What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-02-21 compared with 2024-02-23 · 199 added, 170 removed, 376 unchanged (50% of the section changed)

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We also supply engineered systems for defense, space, environmental and energy applications.

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 our technological capabilities, 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.

Information about results of operations and financial conditions for 2021 and 2022 can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections in the Company’s Annual Report on Form 10-K for the year ended January 1, 2023.

Information about results of operations and financial conditions for 2022 and 2023 can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

Strategy/Overview

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We intend to strengthen and expand our business with targeted acquisitions and through product development.

We continue to focus on balanced and disciplined capital deployment among capital expenditures, acquisitions and product development.

We continue to focus on balanced and disciplined capital deployment among capital expenditures, acquisitions, stock repurchases and product development.

We aggressively pursue operational excellence to continually improve our margins and earnings by emphasizing cost containment and evaluating cost reductions in all aspects of our business.

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Trends and Other Matters Affecting Our Business

We have experienced supply chain challenges, including long lead times, as well as cost inflation for parts and components, logistics and labor due to availability constraints and high demand.

These supply chain challenges have also delayed our ability to timely convert backlog to revenue.

Although perhaps to a lesser extent compared to recent years, we expect cost inflation impacts and supply chain constraints to continue into 2024.

Sales recorded and costs incurred by subsidiaries operating outside of the United States are translated into U.S.

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As a result, we are exposed to movements in the exchange rates of various currencies against the U.S.

See Item 7 A .

Market Risk , Note 1 and Note 14 for additional discussion around our derivative instruments and hedging activities.

To date, we have not been materially impacted by the conflict in Israel and its effect on neighboring regions.

We do not have material assets in Israel.

Our total sales from Israel in 2023 and 2022 was less than 1.0% of total net sales, respectively.

Risk Factors for additional discussion.

As part of a continuing effort to reduce costs and improve operating performance, we may take and have taken actions to consolidate and relocate certain facilities and reduce headcount across various businesses, reducing our exposure to weaker end markets.

We continue to seek cost reductions in our businesses.

For 2023, 2022 and 2021, we recorded $12.0 million of costs, $0.5 million of benefits and $26.4 million of costs, respectively, related to these actions, with the majority of the costs included within selling, general and administrative expense within the Digital Imaging segment.

At December 31, 2023, $2.9 million remains to be paid related to actions taken in 2023.

In 2022, we, recorded a net benefit of $0.5 million, which related to $3.5 million of costs related to headcount or facility consolidation costs, partially offset by $4.0 million of income related to the favorable resolution of a facility consolidation charge within the Digital Imaging segment.

In February 2025, the U.S.

Presidential administration proposed certain orders directing the United States to potentially impose new tariffs on foreign imports impacting multiple countries, commodities and industries.

We are currently evaluating the potential impact of the proposed tariffs to our business and financial condition.

See our risks factor disclosure in Item 1A .

Risk Factors for further information.

Recent Acquisitions

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The financial results of these acquisitions have been included since the respective date of each acquisition.

Our 2023 acquisitions were within the Digital Imaging and Instrumentation segments, and both acquisitions in 2022 were part of the Digital Imaging segment.

See Note 3 for additional information about our recent business acquisitions.

Our 2024 and 2023 acquisitions were within the Digital Imaging and Instrumentation segments.

See Note 3 for additional information about our 2024 and 2023 business acquisitions.

Subsequent to the end of fiscal year 2024, we have completed two acquisitions.

See Note 18 for additional information.

Selected Consolidated Operating Results

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Fiscal years 2024 and 2023 each contained 52 weeks.

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

We now disclose research and development expense on a separate income statement line.

Research and development expense was previously included in selling, general and administrative expenses.

In addition, we historically included bid and proposal expense as part of its annual research and development expense disclosures.

We have not reclassified bid and proposal expense, which remains withing selling, general and administrative expense.

We also now disclose impairment of acquired intangible assets on a separate income statement line item.

Impairment of acquired intangible assets was previously included within selling, general and administrative expense.

2024 2023 $ Change % Change

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Selling, general and administrative 902.6 852.0 50.6 5.9 %

Research and development

292.6 356.3 (63.7) (17.9) %

Acquired intangible asset amortization

198.0 196.7 1.3 0.7 %

Impairment of acquired intangible assets

52.5 — 52.5 *

Total costs and expenses 4,680.9 4,601.1 79.8 1.7 %

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Diluted earnings per common share $ 17.21 $ 18.49 $ (1.28) (6.9) %

Total year 2023 net sales included $99.8 million in incremental net sales from current and prior year acquisitions.

Net income for 2023 and 2022 also included net discrete tax benefits of $137.5 million and $86.7 million, respectively.

* not meaningful

Consolidated Results of Operations

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Net income (loss) attributable to Teledyne $ 819.2 $ 885.7 $ (66.5) (7.5) %

* not meaningful

Net sales increased across all business segments.

Net sales increased across three of our four business segments.

Total year 2024 net sales included $49.4 million in incremental net sales from current and prior year acquisitions.

Refer to the “Business Segment Operating Results” discussion later in this section for additional discussion of changes in net sales.

Refer to “Business Segment Operating Results” later in this section for additional discussion of changes in net sales.

Sales to international customers represented approximately 48% of net sales in 2024 and 49% of net sales in 2023.

Approximately 25% and 25% of our total net sales 2023 and 2022, respectively, were derived from contracts with agencies of, or prime contractors to, the U.S.

Approximately 24% and 25% of our total net sales for 2024 and 2023, respectively, were derived from contracts with agencies of, or prime contractors to, the U.S.

Cost of Sales

Cost of sales increased in 2023, primarily driven by the impact of higher net sales.

Cost of sales increased in 2024, primarily driven by the impact of higher net sales as well as higher engineering costs.

Cost of sales as a percentage of net sales for 2024 was 57.1%, compared with 56.7% for 2023.

Refer to the “Business Segment Operating Results” discussion later in this section for additional discussion of changes in cost of sales.

Selling, General and Administrative Expenses

Selling, general and administrative expenses, including research and development expense, were higher in 2023, primarily driven by higher net sales in 2023.

Selling, general and administrative expenses as a percentage of net sales was 21.4% for 2023, compared with 21.2% for 2022.

