The first quarter 2017 sales reflected $7.4 million of higher sales of avionics products and electronic relays, offset by $5.6 million of lower sales of electronic manufacturing services products primarily due to the divestiture of Teledyne Printed Circuit Technology, as well as $2.5 million of lower sales of microwave and interconnect systems. Operating income in the first quarter of 2017 reflected favorable product mix, partially offset by higher environmental reserves of $2.0 million.

Engineered Systems

The Engineered Systems segment’s first quarter 2017 sales were $67.6 million, compared with $64.3 million, an increase of 5.1%. Operating income was $8.9 million for the first quarter of 2017, compared with $8.0 million, an increase of 11.3%.

The first quarter 2017 sales reflected $2.1 million of higher sales of turbine engines, $0.9 million of higher sales of energy systems products, and higher sales of $0.3 million of engineered products and services. The higher sales of turbine engines reflected increased sales for the Joint Air-to-Surface Standoff Missile (“JASSM”) program. Operating income in the first quarter of 2017 reflected higher sales and improved margins for turbine engines.

Additional Financial Information

Cash Flow

Cash provided by operating activities was $53.4 million for the first quarter of 2017, compared with $69.1 million. The lower cash provided by operating activities in the first quarter of 2017 reflected the impact of transaction related payments for the e2v acquisition, higher income tax payments and the timing of accounts receivable collections. At April 2, 2017, cash totaled $69.7 million and total debt, including capital lease obligations, was $1,313.1 million. At April 2, 2017, $595.0 million was outstanding under the $750.0 million credit facility. The company received $6.3 million from the exercise of stock options in the first quarter of 2017, compared with $2.6 million. Capital expenditures for the first quarter of 2017 were $12.6 million, compared with $14.2 million. Depreciation and amortization expense for the first quarter of 2017 was $22.8 million, compared with $21.1 million. In the first quarter of 2017, Teledyne completed the acquisition of e2v for $770.7 million, including stock options and assumed net debt. In connection with the acquisition of e2v, on March 17, 2017, Teledyne entered into a $100.0 million term loan with a maturity date of October 30, 2019. Subsequently, in March 2017, Teledyne entered into a cross currency swap to convert the $100.0 million term loan to a 93.0 million Euro denominated instrument. On April 18, 2017, Teledyne entered into a note purchase agreement for a private placement of €250.0 million of senior unsecured notes, due through April 2024. Teledyne intends to use the proceeds of the private placement to, among other things, repay indebtedness and for general corporate purposes.