Item 15. Exhibits and Financial Statement Schedules

(a) Exhibits and Financial Statement Schedules:

(1) Financial Statements

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

(2) Financial Statement Schedules

See Schedule II captioned “Valuation and Qualifying Accounts” on page 100 of this Report, which is incorporated herein by reference.

(3) Exhibits

A list of exhibits filed with this Form 10-K or incorporated by reference is found in the Exhibit Index immediately following the certifications of this Report and incorporated herein by reference.

(b) Exhibits:

See Item 15(a)(3) above.

(c) Financial Schedules:

See Item 15(a)(2) above.

INDEX TO FINANCIAL STATEMENTS AND RELATED INFORMATION

	Page
Financial Statements and Related Information:
Management Statement	59
Report of Independent Registered Public Accounting Firm	60
Report of Independent Registered Public Accounting Firm	61
Consolidated Statements of Income	62
Consolidated Statements of Comprehensive Income	62
Consolidated Balance Sheets	63
Consolidated Statements of Stockholders’ Equity	64
Consolidated Statements of Cash Flows	65
Notes to Consolidated Financial Statements	66
Financial Statement Schedule:
Schedule II - Valuation and Qualifying Accounts	100

MANAGEMENT STATEMENT

RESPONSIBILITY FOR PREPARATION OF THE FINANCIAL STATEMENTS AND ESTABLISHING AND MAINTAINING ADEQUATE INTERNAL CONTROL OVER FINANCIAL REPORTING

We are responsible for the preparation of the financial statements included in this Annual Report. The financial statements were prepared in accordance with accounting principles generally accepted in the United States of America and include amounts that are based on the best estimates and judgments of management. The other financial information contained in this Annual Report is consistent with the financial statements.

Our internal control system is designed to provide reasonable assurance concerning the reliability of the financial data used in the preparation of Teledyne financial statements, as well as to safeguard the Company’s assets from unauthorized use or disposition.

All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement presentation.

REPORT OF MANAGEMENT ON TELEDYNE TECHNOLOGIES INCORPORATED’S INTERNAL CONTROL OVER FINANCIAL REPORTING

We are also responsible for establishing and maintaining adequate internal control over financial reporting. We conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2017. In making this evaluation, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework) (the COSO criteria) in Internal Control - Integrated Framework. Our evaluation included reviewing the documentation of our controls, evaluating the design effectiveness of our controls and testing their operating effectiveness. Our evaluation did not include assessing the effectiveness of internal control over financial reporting for the e2v acquisition and the SSI asset acquisition in 2017. These acquisitions, which are included in the 2017 consolidated financial statements of the Company, constituted approximately 26% of total assets, 11% of total revenues and 12% of net income of the Company as of and for the year ended December 31, 2017. We did not assess the effectiveness of internal control over financial reporting at these newly acquired entities due to the insufficient time between the date acquired and year-end and the complexity associated with assessing internal controls during integration efforts making the process impractical. Based on this evaluation we believe that, as of December 31, 2017, the Company’s internal controls over financial reporting were effective.

Deloitte and Touche LLP, our independent registered public accounting firm, has issued its report on the effectiveness of Teledyne’s internal control over financial reporting. Their report appears on page 60 of this Annual Report.

Date: February 27, 2018

/s/ ROBERT MEHRABIAN
Robert Mehrabian
Chairman, President and Chief Executive Officer

Date: February 27, 2018

/s/ SUSAN L. MAIN
Susan L. Main
Senior Vice President and Chief Financial Officer

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Teledyne Technologies Incorporated

Thousand Oaks, California

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of Teledyne Technologies Incorporated and subsidiaries (the “Company”) as of December 31, 2017, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control - Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements and financial statement schedule as of and for the year ended December 31, 2017, of the Company and our report dated February 27, 2018, expressed an unqualified opinion on those financial statements and financial statement schedule.

As described in 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 e2v technologies plc acquisition and the Scientific Systems, Inc. asset acquisition (“the 2017 acquisitions”), which were acquired in March and July, respectively, and whose financial statements constitute approximately 26% of total assets, 11% of total revenues and 12% of net income of the consolidated financial statement amounts as of and for the year ended December 31, 2017. Accordingly, our audit did not include the internal control over financial reporting for the 2017 acquisitions.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Report of Management on Teledyne Technologies Incorporated’s Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Deloitte & Touche LLP

Los Angeles, California

February 27, 2018

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Teledyne Technologies Incorporated

Thousand Oaks, California

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Teledyne Technologies Incorporated and subsidiaries (the “Company”) as of December 31, 2017 and January 1, 2017, the related consolidated statements of income, comprehensive income, shareholders' equity, and cash flows, for the three years ended December 31, 2017, January 1, 2017, and January 3, 2016, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and January 1, 2017 and the results of its operations and its cash flows for years ended December 31, 2017, January 1, 2017, and January 3, 2016, in conformity with the 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) (PCAOB), the Company's internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 27, 2018, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Deloitte & Touche LLP

Los Angeles, California

February 27, 2018

We have served as the Company's auditor since 2015.

TELEDYNE TECHNOLOGIES INCORPORATED

CONSOLIDATED STATEMENTS OF INCOME

(In millions, except per-share amounts)

		For the Fiscal Year
		2017				2016				2015
Net Sales		$	2,603.8			$	2,149.9			$	2,298.1
Costs and expenses
Cost of sales		1,612.2				1,318.0				1,427.8
Selling, general and administrative expenses		656.0				578.1				588.6
Total costs and expenses		2,268.2				1,896.1				2,016.4
Operating income		335.6				253.8				281.7
Interest and debt expense, net		(33.1		)		(23.2		)		(23.9		)
Other income/(expense), net		(15.5		)		10.7				0.4
Income before income taxes		287.0				241.3				258.2
Provision for income taxes		59.8				50.4				62.7
Net income		227.2				190.9				195.5
Noncontrolling interest		—				—				0.3
Net income attributable to Teledyne		$	227.2			$	190.9			$	195.8
Basic earnings per common share		$	6.45			$	5.52			$	5.55
Weighted average common shares outstanding		35.2				34.6				35.3
Diluted earnings per common share		$	6.26			$	5.37			$	5.44
Weighted average diluted common shares outstanding		36.3				35.5				36.0

The accompanying notes are an integral part of these financial statements.

TELEDYNE TECHNOLOGIES INCORPORATED

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)

		For the Fiscal Year
		2017				2016				2015
Net income		$	227.2			$	190.9			$	195.5
Other comprehensive income (loss):
Foreign exchange translation adjustment		96.8				(24.6		)		(83.6		)
Hedge activity, net of tax		3.3				3.9				(1.4		)
Pension and postretirement benefit adjustments, net of tax		21.8				(17.3		)		(5.0		)
Other comprehensive income (loss)(a)		121.9				(38.0		)		(90.0		)
Comprehensive income		349.1				152.9				105.5
Noncontrolling interest		—				—				0.3
Comprehensive income attributable to Teledyne, net of tax		$	349.1			$	152.9			$	105.8

(a) Net of income tax expense of $12.7 million in 2017, income tax benefit of $8.0 million for 2016 and income tax expense of $3.5 million for 2015.

The accompanying notes are an integral part of these financial statements.

TELEDYNE TECHNOLOGIES INCORPORATED

CONSOLIDATED BALANCE SHEETS

For the Fiscal Years Ended December 31, 2017 and January 1, 2017

(In millions, except share amounts)

		2017				2016
Assets
Current Assets
Cash		$	70.9			$	98.6
Accounts receivable, net		478.1				383.7
Inventories, net		400.2				314.2
Prepaid expenses and other current assets		62.7				49.7
Total current assets		1,011.9				846.2
Property, plant and equipment, net		442.8				340.8
Goodwill, net		1,776.7				1,193.5
Acquired intangibles, net		398.9				234.6
Prepaid pension assets		127.2				88.5
Other assets, net		88.9				70.8
Total Assets		$	3,846.4			$	2,774.4
Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable		$	191.7			$	138.8
Accrued liabilities		345.3				261.0
Current portion of long-term debt, capital leases and other debt		3.6				102.0
Total current liabilities		540.6				501.8
Long-term debt and capital leases		1,069.3				515.8
Other long-term liabilities		289.2				202.4
Total Liabilities		1,899.1				1,220.0
Commitments and contingencies
Stockholders’ Equity
Preferred stock, $0.01 par value; outstanding shares-none		—				—
Common stock, $0.01 par value; authorized 125 million shares; Issued shares: 37,697,865 at December 31, 2017, and 37,697,865 at January 1, 2017; outstanding shares: 35,540,233 at December 31, 2017, and 35,110,762 at January 1, 2017		0.4				0.4
Additional paid-in capital		337.3				335.7
Retained earnings		2,139.6				1,912.4
Treasury stock, 2,157,632 at December 31, 2017 and 2,587,103 at January 1, 2017		(200.7		)		(242.9		)
Accumulated other comprehensive loss		(329.3		)		(451.2		)
Total Stockholders’ Equity		1,947.3				1,554.4
Total Liabilities and Stockholders’ Equity		$	3,846.4			$	2,774.4

The accompanying notes are an integral part of these financial statements.

TELEDYNE TECHNOLOGIES INCORPORATED

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In millions)

		Common Stock				Additional Paid-in Capital					Treasury Stock				Retained Earnings				Accumulated Other Comprehensive Income (Loss)				Total Teledyne Technologies Incorporated Stockholders’ Equity				Noncontrolling Interest				Total Stockholders' Equity
Balance, December 28, 2014		$	0.4			$	326.5				$	(102.1	)		$	1,525.7			$	(323.2	)		$	1,427.3			$	41.2			$	1,468.5
Net income (loss)		—				—					—				195.8				—				195.8				(0.3		)		195.5
Other comprehensive loss, net of tax		—				—					—				—				(90.0		)		(90.0		)		—				(90.0		)
Purchase of noncontrolling interest		—				17.6					—				—				—				17.6				(39.6		)		(22.0		)
Foreign currency translation adjustment - noncontrolling interest		—				—					—				—				—				—				(1.3		)		(1.3		)
Treasury stock purchases, net		—				(36.0		)			(207.8		)		—				—				(243.8		)		—				(243.8		)
Stock-based compensation		—				13.9					—				—				—				13.9				—				13.9
Exercise of stock options and other		—				23.3					—				—				—				23.3				—				23.3
Balance, January 3, 2016		0.4				345.3					(309.9		)		1,721.5				(413.2		)		1,344.1				—				1,344.1
Net income		—				—					—				190.9				—				190.9				—				190.9
Other comprehensive loss, net of tax		—				—					—				—				(38.0		)		(38.0		)		—				(38.0		)
Treasury stock issued		—				(67.0		)			67.0				—				—				—				—				—
Stock-based compensation		—				21.3					—				—				—				21.3				—				21.3
Exercise of stock options and other		—				36.1					—				—				—				36.1				—				36.1
Balance, January 1, 2017		0.4				335.7					(242.9		)		1,912.4				(451.2		)		1,554.4				—				1,554.4
Net income		—				—			—		—				227.2				—				227.2				—				227.2
Other comprehensive income, net of tax		—				—					—				—				121.9				121.9				—				121.9
Treasury stock issued		—				(42.2		)			42.2				—				—				—				—				—
Stock-based compensation		—				24.9					—				—				—				24.9				—				24.9
Exercise of stock options and other		—				18.9					—				—				—				18.9				—				18.9
Balance, December 31, 2017		$	0.4			$	337.3				$	(200.7	)		$	2,139.6			$	(329.3	)		$	1,947.3			$	—			$	1,947.3

The accompanying notes are an integral part of these financial statements.

TELEDYNE TECHNOLOGIES INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

		For the Fiscal Year
		2017				2016				2015
Operating Activities
Net income		$	227.2			$	190.9			$	195.5
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		113.0				87.3				90.3
Deferred income taxes		(12.3		)		(7.9		)		(7.9		)
Stock-based compensation		18.8				16.2				12.2
Change in fair value of derivative instruments		6.0				5.5				—
Gain on sale of facility		—				(17.9		)		—
Changes in operating assets and liabilities, excluding the effect of businesses acquired:
Accounts receivable		(19.6		)		(11.4		)		21.9
Inventories		(7.4		)		(9.1		)		(6.4		)
Prepaid expenses and other assets		(3.6		)		(1.7		)		(1.3		)
Accounts payable		12.4				2.1				(26.8		)
Accrued liabilities		16.2				26.8				(41.1		)
Income taxes payable, net		40.4				23.8				(21.3		)
Long-term assets		(13.8		)		1.0				3.7
Other long-term liabilities		18.3				11.4				(5.0		)
Pension benefits		(19.7		)		4.0				3.3
Postretirement benefits		(0.8		)		(0.9		)		(2.0		)
Other operating, net		(0.4		)		(3.1		)		(4.9		)
Net cash provided by operating activities		374.7				317.0				210.2
Investing Activities
Purchases of property, plant and equipment		(58.5		)		(87.6		)		(47.0		)
Purchase of businesses and other investments, net of cash acquired		(774.1		)		(93.4		)		(66.7		)
Proceeds from the sale of businesses and disposal of fixed assets		1.4				30.0				3.8
Sales proceeds transferred to escrow as restricted cash		—				(19.5		)		—
Sales proceeds transferred from escrow to cash		—				19.5				—
Net cash used in investing activities		(831.2		)		(151.0		)		(109.9		)
Financing Activities
Net proceeds (payments) on credit facility		165.0				(147.0		)		45.5
Proceeds from other debt		100.0				6.1				9.7
Payments on other debt		(139.3		)		(22.2		)		(102.8		)
Proceeds from issuance of senior notes		268.0				—				125.0
Purchase of treasury stock		—				—				(243.8		)
Proceeds from stock options exercised		24.9				36.1				19.0
Purchase of option contract		—				(11.6		)		—
Other financing		(4.5		)		(6.4		)		2.4
Net cash provided by (used in) by financing activities		414.1				(145.0		)		(145.0		)
Effect of exchange rate changes on cash		14.7				(7.5		)		(11.6		)
Change in cash		(27.7		)		13.5				(56.3		)
Cash—beginning of period		98.6				85.1				141.4
Cash—end of period		$	70.9			$	98.6			$	85.1

The accompanying notes are an integral part of these financial statements.

TELEDYNE TECHNOLOGIES INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2017

Note 1. Description of Business

Teledyne Technologies Incorporated (“Teledyne” or the “Company”) became an independent, public company effective November 29, 1999. Teledyne provides enabling technologies for industrial growth markets that require advanced technology and high reliability. These markets include aerospace and defense, factory automation, air and water quality environmental monitoring, electronics design and development, oceanographic research, deepwater oil and gas exploration and production, medical imaging and pharmaceutical research. The products include digital imaging sensors, cameras and systems within the visible, infrared and X-ray spectra, monitoring and control instrumentation for marine and environmental applications, harsh environment interconnects, electronic test and measurement equipment, aircraft information management systems, and defense electronics and satellite communication subsystems. Teledyne also supplies engineered systems for defense, space, environmental and energy applications. Teledyne differentiates itself from many of its direct competitors by having a customer and company-sponsored applied research center that augments our product development expertise.

Teledyne consists of the Instrumentation segment with principal operations in the United States, the United Kingdom and Denmark; the Digital Imaging segment with principal operations in the United States, Canada, France, the Netherlands and the United Kingdom: the Aerospace and Defense Electronics segment with principal operations in the United States and the United Kingdom; and the Engineered Systems segment with principal operations in the United States and the United Kingdom.

Note 2. Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of Teledyne and all wholly-owned and majority-owned domestic and foreign subsidiaries. Intercompany accounts and transactions have been eliminated.

Fiscal Year

The Company operates on a 52- or 53-week fiscal year convention ending on the Sunday nearest to December 31. Fiscal year 2017 was a 52-week fiscal year and ended on December 31, 2017. Fiscal year 2016 was a 52-week fiscal year and ended on January 1, 2017. Fiscal year 2015 was a 53-week fiscal year and ended on January 3, 2016. References to the years 2017, 2016 and 2015 are intended to refer to the respective fiscal year unless otherwise noted.

Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent liabilities. On an ongoing basis, the Company evaluates its estimates, including those related to sales returns and allowances, allowance for doubtful accounts, inventories, goodwill, intangible assets, asset valuations, income taxes, warranty obligations, pension and other postretirement benefits, long-term contracts, environmental, workers’ compensation and general liability, employee benefits and other contingencies and litigation. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances at the time, the results of which form the basis for making its judgments. Actual results may differ materially from these estimates under different assumptions or conditions. Management believes that the estimates are reasonable.

Accumulated Other Comprehensive Income/(Loss)

The following table summarizes the changes in accumulated balances of other comprehensive income/(loss) (“AOCI”) for the fiscal years ended December 31, 2017, and January 1, 2017 (in millions):

	Foreign Currency Translation				Cash Flow Hedges and other				Pension and Postretirement Benefits				Total
Balance as of January 3, 2016	$	(174.2	)		$	(6.7	)		$	(232.3	)		$	(413.2	)
Other comprehensive loss before reclassifications	(24.6		)		1.8				—				(22.8		)
Amounts reclassified from AOCI	—				2.1				(17.3		)		(15.2		)
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		)
Other comprehensive income (loss) before reclassifications	96.8				(3.0		)		—				93.8
Amounts reclassified from AOCI	—				6.3				21.8				28.1
Net other comprehensive income	96.8				3.3				21.8				121.9
Balance as of December 31, 2017	$	(102.0	)		$	0.5			$	(227.8	)		$	(329.3	)

The reclassification out of AOCI for the fiscal years ended December 31, 2017, and January 1, 2017, are as follows (in millions):

	December 31, 2017				January 1, 2017
	Amount reclassified from AOCI				Amount reclassified from AOCI			Financial Statement Presentation
Loss on cash flow hedges:
Loss recognized in income on derivatives	$	8.5			$	2.8		Cost of sales
Income tax impact	(2.2		)		(0.7		)	Income tax benefit
Total	$	6.3			$	2.1
Amortization of defined benefit pension and postretirement plan items:
Amortization of prior service cost	$	(6.1	)		$	(6.1	)	See Note 11
Amortization of net actuarial loss	29.2				27.2			See Note 11
Pension adjustments	10.2				(47.7		)	See Note 11
Total before tax	33.3				(26.6		)
Income tax impact	(11.5		)		9.3
Net of tax	$	21.8			$	(17.3	)

Revenue Recognition

Revenue is recognized when the earnings process is substantially complete and all of the following criteria are met: 1) persuasive evidence of an arrangement exists; 2) delivery has occurred or services have been rendered; 3) our price to our customer is fixed or determinable; and 4) collectability is reasonably assured.

