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 30, 2025 AND MARCH 31, 2024
(Unaudited — Amounts in millions, except per share amounts)
| First Quarter | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Net sales | $ | 1,449.9 | $ | 1,350.1 | |||||||||||||||||||
| Costs and expenses | |||||||||||||||||||||||
| Cost of sales | 830.4 | 770.2 | |||||||||||||||||||||
| Selling, general and administrative | 233.9 | 219.7 | |||||||||||||||||||||
| Research and development | 74.3 | 76.5 | |||||||||||||||||||||
| Acquired intangible asset amortization | 52.0 | 49.4 | |||||||||||||||||||||
| Total costs and expenses | 1,190.6 | 1,115.8 | |||||||||||||||||||||
| Operating income (loss) | 259.3 | 234.3 | |||||||||||||||||||||
| Interest and debt income (expense), net | (17.3) | (12.7) | |||||||||||||||||||||
| Non-service retirement benefit income (expense), net | 2.8 | 2.7 | |||||||||||||||||||||
| Other income (expense), net | (5.9) | 1.2 | |||||||||||||||||||||
| Income (loss) before income taxes | 238.9 | 225.5 | |||||||||||||||||||||
| Provision (benefit) for income taxes | 50.1 | 46.4 | |||||||||||||||||||||
| Net income (loss) including noncontrolling interest | 188.8 | 179.1 | |||||||||||||||||||||
| Less: Net income (loss) attributable to noncontrolling interest | 0.2 | 0.6 | |||||||||||||||||||||
| Net income (loss) attributable to Teledyne | $ | 188.6 | $ | 178.5 | |||||||||||||||||||
| Basic earnings per common share | $ | 4.03 | $ | 3.77 | |||||||||||||||||||
| Weighted average common shares outstanding | 46.8 | 47.3 | |||||||||||||||||||||
| Diluted earnings per common share | $ | 3.99 | $ | 3.72 | |||||||||||||||||||
| Weighted average diluted common shares outstanding | 47.3 | 48.0 |
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 30, 2025 AND MARCH 31, 2024
(Unaudited — Amounts in millions)
| First Quarter | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Net income (loss) including noncontrolling interest | $ | 188.8 | $ | 179.1 | |||||||||||||||||||
| Other comprehensive income (loss): | |||||||||||||||||||||||
| Foreign exchange translation adjustment | 150.8 | (88.8) | |||||||||||||||||||||
| Hedge activity, net of tax | 1.3 | (4.2) | |||||||||||||||||||||
| Pension and postretirement benefit adjustments, net of tax | 1.5 | 2.1 | |||||||||||||||||||||
| Other comprehensive income (loss) | 153.6 | (90.9) | |||||||||||||||||||||
| Comprehensive income (loss) including noncontrolling interest | 342.4 | 88.2 | |||||||||||||||||||||
| Less: Comprehensive income (loss) attributable to noncontrolling interest | 0.2 | 0.6 | |||||||||||||||||||||
| Comprehensive income (loss) attributable to Teledyne | $ | 342.2 | $ | 87.6 |
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 30, 2025 | December 29, 2024 | ||||||||||
| Assets | |||||||||||
| Current Assets | |||||||||||
| Cash and cash equivalents | $ | 461.5 | $ | 649.8 | |||||||
| Accounts receivable, net | 935.5 | 901.1 | |||||||||
| Unbilled receivables, net | 368.3 | 312.1 | |||||||||
| Inventories, net | 1,011.8 | 914.4 | |||||||||
| Prepaid expenses and other current assets | 204.6 | 167.2 | |||||||||
| Total current assets | 2,981.7 | 2,944.6 | |||||||||
| Property, plant and equipment, net of accumulated depreciation and amortization of $1,045.9 at March 30, 2025 and $1,012.1 at December 29, 2024 | 815.3 | 745.2 | |||||||||
| Goodwill | 8,534.0 | 7,990.5 | |||||||||
| Acquired intangibles, net | 2,187.8 | 2,012.9 | |||||||||
| Prepaid pension assets | 231.8 | 227.6 | |||||||||
| Other assets, net | 297.9 | 279.7 | |||||||||
| Total Assets | $ | 15,048.5 | $ | 14,200.5 | |||||||
| Liabilities, Redeemable Noncontrolling Interest and Stockholders’ Equity | |||||||||||
| Current Liabilities | |||||||||||
| Accounts payable | $ | 489.9 | $ | 416.4 | |||||||
| Accrued liabilities | 874.3 | 844.9 | |||||||||
| Current portion of long-term debt | 0.2 | 0.3 | |||||||||
| Total current liabilities | 1,364.4 | 1,261.6 | |||||||||
| Long-term debt, net of current portion | 2,964.6 | 2,648.7 | |||||||||
| Long-term deferred tax liabilities | 374.1 | 354.0 | |||||||||
| Other long-term liabilities | 414.0 | 380.8 | |||||||||
| Total Liabilities | 5,117.1 | 4,645.1 | |||||||||
| Commitments and contingencies (see Note 15) | |||||||||||
| Redeemable Noncontrolling Interest | 6.2 | 6.0 | |||||||||
| Stockholders’ Equity | |||||||||||
| Preferred stock, $0.01 par value; outstanding shares - none | — | — | |||||||||
| Common stock, $0.01 par value; issued shares: 47,424,847 at March 30, 2025 and 47,432,888 at December 29, 2024; outstanding shares: 46,851,809 at March 30, 2025 and 46,706,612 at December 29, 2024 | 0.5 | 0.5 | |||||||||
| Additional paid-in capital | 4,386.8 | 4,414.5 | |||||||||
| Retained earnings | 6,455.3 | 6,266.7 | |||||||||
| Treasury stock, 573,038 shares at March 30, 2025 and 726,276 at December 29, 2024 | (231.1) | (292.4) | |||||||||
| Accumulated other comprehensive income (loss) | (686.3) | (839.9) | |||||||||
| Total Stockholders’ Equity | 9,925.2 | 9,549.4 | |||||||||
