What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-02-20 compared with 2025-02-21 · 181 added, 148 removed, 427 unchanged (44% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

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

Teledyne provides enabling technologies to sense, analyze and distribute information 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.

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Information about results of operations and financial conditions for 2023 and 2024 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 29, 2024.

Strategy/Overview

Our strategy continues to emphasize growth in our four business segments:

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At Teledyne, operational excellence includes the rapid integration of the businesses we acquire.

Using complementary technology across our businesses and through targeted research and development, we seek to create new products to grow our company and expand our addressable markets.

We continually evaluate our businesses to ensure that they are aligned with our strategy.

Using complementary technology across our businesses and through targeted R&D, we seek to create new products to grow our company and expand our addressable markets.

We continually evaluate our businesses and products to ensure that they are aligned with our strategy.

Trends and Other Matters Affecting Our Business

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

The global trade environment continues to be highly dynamic, including new potential tariffs and retaliatory tariffs, and a number of the tariffs remain in effect.

There have been continuing significant tariffs and trade sanctions between the United States and China.

China has also restricted the export of certain rare earth minerals that we use in our products, which could disrupt the supply chain for these minerals and components made from these materials.

Tariffs, trade restrictions and retaliatory measures could result in revenue reductions, cost increases on material used in our products or significant production delays, which could adversely affect our business, financial condition, operational results and cash flows.

Our manufacturing facilities span across many countries which helps us mitigate the impact of certain tariffs and trade restrictions.

Also, consistent with our strategy, we continually optimize our operations and take measures to contain costs to reduce the impact from tariffs.

We may also implement additional pricing actions to mitigate the impact of these tariffs.

We have been working to minimize potential delivery delays and shortages of components and raw materials needed for certain products we manufacture.

To date, we believe our strategies have helped minimize our exposure to these conditions.

It is unclear how the recent U.S.

Supreme Court ruling invalidating certain tariffs will impact our exposure to tariffs or our strategy with respect to tariffs going forward.

Government shutdowns could negatively impact our businesses.

Previous U.S.

Government shutdowns have resulted in delays in anticipated contract awards, issuances of export licenses, shipments and payments of invoices for several of our businesses.

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

dollars using exchange rates effective during the respective period.

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.

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.

We try to reduce this potential volatility in reported earnings primarily through derivative instruments and hedging activities.

See Note 1 4 for additional discussion around our derivative instruments and hedging activities used to mitigate these impacts.

During 2026, we plan to invest approximately $150 million in capital expenditures, principally to upgrade facilities and manufacturing equipment as well as to support internal growth initiatives.

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

We continue to seek cost reductions in our businesses.

Recent Acquisitions

Consistent with our strategy, we completed two acquisitions each in 2024 and in 2023.

Consistent with our strategy, we completed four acquisitions in 2025 and two acquisitions in 2024.

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

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

Our 2025 and 2024 acquisitions were within the Digital Imaging, Instrumentation and Aerospace and Defense Electronics segments.

See Note 3 for additional information about our 2025 and 2024 business acquisitions.

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

Subsequent to the end of the year, we have completed one acquisition which will be included within the Instrumentation segment.

See Note 18 for additional information.

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Fiscal years 2025 and 2024 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.

(dollars in millions)

2025 2024 $ Change % Change

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Research and development 317.3 292.6 24.7 8.4 %

292.6 356.3 (63.7) (17.9) %

Acquired intangible asset amortization 216.6 198.0 18.6 9.4 %

198.0 196.7 1.3 0.7 %

Impairment of acquired intangible assets — 52.5 (52.5) (100.0) %

52.5 — 52.5 *

Total costs and expenses 4,965.6 4,680.9 284.7 6.1 %

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Diluted earnings per common share $ 18.88 $ 17.21 $ 1.67 9.7 %

* not meaningful

Consolidated Results of Operations

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Results of operations (dollars in millions) 2025 2024 $ Change % Change

Operating income (loss):

Digital Imaging $ 528.2 $ 442.0 $ 86.2 19.5 %

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Corporate expense (87.5) (77.8) (9.7) 12.5 %

Operating income (loss) 989.1 1,034.4 (45.3) (4.4) %

Total operating income (loss)

1,149.8 989.1 160.7 16.2 %

Interest and debt expense, net (59.6) (57.9) (1.7) 2.9 %

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Net income (loss) attributable to Teledyne $ 894.8 $ 819.2 $ 75.6 9.2 %

* Not meaningful

Net sales increased across three of our four business segments.

