filings.toolsItem 1. Financial Statements
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Item 1. Financial Statements
TELEDYNE TECHNOLOGIES INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
FOR THE FIRST QUARTER ENDED MARCH 31, 2024 AND APRIL 2, 2023
(Unaudited - Amounts in millions, except per-share amounts)
| First Quarter | |||||||||||||||||||||||
| 2024 | 2023 | ||||||||||||||||||||||
| Net sales | $ | 1,350.1 | $ | 1,383.3 | |||||||||||||||||||
| Costs and expenses | |||||||||||||||||||||||
| Cost of sales | 770.2 | 790.7 | |||||||||||||||||||||
| Selling, general and administrative | 296.2 | 300.4 | |||||||||||||||||||||
| Acquired intangible asset amortization | 49.4 | 49.7 | |||||||||||||||||||||
| Total costs and expenses | 1,115.8 | 1,140.8 | |||||||||||||||||||||
| Operating income (loss) | 234.3 | 242.5 | |||||||||||||||||||||
| Interest and debt income (expense), net | (12.7) | (21.0) | |||||||||||||||||||||
| Non-service retirement benefit income (expense), net | 2.7 | 3.3 | |||||||||||||||||||||
| Other income (expense), net | 1.2 | (1.1) | |||||||||||||||||||||
| Income (loss) before income taxes | 225.5 | 223.7 | |||||||||||||||||||||
| Provision (benefit) for income taxes | 46.4 | 44.9 | |||||||||||||||||||||
| Net income (loss) including noncontrolling interest | 179.1 | 178.8 | |||||||||||||||||||||
| Less: Net income (loss) attributable to noncontrolling interest | 0.6 | 0.1 | |||||||||||||||||||||
| Net income (loss) attributable to Teledyne | $ | 178.5 | $ | 178.7 | |||||||||||||||||||
| Basic earnings per common share | $ | 3.77 | $ | 3.81 | |||||||||||||||||||
| Weighted average common shares outstanding | 47.3 | 46.9 | |||||||||||||||||||||
| Diluted earnings per common share | $ | 3.72 | $ | 3.73 | |||||||||||||||||||
| Weighted average diluted common shares outstanding | 48.0 | 47.9 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
TELEDYNE TECHNOLOGIES INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
FOR THE FIRST QUARTER ENDED MARCH 31, 2024 AND APRIL 2, 2023
(Unaudited - Amounts in millions)
| First Quarter | |||||||||||||||||||||||
| 2024 | 2023 | ||||||||||||||||||||||
| Net income (loss) including noncontrolling interest | $ | 179.1 | $ | 178.8 | |||||||||||||||||||
| Other comprehensive income (loss): | |||||||||||||||||||||||
| Foreign exchange translation adjustment | (88.8) | (4.3) | |||||||||||||||||||||
| Hedge activity, net of tax | (4.2) | 2.5 | |||||||||||||||||||||
| Pension and postretirement benefit adjustments, net of tax | 2.1 | 1.5 | |||||||||||||||||||||
| Other comprehensive income (loss) | (90.9) | (0.3) | |||||||||||||||||||||
| Comprehensive income (loss) including noncontrolling interest | 88.2 | 178.5 | |||||||||||||||||||||
| Less: Comprehensive income (loss) attributable to noncontrolling interest | 0.6 | 0.1 | |||||||||||||||||||||
| Comprehensive income (loss) attributable to Teledyne | $ | 87.6 | $ | 178.4 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
TELEDYNE TECHNOLOGIES INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited - Amounts in millions, except share amounts)
| March 31, 2024 | December 31, 2023 | ||||||||||
| Assets | |||||||||||
| Current Assets | |||||||||||
| Cash and cash equivalents | $ | 912.4 | $ | 648.3 | |||||||
| Accounts receivable, net | 885.8 | 899.7 | |||||||||
| Unbilled receivables, net | 296.9 | 302.4 | |||||||||
| Inventories, net | 933.2 | 917.7 | |||||||||
| Prepaid expenses and other current assets | 195.3 | 213.3 | |||||||||
| Total current assets | 3,223.6 | 2,981.4 | |||||||||
| Property, plant and equipment, net of accumulated depreciation and amortization of $961.3 at March 31, 2024 and $947.1 at December 31, 2023 | 760.0 | 777.0 | |||||||||
| Goodwill | 7,956.0 | 8,002.8 | |||||||||
| Acquired intangibles, net | 2,207.1 | 2,278.1 | |||||||||
| Prepaid pension assets | 207.4 | 203.3 | |||||||||
| Other assets, net | 285.1 | 285.3 | |||||||||
| Total Assets | $ | 14,639.2 | $ | 14,527.9 | |||||||
| Liabilities, Redeemable Noncontrolling Interest and Stockholders’ Equity | |||||||||||
| Current Liabilities | |||||||||||
| Accounts payable | $ | 409.0 | $ | 384.7 | |||||||
| Accrued liabilities | 767.6 | 781.3 | |||||||||
| Current portion of long-term debt | 600.2 | 600.1 | |||||||||
| Total current liabilities | 1,776.8 | 1,766.1 | |||||||||
| Long-term debt, net of current portion | 2,646.1 | 2,644.8 | |||||||||
| Long-term deferred tax liabilities | 413.2 | 415.4 | |||||||||
| Other long-term liabilities | 469.9 | 475.8 | |||||||||
| Total Liabilities | 5,306.0 | 5,302.1 | |||||||||
| Commitments and contingencies | |||||||||||
| Redeemable Noncontrolling Interest | 5.2 | 4.6 | |||||||||
| Stockholders’ Equity | |||||||||||
| Preferred stock, $0.01 par value; outstanding shares - none | — | — | |||||||||
| Common stock, $0.01 par value; authorized 125,000,000 shares; issued shares: 47,420,690 at March 31, 2024 and 47,331,845 at December 31, 2023; outstanding shares: 47,420,690 at March 31, 2024 and 47,331,845 at December 31, 2023 | 0.5 | 0.5 | |||||||||
| Additional paid-in capital | 4,426.5 | 4,407.3 | |||||||||
| Retained earnings | 5,626.0 | 5,447.5 | |||||||||
| Treasury stock - none | — | — | |||||||||
| Accumulated other comprehensive income (loss) | (725.0) | (634.1) | |||||||||
| Total Stockholders’ Equity | 9,328.0 | 9,221.2 | |||||||||
| Total Liabilities, Redeemable Noncontrolling Interest and Stockholders' Equity | $ | 14,639.2 | $ | 14,527.9 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
TELEDYNE TECHNOLOGIES INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In millions)
| Common Stock | Additional Paid-in Capital | Treasury Stock | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total | ||||||||||||||||||||||||||||||