| Total Liabilities, Redeemable Noncontrolling Interest and Stockholders’ Equity | $ | 15,048.5 | $ | 14,200.5 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
TELEDYNE TECHNOLOGIES INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited — Amounts in millions)
| Common Stock | Additional Paid-in Capital | Treasury Stock | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total | ||||||||||||||||||||||||||||||
| Balance, December 29, 2024 | $ | 0.5 | $ | 4,414.5 | $ | (292.4) | $ | 6,266.7 | $ | (839.9) | $ | 9,549.4 | |||||||||||||||||||||||
| Net income (loss) | — | — | — | 188.6 | — | 188.6 | |||||||||||||||||||||||||||||
| Other comprehensive income (loss), net of tax | — | — | — | — | 153.6 | 153.6 | |||||||||||||||||||||||||||||
| Treasury stock issued | — | (61.3) | 61.3 | — | — | — | |||||||||||||||||||||||||||||
| Stock-based compensation and other | — | 4.1 | — | — | — | 4.1 | |||||||||||||||||||||||||||||
| Exercise of stock options | — | 29.5 | — | — | — | 29.5 | |||||||||||||||||||||||||||||
| Balance, March 30, 2025 | $ | 0.5 | $ | 4,386.8 | $ | (231.1) | $ | 6,455.3 | $ | (686.3) | $ | 9,925.2 | |||||||||||||||||||||||
| 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 and other | — | 10.1 | — | — | — | 10.1 | |||||||||||||||||||||||||||||
| Exercise of stock options | — | 9.1 | — | — | — | 9.1 | |||||||||||||||||||||||||||||
| Balance, March 31, 2024 | $ | 0.5 | $ | 4,426.5 | $ | — | $ | 5,626.0 | $ | (725.0) | $ | 9,328.0 | |||||||||||||||||||||||
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 30, 2025 AND MARCH 31, 2024
(Unaudited — Amounts in millions)
| Three Months | |||||||||||
| 2025 | 2024 | ||||||||||
| Operating Activities | |||||||||||
| Net income (loss) including noncontrolling interest | $ | 188.8 | $ | 179.1 | |||||||
| Adjustments to reconcile net income (loss) including noncontrolling interest to net cash provided by (used in) operating activities: | |||||||||||
| Depreciation and amortization | 80.7 | 78.0 | |||||||||
| Stock-based compensation | 8.9 | 12.0 | |||||||||
| Changes in operating assets and liabilities excluding the effect of business acquired: | |||||||||||
| Accounts receivable and unbilled receivables | (5.6) | 12.1 | |||||||||
| Inventories | (33.5) | (25.2) | |||||||||
| Accounts payable | 53.1 | 27.7 | |||||||||
| Deferred taxes and income taxes receivable (payable), net | 19.2 | 19.3 | |||||||||
| Prepaid expenses and other assets | (3.0) | (1.5) | |||||||||
| Accrued expenses and other liabilities | (57.3) | (21.8) | |||||||||
| Other operating, net | (8.7) | 11.3 | |||||||||
| Net cash provided by (used in) operating activities | 242.6 | 291.0 | |||||||||
| Investing Activities | |||||||||||
| Purchases of property, plant and equipment | (18.0) | (15.9) | |||||||||
| Purchases of businesses, net of cash acquired | (757.6) | — | |||||||||
| Other investing, net | 0.6 | — | |||||||||
| Net cash provided by (used in) investing activities | (775.0) | (15.9) | |||||||||
| Financing Activities | |||||||||||
| Net borrowings from (repayments made to) credit facility | 315.0 | — | |||||||||
| Proceeds from (payments on) other debt | (0.1) | (0.1) | |||||||||
| Proceeds from exercise of stock options | 29.5 | 9.1 | |||||||||
| Other financing, net | (4.8) | (2.9) | |||||||||
| Net cash provided by (used in) financing activities | 339.6 | 6.1 | |||||||||
| Effects of exchange rate changes on cash | 4.5 | (17.1) | |||||||||
| Change in cash and cash equivalents | (188.3) | 264.1 | |||||||||
| Cash and cash equivalents—beginning of period | 649.8 | 648.3 | |||||||||
| Cash and cash equivalents—end of period | $ | 461.5 | $ | 912.4 | |||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
TELEDYNE TECHNOLOGIES INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
March 30, 2025
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 U.S. Securities and Exchange Commission (“SEC”). 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 29, 2024 (“2024 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 30, 2025 and the consolidated results of operations, consolidated comprehensive income (loss) and consolidated cash flows for the first quarter ended March 30, 2025. The results of operations and cash flows for the period ended March 30, 2025 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 December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“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. 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.
In November 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. This standard requires public entities, on an interim and annual basis, to provide disclosure of specified information about costs and expenses in the notes to the financial statements. The new standard is effective for fiscal years beginning after December 15, 2026, and interim periods with fiscal years beginning after December 15, 2027, with early adoption permitted. The Company is evaluating the impact of adopting this guidance on its consolidated financial statements.
