What changed in this filing

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Item 9A. Controls and Procedures

2022-02-25 compared with 2021-02-26 · 468 added, 417 removed, 1257 unchanged (41% of the section changed)

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Teledyne’s disclosure controls and procedures are designed to ensure that information required to be disclosed in reports that it files or submits, under the Securities Exchange Act of 1934, was recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission and to provide reasonable assurance that information required to be disclosed by us in such reports is accumulated and communicated to the Company’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

The Company’s President and Chief Executive Officer and Senior Vice President and Chief Financial Officer, with the participation and assistance of other members of management, have evaluated the effectiveness, as of January 3, 2021, of the Company’s “disclosure controls and procedures,” as that term is defined in Rule 13a-15(e) under the Securities and Exchange Act of 1934, as amended (“the Exchange Act”).

The Company’s Chairman, President and Chief Executive Officer and Senior Vice President and Chief Financial Officer, with the participation and assistance of other members of management, have evaluated the effectiveness, as of January 2, 2022, of the Company’s “disclosure controls and procedures,” as that term is defined in Rule 13a-15(e) under the Securities and Exchange Act of 1934, as amended (“the Exchange Act”).

Based upon that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that the disclosure controls and procedures as of January 2, 2022, are effective.

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Paul Sassalos, Associate Vice President, Associate General Counsel and Assistant Secretary

Jason VanWees, Executive Vice President

Vernon, Senior Director, SEC/GAAP Compliance and External Reporting

Jason VanWees, Vice Chairman

Vernon, Senior Director and Assistant Controller

Among its tasks, the Sarbanes-Oxley Disclosure Committee discusses and reviews disclosure issues to help us fulfill our disclosure obligations on a timely basis in accordance with SEC rules and regulations and is intended to be used as an additional resource for employees to raise questions regarding accounting, auditing, internal controls and disclosure matters.

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Other Information

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Directors, Executive Officers and Corporate Governance.

The information required by this item is set forth in the 2021 Proxy Statement under the captions “Executive Management”, “Item 1 on Proxy Card - Election of Directors,” “Board Composition and Practices,” “Corporate Governance,” “Committees of Our Board of Directors - Audit Committee” and “Report of the Audit Committee” and “Stock Ownership - Sections 16(a) Beneficial Ownership Reporting Compliance.” This information is incorporated herein by reference.

The information required by this item is set forth in the 2022 Proxy Statement under the captions “Executive Management”, “Item 1 on Proxy Card - Election of Directors,” “Board Composition and Practices,” “Corporate Governance,” “Committees of Our Board of Directors - Audit Committee” and “Report of the Audit Committee”.

This information is incorporated herein by reference.

Executive Compensation.

The information required by this item is set forth in the 2021 Proxy Statement under the captions “Executive and Director Compensation” “Compensation Committee Interlocks and Insider Participation” and “Personnel and Compensation Committee Report.” This information is incorporated herein by reference.

The information required by this item is set forth in the 2022 Proxy Statement under the captions “Executive and Director Compensation” and “Personnel and Compensation Committee Report.” This information is incorporated herein by reference.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

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Management Statement

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm (PCAOB ID No.

Consolidated Statements of Income

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Our evaluation included reviewing the documentation of our controls, evaluating the design effectiveness of our controls and testing their operating effectiveness.

Our evaluation of internal control over financial reporting excluded the internal control activities of FLIR Systems, Inc ("FLIR"), which we acquired in May 2021.

We have included the financial results of this acquisition in our consolidated financial statements from the date of acquisition.

Total assets (excluding goodwill and intangible assets) and total net sales subject to FLIR’s internal control over financial reporting represented approximately 11% and 28% of our consolidated total assets and total net sales as of and for the fiscal year ended January 2, 2022, respectively.

We did not assess the effectiveness of internal control over financial reporting at this newly acquired entity due to the insufficient time between the date acquired and year-end and the complexity associated with assessing internal controls during integration efforts making the process impractical.

Based on this evaluation we believe that, as of January 2, 2022, the Company’s internal controls over financial reporting were effective.

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February 25, 2022

/s/ ALDO PICHELLI

Aldo Pichelli

President and Chief Executive Officer

/s/ ROBERT MEHRABIAN

Robert Mehrabian

Chairman, President and Chief Executive Officer

February 25, 2022

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Teledyne Technologies Incorporated

To the Stockholders and Board of Directors of Teledyne Technologies Incorporated

Thousand Oaks, California

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We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended January 2, 2022, of the Company and our report dated February 25, 2022, expressed an unqualified opinion on those financial statements and financial statement schedule.

As described in the Report of Management on Teledyne Technologies Incorporated’s Internal Control over Financial Reporting, management excluded from its assessment the internal control over financial reporting at FLIR Systems, Inc., which was acquired on May 14, 2021, and whose financial statements (excluding goodwill and intangibles assets) constitute approximately 11% of total assets and 28% of net sales of the consolidated financial statement amounts as of and for the year ended January 2, 2022.

Accordingly, our audit did not include the internal control over financial reporting at FLIR Systems, Inc.

Basis for Opinion

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Teledyne Technologies Incorporated

To the Stockholders and Board of Directors of Teledyne Technologies Incorporated

Thousand Oaks, California

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Teledyne Technologies Incorporated and subsidiaries (the "Company") as of January 3, 2021 and December 29, 2019, the related consolidated statements of income, comprehensive income, stockholder's equity, and cash flows, for each of the three years in the period ended January 3, 2021, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of January 3, 2021 and December 29, 2019, and the results of its operations and its cash flows for each of the three years in the period ended January 3, 2021, in conformity with accounting principles generally accepted in the United States of America.

We have audited the accompanying consolidated balance sheets of Teledyne Technologies Incorporated and subsidiaries (the “Company”) as of January 2, 2022 and January 3, 2021, the related consolidated statements of income, comprehensive income, stockholders' equity, and cash flows, for each of the three years in the period ended January 2, 2022, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of January 2, 2022 and January 3, 2021, and the results of its operations and its cash flows for each of the three years in the period ended January 2, 2022, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of January 2, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 25, 2022, expressed an unqualified opinion on the Company's internal control over financial reporting.

Change in Accounting Principle

Effective December 31, 2018, the Company adopted FASB ASC Topic 842, Leases, using the modified retrospective approach.

Basis for Opinion

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Cost Estimates for Over time Contracts

Acquisitions —FLIR Systems, Inc.

– Intangible Assets – Refer to Notes 2 and 3 to the financial statements

Critical Audit Matter Description

The Company recognizes revenue over time for contracts where the customer controls the work in process as evidenced either by contractual termination clauses or by the right to payment for costs incurred to date plus a reasonable profit for products or services that do not have an alternative use.

As control transfers continuously over time on these contracts, revenue is recognized based on the extent of progress towards completion of the performance obligation.

For the year ended January 3, 2021, 40% of the Company’s revenue was recognized over time, from a combination of fixed price and cost type contracts.

While fixed price and cost type contracts both require judgment in estimating total contract costs and revenue at completion, key inputs to the percentage of completion calculation;

fixed price contracts have additional uncertainty as cost estimates may change while estimated revenue at completion remains constant.

Changes to assumptions across the Company’s portfolio of contracts may have a significant impact on the estimated revenue and profit recorded during the period under audit.

We identified assumptions related to estimates and changes in estimates used to recognize revenue for overtime contracts to be a critical audit matter in the current year.

This is due to the volume of contracts over multiple product lines, the complexity of judgments involved, and the impact that changes in these estimates can have on current period revenue and profit.

Performing audit procedures and evaluating the results of the procedures over these estimates and changes in estimates required extensive audit effort and a high degree of auditor judgement.

The Company completed the acquisition of FLIR Systems, Inc.

(“FLIR”) for total consideration of $7.9 billion on May 14, 2021.

The Company accounted for the acquisition under the acquisition method of accounting for business combinations.

Accordingly, the purchase price was allocated to the assets acquired and liabilities assumed based on their respective fair values, including acquired intangible assets of $2.49 billion primarily from proprietary technology, trademarks, and customer list/relationships.

Management estimated the fair value of proprietary technology using the discounted cash flows approach, trademarks using the relief from royalty approach, and customer list/relationships using the multi-period excess earnings approach.

The provisional fair value determination of the acquired intangible assets required management to make significant estimates and assumptions related to future revenue projections.

Given the fair value determination of the acquired intangibles for FLIR requires management to make significant estimates and assumptions related to the forecasts of future revenue projections, performing audit procedures to evaluate the reasonableness of these estimates and assumptions required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to aggregated estimates or judgments for overtime revenue included the following, among others:

We tested the design and operating effectiveness of controls over (1) management’s review of contract estimated revenue and costs at completion and (2) management’s review of the cumulative effect of changes in estimates on contract adjustments.

We tested the accuracy and completeness of the revenue recognized on over time contracts through the following substantive testing procedures:

Examined the cumulative effect of changes in estimates on contract adjustments:

• Performed a retrospective review on the cumulative effect of changes in estimates on contract adjustments by comparing current year data to historical data, including the amounts of prior period adjustments, net favorable adjustment, and net unfavorable adjustments.

• Evaluated trends and fluctuations in changes in estimates on contract adjustments for potential bias at the company level, the segment level, and at individual business units.

• Evaluated the accuracy and timing of any potential cumulative adjustments that were individually material or were significant drivers of trends or fluctuations discussed above.

Our audit procedures related to revenue projections used to estimate the fair value of the intangible assets acquired included the following, among others:

• We tested the effectiveness of management’s controls over the revenue projections used to estimate the fair value of the intangible assets acquired.

• We evaluated the reasonableness of the revenue projections by comparing them to (1) FLIR and third-party historical financial data, (2) current economic factors and analyst reports of FLIR and companies in its peer group, (3) the Company’s similar historical acquisitions and reporting units.

• We performed a sensitivity analysis by varying projected revenue assumptions.

• With the assistance of our fair value specialists, we performed an analysis comparing applicable industry forecasted long-term revenue growth rates to management’s projected revenues used within the valuation models.

Acquisitions —FLIR Systems, Inc.

– Uncertain Tax Positions – Refer to Notes 2 and 3 and 10 to the financial statements

Critical Audit Matter Description

The Company completed the acquisition of FLIR for total consideration of $7.9 billion on May 14, 2021.

The Company accounted for the acquisition under the acquisition method of accounting for business combinations.

Accordingly, the Company evaluated the FLIR historical domestic and international tax positions to determine whether the ultimate tax determinations are uncertain and therefore represent a liability assumed in the acquisition.

A tax position is recorded when a determination is made that it is more likely than not that the position is sustainable upon examination based on the technical merits of the position.

We identified the Company’s assessment of technical merits evaluated in the more likely than not analysis for certain uncertain tax positions in foreign taxing jurisdictions in which FLIR operates and the resulting existence as of the acquisition date as a critical audit matter.

This critical audit matter required challenging auditor judgment due to the nature and subjectivity of the applicable tax rules and/or their interpretation in each jurisdiction, as well as evaluating whether the information used in the Company’s analysis was known or knowable as of the acquisition date.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to (1) assessment of the technical merits evaluated in the more likely than not analysis for uncertain tax positions, and (2) existence of such uncertain tax positions as of the acquisition date included the following, among others:

We tested the effectiveness of management’s controls over the determination of meeting the more likely than not threshold on potential uncertain tax positions and resulting existence as of the acquisition date.

We evaluated the information used in Management’s assessment of the technical merits of the Company’s positions to determine whether such information was known or knowable as of the acquisition date and therefore should be recorded as a liability assumed as part of purchase accounting.

We inspected external information and correspondence from foreign tax authorities on open tax examinations and tax assessments issued

We inquired with external counsel through confirmations to understand matters, status, and facts relevant to tax positions.

We also involved international tax professionals with specialized skills and knowledge in foreign tax law, who assisted in:

– inspecting management prepared tax positions and external tax opinion documentation and comparing to interpretation of tax law

– performing independent evaluation of tax positions and assumptions and comparing the results to the Company’s position, challenging the need for an uncertain tax position liability and disclosure

/s/ Deloitte & Touche LLP

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Selling, general and administrative expenses 1,067.8 662.0 715.1

Acquired intangible asset amortization 149.3 38.8 36.5

Total costs and expenses 3,990.0 2,606.1 2,671.9

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Non-service retirement benefit income 11.2 12.1 8.0

Other expense, net ( 7.2 ) ( 5.0 ) ( 10.7 )

Other income (expense), net 2.5 ( 7.2 ) ( 5.0 )

Income before income taxes

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Pension and postretirement benefit adjustments, net of tax 50.2 ( 24.7 ) ( 16.3 )

Other comprehensive income (loss)(a) 45.7 17.4 ( 116.3 )

Other comprehensive income(a) 0.1 45.7 17.4

Comprehensive income $ 445.4 $ 447.6 $ 419.7

(a) Net of income tax benefit of $ 9.8 million in 2020, income tax benefit of $ 6.6 million for 2019 and income tax benefit of $ 10.6 million for 2018.

(a) Net of income tax expense of $ 11.7 million in 2021, income tax benefit of $ 9.8 million for 2020 and income tax benefit of $ 6.6 million for 2019.

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

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CONSOLIDATED BALANCE SHEETS

For the Fiscal Years Ended January 3, 2021 and December 29, 2019

For the Fiscal Years Ended January 2, 2022 and January 3, 2021

(In millions, except share amounts)

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Long-term debt 4,099.4 680.9

Long-term deferred tax liabilities 625.5 39.0

Other long-term liabilities 585.0 375.4

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Issued shares:

37,697,865 at January 3, 2021, and December 29, 2019;

47,194,766 at January 2, 2022, and 37,697,865 at January 3, 2021;

outstanding shares:

36,951,607 at January 3, 2021, and 36,547,966 at December 29, 2019

46,692,296 at January 2, 2022, and 36,951,607 at January 3, 2021

Additional paid-in capital 4,317.1 389.9

Retained earnings 3,773.2 3,327.9

Treasury stock, 746,258 at January 3, 2021 and 1,149,899 at December 29, 2019

Treasury stock, 502,470 at January 2, 2022 and 746,258 at January 3, 2021

( 38.8 ) ( 59.5 )

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Net income — — — 402.3 — 402.3

Other comprehensive loss, net of tax — — — — ( 116.3 ) ( 116.3 )

Other comprehensive income, net of tax — — — — 17.4 17.4

Treasury stock issued — ( 48.5 ) 48.5 — — —

Stock-based compensation — 30.7 — — — 30.7

Exercise of stock options and other — 25.0 — ( 0.6 ) — 24.4

Cumulative effect of new accounting standards — — — 50.9 ( 47.6 ) 3.3

Exercise of stock options — 34.6 — — — 34.6

Balance, December 29, 2019 0.4 360.5 ( 96.4 ) 2,926.0 ( 475.8 ) 2,714.7

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Exercise of stock options — 36.3 — — — 36.3

Balance, December 29, 2019 0.4 360.5 ( 96.4 ) 2,926.0 ( 475.8 ) 2,714.7

Balance, January 3, 2021 0.4 389.9 ( 59.5 ) 3,327.9 ( 430.1 ) 3,228.6

Net income — — — 445.3 — 445.3

Other comprehensive income, net of tax — — — — 0.1 0.1

Common stock issued 0.1 3,888.6 — — — 3,888.7

Treasury stock issued — ( 20.7 ) 20.7 — — —

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Stock-based compensation 33.9 30.0 30.7

Bridge financing and debt extinguishment expense 30.5 — —

Changes in operating assets and liabilities, excluding the effect of businesses acquired:

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Financing Activities

Net proceeds (payments) on credit facility — 96.0 ( 136.0 )

Proceeds from other debt 2.7 — 11.5

Net proceeds from credit facility — — 96.0

Proceeds from issuance of term loans and senior notes, net 3,975.9 2.7 150.0

Payments on other debt ( 1,141.7 ) ( 100.8 ) ( 137.2 )

Proceeds from issuance of term loans and senior notes — 150.0 —

Proceeds from stock options exercised 25.4 36.3 34.6

Payments for bridge financing and debt extinguishment ( 30.5 ) — —

Other, net ( 22.0 ) — ( 1.7 )

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Change in cash and cash equivalents ( 198.4 ) 473.6 57.0

Cash—beginning of period 199.5 142.5 70.9

Cash and cash equivalents—beginning of period 673.1 199.5 142.5

Cash and cash equivalents—end of period $ 474.7 $ 673.1 $ 199.5

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Description of Business

Teledyne Technologies Incorporated (“Teledyne” or the “Company”) became an independent, public company effective November 29, 1999.

