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Ariela Engber, Rachel Clark, Michael Samsel & Katie Presser

Executive Summary
Based on the issues presented concerning IEs current position, Final Consulting Group proposes a full acquisition of Teledyne Technologys. Teledyne is a partially vertically integrated global conglomerate that operates four main business segments: Instrumentation, Digital Imaging, Aerospace and Defense, and Engineered Systems. Teledyne manufactures and designs industrial goods to several, including military, medical, industrial, manufacturing, marine, and space exploration. Teledyne Instrumentation and Teledyne Digital Imaging represent the largest growth segments, with 21% and 18.9% sales growth respectively in 2012. Fueling this growth is a series of strategic acquisitions, with the addition of 9 Instrumentation and 5 Digital Imaging companies over the past five years. Beyond acquisitions, this growth stems from a series of trends, among which are the alternative energy boom, increased demand for environmental monitoring and medical digital imaging, advances in technology, and the increased applications for digital imaging in manufacturing. These trends have increased demand for Teledynes environmental monitoring products - such as air quality and water quality monitors as well as infrared sensing devices used for a variety of applications. While Teledyne Aerospace and Defense and Teledyne Engineered Systems have not experienced as much growth as the other segments, they have remained a stable source of profits over the years. This mixture between growth and stability diversifies Teledynes risk of remaining to dependent on one segment or one customer segment for sales. Due to its diversification, Teledyne has an attractive position in a market with high barriers to entry and virtually no substitutes. Competitors in this industry range widely, from large publicly traded competitors such as Lockheed Martin, to much smaller firms that are privately owned. These competitors tend to be limited by reliance on either one customer such as the U.S. Government, or through offering narrowly specialized products that have specific applications. Conversely, Teledyne operates in several industries that overlap and serves a broad range of products with many uses. This mitigates Teledynes overall risk by not overly relying on one segment. Teledynes products overlap with IEs Oil and Gas and Commodities businesses. Instrumentation has the largest amount of synergy, notably producing and designing oil and gas equipment as well as manufacturing and monitoring equipment for industrial applications. Teledyne Digital Imaging also has an overlap, producing systems and sensors for streamlined manufacturing and processes. Aerospace and Defense has some synergies with IE, producing LED devices and other electronic components for manufacturing. While Engineered Systems does not have as much synergies with IE, the other segments produce equipment and products that are in line with IE and could be integrated vertically and horizontally. Teledyne has been pinpointed as an attractive target for acquisition for IE due to: (1) synergies with IEs two largest segments that would allow for economies of scale and scope; (2) Teledyne has profitable business segments that are stable and have room for growth; (3) the firm possesses strong management that has allowed it to expanded through strategic acquisition; and (3) Teledynes broad product offering and number of industries served diversifies the companys risk. In considering the size of IEs investment, Teledyne was chosen due to its overall stability and future profit potential that would strengthen and diversify IEs portfolio.

Table of Contents
The Present Situation Company Info
Companies, Products & Services Competitive Strategy & Strengths Value Chain Risk Factors 5 7 8 13

The External Environment

Industry Definition Porters 5 Forces PEST Analysis Competitors Competitive Analysis 15 16 20 29 40

Firm Analysis
Corporate Strategies Assets Financial Analysis Segment Analysis 45 46 53 58

Opportunity Analysis
SWOT Analysis BCG Matrix Strategic Fit, Scope & Synergies 70 75 78

Acquisition Strategy
Execution Financial Projections 81 82

References Appendix
Appendix A Appendix B Appendix C Appendix D Appendix E 92 95 98 103 107

The Present Situation

International Everything Inc.

While IE has experienced considerable growth as a supplier of business consulting services and should continue to foster this growth over time, the more immediate issue concerns the lack of growth within the two major industries that IE is involved in: commodities and off-site design/engineering for energy exploration. Considering that 80% of the companys revenues stem from these two segments, it is vital that IE reassess its strategy regarding these principal businesses in order to remain financially stable.

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Based on the facts listed below, IE has the option to either reinvest in commodities and off-site design/engineering, or divest and focus solely on consulting services:

! ! ! ! ! !

Global distribution capabilities Business founded on commodities and energy design/engineering Excess cash Dropping IE stock prices Growth within financial consulting Rumors of corporate raiders trying to rally shareholders to split up the company

Beyond ensuring IEs financial stability and improving stock prices, investing in commodities and off-site design/engineering for energy exploration will: (1) decrease the threat of being disbanded by corporate raiders, (2) benefit from synergism of investing in industries that IE is already established in, and (3) demonstrate the firms ability to adapt over time, strengthening shareholder/stakeholder confidence in IE as a whole.
!

