ý | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 25-1843385 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) | |
1049 Camino Dos Rios Thousand Oaks, California | 91360-2362 | |
(Address of principal executive offices) | (Zip Code) | |
Large accelerated filer | ý | Accelerated filer | ¨ |
Non-accelerated filer | ¨ (Do not check if a smaller reporting company) | Smaller reporting company | ¨ |
Emerging growth company | ¨ | ||
PAGE | |||
Part I | |||
19 | |||
30 | |||
31 | |||
Part II | 31 | ||
Item 1. Legal Proceedings | 31 | ||
31 | |||
32 | |||
33 | |||
Third Quarter | Nine Months | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Net sales | $ | 662.2 | $ | 526.8 | $ | 1,899.4 | $ | 1,597.0 | |||||||
Costs and expenses | |||||||||||||||
Cost of sales | 405.8 | 317.0 | 1,178.3 | 978.0 | |||||||||||
Selling, general and administrative expenses | 163.5 | 141.0 | 483.9 | 435.7 | |||||||||||
Total costs and expenses | 569.3 | 458.0 | 1,662.2 | 1,413.7 | |||||||||||
Operating income | 92.9 | 68.8 | 237.2 | 183.3 | |||||||||||
Interest and debt expense, net | (8.2 | ) | (5.6 | ) | (25.5 | ) | (17.2 | ) | |||||||
Other income/(expense), net | (3.0 | ) | (0.8 | ) | (13.0 | ) | 15.1 | ||||||||
Income before income taxes | 81.7 | 62.4 | 198.7 | 181.2 | |||||||||||
Provision for income taxes | 12.7 | 10.4 | 39.1 | 43.3 | |||||||||||
Net income | $ | 69.0 | $ | 52.0 | $ | 159.6 | $ | 137.9 | |||||||
Basic earnings per common share | $ | 1.95 | $ | 1.50 | $ | 4.53 | $ | 4.00 | |||||||
Weighted average common shares outstanding | 35.3 | 34.7 | 35.2 | 34.5 | |||||||||||
Diluted earnings per common share | $ | 1.90 | $ | 1.46 | $ | 4.41 | $ | 3.90 | |||||||
Weighted average diluted common shares outstanding | 36.4 | 35.6 | 36.2 | 35.4 | |||||||||||
Third Quarter | Nine Months | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Net income | $ | 69.0 | $ | 52.0 | $ | 159.6 | $ | 137.9 | |||||||
Other comprehensive income (loss): | |||||||||||||||
Foreign exchange translation adjustment | 36.8 | (7.7 | ) | 91.6 | 3.6 | ||||||||||
Hedge activity, net of tax | 1.9 | (0.9 | ) | 4.8 | 4.6 | ||||||||||
Pension and postretirement benefit adjustments, net of tax | 3.2 | 3.3 | 10.0 | 10.8 | |||||||||||
Other comprehensive income (loss) | 41.9 | (5.3 | ) | 106.4 | 19.0 | ||||||||||
Comprehensive income, net of tax | $ | 110.9 | $ | 46.7 | $ | 266.0 | $ | 156.9 | |||||||
October 1, 2017 | January 1, 2017 | ||||||
Assets | |||||||
Current Assets | |||||||
Cash | $ | 82.5 | $ | 98.6 | |||
Accounts receivable, net | 466.0 | 383.7 | |||||
Inventories, net | 431.9 | 314.2 | |||||
Prepaid expenses and other current assets | 60.6 | 49.7 | |||||
Total current assets | 1,041.0 | 846.2 | |||||
Property, plant and equipment, net of accumulated depreciation and amortization of $519.4 at October 1, 2017 and $468.5 at January 1, 2017 | 452.1 | 340.8 | |||||
Goodwill | 1,748.9 | 1,193.5 | |||||
Acquired intangibles, net | 408.2 | 234.6 | |||||
Prepaid pension assets | 109.8 | 88.5 | |||||
Other assets, net | 87.5 | 70.8 | |||||
Total Assets | $ | 3,847.5 | $ | 2,774.4 | |||
Liabilities and Stockholders’ Equity | |||||||
Current Liabilities | |||||||
Accounts payable | $ | 186.0 | $ | 138.8 | |||
Accrued liabilities | 336.6 | 261.0 | |||||
Current portion of long-term debt, capital leases and other debt | 2.5 | 102.0 | |||||
Total current liabilities | 525.1 | 501.8 | |||||
Long-term debt and capital leases | 1,193.2 | 515.8 | |||||
Other long-term liabilities | 275.8 | 202.4 | |||||
Total Liabilities | 1,994.1 | 1,220.0 | |||||
Commitments and contingencies | |||||||
Stockholders’ Equity | |||||||
Preferred stock, $0.01 par value; outstanding shares - none | — | — | |||||
Common stock, $0.01 par value; authorized 125,000,000 shares; issued shares: 37,697,865 at October 1, 2017 and January 1, 2017; outstanding shares: 35,436,187 at October 1, 2017 and 35,110,762 at January 1, 2017 | 0.4 | 0.4 | |||||
Additional paid-in capital | 337.1 | 335.7 | |||||
Retained earnings | 2,072.0 | 1,912.4 | |||||
Treasury stock, 2,261,678 at October 1, 2017 and 2,587,103 at January 1, 2017 | (211.3 | ) | (242.9 | ) | |||
Accumulated other comprehensive loss | (344.8 | ) | (451.2 | ) | |||
Total Stockholders’ Equity | 1,853.4 | 1,554.4 | |||||
Total Liabilities and Stockholders’ Equity | $ | 3,847.5 | $ | 2,774.4 | |||
Nine Months | |||||||
2017 | 2016 | ||||||
Operating Activities | |||||||
Net income | $ | 159.6 | $ | 137.9 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 87.4 | 65.6 | |||||
Deferred income taxes | (1.3 | ) | 9.0 | ||||
Stock-based compensation | 14.3 | 12.2 | |||||
Gain on sale of facility | — | (17.9 | ) | ||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | (7.7 | ) | 2.3 | ||||
Inventories | (36.9 | ) | (18.9 | ) | |||
Prepaid expenses and other assets | (1.2 | ) | (1.4 | ) | |||
Accounts payable | 12.6 | 6.9 | |||||
Accrued liabilities | 11.4 | 37.5 | |||||
Income taxes receivable/payable, net | 11.9 | 26.7 | |||||
Long-term assets | (12.5 | ) | 0.8 | ||||
Other long-term liabilities | 16.1 | 6.0 | |||||
Pension and postretirement benefits | (13.9 | ) | (12.3 | ) | |||
Other operating, net | 8.5 | (3.7 | ) | ||||
Net cash provided by operating activities | 248.3 | 250.7 | |||||
Investing Activities | |||||||
Purchases of property, plant and equipment | (40.5 | ) | (44.9 | ) | |||
Purchase of businesses and other investments, net of cash acquired | (773.8 | ) | (58.5 | ) | |||
Proceeds from the sale of assets | 1.1 | 29.6 | |||||
Sales proceeds transferred to escrow as restricted cash | — | (19.5 | ) | ||||
Net cash used in investing activities | (813.2 | ) | (93.3 | ) | |||
Financing Activities | |||||||
Net proceeds from (payments on) credit facility | 285.0 | (150.5 | ) | ||||
Proceeds from senior notes | 268.0 | — | |||||
Proceeds from term loan | 100.0 | — | |||||
Payments on senior notes and other debt | (131.7 | ) | (22.7 | ) | |||
Proceeds from other debt | — | 6.1 | |||||
Proceeds from exercise of stock options | 18.7 | 26.7 | |||||
Other financing, net | (4.4 | ) | (1.1 | ) | |||
Net cash provided by (used in) financing activities | 535.6 | (141.5 | ) | ||||
Effect of exchange rate changes on cash | 13.2 | (1.5 | ) | ||||
Change in cash | (16.1 | ) | 14.4 | ||||
Cash—beginning of period | 98.6 | 85.1 | |||||
Cash—end of period | $ | 82.5 | $ | 99.5 | |||
Foreign Currency Translation | Cash Flow Hedges and Other | Pension and Postretirement Benefits | Total | ||||||||||||
Balance as of July 2, 2017 | $ | (144.0 | ) | $ | 0.1 | $ | (242.8 | ) | $ | (386.7 | ) | ||||
Other comprehensive income before reclassifications | 36.8 | 0.6 | — | 37.4 | |||||||||||
Amounts reclassified from AOCI | — | 1.3 | 3.2 | 4.5 | |||||||||||
Net other comprehensive income | 36.8 | 1.9 | 3.2 | 41.9 | |||||||||||
Balance as of October 1, 2017 | $ | (107.2 | ) | $ | 2.0 | $ | (239.6 | ) | $ | (344.8 | ) | ||||
Foreign Currency Translation | Cash Flow Hedges and Other | Pension and Postretirement Benefits | Total | ||||||||||||
Balance as of July 3, 2016 | $ | (162.9 | ) | $ | (1.2 | ) | $ | (224.8 | ) | $ | (388.9 | ) | |||
Other comprehensive loss before reclassifications | (7.7 | ) | (0.8 | ) | — | (8.5 | ) | ||||||||
Amounts reclassified from AOCI | — | (0.1 | ) | 3.3 | 3.2 | ||||||||||
Net other comprehensive income (loss) | (7.7 | ) | (0.9 | ) | 3.3 | (5.3 | ) | ||||||||
Balance as of October 2, 2016 | $ | (170.6 | ) | $ | (2.1 | ) | $ | (221.5 | ) | $ | (394.2 | ) | |||
Foreign Currency Translation | Cash Flow Hedges and Other | Pension and Postretirement Benefits | Total | ||||||||||||
Balance as of January 1, 2017 | $ | (198.8 | ) | $ | (2.8 | ) | $ | (249.6 | ) | $ | (451.2 | ) | |||
Other comprehensive income (loss) before reclassifications | 91.6 | (1.5 | ) | — | 90.1 | ||||||||||
Amounts reclassified from AOCI | — | 6.3 | 10.0 | 16.3 | |||||||||||
Net other comprehensive income | 91.6 | 4.8 | 10.0 | 106.4 | |||||||||||
Balance as of October 1, 2017 | $ | (107.2 | ) | $ | 2.0 | $ | (239.6 | ) | $ | (344.8 | ) | ||||
Foreign Currency Translation | Cash Flow Hedges and Other | Pension and Postretirement Benefits | Total | ||||||||||||
Balance as of January 3, 2016 | $ | (174.2 | ) | $ | (6.7 | ) | $ | (232.3 | ) | $ | (413.2 | ) | |||
Other comprehensive income before reclassifications | 3.6 | 2.5 | — | 6.1 | |||||||||||
Amounts reclassified from AOCI | — | 2.1 | 10.8 | 12.9 | |||||||||||
Net other comprehensive income | 3.6 | 4.6 | 10.8 | 19.0 | |||||||||||
Balance as of October 2, 2016 | $ | (170.6 | ) | $ | (2.1 | ) | $ | (221.5 | ) | $ | (394.2 | ) | |||
Amount Reclassified from AOCI Three Months Ended | Amount Reclassified from AOCI Three Months Ended | Statement of Income | ||||||
October 1, 2017 | October 2, 2016 | Presentation | ||||||
(Gain) loss on cash flow hedges: | ||||||||
(Gain) loss recognized in income on derivatives | $ | 1.8 | $ | (0.1 | ) | Cost of sales | ||
Income tax benefit | (0.5 | ) | — | Income tax benefit | ||||
Total | $ | 1.3 | $ | (0.1 | ) | |||
Amortization of defined benefit pension and postretirement plan items: | ||||||||
Amortization of prior service cost | $ | (1.5 | ) | $ | (1.5 | ) | Costs and expenses | |
Amortization of net actuarial loss | 6.7 | 6.6 | Costs and expenses | |||||
Total before tax | 5.2 | 5.1 | ||||||
Income tax benefit | (2.0 | ) | (1.8 | ) | Income tax benefit | |||
Total | $ | 3.2 | $ | 3.3 | ||||
Amount Reclassified from AOCI Nine Months Ended | Amount Reclassified from AOCI Nine Months Ended | Statement of Income | ||||||
October 1, 2017 | October 2, 2016 | Presentation | ||||||
Loss on cash flow hedges: | ||||||||
Loss recognized in income on derivatives | $ | 8.5 | $ | 2.9 | Cost of sales | |||
Income tax benefit | (2.2 | ) | (0.8 | ) | Income tax benefit | |||
Total | $ | 6.3 | $ | 2.1 | ||||
Amortization of defined benefit pension and postretirement plan items: | ||||||||
Amortization of prior service cost | $ | (4.5 | ) | $ | (4.5 | ) | Costs and expenses | |
Amortization of net actuarial loss | 20.8 | 21.0 | Costs and expenses | |||||
Total before tax | 16.3 | 16.5 | ||||||
Income tax benefit | (6.3 | ) | (5.7 | ) | Income tax benefit | |||
Total | $ | 10.0 | $ | 10.8 | ||||
Third Quarter (a) | Nine Months (a) | |||||||||||||||
(unaudited - in millions, except per share amounts) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
Net sales | $ | 662.2 | $ | 614.6 | $ | 1,992.4 | $ | 1,853.0 | ||||||||
Net income | $ | 69.0 | $ | 55.5 | $ | 142.2 | $ | 126.3 | ||||||||
Basic earnings per common share | $ | 1.95 | $ | 1.60 | $ | 4.04 | $ | 3.66 | ||||||||
Diluted earnings per common share | $ | 1.90 | $ | 1.56 | $ | 3.93 | $ | 3.57 | ||||||||
Fair values allocated to the assets acquired and liabilities assumed - e2v (in millions): (a) | ||||
Current assets, excluding cash acquired | $ | 152.3 | ||
Property, plant and equipment | 104.7 | |||
Goodwill | 471.1 | |||
Acquired intangible assets | 173.4 | |||
Other long-term assets | 8.9 | |||
Total assets acquired | 910.4 | |||
Current liabilities | (78.7 | ) | ||
Long-term liabilities | (89.3 | ) | ||
Total liabilities assumed | (168.0 | ) | ||
Consideration transferred, net of cash acquired (b) | $ | 742.4 | ||
(a) | The amounts recorded as of October 1, 2017 are preliminary since there was insufficient time between the acquisition date of March 28, 2017 and the end of the period to finalize the analysis. |
(b) | Consideration transferred includes a $2.0 million liability for the payment to former e2v share option holders paid prior to the end of fiscal year 2017. |
Intangibles subject to amortization:(a) | Intangible Assets | Weighted average useful life in years | ||||
Proprietary technology | $ | 97.5 | 11.8 | |||
Customer list/relationships | 26.3 | 13.0 | ||||
