TELEDYNE TECHNOLOGIES INC

Previous wording

The global trade environment continues to be highly dynamic. There have been continuing significant tariffs and trade sanctions between the United States and other countries, including China. China has also restricted the export of certain rare earth minerals that we use in our products, which could disrupt the supply chain for these minerals and components made from these materials. Tariffs, trade restrictions and retaliatory measures could result in revenue reductions, cost increases on material used in our products or significant production delays, which could adversely affect our business, financial condition, operational results and cash flows. Our manufacturing facilities span across many countries which helps us mitigate the impact of certain tariffs and trade restrictions. Also, consistent with our strategy, we continually optimize our operations and take measures to contain costs to reduce the impact from tariffs or other inflationary pressures. We may also implement additional pricing actions to mitigate the impact of these tariffs or other inflationary pressures. We have been working to minimize potential delivery delays and shortages of components and raw materials needed for certain products we manufacture. To date, we believe our strategies have helped minimize our exposure to these conditions. In February 2026, the U.S. Supreme Court issued a ruling invalidating tariffs under International Emergency Economic Powers Act (IEEPA). We filed for IEEPA refunds during the first half of 2026, and we began receiving these refunds in the second quarter of 2026. We also continue to pay tariffs, as required. We will continue to assess these developments as additional information becomes available.

Current wording

The global trade environment continues to be highly dynamic. There have been continuing significant tariffs and trade sanctions between the United States and other countries, including China. China has also restricted the export of certain rare earth minerals that we use in our products, which could disrupt the supply chain for these minerals and components made from these materials. Tariffs, trade restrictions and retaliatory measures could result in revenue reductions, cost increases on material used in our products or significant production delays, which could adversely affect our business, financial condition, operational results and cash flows. Our manufacturing facilities span across many countries which helps us mitigate the impact of certain tariffs and trade restrictions. Also, consistent with our strategy, we continually optimize our operations and take measures to contain costs to reduce the impact from tariffs or other inflationary pressures. We have been implementing additional pricing actions to mitigate the impact of these tariffs or other inflationary pressures. We have been working to minimize potential delivery delays and shortages of components and raw materials needed for certain products we manufacture. To date, we believe our strategies have helped minimize our exposure to these conditions. In February 2026, the U.S. Supreme Court issued a ruling invalidating tariffs under the International Emergency Economic Powers Act (“IEEPA”). We filed for IEEPA refunds during the first half of 2026, and we received substantially all of these refunds as of the end of the third quarter of 2026. We also continue to pay tariffs, as required. We will continue to assess these developments as additional information becomes available.

Previous wording

To date, we have not been materially impacted by the current conflict in the Middle East; however, the conflict has increased the disruption, instability and volatility in global markets and industries, and could negatively impact our operations. If the ongoing conflict intensifies or expands, it could adversely affect our business, supply chain, partners or customers. Given the fluid and evolving nature of the conflict, we are unable to predict the full extent of the impact of the conflict on Teledyne at this time.

Current wording

To date, we have not experienced a material adverse impact from the current conflicts in the Middle East; however, the conflicts have increased the disruption, instability and volatility in global markets and industries, and could negatively impact our operations. If the ongoing conflicts continue to intensify or further expand, it could adversely affect our business, supply chain, partners or customers. Given the fluid and evolving nature of the conflicts, we are unable to predict the full extent of the impact of the conflicts on Teledyne at this time.

Previous wording

Sales recorded and costs incurred recorded by subsidiaries operating outside of the United States are translated into U.S. dollars using exchange rates effective during the respective period. As a result, we are exposed to movements in the exchange rates of various currencies against the U.S. dollar. We try to reduce this potential volatility in reported earnings primarily through derivative instruments and hedging activities. See Note 13 for additional discussion around our derivative instruments and hedging activities used to mitigate these impacts.