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Company Information

The information for the sections up until Value Chain has been provided by Teledynes company website.

Teledyne Technologies Inc.

Headquartered in Thousand Oaks California, Teledyne is a conglomerate composed of four primary companies: Digital Imaging, Instrumentation, Aerospace and Defense Electronics, and Engineered Systems. While the firm serves many markets and industries, for the purposes of this report it has been classified as a manufacturer within the Industrial Equipment and Systems Design and Manufacturing industry.

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Company Background
From 400 employees in 1960, Teledyne has grown into a (partial) vertically integrated high-tech industrial conglomerate through continual acquisitions, and now employs 9,630 people around the globe. Teledynes loose translation means Power Through Communication, embodying co-founder George Kosmetsky and Henry Singletons vision of a tech company that would revolutionize communication through technology. Due to the nature of Teledynes business, the U.S. government has long been a major source of revenue for the company, though in recent years government dependence has been gradually declining.

Mission
Though Teledyne doesnt list an overarching mission statement, the company website identifies that: Teledyne provides enabling technologies for industrial growth markets. While certain segments have their own specific mission statements, this broadly summarizes the companys business and mission as a whole.

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Companies, Products & Services

Listed below are Teledynes four primary companies accompanied by their respective contribution to sales in 2012.

35%

Instrumentation (TI)
Teledyne Instrumentation is a group of companies that provide monitoring, sensing and analytical instruments to a wide range of industries, including: energy, chemical, food/beverage, power utilities, marine and medical. Consisting of a total of 23 companies, Teledyne Instrumentation has 4 primary product and marketing portals: Instruments, Marine, Water Quality, and Oil and Gas.

20%

Digital Imaging (TDI )

Teledyne Digital Imaging produces high performance sensors, cameras, software, and infrared detectors for a variety of markets including: factories, laboratories, studios, hospitals and inspection stations. This segment also includes state of the art research laboratories that facilitate major development efforts for the innovation of digital imaging products for government and commercial purposes. Teledyne Digital Imaging is made up of seven companies: DALSA, Imaging Sensors, Judson Technologies, Optimum Optical, Scientific Company, Nova Sensors, and Optech.

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31%

Aerospace & Defense (TAD)

Teledyne Aerospace and Defense produces high-end electronic components and communication systems and subsystems. TAD provides harsh environment interconnects, communication equipment for aircrafts, military applications, electronic manufacturing services, wireless and satellite communication systems and data acquisition, and analysis electronics. Teledynes Aerospace and Defense sector has 21 businesses, seven of which operate through the single product and marketing portal Teledyne Microwave.

14%

Engineering Systems (TES)

Teledyne Engineered Systems segment provides technology development and manufacturing solutions to several private businesses in addition to core government sectors such as NASA, the U.S. Department of Defense, and the U.S. Department of Energy. TES has two product and marketing portals Nuclear and Space - and consists of three primary businesses: Energy Systems, Brown Engineering, and Turbine Engines.

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Competitive Strategy & Strengths

Teledyne prides itself in being one of the leading developers of high technology product applications for the industries we serve, and attributes its success to the following corporate strategies and competitive strengths:

Strategy
! ! ! Invest in organic growth in imaging, instrumentation and electronics markets Strengthen and expand core business with targeted acquisitions Aggressively pursue operational excellence to continuously improve margins and earnings one of the leading developers of high technology product applications for the industries we serve.

Competitive Strengths
! ! ! ! ! ! ! ! Markets with Significant Barriers to Entry Product Innovation and Advanced Research and Development Highly Sophisticated Engineering Capabilities Widely-Recognized Name Brands Advanced Manufacturing Capabilities Established Customer and Regulatory Relationships Technically-Sophisticated Workforce and Extensive Intellectual Property Financial and Operating Discipline

The next section demonstrates the value that these competitive resources add in Teledynes value chain.

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Value Chain
As there is little information about the distribution and suppliers due to the nature of the industry, it must be noted that these sections of the value chain may be missing information that are not available externally. The information for this section has been provided by Teledynes 10K (unless cited otherwise).