Backlog | 2.8 | 0.8 | ||||
Total intangibles subject to amortization | 126.6 | 11.8 | ||||
Intangibles not subject to amortization:(a) | ||||||
Trademarks | 46.8 | |||||
Total acquired intangible assets | $ | 173.4 | ||||
(a) | The amounts recorded as of October 1, 2017 are preliminary since there was insufficient time between the acquisition date and the end of the period to finalize the analysis. |
Third Quarter | Nine Months | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Net gain (loss) recognized in AOCI (a) | $ | 1.0 | $ | (1.0 | ) | $ | (1.9 | ) | $ | 3.4 | |||||
Net gain (loss) reclassified from AOCI into cost of sales (a) | $ | (0.8 | ) | $ | (0.1 | ) | $ | — | $ | 2.9 | |||||
Net gain reclassified from AOCI into interest expense (a) | $ | 0.4 | $ | — | $ | 0.9 | $ | — | |||||||
Net loss reclassified from AOCI into other income and expense, net (b) | $ | (3.0 | ) | $ | — | $ | (9.3 | ) | $ | — | |||||
Net foreign exchange gain (loss) recognized in other income and expense, net (c) | $ | 0.8 | $ | 0.1 | $ | (0.8 | ) | $ | (0.2 | ) | |||||
Contracts to Buy | Contracts to Sell | |||||||
Currency | Amount | Currency | Amount | |||||
Canadian Dollars | C$ | 155.4 | U.S. Dollars | US$ | 124.1 | |||
Canadian Dollars | C$ | 4.0 | Euros | € | 2.6 | |||
Euros | € | 36.8 | Great Britain Pounds | £ | 33.8 | |||
Great Britain Pounds | £ | 1.7 | Australian Dollars | A$ | 2.7 | |||
Great Britain Pounds | £ | 54.8 | U.S. Dollars | US$ | 71.8 | |||
Singapore Dollars | S$ | 1.9 | U.S. Dollars | US$ | 1.4 | |||
Euros | € | 14.2 | U.S. Dollars | US$ | 17.1 | |||
Swiss Franc | Fr. | 1.2 | U.S. Dollars | US$ | 1.3 | |||
U.S. Dollars | US$ | 0.9 | Japanese Yen | ¥ | 100.0 | |||
Danish Krone | DKR | 31.2 | U.S. Dollars | US$ | 5.0 | |||
Swedish Krone | kr | 34.2 | Great Britain Pounds | £ | 3.3 | |||
Asset/(Liability) Derivatives | Balance sheet location | October 1, 2017 | January 1, 2017 | ||||||
Derivatives designated as hedging instruments: | |||||||||
Cash flow forward contracts | Other assets | $ | 5.3 | $ | — | ||||
Cash flow cross currency swap | Accrued liabilities | (10.0 | ) | — | |||||
Cash flow forward contracts | Accrued liabilities | — | (1.0 | ) | |||||
Cash flow forward contracts | Other long-term liabilities | — | (0.1 | ) | |||||
Total derivatives designated as hedging instruments | (4.7 | ) | (1.1 | ) | |||||
Derivatives not designated as hedging instruments: | |||||||||
Non-designated forward contracts | Other current assets | 4.7 | 6.4 | ||||||
Non-designated forward contracts | Accrued liabilities | (4.1 | ) | (1.0 | ) | ||||
Total derivatives not designated as hedging instruments | 0.6 | 5.4 | |||||||
Total (liability) asset derivatives | $ | (4.1 | ) | $ | 4.3 | ||||
Third Quarter | Nine Months | ||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||
Weighted average basic common shares outstanding | 35.3 | 34.7 | 35.2 | 34.5 | |||||||
Effect of dilutive securities (primarily stock options) | 1.1 | 0.9 | 1.0 | 0.9 | |||||||
Weighted average diluted common shares outstanding | 36.4 | 35.6 | 36.2 | 35.4 | |||||||
2017 | |
Expected volatility | 32.3% |
Risk-free interest rate range | 1.0% to 2.5% |
Expected life in years | 7.2 |
Expected dividend yield | — |
2017 | |||||||||||||
Third Quarter | Nine Months | ||||||||||||
Shares | Weighted Average Exercise Price | Shares | Weighted Average Exercise Price | ||||||||||
Beginning balance | 2,515,100 | $ | 82.26 | 2,175,442 | $ | 70.44 | |||||||
Granted | — | $ | — | 543,880 | $ | 123.40 | |||||||
Exercised | (104,496 | ) | $ | 66.49 | (289,178 | ) | $ | 64.84 | |||||
Canceled | (13,147 | ) | $ | 104.92 | (32,687 | ) | $ | 92.52 | |||||
Ending balance | 2,397,457 | $ | 82.83 | 2,397,457 | $ | 82.83 | |||||||
Options exercisable at end of period | 1,545,815 | $ | 69.77 | 1,545,815 | $ | 69.77 | |||||||
Restricted stock: | Shares | Weighted average fair value per share | ||||
Balance, January 1, 2017 | 95,304 | $ | 83.87 | |||
Granted | 23,002 | $ | 114.42 | |||
Vested | (30,704 | ) | $ | 87.98 | ||
Forfeited/Canceled | (1,068 | ) | $ | 87.59 | ||
Balance, October 1, 2017 | 86,534 | $ | 90.49 | |||
Balance at | |||||||
Inventories (in millions): | October 1, 2017 | January 1, 2017 | |||||
Raw materials and supplies | $ | 201.2 | $ | 146.0 | |||
Work in process | 193.4 | 147.8 | |||||
Finished goods | 57.7 | 43.0 | |||||
452.3 | 336.8 | ||||||
Progress payments | (8.4 | ) | (9.1 | ) | |||
Reduction to LIFO cost basis | (12.0 | ) | (13.5 | ) | |||
Total inventories, net | $ | 431.9 | $ | 314.2 | |||
Nine Months | |||||||
Warranty Reserve (in millions): | 2017 | 2016 | |||||
Balance at beginning of year | $ | 18.4 | $ | 17.1 | |||
Accruals for product warranties charged to expense | 4.8 | 7.0 | |||||
Cost of product warranty claims | (5.3 | ) | (4.7 | ) | |||
Acquisitions | 3.1 | 0.3 | |||||
Balance at end of period | $ | 21.0 | $ | 19.7 | |||
Balance at | |||||||
Long-Term Debt (in millions): | October 1, 2017 | January 1, 2017 | |||||
$750.0 million credit facility due December 2020, weighted average rate of 2.41% at October 1, 2017 | $ | 285.0 | $ | — | |||
Term loans due through January 2022, weighted average rate of 2.61% at October 1, 2017 and 1.90% at January 1, 2017 | 182.5 | 182.5 | |||||
4.74% Fixed Rate Senior Notes due and repaid September 2017 | — | 100.0 | |||||
Term loan due October 2019, variable rate of 2.49% swapped to a Euro fixed rate of 0.7055% at October 1, 2017 | 100.0 | — | |||||
2.61% Fixed Rate Senior Notes due December 2019 | 30.0 | 30.0 | |||||
5.30% Fixed Rate Senior Notes due September 2020 | 75.0 | 75.0 | |||||
2.81% Fixed Rate Senior Notes due November 2020 | 25.0 | 25.0 | |||||
3.09% Fixed Rate Senior Notes due December 2021 | 95.0 | 95.0 | |||||
3.28% Fixed Rate Senior Notes due November 2022 | 100.0 | 100.0 | |||||
0.70% €50 Million Fixed Rate Senior Notes due April 2022 | 59.0 | — | |||||
0.92% €100 Million Fixed Rate Senior Notes due April 2023 | 118.2 | — | |||||
1.09% €100 Million Fixed Rate Senior Notes due April 2024 | 118.2 | — | |||||
Other debt at various rates due through 2018 | 3.0 | 4.2 | |||||
Total debt | 1,190.9 | 611.7 | |||||
Less: current portion of long-term debt and debt issuance costs (a) | (3.4 | ) | (102.0 | ) | |||
Total long-term debt | $ | 1,187.5 | $ | 509.7 | |||
Third Quarter | Nine Months | ||||||||||||||
Net periodic pension benefit (income) expense (in millions): | 2017 | 2016 | 2017 | 2016 | |||||||||||
Service cost — benefits earned during the period | $ | 2.7 | $ | 2.8 | $ | 8.1 | $ | 8.4 | |||||||
Interest cost on benefit obligation | 9.1 | 10.2 | 27.4 | 30.4 | |||||||||||
Expected return on plan assets | (18.3 | ) | (18.8 | ) | (54.9 | ) | (56.3 | ) | |||||||
Amortization of prior service cost | (1.5 | ) | (1.5 | ) | (4.5 | ) | (4.5 | ) | |||||||
Amortization of net actuarial loss | 7.3 | 6.8 | 21.9 | 20.4 | |||||||||||
Net periodic pension income | $ | (0.7 | ) | $ | (0.5 | ) | $ | (2.0 | ) | $ | (1.6 | ) | |||
Third Quarter | Nine Months | ||||||||||||||
Net periodic postretirement benefits expense (in millions): | 2017 | 2016 | 2017 | 2016 | |||||||||||
Interest cost on benefit obligation | $ | 0.1 | $ | 0.1 | $ | 0.3 | $ | 0.4 | |||||||
Amortization of net actuarial gain | (0.1 | ) | (0.1 | ) | (0.3 | ) | (0.3 | ) | |||||||
Net periodic postretirement expense | $ | — | $ | — | $ | — | $ | 0.1 | |||||||
Third Quarter | % | Nine Months | % | ||||||||||||||||||
2017 | 2016 | Change | 2017 | 2016 | Change | ||||||||||||||||
Net sales(a): | |||||||||||||||||||||
Instrumentation | $ | 232.5 | $ | 208.3 | 11.6 | % | $ | 699.1 | $ | 652.1 | 7.2 | % | |||||||||
Digital Imaging | 191.5 | 98.5 | 94.4 | % | 493.8 | 287.8 | 71.6 | % | |||||||||||||
Aerospace and Defense Electronics | 165.1 | 153.5 | 7.6 | % | 489.8 | 464.1 | 5.5 | % | |||||||||||||
Engineered Systems | 73.1 | 66.5 | 9.9 | % | 216.7 | 193.0 | 12.3 | % | |||||||||||||
Total net sales | $ | 662.2 | $ | 526.8 | 25.7 | % | $ | 1,899.4 | $ | 1,597.0 | 18.9 | % | |||||||||
Operating income(b): | |||||||||||||||||||||
Instrumentation | $ | 34.8 | $ | 28.1 | 23.8 | % | $ | 96.0 | $ | 79.6 | 20.6 | % | |||||||||
Digital Imaging | 31.9 | 11.7 | 172.6 | % | 73.6 | 30.6 | 140.5 | % | |||||||||||||
Aerospace and Defense Electronics | 29.4 | 31.5 | (6.7 | )% | 88.0 | 83.6 | 5.3 | % | |||||||||||||
Engineered Systems | 10.0 | 8.6 | 16.3 | % | 28.0 | 22.2 | 26.1 | % | |||||||||||||
Corporate expense | (13.2 | ) | (11.1 | ) | 18.9 | % | (48.4 | ) | (32.7 | ) | 48.0 | % | |||||||||
Operating income | $ | 92.9 | $ | 68.8 | 35.0 | % | $ | 237.2 | $ | 183.3 | 29.4 | % | |||||||||
(a) | Net sales excludes inter-segment sales of $6.4 million and $17.8 million for the third quarter and first nine months of 2017, respectively, and $4.2 million and $16.2 million for the third quarter and first nine months of 2016, respectively. |
(b) | The third quarter of 2017 includes pretax charges of $2.9 million related to the acquisition of e2v which was recorded in the Digital Imaging segment. The first nine months of 2017 includes pretax charges of $19.8 million related to the acquisition of e2v, of which $9.1 million was recorded in the Digital Imaging segment, $0.3 million was recorded in the Aerospace and Defense Electronics segment and $10.4 million was recorded in corporate expense. |
Identifiable assets: | October 1, 2017 | January 1, 2017 | ||||||
Instrumentation | $ | 1,428.1 | $ | 1,361.0 | ||||
Digital Imaging | 1,501.6 | 671.1 | ||||||
Aerospace and Defense Electronics | 619.6 | 449.4 | ||||||
Engineered Systems | 104.6 | 93.9 | ||||||
Corporate | 193.6 | 199.0 | ||||||
Total identifiable assets | $ | 3,847.5 | $ | 2,774.4 | ||||
Third Quarter | Nine Months | ||||||||||||||
Instrumentation | 2017 | 2016 | 2017 | 2016 | |||||||||||
Marine Instrumentation | $ | 101.8 | $ | 97.6 | $ | 318.3 | $ | 314.3 | |||||||
Environmental Instrumentation | 77.7 | 63.8 | 230.2 | 200.4 | |||||||||||
Test and Measurement Instrumentation | 53.0 | 46.9 | 150.6 | 137.4 | |||||||||||
Total | $ | 232.5 | $ | 208.3 | $ | 699.1 | $ | 652.1 | |||||||
Third Quarter | Nine Months | ||||||||||||||
(in millions) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Net sales | $ | 662.2 | $ | 526.8 | $ | 1,899.4 | $ | 1,597.0 | |||||||
Costs and expenses | |||||||||||||||
Cost of sales | 405.8 | 317.0 | 1,178.3 | 978.0 | |||||||||||
Selling, general and administrative expenses | 163.5 | 141.0 | 483.9 | 435.7 | |||||||||||
Total costs and expenses | 569.3 | 458.0 | 1,662.2 | 1,413.7 | |||||||||||
Operating income | 92.9 | 68.8 | 237.2 | 183.3 | |||||||||||
Interest expense, net | (8.2 | ) | (5.6 | ) | (25.5 | ) | (17.2 | ) | |||||||
Other income/(expense), net | (3.0 | ) | (0.8 | ) | (13.0 | ) | 15.1 | ||||||||
Income before income taxes | 81.7 | 62.4 | 198.7 | 181.2 | |||||||||||
Provision for income taxes | 12.7 | 10.4 | 39.1 | 43.3 | |||||||||||
Net income | $ | 69.0 | $ | 52.0 | $ | 159.6 | $ | 137.9 | |||||||
Third Quarter | % | Nine Months | % | ||||||||||||||||||
(dollars in millions) | 2017 | 2016 | Change | 2017 | 2016 | Change | |||||||||||||||
Net sales(a): | |||||||||||||||||||||
Instrumentation | $ | 232.5 | $ | 208.3 | 11.6 | % | $ | 699.1 | $ | 652.1 | 7.2 | % | |||||||||
Digital Imaging | 191.5 | 98.5 | 94.4 | % | 493.8 | 287.8 | 71.6 | % | |||||||||||||
Aerospace and Defense Electronics | 165.1 | 153.5 | 7.6 | % | 489.8 | 464.1 | 5.5 | % | |||||||||||||
Engineered Systems | 73.1 | 66.5 | 9.9 | % | 216.7 | 193.0 | 12.3 | % | |||||||||||||
Total net sales | $ | 662.2 | $ | 526.8 | 25.7 | % | $ | 1,899.4 | $ | 1,597.0 | 18.9 | % | |||||||||
Operating income: | |||||||||||||||||||||
Instrumentation | $ | 34.8 | $ | 28.1 | 23.8 | % | $ | 96.0 | $ | 79.6 | 20.6 | % | |||||||||