Teledyne provides enabling technologies for industrial growth markets that require advanced technology and high reliability.

These markets include aerospace and defense, factory automation, air and water quality environmental monitoring, electronics design and development, oceanographic research, deepwater oil and gas exploration and production, medical imaging and pharmaceutical research.

The products include digital imaging sensors, cameras and systems within the visible, infrared and X-ray spectra, monitoring and control instrumentation for marine and environmental applications, harsh environment interconnects, electronic test and measurement equipment, aircraft information management systems, and defense electronics and satellite communication subsystems.

Teledyne also supplies engineered systems for defense, space, environmental and energy applications.

Teledyne differentiates itself from many of its direct competitors by having a customer and company-sponsored applied research center that augments our product development expertise.

Teledyne consists of the Instrumentation segment with principal operations in the United States, the United Kingdom and Denmark;

the Digital Imaging segment with principal operations in the United States, Canada, France, the Netherlands and the United Kingdom:

Teledyne Technologies Incorporated (“Teledyne” or the “Company”), a Delaware company that became an independent public company effective November 29, 1999, provides enabling technologies for industrial growth markets that require advanced technology and high reliability.

These markets include factory automation and condition monitoring, aerospace and defense, air and water quality environmental monitoring, electronics design and development, medical imaging and pharmaceutical research, oceanographic research, and deepwater energy exploration and production.

Following the 2021 acquisition of FLIR Systems, Inc.

( “FLIR”), we further evolved into a global sensing and decision-support technology company:

providing specialty sensors, cameras, instrumentation, algorithms and software across the electromagnetic spectrum, as well as unmanned systems, in the subsea, land and air domains.

We differentiate ourselves from many of our direct competitors by having a customer and Company-sponsored applied research center that augments our product development expertise.

We believe that technological capabilities and innovation and the ability to invest in the development of new and enhanced products are critical to obtaining and maintaining leadership in our markets and the industries in which we compete.

Teledyne consists of the Digital Imaging segment with principal operations in the United States, the United Kingdom, Canada, France, Sweden, the Netherlands, Belgium, Estonia and the United Arab Emirates:

the Instrumentation segment with principal operations in the United States, the United Kingdom, Denmark and France;

the Aerospace and Defense Electronics segment with principal operations in the United States and the United Kingdom;

and the Engineered Systems segment with principal operations in the United States.

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

The Company now discloses acquired intangible asset amortization on a separate income statement line.

Acquired intangible asset amortization was previously included in selling, general and administrative expenses.

In addition, the Company now discloses the balance of long-term deferred tax liabilities on a separate balance sheet line.

Long-term deferred tax liabilities was previously included in other long-term liabilities.

On May 14, 2021, Teledyne completed the acquisition of FLIR, and the financial results of FLIR have been included since the date of the acquisition.

The financial statements of Teledyne contained herein are as of and for the fiscal year ended January 2, 2022, and reflect the results of the Company after giving effect to the acquisition of FLIR.

Teledyne acquired the outstanding stock of FLIR for approximately $ 8.1 billion, comprising of net cash payments of $ 3.7 billion, Teledyne share issuances of $ 3.9 billion, and the assumption of FLIR debt of $ 0.5 billion.

See Note 3 to these Notes to Consolidated Financial Statements for information regarding FLIR acquisition.

Summary of Significant Accounting Policies

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Fiscal year 2021 was a 52-week fiscal year and ended on January 2, 2022.

Fiscal year 2019 was a 52-week fiscal year and ended on December 29, 2019.

Fiscal year 2020 was a 53-week fiscal year and ended on January 3, 2021.

Fiscal year 2019 was a 52-week fiscal year and ended on December 29, 2019.

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Accumulated Other Comprehensive Income (Loss)

The following table summarizes the changes in accumulated balances of other comprehensive income/(loss) (“AOCI”) for the fiscal years ended January 3, 2021, and December 29, 2019 (in millions):

The following table summarizes the changes in accumulated balances of other comprehensive income (loss) (“AOCI”) for the fiscal years ended January 2, 2022, and January 3, 2021 (in millions):

Foreign Currency Translation Cash Flow Hedges and other Pension and Postretirement Benefits Total

Balance as of December 29, 2019 $ ( 150.4 ) $ ( 2.3 ) $ ( 323.1 ) $ ( 475.8 )

Other comprehensive income before reclassifications 31.1 7.6 — 38.7

Other comprehensive income (loss) before reclassifications 65.8 ( 13.8 ) — 52.0

Amounts reclassified from AOCI — 18.4 ( 24.7 ) ( 6.3 )

Net other comprehensive income (loss) 65.8 4.6 ( 24.7 ) 45.7

Balance as of December 29, 2019 ( 150.4 ) ( 2.3 ) ( 323.1 ) ( 475.8 )

Balance as of January 3, 2021 ( 84.6 ) 2.3 ( 347.8 ) ( 430.1 )

Other comprehensive income (loss) before reclassifications ( 44.4 ) 18.0 — ( 26.4 )

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Balance as of January 2, 2022 $ ( 129.0 ) $ ( 3.4 ) $ ( 297.6 ) $ ( 430.0 )

The reclassification out of AOCI for the fiscal years ended January 3, 2021, and December 29, 2019, are as follows (in millions):

January 3, 2021 December 29, 2019

The reclassification out of AOCI for the fiscal years ended January 2, 2022, and January 3, 2021, are as follows (in millions):

January 2, 2022 January 3, 2021

Amount reclassified from AOCI Amount reclassified from AOCI Financial Statement Presentation

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For performance obligations where list price is not available, we typically use the expected cost plus a margin approach to estimate the standalone selling price for that performance obligation.

Approximately 60 % of our revenue is recognized at a point in time, with the remaining 40 % recognized over time.

Prior to the acquisition of FLIR, approximately 60 % of our revenue was recognized at a point in time, with the remaining 40 % recognized over time.

The majority of FLIR revenue is recognized at a point in time.

In future periods, we expect approximately 70 % of revenue to be recognized at a point in time, with the remaining 30 % recognized over time.

Revenue recognized at a point in time relates primarily to the sale of standard or minimally customized products, with control transferring to the customer generally upon the transfer of title.

This type of revenue arrangement is typical for our commercial contracts within the Instrumentation, Digital Imaging, and Aerospace and Defense Electronics segments, and to a lesser extent for certain commercial contracts within the Engineered Systems segment relating to the sale of standard hydrogen/oxygen gas generators.

This type of revenue arrangement is typical for our commercial contracts within the Digital Imaging, Instrumentation, and Aerospace and Defense Electronics segments, and to a lesser extent for certain commercial contracts within the Engineered Systems segment relating to the sale of standard hydrogen/oxygen gas generators.

In limited circumstances, customer specified acceptance criteria exist.

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The transaction price in these arrangements can include variable consideration, such as product returns and sales allowances.

The estimation of this variable consideration and determination of whether to include estimated amounts as a reduction in the transaction price is based largely on an assessment of our anticipated performance and all information (historical, current and forecasted) that is reasonably available to us.

The estimation of this variable consideration and determination of whether to include estimated amounts as a

reduction in the transaction price is based largely on an assessment of our anticipated performance and all information (historical, current and forecasted) that is reasonably available to us.

Revenue recognized over time relates primarily to contracts to design, develop and/or manufacture highly engineered products used in both defense and commercial applications.

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The effect of a contract modification on the transaction price and our measure of progress for the performance obligation to which it relates, is recognized as an adjustment to revenue (either as an increase in or a reduction of revenue) on a cumulative catch-up basis.

For over time contracts using cost-to-cost, we have an Estimate at Completion (“EAC”) process in which management reviews the progress and execution of our performance obligations.

For over time contracts using the cost-to-cost method, we have 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.

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Facts and circumstances related to a product warranty matter and cost estimates to return, repair and/or replace the product are considered when establishing a product warranty reserve.

The adequacy of the preexisting warranty liabilities is assessed regularly and the reserve is adjusted as necessary based on a review of historic warranty experience with respect to the applicable business or products, as well as the length and actual terms of the warranties, which are typically one year .

The adequacy of the preexisting warranty liabilities 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, which are typically one year .

The product warranty reserve is included in current accrued liabilities and long-term liabilities on the balance sheet.

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Selling, general and administrative expenses include Company-funded research and development and bid and proposal costs which are expensed as incurred and were $ 299.3 million in 2021, $ 196.0 million in 2020 and $ 209.6 million in 2019.

The higher amount in 2021 reflected $ 113.8 million in research and development and bid and proposal costs incurred by FLIR.

We compute the provision for income taxes using the asset and liability method, under which deferred tax assets and liabilities are recognized for temporary differences between the tax basis of assets and liabilities and their reported amount in the financial statements, which will result in taxable or deductible amounts in the future.

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As new information becomes available, the assessment of the recognition threshold and the measurement of the associated tax benefit of uncertain tax positions may result in financial statement recognition or derecognition.

Net Income Per Common Share

Basic and diluted earnings per share were computed based on net income.

Earnings Per Common Share

Basic and diluted earnings per common share were computed based on net income.

The weighted average number of common shares outstanding during the period was used in the calculation of basic earnings per share.

This number of shares was increased by contingent shares that could be issued under various compensation plans as well as by the dilutive effect of stock options based on the treasury stock method in the calculation of diluted earnings per share.

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

Net Income Per Common Share:

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

Earnings Per Common Share:

2021 2020 2019

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Diluted earnings per common share $ 10.05 $ 10.62 $ 10.73

For 2020, 239,422 stock options were excluded in the computation of diluted earnings per share because the effect of their inclusion would have been anti-dilutive.

For each of 2019 and 2018, less than 3,000 stock options were excluded in the computation of diluted earnings per share because the effect of their inclusion would have been anti-dilutive.

For 2021, 2020 and 2019, 196,802 , 239,422 and less than 3,000 stock options, respectively, were excluded in the computation of diluted earnings per share because the effect of their inclusion would have been anti-dilutive.

For 2021, 2020 and 2019, stock options to purchase 1.6 million, 1.6 million and 2.0 million shares of common stock, respectively, had exercise prices that were less than the average market price of the Company’s common stock during the respective periods and are included in the computation of diluted earnings per share.

For 2020, 497 shares under the restricted stock plan were excluded from fully diluted shares outstanding because they did not meet the applicable performance conditions for issuance.

No contingent shares under the restricted stock plan were excluded from fully diluted shares outstanding for 2019 or 2018.

For 2021 and 2020, 2,608 and 497 shares, respectively, under the restricted stock plan, respectively, were excluded from fully diluted shares outstanding because they did not meet the applicable performance conditions for issuance.

No contingent shares under the restricted stock plan were excluded from fully diluted shares outstanding for 2019.

No contingent shares under the performance share compensation plan were excluded from fully diluted shares outstanding for 2021, 2020 or 2019.

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We may receive interim payments as work progresses, although for some contracts, we may be entitled to receive an advance payment.

We recognize a liability for these interim and advance payments in excess of revenue recognized and present it as a contract liability which is included within accrued liabilities and other long-term liabilities on the Consolidated Balance Sheet, which represented $ 160.1 million and $ 14.0 million as of January 3, 2021 and $ 126.8 million and $ 17.9 million as of December 29, 2019, respectively.

We recognize a liability for these interim and advance payments in excess of revenue recognized and present it as a contract liability which is included within accrued liabilities and other long-term liabilities on the Consolidated Balance Sheet, which represented $ 186.0 million and $ 25.3 million as of January 2, 2022 and $ 160.1 million and $ 14.0 million as of January 3, 2021, respectively.

Contract liabilities typically are not considered a significant financing component because these cash advances are used to meet working capital demands that can be higher in the early stages of a contract, and these cash advances protect us from the other party failing to adequately complete some or all of its obligations under the contract.

When revenue recognized exceeds the amount billed to the customer, we record an unbilled receivable (contract asset) for the amount we are entitled to receive based on our enforceable right to payment.

The unbilled receivable balance increased from the beginning of the y ear by $ 21.6 million, or 10.8 %, pri marily due to work performed ahead of billings on certain over time revenue contracts primarily in our Engineered Systems segment.

Contract liabilities increased from the beginning of the year by $ 29.4 million, or 20.3 % primarily due to an increase in customer advances in our Digital Imaging segment.

The unbilled receivable balance increased from the beginning of the year by $ 99.9 million, or 39.6 %, primarily due to the acquisition of FLIR.

Contract liabilities increased from the beginning of the year by $ 37.2 million, or 21.4 % primarily due to the acquisition of FLIR.

The Company recognized revenue of $ 114.0 million during the year ended January 2, 2022 from contract liabilities that existed at the beginning of year.

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Incremental costs to obtain or fulfill contracts with an amortization period greater than one year were not material.

Accounts receivable is presented net of an allowance for doubtful accounts of $ 12.3 million at January 3, 2021, and $ 10.2 million at December 29, 2019.

Accounts receivable is presented net of an allowance for doubtful accounts of $ 13.8 million at January 2, 2022, and $ 12.3 million at January 3, 2021.

Expense recorded for the allowance for doubtful accounts was $ 4.5 million, $ 4.1 million and $ 1.3 million for 2021, 2020 and 2019, respectively.

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Judgment is required in the estimation of the allowance and we evaluate the collectability of our accounts receivable and contract assets based on a combination of factors.

If we become aware of a

customer’s inability to meet its financial obligations, a specific allowance is recorded to reduce the net receivable to the amount reasonably believed to be collectible from the customer.

For all other customers, we use an aging schedule and recognize allowances for doubtful accounts based on the creditworthiness of the debtor, the age and status of outstanding receivables, the current business environment and our historical collection experience adjusted for current expectations for the customers or industry.

If we become aware of a customer’s inability to meet its financial obligations, a specific allowance is recorded to reduce the net receivable to the amount reasonably believed to be collectible from the customer.

For all other customers, we use an aging schedule and recognize

allowances for doubtful accounts based on the creditworthiness of the debtor, the age and status of outstanding receivables, the current business environment and our historical collection experience adjusted for current expectations for the customers or industry.

Accounts receivable are written off against the allowance for uncollectible accounts when we determine amounts are no longer collectible.

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Inventories are stated at the lower of cost or net realizable value.

The majority of inventory values are valued on an average cost or first-in, first-out method, while the remainder are stated at cost based on the last-in, first-out method.

The majority of inventory values are valued on an average cost or first-in, first-out method, and an immaterial amount of inventory values are stated at cost based on the last-in, first-out method.