Current wording

Sales recorded and costs incurred recorded by subsidiaries operating outside of the United States are translated into U.S. dollars using exchange rates effective during the respective period. As a result, we are exposed to movements in the exchange rates of various currencies against the U.S. dollar. We try to reduce this potential volatility in reported earnings primarily through derivative instruments and hedging activities. See Note 13 to these condensed consolidated financial statements for additional discussion around our derivative instruments and hedging activities used to mitigate these impacts.

Previous wording

During 2026, we plan to invest approximately $150 million in capital expenditures, principally to upgrade facilities and manufacturing equipment as well as to support internal growth initiatives. As part of a continuing effort to reduce costs and improve operating performance, we continue to take actions to consolidate and relocate certain facilities, rationalize products and reduce headcount across various businesses, reducing our exposure to weaker end markets. We continue to seek cost reductions in our businesses.

Current wording

During 2026, we plan to invest approximately $140 million in capital expenditures, principally to upgrade facilities and manufacturing equipment as well as to support internal growth initiatives. As part of a continuing effort to reduce costs and improve operating performance, we continue to take actions to consolidate and relocate certain facilities, rationalize products and reduce headcount across various businesses, reducing our exposure to weaker end markets. We continue to seek cost reductions in our businesses.

Previous wording

(a) Net sales exclude inter-segment sales of $18.0 million and $23.3 million for the second quarter and six months of 2026, respectively, and $7.2 million and $11.0 million for the second quarter and six months of 2025, respectively.

Current wording

(a) Net sales exclude inter-segment sales of $13.1 million and $36.4 million for the third quarter and nine months of 2026, respectively, and $6.6 million and $17.5 million for the third quarter and nine months of 2025, respectively.

Previous wording

The following is a discussion of our 2026 second quarter results compared with the second quarter results of 2025. Comparisons are with the corresponding reporting period of 2025 unless noted otherwise.

Current wording

The following is a discussion of our 2026 third quarter results compared with the third quarter results of 2025. Comparisons are with the corresponding reporting period of 2025 unless noted otherwise.

Previous wording

Our second quarter of 2026 net sales increased 9.8%. Net income attributable to Teledyne for the second quarter of 2026 increased 19.9%, primarily driven by an increase in sales and an increase in overall operating margin. Net income per diluted share was $5.37 for the second quarter of 2026, compared with net income per diluted share of $4.43.

Current wording

Our third quarter of 2026 net sales increased 9.4%. Net income attributable to Teledyne for the third quarter of 2026 increased 23.6%, primarily driven by an increase in sales and an increase in overall operating margin. Net income per diluted share was $5.82 for the third quarter of 2026, compared with net income per diluted share of $4.65.

Previous wording

The second quarter of 2026 net sales compared with the second quarter of 2025 reflected higher net sales in each segment. The second quarter of 2026 included $12.2 million in incremental sales from recent acquisitions, which are included within the Digital Imaging and Instrumentation segments.

Current wording

The third quarter of 2026 net sales compared with the third quarter of 2025 reflected higher net sales in each segment. The third quarter of 2026 included $11.7 million in incremental sales from recent acquisitions, which are included within the Digital Imaging and Instrumentation segments.

Previous wording

Cost of sales increased $55.3 million in the second quarter of 2026, primarily driven by higher net sales partially offset by tariff refunds, primarily within the Digital Imaging segment. Cost of sales as a percentage of net sales decreased for the second quarter of 2026, to 55.6% from 57.4%.

Current wording

Cost of sales increased $65.5 million in the third quarter of 2026, primarily driven by higher net sales. Cost of sales as a percentage of net sales decreased for the third quarter of 2026, to 56.1% from 57.2%.

Previous wording

Selling, general and administrative (“SG&A”) expense increased $29.3 million in the second quarter of 2026 primarily due to higher net sales, including net sales related to 2026 and 2025 acquisitions. SG&A expense as a percentage of net sales increased to 15.6% for the second quarter of 2026 compared with 15.2%. Corporate expense, which is included in SG&A expense, was $28.0 million for the second quarter of 2026 compared with $21.7 million, with the increase related to higher compensation costs, including incentive compensation as well as higher professional services. Stock-based compensation expense was $13.9 million for the second quarter of 2026 compared with $11.3 million.

Current wording

Selling, general and administrative (“SG&A”) expense increased $20.2 million in the third quarter of 2026 primarily due to higher net sales, including net sales related to 2026 and 2025 acquisitions. SG&A expense as a percentage of net sales decreased to 15.3% for the third quarter of 2026 compared with 15.5%. Corporate expense, which is included in SG&A expense, was $25.9 million for the third quarter of 2026 compared with $22.0 million, with the increase related to higher compensation costs, including incentive compensation as well as higher professional services. Stock-based compensation expense was $12.2 million for the third quarter of 2026 compared with $10.5 million.

Previous wording

R&D expense increased $7.8 million in the second quarter of 2026 primarily due to higher R&D expense in the Digital Imaging segment.

Current wording

R&D expense decreased $4.8 million in the third quarter of 2026 primarily due to lower R&D expense in the Aerospace and Defense Electronics segment.

Previous wording

Acquired intangible asset amortization for the second quarter of 2026 was $56.0 million compared with $54.6 million, with the increase primarily related to 2026 and 2025 acquisitions across multiple segments.

Current wording

Acquired intangible asset amortization for the third quarter of 2026 was $55.2 million compared with $55.1 million, with the increase primarily related to 2026 and 2025 acquisitions across multiple segments.

Previous wording

Pension service expense is included in both cost of sales and SG&A expense. For the second quarter of 2026 and 2025, pension service expense was $1.2 million and $1.5 million, respectively.

Current wording

Pension service expense is included in both cost of sales and SG&A expense. For the third quarter of 2026 and 2025, pension service expense was $1.2 million and $1.5 million, respectively.

Previous wording

Operating income for the second quarter of 2026 increased 19.8%. The second quarter of 2026, compared with the second quarter of 2025, reflected higher operating income in the Digital Imaging, Aerospace and Defense Electronics and Engineered Systems segments, including incremental operating income related to 2026 and 2025 acquisitions.

Current wording

Operating income for the third quarter of 2026 increased 22.8%. The third quarter of 2026, compared with the third quarter of 2025, reflected higher operating income in each segment, including incremental operating income related to 2026 and 2025 acquisitions.

Previous wording

Interest and debt expense, net of interest income, was $13.6 million for the second quarter of 2026 compared with $17.6 million, with the decrease related to lower outstanding borrowings compared to the second quarter of 2025. Non-service retirement benefit income was $2.6 million for the second quarter of 2026 compared with $2.7 million. Other income (expense), net, was expense of $0.9 million for the second quarter of 2026 compared with expense of $2.7 million. Other income (expense), net, primarily consisted of foreign currency exchange losses for the second quarter of 2026 and 2025.

Current wording

Interest and debt expense, net of interest income, was $10.5 million for the third quarter of 2026 compared with $12.6 million, with the decrease related to lower outstanding borrowings compared with the third quarter of 2025. Non-service retirement benefit income was $2.6 million for the third quarter of 2026 compared with $2.7 million. Other income (expense), net, was income of $7.5 million for the third quarter of 2026 compared with income of $0.9 million. For the third quarter of 2026, Other income (expense), net, primarily consisted of a $10.6 million gain related to adjusting Varex shares to the market price at the end of the quarter. For the third quarter of 2025, Other income (expense), net, primarily consisted of a $7.2 million gain on debt extinguishment, partially offset by foreign currency exchange losses.

Previous wording

The second quarter of both the 2026 and 2025 income tax provision considers income, permanent items, tax credits and various statutory tax rates.

Current wording

The third quarter of both the 2026 and 2025 income tax provision considers income, permanent items, tax credits and various statutory tax rates.

Previous wording

(a) The second quarter of 2026 and 2025 includes net discrete income tax benefits of $1.2 million and $8.4 million, respectively.

Current wording

(a) The third quarter of 2026 and 2025 includes net discrete income tax benefits of $1.6 million and $4.9 million, respectively.

Previous wording

The first six months of 2026 net sales increased 8.7%. Net income attributable to Teledyne for the first six months of 2026 increased 20.1%, primarily driven by an increase in sales and an increase in overall operating margin. Net income per diluted share was $10.20 for the first six months of 2026, compared with net income per diluted share of $8.41.

Current wording

The first nine months of 2026 net sales increased 9.0%. Net income attributable to Teledyne for the first nine months of 2026 increased 21.3%, primarily driven by an increase in sales and an increase in overall operating margin. Net income per diluted share was $16.02 for the first nine months of 2026, compared with net income per diluted share of $13.06.

Previous wording

The first six months of 2026 net sales, compared with the first six months of 2025, reflected higher net sales in each segment. The first six months of 2026 included $25.2 million in incremental sales from recent acquisitions, which are included within the Digital Imaging and Instrumentation segments.

Current wording

The first nine months of 2026 net sales, compared with the first nine months of 2025, reflected higher net sales in each segment. The first nine months of 2026 included $36.9 million in incremental sales from recent acquisitions, which are included within the Digital Imaging and Instrumentation segments.

Previous wording

Cost of sales increased $111.2 million in the first six months of 2026, primarily driven by higher net sales partially offset by tariff refunds, primarily within the Digital Imaging segment. Cost of sales as a percentage of net sales decreased for the first six months of 2026 to 56.2% from 57.3%.

Current wording

Cost of sales increased $176.7 million in the first nine months of 2026, primarily driven by higher net sales, primarily within the Digital Imaging segment. Cost of sales as a percentage of net sales decreased for the first nine months of 2026 to 56.2% from 57.3%.

Previous wording

SG&A expense increased $32.8 million in the first six months of 2026 primarily due to higher net sales, including net sales related to 2026 and 2025 acquisitions. SG&A expense as a percentage of net sales decreased to 15.4% for the first six months of 2026 compared with 15.6%. Corporate expense, which is included in SG&A expense, was $47.0 million for the first six months of 2026 compared with $43.9 million, with the increase primarily related to higher employee compensation costs, including incentive compensation as well as higher professional services. Stock-based compensation expense was $19.5 million for the first six months of 2026 compared with $20.2 million.

Current wording

SG&A expense increased $53.0 million in the first nine months of 2026 primarily due to higher net sales, including net sales related to 2026 and 2025 acquisitions. SG&A expense as a percentage of net sales decreased to 15.4% for the first nine months of 2026 compared with 15.6%. Corporate expense, which is included in SG&A expense, was $72.9 million for the first nine months of 2026 compared with $65.9 million, with the increase primarily related to higher employee compensation costs, including incentive compensation as well as higher professional services. Stock-based compensation expense was $31.7 million for the first nine months of 2026 compared with $30.7 million.

Previous wording

R&D expense increased $18.1 million in the first six months of 2026 due to higher R&D expense within the Digital Imaging, Instrumentation and Engineered Systems segments.

Current wording

R&D expense increased $13.3 million in the first nine months of 2026 primarily due to higher R&D expense within the Digital Imaging segment.

Previous wording

Acquired intangible asset amortization for the first six months of 2026 was $113.6 million compared with $106.6 million, with the increase primarily related to 2026 and 2025 acquisitions across multiple segments.

Current wording

Acquired intangible asset amortization for the first nine months of 2026 was $168.8 million compared with $161.7 million, with the increase primarily related to 2026 and 2025 acquisitions across multiple segments.

Previous wording

Pension service expense is included in both cost of sales and SG&A expense. For the first six months of 2026 and 2025, pension service expense was $2.4 million and $3.0 million, respectively.

Current wording

Pension service expense is included in both cost of sales and SG&A expense. For the first nine months of 2026 and 2025, pension service expense was $3.6 million and $4.5 million, respectively.

Previous wording

Operating income for the first six months of 2026 increased 16.7%. The first six months of 2026, compared with the first six months of 2025, reflected higher operating income in the Digital Imaging, Aerospace and Defense Electronics, and Engineered Systems segments, including incremental operating income related to 2026 and 2025 acquisitions

Current wording

Operating income for the first nine months of 2026 increased 18.8%. The first nine months of 2026, compared with the first nine months of 2025, reflected higher operating income in the Digital Imaging, Aerospace and Defense Electronics, and Engineered Systems segments, including incremental operating income related to 2026 and 2025 acquisitions.

Previous wording

Interest and debt expense, net of interest income, was $25.9 million for the first six months of 2026, compared with $34.9 million, with the decrease related to lower outstanding borrowings compared to the first six months of 2025. Non-service retirement benefit income was $5.3 million for the first six months of 2026 compared to $5.5 million. Other income (expense), net was expense of $6.8 million for the first six months of 2026 compared with expense of $8.6 million. Other income (expense), net primarily consisted of foreign currency exchange losses for the first six months of 2026 and 2025.

Current wording

Interest and debt expense, net of interest income, was $36.4 million for the first nine months of 2026, compared with $47.5 million, with the decrease related to lower outstanding borrowings compared with the first nine months of 2025. Non-service retirement benefit income was $7.9 million for the first nine months of 2026 compared with $8.2 million. Other income (expense), net was income of $0.7 million for the first nine months of 2026 compared with expense of $7.7 million. For the first nine months of 2026, other income (expense), net, primarily consisted of a $10.6 million gain related to adjusting Varex shares to the market price at the end of the period, partially offset by foreign currency exchange losses. Other income (expense), net expense of $7.7 million for the first nine months of 2025 included a $10.5 million gain on debt extinguishment, partially offset by foreign currency exchange losses.

Previous wording

The first six months of both the 2026 and 2025 income tax provision considers income, permanent items, tax credits and various statutory tax rates. In both 2026 and 2025, the first six months discrete impact is primarily related to tax on stock-based compensation.

Current wording

The first nine months of both the 2026 and 2025 income tax provision considers income, permanent items, tax credits and various statutory tax rates. In both 2026 and 2025, the first nine months discrete impact is primarily related to tax on stock-based compensation.

Previous wording

(a) The first six months of 2026 and 2025 includes net discrete income tax benefits of $9.2 million and $12.1 million, respectively.

Current wording

(a) The first nine months of 2026 and 2025 includes net discrete income tax benefits of $10.8 million and $17.0 million, respectively.

Previous wording

In July 2025, the “One Big Beautiful Bill Act” (the “Act”) was enacted into law. The Act includes changes to U.S. tax law, including provisions to accelerate tax deductions for qualified property and research expense. The Company estimated the 2025 impact in current results which included a cash tax reduction of approximately $30.0 million. The Company will continue to model the elective decisions before the 2025 tax return is filed in 2026. The 2026 impact is estimated to include a cash tax reduction of between $60.0 million and $70.0 million.

Current wording

In July 2025, the “One Big Beautiful Bill Act” (the “Act”) was enacted into law. The Act includes changes to U.S. tax law, including provisions to accelerate tax deductions for qualified property and research expense. The 2025 impact was a cash tax reduction of approximately $30.0 million. The 2026 impact is estimated to include a cash tax reduction of between $60.0 million and $70.0 million.

Previous wording

Net sales increased primarily due to higher sales of infrared imaging detectors, components and subsystems for both defense and commercial applications as well as higher surveillance systems, industrial and scientific imaging systems, and X-ray products. Sales of infrared imaging detectors, components and subsystems increased $29.0 million, sales of surveillance systems increased $15.5 million, and sales of industrial and scientific imaging systems increased $9.1 million, and sales of X-ray products increased $7.1 million. The second quarter of 2026 included $6.1 million in incremental Digital Imaging sales from recent acquisitions.

Current wording

Net sales increased primarily due to higher sales of infrared imaging detectors, components and subsystems for both defense and commercial applications as well as higher surveillance systems, industrial and scientific imaging systems, and X-ray products. Sales of infrared imaging detectors, components and subsystems increased $47.5 million, sales of integrated defense systems increased $12.2 million, sales of maritime products increased $11.2 million, sales of industrial and scientific imaging systems increased $10.6 million, sales of X-ray products increased $4.7 million, and sales of surveillance systems increased $4.3 million. The third quarter of 2026 included $5.5 million in incremental Digital Imaging sales from recent acquisitions.

Previous wording

Cost of sales increased primarily due to higher net sales as well as increased inventory reserves, partially offset by favorable product mix and tariff refunds. The cost of sales percentage decreased during the period due to favorable product mix and tariff refunds. SG&A expense increased primarily due to higher net sales, and SG&A expense as a percentage of net sales decreased. R&D expense and R&D expense as a percentage of net sales increased primarily due to the timing of FLIR product development activities, including both defense and commercial development activities. Acquired intangible asset amortization increased slightly, and acquired intangible asset amortization as a percentage of net sales decreased.

Current wording

Cost of sales increased primarily due to higher net sales partially offset by favorable product mix. The cost of sales percentage decreased during the period due to favorable product mix. SG&A expense increased primarily due to higher net sales, and SG&A expense as a percentage of net sales decreased. R&D expense increased slightly and R&D expense as a percentage of net sales decreased. Acquired intangible asset amortization increased slightly and acquired intangible asset amortization as a percentage of net sales decreased.

Previous wording

Net sales increased primarily due to higher sales of infrared imaging detectors, components and subsystems for both defense and commercial applications as well as higher surveillance systems, industrial and scientific imaging systems, and X-ray products. Sales of infrared imaging detectors, components and subsystems increased $47.9 million, sales of surveillance systems increased $24.4 million, sales of industrial and scientific imaging systems increased $13.4 million and sales of X-ray products increased $10.9 million. The first six months of 2026 included $14.2 million in incremental Digital Imaging sales from recent acquisitions.

Current wording

Net sales increased primarily due to higher sales of infrared imaging detectors, components and subsystems for both defense and commercial applications as well as higher surveillance systems, industrial and scientific imaging systems, and X-ray products. Sales of infrared imaging detectors, components and subsystems increased $95.4 million, sales of surveillance systems increased $28.7 million, sales of industrial and scientific imaging systems increased $24.0 million, and sales of X-ray products increased $15.6 million. The first nine months of 2026 included $19.7 million in incremental Digital Imaging sales from recent acquisitions.

Previous wording

Cost of sales increased primarily due to higher net sales, and the cost of sales percentage decreased during the period due to favorable product mix as well as tariff refunds. SG&A expense increased primarily due to higher net sales, and SG&A expense as a percentage of net sales decreased. R&D expense and R&D expense as a percentage of net sales increased primarily due to the timing of FLIR product development activities, including both defense and commercial development activities. Acquired intangible asset amortization increased while acquired intangible asset amortization as a percentage of net sales decreased.

Current wording

Cost of sales increased primarily due to higher net sales, and the cost of sales percentage decreased during the period due to favorable product mix as well as tariff refunds primarily recorded in the second quarter of 2026. SG&A expense increased primarily due to higher net sales, and SG&A expense as a percentage of net sales decreased. R&D expense and R&D expense as a percentage of net sales increased primarily due to the timing of FLIR product development activities, including both defense and commercial development activities. Acquired intangible asset amortization increased while acquired intangible asset amortization as a percentage of net sales decreased.

Previous wording

Net sales increased due to higher sales in each product line. Sales of Marine Instrumentation increased $9.7 million due to stronger offshore energy and defense markets. Sales of Environmental Instrumentation increased $7.2 million primarily due to stronger sales of gas detection products. Test and Measurement Instrumentation increased $3.3 million. The second quarter of 2026 included $6.1 million in incremental Environmental Instrumentation sales from recent acquisitions.

Current wording

Net sales increased due to higher sales in the Environmental Instrumentation and Marine Instrumentation product lines. Sales of Environmental Instrumentation increased $8.3 million primarily due to stronger sales of gas detection products. Sales of Marine Instrumentation increased $3.4 million. Sales of Test and Measurement Instrumentation decreased $4.8 million. The third quarter of 2026 included $6.2 million in incremental Environmental Instrumentation sales from recent acquisitions.

Previous wording

Net sales increased due to higher sales in each product line. Sales of Marine Instrumentation increased $23.2 million due to stronger offshore energy and defense markets. Sales of Environmental Instrumentation increased $14.5 million primarily due to stronger sales of gas detection products. Test and Measurement Instrumentation increased $0.6 million. The first six months of 2026 included $11.0 million in incremental Environmental Instrumentation sales from recent acquisitions.

Current wording

Net sales increased due to higher sales in the Marine Instrumentation and Environmental Instrumentation product lines. Sales of Marine Instrumentation increased $26.6 million due to stronger offshore energy and defense markets. Sales of Environmental Instrumentation increased $22.8 million primarily due to stronger sales of gas detection products. Sales of Test and Measurement Instrumentation decreased $4.2 million. The first nine months of 2026 included $17.2 million in incremental Environmental Instrumentation sales from recent acquisitions.

Previous wording

Cost of sales increased due to higher net sales and unfavorable product mix. As a result, the cost of sales percentage increased. SG&A expense increased, and SG&A expense as a percentage of net sales increased. R&D expense increased in each product line, and R&D expense as a percentage of net sales decreased slightly. Acquired intangible asset amortization increased due to the 2026 acquisition of DD-Scientific while acquired intangible asset amortization as a percentage of net sales remained consistent for both periods.

Current wording

Cost of sales increased due to higher net sales and unfavorable product mix. As a result, the cost of sales percentage increased. SG&A expense and SG&A expense as a percentage of net sales increased. R&D expense increased in each product line, and R&D expense as a percentage of net sales decreased slightly. Acquired intangible asset amortization increased slightly due to the 2026 acquisition of DD-Scientific while acquired intangible asset amortization as a percentage of net sales remained consistent for both periods.

Previous wording

Net sales increased due to a $20.8 million increase in defense electronics and a $0.8 million increase in aerospace electronics.

Current wording

Net sales increased due to a $16.5 million increase in defense electronics, partially offset by a $4.6 million decrease in aerospace electronics.

Previous wording

Cost of sales increased due to higher net sales. The cost of sales percentage increased due to unfavorable product mix. SG&A expense increased, and SG&A expense as a percentage of net sales decreased. R&D expense and R&D expense as a percentage of net sales decreased. Acquired intangible asset amortization increased slightly primarily due to the 2025 acquisitions, and acquired intangible asset amortization as a percentage of net sales decreased slightly.

Current wording

Cost of sales increased due to higher net sales while the cost of sales percentage remained consistent for both periods. SG&A expense and SG&A expense as a percentage of net sales increased. R&D expense and R&D expense as a percentage of net sales decreased. Acquired intangible asset amortization and acquired intangible asset amortization as a percentage of net sales increased slightly primarily due to the 2025 acquisitions.

Previous wording

Net sales increased due to a $56.9 million increase for defense electronics, partially offset by a $0.3 million decrease for aerospace electronics.

Current wording

Net sales increased due to a $73.4 million increase for defense electronics, partially offset by a $4.9 million decrease for aerospace electronics.

Previous wording

Cost of sales increased due to higher net sales. The cost of sales percentage decreased due to favorable product mix. SG&A expense and SG&A expense as a percentage of net sales decreased. R&D expense and R&D expense as a percentage of net sales decreased. Acquired intangible asset amortization, and acquired intangible asset amortization as a percentage of net sales increased due to the 2025 acquisitions.

Current wording

Cost of sales increased due to higher net sales. The cost of sales percentage decreased slightly due to favorable product mix. SG&A expense increased, and SG&A expense as a percentage of net sales decreased. R&D expense and R&D expense as a percentage of net sales decreased. Acquired intangible asset amortization and acquired intangible asset amortization as a percentage of net sales increased due to the 2025 acquisitions.