Digital Imaging | 31.9 | 11.7 | 172.6 | % | 73.6 | 30.6 | 140.5 | % | |||||||||||||
Aerospace and Defense Electronics | 29.4 | 31.5 | (6.7 | )% | 88.0 | 83.6 | 5.3 | % | |||||||||||||
Engineered Systems | 10.0 | 8.6 | 16.3 | % | 28.0 | 22.2 | 26.1 | % | |||||||||||||
Corporate expense | (13.2 | ) | (11.1 | ) | 18.9 | % | (48.4 | ) | (32.7 | ) | 48.0 | % | |||||||||
Total operating income | $ | 92.9 | $ | 68.8 | 35.0 | % | $ | 237.2 | $ | 183.3 | 29.4 | % | |||||||||
(a) | Net sales excludes inter-segment sales of $6.4 million and $17.8 million for the third quarter and first nine months of 2017, respectively, and $4.2 million and $16.2 million for the third quarter and first nine months of 2016, respectively. |
Third Quarter | Nine Months | |||||||||||||||
(dollars in millions) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
Instrumentation | ||||||||||||||||
Net sales | $ | 232.5 | $ | 208.3 | $ | 699.1 | $ | 652.1 | ||||||||
Cost of sales | $ | 129.3 | $ | 116.1 | $ | 398.1 | $ | 364.3 | ||||||||
Cost of sales as a % of net sales | 55.6 | % | 55.7 | % | 57.0 | % | 55.9 | % | ||||||||
Digital Imaging | ||||||||||||||||
Net sales | $ | 191.5 | $ | 98.5 | $ | 493.8 | $ | 287.8 | ||||||||
Cost of sales | $ | 116.8 | $ | 57.5 | $ | 308.6 | $ | 174.0 | ||||||||
Cost of sales as a % of net sales | 61.0 | % | 58.4 | % | 62.5 | % | 60.5 | % | ||||||||
Aerospace and Defense Electronics | ||||||||||||||||
Net sales | $ | 165.1 | $ | 153.5 | $ | 489.8 | $ | 464.1 | ||||||||
Cost of sales | $ | 103.0 | $ | 90.6 | $ | 299.6 | $ | 284.2 | ||||||||
Cost of sales as a % of net sales | 62.4 | % | 59.0 | % | 61.2 | % | 61.2 | % | ||||||||
Engineered Systems | ||||||||||||||||
Net sales | $ | 73.1 | $ | 66.5 | $ | 216.7 | $ | 193.0 | ||||||||
Costs of sales | $ | 56.7 | $ | 52.8 | $ | 172.0 | $ | 155.5 | ||||||||
Cost of sales as a % of net sales | 77.6 | % | 79.4 | % | 79.4 | % | 80.6 | % | ||||||||
Total Company | ||||||||||||||||
Net sales | $ | 662.2 | $ | 526.8 | $ | 1,899.4 | $ | 1,597.0 | ||||||||
Costs of sales | $ | 405.8 | $ | 317.0 | $ | 1,178.3 | $ | 978.0 | ||||||||
Cost of sales as a % of net sales | 61.3 | % | 60.2 | % | 62.0 | % | 61.2 | % | ||||||||
Third Quarter | Nine Months | ||||||||||||||
(dollars in millions) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Net sales | $ | 232.5 | $ | 208.3 | $ | 699.1 | $ | 652.1 | |||||||
Cost of sales | $ | 129.3 | $ | 116.1 | $ | 398.1 | $ | 364.3 | |||||||
Selling, general and administrative expenses | $ | 68.4 | $ | 64.1 | $ | 205.0 | $ | 208.2 | |||||||
Operating income | $ | 34.8 | $ | 28.1 | $ | 96.0 | $ | 79.6 | |||||||
Cost of sales as a % of net sales | 55.6 | % | 55.7 | % | 57.0 | % | 55.9 | % | |||||||
Selling, general and administrative expenses % of sales | 29.4 | % | 30.8 | % | 29.3 | % | 31.9 | % | |||||||
Operating income as a % of net sales | 15.0 | % | 13.5 | % | 13.7 | % | 12.2 | % | |||||||
Third Quarter | Nine Months | ||||||||||||||
(dollars in millions) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Net sales | $ | 191.5 | $ | 98.5 | $ | 493.8 | $ | 287.8 | |||||||
Cost of sales | $ | 116.8 | $ | 57.5 | $ | 308.6 | $ | 174.0 | |||||||
Selling, general and administrative expenses | $ | 42.8 | $ | 29.3 | $ | 111.6 | $ | 83.2 | |||||||
Operating income | $ | 31.9 | $ | 11.7 | $ | 73.6 | $ | 30.6 | |||||||
Cost of sales as a % of net sales | 61.0 | % | 58.4 | % | 62.5 | % | 60.5 | % | |||||||
Selling, general and administrative expenses % of sales | 22.3 | % | 29.7 | % | 22.6 | % | 28.9 | % | |||||||
Operating income as a % of net sales | 16.7 | % | 11.9 | % | 14.9 | % | 10.6 | % | |||||||
Third Quarter | Nine Months | ||||||||||||||
(dollars in millions) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Net sales | $ | 165.1 | $ | 153.5 | $ | 489.8 | $ | 464.1 | |||||||
Cost of sales | $ | 103.0 | $ | 90.6 | $ | 299.6 | $ | 284.2 | |||||||
Selling, general and administrative expenses | $ | 32.7 | $ | 31.4 | $ | 102.2 | $ | 96.3 | |||||||
Operating income | $ | 29.4 | $ | 31.5 | $ | 88.0 | $ | 83.6 | |||||||
Cost of sales as a % of net sales | 62.4 | % | 59.0 | % | 61.2 | % | 61.2 | % | |||||||
Selling, general and administrative expenses % of sales | 19.8 | % | 20.5 | % | 20.8 | % | 20.8 | % | |||||||
Operating income as a % of net sales | 17.8 | % | 20.5 | % | 18.0 | % | 18.0 | % | |||||||
Third Quarter | Nine Months | ||||||||||||||
(dollars in millions) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Net sales | $ | 73.1 | $ | 66.5 | $ | 216.7 | $ | 193.0 | |||||||
Cost of sales | $ | 56.7 | $ | 52.8 | $ | 172.0 | $ | 155.5 | |||||||
Selling, general and administrative expenses | $ | 6.4 | $ | 5.1 | $ | 16.7 | $ | 15.3 | |||||||
Operating income | $ | 10.0 | $ | 8.6 | $ | 28.0 | $ | 22.2 | |||||||
Cost of sales as a % of net sales | 77.6 | % | 79.4 | % | 79.4 | % | 80.6 | % | |||||||
Selling, general and administrative expenses % of sales | 8.7 | % | 7.7 | % | 7.7 | % | 7.9 | % | |||||||
Operating income as a % of net sales | 13.7 | % | 12.9 | % | 12.9 | % | 11.5 | % | |||||||
$750.0 million Credit Facility expires December 2020 and $182.5 million term loans due through January 2022 (issued in October 2012) and $100.0 million term loan due October 2019 (issued in March 2017) | |||
Financial Covenants | Requirement | Actual Measure | |
Consolidated Leverage Ratio (Net Debt/EBITDA) (a) | No more than 3.25 to 1 | 2.6 to 1 | |
Consolidated Interest Coverage Ratio (EBITDA/Interest) (b) | No less than 3.0 to 1 | 10.9 to 1 | |
$620.4 million Private Placement Senior Notes due from 2019 to 2024 | |||
Financial Covenants | Requirement | Actual Measure | |
Consolidated Leverage Ratio (Net Debt/EBITDA) (a) | No more than 3.25 to 1 | 2.6 to 1 | |
Consolidated Interest Coverage Ratio (EBITDA/Interest) (b) | No less than 3.0 to 1 | 10.9 to 1 | |
a) | The Consolidated Leverage Ratio is equal to Net Debt/EBITDA as defined in our private placement note purchase agreement and our $750.0 million credit agreement. |
b) | The Consolidated Interest Coverage Ratio is equal to EBITDA/Interest as defined in our private placement note purchase agreement and our $750.0 million credit agreement. |
Item 4. | Controls and Procedures |
Item 1. | Legal Proceedings |
Item 1A. | Risk Factors |
Item 6. | Exhibits |
(a) | Exhibits | |
Exhibit 31.1 | ||
Exhibit 31.2 | ||
Exhibit 32.1 | ||
Exhibit 32.2 | ||
Exhibit 101 (INS) | XBRL Instance Document | |
Exhibit 101 (SCH) | XBRL Schema Document | |
Exhibit 101 (CAL) | XBRL Calculation Linkbase Document | |
Exhibit 101 (LAB) | XBRL Label Linkbase Document XBRL Schema Document | |
Exhibit 101 (PRE) | XBRL Presentation Linkbase Document XBRL Schema Document | |
Exhibit 101 (DEF) | XBRL Definition Linkbase Document XBRL Schema Document | |
TELEDYNE TECHNOLOGIES INCORPORATED | |||
DATE: November 6, 2017 | By: | /s/ Susan L. Main | |
Susan L. Main, Senior Vice President and | |||
Chief Financial Officer | |||
(Principal Financial Officer and Authorized Officer) | |||
Exhibit Number | Description |
Exhibit 31.1 | |
Exhibit 31.2 | |
Exhibit 32.1 | |
Exhibit 32.2 | |
Exhibit 101 (INS) | XBRL Instance Document |
Exhibit 101 (SCH) | XBRL Schema Document |
Exhibit 101 (CAL) | XBRL Calculation Linkbase Document |
Exhibit 101 (DEF) | XBRL Definition Linkbase Document XBRL Schema Document |
Exhibit 101 (LAB) | XBRL Label Linkbase Document XBRL Schema Document |
Exhibit 101 (PRE) | XBRL Presentation Linkbase Document XBRL Schema Document |
1. | I have reviewed this quarterly report on Form 10-Q of Teledyne Technologies Incorporated (the “registrant”); |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d – 15(f)) for the registrant and have: |
a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and |
d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrants’ fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
By: | /s/ Robert Mehrabian |
Robert Mehrabian | |
Chairman, President and Chief Executive Officer | |
1. | I have reviewed this quarterly report on Form 10-Q of Teledyne Technologies Incorporated (the “registrant”); |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d – 15(f)) for the registrant and have: |
a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and |
d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrants’ fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
By: | /s/ Susan L. Main |
Susan L. Main | |
Senior Vice President and Chief Financial Officer | |
1. | the Quarterly Report on Form 10-Q of Teledyne Technologies Incorporated (the “Corporation”) for the quarter ended October 1, 2017 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation. |
By: | /s/ Robert Mehrabian |
Robert Mehrabian | |
Chairman, President and Chief Executive Officer | |
November 6, 2017 | |
1. | the Quarterly Report on Form 10-Q of Teledyne Technologies Incorporated (the “Corporation”) for the quarter ended October 1, 2017 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation. |
By: | /s/ Susan L. Main |
Susan L. Main | |
Senior Vice President and Chief Financial Officer | |
November 6, 2017 | |
Document and Entity Information - shares |
9 Months Ended | |
|---|---|---|
Oct. 01, 2017 |
Oct. 31, 2017 |
|
| Document and Entity Information [Abstract] | ||
| Entity Registrant Name | TELEDYNE TECHNOLOGIES INC | |
| Entity Central Index Key | 0001094285 | |
| Document Type | 10-Q | |
| Document Period End Date | Oct. 01, 2017 | |
| Amendment Flag | false | |
| Document Fiscal Year Focus | 2017 | |
| Document Fiscal Period Focus | Q3 | |
| Current Fiscal Year End Date | --12-31 | |
| Entity Filer Category | Large Accelerated Filer | |
| Entity Common Stock, Shares Outstanding | 35,436,487 |
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Oct. 01, 2017 |
Oct. 02, 2016 |
Oct. 01, 2017 |
Oct. 02, 2016 |
|
| Statement of Comprehensive Income [Abstract] | ||||
| Net income | $ 69.0 | $ 52.0 | $ 159.6 | $ 137.9 |
| Other comprehensive income (loss): | ||||
| Foreign exchange translation adjustment | 36.8 | (7.7) | 91.6 | 3.6 |
| Hedge activity, net of tax | 1.9 | (0.9) | 4.8 | 4.6 |
| Pension and postretirement benefit adjustments, net of tax | 3.2 | 3.3 | 10.0 | 10.8 |
| Other comprehensive income (loss) | 41.9 | (5.3) | 106.4 | 19.0 |
| Comprehensive income, net of tax | $ 110.9 | $ 46.7 | $ 266.0 | $ 156.9 |
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions |
Oct. 01, 2017 |
Jan. 01, 2017 |
|---|---|---|
| Statement of Financial Position [Abstract] | ||
| Accumulated depreciation and amortization | $ 519.8 | $ 468.5 |
| Preferred stock, par value (in USD per share) | $ 0.01 | $ 0.01 |
| Preferred stock, shares outstanding (in shares) | 0 | 0 |
| Common stock, par value (in USD per share) | $ 0.01 | $ 0.01 |
| Common stock, shares authorized (in shares) | 125,000,000 | 125,000,000 |
| Common stock, shares, issued (in shares) | 37,697,865 | 37,697,865 |
| Common stock, shares outstanding (in shares) | 35,436,187 | 35,110,762 |
| Treasury stock (in shares) | 2,261,678 | 2,587,103 |
General |
9 Months Ended |
|---|---|