Costs include direct material, direct labor, applicable manufacturing and engineering overhead, and other direct costs.

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Property, Plant and Equipment

Property, plant and equipment is capitalized at cost.

Property, plant and equipment is stated at cost less accumulated depreciation and amortization.

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Otherwise the Company performs a quantitative impairment test.

A quantitative impairment test, if applicable, is used to identify potential goodwill impairment and then measure the amount of goodwill impairment loss, if any.

The Company performs quantitative tests for reporting units at least once every three years .

However, for certain reporting units the Company may perform a quantitative impairment test every year.

The Company performed a quantitative test for all reporting units in 2020.

The two-step quantitative impairment test is used to first identify potential goodwill impairment and then measure the amount of goodwill impairment loss, if any.

When it is determined that an impairment has occurred, an appropriate charge to operations is recorded.

However, for certain reporting units the Company may perform a quantitative impairment test more frequently.

The Company performed a qualitative test for all reporting units in 2021.

The results of our annual impairment tests of goodwill indicated that no impairment existed in 2021, 2020 or 2019.

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We have an unsecured obligation to pay in the future the value of the deferred compensation adjusted to reflect the performance, whether positive or negative, of selected investment measurement options chosen by each participant during the deferral period.

As of January 3, 2021 and December 29, 2019, $ 68.9 million and $ 63.0 million, respectively, is included in other long-term liabilities related to these deferred compensation liabilities.

In addition, the Company has a separate deferred compensation plan that was acquired in connection with the FLIR acquisition.

This plan was frozen at year end 2021.

As of January 2, 2022 and January 3, 2021, $ 115.5 million and $ 68.9 million, respectively, is included in other long-term liabilities related to these deferred compensation liabilities.

Additionally, the Company purchased life insurance policies on certain participants to potentially offset these unsecured obligations.

These policies are recorded at their cash surrender value as determined by the insurance carrier.

The cash surrender value of these policies was $ 72.6 million and $ 65.6 million, as of January 3, 2021 and December 29, 2019, respectively, and are recorded in other non-current assets.

The cash surrender value of these policies was $ 113.4 million and $ 72.6 million, as of January 2, 2022 and January 3, 2021, respectively, and are recorded in other non-current assets.

Environmental

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Such estimates take into consideration the Company’s prior experience in site investigation and remediation, the data concerning cleanup costs available from other companies and regulatory authorities, and the professional judgment of the Company’s environmental personnel in consultation with outside environmental specialists, when necessary.

The Company’s reserves for environmental remediation obligations totaled $ 6.5 million and $ 6.0 million as of January 3, 2021 and December 29, 2019, respectively.

The Company’s reserves for environmental remediation obligations totaled $ 6.3 million and $ 6.5 million as of January 2, 2022 and January 3, 2021, respectively.

The short term amount is included in current accrued liabilities and the long-term amount is included in long-term accrued liabilities.

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The Company has also converted a U.S.

dollar denominated, variable rate debt obligation into a euro fixed rate obligation using a receive-float, pay fixed cross currency swap.

dollar denominated, variable rate and fixed rate debt obligations of a European subsidiary, into a euro fixed rate obligations using a receive float, pay fixed cross currency swap, and a receive fixed, pay fixed cross currency swap.

These cross currency swaps are designated as cash flow hedges.

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The effective portion of the cash flow hedge contracts’ gains or losses resulting from changes in the fair value of these hedges is initially reported, net of tax, as a component of AOCI in stockholders’ equity until the underlying hedged item is reflected in our consolidated statements of income, at which time the effective amount in AOCI is reclassified to revenue in our consolidated statements of income.

Net deferred gains recorded in AOCI, net of tax, for forward contracts that will mature in the next 12 months total $ 5.4 million.

These gains are expected to be offset by anticipated losses in the value of the forecasted underlying hedged item.

Net deferred losses recorded in AOCI, net of tax, for forward contracts that will mature in the next 12 months total $ 0.7 million.

These losses are expected to be offset by anticipated gains in the value of the forecasted underlying hedged item.

Amounts related to the cross currency swaps and interests rate swap expected to be reclassified from AOCI into income in the next 12 months total $ 2.8 million.

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These foreign currency forward contracts have maturities ranging from March 2022 to February 2023.

Teledyne had foreign currency forward contracts designated as cash flow hedges to buy British pounds and to sell U.S.

dollars totaling $ 18.9 million.

These foreign currency forward contracts have maturities ranging from March 2022 to February 2023.

The cross currency swaps have notional amounts of € 113.0 million and $ 125.0 million, and € 135.0 million and $ 150.0 million, and mature in March 2023 and October 2024, respectively.

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In addition, the Company utilizes foreign currency forward contracts which are not designated as hedging instruments for accounting purposes to mitigate foreign exchange rate risk associated with foreign currency denominated monetary assets and liabilities, including intercompany receivables and payables.

As of January 3, 2021, Teledyne primarily had foreign currency contracts of this type in the following pairs (in millions):

As of January 2, 2022, Teledyne had foreign currency contracts of this type primarily in the following pairs (in millions):

Contracts to Buy Contracts to Sell

Currency Amount Currency Amount

Canadian Dollars $ 78.0 U.S.

Canadian Dollars C$ 169.4 U.S.

Dollars US$ 132.0

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Dollars US$ 167.1

Euros € 33.5 Canadian Dollars C$ 48.4

Great Britain Pounds £ 59.2 U.S.

Dollars US$ 78.9

Canadian Dollars $ 22.3 Euros € 14.4

Dollars US$ 31.0 Swedish Krona kr 280.1

Danish Krone Kr.

Dollars US$ 60.2

Swedish Krona kr 355.7 Euros € 35.0

Norwegian Krone kr 228.0 Swedish Krona kr 227.1

Norwegian Krone kr 78.9 U.S.

Dollars US$ 8.6

The above table includes non-designated hedges derived from terms contained in triggered or previously designated cash flow hedges.

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Net gain recognized in AOCI - interest rate contracts $ 0.4 $ 4.8

Net gain (loss) reclassified from AOCI into revenue/cost of sales - foreign exchange contracts $ 1.5 $ ( 1.8 )

Net gain reclassified from AOCI into revenue/cost of sales - foreign exchange contracts $ 9.2 $ 1.5

Net gain reclassified from AOCI into interest expense - foreign exchange contracts $ 3.4 $ 4.4

Net gain (loss) reclassified from AOCI into interest expense -interest rate contracts $ ( 1.0 ) $ 0.2

Net loss reclassified from AOCI into interest expense -interest rate contracts $ ( 1.6 ) $ ( 1.0 )

Net gain (loss) reclassified from AOCI into other income and expense, net - foreign exchange contracts (b) $ 20.7 $ ( 26.7 )

Net foreign exchange loss recognized in revenue, net - foreign exchange contracts (c) $ — $ ( 0.5 )

(a) Effective portion

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

The effect of derivative instruments not designated as cash flow hedges recognized in other income and expense for 2020 and 2019 was a gain of $ 7.4 million and a gain of $ 4.9 million, respectively.

The effect of derivative instruments designated as fair value hedges for 2021 and 2020 was as follows (in millions):

Net gain recognized in earnings for effective portion - other income and expense, net - foreign exchange contracts $ 7.9 $ —

Net gain recognized in earnings for amounts excluded from effectiveness testing - other income and expense, net - foreign exchange contracts $ 0.2 $ —

The effect of derivative instruments not designated as cash flow hedges recognized in other income and expense for 2021 and 2020 was a expense of $ 21.9 million and a gain of $ 7.4 million, respectively.

The Company has elected to use the income approach to value the derivatives, using observable Level 2 market expectations at measurement date and standard valuation techniques to convert future amounts to a single present amount.

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The fair value measurement of an asset or liability must reflect the nonperformance risk of the entity and the counterparty.

Therefore, the impact of the counterparty’s creditworthiness when in an asset position and the Company’s creditworthiness when in a liability position has also been factored into the fair value measurement of the derivative instruments and did not have a material impact on the fair value of

these derivative instruments.

Both the counterparty and the Company are expected to continue to perform under the contractual terms of the instruments.

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All fair values for these derivatives were measured using Level 2 information as defined by the accounting standard hierarchy (in millions):

Asset/(Liability) Derivatives Balance sheet location January 3, 2021 December 29, 2019

Asset/(Liability) Derivatives Balance sheet location January 2, 2022 January 3, 2021

Derivatives designated as hedging instruments:

Cash flow forward contracts Other assets $ 0.3 $ 7.3

Interest rate contracts Other current assets — 0.2

Interest rate contracts Other non-current assets (liabilities) ( 1.8 ) 0.3

Interest rate contracts Other non-current liabilities ( 0.1 ) ( 1.8 )

Interest rate contracts Other current liabilities ( 1.2 ) ( 1.5 )

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Cash flow cross currency swaps Other non-current liabilities ( 9.4 ) ( 29.2 )

Cash flow cross currency swaps Accrued liabilities — 0.3

Cash flow cross currency swaps Other current assets (accrued interest) 0.1 0.1

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Cash payments for federal, foreign and state income taxes were $ 110.1 million for 2019, which are net of $ 7.1 million in tax refunds.

Cash payments for interest and credit facility fees totaled $ 19.1 million, $ 23.4 million and $ 28.1 million for 2020, 2019 and 2018, respectively.

Cash payments for interest and credit facility fees and other bank charges totaled $ 117.2 million, $ 19.1 million and $ 23.4 million for 2021, 2020 and 2019, respectively.

The 2021 amount included $ 30.5 million paid for bond financing and debt extinguishment costs.

Fair Value Measurements

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Recent Accounting Standards

In February 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2018-02, “Income Statement-Reporting Comprehensive Income (Topic 220) Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income”, to address a specific consequence of the Tax Cuts and Jobs Act (“Tax Act”) by allowing a reclassification from AOCI to retained earnings for stranded tax effects resulting from the Tax Act reduction of the U.S.

federal corporate income tax rate.

The guidance is effective for all entities for annual periods beginning after December 15, 2018, with early adoption permitted, and is to be applied either in the period of adoption or retrospectively to each period in which the effect of the change in the U.S.

federal corporate income tax rate in the Tax Act is recognized.

In the third quarter of 2018, Teledyne elected to early adopt this ASU and elected to reclassify, in the period of enactment, stranded tax effects totaling $ 47.6 million from AOCI to retained earnings in its consolidated balance sheet.

The reclassification amount primarily included income tax effects related to our pension and postretirement benefit plans.

Income tax effects remaining in AOCI will be released into earnings as the related pretax amounts are reclassified to earnings.

In August 2017, the FASB issued ASU No.

2017-12, “Derivatives and Hedging (Topic 815) Targeted Improvements to Accounting for Hedging Activities.” This guidance better aligns an entity’s risk management activities and financial reporting for hedging relationships and expands and refines hedge accounting for both nonfinancial and financial risk components.

This guidance also simplifies and aligns the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements.

We adopted the guidance as of December 31, 2018, the beginning of our 2019 fiscal year using the modified retrospective approach, there was no cumulative adjustment to retained earnings related to hedge ineffectiveness for the year ended December 31, 2018.

Additionally, as a result of the adoption, we no longer disclose the ineffective portion of the change in fair value of our derivative financial instruments.

The entire change in the fair value of the cash flow hedging instruments aside from components excluded from the assessment of hedge effectiveness is now recorded in other comprehensive income and will be subsequently reclassified to earnings in the period the hedged item impacts earnings.

The adoption of this guidance did not have a material impact on our consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, “Simplifying the Test for Goodwill Impairment”, which eliminates the computation of the implied fair value of goodwill to measure a goodwill impairment charge.

Instead, entities will record a goodwill impairment charge based on the excess of a reporting unit’s carrying amount over its fair value.

We adopted the this ASU as of December 30, 2019 which reduced the complexity surrounding the evaluation of goodwill for impairment.

The adoption of this guidance did not have a material impact on our consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326).

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments - Credit Losses (Topic 326).

The standard replaces the incurred loss impairment methodology under current GAAP with a methodology that reflects expected credit losses and requires the use of a forward-looking expected credit loss model for accounts receivables, loans, and other financial instruments.

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The adoption of this guidance did not have a material impact on our consolidated financial statements.

In October 2021, the FASB issued ASU No.

2021-08, Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (ASU 2021-08), which clarifies that an acquirer of a business should recognize and measure contract assets and contract liabilities in a business combination in accordance with Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers (Topic 606), which we generally expect will result in the recognition and measurement of contract assets and contract liabilities in a manner that is consistent with the acquiree.

Prior to the adoption of ASU 2021-08, the Company measured contract assets and contract liabilities acquired in business acquisitions at fair value.

The Company early adopted ASU 2021-08 in the fourth quarter of 2021, with applicability to the accounting for our 2021 business acquisitions and any future business acquisitions.

The application of ASU 2021-08 did not have a material effect on the recognition and measurement of acquired contract assets and contract liabilities associated with our 2021 acquisition.

Business Acquisitions, Goodwill and Acquired Intangible Assets

The Company spent $ 29.0 million, $ 484.0 million and $ 3.1 million on acquisitions and other investments, net of cash acquired, in 2020, 2019 and 2018, respectively.

2021 Acquisition

On May 14, 2021, Teledyne acquired the outstanding stock of FLIR for approximately $ 8.1 billion, comprising of net cash payments of $ 3.7 billion, Teledyne share issuances of $ 3.9 billion, and the assumption of FLIR debt of $ 0.5 billion.

FLIR stockholders received $ 28.00 per share in cash and 0.0718 shares of Teledyne common stock for each FLIR share, and Teledyne issued approximately 9.5 million shares at $ 409.41 per share.

See Note 9 to these Notes to Consolidated Financial Statements for information regarding financing activities undertaken in connection with the FLIR acquisition.

FLIR is an industrial technology company focused on intelligent sensing solutions for defense and industrial applications.

FLIR offers a diversified portfolio that serves a number of applications in government and defense, industrial, and commercial markets.

FLIR technologies include thermal imaging systems, visible-light imaging systems, locater systems, measurement and diagnostic systems, and advanced threat-detection solutions.

FLIR is part of the Digital Imaging segment.

2020 Acquisition

On January 5, 2020, we acquired OakGate Technology, Inc.

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Applications and markets include materials analysis, quantum technology and cell biology imaging using fluorescence and chemiluminescence.

Lumenera primarily provides rugged USB-based customized cameras for markets such as traffic management, as well as life

sciences applications.

Lumenera primarily provides rugged USB-based customized cameras for markets such as traffic management, as well as life sciences applications.

Principally located in the United States and Canada, the acquired businesses are part of the Digital Imaging segment.

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

Pending 2021 Acquisition

See Note 15 , Subsequent Events, to these Consolidated Financial Statements for information about the pending acquisition of FLIR Systems, Inc.

The primary reasons for the above acquisitions were to strengthen and expand our core businesses through adding complementary product and service offerings, allowing greater integrated products and services, enhancing our technical capabilities or increasing our addressable markets.

The significant factors that resulted in recognition of goodwill were:

(a) the purchase price was based on cash flow and return on capital projections assuming integration with our businesses and (b) the calculation of the fair value of tangible and intangible assets acquired that qualified for recognition.

Teledyne funded the acquisitions primarily from borrowings under its credit facilities, issuance of senior notes and term loans and cash on hand.

Teledyne’s goodwill was $ 2,150.0 million at January 3, 2021, and $ 2,050.5 million at December 29, 2019.

The increase in the balance of goodwill in 2019 resulted from recent acquisitions and the impact of exchange rate changes.

