Teledyne Technologies (TDY) 10-K risk factor changes: FY2017 vs FY2016

Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Form 10-K and in Teledyne’s [removed: 2015] [added: 2016] Annual Report to Stockholders.

In [removed: 2015,] [added: 2015 and 2016,] for example, our revenue and income were negatively impacted by the downturn in energy markets.

[removed: Our] [added: One of our] largest commercial [removed: customer] [added: customers] is in the offshore oil and gas industry and accounted for [removed: 2.3%, 2.8%] [added: 2.3%] and [removed: 3.6%] [added: 2.8%] of total sales in [removed: 2015, 2014] [added: 2015] and [removed: 2013,] [added: 2014,] respectively.

| • | the price and availability of alternative fuels; [added: and] |

| • | climate change regulation that provide incentives to conserve energy or use alternative energy [removed: sources; and] [added: sources.] |

During [removed: 2015,] [added: 2016,] sales to international customers accounted for approximately [removed: 44%] [added: 43%] of our total revenues, compared with [removed: 45%] [added: 44%] in [removed: 2014] [added: 2015] and [removed: 44%] [added: 45%] in [removed: 2013.][added: 2014.]

In [removed: 2015,] [added: 2016,] we sold products to customers in over 100 countries.

[removed: The 2015] [added: In 2016, the] top five countries for international sales were [added: China,] the United Kingdom, [removed: Norway, China, Germany and] [added: Germany,] South [removed: Korea,] [added: Korea and Japan,] constituting [removed: 21%] [added: approximately 20%] of our total sales.

Our acquisitions, including [added: CARIS in 2016,] Bowtech [added: Products Limited (“Bowtech”)] and ICM in 2015, Bolt in 2014, RESON in 2013, LeCroy in 2012 and DALSA in 2011, contributed to greater international sales.

Further, in 2011, the United Kingdom also implemented the U.K. Bribery Act, which [removed: raised] [added: increased] the [removed: bar for] [added: level of] anti-bribery law enforcement and compliance relative to the FCPA.

Additionally, [removed: both DALSA’s and LeCroy’s] [added: the] businesses [removed: have been] [added: of e2v, DALSA and LeCroy are] more capital intensive than other Teledyne businesses, [added: which could result in] increasing Teledyne’s capital requirements.

Our [removed: 2015] [added: 2016] management’s report specifically excludes from its scope and coverage our [removed: 2015] [added: 2016] acquisitions of [removed: Bowtech] [added: CARIS, Quantum Data, Frontline, IN USA] and [removed: ICM,] [added: Hanson,] allowing us additional time to evaluate existing internal controls and implement additional controls as appropriate.

Further, the acquisitions of [added: U.S.] public companies, such as Bolt and LeCroy, now routinely trigger purported class action lawsuits, filed by shareholders of the target companies, the defense of which has increased transaction costs, among other things.

On January [removed: 3, 2016,] [added: 1, 2017,] Teledyne’s goodwill was [removed: $1,140.2] [added: $1,193.5] million and net acquired intangible assets were [removed: $243.3] [added: $234.6] million.

As we have grown through acquisitions, the amount of goodwill and net acquired intangible assets is [added: a] significant [removed: compared with] [added: portion of] our total assets.

In addition, a prolonged virus epidemic or pandemic, or the threat thereof, could result in worker absences, lower productivity, voluntary closure of our offices and manufacturing [removed: facilities, disruptions in our supply chain, travel restrictions on our employees, and other disruptions to our businesses.]

Sales under contracts with the U.S. Government as a whole, including sales under contracts with the U.S. Department of Defense, as prime contractor or subcontractor, represented approximately [removed: 26%] [added: 27%] of our total revenue in [removed: 2015,] [added: 2016,] compared with [removed: 25%] [added: 26%] in [removed: 2014] [added: 2015] and [removed: 27%] [added: 25%] in [removed: 2013.][added: 2014.]

The sequestration provision of the Budget Control Act of 2011 originally imposed [removed: $500] [added: $500.0] billion of defense cuts over nine years starting in fiscal year 2013, which represented approximately 9% of planned defense funding over the period.

On November 2, 2015, the [removed: President signed the] Bipartisan Budget Act of 2015 (the Budget [removed: Act).][added: Act) was signed into law.]

The Budget Act raises the statutory limit on the amount of permissible federal debt (the debt ceiling) until March 2017 and raises the sequester caps imposed by the Budget Control Act of 2011 by $80.0 billion, split equally between defense and domestic [removed: spending, over the next two years.][added: spending ($50.0 billion in government fiscal year 2016 and $30.0 billion in government fiscal year 2017).]

[removed: It is also not uncommon for the U.S.] Department of Defense to delay the timing of awards for major programs for six to twelve months.

The [removed: current] [added: prior] Administration introduced significant changes to the national space policy, including the cancellation of the NASA’s Constellation Program which includes Ares launch vehicles.

Teledyne Brown Engineering [removed: is developing] [added: has developed] the MUSES, an Earth imaging platform, as part of our commercial space-based digital imaging business.

While most recently, in early 2014, we were awarded a five-year [removed: $60] [added: $60.0] million contract by NASA’s Marshall Space Flight Center to develop and manufacture the Launch Vehicle Stage Adapter for the Space Launch System, failure to further transition our business successfully could result in reduced sales.

The [removed: outcome of the upcoming 2016] [added: new] Presidential [removed: election] [added: Administration] could also lead to changes to the nation’s space policy, some or all of which could materially impact our results.

We had [removed: eight] [added: one] U.S. Government [removed: contracts] [added: contract] terminated for convenience in [removed: 2015,] [added: 2016,] compared with [removed: three] [added: eight] in [removed: 2014] [added: 2015] and [removed: four] [added: three] in [removed: 2013.][added: 2014.]

We may lose money or generate less than expected profits on our fixed-price [added: and other] government contracts and we may lose money if we fail to meet certain pre-specified targets in government contracts.

A number of our U.S. Government prime contracts and subcontracts are fixed-price type contracts (54% of our total U.S. Government contracts were fixed-price in [removed: 2015, 58%] [added: 2016, 54%] in [removed: 2014] [added: 2015] and [removed: 60%] [added: 58%] in [removed: 2013).][added: 2014).]

Our business is subject to government contracting [added: regulations, including increasingly complex] regulations [added: on cybersecurity] and our failure to comply with such laws and regulations could harm our operating results and prospects.

As of January [removed: 3, 2016,] [added: 1, 2017,] we had [removed: $765.5] [added: $611.7] million in total outstanding indebtedness.

This indebtedness included $425.0 million in senior unsecured notes, [removed: $190.0] [added: $182.5] million in term loans and [removed: $150.5 million] [added: no amounts outstanding] under our $750.0 million 2015-amended credit facility.

We have a [added: domestic qualified] defined benefit [removed: qualified] pension plan covering most of our U.S. employees hired prior to 2004 or approximately [removed: 18%] [added: 16%] of our active employees.

[removed: The] [added: As of January 1, 2017, the] value of the combined pension assets is [removed: currently] greater than our [removed: qualified] [added: combined] pension benefit [removed: obligation.][added: obligations.]

The accounting rules applicable to our [removed: qualified] pension [removed: plan] [added: plans] require that amounts recognized in the financial statements be determined on an actuarial basis, rather than as contributions are made to the plan.

[removed: Recently,] [added: Each year beginning with 2014,] the Society of Actuaries released revised mortality tables, which [removed: update] [added: updated] life expectancy assumptions.

In consideration of these tables, we modified the mortality assumptions used in determining our pension and post-retirement benefit [removed: obligations as of December 28, 2014, which will have a related impact on our future pension and post-retirement benefit expense.][added: obligations.]

No contributions were made to the domestic pension plan [removed: in 2015 or 2014.][added: since the 2013 contribution.]

China’s aviation authorities [removed: are also proposing] [added: recently adopted] new safety regulations for airlines that [removed: could result] [added: resulted] in increased sales of our avionics products in [removed: China.][added: China in 2016.]

If these regulations are [removed: not adopted, or are not adopted in a manner that benefits us,] [added: reversed,] the growth prospects of our commercial aerospace business in China may be limited.

We cannot assure that, for [removed: 2016] [added: 2017] and in future years, insurance carriers will be willing to renew coverage or provide new coverage for product liability.

In 2016, no commercial customer in the offshore oil and gas industry accounted for more than 1% of total sales.

Risks related to the proposed acquisition of e2v:

With the pending acquisition of e2v, the risk profile of Teledyne may differ materially from prior years, which could materially change our results of operations.

On December 12, 2016, Teledyne and e2v reached agreement on the terms of a recommended cash acquisition to be made by Teledyne for the ordinary share capital of e2v by means of a Scheme of Arrangement.

At announcement, the aggregate enterprise value for the transaction is expected to be approximately £627.1 million (or approximately $788.9 million) taking into account e2v stock options and net debt.

It is expected that, subject to the satisfaction or waiver of all relevant conditions, the acquisition will be completed in the first half of calendar 2017.

e2v is a leading designer, developer and manufacturer of radio frequency (“RF”) power systems, imaging solutions and semiconductors to the aerospace, security and defense, space, medical, scientific and industrial markets.

e2v is headquartered in the United Kingdom, with key operations in the United Kingdom, France, the United States and Spain.

As discussed below, while there are risks associated with acquisitions generally, including closing and integration risks, there are additional risks associated with owning and operating businesses internationally, including those arising from U.S. and foreign policy changes, political instability, and exchange rate fluctuations.

With this acquisition, a greater percentage of Teledyne’s revenues and expenses will arise from international sources.

The acquisition will also significantly expand Teledyne’s international employee base and manufacturing footprint.

As a result of the acquisition of e2v, the financial results of the combined company will be more exposed to currency exchange rate fluctuations and an increased proportion of assets, liabilities and earnings will be denominated in non-U.S. dollar currencies.

The combined company will present its financial statements in U.S. dollars and will have a significant proportion of net assets, expenses and income in non-U.S. dollar currencies, primarily the British pound, the Canadian dollar and the euro.

The combined company’s financial results and capital ratios will therefore be sensitive to movements in foreign exchange rates.

A depreciation of non-U.S. dollar currencies relative to the U.S. dollar could have an adverse impact on the combined company’s financial results.

While most of the products made and markets served by e2v are complementary to Teledyne, the acquisition of e2v will expand the size of Teledyne’s Digital Imaging segment relative to its other segments.

Continued innovation and research and development efforts will be required to maintain e2v’s leadership position in imaging products and semiconductor production.

e2v’s business also may be more capital intensive than many of Teledyne’s other businesses, increasing Teledyne’s capital requirements.