Corporate expense in 2023 was $65.6 million, compared with $65.9 million in 2022.

Refer to “Business Segment Operating Results” later in this section for additional discussion of changes in cost of sales.

Selling, General and Administrative Expense

Selling, general and administrative expense increased in 2024, primarily driven by higher sales across most segments.

Selling, general and administrative expense as a percentage of net sales was 15.9% for 2024, compared with 15.1% for 2023.

Corporate expense in 2024 was $77.8 million, compared with $65.6 million in 2023, with the increase primarily related to higher compensation expense, including higher stock-based compensation as well as higher consulting and legal costs.

Research and Development Expense

Research and development expense decreased in 2024, primarily driven by a decrease within the Digital Imaging segment.

Acquired Intangible Asset Amortization

Acquired intangible asset amortization for 2023 was $196.7 million, compared with $201.7 million for 2022, primarily related to decreased expense within the Digital Imaging and Instrumentation segments.

Acquired intangible asset amortization for 2024 was $198.0 million, compared with $196.7 million for 2023.

Impairment of Acquired Intangible Assets

We recorded $52.5 million of pretax, non-cash trademark impairments in 2024 in the Digital Imaging and Instrumentation segments.

No comparative amounts were recorded in 2023.

Operating Income

Operating income increased in 2023 due to higher operating income in each segment except the Digital Imaging segment.

Non-operating Income and Expenses

Operating income decreased in 2024 primarily driven by $52.5 million of pretax, non-cash trademark impairments recorded in 2024.

No comparative amounts were recorded in 2023.

Non-operating Income and Expense

Interest expense, including credit facility fees and other bank charges and net of interest income, was $57.9 million in 2024, compared with $77.3 million in 2023.

The decrease was due primarily to reduced outstanding borrowings with lower weighted average interest rates compared to 2023.

In 2023, the Company repurchased and retired $10.0 million of its Fixed

Rate Senior Notes due April 2031, recording a $1.6 million non-cash gain on the extinguishment of this debt.

In 2022, the Company repurchased and retired $75.0 million of its Fixed Rate Senior Notes due August 2030 and April 2031, recording a $10.6 million non-cash gain on the extinguishment of this debt.

The other expense, net in other income and expense, net, in 2023 was driven primarily by foreign exchange losses, net as well as higher expense from deferred compensation plan activity, compared to the 2022 other income, net amount, which included foreign exchange gains, net as well as higher income from deferred compensation plan activity.

In 2023, we repurchased and retired $10 million of its Fixed Rate Senior Notes due April 2031, recording a $1.6 million non-cash gain on the extinguishment of this debt.

The other expense, net in other income and expense, net, in 2024 was driven primarily by lower foreign exchange losses compared to the 2023 other expense, net amount.

The income tax provision considers income, permanent items, tax credits, and various statutory tax rates.

Both the current and prior year discrete impact includes the resolution of uncertain tax positions which are primarily acquisition related and tax benefits on stock-based compensation.

The effective tax rate decreased in 2024 compared to 2023 primarily due to lower reversals of unrecognized tax benefits in 2024 as well as lower research and development tax credits in 2024.

See Note 9 for further information regarding our income taxes.

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Provision (benefit) for income taxes $ 117.2 $ 72.3

Discrete event expense (benefit) $ 137.5 $ 86.7

Provision (benefit) for income taxes without discrete event expense (benefit) $ 209.8 $ 205.9

Income (loss) before income taxes $ 937.9 $ 958.9

Effective tax rate 12.5% 7.5%

Effective tax rate without discrete events 21.9% 22.7%

Business Segment Operating Results

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Digital Imaging

(Dollars in millions) 2023 2022 $ Change % Change

(dollars in millions)

2024 2023 $ Change % Change

Net sales $ 3,070.8 $ 3,144.1 $ (73.3) (2.3)%

Cost of sales $ 1,708.0 $ 1,711.4 $ (3.4) (0.2)%

Selling, general and administrative expenses $ 733.6 $ 702.3 $ 31.3 4.5%

Selling, general and administrative expense

$ 510.7 $ 489.6 $ 21.1 4.3%

Research and development expense

$ 177.3 $ 244.0 $ (66.7) (27.3)%

Acquired intangible asset amortization $ 183.3 $ 181.7 $ 1.6 0.9%

Impairment of acquired intangible assets

$ 49.5 $ — $ 49.5 *

Operating income $ 442.0 $ 517.4 $ (75.4) (14.6)%

Cost of sales % of net sales 55.6 % 54.4 % 1.2%

Selling, general and administrative expenses % of net sales 23.3 % 22.6 % 0.7%

Selling, general and administrative expense % of net sales

16.6 % 15.6 % 1.0%

Research and development expense % of net sales

5.8 % 7.7 % (1.9)%

Acquired intangible asset amortization % of net sales 6.0 % 5.8 % 0.2%

Impairment of acquired intangible assets % of net sales

Operating income % of net sales 14.4 % 16.5 % (2.1)%

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Government sales % of net sales 18.1 % 18.2 % (0.1)%

* not meaningful

Our 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 MEMS and high-performance, high-reliability semiconductors including analog-to-digital and digital-to-analog converters.

It also includes our customer- and Company-sponsored applied research center which benefits government programs and commercial businesses.

2024 compared with 2023

Our Digital Imaging segment net sales for 2023 increased 1.1%, compared with 2022.

Operating income for 2023 decreased 0.4%, compared with 2022.

Total year 2023 net sales included $97.3 million in incremental net sales from current and prior year acquisitions as well as organic sales growth from X-ray products, infrared imaging detectors and surveillance systems, offset by lower sales of unmanned air and ground systems for defense applications, MEMS, and commercial maritime and commercial infrared products.

The decrease in operating income in 2023 reflected the impact of higher employee severance and facility consolidation costs, which included $9.4 million of expense in 2023 compared with $1.9 million of income in 2022.

The 2022 severance and facility consolidation costs amount included $4.0 million of income related to the favorable resolution of a facility consolidation charge in 2022.

Cost of sales for 2023 increased compared with 2022, and reflected the impact of higher net sales, partially offset by product mix, including lower sales of unmanned ground systems offset by sales of higher margin products.

The cost of sales percentage in 2023 decreased compared with 2022 and reflected the impact of product mix.