Teledyne’s net acquired intangible assets were $ 409.7 million at January 3, 2021, and $ 430.8 million at December 29, 2019.

The decrease in the balance of acquired intangible assets in 2020 primarily resulted from amortization of acquired intangible assets, partially offset by recent acquisitions and the impact of exchange rate changes.

The primary reasons for the FLIR acquisition were to achieve synergies in merging with a business that has the same core business model based on proprietary sensor technologies, but with different products and markets;

the opportunity to add new and complementary products with FLIR’s products based on different semiconductor technologies for imaging across different wavelengths than Teledyne products, and the opportunity to serve different customers and applications, with minimal overlapping technologies and markets;

the expectation of combining two businesses that both provide sensors, cameras and sensor systems to customers and both business portfolios being balanced among commercial and government markets and geographies, but in the case of thermal imaging, with Teledyne primarily producing extremely high-performance infrared detectors used for astronomy and space-based imaging applications compared to FLIR’s products ranging from air and ground imaging systems to commercial thermography instruments and automotive advanced driver assistance systems;

and the opportunity to add FLIR’s suite of imaging sensor products based on different semiconductor technologies for different wavelengths to Teledyne’s offerings.

The primary reasons for the 2020 and 2019 acquisitions were to strengthen and expand our core businesses through adding complementary product and service offerings, allowing greater integrated products and services, enhancing our technical capabilities or increasing our addressable markets.

Teledyne funded the 2020 and 2019 acquisitions primarily from borrowings under its credit facilities, issuance of senior notes and term loans and cash on hand.

The significant factors that resulted in recognition of goodwill include the acquired businesses’ market positions, growth opportunities in the markets in which they operate, their experienced work force and established operating infrastructures.

Teledyne’s goodwill was $ 7,986.7 million at January 2, 2022, and $ 2,150 million at January 3, 2021.

The increase in the balance of goodwill in 2021 primarily resulted from the FLIR acquisition.

Teledyne’s net acquired intangible assets were $ 2,741.6 million at January 2, 2022, and $ 409.7 million at January 3, 2021.

The increase in the balance of acquired intangible assets in 2021 resulted from the FLIR acquisition, partially offset by amortization of acquired intangible assets.

The Company’s cost to acquire the 2021 and 2020 acquisitions has been allocated to the assets acquired and liabilities assumed based upon their respective fair values as of the date of the completion of the acquisition.

The differences between the fair value of the consideration paid and the estimated fair value of the assets and liabilities acquired has been recorded as goodwill.

The fair value of all the acquired identifiable assets and liabilities summarized below for the 2020 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.

The following tables show the purchase price (net of cash acquired), provisional goodwill acquired for the OakGate acquisition and other investments made in 2020 (in millions):

The fair value of all the acquired identifiable assets and liabilities summarized below for the 2021 FLIR 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.

The following tables show the purchase price (net of cash acquired), goodwill acquired for the FLIR, OakGate acquisition and other investments made in 2021 and 2020 (in millions):

Acquisition Acquisition Date Consideration Transferred(a) Goodwill Acquired Acquired Intangible Assets

May 14, 2021 $ 7,620.9 $ 5,905.5 $ 2,490.0

(a) Net of cash acquired.

The consideration included approximately $ 3.9 billion of Teledyne shares issued to existing shareholders of the acquired company.

This $ 3.9 billion of equity consideration is a non-cash transaction.

An immaterial portion of the cash consideration for certain vested FLIR restricted stock awards was deferred at the election of the award holder and will be paid out in future periods.

Acquisitions Acquisition Date Cash Paid (a) Goodwill Acquired Acquired Intangible Assets

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Purchase price adjustment - Micralyne Inc.

(acquired in 2019) 0.5 — —

Total $ 29.0 $ 16.9 $ 7.0

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Goodwill resulting from the OakGate acquisition will not be deductible for tax purposes.

Provisional fair values allocated to the assets acquired and liabilities assumed (in millions):

Current assets, excluding cash acquired $ 3.7

The following table presents the preliminary purchase price allocation for FLIR.

We are accounting for the FLIR acquisition under the acquisition method and are required to measure identifiable assets acquired and liabilities assumed of the acquiree at the fair values on the closing date.

The Company made an initial allocation of the purchase price at the date of acquisition based upon its understanding of the fair value of the acquired assets and assumed liabilities.

As of January 2, 2022, the measurement period (not to exceed one year) is open;

therefore, the assets acquired and liabilities assumed related to the FLIR acquisition are subject to adjustment until the end of the respective measurement period.

The Company is in the process of specifically identifying the amounts assigned to certain assets, including acquired intangible assets, and liabilities and the related impact on taxes and goodwill for the FLIR acquisition.

The Company is in the process of reviewing a third-party

valuation of certain intangible assets and tangible assets of FLIR.

The fair values of acquired intangibles are determined based on estimates and assumptions that are deemed reasonable by the Company.

The amounts recorded as of January 2, 2022 are preliminary since there was insufficient time between the acquisition date and the end of the period to finalize the analysis.

Goodwill resulting from the FLIR acquisition will not be deductible for tax purposes.

Provisional fair values allocated to the assets acquired and liabilities assumed - FLIR (in millions):

Cash and cash equivalents $ 287.7

Accounts receivable, net 241.3

Unbilled receivables, net 72.2

Inventories, net 531.8

Prepaid expenses and other current assets 55.2

Total current assets 1,188.2

Property, plant and equipment 356.3

Goodwill 5,905.5

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Total assets acquired 10,091.5

Current liabilities ( 1.9 )

Accounts payable 144.8

Accrued liabilities 629.5

Total current liabilities acquired 774.3

Long-term debt, net 496.8

Long-term deferred tax liabilities 646.5

Other long-term liabilities 265.3

Total liabilities assumed 2,182.9

Cash paid, net of cash acquired $ 28.5

The following table is a summary at the acquisition date of the acquired intangible assets and weighted average useful life in years for the OakGate acquisition made in 2020 (dollars in millions;

Consideration transferred $ 7,908.6

Consideration transferred, net of cash acquired (a) $ 7,620.9

(a) The consideration included approximately $ 3.9 billion of Teledyne shares issued to existing shareholders of the acquired company.

This $ 3.9 billion of equity consideration is a non-cash transaction.

An immaterial portion of the cash consideration for certain vested FLIR restricted stock awards was deferred at the election of the award holder and will be paid out in future periods.

With significant operations in the United States, Europe and Canada, FLIR had sales of approximately $ 1,923.7 million for its fiscal year ended December 31, 2020.

FLIR’s results have been included since the date of the acquisition and include $ 1,273.6 million in net sales and operating income of $ 80.4 million, which included $ 242.6 million in acquisition-related costs for 2021 in the Digital Imaging segment.

In connection with the FLIR acquisition, in 2021, Teledyne incurred pretax expenses of $ 350.3 million, consisting of $ 110.3 million in acquired intangible asset amortization expense, $ 106.7 million recorded to cost of sales, primarily in acquired inventory step-up expense, and $ 103.0 million of transaction and integration-related costs, recorded to selling, general and administrative expenses and $ 30.6 million was recorded to interest and debt expense.

Of these amounts, $ 242.6 million impacted the Digital Imaging segment’s operating income and $ 77.1 million of transaction and integration-related costs impacted corporate expense.

The unaudited proforma information below, as required by GAAP, assumes that FLIR had been acquired at the beginning of the 2020 fiscal year and includes the effect of transaction accounting adjustments.

These adjustments include the financing and interest costs associated with debt to fund the acquisition, amortization of acquired intangible assets, depreciation of the fair value step-up of acquired property, plant and equipment, amortization of inventory fair value step-up (assumed to be fully amortized in 2020), and tax related effects as well as the issuance of Teledyne common stock in connection with the acquisition.

This unaudited proforma financial information is presented for informational purposes only and is not necessarily indicative of the results of operations that actually would have resulted had the acquisition been in effect at the beginning of the 2020 fiscal year.

In addition, the unaudited proforma results are not intended to be a projection of future results and do not reflect any operating efficiencies or cost savings that might be achievable.

The following table presents proforma net sales, net income and earnings per share data assuming FLIR was acquired at the beginning of the 2020 fiscal year:

(unaudited - in millions, except per share amounts) 2021 (a) 2020 (a)

Net sales $ 5,235.6 $ 5,009.9

Net income $ 571.7 $ 399.6

Basic earnings per common share $ 13.23 $ 8.65

Diluted earnings per common share $ 12.91 $ 8.43

(a) The above unaudited proforma information is presented for the FLIR acquisition as it is considered a material acquisition.

During fiscal year 2018, the Swedish Tax Authority (“STA”) issued a reassessment of tax for the year ending December 31, 2012 to one of FLIR’s non-operating subsidiaries in Sweden.

The total taxes, penalties and interest levied by the STA totals SEK 3.1 billion ($ 364.7 million based on exchange rates as of the acquisition date).

The reassessment concerns the use of tax credits applied against capital gains pursuant to European Union Council Directive 2009/133/EC, commonly referred to as the EU Merger Directive, and the reassessment levied significant taxes and penalties.

In March 2020, FLIR received an adverse judgment from the First Instance Court of Sweden regarding the STA’s reassessment.

FLIR appealed the decision to the Administrative Court of Appeal in Stockholm, Sweden (the “ Appellate Court”).

After completing an extensive analysis, including consultation with outside specialists, Teledyne recorded a liability for this uncertain tax position that reflects the most likely outcome for this tax matter under the acquisition method for business combinations in the third quarter of 2021, which is included within accrued liabilities on the consolidated balance sheet.

Subsequently, the Appellate Court hearing was held on September 15, 2021 and in the subsequent weeks ending on October 22, 2021, the STA and Teledyne submitted additional arguments in writing, including closing arguments.

On January 26, 2022, the Administrative Court of Appeal in Stockholm, Sweden generally affirmed the March 2020 ruling of the First Instance Court and determined an estimated tax liability in the amount of SEK 2.765 billion.

We paid the tax on February 2, 2022 totaling $ 296.4 million.

We are evaluating the ruling.

The Company is in the process of reviewing and identifying acquisition accounting adjustments for a number of acquired tax positions of FLIR that may meet the definition of an acquired uncertain tax position.

In addition to the STA matter described above, the Company has preliminarily recorded $ 177.5 million of provisional purchase accounting adjustments for the accrual of other uncertain tax positions of FLIR.

These amounts are included primarily within other long-term liabilities on the consolidated balance sheet.

These preliminary estimates are subject to change as the Company obtains additional information on these matters and as additional information is made known during the post-acquisition measurement period.

The final acquisition accounting adjustments for these tax matter may be materially different, as Teledyne obtains additional information on this matter and as additional information is made known during the post-acquisition measurement period.

The following table is a summary at the acquisition date of the acquired intangible assets and weighted average useful life in years for the FLIR acquisition made in 2021 (dollars in millions;

amounts considered provisional as discussed above):

3 unchanged sentences

Customer list/relationships 450.0 14.4

Trademarks 0.3 3.0

Total acquired intangibles subject to amortization 1,805.0 10.9

Intangibles not subject to amortization:(a)

Trademarks 685.0 n/a

Total acquired intangible assets $ 2,490.0

Goodwill $ 5,905.5 n/a

Goodwill (in millions) :

Instrumentation Digital Imaging Aerospace and Defense Electronics Engineered Systems Total

Digital Imaging Instrumentation Aerospace and Defense Electronics Engineered Systems Total

Balance at December 29, 2019 $ 962.7 $ 905.9 $ 164.3 $ 17.6 $ 2,050.5

Current year acquisitions — 16.9 — — 16.9

Foreign currency changes and other (a) 3.5 ( 4.2 ) 15.8 ( 4.7 ) 10.4

Balance at December 29, 2019 905.9 962.7 164.3 17.6 2,050.5

Foreign currency changes and other 35.1 46.0 1.5 — 82.6

Balance at January 3, 2021 997.8 968.8 165.8 17.6 2,150.0

Current year acquisition 5,905.5 — — — 5,905.5

1 unchanged sentence

Balance at January 3, 2022 $ 6,867.5 $ 935.9 $ 165.7 $ 17.6 $ 7,986.7

(a) Certain prior period balances have been recast due to a business realignment affecting the Aerospace and Defense Electronics segment the Digital Imaging segment and the Engineered Systems segment in 2019.

Gross carrying amount Accumulated amortization Net carrying amount Gross carrying amount Accumulated amortization Net carrying amount

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As such, we believe the value of acquired intangible assets decline in a linear, as opposed to an accelerated fashion, and we believe amortization on a straight-line basis is appropriate.

The Company recorded $ 39.6 million, $ 37.4 million and $ 39.5 million in amortization expense in 2020, 2019 and 2018, respectively, for acquired intangible assets.

The expected future amortization expense for the next five years is as follows (in millions):

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Financial Instruments

The Company had $ 471.0 million in cash equivalents at January 3, 2021 and no cash equivalents at December 29, 2019.

The Company had an immaterial amount of cash equivalents at January 2, 2022, compared with $ 471.0 million in cash equivalents at January 3, 2021.

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.

The fair value of the Company’s forward currency contracts as of January 3, 2021 and December 29, 2019, are disclosed in Note 2 , under “Derivative Instruments and Hedging Activities,” of the Notes to Consolidated Financial Statements and are based on Level 2 inputs.

The fair value of the Company’s forward currency contracts as of January 2, 2022 and January 3, 2021, are disclosed in Note 2, under “Derivative Instruments and Hedging Activities,” of the Notes to Consolidated Financial Statements and are based on Level 2 inputs.

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 fair value of the Company’s senior unsecured notes as described in Note 9 , “Long-Term Debt,” of the Notes to Consolidated Financial Statements approximated the carrying value based upon Level 2 inputs and is valued based on observable market data at January 3, 2021 and December 29, 2019.

The fair value of the Company’s credit facility, term loans and other debt, also described in Note 9 , at January 3, 2021 and December 29, 2019, approximated the carrying value due to the variable market rate used to calculate interest payments.

The fair value of the Company’s senior unsecured notes as described in Note 9, “Long-Term Debt,” of the Notes to Consolidated Financial Statements approximated the carrying value based upon Level 2 inputs and is valued based on observable market data at January 2, 2022 and January 3, 2021.

The fair value of the Company’s credit facility, term loans and other debt, also described in Note 9, at January 2, 2022 and January 3, 2021, approximated the carrying value due to the variable market rate used to calculate interest

The Company does not have any other significant financial assets or liabilities that are measured at fair value.

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Finished goods 150.1 62.0

Reduction to LIFO cost basis ( 6.7 ) ( 7.8 )

Total inventories, net $ 752.9 $ 347.3

Inventories at cost determined on the LIFO method were $ 29.2 million at January 3, 2021, and $ 40.0 million at December 29, 2019.

The remainder of the inventories using average cost or the FIFO methods, were $ 324.8 million at January 3, 2021, and $ 361.2 million at December 29, 2019.

The Company recorded LIFO income of $ 1.1 million, $ 1.6 million and $ 0.1 million in 2020, 2019 and 2018, respectively.

Supplemental Balance Sheet Information

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The following table presents selected balance sheet components (in millions):

Balance sheet items Balance sheet location January 3, 2021 December 29, 2019

Balance sheet items Balance sheet location January 2, 2022 January 3, 2021

Salaries and wage accruals Accrued liabilities $ 215.1 $ 126.2

Deferred tax liabilities Other long-term liabilities $ 39.0 $ 34.0

Stockholders ’ Equity

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Balance, December 29, 2019

37,697,865 1,149,899

Issued — ( 403,641 )

Balance, December 29, 2019 37,697,865 1,149,899

Balance, January 3, 2021

37,697,865 746,258

Issued 9,496,901 ( 243,788 )

Balance, January 2, 2022

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

47,194,766 502,470

In 2021, Teledyne issued approximately 9.5 million shares in connection with the FLIR acquisition.