| Balance, December 31, 2023 | $ | 0.5 | $ | 4,407.3 | $ | — | $ | 5,447.5 | $ | (634.1) | $ | 9,221.2 | |||||||||||||||||||||||
| Net income (loss) | — | — | — | 178.5 | — | 178.5 | |||||||||||||||||||||||||||||
| Other comprehensive income (loss), net of tax | — | — | — | — | (90.9) | (90.9) | |||||||||||||||||||||||||||||
| Stock-based compensation | — | 12.0 | — | — | — | 12.0 | |||||||||||||||||||||||||||||
| Exercise of stock options and other | — | 7.2 | — | — | — | 7.2 | |||||||||||||||||||||||||||||
| Balance, March 31, 2024 | $ | 0.5 | $ | 4,426.5 | $ | — | $ | 5,626.0 | $ | (725.0) | $ | 9,328.0 | |||||||||||||||||||||||
| Common Stock | Additional Paid-in Capital | Treasury Stock | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total | ||||||||||||||||||||||||||||||
| Balance, January 1, 2023 | $ | 0.5 | $ | 4,353.4 | $ | (20.0) | $ | 4,561.8 | $ | (726.5) | $ | 8,169.2 | |||||||||||||||||||||||
| Net income (loss) | — | — | — | 178.7 | — | 178.7 | |||||||||||||||||||||||||||||
| Other comprehensive income (loss), net of tax | — | — | — | — | (0.3) | (0.3) | |||||||||||||||||||||||||||||
| Treasury stock issued | — | (10.6) | 10.6 | — | — | — | |||||||||||||||||||||||||||||
| Stock-based compensation | — | 7.9 | — | — | — | 7.9 | |||||||||||||||||||||||||||||
| Exercise of stock options and other | — | 10.2 | — | — | — | 10.2 | |||||||||||||||||||||||||||||
| Balance, April 2, 2023 | $ | 0.5 | $ | 4,360.9 | $ | (9.4) | $ | 4,740.5 | $ | (726.8) | $ | 8,365.7 | |||||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
TELEDYNE TECHNOLOGIES INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND APRIL 2, 2023
(Unaudited - Amounts in millions)
| Three Months | |||||||||||
| 2024 | 2023 | ||||||||||
| Operating Activities | |||||||||||
| Net income (loss) including noncontrolling interest | $ | 179.1 | $ | 178.8 | |||||||
| Adjustments to reconcile net income (loss) including noncontrolling interest to net cash provided by (used in) operating activities: | |||||||||||
| Depreciation and amortization | 78.0 | 82.1 | |||||||||
| Stock-based compensation | 12.0 | 7.9 | |||||||||
| Changes in operating assets and liabilities excluding the effect of business acquired: | |||||||||||
| Accounts receivable and unbilled receivables | 12.1 | 50.0 | |||||||||
| Inventories | (25.2) | (57.6) | |||||||||
| Accounts payable | 27.7 | (10.8) | |||||||||
| Deferred taxes and income taxes receivable (payable), net | 19.3 | 7.2 | |||||||||
| Prepaid expenses and other assets | (1.5) | (11.3) | |||||||||
| Accrued expenses and other liabilities | (21.8) | (34.6) | |||||||||
| Other operating, net | 11.3 | (8.7) | |||||||||
| Net cash provided by (used in) operating activities | 291.0 | 203.0 | |||||||||
| Investing Activities | |||||||||||
| Purchases of property, plant and equipment | (15.9) | (24.4) | |||||||||
| Purchase of businesses, net of cash acquired | — | (52.5) | |||||||||
| Net cash provided by (used in) investing activities | (15.9) | (76.9) | |||||||||
| Financing Activities | |||||||||||
| Net borrowings from (repayments made to) credit facility | — | (100.0) | |||||||||
| Proceeds from (payments on) other debt | (0.1) | (0.1) | |||||||||
| Proceeds from exercise of stock options | 9.1 | 10.2 | |||||||||
| Liquidation (maturity) of cross currency swap | — | (13.5) | |||||||||
| Other financing, net | (2.9) | — | |||||||||
| Net cash provided by (used in) financing activities | 6.1 | (103.4) | |||||||||
| Effect of exchange rate changes on cash | (17.1) | 4.4 | |||||||||
| Change in cash and cash equivalents | 264.1 | 27.1 | |||||||||
| Cash and cash equivalents—beginning of period | 648.3 | 638.1 | |||||||||
| Cash and cash equivalents—end of period | $ | 912.4 | $ | 665.2 | |||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
TELEDYNE TECHNOLOGIES INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
March 31, 2024
Note 1. General
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared by Teledyne Technologies Incorporated (“Teledyne” or the “Company”) pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and disclosures normally included in notes to consolidated financial statements have been condensed or omitted pursuant to such rules and regulations, but resultant disclosures are in accordance with generally accepted accounting principles in the United States (“GAAP”) as they apply to interim reporting. The condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the related notes in Teledyne’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (“2023 Form 10-K”).
In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting of normal recurring adjustments) necessary to present fairly, in all material respects, Teledyne’s consolidated financial position as of March 31, 2024 and the consolidated results of operations, consolidated comprehensive income (loss) and consolidated cash flows for the first quarter ended March 31, 2024. The results of operations and cash flows for the periods ended March 31, 2024 and cash flows for the three months ended March 31, 2024 are not necessarily indicative of the results of operations or cash flows to be expected for any subsequent quarter or the full fiscal year.
Recent Accounting Standards
In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This standard requires a public entity to disclose significant segment expenses and other segment items on an interim and annual basis. Additionally, it requires a public entity to disclose the title and position of the Chief Operating Decision Maker (“CODM”). The new standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. A public entity should apply the amendments in this ASU retrospectively to all prior periods presented in the financial statements. The Company is evaluating the impact of adopting this guidance on its consolidated financial statements.
