Pension Plans and Postretirement Benefits

12 Months Ended

Dec. 31, 2023

Retirement Benefits [Abstract]

Pension Plans and Postretirement Benefits

Pension Plans and Postretirement Benefits

Pension Plans

Teledyne has two domestic qualified defined benefit pension plans covering substantially all U.S. employees hired before January 1, 2004, excluding FLIR U.S. employees. All FLIR U.S. employees participate in a defined contribution plan, as FLIR had no legacy U.S. pension plans. As of January 1, 2004, new Teledyne hires participate in a defined contribution plan only. The Company also has several small domestic non-qualified and foreign-based defined benefit pension plans. The measurement date for the Company’s pension plans is December 31.

The domestic qualified pension plans allow participants to elect a lump-sum payment at retirement. In 2023, 2022 and 2021, the Company made lump sum payments of $17.3 million, $24.8 million and $24.5 million, respectively, from the domestic qualified pension plans assets to certain participants in the plan. Each year beginning with 2014, the Society of Actuaries released revised mortality tables, which updated life expectancy assumptions. In consideration of these tables, each year the Company reviews the mortality assumptions used in determining our pension and postretirement obligations.

Net periodic benefit expense (income) allocation

	Domestic						Foreign
	2023		2022		2021		2023		2022		2021
Service cost - benefits earned during the period (in millions)	$	5.2	$	7.6	$	9.3	$	0.9	$	1.0	$	1.3
	Domestic						Foreign
Pension non-service (income) expense (in millions):	2023		2022		2021		2023		2022		2021
Interest cost on benefit obligation	$	31.7	$	22.8	$	21.6	$	1.9	$	0.8	$	0.7
Expected return on plan assets	(52.6)		(54.9)		(55.8)		(1.6)		(1.1)		(1.0)
Amortization of prior service cost	(1.8)		(1.8)		(3.6)		0.1		—		0.1
Amortization of actuarial loss	9.9		22.7		26.3		0.2		—		0.4
Settlements/Curtailment	—		—		—		—		(0.1)		—
Pension non-service (income) expense	$	(12.8)	$	(11.2)	$	(11.5)	$	0.6	$	(0.4)	$	0.2

Obligations and funded status

The expected long-term rate of return on plan assets is reviewed annually, taking into consideration the Company’s asset allocation, historical returns on the types of assets held, the current economic environment, and prospective expectations.

Teledyne determines the discount rate based on a model which matches the timing and amount of expected benefit payments to maturities of high-quality corporate bonds priced as of the pension plan measurement date. The yields on the bonds are used to derive a discount rate for the obligation.

The following assumptions were used to measure the net benefit income or expense within each respective year for the domestic qualified plans and the foreign plans:

Pension Plan Assumptions:	Discount rates	Increase in future compensation levels	Expected long-term rate of return
Domestic plans - 2023	5.71% - 5.72%	2.75%	6.58% - 7.80%
Domestic plans - 2022	2.91% - 3.08%	2.75%	6.58% - 7.80%
Domestic plans - 2021	2.55% - 2.78%	2.75%	6.71% - 7.80%
Foreign plans - 2023	2.20% - 4.80%	1.50% - 3.00%	1.25% - 5.10%
Foreign plans - 2022	0.20% - 1.80%	1.00% - 2.50%	1.00% - 2.70%
Foreign plans - 2021	0.10% - 1.20%	1.00% - 2.50%	0.80% - 2.50%

For its domestic and foreign pension plans the Company is projecting a weighted-average long-term rate of return on plan assets of 6.86% and 5.02% in 2024, respectively.

	Domestic				Foreign
	2023		2022		2023		2022
Changes in benefit obligation (in millions):
Benefit obligation - beginning of year	$	583.0	$	799.3	$	45.2	$	60.2
Service cost - benefits earned during the year	5.2		7.6		0.9		1.0
Interest cost on projected benefit obligation	31.7		22.8		1.9		0.8
Actuarial (gain) loss	23.6		(179.1)		3.1		(12.0)
Benefits paid	(59.8)		(67.6)		(2.1)		(1.6)
Other - including foreign currency, settlements/curtailments	0.4		—		2.5		(3.2)
Benefit obligation - end of year	$	584.1	$	583.0	$	51.5	$	45.2
Accumulated benefit obligation - end of year	$	581.7	$	580.5	$	47.9	$	42.2

The key assumptions used to measure the benefit obligation at each respective year-end were:

Key assumptions:	Domestic Plans			Foreign Plans
	2023	2022	2021	2023	2022	2021
Discount rate	5.40% - 5.45%	5.71% - 5.72%	2.91% - 3.08%	1.30% - 4.50%	2.20% - 4.80%	0.20% - 1.80%
Salary growth rate	2.75%	2.75%	2.75%	1.50% - 3.00%	1.50% - 3.00%	1.00% -2.50%

Plan assets

	Domestic				Foreign
	2023		2022		2023		2022
Changes in plan assets (in millions):
Fair value of net plan assets - beginning of year	$	719.7	$	864.3	$	35.0	$	52.9
Actual return on plan assets	78.0		(79.2)		2.3		(12.6)
Employer contribution - other benefit plan	2.5		2.2		1.5		1.5
Foreign currency changes	—		—		2.0		(4.6)
Benefits paid	(59.8)		(67.6)		(2.2)		(1.7)
Other	—		—		—		(0.5)
Fair value of net plan assets - end of year	$	740.4	$	719.7	$	38.6	$	35.0

The following tables sets forth the funded status and amounts recognized in the consolidated balance sheets at year-end 2023 and 2022 for the domestic qualified and nonqualified pension plans and the foreign-based pension plans for benefits provided to certain employees (in millions):

		Domestic				Foreign
		2023		2022		2023		2022
Funded (unfunded) status		$	156.3	$	136.7	$	(12.9)	$	(10.2)
Amounts recognized in the consolidated balance sheets as a debit (credit):
Balance sheet item	Balance sheet location
Prepaid pension assets	Other assets, net - noncurrent	$	203.3	$	178.4	$	—	$	—
Accrued pension obligations short-term	Accrued liabilities	(2.9)		(3.9)		(0.6)		(0.5)
Accrued pension obligations long-term	Other long-term liabilities	(44.1)		(37.8)		(12.3)		(9.7)
Net amount recognized		$	156.3	$	136.7	$	(12.9)	$	(10.2)
Amounts recognized in AOCI:
Net prior service cost (credit)		$	1.0	$	(1.2)	$	0.4	$	0.5
Net loss		318.4		330.2		8.2		5.6
Net amount recognized, before tax effect		$	319.4	$	329.0	$	8.6	$	6.1

Amounts for pension plans with accumulated benefit obligations in excess of fair value of plan assets are as follows (in millions):

	2023		2022
Projected benefit obligation	$	98.4	$	84.4
Accumulated benefit obligation	$	94.8	$	81.6
Fair value of plan assets	$	38.6	$	32.7

 At year-end 2023 and 2022 the Company had an accumulated non-cash reduction to stockholders’ equity of $249.6 million and $255.5 million, respectively, related to its pension and postretirement plans. The accumulated non-cash reductions to stockholders’ equity did not affect net income and were recorded net of accumulated deferred taxes of $77.0 million at year end 2023 and $77.6 million at year end 2022.

Estimated future pension plan benefit payments (in millions):	Domestic		Foreign
2024	$	53.0	$	2.4
2025	$	53.2	$	2.4
2026	$	55.3	$	2.7
2027	$	54.7	$	2.6
2028	$	56.4	$	3.1
2029 - 2033	$	243.0	$	14.2

Investments

 The Company has an active management policy for the pension assets in the qualified domestic pension plans. As of December 31, 2023, the long-term asset allocation target for the domestic plans consists of approximately 35% in equity instruments, approximately 54% in fixed income instruments and approximately 11% in alternatives.

The pension plans’ investments are stated at fair value. Plan investments that are considered a level 1 fair value hierarchy and are valued at quoted market prices in active markets. Plan investments that are considered a level 2 fair value hierarchy and are valued based on observable market data. Plan investments that would be considered a level 3 fair value hierarchy are valued based on management’s own assumption about the assumptions that market participants would use in pricing the asset or liability (including assumptions about risk).

Certain investments measured at fair value using net asset values as a practical expedient are not required to be categorized in the fair value hierarchy table listed below. As such, the total fair value of these net asset values based investments has been included in the table below to permit reconciliation to the plan asset amounts previously disclosed.