Selling, general and administrative expenses for 2023 increased 4.5% compared with 2022 and reflected the impact of higher net sales and higher severance and facility consolidation expense.

The selling, general and administrative expense percentage increased in 2023 compared with 2022, driven by higher employee compensation costs as well as higher employee severance and facility consolidation costs.

Our Digital Imaging segment net sales for 2024 decreased 2.3%, compared with 2023.

Operating income for 2024, which included a $49.5 million impairment of acquired intangible assets, decreased 14.6%, compared with 2023.

Total year 2024 net sales included $27.1 million in incremental net sales from current and prior year acquisitions.

Sales of industrial automation vision systems decreased $134.7 million, sales of X-ray products decreased $31.9 million, sales of unmanned ground systems decreased $17.8 million, sales of unmanned air systems increased $56.7 million, sales of commercial and defense infrared detectors and subsystems increased $7.5 million and sales of surveillance systems increased $27.4 million.

Cost of sales for 2024 decreased compared with 2023 and reflected the impact of lower net sales partially offset by unfavorable product mix and higher engineering costs.

The cost of sales percentage in 2024 increased compared with 2023 and reflected the impact of product mix.

Selling, general and administrative expense and the selling, general and administrative expense percentage for 2024 increased compared with 2023 and included incremental selling, general and administrative expense from current and prior year acquisitions, higher bad debt expense in 2024 compared to a bad debt recovery in 2023 on previously reserved amounts and higher third party sales commissions.

Research and development expense and the research and development expense percentage for 2024 decreased 27.3% compared with 2023, with the decrease driven primarily by the completion of certain unmanned air systems product development activities in 2023 that moved to commercialization in early 2024, FLIR integration-related cost-reduction efforts implemented in the second half of 2023 and a larger percentage of labor focused on customer-funded research and development projects in 2024 as compared to 2023.

The decrease in operating income in 2024 reflected the impact of lower net sales, unfavorable product mix, higher engineering costs and $49.5 million impairment of acquired intangible assets, partially offset by lower research and development expense.

Instrumentation

(Dollars in millions) 2023 2022 $ Change % Change

(dollars in millions)

2024 2023 $ Change % Change

Net sales $ 1,382.6 $ 1,326.2 $ 56.4 4.3%

Cost of sales $ 706.4 $ 692.6 $ 13.8 2.0%

Selling, general and administrative expenses $ 281.1 $ 272.8 $ 8.3 3.0%

Acquired intangible asset amortization $ 14.2 $ 17.2 $ (3.0) (17.4)%

Selling, general and administrative expense

$ 196.4 $ 188.2 $ 8.2 4.4%

Research and development expense

$ 92.6 $ 92.9 $ (0.3) (0.3)%

Acquired intangible asset amortization expense

$ 13.9 $ 14.2 $ (0.3) (2.1)%

Impairment of acquired intangible assets

$ 3.0 $ — $ 3.0 *

Operating income $ 370.3 $ 338.3 $ 32.0 9.5%

Cost of sales % of net sales 51.1 % 52.2 % (1.1)%

Selling, general and administrative expenses % of net sales 21.2 % 21.8 % (0.6)%

Selling, general and administrative expense % of net sales

14.2 % 14.2 % —%

Research and development expense % of net sales

6.7 % 7.0 % (0.3)%

Acquired intangible asset amortization % of net sales

1.0 % 1.1 % (0.1)%

Impairment of acquired intangible assets % of net sales

Operating income % of net sales 26.8 % 25.5 % 1.3%

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Government sales % of net sales 8.9 % 7.2 % 1.7%

* not meaningful

Our Instrumentation segment provides monitoring and control instruments for marine, environmental, industrial and other applications, as well as electronic test and measurement applications.

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Operating income for 2024 increased 9.5%, compared with 2023.

In 2023, net sales of marine instrumentation increased $69.0 million, and net sales of test and measurement instrumentation increased $10.1 million compared with 2022.

Net sales of environmental instrumentation decreased $6.9 million compared with 2022.

The increase in operating income in 2023 reflected the impact of higher net sales, improved product margins and lower acquired intangible asset amortization.

Total year 2024 net sales included $22.3 million in incremental net sales from current and prior year acquisitions.

In 2024 compared with 2023, net sales of marine instrumentation increased $101.8 million which included $13.3 million in incremental net sales from current and prior year acquisitions.

Net sales of test and measurement instrumentation decreased $34.7 million, which included $9.0 million in incremental net sales from current and prior year acquisitions.

Net sales of environmental instrumentation decreased $10.7 million.

Cost of sales increased in 2024, compared with 2023, and primarily reflected the impact of higher net sales.

The cost of sales percentage decreased in 2023 compared with 2022 primarily driven by product mix and improved product margins.

Selling, general and administrative expenses, including research and development expense increased in 2023 compared with 2022, primarily driven by higher net sales.

Selling, general and administrative expenses for 2023, as a percentage of sales, decreased from 2022, primarily due to the impact of higher net sales while maintaining focus on cost control.

Acquisition intangible asset amortization expense decreased primarily to lower intangible amortization for the test and measurement instrumentation product line, as certain historical acquisition intangibles became fully amortized in late 2022.

The cost of sales percentage decreased in 2024 compared with 2023 primarily driven by favorable product mix and improved product margins.

Selling, general and administrative expense increased in 2024 compared with 2023, primarily driven by higher net sales.

Selling, general and administrative expenses for 2024, as a percentage of sales, decreased slightly from 2023.

Research and development expense as well as research and development expense as a percentage of revenue decreased slightly compared with 2023.

Acquisition intangible asset amortization expense decreased slightly, and we recorded a $3.0 million impairment of acquired intangible assets in 2024.

The increase in operating income in 2024 reflected the impact of higher net sales, favorable product mix and improved product margins.

Aerospace and Defense Electronics

(Dollars in millions) 2023 2022 $ Change % Change

(dollars in millions)

2024 2023 $ Change % Change

Net sales $ 776.8 $ 726.5 $ 50.3 6.9%

Cost of sales $ 441.3 $ 424.6 $ 16.7 3.9%

Selling, general and administrative expenses $ 101.5 $ 89.7 $ 11.8 13.2%

Selling, general and administrative expense

$ 91.2 $ 83.7 $ 7.5 9.0%

Research and development expense

$ 21.8 $ 17.8 $ 4.0 22.5%

Acquired intangible asset amortization $ 0.8 $ 0.8 $ — —%

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Selling, general and administrative expenses % of net sales 11.8 % 11.5 % 0.3%

Research and development expense % of net sales

2.8 % 2.5 % 0.3%

Acquired intangible asset amortization % of net sales 0.1 % 0.1 % —%

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Operating income for 2024 increased 11.1%, compared with 2023.