See Note 3 to these Notes to Consolidated Financial Statements for additional information about the FLIR acquisition.

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

Treasury Stock

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There were no shares of preferred stock issued or outstanding in 2021, 2020 or 2019.

Stock Incentive Plan

Stock Incentive Plans

Teledyne has long-term incentive plans which provide its Board of Directors the flexibility to grant restricted stock, restricted stock units, performance shares, non-qualified stock options, incentive stock options and stock appreciation rights to officers and employees of Teledyne.

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Stock Options

Stock option compensation expense is recorded on a straight line basis over the appropriate vesting period, generally three years except for stock options that were granted after 2018 to Teledyne’s President and Chief Executive Officer and Teledyne’s Executive Chairman, which were expensed immediately.

Stock option compensation expense is recorded on a straight line basis over the appropriate vesting period, generally three years except for stock options that were granted after 2018 to Teledyne’s then President and Chief Executive Officer and Teledyne’s Executive Chairman, which were expensed immediately.

The Company recorded $ 20.0 million, $ 24.7 million, and $ 26.1 million for stock option expense, for 2021, 2020 and 2019, respectively.

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1,793,857 $ 206.08 5.8 1,328,191 $ 148.73

238,139 $ 382.90 9.1 455 $ 383.33

1,819,147 $ 170.10 6.1 1,242,786 $ 118.57

Performance Shares

Performance Share Plan

Teledyne’s Performance Share Plan (“PSP”) provides grants of performance share units, which key officers and executives may earn if Teledyne meets specified performance objectives over a three-year period.

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Under the 2015 to 2017 plan, and based on actual performance, the Company issued 7,673 , 8,586 and 6,481 shares of Teledyne common stock in 2020, 2019 and 2018, respectively.

In February 2018, the performance cycle for the three-year period ending December 31, 2020, was set.

Under the plan, and based on actual performance, the maximum number of shares that could be issued in three equal installments in 2021, 2022 and 2023, is 51,630 .

The estimated expense for each plan year was based on the expected cash payout and the expected shares to be issued, valued at the share price at the inception of the performance cycle, except for the shares that can be issued based on a market comparison.

The estimated expense for these shares was calculated using a lattice-based simulation which takes into consideration several factors including volatility, risk free interest rates and correlation of Teledyne’s stock price with the comparator, the Russell 1000 Index (for the 2015-2017 performance cycle, the comparator was the Russell 2000).

No adjustment to the calculated expense for the shares issued based on a market based comparison will be made regardless of the actual performance.

The Company recorded $ 6.2 million, $ 7.5 million and $ 5.1 million in compensation expense related to the PSP program for fiscal years 2020, 2019 and 2018, respectively.

Under the 2018 to 2020 plan, and based on actual performance, the Company issued 9,588 shares of Teledyne common stock in 2021.

The maximum number of remaining shares that could be issued in two equal installments in 2022 and 2023, is 35,082 .

The Company recorded $ 6.2 million and $ 7.5 million in compensation expense related to the PSP program for fiscal years 2020 and 2019, respectively.

In 2021, the Company discontinued the PSP.

Restricted Stock

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If employment is terminated (other than by death, retirement or disability) during the restricted period, the stock grant is forfeited.

The estimated expense for restricted stock awards to employees is based on a lattice-based simulation which takes into consideration several factors including volatility, risk free interest rates and the correlation of Teledyne’s stock price with the comparator, the Russell 1000 Index (for awards granted prior to 2018 the comparator was the Russell 2000).

No adjustment to the estimated expense will be made regardless of actual performance.

The estimated expense for restricted stock awards to employees is based on a lattice-based simulation which takes into consideration several factors including volatility, risk free interest rates and the correlation of Teledyne’s stock price with the comparator, the S&P 500 Index for awards granted in 2021, the Russell 1000 Index for awards granted from 2018 to 2020 and the Russell 2000 for awards granted prior to 2018.

The Company recorded $ 3.5 million, $ 3.3 million and $ 3.0 million in compensation expense related to restricted stock awards to employees, for fiscal years 2021, 2020 and 2019, respectively.

At January 2, 2022, there was $ 3.5 million of total estimated unrecognized compensation cost related to non-vested awards which is expected to be recognized over a weighted-average period of approximately 1.5 years.

As part of the acquisition of FLIR, the Company assumed certain unvested restricted stock units that were issued by FLIR in March 2021.

The unvested restricted stock units were converted to 62,974 Teledyne restricted stock units.

The post-acquisition expense for these restricted stock units was $ 7.8 million for 2021.

The expense related to these assumed restricted stock units is included in the Digital Imaging segment results.

This amount can be impacted by employee retirements and terminations or other awards granted during the remainder of the year.

At January 2, 2022, 49,351 restricted stock units are outstanding and there was $ 14.4 million of total estimated unrecognized compensation cost related to non-vested awards which is expected to be recognized over a weighted-average period of approximately 2.2 years.

The following table shows restricted stock award activity for grants made to employees:

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Issued ( 35,330 ) $ 72.91

Forfeited/Canceled ( 2,094 ) $ 135.48

Balance, December 29, 2019

56,412 $ 158.62

Granted 10,080 $ 360.33

Issued ( 23,087 ) $ 114.74

Balance, December 29, 2019 56,412 $ 158.62

Balance, January 3, 2021

43,405 $ 228.80

Granted 10,227 $ 334.92

Issued ( 15,423 ) $ 176.64

Forfeited/Canceled ( 380 ) $ 176.64

Balance, January 2, 2022

In December 2016, Teledyne granted 16,045 restricted stock units with a grant date fair value of $ 2.0 million to Teledyne’s then Chief Executive Officer, which vested in equal annual installments over three years .

The calculated expense of $ 2.0 million was expensed evenly over the three years performance period.

In 2019, 2018 and 2017 we issued 2,697 , 2,697 and 2,389 shares, respectively, which were net of shares withheld to pay income taxes.

Non-employee directors each receive restricted stock units valued at $ 110,000 (or valued at $ 55,000 for a person who becomes a director for the first time after the date of the Annual Meeting).

37,829 $ 279.27

Non-employee directors each received restricted stock units valued at $ 130,000 in 2021 and $ 110,000 in 2020 and 2019 or valued at half the amount for a person who becomes a director for the first time after the date of the Annual Meeting.

The restricted stock units generally vest one year following the date of grant and are settled in shares of common stock on the date of vesting unless a director has elected to defer settlement of the award until his or her separation from Board service.

The annual expense related to non-employee director’s restricted stock units was approximately $ 1.0 million for each of 2020, 2019 and 2018.

The annual expense related to non-employee director’s restricted stock units was $ 1.2 million for 2021, $ 1.1 million for 2020 and $ 1.0 million for 2019.

The following table shows restricted stock award activity for grants made to non-employee directors:

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Balance, December 29, 2019

9,067 $ 199.90

Granted 3,692 $ 312.41

Issued ( 2,640 ) $ 249.72

Balance, December 29, 2019 9,067 $ 199.90

Canceled ( 353 ) $ 311.17

Balance, January 3, 2021

9,766 $ 224.94

Granted 2,592 $ 450.27

Issued ( 5,300 ) $ 227.90

Canceled ( 353 ) $ 311.17

Balance, January 2, 2022

7,058 $ 308.54

Long-Term Debt

Long-Term Debt (dollars in millions):

January 3, 2021 December 29, 2019

$ 750.0 million credit facility, due March 2024, weighted average rate of 1.05 % at January 3, 2021 and 2.80 % at December 29, 2019

Long-Term Debt (dollars in millions, except as noted) :

January 2, 2022 January 3, 2021

$ 1.15 billion credit facility, due March 2026, weighted average variable rate of 1.20 % at January 2, 2022 and 1.05 % at January 3, 2021

$ 125.0 $ 125.0

Term loan due October 2024, variable rate of 1.15 % at January 3, 2021 and 2.702 % at December 29, 2019, swapped to a Euro fixed rate of 0.612 %

5.30 % Fixed Rate Senior Notes repaid September 2020

2.81 % Fixed Rate Senior Notes repaid November 2020

Term loan due October 2024, variable rate of 1.35 % at January 2, 2022 and 1.150 % at January 3, 2021, swapped to a Euro fixed rate of 0.612 %

0.65 % Fixed Rate Senior Notes due April 2023

0.95 % Fixed Rate Senior Notes due April 2024, callable after April 2022

1.60 % Fixed Rate Senior Notes due April 2026

2.25 % Fixed Rate Senior Notes due April 2028

2.50 % Fixed Rate Senior Notes due April 2030

2.75 % Fixed Rate Senior Notes due April 2031

Term loan due May 2026, variable rate of 1.35 % at January 2, 2022

3.09 % Fixed Rate Senior Notes due December 2021

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Debt issuance costs ( 31.9 ) ( 0.8 )

Total long-debt 778.5 850.6

Total long-term debt 4,099.4 778.5

Current portion of long-term debt and other debt — ( 97.6 )

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The Company has no sinking fund requirements.

Teledyne's $ 750.0 million credit agreement has a maturity date to March 2024.

The credit agreement permits Teledyne to increase the aggregate amount of the borrowing capacity by up to $ 250.0 million subject to certain conditions.

Excluding interest and fees, no payments are due under the $ 750.0 million unsecured credit facility (“credit facility”) until it matures.

Borrowings under our credit facility and term loans are at variable rates which are, at our option, tied to a Eurocurrency rate equal to LIBOR (London Interbank Offered Rate) plus an applicable rate or a base rate as defined in our credit agreements.

Eurocurrency rate loans may be denominated in U.S.

dollars or an alternative currency as defined in the agreement.

Eurocurrency or LIBOR based loans under the facility typically have terms of one, two, three or six months and the interest rate for each such loan is subject to change if the loan is continued or converted following the applicable maturity date.

The Company has not drawn any loans with a term longer than three months under the credit facility.

Base rate loans have interest rates that primarily fluctuate with changes in the prime rate.

Interest rates are also subject to change based on our consolidated leverage ratio as defined in the credit agreement.

The credit facility also provides for facility fees that vary between 0.12 % and 0.25 % of the credit line, depending on our consolidated leverage ratio as calculated from time to time.

In the first quarter of 2021, Teledyne completed various financing activities related to the then pending acquisition of FLIR.

These activities included entering into a $ 4.5 billion short term stand-by bridge facility on January 4, 2021, as required by the definitive agreement, resulting in debt expense of $ 17.2 million.

In addition, on March 17, 2021 Teledyne called $ 493.3 million of existing fixed rate senior notes and incurred debt extinguishment expenses of $ 13.4 million, which is included in interest and debt expense, net.

On March 22, 2021, Teledyne completed all permanent financing for the acquisition of FLIR and terminated the $ 4.5 billion stand-by bridge facility.

The permanent financing consists of $ 3.0 billion investment-grade bonds (the “Notes”), including $ 300.0 million aggregate principal amount of 0.65 % Notes due 2023, $ 450.0 million aggregate principal amount of 0.95 % Notes due 2024, $ 450.0 million aggregate principal amount of 1.60 % Notes due 2026, $ 700.0 million aggregate principal amount of 2.25 % Notes due 2028 and $ 1.1 billion aggregate principal amount of 2.75 % Notes due 2031.

Teledyne may redeem the $ 450.0 million of 0.95 % Notes due 2024 at any time or from time to time, in whole or in part, at the Company’s option, from and after April 1, 2022, at a redemption price equal to 100 % of the principal amount of the Notes redeemed.

In addition, we guaranteed FLIR’s $ 500.0 million, 2.50 % Fixed Rate Senior Notes due August 2030.

Previously on March 4, 2021, Teledyne entered into a $ 1.0 billion Term Loan Credit Agreement (maturing May 2026) and an Amended and Restated Credit Agreement (maturing March 2026) with capacity of $ 1.15 billion.

The terms of the $ 1.0 billion Term Loan Credit Agreement allow for prepayments, at the Company’s option, at any time or from time to time, in whole or in part without premium or penalty.

Teledyne used the proceeds from the Notes together with the proceeds from the $ 1.0 billion Term Loan Credit Agreement and cash on hand to pay the cash portion of the consideration for the FLIR acquisition and refinance certain existing debt.

Excluding interest and fees, no payments are due under the $ 1.15 billion unsecured credit facility (“credit facility”) until it matures in March 2026.

Borrowings under our credit facility and term loans are at variable rates which are, at our option, tied to a base rate, Eurocurrency rate or equivalent as defined in our credit agreements.

Available borrowing capacity under the credit facility, which is reduced by borrowings and certain outstanding letters of credit, was $ 759.2 million at January 2, 2022.

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At January 2, 2022, Teledyne had $ 281.9 million in outstanding letters of credit.

As part of the pending FLIR acquisition, Teledyne has arranged a $ 4.5 billion 364-day credit commitment to fund the transaction and refinance certain existing debt.

See also Note 15 , Subsequent Events, to these Consolidated Financial Statements for additional information regarding the funding of the pending acquisition of FLIR.

Of this amount, $ 244.6 million was released in February 2022.

Total interest expense including credit facility fees and other bank charges was $ 104.8 million in 2021, $ 15.8 million in 2020 and $ 22.0 million in 2019.

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export sales ( 1.3 ) ( 2.5 ) ( 3.0 )

Acquisition-related costs 1.7 — —

Other 1.4 1.5 1.4

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Deferred income tax liabilities:

Property, plant and equipment differences 16.5 16.0

Intangible amortization 751.5 139.4

Property, plant and equipment differences 37.8 16.5

Operating lease right-of-use assets 35.0 27.7

Unremitted earnings of foreign subsidiaries 15.9 —

Other 7.9 3.7

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We estimate that future domestic cash generation will be sufficient to meet future domestic cash requirements.

Due to the Tax Act, U.S.

federal and applicable state income taxes have been accrued for the deemed repatriation.

federal and applicable state income taxes have been accrued for deemed repatriations.

At January 2, 2022, the amount of undistributed foreign earnings was $ 619.8 million, for which we have not recorded a deferred tax liability of approximately $ 1.3 million for corporate income taxes which would be due if reinvested foreign earnings were repatriated.

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Based on a review of such information, management believes that it is possible that some portion of deferred tax assets will not be realized as a future benefit and therefore has recorded a valuation allowance.

The valuation allowance for deferred tax assets increased by $ 6.8 million in 2020, primarily related to deferred tax assets for which it is more likely than not that a tax benefit will not be realized by the reporting entity.

At January 3, 2021, the Company had approximately $ 71.5 million of net operating loss carryforward primarily from the Company’s entities in the United Kingdom, Denmark and Norway, all of which have no expiration date.

The Company had foreign capital loss carryforward in the amount of $ 2.2 million which has no expiration date.

Also the Company had aggregate Canadian federal and provincial investment tax credits of $ 16.3 million, which have expiration dates of 2030 to 2040.

The valuation allowance for deferred tax assets decreased by $ 0.2 million in 2021, primarily related to the evidence for future utilization of remaining investment tax credits, offset by acquisition-related valuation allowance.

At January 2, 2022, the Company had approximately $ 45.3 million of net operating loss carryforward primarily from the Company’s entities in the United Kingdom, Denmark and Norway, of which $ 28.8 million have no expiration dates and $ 16.5 million have expiration dates ranging from 2025 to 2040.