Approximately one quarter of e2v’s revenue relates to long-term contracts, many of which involve advancements in technology and are fixed price.

As discussed below, an inherent risk in fixed price contracts is that actual performance costs may exceed the projected costs on which the contracts are agreed.

The failure to anticipate technical problems, estimate costs accurately or control costs during the performance of a fixed price contract can reduce its profitability or result in a loss.

We may not realize all of the anticipated benefits of the proposed acquisition of e2v, or those benefits may take longer to realize than expected.

We may also encounter significant unexpected difficulties in integrating the two businesses.

Our ability to realize the anticipated benefits of the pending acquisition of e2v will depend, to a large extent, on our ability to integrate our business with e2v’s business.

Combining two independent businesses is a complex, costly and time-consuming process.

As a result, we will be required to devote significant management attention and resources to integrating the business practices and operations of the company and e2v.

The integration process may disrupt the combined business and, if implemented ineffectively, could preclude the realization of the full benefits of the acquisition that are currently expected.

Our failure to meet the challenges involved in integrating the two businesses and to realize the anticipated benefits of the proposed acquisition could cause an interruption of, or a loss of momentum in, the activities of e2v and Teledyne and could adversely affect our results of operations.

In addition, the overall integration of the businesses may result in material unanticipated problems, expenses, liabilities, competitive responses, loss of customer relationships, and diversion of management’s attention.

In addition, even if the operations of the businesses of the Teledyne and e2v are integrated successfully, we may not realize the full benefits of the proposed acquisition, including the synergies, cost savings or sales or growth opportunities that we expect, or the full benefits may not be achieved within the anticipated time frame, or at all.

Additional unanticipated costs may be incurred in the integration of the two businesses.

All of these factors could adversely affect our earnings, decrease or delay the expected accretive effect of the proposed acquisition, or negatively impact the price of our common stock.

As a result, we cannot assure that the combination of Teledyne’s and e2v’s businesses will result in the realization of the full benefits anticipated from the proposed acquisition.

In order to close the proposed acquisition of e2v, we will need to incur a significant level of debt that could have significant consequences for our business and any investment in our securities.

The proposed acquisition of e2v will be Teledyne’s largest acquisition to date.

In connection with the announcement of the proposed acquisition, in December 2016, we entered into a £625.0 million bridge credit facility to fund the acquisition and related transaction costs, in order to meet the requirement under the U.K. City Code on Takeovers and Mergers that we have sufficient and certain resources available to fund the consideration for the acquisition.

In January 2017, we amended our revolving credit agreement to allow us to use that facility to fund part of the consideration in lieu of the bridge credit facility.

We intend to use the proceeds of the term loans and the senior notes to fund the consideration and transaction costs for the proposed acquisition.

The indebtedness we have incurred and expect to incur to fund the proposed acquisition could have significant consequences for our business and any investment in our common stock, including:

| • | increasing our vulnerability to adverse economic, industry or competitive developments; |

| • | the recent proposal by the President to impose a tax on each barrel of oil produced. |

Our 2014 acquisition of Bolt increased our exposure to offshore oil and gas exploration markets.

Our United Kingdom (“U.K.”)-based businesses and sales to customers in the U.K. could be adversely impacted by uncertainty related to continued U.K. membership in the European Union and continued austerity measures imposed by the U.K. Government.

The upcoming 2016 Presidential election could also generate uncertainty or Congressional inaction that results in further delay in funding and timing of awards that could have a material impact on our revenues in 2016.

In 2013, we established an environmental reserve related to potential soil remediation activities at a former leased facility, which as of January 3, 2016, was $4.6 million.

| • | the outcome of the 2016 U.S. Presidential election; and |

Consistent with this strategy, we made [removed: three] [added: five] acquisitions in [removed: 2015, four] [added: 2016, three] acquisitions in [removed: 2014] [added: 2015] and four acquisitions in [removed: 2013.][added: 2014.]

On June 5, 2015, Teledyne DALSA [removed: BV,] [added: B.V.,] a Netherlands-based subsidiary, acquired Industrial Control Machines SA (“ICM”) a leading supplier of portable X-ray generators for non-destructive testing applications, as well as complete X-ray imaging systems for on-site security screening.

[removed: Our largest acquisition in 2014,] [added: The 2014 acquisitions included,] Bolt Technology Corporation (“Bolt”) [added: which] expanded our capabilities related to offshore oil and natural gas exploration, as well as increased our offerings of remotely operated robotic vehicles systems.

We [added: also] acquired assets of Atlas Hydrographic GmbH (“Atlas”) to add marine sonar systems for mid and deep water [removed: applications.][added: applications and we acquired Photon Machines, Inc. (“Photon”) to supplement our offerings of laser-based sample introduction equipment for laboratory instrumentation.]

[removed: During 2013 and] [added: As part of a] continuing [removed: into 2014 and 2015, in an] effort to reduce [removed: ongoing] costs and improve operating [removed: performance] [added: performance,] we took actions to consolidate and relocate certain facilities and reduce headcount across various businesses, reducing our exposure to weak end markets and high cost locations.

The Company spent [removed: $66.7] [added: $93.4] million, [removed: $195.8] [added: $66.7] million and [removed: $128.2] [added: $195.8] million on acquisitions and investments in [removed: 2015, 2014] [added: 2016, 2015] and [removed: 2013,] [added: 2014,] respectively.

On June 5, 2015, Teledyne DALSA [removed: BV,] [added: B.V.,] a Netherlands-based subsidiary, acquired Industrial Control Machines SA (“ICM”) for [removed: an initial payment of $21.4] [added: $21.8] million, net of cash acquired.

As a result of the [removed: purchase,] [added: purchase of] the [added: remaining interest in Optech in 2015, the] difference between the cash paid and the balance of noncontrolling interest was recorded to additional paid-in capital.

[removed: Optech is] [added: The CARIS, ICM and Axiom acquisitions are] part of the Digital Imaging segment.

The [added: CARIS,] ICM, Bowtech and Optech acquisitions were funded with cash held by foreign subsidiaries.

On October 22, 2014, a subsidiary of Teledyne acquired the assets of Oceanscience for $14.7 million, net of cash [removed: acquired, to enhance our capabilities related to marine sensor platforms and unmanned surface vehicles.][added: acquired.]

On August 18, 2014, a subsidiary of Teledyne acquired assets of Atlas [removed: Hydrographic GmbH (“Atlas”)] for $5.2 million.

Fiscal year [added: 2016 contained 52 weeks, fiscal year] 2015 contained 53 weeks and fiscal [removed: years] [added: year] 2014 [removed: and 2013 each] contained 52 weeks.

The following are selected financial highlights for [removed: 2015, 2014] [added: 2016, 2015] and [removed: 2013] [added: 2014] (in millions, except per-share amounts):

| | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | |

| Sales | | $ | [removed: 2,298.1] [added: 2,149.9] | | | $ | [removed: 2,394.0] [added: 2,298.1] | | | $ | [removed: 2,338.6] [added: 2,394.0] | |

| Cost of sales | | [removed: 1,427.8] [added: 1,318.0] | | | | [removed: 1,487.1] [added: 1,427.8] | | | | [removed: 1,500.0] [added: 1,487.1] | | |

| Selling, general and administrative expenses | | [removed: 588.6] [added: 578.1] | | | | [removed: 612.4] [added: 588.6] | | | | [removed: 598.3] [added: 612.4] | | |

| Total costs and expenses | | [removed: 2,016.4] [added: 1,896.1] | | | | [removed: 2,099.5] [added: 2,016.4] | | | | [removed: 2,098.3] [added: 2,099.5] | | |

| Operating Income | | [removed: 281.7] [added: 253.8] | | | | [removed: 294.5] [added: 281.7] | | | | [removed: 240.3] [added: 294.5] | | |

| Interest and debt expense, net | | [removed: (23.9] [added: (23.2] | | ) | | [removed: (19.0] [added: (23.9] | | ) | | [removed: (20.4] [added: (19.0] | | ) |

| Other income, net | | [removed: 0.4] [added: 10.7] | | | | [removed: 6.6] [added: 0.4] | | | | [removed: 4.1] [added: 6.6] | | |

| Income before income taxes | | [removed: 258.2] [added: 241.3] | | | | [removed: 282.1] [added: 258.2] | | | | [removed: 224.0] [added: 282.1] | | |

| Provision for income taxes | | [removed: 62.7] [added: 50.4] | | | | [removed: 66.5] [added: 62.7] | | | | [removed: 39.5] [added: 66.5] | | |

| Net income | | [removed: 195.5] [added: 190.9] | | | | [removed: 215.6] [added: 195.5] | | | | [removed: 184.5] [added: 215.6] | | |

| Noncontrolling interest | | [removed: 0.3] [added: —] | | | | [removed: 2.1] [added: 0.3] | | | | [removed: 0.5] [added: 2.1] | | |

| Net income attributable to Teledyne | | $ | [removed: 195.8] [added: 190.9] | | | $ | [removed: 217.7] [added: 195.8] | | | $ | [removed: 185.0] [added: 217.7] | |

| Basic earnings per common share | | $ | [removed: 5.55] [added: 5.52] | | | $ | [removed: 5.87] [added: 5.55] | | | $ | [removed: 4.96] [added: 5.87] | |

| Diluted earnings per common share | | $ | [removed: 5.44] [added: 5.37] | | | $ | [removed: 5.75] [added: 5.44] | | | $ | [removed: 4.87] [added: 5.75] | |

Our four business segments and their respective percentage contributions to our total sales in [removed: 2015, 2014] [added: 2016, 2015] and [removed: 2013] [added: 2014] are summarized in the following table:

| Segment contribution to total sales: | | [removed: 2015] [added: 2016] | | | [removed: 2014] [added: 2015] | | | [removed: 2013] [added: 2014] | |

| Instrumentation | | [removed: 46] [added: 41] | % | | [removed: 47] [added: 46] | % | | [removed: 44] [added: 47] | % |

| Digital Imaging | | [removed: 16] [added: 18] | % | | [removed: 17] [added: 16] | % | | [removed: 18] [added: 17] | % |

| Aerospace and Defense Electronics | | [removed: 26] [added: 29] | % | | [removed: 25] [added: 26] | % | | [removed: 26] [added: 25] | % |

| Engineered Systems | | 12 | % | | [removed: 11] [added: 12] | % | | [removed: 12] [added: 11] | % |

The total company cost of sales as a percentage of sales [removed: for 2015] was 62.1%, for both 2015 and 2014.