The 2023 net sales increase compared with 2022 reflected $25.2 million of higher sales for aerospace electronics and

$18.9 million of higher sales for defense electronics.

The increase in operating income for 2023 primarily reflected the impact of higher net sales and favorable product mix, partially offset by higher research and development expense.

The 2024 net sales increase compared with 2023 reflected $34.7 million of higher sales for defense electronics and $15.6 million of higher sales for aerospace electronics.

Cost of sales for 2024 increased compared with 2023 and reflected the impact of higher net sales partially offset by favorable product mix.

Cost of sales as a percentage of net sales for 2023 decreased compared with 2022 and primarily reflected product mix, including the increased sales of aerospace electronics which carry a higher margin than most defense electronics products.

Selling, general and administrative expenses, including research and development expense, increased in 2023 compared with 2022 and included $3.2 million of higher research and development expense in 2023.

The higher research and development expense primarily reflected higher spending for aerospace electronics.

The selling, general and administrative expense percentage in 2023 increased compared with 2022 and reflected the higher research and development expense.

Cost of sales as a percentage of net sales for 2024 decreased compared with 2023 and primarily reflected product mix.

Selling, general and administrative expense increased in 2024 compared with 2023, and primarily related to higher net sales.

Research and development expense increased in 2024 compared with 2023 primarily due to higher aerospace electronics spending.

The selling, general and administrative expense and research and development expense percentages in 2024 increased slightly compared with 2023.

The increase in operating income for 2024 primarily reflected the impact of higher net sales and favorable product mix.

Engineered Systems

(Dollars in millions) 2023 2022 $ Change % Change

(dollars in millions)

2024 2023 $ Change % Change

Net sales $ 439.8 $ 438.7 $ 1.1 0.3%

Cost of sales $ 379.5 $ 367.5 $ 12.0 3.3%

Selling, general and administrative expenses $ 26.5 $ 25.9 $ 0.6 2.3%

Selling, general and administrative expense

$ 26.5 $ 24.9 $ 1.6 6.4%

Research and development expense

$ 0.9 $ 1.6 $ (0.7) (43.8)%

Operating income $ 32.9 $ 44.7 $ (11.8) (26.4)%

Cost of sales % of net sales 86.3 % 83.8 % 2.5 %

Selling, general and administrative expenses % of net sales 6.0 % 6.3 % (0.3) %

Selling, general and administrative expense % of net sales

6.0 % 5.7 % 0.3 %

Research and development expense % of net sales

0.2 % 0.3 % (0.1) %

Operating income % of net sales 7.5 % 10.2 % (2.7) %

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Our Engineered Systems segment net sales for 2024 increased 0.3%, compared with 2023.

Operating income for 2023 increased 14.0%, compared with 2022.

The 2023 net sales increase primarily reflected $17.9 million of higher sales for engineered products and $9.5 million of higher sales for energy systems.

The higher net sales for engineered products primarily reflected increased sales from space and electronic manufacturing services programs products, partially offset by decreased sales in missile defense, maritime, and other manufacturing programs.

Operating income in 2023 primarily reflected the impact of favorable product mix, primarily driven by higher electronic manufacturing services products.

Cost of sales for 2023 increased compared with 2022, and primarily reflected the impact of higher net sales.

Cost of sales as a percentage of net sales for 2023 decreased compared with 2022.

Selling, general and administrative expenses in 2023, including research and development and bid and proposal expense, increased slightly compared with 2022.

The selling, general and administrative expense as a percentage of net sales decreased slightly compared with 2022.

Operating income for 2024 decreased 26.4%, compared with 2023.

The 2024 net sales increase primarily reflected $2.4 million of higher sales for engineered products, partially offset by $1.3 million of lower sales for energy systems.

Operating income in 2024 primarily reflected the impact of unfavorable contract estimate changes related to electronic manufacturing services products.

Cost of sales for 2024 increased compared with 2023, and primarily reflected the impact of unfavorable contract estimate changes related to electronic manufacturing services products.

Cost of sales as a percentage of net sales for 2024 increased compared with 2023.

Selling, general and administrative expense in 2024 increased slightly compared with 2023.

The selling, general and administrative expense as a percentage of net sales increased slightly compared with 2023.

Operating income in 2024 primarily reflected the impact of unfavorable contract estimate changes related to electronic manufacturing services products.

Financial Condition, Liquidity and Capital Resources

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Our principal cash and capital requirements are to fund working capital needs, capital expenditures, income tax payments and debt service requirements, as well as acquisitions.

We may deploy cash for the stock repurchase program.

It is anticipated that operating cash flow, together with available borrowings under the credit facility and the debt financing arrangements described below, will be sufficient to meet these requirements.

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Long-term Debt

Long-term debt, including unamortized debt issuance costs was $3,244.9 million at December 31, 2023 compared to $3,920.6 million at January 1, 2023.

During 2023, we repaid $125.0 million of amount on its credit facility, the $300.0 million Fixed Rate Senior Notes due April 2023, and the remaining $245.0 million on our term loan due May 2026.

repurchased and retired $10.0 million of our Fixed Rate Senior Notes due April 2031, recording a $1.6 million non-cash gain on the extinguishment of this debt.

At December 31, 2023, we had $41.9 million in outstanding letters of credit.

The credit agreement and term loans require us to comply with various financial and operating covenants and at December 31, 2023, the Company was in compliance with these covenants and had a significant amount of margin between required financial covenant ratios and our actual ratios.

Long-term debt, including unamortized debt issuance costs was $2,649.0 million at December 29, 2024 compared to $3,244.9 million at December 31, 2023.

During 2024, we repaid $450.0 million Fixed Rate Senior Notes due April 2024 and $150.0 million for a term loan due October 2024.

At December 29, 2024, we had $52.9 million in outstanding letters of credit, including $29.3 million against our credit facility.