We determine the appropriate method by which we recognize revenue by analyzing the terms and conditions of our contracts or arrangements entered into with our customers. The majority of our revenue relates to product sales and is recognized upon shipment to the customer, at fixed or determinable prices and with a reasonable assurance of collection, passage of title to the customer and fulfillment of all significant obligations. Revenue is recognized net of estimated sales returns and other allowances. The Company does not offer substantial sales incentives and credits to customers. The remaining revenue is generally associated with long-term contracts to design, develop and manufacture highly engineered products used in commercial or defense applications. Such contracts are generally accounted for using contract accounting, percentage-of-completion (“POC”) method.

The Company’s standard terms of sale are FOB shipping point. For a small percentage of sales where title and risk of loss passes at destination point, and assuming all other criteria for revenue recognition are met, the Company recognizes revenue upon delivery to the customer. If any significant obligation to the customer with respect to a sales transaction remains following shipment, revenue recognition is deferred until such obligations have been fulfilled. In general, our revenue arrangements do not involve acceptance provisions based on customer specified acceptance criteria. In those

circumstances when customer specified acceptance criteria exist, and if we cannot demonstrate that the product meets those specifications prior to the shipment, then revenue is deferred until customer acceptance is obtained.

We have a few contracts that require the Company to warehouse certain goods, for which revenue is recognized when all risks of loss are borne by the customer and all other criteria for revenue recognition are met.

We also have a small number of multiple elements arrangements (i.e., free product, training, installation, additional parts, etc.). If contract accounting does not apply, we allocate the contract price among the deliverables based on vendor-specific objective evidence of fair value to each element in the arrangement. If objective and reliable evidence of fair value of any element is not available, we use our best estimate of selling price for purposes of allocating the total arrangement consideration among the elements. Also, extended or non-customary warranties do not represent a significant portion of our revenue; however when our revenue arrangements include an extended or non-customary warranty provision, the revenue is deferred and recognized ratably over the extended warranty period.

For contracts that require substantial performance over a long time period (generally one or more years), revenue is recorded under the POC method. We record net revenue and an estimated profit as work on our contracts progresses. The POC method for these contracts is dependent on the nature of the contract or products provided. Depending on the contract, we may measure the extent of progress toward completion using the units-of-delivery method, cost-to-cost method or upon attainment of scheduled performance contract milestones which could be time, event or expense driven. For example, for cost-reimbursable contracts we use the cost-to-cost method to measure progress toward completion. Under the cost-to-cost method of accounting, we recognize revenue and an estimated profit as allowable costs are incurred based on the proportion that the incurred costs bear to total estimated costs. Another example, for contracts that require us to provide a substantial number of similar items, we record revenue and an estimated profit on a POC basis using units-of-delivery as the basis to measure progress toward completing the contract. Occasionally, it is appropriate to combine individual customer orders and treat them as one arrangement when the underlying agreement was reached with the customer for a single large project.

Accounting for contracts using the POC method requires management judgment relative to assessing risks, estimating contract revenue and cost, and making assumptions for schedule and technical issues. Contract revenue may include estimated amounts not contractually agreed to by the customer, including price redetermination, cost or performance incentives (such as award and incentives fees), un-priced change orders, claims and requests for equitable adjustment. The POC method requires management’s judgment to make reasonably dependable cost estimates generally over a long time period. Since certain contracts extend over a long period of time, the impact of revisions in cost and revenue estimates during the progress of work may adjust the current period earnings on a cumulative catch-up basis. This method recognizes, in the current period, the cumulative effect of the changes on current and prior quarters. Additionally, if the current contract estimate indicates a loss, a provision is made for the total anticipated loss in the period that it becomes evident. Contract cost and revenue estimates for significant contracts are generally reviewed and reassessed quarterly. The percentage of Teledyne revenue recognized using any POC method was 28.6% in 2017, 30.5% in 2016, and 31.2% in 2015. The net aggregate effects of these changes in estimates on contracts accounted for under the POC accounting method for 2017 and 2016, were $7.5 million and $1.9 million of unfavorable operating income, respectively, and $3.1 million of favorable operating income for 2015.

We do not believe that any discrete event or adjustment to an individual contract within the aggregate changes in contract estimates for 2017, 2016 or 2015 was material to the consolidated statements of income for such annual periods.

Shipping and Handling

Shipping and handling fees reimbursed by customers are classified as revenue while shipping and handling costs incurred by Teledyne are classified as cost of sales in the accompanying consolidated statements of income.

Product Warranty Costs

Some of the Company’s products are subject to standard warranties and the Company reserves for the estimated cost of product warranties on a product-specific basis. Facts and circumstances related to a product warranty matter and cost estimates to return, repair and/or replace the product are considered when establishing a product warranty reserve. The adequacy of the preexisting warranty liabilities is assessed regularly and the reserve is adjusted as necessary based on a review of historic warranty experience with respect to the applicable business or products, as well as the length and actual terms of the warranties, which are typically one year. The product warranty reserve is included in current accrued liabilities and long-term liabilities on the balance sheet.

Warranty Reserve (in millions):	2017				2016				2015
Balance at beginning of year	$	18.4			$	17.1			$	18.5
Accruals for product warranties charged to expense	6.0				7.4				6.1
Cost of product warranty claims	(6.4		)		(6.7		)		(7.7		)
Acquisitions	3.1				0.6				0.2
Balance at end of period	$	21.1			$	18.4			$	17.1

Research and Development

Selling, general and administrative expenses include Company-funded research and development and bid and proposal costs which are expensed as incurred and were $177.7 million in 2017, $167.7 million in 2016 and $163.7 million in 2015.

Income Taxes

We compute the provision for income taxes using the asset and liability method, under which deferred tax assets and liabilities are recognized for temporary differences between the tax basis of assets and liabilities and their reported amount in the financial statements, which will result in taxable or deductible amounts in the future. In evaluating our ability to recover our deferred tax assets within the jurisdiction from which they arise, we consider all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax-planning strategies, and results of recent operations. In projecting future taxable income, we begin with historical results adjusted for the results of discontinued operations and incorporate assumptions about the amount of future state, federal and foreign pretax operating income adjusted for items that do not have tax consequences. The assumptions about future taxable income require significant judgment and are consistent with the plans and estimates we are using to manage the underlying businesses. In evaluating the objective evidence that historical results provide, we consider three years of cumulative operating income. A valuation allowance is recorded when it is more likely than not that some of the deferred tax assets will not be realized.

Income tax positions must meet a more-likely-than-not recognition in order to be recognized in the financial statements. We recognize potential accrued interest and penalties related to unrecognized tax benefits within operations as income tax expense. As new information becomes available, the assessment of the recognition threshold and the measurement of the associated tax benefit of uncertain tax positions may result in financial statement recognition or derecognition.

Net Income Per Common Share

Basic and diluted earnings per share were computed based on net income attributable to Teledyne. The weighted average number of common shares outstanding during the period was used in the calculation of basic earnings per share. This number of shares was increased by contingent shares that could be issued under various compensation plans as well as by the dilutive effect of stock options based on the treasury stock method in the calculation of diluted earnings per share.

The following table sets forth the computations of basic and diluted earnings per share (amounts in millions, except per share data):

Net Income Per Common Share:	2017				2016				2015
Net income attributable to Teledyne	$	227.2			$	190.9			$	195.8
Basic earnings per common share:
Weighted average common shares outstanding	35.2				34.6				35.3
Basic earnings per common share	$	6.45			$	5.52			$	5.55
Diluted earnings per share:
Weighted average common shares outstanding	35.2				34.6				35.3
Effect of diluted securities	1.1				0.9				0.7
Weighted average diluted common shares outstanding	36.3				35.5				36.0
Diluted earnings per common share	$	6.26			$	5.37			$	5.44

For 2017, 2016 and 2015 no stock options were excluded in the computation of diluted earnings per share.

For 2017, 2016 and 2015, stock options to purchase 2.3 million, 2.2 million and 2.4 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.

In addition, no contingent shares of the Company’s common stock under the restricted stock or performance share compensation plans were excluded from fully diluted shares outstanding for 2017 or 2016. In 2015, 3,997 contingent shares of the Company’s common stock under the restricted stock or performance share compensation plans were excluded from fully diluted shares outstanding.

Accounts Receivable

Receivables are presented net of an allowance for doubtful accounts of $10.3 million at December 31, 2017, and $5.2 million at January 1, 2017. Expense recorded for the allowance for doubtful accounts was $4.2 million, $0.7 million and $0.9 million for 2017, 2016 and 2015, respectively. An allowance for doubtful accounts is established for losses expected to be incurred on accounts receivable balances. Judgment is required in the estimation of the allowance and is based upon specific identification, collection history and creditworthiness of the debtor. Trade credit is extended based upon evaluations of each customer’s ability to perform its obligations, which are updated periodically.

Cash

Cash totaled $70.9 million at December 31, 2017, of which $67.5 million was held by foreign subsidiaries of Teledyne.

Inventories

Inventories are stated at the lower of cost or net realizable value, less progress payments. The majority of inventory values are valued on an average cost or first-in, first-out method, while the remainder are stated at cost based on the last-in, first-out method. Costs include direct material, direct labor, applicable manufacturing and engineering overhead, and other direct costs. Additionally, certain inventory costs are also reflective of the estimates used in applying the percentage-of-completion revenue recognition method. Judgment is required when establishing reserves to reduce the carrying amount of inventory to market or net realizable value. Inventory reserves are recorded when inventory is considered to be excess or obsolete based upon an analysis of actual on-hand quantities on a part-level basis to forecasted product demand and historical usage.

Property, Plant and Equipment

Property, plant and equipment is capitalized at cost. Property, plant and equipment is stated at cost less accumulated depreciation and amortization. Depreciation and amortization are determined using a combination of accelerated and straight-line methods over the estimated useful lives of the various asset classes. Buildings and building improvements are depreciated over periods not exceeding 45 years, equipment over 5 to 18 years, computer hardware and software over 3 to 7 years and leasehold improvements over the shorter of the estimated remaining lives or lease terms. Significant improvements are capitalized while maintenance and repairs are charged to expense as incurred. Depreciation expense on property, plant and equipment, including assets under capital leases, was $65.9 million in 2017, $57.6 million in 2016 and $58.3 million in 2015. Other income for 2016 included a gain of $17.9 million on the sale of a former operating facility in California.

Goodwill and Other Intangible Assets

Business acquisitions are accounted for under the acquisition method by assigning the purchase price to tangible and intangible assets acquired and liabilities assumed. Assets acquired and liabilities assumed are recorded at their fair values and the excess of the purchase price over the amounts assigned is recorded as goodwill.

Goodwill and intangible assets with indefinite lives are not amortized, but tested at least annually for impairment. The Company performs an annual impairment test for goodwill and other acquired intangible assets in the fourth quarter of each year, or more often as circumstances require. The two-step impairment test is used to first identify potential goodwill impairment and then measure the amount of goodwill impairment loss, if any. When it is determined that an impairment has occurred, an appropriate charge to operations is recorded. No impairment of goodwill was indicated in 2017, 2016 or 2015, based on the annual impairment test completed in the fourth quarter of each year. Acquired intangible assets with finite lives are amortized and reflected in the segments operating income over their estimated useful lives.

We review intangible assets subject to amortization for impairment whenever events or circumstances indicate that the carrying value of the asset may not be recoverable. We assess the recoverability of the carrying value of assets held for use based on a review of projected undiscounted cash flows. Impairment losses, where identified, are determined as the excess of the carrying value over the estimated fair value of the long-lived asset. In 2017, 2016 and 2015, the Company recorded $0.2 million, $1.0 million and 0.5 million impairment to acquired intangible assets, respectively.

Deferred Compensation Plan

The Company has a non-qualified executive deferred compensation plan that provides supplemental retirement income benefits for a select group of management. This plan permits eligible employees to make salary and bonus deferrals that are 100% vested. We have an unsecured obligation to pay in the future the value of the deferred compensation adjusted to reflect the performance, whether positive or negative, of selected investment measurement options chosen by each participant during the deferral period. As of December 31, 2017 and January 1, 2017, $55.3 million and $47.4 million, respectively, is included in other long-term liabilities related to these deferred compensation liabilities. Additionally, the Company purchased life insurance policies on certain participants to potentially offset these unsecured obligations. These policies are recorded at their cash surrender value as determined by the insurance carrier. The cash surrender value of these policies was $57.2 million and $48.5 million, as of December 31, 2017 and January 1, 2017, respectively, and are recorded in other non-current assets.

Environmental

Costs that mitigate or prevent future environmental contamination or extend the life, increase the capacity or improve the safety or efficiency of property utilized in current operations are capitalized. Other costs that relate to current operations or an existing condition caused by past operations are expensed in the period incurred. Environmental liabilities are recorded when the Company’s liability is probable and the costs are reasonably estimable, which is generally not later than the completion of the feasibility study or the Company’s recommendation of a remedy or commitment to an appropriate plan of action. The accruals are reviewed periodically and, as investigations and remediations proceed, adjustments are made as necessary. Accruals for losses from environmental remediation obligations do not consider the effects of inflation, and anticipated expenditures are not discounted to their present value. The accruals are not reduced by possible recoveries from insurance carriers or other third parties, but do reflect anticipated allocations among potentially responsible parties at federal Superfund sites or similar state-managed sites and an assessment of the likelihood that such parties will fulfill their obligations at such sites. The measurement of environmental liabilities by the Company is based on currently available facts, present laws and regulations, and current technology. Such estimates take into consideration the Company’s prior experience in site investigation and remediation, the data concerning cleanup costs available from other companies and regulatory authorities, and the professional judgment of the Company’s environmental personnel in consultation with outside environmental specialists, when necessary. The Company’s reserves for environmental remediation obligations totaled $5.1 million and $7.0 million at December 31, 2017 and January 1, 2017, respectively.

Foreign Currency Translation

The Company’s foreign entities’ accounts are generally measured using local currency as the functional currency. Assets and liabilities of these entities are translated at the exchange rate in effect at year-end. Revenues and expenses are translated at average month end rates of exchange prevailing during the year. Unrealized translation gains and losses arising from differences in exchange rates from period to period are included as a component of accumulated other comprehensive loss in stockholders’ equity.

Hedging Activities/Derivative Instruments

Teledyne transacts business in various foreign currencies and has international sales and expenses denominated in foreign currencies, subjecting the Company to foreign currency risk. The Company’s primary foreign currency risk objective is to protect the United States dollar value of future cash flows and minimize the volatility of reported earnings. The Company utilizes foreign currency forward contracts to reduce the volatility of cash flows primarily related to forecasted revenue and expenses denominated in Canadian dollars for our Canadian companies, including DALSA and in British pounds for our UK companies, including e2v. These contracts are designated and qualify as cash flow hedges. The Company has also converted a US dollar denominated, variable rate debt obligation into a euro fixed rate obligation using a receive-float, pay fixed cross currency swap. This cross currency swap is designated as a cash flow hedge.

The effectiveness of the cash flow hedge forward contracts, excluding time value, is assessed prospectively and retrospectively on a monthly basis using regression analysis, as well as using other timing and probability criteria. To receive hedge accounting treatment, all hedging relationships are formally documented at the inception of the hedges and must be highly effective in offsetting changes to future cash flows on hedged transactions. The effective portion of the cash flow hedge contracts’ gains or losses resulting from changes in the fair value of these hedges is initially reported, net of tax, as a component of AOCI in stockholders’ equity until the underlying hedged item is reflected in our consolidated statements of income, at which time the effective amount in AOCI is reclassified to cost of sales in our consolidated statements of income. Net deferred gains recorded in AOCI, net of tax, for forward contracts that will mature in the next 12 months total $3.2 million. These gains are expected to be offset by anticipated losses in the value of the forecasted underlying hedged item. Amounts related to the cross currency swap expected to be reclassified from AOCI into income in the coming 12 months total $2.2 million.

In the event that the gains or losses in AOCI are deemed to be ineffective, the ineffective portion of gains or losses resulting from changes in fair value, if any, is reclassified to other income and expense. In the event that the underlying forecasted transactions do not occur, or it becomes remote that they will occur, within the defined hedge period, the gains or losses on the related cash flow hedges will be reclassified from AOCI to other income and expense. During the current reporting period, all forecasted transactions occurred and, therefore, there were no such gains or losses reclassified to other income and expense. As of December 31, 2017, Teledyne had foreign currency forward contracts designated as cash flow hedges to buy Canadian dollars and to sell U.S. dollars totaling $80.6 million. These foreign currency forward contracts have maturities ranging from March 2018 to February 2019. Teledyne had foreign currency forward contracts designated as cash flow hedges to buy British pounds and to sell U.S. dollars totaling $0.6 million. These foreign currency forward contracts have maturities ranging from March 2018 to April 2018. Together these contracts has a fair value of $3.8 million. The cross currency swap have notional amounts of 93.0 million euros equivalent to $100.0 million, matures in October 2019.

In addition, the Company utilizes foreign currency forward contracts which are not designated as hedging instruments for accounting purposes to mitigate foreign exchange rate risk associated with foreign currency denominated monetary assets and liabilities, including intercompany receivables and payables. As of December 31, 2017, Teledyne had foreign currency contracts of this type in the following pairs (in millions):

Contracts to Buy					Contracts to Sell
Currency	Amount				Currency	Amount
Canadian Dollars	C$	165.7			U.S. Dollars	US$	128.4
Euros	€	20.7			U.S. Dollars	US$	24.8
Great Britain Pounds	£	1.5			Australian Dollars	A$	2.7
Great Britain Pounds	£	70.3			U.S. Dollars	US$	94.6
Canadian Dollars	C$	7.6			Euros	€	5.0
U.S. Dollars	US$	0.9			Japanese Yen	¥	100.0
Singapore Dollars	S$	2.0			U.S. Dollars	US$	1.5
Danish Krone	Kr.	44.8			U.S. Dollars	US$	7.2
Swedish Krone	kr	16.5			Great Britain Pounds	£	1.4
Swiss Franc	Fr.	1.8			U.S. Dollars	US$	1.8
Euros	€	29.9			Great Britain Pounds	£	26.3

The above table includes non-designated hedges derived from terms contained in triggered or previously designated cash flow hedges. The gains and losses on these derivatives which are not designated as hedging instruments, are intended to, at a minimum, partially offset the transaction gains and losses recognized in earnings.