Product R&D, Technology & System Development

Due to the fast pace and highly technical nature of markets in which Teledyne operates, ample investments in R&D to advance current ideas and pioneer new research are essential for company growth. In 2012 Teledyne spent $364.2 million on R&D, roughly $50 million more than 2011. The U.S. Government funded research and development represented approximately 64% of total research and development costs for 2012, compared with 68% in 2011 and 81% in 2010. While government funding represents a large portion of Teledynes R&D expenditures, the company funded $131.6 million in 2012, and anticipates spending an estimated $157.1 million in 2013, demonstrating a shift towards less government reliance in future R&D initiatives. ! The importance of R&D to Teledyne is illustrated by the Digital Imaging company Teledyne Scientific and Imaging. R&D is described as the backbone of Teledyne Scientific & Imaging, explaining that the only way to truly develop innovative technologies is through persistent and deep research driven by our world-class scientists and engineers, ("Teledyne technologies,"). While TSI is one of Teledynes many companies, these statements are reflective of the importance of R&D to the firm as a whole. Though Teledyne keeps product design and processes confidential due to infringements and rights, they explain that while we own and control various intellectual property rights that are of material importance to our business, we believe that our business as a whole is not materially dependent upon any one intellectual property or related group of such properties. In addition to the several hundred active patents owned and licensed by Teledyne, the company also licenses other companys intellectual property for design and engineering purposes.
!

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Supply Chain Management

Teledyne is a global company that operates in 4 foreign countries and 17 states, with a total of 65 operating facilities.

Teledyne describes its manufacturing process, explaining that: we use our own production capabilities and also third party suppliers and subcontractors, including international sources. This partial vertical integration enables the company to provide better value to customers. Several key components that cannot be produced internally with efficiency and must be procured from third parties include: gyro components, magnets and helix wires, infrared detectors substrates, and scintillator materials. Teledyne continues to provide value to customers by constantly working to improve operation efficiency. For example, in January 2013 Teledyne Oil and Gas reported cost savings of $40,000+ by recycling components to reduce waste at their Daytona Beach (FL) research and development center (Hussein, 2013). By cutting back on these unnecessary costs and implementing lean manufacturing, Teledyne has improved production and is able to create more job opportunities. Teledyne benefits from economies of scale in many of its segments, enabling for higher value provided to customers. For example, Teledyne Analytical Instruments standard analyzer platform allows TAI to maximize its economies of scale where PCBs, power supplies and housings are concerned. This streamlined manufacturing capability results in quick deliveries and competitive product pricing -- not to mention the ease in field commissioning and servicing, ("Teledyne technologies,").

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Marketing
Teledyne highlights the value of the Teledyne brand by emphasizing the ability to provide superior products and technical solutions in addition to competitive pricing, ("Teledyne technologies,"). However, due to the broad range of products and markets served around the globe, Teledynes marketing varies by segment. An integral part of Teledynes marketing - especially considering the business-2business nature of its products - is the Teledyne corporate website. Teledyne employs product and marketing portals, providing value to customers by allowing them to find what they are looking for quickly and easily. This is important due to the complex decision making process for those investing in high-tech products and systems. Teledyne increases the ease of decision making for customers is through promoting the idea of a one-stop shopping experience by offering a wide breadth and depth of compatible products across their various brands. Another way that Teledyne promotes itself as a brand name is through continually cultivating strong ties with distributors and customers through customer oriented direct selling. Beyond personal selling, Teledyne promotes its products and capabilities through industry trade journals and trade shows and through maintaining a presence on industry websites. For example, Teledynes Air Quality Monitoring products are listed first on the leading industry website Environmental Expert. This website caters to Teledynes target audiences across various industries, with customers such as NASA, Shell and Unilever ("Teledyne equipment,").

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Distribution
The products and capabilities of Teledyne are distributed globally. By directly contracting with the government, Teledyne is able to cut distribution costs by reducing reliance on third party distributors. However, Teledyne does sell a portion of its products through third parties such as distributors, value-added resellers and OEMs.

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Quality Assurance and Customer Service

Meeting customer expectations with regard to quality and support is crucial within the Industrial Equipment and System Design and Manufacturing. Considering the amount of money and time invested in making a purchasing decision - especially for the larger equipment and systems - customer support allows for a smooth transition to complex high-tech equipment. Similarly, quality assurance is vital to providing ROI to customers. Beyond providing value to customers, emphasizing quality and support acts to strengthen the brand while increasing customer loyalty. Quality assurance is provided through establishing safety, quality and performance standards for each company and business. Teledyne ensures that these standards are met through operating facilities such as Quality Management System of Teledyne Controls, located in El Segundo. While exceeding customer expectations and continually improve quality is the goal outlined by Teledyne Controls Quality System, this goal reflects the numerous quality systems and standards implemented across the firm as a whole ("Teledyne technologies,"). Beyond ensuring product quality, Teledyne also prides itself in providing service and support quality. An example of Teledynes commitment to customer support is Teledyne RD Instruments, which provides 24/7 customer support, extended warranties, training online and in specialized labs, as well as extensive information manuals located online (Teledyne technologies,). In addition, RD Instruments recently launched a new support program referred to as the Phoenix Program. This program caters to customers who need immediate delivery, offering shipping of products and systems to the nearest major port or staging area within 48 hours of request ("Teledyne technologies,"). Lastly, extended warranties based on a percentage of the product purchase price are available as well ("Teledyne technologies,"). ! !