The fair values of the Company’s net pension assets, by fair value hierarchy, for both the U.S. and foreign pension plans as of December 31, 2023, by asset category are as follows (in millions):

Asset category:(a)	Level 1		Level 2		Level 3		Total
Cash and cash equivalents (b)	$	—	$	20.1	$	—	$	20.1
Equity securities	3.5		209.0		—		212.5
U.S. Government securities and futures	231.4		11.4		—		242.8
Corporate bonds	—		22.5		—		22.5
Insurance contracts related to foreign plans	—		13.1		—		13.1
Fair value of net plan assets at the end of the year	$	234.9	$	276.1	$	—	$	511.0
Investments measured at net asset value:
Alternatives							$	189.3
Mutual funds (c)							4.8
Mortgage-backed securities							60.3
High yield bonds							13.6
Fair value of net plan assets at the end of the year							$	268.0

(a) There were no transfers of plan assets between the three levels of the fair value hierarchy during the year.

(b) Reflects cash and cash equivalents held in overnight cash investments.

(c) The mutual funds are invested in equity securities.

The fair values of the Company’s net pension assets, by fair value hierarchy, for both the U.S. and foreign pension plans as of January 1, 2023, by asset category are as follows (in millions):

Asset category: (a)	Level 1		Level 2		Level 3		Total
Cash and cash equivalents (b)	$	—	$	48.3	$	—	$	48.3
Equity securities	2.8		185.7		—		188.5
U.S. Government securities and futures	225.9		11.2		—		237.1
Corporate bonds	—		22.4		—		22.4
Insurance contracts related to foreign plans	—		10.7		—		10.7
Fair value of net plan assets at the end of the year	$	228.7	$	278.3	$	—	$	507.0
Investments measured at net asset value:
Alternatives							$	177.5
Mutual funds (c)							4.3
Mortgage-backed securities							53.6
High yield bonds							12.3
Fair value of net plan assets at the end of the year							$	247.7

(a) There were no transfers of plan assets between the three levels of the fair value hierarchy during the year.

(b) Reflects cash and cash equivalents held in overnight cash investments.

(c) The mutual funds are invested in equity securities.

U.S. equities are valued at the closing price reported in an active market on which the individual securities are traded. U.S. equities and non-U.S. equities are also valued at the net asset value provided by the independent administrator or custodian of the commingled fund.  The net asset value is based on the value of the underlying equities, which are traded on an active market. Corporate bonds are valued using inputs such as the closing price reported, if traded on an active market, values derived from comparable securities of issuers with similar credit ratings, or under a discounted cash flow approach that utilizes observable inputs, such as current yields of similar instruments. Fixed income investments are also valued at the net asset value provided by the independent administrator or custodian of the fund.  The net asset value is based on the underlying assets, which are valued using inputs such as the closing price reported, if traded on an active market, values derived from comparable securities of issuers with similar credit ratings, or under a discounted cash flow approach that utilizes observable inputs, such as current yields of similar instruments.  Alternative investments are primarily valued at the net asset value as determined by the independent administrator or custodian of the fund.  The net asset value is based on the underlying investments, which are valued using inputs such as quoted market prices of identical instruments or values derived from comparable securities of issuers with similar credit ratings, or under a discounted cash flow approach that utilizes observable inputs, such as current yields of similar instruments.

Defined Benefit Postretirement Plans

The Company sponsors several postretirement defined benefit plans covering certain salaried and hourly employees. The plans provide health care and life insurance benefits for certain eligible retirees. Total cost for these plans was less than

$1.0 million for each fiscal year 2023, 2022 and 2021.

Deferred Contribution Plans

The Company’s contributions associated with its 401(k) plans were $31.4 million, $29.7 million and $15.2 million, for 2023, 2022 and 2021, respectively.

Deferred Compensation Plans

The Company has non-qualified executive deferred compensation plans that provide supplemental retirement income benefits for a select group of management. This plan permits eligible employees to make salary and bonus deferrals that are 100% vested. Teledyne has an unsecured obligation to pay in the future the value of the deferred compensation adjusted to reflect the performance, whether positive or negative, of selected investment measurement options chosen by each participant during the deferral period. In addition, the Company has separate deferred compensation plans acquired in connection with the FLIR and ETM acquisitions, and these plans were frozen at the end of fiscal years 2021 and 2022, respectively.

As of December 31, 2023 and January 1, 2023, $102.2 million and $92.2 million, respectively, is included in other long-term liabilities related to deferred compensation liabilities on the consolidated balance sheets. Additionally, the Company purchased life insurance policies on certain participants to potentially offset these unsecured obligations. These policies are recorded at their cash surrender value as determined by the insurance carrier. The cash surrender value of these policies was $101.3 million and $94.7 million, as of December 31, 2023 and January 1, 2023, respectively, and is primarily included in other non-current assets on the consolidated balance sheets.