All derivatives are recorded on the balance sheet at fair value. As discussed below, the accounting for gains and losses resulting from changes in fair value depends on the use of the derivative and whether it is designated and qualifies for hedge accounting. Teledyne does not use foreign currency forward contracts for speculative or trading purposes.

The effect of derivative instruments designated as cash flow hedges for 2017 and 2016 was as follows (in millions):

		2017				2016
Net gain (loss) recognized in AOCI (a)		$	(3.8	)		$	2.3
Net loss reclassified from AOCI into cost of sales (a)		$	(0.9	)		$	(2.8	)
Net gain reclassified from AOCI into interest expense		$	1.3			$	—
Net loss reclassified from AOCI into other income and expense, net (b)		$	(10.7	)		$	—
Net foreign exchange loss recognized in other income and expense, net (c)		$	(0.7	)		$	(0.1	)

(a)Effective portion

(b)Amount reclassified to offset earnings impact of liability hedged by cross currency swap

(c)Amount excluded from effectiveness testing

The effect of derivative instruments not designated as cash flow hedges recognized in other income and expense for 2017 and 2016 was a loss of $2.9 million and $9.6 million, respectively.

The Company has elected to use the income approach to value the derivatives, using observable Level 2 market expectations at measurement date and standard valuation techniques to convert future amounts to a single present amount. Level 2 inputs for the valuations are limited to quoted prices for similar assets or liabilities in active markets (specifically futures contracts on LIBOR and EURIBOR) and inputs other than quoted prices that are observable for the asset or liability (specifically LIBOR and EURIBOR cash and swap rates, foreign currency forward rates and cross currency basis spreads). Mid-market pricing is used as a practical expedient for fair value measurements. The fair value measurement of an asset or liability must reflect the nonperformance risk of the entity and the counterparty. Therefore, the impact of the counterparty’s creditworthiness when in an asset position and the Company’s creditworthiness when in a liability position has also been factored into the fair value measurement of the derivative instruments and did not have a material impact on the fair value of these derivative instruments. Both the counterparty and the Company are expected to continue to perform under the contractual terms of the instruments.

The fair values of the Company’s derivative financial instruments are presented below. All fair values for these derivatives were measured using Level 2 information as defined by the accounting standard hierarchy (in millions):

Asset/(Liability) Derivatives	Balance sheet location		December 31, 2017				January 1, 2017
Derivatives designated as hedging instruments:
Cash flow forward contracts	Other assets		$	3.8			$	—
Cash flow cross currency swaps	Other assets		$	2.2			$	—
Cash flow forward contracts	Accrued liabilities		$	—			$	(1.0	)
Cash flow cross currency swaps	Other long-term liabilities		$	(13.9	)		$	—
Cash flow forward contracts	Other long-term liabilities		—				(0.1		)
Total derivatives designated as hedging instruments			(7.9		)		(1.1		)
Derivatives not designated as hedging instruments:
Non-designated forward contracts	Other current assets		4.9				6.4
Non-designated forward contracts	Accrued liabilities		(1.2		)		(1.0		)
Total derivatives not designated as hedging instruments			3.7				5.4
Total asset/(liability) derivatives			$	(4.2	)		$	4.3

Supplemental Cash Flow Information

Cash payments for federal, foreign and state income taxes were $36.7 million for 2017, which are net of $8.5 million in tax refunds. Cash payments for federal, foreign and state income taxes were $24.6 million for 2016, which are net of $1.4 million in tax refunds. Cash payments for federal, foreign and state income taxes were $86.5 million for 2015, which are net of $4.8 million in tax refunds. Cash payments for interest and credit facility fees totaled $32.4 million, $23.6 million and $24.2 million for 2017, 2016 and 2015, respectively.

Fair Value Measurements

When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance. The Company uses the following three levels of inputs in determining the fair value of the Company’s assets and liabilities, focusing on the most observable inputs when available:

•	Level 1-Quoted prices in active markets for identical assets or liabilities.

•

Level 2-Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities.

•	Level 3-Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities.

To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy

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

Related Party Transactions

The Company had no related party transactions that are required to be disclosed for all periods presented.

Recent Accounting Standards

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. The guidance is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods, with early adoption permitted for any entity in any interim or annual period. 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. The new guidance did not impact any periods prior to our 2016 fiscal year, as the changes were applied on a prospective basis.

In May 2014, the FASB issued ASU No. 2014-09 (Topic 606), Revenue from Contracts with Customers, which provides a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and will supersede most current revenue recognition guidance under Topic 605, Revenue Recognition. The Company adopted the new standard as of January 1, 2018, using the modified retrospective transition method which requires a cumulative-effect adjustment as of the date of adoption. Under the new standard, an entity recognizes revenue when or as it satisfies a performance obligation by transferring control of a good or service to the customer, either at a point in time or over time. The new standard requires expanded disclosures, including how and when we satisfy performance obligations as well as additional disaggregated revenue information to be provided more frequently in the reporting process. We have expanded our reporting process to consider these additional disclosure requirements.

During the implementation process, the Company performed detailed contract analysis to determine the impact of the new standard to its revenue arrangements, updated its accounting policies and internal controls, continuously updated the impact of the standard and reported the findings and progress to the Audit Committee on a frequent basis over the last two years. Under the new standard, we will continue to recognize revenue over time on most of our contracts that are covered by contract accounting standards using cost inputs to measure progress toward completion of our performance obligations, which is similar to the POC cost-to-cost method currently used on certain of these contracts. Therefore, adoption of the new standard primarily impacts our contracts for which revenue is currently recognized using the POC units-of-delivery and milestone methods as we will recognize revenue for these contracts over time under the new standard using the POC cost-to-cost method. These contracts represent approximately half of the revenue currently recognized under the POC method. The percentage of Teledyne revenue recognized using any POC method was 28.6% in 2017, 30.5% in 2016, and 31.2% in 2015. Also impacted but to a much lesser extent, certain ship and bill contracts for custom products and products sold primarily to the U.S. Government, as well as repair contracts, will be recognized over time. Accordingly, revenue will be recognized earlier in the performance period as costs are incurred, as opposed to recognizing revenue when units are delivered, milestones achieved or services completed. The new standard will also impact our backlog and balance sheet presentation with an expected decrease in inventories, an increase in accounts receivable (i.e., unbilled receivables) and a net increase to retained earnings to primarily reflect the impact of converting certain ship and bill contracts and contracts currently applying the units-of-delivery and milestone methods to the cost-to-cost method for recognizing revenue and profits.

Under the modified retrospective transition method, the Company completed an analysis of its backlog as of January 1, 2018 and calculated and recorded the cumulative-effect of adopting the new standard as of January 1, 2018. The cumulative effect of adopting the new standard resulted in an immaterial increase to retained earnings as of January 1, 2018 primarily because we continue to recognize revenue over time on the majority of impacted contracts. The adoption of this standard is not expected to be material on our consolidated financial statements and financial condition.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The new guidance will require lessees to recognize almost all leases on their balance sheet as a right-of-use asset and a lease liability, other than leases that meet the definition of a short-term lease. For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance. The new guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years, with early adoption permitted. The new guidance must be adopted using a modified retrospective transition, requiring application at the beginning of the earliest comparative period presented. The

Company is currently evaluating the impact this guidance will have on the consolidated financial statements and footnote disclosures.

In January 2017, the FASB issued ASU 2017-04, “Simplifying the Test for Goodwill Impairment”, which eliminates the computation of the implied fair value of goodwill to measure a goodwill impairment charge. Instead, entities will record a goodwill impairment charge based on the excess of a reporting unit’s carrying amount over its fair value. The new standard, will be effective for the Company prospectively for interim and annual reporting periods beginning after December 15, 2019, with early adoption permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We expect the adoption of this standard will reduce the complexity surrounding the evaluation of goodwill for impairment. The impact of this new standard for the Company will depend on the outcomes of future goodwill impairment tests.

In March 2017, the FASB issued ASU No. 2017-07, “Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.” This ASU requires the service cost component of net benefit costs to be disaggregated from all other components and be reported in the same line item or items as other compensation costs and allow only the service cost component to be eligible for capitalization when applicable. The other components of net benefit cost are required to be presented in the income statement separately from the service cost component and before income from operations. This ASU is effective for the Company for interim and annual periods beginning January 1, 2018. Upon adoption, the amendments in this update will be applied retrospectively for the presentation of the components of net benefit cost, and prospectively for the capitalization of the service cost component of net benefit cost. The adoption of this standard will not impact pre-tax income or earnings per share reported for the years ended December 31, 2017 and January 1, 2017 and is not expected to have a material impact on our Consolidated Financial Statements. If this standard was adopted in prior periods, reported operating income would have been $13.9 million and $13.3 million lower and other income would have been $13.9 million and $13.3 million higher than reflected in the Consolidated Statements of Income for the years ended December 31, 2017 and January 1, 2017, respectively. We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements.

In August 2017, the FASB issued ASU No. 2017-12, “Derivatives and Hedging (Topic 815) Targeted Improvements to Accounting for Hedging Activities.” This ASU better aligns an entity’s risk management activities and financial reporting for hedging relationships. This ASU expands and refines hedge accounting for both nonfinancial and financial risk components, and this ASU simplifies and aligns the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. This ASU is effective for fiscal years beginning after December 15, 2018 and for interim periods therein, with early adoption permitted. Teledyne is currently evaluating the impact this guidance will have on the consolidated financial statements and footnote disclosures.

In February 2018, the FASB issued ASU No. 2018-02, “Income Statement-Reporting Comprehensive Income (Topic 220) Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income”, to address a specific consequence of the Tax Cuts and Jobs Act (“Tax Act”) by allowing a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Act reduction of the U.S. federal corporate income tax rate. The guidance is effective for all entities for annual periods beginning after December 15, 2018, with early adoption permitted, and is to be applied either in the period of adoption or retrospectively to each period in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Act is recognized. Teledyne has not yet completed its assessment of the impact of the guidance on the Company’s Consolidated Financial Statements.

Note 3. Business Acquisitions, Goodwill and Acquired Intangible Assets

The Company spent $774.1 million, $93.4 million and $66.7 million on acquisitions and other investments in 2017, 2016 and 2015, respectively, net of any cash acquired.

2017 Acquisitions

On March 28, 2017, Teledyne completed the acquisition of all of the outstanding common stock of e2v technologies plc (“e2v”) for $770.7 million, including stock options and assumed debt, net of $24.4 million of cash acquired. e2v provides high performance image sensors and custom camera solutions and application specific standard products for the machine vision market. 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 communications applications. Teledyne funded the acquisition of e2v with borrowings under its credit facility and cash on hand as well as $100.0 million in a newly issued term loan.

Most of e2v’s operations are included in the Digital Imaging and Aerospace and Defense Electronics segments. The Instrumentation segment includes a small portion of e2v’s operations. Principally located in Chelmsford, United Kingdom and Grenoble, France, e2v had sales of approximately £236 million for its fiscal year ended March 31, 2016. e2v’s results have

been included since the date of the acquisition and include $274.2 million in net sales and operating income of $37.3 million, which included $8.3 million in acquisition-related costs and $11.2 million in additional intangible asset amortization expense.

Fiscal year 2017 includes pretax charges of $27.0 million related to the acquisition of e2v, which included $13.0 million in transaction costs, including stamp duty, advisory, legal and other consulting fees and other costs recorded to selling, general and administrative expenses, $5.7 million in inventory fair value step-up amortization expense recorded to cost of sales, $2.3 million in bank bridge facility commitment expense recorded to interest expense and $6.0 million related to a foreign currency option contract expense to hedge the e2v purchase price recorded as other expense. Of these amounts, $8.0 million impacted the Digital Imaging segment and $0.3 million impacted the Aerospace and Defense segment operating results. Fiscal year 2016 includes pretax charges of $7.9 million related to the acquisition of e2v, of which, $1.9 million was recorded to selling, general and administrative expenses, $0.5 million was recorded to interest expense and $5.5 million was recorded as other expense.

On July 20, 2017, a subsidiary of Teledyne acquired assets of Scientific Systems, Inc. (“SSI”) for an initial cash payment of $31.0 million. A subsequent cash payment of $0.3 million related to a purchase price adjustment was made in 2017. Headquartered in State College, PA, SSI manufactures precision components and specialized subassemblies used primarily in analytical and diagnostic instrumentation, such as High Performance Liquid Chromatography systems and specific medical devices and is part of the Instrumentation segment.

2016 Acquisitions

On December 6, 2016, Teledyne Instruments, Inc. acquired Hanson Research Corporation (“Hanson Research”) for $25.0 million in cash. Hanson Research, headquartered in Chatsworth, California, specializes in analytical instrumentation for the pharmaceutical industry.

On November 2, 2016, Teledyne Instruments, Inc. acquired assets of IN USA, Inc. (“IN USA”) for $10.2 million in cash. IN USA, headquartered in Norwood, Massachusetts, manufactures a range of ozone generators, ozone analyzers and other gas monitoring instruments utilizing ultraviolet and infrared based technologies. Teledyne intends to relocate and consolidate manufacturing into the new, owned facility of Teledyne Advanced Pollution Instrumentation in San Diego, California.

On May 3, 2016, Teledyne DALSA, Inc., a Canadian-based subsidiary, acquired the assets and business of CARIS, Inc. (“CARIS”) for an initial cash payment of $26.2 million, net of cash acquired. Based in Fredericton, New Brunswick, Canada, CARIS is 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”) for $17.3 million in cash. Based in Elgin, Illinois, Quantum Data provides electronic test and measurement instrumentation and is a market leader in video protocol analysis test tools. On April 6, 2016, Teledyne LeCroy, Inc. also acquired Frontline Test Equipment, Inc. (“Frontline”) for $13.7 million in cash. Based in Charlottesville, Virginia, Frontline provides electronic test and measurement instrumentation and is a market leader in wireless protocol analysis test tools. Each of the 2016 acquisitions are part of the Instrumentation segment except for CARIS which is part of the Digital Imaging segment.

2015 Acquisitions

On June 5, 2015, Teledyne DALSA BV, a Netherlands-based subsidiary, acquired ICM for $21.8 million, net of cash acquired. In December 2016, an additional $2.5 million was paid by Teledyne related to an indemnification holdback. Based in Liège, Belgium, ICM 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 and is part of the Digital Imaging segment.

On April 29, 2015, Teledyne DALSA, Inc. acquired the remaining 49% noncontrolling interest in the parent company of Optech for $22.0 million in cash. As a result of the purchase, the difference between the cash paid and the balance of noncontrolling interest was recorded to additional paid in capital. The balance of the noncontrolling interest of $41.2 million at December 28, 2014 decreased by $0.3 million for the net loss and $1.3 million in translation adjustments prior to the purchase which eliminated the remaining balance. The balance of the noncontrolling interest of $47.0 million at December 29, 2013 decreased by $2.1 million for the net loss and $3.7 million in translation adjustments, resulting in a balance of $41.2 million at December 28, 2014. Teledyne no longer has any noncontrolling interests. Optech is part of the Digital Imaging segment.

On February 2, 2015, Teledyne acquired Bowtech through a U.K.-based subsidiary for $18.9 million in cash, net of cash acquired and including an estimated working capital adjustment. Based in Aberdeen, Scotland, Bowtech designs and manufactures harsh underwater environment vision systems and is part of the Instrumentation segment. Also in 2015, Teledyne made an additional investment in Ocean Aero.

Teledyne funded the purchases from borrowings under its credit facility and cash on hand. The ICM, Bowtech and Optech acquisitions were funded with cash held by foreign subsidiaries. The results of the acquisitions have been included in Teledyne’s results since the dates of the respective acquisition.

The results of these acquisitions have been included in Teledyne’s results since the dates of their respective acquisition.

Other

The primary reasons for the above acquisitions were to strengthen and expand our core businesses through adding complementary product and service offerings, allowing greater integrated products and services, enhancing our technical capabilities or increasing our addressable markets. The significant factors that resulted in recognition of goodwill were: (a) the purchase price was based on cash flow and return on capital projections assuming integration with our businesses and (b) the calculation of the fair value of tangible and intangible assets acquired that qualified for recognition. Teledyne funded the purchases primarily from borrowings under its credit facility and cash on hand.

Teledyne’s goodwill was $1,776.7 million at December 31, 2017, and $1,193.5 million at January 1, 2017. The increase in the balance of goodwill in 2017 resulted from the goodwill from current year acquisitions, partially offset by the impact of exchange rate changes. Teledyne’s net acquired intangible assets were $398.9 million at December 31, 2017, and $234.6 million at January 1, 2017. The increase in the balance of acquired intangible assets in 2017 primarily resulted from the acquisition of e2v, partially offset by amortization of acquired intangible assets. The Company’s cost to acquire the 2017 acquisitions has been allocated to the assets acquired and liabilities assumed based upon their respective fair values as of the date of the completion of the acquisition. The differences between the fair value of the consideration paid and the estimated fair value of the assets and liabilities acquired has been recorded as goodwill. The Company is still in the process of specifically identifying the amount to be assigned to certain assets, including acquired intangible assets, and liabilities and the related impact on taxes and goodwill for the e2v and SSI acquisitions. The Company made preliminary estimates as of December 31, 2017, since there was insufficient time between the acquisition date and the end of the period to finalize the analysis. The Company has completed the allocation of all other acquisitions.

The following table presents proforma net sales, net income and earnings per share data assuming e2v was acquired at the beginning of the 2016 fiscal year:

	Fiscal Year (a)
(unaudited - in millions, except per share amounts)	2017				2016
Net sales	$	2,696.8			$	2,491.8
Net income	$	209.8			$	183.6
Basic earnings per common share	$	5.96			$	5.31
Diluted earnings per common share	$	5.78			$	5.17
a) The above unaudited proforma information is presented for the e2v acquisition as it is considered a material acquisition.