Included in operating [removed: profit] [added: income] in 2015 was pension expense of $3.0 million compared with pension income of $1.3 million in 2014.

Pension expense allocated to contracts pursuant to U.S. Government Cost Accounting Standards (“CAS”) was $13.8 million for both [removed: 2015] [added: 2016] and [removed: 2014.][added: 2015.]

[removed: Operating] [added: The decrease in operating] income primarily reflected lower costs as a result of the lower sales.

[removed: Fiscal] [added: Total] year 2015 included net discrete tax benefits of $9.8 million primarily related to the remeasurement of uncertain tax positions which were mainly due to the expiration of statute of limitations and the release of valuation allowances.

On December 6, 2016, Teledyne Instruments, Inc. acquired Hanson Research Corporation (“Hanson Research”) which specializes in analytical instrumentation for the pharmaceutical industry.

On November 2, 2016, Teledyne Instruments, Inc. acquired assets of IN USA, Inc. (“IN USA”), a manufacturer of a range of ozone generators, ozone analyzers and other gas monitoring instruments utilizing ultraviolet and infrared based technologies.

On May 3, 2016, Teledyne DALSA, Inc., a Canadian-based subsidiary, acquired the assets and business of CARIS, Inc. (“CARIS”) a leading developer of geospatial software designed for the hydrographic and marine community.

On April 15, 2016, Teledyne LeCroy, Inc., a U.S.-based subsidiary, acquired assets of Quantum Data, Inc. (“Quantum Data”) a market leader in video protocol analysis test tools.

On April 6, 2016, Teledyne LeCroy, Inc. also acquired Frontline Test Equipment, Inc. (“Frontline”) a market leader in wireless protocol analysis test tools.

In 2015, Teledyne made an additional investment in Ocean Aero, Inc. (“Ocean Aero”) and we acquired a product line.

On December 12, 2016, Teledyne and e2v technologies plc (“e2v”) reached agreement on the terms of a recommended cash acquisition to be made by Teledyne for the ordinary share capital of e2v by means of a Scheme of Arrangement (the “Offer”).

Under the terms of the Offer, e2v’s ordinary shareholders (“e2v Shareholders”) will receive 275 pence in cash for each e2v share valuing the entire issued and to be issued ordinary share capital of e2v at approximately £619.6 million on a fully diluted basis.

It is expected that, subject to the satisfaction or waiver of all relevant conditions, the acquisition will be completed in the first half of calendar 2017.

At meetings held in January 2017, e2v shareholders voted in favor of the resolution to approve the scheme of arrangement and voted to pass a special resolution to approve the implementation of the scheme.

The waiting periods required under both the U.S. Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and in respect of the e2v’s U.S. State Department’s ITAR registration have expired.

Clearance or expiration of the waiting period under German merger control laws remains outstanding.

After discussions with the German authorities, e2v and Teledyne submitted a revised application for clearance on February 24, 2017 in respect of the acquisition.

The German authorities have one month to review such revised submission.

Clearance from the French Ministry of Economy and Finance and the French Ministry of Defense in respect of the acquisition also remains outstanding.

Teledyne expects to fund the acquisition from cash on hand and its credit facility, as well as the anticipated proceeds from the issuance of senior unsecured notes and term loans.

For the machine vision market, e2v provides high performance image sensors and custom camera solutions and application specific standard products.

In addition, e2v provides high performance space qualified imaging sensors and arrays for space science and astronomy.

e2v also produces components and subsystems that deliver high reliability radio frequency power generation for healthcare, industrial and defense applications.

Finally, the company provides high reliability semiconductors and board-level solutions for use in aerospace, space and radio frequency communications applications.

At announcement, the aggregate enterprise value for the transaction is expected to be approximately £627.1 million (or approximately $788.9 million) taking into account e2v stock options and net debt.

For its fiscal year ended March 31, 2016, e2v had sales of approximately £236.4 million.

In connection with our strategy, in the third quarter of 2016, Teledyne completed the disposition of the net assets of its Printed Circuit Technology (“PCT”) business for $9.3 million in cash, resulting in no gain or loss.

In connection with the sale, we entered into a transition services agreement, effective July 8, 2016, to provide certain administrative services to facilitate the orderly transfer of the business operations to the buyer, with the transition services agreement expected to continue through the first half of 2017.

In addition, in 2016 we sold a former operating facility in California and recorded a pretax gain of $17.9 million, and incurred pretax charges totaling $7.9 million related to the pending e2v acquisition.

We continue to seek cost reductions in our businesses.

The following pre-tax charges were incurred related to severance and facility consolidations (in millions):

| Instrumentation | | $ | 10.6 | | | $ | 3.9 | | | $ | 1.0 | |

| Engineered Systems | | 0.1 | | | | 0.1 | | | | (0.2 | | ) |

| Total | | $ | 17.3 | | | $ | 8.4 | | | $ | 4.4 | |

| | | 2016 | | | | 2015 | | | | 2014 | | |

| Severance | | $ | 9.5 | | | $ | 8.4 | | | $ | 4.2 | |

| Facility consolidations | | 7.8 | | | | — | | | | 0.2 | | |

| Total | | $ | 17.3 | | | $ | 8.4 | | | $ | 4.4 | |

| | | 2016 | | | | 2015 | | | | 2014 | | |

| Cost of sales | | $ | 6.8 | | | $ | 3.7 | | | $ | 1.0 | |

| Total | | $ | 17.3 | | | $ | 8.4 | | | $ | 4.4 | |

At January 1, 2017, $3.7 million remains to be paid related to these actions.

On November 2, 2016, Teledyne Instruments, Inc. acquired assets of IN USA, headquartered in Norwood, Massachusetts, for $10.2 million in cash.

Teledyne intends to relocate and consolidate manufacturing into the new, owned facility of Teledyne Advanced Pollution Instrumentation in San Diego, California.

In 2015, Teledyne made an additional investment in Ocean Aero, Inc. (“Ocean Aero”) and now owns a 36.9% interest in Ocean Aero which is accounted for under the equity method.

Also in 2015, we acquired a product line for $3.0 million of which an initial payment of $2.7 million was made in 2015.

We acquired Photon Machines, Inc. (“Photon”) to supplement our offerings of laser-based sample introduction equipment for laboratory instrumentation.

In connection with these efforts, in 2013, we incurred pretax charges totaling $24.0 million for severance and facility consolidation expense and environmental reserves.

The charges were comprised of $10.4 million in severance related costs and $13.6 million in facility closure and relocation costs, which included $5.3 million of environmental reserves.

In 2015 and 2014, we incurred $8.4 million and $4.4 million, respectively, primarily for severance related costs.

While the 2015 actions and related cash payments were substantially completed by year-end, we continue to seek cost reductions in our businesses.

With our recent acquisitions, as well as growth in our commercial markets, our business mix has continued to evolve.

We have worked to transform our product portfolio into that of a high-technology industrial company that is less dependent on U.S. Government business.

For 2015, Teledyne’s sales were approximately 74% to commercial and international customers and 26% to the U.S. Government compared with about 75% commercial and international customers and 25% U.S. government in 2014.

Our international sales have increased to 44% of total sales in 2015, compared with 39% in 2012.

The Company paid a $0.4 million purchase price adjustment in 2015.

An additional $2.6 million of the purchase price is subject to an indemnification holdback, all or a portion of which is payable in December 2016.

On April 29, 2015, Teledyne DALSA, Inc. acquired the remaining 49% noncontrolling interest in the parent company of Optech Incorporated (“Optech”) for $22.0 million in cash.

Also in 2015, Teledyne made an additional $1.3 million investment in Ocean Aero, Inc. (“Ocean Aero”) and now owns a 36.9% interest in Ocean Aero which is accounted for under the equity method.

Based in Poway, California, Ocean Aero is designing an unmanned surface vehicle that will also have the ability to descend subsea.

Also in 2015, we acquired a product line for $3.0 million of which an initial payment of $2.7 million was made in 2015.

During 2014, Teledyne made 4 acquisitions, the largest of which was Bolt Technology Corporation (“Bolt”) in November 2014.

We acquired assets of Atlas to add marine sonar systems for mid and deep water applications.

We acquired Photon to supplement our offerings of laser-based sample introduction equipment for laboratory instrumentation.

On July 1, 2014, Teledyne made an initial investment in Ocean Aero.

On March 1, 2013, a subsidiary of Teledyne acquired all the outstanding shares of RESON A/S (“RESON”) for $69.7 million, net of cash acquired.

RESON, headquartered in Slangerup, Denmark, provides multibeam sonar systems and specialty acoustic sensors for hydrography, global marine infrastructure and offshore energy operations.

RESON is part of the Instrumentation segment.

On October 22, 2013, a subsidiary of Teledyne acquired C.D. Limited (“CDL”) for $21.8 million in cash, net of cash acquired.

CDL is headquartered in Aberdeen, Scotland, is a leading supplier of subsea inertial navigation systems and motion sensors for a variety of marine applications.

We acquired CDL to obtain additional inertial sensing and navigation products, and to accelerate the development of real-time motion sensing and communication systems for our subsea oil and gas customers.

CDL is part of the Instrumentation segment.

On August 30, 2013, a subsidiary of Teledyne acquired SD Acquisition, Inc. d/b/a CETAC Technologies (“CETAC”) for $26.4 million.

Teledyne paid a $0.4 million purchase price adjustment in the fourth quarter.

CETAC, headquartered in Omaha, Nebraska, is a designer and manufacturer of automated sample handling and sample introduction equipment for laboratory instrumentation.

We acquired CETAC to expand our automated sample handling and sample introduction equipment for laboratory instrumentation capabilities.

CETAC is part of the Instrumentation segment.

On July 8, 2013, a subsidiary of Teledyne purchased the remaining 49% interest in Nova Research, Inc. (“Nova Sensors”) that it did not already own for $4.9 million.

Nova Sensors produces compact short-wave and mid-wave infrared cameras and operates within the Digital Imaging segment.

Also in 2013, the Company spent $1.4 million on the purchase of a product line.

On May 8, 2013, a subsidiary of Teledyne acquired Axiom IC B.V. (“Axiom”), for an initial payment of $4.0 million, net of cash acquired.

Axiom, located in the Netherlands, is a fabless semiconductor company that develops high-performance CMOS mixed-signal integrated circuits and is part of the Digital Imaging segment.

For 2016, the Company’s domestic pension plan will result in pension income, compared with pension expense in 2015, due to changes to the pension assumptions.

The Company anticipates the total unrecognized tax benefit may be reduced by $7.0 million due to the resolution of various federal, state and foreign tax issues in the next twelve months.

