TDY Teledyne Technologies Inc - 10-K

Item 1A.

Risk Factors

Risk Factors

The following discussion sets forth the material risk factors that could affect Teledyne’s financial condition and operations. You should not consider any descriptions of these factors to be a complete set of all potential risks that could affect Teledyne. Any risk factor discussed below could by itself, or combined with other factors, materially and adversely affect our business, results of operations, financial condition, competitive position or reputation, including by materially increasing expenses or decreasing revenues, which could result in material losses or a decrease in earnings.

Risks Related to our Business and Industry

A possible recession in the United States or globally may adversely affect us.

We sell products and services to customers in industries that are sensitive to the level of general economic activity and consumer spending habits. If another recession emerges, either globally or in the United States, we may experience declines in revenues, profitability and cash flows from reduced orders, payment delays, collection difficulties, increased price pressures for our products, increased risk of excess and obsolete inventories or other factors caused by the economic problems of our customers.

Acquisitions and our ability to make acquisitions involve inherent risks that may adversely affect our operating results and financial condition.

Our growth strategy includes acquisitions. Acquisitions involve various inherent risks, such as:

• our ability to assess accurately the value, strengths, weaknesses, internal controls, contingent and other liabilities and potential profitability of acquisition candidates;

• difficulties in integrating acquired businesses, including the potential loss of key personnel from an acquired business, our potential inability to achieve identified financial, operating and other synergies anticipated to result from an acquisition, and integration issues associated with internal controls of acquired businesses;

• the diversion of management’s attention from our existing businesses;

• the potential impairment of assets;

• potential unknown liabilities associated with a business that we acquire or in which we invest, including environmental liabilities;

• new and proposed regulations limiting the enforcement of noncompetition and nonsolicitation agreements;

• production delays associated with consolidating acquired facilities and manufacturing operations;

• pre-existing vulnerabilities, including cybersecurity vulnerabilities, undetected malware and access management issues at the acquired business and its supply chain;

• the incurrence of significant transaction costs, including for acquisitions which we may not complete; and

• the inadequacy of indemnification, insurance, escrows, holdbacks or other forms of protection for liabilities of the acquired company.

If we are unable to make acquisitions our future growth may be adversely impacted. Our ability to make acquisitions depends on a number of factors, including the availability of potential acquisition candidates at reasonable prices, competition from other bidders, the ability to obtain regulatory approvals, including under increasingly stringent merger control and foreign direct investment laws, and the availability of debt and equity financing, among other factors. For additional discussion of business acquisition, see the discussion under “Item 7 . Management’s Discussion and Analysis of Operations and Financial Condition” and Note 3 .

Increased prices for components and raw materials used in our products and higher labor and shipping costs could adversely impact our profitability.

In recent years, inflation and supply chain constraints resulted in sustained increases in the prices we pay for many of the components and raw materials used in our products. In addition, we have experienced higher labor costs due to increased competition for personnel in many regions in which we operate as well as general inflationary conditions, and higher shipping costs due to labor and rising energy prices. If we are unable to increase our product prices enough to offset these increased costs, our gross margins and profitability could decrease, perhaps significantly over a sustained period of time.

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We have experienced component and raw material shortages in the past that impacted our ability to manufacture and ship all the product for which we have demand, and these constraints may continue in the future.

Our business in the recent past was impacted by interruptions in the supply chain. As a result, we experienced delivery delays and shortages of components and raw materials needed for certain products we manufacture. China has also restricted the export of certain rare earth minerals and permanent magnets that are used in our products, which has in the past delayed and could in the future limit our ability to sell products that require these components or result in lower margins products that incorporate these components. Any such delays in the future would reduce our revenue and margins for the periods affected and would also result in an increase in our inventory of other components, which would reduce our operating cash flow.

We may not have sufficient resources to fund all future research and development and capital expenditures.

In order to remain competitive, we must make substantial investments in research and development (“R&D”) of new or enhanced products and continuously upgrade our process technology and manufacturing capabilities. We may be unable to fund all of our R&D and capital investment needs. Our ability to raise additional capital will depend on a variety of factors, some of which will not be within our control, including the existence of bank and capital markets, investor perceptions of us, our businesses and the industries in which we operate, and general economic conditions. Failure to successfully raise needed capital or generate cash flow on a timely or cost-effective basis could have a material adverse effect on our business, results of operations and financial condition.

We may be unable to successfully introduce new and enhanced products in a timely and cost-effective manner or increase our participation in new markets, which could harm our profitability and prospects.

Our operating results depend in part on our ability to introduce new and enhanced products on a timely basis. Some of our businesses are engaged in major development activities. If we fail to execute on these development activities in a timely manner, our business could be negatively impacted. Some products, especially those sold by our Test and Measurement group, have short lifecycles that require frequent updating and new product innovation. We may not be able to develop and introduce new or enhanced products in a timely and cost-effective manner or develop and introduce products that satisfy customer requirements.

Increasing competition could reduce the demand for our products and services.

Each of our markets is highly competitive. Many of our competitors have, and potential competitors could have, greater name recognition, a larger installed base of products, more extensive engineering, manufacturing, marketing and distribution capabilities and greater financial, technological and personnel resources. New or existing competitors may also develop new technologies that could adversely affect the demand for our products and services. Furthermore, some of our patents have expired or are expiring, which could open up further competition. Additionally, some of our customers have been developing competing products or electing to vertically integrate and replace our products with their own.

Low-cost competition from China and other developing countries could also result in decreased demand for our products.

Higher interest rates and other factors could cause our customers to reduce capital spending, which could adversely impact us.

Higher interest rates may reduce capital spending by our existing and potential customers, which could result in lower sales of our products.

Risks Related to International Operations

We are subject to the risks associated with international sales and international operations, and events in those countries could harm our business or results of operations.

In both 2025 and 2024, sales to customers outside the United States accounted for approximately 48% of total net sales. In both 2025 and 2024, we sold products to customers in over 100 foreign countries. In 2025, the top five countries for sales to international customers, ranked by net sales, were the UK, Germany, Japan, China and France and represented approximately 20% of our total net sales. We anticipate that future sales to international customers will continue to account for a significant and increasing percentage of our revenues.

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Risks associated with international sales and operations include, but are not limited to:

• political and economic instability;

• additional deterioration in United States - China and United States - Russia relations;

• existing and intensifying global economic sanctions and export controls, including export controls related to China and sanctions related to Russia;

• our ability to obtain export licenses in a timely manner;

• unauthorized release of export-controlled or otherwise protected information;

• compliance with anti-corruption laws, including the U.S. Foreign Corrupt Practices Act and the UK Bribery Act;

• changes in tax laws and tariff rates;

• protection and enforcement of intellectual property rights;

• compliance with non-U.S. data protection laws;

• existing and emerging non-U.S. regulations relating to ESG and CSR matters, which could be costly to comply with;

• international terrorism;

• transportation, including piracy in international waters;

• currency exchange rate fluctuations; and

• challenges relating to managing a global workforce with diverse cultures, backgrounds and labor laws.

The impact of these factors is difficult to predict, but one or more of them could have a material adverse effect on our financial position, results of operations, or cash flows.

Currency exchange rate fluctuations may increase the cost of our products to international customers and therefore reduce our competitive position. In addition to making our products manufactured in the United States more expensive, a stronger dollar impacts the value of our foreign profits when translated back into dollars. Since we report our financials in U.S. dollars, volatility in the strength of the U.S. dollar could have a material impact on our reported earnings.

Escalating global trade tensions and the adoption or expansion of tariffs and trade restrictions could negatively impact us.