Other ASUs issued but not effective until after March 30, 2025, are not expected to have a material effect on the Company’s consolidated financial position, annual results of operations and/or cash flows.
Note 2. Business Acquisitions
2025 Acquisitions
Micropac
During the first quarter of 2025, the Company acquired Micropac Industries, Inc. (“Micropac”) for approximately $51.2 million in cash, net of cash acquired. Micropac, founded in 1963 and headquartered in Garland, Texas, designs and manufactures microelectronic circuits, optoelectronic components and sensor and display assemblies primarily for military, aerospace and medical applications. Micropac will be part of the Aerospace & Defense Electronics segment. The Company funded the acquisition from cash on hand. Goodwill resulting from the Micropac acquisition will not be deductible for tax purposes.
Optical Systems and Advanced Electronics Systems businesses
During the first quarter of 2025, the Company acquired select aerospace and defense electronics businesses of Excelitas Technologies Corp. (“Excelitas”) for approximately $706.4 million in cash, net of cash acquired, and subject to certain adjustments. The acquisition includes the Optical Systems (“OS”) business known under the Qioptiq® brand based in Northern Wales, UK, as well as the U.S. based Advanced Electronic Systems (“AES”) business. The OS and AES businesses will be part of the Aerospace and Defense Electronics segment. The Company funded the acquisition from available borrowings on the credit facility as well as from cash on hand. Goodwill resulting from the acquisition of the UK operations will not be deductible for tax purposes, and goodwill resulting from the acquisition of the U.S. operations will be deductible for tax purposes.
2024 Acquisitions
Adimec
During the second quarter of 2024, the Company acquired Adimec Holding B.V. and its subsidiaries (“Adimec”) for $88.7 million in cash, net of cash acquired, and subject to certain adjustments. Adimec, founded in 1992 and headquartered in Eindhoven, Netherlands, develops customized high-performance industrial and scientific cameras. Adimec is part of the Digital Imaging segment. Goodwill resulting from the Adimec acquisition will not be deductible for tax purposes.
Valeport
During the second quarter of 2024, the Company acquired Valeport Holdings 2019 Limited and its affiliates (“Valeport”) for $35.0 million in cash, net of cash acquired, subject to certain adjustments. Valeport, founded in 1969 and headquartered in Totnes, UK, 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. Goodwill resulting from the Valeport 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):
| 2025 | ||||||||||||||||||||||||||
| Acquisitions | Acquisition Date | Consideration Transferred (a) | Goodwill Acquired | Acquired Intangible Assets | ||||||||||||||||||||||
| OS and AES businesses | February 3, 2025 | $ | 706.4 | $ | 451.6 | $ | 183.6 | |||||||||||||||||||
| Micropac | December 30, 2024 | 51.2 | 5.0 | 8.1 | ||||||||||||||||||||||
| Total | $ | 757.6 | $ | 456.6 | $ | 191.7 |
(a) Net of cash acquired
| 2024 | ||||||||||||||||||||||||||
| Acquisitions | Acquisition Date | Consideration Transferred (a) | Goodwill Acquired | Acquired Intangible Assets | ||||||||||||||||||||||
| Adimec | June 4, 2024 | $ | 88.7 | $ | 64.6 | $ | 17.9 | |||||||||||||||||||
| Valeport | April 10, 2024 | 35.0 | 23.6 | 7.8 | ||||||||||||||||||||||
| Total | $ | 123.7 | $ | 88.2 | $ | 25.7 |
(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 OS and AES businesses, Micropac and Adimec are 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 both 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 2025 and 2024 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 exclude corporate expenses. Corporate expense primarily includes administrative expenses relating to the corporate office not allocated to our segments.
In the first quarter of 2025, the Company completed two acquisitions, and the financial results of these acquisitions have been included since the date of the acquisition and are part of the Aerospace and Defense Electronics segment. See Note 2 to these Notes to Condensed Consolidated Financial Statements for information regarding these 2025 acquisitions.
The following table presents net sales, operating expenses and operating income by segment (dollars in millions):
| First Quarter | % | ||||||||||||||||||||||||||||||||||
| Net Sales (a): | 2025 | 2024 | Change | ||||||||||||||||||||||||||||||||
| Digital Imaging | $ | 757.0 | $ | 740.8 | 2.2 | % | |||||||||||||||||||||||||||||
| Instrumentation | 343.3 | 330.4 | 3.9 | % | |||||||||||||||||||||||||||||||
| Aerospace and Defense Electronics | 242.5 | 185.7 | 30.6 | % | |||||||||||||||||||||||||||||||
| Engineered Systems | 107.1 | 93.2 | 14.9 | % | |||||||||||||||||||||||||||||||
| Total net sales | $ | 1,449.9 | $ | 1,350.1 | 7.4 | % |
(a) Net sales exclude inter-segment sales of $3.8 million and $4.8 million for the first quarter of 2025 and 2024, respectively.