The information required by this item is included in this Report on page [removed: 47] [added: 50] under the caption “Other Matters - Hedging Activities; Market Risk Disclosures” of “Item 7.

Total sales in [removed: 2015] [added: 2016] were [removed: $2,298.1] [added: $2,149.9] million, compared with [removed: $2,394.0] [added: $2,298.1] million in [removed: 2014] [added: 2015] and [removed: $2,338.6] [added: $2,394.0] million in [removed: 2013.][added: 2014.]

Approximately [removed: 74%] [added: 73%] of our total sales in [removed: 2015] [added: 2016] were to commercial and international customers and [removed: the balance] [added: 27%] was to the U.S. Government, as a prime contractor or subcontractor.

[removed: Approximately 54% of these] [added: Of the 27%] U.S. Government [removed: sales] [added: sales, approximately 54%] were attributable to fixed-price type contracts [removed: and] [added: with] the balance [added: attributable] to cost-plus-fee type contracts.

Sales to international customers accounted for approximately [removed: 44%] [added: 43%] of total sales in [removed: 2015.][added: 2016.]

Our Recent [added: and Pending] Acquisitions

Consistent with our strategy, during [removed: 2015,] [added: 2016,] we made acquisitions and investments totaling [removed: $66.7] [added: $93.4] million, which included the following:

To broaden our [removed: marine] [added: test and measurement] instrumentation capabilities:

The respective percentage contributions of our four business segments to our total sales in [removed: 2015, 2014] [added: 2016, 2015] and [removed: 2013] [added: 2014] are summarized in the following table:

| Segment contribution to total sales (a) | | [removed: 2015] [added: 2016] | | | [removed: 2014] [added: 2015] | | | [removed: 2013] [added: 2014] | |

| Instrumentation | | [removed: 46] [added: 41] | % | | [removed: 47] [added: 46] | % | | [removed: 44] [added: 47] | % |

| Digital Imaging | | [removed: 16] [added: 18] | % | | [removed: 17] [added: 16] | % | | [removed: 18] [added: 17] | % |

| Aerospace and Defense Electronics | | [removed: 26] [added: 29] | % | | [removed: 25] [added: 26] | % | | [removed: 26] [added: 25] | % |

| Engineered Systems | | 12 | % | | [removed: 11] [added: 12] | % | | [removed: 12] [added: 11] | % |

| (a) | [removed: See] [added: For] further discussion of our four segments [removed: in] [added: see] Note 12 to the Notes to Consolidated Financial [removed: Statements] [added: Statements.] |

Our instrumentation monitors trace levels of gases such as sulfur dioxide, carbon monoxide, [removed: carbon dioxide,] oxides of nitrogen and ozone in order to measure the quality of the air we breathe.

We offer eight families of real-time oscilloscopes, which address different needs: [removed: HDO4000/HDO6000/HDO8000,] [added: HDO4000/HDO6000/HDO8000/HDO9000,] our 12-bit, high-definition oscilloscopes; LabMaster and WaveMaster, our industry leading high-end oscilloscope family; WavePro, which is targeted at the mid-to high-range performance sector; WaveRunner, designed for the general purpose and bench-top sector; WaveSurfer designed for users in the lower bandwidth bench-top sector of the market; WaveJet, designed for value-oriented users in the economy sector of the market; and WaveAce, our entry-level oscilloscope products.

The 2015 acquisition of [removed: ICM adds] [added: Industrial Control Machines SA (“ICM”) added] lightweight X-ray sources for the inspection of materials and structures, ranging from light aviation parts to thick steel pipelines in harsh and extreme environments.

We are a leader in the development and production of large format focal plane array sensors for astronomy, [removed: military,] [added: defense,] commercial and space science markets.

We deliver advanced imaging solutions to the U.S. Department of Defense, [removed: NASA,] [added: National Aeronautics and Space Administration (“NASA”),] prime system integrators, foreign space agencies and commercial customers.

Our sensor technologies are on [added: many of NASA’s major astronomy missions (including Hubble, James Webb Space Telescope and Wide Field Infrared Survey Telescope), are on] weather satellites, are orbiting [removed: the moon and] Mars, are on spacecraft involved in [removed: the Pluto flyby] [added: missions to Jupiter] and on [removed: asteroid missions,] [added: asteroids,] and can be found [removed: in] [added: operating at] nearly every major ground-based observatory telescope.

In the U.S. defense arena, our sensors are integrated into several major systems for space surveillance, [removed: persistent] [added: airborne] surveillance, chemical detection and target [removed: identification, among others.][added: identification.]

We have developed [removed: various] sensors, subassemblies and cameras for air- and ground-based applications, including hyperspectral sensors for long-wave infrared and for simultaneous visible-shortwave infrared applications.

We also design and manufacture advanced military laser eye protection [removed: spectacles.][added: spectacles and sensor protection filters.]

[removed: Finally, we develop] [added: We integrate our] low-noise, high-performance [added: sensors into] cameras for [removed: use in] commercial laboratory instrumentation.

An enhanced digital flight data acquisition unit [added: for the new Boeing 737MAX aircraft] is expected to be certified in the [removed: third] [added: first] quarter of [removed: 2016,] [added: 2017,] with production deliveries to [removed: follow.][added: follow soon after.]

Our Engineered Systems segment provides innovative systems engineering and integration and advanced technology development as well as [added: complex] manufacturing solutions for defense, space, environmental and energy applications.

Teledyne Brown Engineering, Inc. is a well-recognized whole life-cycle space, missile defense, marine systems, [added: environmental] and energy company.

With changes in U.S. fiscal policy, we have been working to shift its focus from chiefly supporting U.S. Government space and defense programs to increasing its commercial [removed: portfolio.][added: portfolio, specifically with the commercialization of space.]

With the design of the SWCS engineering development model vehicle having been completed in [removed: 2015, we have started] [added: 2015 and] the development test phase [removed: and expect the] [added: having been completed in 2016, we began] low-rate initial production [removed: phase to begin later] in [added: late] 2016.

We provide 24-hour-per-day payload operations in the ISS Payload Operations and Integration Center located at NASA’s Marshall Space Flight [removed: Center.][added: Center (“MSFC”).]

[removed: Under this agreement, we continue to work to develop a commercial earth imaging] [added: The] platform known as the Multi-User System for Earth [removed: Imaging (“MUSES”); the launch of which] [added: Sensing (“MUSES”)] is [removed: now expected] [added: scheduled] to [removed: occur] [added: launch] in [removed: 2017.][added: mid-2017.]

We also manage and operate a separation, purification and analysis of atmospheric samples laboratory for the U.S. [removed: Government.][added: Government, as well as, design, build, and test systems for processing the nation’s enriched uranium at the United States Department of Energy National Nuclear Security Complex.]

We [removed: also] provide [removed: thermoelectric] [added: leading edge battery] and [removed: electrochemical] [added: fuel cell] energy technology solutions for use in U.S. Government programs.

We design, develop and manufacture small turbine engines primarily used in tactical [added: cruise] missiles for military markets.

No commercial customer accounted for more than 10% of [removed: our total sales, nor more than 10% of] any segment sales, during [removed: 2015, 2014] [added: 2016, 2015] or [removed: 2013.][added: 2014.]

[removed: Our] [added: In 2015 and 2014, our] largest commercial customer, a customer of our Instrumentation segment, accounted for [removed: 2.3%, 2.8%] [added: 2.3%] and [removed: 3.6%] [added: 2.8%] of total [removed: sales in 2015, 2014 and 2013,] [added: sales,] respectively.

Sales to international customers accounted for approximately [removed: 44%] [added: 43%] of total sales in [removed: 2015,] [added: 2016,] compared with [removed: 45%] [added: 44%] in [removed: 2014] [added: 2015] and [removed: 44%] [added: 45%] in [removed: 2013.][added: 2014.]

In [removed: 2015,] [added: 2016,] we sold products to customers in over 100 foreign countries.

Approximately 90% of our sales to foreign-based customers were made to customers in [removed: 25] [added: 24] foreign countries.

[removed: The 2015] [added: In 2016, the] top five countries for international sales were [added: China,] the United Kingdom, [removed: Norway, China, Germany and] [added: Germany,] South Korea and [added: Japan and] constituted approximately [removed: 21%] [added: 20%] of our total sales.

| • | Assets of Quantum Data, Inc. (“Quantum Data”) based in Elgin, Illinois, which provides electronic test and measurement instrumentation and is a market leader in video protocol analysis test tools. |

| • | Frontline Test Equipment, Inc. (“Frontline”) based in Charlottesville, Virginia, which provide electronic test and measurement instrumentation and is a market leader in wireless protocol analysis test tools. |

| • | CARIS, Inc. (“CARIS”) based in Fredericton, New Brunswick, Canada, is a leading developer of geospatial software designed for the hydrographic and marine community. |

To expand our environmental instrumentation capabilities:

| • | Hanson Research Corporation (“Hanson Research”) headquartered in Chatsworth, California, which specializes in analytical instrumentation for the pharmaceutical industry. |

| • | Assets of IN USA, Inc. (“IN USA”) headquartered in Norwood, Massachusetts, which manufactures a range of ozone generators, ozone analyzers and other gas monitoring instruments utilizing ultraviolet and infrared based technologies. |

On December 12, 2016, Teledyne and e2v technologies plc (LSE:E2V.L) (“e2v”) reached agreement on the terms of a recommended cash acquisition to be made by Teledyne for the ordinary share capital of e2v by means of a Scheme of Arrangement (the “Offer”).

Under the terms of the Offer, e2v’s ordinary shareholders (“e2v Shareholders”) will receive 275 pence in cash for each e2v share valuing the entire issued and to be issued ordinary share capital of e2v at approximately £619.6 million on a fully diluted basis.

It is expected that, subject to the satisfaction or waiver of all relevant conditions, the acquisition will be completed in the first half of 2017.

In November 2016, we acquired assets of IN USA, which expanded our product portfolio to include a range of ozone generators, ozone analyzers and other gas monitoring instruments.

In December 2016, we acquired Hanson Research, a leading manufacturer of the systems used in testing of pharmaceutical products, including FDA-mandated dissolution rates of oral dosage forms and systems used in the research and development of topical creams, ointments, and gels containing active pharmaceutical ingredients.

In April 2016, we acquired Frontline, which allowed us to expand our protocol test portfolio into important wireless technologies like Bluetooth and 802.11 (Wi-Fi); and assets of Quantum Data, which broadened our protocol product offering to penetrate emerging video technologies like HDMI, SDI and other digital video technologies.