Oct. 01, 2017 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| General | General Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared by Teledyne Technologies Incorporated (“Teledyne” or the “Company”) pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and disclosures normally included in notes to consolidated financial statements have been condensed or omitted pursuant to such rules and regulations, but resultant disclosures are in accordance with accounting principles generally accepted in the United States (“GAAP”) as they apply to interim reporting. The condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the related notes in Teledyne’s Annual Report on Form 10-K for the fiscal year ended January 1, 2017 (“2016 Form 10-K”). In the opinion of Teledyne’s management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting of normal recurring adjustments) necessary to present fairly, in all material respects, Teledyne’s consolidated financial position as of October 1, 2017 and the consolidated results of operations and consolidated comprehensive income for the three and nine months then ended and cash flows for the nine months then ended. The results of operations and cash flows for the period ended October 1, 2017 are not necessarily indicative of the results of operations or cash flows to be expected for any subsequent quarter or the full fiscal year. Certain prior year amounts have been reclassified to conform to the current period presentation. Recent Accounting Pronouncements In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2017-04, Simplifying the Test for Goodwill Impairment, which eliminates the computation of the implied fair value of goodwill to measure a goodwill impairment charge. Instead, entities will record a goodwill impairment charge based on the excess of a reporting unit’s carrying amount over its fair value. The new standard is effective for interim and annual reporting periods beginning after December 15, 2019, with early adoption permitted. We expect the adoption of this standard will reduce the complexity surrounding the evaluation of goodwill for impairment. The impact of this new standard for the Company will depend on the outcomes of future goodwill impairment tests. In March 2017, the FASB issued ASU No. 2017-07, “Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.” This ASU requires the service cost component of net benefit costs to be disaggregated from all other components and be reported in the same line item or items as other compensation costs and allow only the service cost component to be eligible for capitalization when applicable. The other components of net benefit cost are required to be presented in the income statement separately from the service cost component and before income from operations. This ASU is effective for the Company for interim and annual periods beginning January 1, 2018. Upon adoption, the amendments in this update will be applied retrospectively for the presentation of the components of net benefit cost, and prospectively for the capitalization of the service cost component of net benefit cost. The adoption of this standard will not impact pre-tax income or earnings per share reported for the years ended December 31, 2017 and January 1, 2017 and is not expected to materially impact pre-tax income or earnings per share for the year ended December 30, 2018. The impacts to operating income from the re-classification of the other components of net benefit cost for the years ended December 31, 2017 and January 1, 2017 are immaterial. The impacts to operating income from the re-classification of the other components on net benefit cost for the year ended December 31, 2018 will be known when the Company measures its plan assets and benefit obligations as of December 31, 2017. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which provides a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and will supersede most current revenue recognition guidance. The new standard, as subsequently amended, is effective for Teledyne for interim and annual reporting periods beginning after December 15, 2017, with early adoption permitted for interim and annual reporting periods beginning after December 15, 2016. The new standard can be adopted either retrospectively to each prior reporting period presented or as a cumulative-effect adjustment as of the date of adoption. Under the new standard, an entity recognizes revenue when or as it satisfies a performance obligation by transferring control of a good or service to the customer, either at a point in time or over time. Under the new standard, Teledyne expects to recognize revenue over time on most of its contracts that are covered by contract accounting standards using cost inputs to measure progress toward completion of its performance obligations, which is similar to the percentage-of-completion (“POC”) cost-to-cost method currently used on certain of these contracts. Therefore, adoption of the ASU will primarily impact our contracts for which revenue is currently recognized using the POC units-of-delivery and milestone methods as we expect to recognize revenue for these contracts over time using the POC cost-to-cost method. These contracts represent approximately half of the revenue currently recognized under the POC method. The percentage of Teledyne revenue recognized using any POC method was 30.5% in 2016, 31.2% in 2015, and 28.7% in 2014. Also, to a lesser extent, we expect certain ship and bill contracts for custom products and products sold to the U.S. Government, as well as service and repair contracts will be recognized over time. Accordingly, revenue will be recognized earlier in the performance period as costs are incurred, as opposed to recognizing revenue when units are delivered, milestones achieved or services performed. This change will also impact our backlog and balance sheet presentation with an expected decrease in inventories, an increase in accounts receivable (i.e., unbilled receivables) and a net increase to retained earnings to primarily reflect the impact of converting certain ship and bill contracts and contracts currently applying the units-of-delivery and milestone methods to the cost-to-cost method for recognizing revenue and profits. The Company will adopt the standard as of January 1, 2018, using the modified retrospective transition method and is currently quantifying the impact of the adoption on its consolidated financial statements and related disclosures. Under the modified retrospective transition method, the Company will be required to calculate and record the cumulative-effect of adopting the new standard as of January 1, 2018, in the Company’s Quarterly Report on Form 10-Q for the first quarter of 2018. The impact of adopting the new standard to retained earnings is not known at this time, as it will be dependent on the affected contracts that have not been substantially completed as of December 31, 2017. In August 2017, the FASB issued ASU No. 2017-12, “Derivatives and Hedging (Topic 815) Targeted Improvements to Accounting for Hedging Activities.” This ASU better aligns an entity’s risk management activities and financial reporting for hedging relationships. This ASU expands and refines hedge accounting for both nonfinancial and financial risk components, and this ASU simplifies and aligns the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. This ASU is effective for fiscal years beginning after December 15, 2018 and for interim periods therein, with early adoption permitted. Teledyne is currently evaluating the impact this guidance will have on the consolidated financial statements and footnote disclosures. |
Accumulated Other Comprehensive Loss |
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| Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss The changes in accumulated other comprehensive income/(loss) (“AOCI”) by component, net of tax, for the third quarter and nine months ended October 1, 2017 and October 2, 2016 are as follows (in millions):
The reclassifications out of AOCI for the third quarter and nine months ended October 1, 2017 and October 2, 2016 are as follows (in millions):
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Business Combinations, Goodwill and Acquired Intangible Assets |
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| Business Combinations and Investments, Goodwill and Acquired Intangible Assets [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Business Combinations, Goodwill and Acquired Intangible Assets | Business Combinations, Goodwill and Acquired Intangible Assets Acquisition of e2v On March 28, 2017, Teledyne completed the acquisition of all of the outstanding common stock of e2v technologies plc (“e2v”) for $770.7 million, including stock options and assumed debt, net of $24.4 million of cash acquired. e2v provides high performance image sensors and custom camera solutions and application specific standard products for the machine vision market. In addition, e2v provides high performance space qualified imaging sensors and arrays for space science and astronomy. e2v also produces components and subsystems that deliver high reliability radio frequency power generation for healthcare, industrial and defense applications. Finally, the company provides high reliability semiconductors and board-level solutions for use in aerospace, space and communications applications. Teledyne funded the acquisition of e2v with borrowings under its credit facility and cash on hand as well as $100.0 million in a newly issued term loan. Most of e2v’s operations are included in the Digital Imaging and Aerospace and Defense Electronics segments. The Instrumentation segment includes a small portion of e2v’s operations. Principally located in Chelmsford, United Kingdom and Grenoble, France, e2v had sales of approximately £236 million for its fiscal year ended March 31, 2016. e2v’s results have been included since the date of the acquisition and include $181.7 million in net sales and operating income of $19.1 million, which included $9.4 million in acquisition-related costs and $7.7 million in additional intangible asset amortization expense. The first nine months of 2017 includes pretax charges of $28.1 million related to the acquisition of e2v, which included $13.0 million in transaction costs, including stamp duty, advisory, legal and other consulting fees and other costs recorded to selling, general and administrative expenses, $6.8 million in inventory fair value step-up amortization expense recorded to cost of sales, $2.3 million in bank bridge facility commitment expense recorded to interest expense and $6.0 million related to a foreign currency option contract expense to hedge the e2v purchase price recorded as other expense. Of these amounts, $9.4 million impacted segment operating income. The unaudited proforma information below, as required by GAAP, assumes that e2v had been acquired at the beginning of the 2016 fiscal year and includes the effect of increased interest expense on net acquisition debt and the amortization of acquired intangible assets. The 2016 first nine months proforma amounts also include $14.9 million in transaction costs, including legal and other consulting fees, $11.5 million in expense related to a foreign currency option contract to hedge the e2v purchase price, $2.8 million in bridge financing costs and $6.8 million in inventory fair value step-up amortization expense. These amounts totaling $36.0 million (which includes $2.9 million for the third quarter) should be considered non-recurring costs that were necessary to complete the acquisition and are not indicative of the ongoing operations of the combined company. This unaudited proforma financial information is presented for informational purposes only and is not necessarily indicative of the results of operations that actually would have resulted had the acquisition been in effect at the beginning of the periods presented. In addition, the unaudited proforma results are not intended to be a projection of future results and do not reflect any operating efficiencies or cost savings that might be achievable. The following table presents proforma net sales, net income and earnings per share data assuming e2v was acquired at the beginning of the 2016 fiscal year:
a) The above unaudited proforma information is presented for the e2v acquisition as it is considered a material acquisition.