| First Quarter | % | ||||||||||||||||||||||||||||||||||
| Cost of sales: | 2025 | 2024 | Change | ||||||||||||||||||||||||||||||||
| Digital Imaging | $ | 422.5 | $ | 408.6 | 3.4 | % | |||||||||||||||||||||||||||||
| Instrumentation | 173.5 | 171.2 | 1.3 | % | |||||||||||||||||||||||||||||||
| Aerospace and Defense Electronics | 144.2 | 107.9 | 33.6 | % | |||||||||||||||||||||||||||||||
| Engineered Systems | 90.2 | 82.5 | 9.3 | % | |||||||||||||||||||||||||||||||
| Total cost of sales | $ | 830.4 | $ | 770.2 | 7.8 | % |
| First Quarter | % | ||||||||||||||||||||||||||||||||||
| Selling, general and administrative: | 2025 | 2024 | Change | ||||||||||||||||||||||||||||||||
| Digital Imaging | $ | 122.7 | $ | 123.7 | (0.8) | % | |||||||||||||||||||||||||||||
| Instrumentation | 49.7 | 47.0 | 5.7 | % | |||||||||||||||||||||||||||||||
| Aerospace and Defense Electronics | 33.2 | 21.0 | 58.1 | % | |||||||||||||||||||||||||||||||
| Engineered Systems | 6.1 | 7.9 | (22.8) | % | |||||||||||||||||||||||||||||||
| Total selling, general and administrative | $ | 211.7 | $ | 199.6 | 6.1 | % |
| First Quarter | % | ||||||||||||||||||||||||||||||||||
| Research and development: | 2025 | 2024 | Change | ||||||||||||||||||||||||||||||||
| Digital Imaging | $ | 44.1 | $ | 48.9 | (9.8) | % | |||||||||||||||||||||||||||||
| Instrumentation | 24.2 | 22.8 | 6.1 | % | |||||||||||||||||||||||||||||||
| Aerospace and Defense Electronics | 6.0 | 4.7 | 27.7 | % | |||||||||||||||||||||||||||||||
| Engineered Systems | — | 0.1 | (100.0) | % | |||||||||||||||||||||||||||||||
| Total research and development | $ | 74.3 | $ | 76.5 | (2.9) | % |
| First Quarter | % | ||||||||||||||||||||||||||||||||||
| Acquired intangible asset amortization: | 2025 | 2024 | Change | ||||||||||||||||||||||||||||||||
| Digital Imaging | $ | 45.4 | $ | 45.8 | (0.9) | % | |||||||||||||||||||||||||||||
| Instrumentation | 3.2 | 3.4 | (5.9) | % | |||||||||||||||||||||||||||||||
| Aerospace and Defense Electronics | 3.4 | 0.2 | * | ||||||||||||||||||||||||||||||||
| Total acquired intangible asset amortization | $ | 52.0 | $ | 49.4 | 5.3 | % |
- Not meaningful
| First Quarter | % | ||||||||||||||||||||||||||||||||||
| Operating income (loss): | 2025 | 2024 | Change | ||||||||||||||||||||||||||||||||
| Digital Imaging | $ | 122.3 | $ | 113.8 | 7.5 | % | |||||||||||||||||||||||||||||
| Instrumentation | 92.7 | 86.0 | 7.8 | % | |||||||||||||||||||||||||||||||
| Aerospace and Defense Electronics | 55.7 | 51.9 | 7.3 | % | |||||||||||||||||||||||||||||||
| Engineered Systems | 10.8 | 2.7 | 300.0 | % | |||||||||||||||||||||||||||||||
| Corporate expense | (22.2) | (20.1) | 10.4 | % | |||||||||||||||||||||||||||||||
| Operating income (loss) | $ | 259.3 | $ | 234.3 | 10.7 | % |
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 | 2025 | 2024 | |||||||||||||||||||||
| Marine Instrumentation | $ | 161.8 | $ | 147.8 | |||||||||||||||||||
| Environmental Instrumentation | 108.9 | 111.1 | |||||||||||||||||||||
| Test and Measurement Instrumentation | 72.6 | 71.5 | |||||||||||||||||||||
| Total | $ | 343.3 | $ | 330.4 | |||||||||||||||||||
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 30, 2025 | December 29, 2024 | ||||||||||||
| Digital Imaging | $ | 11,021.1 | $ | 10,942.4 | ||||||||||
| Instrumentation | 1,781.9 | 1,750.9 | ||||||||||||
| Aerospace and Defense Electronics | 1,496.8 | 576.2 | ||||||||||||
| Engineered Systems | 200.4 | 180.3 | ||||||||||||
| Corporate | 548.3 | 750.7 | ||||||||||||
| Total identifiable assets | $ | 15,048.5 | $ | 14,200.5 |
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 30, 2025 | First Quarter Ended March 30, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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 | $ | 161.7 | $ | 595.3 | $ | 757.0 | $ | 355.9 | $ | 188.2 | $ | 139.7 | $ | 73.2 | $ | 757.0 | |||||||||||||||||||||||||||||||||||||
| Instrumentation | 27.3 | 316.0 | 343.3 | 148.0 | 102.5 | 58.8 | 34.0 | 343.3 | |||||||||||||||||||||||||||||||||||||||||||||
| Aerospace and Defense Electronics | 90.2 | 152.3 | 242.5 | 159.1 | 50.9 | 23.0 | 9.5 | 242.5 | |||||||||||||||||||||||||||||||||||||||||||||
| Engineered Systems | 92.6 | 14.5 | 107.1 | 106.3 | — | 0.3 | 0.5 | 107.1 | |||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | 371.8 | $ | 1,078.1 | $ | 1,449.9 | $ | 769.3 | $ | 341.6 | $ | 221.8 | $ | 117.2 | $ | 1,449.9 | |||||||||||||||||||||||||||||||||||||
(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 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
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 30, 2025, 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 30, 2025 | December 29, 2024 | |||||||||||||||||||||
| Accrued liabilities | $ | 323.7 | $ | 312.6 | |||||||||||||||||||
| Other long-term liabilities | 42.5 | 30.5 | |||||||||||||||||||||
| Total contract liabilities | $ | 366.2 | $ | 343.1 |
The Company recognized revenue of $98.3 million during the three months ended March 30, 2025, 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 30, 2025, the aggregate amount of the transaction price allocated to remaining performance obligations was $4,214.5 million. The Company expects approximately 77% of remaining performance obligations to be recognized into revenue within the next 12 months, with the remaining 23% 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’s judgment relative to assessing risks, estimating contract revenue, determining reasonably dependable cost estimates, and making assumptions for scheduling 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 2025 was $2.3 million of favorable operating income compared with $0.3 million of unfavorable operating income in the first three months of 2024. None of the effects of changes in estimates on any individual contract were material to the condensed consolidated statements of income (loss) for any period presented.
