Company: TDY
Filing Date: 2025-02-21
Form Type: 10-K
Source: 0001094285-25-000053
Chunk: 170

Company: TELEDYNE TECHNOLOGIES INC
Filing Date: 2025-02-21
Form: 10-K
Item: Item 7
Chunk 170
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, including different assumptions used in determining the fair value of the reporting unit, changes to customer spending priorities, or a sharp increase in interest rates without a corresponding increase in future net sales.

As of December 29, 2024, we had $793.1 million of indefinite-lived trademark intangibles which were subject to an annual impairment test in the fourth quarter of 2024.  With the exception of the FLIR indefinite-lived trademark, the estimated fair value of all material indefinite-lived trademarks significantly exceeded their respective carrying value.  We recorded a $3.0 million full impairment of an immaterial Marine Instrumentation trademark that we decided to no longer actively market, with the charge recorded within impairment of acquired intangible assets on the consolidated statement of income (loss).

At the annual assessment date, the FLIR indefinite-lived trademark had a carrying value of $685.3 million and a fair value of $635.8 million, or approximately 7% below its carrying value, and we recorded a $49.5 million non-cash impairment charge in fiscal year 2024, which is included within impairment of acquired intangible assets on the consolidated statement of income (loss).

The most significant assumptions utilized in the determination of the fair value of the FLIR indefinite-lived trademark are the net sales growth rates (including residual growth rates), discount rate and royalty rate.  Although the FLIR sales forecasts are based on assumptions that are considered reasonable by management and consistent with the plans and estimates management uses to operate the underlying businesses, there is significant judgment in determining the expected results of the FLIR business.  Changes in sales forecast estimates or the application of alternative assumptions could produce significantly different results.  The discount rate, which is consistent with a weighted average cost of capital that is likely to be expected by a market participant, is based upon industry required rates of return, including consideration of both debt and equity components of the capital structure.  During its fourth quarter annual assessment and as part of finalizing its strategic plan in December 2024, the Company also included an additional 50 basis points of risk premium in the discount rate when considering FLIR’s historical and expected future performance of achieving sales forecast projections.  The royalty rate was driven by historical and estimated future profitability of the underlying FLIR business.  The royalty rate may be impacted by significant adverse changes in long-term operating margins.  Additional future non-cash impairment charges on the FLIR trademark could result from a number of circumstances, including different assumptions used in determining the fair value of