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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 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.

In both 2025 and 2024, sales to international customers represented approximately 48% of total net sales.

Approximately 25% and 24% of our total net sales in 2025 and 2024, respectively, were derived from contracts with agencies of, or prime contractors to, the U.S.

Cost of 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 increased in 2025, primarily driven by the impact of higher net sales.

Cost of sales as a percentage of net sales for 2025 was 57.2%, compared with 57.1% for 2024.

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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.

Selling, general and administrative (“SG&A”) expense increased in 2025, primarily driven by higher sales across most segments.

SG&A expense as a percentage of net sales was 15.2% for 2025, compared with 15.9% for 2024.

Corporate expense in 2025 was $87.5 million, compared with $77.8 million in 2024, 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.

R&D expense increased in 2025, primarily driven by increases within our Digital Imaging, Aerospace and Defense Electronics, and Instrumentation segments.

Acquired Intangible Asset Amortization

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

Acquired intangible asset amortization for 2025 was $216.6 million, compared with $198.0 million for 2024, with the increase primarily related to current and prior year acquisitions.

Impairment of Acquired Intangible Assets

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No comparative amounts were recorded in 2025.

Pension Service Expense

Pension service expense is included in both cost of sales and SG&A expense.

In 2025 and 2024, pension service expense was $5.9 million and $6.2 million, respectively.

Operating Income

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.

Operating income increased in 2025, primarily driven by higher operating income in each segment, including incremental operating income related to current and prior year acquisitions as well as $52.5 million of pretax, non-cash trademark impairments recorded in 2024.

No trademark impairments were recorded in 2025.

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, 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.

Interest and debt expense, net of interest income, was $59.6 million in 2025, compared with $57.9 million in 2024.

Non-service retirement benefit income was $10.9 million in 2025 and $10.8 million in 2024.

Other income and expense, net was expense of $21.6 million in 2025 compared with expense of $4.1 million in 2024 and primarily related to foreign exchange losses in both periods.

In 2025, we repurchased and retired $177.0 million of our fixed rate senior notes, recording a $15.0 million non-cash gain on the extinguishment of this debt, with no comparable amount recorded in 2024.

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

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.

The effective tax rate increased in 2025 compared with 2024, primarily due to lower reversals of unrecognized tax benefits in 2025.

See Note 9 for further information regarding our income taxes.

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Provision (benefit) for income taxes

$ 198.8 $ 117.2

Income (loss) before income taxes $ 1,094.5 $ 937.9

Effective tax rate 18.2% 12.5%

In July 2025, the “One Big Beautiful Bill Act” (the “Act”) was enacted into law.

The Act includes changes to U.S.

tax law, including provisions to accelerate tax deductions for qualified property and research expense.

The Company has estimated the 2025 impact in current results which includes a cash tax reduction of approximately $30.0 million.

The Company will continue to evaluate elective decisions impacting cash taxes before the 2025 tax return is filed in 2026.

The 2026 impact is estimated to include a cash tax reduction of between $60.0 million and $70.0 million.

Business Segment Operating Results

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Impairment of acquired intangible assets % of net sales

— % 1.6 % (1.6)%

Operating income % of net sales 16.7 % 14.4 % 2.3%

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Government sales % of net sales 20.4 % 18.1 % 2.3%

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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.

2025 compared with 2024

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.

Our Digital Imaging segment net sales for 2025 increased 3.0%.

Operating income for 2025 increased 19.5%.

Total year 2025 net sales included $21.2 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.

Net sales increased primarily due to higher sales of commercial infrared imaging components and subsystems, unmanned air systems and surveillance systems, partially offset by lower sales of commercial infrared imaging systems, X-ray products, geospatial products and industrial automation imaging systems.

Sales of commercial infrared imaging components and subsystems increased by $55.9 million, sales of unmanned air systems increased by $35.1 million, sales of surveillance systems increased by $28.7 million, sales of commercial infrared imaging systems decreased by $25.2 million, sales of X-ray products decreased by $14.2 million, sales of geospatial products decreased by $7.4 million, and sales of industrial automation imaging systems decreased by $5.6 million.

Cost of sales and the cost of sales percentage increased, primarily due to unfavorable product mix.

The SG&A expense decrease included the reduction of a contingent liability resulting from a change in estimate, partially offset by higher severance and facility consolidation costs.