The U.S. Presidential administration has announced significant new tariffs on foreign imports into the United States, particularly with respect to imports from China, and has proposed additional new tariffs that may be implemented in the future, including on member states of the European Union (“EU”) and on Canada and Mexico. High tariffs generally increase the cost of materials for our products, which could result in our products becoming less competitive or generating lower margins. The extent and duration of increased tariffs and the resulting impact on general economic conditions and on our business are uncertain and depend on various factors, such as negotiations between the United States and affected countries, the responses of other countries or regions, exemptions or exclusions that may be granted, availability and cost of alternative sources of supply, and demand for our products in affected markets. Uncertainty about whether and the extent to which new tariffs will be imposed could also impact our supply chain and the cost of our products. We have significant operations in Canada and in member states of the EU, which could be negatively impacted by a trade war with the United States. With high tariffs imposed on our products, we may also need to find new suppliers and components for our products, which could result in production delays. These countries could impose retaliatory tariffs on imports from the United States. To the extent our products are the subject of retaliatory tariffs, customers may begin to seek domestic or non-U.S. sources for products that we sell, or be pressured or incentivized by foreign governments not to purchase U.S.-origin goods, which could harm our future sales in these markets. Further escalation of the “trade war” between the United States and China, or new trade wars between the United States and other countries, could result in continued or increased tariffs. Efforts to avoid tariffs are also under increased scrutiny.

New and expanding economic sanctions and export restrictions could impact our ability to sell our products.

Recent export restrictions have had a significant impact on our business. A number of well-established customers and suppliers have become listed on government restricted party lists. In particular, U.S. export enforcement agencies have placed several Chinese companies and many of their international subsidiaries on such lists, prohibiting the export to them of most commercial and dual-use items subject to the Export Administration Regulations. Furthermore, the United States has imposed certain sectoral sanctions to limit Chinese development and manufacturing of semiconductor and supercomputer technology and have imposed comprehensive restrictions of both U.S.-origin items as well as non-U.S. items manufactured from U.S.-origin equipment. In response, China has unveiled restrictions on exports from China of certain materials and components, including gallium and germanium and which are used in semiconductor manufacturing and permanent magnets and which have impacted

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the production and pricing of some of our digital imaging and aerospace and defense products. China has also increased sanctions on certain specific U.S. companies, including two Teledyne legal entities, by adding them to its Unreliable Entity List or Export Control List, which has impacted the ability of some Teledyne subsidiaries (including those not so listed) to conduct business in China. Chinese airlines and other manufacturers are under pressure to decrease their dependence on U.S. components and products and increase the use of domestic suppliers. Many key suppliers to our businesses, whether direct or indirect, are based in China. These and other tariffs, trade restrictions and retaliatory measures could result in revenue reduction, price increases on material used in our products or significant production delays, which could adversely affect our business, financial condition, operational results and cash flows.

Sanctions on Russia imposed by multiple countries and related Teledyne policies have led to a comprehensive ban on commercial activity with that market.

Global conflicts could lead to disruption, instability and volatility in global markets and industries that could negatively impact our operations.

A military conflict between China and Taiwan would likely have a material adverse impact on our ability to sell products to customers in these areas and on our supply chain. Ongoing instability in the Middle East and the conflict between Russia and Ukraine could result in supply chain and other business disruptions.

An economic slowdown in China may adversely affect us.

Our net sales to China-based customers represented approximately 4% of total revenues in 2025 and 2024, respectively. Economic growth in China has slowed since the coronavirus disease (“COVID”) pandemic. Continued growth in many of our businesses, including those in our Environmental Instrumentation group, could be negatively impacted if another economic downturn occurs in China.

In-country manufacturing could result in lower demand for our products.

Many countries, including China, India and Saudi Arabia, have bolstered laws or regulations requiring the use of local suppliers, personnel and in-country manufacturing, which has had a negative impact on Teledyne’s revenues of instrumentation, commercial aerospace, marine and digital imaging products, as we currently have limited manufacturing operations in these countries. Several of our competitors in countries like China may be subsidized by state actors and as a result may be able to offer competing products at much lower prices than we can. As European countries increase their defense spending, requirements to have production facilities in the EU are becoming more common to win contracts. If we are unable to respond to these requirements, we may be unable to bid on new programs or lose opportunities to competitors that are based in the EU.

Risks Related to our Markets

We sell products in markets that are cyclical in nature and a downturn in one or more of these markets could materially impact our financial results.

We develop and manufacture products for customers in the energy exploration and production markets, commercial aerospace markets, the semiconductor industry, and the consumer electronics, telecommunications, automotive and healthcare industries; each of which has been cyclical, exhibited rapid changes and suffered from fluctuating market demands. A cyclical downturn in one or more of these markets may materially affect future operating results. Some of our product sales are tied to artificial intelligence (“AI”)-related capital expenditures and data center infrastructure. Several factors could result in volatility in AI-related spending, including constraints related to electricity generation and delivery, overbuilt capacity, new AI-focused legal regulations, and a consolidation of competing independent technologies.

Our revenue from U.S. Government contracts depends on the continued availability of funding from the U.S. Government, and, accordingly, we have the risk that funding for our existing contracts may be canceled or diverted to other uses or delayed or that funding for new programs will not be available. Similarly, sales to the European defense market depends on continued funding from European governments.

We perform work on a number of contracts with the U.S. Department of War and other agencies and departments of the U.S. Government including subcontracts with government prime contractors. Sales under contracts with the U.S. Government, including sales under contracts with the U.S. Department of War, as prime contractor or subcontractor, represented 25% and 24% of our total net sales in 2025 and 2024, respectively. Performance under government contracts has inherent risks that could have a material effect on our business, results of operations, and financial condition.

Government contracts are conditioned upon the continuing availability of Congressional appropriations, and the failure of Congress to appropriate funds for programs in which we participate could negatively affect our results of operations. U.S. Government operation under a continuing resolution could impact the business by preventing new programs from starting as planned and by limiting funding on existing programs. U.S. Government shutdowns have resulted in delays in anticipated contract awards and delayed payments of invoices for several of our businesses. In the fall of 2025, a shutdown of the U.S.

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Government lasted 43 days and resulted in delays in contract awards, issuances of export licenses, shipments and payments of invoices for several of our businesses; any new shutdown or increase in the frequency of shutdowns could have similar or worse effects. Any renewed emphasis on Federal deficit and debt reduction could lead to a further decrease in overall defense spending.

Changes in policy and budget priorities by the U.S. Presidential Administration for various defense and NASA programs could impact our Engineered Systems, Aerospace and Defense Electronics and Digital Imaging segments. Budget cuts at NASA have negatively impacted the revenues of Engineered Systems in 2025 and are expected to further impact revenues in 2026.

It is also not uncommon for the U.S. Department of War to delay the timing of awards or change orders for major programs for six to twelve months. These delays by the U.S. Government could impact our revenues. Uncertainty over budgets or priorities with the U.S. Presidential Administration could result in further delays in funding and the timing of awards, and changes in funded programs that could have a material impact on our revenues.

Further, most of our U.S. Government contracts are subject to termination by the U.S. Government either at its convenience or upon the default of the contractor. Termination for convenience provisions provides only for the recovery of costs incurred or committed, settlement expenses, and profit on work completed prior to termination. Termination for default clauses imposes liability on the contractor for excess costs incurred by the U.S. Government in re-procuring undelivered items from another source. During 2025 and 2024, contracts terminated by the U.S. Government have not materially impacted our results of operations; however, our Defense Electronics businesses have seen an increase in terminations for convenience due to shifting Government priorities.

We are seeing increased sales into the European defense market as European defense budgets increase as a result of the conflict in Ukraine, threats from Russia and other geopolitical instability. If European government funding on defense programs declines, or if defense spending priorities of the North Atlantic Treaty Organization (“NATO”)-member countries change with respect to Ukraine, existing and potential future sales would be negatively impacted. New EU cybersecurity requirements are expected to come into effect in 2026, which may impact our ability to market our products and services in the EU.

Our U.S. Government contracting businesses are subject to government contracting regulations, including increasingly complex regulations on cybersecurity, and our failure to comply with such laws and regulations could harm our operating results and prospects.

Our U.S. Government contracting businesses, like other government contractors, are subject to various audits, reviews and investigations (including private party “whistleblower” lawsuits) relating to our compliance with applicable federal and state laws and regulations. More routinely, the U.S. Government may audit the costs we incur on our U.S. Government contracts, including allocated indirect costs. Any costs found to be improperly allocated to a specific contract will not be reimbursed, and such costs already reimbursed would need to be refunded. In a worst case scenario, should a business or division be charged with wrongdoing, or should the U.S. Government determine that the business or division is not a “presently responsible contractor,” that business or division, and conceivably our Company as a whole, could be temporarily suspended or, in the event of a conviction, could be debarred for up to three years from receiving new government contracts or government-approved subcontracts. In addition, we could expend substantial amounts defending against such charges or face damages, fines and penalties if such charges were proven. Routine audits by U.S. Government agencies of Teledyne’s various procurement and accounting systems have the potential to result in disapproval of the audited systems by the administrative contracting officer. Disapproval could significantly impact cash flow, as up to 10% may be withheld from payments, as well as significantly impact potential contract awards and increase audit oversight of individual contract proposals.