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires public entities, on an annual basis, to provide disclosure of specific categories in the rate reconciliation, as well as disclosure of income taxes paid disaggregated by jurisdiction focuses on the rate reconciliation and income taxes paid. ASU 2023-09 is effective for annual periods beginning after December 15, 2024, with early adoption permitted. The Company is evaluating the impact of adopting this guidance on its consolidated financial statements.
Note 2. Business Acquisitions
2024 Acquisitions
Refer to Note 15 for discussion of announced acquisitions or acquisitions completed after the end of the first quarter of 2024.
2023 Acquisitions
Xena Networks
During the fourth quarter of 2023, the Company acquired Xena Networks ApS and affiliates (“Xena Networks”) for $24.2 million in cash, net of cash acquired, and subject to certain adjustments. Xena Networks, headquartered in Denmark, is a leading provider of high-speed terabit ethernet validation, quality assurance, and production test solutions. Xena Networks is part of the test and measurement instrumentation product line within the Instrumentation segment. Goodwill resulting from the Xena Networks acquisition will not be deductible for tax purposes.
ChartWorld
During the first quarter of 2023, the Company acquired ChartWorld International Limited and affiliates ("ChartWorld") for $53.5 million in cash, net of cash acquired, and subject to certain adjustments. ChartWorld, headquartered in Cyprus, with additional locations in Germany, Singapore, Canada and Japan, is a provider of digital marine navigation hardware and software provided through an affordable subscription-based model. ChartWorld is part of the Digital Imaging segment. Goodwill resulting from the ChartWorld acquisition will not be deductible for tax purposes.
The following tables show the purchase price (net of cash acquired), goodwill acquired, and acquired intangible assets for these acquisitions (in millions):
| 2023 | ||||||||||||||||||||||||||
| Acquisitions | Acquisition Date | Cash Paid (a) | Goodwill Acquired | Acquired Intangible Assets | ||||||||||||||||||||||
| Xena Networks | October 13, 2023 | $ | 24.2 | $ | 21.1 | $ | 4.8 | |||||||||||||||||||
| ChartWorld | January 3, 2023 | 53.5 | 55.5 | 11.3 | ||||||||||||||||||||||
| Total | $ | 77.7 | $ | 76.6 | $ | 16.1 | ||||||||||||||||||||
| (a) Net of cash acquired |
The Company’s cost to acquire these acquisitions was 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 was recorded as goodwill. The fair value of the acquired identifiable assets and liabilities for the Xena Networks acquisition is provisional pending finalization of the Company’s acquisition accounting, including the measurement of tax basis in certain jurisdictions and the resulting deferred taxes that might arise from book and tax basis differences, if any. Pro forma results of operations, the revenue and net income subsequent to the acquisition date, and a more detailed breakout of the major classes of assets and liabilities acquired for these acquisitions have not been presented because the effects of these acquisitions, individually and in the aggregate, were not material to the Company's financial results. The significant factors that resulted in recognition of goodwill for the 2023 acquisitions included the acquired businesses’ market positions, growth opportunities in the markets in which they operate, their experienced work force and established operating infrastructures. The results of these acquisitions have been included in Teledyne’s results since the dates of their respective acquisition.
Note 3. Business Segments
Teledyne is a leading provider of sophisticated digital imaging products and software, instrumentation, aerospace and defense electronics, and engineered systems. Our customers include government agencies, aerospace prime contractors, energy exploration and production companies, major industrial companies and airlines. The Company has four reportable segments: Digital Imaging; Instrumentation; Aerospace and Defense Electronics; and Engineered Systems.
Segment results include net sales and operating income by segment but excludes corporate expenses. Corporate expense primarily includes administrative expenses relating to the corporate office not allocated to our segments.
The following table presents net sales and operating income by segment (dollars in millions):
| First Quarter | % | ||||||||||||||||||||||||||||||||||
| 2024 | 2023 | Change | |||||||||||||||||||||||||||||||||
| Net sales (a): | |||||||||||||||||||||||||||||||||||
| Digital Imaging | $ | 740.8 | $ | 772.5 | (4.1) | % | |||||||||||||||||||||||||||||
| Instrumentation | 330.4 | 333.5 | (0.9) | % | |||||||||||||||||||||||||||||||
| Aerospace and Defense Electronics | 185.7 | 173.2 | 7.2 | % | |||||||||||||||||||||||||||||||
| Engineered Systems | 93.2 | 104.1 | (10.5) | % | |||||||||||||||||||||||||||||||
| Total net sales | $ | 1,350.1 | $ | 1,383.3 | (2.4) | % | |||||||||||||||||||||||||||||
| Operating income: | |||||||||||||||||||||||||||||||||||
| Digital Imaging | $ | 113.8 | $ | 122.2 | (6.9) | % | |||||||||||||||||||||||||||||
| Instrumentation | 86.0 | 80.7 | 6.6 | % | |||||||||||||||||||||||||||||||
| Aerospace and Defense Electronics | 51.9 | 47.0 | 10.4 | % | |||||||||||||||||||||||||||||||
| Engineered Systems | 2.7 | 10.0 | (73.0) | % | |||||||||||||||||||||||||||||||
| Corporate expense | (20.1) | (17.4) | 15.5 | % | |||||||||||||||||||||||||||||||
| Operating income | $ | 234.3 | $ | 242.5 | (3.4) | % | |||||||||||||||||||||||||||||
| (a) Net sales exclude inter-segment sales of $4.8 million and $6.2 million for the first quarter of 2024 and 2023, respectively. | |||||||||||||||||||||||||||||||||||
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 (in millions):
| Identifiable assets: | March 31, 2024 | December 31, 2023 | ||||||||||||
| Digital Imaging | $ | 11,197.1 | $ | 11,382.2 | ||||||||||
| Instrumentation | 1,683.9 | 1,692.3 | ||||||||||||
| Aerospace and Defense Electronics | 561.9 | 569.1 | ||||||||||||
| Engineered Systems | 213.4 | 184.8 | ||||||||||||
| Corporate | 982.9 | 699.5 | ||||||||||||
| Total identifiable assets | $ | 14,639.2 | $ | 14,527.9 |
Product Lines
The Instrumentation segment includes three product lines: Marine Instrumentation, Environmental Instrumentation and Test and Measurement Instrumentation. The Company’s other three segments each contain one product line.