The following tables show the purchase price (net of cash acquired), goodwill acquired and intangible assets acquired for the acquisitions made in 2017 and 2016 (in millions):

		2017
Acquisition		Acquisition Date		Cash Paid (a)				Goodwill Acquired				Acquired Intangible Assets
e2v		March 28, 2017		$	740.6			$	490.4			$	172.3
SSI		July 20, 2017		31.3				13.8				9.3
Other Investments				2.2				0.6				0.4
				$	774.1			$	504.8			$	182.0
(a) net of any cash acquired.

		2016
Acquisition		Acquisition Date		Cash Paid (a)				Goodwill Acquired				Acquired Intangible Assets
Frontline		April 6, 2016		$	13.7			$	11.3			$	2.3
Quantum Data		April 15, 2016		17.3				10.7				5.4
CARIS		May 3, 2016		26.2				22.2				3.6
IN USA		November 2, 2016		10.2				6.3				3.0
Hanson Research		December 6, 2016		25.0				13.5				8.4
Other investments				1.0				—				—
				$	93.4			$	64.0			$	22.7
(a) net of any cash acquired.

Fair values allocated to the assets acquired and liabilities assumed (in millions):		2017				2016
Current assets, excluding cash acquired		$	152.9			$	11.9
Property, plant and equipment		94.5				3.9
Goodwill		504.8				64.0
Acquired intangible assets		182.0				22.7
Other long-term assets		10.1				1.2
Total assets acquired		944.3				103.7
Current liabilities		(82.1		)		(9.9		)
Long-term liabilities		(88.1		)		(0.4		)
Total liabilities assumed		(170.2		)		(10.3		)
Cash paid, net of cash acquired		$	774.1			$	93.4

The following table is a summary at the acquisition date of the acquired intangible assets and weighted average useful life in years for the acquisitions made in 2017 and 2016 (dollars in millions):

		2017						2016
Intangibles subject to amortization:		Intangible Assets				Weighted average useful life in years		Intangible Assets				Weighted average useful life in years
Proprietary technology		$	107.0			11.6		$	10.4			9.4
Customer list/relationships		25.2				12.9		8.9				13.2
Backlog		3.0				0.8		0.3				0.3
Trademarks		—				n/a		0.5				3.0
Total intangibles subject to amortization		135.2				11.6		20.1				10.8
Intangibles not subject to amortization:
Trademarks		46.8				n/a		2.6				n/a
Total acquired intangible assets		$	182.0			n/a		$	22.7			n/a
Goodwill		$	504.8			n/a		$	64.0			n/a

Goodwill resulting from the acquisitions of SSI, Frontline, Quantum Data, IN USA and CARIS will be deductible for tax purposes. Goodwill resulting from the acquisitions of e2v and Hanson Research will not be deductible for tax purposes.

Goodwill (in millions):		Instrumentation				Digital Imaging				Aerospace and Defense Electronics				Engineered Systems				Total
Balance at January 3, 2016		$	680.8			$	292.5			$	143.5			$	23.4			$	1,140.2
Current year acquisitions		41.8				22.2				—				—				64.0
Foreign currency changes		(9.3		)		2.7				(4.1		)		—				(10.7		)
Balance at January 1, 2017		713.3				317.4				139.4				$	23.4			1,193.5
Current year acquisitions		25.8				441.3				37.7				—				504.8
Foreign currency changes and other		17.3				56.9				4.9				(0.7		)		78.4
Balance at December 31, 2017		$	756.4			$	815.6			$	182.0			$	22.7			$	1,776.7

		2017												2016
		Gross carrying amount				Accumulated amortization				Net carrying amount				Gross carrying amount				Accumulated amortization				Net carrying amount
Other acquired intangible assets (in millions):
Proprietary technology		$	329.6			$	159.4			$	170.2			$	207.2			$	130.1			$	77.1
Customer list/relationships		153.2				82.7				70.5				121.9				68.3				53.6
Patents		0.7				0.6				0.1				0.7				0.6				0.1
Non-compete agreements		0.9				0.9				—				0.9				0.9				—
Trademarks		3.9				2.7				1.2				3.8				2.4				1.4
Backlog		16.3				15.9				0.4				12.7				12.6				0.1
Other acquired intangible assets subject to amortization		504.6				262.2				242.4				347.2				214.9				132.3
Other acquired intangible assets not subject to amortization:
Trademarks		156.5				—				156.5				102.3				—				102.3
Total other acquired intangible assets		$	661.1			$	262.2			$	398.9			$	449.5			$	214.9			$	234.6

Amortizable other intangible assets are amortized on a straight-line basis over their estimated useful lives ranging from one to 15 years. Consistent with Teledyne’s growth strategy, we seek to acquire companies in markets characterized by high barriers to entry and that include specialized products not likely to be commoditized. Given our markets and highly engineered nature of our products, the rates of new technology development and customer acquisition and/or attrition are often not volatile. As such, we believe the value of acquired intangible assets decline in a linear, as opposed to an accelerated fashion, and we believe amortization on a straight-line basis is appropriate.

The Company recorded $41.4 million, $28.3 million and $30.6 million in amortization expense in 2017, 2016 and 2015, respectively, for other acquired intangible assets. The expected future amortization expense for the next five years is as follows (in millions): 2018 - $38.5; 2019 - $30.6; 2020 - $28.7; 2021 - $27.8; 2022 - $24.9.

The estimated remaining useful lives by asset category as of December 31, 2017, are as follows:

Intangibles subject to amortization		Weighted average remaining useful life in years
Proprietary technology		6.3
Customer list/relationships		6.3
Patents		3.3
Backlog		0.9
Trademarks		3.8
Total intangibles subject to amortization		6.3

Note 4. Financial Instruments

The Company had no cash equivalents at December 31, 2017 or January 1, 2017. The Company has categorized its cash equivalents, if any, as a Level 1 financial asset, measured at fair value based on quoted prices in active markets of identical assets. The fair value of the Company’s forward currency contracts as of December 31, 2017 and January 1, 2017, are disclosed in Note 2, “Hedging Activities/Derivative Instruments,” of the Notes to Consolidated Financial Statements below and are based on Level 2 inputs. The fair value of the Company’s senior unsecured notes as described in Note 9, “Long-Term Debt,” of the Notes to Consolidated Financial Statements approximated the carrying value based upon Level 2 inputs at December 31, 2017 and January 1, 2017. The fair value of the Company’s credit facility, term loans and other debt, also described in Note 9, at December 31, 2017 and January 1, 2017, approximates the carrying value due to the variable market rate used to calculate interest payments. The Company does not have any other significant financial assets or liabilities that are measured at fair value. The carrying value of other on-balance-sheet financial instruments approximates fair value, and the cost, if any, to terminate off-balance sheet financial instruments (primarily letters of credit) is not significant.

Note 5. Accounts Receivable

Accounts receivable (in millions):		Balance at year-end
		2017				2016
Commercial and other receivables		$	419.8			$	329.1
U.S. Government and prime contractors contract receivables:
Billed receivables		26.2				19.2
Unbilled receivables		42.4				40.6
		488.4				388.9
Allowance for doubtful accounts		(10.3		)		(5.2		)
Total accounts receivable, net		$	478.1			$	383.7

The billed contract receivables from the U.S. Government and prime contractors contain $26.2 million and $10.6 million at December 31, 2017, and January 1, 2017, respectively, due to long-term contracts. The unbilled contract receivables from the U.S. Government and prime contractors contain $42.4 million and $36.9 million at December 31, 2017, and January 1, 2017, respectively, due to long-term contracts, generally one to two years.

Unbilled contract receivables represent accumulated costs and profits earned but not yet billed to customers. The Company believes that substantially all such amounts will be billed and collected within one year.

Note 6. Inventories

Inventories (in millions):		Balance at year-end
		2017				2016
Raw materials and supplies		$	200.2			$	146.0
Work in process		157.9				147.8
Finished goods		54.1				43.0
		412.2				336.8
Progress payments		(1.4		)		(9.1		)
Reduction to LIFO cost basis		(10.6		)		(13.5		)
Total inventories, net		$	400.2			$	314.2

Inventories at cost determined on the LIFO method were $63.6 million at December 31, 2017, and $68.4 million at January 1, 2017. The remainder of the inventories using average cost or the FIFO methods, were $348.6 million at December 31, 2017, and $268.4 million at January 1, 2017. Certain inventory costs are also reflective of the estimates used in applying the percentage-of-completion revenue recognition method.

The Company recorded $2.9 million in LIFO income in 2017, $0.7 million in LIFO income in 2016 and $1.2 million of LIFO income in 2015.

Inventories, before progress payments, related to long-term contracts were $87.7 million and $87.2 million at December 31, 2017, and January 1, 2017, respectively. Progress payments related to long-term contracts were $1.4 million and $9.1 million at December 31, 2017, and January 1, 2017, respectively. Under the contractual arrangements by which progress payments are received, the customer has an ownership right in the inventories associated with specific contracts.

Note 7. Supplemental Balance Sheet Information

Property, plant and equipment (in millions):		Balance at year-end
		2017				2016
Land		$	61.4			$	37.5
Buildings		256.6				204.3
Equipment and software		656.4				567.5
		974.4				809.3
Accumulated depreciation and amortization		(531.6		)		(468.5		)
Total property, plant and equipment, net		$	442.8			$	340.8

The following table presents the balance of selected components of Teledyne’s balance sheet (in millions):

Balance sheet items	Balance sheet location		December 31, 2017				January 1, 2017
Salaries and wages	Accrued liabilities		$	121.6			$	90.1
Customer related accruals, deposits and credits	Accrued liabilities		$	109.6			$	72.4
Deferred tax liabilities	Other long-term liabilities		$	61.8			$	26.8

Note 8. Stockholders’ Equity

Common stock and treasury stock activity:		Stock			Treasury Stock
Balance, December 28, 2014		37,697,865			1,042,281
Acquired		—			2,561,815
Issued		—			(420,830	)
Balance, January 3, 2016		37,697,865			3,183,266
Acquired		—			138,831
Issued		—			(734,994	)
Balance, January 1, 2017		37,697,865			2,587,103
Issued		—			(429,471	)
Balance, December 31, 2017		37,697,865			2,157,632

Shares issued include stock options exercised as well as shares issued under certain compensation plans.

Treasury Stock

On January 27, 2015, the Company’s Board of Directors authorized a stock repurchase program authorizing the Company to repurchase up to 2,500,000 shares of its common stock. In February 2015, the Company entered into a $142.0 million accelerated share repurchase (“ASR”) agreement with a financial institution (“ASR Counterparty”) in a privately negotiated transaction for 1,500,000 shares of the Company's common stock. Pursuant to the ASR agreement, in February 2015, the Company advanced $142.0 million to the ASR counterparty and received 1,425,000 shares of common stock, which used $134.9 million of the $142.0 million advanced, representing 95% of the estimated shares to be repurchased under the ASR agreement. In November 2015, the February 2015 ASR was settled with the Company making a payment of $1.2 million. In November 2015, the Company entered into a $100.5 million ASR agreement with a financial institution in a privately negotiated transaction for 1,100,000 shares of the Company's common stock. Pursuant to the ASR agreement, the Company advanced $100.5 million to the ASR counterparty and received 1,045,000 shares of common stock, which used $95.5 million of the $100.5 million advanced, representing 95% of the estimated shares to be repurchased under the ASR agreement. In February 2016, the November 2015 ASR was settled and Teledyne received 135,374 shares of common stock.

The up-front payments were accounted for as a reduction to stockholders’ equity in the Company’s Consolidated Balance Sheet in the period the payments were made. The total number of shares of common stock repurchased under each ASR is based on the average of the daily volume-weighted average prices of the common stock during the term of the respective ASR, less a discount. At settlement, the ASR Counterparty may be required to deliver additional shares of the Company’s common stock to the Company or, under certain circumstances, the Company may be required to deliver shares of its common stock or make a cash payment to the ASR Counterparty. The Company has treated the ASRs as a treasury share repurchase of common stock in the period the shares were delivered for purposes of calculating earnings per share and as a forward contract indexed to its own common stock. The ASRs meet all of the applicable criteria for equity classification, and, therefore, is not accounted for as a derivative instrument.

In 2015, the Company spent $243.8 million to repurchase a total of 2,561,815 shares of its common stock. Teledyne has 2,157,632 shares of treasury stock at December 31, 2017.

On January 26, 2016, the Company’s Board of Directors authorized an additional stock repurchase program authorizing the Company to repurchase up to an additional 3,000,000 shares of its common stock. The 2015 and 2016 stock repurchase authorizations are expected to remain open continuously, with respect to the shares remaining thereunder, and the number of shares repurchased will depend on a variety of factors, such as share price, levels of cash and borrowing capacity available, alternative investment opportunities available immediately or longer-term, and other regulatory, market or economic conditions. Future repurchases are expected to be funded with cash on hand and borrowings under the Company’s credit facility. No repurchases were made in 2017 or in 2016.

Preferred Stock

Authorized preferred stock may be issued with designations, powers and preferences designated by the Board of Directors. There were no shares of preferred stock issued or outstanding in 2017, 2016 or 2015.

Stock Incentive Plan

Teledyne has long-term incentive plans which provide its Board of Directors the flexibility to grant restricted stock, restricted stock units, performance shares, non-qualified stock options, incentive stock options and stock appreciation rights to officers and employees of Teledyne. Employee stock options become exercisable in one-third increments on the first, second and third anniversary of the grant and have a maximum 10-year life.

Until January 1, 2015, Teledyne also sponsored a stock plan for non-employee directors pursuant to which non-employee directors received annual stock options and received stock or stock options in lieu of their respective retainer and meeting fees. The stock options became exercisable one year after issuance and have a maximum 10-year life.

No stock options were granted in 2015. Stock option compensation expense is recorded on a straight line basis over the appropriate vesting period, generally three years. The Company recorded $14.2 million, $11.6 million, and $12.2 million for stock option expense, for 2017, 2016 and 2015, respectively. The Company issues shares of common stock upon the exercise of stock options. On January 23, 2018, the Company granted 373,468 stock options to its employees at an exercise price of $192.00 per share.

The total pretax intrinsic value of options exercised during 2017 and 2016 (which is the amount by which the stock price exceeded the exercise price of the options on the date of exercise) was $33.1 million and $36.6 million, respectively. At December 31, 2017, the intrinsic value of stock options outstanding was $224.9 million and the intrinsic value of stock options exercisable was $161.3 million. During 2017 and 2016, the amount of cash received from the exercise of stock options was $24.9 million and $36.1 million, respectively.

At December 31, 2017, there was $22.7 million of total unrecognized compensation cost related to non-vested stock option awards which is expected to be recognized over a weighted-average period of 1.4 years.

The fair value of stock options is determined by using a lattice-based option pricing model. The Company uses a combination of its historical stock price volatility and the volatility of exchange traded options, if any, on the Company stock to compute the expected volatility for purposes of valuing stock options granted. The period used for the historical stock price corresponded to the expected term of the options. The period used for the exchange traded options, if any, included the longest-dated options publicly available, generally three months. The expected dividend yield is based on Teledyne’s practice of not paying dividends. The risk-free rate of return is based on the yield of U.S. Treasury Strips with terms equal to the expected life of the options as of the grant date. The expected life in years is based on historical actual stock option exercise experience.

Stock option valuation assumptions:	2017			2016
Expected dividend yield	—			—
Expected volatility	32.3	%		32.7	%
Risk-free interest rate	1.0% to 2.5%			1.5	%
Expected life in years	7.2			7.2

Based on the assumptions used in the valuation of stock options, the grant date weighted average fair value of stock options granted in 2017 and 2016 was $48.45 and $29.95, respectively.

Stock option transactions for Teledyne’s stock option plans are summarized as follows:

	2017							2016							2015
	Shares			Weighted Average Exercise Price				Shares			Weighted Average Exercise Price				Shares			Weighted Average Exercise Price
Beginning balance	2,175,442			$	70.44			2,383,870			$	63.74			2,850,877			$	62.37
Granted	543,880			$	123.40			520,310			$	78.46			—			$	—
Exercised	(390,835	)		$	63.96			(687,018	)		$	52.54			(386,679	)		$	49.13
Canceled or expired	(42,784	)		$	92.79			(41,720	)		$	82.49			(80,328	)		$	85.26
Ending balance	2,285,703			$	83.73			2,175,442			$	70.44			2,383,870			$	63.74
Options exercisable at end of period	1,443,241			$	70.35			1,530,847			$	65.52			1,907,126			$	57.61

The following table provides certain information with respect to stock options outstanding and stock options exercisable at December 31, 2017, under the stock option plans:

		Stock Options Outstanding									Stock Options Exercisable
Range of Exercise Prices		Shares			Weighted Average Exercise Price				Remaining life in years		Shares			Weighted Average Exercise Price
$15.53-$24.99		5,359			$	21.83			1.5		5,359			$	21.83
$25.00-$49.99		351,909			$	43.78			2.8		351,909			$	43.78
$50.00-$74.99		260,431			$	63.03			4.0		260,431			$	63.03
$75.00-$99.99		1,139,099			$	82.67			6.8		825,542			$	84.30
$100.00-$124.99		528,005			$	123.38			9.1		—			$	—
$125.00-$135.24		900			$	133.88			9.2		—			$	—
		2,285,703			$	83.73			6.4		1,443,241			$	70.35

Performance Shares

Teledyne’s Performance Share Plan (“PSP”) provides grants of performance share units, which key officers and executives may earn if Teledyne meets specified performance objectives over a three-year period. Awards are payable in cash and to the extent available, shares of Teledyne common stock. Awards are generally paid to the participants in three annual installments after the end of the performance cycle so long as they remain employed by Teledyne (with an exception for retirement). Participants in the performance share program may elect to pay taxes due with respect to an installment payment with awarded cash, by reducing the number of awarded shares, or a combination thereof.