Our credit facility requires us to comply with various financial and operating covenants and at December 29, 2024, we were in compliance with these covenants and had a significant amount of margin between required financial covenant ratios and our actual ratios.

Currently, we do not believe our ability to undertake additional debt financing, if needed, is reasonably likely to be materially impacted by debt restrictions under our credit agreements.

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Total $ 509.6 $ 550.6 $ 86.3 $ 765.8 $ 56.3 $ 1,592.4 $ 3,561.0

(a) Interest expense related to the credit facility, including facility fees, is assumed to accrue at the rates in effect at year-end 2023 and is assumed to be paid at the end of each quarter with the final payment in March 2026 when the credit facility expires.

(b) Includes imputed interest and the short-term portion of lease obligations.

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Unrecognized tax benefits of $45.2 million and accrued interest and penalties on these tax matters of $8.5 million are not included in the table above.

The remaining unrecognized tax benefits and accrued interest and penalties are not included in the table above because $28.9 million is offset by deferred tax assets, and the remainder cannot be reasonably estimated to be settled in cash due to a lack of prior settlement history and offsetting credits.

These unrecognized tax benefits, accrued interest and penalties are not included in the table above because $25.7 million is offset by deferred tax assets, and the remainder cannot be reasonably estimated to be settled in cash due to a lack of prior settlement history and offsetting credits.

At December 29, 2024, we were not required, and accordingly are not planning, to make any cash contributions to the domestic qualified pension plans for 2025.

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Net cash provided by operating activities was $1,191.9 million and $836.1 million in 2024 and 2023, respectively.

The higher cash provided by operating activities in 2023, compared with 2022 primarily resulted from a payment of $296.4 million to the Swedish Tax Authority in the first quarter of 2022, related to a disputed pre-acquisition 2018 tax reassessment issued to a FLIR subsidiary in Sweden as well as lower inventory purchases and stronger accounts receivable collections in 2023 compared with 2022.

These changes were partially offset by higher accounts payable and income tax payments in 2023 as compared with 2022.

Free cash flow (cash provided by operating activities less capital expenditures) and adjusted free cash flow (both non-GAAP measures) were as follows (in millions):

The higher cash provided by operating activities in 2024, compared with 2023 primarily resulted from lower income tax payments, a higher amount of customer advances received in 2024 as well as the of accounts payable payments.

Free cash flow (cash provided by operating activities less capital expenditures) was as follows (in millions):

Free Cash Flow (a)

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Free cash flow $ 1,108.2 $ 721.2

Payment for acquisition-related tax matter — 296.4

Adjusted free cash flow $ 721.2 $ 690.6

(a) We define free cash flow as cash provided by operating activities (a measure prescribed by GAAP) less capital expenditures for property, plant and equipment.

Adjusted free cash flow eliminates the impact of cash paid for transaction related expenses for the FLIR acquisition on a net of tax basis as well as the payment of a pre-acquisition 2018 tax reassessment issued to a FLIR subsidiary in Sweden.

(a) We define free cash flow as cash provided by operating activities (a measure prescribed by U.S.

generally accepted accounting principles “GAAP”) less capital expenditures for property, plant and equipment.

We believe that this supplemental non-GAAP information is useful to assist management and the investment community in analyzing the company’s ability to generate cash flow.

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Investing activities used cash for acquisitions and other investments of $123.7 million and $77.7 million in 2024 and 2023, respectively (see “Recent Acquisitions”).

We funded the acquisitions from borrowings under our credit facilities and cash on hand.

We funded the acquisitions from cash on hand.

Cash flows relating to investing activities for capital expenditures.

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$ 83.7 $ 114.9

During 2024, we plan to invest approximately $105 million in capital expenditures, principally to upgrade facilities and manufacturing equipment.

During 2025, we plan to invest approximately $130 million in capital expenditures, principally to upgrade facilities and manufacturing equipment, and this amount includes estimated post-acquisition capital expenditures relates to 2025 acquisitions described in Note 18 .

Financing Activities

Financing activities reflected net payments from debt of $678.9 million in 2023 and $174.8 million in 2022.

Fiscal years 2023 and 2022 reflect proceeds from the exercise of stock options of $45.4 million and $23.6 million, respectively.

During 2023, we repaid $125.0 million of amounts outstanding on its credit facility, the $300.0 million Fixed Rate Senior Notes due April 2023, and the remaining $245.0 million on its term loan due May 2026.

We also repurchased and retired $10.0 million of its Fixed Rate Senior Notes due April 2031, recording a $1.6 million non-cash gain on the extinguishment of this debt.

During 2022, we repaid $185.0 million of debt.

We made $110.0 million of floating rate debt payments on its term loan due May 2026.

We also repurchased and retired $75.0 million of its Fixed Rate Senior Notes due August 2030 and April 2031, recording a $10.6 million non-cash gain on the extinguishment of this debt.

Net cash used in financing activities reflected net payments from debt of $600.6 million, share repurchases of $354.0 million and net proceeds from the exercise of stock options of $37.9 million in 2024.

Net cash used in financing activities reflected net payments from debt of $678.9 million and proceeds from the exercise of stock options of $45.4 million in 2023.

During 2024, we repaid $450.0 million Fixed Rate Senior Notes due April 2024 and $150.0 million for a term loan due October 2024.

During 2023, we repaid $125.0 million of amounts outstanding on our credit facility, the $300.0 million Fixed Rate Senior Notes due April 2023, and the remaining $245.0 million on our term loan due May 2026.

We also repurchased and retired $10.0 million of our Fixed Rate Senior Notes due April 2031, recording a $1.6 million non-cash gain on the extinguishment of this debt.

Other Matters

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Significant judgments and estimates are required in determining the consolidated income tax expense.

The Company continually evaluates its global cash needs and has historically asserted that most of its unremitted foreign earnings are permanently reinvested and did not generally record deferred taxes on such amounts.

During 2022, the Company determined that it could no longer make the assertion foreign earnings are permanently reinvested, as cash from most foreign subsidiaries may be remitted without incurring additional U.S.

We continually evaluate our global cash needs and have historically asserted that most of our unremitted foreign earnings are permanently reinvested, and we did not generally record deferred taxes on such amounts.