The Company had Canadian capital loss carryforward in the amount of $ 4.2 million which has no expiration date.

Also the Company had aggregate Canadian federal and provincial investment tax credits of $ 16.9 million, which have expiration dates ranging from 2030 to 2041.

The Company had Spanish federal research and development credit carryforward in the amount of $ 0.4 million, which have expiration dates ranging from 2025 to 2028.

In addition, the Company had domestic federal and state net operating loss carryforward of $ 28.0 million and $ 117.1 million, respectively.

Generally, federal net operating loss carryforward amounts are limited in their use by earnings of certain acquired subsidiaries, and have no expiration date and the state net operating loss carryforward amounts have expiration dates ranging from 2021 to 2040.

Finally, the Company had federal research and development credit carryforward in the amount of $ 0.5 million which will expire between 2032 and 2035 and state tax credits of $ 11.7 million, of which $ 11.3 million have no expiration date and $ 0.4 million have expiration dates ranging from 2023 to 2040.

Generally, federal net operating loss carryforward amounts are limited in their use by earnings of certain acquired subsidiaries.

Of the $ 28.0 million federal net operation loss carryforward, $ 20.6 million have no expiration dates and $ 7.4 million have expiration dates ranging from 2024 to 2037.

The state net operating loss carryforward amounts have expiration dates ranging from 2022 to 2041.

Finally, the Company had federal research and development credit carryforward in the amount of $ 0.3 million which has an expiration date of 2037 and state tax credits of $ 17.9 million, of which $ 14.1 million have no expiration date and $ 3.8 million have expiration dates ranging from 2023 to 2035.

Unrecognized tax benefits (in millions):

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Beginning of year $ 32.3 $ 24.5 $ 25.0

Increase in prior year tax positions (a) 5.1 4.2 2.3

Increase due to FLIR acquisition 413.8 — —

Increase for tax positions taken during the current period 6.3 9.4 4.3

Increase in prior year tax positions 2.5 5.1 4.2

Reduction related to settlements with taxing authorities ( 1.6 ) ( 1.9 ) ( 4.6 )

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End of year $ 402.0 $ 32.3 $ 24.5

a) Includes the impact of acquisitions in all years.

The Company anticipates the total unrecognized tax benefit for various federal, state and foreign tax items may be reduced by $ 2.8 million due to the expiration of statutes of limitation for various federal, state and foreign tax issues in the next 12 months.

We recognized net tax benefits and expense for interest and penalties related to unrecognized tax benefits within the provision for income taxes in our statements of operations of $ 0.1 million of expense, $ 0.3 million of benefit and $ 0.3 million of expense, for 2020, 2019 and 2018, respectively.

In the next 12 months, the Company anticipates the total unrecognized tax benefit for various federal, state and foreign tax items may be reduced by $ 19.1 million due to the expiration of statutes of limitation for various federal, state and foreign tax issues.

We recognized net tax benefits and expense for interest and penalties related to unrecognized tax benefits within the provision for income taxes in our statements of operations of $ 2.4 million of expense, $ 0.1 million of expense and $ 0.3 million of benefit, for 2021, 2020 and 2019, respectively.

Interest and penalties in the amount of $ 160.8 million, $ 1.2 million and $ 1.1 million were recognized in the 2021, 2020 and 2019 statement of financial position, respectively.

In 2021, interest and penalties of $ 157.0 million were accrued as a result of the acquisition of FLIR.

Substantially all of the unrecognized tax benefits as of January 2, 2022, if recognized, would affect our effective tax rate.

Current accrued liabilities on the consolidated balance sheet included unrecognized tax benefits including accrued interest and penalties of $ 341.0 million as of January 2, 2022, compared with no balance as of January 3, 2021.

Teledyne paid $ 296.4 million related to this current accrued liabilities balance on February 2, 2022.

We file income tax returns in the United States federal jurisdiction and in various states and foreign jurisdictions.

The Company has substantially concluded on all U.S.

federal income tax matters for all years through 2016, United Kingdom income tax matters for all years through 2019, France income tax matters for all years through 2016 and Canadian income tax matters for all years through 2012.

federal income tax matters for all years through 2011, Canadian income tax matters for all years through 2012, Swedish income tax matters for all years through 2011, Norwegian income tax matters for all years through 2016, Belgian income tax matters for all years through 2018, French income tax matters for all years through 2018 and United Kingdom income tax matters for all years through 2019.

Pension Plans and Postretirement Benefits

Pension Plans

Effective January 1, 2020, Teledyne restructured its domestic qualified defined benefit pension plan.

The restructuring involved dividing our domestic qualified defined pension plan into two separate plans, one comprised primarily of inactive participants (the “inactive plan”) and the other comprised primarily of active participants (the “active plan”).

The reorganization was made to facilitate a targeted investment strategy over time and to provide additional flexibility in evaluating opportunities to reduce risk and volatility.

Actuarial gains and losses associated with the active plan will continue to be amortized over the average remaining service period of the active participants, which is approximately nine years , while the actuarial gains and losses associated with the inactive plan will be amortized over the average remaining life expectancy of the inactive participants which is approximately 17 years.

These plans cover substantially all U.S.

employees hired before January 1, 2004, or approximately 10 % of Teledyne’s active employees.

As of January 1, 2004, new hires participate in a defined contribution plan only.

Teledyne has two domestic qualified defined benefit pension plans covering substantially all U.S.

employees hired before January 1, 2004, excluding FLIR U.S.

All FLIR U.S.

employees participate in a defined contribution plan, as FLIR has no legacy U.S.

Pension Plans.

As of January 1, 2004, new Teledyne hires participate in a defined contribution plan only.

The Company also has several small domestic non-qualified and foreign-based defined benefit pension plans.

In 2018, the Company’s U.S.

domestic qualified pension plan purchased group annuity contracts from insurance companies and paid a total annuity premium of $ 17.8 million.

These annuity contracts transfer the obligation to the insurance companies to guarantee the full payment of all annuity payments to existing retired pension plan participants or their surviving beneficiaries.

These annuity contracts assume all investment risk associated with the assets that were delivered as the annuity contract premiums.

These annuity contracts covered 321 existing retired pension plan participants for 2018, at the time of purchase.

No annuity contracts were purchased in 2020 or 2019.

The domestic qualified pension plans allow participants to elect a lump-sum payment at retirement.

In 2020, 2019 and 2018, the Company made lump sum payments of $ 24.9 million, $ 17.2 million and $ 18.6 million, respectively, from the domestic qualified pension plan assets to certain participants in the plan.

In 2021, 2020 and 2019, the Company made lump sum payments of $ 24.5 million, $ 24.9 million and $ 17.2 million, respectively, from the domestic qualified pension plans assets to certain participants in the plan.

Each year beginning with 2014, the Society of Actuaries released revised mortality tables, which updated life expectancy assumptions.

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2.55 % - 2.78 %

2.75 % 6.71 % - 7.80 %

Domestic plan - 2020

3.38 % to 3.52 %

2.75 % 6.71 % - 7.80 %

Domestic plan - 2019

4.59 % 2.75 % 7.80 %

Foreign plans - 2021

1 unchanged sentence

1.00 % - 2.50 %

0.80 % - 2.50 %

Foreign plans - 2020

1 unchanged sentence

1.00 % - 2.50 %

1.00 % - 3.00 %

Foreign plans - 2019

1 unchanged sentence

1.00 % - 2.50 %

For its domestic based pension plans the Company is projecting a long-term rate of return on plan assets will range from 6.71 % to 7.80 % in 2021.

For its foreign based pension plans the Company is projecting a long-term rate of return on plan assets will range from 0.80 % to 2.50 % in 2021.

1.00 % - 3.80 %

For its domestic based pension plans the Company is projecting a long-term rate of return on plan assets of 6.82 % in 2022.

For its foreign based pension plans the Company is projecting a long-term rate of return on plan assets of 2.23 % in 2022.

Domestic Foreign

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Discount rate 2.91 % - 3.08 %

2.55 % to 2.78 %

0.20 % - 1.80 %

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The fair values of the Company’s net pension assets, by fair value hierarchy, for both the U.S.

and foreign pension plans as of December 29, 2019, by asset category are as follows (in millions):

and foreign pension plans as of January 3, 2021, by asset category are as follows (in millions):

Asset category:

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Fixed income investments are also valued at the net asset value provided by the independent administrator or custodian of the fund.

The net asset value is based on the underlying assets, which are valued using inputs such as the closing price reported, if traded on an active market, values derived from comparable securities of issuers with similar credit ratings, or under a discounted cash flow approach that utilizes observable inputs, such as current yields of similar instruments.

current yields of similar instruments.

Alternative investments are primarily valued at the net asset value as determined by the independent administrator or custodian of the fund.

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The plans provide health care and life insurance benefits for certain eligible retirees.

No service cost was incurred for these plans in 2020, 2019 or 2018.

Postretirement benefits non-service expense (in millions):

2020 2019 2018

Interest cost on benefit obligation $ 0.2 $ 0.4 $ 0.4

Amortization of actuarial gain ( 0.2 ) ( 0.3 ) ( 0.3 )

Postretirement benefits non-service expense $ — $ 0.1 $ 0.1

Changes in benefit obligation (in millions):

Benefit obligation - beginning of year $ 8.1 $ 8.7

Interest cost on projected benefit obligation 0.2 0.4

Actuarial loss 1.1 0.1

Benefits paid ( 1.4 ) ( 1.2 )

Other 0.1 0.1

Benefit obligation - end of year $ 8.1 $ 8.1

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

Future postretirement plan benefit payments (in millions):

2026-2030 2.6

The following table sets forth the funded status and amounts recognized in Teledyne’s consolidated balance sheets for the postretirement plans at year-end 2020 and 2019 (in millions):

Funded status:

Funded status $ ( 8.1 ) $ ( 8.1 )

Unrecognized net gain ( 0.9 ) ( 2.2 )

Accrued benefit cost $ ( 9.0 ) $ ( 10.3 )

Amounts recognized in the consolidated balance sheets:

Accrued postretirement benefits (long-term) $ ( 7.2 ) $ ( 7.2 )

Accrued postretirement benefits (short-term) ( 0.9 ) ( 0.9 )

Accumulated other comprehensive income ( 0.9 ) ( 2.2 )

Net amount recognized $ ( 9.0 ) $ ( 10.3 )

At January 3, 2021, the amount in AOCI that has not yet been recognized as a component of net periodic benefit income for the retiree medical plans is a net gain $ 0.9 million and no net prior service credit.

At January 3, 2021, the estimated amortization from AOCI expected to be recognized as components of net periodic benefit income during 2021 for the retiree medical plans is a net gain of $ 0.1 million and no net prior service cost.

The annual assumed rate of increase in the per capita cost of covered benefits (the health care cost trend rate) for health care plans is 6.25 % in 2021 and was assumed to decrease to 5.0 % by the year 2027 and remain at that level thereafter.

Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans.

A one percentage point increase in the assumed health care cost trend rates would result in an increase in the annual service and interest costs by less than $ 0.1 million for 2020 and would result in an increase in the postretirement benefit obligation by $ 0.2 million at January 3, 2021.

A one percentage point decrease in the assumed health care cost trend rates would result in a decrease in the annual service and interest costs by less than $ 0.1 million for 2020 and would result in a decrease in the postretirement benefit obligation by $ 0.2 million at January 3, 2021.

Total cost for these plans was less than $ 1.0 million for each fiscal year 2021, 2020 and 2019.

Business Segments

The Company has four reportable segments:

Instrumentation;

Digital Imaging;

Instrumentation;

Aerospace and Defense Electronics;

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The Company manages, evaluates and aggregates its operating segments for segment reporting purposes primarily on the basis of product and service type, production process, distribution methods, type of customer, management organization, sales growth potential and long-term profitability.

The Digital Imaging segment includes high-performance sensors, cameras and systems, within the visible, infrared and X-ray spectra for use in industrial, government and medical applications, as well as micro electromechanical systems (“MEMS”) and high-performance, high-reliability semiconductors including analog-to-digital and digital-to-analog converters.

This segment also includes our sponsored and centralized research laboratories which benefit government programs and commercial businesses.

Teledyne acquired FLIR in May 2021, which is reported in the Digital Imaging segment.

FLIR offers a diversified portfolio that serves a number of applications in government and defense, industrial, and commercial markets.

FLIR technologies include thermal imaging systems, visible-light imaging systems, locater systems, measurement and diagnostic systems, and advanced threat-detection solutions.

The Instrumentation segment provides monitoring and control instruments for marine, environmental, industrial and other applications, electronic test and measurement equipment and harsh environment interconnect products.

The Digital Imaging segment includes high-performance sensors, cameras and systems, within the visible, infrared and X-ray spectra, for use in industrial, government and medical applications, as well as micro electro-mechanical systems (“MEMS”) and high-performance, high-reliability semiconductors including analog-to-digital and digital-to-analog converters.

It also includes our sponsored and centralized research laboratories benefiting government programs and businesses.

The Aerospace and Defense Electronics segment provides sophisticated electronic components and subsystems and communications products, including defense electronics, harsh environment interconnects, data acquisition and communications equipment for aircraft and components and subsystems for wireless and satellite communications, as well as general aviation batteries.

The Engineered Systems segment provides innovative systems engineering and integration, advanced technology application, software development and manufacturing solutions for defense, space, environmental and energy applications.

The Engineered Systems segment also designs and manufactures electrochemical energy systems and small turbine engines.

Segment results include net sales and operating income by segment but excludes noncontrolling interest, equity income or loss, unusual non-recurring legal matter settlements, interest income and expense, gains and losses on the disposition of assets, sublease rental income and non-revenue licensing and royalty income, domestic and foreign income taxes and corporate office expenses.

The Engineered Systems segment also designs and manufactures electrochemical energy systems.

Teledyne exited the cruise missile turbine engine business in the first quarter of 2021.

Segment results include net sales and operating income by segment but excludes noncontrolling interest, equity income or loss, unusual non-recurring legal matter settlements, interest income and expense, sublease rental income and non-revenue licensing and royalty income, domestic and foreign income taxes and corporate office expenses.

Corporate expense includes various administrative expenses relating to the corporate office and certain nonoperating expenses not allocated to our segments.

As part of a continuing effort to reduce costs and improve operating performance, as well as to respond to the impact of COVID-19, in 2020, the Company took actions to reduce headcount by 9.8 % across various businesses, reducing our exposure to weak end markets, such as commercial aerospace.

At January 3, 2021, $ 2.1 million remains to be paid related to these actions.

As part of a continuing effort to reduce costs and improve operating performance, as well as to respond to the impact of the COVID pandemic, beginning in 2020 the Company took actions to reduce headcount across various businesses, reducing our exposure to weak end markets, such as commercial aerospace.

We also exited certain facilities no longer needed.

In 2021, we took actions to integrate FLIR into our businesses resulting in higher severance and facility closure costs in the Digital Imaging segment.

At January 2, 2022, an immaterial amount remains to be paid related to these actions.