As a result, SG&A expense as a percentage of net sales decreased in 2025.

R&D expense and R&D expense as a percentage of net sales increased, primarily due to the timing of FLIR unmanned systems product development activities.

Acquired intangible asset amortization and acquired intangible asset amortization as a percentage of net sales increased slightly.

Operating income increased, primarily due to higher net sales and lower SG&A as well as an impairment of intangible assets of $49.5 million in 2024 with no comparable amount in 2025, partially offset by unfavorable product mix during the period.

As a result, operating income as a percentage of net sales increased during the period.

Instrumentation

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Impairment of acquired intangible assets % of net sales

— % 0.2 % (0.2)%

Operating income % of net sales 27.5 % 26.8 % 0.7%

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Government sales % of net sales 8.6 % 8.9 % (0.3)%

* 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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2025 compared with 2024

Our Instrumentation segment net sales for 2024 increased 4.3%, compared with 2023.

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

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 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.

Our Instrumentation segment net sales for 2025 increased 5.4%.

Operating income for 2025 increased 8.1%.

Total year 2025 net sales included $4.7 million in incremental net sales from current and prior year acquisitions which were all included within the Marine Instrumentation product line.

Net sales increased due to higher sales in each product line.

Sales of Marine Instrumentation increased $48.6 million due to stronger offshore energy and defense markets.

Sales of Environmental Instrumentation increased $19.2 million primarily due to stronger sales of gas detection products and sales of Test and Measurement Instrumentation increased $6.7 million.

Cost of sales increased primarily due to higher net sales.

The cost of sales percentage decreased slightly, and SG&A expense as a percentage of net sales decreased primarily due to maintaining cost levels year-over-year.

R&D expense increased due to higher Marine Instrumentation product development, and R&D expense as a percentage of net sales increased slightly.

Acquired intangible asset amortization and acquired intangible asset amortization as a percentage of net sales decreased slightly.

Operating income increased primarily due to higher net sales and an impairment of intangible assets of $3.0 million in 2024 with no comparable amount in 2025.

Operating income as a percentage of net sales increased primarily due slower SG&A growth as compared with stronger net sales growth as well as an impairment of intangible assets in 2024 with no comparable amount recorded in 2025.

Aerospace and Defense Electronics

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Government sales % of net sales 39.7 % 39.6 % 0.1%

* Not meaningful

Our 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, components and subsystems for wireless and satellite communications, and general aviation batteries.

2025 compared with 2024

Our Aerospace and Defense Electronics segment net sales for 2024 increased 6.9%, compared with 2023.

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

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 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.

Our Aerospace and Defense Electronics segment net sales for 2025 increased 36.3%.

Operating income for 2025 increased 18.2%.

Total year 2025 net sales included $244.2 million in incremental net sales from current year acquisitions.

Net sales increased due to a $277.6 million increase for defense electronics and a $4.3 million increase for aerospace electronics.

Cost of sales increased due to higher net sales, inventory step-up expense related to the 2025 acquisitions and unfavorable product mix, including recent acquisitions, which carry a higher cost of sales percentage, and as a result, the cost of sales percentage increased.

SG&A expense increased primarily due to incremental SG&A from current year acquisitions, including higher transaction and integration costs related to these acquisitions.

R&D expense increased primarily due to the current year acquisitions, and the R&D expense as a percentage of net sales was similar in both periods.

Acquired intangible asset amortization increased primarily due to the 2025 acquisitions.

Operating income increased primarily due to increased net sales, and operating income as a percentage of net sales decreased primarily due to higher transaction and integration costs, higher acquired intangible asset amortization and unfavorable product mix including lower gross margins on sales from 2025 acquisitions.

Engineered Systems

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2025 compared with 2024

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

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.

Our Engineered Systems segment net sales for 2025 decreased 0.9%.

Operating income for 2025 increased 41.6%.

Net sales decreased due to a decrease of $4.9 million for engineered systems, partially offset by a $0.8 million increase in energy products.

Cost of sales and cost of sales as a percentage of net sales decreased primarily due to favorable program mix.

SG&A expense decreased slightly primarily due to lower bid and proposal expense, and SG&A expense as a percentage of net sales increased slightly primarily due to lower net sales.

Operating income and operating income as a percentage of net sales increased primarily due to favorable program mix.