As a result of our acquisition of CARIS in April 2016, we also provide geospatial software designed for the hydrographic and marine community.

We provide focal plane electronics for our own sensors and for sensors produced by other companies.

Under contract with MSFC, we have designed, developed, and we are manufacturing, assembling, and testing the Launch Vehicle Stage Adapter, a critical element of NASA’s Space Launch System.

Under this agreement, we have developed a commercial platform that will host payloads for earth imaging and other scientific applications.

We provide advanced thermoelectric material technology and generators for challenging applications.

The NASA Curiosity rover is powered by a thermoelectric generator designed and built by Teledyne Energy Systems, Inc., and we are developing the next generation system based on advanced thermoelectric materials.

These are lightweight compact systems for underwater vehicles, aircraft, launch vehicles, and spacecraft.

Both technologies can be customized to meet challenging applications for extended duration missions.

No commercial customer in 2016 accounted for more than 2.0% of total sales.

In 2016, our largest program with the U.S. Government was the Mission Operations and Integration contract with the NASA Marshall Space Flight Center which represented 1.5% of our total sales.

Executive Officers of the Registrant

| --- | --- |

| | |

| --- | --- |

| | |

| • | Bowtech Products Limited (“Bowtech”) - Bowtech, based in Aberdeen, Scotland designs and manufactures harsh underwater environment vision systems. |

| • | Industrial Control Machines SA (“ICM”) - ICM, based in Liège, Belgium, is a supplier of portable X-ray generators for non-destructive testing applications, as well as complete X-ray imaging systems for on-site security screening. |

| • | Acquired the remaining 49% noncontrolling interest in the parent company of Optech Incorporated (“Optech”). |

We manufacture advanced packaging solutions for military and commercial aircraft using rigid and rigid-flex printed circuit boards.

Engineered Products and Services

Energy Systems

Turbine Engines

Executive Management

| Anna Segobia Masters Vice President, Human Resources and Deputy General Counsel | | 57 | | | Ms. Masters has been Vice President, Human Resources and Deputy General Counsel of Teledyne since joining on July 7, 2014. For more than five years prior to that, Ms. Masters served as a partner in the Los Angeles office of the law firm Winston & Strawn LLP, focusing on employment law matters. |

On May 16, 2014, Rex Geveden, a former executive vice president, and Teledyne had entered into a letter agreement in connection with Mr. Geveden’s appointment as President of DALSA and his temporary relocation to Ontario, Canada.

Pursuant to the letter agreement, effective May 16, 2014, Mr. Geveden’s annual base salary was $435,000 (from his 2014 beginning base salary of $410,000), he was entitled to participate in the AIP and other executive compensation and benefit programs, he was eligible for reimbursement of up to $200,000 to cover all relocation costs for his move to Canada and up to $200,000 to cover all relocation costs for his move back to the United States to further his employment with Teledyne, in each case net of taxes, and Teledyne was to make an additional tax equalization payment to compensate Mr. Geveden for any additional Canadian income tax liability which he may have incurred as a result of the performance of his duties in Canada.

Mr. Geveden resigned from his positions with Teledyne and its subsidiaries effective October 6, 2015.

Following his resignation, Mr. Geveden repaid to the Company $188,983 of reimbursements and advances made to him in connection with his 2014 relocation to Canada.

He also forfeited his 2014-2016 restricted stock award, 2015-2017 restricted stock unit award, his 2015-2017 PSP award, the remaining payments under the 2012-2014 PSP awards and unvested stock options.

As a result of his resignation, Mr. Geveden was not entitled to an AIP bonus award for 2015.

For the fiscal year ended January [removed: 3, 2016][added: 1, 2017]

The aggregate market value of the registrant’s Common Stock held by non-affiliates on June [removed: 26, 2015,] [added: 30, 2016,] was [removed: $3.4] [added: $3.2] billion, based on the closing price of a share of Common Stock on such date, which is the last business day of the registrant’s most recently completed fiscal second quarter.

At February [removed: 25, 2016,] [added: 28, 2017,] there were [removed: 34,467,315] [added: 35,216,739] shares of the registrant’s Common Stock outstanding.

Selected portions of the registrant’s proxy statement for its [removed: 2016] [added: 2017] Annual Meeting of Stockholders (the [removed: “2016] [added: “2017] Proxy Statement”) are incorporated by reference in Part III of this Report.

| | Item 1A. Risk Factors | [removed: [13](#s3CDBFFC1A8845707BC94F5130D7FC01F)] [added: 13] | |

| | [Item 1B. Unresolved Staff [removed: Comments](#s3F1F200882CC53D1B22A49852B5E0629)] [added: Comments](#sC2EE5D153D0E56D8908B0E1F4A64A14E)] | [removed: [26](#s304814EA48E75A3D8855249C142DD3C5)] [added: 29] | |

| | [Item 2. [removed: Properties](#s79C4A1C76271563581B92949015DA1E7)] [added: Properties](#s5EC23E7221D451D8B44B555EB6819F7E)] | [removed: 26] [added: 29] | |

| | [Item 3. Legal [removed: Proceedings](#sAA36C5A399BA5E3CBF384403BFB8FCEB)] [added: Proceedings](#s43A8C54F622F582D977F06F1A610A216)] | [removed: [27](#sC2DDD29ED054542F8C6EE4087495F278)] [added: [29](#s936373E289505BB681C244B99B30B7C4)] | |

| | [Item 4. Mine Safety [removed: Disclosures](#sDF5C6724BC725983A626637893C27550)] [added: Disclosures](#s5CCC77328E9E51B0AD25DF1AC5B8BE65)] | [removed: [27](#sE59C59A1C41050C6945EBB2FD9DBDBD8)] [added: [29](#s15164200C9635F8C94A27E7C9ACA3F6A)] | |

| | [Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#s5DDB3625949F5A92AA729C008C14B7C0)] [added: Securities](#sB6D14F13CF345A06A0870DC246378BB4)] | [removed: [27](#sCFC4F256CB5B51E7842086C5F22BA5D4)] [added: 30] | |

| | [Item 6. Selected Financial [removed: Data](#s62A32A08D7BA5BDC90E63C6F6AA2A193)] [added: Data](#s77CCB541C1E55F288559A7BDCD9430AA)] | [removed: [29](#s3DF8793FB56A5CC1B8305FE6E277828D)] [added: [31](#s9E04F727D42D5AB4878056809BCEA49E)] | |

| | [Item 7. Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operation](#s38F1834A65F457C7A840A642C75AD1C5)s] [added: Operation](#sCAC3B9458CA15AA1AF2CE958076BD9F6)s] | [removed: [29](#s5DDB3625949F5A92AA729C008C14B7C0)] [added: [31](#sB6D14F13CF345A06A0870DC246378BB4)] | |

| | [Item 7A. Quantitative and Qualitative Disclosure About Market [removed: Risk](#s62A32A08D7BA5BDC90E63C6F6AA2A193)] [added: Risk](#s77CCB541C1E55F288559A7BDCD9430AA)] | [removed: [54](#s62A32A08D7BA5BDC90E63C6F6AA2A193)] [added: [56](#s77CCB541C1E55F288559A7BDCD9430AA)] | |

| | [Item 8. Financial Statements and Supplementary [removed: Data](#s62A32A08D7BA5BDC90E63C6F6AA2A193)] [added: Data](#s77CCB541C1E55F288559A7BDCD9430AA)] | [removed: [54](#sAF0D23B06B325E6CAAB7CD5A03E573D1)] [added: [56](#s3345BD588A9050D0B7883E5B9CFD3E31)] | |

| | [Item 9. Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#s62A32A08D7BA5BDC90E63C6F6AA2A193)] [added: Disclosure](#s77CCB541C1E55F288559A7BDCD9430AA)] | [removed: [54](#sD270FB724FCF50989CEDD947881F9E6C)] [added: 57] | |

| | [Item 9A. Controls and [removed: Procedures](#s62A32A08D7BA5BDC90E63C6F6AA2A193)] [added: Procedures](#s77CCB541C1E55F288559A7BDCD9430AA)] | [removed: [54](#s38F1834A65F457C7A840A642C75AD1C5)] [added: [57](#sCAC3B9458CA15AA1AF2CE958076BD9F6)] | |

| | [Item 9B. Other [removed: Information](#s62A32A08D7BA5BDC90E63C6F6AA2A193)] [added: Information](#s77CCB541C1E55F288559A7BDCD9430AA)] | [removed: [55](#sD8E108B9451E5FCCB7A06AAA7404801F)] [added: [57](#s558262A1BCD858C68206BB7C8D6A53CD)] | |

| | [Item 10. Directors, Executive Officers and Corporate [removed: Governance](#s20133C60CCFC5553984548B929BD50FC)] [added: Governance](#s4A5E4F698B8C524B9295CE424833DE7F)] | [removed: [55](#s44331BDDAF335511AF673A8E7A97D72F)] [added: [58](#sEEE0AF6501B155AC82F0DB53F660DD21)] | |

| | [Item 11. Executive [removed: Compensation](#sEADD6885FDB35976B06E08FA523042A6)] [added: Compensation](#sB680903CB839564BBDEB04B3DDDE208C)] | [removed: [55](#sEA29AC3526CF54C2A7C56071DF611A0B)] [added: [58](#s702684D5D26659AEA98E77CBC39CC0CE)] | |

| | [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#s84AEC19190D8523C9641B648FA197A7A)] [added: Matters](#s68BAA265BE5B5DE5B896DEC4D83ED22B)] | [removed: 57] [added: 58] | |

| | [Item 13. Certain Relationships and Related Transactions, and Director [removed: Independence](#s3D9B5F13BECE52879F7869C4E41F3B78)] [added: Independence](#s3395FC820A2559D09E2B483E45121726)] | [removed: [56](#sCB6BA10A350153B78A2C0CA06B5A21FE)] [added: [58](#sEF35C01593565A50973D2705F85AC3C4)] | |

| | [Item 14. Principal Accountant Fees and [removed: Services](#sEADD6885FDB35976B06E08FA523042A6)] [added: Services](#sB680903CB839564BBDEB04B3DDDE208C)] | [removed: [56](#sF09C89D6F3A05C198857E5DFA99C120A)] [added: [58](#s1258A0F7C35655CCA46930494BC5D01B)] | |

| | [Item 15. Exhibits and Financial Statement [removed: Schedules](#s62A32A08D7BA5BDC90E63C6F6AA2A193)] [added: Schedules](#s77CCB541C1E55F288559A7BDCD9430AA)] | [removed: [57](#s6BE4E477E105518EBA964790248911EB)] [added: [58](#sA16F8E0C1DB05BF2ADD34B99B81AC283)] | |

| | [INDEX TO FINANCIAL STATEMENTS AND RELATED [removed: INFORMATION](#sEADD6885FDB35976B06E08FA523042A6)] [added: INFORMATION](#sB680903CB839564BBDEB04B3DDDE208C)] | [removed: [58](#s6E93FD97DB62566F80FDDDEFC5B11151)] [added: [59](#s1A7CA1AFE724526288CF398A270C8FD6)] | |