The following table is a summary at the acquisition date of the acquired intangible assets and weighted average useful life in years for the e2v acquisition made in 2017 (dollars in millions):
Other Acquisitions On July 20, 2017, a subsidiary of Teledyne acquired assets of Scientific Systems, Inc. (“SSI”) for $31.0 million in cash. Headquartered in State College, PA, SSI manufactures precision components and specialized subassemblies used primarily in analytical and diagnostic instrumentation, such as High Performance Liquid Chromatography systems and specific medical devices and is part of the Instrumentation segment. Teledyne spent $93.4 million on acquisitions and other investments in 2016. On December 6, 2016, Teledyne Instruments, Inc. acquired Hanson Research Corporation (“Hanson Research”) which specializes in analytical instrumentation for the pharmaceutical industry, for $25.0 million in cash. On November 2, 2016, Teledyne Instruments, Inc. acquired assets of IN USA, Inc. (“IN USA”) which manufactures a range of ozone generators, ozone analyzers and other gas monitoring instruments utilizing ultraviolet and infrared based technologies, for $10.2 million in cash. On May 3, 2016, Teledyne DALSA, Inc., a Canadian-based subsidiary, acquired the assets and business of CARIS, Inc. (“CARIS”) a leading developer of geospatial software designed for the hydrographic and marine community, for a cash payment of $26.2 million, net of cash acquired. On April 15, 2016, Teledyne LeCroy, Inc., a U.S.-based subsidiary, acquired assets of Quantum Data, Inc. (“Quantum Data”) which provides electronic test and measurement instrumentation and is a market leader in video protocol analysis test tools for $17.3 million in cash. On April 6, 2016, Teledyne LeCroy, Inc. also acquired Frontline Test Equipment, Inc. (“Frontline”) which provides electronic test and measurement instrumentation and is a market leader in wireless protocol analysis test tools, for $13.7 million in cash. Each of the 2016 acquisitions are part of the Instrumentation segment except for CARIS which is part of the Digital Imaging segment. Teledyne funded the SSI acquisition and the 2016 acquisitions from borrowings under its credit facility and cash on hand. The results of all the acquisitions have been included in Teledyne’s results since the dates of the respective acquisition. The primary reasons for the 2017 and 2016 acquisitions were to strengthen and expand our core businesses through adding complementary product and service offerings, allowing greater integrated products and services, enhancing our technical capabilities or increasing our addressable markets. The significant factors that resulted in recognition of goodwill were: (a) the purchase price was based on cash flow and return on capital projections assuming integration with our businesses and (b) the calculation of the fair value of tangible and intangible assets acquired that qualified for recognition. For a further description of the Company’s acquisition activity for fiscal year 2016, please refer to Note 3 of the Notes to Consolidated Financial Statements included in our 2016 Form 10-K. Goodwill and Acquired Intangible Assets Teledyne’s goodwill was $1,748.9 million at October 1, 2017 and $1,193.5 million at January 1, 2017. The increase in the balance of goodwill in 2017 primarily included $471.1 million in goodwill from e2v acquisition, as well as the impact of exchange rate changes. Goodwill from the e2v acquisition will not be deductible for tax purposes. Teledyne’s net acquired intangible assets were $408.2 million at October 1, 2017 and $234.6 million at January 1, 2017. The increase in the balance of acquired intangible assets in 2017 reflected $173.4 million in intangible assets from the e2v acquisition, partially offset by $29.2 million of amortization. The Company is in the process of specifically identifying the amount to be assigned to certain assets, including acquired intangible assets, and liabilities and the related impact on taxes and goodwill for the e2v acquisition, including the allocation by segment. The amounts recorded as of October 1, 2017 are preliminary since there was insufficient time between the acquisition date and the end of the period to finalize the analysis. In addition, the Company is still in the process of specifically identifying the amount to be assigned to certain assets, including acquired intangible assets, and liabilities and the related impact on taxes and goodwill for the SSI acquisition made in July 2017 and the IN USA and Hanson Research acquisitions made in the fourth quarter of 2016. The amounts recorded as of October 1, 2017 are preliminary since there was insufficient time between the acquisition date and the end of the period to finalize the analysis. |
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Derivative Instruments |
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| Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Derivative Instruments | Derivative Instruments Teledyne transacts business in various foreign currencies and has international sales and expenses denominated in foreign currencies, subjecting the Company to foreign currency risk. The Company’s primary foreign currency risk management objective is to protect the United States dollar value of future cash flows and minimize the volatility of reported earnings. All derivatives are recorded on the balance sheet at fair value. As discussed below, 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. The Company utilizes foreign currency forward contracts to reduce the volatility of cash flows primarily related to forecasted revenues and expenses denominated in Canadian dollars for our Canadian companies, including DALSA and in British pounds for our UK companies, including e2v. These contracts are designated and qualify as cash flow hedges. The Company has converted a US dollar denominated, variable rate debt obligation into a euro fixed rate obligation using a receive-float, pay fixed cross currency swap. This cross currency swap is designated as a cash flow hedge. Cash Flow Hedging Activities The effectiveness of the forward contract cash flow hedge, which exclude time value, and the cross currency swap cash flow hedge is assessed prospectively and retrospectively on a monthly basis using regression analysis, as well as using other timing and probability criteria. To receive hedge accounting treatment, all hedging relationships are formally documented at the inception of the hedges and must be highly effective in offsetting changes to future cash flows on hedged transactions. The effective portion of the cash flow hedge forward contracts’ gains or losses resulting from changes in the fair value of these hedges is initially reported, net of tax, as a component of AOCI in stockholders’ equity until the underlying hedged item is reflected in our consolidated statements of income, at which time the effective amount in AOCI is reclassified to cost of sales in our consolidated statements of income. For the cross currency swap cash flow hedge, effective amounts are recorded in AOCI, and reclassified into interest expense in the consolidated statements of income. In addition, for the cross currency swap an amount is reclassified from AOCI to other income and expense each reporting period, to offset the earnings impact of the remeasurement of the hedged liability. Net deferred gains recorded in AOCI, net of tax, for the forward contracts that will mature in the next twelve months total $3.8 million. These gains are expected to be offset by anticipated losses in the value of the forecasted underlying hedged item. Amounts related to the cross currency swap expected to be reclassified from AOCI into income in the coming twelve months total $1.9 million. In the event that the gains or losses in AOCI are deemed to be ineffective, the ineffective portion of gains or losses resulting from changes in fair value, if any, is reclassified to other income and expense. In the event that the underlying forecasted transactions do not occur, or it becomes remote that they will occur, within the defined hedge period, the gains or losses on the related cash flow hedges will be reclassified from AOCI to other income and expense. During the current reporting period, all forecasted transactions occurred and, therefore, there were no such gains or losses reclassified to other income and expense. As of October 1, 2017, Teledyne had foreign currency forward contracts designated as cash flow hedges to buy Canadian dollars and to sell U.S. dollars totaling $84.4 million. These foreign currency forward contracts have maturities ranging from December 2017 to February 2019. The cross currency swap has notional amounts of €93.0 million equivalent to $100.0 million, and matures in September 2019. The effect of derivative instruments designated as cash flow hedges in the condensed consolidated financial statements for the third quarter and nine months ended October 1, 2017 and October 2, 2016 was as follows (in millions):
a) Effective portion, pre-tax b) Amount reclassified to offset earnings impact of liability hedged by cross currency swap c) Amount excluded from effectiveness testing Non-Designated Hedging Activities In addition, the Company utilizes foreign currency forward contracts to mitigate foreign exchange rate risk associated with foreign-currency-denominated monetary assets and liabilities, including intercompany receivables and payables. As of October 1, 2017, Teledyne had non-designated foreign currency contracts of this type in the following pairs (in millions):
The above table includes non-designated hedges derived from terms contained in triggered or previously designated cash flow hedges. The gains and losses on these derivatives which are not designated as hedging instruments are intended to, at a minimum, partially offset the transaction gains and losses recognized in earnings. Teledyne does not use foreign currency forward contracts for speculative or trading purposes. The effect of derivative instruments not designated as cash flow hedges recognized in other income and expense for the third quarter and nine months ended October 1, 2017 was income of $4.8 million and expense of $1.7 million, respectively. The effect of derivative instruments not designated as cash flow hedges in other income and expense for the third quarter and nine months ended October 2, 2016 was expense of $1.3 million and $0.9 million, respectively. Fair Value of Derivative Financial Instruments The Company has elected to use the income approach to value the derivatives, using observable Level 2 market expectations at measurement date and standard valuation techniques to convert future amounts to a single present amount. Level 2 inputs for the valuations are limited to quoted prices for similar assets or liabilities in active markets (specifically futures contracts on LIBOR and EURIBOR) and inputs other than quoted prices that are observable for the asset or liability (specifically LIBOR and EURIBOR cash and swap rates, foreign currency forward rates and cross currency basis spreads). Mid-market pricing is used as a practical expedient for fair value measurements. The fair value measurement of an asset or liability must reflect the nonperformance risk of the entity and the counterparty. Therefore, the impact of the counterparty’s creditworthiness when in an asset position and the Company’s creditworthiness when in a liability position has also been factored into the fair value measurement of the derivative instruments and did not have a material impact on the fair value of these derivative instruments. Both the counterparty and the Company are expected to continue to perform under the contractual terms of the instruments. The fair values of the Company’s derivative financial instruments are presented below. All fair values for these derivatives were measured using Level 2 information as defined by the accounting standard hierarchy (in millions):
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Earnings Per Share |
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| Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Earnings Per Share | Earnings Per Share For the third quarter of 2017, no stock options were excluded in the computation of diluted earnings per share. For the first nine months of 2017, 600 stock options were excluded in the computation of diluted earnings per share because they had exercise prices that were greater than the weighted average market price of the Company’s common stock during the period. For the third quarter of 2016, no stock options were excluded in the computation of diluted earnings per share. For the first nine months of 2016, 336,457 stock options were excluded in the computation of diluted earnings per share because they had exercise prices that were greater than the weighted average market price of the Company’s common stock during the period. The weighted average number of common shares used in the calculation of basic and diluted earnings per share consisted of the following (in millions):
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Stock-Based Compensation Plans |
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| Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-Based Compensation Plans | Stock-Based Compensation Plans Teledyne has long-term incentive plans pursuant to which it has granted non-qualified stock options, restricted stock and performance shares to certain employees. The Company also has non-employee Board of Director stock compensation plans, pursuant to which non-qualified stock options and common stock, and beginning in 2015 restricted stock units, have been issued to its directors. After 2014, non-employee directors no longer receive non-qualified stock options. Stock Incentive Plan The following disclosures are based on stock options granted to Teledyne’s employees and directors. Stock option compensation expense was $3.2 million and $11.0 million for the third quarter and first nine months of 2017, and was $2.5 million and $8.8 million for the third quarter and first nine months of 2016. Employee stock option grants are charged to expense evenly over the three year vesting period. For 2017, the Company currently expects approximately $14.4 million in stock option compensation expense based on stock options currently outstanding. This amount can be impacted by employee retirements and terminations or stock options granted during the remainder of the year. The Company issues shares of common stock upon the exercise of stock options. The following assumptions were used in the valuation of stock options granted in 2017:
Based on the assumptions used in the valuation of stock options, the grant date weighted average fair value of stock options granted in 2017 was $48.45 per share. Stock option transactions for the third quarter and nine months ended October 1, 2017 are summarized as follows:
Performance Share Plan and Restricted Stock Award Program In the first quarter of 2017, the Company issued 876 shares of Teledyne common stock as the third and final payout under the 2012 to 2014 Performance Share Plan. The following table shows the restricted stock activity for the first nine months of 2017:
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Inventories |
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| Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Inventories | Inventories Inventories are stated at current cost net of reserves for excess, slow moving and obsolete inventory, less progress payments. Inventories are valued under the FIFO method, LIFO method and average cost method. Inventories at cost determined on the average cost or the FIFO methods were $372.2 million at October 1, 2017 and $268.4 million at January 1, 2017. The remainder of the inventories using the LIFO method were $80.1 million at October 1, 2017 and $68.4 million at January 1, 2017. Interim LIFO calculations are based on the Company’s estimates of expected year-end inventory levels and costs since an actual valuation of inventory under the LIFO method can be made only at the end of each year based on the inventory levels and costs at that time. Because these estimates are subject to many factors beyond the Company’s control, interim results are subject to the final year-end LIFO inventory valuation.