Financial Condition, Liquidity and Capital Resources

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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.

It is anticipated that cash on hand, operating cash flow, together with available borrowings under our $1.2 billion credit facility, will be sufficient to meet these requirements during the next 12 months and during the period thereafter covered by our current longer-term business plan.

To support acquisitions, we may need to raise additional capital.

Our liquidity is not dependent upon the use of off-balance sheet financial arrangements.

We have no off-balance sheet financing arrangements that incorporate the use of special purpose or unconsolidated entities.

No cash pension contributions have been made since 2013 or are planned for 2026 for the domestic qualified pension plans.

During the second quarter of 2025, we entered into a multi-currency notional cash pooling agreement with a financial institution to manage cash flow more efficiently and optimize liquidity.

Under the terms of this arrangement, certain participating foreign subsidiaries combine their cash balances in pooling accounts at the same financial institution, with the ability to offset bank overdrafts of one participant against positive cash account balances held by another participant.

The pool runs daily on a net positive cash basis and is not intended to be used as a source of funding.

Amounts in each of the accounts are unencumbered and unrestricted with respect to use.

The net positive cash balance related to this pooling arrangement is included in cash and cash equivalents on the consolidated balance sheets.

Cash and Cash Equivalents

Cash and cash equivalents totaled $649.8 million at December 29, 2024, of which $314.4 million was held by foreign subsidiaries.

Cash and cash equivalents totaled $352.4 million at December 28, 2025, compared with $649.8 million at December 29, 2024.

In 2025, we generated $1,191.3 million of cash flow from operating activities, and we used our cash flow in 2025 to fund acquisitions, make stock repurchases as well as repurchase portions of our fixed rate senior notes.

Cash equivalents consist of highly liquid money-market mutual funds with maturities of three months or less when purchased.

Long-term Debt

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.

Long-term debt, including unamortized debt issuance costs, was $2,475.4 million at December 28, 2025, compared with $2,649.0 million at December 29, 2024.

During 2025, the Company repurchased and retired $177.0 million of principal of its fixed rate senior notes for $162.0 million in cash.

At December 28, 2025, we had $53.4 million in outstanding letters of credit, including $29.0 million against our credit facility.

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Available borrowing capacity under the $1.20 billion credit facility, which is reduced by borrowings and $29.0 million in outstanding letters of credit, was $1,171.0 million at December 28, 2025.

Our liquidity is not dependent upon the use of off-balance sheet financial arrangements.

We have no off-balance sheet financing arrangements that incorporate the use of special purpose entities or unconsolidated entities.

We may at any time and from time to time seek to retire or purchase our outstanding debt through cash purchases in open-market purchases, privately negotiated transactions or otherwise.

Such repurchases, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors.

The amounts involved may be material.

See Note 8 for additional information regarding our credit facility and long-term debt.

Stock Repurchases

In July 2025, our Board approved a stock repurchase program authorizing the Company to repurchase up to $2.0 billion of our common stock.

This authorization superseded the remaining prior open stock repurchase programs authorized by the Board.

The newly authorized stock repurchase program does not have a stated expiration date.

Shares may be repurchased from time to time in open-market transactions at prevailing market prices, in privately negotiated transactions or via an accelerated stock repurchase program.

Shares could be repurchased in a plan pursuant to Rule 10b5-1 of the Securities Exchange Act of 1934.

The number of shares purchased will depend on a variety of factors such as share price, levels of cash available, acquisitions and alternative investment opportunities available immediately or longer-term, and other regulatory, market or economic conditions.

We currently intend to fund future share repurchases, if any, with cash on hand and available borrowings under our credit facility.

During 2025, we repurchased approximately 0.8 million shares for $400.0 million with a weighted average price of $507.52 per share.

Contractual Obligations

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At December 28, 2025, we were not required, and accordingly are not planning, to make any cash contributions to the domestic qualified pension plans for 2026.

Our minimum funding requirements after 2024 as set forth by the Employee Retirement Income Security Act, are dependent on several factors.

Our minimum funding requirements after 2025 as set forth by the Employee Retirement

Income Security Act, are dependent on several factors.

Estimates beyond 2026 have not been provided due to the significant uncertainty of these amounts, which are subject to change until the Company’s pension assumptions can be updated at the appropriate times.

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Net cash provided by operating activities was $1,191.3 million and $1,191.9 million in 2025 and 2024, respectively.