The Department of War as well as other U.S. Government contracting agencies have adopted rules and regulations requiring contractors to implement a set of cybersecurity measures to attain the safeguarding of contractor systems that process, store, or transmit certain information. Implementation and compliance with these cybersecurity requirements is complex and costly, and could result in unforeseen expenses, lower profitability and, in the case of non-compliance, penalties and damages, all of which could have an adverse effect on our business. The cybersecurity requirements also impact our supply base which could impact cost, schedule and performance on programs if suppliers do not meet the requirements and therefore, do not qualify to support the programs.

In January 2026, the President issued an executive order that imposes obligations on U.S. defense contractors, including immediately prohibiting any “major defense contractor” from conducting future stock buybacks or issuing dividends at the expense of accelerated procurement and increased production capacity. The executive order also orders a historical review of defense contractor performance and directs the Secretary of War to develop and implement additional provisions related to prohibition of stock buybacks and corporate distributions, prohibition on the use of certain metrics in determining executive compensation and authorizing the U.S. Government to cap executive base salaries. At this time, it is unclear the extent to which the executive order will apply to us and significant uncertainties exist as to how the executive order will be implemented and interpreted. Depending on its implementation and application to us, the executive order could have a material adverse impact on our ability to make stock repurchases or issue dividends and continue to attract and retain executive talent.

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We also are required to procure certain materials and parts from supply sources approved by the U.S. Government. The inability of a supplier to meet our needs, the failure to obtain such approvals or the appearance of counterfeit parts in our products could have a material adverse effect on our financial position, results of operations or cash flows. Such failure or inclusion could result in claims under the False Claims Act, which could lead to civil and criminal penalties and disbarment of the applicable business unit from doing business with the U.S. Government, among other things. Risks associated with counterfeit parts could be exacerbated as a result of supply chain shortages or due to parts becoming obsolete.

We generate revenue from companies in the oil and gas industry, especially the offshore oil and gas industry, a historically cyclical industry with levels of activity that are significantly affected by the levels and volatility of oil and gas prices, which has in the past impacted and can impact in the future our financial results.

Teledyne manufactures seismic energy sources, interconnects and data acquisition products that are used in offshore energy exploration. The oil and gas industry has historically been cyclical and characterized by significant changes in the levels of exploration and development activities. Oil and gas prices, and market expectations of potential changes in those prices, significantly affect the levels of those activities. Any prolonged reduction in the overall level of offshore oil and gas exploration and development activities, whether resulting from changes in oil and gas prices or otherwise, could materially and adversely affect our financial condition and the results of our businesses within our Instrumentation segment.

Some factors that have affected and are likely to continue affecting oil and gas prices and the level of demand for our products and services include the following:

• worldwide demand for oil and gas;

• the ability of the Organization of Petroleum Exporting Countries (“OPEC”), to set and maintain production levels;

• the level of production by non-OPEC countries;

• the war between Russia and Ukraine, including the implementation of price controls on Russian oil exports and restrictions on oil and gas exports imposed by Russia;

• instability in the Middle East and oil-producing regions of Latin America, including Venezuela;

• the ability of oil and gas companies to generate or raise funds for capital expenditures;

• domestic and foreign tax policy;

• laws and governmental regulations that restrict exploration and development of oil and gas in various offshore jurisdictions or the use of hydraulic fracturing;

• laws and governmental regulation that restrict the use of hydraulic fracturing;

• technological changes;

• the political environment of oil-producing regions;

• the price and availability of alternative fuels; and

• climate change regulations that provide incentives to conserve energy, use electric vehicles or use alternative energy sources, or that impose restrictions on the development and extraction of oil and gas.

The airline industry is heavily regulated, and if we fail to comply with applicable requirements, our results of operations could suffer.

Our commercial aerospace group produces products for use in commercial aviation. Governmental agencies throughout the world, including the Federal Aviation Administration (“FAA”), prescribe standards and qualification requirements for aircraft components, including virtually all commercial airline and general aviation products. Specific regulations vary from country to country, although compliance with FAA requirements generally satisfies regulatory requirements in other countries. If any material authorization or approval qualifying us to supply our products is revoked or suspended, then sale of the product would be prohibited by law, which would have an adverse effect on our business, financial condition and results of operations.

The FAA and equivalent regulatory agencies have increasingly focused on the need to assure that airline industry products are designed with sufficient cybersecurity controls to protect against unauthorized access or other unwanted compromise. A failure to meet these evolving expectations could negatively impact sales into the industry and expose us to legal or contractual liability.

Changes in production rates for major aircraft manufacturers, like Boeing and Airbus, impact our commercial aerospace businesses. Boeing and Airbus have in the recent past struggled to meet delivery targets due to supply chain issues and other challenges. Any future pauses or reductions in manufacturing from Boeing or Airbus could negatively impact our business.

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A change in policy direction related to environmental regulations and green energy could negatively impact demand for our monitoring instruments and energy systems products.

Many of our products are used by industrial customers and municipalities to monitor ambient air quality, water quality and gas and particulate emissions in order comply with regulatory requirements issued by the U.S. Environmental Protection Agency and other federal agencies. The Presidential Administration scaled back many of these regulations, which could result in decreased demand for our products, especially if funding from individual states do not make up for the shortfall in federal funding. The Presidential Administration has also rolled back green energy initiatives, which could harm our energy systems business that manufactures hydrogen-based energy generation systems and which also is likely to reduce the number of federally funded hydrogen generation projects, which lowers demand for our process instrumentation products.

Risks related to Finance and Tax Matters

Our indebtedness, and any failure to comply with our covenants that apply to our indebtedness, could materially and adversely affect our business.

As of December 28, 2025, we had $2,488.0 million total outstanding indebtedness in senior notes. As of December 28, 2025, no borrowings were outstanding under our $1.20 billion credit facility. The agreements we entered into with respect to our indebtedness contain negative covenants, that, subject to certain exceptions, include limitations on indebtedness related to our credit facility, liens, dispositions, investments and mergers and other fundamental changes. Our ability to comply with these negative covenants can be affected by events beyond our control. The indebtedness and these negative covenants may also have the effect, among other things, of limiting our ability to obtain additional financing, if needed, reducing the funds available to make acquisitions or capital expenditures, reducing our flexibility in planning for or reacting to changes in our business or market conditions, and making us more vulnerable to economic downturns and adverse competitive and industry conditions. In addition, a breach of the negative covenants could result in an event of default with respect to the indebtedness, which, if not cured or waived, could result in the indebtedness becoming immediately due and payable and could have a material adverse effect on our business, financial condition or operating results. Any future indebtedness incurred under our credit facility will expose us to interest rate risk.

We may not be able to service our debt obligations, which could have a material and adverse effect on our business, financial condition or operating results.

Our ability to meet our interest expense and debt service obligations will depend on our future performance, including the cash we generate from operating activities, which will be affected by financial, business, economic and other factors, including potential changes in laws or regulations, industry conditions, industry supply and demand, customer preferences, the success of our products and pressure from competitors. If we are unable to meet our debt service obligations we may be required to refinance all or part of our debt, sell strategic assets at unfavorable prices, incur additional indebtedness or issue common stock or other equity securities and we may not be able to take such actions on terms acceptable to us and in amounts sufficient to meet our needs. If we are able to raise additional funds through the issuance of equity securities, such issuance would also result in dilution to our stockholders.

The credit rating of Teledyne could be downgraded, which may increase borrowing costs.

The credit ratings of Teledyne’s debt could be subject to a downgrade below investment grade which could result in higher borrowing costs and more restrictive debt covenants in the future.

Higher tax rates may harm our results of operations and cash flow.