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Warranty Reserve |
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| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Warranty Reserve | Warranty Reserve Some of the Company’s products are subject to specified warranties, and the Company provides for the estimated cost of product warranties. The adequacy of the warranty reserve is assessed regularly, and the reserve is adjusted as necessary based on a review of historic warranty experience with respect to the applicable business or products, as well as the length and actual terms of the warranties. The warranty reserve is included in current and long-term accrued liabilities on the balance sheet.
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Income Taxes |
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Oct. 01, 2017 | |
| Income Tax Disclosure [Abstract] | |
| Income Taxes | Income Taxes The income tax provision is calculated using an estimated annual effective tax rate, based upon expected annual income, permanent items, statutory rates and planned tax strategies in the various jurisdictions in which the Company operates. However, losses in certain jurisdictions and discrete items, such as the resolution of uncertain tax positions, are treated separately. The Company’s effective income tax rate for the third quarter and first nine months of 2017 was 15.6% and 19.7%, respectively. The Company’s effective income tax rate for the third quarter and first nine months of 2016 was 16.7% and 23.9% respectively. The third quarter and first nine months of 2017 includes net discrete income tax benefits of $9.9 million and $15.9 million, respectively. Excluding net discrete income tax items in both 2017 periods, the effective tax rates would have been 27.7% for both the third quarter and first nine months of 2017. The 2017 first nine months net discrete tax benefits includes a $7.7 million income tax benefit as a result of the remeasurement of uncertain tax positions due to expiration of statute of limitation, of which $7.4 million was recorded in the third quarter of 2017. The first nine months of 2017 also includes an $8.5 million income tax benefit related to the release of valuation allowance for which the deferred tax assets are now determined more-likely-than-not to be realizable, of which $0.4 million was recorded in the third quarter. The first nine months of 2017 includes a $4.6 million income tax expense related to adjustments for uncertain tax positions. The 2017 third quarter and first nine months net discrete tax benefits also includes $2.3 million and $5.1 million, respectively, related to share-based accounting. The third quarter and first nine months of 2016 included net discrete income tax benefits of $6.6 million and $1.5 million, respectively. The first nine months of 2016 reflected $6.7 million in income tax expense related to the $17.9 million gain on the sale of a former operating facility. The 2016 third quarter and first nine months also included $4.0 million and $5.8 million, respectively, in net discrete tax benefits related to share-based accounting. Excluding net discrete income tax items in both 2016 periods, and the gain and related taxes on the facility sale in 2016, the effective tax rates would have been 27.2% for the third quarter and 27.4% for the first nine months of 2016. |
Long-Term Debt, Capital Lease and Letters of Credit |
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| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Long-Term Debt, Capital Lease and Letters of Credit | Long-Term Debt, Capital Lease and Letters of Credit
(a) Includes debt issue costs associated with the term loans and senior notes of $2.2 million at October 1, 2017 and $1.4 million at January 1, 2017. Available borrowing capacity under the $750.0 million credit facility, which is reduced by borrowings and certain outstanding letters of credit, was $447.5 million at October 1, 2017. The credit agreements require the Company to comply with various financial and operating covenants and at October 1, 2017, the Company was in compliance with these covenants. In March 2017, Teledyne entered into a $100.0 million term loan with a maturity date of October 30, 2019. Subsequently, in March 2017, Teledyne entered into a cross currency swap to effectively convert the $100.0 million term loan to a €93.0 million denominated instrument with a fixed euro interest rate of 0.7055%. The proceeds from the term loan were used in connection with the acquisition of e2v. On April 18, 2017, Teledyne entered into a note purchase agreement for a private placement of €250.0 million of senior unsecured notes due through April 2024. Teledyne used the proceeds of the private placement, among other things, to repay indebtedness and for general corporate purposes. Teledyne estimates the fair value of its long-term debt based on debt of similar type, rating and maturity and at comparable interest rates. The Company’s long-term debt is considered a level 2 fair value hierarchy and is valued based on observable market data. The estimated fair value of Teledyne’s long-term debt at October 1, 2017 and January 1, 2017, approximated the carrying value. At October 1, 2017, the Company had $7.0 million in capital leases, of which $1.3 million is current. At January 1, 2017, the Company had $7.4 million in capital leases, of which $1.3 million was current. At October 1, 2017, Teledyne had $20.9 million in outstanding letters of credit. |
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Lawsuits, Claims, Commitments, Contingencies and Related Matters |
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Oct. 01, 2017 | |
| Commitments and Contingencies Disclosure [Abstract] | |
| Lawsuits, Claims, Commitments, Contingencies and Related Matters | Lawsuits, Claims, Commitments, Contingencies and Related Matters For a further description of the Company’s commitments and contingencies, reference is made to Note 14 of the Company’s financial statements as of and for the fiscal year ended January 1, 2017, included in the 2016 Form 10-K. At October 1, 2017, the Company’s reserves for environmental remediation obligations totaled $5.5 million, of which $1.7 million is included in current accrued liabilities. At January 1, 2017, the Company’s reserves for environmental remediation obligations totaled $7.0 million. The Company periodically evaluates whether it may be able to recover a portion of future costs for environmental liabilities from its insurance carriers and from third parties. The timing of expenditures depends on a number of factors that vary by site, including the nature and extent of contamination, the number of potentially responsible parties, the timing of regulatory approvals, the complexity of the investigation and remediation, and the standards for remediation. The Company expects that it will expend present accruals over many years and will complete remediation of all sites with which it has been identified in up to 30 years. A number of other lawsuits, claims and proceedings have been or may be asserted against the Company, including those pertaining to product liability, acquisitions, patent infringement, contracts, environmental, employment and employee benefits matters. While the outcome of litigation cannot be predicted with certainty, and some of these lawsuits, claims or proceedings may be determined adversely to the Company, management does not believe that the disposition of any such pending matters is likely to have a material adverse effect on the Company’s financial statements. |
Pension Plans and Postretirement Benefits |
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| Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pension Plans and Postretirement Benefits | Pension Plans and Postretirement Benefits For the domestic pension plan, the discount rate decreased to 4.54% in 2017 compared with a 4.91% discount rate used in 2016. Pension expense allocated to contracts pursuant to U.S. Government Cost Accounting Standards (“CAS”) was $3.5 million and $10.4 million for the third quarter and first nine months of both 2017 and 2016, respectively. Pension expense determined under CAS can generally be recovered through the pricing of products and services sold to the U.S. Government. Teledyne did not make any cash pension contributions to its domestic pension plan in 2017 or 2016. No cash pension contributions are planned for 2017 for the domestic pension plan.
Teledyne sponsors several postretirement defined benefit plans that provide health care and life insurance benefits for certain eligible retirees.
