Stockholders' Equity

12 Months Ended

Jan. 01, 2012

Stockholders' Equity [Abstract]

Stockholders' Equity

Note 8.    Stockholders’ Equity

The following is an analysis of Teledyne’s common stock share activity:

Balance, December 28, 2008	35,926,224
Stock options exercised and other	152,253
Balance, January 3, 2010	36,078,477
Stock options exercised and other	284,895
Balance, January 2, 2011	36,363,372
Stock options exercised and other	663,643
Balance, January 1, 2012	37,027,015

Shares issued in all three fiscal years include stock options exercised as well as shares issued under certain compensation plans.

Preferred Stock

Authorized preferred stock may be issued with designations, powers and preferences designated by the Board of Directors. There were no shares of preferred stock issued or outstanding in 2011, 2010 or 2009.

Treasury Stock

In October 2011, Teledyne’s Board of Directors approved a stock repurchase program authorizing the Company to repurchase up to 2,500,000 shares of its common stock. Shares may be repurchased from time to time in open market transactions at prevailing market prices or in privately negotiated transactions. Shares could be repurchased in a plan pursuant to Rule 10b5-1 of the Securities Exchange Act of 1934. The repurchase program is expected to remain open continuously, and the number of shares purchased will depend on a variety of factors, such as share price, levels of cash available, alternative investment opportunities available immediately or longer-term, and other regulatory, market or economic conditions. Repurchases would be funded with cash on hand and borrowings under the Company’s credit facility. In 2011, Teledyne repurchased 658,562 shares of Teledyne common stock for $34.9 million under the program. Such repurchased shares became treasury stock. Teledyne issues shares for share-based compensation plans from treasury stock. Teledyne has 577,923 shares of treasury stock at January 1, 2012. In 2009, Teledyne repurchased 36,239 shares of Teledyne common stock for $0.8 million under a program that expired in 2010. No shares were repurchased in 2010.

Stock Incentive Plan

Teledyne has long-term incentive plans which provide its Board of Directors the flexibility to grant restricted stock, restricted stock units, performance shares, non-qualified stock options, incentive stock options and stock appreciation rights to officers and employees of Teledyne. Stock options become exercisable in one-third increments on the first, second and third anniversary of the grant and have a maximum 10 year life.

The valuation methodologies and assumptions in estimating the fair value of stock options granted in 2011 were similar to those used in estimating the fair value of stock options granted in 2010 and 2009. Stock option compensation expense is recorded on a straight line basis over the appropriate vesting period, generally three years. The Company recorded $5.8 million, $4.7 million, and $5.2 million for stock option expense, for 2011, 2010 and 2009, respectively. The Company issues shares of common stock upon the exercise of stock options.

The Company used a combination of its historical stock price volatility and the volatility of exchange traded options on the Company stock to compute the expected volatility for purposes of valuing stock options issued. The period used for the historical stock price corresponded to the expected term of the options and was between five and six years. The period used for the exchange traded options extended to the longest-dated options publicly available, generally six to nine months. The expected dividend yield is based on Teledyne’s practice of not paying dividends. The risk-free rate of return is based on the yield of U.S. Treasury Strips with terms equal to the expected life of the option as of the grant date. The expected life in years is based on historical actual stock option exercise experience. The following assumptions were used in the valuation of stock options granted in 2011, 2010 and 2009:

For the year	2011			2010			2009
Expected dividend yield		—			—			—
Expected volatility		36.8	%		35.3	%		38.8	%
Risk-free interest rate		2.1	%		2.4	%		2.1	%
Expected lives		6.2			6.0			5.6

Based on the assumptions in the table above, the grant date weighted average fair value of stock options granted in 2011, 2010 and 2009 was $18.94, $16.44 and $10.02, respectively.