During 2022, we determined that we could no longer make the assertion foreign earnings are permanently reinvested, as cash from most foreign subsidiaries may be remitted without incurring additional U.S.

federal income tax.

As a result, the Company changed its indefinite reinvestment assertion of unremitted earnings and certain other aspects of outside basis differences on a majority of its foreign subsidiaries.

The Company continues to make an indefinite reinvestment assertion on the historic excess of the financial reporting bases over tax bases in its material foreign subsidiaries in Canada.

The unremitted earnings of the Company’s Canadian foreign subsidiaries held for indefinite reinvestment are used to finance Canadian operations and investments.

The Company estimate that future cash generation from non-Canadian operations will be sufficient to meet future domestic cash requirements.

As a result, we changed our indefinite reinvestment assertion of unremitted earnings and certain other aspects of outside basis differences on a majority of our foreign subsidiaries.

We continue to make an indefinite reinvestment assertion on the historic excess of the financial reporting bases over tax bases in our material foreign subsidiaries in Canada.

The unremitted earnings of our Canadian foreign subsidiaries held for indefinite reinvestment are used to finance Canadian operations and investments.

We estimate that future cash generation from non-Canadian operations will be sufficient to meet future domestic cash requirements.

Determination of the unrecognized deferred tax liability for unremitted Canadian earnings is not practicable due to uncertainty and overall complexity of the potential calculations.

The Company continues to evaluate its cash needs and may update its assertion in future periods.

We continue to evaluate its cash needs and may update our assertion in future periods.

Deferred income taxes arise from 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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In projecting future taxable income, we begin with historical results adjusted for the results of discontinued operations and incorporate assumptions about the amount of future state, federal and foreign pretax operating income adjusted for items that do not have tax consequences.

The assumptions about future taxable income require significant

judgment and are consistent with the plans and estimates we are using to manage the underlying businesses.

The assumptions about future taxable income require significant judgment and are consistent with the plans and estimates we are using to manage the underlying businesses.

In evaluating the objective evidence that historical results provide, we consider three years of cumulative operating income.

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

We have substantially concluded income tax matters in the U.S.

through 2016, in Canada through 2012, in Sweden through 2018, in Norway through 2018, in Belgium through 2019, in France through 2019 and in the United Kingdom through 2015.

We have substantially concluded income tax matters in the United States through 2016, in Canada through 2012, in Sweden through 2018, in Norway through 2018, in Belgium through 2019, in France through 2019 and in the United Kingdom through 2015.

Costs and Pricing

Inflation has been rising in the markets in which we operate.

Current inventory costs, the increasing costs of labor, materials, equipment and other costs are considered in establishing sales pricing policies.

The Company emphasizes cost containment and cost reductions in all aspects of its business.

Inflation exists in certain markets in which we operate.

Current inventory costs, the costs of labor, materials, equipment and other costs are considered in establishing sales pricing policies.

In addition, we emphasize cost containment and cost reductions in all aspects of our business.

Market Risk Disclosures

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These contracts are designated and qualify as cash flow hedges.

• We have converted a U.S.

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

This cross currency swap is designated as a cash flow hedge.

• We utilize foreign currency forward contracts to mitigate foreign exchange rate risk associated with foreign currency denominated monetary assets and liabilities, including intercompany receivables and payables.

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A hypothetical 10% price change of the U.S.

dollar from its value at December 31, 2023, would result in a decrease or increase in the fair value of our foreign currency forward contracts designated as cash flow hedges to buy Canadian dollars and to sell U.S.

dollars by approximately $16.4 million.

A hypothetical 10% price change in the U.S.

dollar from its value at December 31, 2023 would result in a decrease or increase in the fair value of our foreign currency forward contracts designated as cash flow hedges to buy British Pounds and to sell U.S.

dollar from its value on December 29, 2024, would result in a decrease or increase in the fair value of our foreign currency forward contracts designated as cash flow hedges to buy Canadian dollars and sell U.S.

dollars by approximately $8.7 million.

A hypothetical 10% price change in the U.S.

dollar from its value at December 31, 2023 would result in a decrease or increase in the fair value of our Euro/U.S.

Dollar cross currency swap designated as cash flow hedges by approximately $17.3 million.

Environmental

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We are currently involved in the investigation and remediation of a number of sites.

Reserves for environmental investigation and remediation totaled $5.4 million and $5.8 million as of December 31, 2023 and January 1, 2023, respectively.

As investigation and remediation of these sites proceed and new information is received, the Company will adjust reserves to reflect new

Reserves for environmental investigation and remediation totaled $6.5 million and $5.4 million as of December 29, 2024 and December 31, 2023, respectively.

As investigation and remediation of these sites proceed and new information is received, we will adjust reserves to reflect new information.

Based on current information, we do not believe that future environmental costs, in excess of those already accrued, will materially and adversely affect our financial condition or liquidity.

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Sales to the U.S.

Department of Defense represented approximately 19% and 20% of total net sales for 2023 and 2022, respectively.

Performance under government contracts has certain inherent risks that could have a material adverse effect on the Company’s business, results of operations and financial condition.

Department of Defense represented approximately 19% of total net sales for both 2024 and 2023, respectively.

Performance under government contracts has certain inherent risks that could have a material adverse effect on our business, results of operations and financial condition.

Government contracts are conditioned upon the continuing availability of Congressional appropriations, which usually are made available on a fiscal year basis even though contract performance may take more than one year.

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See Critical Accounting Policies and Estimates for further information on key estimates.

Some of the Company’s products are subject to standard warranties and the Company provides for the estimated cost of product warranties.

Some of our products are subject to standard warranties, and we provide for the estimated cost of product warranties.

We regularly assess the adequacy of our pre-existing warranty liabilities and adjust amounts 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.

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

The transaction price in these arrangements may include estimated amounts of variable consideration, including award fees, incentive fees, contract amounts not yet funded, or other provisions that can either increase or decrease the transaction price.

either increase or decrease the transaction price.

We estimate variable consideration at the amount to which we expect to be entitled, and we include estimated amounts in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the estimation uncertainty is resolved.

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Contract cost and revenue estimates for significant contracts are generally reviewed and reassessed at least quarterly.

We do not believe that any discrete event or adjustment to an individual contract within the aggregate changes in contract estimates for 2023 and 2022 was material to the consolidated statement of income for such annual periods.