10-K 1 tdy-2016x10k.htm 10-K 2016 FORM 10K

| | [Item 1. Business](#sA16F8E0C1DB05BF2ADD34B99B81AC283) | [1](#s605DEACB22325F3E901EDB0A6AA64BE7) | |

| | [SIGNATURES](#s77CCB541C1E55F288559A7BDCD9430AA) | [103](#sE5868AC8727F5A198D6F904CE377FCD6) | |

| | [EXHIBIT INDEX](#s77CCB541C1E55F288559A7BDCD9430AA) | [105](#s68F9BEDD7AEC52C8ACD147FD61245D0B) | |

10-K 1 tdy-20160103x10k.htm 10-K 2015 JANUARY 3, 2016

| | [Item 1. Business](#s6BE4E477E105518EBA964790248911EB) | [1](#s12195C3C863E5DC5B533296AD5FE6FF4) | |

| | [SIGNATURES](#s62A32A08D7BA5BDC90E63C6F6AA2A193) | [100](#s901F9825FF2050BE94D0634FF8A31724) | |

| | [EXHIBIT INDEX](#s62A32A08D7BA5BDC90E63C6F6AA2A193) | [102](#s399F56BE72445F89A9C7D0DD995B7912) | |

The Company has [removed: 65] [added: 61] principal operating facilities in [removed: 18] [added: 16] states and five foreign countries.

Our [added: maintain our] facilities [added: in good operating condition and we believe they] are [removed: considered to be] suitable and adequate for the purposes for which they are intended and overall have sufficient capacity to conduct business as currently conducted.

Information on the number, ownership and location of principal operating facilities by segment was as follows at February [removed: 25, 2016:][added: 28, 2017:]

| Instrumentation | | [removed: 12] [added: 13] | | | | [removed: 16] [added: 12] | | | California, Colorado, [removed: Connecticut,] Florida, Massachusetts, Nebraska, New Hampshire, New York, Ohio, Texas and Virginia | | United States, Canada, Denmark and United Kingdom |

| Digital Imaging | | [removed: 7] [added: 8] | | | | 4 | | | California, Massachusetts, North Carolina and Pennsylvania | | United States, Belgium, Canada and The Netherlands |

| Aerospace and Defense Electronics | | 7 | | | | [removed: 14] [added: 12] | | | California, Illinois, New Hampshire, Pennsylvania, Tennessee and Texas | | United States and United Kingdom |

| Total | | [removed: 27] [added: 29] | | | | [removed: 38] [added: 32] | | | | | |

Of these facilities, 27 are owned by the Company and 38 are leased.

| 1st Quarter (through February [removed: 24, 2016)] [added: 28, 2017)] | | $ | [removed: 88.38] [added: 134.79] | | | $ | [removed: 73.66] [added: 119.67] | |

On February [removed: 25, 2016,] [added: 28, 2017,] the closing sale price of our Common Stock as reported by the New York Stock Exchange was [removed: $83.32] [added: $131.41] per share.

As of February [removed: 25, 2016,] [added: 28, 2017,] there were [removed: 3,740] [added: 3,574] holders of record of the Common Stock.

We [removed: currently] intend to [removed: retain any] [added: use] future earnings to fund the development and growth of our businesses, including through potential acquisitions.

| 1st Quarter | | $ | 90.85 | | | $ | 73.66 | |

| 2nd Quarter | | $ | 101.66 | | | $ | 85.29 | |

| 3rd Quarter | | $ | 110.61 | | | $ | 94.68 | |

| 4th Quarter | | $ | 129.36 | | | $ | 101.90 | |

| 2017 | | | | | | | | |

| 2014 | | | | | | | | |

| 1st Quarter | | $ | 102.40 | | | $ | 87.50 | |

| 2nd Quarter | | $ | 101.43 | | | $ | 91.46 | |

| 3rd Quarter | | $ | 100.23 | | | $ | 90.54 | |

| 4th Quarter | | $ | 109.18 | | | $ | 91.17 | |

The following table sets forth the shares repurchased during each fiscal month during the fourth quarter of 2015:

| | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | |

| Shares repurchased - Fourth Quarter 2015 | | Total number of shares purchased | | | Average price paid per share | | | | Total number of shares purchased as part of publicly announced plans or programs | | | Maximum number of shares that may yet be purchased under the plans or programs | |

| October 28 - November 1 | | — | | | $ | — | | | — | | | 1,441,626 | |

| November 2 - November 29 | | 1,045,000 | | | $ | 91.39 | | | 1,045,000 | | | 396,626 | |

| November 30 - January 3 | | — | | | $ | — | | | — | | | 396,626 | |

| Total | | 1,045,000 | | | $ | 91.39 | | | 1,045,000 | | | | |

| | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | | | [removed: 2012] [added: 2013] | | | | [removed: 2011] [added: 2012] | | |

| Sales | | $ | [removed: 2,298.1] [added: 2,149.9] | | | $ | [removed: 2,394.0] [added: 2,298.1] | | | $ | [removed: 2,338.6] [added: 2,394.0] | | | $ | [removed: 2,127.3] [added: 2,338.6] | | | $ | [removed: 1,941.9] [added: 2,127.3] | |

| Net income from continuing operations | | $ | [removed: 195.8] [added: 190.9] | | | $ | [removed: 217.7] [added: 195.8] | | | $ | [removed: 185.0] [added: 217.7] | | | $ | [removed: 161.8] [added: 185.0] | | | $ | [removed: 142.1] [added: 161.8] | |

| Net income from discontinued operations | | $ | — | | | $ | — | | | $ | — | | | $ | [removed: 2.3] [added: —] | | | $ | [removed: 113.1] [added: 2.3] | |

| Net income attributable to Teledyne | | $ | [removed: 195.8] [added: 190.9] | | | $ | [removed: 217.7] [added: 195.8] | | | $ | [removed: 185.0] [added: 217.7] | | | $ | [removed: 164.1] [added: 185.0] | | | $ | [removed: 255.2] [added: 164.1] | |

| Basic earnings per common share - continuing operations | | $ | [removed: 5.55] [added: 5.52] | | | $ | [removed: 5.87] [added: 5.55] | | | $ | [removed: 4.96] [added: 5.87] | | | $ | [removed: 4.41] [added: 4.96] | | | $ | [removed: 3.88] [added: 4.41] | |

| Diluted earnings per common share - continuing operations | | $ | [removed: 5.44] [added: 5.37] | | | $ | [removed: 5.75] [added: 5.44] | | | $ | [removed: 4.87] [added: 5.75] | | | $ | [removed: 4.33] [added: 4.87] | | | $ | [removed: 3.81] [added: 4.33] | |

| Basic earnings per common share | | $ | [removed: 5.55] [added: 5.52] | | | $ | [removed: 5.87] [added: 5.55] | | | $ | [removed: 4.96] [added: 5.87] | | | $ | [removed: 4.47] [added: 4.96] | | | $ | [removed: 6.97] [added: 4.47] | |

| Diluted earnings per common share | | $ | [removed: 5.44] [added: 5.37] | | | $ | [removed: 5.75] [added: 5.44] | | | $ | [removed: 4.87] [added: 5.75] | | | $ | [removed: 4.39] [added: 4.87] | | | $ | [removed: 6.84] [added: 4.39] | |

| Weighted average diluted common shares outstanding | | [removed: 36.0] [added: 35.5] | | | | [removed: 37.9] [added: 36.0] | | | | [removed: 38.0] [added: 37.9] | | | | [removed: 37.4] [added: 38.0] | | | | [removed: 37.3] [added: 37.4] | | |

| Total assets | | $ | [removed: 2,718.5] [added: 2,774.4] | | | $ | [removed: 2,862.2] [added: 2,717.1] | | | $ | [removed: 2,751.1] [added: 2,862.2] | | | $ | [removed: 2,406.4] [added: 2,751.1] | | | $ | [removed: 1,826.1] [added: 2,406.4] | |

| Long-term debt and capital lease obligations, net of current portion | | $ | [removed: 762.9] [added: 515.8] | | | $ | [removed: 618.9] [added: 761.5] | | | $ | [removed: 549.0] [added: 618.9] | | | $ | [removed: 556.2] [added: 549.0] | | | $ | [removed: 311.4] [added: 556.2] | |

| Total equity | | $ | [removed: 1,344.1] [added: 1,554.4] | | | $ | [removed: 1,468.5] [added: 1,344.1] | | | $ | [removed: 1,518.7] [added: 1,468.5] | | | $ | [removed: 1,203.4] [added: 1,518.7] | | | $ | [removed: 984.1] [added: 1,203.4] | |

The Company’s Form 10-Qs for the second and third quarters of 2016 classified our Printed Circuit Technology (“PCT”) business, which was sold in July 2016, as discontinued operations.

Based on further review we have determined that the sale and impact to the Company’s operations were insignificant and therefore the results of PCT are no longer presented within discontinued operations.

| Working capital | | $ | 434.6 | | | $ | 402.7 | | | $ | 381.0 | | | $ | 337.5 | | | $ | 268.5 | |

The information required by this item is included in this Report on pages [removed: 59] [added: 60] through [removed: 99.][added: 102.]

See the “Index to Financial Statements and Related Information” on page [removed: 58.][added: 59.]

The Company’s Chairman, President and Chief Executive Officer and Senior Vice President and Chief Financial Officer, with the participation and assistance of other members of management, have evaluated the effectiveness, as of January [removed: 3, 2016,] [added: 1, 2017,] of the Company’s “disclosure controls and procedures,” as that term is defined in Rule 13a-15(e) under the Securities and Exchange Act of 1934, as amended (“the Exchange Act”).

Based upon that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that the disclosure controls and procedures as of January [removed: 3, 2016,] [added: 1, 2017,] are effective.

See Management Statement on page [removed: 59] [added: 60] for management’s annual report on internal control over financial reporting.