Stock option transactions for Teledyne’s employee stock option plans are summarized as follows:

	2011					2010					2009
	Shares			Weighted Average Exercise Price		Shares			Weighted Average Exercise Price		Shares			Weighted Average Exercise Price
Beginning balance		2,456,296		$	33.07		2,249,050		$	30.40		2,339,970		$	30.39
Granted		499,038		$	47.35		433,094		$	42.09		—		$	—
Exercised		(576,575	)	$	23.89		(179,747	)	$	20.34		(76,517	)	$	12.83
Canceled or expired		(55,914	)	$	42.94		(46,101	)	$	36.74		(14,403	)	$	28.04
Ending balance		2,322,845		$	38.19		2,456,296		$	33.07		2,249,050		$	30.40
Options exercisable at year-end		1,586,480		$	34.79		1,939,785		$	30.19		1,879,554		$	27.29

The following table provides certain information with respect to stock options outstanding and stock options exercisable at January 1, 2012 under the employee stock option plans:

	Stock Options Outstanding						Stock Options Exercisable
Range of Exercise Prices	Shares		Weighted Average Exercise Price		Remaining Life		Shares		Weighted Average Exercise       Price
$13.45-$20.00		285,384	$	16.74		1.6		285,384	$	16.74
$20.01-$30.00		217,893	$	26.99		3.2		217,893	$	26.99
$30.01-$40.00		651,919	$	36.36		4.7		651,919	$	36.36
$40.01-$50.00		813,239	$	44.64		8.7		126,224	$	42.14
$50.01-$59.05		354,410	$	50.92		6.5		305,060	$	50.86
		2,322,845	$	38.19		5.9		1,586,480	$	34.79

Non-Employee Director Stock Compensation Plan

Teledyne also sponsors a stock plan for non-employee directors pursuant to which non-employee directors receive annual stock options and may receive stock or stock options in lieu of their respective retainer and meeting fees. The options become exercisable one year after issuance and have a maximum 10 year life.

Stock option transactions for Teledyne’s non-employee director stock option plan are summarized as follows:

	2011					2010					2009
	Shares			Weighted Average Exercise Price		Shares			Weighted Average Exercise Price		Shares			Weighted Average Exercise Price
Beginning balance		440,825		$	28.15		418,817		$	26.66		392,002		$	25.53
Granted		42,759		$	45.19		41,364		$	39.53		42,483		$	30.66
Exercised		(78,892	)	$	13.31		(17,356	)	$	14.55		(15,668	)	$	9.26
Canceled or expired		—		$	—		(2,000	)	$	14.75		—		$	—
Ending balance		404,692		$	32.85		440,825		$	28.15		418,817		$	26.66
Options exercisable at year-end		361,933		$	31.39		399,461		$	27.06		378,974		$	26.24

The following table provides certain information with respect to stock options outstanding and stock options exercisable at January 2, 2011 under the non-employee director stock option plan:

	Stock Options Outstanding						Stock Options Exercisable
Range of Exercise Prices	Shares		Weighted Average Exercise Price		Remaining Life		Shares		Weighted Average Exercise Price
$8.37-$10.00		14,155	$	9.32		1.3		14,155	$	9.32
$10.01-$20.00		82,424	$	16.39		2.0		82,424	$	16.39
$20.01-$30.00		85,315	$	26.37		4.5		81,102	$	26.19
$30.01-$40.00		84,798	$	34.36		5.5		78,252	$	34.40
$40.01-$50.00		102,000	$	46.18		7.6		70,000	$	44.66
$50.01-$53.76		36,000	$	53.76		6.4		36,000	$	53.76
		404,692	$	32.85		5.0		361,933	$	31.39

The total pretax intrinsic value of options exercised during 2011 and 2010 (which is the amount by which the stock price exceeded the exercise price of the options on the date of exercise) was $18.5 million and $4.3 million, respectively. At January 1, 2012, the intrinsic value of stock options outstanding was $44.1 million and the intrinsic value of stock options exercisable was $40.3 million. During 2011 and 2010, the amount of cash received from the exercise of stock options was $14.8 million and $3.9 million, respectively.

At January 1, 2012, there was $5.8 million of total unrecognized compensation cost related to non-vested stock option awards which is expected to be recognized over a weighted-average period of 1.3 years.

Performance Share Plan

Teledyne’s Performance Share Plan (“PSP”) provides grants of performance share units, which key officers and executives may earn if Teledyne meets specified performance objectives over a three-year period. Awards are payable in cash and to the extent available, shares of Teledyne common stock. Awards are generally paid to the participants in three annual installments after the end of the performance cycle so long as they remain employed by Teledyne (with exceptions for retirement, disability and death).

In January 2006, the performance cycle for the three-year period ending December 28, 2008 was set. Based on the performance over the three-year period, 53,834 shares were issued in 2009, 44,751 shares were issued in February 2010 and 47,589 shares were issued in February 2011.

In January 2009, the performance cycle for the three-year period ending January 1, 2012 was set. Based on the estimated performance over the three-year period, at January 1, 2012 109,557 shares are calculated to be issueable in three equal installments during 2012, 2013 and 2014. However, the first installment in 2012 was paid entirely in cash based upon the then current market price of $55.58 per share multiplied by 36,531 shares that would have been issued.

The calculated expense for each plan year was based on the expected cash payout and the expected shares to be issued, valued at the share price at the inception of the performance cycle, except for the shares that can be issued based on a market comparison. The expected expense for these shares was calculated using a Monte-Carlo type simulation which takes into consideration several factors including volatility, risk free interest rates and correlation of Teledyne’s stock price with the comparator, the Russell 2000 Index. No adjustment to the calculated expense for the shares issued based on a market based comparison will be made regardless of the actual performance. The Company recorded $3.7 million, $2.6 million and $2.6 million in compensation expense related to the PSP program for fiscal years 2011, 2010 and 2009, respectively. The higher amount for 2011 reflected the impact of converting the 36,531 shares into the cash payment for the first installment paid in 2012. At January 1, 2012 there was no unrecognized compensation cost related to the PSP program.

Restricted Stock Award Program

Under Teledyne’s restricted stock award program selected officers and key executives receive a grant of stock equal to 30% of the participant’s annual base salary at the date of grant. The Restricted Stock is subject to transfer and forfeiture restrictions during an applicable “restricted period”. The restrictions have both time-based and performance-based components. The restricted period expires (and the restrictions lapse) on the third anniversary of the date of grant, subject to the achievement of stated performance objectives over a specified three-year performance period. If employment is terminated (other than via death, retirement or disability) during the restricted period, stock is forfeited. At January 1, 2012 an aggregate of 117,432 shares of restricted stock were issued and outstanding at year-end 2011.

The following table summarizes Teledyne’s restricted stock activity:

	Shares			Weighted average fair value per share
Balance, December 28, 2008		100,948		$	28.04
Granted		39,204		$	30.97
Issued		(37,100	)	$	21.24
Forfeited/Canceled		(1,712	)	$	21.24
Balance, January 3, 2010		101,340		$	31.77
Granted		41,885		$	29.62
Issued		(31,307	)	$	27.71
Forfeited/Canceled		(2,916	)	$	27.71
Balance, January 2, 2011		109,002		$	32.22
Granted		43,654		$	37.22
Issued		(27,913	)	$	37.89
Forfeited/Canceled		(7,311	)	$	30.77
Balance, January 1, 2012		117,432		$	32.82

The calculated expense for each plan year is based on a Monte-Carlo type simulation which takes into consideration several factors including volatility, risk free interest rates and the correlation of Teledyne’s stock price with the comparator, the Russell 2000 Index. No adjustment to the calculated expense will be made regardless of actual performance. The Company recorded $1.4 million, $1.2 million and $1.1 million in compensation expense related to the restricted stock award program for fiscal years 2011, 2010 and 2009, respectively. At January 1, 2012, there was $1.5 million of total unrecognized compensation cost related to non-vested awards which is expected to be recognized over a weighted-average period of 1.3 years.