Increases in the United States on the taxation of foreign income and expense may harm our results of operations and cash flow. The relative amount of income we earn in jurisdictions outside the United States could reduce our net income and increase our cash payments. Additionally, beginning in 2023, the United States has adopted a 15% corporate alternative minimum tax for certain large corporations. Teledyne does not expect to be subject to this tax; however, Teledyne continues to monitor the potential impact of the U.S. corporate minimum tax. Many other jurisdictions have also enacted corporate global 15% minimum tax rules, which apply to Teledyne. Teledyne is monitoring the impact of these foreign minimum tax rules. Increased tax due to corporate minimum taxes in the United States or in other jurisdictions could reduce our net income and increase our cash payments.

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Changes in future business conditions could cause business investments, goodwill and other long-lived assets to become impaired, resulting in significant losses and write-downs that would reduce our operating income.

On December 28, 2025, Teledyne’s goodwill was $8,687.6 million and net acquired intangible assets were $2,100.1 million. We are required to test annually both acquired goodwill and other indefinite-lived intangible assets for impairment based upon a fair value approach, rather than amortizing the value over time. We have chosen to perform our annual impairment reviews of goodwill and other indefinite-lived intangible assets during the fourth quarter of each fiscal year. As a result of these annual tests, we recorded $52.5 million of pretax, non-cash trademark impairments in 2024 in the Digital Imaging and Instrumentation segments, and no comparable amounts were recorded in 2025. We are also required to test goodwill 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. These events or circumstances could include a significant change in the business climate, including a significant sustained decline in an entity’s market value, legal factors, operating performance indicators, competition, sale or disposition of a significant portion of the business, or other factors. If the fair market value is less than the carrying value, including goodwill, we could be required to record a non-cash impairment charge. The valuation of reporting units requires judgment in estimating future cash flows, discount rates and estimated product life cycles. In making these judgments, we evaluate the financial health of the business, including such factors as industry performance, changes in technology and operating cash flows. As we have grown through acquisitions, the amount of goodwill and net acquired intangible assets is a significant portion of our total assets. As a result, the amount of any annual or interim impairment could be significant and could have a material adverse effect on our reported financial results for the period in which the charge is taken. Goodwill and acquired intangibles assets of recently acquired reporting units generally represent a higher inherent risk of impairment, which typically decreases as the businesses are integrated into the Company. We also may be required to record an earnings charge or incur unanticipated expenses if, as a result of a change in strategy or other reason, we were to determine the value of other assets had been impaired.

For additional discussion of business acquisitions, goodwill and other long-lived assets, see the discussion under “Item 7 . Management’s Discussion and Analysis of Operations and Financial Condition” and Notes 3 and 6 .

Risks related to climate change

Climate change may disrupt or adversely impact our business.

Climate change may have an increasingly adverse impact on our business and those of our customers, partners and suppliers. As discussed under the risk factor below headed “Natural and man-made disasters could adversely affect our business, results of operations and financial condition,” some of our manufacturing facilities are located in regions that may be impacted by severe weather events, like hurricanes or ice storms, or in areas prone to wildfires, droughts and rising sea levels, the frequency and severity of which may increase as a result of climate change. These events could result in potential damage to our physical assets and may result in disruptions in manufacturing activities and impair the ability of our employees to work effectively. The effects of climate change also may impact our decisions to construct new facilities or maintain existing facilities in the areas most prone to physical risks, which could similarly increase our operating and material costs. We could also face indirect financial risks passed through the supply chain that could result in higher prices for our products and the resources needed to produce them.

We sell products to customers directly engaged in oil and gas exploration and production. Changes to regulations, social practices and preferences, energy generation and transportation technologies that may occur or be implemented to mitigate climate change could result in reduced demand for hydrocarbon products, which could result in a reduction in sales to these customers.

Regulations associated with climate change could adversely affect our business.

Legislative and regulatory measures currently under consideration or being implemented by government authorities to address climate change could require reductions in our GHG or other emissions, establish a carbon tax or increase fuel or energy taxes. We have also voluntarily announced goals to reduce our GHG emissions by a target date. These legal requirements, in addition to emission reduction efforts that we voluntarily undertake, are expected to result in increased capital expenditures and compliance costs and could result in higher costs required to operate and maintain our facilities, procure raw materials and energy, and may require us to acquire emission credits or carbon offsets. The inconsistent international, regional and/or national requirements associated with climate change regulations also create economic and regulatory uncertainty.

Investor sentiment towards climate change and sustainability could adversely affect our business and the market price for our common stock.

Investor focus and activism related to climate change and sustainability may hinder our access to capital, as investors may reconsider their capital investment as a result of their assessment of our sustainability practices. If we are unable to meet the sustainability standards set by these investors, or if we are unable to meet GHG reduction targets we communicate to the public, we may lose investors, our stock price may be negatively impacted, and our reputation may be negatively affected.

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Risks related to Legal and Compliance Matters

Adverse findings in matters related to export control practices, including FLIR’s historical practices, could materially impact us.

Effective April 24, 2022, the United States Department of State’s Office of Defense Trade Controls Compliance (“DDTC”) closed the four-year Consent Agreement that had been entered into by FLIR Systems, Inc., to resolve various export allegations under the International Traffic in Arms Regulations (“ITAR”). Teledyne FLIR has enhanced its trade compliance program. Nonetheless, adverse disclosures and findings could cause additional expenses in connection with further remedial measures or potential penalties.

We have made other voluntary disclosures to the U.S. Department of State and the U.S. Department of Commerce, including to the Bureau of Industry and Security (“BIS”) with respect to Teledyne FLIR shipments of products from non-U.S. jurisdictions which were not licensed due to incorrect de minimis calculation methodology under the Export Administration Regulations. We have made voluntary disclosures to export authorities in jurisdictions outside the United States for certain potential violations of local export laws.

An unfavorable outcome could result in substantial fines and penalties or loss or suspension of export privileges or of particular authorizations that could be material to our financial position, results of operations or cash flows.

We may not be able to enforce or protect our intellectual property rights, or third parties may claim we infringe their intellectual rights, each which may harm our ability to compete and thus harm our business.

Our ability to enforce and protect our patents, copyrights, software licenses, trade secrets, know-how, and other intellectual property rights is subject to general litigation risks, as well as uncertainty as to the enforceability of our intellectual property rights in various countries. When we seek to enforce our rights, we have found that various claims may be asserted against us, including claims that our intellectual property right is invalid, is otherwise not enforceable or is licensed to the party against whom we are asserting a claim. In addition, we may be the target of aggressive and opportunistic enforcement of patents by third parties. If we are not ultimately successful in defending ourselves against these claims in litigation, we may not be able to sell a product or family of products due to an injunction, or we may have to pay damages that could, in turn, harm our results of operations. Our inability to enforce our intellectual property rights under these circumstances may harm our competitive position and our business.

Product liability claims, product recalls and field service actions could have a material adverse effect on our reputation, business, results of operations and financial condition and we may have difficulty obtaining product liability and other insurance coverage.

As a manufacturer and distributor of a wide variety of products, including monitoring instruments, gas and flame detection instruments, products used in offshore oil and gas production, products used in transportation and commercial aviation, products used in maritime navigation and products used in medical devices (including X-ray detectors), our results of operations are susceptible to adverse publicity regarding the quality or safety of our products. Product liability claims challenging the safety of our products may result in a decline in sales for a product, which could adversely affect our results of operations. This could be the case even if the claims themselves are proven to be untrue or settled for immaterial amounts.

While we have general liability and other insurance policies concerning product liabilities and errors and omissions, we have self-insured retentions or deductibles under such policies with respect to a portion of these liabilities. Awarded damages could be more than our accruals. We could incur losses above the aggregate annual policy limit as well. We cannot ensure that, for 2026 and in future years, insurance carriers will be willing to renew coverage or provide new coverage for product liability.

Product recalls can be expensive and tarnish our reputation and have a material adverse effect on the sales of our products. We cannot assure that we will not have additional product liability claims or that we will not recall any products.