Note 5. Goodwill and Acquired 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 29, 2024 | $ | 6,854.6 | $ | 955.3 | $ | 163.0 | $ | 17.6 | $ | 7,990.5 | |||||||||||||||||||
| Current year acquisitions | — | — | 456.6 | — | 456.6 | ||||||||||||||||||||||||
| Foreign currency changes and other | 63.6 | 10.6 | 12.7 | — | 86.9 | ||||||||||||||||||||||||
| Balance at March 30, 2025 | $ | 6,918.2 | $ | 965.9 | $ | 632.3 | $ | 17.6 | $ | 8,534.0 |
Acquired intangible assets
Acquired intangible assets consisted of the following (in millions):
| March 30, 2025 | December 29, 2024 | |||||||||||||||||||||||||||||||||||||
| Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | |||||||||||||||||||||||||||||||||
| Proprietary technology | $ | 1,830.5 | $ | 859.1 | $ | 971.4 | $ | 1,665.5 | $ | 796.6 | $ | 868.9 | ||||||||||||||||||||||||||
| Customer list/relationships | 655.6 | 266.3 | 389.3 | 599.3 | 252.9 | 346.4 | ||||||||||||||||||||||||||||||||
| Patents | 0.6 | 0.6 | — | 0.6 | 0.6 | — | ||||||||||||||||||||||||||||||||
| Non-compete agreements | 0.9 | 0.9 | — | 0.9 | 0.9 | — | ||||||||||||||||||||||||||||||||
| Trademarks | 48.4 | 9.4 | 39.0 | 12.2 | 7.7 | 4.5 | ||||||||||||||||||||||||||||||||
| Backlog | 16.2 | 16.2 | — | 16.0 | 16.0 | — | ||||||||||||||||||||||||||||||||
| Total intangibles subject to amortization | 2,552.2 | 1,152.5 | 1,399.7 | 2,294.5 | 1,074.7 | 1,219.8 | ||||||||||||||||||||||||||||||||
| Intangibles not subject to amortization: | ||||||||||||||||||||||||||||||||||||||
| Trademarks | 788.1 | — | 788.1 | 793.1 | — | 793.1 | ||||||||||||||||||||||||||||||||
| Total acquired intangible assets | $ | 3,340.3 | $ | 1,152.5 | $ | 2,187.8 | $ | 3,087.6 | $ | 1,074.7 | $ | 2,012.9 |
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.
Based on the results of the Company’s annual assessment in the fourth quarter of 2024, all reporting units with the exception of the FLIR reporting unit in the Digital Imaging segment had estimated fair values that significantly exceeded their respective carrying value. At the assessment date in the fourth quarter of 2024, the estimated fair value of the FLIR reporting unit exceeded its carrying value by approximately $420 million, or 5%, and the FLIR reporting unit had $5,856.5 million of goodwill at the prior year assessment date. As of March 30, 2025, the FLIR reporting unit had $5,873.4 million of goodwill, with the change in value from the prior year assessment date related to the impact of foreign currency translation.
Although the assumptions used in the Company’s prior year discounted cash flow model and market approach are based on assumptions that are considered reasonable by management and consistent with the plans and estimates management uses to operate the underlying businesses, there is significant judgment in determining the expected results of the FLIR reporting unit. Changes in forecast estimates or the application of alternative assumptions could produce significantly different results. The discount rate, which is consistent with a weighted average cost of capital that is likely to be expected by a market participant, is based upon industry required rates of return, including consideration of both debt and equity components of the capital structure.
Although no impairment existed for the FLIR reporting unit as of the prior year assessment date, a non-cash impairment of goodwill could result from a number of circumstances, including different assumptions used in determining the fair value of the reporting unit, changes to customer spending priorities, or a sharp increase in interest rates without a corresponding increase in future net sales.
For all reporting units, including the FLIR reporting unit, there have been no events or changes in circumstances which indicate that it is more likely than not that the fair value of the reporting unit is below its carrying value. As such, no interim impairment review was required. The Company will perform its annual analysis during the fourth quarter of 2025.
Based on the results of the Company’s annual assessment in the fourth quarter of 2024, the estimated fair value of all material indefinite-lived trademarks, with the exception of the FLIR indefinite-lived trademark, significantly exceeded their respective carrying value. At the prior year annual assessment date, the FLIR indefinite-lived trademark value was reduced to $635.8 million, which represented the estimated fair value of the asset as of the prior year assessment date.