We do not believe that any discrete event or adjustment to an individual contract within the aggregate changes in contract estimates for 2024 and 2023 was material to the consolidated statement of income (loss) for such annual periods.

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.

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Business Combinations, Goodwill and Acquired Intangible Assets

The results for all acquisitions are included in the Company’s consolidated financial statements from the date of each respective acquisition.

The results for all acquisitions are included in our consolidated financial statements from the date of each respective acquisition.

Business acquisitions are accounted for under the acquisition method by assigning the purchase price to tangible and intangible assets acquired and liabilities assumed.

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We review goodwill and acquired indefinite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable.

The Company also performs an annual impairment test in the fourth quarter of each year.

We also perform an annual impairment test in the fourth quarter of each year.

We test goodwill and acquired indefinite-lived intangible assets for impairment between annual tests if events occur or circumstances change that would more likely than not reduce our enterprise fair value below its book value.

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We perform a quantitative test for each reporting unit at least once every three years.

For goodwill impairment testing using the quantitative approach, we estimate the fair value of the selected reporting units primarily through the use of a discounted cash flow model based on our best estimate of amounts and timing of future revenues and cash flows and our most recent business and strategic plans, and compares the estimated fair value to the carrying value of the reporting unit, including goodwill.

The discounted cash flow model requires judgmental assumptions about projected revenue growth, future operating margins, discount rates and terminal values over a multi-year period.

For goodwill impairment testing using the quantitative approach, we estimate the fair value of the selected reporting units primarily through the use of a discounted cash flow model.

We compare the estimated fair value of the reporting unit to the carrying value of the reporting unit, including goodwill.

The discounted cash flow model requires judgmental assumptions about projected revenue growth, future operating margins, discount rates and terminal values over a multi-year period, and the discounted cash flow model is based on our best estimate of amounts and timing of future revenues and cash flows using our most recent business and strategic plans.

There are inherent uncertainties related to these assumptions and management’s judgment in applying them to the analysis of goodwill impairment.

While we believe we have made reasonable estimates and assumptions to calculate the fair value of its reporting units, it is possible a material change could occur.

If actual results are not consistent with management’s estimates and assumptions, goodwill may be overstated, and a charge would need to be taken against net earnings.

When using a quantitative approach, changes in our projections used in the discounted cash flow model could affect the estimated fair value of certain of the Company’s reporting units and could result in a goodwill impairment charge in a future period.

In order to evaluate the sensitivity of the fair value calculations used in the quantitative goodwill impairment test, the Company will apply a hypothetical 10% decrease to the fair values of each reporting unit subject to a quantitative impairment test and compare those values to the reporting unit carrying values.

If actual results are below management’s estimates and assumptions, goodwill may be overstated, and an impairment loss might need to be recorded.

When using a quantitative approach to test goodwill, changes in our projections used in the discounted cash flow model could affect the estimated fair value of certain of our reporting units and could result in a goodwill impairment charge in a future period.

In order to evaluate the sensitivity of the fair value calculations used in the quantitative goodwill impairment test, we will apply a hypothetical 10% decrease to the fair values of each reporting unit subject to a quantitative impairment test and compare those values to the reporting unit carrying values.

Due to the many variables inherent in the estimation of a reporting unit’s fair value and the relative size of our recorded goodwill, differences in assumptions may have a material effect on the results of our impairment analysis.

Recently acquired reporting units generally represent a higher inherent risk of impairment, which typically decreases as the businesses are integrated into the Company.

As of December 31, 2023, the Company had ten reporting units for goodwill impairment testing.

In the fourth quarter of 2023, a quantitative test was performed for each reporting unit, and the carrying value of non-cash goodwill included in these reporting units ranged from $20.4 million to $5,832.4 million.

With the exception of the FLIR reporting unit, the estimated fair value of all other reporting units exceeded their respective carrying value by more than 100%.

At the assessment date, the estimated fair value of the FLIR reporting unit exceeded its carrying value by approximately $460 million or 6%.

forecasts used in the Company’s discounted cash flow model are based on assumptions that are considered reasonable by management and consistent with the plans and estimates management uses to operate the underlying businesses, there is significant judgment in determining the expected results of the FLIR reporting unit.

As of December 29, 2024, we had ten reporting units for goodwill impairment testing.

In the fourth quarter of 2024, a qualitative test was performed for nine of the ten reporting units, and the carrying value of goodwill included in these reporting units ranged from $20.4 million to $952.2 million.

The results of our qualitative assessments indicated that no impairment existed in 2024.

We bypassed the qualitative test for the FLIR reporting unit and performed a quantitative impairment test.

At the assessment date, the FLIR reporting unit had $5,856.5 million of goodwill, and the estimated fair value of the FLIR reporting unit exceeded its carrying value by approximately $420 million or 5%.

Although the forecasts used in our discounted cash flow model and market approach are based on assumptions that are considered reasonable by management and consistent with the plans and estimates management uses to operate the underlying businesses, there is significant judgment in determining the expected results of the FLIR reporting unit.

Changes in forecast estimates or the application of alternative assumptions could produce significantly different results.

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Although no impairment exists for the FLIR reporting unit, a non-cash impairment of goodwill could result from a number of circumstances, including different assumptions used in determining the fair value of the reporting unit, changes to customer spending priorities, or a sharp increase in interest rates without a corresponding increase in future net sales.

As of December 31, 2023, the Company had $850.0 million of indefinite-lived trademark intangibles which were subject to an annual impairment test in the fourth quarter of 2024.

As of December 29, 2024, we had $793.1 million of indefinite-lived trademark intangibles which were subject to an annual impairment test in the fourth quarter of 2024.

With the exception of the FLIR indefinite-lived trademark, the estimated fair value of all material indefinite-lived trademarks significantly exceeded their respective carrying value.

Trademarks of recently acquired businesses generally represent a higher inherent risk of impairment, which typically decreases as the businesses are integrated into the Company.

At the annual assessment date, the FLIR indefinite-lived trademark had a carrying value of $685.3 million and a fair value of $694.9 million.

The most significant assumptions utilized in the determination of the fair value of the FLIR trademark are the net sales growth rates (including residual growth rates), discount rate and royalty rate.