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Risk Factors
Some of the risks outlined by Teledyne in their 2012 10K include:

! A new global recession, continued economic uncertainty in Europe or an

economic downturn in China may adversely affect us. ! Our revenue from government contracts depends on the continued availability of funding from the U.S. Government, and, accordingly, we have the risk that funding for our existing contracts may be canceled or diverted to other uses or delayed. ! Our participation in government programs may decrease or be subject to renegotiation as those programs evolve over time. ! Our contracts with the U.S. Government are subject to termination rights that could adversely affect us.

! We may lose money or generate less than expected profits on our fixed-price
government contracts and we may lose money if we fail to meet certain prespecified targets in government contracts.

! Our business is subject to government contracting regulations and our failure

to comply with such laws and regulations could harm our operating results and prospects.

! United States and global responses to terrorism, the end of the war in Iraq
and the winding down of war in Afghanistan, continuing turmoil in Middle Eastern countries, Mexican border town violence, concerns regarding nuclear proliferation and the safety of nuclear energy, potential epidemics, financial issues facing airlines and volatile energy prices increase uncertainties with respect to many of our businesses and may adversely affect our business and results of operations.

! Acquisitions involve inherent risks that may adversely affect our operating
results and financial condition.

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The External Environment

The products and services produced by Teledyne and its competitors are used across a wide range of industries, though for the purposes of this report the industry has been classified as Industrial Equipment and Systems Design and Manufacturing industry.

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Industry Definition
The products produced by the Industrial Equipment and Systems Design and Manufacturing industry include: large and small manufacturing equipment and components, engineering and system design, analyzers and sensors, engines and electronic devices, and specialized vehicles. Consumers within this industry primarily consist of government contractors and large firms. The Industrial Equipment and Systems Design and Manufacturing industry produces products, systems and components that are used in various contexts for many uses. Industries served include:

Defense Manufacturing Medical Scientific research Exploration Agriculture Energy

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Porters 5 Forces
The following is an assessment of the Industrial Equipment and Systems Deisgn and Manufacturing markets attractiveness.

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Power of Suppliers Moderate/High

Though many of the firms in this industry are vertically integrated, companies are dependant upon a few suppliers of key components/raw materials. This renders firms subject to the volatile pricing of the suppliers they depend on. The following statement from Lockheed Martins 10K outlines the risk of depending on suppliers: We are the prime contractor on most of our contracts and if our subcontractors, suppliers, or teaming agreement or joint venture partners fail to perform their obligations, our performance and our ability to win future business could be harmed. The above statement is reflective of the risks outlined by competing firms, demonstrating the power of suppliers within this industry. However, firms mitigate risk by vertically integrating as much as possible, decreasing dependency on suppliers.

Power of Buyers - High

The power of buyers within this industry is high due to reliance on contracts with the government and other large firms. Due to the fact that many of the components and systems produced are highly specialized, pricing varies widely. Companies in this industry must often compete for contracts, allowing customers to choose the firm that provides the best value. Another factor that contributes to the high power of buyers, is that there are a small number of highly important buyers. Sustaining a long-term relationship is vital to success within this industry, giving buyers sizable leverage in determining prices. Lastly, buyers in this industry are investing ample amounts of capital and are well informed in making their purchasing decision. Their expertise allows them to evaluate the comparative value of products, giving them more freedom to command prices based upon their knowledge. The following excerpt from Northrop Grummans 10K was listed as a primary business risk: We depend heavily on a single customer, the U.S. Government, for a substantial portion of our business. Changes in this customers priorities and spending could have a material adverse effect on our financial position, results of operations, or cash flows. Dependence on U.S. Government contracts is highly characteristic of the firms within this industry, though the amount of dependence varies by firm.