In February 2012, the performance cycle for the three-year period ending December 31, 2014, was set. Under the plan, and based on actual performance, the company issued 1,944 shares in 2015, 864 shares in 2016 and 1,883 shares in 2017.

In February 2015, the performance cycle for the three-year period ending December 31, 2017, was set. Under the plan, and based on actual performance, the number of shares that could be issued in three equal installments in 2018, 2019 and 2020, is 48,156.

The calculated expense for each plan year was based on the expected cash payout and the expected shares to be issued, valued at the share price at the inception of the performance cycle, except for the shares that can be issued based on a market comparison. The expected expense for these shares was calculated using a Monte-Carlo type simulation which takes into consideration several factors including volatility, risk free interest rates and correlation of Teledyne’s stock price with the comparator, the Russell 2000 Index (for 2018 the comparator is the Russell 1000). No adjustment to the calculated expense for the shares issued based on a market based comparison will be made regardless of the actual performance. The Company recorded $4.6 million, $2.1 million and $2.3 million in compensation expense related to the PSP program for fiscal years 2017, 2016 and 2015, respectively.

Restricted Stock

Under Teledyne’s restricted stock award program selected officers and key executives receive a grant of stock equal to a specified percentage of the participant’s annual base salary at the date of grant. The restricted stock is subject to transfer and forfeiture restrictions during an applicable “restricted period”. The restrictions have both time-based and performance-based components. The restricted period expires (and the restrictions lapse) on the third anniversary of the date of grant, subject to the achievement of stated performance objectives over a specified three-year performance period. If employment is terminated (other than by death, retirement or disability) during the restricted period, stock is forfeited.

The calculated expense for restricted stock awards to employees is based on a Monte-Carlo type simulation which takes into consideration several factors including volatility, risk free interest rates and the correlation of Teledyne’s stock price with the comparator, the Russell 2000 Index (for 2018 the comparator is the Russell 1000). No adjustment to the calculated expense will be made regardless of actual performance. The Company recorded $2.7 million, $2.7 million and $2.6 million in compensation expense related to restricted stock awards to employees, for fiscal years 2017, 2016 and 2015, respectively. At December 31, 2017, there was $2.6 million of total estimated unrecognized compensation cost related to non-vested awards which is expected to be recognized over a weighted-average period of approximately 1.3 years.

The following table shows restricted stock award activity for grants made to both domestic and foreign based employees:

Restricted stock:		Shares			Weighted average fair value per share
Balance, December 28, 2014		108,726			$	69.55
Granted		34,054			$	92.74
Issued		(29,642	)		$	51.38
Forfeited/Canceled		(13,502	)		$	82.33
Balance, January 3, 2016		99,636			$	81.15
Granted		37,104			$	72.91
Issued		(39,357	)		$	67.15
Forfeited/Canceled		(339	)		$	79.93
Balance, January 1, 2017		97,044			$	83.68
Granted		24,232			$	114.42
Issued		(30,704	)		$	87.98
Forfeited/Canceled		(2,136	)		$	82.53
Balance, December 31, 2017		88,436			$	90.63

Beginning with the 2015 Annual Meeting, non-employee directors each receive restricted stock units valued at $110,000 (or valued at $55,000 for a person who becomes a director for the first time after the date of the Annual Meeting). The restricted stock units generally vest one year following the date of grant and are settled in shares of common stock on the date of vesting unless a director has elected to defer settlement of the award until his or her separation from Board service. The annual expense related to non-employee directors restricted stock grants was approximately $1.0 million for each of 2017, 2016 and 2015. The following table shows restricted stock award activity for grants made to non-employee directors:

Directors Restricted stock:		Shares			Weighted average fair value per share
Balance, December 28, 2014		—			$	—
Granted		9,534			$	108.95
Balance, January 3, 2016		9,534			$	108.95
Granted		10,305			$	96.00
Issued		(8,532	)		$	108.93
Balance, January 1, 2017		11,307			$	97.16
Granted		7,371			$	134.26
Issued		(10,305	)		$	96.00
Balance, December 31, 2017		8,373			$	131.25

In December 2016, Teledyne granted 16,045 restricted stock units with a grant date fair value of $2.0 million to Teledyne’s Chief Executive Officer, which vest in equal annual installments over three years. The calculated expense for restricted stock units is based on the market price of a share of Teledyne common stock at the grant date, which is recognized over the vesting period and was $0.7 million in 2017 and less than $0.1 million in 2016. In December 2017, we issued 2,389 shares under the plan and 2,960 shares were withheld to pay income taxes.

Note 9. Long-Term Debt

At December 31, 2017, Teledyne had $1,063.9 million in long-term debt outstanding. At January 1, 2017, Teledyne had $509.7 million in long-term debt outstanding.

In March 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 effectively convert the $100.0 million term loan to a €93.0 million denominated instrument with a fixed euro interest rate of 0.7055%. The proceeds from the term loan were used in connection with the acquisition of e2v. 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 used the proceeds of the private placement, among other things, to repay indebtedness and for general corporate purposes.

In December 2016, the Company entered into an amendment relating to term loans of $182.5 million in aggregate principal amount (the “Term Loans”) to extend the maturity date of the Term Loans from March 1, 2019 to January 31, 2022 and extending the date on which amortization of principal begins; and generally lowering the applicable rate for base rate and Eurocurrency loans. The other material terms of the Term Loans, including covenants, remain unchanged. In November 2015, the Company issued $125.0 million in aggregate principal amount of senior unsecured notes. The notes consisted of $25.0 million of 2.81% senior unsecured notes due in November 2020, and $100.0 million of 3.28% senior unsecured notes due in November 2022. In December 2015, the Company amended the $750.0 million credit facility (“credit facility”) to extend the maturity from March 2018 to December 2020. The other material terms of the credit facility, including covenants, remain unchanged. Excluding interest and fees, no payments are due under the credit facility until it matures. The credit agreements require the Company to comply with various financial and operating covenants, including maintaining certain consolidated leverage and interest coverage ratios. Borrowings under our credit facility and term loans are at variable rates which are, at our option, tied to a Eurocurrency rate equal to LIBOR (London Interbank Offered Rate) plus an applicable rate or a base rate as defined in our credit agreements. Eurocurrency rate loans may be denominated in U.S. dollars or an alternative currency as defined in the agreement. Eurocurrency or LIBOR-based loans under the facility typically have terms of one, two, three or six months and the interest rate for each such loan is subject to change if the loan is continued or converted following the applicable maturity date. The Company has not drawn any loans with a term longer than three months under the credit facility. Base rate loans have interest rates that primarily fluctuate with changes in the prime rate. Interest rates are also subject to change based on our consolidated leverage ratio as defined in the credit agreement. The credit agreement also provides for facility fees that vary between 0.12% and 0.25% of the credit line, depending on our consolidated leverage ratio as calculated from time to time.

Teledyne also has a $5.0 million uncommitted credit line which permits credit extensions up to $5.0 million plus an incremental $2.0 million solely for standby letters of credit. This credit line is utilized, as needed, for periodic cash needs. There were no in outstanding funding advances under the uncommitted credit line at December 31, 2017 and $3.5 million outstanding at January 1, 2017. The Company also has $6.7 million outstanding under capital leases, of which $1.3 million is current. At year-end 2017, Teledyne had $29.6 million in outstanding letters of credit.

Available borrowing capacity under the $750.0 million credit facility, which is reduced by borrowings and certain outstanding letters of credit, was $558.7 million at December 31, 2017. The credit agreement and term loans requires the Company to comply with various financial and operating covenants and at December 31, 2017, the Company was in compliance with these covenants.

Total interest expense including credit facility fees and other bank charges was $35.5 million in 2017, $23.6 million in 2016 and $24.0 million in 2015.

Teledyne estimates the fair value of its long-term debt based on debt of similar type, rating and maturity and at comparable interest rates. The Company’s long-term debt was considered a level 2 fair value hierarchy and is valued based on observable market data. The estimated fair value of Teledyne’s long-term debt at December 31, 2017, and January 1, 2017, approximated the carrying value.

Long-Term Debt (in millions):	December 31, 2017				January 1, 2017
$750.0 million revolving credit facility, due December 2020, weighted average rate of 2.72% at December 31, 2017	$	165.0			$	—
Term Loans due through January 2022, weighted average rate of 2.94% at December 31, 2017, and 1.90% at January 1, 2017	175.5				182.5
Term loan due October 2019, variable rate of 2.80% swapped to a Euro fixed rate of 0.7055% at December 31, 2017	100.0				—
4.74% Fixed Rate Senior Notes due and repaid September 2017	—				100.0
2.61% Fixed Rate Senior Notes due December 2019	30.0				30.0
5.30% Fixed Rate Senior Notes due September 2020	75.0				75.0
2.81% Fixed Rate Senior Notes due November 2020	25.0				25.0
3.09% Fixed Rate Senior Notes due December 2021	95.0				95.0
3.28% Fixed Rate Senior Notes due November 2022	100.0				100.0
0.70% €50 Million Fixed Rate Senior Notes due April 2022	60.0				—
0.92% €100 Million Fixed Rate Senior Notes due April 2023	120.0				—
1.09% €100 Million Fixed Rate Senior Notes due April 2024	120.0				—
Other debt at various rates due through 2018	2.7				4.2
Total long-debt	1,068.2				611.7
Current portion of long-term debt and debt issue costs	(4.3		)		(102.0		)
Total long-term debt, net of current portion	$	1,063.9			$	509.7

No minimum principal payments on the $750.0 million revolving credit facility are required until December 2020. The Company began making quarterly minimum principal payments on the term loans in 2015. Future minimum principal payments on long-term debt are as follows: 2018 - $2.3 million; 2019 - $136.0 million; 2020 - $105.1 million; 2021 - $102.4 million; 2022 - $482.0 million; 2023 and beyond - $240.4 million. The Company has no sinking fund requirements.

Note 10. Income Taxes

On December 22, 2017, the Tax Cuts and Jobs Act was enacted. The Tax Act significantly revised the U.S. corporate income tax by, among other things, lowering corporate income tax rates, implementing the territorial tax system and imposing a tax on deemed repatriation of non-U.S. earnings. As a result of the Tax Act, Teledyne incurred provisional charges of $4.7 million in the fourth quarter of 2017 primarily due to the repatriation tax and the remeasurement of U.S. deferred tax assets and liabilities. In accordance with the Tax Act, the Company will elect to pay the repatriation tax liability over a period of eight years, with the first installment of $3.1 million due in 2018. The remainder of the tax liability is recorded in non-current income tax payable. The repatriation tax resulted in a net tax expense of $26.2 million and the remeasurement of U.S. deferred tax assets and liabilities resulted in a net tax benefit of $21.5 million. The impacts of the Tax Act may differ from this estimate, possibly materially (and the amount of the provisional charge may accordingly be adjusted over the course of 2018), due to changes in interpretations and assumptions Teledyne has made, guidance that may be issued, and actions Teledyne may take as a result of the Tax Act. These adjustments to the provisional charge related to the Tax Act will be recorded quarterly until the computations are complete which is expected no later than the fourth quarter of 2018.

Income before income taxes included income from domestic operations of $187.2 million for 2017, $195.2 million for 2016 and $213.8 million for 2015. Income before taxes included income from foreign operations of $99.8 million for 2017, $46.1 million for 2016 and $44.4 million for 2015.

Income tax provision/(benefit) - (in millions):		2017				2016				2015
Current
Federal		$	54.0			$	43.0			$	54.4
State		6.4				3.9				5.3
Foreign		22.8				3.4				4.0
Total current		83.2				50.3				63.7
Deferred
Federal		(10.7		)		4.3				3.5
State		(3.6		)		(4.8		)		(2.5		)
Foreign		(9.1		)		0.6				(2.0		)
Total deferred		(23.4		)		0.1				(1.0		)
Provision for income taxes		$	59.8			$	50.4			$	62.7

The following is a reconciliation of the statutory federal income tax rate to the actual effective income tax rate:

Tax rate reconciliation:		2017			2016			2015
U.S. federal statutory tax rate		35.0	%		35.0	%		35.0	%
State and local taxes, net of federal benefit		1.8			1.6			1.9
Research and development tax credits		(3.2	)		(2.0	)		(3.4	)
Investment tax credits		(1.5	)		(1.8	)		(1.2	)
Qualified production activity deduction		(1.3	)		(1.6	)		(2.2	)
Foreign rate differential		(4.2	)		(2.7	)		(2.1	)
Net reversals for unrecognized tax benefits		(0.8	)		(1.5	)		(2.1	)
Stock-based compensation (ASU No. 2016-09)		(3.1	)		(3.5	)		—
Provisional charges related to U.S. tax reform		1.6			—			—
Other		(3.5	)		(2.6	)		(1.6	)
Effective income tax rate		20.8	%		20.9	%		24.3	%

Deferred income taxes result from temporary differences in the recognition of income and expense for financial and income tax reporting purposes, and differences between the fair value of assets acquired in business combinations accounted for as purchases for financial reporting purposes and their corresponding tax bases. Deferred income taxes represent future tax benefits or costs to be recognized when those temporary differences reverse.

The categories of assets and liabilities that have resulted in differences in the timing of the recognition of income and expense were as follows (in millions):

Deferred income tax assets:		2017				2016
Long-term:
Accrued liabilities		$	16.9			$	36.4
Inventory valuation		14.3				17.7
Accrued vacation		7.6				10.7
Deferred compensation and other benefit plans		11.6				24.5
Postretirement benefits other than pensions		3.0				4.6
Tax credit and net operating loss carryforward		49.8				47.7
Valuation allowance		(8.8		)		(16.9		)
Total deferred income tax assets		94.4				124.7
Deferred income tax liabilities:
Long-term:
Property, plant and equipment differences		28.6				30.6
Intangible amortization		113.4				110.7
Other		3.4				4.8
Total deferred income tax liabilities		145.4				146.1
Net deferred income tax liabilities		$	51.0			$	21.4

On a provisional basis, we intend to reinvest indefinitely the earnings of our material foreign subsidiaries in our operations outside of the United States. The cash that the Company's foreign subsidiaries hold for indefinite reinvestment is generally used to finance foreign operations and investments, including acquisitions. We estimate that future domestic cash generation will be sufficient to meet future domestic cash requirements. Due to the Tax Act, U.S. federal and applicable state income taxes have been accrued for the deemed repatriation. At December 31, 2017, the amount of undistributed foreign earnings was $324.3 million, for which we have not recorded a deferred tax liability of approximately $1.4 million for state corporate income taxes which would be due if reinvested foreign earnings were repatriated. Should we decide to repatriate the foreign earnings, we would need to adjust our income tax provision in the period we determined that we would no longer indefinitely reinvest the earnings outside the United States.

In assessing the need for a valuation allowance, we consider all positive and negative evidence, including recent financial performance, scheduled reversals of temporary differences, projected future taxable income, availability of taxable income in carryback periods and tax planning strategies. Based on a review of such information, management believes that it is possible that some portion of deferred tax assets will not be realized as a future benefit and therefore has recorded a valuation allowance. The valuation allowance for deferred tax assets decreased by $8.1 million in 2017, primarily related to the

utilization of net operating loss carryforward and evidence for future utilization of the remaining investment tax credit and net operating loss carryforwards.

At December 31, 2017, the Company had approximately $60.6 million of net operating loss carryforward from foreign entities primarily from the Company’s Danish entity, which has no expiration date. The Company had foreign capital loss carryforward in the amount of $2.2 million which has no expiration date. Also the Company had aggregate Canadian federal and provincial investment tax credits of $19.9 million, which have expiration dates of 2029 to 2037. In addition, the Company had domestic federal and state net operating loss carryforward of $3.8 million and $131.1 million, respectively. Generally, federal net operating loss carryforward amounts are limited in their use by earnings of certain acquired subsidiaries, and have expiration dates ranging from 2030 to 2037 and the state net operating loss carryforward amounts have expiration dates ranging from 2020 to 2037. Finally, the Company had federal research and development credit carryforward in the amount of $1.2 million which will expire between 2032 and 2035 and state tax credits of $13.8 million, of which $11.6 million have no expiration date and $2.2 million have expiration dates ranging from 2019 to 2033.

Unrecognized tax benefits (in millions):		2017				2016				2015
Beginning of year		$	24.5			$	28.8			$	32.3
Increase in prior year tax positions (a)		0.5				1.6				2.1
Increase for tax positions taken during the current period		9.8				1.6				1.6
Reduction related to settlements with taxing authorities		—				—				(1.5		)
Reduction related to lapse of the statute of limitations		(8.8		)		(7.5		)		(5.0		)
Impact of exchange rate changes		—				—				(0.7		)
End of year		$	26.0			$	24.5			$	28.8
a) Includes the impact of acquisitions in all years.

The Company anticipates the total unrecognized tax benefit for various federal, state and foreign tax items may be reduced by $4.9 million due to the expiration of statutes of limitation for various federal, state and foreign tax issues in the next 12 months.

We recognized net tax benefits for interest and penalties related to unrecognized tax benefits within the provision for income taxes in our statements of operations of $0.5 million, $0.2 million and $0.2 million, for 2017, 2016 and 2015, respectively. Interest and penalties in the amount of $1.4 million, $1.9 million and $2.1 million were recognized in the 2017, 2016 and 2015 statement of financial position, respectively. Substantially all of the unrecognized tax benefits as of December 31, 2017, if recognized would affect our effective tax rate.

We file income tax returns in the United States federal jurisdiction and in various states and foreign jurisdictions. The Company has substantially concluded on all U.S. federal income tax matters for all years through 2013, United Kingdom and France tax matters for all years through 2014 and Canadian income tax matters for all years through 2009.

Note 11. Pension Plans and Postretirement Benefits

Pension Plans

Teledyne has a defined benefit pension plan covering substantially all U.S. employees hired before January 1, 2004, or approximately 13% of Teledyne’s active employees. As of January 1, 2004, new hires participate in a defined contribution plan only. The Company also has several smaller domestic qualified and foreign-based defined benefit pension plans.

Teledyne’s domestic pension income was $2.9 million in 2017, compared with pension income of $3.0 million in 2016 and pension expense of $2.0 million in 2015. In the first quarter of 2015, Teledyne froze its non-qualified pension plan for top executives which resulted in a one-time gain of $1.2 million. In accordance with U.S. Government Cost Accounting Standards (“CAS”), $13.8 million was recoverable from certain government contracts, for each of 2017, 2016 and 2015. Teledyne did not make any cash contributions to its domestic qualified pension plan since 2013. In 2018, we are not required, and are not planning, to make any cash contributions to the domestic qualified pension plan.