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

2021 2020 2019

Instrumentation $ 5.9 $ 1.5 $ 5.6

Digital Imaging $ 23.9 $ 2.9 $ 1.1

Instrumentation 1.3 5.9 1.5

Aerospace and Defense Electronics 0.7 11.1 0.5

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2021 2020 2019

Instrumentation $ 1,094.5 $ 1,105.1 $ 1,021.2

Digital Imaging $ 2,412.9 $ 986.0 $ 992.9

Instrumentation 1,166.9 1,094.5 1,105.1

Aerospace and Defense Electronics 628.7 589.4 690.1

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2021 2020 2019

Instrumentation $ 213.2 $ 200.4 $ 147.4

Digital Imaging $ 325.6 $ 192.8 $ 176.5

Instrumentation 253.7 213.2 200.4

Aerospace and Defense Electronics 133.2 80.8 143.4

4 unchanged sentences

2021 2020 2019

Instrumentation $ 38.3 $ 35.9 $ 37.0

Digital Imaging $ 309.2 $ 49.2 $ 48.5

Instrumentation 38.1 38.3 35.9

Aerospace and Defense Electronics 13.2 13.7 14.3

4 unchanged sentences

2021 2020 2019

Instrumentation $ 18.0 $ 18.9 $ 14.8

Digital Imaging $ 64.2 $ 33.4 $ 45.2

Instrumentation 13.3 18.0 18.9

Aerospace and Defense Electronics 8.4 10.4 19.0

6 unchanged sentences

2021 2020 2019

Instrumentation $ 1,676.2 $ 1,680.2 $ 1,392.7

Digital Imaging $ 11,756.8 $ 2,000.8 $ 1,874.6

Instrumentation 1,640.3 1,676.2 1,680.2

Aerospace and Defense Electronics 536.3 567.6 618.3

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Total identifiable assets $ 14,430.3 $ 5,084.8 $ 4,579.8

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

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

Sales by country of origin:

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United Kingdom 286.3 237.5 251.7

Belgium 227.3 10.7 10.2

The Netherlands 127.0 105.5 134.2

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Long-lived assets consist of property, plant and equipment, goodwill, acquired intangible assets, prepaid pension assets and other long-term assets including deferred compensation assets but excluding any deferred tax assets.

The all other countries category primarily consists of Teledyne’s operations in Europe.

Until purchase accounting for the FLIR acquisition is finalized, provisional amounts for goodwill and intangible assets are primarily included in the United States.

The all other countries category primarily consists of Teledyne’s other operations in Europe.

Product Lines

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Sales between business segments generally were priced at prevailing market prices and were $ 20.2 million, $ 23.4 million and $ 30.3 million for 2021, 2020 and 2019, respectively.

We also disaggregate our revenue from contracts with customers by customer type, contract-type and geographic region for each of our segments, as we believe it best depicts how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors.

We also disaggregate our revenue from contracts with customers by customer type and geographic region for each of our segments, as we believe it best depicts how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors.

With the exception of the Engineered Systems segment, net sales in our segments is primarily derived from fixed price contracts.

Net sales in the Engineered Systems segment is typically between 45 % and 55 % fixed price contracts in a given reporting period, with the balance of net sales derived from cost type contracts.

For the year ended January 2, 2022, approximately 47 % of net sales in the Engineered Systems segment was derived from fixed price contracts.

Fiscal Year Ended

January 2, 2022 Fiscal Year Ended

December 29, 2019 Fiscal Year Ended

January 3, 2021 Fiscal Year Ended

December 29, 2019

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(in millions) United States Government (a) Other, Primarily Commercial Total United States Government (a) Other, Primarily Commercial Total United States Government (a) Other, Primarily Commercial Total

Instrumentation $ 80.6 $ 1,013.9 $ 1,094.5 $ 80.4 $ 1,024.7 $ 1,105.1 $ 68.3 $ 952.9 $ 1,021.2

Digital Imaging $ 515.9 $ 1,897.0 $ 2,412.9 $ 120.9 $ 865.1 $ 986.0 $ 107.4 $ 885.5 $ 992.9

Instrumentation 91.6 1,075.3 1,166.9 80.6 1,013.9 1,094.5 80.4 1,024.7 1,105.1

Aerospace and Defense Electronics 227.2 401.5 628.7 229.9 359.5 589.4 225.3 464.8 690.1

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January 2, 2022 Fiscal Year Ended

December 29, 2019 Fiscal Year Ended

December 30, 2018

Contract Type Contract Type Contract Type

(in millions) Fixed Price Cost Type Total Fixed Price Cost Type Total Fixed Price Cost Type Total

Instrumentation $ 1,081.6 $ 12.9 $ 1,094.5 $ 1,094.4 $ 10.7 $ 1,105.1 $ 1,001.0 $ 20.2 $ 1,021.2

Digital Imaging 883.5 102.5 986.0 903.1 89.8 992.9 795.5 79.8 875.3

Aerospace and Defense Electronics 588.8 0.6 589.4 687.8 2.3 690.1 637.4 2.8 640.2

Engineered Systems 219.0 197.3 416.3 168.9 206.6 375.5 165.8 199.3 365.1

Total $ 2,772.9 $ 313.3 $ 3,086.2 $ 2,854.2 $ 309.4 $ 3,163.6 $ 2,599.7 $ 302.1 $ 2,901.8

Fiscal Year Ended

January 3, 2021 Fiscal Year Ended

December 29, 2019 Fiscal Year Ended

December 29, 2019

1 unchanged sentence

(in millions) United States Europe All other Total United States Europe All other Total United States Europe All other Total

Instrumentation $ 844.4 $ 204.4 $ 45.7 $ 1,094.5 $ 899.7 $ 164.8 $ 40.6 $ 1,105.1 $ 835.0 $ 134.6 $ 51.6 $ 1,021.2

Digital Imaging $ 1,144.9 $ 642.7 $ 625.3 $ 2,412.9 $ 309.3 $ 272.9 $ 403.8 $ 986.0 $ 316.1 $ 299.4 $ 377.4 $ 992.9

Instrumentation 857.9 248.2 60.8 1,166.9 844.4 204.4 45.7 1,094.5 899.7 164.8 40.6 1,105.1

Aerospace and Defense Electronics 523.5 105.2 — 628.7 508.7 80.1 0.6 589.4 588.3 100.8 1.0 690.1

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We evaluate the likelihood of exercising each renewal option based on many factors, including the length of the renewal option and the future new lease cost, if known, or the estimated future new lease cost if it is not a fixed amount and will include those renewal options that are reasonably certain to be exercised for purposes of calculating the lease liability and corresponding right-of-use asset.

Lease expense for lease payments is recognized on a straight-line basis over the lease term.

Lease expense for operating leases is recognized on a straight-line basis over the lease term.

Operating Leases

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Imputed interest ( 27.1 )

Current portion (included in other current liabilities) ( 21.2 )

Current portion (included in current accrued liabilities) ( 28.3 )

Present value of minimum lease payments, net of current portion $ 138.0

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The Company expects that it will expend present accruals over many years, and will complete remediation of all sites with which it has been identified in up to thirty years .

On April 24, 2018, FLIR entered into a Consent Agreement with the United States Department of State’s Directorate of Defense Trade Controls to resolve allegations regarding the unauthorized export of technical data and defense services to dual and third country nationals in certain of FLIR’s facilities, the failure to properly use and manage export licenses and export authorizations, and failures to report certain payments under 22 CFR Part 130 in potential violation of International Traffic in Arms Regulations (“ITAR”).

The Consent Agreement has a four-year term and provides for:

(i) a civil penalty of $ 30.0 million with $ 15.0 million of this amount suspended on the condition that the funds have or will be used for Department-approved Consent Agreement remedial compliance measures, (ii) the appointment of an external Special Compliance Official to oversee compliance with the Consent Agreement and the ITAR;

(iii) two external audits of our ITAR compliance program;

and (iv) continued implementation of ongoing remedial compliance measures and additional remedial compliance measures related to automated systems and ITAR compliance policies, procedures, and training.

While FLIR has enhanced its trade compliance program more broadly, implemented and continues to implement remedial measures and has undergone its first external audit and just concluded its second external audit of FLIR’s ITAR compliance program, additional adverse disclosures and findings could materially cause incurrence of additional expenses in connection with implementation of remedial measures and result in a substantial adjustment to our revenue and net income.

As of January 2, 2022, under the Consent Agreement, $ 3.5 million remains to be paid by April 24, 2022.

FLIR’s investments to date in remedial compliance measures have been more than sufficient to cover the $ 15.0 million suspension amount.

In June 2017, the Bureau of Industry and Security (“BIS”) of the United States Department of Commerce informed FLIR of additional export licensing requirements that restricted the FLIR’s ability to sell certain thermal products without a license to customers in China not identified on a list maintained by the United States Department of Commerce.

This action was precipitated by concerns of sale without a license or potential diversion of some of FLIR’s products to prohibited end users and to countries subject to economic and other sanctions implemented by the United States.

BIS subsequently favorably modified these restrictions to reduce the applicability of the restrictions to sales of FLIR's Tau camera cores (as opposed to finished products containing Tau camera cores) to customers in China not identified on a list maintained by the United States Department of Commerce and persons in a country other than those in the Export Administration Regulations (“EAR”) Country Group A:5 (Supplement No.

1 to Part 740 of the EAR).

FLIR has identified certain shipments that potentially violate these license requirements and voluntary disclosed this matter to BIS.

In April 2021, FLIR resolved allegations of misrepresentations made to BIS, between November 2012 and December 2013, in a commodity jurisdiction request relating to newly developed Lepton uncooled focal plane arrays by an administrative settlement and fine of $ 0.3 million and agreeing to perform two internal audits of its EAR export compliance programs.

The first internal audit has been completed and another voluntary disclosure has been filed to report potential violations.

FLIR has made other voluntary disclosures to the U.S.

Department of State and U.S.

Department of Commerce, including to BIS with respect to the shipments of products from non-U.S.

jurisdictions which were not licensed due to incorrect de minimis calculation methodology.

If FLIR is found to have violated applicable rules and regulations with respect to customers and limitations on the export and end use of its products, FLIR could be subject to substantial fines and penalties, suspension of existing licenses or other authorizations and/or loss or suspension of export privileges.

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 an outcome becomes estimable or known.

Certain provisional adjustments have been made for the FLIR historical export compliance matters in Teledyne’s current preliminary estimates of its purchase price allocation.

The final acquisition accounting adjustments for these matters may be materially different, as Teledyne obtains additional information on these matters and as additional information is made known during the post-acquisition measurement period.

See Note 3 to these Notes to Consolidated Financial Statements for information regarding FLIR historical tax matters that existed at the date of the acquisition, including the Swedish Tax Authority's reassessment of tax for the year ending December 31, 2012 related to one of FLIR’s non-operating subsidiaries in Sweden.

Various claims (whether based on U.S.

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Subsequent Events

On January 4, 2021, the first day of the 2021 fiscal year, Teledyne and FLIR entered into a definitive agreement under which Teledyne will acquire FLIR in a cash and stock transaction valued at approximately $ 8.0 billion.

Under the terms of the agreement, FLIR stockholders will receive $ 28.00 per share in cash and 0.0718 shares of Teledyne common stock for each FLIR share, which implies a total purchase price of $ 56.00 per FLIR share based on Teledyne’s 5-day volume weighted average price as of December 31, 2020.

The transaction is expected to close in the middle of 2021 subject to the receipt of required regulatory approvals, including expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act, approvals of Teledyne and FLIR stockholders and other customary closing conditions.

FLIR Systems, Inc.

designs, develops, manufactures, markets, and distributes technologies that enhance perception and awareness.

FLIR provides innovative sensing solutions through thermal imaging, visible-light imaging, video analytics, measurement and diagnostic, and advanced threat detection systems.

FLIR offers a diversified portfolio that serves a number of applications in government and defense, industrial, and commercial markets.

FLIR, headquartered in Wilsonville, Oregon, will be part of the Digital Imaging segment.

As part of the pending acquisition of FLIR, Teledyne has arranged a $ 4.5 billion 364-day credit commitment to support funding of the transaction.

Teledyne expects to fund the acquisition with a combination of equity, cash on hand and permanent debt financing, including a combination of senior notes and bank term loans.

Quarterly Financial Data (Unaudited)

Fiscal Year 2020 (a) (in millions, except per-share amounts)

Net Sales $ 784.6 $ 743.3 $ 749.0 $ 809.3

Costs and expenses

Cost of sales 492.6 460.6 458.5 493.6

Selling, general and administrative expenses 188.0 172.9 168.0 171.9

Total costs and expenses 680.6 633.5 626.5 665.5

Operating income 104.0 109.8 122.5 143.8

Interest and debt expense, net ( 4.1 ) ( 3.7 ) ( 4.1 ) ( 3.4 )

Non-service retirement benefit income 2.5 3.2 3.2 3.2

Other expense, net ( 1.4 ) ( 1.4 ) ( 1.9 ) ( 2.5 )

Income before income taxes 101.0 107.9 119.7 141.1

Provision for income taxes (b) 18.8 14.2 25.8 9.0

Net income $ 82.2 $ 93.7 $ 93.9 $ 132.1

Basic earnings per common share $ 2.25 $ 2.55 $ 2.55 $ 3.58

Diluted earnings per common share $ 2.17 $ 2.48 $ 2.48 $ 3.48

a) Fiscal year 2020 was a 53-week fiscal-year, each quarter contained 13 weeks except the fourth quarter which contained 14 weeks..

b) Includes $ 4.2 million in net discrete income tax benefits in the first quarter, $ 10.4 million in net discrete income tax benefits in the second quarter, $ 1.2 million in net discrete income tax benefits the third quarter and $ 18.8 million in net discrete income tax benefits in the fourth quarter.

Fiscal Year 2020 (in millions)

Instrumentation $ 285.1 $ 263.1 $ 263.5 $ 282.8

Digital Imaging 246.7 237.6 239.7 262.0

Aerospace and Defense Electronics 156.3 143.1 144.8 145.2

Engineered Systems 96.5 99.5 101.0 119.3

Total net sales $ 784.6 $ 743.3 $ 749.0 $ 809.3

Operating income:

Instrumentation $ 50.8 $ 48.5 $ 50.7 $ 63.2

Digital Imaging 43.8 46.8 45.5 56.7

Aerospace and Defense Electronics 13.4 17.5 26.7 23.2

Engineered Systems 11.4 10.8 12.5 15.4

Corporate expense ( 15.4 ) ( 13.8 ) ( 12.9 ) ( 14.7 )

Total operating income $ 104.0 $ 109.8 $ 122.5 $ 143.8

Fiscal Year 2019 (a) (in millions, except per-share amounts)

Net Sales $ 745.2 $ 782.0 $ 802.2 $ 834.2

Costs and expenses

Cost of sales 463.9 463.6 487.7 505.1

Selling, general and administrative expenses 184.0 186.5 185.8 195.3

Total costs and expenses 647.9 650.1 673.5 700.4

Operating income 97.3 131.9 128.7 133.8

Interest and debt expense, net ( 5.4 ) ( 5.4 ) ( 5.5 ) ( 4.7 )

Non-service retirement benefit income 2.2 2.0 1.9 1.9

Other expense, net ( 1.2 ) ( 0.6 ) ( 1.7 ) ( 1.5 )

Income before income taxes 92.9 127.9 123.4 129.5

Provision for income taxes (b) 17.6 23.3 16.7 13.8

Net income $ 75.3 $ 104.6 $ 106.7 $ 115.7

Basic earnings per common share $ 2.09 $ 2.89 $ 2.93 $ 3.17

Diluted earnings per common share $ 2.02 $ 2.80 $ 2.84 $ 3.06

a) Fiscal year 2019 was a 52-week fiscal-year, each quarter contained 13 weeks.

b) Includes $ 3.1 million in net discrete income tax benefits in the first quarter, $ 4.3 million in net discrete income tax benefits in the second quarter, $ 10.4 million in net discrete income tax benefits the third quarter and $ 8.3 million in net discrete income tax benefits in the fourth quarter.