The most significant assumptions utilized in the determination of the fair value of the FLIR trademark were the net sales growth rates (including residual growth rates), discount rate, and royalty rate. Although the FLIR sales forecasts were based on assumptions that are considered reasonable by management and consistent with the plans and estimates management uses to operate the underlying businesses, there is significant judgment in determining the expected results of the FLIR business. Changes in sales forecast estimates or the application of alternative assumptions could produce significantly different results. The discount rate, which is consistent with a weighted average cost of capital that is likely to be expected by a market participant, is based upon industry required rates of return, including consideration of both debt and equity components of the capital structure. The royalty rate was driven by historical and estimated future profitability of the underlying FLIR business. The royalty rate may be impacted by significant adverse changes in long-term operating margins. Subsequent to the assessment made in the prior year, additional non-cash impairment of the trademark could result from a number of circumstances, including different assumptions used in determining the fair value of the trademark, changes to customer spending priorities, or a sharp increase in interest rates without a corresponding increase in future net sales.
For all indefinite-lived trademarks, including the FLIR trademark, there have been no events or changes in circumstances which indicate that it is more likely than not that the fair value of the trademark is below its carrying value. As such, no interim impairment review was required. The Company will perform its annual analysis during the fourth quarter of 2025.
Note 6. Supplemental Balance Sheet Information
Cash Equivalents
The Company had $99.7 million and $304.1 million of cash equivalents at March 30, 2025, and December 29, 2024, 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 $15.6 million at March 30, 2025 and $15.5 million at December 29, 2024.
Inventories, Net
Inventories are stated at current cost, net of reserves for excess, slow moving and obsolete inventory. Inventories are primarily valued under the first-in, first-out method or the average cost method. Inventory balances are summarized as follows (in millions):
| Balance at | |||||||||||
| March 30, 2025 | December 29, 2024 | ||||||||||
| Raw materials and supplies | $ | 599.4 | $ | 559.2 | |||||||
| Work in process | 242.0 | 190.4 | |||||||||
| Finished goods | 170.4 | 164.8 | |||||||||
| Total inventories, net | $ | 1,011.8 | $ | 914.4 |
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 historical 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.
| First Quarter | |||||||||||
| Warranty Reserve (in millions): | 2025 | 2024 | |||||||||
| Balance at beginning of year | $ | 50.2 | $ | 49.1 | |||||||
| Product warranty expense | 7.4 | 3.5 | |||||||||
| Deductions | (3.8) | (5.1) | |||||||||
| Acquisition | 0.4 | — | |||||||||
| Balance at end of period | $ | 54.2 | $ | 47.5 |
Note 7. Long-Term Debt
| Balance at | |||||||||||
| Long-Term Debt (in millions): | March 30, 2025 | December 29, 2024 | |||||||||
| $1.20 billion credit facility due June 2029, weighted average variable rate of 5.55% at March 30, 2025 | $ | 315.0 | $ | — | |||||||
| 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 | 1.1 | 1.2 | |||||||||
| Debt discount and debt issuance costs | (16.3) | (17.2) | |||||||||
| Total debt, net | 2,964.8 | 2,649.0 | |||||||||
| Less: Current portion of long-term debt | (0.2) | (0.3) | |||||||||
| Total long-term debt, net of current portion | $ | 2,964.6 | $ | 2,648.7 |
At March 30, 2025, $855.5 million was available under the $1.2 billion credit facility after reductions of $315.0 million in outstanding borrowings and $29.5 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 30, 2025, the Company was in compliance with these covenants.
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 the Company operates, 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) | 2025 | 2024 | ||||||||||||||||||||||||
| Provision (benefit) for income taxes (a) | $ | 50.1 | $ | 46.4 | ||||||||||||||||||||||
| Income (loss) before income taxes | $ | 238.9 | $ | 225.5 | ||||||||||||||||||||||
| Effective tax rate | 21.0% | 20.6% | ||||||||||||||||||||||||
(a) The first quarter of 2025 includes net discrete income tax benefits of $3.7 million and $4.4 million, respectively
Note 9. Pension Plans
| First Quarter | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| 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 | $ | 7.9 | $ | 8.2 | |||||||||||||||||||
| Expected return on plan assets | (13.4) | (13.6) | |||||||||||||||||||||
| Amortization of net prior service cost (income) | 0.1 | (0.2) | |||||||||||||||||||||
| Amortization of net actuarial loss (gain) | 2.8 | 2.9 | |||||||||||||||||||||
| Pension non-service cost (income) | $ | (2.6) | $ | (2.7) |
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. The Company uses the Black–Scholes option pricing model to determine the fair value of stock options.
Stock-based compensation expense was $8.9 million and $12.0 million for the first quarter of 2025 and 2024, respectively.
Stock option activity for the first quarter of 2025 is as follows:
| Shares | Weighted Average Exercise Price | |||||||||||||||||||||||||
| Beginning balance | 1,135,749 | $ | 278.34 | |||||||||||||||||||||||
| Exercised | (137,124) | $ | 215.36 | |||||||||||||||||||||||
| Canceled | (749) | $ | 405.53 | |||||||||||||||||||||||
| Ending balance | 997,876 | $ | 286.90 | |||||||||||||||||||||||
| Exercisable at end of period | 916,486 | $ | 276.56 |
On April 22, 2025, the Company granted approximately 63,000 stock options at an exercise price of $461.10 per share and a grant date fair value of $179.30 per share.
Restricted stock activity for the first quarter of 2025 is as follows:
| Shares | Weighted Average Fair Value per Share | ||||||||||||||||||||||
| Beginning balance | 160,344 | $ | 398.79 | ||||||||||||||||||||
| Granted | 19,188 | $ | 442.76 | ||||||||||||||||||||
| Vested | (37,287) | $ | 409.82 | ||||||||||||||||||||
| Forfeited/canceled | (5,428) | $ | 379.91 | ||||||||||||||||||||
| Ending balance | 136,817 | $ | 402.70 |
On April 22, 2025, the Company granted approximately 71,000 time-based restricted stock units with a grant date fair value of $461.10 per share.