In December 2017, the Company’s U.S. domestic qualified pension plan purchased group annuity contracts from an insurance company and paid a total annuity premium of $19.0 million. This annuity contract transfers the obligation to this insurance company to guarantee the full payment of all annuity payments to approximately 412 existing retired pension plan participants or their surviving beneficiaries. In June and December 2016, the Company’s U.S. domestic qualified pension plan purchased group annuity contracts from two insurance companies and paid a total annuity premium of $27.2 million. These annuity contracts transfer the obligation to these insurance companies to guarantee the full payment of all annuity payments to approximately 1,193 existing retired pension plan participants or their surviving beneficiaries. These annuity contracts assume all investment risk associated with the assets that were delivered as the annuity contract premiums.

The domestic qualified pension plan was amended in 2015 to allow participants at retirement to elect a lump-sum payment. In 2017, 2016 and 2015, the Company made lump sum payments of approximately $21.7 million, $14.6 million and $10.5 million, respectively, from the domestic qualified pension plan assets to certain participants in the plan as a result of these lump sum offers. Each year beginning with 2014, the Society of Actuaries released revised mortality tables, which updated life expectancy assumptions. In consideration of these tables, each year the Company reviews the mortality assumptions used in determining our pension and post-retirement obligations.

The Company’s contributions associated with its 401(k) plans were $9.8 million, $9.3 million and $10.1 million, for 2017, 2016 and 2015, respectively.

Net periodic benefit (income) expense - in millions:		Domestic												Foreign
		2017				2016				2015				2017				2016				2015
Service cost - benefits earned during the period		$	10.2			$	10.4			$	12.4			$	1.0			$	0.8			$	0.9
Interest cost on benefit obligation		35.6				38.9				37.8				1.2				1.6				1.7
Expected return on plan assets		(71.3		)		(72.9		)		(74.4		)		(2.1		)		(2.2		)		(2.2		)
Amortization of prior service cost		(6.0		)		(6.0		)		(6.0		)		(0.1		)		—				—
Amortization of actuarial loss		28.6				26.6				33.4				0.6				0.6				0.6
Curtailment		—				—				(1.2		)		(0.4		)		—				—
Net periodic benefit (income) expense		$	(2.9	)		$	(3.0	)		$	2.0			$	0.2			$	0.8			$	1.0

The expected long-term rate of return on plan assets is reviewed annually, taking into consideration the Company’s asset allocation, historical returns on the types of assets held, the current economic environment, and prospective expectations. We determined the discount rate based on a model which matches the timing and amount of expected benefit payments to maturities of high-quality corporate bonds priced as of the pension plan measurement date. The yields on the bonds are used to derive a discount rate for the obligation.

The following assumptions were used to measure the net benefit income/cost within each respective year:

Pension Plan Assumptions:		Weighted average discount rate		Weighted average increase in future compensation levels		Expected weighted-average long-term rate of return
Domestic plan - 2017		4.54%		2.75%		8.00%
Domestic plan - 2016		4.91%		2.75%		8.00%
Domestic plan - 2015		4.50%		2.75%		8.25%
Foreign plans - 2017		0.60% - 2.50%		1.00% - 2.50%		1.00% - 5.90%
Foreign plans - 2016		0.90% - 3.60%		1.00% - 2.43%		1.40% - 6.50%
Foreign plans - 2015		1.20% - 3.50%		1.30% - 2.40%		1.80% - 6.40%

For its domestic pension plans the Company is projecting a long-term rate of return on plan assets of 8.00% in 2018. For its foreign based pension plans the Company is projecting a long-term rate of return on plan assets will range from 1.00% to 4.50% in 2018.

		Domestic								Foreign
		2017				2016				2017				2016
Changes in benefit obligation (in millions):
Benefit obligation - beginning of year		$	810.9			$	820.4			$	51.4			$	56.6
Service cost - benefits earned during the year		10.2				10.4				1.0				0.8
Interest cost on projected benefit obligation		35.6				38.9				1.2				1.6
Actuarial (gain) loss		41.9				29.5				(1.6		)		6.2
Benefits paid(a)		(86.3		)		(88.3		)		(2.4		)		(1.8		)
Plan amendments		—				—				—				(0.3		)
Settlements/curtailments		—				—				(3.0		)		(4.6		)
Other - including foreign currency		—				—				5.7				(7.1		)
Business combinations		—				—				5.5				—
Benefit obligation - end of year		$	812.3			$	810.9			$	57.8			$	51.4
Accumulated benefit obligation - end of year		$	809.4			$	807.3			$	53.7			$	49.1

(a)	The 2017, 2016 and 2015 amounts include lump sum payments to certain participants of $21.7 million, $14.6 million and $10.5 million, respectively. In addition, in 2016, the Company’s U.S. domestic qualified pension plan purchased group annuity contracts from two insurance companies and paid a total annuity premium of $27.2 million.

The key assumptions used to measure the benefit obligation at each respective year-end were:

Key assumptions:		Domestic Plan									Foreign Plans
		2017			2016			2015			2017		2016		2015
Discount rate		4.54	%		4.54	%		4.91	%		0.60% - 2.50%		0.60% - 2.50%		0.90% - 3.60%
Salary growth rate		2.75	%		2.75	%		2.75	%		1.00% - 2.50%		1.00% - 2.30%		1.00% - 2.40%

		Domestic								Foreign
		2017				2016				2017				2016
Changes in plan assets (in millions):
Fair value of net plan assets - beginning of year		$	857.1			$	890.4			$	42.1			$	43.8
Actual return on plan assets		123.1				52.9				2.5				5.8
Employer contribution - other benefit plan		2.1				2.1				2.6				3.4
Foreign currency changes		—				—				4.3				(5.9		)
Benefits paid		(86.3		)		(88.3		)		(2.4		)		(1.8		)
Other		—				—				(2.4		)		(3.2		)
Fair value of net plan assets - end of year		$	896.0			$	857.1			$	46.7			$	42.1

The measurement date for the Company’s pension plans is December 31.

The following table sets forth the funded status and amounts recognized in the consolidated balance sheets at year-end 2017 and 2016 for the domestic qualified and nonqualified pension plans and the foreign-based pension plans for benefits provided to certain employees (in millions):

		Domestic								Foreign
		2017				2016				2017				2016
Funded status		$	83.7			$	46.2			$	(11.1	)		$	(9.3	)
Amounts recognized in the consolidated balance sheets:
Prepaid pension asset long-term		$	127.2			$	88.5			$	—			$	—
Accrued pension obligation long-term		(35.4		)		(34.5		)		(11.1		)		(9.3		)
Accrued pension obligation short-term		(2.6		)		(2.6		)		—				—
Other long-term liabilities		(5.5		)		(5.2		)		—				—
Net amount recognized		$	83.7			$	46.2			$	(11.1	)		$	(9.3	)
Amounts recognized in accumulated other comprehensive loss:
Prior service credit		$	(24.7	)		$	(30.7	)		$	(0.2	)		$	(0.5	)
Net loss		383.0				421.5				8.2				10.3
Net amount recognized, before tax effect		$	358.3			$	390.8			$	8.0			$	9.8

Amounts for pension plans with accumulated benefit obligations in excess of fair value of plan assets are as follows (in millions):

		2017			2016
Projected benefit obligation		$	101.3		$	93.7
Accumulated benefit obligation		$	97.3		$	91.4
Fair value of plan assets		$	46.7		$	42.1

At year-end 2017 and 2016 the Company had an accumulated non-cash reduction to stockholders’ equity of $227.8 million and $249.6 million, respectively, related to its pension and postretirement plans. The accumulated non-cash reductions to stockholders’ equity did not affect net income and were recorded net of accumulated deferred taxes of $135.8 million at year end 2017 and $147.3 million at year end 2016.

At December 31, 2017, the estimated amounts of the minimum liability adjustment that are expected to be recognized as components of net periodic benefit cost during 2018 for the pension plans are: net loss $31.5 million and net prior service credit $6.1 million.

Estimated future pension plan benefit payments (in millions):		Domestic				Foreign
2018		$	56.7			$	2.9
2019		56.9				2.0
2020		57.1				2.2
2021		57.8				2.3
2022		58.3				2.1
2023-2027		287.3				12.6
Total		$	574.1			$	24.1

The following table sets forth the percentage of year-end market value by asset class for the pension plans:

Market value by asset class:		Domestic Plan Assets % to Total						Foreign Plan Assets % to Total
		2017			2016			2017			2016
Equity instruments		58	%		57	%		46	%		75	%
Fixed income instruments		29			30			30			15
Alternatives and other		13			13			24			10
Total		100	%		100	%		100	%		100	%

The Company has an active management policy for a portion of the pension assets in the domestic pension plan. The long term asset allocation target for the domestic plan consists of 70% in equity instruments including a portion in alternatives and 30% in fixed income instruments. The balance in equity instruments for the domestic plan can range from 45% to 75% before rebalancing is required under the Company’s policy.

The pension plan’s investments are stated at fair value. Plan investments that are considered a level 1 fair value hierarchy and are valued at quoted market prices in active markets. Plan investments that are considered a level 2 fair value hierarchy and are valued based on observable market data. Plan investments that would be considered a level 3 fair value hierarchy are valued based on management’s own assumption about the assumptions that market participants would use in pricing the asset or liability (including assumptions about risk).

Certain investments measured at fair value using net asset values as a practical expedient are not required to be categorized in the fair value hierarchy table listed below. As such, the total fair value of these net asset values based investments has been included in the table below to permit reconciliation to the plan asset amounts previously disclosed.

The fair values of the Company’s net pension assets, by fair value hierarchy, for both the U.S. and foreign pension plans as of December 31, 2017, by asset category are as follows (in millions):

Asset category:(a)		Level 1				Level 2				Level 3				Total
Cash and cash equivalents (b)		$	—			$	40.9			$	—			$	40.9
Equity securities		131.8				253.5				—				385.3
U.S. government securities and futures		69.5				—				—				69.5
Corporate bonds		—				86.7				—				86.7
Insurance contracts related to foreign plans		—				12.3				—				12.3
Fair value of net plan assets at the end of the year		$	201.3			$	393.4			$	—			$	594.7
Investments measured at net asset value:
Alternatives														$	159.5
Mutual funds (c)														157.0
Senior secured loans														0.2
Mortgage-backed securities														17.3
High yield bonds														14.0
Fair value of net plan assets at the end of the year														$	348.0

a) There were no transfers of plan assets between the three levels of the fair value hierarchy during the year.

b) Reflects cash and cash equivalents held in overnight cash investments.

c) 29% of mutual funds invest in fixed income types of securities; 71% invest in equity securities.

The fair values of the Company’s net pension assets, by fair value hierarchy, for both the U.S. and foreign pension plans as of January 1, 2017, by asset category are as follows (in millions):

Asset category: (a)		Level 1				Level 2				Level 3				Total
Cash and cash equivalents (b)		$	—			$	39.5			$	—			$	39.5
Equity securities		152.0				78.2				—				230.2
U.S. government securities and futures		46.2				0.1				—				46.3
Corporate bonds		—				84.8				—				84.8
Insurance contracts related to foreign plans		—				12.7				—				12.7
Fair value of net plan assets at the end of the year		$	198.2			$	215.3			$	—			$	413.5
Investments measured at net asset value:
Equity securities														$	147.2
Alternatives														148.5
Mutual funds (c)														136.4
Corporate bonds														19.4
Senior secured loans														4.4
Mortgage-backed securities														16.5
High yield bonds														13.2
Fair value of net plan assets at the end of the year														$	485.6

(a) There were no of transfers of plan assets between the three levels of the fair value hierarchy during the year.

(b) Reflects cash and cash equivalents held in overnight cash investments.

(c) 29% of mutual funds invest in fixed income types of securities; 71% invest in equity securities.

U.S. equities are valued at the closing price reported in an active market on which the individual securities are traded. U.S. equities and non-U.S. equities are also valued at the net asset value provided by the independent administrator or custodian of the commingled fund. The net asset value is based on the value of the underlying equities, which are traded on an active market. Corporate bonds are valued using inputs such as the closing price reported, if traded on an active market, values derived from comparable securities of issuers with similar credit ratings, or under a discounted cash flow approach that utilizes observable inputs, such as current yields of similar instruments. Fixed income investments are also valued at the net asset value provided by the independent administrator or custodian of the fund. The net asset value is based on the underlying assets, which are valued using inputs such as the closing price reported, if traded on an active market, values derived from comparable securities of issuers with similar credit ratings, or under a discounted cash flow approach that utilizes observable inputs, such as current yields of similar instruments. Alternative investments are primarily valued at the net asset value as determined by the independent administrator or custodian of the fund. The net asset value is based on the underlying investments, which are valued using inputs such as quoted market prices of identical instruments or values derived from comparable securities of issuers with similar credit ratings, or under a discounted cash flow approach that utilizes observable inputs, such as current yields of similar instruments.

Postretirement Plans

The Company sponsors several postretirement defined benefit plans covering certain salaried and hourly employees. The plans provide health care and life insurance benefits for certain eligible retirees.

Net period postretirement benefit expense (in millions):		2017				2016				2015
Service cost - benefits earned during the period		$	—			$	—			$	—
Interest cost on benefit obligation		0.4				0.5				0.5
Amortization of prior service cost		—				—				—
Amortization of actuarial gain		(0.4		)		(0.4		)		(0.2		)
Net periodic benefit expense		$	—			$	0.1			$	0.3

		2017				2016
Changes in benefit obligation (in millions):
Benefit obligation - beginning of year		$	9.8			$	10.7
Interest cost on projected benefit obligation		0.4				0.5
Actuarial loss		0.8				0.1
Benefits paid		(1.3		)		(1.5		)
Benefit obligation - end of year		$	9.7			$	9.8

The measurement date for the Company’s postretirement plans is December 31.

Future postretirement plan benefit payments (in millions):
2018		$	1.1
2019		1.0
2020		0.9
2021		0.9
2022		0.8
2023-2027		3.4
Total		$	8.1

The following table sets forth the funded status and amounts recognized in Teledyne’s consolidated balance sheets for the postretirement plans at year-end 2017 and 2016 (in millions):

		2017				2016
Funded status:
Funded status		$	(9.7	)		$	(9.8	)
Unrecognized net gain		(2.7		)		(3.8		)
Accrued benefit cost		$	(12.4	)		$	(13.6	)
Amounts recognized in the consolidated balance sheets:
Accrued postretirement benefits (long-term)		$	(8.7	)		$	(8.7	)
Accrued postretirement benefits (short-term)		(1.0		)		(1.1		)
Accumulated other comprehensive income		(2.7		)		(3.8		)
Net amount recognized		$	(12.4	)		$	(13.6	)

At December 31, 2017, the amounts in the AOCI that have not yet been recognized as components of net periodic benefit income for the retiree medical plans are: net gain $2.7 million and net prior service credit of less than $0.1 million. At December 31, 2017, the estimated amortization from AOCI expected to be recognized as components of net periodic benefit income during 2018 for the retiree medical plans are: net gain $0.3 million and net prior service cost of less than $0.1 million.

The annual assumed rate of increase in the per capita cost of covered benefits (the health care cost trend rate) for health care plans is 6.5% in 2018 and was assumed to decrease to 5.0% by the year 2024 and remain at that level thereafter. Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans. A one percentage point increase in the assumed health care cost trend rates would result in an increase in the annual service and interest costs by less than $0.1 million for 2017 and would result in an increase in the postretirement benefit obligation by $0.3 million at December 31, 2017. A one percentage point decrease in the assumed health care cost trend rates would result in a decrease in the annual service and interest costs by less than $0.1 million for 2017 and would result in a decrease in the postretirement benefit obligation by $0.2 million at December 31, 2017.

Note 12. Business Segments

The Company has four reportable segments: Instrumentation; Digital Imaging; Aerospace and Defense Electronics; and Engineered Systems. The Company manages, evaluates and aggregates its operating segments for segment reporting purposes primarily on the basis of product and service type, production process, distribution methods, type of customer, management organization, sales growth potential and long-term profitability. The Instrumentation segment provides monitoring and control instruments for marine, environmental, industrial and other applications, electronic test and measurement equipment and harsh environment interconnect products. The Digital Imaging segment includes high-performance sensors, cameras and systems, within the visible, infrared and X-ray spectra, for use in industrial, government and medical applications, as well as micro electro-mechanical systems (“MEMS”) and high-performance, high-reliability semiconductors including analog-to-digital and digital-to-analog converters. It also includes our sponsored and centralized research laboratories benefiting government programs and businesses. The Aerospace and Defense Electronics segment provides sophisticated electronic components and subsystems and communications products, including defense electronics, harsh environment interconnects, data acquisition and communications equipment for aircraft and components and subsystems for wireless and satellite communications, as well as general aviation batteries. In the third quarter of 2016, Teledyne completed the disposition of the net assets of its PCT business for $9.3 million in cash resulting in no gain or loss. PCT, which was part of the Aerospace and Defense Electronics segment, had sales of $10.1 million and $16.6 million for 2016 and 2015, respectively. For 2016, PCT reported a pretax loss of $3.1 million and $3.9 million for 2016 and 2015, respectively. The Engineered Systems segment provides innovative systems engineering and integration, advanced technology application, software development and manufacturing solutions for defense, space, environmental and energy applications. The Engineered Systems segment also designs and manufactures electrochemical energy systems and small turbine engines.

Segment results include net sales and operating income by segment but excludes noncontrolling interest, equity income or loss, unusual non-recurring legal matter settlements, interest income and expense, gains and losses on the disposition of assets, sublease rental income and non-revenue licensing and royalty income, domestic and foreign income taxes and corporate office expenses. Corporate expense includes various administrative expenses relating to the corporate office and certain nonoperating expenses not allocated to our segments.