The following table provides a summary of the net sales by product line for the Instrumentation segment (in millions):
| First Quarter | |||||||||||||||||||||||
| Instrumentation | 2024 | 2023 | |||||||||||||||||||||
| Marine Instrumentation | $ | 147.8 | $ | 128.2 | |||||||||||||||||||
| Environmental Instrumentation | 111.1 | 117.9 | |||||||||||||||||||||
| Test and Measurement Instrumentation | 71.5 | 87.4 | |||||||||||||||||||||
| Total | $ | 330.4 | $ | 333.5 | |||||||||||||||||||
Note 4. Revenue Recognition and Contract Balances
Approximately 70% of the Company's net sales are recognized at a point in time, with the remaining 30% of net sales recognized over time. The Company disaggregates its revenue from contracts with customers by customer type and geographic region for each segment, as management believes it best depicts how the nature, amount, timing and uncertainty of its revenue and cash flows are affected by economic factors.
| First Quarter Ended March 31, 2024 | First Quarter Ended March 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Customer Type | Geographic Region (c) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| (in millions) | U.S. Govt. (a) | Other (b) | Total | United States | Europe | Asia | All other | Total | |||||||||||||||||||||||||||||||||||||||||||||
| Net sales: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Digital Imaging | $ | 130.7 | $ | 610.1 | $ | 740.8 | $ | 333.7 | $ | 200.3 | $ | 134.2 | $ | 72.6 | $ | 740.8 | |||||||||||||||||||||||||||||||||||||
| Instrumentation | 33.3 | 297.1 | 330.4 | 144.6 | 96.9 | 60.1 | 28.8 | 330.4 | |||||||||||||||||||||||||||||||||||||||||||||
| Aerospace and Defense Electronics | 58.8 | 126.9 | 185.7 | 123.7 | 34.2 | 18.6 | 9.2 | 185.7 | |||||||||||||||||||||||||||||||||||||||||||||
| Engineered Systems | 79.8 | 13.4 | 93.2 | 92.8 | — | 0.1 | 0.3 | 93.2 | |||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | 302.6 | $ | 1,047.5 | $ | 1,350.1 | $ | 694.8 | $ | 331.4 | $ | 213.0 | $ | 110.9 | $ | 1,350.1 |
(a) U.S. Government sales include sales as a prime contractor or subcontractor.
(b) Primarily commercial sales
(c) Geographic region by destination
| First Quarter Ended April 2, 2023 | First Quarter Ended April 2, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Customer Type | Geographic Region (c) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| (in millions) | U.S. Govt. (a) | Other (b) | Total | United States | Europe | Asia | All other | Total | |||||||||||||||||||||||||||||||||||||||||||||
| Net sales: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Digital Imaging | $ | 130.4 | $ | 642.1 | $ | 772.5 | $ | 334.4 | $ | 197.3 | $ | 158.4 | $ | 82.4 | $ | 772.5 | |||||||||||||||||||||||||||||||||||||
| Instrumentation | 23.0 | 310.5 | 333.5 | 138.0 | 97.2 | 67.5 | 30.8 | 333.5 | |||||||||||||||||||||||||||||||||||||||||||||
| Aerospace and Defense Electronics | 64.7 | 108.5 | 173.2 | 120.1 | 29.5 | 17.0 | 6.6 | 173.2 | |||||||||||||||||||||||||||||||||||||||||||||
| Engineered Systems | 93.4 | 10.7 | 104.1 | 103.3 | — | 0.2 | 0.6 | 104.1 | |||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | 311.5 | $ | 1,071.8 | $ | 1,383.3 | $ | 695.8 | $ | 324.0 | $ | 243.1 | $ | 120.4 | $ | 1,383.3 |
(a) U.S. Government sale include sales as a prime contractor or subcontractor.
(b) Primarily commercial sales
(c) Geographic region by destination
With the exception of the Engineered Systems segment, net sales in each segment are primarily derived from fixed price contracts. Net sales in the Engineered Systems segment are typically between 45% and 55% fixed price contracts in a given reporting period, with the balance of net sales derived from cost-reimbursable type contracts. For the three months ended March 31, 2024, approximately 47% of net sales in the Engineered Systems segment were derived from fixed price contracts.
Contract Liabilities
| Balance at | |||||||||||||||||||||||
| Contract Liabilities by Balance Sheet Location (in millions) | March 31, 2024 | December 31, 2023 | |||||||||||||||||||||
| Accrued liabilities | $ | 274.2 | $ | 241.1 | |||||||||||||||||||
| Other long-term liabilities | 25.9 | 25.5 | |||||||||||||||||||||
| Total contract liabilities | $ | 300.1 | $ | 266.6 |
The Company recognized revenue of $66.3 million during the three months ended March 31, 2024 from contract liabilities that existed at the beginning of year.
Remaining Performance Obligations
Remaining performance obligations represent the transaction price of firm orders for which work has not been performed as of the period end date and exclude unexercised contract options and potential orders under ordering-type contracts (e.g., indefinite-delivery, indefinite-quantity). As of March 31, 2024, the aggregate amount of the transaction price allocated to remaining performance obligations was $3,290.2 million. The Company expects approximately 78% of remaining performance obligations to be recognized into revenue within the next twelve months, with the remaining 22% recognized thereafter.
Changes in Contract Estimates at Completion
For over time contracts using the cost-to-cost method, the Company has an Estimate at Completion (“EAC”) process in which management reviews the progress and execution of our performance obligations. This EAC process requires management judgment relative to assessing risks, estimating contract revenue, determining reasonably dependable cost estimates, and making assumptions for schedule and technical issues. The majority of revenue recognized over time uses an EAC process. 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 through 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 net aggregate effects of these changes in estimates on contracts accounted for under the cost-to-cost method in the first three months of 2024 was $0.3 million of unfavorable operating income compared with $2.9 million of favorable operating income in the first three months of 2023. None of the effects of changes in estimates on any individual contract were material to the consolidated statements of income (loss) for any period presented.