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Segment Information |
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| Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment Information | Segment Information Teledyne is a leading provider of sophisticated instrumentation, digital imaging products and software, aerospace and defense electronics, and engineered systems. Our customers include government agencies, aerospace prime contractors, energy exploration and production companies, major industrial companies and airlines. The Company has four reportable segments: Instrumentation; Digital Imaging; Aerospace and Defense Electronics; and Engineered Systems. Segment results include net sales and operating income by segment but excludes equity income or loss, unusual non-recurring legal matter settlements, interest income and expense, gains and losses on the disposition of assets, sublease rental income and non-revenue licensing and royalty income, domestic and foreign income taxes and corporate office expenses. Corporate expense includes various administrative expenses relating to the corporate office and certain non-operating expenses, including certain acquisition related transaction costs, not allocated to our segments. As part of a continuing effort to reduce costs and improve operating performance, the Company has taken actions to consolidate and relocate certain facilities and reduce headcount across various businesses, reducing our exposure to weak end markets and high cost locations. Teledyne incurred $2.6 million and $6.1 million in expense related to these efforts for the third quarter and first nine months of 2017, respectively. Teledyne incurred $3.1 million and $15.3 million in expense related to these efforts for the third quarter and first nine months of 2016, respectively. At October 1, 2017, Teledyne had a liability of $0.9 million included in other current liabilities related to these charges. The following table presents Teledyne’s segment disclosures (dollars in millions):
Identifiable assets are those assets used in the operations of the segments. Corporate assets primarily consist of cash, deferred taxes, net pension assets/liabilities and other assets (in millions):
Product Lines The Instrumentation segment includes three product lines: Environmental Instrumentation, Marine Instrumentation and Test and Measurement Instrumentation. Teledyne’s other three segments each contain one product line. The following tables provide a summary of the net sales by product line for the Instrumentation segment (in millions):
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General (Policies) |
9 Months Ended |
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Oct. 01, 2017 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared by Teledyne Technologies Incorporated (“Teledyne” or the “Company”) pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and disclosures normally included in notes to consolidated financial statements have been condensed or omitted pursuant to such rules and regulations, but resultant disclosures are in accordance with accounting principles generally accepted in the United States (“GAAP”) as they apply to interim reporting. The condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the related notes in Teledyne’s Annual Report on Form 10-K for the fiscal year ended January 1, 2017 (“2016 Form 10-K”). In the opinion of Teledyne’s management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting of normal recurring adjustments) necessary to present fairly, in all material respects, Teledyne’s consolidated financial position as of October 1, 2017 and the consolidated results of operations and consolidated comprehensive income for the three and nine months then ended and cash flows for the nine months then ended. The results of operations and cash flows for the period ended October 1, 2017 are not necessarily indicative of the results of operations or cash flows to be expected for any subsequent quarter or the full fiscal year. Certain prior year amounts have been reclassified to conform to the current period presentation. |
| Recent Accounting Pronouncements | Recent Accounting Pronouncements In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2017-04, Simplifying the Test for Goodwill Impairment, which eliminates the computation of the implied fair value of goodwill to measure a goodwill impairment charge. Instead, entities will record a goodwill impairment charge based on the excess of a reporting unit’s carrying amount over its fair value. The new standard is effective for interim and annual reporting periods beginning after December 15, 2019, with early adoption permitted. We expect the adoption of this standard will reduce the complexity surrounding the evaluation of goodwill for impairment. The impact of this new standard for the Company will depend on the outcomes of future goodwill impairment tests. In March 2017, the FASB issued ASU No. 2017-07, “Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.” This ASU requires the service cost component of net benefit costs to be disaggregated from all other components and be reported in the same line item or items as other compensation costs and allow only the service cost component to be eligible for capitalization when applicable. The other components of net benefit cost are required to be presented in the income statement separately from the service cost component and before income from operations. This ASU is effective for the Company for interim and annual periods beginning January 1, 2018. Upon adoption, the amendments in this update will be applied retrospectively for the presentation of the components of net benefit cost, and prospectively for the capitalization of the service cost component of net benefit cost. The adoption of this standard will not impact pre-tax income or earnings per share reported for the years ended December 31, 2017 and January 1, 2017 and is not expected to materially impact pre-tax income or earnings per share for the year ended December 30, 2018. The impacts to operating income from the re-classification of the other components of net benefit cost for the years ended December 31, 2017 and January 1, 2017 are immaterial. The impacts to operating income from the re-classification of the other components on net benefit cost for the year ended December 31, 2018 will be known when the Company measures its plan assets and benefit obligations as of December 31, 2017. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which provides a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and will supersede most current revenue recognition guidance. The new standard, as subsequently amended, is effective for Teledyne for interim and annual reporting periods beginning after December 15, 2017, with early adoption permitted for interim and annual reporting periods beginning after December 15, 2016. The new standard can be adopted either retrospectively to each prior reporting period presented or as a cumulative-effect adjustment as of the date of adoption. Under the new standard, an entity recognizes revenue when or as it satisfies a performance obligation by transferring control of a good or service to the customer, either at a point in time or over time. Under the new standard, Teledyne expects to recognize revenue over time on most of its contracts that are covered by contract accounting standards using cost inputs to measure progress toward completion of its performance obligations, which is similar to the percentage-of-completion (“POC”) cost-to-cost method currently used on certain of these contracts. Therefore, adoption of the ASU will primarily impact our contracts for which revenue is currently recognized using the POC units-of-delivery and milestone methods as we expect to recognize revenue for these contracts over time using the POC cost-to-cost method. These contracts represent approximately half of the revenue currently recognized under the POC method. The percentage of Teledyne revenue recognized using any POC method was 30.5% in 2016, 31.2% in 2015, and 28.7% in 2014. Also, to a lesser extent, we expect certain ship and bill contracts for custom products and products sold to the U.S. Government, as well as service and repair contracts will be recognized over time. Accordingly, revenue will be recognized earlier in the performance period as costs are incurred, as opposed to recognizing revenue when units are delivered, milestones achieved or services performed. This change will also impact our backlog and balance sheet presentation with an expected decrease in inventories, an increase in accounts receivable (i.e., unbilled receivables) and a net increase to retained earnings to primarily reflect the impact of converting certain ship and bill contracts and contracts currently applying the units-of-delivery and milestone methods to the cost-to-cost method for recognizing revenue and profits. The Company will adopt the standard as of January 1, 2018, using the modified retrospective transition method and is currently quantifying the impact of the adoption on its consolidated financial statements and related disclosures. Under the modified retrospective transition method, the Company will be required to calculate and record the cumulative-effect of adopting the new standard as of January 1, 2018, in the Company’s Quarterly Report on Form 10-Q for the first quarter of 2018. The impact of adopting the new standard to retained earnings is not known at this time, as it will be dependent on the affected contracts that have not been substantially completed as of December 31, 2017. In August 2017, the FASB issued ASU No. 2017-12, “Derivatives and Hedging (Topic 815) Targeted Improvements to Accounting for Hedging Activities.” This ASU better aligns an entity’s risk management activities and financial reporting for hedging relationships. This ASU expands and refines hedge accounting for both nonfinancial and financial risk components, and this ASU simplifies and aligns the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. This ASU is effective for fiscal years beginning after December 15, 2018 and for interim periods therein, with early adoption permitted. Teledyne is currently evaluating the impact this guidance will have on the consolidated financial statements and footnote disclosures. |
Accumulated Other Comprehensive Loss (Tables) |
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| Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Changes in AOCI by Component | The changes in accumulated other comprehensive income/(loss) (“AOCI”) by component, net of tax, for the third quarter and nine months ended October 1, 2017 and October 2, 2016 are as follows (in millions):
The reclassifications out of AOCI for the third quarter and nine months ended October 1, 2017 and October 2, 2016 are as follows (in millions):
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Business Combinations, Goodwill and Acquired Intangible Assets (Tables) |
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| Business Combinations and Investments, Goodwill and Acquired Intangible Assets [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Business Acquisition, Pro Forma Information | The following table presents proforma net sales, net income and earnings per share data assuming e2v was acquired at the beginning of the 2016 fiscal year:
a) The above unaudited proforma information is presented for the e2v acquisition as it is considered a material acquisition.
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| Schedule of Business Acquisitions, by Acquisition |
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| Schedule of Finite-Lived Intangible Assets Acquired as Part of Business Combination | The following table is a summary at the acquisition date of the acquired intangible assets and weighted average useful life in years for the e2v acquisition made in 2017 (dollars in millions):
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Derivative Instruments (Tables) |
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| Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Effect of Derivative Instruments Designated as Cash Flow Hedges | The effect of derivative instruments designated as cash flow hedges in the condensed consolidated financial statements for the third quarter and nine months ended October 1, 2017 and October 2, 2016 was as follows (in millions):
a) Effective portion, pre-tax b) Amount reclassified to offset earnings impact of liability hedged by cross currency swap c) Amount excluded from effectiveness testing |
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| Schedule of Notional Amounts of Outstanding Foreign Currency Contracts | As of October 1, 2017, Teledyne had non-designated foreign currency contracts of this type in the following pairs (in millions):
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| Fair Values of Derivative Financial Instruments | The fair values of the Company’s derivative financial instruments are presented below. All fair values for these derivatives were measured using Level 2 information as defined by the accounting standard hierarchy (in millions):
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Earnings Per Share (Tables) |
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| Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Computations of Basic and Diluted Earnings per Share | The weighted average number of common shares used in the calculation of basic and diluted earnings per share consisted of the following (in millions):
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Stock-Based Compensation Plans (Tables) |
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| Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Stock Valuation Assumptions | The following assumptions were used in the valuation of stock options granted in 2017:
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| Stock Option Transactions for Employee Stock Option Plans | Stock option transactions for the third quarter and nine months ended October 1, 2017 are summarized as follows:
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| Schedule of Restricted Stock Activity | The following table shows the restricted stock activity for the first nine months of 2017:
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Inventories (Tables) |
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| Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Inventories |
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Warranty Reserve (Tables) |
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| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Company's Product Warranty Reserve |
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Long-Term Debt and Capital Leases (Tables) |
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| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Long-Term Debt |
(a) Includes debt issue costs associated with the term loans and senior notes of $2.2 million at October 1, 2017 and $1.4 million at January 1, 2017. |
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Pension Plans and Postretirement Benefits (Tables) |