We have been joined, among a number of defendants (often over 100), in lawsuits alleging injury or death as a result of exposure to asbestos. In addition, because of the prominent “Teledyne” name, we may continue to be mistakenly joined in lawsuits involving a company or business that was not assumed by us as part of our 1999 spin-off from Allegheny Teledyne Incorporated. To date, we have not incurred material liabilities in connection with these lawsuits. However, our historical insurance coverage, including that of our predecessors, may not fully cover such claims and the defense of such matters. Coverage typically depends on the year of purported exposure and other factors. Nonetheless, we intend to vigorously defend our position against these claims.

Teledyne Brown Engineering, Inc. and other Teledyne companies manufacture components for customers in the nuclear power market, including utilities and certain governmental entities. Certain liabilities associated with such products are covered by the Price-Anderson Nuclear Industries Indemnity Act and other statutory and common law defenses, and we have received indemnities from some of our customers. However, there is no assurance we will not face product liability claims related to such products or that our exposure will not exceed the amounts for which we have liability coverage or protection.

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Failing to comply with increasing environmental regulations, as well as the effects of potential environmental liabilities, could have a material adverse financial effect on us.

We, like other industry participants, are subject to various federal, state, local and international environmental laws and regulations.

Our manufacturing operations, including former operations, could expose us to material environmental liabilities. Additionally, companies that we acquire may have environmental liabilities that might not be accurately assessed or brought to our attention at the time of the acquisition.

Our Teledyne Battery Products unit makes lead acid batteries in California and is subject to a variety of environmental regulations and inspections, which have increased over time. Also, some of our sites conduct electroplating, metal finishing and other operations that utilize hazardous materials that are subject to similar regulations. Regulatory changes or failure by a business to meet applicable requirements could disrupt that business or force a closure or relocation of the business.

Our products are subject to various regulations that prohibit or restrict the use of certain hazardous substances. Future hazardous substance restrictions or prohibitions may limit our ability to market some products in certain countries.

For additional discussion of environmental matters, see the discussion under the caption “Other Matters – Environmental” of “Item 7 . Management’s Discussion and Analysis of Results of Operation and Financial Condition” and Note 17 .

Other risks we face

Natural and man-made disasters could adversely affect our business, results of operations and financial condition.

Several of our facilities, as a result of their locations, could be subject to a catastrophic loss caused by earthquakes, hurricanes, tornados, floods, ice storms, rising sea levels, droughts or other natural disasters. Many of our production facilities and our headquarters are located in California and thus are in areas with above average seismic activity and may also be at risk of damage due to wildfire or mudslides. Local utilities may impose blackouts during high fire risk weather conditions, which could result in disruptions to our businesses located in California, including our headquarters.

In the event of a major earthquake, tornado, hurricane or catastrophic event such as fire, power loss, telecommunications failure, vandalism, cyber-attack, war, terrorist attack or health epidemic (including COVID), we may be unable to continue our operations and may endure system interruptions, reputational harm, delays in our application development, lengthy interruptions in our production, breaches of data security and loss of critical data, all of which could harm our business, results of operations and financial condition and have a material adverse impact on us. Starting in December 2022, a series of direct-action protests by political extremists on several of our facilities in the UK have resulted in trespass and vandalism and in some cases caused damage to our facilities and interrupted some productions lines for a period of time. Teledyne FLIR’s components operation is a single source supplier of certain sensors used throughout the FLIR business, and a disruption in business due to a disaster could have a material adverse impact on the businesses of Teledyne FLIR. Teledyne’s facilities in Quebec, Canada have been impacted by loss of electrical power caused by severe ice storms. In addition, we have manufacturing facilities in the southeastern United States and Texas that have been threatened or struck by major hurricanes. Our businesses located in Houston, Texas and Daytona Beach, Florida have been impacted in the past by hurricanes. Our facilities in Alabama, Florida, Nebraska, Tennessee and Virginia have also been threatened by tornados. If any of our facilities were to experience a catastrophic earthquake, wildfire, hurricane, storm, tornado or other natural disaster, or if Teledyne’s major facilities experience long-term loss of electrical power, such event could disrupt our operations, delay production, shipments and revenue, result in large expenses to repair or replace the facility or facilities and could have a material adverse effect on our business. In addition, the insurance we maintain may be insufficient to cover our losses resulting from disasters, cyber-attacks or other business interruptions, and any incidents may result in loss of, or increased costs of, such insurance. Our existing disaster recovery and business continuity plans (including those relating to our information technology systems) may not be fully responsive to, or minimize losses associated with, catastrophic events.

Disasters also have an indirect adverse impact on our business. For example, in 2018, a fire at a Netherlands-based facility of a key supplier of printed circuit boards resulted in delivery disruptions to the electronics industry, including to businesses in our Digital Imaging segment.

Our business and operations could suffer in the event of cybersecurity breaches.

Attempts by malicious actors to gain unauthorized access to our information technology systems have become more sophisticated and are sometimes successful. These attempts, which might be related to industrial or foreign government espionage, crime, activism, or other motivations, include covertly introducing malware into our computers and computer networks, performing reconnaissance, impersonating authorized users, extortion, fraud, and stealing, corrupting or restricting our access to data, among other activities. We have in the past experienced cyber-attacks including some loss of confidentiality and some loss of availability and integrity, although these attacks have not had material impact on our business. Our customers and suppliers have also experienced successful cyber-attacks, which in some cases resulted in payments by or to us being

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unlawfully diverted. The theft, corruption, unauthorized use or publication of our intellectual property or confidential business information due to a cyber-attack could harm our competitive position, damage our reputation, reduce the value of our investment in R&D and other strategic initiatives or otherwise adversely affect our business. We are subject to U.S. Department of War, Department of Homeland Security, and Department of Energy regulations applicable to certain types of data residing on or transiting through our information systems, and these regulations have been and will continue to be incorporated into certain U.S. Government contracts that we hold. To the extent that any security breach results in inappropriate disclosure of confidential or controlled information of employees, third parties or the U.S. Government, or any of the deployed security controls are deemed insufficient, we may incur liability or the loss of contracts or security clearances. As a result, we expect to continue to devote resources to the security of our information technology systems, operating technology systems, products and services. More resources may be required in the defense arena to the extent the U.S. Government increases its cybersecurity mandates. Unauthorized access to or control of our products, data, devices or systems could impact the safety of our customers and other third parties which could result in legal claims against us. Security breaches also could result in a violation of applicable U.S. and international privacy and other laws, including General Data Protection Regulation, Health Insurance Portability and Accountability Act, Payment Card Industry Data Security Standard, and California Consumer Privacy Act, or SEC regulations, and subject us to private consumer or securities litigation and governmental investigations and proceedings, any of which could result in our exposure to material civil or criminal liability. The systemic cybersecurity risk environment is elevated, in part by geopolitical conflicts and tensions, including the war between Ukraine and Russia, and increased supply chain-related cyber-risks. New technologies, including generative AI, quantum computing, new uses of QR codes and other innovations in digital communications, introduce new attack vectors, and new potential compromise scenarios, which malicious adversaries can exploit. Defending against malicious use of these new disruptive technologies could result in significant expense.

Issues in the development and use of AI may result in reputational harm or liability, and failure to introduce new and innovative products that have AI capabilities could put us at a competitive disadvantage.

We currently incorporate machine learning and AI capabilities into certain of our products and solutions and may seek to expand the use of AI in our offerings in the future. As with many innovations, AI presents risks, challenges, and unintended consequences that could affect our business. AI algorithms and training methodologies may be flawed. These deficiencies and other failures of AI systems could subject us to competitive harm, regulatory action, legal liability, and brand or reputational harm. Further, incorporating AI could give rise to litigation risk and risk of non-compliance and unknown cost of compliance, as AI is an emerging technology for which the legal and regulatory landscape is not fully developed (including potential liability for breaching intellectual property or privacy rights or laws). While new AI initiatives, laws, and regulations are emerging and evolving, what they ultimately will look like remains uncertain, and our obligation to comply with them could entail significant costs, negatively affect our business, or entirely limit our ability to incorporate certain AI capabilities into our offerings.

Additionally, leveraging AI capabilities to potentially improve internal functions and operations presents further risks and challenges. The use of AI to support business operations carries inherent risks related to data privacy and security, such as intended, unintended, or inadvertent transmission of proprietary, sensitive or export-controlled information, as well as challenges related to implementing and maintaining AI tools. Additionally, our competitors might move faster than us to gain efficiencies by incorporating AI into their design and development processes, and our products and/or cost structure could become less competitive as a result.