Note 5. Goodwill and Intangible Assets
Goodwill
The carrying value of goodwill by segment was as follows (in millions):
| Digital Imaging | Instrumentation | Aerospace and Defense Electronics | Engineered Systems | Total | |||||||||||||||||||||||||
| Balance at December 31, 2023 | $ | 6,877.0 | $ | 944.8 | $ | 163.4 | $ | 17.6 | $ | 8,002.8 | |||||||||||||||||||
| Foreign currency changes and other | (38.6) | (7.9) | (0.3) | — | (46.8) | ||||||||||||||||||||||||
| Balance at March 31, 2024 | $ | 6,838.4 | $ | 936.9 | $ | 163.1 | $ | 17.6 | $ | 7,956.0 |
| Acquired intangible assets (in millions): | March 31, 2024 | December 31, 2023 | ||||||||||||||||||||||||||||||||||||
| Gross carrying amount | Accumulated amortization | Net carrying amount | Gross carrying amount | Accumulated amortization | Net carrying amount | |||||||||||||||||||||||||||||||||
| Proprietary technology | $ | 1,669.3 | $ | 691.2 | $ | 978.1 | $ | 1,696.6 | $ | 663.0 | $ | 1,033.6 | ||||||||||||||||||||||||||
| Customer list/relationships | 604.0 | 227.4 | 376.6 | 609.5 | 219.4 | 390.1 | ||||||||||||||||||||||||||||||||
| Patents | 0.6 | 0.6 | — | 0.6 | 0.6 | — | ||||||||||||||||||||||||||||||||
| Non-compete agreements | 0.9 | 0.9 | — | 0.9 | 0.9 | — | ||||||||||||||||||||||||||||||||
| Trademarks | 10.2 | 6.1 | 4.1 | 10.2 | 5.8 | 4.4 | ||||||||||||||||||||||||||||||||
| Backlog | 16.3 | 16.3 | — | 16.4 | 16.4 | — | ||||||||||||||||||||||||||||||||
| Total intangibles subject to amortization | 2,301.3 | 942.5 | 1,358.8 | 2,334.2 | 906.1 | 1,428.1 | ||||||||||||||||||||||||||||||||
| Intangibles not subject to amortization: | ||||||||||||||||||||||||||||||||||||||
| Trademarks | 848.3 | — | 848.3 | 850.0 | — | 850.0 | ||||||||||||||||||||||||||||||||
| Total acquired intangible assets | $ | 3,149.6 | $ | 942.5 | $ | 2,207.1 | $ | 3,184.2 | $ | 906.1 | $ | 2,278.1 |
An evaluation of the carrying value of goodwill and indefinite-lived intangibles is required to be performed on an annual basis and on an interim basis if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. There have been no events or changes in circumstances which indicate an interim impairment review is required in 2024. The Company will perform its annual analysis during the fourth quarter of 2024.
Note 6. Supplemental Balance Sheet Information
Cash Equivalents
The Company had $527.1 million and $265.1 million of cash equivalents at March 31, 2024 and December 31, 2023, respectively. The Company has categorized its cash equivalents as a Level 1 financial asset, measured at fair value based on quoted prices in active markets of identical assets.
Accounts Receivable, net
Accounts receivable is presented net of an allowance for doubtful accounts of $11.4 million at March 31, 2024 and $11.5 million at December 31, 2023.
Inventories, net
Inventories are stated at current cost, net of reserves for excess, slow moving and obsolete inventory. Inventories are primarily valued under the FIFO method or average cost method. Inventory balances are summarized as follows (in millions):
| Balance at | |||||||||||
| March 31, 2024 | December 31, 2023 | ||||||||||
| Raw materials and supplies | $ | 571.3 | $ | 560.6 | |||||||
| Work in process | 193.4 | 184.8 | |||||||||
| Finished goods | 168.5 | 172.3 | |||||||||
| Total inventories, net | $ | 933.2 | $ | 917.7 |
Product Warranty Costs
Some of the Company’s products are subject to specified warranties, and the Company provides for the estimated cost of product warranties. The adequacy of the warranty reserve 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. The warranty reserve is included in current accrued liabilities and other long-term liabilities on the condensed consolidated balance sheet.
| Three Months | |||||||||||
| Warranty Reserve (in millions): | 2024 | 2023 | |||||||||
| Balance at beginning of year | $ | 49.1 | $ | 50.3 | |||||||
| Product warranty expense | 3.5 | 4.3 | |||||||||
| Deductions | (5.1) | (4.2) | |||||||||
| Balance at end of period | $ | 47.5 | $ | 50.4 |
Note 7. Long-Term Debt
| Balance at | |||||||||||
| Long-Term Debt (in millions): | March 31, 2024 | December 31, 2023 | |||||||||
| $1.15 billion credit facility due March 2026 | $ | — | $ | — | |||||||
| 0.95% Fixed Rate Senior Notes due April 2024 | 450.0 | 450.0 | |||||||||
| Term loan due October 2024, variable rate of 6.68% at March 31, 2024 and 6.71% at December 31, 2023, swapped to a Euro fixed rate of 0.61% | 150.0 | 150.0 | |||||||||
| 1.60% Fixed Rate Senior Notes due April 2026 | 450.0 | 450.0 | |||||||||
| 2.25% Fixed Rate Senior Notes due April 2028 | 700.0 | 700.0 | |||||||||
| 2.50% Fixed Rate Senior Notes due August 2030 | 485.0 | 485.0 | |||||||||
| 2.75% Fixed Rate Senior Notes due April 2031 | 1,030.0 | 1,030.0 | |||||||||
| Other debt | 1.3 | 1.0 | |||||||||
| Debt discount and debt issuance costs | (20.0) | (21.1) | |||||||||
| Total debt, net | 3,246.3 | 3,244.9 | |||||||||
| Less: Current portion of long-term debt | (600.2) | (600.1) | |||||||||
| Total long-term debt, net of current portion | $ | 2,646.1 | $ | 2,644.8 |
At March 31, 2024, $1,128.2 million was available under the $1.15 billion credit facility, after a reduction of $21.8 million in outstanding letters of credit. The Company’s bank credit agreements requires it to comply with various financial and operating covenants and at March 31, 2024, the Company was in compliance with these covenants. Subsequent to the end of the first quarter of 2024, the Company made a $450 million debt maturity payment on the Senior Notes due April 2024.