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)

Cash provided by (used in) operating activities $ 1,191.3 $ 1,191.9

Capital expenditures for property, plant and equipment (117.3) (83.7)

Free cash flow $ 1,108.2 $ 721.2

Free cash flow (a)

$ 1,074.0 $ 1,108.2

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

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Investing Activities

Net cash used in investing activities was $207.2 million and $190.3 million for 2024 and 2023, respectively.

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”).

Net cash used in investing activities was $937.9 million and $207.2 million in 2025 and 2024, respectively.

Investing activities used cash for business acquisitions of $821.4 million and $123.7 million in 2025 and 2024, respectively (see “ Recent Developments ”).

We funded the acquisitions from cash on hand.

Cash flows relating to investing activities for capital expenditures.

Capital expenditures (in millions):

Cash flows relating to investing activities for capital expenditures was as follows (dollars in millions):

2025 2024 $ Change

Digital Imaging $ 67.7 $ 54.7 $ 13.0 23.8 %

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Engineered Systems 4.7 2.4 2.3 95.8 %

Total segment capital expenditures

106.9 79.3 27.6 34.8 %

Corporate 10.4 4.4 6.0 136.4 %

Total Teledyne capital expenditures

$ 117.3 $ 83.7 $ 33.6 40.1 %

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 .

During 2026, we plan to invest approximately $150 million in capital expenditures, principally to upgrade facilities and manufacturing equipment as well as to support internal growth initiatives.

Financing Activities

Net cash used in financing activities reflected net repayment of debt of $163.8 million, share repurchases of $402.9 million, net proceeds from the exercise of stock options of $48.8 million and acquired redeemable noncontrolling interest of NL Acoustics for $27.2 million in 2025.

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 2025, we repurchased and retired $177.0 million in principal of our fixed rate senior notes for $162.0 million in cash.

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.

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, 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.

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

There is no deferred tax liability recognized for unrepatriated prior year earnings of the Company’s material subsidiaries in Canada, which would become taxable if distributed to the United States.

The unrecognized deferred tax liability for this is estimated between $23 million to $26 million of potential tax.

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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Based on the Company’s history of operating earnings, expectations of future operating earnings and potential tax planning strategies, management believes that it is possible that some portion of deferred taxes will not be realized as a future tax benefit and therefore has recorded a valuation allowance.

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 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.

We file income tax returns in the U.S.

federal jurisdiction and in various states and foreign jurisdictions.

We have substantially concluded income tax matters in the United States through 2016, in Canada through 2012, in the UK through 2022, and in France through 2020.

Costs and Pricing

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Our primary foreign currency risk management objective is to protect the U.S.

dollar value of future cash flows and minimize the volatility of reported earnings, primarily achieved through the following:

dollar value of future cash flows and reduce the volatility of reported earnings, primarily achieved through the following:

• We utilize foreign currency forward contracts to reduce the volatility of cash flows primarily related to forecasted revenue and expenses denominated in Canadian dollars for our Canadian companies, and in British pounds for our U.K.

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• 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.

• The Company utilizes cross-currency swaps to hedge portions of the Company’s euro denominated net investments against the effect of exchange rate fluctuations on the translation of foreign currency balances to the U.S.

All derivatives are recorded on the balance sheet at fair value.

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dollars by approximately $3.2 million.

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

dollar from its value on December 28, 2025, 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 sell U.S.

dollars by approximately $1.9 million.

A hypothetical 10% price change of the euro from its value on December 28, 2025, would result in a decrease or increase in the fair value of our cross-currency swaps designated as net investment hedges to buy U.S.

dollars and sell euros by approximately $53.5 million.

Environmental

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We perform work on a number of contracts with the U.S.

Department of Defense and other agencies and departments of the U.S.

Department of War and other agencies and departments of the U.S.

Government including sub-contracts with government prime contractors.

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Government, which included contracts with the U.S.

Department of Defense, were 24.3% and 24.5% of our total net sales in 2024 and 2023, respectively.

Department of War, were 25% and 24% of our total net sales in 2025 and 2024, respectively.

For a summary of sales to the U.S.

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Sales to the U.S.

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

Department of War represented approximately 20% of total net sales for both 2025 and 2024.

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

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Estimates and Reserves

Our discussion and analysis of financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States.

Our discussion and analysis of financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with U.S.

The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent liabilities.