The rapid evolution of AI will require the application of resources by us to develop, test and maintain our products, services and operations to help ensure that AI is implemented ethically in order to minimize unintended, harmful impact.

Our competitors may be faster or more successful than we are in incorporating AI and other disruptive technology into their offerings, which would impair our ability to compete successfully.

Our business may suffer if we are unable to attract and retain key personnel.

Our future success depends to a significant extent upon the continued service of our executive officers and other key management and technical personnel and on our ability to continue to attract, retain and motivate qualified personnel. The lack of human capital due to very competitive labor market conditions in certain regions could impact our ability to deliver products and services. A significant portion of our revenue depends on the availability of a highly skilled technical workforce, the market for which is competitive. It is critical that we retain and develop our workforce to protect future revenue and improve our competitive advantage.

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We also have a mature workforce. Some of our businesses, including our businesses in engineered systems as well as in traveling wave tube and integrated microwave module design and development, draw from a pool of specialized engineering talent that is small and, in some cases, currently shrinking. Some of our businesses have a need for employees with a certain level of security clearance, and competition for such employees has increased. While we have engaged in succession planning, the loss of the services of one or more of our key employees or our failure to attract, retain and motivate qualified personnel could have a material adverse effect on our business, financial condition and results of operations.

Our business and financial results could be adversely affected by conditions and other factors associated with our suppliers and subcontractors.

Some items we purchase for the manufacture of our products are purchased from limited or single sources of supply due to technical capability, price and other factors. Furthermore, sole source supply is more common among our businesses that are heavily involved in R&D because there can be few suppliers in the world capable of producing the products or providing the services with the right highly specialized technology. In the case of our Defense Electronics businesses, once a part has been designed in, our customers often require lengthy and expensive qualification testing, potentially at the system level before a new supplier can be used on production hardware. Additionally, overall volumes are often small when compared to commercial markets. Both factors limit the ability to rapidly address supply chain issues when they occur. We have also outsourced from time to time the manufacturing of certain parts, components, subsystems and even finished products to single or limited sources, including international sources. Disruption of these sources or supplier-imposed rationing of scarce components could cause delays or reductions in shipments of our products or increases in our costs, which could have an adverse effect on our financial condition or operations. International sources pose additional risks, some of which are similar to those described above regarding international sales. With any continuing disruption in the global economy and financial markets, some of our suppliers may also continue to face issues gaining access to sufficient credit and materials to maintain their businesses, which could reduce the availability of some components and, to the extent such suppliers are single source suppliers, could adversely affect our ability to continue to manufacture and sell our products. Some companies engage subcontractors to perform a portion of the services we provide to our customers. To provide these services, the subcontractor must be financially viable and compliant with applicable laws, regulations and contract terms. Non-performance by a subcontractor could result in misalignment between subcontractor performance and our contractual obligations to our customers.

We face risks related to sales through distributors and other third parties which could harm our business.

We sell a portion of our products through third parties such as distributors, sales representatives and value-added resellers. Use of third party sales channels expose Teledyne to risks, including concentration, credit risk and legal risk because under certain circumstances we may be held responsible for the actions of third party intermediaries. We may rely on one or more key third party intermediaries for selling a product, and the loss of these third party intermediaries could reduce our revenue. Third party intermediaries may face financial difficulties, including bankruptcy, which could harm our collection of accounts receivables and financial results. Violations of anti-corruption laws, trade compliance regulations, procurement regulations and other laws and regulations by third party intermediaries could have a material impact on our business. Competitors could also block our access to such parties. Failing to manage risks related to our use of third party intermediaries may reduce sales, increase expenses, and weaken our competitive position, and result in sanctions against us.

We may not be able to sell or reconfigure businesses, facilities or product lines that we determine no longer meet with our growth strategy or that should be consolidated.

Consistent with our strategy to emphasize growth in our core markets, we continually evaluate our businesses to ensure that they are aligned with our strategy and objectives. Over the years we have also consolidated some of our business units and facilities, in some cases to respond to downturns in the defense or oil and gas industries, among other reasons. We may not be able to realize efficiencies and cost savings from our consolidation activities. Our ability to dispose of, exit or reconfigure businesses that may no longer be aligned with our growth strategy will depend on many factors, including the terms and conditions of any asset purchase and sale agreement or lease agreement, as well as industry, business and economic conditions.

Risks related to Corporate Governance Matters

Provisions of our governing documents, applicable law, and our Change in Control Severance Agreements could make an acquisition of Teledyne more difficult.

Our Restated Certificate of Incorporation, our Fifth Amended and Restated Bylaws and the General Corporation Law of the State of Delaware contain several provisions, that could make the acquisition of control of Teledyne, in a transaction not approved by our Board, more difficult. We have also entered into Change in Control Severance Agreements with eight members of our current management, which could have an anti-takeover effect. These provisions may prevent or discourage attempts to acquire our Company.

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Our Fifth Amended and Restated Bylaws (“Bylaws”) designate the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain lawsuits between us and our stockholders, which could limit our stockholders’ ability to obtain a judicial forum that it finds favorable for such lawsuits and make it more costly for our stockholders to bring such lawsuits, which may have the effect of discouraging such lawsuits.

Our Bylaws provide that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will be, to the fullest extent permitted by law, the sole and exclusive forum for any (i) derivative action or proceeding brought on our behalf, (ii) action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, employees or agents to us or our stockholders, (iii) action asserting a claim arising pursuant to any provision of the General Corporation Law of the State of Delaware, Restated Certificate of Incorporation or Bylaws or (iv) any action asserting a claim governed by the internal affairs doctrine. Our Bylaws further provide that the federal district courts of the United States of America shall be the exclusive forum for the resolution of any complaint asserting a cause or causes of action arising under the Securities Act of 1933, as amended, including all causes of action asserted against any defendant to such complaint. Our Bylaws also provide that any person or entity purchasing or otherwise acquiring or holding any interest in shares of our capital stock will be deemed to have notice of and consented to this forum selection provision.

However, this forum selection provision is not intended to apply to any actions brought under the Exchange Act. Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder and accordingly, the forum selection provision in our Bylaws will not relieve us of our duties to comply with the Exchange Act and the rules and regulations thereunder, and our stockholders will not be deemed to have waived our compliance with these laws, rules and regulations.

Nevertheless, this forum selection provision in our Bylaws may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our directors, officers and other employees, which may discourage lawsuits with respect to such claims, although our stockholders will not be deemed to have waived our compliance with federal securities laws and the rules and regulations thereunder. In addition, stockholders who do bring a claim in the Court of Chancery in the State of Delaware could face additional litigation costs in pursuing any such claim, particularly if they do not reside in or near Delaware. While we believe the risk of a court declining to enforce the forum selection provision contained in our Bylaws is low, if a court were to find the provision inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, operating results and financial condition.

Risks Related to Our Securities

An investment in Teledyne’s common stock and other securities involve risks, many of which are beyond our control.

Stock markets in general, including the New York Stock Exchange on which our common stock is listed, have experienced a high degree of price and volume fluctuations that are not necessarily related to operating performance of the listed companies. In addition to general economic, political and market conditions, such volatility may be related to: (i) changes from analysts’ expectations in revenues, earnings and other financial results; (ii) strategic actions by other competitors; (iii) changes to budgets or policies of the United States and other governments; and (iv) other risks described in this report. We cannot provide assurances as to our common stock price, which during fiscal 2025 ranged from a low of $419.00 to a high of $595.99.

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Item 7.

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

Overview

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

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Strategy

Our strategy continues to emphasize growth in our four business segments: Digital Imaging, Instrumentation, Aerospace and Defense Electronics, and Engineered Systems. The markets in which we sell our enabling technologies are characterized by high barriers to entry and include specialized products and services not likely to be commoditized. 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, 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. At Teledyne, operational excellence includes the rapid integration of the businesses we acquire. 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

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.