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 is considered a level 2 input in the fair value hierarchy and is valued based on observable market data. As of March 31, 2024 and December 31, 2023, the aggregate fair values of our borrowings were $2,945.5 million and $2,965.3 million, respectively, and the carrying values were $3,266.3 million and $3,266.0 million, respectively.
Note 8. Income Taxes
The income tax provision is calculated using an estimated annual effective tax rate, based upon estimates of annual income, permanent items, statutory tax rates and planned tax strategies in the various jurisdictions in which we operate except that certain loss jurisdictions and discrete items, such as the resolution of uncertain tax positions and stock-based accounting income tax benefits, are treated separately.
| First Quarter | ||||||||||||||
| (Dollars in millions) | 2024 | 2023 | ||||||||||||
| Provision (benefit) for income taxes | $ | 46.4 | $ | 44.9 | ||||||||||
| Discrete event expense (benefit): | ||||||||||||||
| Stock-based accounting | $ | (5.3) | $ | (5.9) | ||||||||||
| Uncertain tax position reserves (primarily acquisition related) | 0.3 | 0.3 | ||||||||||||
| Other discrete event expense (benefit) | 0.6 | (0.9) | ||||||||||||
| Discrete event expense (benefit): | $ | (4.4) | $ | (6.5) | ||||||||||
| Provision (benefit) for income taxes without discrete event expense (benefit) | $ | 50.8 | $ | 51.4 | ||||||||||
| Income (loss) before income taxes | $ | 225.5 | $ | 223.7 | ||||||||||
| Effective tax rate | 20.6% | 20.1% | ||||||||||||
| Effective tax rate without discrete events | 22.5% | 23.0% |
Numerous foreign jurisdictions have enacted or are in the process of enacting legislation to adopt a minimum effective tax rate described in the Global Anti-Base Erosion, or Pillar Two, model rules issued by the Organization for Economic Co-operation and Development (“OECD”). A minimum effective tax rate of 15% would apply to multinational companies with consolidated revenue above €750 million.
Under the Pillar Two rules, a company would be required to determine a combined effective tax rate for all entities located in a jurisdiction. If the jurisdictional effective tax rate determined under the Pillar Two is less than 15%, a top-up tax will be due to bring the jurisdictional effective tax rate up to 15%. The Company is continuing to monitor the pending implementation of
Pillar Two by individual countries and the potential effects of Pillar Two on our business. The Company does not expect the provisions effective in 2024 will have a materially adverse impact on its results of operations, financial position or cash flows.
The Inflation Reduction Act of 2022 (“IRA”) levies a 1% excise tax on net stock repurchases after December 31, 2022. If the Company were to repurchase shares, the excise tax would be recorded as a cost of acquiring treasury stock and is not material. Additionally, the IRA imposes a 15% corporate alternative minimum tax (“CAMT”) for tax years beginning after December 31, 2022. The Company does not expect the CAMT to have a material impact on its results of operations or financial position.
Note 9. Pension Plans
| First Quarter | |||||||||||||||||||||||
| 2024 | 2023 | ||||||||||||||||||||||
| Service cost — benefits earned during the period (in millions) | $ | 1.5 | $ | 1.5 | |||||||||||||||||||
| Pension non-service cost (income) (in millions): | |||||||||||||||||||||||
| Interest cost on benefit obligation | $ | 8.2 | $ | 8.4 | |||||||||||||||||||
| Expected return on plan assets | (13.6) | (13.6) | |||||||||||||||||||||
| Amortization of net prior service cost (income) | (0.2) | (0.5) | |||||||||||||||||||||
| Amortization of net actuarial loss (gain) | 2.9 | 2.4 | |||||||||||||||||||||
| Pension non-service cost (income) | $ | (2.7) | $ | (3.3) | |||||||||||||||||||
Note 10. Stock-based Compensation
Teledyne has long-term incentive plans pursuant to which it has granted non-qualified stock options, restricted stock awards and restricted stock units. The Company also has non-employee director stock compensation plans, pursuant to which common stock, stock options and restricted stock units have been issued to its directors. The Company issues shares of common stock upon the exercise of stock options.
Stock-based compensation expense was $12.0 million for the first quarter of 2024 and $7.9 million first quarter of 2023. Stock option activity for the first quarter of 2024 is as follows:
| First Quarter | ||||||||||||||||||||||||||
| Shares | Weighted Average Exercise Price | |||||||||||||||||||||||||
| Beginning balance | 1,337,972 | $ | 223.43 | |||||||||||||||||||||||
| Granted | 67,003 | $ | 441.98 | |||||||||||||||||||||||
| Exercised | (83,027) | $ | 109.33 | |||||||||||||||||||||||
| Canceled | (9,283) | $ | 389.07 | |||||||||||||||||||||||
| Ending balance | 1,312,665 | $ | 267.47 | |||||||||||||||||||||||
| Exercisable at end of period | 1,108,192 | $ | 241.34 |
Restricted stock activity for the first three months of 2024 is as follows:
| Shares | Weighted average fair value per share | ||||||||||
| Balance at December 31, 2023 | 123,089 | $ | 364.86 | ||||||||
| Granted | 89,267 | $ | 432.52 | ||||||||
| Vested | (20,863) | $ | 382.20 | ||||||||
| Forfeited/Canceled | (3,256) | $ | 373.66 | ||||||||
| Balance at March 31, 2024 | 188,237 | $ | 394.81 |
Note 11. Earnings Per Share
The weighted average number of common shares used in the calculation of basic and diluted earnings per share consisted of the following (in millions):
| First Quarter | |||||||||||||||||||||||
| 2024 | 2023 | ||||||||||||||||||||||
| Weighted average basic common shares outstanding | 47.3 | 46.9 | |||||||||||||||||||||
| Effect of dilutive securities (primarily stock options) | 0.7 | 1.0 | |||||||||||||||||||||
| Weighted average diluted common shares outstanding | 48.0 | 47.9 |
For the first quarter of 2024 and 2023, the Company excluded approximately 0.2 million of stock options in the computation of diluted earnings per share because the effect of their inclusion would have been anti-dilutive.