As part of a continuing effort to reduce costs and improve operating performance the Company may take 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 following pre-tax charges were incurred related to severance and facility consolidations (in millions):

		2017				2016				2015
Instrumentation		$	2.1			$	10.6			$	3.9
Digital Imaging		—				2.0				3.2
Aerospace and Defense Electronics		2.1				4.6				1.2
Engineered Systems		—				0.1				0.1
Total		$	4.2			$	17.3			$	8.4

At December 31, 2017, $1.5 million remains to be paid related to these actions.

Information on the Company’s business segments was as follows (in millions):

Net sales:	2017				2016				2015
Instrumentation	$	953.9			$	876.7			$	1,051.1
Digital Imaging	693.5				398.7				379.0
Aerospace and Defense Electronics	670.2				615.9				593.4
Engineered Systems	286.2				258.6				274.6
Total net sales	$	2,603.8			$	2,149.9			$	2,298.1
Operating income:	2017				2016				2015
Instrumentation	$	127.4			$	109.8			$	171.0
Digital Imaging	108.4				45.9				40.0
Aerospace and Defense Electronics	124.9				112.1				84.8
Engineered Systems	37.7				32.1				26.1
Corporate expense	(62.8		)		(46.1		)		(40.2		)
Total operating income	$	335.6			$	253.8			$	281.7

Depreciation and amortization:		2017				2016				2015
Instrumentation		$	38.2			$	37.3			$	41.2
Digital Imaging		48.5				26.2				26.1
Aerospace and Defense Electronics		15.7				14.4				15.0
Engineered Systems		4.0				4.1				3.5
Corporate		6.6				5.3				4.5
Total depreciation and amortization		$	113.0			$	87.3			$	90.3

Capital expenditures:		2017				2016				2015
Instrumentation		$	13.7			$	50.9			$	20.9
Digital Imaging		23.3				12.5				9.2
Aerospace and Defense Electronics		11.0				12.6				9.1
Engineered Systems		5.8				5.9				5.7
Corporate		4.7				5.7				2.1
Total capital expenditures		$	58.5			$	87.6			$	47.0

Identifiable assets are those assets used in the operations of the segments. Corporate assets primarily consist of cash and cash equivalents, deferred taxes, net pension assets/liabilities and other assets.

Identifiable assets:		2017				2016				2015
Instrumentation		$	1,413.6			$	1,361.0			$	1,339.6
Digital Imaging		1,496.4				671.1				634.9
Aerospace and Defense Electronics		605.5				449.4				451.6
Engineered Systems		107.0				93.9				92.2
Corporate (a)		223.9				199.0				198.8
Total identifiable assets		$	3,846.4			$	2,774.4			$	2,717.1
(a) The amount for 2017, 2016 and 2015 includes $127.2 million, $88.5 million and $111.0 million prepaid pension asset, respectively.

Information on the Company’s sales by country of origin and long-lived assets by major geographic area was as follows (in millions):

Sales by country of origin:		2017				2016				2015
United States		$	1,834.6			$	1,645.7			$	1,797.1
Canada		266.1				209.2				208.8
United Kingdom		197.5				109.6				124.6
France		36.1				7.9				8.3
All other countries		269.5				177.5				159.3
Total sales		$	2,603.8			$	2,149.9			$	2,298.1

Long-lived assets:		2017				2016				2015
United States		$	1,495.4			$	1,404.9			$	1,329.1
Canada		288.2				273.5				249.9
United Kingdom		487.9				103.3				127.3
France		370.2				3.2				3.4
All other countries		182.0				138.1				139.3
Total long-lived assets		$	2,823.7			$	1,923.0			$1,849.0

Long-lived assets consist of property, plant and equipment, goodwill, acquired intangible assets, prepaid pension assets and other long-term assets including deferred compensation assets but excluding any deferred tax assets. The all other countries category primarily consists of Teledyne’s operations in Europe.

Product Lines

The Instrumentation segment includes three product lines: Environmental Instrumentation, Marine Instrumentation and Test and Measurement Instrumentation. All other segments each contain one product line.

The tables below provide a summary of the sales by product line for the Instrumentation segment (in millions):

Instrumentation:		2017				2016				2015
Environmental Instrumentation		$	314.3			$	270.1			$	268.7
Marine Instrumentation		430.7				418.7				614.0
Test and Measurement Instrumentation		208.9				187.9				168.4
Total		$	953.9			$	876.7			$	1,051.1

Sales to the U.S. Government included sales to the U.S. Department of Defense of $479.7 million in 2017, $449.4 million in 2016, and $447.2 million in 2015. Total sales to international customers were $1,208.5 million in 2017, $919.4 million in 2016, and $1,020.4 million in 2015. Of these amounts, sales by operations in the United States to customers in other countries were $555.5 million in 2017, $539.4 million in 2016, and $628.2 million in 2015. There were no sales to individual countries outside of the United States in excess of 10 percent of the Company’s sales. Sales between business segments generally were priced at prevailing market prices and were $22.8 million, $20.2 million and $19.4 million for 2017, 2016 and 2015, respectively.

Note 13. Lease Commitments

Operating lease agreements, which include leases for manufacturing facilities and office space frequently include renewal options and require the Company to pay for utilities, taxes, insurance and maintenance expense. No lease agreement imposes a restriction on the Company’s ability to engage in financing transactions or enter into further lease agreements.

At December 31, 2017, future minimum lease payments for capital leases and for operating leases with non-cancelable terms of more than one year were as follows (in millions):

Lease Commitments:		Capital				Operating
2018		$	1.3			$	22.4
2019		1.2				18.7
2020		1.3				17.6
2021		1.2				15.6
2022		1.2				12.4
Thereafter		1.5				51.4
Total minimum lease payments		7.7				$	138.1
Less:
Imputed interest		(1.0		)
Current portion		(1.3		)
Present value of minimum capital lease payments, net of current portion		$	5.4

The 2017 property, plant and equipment accounts included $11.0 million of property leased under capital leases and $6.4 million of related accumulated depreciation. The 2016 property, plant and equipment accounts included $10.1 million of property leased under capital leases and $5.2 million of related accumulated depreciation. Rental expense under operating leases, net of immaterial sublease income, was $26.9 million in 2017, $28.1 million in 2016 and $24.5 million in 2015.

Note 14. Commitments and Contingencies

The Company is subject to federal, state and local environmental laws and regulations which require that it investigate and remediate the effects of the release or disposal of materials at sites associated with past and present operations, including sites at which the Company has been identified as a potentially responsible party under the federal Superfund laws and comparable state laws.

In accordance with the Company’s accounting policy disclosed in Note 2, environmental liabilities are recorded when the Company’s liability is probable and the costs are reasonably estimable. In many cases, however, investigations are not yet at a stage where the Company has been able to determine whether it is liable or, if liability is probable, to reasonably estimate the loss or range of loss, or certain components thereof. Estimates of the Company’s liability are further subject to uncertainties regarding the nature and extent of site contamination, the range of remediation alternatives available, evolving remediation standards, imprecise engineering evaluations and estimates of appropriate cleanup technology, methodology and cost, the extent of corrective actions that may be required, and the number and financial condition of other potentially responsible parties, as well as the extent of their responsibility for the remediation. Accordingly, as investigation and remediation of these sites proceeds, it is likely that adjustments in the Company’s accruals will be necessary to reflect new information. The amounts of any such adjustments could have a material adverse effect on the Company’s results of operations in a given period, but the amounts, and the possible range of loss in excess of the amounts accrued, are not reasonably estimable. Based on currently available information, however, management does not believe that future environmental costs in excess of those accrued with respect to sites with which the Company has been identified are likely to have a material adverse effect on the Company’s financial condition or liquidity.

At December 31, 2017, the Company’s reserves for environmental remediation obligations totaled $5.1 million, of which $1.0 million is included in current accrued liabilities. The Company periodically evaluates whether it may be able to recover a portion of future costs for environmental liabilities from its insurance carriers and from third parties. The timing of expenditures depends on a number of factors that vary by site, including the nature and extent of contamination, the number of potentially responsible parties, the timing of regulatory approvals, the complexity of the investigation and remediation, and the standards for remediation. The Company expects that it will expend present accruals over many years, and will complete remediation of all sites with which it has been identified in up to thirty years.

Various claims (whether based on U.S. Government or Company audits and investigations or otherwise) may be asserted against the Company related to its U.S. Government contract work, including claims based on business practices and cost classifications and actions under the False Claims Act. Although such claims are generally resolved by detailed fact-finding and negotiation, on those occasions when they are not so resolved, civil or criminal legal or administrative proceedings may ensue. Depending on the circumstances and the outcome, such proceedings could result in fines, penalties, compensatory and treble damages or the cancellation or suspension of payments under one or more U.S. Government contracts. Under government regulations, a company, or one or more of its operating divisions or units, can also be suspended or debarred from government contracts based on the results of investigations. However, although the outcome of these matters cannot be predicted with certainty, management does not believe there is any audit, review or investigation currently pending against the Company of which management is aware that is likely to result in suspension or debarment of the Company, or that is otherwise likely to have a material adverse effect on the Company’s financial condition or liquidity, although the resolution in any reporting period of one or more of these matters could have a material adverse effect on the Company’s results of operations for that period.

A number of other lawsuits, claims and proceedings have been or may be asserted against the Company, including those pertaining to product liability, acquisitions, patent infringement, commercial contracts, employment and employee benefits. While the outcome of litigation cannot be predicted with certainty, and some of these lawsuits, claims or proceedings may be determined adversely to the Company, management does not believe that the disposition of any such pending matters is likely to have a material adverse effect on the Company’s financial condition.

Note 15. Quarterly Financial Data (Unaudited)

Fiscal Year 2017 (a) (in millions, except per-share amounts)		1st Quarter				2nd Quarter				3rd Quarter				4th Quarter
Net Sales		$	566.1			$	671.1			$	662.2			$	704.4
Costs and expenses
Cost of sales (b)		354.2				418.3				405.8				433.9
Selling, general and administrative expenses (b)		153.8				166.6				163.5				172.1
Total costs and expenses		508.0				584.9				569.3				606.0
Operating income		58.1				86.2				92.9				98.4
Interest and debt expense, net (b)		(8.2		)		(9.1		)		(8.2		)		(7.6		)
Other income, net (b)		(9.3		)		(0.7		)		(3.0		)		(2.5		)
Income before income taxes		40.6				76.4				81.7				88.3
Provision for income taxes (c)		10.1				16.3				12.7				20.7
Net income attributable to Teledyne		$	30.5			$	60.1			$	69.0			$	67.6
Basic earnings per common share		$	0.87			$	1.71			$	1.95			$	1.91
Diluted earnings per common share		$	0.84			$	1.66			$	1.90			$	1.84

a) Fiscal year 2017 was a 52-week fiscal-year, each quarter contained 13 weeks.
b) The first quarter of 2017 includes pretax charges of $21.2 million related to the acquisition of e2v, of which, $1.4 million was recorded to cost of sales, $11.5 million was recorded to selling, general and administrative expenses, $2.3 million was recorded to interest expense and $6.0 million was recorded as other expense. The second quarter of 2017 includes pretax charges of $4.0 million related to the acquisition of e2v, of which, $2.7 million was recorded to cost of sales and $1.3 million was recorded to selling, general and administrative expenses. The third quarter of 2017 includes pretax charges of $2.9 million related to the acquisition of e2v, of which, $2.7 million was recorded to cost of sales and $0.2 million was recorded to selling, general and administrative expenses. The fourth quarter of 2017 includes a $1.1 million reduction to estimated pretax charges recorded in 2017 related to the acquisition of e2v, which was recorded to cost of sales.
c) Includes $1.4 million in net discrete income tax benefits in the first quarter, $4.6 million in net discrete income tax benefits in the second quarter, $9.9 million in net discrete income tax benefits the third quarter and $1.3 million in net discrete income tax benefits in the fourth quarter. The net discrete income tax benefits in the fourth quarter includes provisional charges of $4.7 million due to the estimated impact of the Tax Act.

Fiscal Year 2017 (in millions)		1st Quarter				2nd Quarter				3rd Quarter				4th Quarter
Net Sales:
Instrumentation		$	232.8			$	233.8			$	232.5			$	254.8
Digital Imaging		113.8				188.5				191.5				199.7
Aerospace and Defense Electronics		151.9				172.8				165.1				180.4
Engineered Systems		67.6				76.0				73.1				69.5
Total net sales		$	566.1			$	671.1			$	662.2			$	704.4
Operating income:
Instrumentation		$	30.4			$	30.8			$	34.8			$	31.4
Digital Imaging (a)		15.3				26.4				31.9				34.8
Aerospace and Defense Electronics (a)		26.2				32.4				29.4				36.9
Engineered Systems		8.9				9.1				10.0				9.7
Corporate expense (a)		(22.7		)		(12.5		)		(13.2		)		(14.4		)
Total operating income		$	58.1			$	86.2			$	92.9			$	98.4

a)

The first quarter of 2017 includes pretax charges of $12.9 million related to the acquisition of e2v, of which, $10.4 million was recorded to corporate expense and $2.5 million was recorded in the Digital Imaging segment. The second quarter of 2017 includes pretax charges of $4.0 million related to the acquisition of e2v, of which, $3.7 million was recorded in the Digital Imaging segment and $0.3 million was recorded in the Aerospace and Defense Electronics segment. The third quarter of 2017 includes pretax charges of $2.9 million related to the acquisition of e2v which was recorded in the Digital Imaging segment. The fourth quarter of 2017 includes a $1.1 million reduction to estimated pretax charges recorded in 2017 related to the acquisition of e2v which was recorded in the Digital Imaging segment.

Fiscal Year 2016 (a) (in millions, except per-share amounts)		1st Quarter				2nd Quarter				3rd Quarter				4th Quarter
Net Sales		$	530.5			$	539.7			$	526.8			$	552.9
Costs and expenses
Cost of sales		324.8				336.2				317.0				340.0
Selling, general and administrative expenses (b)		144.8				149.9				141.0				142.4
Total costs and expenses		469.6				486.1				458.0				482.4
Operating income		60.9				53.6				68.8				70.5
Interest and debt expense, net (b)		(5.7		)		(5.9		)		(5.6		)		(6.0		)
Other income/(expense), net (b)		(1.3		)		17.2				(0.8		)		(4.4		)
Income before income taxes		53.9				64.9				62.4				60.1
Provision for income taxes (c)		14.9				18.0				10.4				7.1
Net income attributable to Teledyne		$	39.0			$	46.9			$	52.0			$	53.0
Basic earnings per common share		$	1.13			$	1.36			$	1.50			$	1.52
Diluted earnings per common share		$	1.11			$	1.33			$	1.46			$	1.48

a) Fiscal year 2016 was a 52-week fiscal-year, each quarter contained 13 weeks.
b) The second quarter other income includes a $17.9 million pretax gain on the sale of a former operating facility. The fourth quarter and total year 2016 includes pretax charges of $7.9 million related to the acquisition of e2v, of which, $1.9 million was recorded to selling, general and administrative expenses, $0.5 million was recorded to interest expense and $5.5 million was recorded as other expense.
c) Includes $0.6 million in net discrete income tax benefits in the first quarter, $5.7 million in net discrete income tax expense in the second quarter, $6.6 million in net discrete income tax benefits the third quarter and $9.4 million in net discrete income tax benefits in the fourth quarter. The second quarter amount includes $6.7 million in tax expense related to the gain on the sale of the former operating facility.

Fiscal Year 2016 (in millions)		1st Quarter				2nd Quarter				3rd Quarter				4th Quarter
Net Sales:
Instrumentation		$	223.7			$	220.1			$	208.3			$	224.6
Digital Imaging		89.9				99.4				98.5				110.9
Aerospace and Defense Electronics		152.6				158.0				153.5				151.8
Engineered Systems		64.3				62.2				66.5				65.6
Total net sales		$	530.5			$	539.7			$	526.8			$	552.9
Operating income:
Instrumentation		$	31.4			$	20.1			$	28.1			$	30.2
Digital Imaging		8.2				10.7				11.7				15.3
Aerospace and Defense Electronics		24.1				28.0				31.5				28.5
Engineered Systems		8.0				5.6				8.6				9.9
Corporate expense (a)		(10.8		)		(10.8		)		(11.1		)		(13.4		)
Total operating income		$	60.9			$	53.6			$	68.8			$	70.5

a)	The fourth quarter of 2016 includes pretax charges of $1.9 million related to the acquisition of e2v, which was recorded to corporate expense.

Schedule II VALUATION AND QUALIFYING ACCOUNTS

Schedule II

VALUATION AND QUALIFYING ACCOUNTS

For the Fiscal Years Ended December 31, 2017, January 1, 2017 and January 3, 2016

(In millions)

						Additions
Description		Balance at beginning of period				Charged to costs and expenses			Acquisitions			Deductions and other (a)			Balance at end of period
Fiscal 2017
Allowance for doubtful accounts		$	5.2			4.2			1.6			(0.7	)		$	10.3
Environmental reserves		$	7.0			2.3			0.3			(4.5	)		$	5.1
Fiscal 2016
Allowance for doubtful accounts		$	6.3			0.7			0.2			(2.0	)		$	5.2
Environmental reserves		$	8.7			0.5			—			(2.2	)		$	7.0
Fiscal 2015
Allowance for doubtful accounts		$	7.8			0.9			0.3			(2.7	)		$	6.3
Environmental reserves		$	9.7			0.6			—			(1.6	)		$	8.7
(a) Represents payments except the amounts for allowance for doubtful accounts primarily represents uncollectible accounts written-off, net of recoveries.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized as of February 27, 2018.

