Company: TDY
Filing Date: 2025-02-21
Form Type: 10-K
Source: 0001094285-25-000053
Chunk: 268

Company: TELEDYNE TECHNOLOGIES INC
Filing Date: 2025-02-21
Form: 10-K
Item: Item 7
Chunk 268
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 assumptions and management’s judgment in applying them to the analysis of goodwill impairment.  While we believe we have made reasonable estimates and assumptions to calculate the fair value of its reporting units, it is possible a material change could occur.  If actual results are below management’s estimates and assumptions, goodwill may be overstated, and an impairment loss might need to be recorded.

35

When using a quantitative approach to test goodwill, changes in our projections used in the discounted cash flow model could affect the estimated fair value of certain of our reporting units and could result in a goodwill impairment charge in a future period.  In order to evaluate the sensitivity of the fair value calculations used in the quantitative goodwill impairment test, we will apply a hypothetical 10% decrease to the fair values of each reporting unit subject to a quantitative impairment test and compare those values to the reporting unit carrying values.  Due to the many variables inherent in the estimation of a reporting unit’s fair value and the relative size of our recorded goodwill, differences in assumptions may have a material effect on the results of our impairment analysis.

As of December 29, 2024, we had ten reporting units for goodwill impairment testing.  In the fourth quarter of 2024, a qualitative test was performed for nine of the ten reporting units, and the carrying value of goodwill included in these reporting units ranged from $20.4 million to $952.2 million.  The results of our qualitative assessments indicated that no impairment existed in 2024.  We bypassed the qualitative test for the FLIR reporting unit and performed a quantitative impairment test. At the assessment date, the FLIR reporting unit had $5,856.5 million of goodwill, and the estimated fair value of the FLIR reporting unit exceeded its carrying value by approximately $420 million or 5%.  Although the forecasts used in our discounted cash flow model and market approach 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 reporting unit.  Changes in 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.  Although no impairment exists for the FLIR reporting unit, a non-cash impairment of goodwill could result from a number of circumstances