We recorded a $3.0 million full impairment of an immaterial Marine Instrumentation trademark that we decided to no longer actively market, with the charge recorded within impairment of acquired intangible assets on the consolidated statement of income (loss).

At the annual assessment date, the FLIR indefinite-lived trademark had a carrying value of $685.3 million and a fair value of $635.8 million, or approximately 7% below its carrying value, and we recorded a $49.5 million non-cash impairment charge in fiscal year 2024, which is included within impairment of acquired intangible assets on the consolidated statement of income (loss).

The most significant assumptions utilized in the determination of the fair value of the FLIR indefinite-lived trademark are the net sales growth rates (including residual growth rates), discount rate and royalty rate.

Although the FLIR sales forecasts are based on assumptions that are considered reasonable by management and consistent with the plans and estimates management uses to operate the underlying businesses, there is significant judgment in determining the expected results of the FLIR business.

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The discount rate, which is consistent with a weighted average cost of capital that is likely to be expected by a market participant, is based upon industry required rates of return, including consideration of both debt and equity components of the capital structure.

The royalty rate was driven by historical and estimated future profitability of the underlying FLIR business, and the royalty rate assumption was consistent with assumptions used by the Company as part of the purchase price allocation of FLIR in 2021.

During its fourth quarter annual assessment and as part of finalizing its strategic plan in December 2024, the Company also included an additional 50 basis points of risk premium in the discount rate when considering FLIR’s historical and expected future performance of achieving sales forecast projections.

The royalty rate was driven by historical and estimated future profitability of the underlying FLIR business.

The royalty rate may be impacted by significant adverse changes in long-term operating margins.

Although no impairment exists for the FLIR trademark, a non-cash impairment of the trademark could result from a number of circumstances, including different assumptions used in determining the fair value of the trademark, changes to customer spending priorities, or a sharp increase in interest rates without a corresponding increase in future net sales.

Additional future non-cash impairment charges on the FLIR trademark could result from a number of circumstances, including different assumptions used in determining the fair value of the trademark, changes to customer spending priorities, or a sharp increase in interest rates without a corresponding increase in future net sales.

For a description of the Company’s tax accounting policies, refer to Note 2 and Note 9 .

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Although we believe our income tax expense is reasonable, no assurance can be given that the final tax outcome will not be different from that which is reflected in our historical income tax provisions.

To the extent that the final tax outcome is different than the amounts recorded, such differences will impact the provision for income taxes in the period in which such determination is made.

To the extent that the final tax outcome is

different than the amounts recorded, such differences will impact the provision for income taxes in the period in which such determination is made.

An increase of 100 basis points in our nominal tax rate would have resulted in additional income tax provision for the fiscal year ended December 29, 2024, of $9.4 million.

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The technical merits of a given tax position are derived from sources of authority in the tax law and their applicability to the facts and circumstances of the position.

In measuring the

tax position, we consider the amount and probabilities of the outcomes that could be realized upon settlement.

In measuring the tax position, we consider the amount and probabilities of the outcomes that could be realized upon settlement.

When it is more-likely-than-not that a tax position will be sustained, we record a liability for the anticipated tax and interest due upon ultimate settlement with a taxing authority.

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Safe Harbor Cautionary Statement Regarding Forward-Looking Information

This Annual Report on Form 10-K contains forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995, directly and indirectly relating to earnings, growth opportunities, acquisitions and divestitures, product sales, capital expenditures, pension matters, stock option compensation expense, the credit facility, interest expense, severance and relocation costs, statements and goals relating to greenhouse gas emission reductions, environmental remediation cost, stock repurchases, taxes, exchange rate fluctuations and strategic plans.

This Annual Report on Form 10-K contains forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995, with respect to management’s beliefs about the financial condition, results of operations, acquisitions, capital expenditures and product synergies, integration costs, tax matters and businesses of Teledyne in the future.

Forward-looking statements involve risks and uncertainties, are based on the current expectations of the management of Teledyne and are subject to uncertainty and changes in circumstances.

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risks associated with indebtedness, as well as our ability to reduce indebtedness and the timing thereof;

the impact of policies of the new Presidential Administration, especially with respect to new and higher tariffs, cutbacks in the funding of government agencies and programs, and the scaling back of environmental and green energy policies;

the impact of semiconductor and other supply chain shortages;

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disruptions in the global economy;

the ongoing conflict in Israel and neighboring regions, including related protests and the disruption to global shipping routes;

the ongoing conflict in Israel and neighboring regions, including related protests, attacks on defense contractors and suppliers and the disruption to global shipping routes;

the ongoing conflict between Russia and Ukraine, including the impact to energy prices and availability, especially in Europe;

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and foreign government spending and budget priorities triggered by inflation, rising interest costs, and economic conditions;

impacts from the United Kingdom’s exit from the European Union;

uncertainties related to the 2024 U.S.

Presidential election;

the imposition and expansion of, and responses to, trade sanctions and tariffs;

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threats to the security of our confidential and proprietary information, including cybersecurity threats;

risks related to artificial intelligence;

risks related to AI;

natural and man-made disasters, including those related to or intensified by climate change;

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Lower oil and natural gas prices, as well as instability in the Middle East or other oil producing regions, and new regulations or restrictions relating to energy production, including those implemented in response to climate change, could further negatively affect our businesses that supply the oil and gas industry.

Weakness in the commercial aerospace industry negatively affects the markets of our commercial aviation businesses.

Ongoing issues with Boeing’s 737 MAX product line could result in manufacturing delays and lower sales of our products to Boeing.

Weakness in the commercial aerospace industry

negatively affects the markets of our commercial aviation businesses.

Lower aircraft production rates at Boeing or Airbus could result in reduced sales of our commercial aerospace products.

In addition, financial market fluctuations affect the value of the company’s pension assets.

Changes in the policies of U.S.

and foreign governments, including economic sanctions, could result, over time, in reductions or realignment in defense or other government spending and further changes in programs in which the company participates.

Changes in the policies of the United States and foreign governments, including economic sanctions or in regard to support for Ukraine, could result, over time, in reductions or realignment in defense or other government spending and further changes in programs in which the company participates.

While the company’s growth strategy includes possible acquisitions, we cannot provide any assurance as to when, if or on what terms any acquisitions will be made.

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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 7. Management’s Discussion and Analysis