Teledyne Technologies Incorporated (Registrant)
By:		/s/ Robert Mehrabian
		Robert Mehrabian
		Chairman, President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

/s/ Robert Mehrabian				Chairman, President and
Robert Mehrabian				Chief Executive Officer (Principal Executive Officer) and Director		February 27, 2018
/s/ Susan L. Main				Senior Vice President and
Susan L. Main				Chief Financial Officer (Principal Financial Officer)		February 27, 2018
/s/ Cynthia Belak				Vice President and
Cynthia Belak				Controller (Principal Accounting Officer)		February 27, 2018
*				Director		February 27, 2018
Roxanne S. Austin
*				Director		February 27, 2018
Charles Crocker
*				Director		February 27, 2018
Kenneth C. Dahlberg
*				Director		February 27, 2018
Simon M. Lorne
*				Director		February 27, 2018
Robert A. Malone
*				Director		February 27, 2018
Paul D. Miller
*				Director		February 27, 2018
Jane C. Sherburne
*				Director		February 27, 2018
Michael T. Smith
*				Director		February 27, 2018
Wesley W. von Schack
*By:		/s/ S. Paul Sassalos
		S. Paul Sassalos Pursuant to Power of Attorney filed as Exhibit 24.1

EXHIBIT INDEX

Exhibit No.		Description
2.1		Separation and Distribution Agreement dated as of November 29, 1999 by and among Allegheny Teledyne Incorporated, TDY Holdings, LLC, Teledyne Industries, Inc. and Teledyne Technologies Incorporated (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K dated as of November 29, 1999 (File No. 1-15295))
2.2		Rule 2.7 Announcement, dated December 12, 2016 , related to the recommend cash offer for e2v technologies plc (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K dated December 11, 2016 (File No. 1-15295))
3.1		Restated Certificate of Incorporation of Teledyne Technologies Incorporated (including Certificate of Designation of Series A Junior Participating Preferred Stock) (incorporated by reference to Exhibit 3.1 to the Company’s Annual Report on Form 10-K for the year ended January 2, 2000 (File No. 1-15295))
3.2		Amended and Restated Bylaws of Teledyne Technologies Incorporated (incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 29, 2014 (File No. 1-15295))
10.1		Employee Benefits Agreement between Allegheny Teledyne Incorporated and Teledyne Technologies Incorporated (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K/A (Amendment No. 1) dated as of November 29, 1999 (File No. 1-15295))†
10.2		Teledyne Technologies Incorporated 1999 Incentive Plan (incorporated by reference to Exhibit 10.5 to the Company’s Annual Report on Form 10-K for the year ended January 2, 2000 (File No. 1-15295))†
10.3		Teledyne Technologies Incorporated 1999 Non-Employee Director Stock Compensation Plan (incorporated by reference to Exhibit 10.6 to the Company’s Annual Report on Form 10-K for the year ended January 2, 2000 (File No. 1-15295))†
10.4		Amendment No. 1 to Teledyne Technologies Incorporated 1999 Non-Employee Director Stock Compensation Plan (incorporated by reference to Exhibit 10.7 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2000 (File No. 1-15295)†
10.5		Amendment No. 2 to Teledyne Technologies Incorporated 1999 Non-Employee Director Stock Compensation Plan (incorporated by reference to Exhibit 10.8 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2000 (File No. 1-15295)†

10.6		Amendment No. 3 to Teledyne Technologies Incorporated 1999 Non-Employee Director Stock Compensation Plan (incorporated by reference to Exhibit 10.8 to the Company’s Annual Report on Form 10-K for the year ended December 29, 2002 (File No. 1-15295)†
10.7		Amendment No. 4 to Teledyne Technologies Incorporated 1999 Non-Employee Director Stock Compensation Plan (incorporated by reference to Exhibit 10.1 to the Company’s Form 10-Q for the period ended September 28, 2003) (File No. 1-15295)†
10.8		Teledyne Technologies Incorporated 2002 Stock Incentive Plan (incorporated by reference to Exhibit 10.14 to the Company’s Annual Report on Form 10-K for the year ended December 30, 2001 (File No. 1-15295))†
10.9		Administrative Rules of the 2002 Stock Incentive Plan Related to Non-Employee Director Stock Compensation (incorporated by reference to Exhibit 99.2 to the Company’s Current Report on Form 8-K dated January 23, 2007 (File No. 1-5295))†
10.10		Teledyne Technologies Incorporated 2008 Incentive Award Plan (incorporated by reference to Annex A of the Company’s Definitive Proxy Statement filed March 7, 2008 (File No. 1-15295))†

10.11		Teledyne Technologies Incorporated Administrative Rules of the 2008 Incentive Award Plan Related to Non-Employee Director Stock Compensation (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 30, 2008 (File No. 1-15295))†
10.12		Administrative Rules for the Teledyne Technologies Incorporated Restricted Stock Award Program under the 2008 Incentive Award Plan, effective as of January 20, 2009 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated January 20, 2009 (File No. 1-15295))†
10.13		Form of Stock Option Agreement under the 2008 Incentive Award Plan (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated January 19, 2010 (File No.1-15295))†
10.14		Summary Plan Description for the Teledyne Technologies Incorporated Performance Service Plan under the 2008 Incentive Award Plan for the 2012-2014 performance cycle (incorporated by reference to Exhibit 10.23 to the Company’s Annual Report on Form 10-K for the fiscal year ended January 1, 2012 (File No. 1-15295))†
10.15		Teledyne Technologies Incorporated Amended and Restated 2008 Incentive Award Plan (incorporated by reference to Annex A of the Company’s Definitive Proxy Statement filed March 8, 2012 (File No. 1-15295))†
10.16		Administrative Rules of the Teledyne Technologies Incorporated Amended and Restated 2008 Incentive Award Plan Related to Non-Employee Director Stock Compensation (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended April 1, 2012 (File No. 1-15295))†
10.17		Form of Stock Option Agreement under the Teledyne Technologies Incorporated Amended and Restated 2008 Incentive Award Plan (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended April 1, 2012 (File No. 1-15295))†
10.18		Administrative Rules related to the Restricted Stock Award Program under the Teledyne Technologies Incorporated Amended and Restated 2008 Incentive Award Plan (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated January 22, 2013 (File No. 1-15295))†
10.19		Form of Restricted Stock Award Agreement under the Teledyne Technologies Incorporated Amended and Restated 2008 Incentive Award Plan (incorporated by reference to Exhibit 10.35 to the Company’s Annual Report Form 10-K for the year ended December 30, 2012) (File No. 1-15295))†
10.20		Restricted Stock Award Agreement, dated October 22, 2013, by and between Teledyne Technologies Incorporated and Dr. Robert Mehrabian (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K dated October 22, 2013) (File No. 1-15295))†
10.21		Teledyne Technologies Incorporated 2014 Incentive Award Plan (incorporated by reference to Annex A of the Company’s Definitive Proxy Statement filed March 5, 2014 (File No. 1-15295))†
10.22		Form of stock option agreement and conditions under the Teledyne Technologies Incorporated 2014 Incentive Award Plan (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K dated April 23, 2014 File No. 1-15295))†
10.23		Administrative Rules of the Teledyne Technologies Incorporated 2014 Incentive Plan Related to Non-Employee Director Stock Compensation (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K dated April 23, 2014 (File No. 1-15295))†
10.24		Standing resolutions of the Nominating and Governance Committee related to non-employee director compensation (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K dated December 31, 2014 (File No. 1-15295))†
10.25		Administrative Rules of the 2014 Incentive Award Plan Related to Non-Employee Director Restricted Stock Unit Awards and Fees (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K dated December 31, 2014 (File No. 1-15295))†
10.26		Administrative Rules for the Restricted Stock Award Program under the 2014 Incentive Award Plan (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated February 17, 2015 (File No. 1-15295))†

10.27		Form of Restricted Stock Award Agreement under the 2014 Incentive Award Plan (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K dated February 17, 2015 (File No. 1-15295))†
10.28		Form of Restricted Stock Unit Agreement under the 2014 Incentive Award Plan (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K dated February 17, 2015 (File No. 1-15295))†
10.29		Restricted Stock Unit Agreement, dated December 20, 2016, by and among Teledyne Technologies Incorporated and Robert Mehrabian (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K/A dated December 20, 2016 (File No. 1-15295))†
10.30		Summary Plan Description for the 2015-2017 Performance Share Program incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K dated February 17, 2015 (File No. 1-15295)†
10.31		Summary Plan Description for the 2015-2017 Performance Share Program (Canadian Participants) (incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K dated February 17, 2015) (File No. 1-15295)†
10.32		Amended and Restated Teledyne Technologies Incorporated 2014 Incentive Award Plan (incorporated by reference to Annex A of the Company’s Definitive Proxy Statement filed March 10, 2017)†
10.33		Standing resolutions of the Nominating and Governance Committee related to non-employee director compensation (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K dated April 26, 2017).†
10.34		Administrative Rules of the Amended and Restated Teledyne Technologies Incorporated 2014 Incentive Award Plan Related to Non-Employee Director Restricted Stock Unit Awards and Fees (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K dated April 26, 2017).†
10.35		Administrative Rules for the Restricted Stock Award Program under the Amended and Restated Teledyne Technologies Incorporated 2014 Incentive Award Plan (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated January 23, 2018)†
10.36		Form of Restricted Stock Award Agreement under the Amended and Restated Teledyne Technologies Incorporated 2014 Incentive Award Plan (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K dated January 23, 2018)†
10.37		Form of Stock Option Award Agreement under the Amended and Restated Teledyne Technologies Incorporated 2014 Incentive Award Plan (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K dated January 23, 2018)†
10.38		Summary Plan Description for the Performance Share Plan 2018-2020 Cycle under the Amended and Restated Teledyne Technologies Incorporated 2014 Incentive Award Plan (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K dated January 23, 2018)†
10.39		Fifth Amended and Restated Employment Agreement, dated October 22, 2013, by and between Teledyne Technologies Incorporated and Dr. Robert Mehrabian (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated October 22, 2013) (File No. 1-15295)†
10.40		Amendment One, dated as of September 28, 2015, to the Fifth Amended and Restated Employment Agreement between Teledyne Technologies Incorporated and Robert Mehrabian. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated September 28, 2015) (File No. 1-15295))†
10.41		Amended and Restated Change in Control Severance Agreement, dated as of January 31, 2011, by and between Teledyne Technologies Incorporated and Robert Mehrabian (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated January 31, 2011 (File No. 1-15295))†
10.42		Amended and Restated Change in Control Severance Agreement, dated as of January 31, 2011, by and between Teledyne Technologies Incorporated and Al Pichelli (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K dated January 31, 2011 (File No. 1-15295))†

10.43		Amended and Restated change in Control Severance Agreement dated January 31, 2011, by and between Teledyne Technologies Incorporated and Susan L. Main (incorporated by reference to Exhibit 10.12 to Company’s Annual Report on Form 10-K for the fiscal years ended December 29, 2013 (File No. 1-15295))†
10.44		Amended and Restated Change in Control Severance Agreement, dated as of January 31, 2011, by and between Teledyne Technologies Incorporated and Melanie Cibik (incorporated by reference to Exhibit 10.13 to the Company’s Annual Report on Form 10-K for the fiscal year end December 29, 2013 (File No. 1-15295))†
10.45		Amended and Restated Change in Control Severance Agreement, dated as of January 31, 2011, by and between Teledyne Technologies Incorporated and Jason Vanwees (incorporated by reference to Exhibit 10.39 to the Company’s Annual Report on Form 10-K for the fiscal year end January 3, 2016 (File No. 1-15295)†
10.46		Teledyne Technologies Incorporated Executive Deferred Compensation Plan, as originally effective as of November 29, 1999, as amended and restated effective December 31, 2004 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated December 31, 2008)(File No. 1-15295)†
10.47		Teledyne Technologies Incorporated Pension Equalization/Benefit Restoration Plan, as originally effective as of November 29, 1999, as amended and restated effective December 31, 2004 (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K dated December 31, 2008(File No. 1-15295))†
10.48		Teledyne Technologies Pension Equalization/Benefit Restoration Plan - Resolutions of the Plan Administration Committee (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K dated December 31, 2014 (File No. 1-15295))†
10.49		Form of Amendment to Stock Options, dated October 1, 2007, by and between Teledyne Technologies Incorporated and directors Charles Crocker, Simon M. Lorne, Paul D. Miller and Michael T. Smith (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2007 (File No. 1-15295))†

10.50		Note Purchase Agreement, dated May 12, 2010, by and among Teledyne Technologies Incorporated and the Purchasers identified therein (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended July 4, 2010 (File No. 1-15295))
10.51		Amendment to Note Purchase Agreement, dated as of April 18, 2017, between Teledyne Technologies Incorporated and the noteholders under that certain Note Purchase Agreement dated as of May 12, 2010 (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K dated April 18, 2017)
10.52		Amended and Restated Credit Agreement, dated as of March 1, 2013, by and among Teledyne Technologies Incorporated (Teledyne), certain subsidiaries of Teledyne as Designated Borrowers, certain subsidiaries of Teledyne as Guarantors, the Lender parties thereto and Bank of America, N.A. as Administrative Agent, Swing-Line Lender and L/C Issuer (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated March 1, 2013) (File No. 1-15295))
10.53		First Amendment to Amended and Restated Credit Facility, dated as of December 4, 2015, by and among Teledyne, certain subsidiaries of Teledyne, the lender parties thereto and Bank of America, N.A. as Administrative Agent, Swing Line Lender and L/C Issuer (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated December 4, 2015 (File No. 1-15295))
10.54		Second Amendment, dated as of January 17, 2017, to Amended and Restated Credit Agreement, dated as of March 1, 2013, as supplemented by the First Amendment dated as of December 4, 2015, by and among Teledyne, certain subsidiaries of Teledyne, the lender parties thereto and Bank of America, N.A. as Administrative Agent, Swing Line Lender and L/C Issuer (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated January 17, 2017 (File No. 1-15295))

10.55		Third Amendment, dated as of March 17, 2017, to Amended and Restated Credit Agreement dated as of March 1, 2013, by and among Teledyne Technologies Incorporated, certain subsidiaries of Teledyne as Designated Borrowers, certain subsidiaries of Teledyne as Guarantors, the Lender parties thereto and Bank of America, N.A. as Administrative Agent, Swing-Line Lender and L/C Issuer, as amended by that certain First Amendment to Amended and Restated Credit Agreement dated as of December 4, 2015 and that certain Second Amendment to Amended and Restated Credit Agreement dated as of January 17, 2017 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated March 17, 2017)
10.56		Loan Agreement, dated October 22, 2012, among Teledyne Technologies Incorporated, as borrower, certain of its subsidiaries, as guarantors, and U.S. Bank National Association., as lender (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated October 22, 2012 (File No. 1-15295))
10.57		Amendment Agreement, dated November 21, 2013, by and among Teledyne Technologies Incorporated and Bank of America, N.A. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated November 21, 2013) (File No. 1-15295))
10.58		Amendment Agreement, dated November 21, 2013, by and among Teledyne Technologies Incorporated and U.S. Bank, National Association(incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K dated November 21, 2013) (File No. 1-15295))
10.59		Second Amendment Agreement, dated December 2, 2016, by and among Teledyne Technologies Incorporated and Bank of America, N.A. and Wells Fargo Bank, National Association (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated December 2, 2016) (File No. 1-15295))
10.60		Second Amendment Agreement, dated December 2, 2016, by and among Teledyne Technologies Incorporated and U.S. Bank, National Association (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K dated December 2, 2016) (File No. 1-15295))
10.61		Note Purchase Agreement, dated September 23, 2014, by and among Teledyne Technologies Incorporated and the Purchasers identified therein (incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K filed on September 23, 2014 (File No. 1-15295))
10.62		Amendment to Note Purchase Agreement, dated as of April 18, 2017, between Teledyne Technologies Incorporated and the noteholders under that certain Note Purchase Agreement dated as of September 23, 2014 (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K dated April 18, 2017).
10.63		Note Purchase Agreement, dated August 27, 2015, by and among Teledyne Technologies Incorporated and the Purchasers identified therein (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated August 27, 2015) (File No. 1-15295))
10.64		Amendment to Note Purchase Agreement, dated as of April 18, 2017, between Teledyne Technologies Incorporated and the noteholders under that certain Note Purchase Agreement dated as of August 27, 2015 (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K dated April 18, 2017).
10.65		Term Loan Credit Agreement, dated as of March 17, 2017, by and among Teledyne Technologies Incorporated and Teledyne Netherlands B.V., as borrowers, the several banks and other financial institutions from time to time parties thereto as lenders, Bank of America, N.A., as administrative agent, and Merrill Lynch, Pierce, Fenner & Smith Incorporated, sole lead arranger and sole book manager (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K dated March 17, 2017).
10.66		Note Purchase and Guaranty Agreement, dated as of April 18, 2017, by and among Teledyne Technologies Incorporated, Teledyne Netherlands B.V. and the purchasers identified therein (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated April 18, 2017).
10.67		Guaranty Agreement to Note Purchase Agreement, dated as of April 18, 2017, made by the Subsidiary Guarantors (incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K dated April 18, 2017).
10.68		Form of Indemnification Agreement executed by each of the Company’s directors and named executive officers (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated April 22, 2009 (File No. 1-15295))†

14.1		Teledyne Technologies Incorporated Global Code of Ethical Conduct - this code of ethics may be accessed via the Company’s website at www.teledyne.com/aboutus/ethics.pdf
14.2		Code of Ethics for Financial Professionals - this code of ethics may be accessed via the Company’s website at www.teledyne.com/aboutus/ethics.asp
14.3		Directors, Code of Business Conduct and Ethics - this code of ethics may be accessed via the Company’s website at www.teledyne.com/aboutus/ethics.asp
21		Subsidiaries of Teledyne Technologies Incorporated*
23.1		Consent of Deloitte & Touche LLP, Independent Registered Public Accounting Firm *
24.1		Power of Attorney - Directors*
31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
32.1		Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
32.2		Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
101.INS		XBRL Instance Document**
101.SCH		XBRL Taxonomy Extension Schema Document**
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document**
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document**
101.LAB		XBRL Taxonomy Extension Label Linkbase Document**
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document**

*	Submitted electronically herewith.

**	Attached as Exhibit 101 to this report are the following documents formatted in XBRL (Extensible Business Reporting Language) for the year ended December 31, 2017: (i) the Consolidated Statement of Income, (ii) the Consolidated Balance Sheet, (iii) the Consolidated Statement of Shareholders’ Equity, (iv) the Consolidated Statement of Comprehensive Income (Loss), (v) the Consolidated Statement of Cash Flows, (vi) Notes to Consolidated Financial Statements and (vii) Financial Schedule of Valuation and Qualifying Accounts.

†	Denotes management contract or compensatory plan or arrangement required to be filed as an Exhibit to this Form 10-K.