider the impact of certain items resulting from our recent acquisition of e2v which have an infrequent or non-recurring impact on
operations. Accordingly, we present non-GAAP financial measures as a supplement to the financial measures we present in accordance with GAAP. These non-GAAP financial
measures provide management with additional means to understand and evaluate the operating results and trends in our ongoing business by adjusting for certain expenses and
other items. Management believes these non-GAAP financial measures provide additional means of evaluating period-over-period operating performance. In addition, management
understands that some investors and financial analysts find this information helpful in analyzing our financial and operational performance and comparing this performance to our
peers and competitors. We use the term "adjusted earnings per share," to refer to GAAP earnings per share excluding items related to the e2v business acquisition and integration
such as expense related to inventory fair value step-up adjustment, transaction and integration expenses such as legal, financial and other advisory fees, stamp duty, purchase price
hedge losses, bridge loan fees and severance. We also adjust for any tax impact related to the above items.
Management includes or excludes the effect of each of the items identified below in the applicable non-GAAP financial measure referenced above for the reasons set forth below with
respect to that item:
- Acquisition and integration related expenses-in connection with our e2v acquisition, we incurred legal, financial, and other advisory fees, stamp duty, purchase price hedge losses,
bridge loan fees and severance. We exclude these expenses from our non-GAAP measures because we believe they do not reflect the performance of our ongoing operations.
-On December 22, 2017, the Tax Cuts and Jobs Act was enacted. The Tax Act significantly revised the U.S. corporate income tax by, among other things, lowering corporate income
tax rates, implementing the territorial tax system and imposing a repatriation tax on deemed repatriated earnings of foreign subsidiaries. As a result of the Tax Act, Teledyne incurred
estimated charges in the fourth quarter of 2017 primarily due to the repatriation tax and the remeasurement of U.S. deferred tax assets and liabilities.
The non-GAAP financial measures described above are not meant to be considered superior to, or a substitute for, our financial statements prepared in accordance with GAAP. There
are material limitations associated with non-GAAP financial measures because they exclude charges that have an effect on our reported results and, therefore, should not be relied
upon as the sole financial measures by which to evaluate our financial results. Management compensates and believes that investors should compensate for these limitations by
viewing the non-GAAP financial measures in conjunction with the GAAP financial measures. In addition, the non-GAAP financial measures included in this presentation may be different
from, and therefore may not be comparable to, similar measures used by other companies.
The non-GAAP financial measures listed above is also used by our management to evaluate our operating performance, and benchmark our results against our historical performance
and the performance of our peers.
Reconciliation of GAAP to Non-GAAP financial measures (in millions):
Fiscal Year
Fiscal Year
2016
2017
Adjusted fully diluted earnings per share (a):
Fully diluted earnings per share
$
5.37
$
6.26
e2v transaction costs, including stamp duty, advisory, legal and other
consulting fees and other costs
0.04
0.26
e2v inventory fair value step-up amortization expense
0.12
e2v funds-certain bank bridge facility commitment expense
0.01
0.05
Foreign currency option contract expense to hedge the e2v purchase price
0.11
0.11
Tax Cuts and Jobs Act repatriation tax and other impacts (b)
0.13
Adjusted fully diluted earnings per share
$
5.53
$
6.93
(a) The adjustments to the full year are net of taxes of $0.20 per diluted share, based on a 26.8% income tax rate
(b) Total year 2017 includes provisional charges of $4.7 million due to the estimated impact of the Tax Act
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