Note 12. Accumulated Other Comprehensive Income (Loss)
The changes in accumulated other comprehensive income (loss) ("AOCI") by component, net of tax, for the first quarter ended March 31, 2024 and April 2, 2023 are as follows (in millions):
| Foreign Currency Translation | Cash Flow Hedges and Other | Pension and Postretirement Benefits | Total | ||||||||||||||||||||
| Balance at December 31, 2023 | $ | (392.7) | $ | 8.2 | $ | (249.6) | $ | (634.1) | |||||||||||||||
| Other comprehensive income (loss) before reclassifications | (88.8) | 2.7 | — | (86.1) | |||||||||||||||||||
| Amounts reclassified from AOCI | — | (6.9) | 2.1 | (4.8) | |||||||||||||||||||
| Net other comprehensive income (loss) | (88.8) | (4.2) | 2.1 | (90.9) | |||||||||||||||||||
| Balance at March 31, 2024 | $ | (481.5) | $ | 4.0 | $ | (247.5) | $ | (725.0) | |||||||||||||||
| Foreign Currency Translation | Cash Flow Hedges and Other | Pension and Postretirement Benefits | Total | ||||||||||||||||||||
| Balance at January 1, 2023 | $ | (472.3) | $ | 1.3 | $ | (255.5) | $ | (726.5) | |||||||||||||||
| Other comprehensive income (loss) before reclassifications | (4.3) | 9.8 | — | 5.5 | |||||||||||||||||||
| Amounts reclassified from AOCI | — | (7.3) | 1.5 | (5.8) | |||||||||||||||||||
| Net other comprehensive income (loss) | (4.3) | 2.5 | 1.5 | (0.3) | |||||||||||||||||||
| Balance at April 2, 2023 | $ | (476.6) | $ | 3.8 | $ | (254.0) | $ | (726.8) |
The reclassifications out of AOCI to net income for the first quarter ended March 31, 2024 and April 2, 2023 are as follows (in millions):
| Amount Reclassified from AOCI for the Quarter Ended | Amount Reclassified from AOCI for the Quarter Ended | Statement of Income (Loss) Presentation | ||||||||||||
| March 31, 2024 | April 2, 2023 | |||||||||||||
| (Gain) loss on cash flow hedges: | ||||||||||||||
| Gain recognized in income on derivatives | $ | (9.3) | $ | (9.8) | See Note 13 | |||||||||
| Income tax impact | 2.4 | 2.5 | Provision for income taxes | |||||||||||
| Total | $ | (6.9) | $ | (7.3) | ||||||||||
| Amortization of defined benefit pension and postretirement plan items: | ||||||||||||||
| Amortization of prior service cost | $ | (0.1) | $ | (0.4) | Costs and expenses | |||||||||
| Amortization of net actuarial loss | 2.9 | 2.4 | Costs and expenses | |||||||||||
| Total before tax | 2.8 | 2.0 | ||||||||||||
| Income tax impact | (0.7) | (0.5) | Provision for income taxes | |||||||||||
| Total | $ | 2.1 | $ | 1.5 |
Note 13. Derivative Instruments and Hedging Activities
The Company's primary exposure to market risk relates to changes in foreign currency exchange rates and interest rates. The Company’s primary foreign currency risk management objective is to protect the U.S. dollar value of future cash flows and minimize the volatility of reported earnings. The Company does not use foreign currency forward contracts for speculative or trading purposes.
The Company mitigates exposure to foreign currency exchange rates and interest rates primarily through the following:
| Mitigation Approach | Quantitative Information on Approach | |||||||||||||
| 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, and in British pounds for our U.K. companies. These contracts are designated and qualify as cash flow hedges. | As of March 31, 2024, the Company had foreign currency forward contracts to buy Canadian dollars and to sell U.S. dollars totaling $131.3 million. These foreign currency forward contracts have maturities ranging from June 2024 to February 2026. As of March 31, 2024, the Company had foreign currency forward contracts to buy British pounds and to sell U.S. dollars totaling $12.7 million. These foreign currency forward contracts have maturities ranging from June 2024 to February 2025. | |||||||||||||
| The Company utilizes foreign currency forward contracts to mitigate foreign exchange rate risk associated with foreign currency denominated monetary assets and liabilities, including intercompany receivables and payables. These foreign currency forward contracts are not designated as accounting hedges. | See Non-Designated Hedging Activities section below. | |||||||||||||
| The Company has converted a U.S. dollar denominated, variable rate debt obligation of a European subsidiary into euro fixed rate obligation using a receive float, pay fixed cross currency swap to reduce the variability of interest rates. This cross currency swap is designated as cash flow hedge. | As of March 31, 2024, the Company has a cross currency swap outstanding with a notional amount of €156.0 million and $150.0 million that matures in October 2024. | |||||||||||||
All derivative instruments are recorded on the condensed consolidated balance sheets at fair value. The accounting for gains and losses resulting from changes in fair value depends on the use of the derivative instrument and whether it is designated and qualifies for hedge accounting.
Designated Hedging Activities
For a derivative instrument designated as an accounting hedge of an anticipated transaction (a cash flow hedge), the change in the fair value is recorded on the condensed consolidated balance sheets in AOCI to the extent the derivative instrument is effective in mitigating the exposure related to the anticipated transaction. The amount recorded within AOCI is reclassified into earnings in the same period during which the underlying hedged transaction affects earnings. The effect of derivative instruments designated as cash flow hedges in the condensed consolidated financial statements for the first quarter ended March 31, 2024 and April 2, 2023 was as follows (in millions):
| First Quarter | |||||||||||||||||||||||
| 2024 | 2023 | ||||||||||||||||||||||
| Net gain (loss) recognized in AOCI - Foreign Exchange Contracts (a) | $ | 0.7 | $ | 13.6 | |||||||||||||||||||
| Net gain (loss) reclassified from AOCI into revenue - Foreign Exchange Contracts (a) | $ | 0.7 | $ | (1.9) | |||||||||||||||||||
| Net gain (loss) reclassified from AOCI into other income and expense, net - Foreign Exchange Contracts (b) | $ | 3.7 | $ | 10.1 | |||||||||||||||||||
| Net gain (loss) reclassified from AOCI into interest expense - Foreign Exchange Contracts | $ | 1.9 | $ | 1.5 | |||||||||||||||||||
| Net gain (loss) reclassified from AOCI into interest expense - Interest Rate Contracts | $ | — | $ | 0.6 | |||||||||||||||||||
(a) Effective portion, pre-tax
(b) Amount reclassified to offset earnings impact of liability hedged by cross currency swap
Net deferred gains recorded in AOCI for the forward contracts that will mature in the next twelve months total $1.0 million, net of taxes. 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 next twelve months total $3.5 million.