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 | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Weighted average basic common shares outstanding | 46.8 | 47.3 | |||||||||||||||||||||
| Effect of dilutive securities (primarily stock options) | 0.5 | 0.7 | |||||||||||||||||||||
| Weighted average diluted common shares outstanding | 47.3 | 48.0 |
For the first quarter of 2024, 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. For the first quarter of 2025, the Company did not have any stock options that would have been anti-dilutive.
Stock Repurchases
In April 2024, our Board of Directors approved a stock repurchase program authorizing the Company 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. The newly authorized stock repurchase program does not have a stated expiration date. Shares may be repurchased from time to time in open market transactions at prevailing market prices, in privately negotiated transactions, or via an accelerated stock repurchase program. Shares could be repurchased in a plan pursuant to Rule 10b5-1 of the Securities Exchange Act of 1934. The repurchase program is expected to remain open continuously, and the number of shares purchased will depend on a variety of factors, such as share price, levels of cash available, acquisitions and alternative investment opportunities available immediately or longer-term, and other regulatory, market or economic conditions. The Company currently intends to fund future share repurchases with cash on hand and available borrowings under the Company's credit facility. No repurchases under any authorizations were made in the first quarter of 2025 or 2024.
Note 12. Accumulated Other Comprehensive Income (Loss)
The changes in accumulated other comprehensive income (loss) (“AOCI”) by component, net of tax, as applicable, for the first quarter ended March 30, 2025, and March 31, 2024, are as follows (in millions):
| Foreign Currency Translation | Cash Flow Hedges | Pension and Postretirement Benefits | Total | ||||||||||||||||||||
| Balance at December 29, 2024 | $ | (602.3) | $ | (2.2) | $ | (235.4) | $ | (839.9) | |||||||||||||||
| Other comprehensive income (loss) before reclassifications | 150.8 | 0.6 | — | 151.4 | |||||||||||||||||||
| Amounts reclassified from AOCI | — | 0.7 | 1.5 | 2.2 | |||||||||||||||||||
| Net other comprehensive income (loss) | 150.8 | 1.3 | 1.5 | 153.6 | |||||||||||||||||||
| Balance at March 30, 2025 | $ | (451.5) | $ | (0.9) | $ | (233.9) | $ | (686.3) | |||||||||||||||
| Foreign Currency Translation | Cash Flow Hedges | 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) | |||||||||||||||
The reclassifications out of AOCI to net income for the first quarter ended March 30, 2025, and March 31, 2024 are as follows (in millions):
| Amount Reclassified from AOCI for the Quarter Ended March 30, 2025 | Amount Reclassified from AOCI for the Quarter Ended March 31, 2024 | Statement of Income (Loss) Presentation | ||||||||||||||||||
| (Gain) loss on cash flow hedges: | ||||||||||||||||||||
| Loss (gain) recognized in income on derivatives | $ | 0.9 | $ | (9.3) | See Note 13 | |||||||||||||||
| Income tax impact | (0.2) | 2.4 | Provision for income taxes | |||||||||||||||||
| Total | $ | 0.7 | $ | (6.9) | ||||||||||||||||
| Amortization of defined benefit pension and postretirement plan items: | ||||||||||||||||||||
| Amortization of prior service cost | $ | 0.1 | $ | (0.1) | Costs and expenses | |||||||||||||||
| Amortization of net actuarial loss | 1.8 | 2.9 | Costs and expenses | |||||||||||||||||
| Total before tax | 1.9 | 2.8 | ||||||||||||||||||
| Income tax impact | (0.4) | (0.7) | Provision for income taxes | |||||||||||||||||
| Total | $ | 1.5 | $ | 2.1 |
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. During the first quarter ended March 30, 2025, the Company entered into certain derivative contracts to reduce the volatility from translation of the Company’s euro denominated net investments. 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:
Designated Hedging Activities
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 UK companies. As of March 30, 2025, foreign currency forward contracts in Canadian dollars designated as cash flow hedges have maturities ranging from June 2025 to February 2026. As of March 30, 2025, foreign currency forward contracts in British pounds designated as cash flow hedges have maturities ranging from June 2025 to February 2026.
The Company utilizes cross-currency swaps to hedge portions of the Company’s euro denominated net investments against the effect of exchange rate fluctuations on the translation of foreign currency balances to the U.S. dollar. In the first quarter of 2025, the Company entered cross-currency swaps designated as net investment hedges with a total notional amount of €300.0 million to hedge portions of the Company’s euro denominated net investments against the effect of exchange rate fluctuations on the translation of foreign currency balances to the U.S. dollar. These cross-currency swaps mature between March 2027 and September 2029.
The Company converted a U.S. dollar denominated, variable rate debt obligation of a European subsidiary into a euro fixed rate obligation using a receive float, pay fixed cross-currency swap to reduce the variability of interest rates. This cross-currency swap had notional amounts of €156.0 million and $150.0 million and matured in October 2024.
Non-Designated Hedging Activities
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. The gain or loss resulting from a change in fair value of a derivative instrument that is not designated in accounting hedge is recognized immediately in earnings and intended to, at a minimum, partially offset the transaction gains and losses recognized in earnings.