There was no change in the Company’s “internal control over financial reporting” (as such term is defined in Rule 13a-15(f) under the Exchange Act) that occurred during the quarter ended January [removed: 3, 2016,] [added: 1, 2017,] that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Cibik, Senior Vice President, General [removed: Counsel] [added: Counsel, Chief Compliance Officer] and Secretary

Lee, [removed: Associate] Director, Global Income Tax Accounting

Tyler Vernon, Senior Manager, SEC/GAAP Compliance & External Reporting

In addition to the information set forth under the caption “Executive Management” beginning on page 10 in Part I of this Report, the information required by this item is set forth in the [removed: 2016] [added: 2017] Proxy Statement under the captions “Item 1 on Proxy Card - Election of Directors,” “Board Composition and Practices,” “Corporate Governance,” “Committees of Our Board of Directors - Audit Committee” and “Report of the Audit Committee” and “Stock Ownership - Sections 16(a) Beneficial Ownership Reporting Compliance.” This information is incorporated herein by reference.

The information required by this item is set forth in the [removed: 2016] [added: 2017] Proxy Statement under the captions “Executive and Director Compensation” “Compensation Committee Interlocks and Insider Participation” and “Personnel and Compensation Committee Report.” This information is incorporated herein by reference.

[removed: Except for the table below, the] [added: The] information required by this item is set forth in the [removed: 2016] [added: 2017] Proxy Statement under the caption “Stock Ownership Information” and [added: under Item 2 “Approval of Amended and Restated Teledyne Technologies Incorporated 2014 Incentive Award Plan” and] is incorporated herein by reference.

Equity Compensation Plans Information

The following table summarizes information about our common stock that may be issued upon the exercise of options, warrant and rights under all of our equity compensation plans, as of January 3, 2016:

| | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | |

| Plan Category | | Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights (a) | | | Weighted-Average Exercise Price of Outstanding Options, Warrants or Rights (b) | | | | Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans \[excluding securities reflected in column (a)\] | | |

| Equity compensation plans approved by security holders: | | | | | | | | | | | |

| 1999 Incentive Plan(1) | | 285,057 | | | 42.83 | | | | — | | |

| 1999 Non-Employee Director Stock Compensation Plan(1) | | 19,030 | | | 31.05 | | | | — | | |

| 2002 Stock Incentive Plan(1) | | 177,106 | | | 47.10 | | | | — | | |

| Amended and Restated 2008 Incentive Award Plan(2) | | 1,385,675 | | | 59.22 | | | | — | | |

| 2014 Incentive Award Plan | | 517,202 | | (3) | 94.26 | | | (4) | 2,352,852 | | (5) |

| Employee Stock Purchase Plan(6) | | — | | | — | | | | 1,000,000 | | |

| Equity Compensation plans not approved by security holders | | — | | | — | | | | — | | |

| Total | | 2,384,070 | | | $ | 63.74 | | | 3,352,852 | | |

| | | | | | | | | | | | |

1) The 1999 Incentive Plan, the 2002 Stock Incentive Plan and the 1999 Non-Employee Director Stock Compensation Plan terminated following stockholder approval of the 2008 Incentive Award Plan at our 2008 Annual Meeting of Stockholders.

No additional awards may be granted under these plans.

2) No additional awards may be granted under the Amended and Restated 2008 Incentive Award Plan (2008 Plan).

Any shares available under the 2008 Plan on the effective date of the 2014 Plan or that were subject to awards under the 2008 Plan that were forfeited or lapsed following the effective date of the 2014 Plan are automatically transferred to the 2014 Plan.

3) Does not include (i) 3,767 shares of stock potentially issuable to certain Canadian employees under the 2012-2014 cycle of our PSP, of which 864 shares were issued as part of the second installment payment in February 2016; and (ii) 11,751 shares subject to restricted stock unit awards issued to employees and directors.

4) Does not include the securities described in footnote (3) above, which do not have an exercise price.

5) The number of shares available for future issuance (i) includes 1,299,291 shares transferred from the 2008 Plan (see footnote (2) above); (ii) assumes the issuance of up to 3,767 shares of stock potentially issuable to certain Canadian employees under the 2012-2014 cycle of our PSP, of which 864 shares were issued as part of the second installment payment in February 2016; (iii) assumes the issuance of 11,751 shares subject to restricted stock unit awards issued to employees and directors; and (iv) assumes the issuance of 97,588 shares under the 2015-2017 PSP assuming performance goals are met at the maximum performance level.

6) We maintain an Employee Stock Purchase Plan (commonly known as The Stock Advantage Plan) for eligible employees.

It enables employees to invest in our common stock through automatic, after-tax payroll deductions, within specified limits.

We add a 25% matching Company contribution up to $1,200 annually.

Our contribution is currently paid in cash and the plan administrator purchases shares of our common stock in the open market.

The information required by this item is set forth in the [removed: 2016] [added: 2017] Proxy Statement under the captions “Corporate Governance” and “Certain Transactions” and is incorporated herein by [removed: reference][added: reference.]

The information required by this item is set forth in the [removed: 2016] [added: 2017] Proxy Statement under the captions “Fees Billed by Independent Registered Public Accounting Firm” and “Audit Committee Pre-Approval Policies” under “Item [removed: 2] [added: 3] on Proxy Card - Ratification of Appointment of Independent Registered Public Accounting Firm” and is incorporated herein by reference.

See the “Index to Financial Statements and Related Information” on page [removed: 58] [added: 60] of this Report, which is incorporated herein by reference.

See Schedule II captioned “Valuation and Qualifying Accounts” on page [removed: 99] [added: 102] of this Report, which is incorporated herein by reference.

| Management Statement | [removed: [59](#sE16637C8297C572E8B32D22D41249467)] [added: [60](#s2AEF0720700E5931BCA91F38DC9E837B)] | |

| Report of Independent Registered Public Accounting Firm | [removed: [60](#s5D5425810F6454C091219A877F2254F2)] [added: 63] | |

| Report of Independent Registered Public Accounting Firm | [removed: [61](#sED8077DB02DD5438B4FD97F6AC5198A9)] [added: [61](#sBA548BC63F3455F599F0D0A2E5294C65)] | |

| Report of Independent Registered Public Accounting Firm | [removed: 62] [added: [62](#s4F6330843B8D535D9AE541B386E1D6BC)] | |

| Consolidated Statements of Income | [removed: [63](#s1439320AFE8652FC9F3AE2F50E6AB938)] [added: [64](#sF839821920D75171B7FA8221E4E5E5FC)] | |

| Consolidated Statements of Comprehensive Income | [removed: [63](#s3F1F200882CC53D1B22A49852B5E0629)] [added: [64](#sC2EE5D153D0E56D8908B0E1F4A64A14E)] | |

| Consolidated Balance Sheets | [removed: [64](#s79C4A1C76271563581B92949015DA1E7)] [added: 65] | |

| Consolidated Statements of Stockholders’ Equity | [removed: [65](#sD1CA445B73C55896B094063C4CC87FB6)] [added: [66](#s3D2481149B475E569CFE68C19B38E272)] | |

| Consolidated Statements of Cash Flows | [removed: [66](#sAA36C5A399BA5E3CBF384403BFB8FCEB)] [added: [67](#s43A8C54F622F582D977F06F1A610A216)] | |

| Notes to Consolidated Financial Statements | [removed: [67](#sDF5C6724BC725983A626637893C27550)] [added: [68](#s5CCC77328E9E51B0AD25DF1AC5B8BE65)] | |

| Schedule II - Valuation and Qualifying Accounts | [removed: 99] [added: 102] | |

We conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting as of January [removed: 3, 2016.][added: 1, 2017.]

In making this evaluation, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework) [removed: ( the] [added: (the] COSO criteria) in Internal Control - Integrated Framework.

Our evaluation did not include assessing the effectiveness of internal control over financial reporting for the [removed: Bowtech] [added: CARIS, Quantum Data, Frontline, IN USA] and [removed: ICM] [added: Hanson Research] acquisitions in [removed: 2015.][added: 2016.]

These acquisitions, which are included in the [removed: 2015] [added: 2016] consolidated financial statements of the Company, constituted less than [removed: 3%] [added: 4%] of total assets and less than [removed: 1%] [added: 2%] of both total revenues and net income of the Company as of and for the year ended January [removed: 3, 2016.][added: 1, 2017.]

Based on this evaluation we believe that, as of January [removed: 3, 2016,] [added: 1, 2017,] the Company’s internal controls over financial reporting were effective.

Their report appears on page [removed: 60] [added: 61] of this Annual Report.

We have audited the internal control over financial reporting of Teledyne Technologies Incorporated and subsidiaries (the [removed: "Company")] [added: “Company”)] as of January [removed: 3, 2016,] [added: 1, 2017,] based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

As described in the Report of Management on Teledyne Technologies Incorporated’s Internal Control Over Financial Reporting, management excluded from its assessment the internal control over financial reporting for [removed: Bowtech] [added: CARIS, Inc., Frontline Test Equipment, Inc., Quantum Data, Inc., IN USA, Inc.,] and [removed: ICM] [added: Hanson Research Corporation] (“the [removed: 2015] [added: 2016] acquisitions”), which were acquired in [removed: February 2015] [added: April, May, November,] and [removed: June 2015,] [added: December,] respectively, and [removed: are included in the 2015 consolidated] [added: whose] financial statements [removed: of the Company and constituted] [added: constitute] less than [removed: 3%] [added: 4%] of total assets and less than [removed: 1%] [added: 2%] of both total revenues and net income of the consolidated financial statement amounts as of and for the year ended January [removed: 3, 2016.][added: 1, 2017.]

Accordingly, our audit did not include the internal control over financial reporting for the [removed: 2015] [added: 2016] acquisitions.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of January [removed: 3, 2016,] [added: 1, 2017,] based on the criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements and financial statement schedule as of and for the year ended January [removed: 3, 2016] [added: 1, 2017] of the Company and our report dated [removed: February 29, 2016] [added: March 2, 2017] expressed an unqualified opinion on those financial statements and financial statement schedule.

We have audited the accompanying consolidated balance [removed: sheet] [added: sheets] of Teledyne Technologies Incorporated and subsidiaries (the [removed: "Company")] [added: “Company”)] as of January [added: 1, 2017 and January] 3, [removed: 2016] [added: 2016,] and the related consolidated statements of income, comprehensive income, [removed: stockholders'] [added: stockholders’] equity, and cash flows for the [removed: year then ended.][added: years ended January 1, 2017 and January 3, 2016.]

Our audits also included the financial statement schedule as of and for the [removed: year] [added: years] ended January [added: 1, 2017 and January] 3, 2016 listed in the Index at Item 15.

These [added: consolidated] financial statements and financial statement schedule are the responsibility of the [removed: Company's] [added: Company’s] management.