Non-Designated Hedging Activities
For a derivative instrument that has not been designated as an accounting hedge, the change in the fair value is recognized immediately in earnings. As of March 31, 2024, the Company had foreign currency forward contracts not designated as accounting hedges primarily in the following types and pairs (in millions):
| Contracts to Buy | Contracts to Sell | |||||||||||||||||||
| Currency | Amount | Currency | Amount | |||||||||||||||||
| Canadian Dollars | $ | 301.2 | U.S. Dollars | US$ | 222.1 | |||||||||||||||
| Canadian Dollars | $ | 12.6 | Euros | € | 8.6 | |||||||||||||||
| Danish Krone | DKR | 154.8 | U.S. Dollars | US$ | 22.5 | |||||||||||||||
| Great Britain Pounds | £ | 5.3 | Euros | € | 6.2 | |||||||||||||||
| Great Britain Pounds | £ | 70.4 | U.S. Dollars | US$ | 88.9 | |||||||||||||||
| U.S. Dollars | US$ | 17.0 | Euros | € | 15.8 | |||||||||||||||
| Norwegian Krone | kr | 179.0 | U.S. Dollars | US$ | 16.9 | |||||||||||||||
| Swedish Krona | SEK | 284.3 | Euros | € | 26.1 | |||||||||||||||
| Swedish Krona | SEK | 310.4 | U.S. Dollars | US$ | 29.3 | |||||||||||||||
The preceding table includes non-designated hedges derived from terms contained in previously designated cash flow hedges. The gains and losses on these derivatives instruments which are not designated as accounting hedges are intended to, at a minimum, partially offset the transaction gains and losses recognized in earnings.
The effect of derivative instruments not designated as accounting hedges recognized in other income and expense for the first quarter ended March 31, 2024 was expense of $9.3 million. The effect of derivative instruments not designated as accounting hedges in other income and expense for the first quarter ended April 2, 2023 was income of $7.8 million. The income or expense was largely offset by losses or gains in the value of the underlying hedged item excluding the impact of forward points.
Fair Value of Derivative Financial Instruments
The fair values of the Company’s derivative instruments are presented below. All fair values for these derivative instruments were measured using Level 2 inputs in the fair value hierarchy (in millions):
| Asset/(Liability) Derivative Instruments | Balance sheet location | March 31, 2024 | December 31, 2023 | ||||||||||||||
| Derivatives designated as hedging instruments: | |||||||||||||||||
| Cash flow forward contracts | Other current assets | $ | 1.2 | $ | 3.7 | ||||||||||||
| Cash flow forward contracts | Other non-current assets | 0.6 | 2.4 | ||||||||||||||
| Interest rate contracts | Other current assets (accrued interest) | 0.1 | 0.1 | ||||||||||||||
| Cash flow cross currency swap | Other current assets | (17.3) | (21.3) | ||||||||||||||
| Total derivatives designated as hedging instruments | (15.4) | (15.1) | |||||||||||||||
| Derivatives not designated as hedging instruments: | |||||||||||||||||
| Non-designated forward contracts | Other current assets | 1.5 | 14.2 | ||||||||||||||
| Non-designated forward contracts | Accrued liabilities | (3.3) | (3.2) | ||||||||||||||
| Total derivatives not designated as hedging instruments | (1.8) | 11.0 | |||||||||||||||
| Total derivative instruments, net | $ | (17.2) | $ | (4.1) |
Note 14. Commitments and Contingencies
Trade Compliance Matters
The Company has made voluntary disclosures to the U.S. Department of State and the U.S. Department of Commerce, including to the Bureau of Industry and Security (“BIS”) with respect to Teledyne FLIR shipments of products from non-U.S. jurisdictions which were not licensed due to incorrect de minimis calculation methodology under the Export Administration Regulations. The Company has also made voluntary disclosures to export authorities in jurisdictions outside the U.S. for certain potential violations of local export laws. At this time, based on available information, we are unable to reasonably estimate the time it may take to resolve these matters or the amount or range of potential loss, penalty or other government action, if any, that may be incurred in connection with these matters. However, an unfavorable outcome could result in substantial fines and penalties or loss or suspension of export privileges or of particular authorizations that could be material to the Company’s financial position, results of operations or cash flows in and following the period in which such outcome becomes estimable or known.
Environmental Remediation Obligations
At March 31, 2024, the Company’s reserves for environmental remediation obligations totaled $5.5 million, of which $1.7 million is included in current accrued liabilities. At December 31, 2023, the Company’s reserves for environmental remediation obligations totaled $5.4 million. The Company 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 pay the amounts recorded over many years and will complete remediation of all sites with which it has been identified in up to 30 years.
Legal Matters
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, contracts, environmental, employment and employee benefits matters. While the outcome of such matters 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 statements.
Note 15. Subsequent Events
On February 13, 2024, the Company announced that it entered into an agreement to acquire Adimec Holding B.V. and its subsidiaries (“Adimec”). Adimec, founded in 1992 and headquartered in Eindhoven, Netherlands, develops customized high-performance industrial and scientific cameras. The closing of the transaction, which is subject to customary conditions and approvals, is anticipated to occur in the first half of 2024. Adimec will be part of the Digital Imaging segment.
On April 10, 2024, the Company acquired Valeport Holdings 2019 Limited and its affiliates ("Valeport"). Valeport, founded in 1969 and headquartered in Totnes, United Kingdom, designs and manufactures underwater sensors for environmental, energy, construction and defense applications. Valeport is part of the marine instrumentation product line within the Instrumentation segment.
Subsequent to the end of the first quarter of 2024, the Company made a $450 million debt maturity payment on the Senior Notes due April 2024.
On April 23, 2024, the Board of Directors of the Company authorized a stock repurchase program to repurchase up to $1.25 billion of Teledyne’s common stock. This authorization superseded prior open stock repurchase programs authorized by the Board of Directors.
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