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 includes 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.

In the second quarter of 2018, we realigned the reporting structure for certain of our microwave product groupings. These products, acquired with the acquisition of e2v were formerly reported as part of the Aerospace and Defense Electronics segment and are now reported as part of the Digital Imaging segment. Previously reported segment data has been adjusted to reflect this change. Total sales for these products were $24.2 million for fiscal year 2017.

The following table presents Teledyne’s segment disclosures (dollars in millions):



	Third Quarter						%		Nine Months						%
	2018			2017			Change		2018			2017			Change
Net sales(a):
Instrumentation	$	256.2		$	232.5		10.2	%	$	757.8		$	699.1		8.4	%
Digital Imaging	223.0			197.0			13.2	%	659.3			511.0			29.0	%
Aerospace and Defense Electronics	171.1			159.6			7.2	%	518.2			472.6			9.6	%
Engineered Systems	75.0			73.1			2.6	%	218.1			216.7			0.6	%
Total net sales	$	725.3		$	662.2		9.5	%	$	2,153.4		$	1,899.4		13.4	%
Operating income:
Instrumentation	$	35.7		$	34.6		3.2	%	$	104.4		$	95.3		9.5	%
Digital Imaging (b)	42.3			31.4			34.7	%	120.2			74.5			61.3	%
Aerospace and Defense Electronics	33.3			28.2			18.1	%	98.7			82.2			20.1	%
Engineered Systems	9.3			8.6			8.1	%	23.9			23.7			0.8	%
Corporate expense (b)	(15.1		)	(13.3		)	13.5	%	(41.8		)	(48.6		)	(14.0	)%
Operating income	$	105.5		$	89.5		17.9	%	$	305.4		$	227.1		34.5	%



(a)	Net sales excludes inter-segment sales of $6.2 million and $16.9 million for the third quarter and first nine months of 2018, respectively, and $6.4 million and $17.8 million for the third quarter and nine months of 2017, respectively.
(b)	The third quarter of 2017 included 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 included 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 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):



Identifiable assets:	September 30, 2018		December 31, 2017
Instrumentation	$	1,378.0	$	1,413.6
Digital Imaging	1,613.8		1,606.5
Aerospace and Defense Electronics	527.9		495.4
Engineered Systems	118.2		107.0
Corporate	275.3		223.9
Total identifiable assets	$	3,913.2	$	3,846.4

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):



	Third Quarter				Nine Months
Instrumentation	2018		2017		2018		2017
Marine Instrumentation	$	106.2	$	101.8	$	329.1	$	318.3
Environmental Instrumentation	85.5		77.7		252.4		230.2
Test and Measurement Instrumentation	64.5		53.0		176.3		150.6
Total	$	256.2	$	232.5	$	757.8	$	699.1

We also disaggregate our revenue from contracts with customers by customer type, contract-type and geographic region for each of our segments, as we believe it best depicts how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors. As we adopted Topic 606 using the modified retrospective transition method, prior period information was not adjusted for Topic 606 and comparative disclosures for disaggregated revenue are not required in the year of adoption.



	Third Quarter Ended September 30, 2018						Nine Months Ended September 30, 2018
	Customer Type						Customer Type
(in millions)	United States Government (a)		Other, Primarily Commercial		Total		United States Government (a)		Other, Primarily Commercial		Total
Net Sales:
Instrumentation	$	15.4	$	240.8	$	256.2	$	44.0	$	713.8	$	757.8
Digital Imaging	23.9		199.1		223.0		68.9		590.4		659.3
Aerospace and Defense Electronics	57.9		113.2		171.1		189.6		328.6		518.2
Engineered Systems	61.9		13.1		75.0		178.1		40.0		218.1
	$	159.1	$	566.2	$	725.3	$	480.6	$	1,672.8	$	2,153.4

a) Includes sales as a prime contractor or subcontractor.



	Third Quarter Ended September 30, 2018						Nine Months Ended September 30, 2018
	Contract Type						Contract Type
(in millions)	Fixed Price		Cost Type		Total		Fixed Price		Cost Type		Total
Net Sales:
Instrumentation	$	252.6	$	3.6	$	256.2	$	745.2	$	12.6	$	757.8
Digital Imaging	206.0		17.0		223.0		600.7		58.6		659.3
Aerospace and Defense Electronics	170.0		1.1		171.1		516.4		1.8		518.2
Engineered Systems	24.3		50.7		75.0		70.9		147.2		218.1
	$	652.9	$	72.4	$	725.3	$	1,933.2	$	220.2	$	2,153.4



	Third Quarter Ended September 30, 2018								Nine Months Ended September 30, 2018
	Geographic Region (a)								Geographic Region (a)
(in millions)	United States		Europe		All other		Total		United States		Europe		All other		Total
Net sales:
Instrumentation	$	215.4	$	31.3	$	9.5	$	256.2	$	612.9	$	116.1	$	28.8	$	757.8
Digital Imaging	62.6		78.1		82.3		223.0		178.8		221.1		259.4		659.3
Aerospace and Defense Electronics	154.6		15.4		1.1		171.1		465.7		50.1		2.4		518.2
Engineered Systems	71.8		3.2		—		75.0		210.9		7.2		—		218.1
	$	504.4	$	128.0	$	92.9	$	725.3	$	1,468.3	$	394.5	$	290.6	$	2,153.4

a) Net sales by geographic region of origin.