Fiscal Year 2019 (in millions)

Instrumentation $ 256.5 $ 264.1 $ 282.9 $ 301.6

Digital Imaging 232.4 248.4 244.0 268.1

Aerospace and Defense Electronics 166.6 176.0 177.1 170.4

Engineered Systems 89.7 93.5 98.2 94.1

Total net sales $ 745.2 $ 782.0 $ 802.2 $ 834.2

Operating income:

Instrumentation $ 39.9 $ 49.0 $ 52.0 $ 59.5

Digital Imaging 36.6 51.6 41.2 47.1

Aerospace and Defense Electronics 32.5 38.6 39.5 32.8

Engineered Systems 6.4 9.0 10.6 10.5

Corporate expense ( 18.1 ) ( 16.3 ) ( 14.6 ) ( 16.1 )

Total operating income $ 97.3 $ 131.9 $ 128.7 $ 133.8

On January 26, 2022, the Administrative Court of Appeal in Stockholm, Sweden generally affirmed the March 2020 ruling of the First Instance Court and determined a tax liability in the amount of SEK 2.765 billion.

We paid the tax on February 2, 2022 totaling $ 296.4 million.

We are evaluating the ruling.

As a result of the payment, the Swedish Tax Authority cancelled the standby letter of credit of $ 244.6 million.

Schedule II VALUATION AND QUALIFYING ACCOUNTS

VALUATION AND QUALIFYING ACCOUNTS

For the Fiscal Years Ended January 3, 2021, December 29, 2019 and December 30, 2018

For the Fiscal Years Ended January 2, 2022, January 3, 2021 and December 29, 2019

(In millions)

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3.1 Restated Certificate of Incorporation of Teledyne Technologies Incorporated (including Certificate of Designation of Series A Junior Participating Preferred Stock) (incorporated by reference to Exhibit 3.1 to the Company’s Annual Report on Form 10-K for the year ended January 2, 2000 (File No.

3.2 Sec ond Amended and Restated Bylaws of Teledyne Technologies Incorporated (incorporated by reference to Exhibit 3.1 to the Company’s Current R eport on Form 8-K dated January 2, 2021 (File No.

4.1 Description of the Registrant's Securities (incorporated by reference to Exhibit 4.1 to the Company's Annual Report on Form 10-K for the fiscal year ended December 29, 2019 File No.

3.2 Third Amended and Restated Bylaws of Teledyne Technologies Incorporated (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K dated August 27, 2021 (File No.

4.1 Description of the Registrant's Securities *

4.2 Indenture, dated as of March 22, 2021, between Teledyne Technologies Incorporated and U.S.

Bank National Association, as trustee.

(incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K dated March 17, 2021) (File No.

4.3 First Supplemental Indenture, dated as of March 22, 2021, between Teledyne Technologies Incorporated and U.S.

Bank National Association, as trustee.

(incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K dated March 17, 2021) (File No.

4.4 Form of 0.650% Notes due 2023 (form included as Exhibit A to the First Supplemental Indenture files as Exhibit 4.3)

4.5 Form of 0.950% Notes due 2024 (form included as Exhibit B to the First Supplemental Indenture files as Exhibit 4.3)

4.6 Form of 1.600% Notes due 2026 (form included as Exhibit C to the First Supplemental Indenture files as Exhibit 4.3)

4.7 Form of 2.250% Notes due 2028 (form included as Exhibit D to the First Supplemental Indenture filed as Exhibit 4.3)

4.8 Form of 2.750% Notes due 2031 (form included as Exhibit E to the First Supplemental Indenture filed as Exhibit 4.3)

10.1 Employee Benefits Agreement between Allegheny Teledyne Incorporated and Teledyne Technologies Incorporated (incorporated by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K/A (Amendment No.

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10.17 Form of Stock Option Award Agreement under the Amended and Restated Teledyne Technologies Incorporated 2014 Incentive Award Plan (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K dated January 23, 2018)†

10.18 Terms and Conditions of Stock Option Award Agreement under the Amended and Restated Teledyne Technologies Incorporated 2014 Incentive Award Plan for grants made after 2018 (incorporated by ref erence to Exh i bit 10.1 7 to th e Company's Annual Rep ort on Form 10-K for the fiscal year ended December 29, 2019 File No.

10.18 Terms and Conditions of Stock Option Award Agreement under the Amended and Restated Teledyne Technologies Incorporated 2014 Incentive Award Plan for grants made after 2018 (incorporated by reference to Exhibit 10.17 to the Company's Annual Report on Form 10-K for the fiscal year ended December 29, 2019 File No.

10.19 Summary Plan Description for the Performance Share Plan 2018-2020 Cycle under the Amended and Restated Teledyne Technologies Incorporated 2014 Incentive Award Plan (incorporated by reference to Exhibit 10.4 to the Company's Current Report on Form 8-K dated January 23, 2018)†

10.20 Performance Plan Summary Plan Des cription ( i ncorporated by reference to Exhibit 10.1 to the Company's Current R ep ort on Form 8- K dated J anuary 26, 2021 File No.

10.21 Sixth Amended and Restated Employment Agreement, by and between Teledyne Technologies Incorporated and Robert Mehrabian, dated as of October 23, 2018.

(incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on October 23, 2018) (File No.

10.22 Amendment No.

1 to Sixth Amended and Restated Employment Agreement dated as of January 26, 2021, by and between Teledyne Technologies Incorporated and Robert Mehrabian (incorporated by reference to Exhibit 10.

2 to the Company’s Current Report on Form 8-K dated January 26, 202 1 File No.

10.20 Performance Plan Summary Plan Description (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K dated January 26, 2021 File No.

10.21 Seventh Amended and Restated Employment Agreement dated as of August 27, 2021, by and between Teledyne Technologies Incorporated and Robert Mehrabian (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated August 27, 2021 (File No.

10.22 Employment Agreement, by and between Teledyne Technologies Incorporated and Aldo Pichelli, dated as of October 23, 2018.

(incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on October 23, 2018) (File No.

10.24 Am en dment No.

1 to Employm ent Agreement dated as of J anuary 26, 2021, by and between Teledyne Technologies Incor porated and Aldo Pichelli * †

10.23 Amendment No.

1 to Employment Agreement dated as of January 26, 2021, by and between Teledyne Technologies Incorporated and Aldo Pichelli*†

10.24 Amendment Number 2 to Employment Agreement dated as of August 27, 2021, by and between Teledyne Technologies Incorporated and Aldo Pichelli (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K dated August 27, 2021 (File No.

10.25 Amended and Restated Change in Control Severance Agreement, dated as of January 31, 2011, by and between Teledyne Technologies Incorporated and Robert Mehrabian (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated January 31, 2011 (File No.

7 unchanged sentences

10.32 Teledyne Technologies Pension Equalization/Benefit Restoration Plan - Resolutions of the Plan Administration Committee (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K dated December 31, 2014 (File No.

10.33 Amended and Restated Credit Agreement, dated as of March 1, 2013, by and among Teledyne Technologies Incorporated (Teledyne), certain subsidiaries of Teledyne as Designated Borrowers, certain subsidiaries of Teledyne as Guarantors, the Lender parties thereto and Bank of America, N.A.

as Administrative Agent, Swing-Line Lender and L/C Issuer (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated March 1, 2013) (File No.

10.34 First Amendment to Amended and Restated Credit Agreement, dated as of December 4, 2015,(incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K dated December 4, 2018 (File No.

10.35 Second Amendment, dated as of January 17, 2017, to Amended and Restated Credit Agreement, (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated January 17, 2017 (File No.

10.36 Third Amendment, dated as of March 17, 2017, to Amended and Restated Credit Agreement (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated March 17, 2017)

10.37 Fourth Amendment, dated as of March 15, 2019, to Amended and Restated Credit Agreement (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K dated March 15, 2019)

10.38 Fifth Amendment, dated as of October 30, 2019, to Amended and Restated Credit Agreement (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K dated October 30, 2019)

10.39 Sixth Amendment to Amended and Restated Credit Agreement dated as of January 19, 2021, by and among Teledyne Technologies Incorporated, the designated borrowers party thereto, the guarantors party thereto, the lenders party thereto and Bank of America, N.A., as administrative agent, swing line lender and L/C issuer (incorporated by reference to Exhibit 10.

2 to the Company’s Current Report on Form 8-K dated January 19, 2021 File No.

10.40 Note Purchase Agreement, dated September 23, 2014, by and among Teledyne Technologies Incorporated and the Purchasers identified therein (incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K filed on September 23, 2014 (File No.

10.41 Amendment to Note Purchase Agreement, dated as of April 18, 2017, between Teledyne Technologies Incorporated and the noteholders under that certain Note Purchase Agreement dated as of August 27, 2015 (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K dated April 18, 2017).

10.42 Note Purchase Agreement, dated August 27, 2015, by and among Teledyne Technologies Incorporated and the Purchasers identified therein (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated August 27, 2015) (File No.

10.43 Amendment to Note Purchase Agreement, dated as of April 18, 2017, between Teledyne Technologies Incorporated and the noteholders under that certain Note Purchase Agreement dated as of September 23, 2014 (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K dated April 18, 2017).

10.33 Amended and Restated Credit Agreement dated as of March 4, 2021, by and among Teledyne Technologies Incorporated, as a borrower and guarantor, the designated borrowers party thereto, the lenders party thereto and Bank of America, N.A., as administrative agent, swing line lender and L/C issuer (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K dated March 2, 2021) (File No.

10.34 First Amendment to Amended and Restated Credit Agreement, dated as of October 26, 2021, by and among Teledyne Technologies Incorporated, as a borrower and guarantor, the designated borrowers party thereto, the guarantor party thereto, the lenders party thereto and Bank of America, N.A., as administrative agent, swing line lender and L/C issuer (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q dated October 3, 2021) (File No.

10.35 Joinder Agreement of Teledyne FLIR, LLC, dated as of May 14, 2021, to Amended and Restated Credit Agreement dated as of March 4, 2021, by and among Teledyne Technologies Incorporated, as a borrower and guarantor, the designated borrowers party thereto, the lenders party thereto and Bank of America, N.A., as administrative agent, swing line lender and L/C issuer (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K dated May 14, 2021) (File No.

10.36 Amended and Restated Term Loan Credit Agreement, dated October 30, 2019, by an among Teledyne Technologies Incorporated and Teledyne Netherlands BV, as borrowers, the several banks and other financial institutions form time to time parties thereto as lenders, Bank of America, N.A., as administrative agent, and B of A Securities, Inc., as sole book manager and sole lead arranger (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K dated October 30, 2019).

10.37 First Amendment to Amended and Restated Term Loan Credit Agreement dated as of January 19, 2021, by and among Teledyne Technologies Incorporated and Teledyne Netherlands BV, as borrowers, the guarantors party thereto, the several banks and other financial institutions from time to time parties thereto as lenders and Bank of America, N.A., as administrative agent (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated January 19, 2021 File No.

10.38 Second Amendment to Amended and Restated Term Loan Credit Agreement dated as of March 4, 2021, by and among Teledyne Technologies Incorporated and Teledyne Netherlands BV, as borrowers, the guarantors party thereto, the lenders party thereto and Bank of America, N.A.

as administrative agent (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K dated March 2, 2021) (File No.

10.39 Third Amendment to Amended and Restated Term Loan Credit Agreement, dated as of October 26, 2021, by and among Teledyne Technologies Incorporated and Teledyne Netherlands BV, as borrowers, the guarantor party thereto and Bank of America, N.A.

as administrative agent (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q dated October 3, 2021) (File No.

10.40 Joinder Agreement of Teledyne FLIR, LLC, dated as of May 14, 2021, to Amended and Restated Term Loan Credit Agreement dated as of October 30, 2019, by and among Teledyne Technologies Incorporated and Teledyne Netherlands BV, as borrowers, the lenders party thereto and Bank of America, N.A., as administrative agent (incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K dated May 14, 2021) (File No.

10.41 Term Loan Credit Agreement dated as of March 4, 2021, by and among Teledyne Technologies Incorporated, as borrower, the lenders party thereto and Bank of America, N.A., as administrative agent (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated March 2, 2021) (File No.

10.42 Joinder Agreement of Teledyne FLIR, LLC, dated as of May 14, 2021, to Term Loan Credit Agreement dated as of March 4, 2021, by and among Teledyne Technologies Incorporated, as borrower, the lenders party thereto and Bank of America, N.A., as administrative agent (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K dated May 14, 2021) (File No.

10.43 Second Supplemental Indenture, dated as of May 14, 2021, between Teledyne Technologies Incorporated, Teledyne FLIR, LLC and U.S.

Bank National Association, as trustee (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated May 14, 2021) (File No.

10.44 Second Supplemental Indenture, dated as of May 14, 2021 between Teledyne FLIR, LLC and U.S.

Bank National Association, as trustee (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K dated May 14, 2021) (File No.

10.45 Note Purchase and Guaranty Agreement, dated as of April 18, 2017, by and among Teledyne Technologies Incorporated, Teledyne Netherlands B.V.

and the purchasers identified therein (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated April 18, 2017).

10.44 Guaranty Agreement to Note Purchase Agreement, dated as of April 18, 2017, made by the Subsidiary Guarantors (incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K dated April 18, 2017).

10.48 Bridge Facility Commitment Letter, dated January 4, 2021, by and among BofA Securities, Inc., Bank of America, N.A.

and Teledyne Technologies Incorporated (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated January 2, 2021 File No.

10.46 Form of Indemnification Agreement executed by each of the Company’s directors and named executive officers (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated April 22, 2009 (File No.

14.1 Teledyne Technologies Incorporated Global Code of Ethical Conduct - this code of ethics may be accessed via the Company’s website at www.teledyne.com/aboutus/ethics.pdf

14.2 Code of Ethics for Financial Professionals - this code of ethics may be accessed via the Company’s website at www.teledyne.com/aboutus/ethics.asp

14.3 Directors, Code of Business Conduct and Ethics - this code of ethics may be accessed via the Company’s website at www.teledyne.com/aboutus/ethics.asp

14.1 Teledyne Technologies Incorporated Global Code of Ethical Conduct - this code of ethics may be accessed via the Company’s website at www.teledyne.com/who-we-are/ethics

14.2 Code of Ethics for Financial Professionals - this code of ethics may be accessed via the Company’s website at www.teledyne.com/who-we-are/ethics

14.3 Directors, Code of Business Conduct and Ethics - this code of ethics may be accessed via the Company’s website at www.teledyne.com/who-we-are/ethics

21 Subsidiaries of Teledyne Technologies Incorporated*

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Teledyne Technologies Incorporated (Registrant)

/s/ Aldo Pichelli

Aldo Pichelli

President and Chief Executive Officer

/s/ Robert Mehrabian

Robert Mehrabian

Chairman, President and Chief Executive Officer

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

/s/ Aldo Pichelli President and Chief Executive Officer

Aldo Pichelli Chief Executive Officer (Principal Executive Officer)

/s/ Robert Mehrabian Chairman, President and Chief

Robert Mehrabian Executive Officer (Principal Executive Officer) and Director

February 25, 2022

5 unchanged sentences

(Principal Accounting Officer) February 25, 2022

/s/ Robert Mehrabian Executive Chairman and Director

Robert Mehrabian February 25, 2021

* Director February 25, 2022

* Director February 25, 2021

Charles Crocker

6 unchanged sentences

* Director February 25, 2022

/s/ Melanie S.

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures