Company: TDY
Filing Date: 2025-02-21
Form Type: 10-K
Source: 0001094285-25-000053
Chunk: 195

Company: TELEDYNE TECHNOLOGIES INC
Filing Date: 2025-02-21
Form: 10-K
Item: Item 7
Chunk 195
---
 due to the significant integration service provided in the context of the contract and are accounted for as if they were part of that existing contract.  The effect of a contract modification on the transaction price and the measure of progress for the performance obligation to which it relates, is recognized as an adjustment to revenue (either as an increase in or a reduction of revenue) on a cumulative catch-up basis. For over time contracts using the cost-to-cost method, the Company has an Estimate at Completion (“EAC”) process in which management reviews the progress and execution of our performance obligations.  This EAC process requires management judgment relative to assessing risks, estimating contract revenue, determining reasonably dependable cost estimates, and making assumptions for schedule and technical issues.  Since certain contracts extend over a longer period of time, the impact of revisions in cost and revenue estimates during the progress of work may adjust the current period earnings through a cumulative catch-up basis.  This method recognizes, in the current period, the cumulative effect of the changes on current and prior quarters.  Additionally, if the current contract estimate indicates a loss, a provision is made for the total anticipated loss in the period that it becomes evident.  Contract cost and revenue estimates for significant contracts are generally reviewed and reassessed quarterly.  The majority of revenue recognized over time uses an EAC process.  The net aggregate effects of these changes in estimates on contracts accounted for under the cost-to-cost method in 2024 and 2023 was approximately $2.5 million of unfavorable operating income and $3.7 million of favorable operating income, respectively.  None of the effects of changes in estimates on any individual contract were material to the consolidated statements of income (loss) for any period presented.While extended or non-customary warranties do not represent a significant portion of the Company’s revenue, the Company recognizes warranty services as a separate performance obligation when it is material to the contract.  When extended or non-customary warranties represents a separate performance obligation, the revenue is deferred and recognized ratably over the extended warranty period.The Company recognizes the incremental costs of obtaining or fulfilling a contract as expense when incurred if the amortization period of the asset is one year or less.  Incremental costs to obtain or fulfill contracts with an amortization period greater than one year were not material.Shipping and HandlingShipping and handling fees reimbursed by customers are classified as revenue while shipping and handling costs incurred by the Company are classified as cost of sales in the accompanying consolidated statements of income (loss).

55

Research and Development Expense