U.S. 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. dollar. 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 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 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 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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Selected Consolidated Operating Results

Our fiscal year is determined based on a 52- or 53-week convention ending on the Sunday nearest to December 31. Fiscal years 2025 and 2024 each contained 52 weeks.

(dollars in millions)

$ Change

% Change

Net sales

Costs and expenses

Cost of sales

Selling, general and administrative

Research and development

Acquired intangible asset amortization

Impairment of acquired intangible assets

Total costs and expenses

Operating income (loss)

Net income (loss) attributable to Teledyne

Diluted earnings per common share

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Consolidated Results of Operations

Our businesses are aligned in four segments: Digital Imaging, Instrumentation, Aerospace and Defense Electronics, and Engineered Systems. Additional financial information about our business segments can be found in Note  4 .

2025 compared with 2024

Net sales (dollars in millions)

$ Change

% Change

Digital Imaging

Instrumentation

Aerospace and Defense Electronics

Engineered Systems

Total net sales

Results of operations (dollars in millions)

$ Change

% Change

Operating income (loss):

Digital Imaging

Instrumentation

Aerospace and Defense Electronics

Engineered Systems

Corporate expense

Total operating income (loss)

Interest and debt expense, net

Non-service retirement benefit income

Gain (loss) on debt extinguishment

Other income (expense), net

Income (loss) before income taxes

Provision (benefit) for income taxes

Net income (loss) including noncontrolling interest

Less: Net income (loss) attributable to noncontrolling interest

Net income (loss) attributable to Teledyne

* Not meaningful

Net Sales

Net sales increased across three of our four business segments. Total year 2025 net sales included $270.1 million in incremental net sales from current and prior year acquisitions. Refer to “ Business Segment Operating Results ” later in this section for additional discussion of changes in net sales. 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. Government.

Cost of Sales

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. 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 (“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

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

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Acquired Intangible Asset Amortization

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

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 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 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 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.

Income Taxes

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

(dollars in millions)

Provision (benefit) for income taxes

Income (loss) before income taxes

Effective tax rate

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.

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Business Segment Operating Results

The following discussion of our four segments should be read in conjunction with Note  4 .

Digital Imaging

(dollars in millions)

$ Change

% Change

Net sales

Cost of sales

Selling, general and administrative expense

Research and development expense

Acquired intangible asset amortization

Impairment of acquired intangible assets

Operating income

Cost of sales % of net sales

Selling, general and administrative expense % of net sales

Research and development expense % of net sales

Acquired intangible asset amortization % of net sales

Impairment of acquired intangible assets % of net sales

Operating income % of net sales

International sales % of net sales

U.S. Government sales % of net sales

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 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. 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.

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Instrumentation

(dollars in millions)

$ Change

% Change

Net sales

Cost of sales

Selling, general and administrative expense

Research and development expense

Acquired intangible asset amortization expense

Impairment of acquired intangible assets

Operating income

Cost of sales % of net sales

Selling, general and administrative expense % of net sales

Research and development expense % of net sales

Acquired intangible asset amortization % of net sales

Impairment of acquired intangible assets % of net sales

Operating income % of net sales

International sales % of net sales

U.S. Government sales % of net sales

Our Instrumentation segment provides monitoring and control instruments for marine, environmental, industrial and other applications, as well as electronic test and measurement applications. We also provide power and communications connectivity devices for distributed instrumentation systems and sensor networks deployed in mission critical, harsh environments.

2025 compared with 2024

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.

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Aerospace and Defense Electronics

(dollars in millions)

$ Change

% Change

Net sales

Cost of sales

Selling, general and administrative expense

Research and development expense

Acquired intangible asset amortization

Operating income

Cost of sales % of net sales

Selling, general and administrative expenses % of net sales

Research and development expense % of net sales

Acquired intangible asset amortization % of net sales

Operating income % of net sales

International sales % of net sales

U.S. Government sales % of net sales

* 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 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.

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Engineered Systems

(dollars in millions)

$ Change

% Change

Net sales

Cost of sales

Selling, general and administrative expense

Research and development expense

Operating income

Cost of sales % of net sales

Selling, general and administrative expense % of net sales

Research and development expense % of net sales

Operating income % of net sales

International sales % of net sales

U.S. Government sales % of net sales

Our Engineered Systems segment provides innovative systems engineering and integration, advanced technology development, and manufacturing solutions for defense, space, environmental and energy applications, including the design and manufacture of electrochemical energy systems.

2025 compared with 2024

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

Principal Cash and Capital Requirements

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 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. 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 $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.

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Long-term Debt

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.

Our credit facility requires us to comply with various financial and operating covenants and at December 28, 2025, 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. 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

The following table summarizes our expected cash outflows resulting from financial contracts and commitments at December 28, 2025:

Contractual obligations (in millions):

After 2031

Total

Debt obligations

Interest expense (a)

Operating lease obligations (b)

Purchase obligations (c)

Total

(a) Interest expense related to the credit facility, including facility fees, is assumed to accrue at the rates in effect at year end 2025 and is assumed to be paid at the end of each quarter with the final payment in June 2029 when the credit facility expires.

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

(c) Purchase obligations generally include contractual obligations for the purchase of goods and services and capital commitments that are enforceable and legally binding on us and that specifies all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum, or variable price provisions; and the approximate timing of the transaction.

Unrecognized tax benefits of $79.6 million and accrued interest and penalties on these tax matters of $11.4 million are not included in the table above. These unrecognized tax benefits, accrued interest and penalties are not included in the table above because $10.9 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.

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 2025 as set forth by the Employee Retirement

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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. In addition, certain pension contributions are eligible for future recovery through the pricing of products and services to the U.S. Government under certain government contracts, therefore, future cash contributions are not necessarily indicative of the impact these contributions may have on our liquidity. We also have payments due under our other postretirement benefit plans. These plans are not required to be funded in advance but are pay as you go. See further discussion in Note 10 . We monitor and manage our defined benefit pension plans obligation and may take additional actions to manage risk in the future.

Operating Activities

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

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

Cash provided by (used in) operating activities

Less: Capital expenditures for property, plant and equipment

Free cash flow (a)

(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.

Investing Activities

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 was as follows (dollars in millions):

$ Change

% Change

Digital Imaging

Instrumentation

Aerospace and Defense Electronics

Engineered Systems

Total segment capital expenditures

Corporate

Total Teledyne capital expenditures

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.

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.

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Other Matters

Income Taxes

Our income tax expense, deferred tax assets and liabilities, and reserves for unrecognized tax benefits reflect management’s best assessment of estimated current and future taxes to be paid. We are subject to income taxes in both the United States and numerous foreign jurisdictions. Significant judgments and estimates are required in determining the consolidated income tax expense.

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. In evaluating our ability to recover our deferred tax assets within the jurisdiction from which they arise, we consider all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax-planning strategies and results of recent operations. 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. In evaluating the objective evidence that historical results provide, we consider three years of cumulative operating income. 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 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

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

Our primary exposure to market risk relates to changes in interest rates and foreign currency exchange rates. We periodically evaluate these risks and have taken measures to mitigate these risks. We own assets and operate facilities in countries that have been politically stable.

Interest Rate Risk

We are exposed to market risk through the interest rate on our borrowings under our $1.20 billion credit facility. As of December 28, 2025, no borrowings are outstanding under our credit facility. Future indebtedness incurred under our credit facility will expose us to interest rate risk.

Foreign Currency Exchange Rate Risk

Teledyne transacts business in various foreign currencies and has international sales and expenses denominated in foreign currencies, subjecting the Company to foreign currency risk. Our primary foreign currency risk management objective is to protect the U.S. 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. companies. These contracts are designated and qualify as cash flow hedges.

• 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. dollar.

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All derivatives are recorded on the balance sheet at fair value. The accounting for gains and losses resulting from changes in fair value depends on the use of the derivative and whether it is designated and qualifies for hedge accounting. Teledyne does not use foreign currency forward contracts for speculative or trading purposes. Refer to Notes  2 , 14 and 15 for further disclosures around our derivative instruments and hedging activities.