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Critical Accounting Policies and Estimates

The preparation of our consolidated financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and the notes to the financial statements.

The preparation of our consolidated financial statements in conformity with U.S.

generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the financial statements and the notes to the financial statements.

Some of those judgments can be subjective and complex, and therefore, actual results could differ materially from those estimates under different assumptions or conditions.

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Revenue Recognition

Approximately 30% of our revenue was recognized over time, with the remaining 70% recognized at a point in time.

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.

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

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

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 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.

We do not believe that any discrete event or adjustment to an individual contract within the aggregate changes in contract estimates in 2025 and 2024 was material to the consolidated statement of income (loss) for such annual periods.

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

See Note 5 for additional revenue recognition disclosures.

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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.

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.

As of December 28, 2025, we had eleven reporting units for goodwill impairment testing.

In the fourth quarter of 2025, a qualitative test was performed for ten of the eleven reporting units, and the carrying value of goodwill included in these reporting units ranged from $20.4 million to $979.1 million.

The results of our qualitative assessments indicated that no impairment existed in 2025.

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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.

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).

At the annual assessment date, the FLIR indefinite-lived trademark had a carrying value of $635.8 million and a fair value of $657.4 million, or approximately 3% above its carrying value.

In fiscal year 2024, we recorded a $49.5 million non-cash impairment charge, which is included within impairment of acquired intangible assets on the consolidated statement of income (loss).

No comparable charges were recorded in 2025.

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.

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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.

The royalty rate may be impacted by significant adverse

changes in long-term operating margins.

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.

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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 28, 2025, of $10.9 million.

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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.

Unrecognized tax benefits, including accrued penalties and interest, increased in 2021 due to the acquisition of FLIR.

To the extent we prevail in matters for which reserves have been established or are required to pay amounts in excess of reserves, there could be a significant impact on our consolidated financial position and annual results of operations.

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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, 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.

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, stock repurchases, 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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Many factors could change anticipated results, including:

the impact of policies of the U.S.

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;

escalating economic and diplomatic tension between China and the United States, including a “trade war” resulting in higher tariffs and restrictions on sales of goods and services;

reciprocal tariffs from other countries, especially from members of the EU;

existing and new restrictions on the supply of rare earth minerals and permanent magnets from China;

Government shutdowns, which in the past have resulted in delays in anticipated contract awards, delayed payments of invoices and delays in the issuance of export and other licenses;

the inability to develop and market new competitive products;

changes in relevant tax and other laws;

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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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labor shortages and competition for skilled personnel;

the inability to develop and market new competitive products;

inherent uncertainties involved in the estimates and judgments used in the preparation of financial statements and the providing of estimates of financial measures, in accordance with U.S.

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disruptions in the global economy;

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;

customer and supplier bankruptcies;

global conflicts including the ongoing conflict between Russia and Ukraine;

changes in demand for products sold to the defense electronics, instrumentation, digital imaging, energy exploration and production, commercial aviation, semiconductor, and communications markets;

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cuts to defense spending resulting from existing and future deficit reduction measures or changes to U.S.

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

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

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

the continuing review and resolution of FLIR’s trade compliance and tax matters;

escalating economic and diplomatic tension between China and the United States;

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

risks related to AI;

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

natural and man-made disasters;

and our ability to achieve emission reduction targets and decrease our carbon footprint.

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.

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

Lower oil and natural gas prices, as well as instability in the Middle East, Latin America or other oil producing regions, and new regulations or restrictions relating to energy production 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.

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

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.

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

Acquisitions involve various inherent risks, such as, among others, our ability to integrate acquired businesses, retain key management and customers, and achieve identified financial and operating synergies.

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While we believe our control systems are effective, there are inherent limitations in all control systems, and misstatements due to error or fraud may occur and may not be detected.

Cautionary Statement as to Forward-Looking Statements.” Forward-looking statements are generally accompanied by words such as “estimate”, “project”, “predict”, “believes” or “expect”, that convey the uncertainty of future events or outcomes.

Additional information concerning factors that could cause actual results to differ materially from those projected in the forward-looking statements is contained beginning on page 7 of this Form 10-K under the caption “Risk Factors” Forward-looking statements are generally accompanied by words such as “estimate”, “project”, “predict”, “believes” or “expect”, that convey the uncertainty of future events or outcomes.

We assume no obligation to publicly update or revise any forward-looking statements, whether as a result of new information or otherwise.

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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