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| Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Defined Benefit Pension Plans and Postretirement Benefit Plans |
Teledyne sponsors several postretirement defined benefit plans that provide health care and life insurance benefits for certain eligible retirees.
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Segment Information (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Industry Segment Disclosures | The following table presents Teledyne’s segment disclosures (dollars in millions):
Identifiable assets are those assets used in the operations of the segments. Corporate assets primarily consist of cash, deferred taxes, net pension assets/liabilities and other assets (in millions):
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| Summary of the sales by product line | The following tables provide a summary of the net sales by product line for the Instrumentation segment (in millions):
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General (Details) |
12 Months Ended | ||
|---|---|---|---|
Jan. 01, 2017 |
Jan. 03, 2016 |
Dec. 28, 2014 |
|
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
| Percentage of completion method, revenue recognized, percent | 30.50% | 31.20% | 28.70% |
Business Combinations, Goodwill and Acquired Intangible Assets - Pro Forma Information (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Oct. 01, 2017 |
Oct. 02, 2016 |
Oct. 01, 2017 |
Oct. 02, 2016 |
|
| Business Acquisition [Line Items] | ||||
| Net income | $ 69.0 | $ 55.5 | $ 142.2 | $ 126.3 |
| Basic earnings per common share (in USD per share) | $ 1.95 | $ 1.60 | $ 4.04 | $ 3.66 |
| Diluted earnings per common share (in USD per share) | $ 1.90 | $ 1.56 | $ 3.93 | $ 3.57 |
| e2v | ||||
| Business Acquisition [Line Items] | ||||
| Net sales | $ 662.2 | $ 614.6 | $ 1,992.4 | $ 1,853.0 |
Business Combinations, Goodwill and Acquired Intangible Assets - Fair Value of Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Millions |
Mar. 28, 2017 |
Oct. 01, 2017 |
Jan. 01, 2017 |
|---|---|---|---|
| Total assets acquired | |||
| Goodwill | $ 1,748.9 | $ 1,193.5 | |
| e2v | |||
| Total assets acquired | |||
| Current assets, excluding cash acquired | $ 152.3 | ||
| Property, plant and equipment | 104.7 | ||
| Goodwill | 471.1 | ||
| Acquired intangible assets | 173.4 | ||
| Other long-term assets | 8.9 | ||
| Total assets acquired | 910.4 | ||
| Total liabilities assumed | |||
| Current liabilities | (78.7) | ||
| Long-term liabilities | (89.3) | ||
| Total liabilities assumed | (168.0) | ||
| Consideration transferred, net of cash acquired (b) | 742.4 | ||
| Payment for liability to former share option holders | $ 2.0 |
Derivative Instruments (Effect of Derivative Instruments) (Details) - Designated as Hedging Instrument - Cash Flow Hedging - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Oct. 01, 2017 |
Oct. 02, 2016 |
Oct. 01, 2017 |
Oct. 02, 2016 |
|
| Derivative Instruments, Gain (Loss) [Line Items] | ||||
| Net gain (loss) recognized in AOCI | $ 1.0 | $ (1.0) | $ (1.9) | $ 3.4 |
| Net foreign exchange gain (loss) recognized in other income and expense | 0.8 | 0.1 | (0.8) | (0.2) |
| Cost of sales | ||||
| Derivative Instruments, Gain (Loss) [Line Items] | ||||
| Net gain (loss) reclassified from AOCI into cost of sales | (0.8) | (0.1) | 0.0 | 2.9 |
| Interest Expense | ||||
| Derivative Instruments, Gain (Loss) [Line Items] | ||||
| Net gain (loss) reclassified from AOCI into cost of sales | 0.4 | 0.0 | 0.9 | 0.0 |
| Other Operating Income (Expense) | ||||
| Derivative Instruments, Gain (Loss) [Line Items] | ||||
| Net gain (loss) reclassified from AOCI into cost of sales | $ (3.0) | $ 0.0 | $ (9.3) | $ 0.0 |
Earnings Per Share (Details) - shares |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Oct. 01, 2017 |
Oct. 02, 2016 |
Oct. 01, 2017 |
Oct. 02, 2016 |
|
| Earnings Per Share [Abstract] | ||||
| Stock options excluded in computation of diluted earnings per share (in shares) | 0 | 0 | 600 | 336,457 |
Earnings Per Share (Computation of Basic and Diluted Earnings Per Share) (Details) - shares shares in Millions |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Oct. 01, 2017 |
Oct. 02, 2016 |
Oct. 01, 2017 |
Oct. 02, 2016 |
|
| Earnings Per Share [Abstract] | ||||
| Weighted average basic common shares outstanding (in shares) | 35.3 | 34.7 | 35.2 | 34.5 |
| Effect of dilutive securities (in shares) | 1.1 | 0.9 | 1.0 | 0.9 |
| Weighted average diluted common shares outstanding (in shares) | 36.4 | 35.6 | 36.2 | 35.4 |
Stock-Based Compensation Plans (Narrative) (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | 9 Months Ended | 12 Months Ended | |||
|---|---|---|---|---|---|---|
Oct. 01, 2017 |
Apr. 02, 2017 |
Oct. 02, 2016 |
Oct. 01, 2017 |
Oct. 02, 2016 |
Dec. 31, 2017 |
|
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
| Stock option compensation expense | $ 3.2 | $ 2.5 | $ 11.0 | $ 8.8 | ||
| Stock Options | ||||||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
| Weighted average grant date fair value (in USD per share) | $ 48.45 | |||||
| Performance Shares | ||||||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
| Shares issued (in shares) | 876 | |||||
| Employee | Stock Options | ||||||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
| Vesting period over which employee stock option grants are evenly expensed | 3 years | |||||
| Scenario, Forecast | ||||||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
| Expected stock option compensation expense | $ 14.4 | |||||
Stock-Based Compensation Plans (Stock Option Valuation Assumptions) (Details) |
9 Months Ended |
|---|---|
Oct. 01, 2017 | |
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
| Expected volatility | 32.30% |
| Expected life in years | 7 years 2 months |
| Expected dividend yield | 0.00% |
| Minimum | |
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
| Risk-free interest rate range | 1.00% |
| Maximum | |
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
| Risk-free interest rate range | 2.50% |
Stock-Based Compensation Plans (Options Plans) (Details) - Stock Options |
3 Months Ended | 9 Months Ended |
|---|---|---|
|
Oct. 01, 2017
$ / shares
shares
|
Oct. 01, 2017
$ / shares
shares
|
|
| Shares | ||
| Beginning balance (in shares) | shares | 2,515,100 | 2,175,442 |
| Granted (in shares) | shares | 0 | 543,880 |
| Exercised (in shares) | shares | (104,496) | (289,178) |
| Canceled (in shares) | shares | (13,147) | (32,687) |
| Ending balance (in shares) | shares | 2,397,457 | 2,397,457 |
| Options exercisable at end of period (in shares) | shares | 1,545,815 | 1,545,815 |
| Weighted Average Exercise Price | ||
| Beginning balance (in USD per share) | $ / shares | $ 82.26 | $ 70.44 |
| Granted (in USD per share) | $ / shares | 0.00 | 123.40 |
| Exercised (in USD per share) | $ / shares | 66.49 | 64.84 |
| Canceled (in USD per share) | $ / shares | 104.92 | 92.52 |
| Ending balance (in USD per share) | $ / shares | 82.83 | 82.83 |
| Options exercisable at end of period (in USD per share) | $ / shares | $ 69.77 | $ 69.77 |
Stock-Based Compensation Plans (Restricted Stock Activity) (Details) - Restricted Stock |
9 Months Ended |
|---|---|
|
Oct. 01, 2017
$ / shares
shares
| |
| Shares | |
| Beginning balance (in shares) | shares | 95,304,000 |
| Granted (in shares) | shares | 23,002,000 |
| Issued (in shares) | shares | (30,704,000) |
| Forfeited/Canceled (in shares) | shares | (1,068,000) |
| Ending balance (in shares) | shares | 86,534,000 |
| Weighted average fair value per share | |
| Beginning balance (in USD per share) | $ / shares | $ 83.87 |
| Granted (in USD per share) | $ / shares | 114.42 |
| Issued (in USD per share) | $ / shares | 87.98 |
| Forfeited/Canceled (in USD per share) | $ / shares | 87.59 |
| Ending balance (in USD per share) | $ / shares | $ 90.49 |
Inventories (Narrative) (Details) - USD ($) $ in Millions |
Oct. 01, 2017 |
Jan. 01, 2017 |
|---|---|---|
| Inventory Disclosure [Abstract] | ||
| Inventories at average cost or FIFO methods | $ 372.2 | $ 268.4 |
| Inventories at cost as per LIFO | $ 80.1 | $ 68.4 |
Inventories (Details) - USD ($) $ in Millions |
Oct. 01, 2017 |
Jan. 01, 2017 |
|---|---|---|
| Inventories | ||
| Raw materials and supplies | $ 201.2 | $ 146.0 |
| Work in process | 193.4 | 147.8 |
| Finished goods | 57.7 | 43.0 |
| Total inventories, gross | 452.3 | 336.8 |
| Progress payments | (8.4) | (9.1) |
| Reduction to LIFO cost basis | (12.0) | (13.5) |
| Total inventories, net | $ 431.9 | $ 314.2 |
Warranty Reserve (Product Warranty) (Details) - USD ($) $ in Millions |
9 Months Ended | |
|---|---|---|
Oct. 01, 2017 |
Oct. 02, 2016 |
|
| Company's product warranty reserve | ||
| Balance at beginning of year | $ 18.4 | $ 17.1 |
| Accruals for product warranties charged to expense | 4.8 | 7.0 |
| Cost of product warranty claims | (5.3) | (4.7) |
| Acquisitions | 3.1 | 0.3 |
| Balance at end of period | $ 21.0 | $ 19.7 |
Income Taxes (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Oct. 01, 2017 |
Oct. 02, 2016 |
Oct. 01, 2017 |
Oct. 02, 2016 |
|
| Income Tax Disclosure [Abstract] | ||||
| Effective income tax rate | 15.60% | 16.70% | 19.70% | 23.90% |
| Net discrete income tax expense | $ (9.9) | $ 6.6 | $ (15.9) | $ 1.5 |
| Effective income tax rate, excluding discrete items | 27.70% | 27.20% | 27.70% | 27.40% |
| Effective income tax rate reconciliation, remeasurement of uncertain tax positions | $ (7.4) | $ (7.7) | ||
| Discrete tax expense (benefit), valuation allowance | (0.4) | (8.5) | ||
| Discrete tax expense (benefit), uncertain tax positions | 4.6 | |||
| Discrete tax expense (benefit), share-based accounting | $ (2.3) | $ (4.0) | (5.1) | $ (5.8) |
| Discrete tax expense (benefit), sale of operating facility | 6.7 | |||
| Gain on sale of facility | $ 17.9 | $ 0.0 | $ 17.9 | |
Lawsuits, Claims, Commitments, Contingencies and Related Matters (Details) - USD ($) $ in Millions |
9 Months Ended | |
|---|---|---|
Oct. 01, 2017 |
Jan. 01, 2017 |
|
| Valuation and Qualifying Accounts Disclosure [Line Items] | ||
| Reserves for environmental remediation obligations | $ 5.5 | |
| Portion of reserves included in current accrued liabilities | $ 336.6 | $ 261.0 |
| Accrual for environmental loss contingencies | $ 7.0 | |
| Maximum | ||
| Valuation and Qualifying Accounts Disclosure [Line Items] | ||
| Estimated duration of remediation | 30 years | |
| Environmental Reserves | ||
| Valuation and Qualifying Accounts Disclosure [Line Items] | ||
| Portion of reserves included in current accrued liabilities | $ 1.7 |
Pension Plans and Postretirement Benefits (Narrative) (Details) - USD ($) |
3 Months Ended | 9 Months Ended | |||
|---|---|---|---|---|---|
Oct. 01, 2017 |
Oct. 02, 2016 |
Oct. 01, 2017 |
Oct. 02, 2016 |
Jan. 01, 2017 |
|
| Defined Benefit Plan Disclosure [Line Items] | |||||
| Contributions by employer by during period | $ 0 | $ 0 | |||
| Estimated contributions in current fiscal year | $ 0 | 0 | |||
| Pension Benefits Allocated to Contracts Pursuant to U.S. Government Cost Accounting Standards | |||||
| Defined Benefit Plan Disclosure [Line Items] | |||||
| Pension expense allocated to contracts pursuant to U.S. Government Cost Accounting Standards | $ 3,500,000 | $ 3,400,000 | $ 10,400,000 | $ 10,400,000 | |
| UNITED STATES | |||||
| Defined Benefit Plan Disclosure [Line Items] | |||||
| Discount rate used to determine the benefit obligation | 4.54% | 4.54% | 4.91% | ||
Pension Plans and Postretirement Benefits (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Oct. 01, 2017 |
Oct. 02, 2016 |
Oct. 01, 2017 |
Oct. 02, 2016 |
|
| Pension Plan | ||||
| Components of net period pension benefit expense | ||||
| Service cost — benefits earned during the period | $ 2.7 | $ 2.8 | $ 8.1 | $ 8.4 |
| Interest cost on benefit obligation | 9.1 | 10.2 | 27.4 | 30.4 |
| Expected return on plan assets | (18.3) | (18.8) | (54.9) | (56.3) |
| Amortization of prior service cost | (1.5) | (1.5) | (4.5) | (4.5) |
| Amortization of net actuarial loss (gain) | 7.3 | 6.8 | 21.9 | 20.4 |
| Net periodic (income) expense | (0.7) | (0.5) | (2.0) | (1.6) |
| Other Postretirement Benefits Plan | ||||
| Components of net period pension benefit expense | ||||
| Interest cost on benefit obligation | 0.1 | 0.1 | 0.3 | 0.4 |
| Amortization of net actuarial loss (gain) | (0.1) | (0.1) | (0.3) | (0.3) |
| Net periodic (income) expense | $ 0.0 | $ 0.0 | $ 0.0 | $ 0.1 |
Segment Information (Narrative) (Details) $ in Millions |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
|
Oct. 01, 2017
USD ($)
product_line
|
Oct. 02, 2016
USD ($)
|
Oct. 01, 2017
USD ($)
segment
product_line
|
Oct. 02, 2016
USD ($)
|
|
| Revenue from External Customer [Line Items] | ||||
| Number of reportable segments | segment | 4 | |||
| Restructuring costs | $ | $ 2.6 | $ 3.1 | $ 6.1 | $ 15.3 |
| Restructuring reserve included in other current liabilities | $ | $ 0.9 | $ 0.9 | ||
| Aerospace and Defense Electronics | ||||
| Revenue from External Customer [Line Items] | ||||
| Number of product lines | 1 | 1 | ||
| Engineered Systems | ||||
| Revenue from External Customer [Line Items] | ||||
| Number of product lines | 1 | 1 | ||
| Instrumentation | ||||
| Revenue from External Customer [Line Items] | ||||
| Number of product lines | 3 | 3 | ||
| Digital Imaging | ||||
| Revenue from External Customer [Line Items] | ||||
| Number of product lines | 1 | 1 | ||
Segment Information (Identifiable Assets) (Details) - USD ($) $ in Millions |
Oct. 01, 2017 |
Jan. 01, 2017 |
|---|---|---|
| Segment Reporting Information [Line Items] | ||
| Identifiable assets | $ 3,847.5 | $ 2,774.4 |
| Operating Segments | Instrumentation | ||
| Segment Reporting Information [Line Items] | ||
| Identifiable assets | 1,428.1 | 1,361.0 |
| Operating Segments | Digital Imaging | ||
| Segment Reporting Information [Line Items] | ||
| Identifiable assets | 1,501.6 | 671.1 |
| Operating Segments | Aerospace and Defense Electronics | ||
| Segment Reporting Information [Line Items] | ||
| Identifiable assets | 619.6 | 449.4 |
| Operating Segments | Engineered Systems | ||
| Segment Reporting Information [Line Items] | ||
| Identifiable assets | 104.6 | 93.9 |
| Corporate, Non-Segment | ||
| Segment Reporting Information [Line Items] | ||
| Identifiable assets | $ 193.6 | $ 199.0 |
Segment Information (Sales) (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Oct. 01, 2017 |
Oct. 02, 2016 |
Oct. 01, 2017 |
Oct. 02, 2016 |
|
| Revenue from External Customer [Line Items] | ||||
| Net sales | $ 662.2 | $ 526.8 | $ 1,899.4 | $ 1,597.0 |
| Operating Segments | Instrumentation | ||||
| Revenue from External Customer [Line Items] | ||||
| Net sales | 232.5 | 208.3 | 699.1 | 652.1 |
| Operating Segments | Instrumentation | Marine Instrumentation | ||||
| Revenue from External Customer [Line Items] | ||||
| Net sales | 101.8 | 97.6 | 318.3 | 314.3 |
| Operating Segments | Instrumentation | Environmental Instrumentation | ||||
| Revenue from External Customer [Line Items] | ||||
| Net sales | 77.7 | 63.8 | 230.2 | 200.4 |
| Operating Segments | Instrumentation | Test and Measurement Instrumentation | ||||
| Revenue from External Customer [Line Items] | ||||
| Net sales | $ 53.0 | $ 46.9 | $ 150.6 | $ 137.4 |