Derivative Instruments
The following is a summary of the gain (loss) included in the condensed consolidated statements of income (loss) and comprehensive income (loss) related to the derivative instruments described above (in millions):
| First Quarter | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Net gain (loss) recognized in AOCI—Foreign Exchange Contracts (a) | $ | 0.8 | $ | 0.7 | |||||||||||||||||||
| Net gain (loss) recognized in AOCI—Cross-Currency Swap Contracts (a) | $ | (5.5) | $ | — | |||||||||||||||||||
| Net gain (loss) reclassified from AOCI into revenue/cost of sales—Foreign Exchange Contracts (a) | $ | (0.9) | $ | 0.7 | |||||||||||||||||||
| Net gain (loss) reclassified from AOCI into other income and expense, net—Foreign Exchange Contracts (b) | $ | — | $ | 3.7 | |||||||||||||||||||
| Net gain (loss) reclassified from AOCI into interest expense—Foreign Exchange Contracts | $ | — | $ | 1.9 | |||||||||||||||||||
| Net gain (loss) recognized in other income and expense, net—Foreign Exchange Contracts | $ | 11.4 | $ | 9.3 |
(a) Effective portion, pre-tax
(b) Amount reclassified to offset earnings impact of liability hedged by cross-currency swap, used to hedge debt
Net deferred losses recorded in AOCI for the forward contracts that will mature in the next 12 months total $1.0 million, net of taxes. These losses are expected to be offset by anticipated gains in the value of the forecasted underlying hedged item.
The following is a summary of notional amounts and fair values of the Company’s derivatives recorded in the condensed consolidated balance sheets presented by instrument type and use (in millions):
| Notional Amount | Fair Value Asset | Fair Value (Liability) | ||||||||||||||||||||||||||||||
| March 30, 2025 | December 29, 2024 | March 30, 2025 | December 29, 2024 | March 30, 2025 | December 29, 2024 | |||||||||||||||||||||||||||
| Derivatives designated as hedging instruments | ||||||||||||||||||||||||||||||||
| Foreign currency forward contracts | $ | 99.6 | $ | 83.3 | $ | 0.6 | $ | — | $ | (1.9) | $ | (3.0) | ||||||||||||||||||||
| Cross-currency swap agreements | 324.0 | — | 2.7 | — | (7.9) | — | ||||||||||||||||||||||||||
| Total derivatives designated as hedging instruments | $ | 423.6 | $ | 83.3 | $ | 3.3 | $ | — | $ | (9.8) | $ | (3.0) | ||||||||||||||||||||
| Derivatives not designated as hedging instruments | ||||||||||||||||||||||||||||||||
| Foreign currency forward contracts | 689.3 | 974.8 | 16.7 | 1.0 | (2.7) | (13.9) | ||||||||||||||||||||||||||
| Total derivatives | $ | 1,112.9 | $ | 1,058.1 | $ | 20.0 | $ | 1.0 | $ | (12.5) | $ | (16.9) |
All derivative assets are presented in Other current assets or Other non-current assets. All derivative liabilities are presented in Accrued liabilities or Other non-current liabilities.
Note 14. Fair Value Measurement
The Company’s financial assets and liabilities carried at fair value are primarily comprised of derivative contracts used to hedge the Company’s foreign currency risk. The Company has not elected to measure any additional financial instruments or other items at fair value.
Financial Instruments Recorded at Fair Value
The fair values of the Company’s derivative financial instruments are presented below. All fair values for these derivatives were measured using Level 2 hierarchy information as defined by the accounting policies (in millions):
| March 30, 2025 | December 29, 2024 | |||||||||||||
| Assets: | ||||||||||||||
| Foreign currency forward contracts | $ | 17.3 | $ | 1.0 | ||||||||||
| Cross-currency swaps | 2.7 | — | ||||||||||||
| Total assets recorded at fair value | $ | 20.0 | $ | 1.0 | ||||||||||
| Liabilities: | ||||||||||||||
| Foreign currency forward contracts | (4.6) | (16.9) | ||||||||||||
| Cross-currency swaps | (7.9) | — | ||||||||||||
| Total liabilities recorded at fair value | $ | (12.5) | $ | (16.9) | ||||||||||
| Net derivatives at fair value | $ | 7.5 | $ | (15.9) |
Gross derivative assets and liabilities are subject to legally enforceable master netting agreements, for which the Company have not elected to present net amounts on the condensed consolidated balance sheets. The effect of such right of setoff on the Company’s financial position were $0.4 million and $0.2 million, as of March 30, 2025, and December 29, 2024, respectively.
Financial Instruments Not Recorded at Fair Value
The carrying amounts of cash and cash equivalents, accounts receivable and accounts payable approximate their fair values due to the short-term maturities of these assets and liabilities.
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 and is valued based on observable market data. As of March 30, 2025 and December 29, 2024, the aggregate fair values of our borrowings were $2,758.8 million and $2,395.0 million, respectively, and the carrying values were $2,981.1 million and $2,666.2 million, respectively.
The cost, if any, to terminate off-balance sheet financial instruments (primarily letters of credit) is not significant.
Note 15. 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 an incorrect de minimis calculation methodology under the Export Administration Regulations. The Company has also made voluntary disclosures to export authorities in jurisdictions outside the United States for certain potential violations of local export laws. At this time, based on available information, the Company is 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 30, 2025, the Company’s reserves for environmental remediation obligations totaled $6.5 million, of which $3.1 million is included in current accrued liabilities. At December 29, 2024, the Company’s reserves for environmental remediation obligations totaled $6.5 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
The Company is working to resolve a civil investigation by the U.S. Department of Justice relating to an ejection seat sequencer program and deliveries to the U.S. Government between 2006 and 2018. 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, employment and employment benefits. While the outcome of litigation, claims, proceedings and investigations cannot be predicted with certainty, and some of these matters 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.
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