Notwithstanding our efforts to mitigate portions of our foreign currency exchange rate risks, there can be no assurance that our hedging activities will adequately protect us against the risks associated with foreign currency fluctuations. 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 Canadian dollars and sell U.S. 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

We are subject to various federal, state, local and international environmental laws and regulations which require that we investigate and remediate the effects of the release or disposal of materials at sites associated with past and present operations. These include sites at which Teledyne has been identified as a potentially responsible party under the Comprehensive Environmental Response, Compensation and Liability Act, commonly known as Superfund, and comparable state laws. We are currently involved in the investigation and remediation of a number of sites. Reserves for environmental investigation and remediation totaled $6.0 million and $6.5 million as of December 28, 2025, and December 29, 2024, 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. See also our environmental risk factor disclosure in Item 1A . “ Risk Factors ” as well as additional discussion in Notes  2 and 1 7.

U. S. Government Contracts

We perform work on a number of contracts with the U.S. Department of War and other agencies and departments of the U.S. Government including sub-contracts with government prime contractors. Sales under these contracts with the U.S. Government, which included contracts with the U.S. 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. Government by segment, see Note  5 . Sales to the U.S. 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. 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. See also our government contracts risks factor disclosure in Item 1A . “ Risk Factors ”.

For information on accounts receivable from the U.S. Government, see Note  7 .

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 U.S. GAAP. 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. On an ongoing basis, we evaluate our estimates, including those related to product returns and replacements, allowance for doubtful accounts, inventory, intangible assets, income taxes, warranty obligations, pension and other postretirement benefits, long-term contracts, environmental, workers’ compensation and general liability, employee benefits and other contingencies and litigation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances at the time, the results of which form the basis for making our judgments. Actual results may differ materially from these estimates under different assumptions or conditions. See “ Critical Accounting Policies and Estimates ” for further information on key estimates.

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. See further discussion in Note  7 .

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Critical Accounting Policies and Estimates

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. Our critical accounting policies are those that are reflective of significant judgment, complexity and uncertainty, and may potentially result in materially different results under different assumptions and conditions. We have identified the following as critical accounting policies: revenue recognition; accounting for business combinations, goodwill and acquired intangible assets; and accounting for income taxes. For additional discussion of the application of these and other accounting policies, see Note  2 .

Revenue Recognition

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. 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. 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. The estimation of this variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of our anticipated performance and all information (historical, current and forecasted) that is reasonably available to us. As control transfers continuously over time on these contracts, revenue is recognized based on the extent of progress towards completion of the performance obligation. The selection of the method to measure progress towards completion requires judgment and is based on the nature of the products or services to be provided. We generally use the cost-to-cost measure of progress as this measure best depicts the transfer of control to the customer which occurs as we incur costs on our contracts. Under the cost-to-cost method, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation.

For over time contracts using the cost-to-cost method, we have an Estimate at Completion (“EAC”) process in which management reviews the progress and execution of our performance obligations. This EAC process requires management judgment relative to assessing risks, estimating contract revenue, determining reasonably dependable cost estimates, and making assumptions for schedule and technical issues. Since certain contracts extend over a longer period of time, the impact of revisions in cost and revenue estimates during the progress of work may adjust the current period earnings through a cumulative catch-up basis. This method recognizes, in the current period, the cumulative effect of the changes on current and prior quarters. Additionally, if the current contract estimate indicates a loss, a provision is made for the total anticipated loss in the period that it becomes evident. Contract cost and revenue estimates for significant contracts are generally reviewed and reassessed at least quarterly. 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.

Business Combinations, Goodwill and Acquired Intangible Assets

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. Assets acquired and liabilities assumed are recorded at their fair values and the excess of the purchase price over the amounts assigned is recorded as goodwill. We determine the fair value of such assets and liabilities, often in consultation with third-party valuation advisors. Acquired intangible assets with finite lives are amortized over their estimated useful lives. Adjustments to fair value assessments are recorded to goodwill over the purchase price allocation period.

Goodwill and acquired intangible assets with indefinite lives are not amortized. 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. 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. These events or circumstances could include a significant change in the business climate, including a significant sustained decline in an entity’s market value, legal factors, operating performance indicators, competition, sale or disposition of a significant portion of the business, or other factors.

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We may use either a qualitative or quantitative approach when testing a reporting unit’s goodwill for impairment. For reporting units where we use the qualitative approach, we perform a qualitative evaluation of events and circumstances impacting the reporting unit to determine the likelihood of goodwill impairment. Based on that qualitative evaluation, if we determine it is more likely than not that the fair value of a reporting unit exceeds its carrying amount, no further evaluation is necessary. Otherwise, we perform a quantitative impairment test. 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. 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 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.

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. 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 $5,193.4 million of goodwill, and the estimated fair value of the FLIR reporting unit exceeded its carrying value by approximately $619.2 million or 8%. 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. The discount rate, which is consistent with a weighted average cost of capital that is likely to be expected by a market participant, is based upon industry required rates of return, including consideration of both debt and equity components of the capital structure. Although no impairment 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 28, 2025, we had $793.4 million of indefinite-lived trademark intangibles which were subject to an annual impairment test in the fourth quarter of 2025. 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. 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. 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. Changes in sales forecast estimates or the application of alternative assumptions could produce significantly different results. The discount rate, which is consistent with a weighted average cost of capital that is likely to be expected by a market participant, is based upon industry required rates of return, including consideration of both debt and equity components of the capital structure. During its fourth quarter annual assessment and as part of finalizing its strategic plan in December 2025, 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

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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.

Income Taxes

For a description of the Company’s tax accounting policies, refer to Note 2 and Note 9 . We make certain estimates and judgments in determining income tax expense for financial statement purposes. These estimates and judgments occur in the calculation of tax credits, benefits and deductions, and in the calculation of certain tax assets and liabilities which arise from differences in the timing of recognition of revenue and expense for tax and financial statement purposes. In addition, uncertainty exists regarding tax positions taken in previously filed tax returns still under examination and positions expected to be taken in the current year and future returns which may impact income tax expense. On a quarterly basis, we provide for income taxes based upon an estimated annual effective tax rate which is dependent on the geographic composition of worldwide earnings, tax regulations governing each region, availability of tax credits, and the effectiveness of our tax planning strategies. 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. 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.

Deferred tax assets and liabilities arise due to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax carryforwards. Significant management judgment is required in determining whether deferred tax assets will be realized in full or in part. When it is more-likely-than-not that all or some portion of deferred tax assets may not be realized, a valuation allowance must be established against the deferred tax assets. In assessing the need for a valuation allowance, we consider all available positive and negative evidence, including past operating results, estimates of future taxable income and the feasibility of tax planning strategies. In the event that we change our determination as to the amount of deferred tax assets that can be realized, we will adjust our valuation allowance with a corresponding impact to the provision for income taxes in the period in which such determination is made.

The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations across domestic and foreign jurisdictions. We establish reserves for uncertain tax positions when, despite the belief that our tax positions are supportable, there remains uncertainty in a tax position taken in our filed tax returns or planned to be taken in a future tax return or claim. We follow a recognition and measurement approach, considering the facts, circumstances, and information available at the reporting date. Judgment is exercised in determining the level of evidence necessary and appropriate to support its assessment using all available information. 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. 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. 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.

Recent Accounting Standards

For a discussion of recent accounting standards see Note 2 .

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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, 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. All statements made in this Annual Report on Form 10-K that are not historical in nature should be considered forward-looking. Actual results could differ materially from these forward-looking statements.

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; U.S. 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; foreign currency exchange risks; rising interest rates; risks associated with indebtedness, as well as our ability to reduce indebtedness and the timing thereof; the impact of semiconductor and other supply chain shortages; higher inflation, including wage competition and higher shipping costs; labor shortages and competition for skilled personnel; 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. GAAP and related standards; disruptions in the global economy; 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; funding, continuation and award of government programs; 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, and economic conditions; the continuing review and resolution of FLIR’s trade compliance and tax matters; threats to the security of our confidential and proprietary information, including cybersecurity threats; risks related to AI; 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, 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 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. There are additional risks associated with acquiring, owning and operating businesses internationally, including those arising from U.S. and foreign government policy changes or actions and exchange rate fluctuations.

We continue to take action to assure compliance with the internal controls, disclosure controls and other requirements of the Sarbanes-Oxley Act of 2002. 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.

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.