Our responsibility is to express an opinion on [removed: these] [added: the consolidated] financial statements and financial statement schedule based on our audits.

In our opinion, [removed: the] [added: such] consolidated financial statements [added: as of] and [removed: financial statement schedule] [added: for the years ended January 1, 2017 and January 3, 2016,] present fairly, in all material respects, the financial position of Teledyne Technologies Incorporated and subsidiaries as of January [added: 1, 2017 and January] 3, 2016, and the results of their operations and their cash flows for the [removed: year] [added: years] then [removed: ended] [added: ended,] in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the [removed: Company's] [added: Company’s] internal control over financial reporting as of January [removed: 3, 2016,] [added: 1, 2017,] based on the criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated [removed: February 29, 2016] [added: March 2, 2017] expressed an unqualified opinion on the [removed: Company's] [added: Company’s] internal control over financial reporting.

We have audited the accompanying consolidated [removed: balance sheet of Teledyne Technologies Incorporated as of December 28, 2014, and the related consolidated] statements of income, comprehensive income, stockholders’ equity, and cash flows [removed: for each] of [removed: the two years in] [added: Teledyne Technologies Incorporated for] the period ended December 28, 2014.

Our [removed: audits] [added: audit] also included the financial statement schedule listed in the index at Item 15(a)(2) for [removed: each of] the [removed: two years in the period] [added: year] ended December 28, 2014.

Our responsibility is to express an opinion on these financial statements and schedule based on our [removed: audits.][added: audit.]

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated [removed: financial position of Teledyne Technologies Incorporated at December 28, 2014, and the consolidated] results of [removed: its] operations and [removed: its] cash flows [removed: for each] of [removed: the two years in] [added: Teledyne Technologies Incorporated for] the [removed: period] [added: year] ended December 28, 2014, in conformity with U.S. generally accepted accounting principles.

Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein for [removed: each of] the [removed: two years in the period] [added: year] ended December 28, 2014.

| | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | |

| Net Sales | | $ | [removed: 2,298.1] [added: 2,149.9] | | | $ | [removed: 2,394.0] [added: 2,298.1] | | | $ | [removed: 2,338.6] [added: 2,394.0] | |

| Cost of sales | | [removed: 1,427.8] [added: 1,318.0] | | | | [removed: 1,487.1] [added: 1,427.8] | | | | [removed: 1,500.0] [added: 1,487.1] | | |

| Selling, general and administrative expenses | | [removed: 588.6] [added: 578.1] | | | | [removed: 612.4] [added: 588.6] | | | | [removed: 598.3] [added: 612.4] | | |

| Total costs and expenses | | [removed: 2,016.4] [added: 1,896.1] | | | | [removed: 2,099.5] [added: 2,016.4] | | | | [removed: 2,098.3] [added: 2,099.5] | | |

Date: March 2, 2017

Date: March 2, 2017

March 2, 2017

Also, in our opinion, such financial statement schedule as of and for the years ended January 1, 2017 and January 3, 2016, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.

March 2, 2017

| | | 2016 | | | | 2015 | | |

| Total Assets | | $ | 2,774.4 | | | $ | 2,717.1 | |

| Total Liabilities | | 1,220.0 | | | | 1,373.0 | | |

| Stock-based compensation | | — | | | | 13.9 | | | | — | | | | — | | | | — | | | | 13.9 | | | | — | | | | 13.9 | | |

| Net income | | — | | | | — | | | | — | | | | 190.9 | | | | — | | | | 190.9 | | | | — | | | | 190.9 | | |

| Treasury stock issued | | — | | | | (67.0 | | ) | | 67.0 | | | | — | | | | — | | | | — | | | | — | | | | — | | |

| Stock-based compensation | | — | | | | 21.3 | | | | — | | | | — | | | | — | | | | 21.3 | | | | — | | | | 21.3 | | |

| Balance, January 1, 2017 | | $ | 0.4 | | | $ | 335.7 | | | $ | (242.9 | ) | | $ | 1,912.4 | | | $ | (451.2 | ) | | $ | 1,554.4 | | | $ | — | | | $ | 1,554.4 | |

| Change in fair value of derivative instruments | | 5.5 | | | | — | | | | — | | |

| Gain on sale of facility | | (17.9 | | ) | | — | | | | — | | |

| Other operating, net | | 1.5 | | | | (0.3 | | ) | | (6.3 | | ) |

| Sales proceeds transferred to escrow as restricted cash | | (19.5 | | ) | | — | | | | — | | |

| Sales proceeds transferred from escrow to cash | | 19.5 | | | | — | | | | — | | |

| Purchase of option contract | | (11.6 | | ) | | — | | | | — | | |

January 1, 2017

| Net other comprehensive income (loss) | (24.6 | | ) | | 3.9 | | | | (17.3 | | ) | | (38.0 | | ) |

| Balance as of January 1, 2017 | $ | (198.8 | ) | | $ | (2.8 | ) | | $ | (249.6 | ) | | $ | (451.2 | ) |

| Percent of revenue - POC Method | | 30.5 | | % | | 31.2 | | % | | 28.7 | | % |

| Favorable changes in estimate | | $ | 27.7 | | | $ | 38.6 | | | $ | 22.9 | |

| Unfavorable changes in estimate | | (29.6 | | ) | | (35.5 | | ) | | (25.9 | | ) |

| Net change - income/(expense) | | $ | (1.9 | ) | | $ | 3.1 | | | $ | (3.0 | ) |

Cash

Other income for 2016 included a gain of $17.9 million on the sale of a former operating facility in California.

The Company recorded a $1.0 million asset impairment related to acquired intangible assets in 2016.

outside environmental specialists, when necessary.

The Company’s reserves for environmental remediation obligations totaled $7.0 million and $8.7 million at January 1, 2017 and January 3, 2016, respectively.

The Company entered into a short-term option contract to purchase £600.0 million in December 2016.

This option was purchased to protect against increases in the U.S. dollar equivalent cost of the pending e2v acquisition from adverse currency movements.

The option contract was not designated as a hedging instrument for accounting purposes.

| | | 2016 | | | | 2015 | | |

In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-09, Compensation - Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting.

The ASU is intended to simplify several aspects of the accounting for employee share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows.

Teledyne elected to adopt early this ASU in the third quarter of 2016, therefore Teledyne is required to report the material impacts of this standard as though the ASU had been adopted at the beginning of the fiscal year.

Accordingly, Teledyne recognized additional income tax benefits as an increase to net income of $8.5 million for 2016.

Teledyne has elected to record forfeitures as they occur, which did not have a material impact on the condensed consolidated financial results.

Date: February 29, 2016

Date: February 29, 2016

February 29, 2015

February 29, 2016

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| Total Liabilities | | 1,374.4 | | | | 1,393.7 | | |

| Total Stockholders’ Equity | | 1,344.1 | | | | 1,468.5 | | |

| Balance, December 30, 2012 | | $ | 0.4 | | | $ | 297.8 | | | $ | — | | | $ | 1,123.0 | | | $ | (273.4 | ) | | $ | 1,147.8 | | | $ | 55.6 | | | $ | 1,203.4 | |

| Net income (loss) | | — | | | | — | | | | — | | | | 185.0 | | | | — | | | | 185.0 | | | | (0.5 | | ) | | 184.5 | | |

| Purchase of noncontrolling interest | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (4.6 | | ) | | (4.6 | | ) |

| Foreign currency translation adjustment - noncontrolling interest | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (3.5 | | ) | | (3.5 | | ) |

| Stock option compensation expense | | — | | | | 10.7 | | | | — | | | | — | | | | — | | | | 10.7 | | | | — | | | | 10.7 | | |

| Stock option expense | | 12.2 | | | | 14.0 | | | | 10.7 | | |

| Other operating, net | | (0.6 | | ) | | (8.4 | | ) | | (0.7 | | ) |

Certain prior year amounts have been reclassified to conform to the current period presentation.

| Balances as of December 29, 2013 | $ | (32.4 | ) | | $ | (3.3 | ) | | $ | (129.8 | ) | | $ | (165.5 | ) |

| Net other comprehensive loss | (58.2 | | ) | | (2.0 | | ) | | (97.5 | | ) | | (157.7 | | ) |

The net effect of the favorable and unfavorable changes in estimates were expense of $3.1 million in 2015, $3.0 million in 2014 and $1.8 million in 2013.

The gross aggregate effects of these favorable and unfavorable changes in estimates in 2015, 2014 and 2013 were $38.6 million, $22.9 million and $21.4 million of favorable operating income and $35.5 million, $25.9 million and $23.2 million of unfavorable operating income, respectively.

For 2015, 2014 and 2013, stock options to purchase 2.4 million, 2.9 million and 2.7 million shares of common stock, respectively, had exercise prices that were less than the average market price of the Company’s common stock during the respective periods and are included in the computation of diluted earnings per share.

The Company markets its products and services principally throughout the United States, Europe, Japan and Canada to commercial customers and agencies of, and prime contractors to, the U.S. Government.

Cash equivalents, if any, consist of highly liquid money-market mutual funds and bank deposits with maturities of three months or less when purchased.

There were no cash equivalents at January 3, 2016 and December 28, 2014.

Inventory reserves are recorded when inventory is considered to be

Based on a quarterly impairment test completed in 2014, the Company recorded a $0.7 million impairment to acquired intangible assets.

Based on an annual impairment test completed in 2013, the Company recorded a $1.2 million impairment to acquired intangible assets.

facts, present laws and regulations, and current technology.

recognized in earnings.

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which the fair value measurement is disclosed is determined based on the lowest level input that is significant to the fair value measurement.

In July 2015, the FASB deferred the effective date by one year, but will allow early adoption as of the original adoption date.

In April 2015, the FASB issued ASU No. 2015-03 (ASU 2015-03), Interest - Imputation of Interest (Subtopic 835-30).

The new guidance changes the presentation of debt issuance costs in the financial statements to present such costs as a direct deduction from the related debt liability rather than as an asset.

Amortization of debt issuance costs will be reported as interest expense.

The Company does not expect the adoption to have a material impact on our consolidated financial position, and will have no impact on our results of operations or cash flows.

In November 2015, the FASB issued ASU No. 2015-17 (ASU 2015-17), Balance Sheet Classification of Deferred Taxes.

The new guidance simplifies the presentation of deferred income taxes by eliminating the requirement for companies to present deferred tax liabilities and assets as current and non-current on the Consolidated Statements of Financial Position.

Instead, companies will be required to classify all deferred tax assets and liabilities as non-current.