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Threat of New Entrants - Low

This industry has high barriers to entry, including: ! ! ! Large cost of capital High government regulation Few competing firms that have large market share

Another factor that decreases the threat of new entrants is that competitors have economies of scale through possessing: ! ! ! ! ! Vertical integration Highly valuable intellectual property Established relationships with key suppliers A strong network of distributors and contractors Large amounts of capital and investments in R&D

However, the more emerging markets that cater to niche segments within these industries will likely have more competition than the maturing markets.

Threat of Substitutes - Low

Due to the nature of the products within this industry, no viable substitute products have been identified.

Competitive Rivalry - High

The competitive rivalry within this industry is high due to the diversity of products sold and the number of industries served. Competitors have large amounts of capital, resources and connections that (1) provide sizable barriers to entry, and (2) make constant adaptation and innovation essential to capturing market share. In an industry so dependant on technological developments and innovation, firms require large amounts of capital for acquisitions and R&D in order to maintain relevancy in this volatile market. Similar to the threat of new entrants section above, the specialized smaller firms within rapidly growing segments will likely face more competitors than the larger firms in more mature industries with few competitors.

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Summary of 5 Forces
Entering this industry from the ground up is not attractive considering the high barriers to entry, the high competitive rivalry, as well as the high leverage of suppliers and buyers. Due to the features that make it unattractive to enter, the likelihood of new entrants is low, leaving companies that are firmly positioned in this industry to dominate their segments without the threat of numerous competitors. Based on these qualities, this industry is attractive for acquisition but not to enter into as a competitor.

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PEST Analysis
The following domestic and global trends directly affect the Industrial Equipment and Systems Deisgn and Manufacturing industry.

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Political & Economic

The political and economic sections have been combined due to their overlapping nature. Environmental Regulation ! Recently the Environmental Protection Agency (EPA) finalized emission standards to limit leakage from natural gas operations. According to the Natural Resource Defense Council: these standards focus mainly on new equipment used in shale operations, (Gowrishankar, 2013). California has used hydraulic fracturing for natural gas extraction for over 60 years virtually regulation free. However, due to increasing environmental concerns in the U.S., the local government is responding to public demand. In addition to the proposal of several laws - including a moratorium, permits and disclosure policy, and increased taxation - Californias Department of Conservation/Division of Oil, Gas and Geothermal Resources have proposed several regulations for storing and monitoring fracking fluids and water quality for contamination (Bruno, 2013). China is facing a pollution crisis in Beijing, with pollution levels 35 times the World Health Organization's recommended standard, (Burket & Spegele, 2013). Currently the Chinese government is working to decrease pollution through increased environmental regulation, and intends to expand the current air-quality monitoring network into 190 Chinese cities in 2013 ("China to expand," 2013). It is estimated that roughly 440 new observatories will be built next year in addition to the 496 erected in 2012. According to Environmental Expert, demand for water analytical instruments in India has grown rapidly over the past several years. In addition to heightening environmental concerns around the globe, changes in regulation carried out by the Indian government and the increasing interest in water analytical instruments from chemical and pharmaceutical industries also contributed to the market growth, ("India water analytical," 2013).

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Foreign Policy, Political Stability & the Global Economy ! Due to Chinas rapid growth as an emerging power and the U.S.s current economic state, it is predicted that unless the Chinese development model hits an impasse, China will likely catch up with the U.S. in terms of GDP this decade, and will become twice as big on an exchange-rate basis by the middle of the century, (Rogov, 2013). In preparation for the future, the government has developed the idea for a Trans-Pacific Partnership that would set up a free trade zone in the Asia-Pacific region. According to the Russia and India Report: if the TTP becomes a reality, the US will account for three-fourths of the partnerships combined GDP, ensuring American dominance within the new economic alliance,(Rogov, 2013). The success or failure of future initiatives such as this with foreign countries could affect the value of the dollar as well as relations with foreign countries, thus impacting the overall American economy. As one of the largest military powers and defense manufacturers in the world, foreign relations with other countries has a large impact on the American defense industry. For example, the U.S. government recently committed to helping Israel preserve its military edge in the mideast by permitting the purchase of certain American weapons and systems (Burns, 2013). Agreements and partnerships with other countries could positively or negatively influence the American defense industry. While GDP growth in the last half of 2012 surpassed predictions, economies such as Japan, the E.U., and even the U.S. are still fighting off the effects of the global downturn from 2008. The U.S. economy is anticipated to pick up over the next few years, as demonstrated by the recovering real estate market and the energy boom that has doubled U.S. exports of crude in the last ten years ("Update 2-as shale," 2013). However, while current projections remain positive, if government policies fail to stimulate the U.S. economy, there is a still a risk returning to a state of recession.

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Budgetary Spending ! Without coming to agreement in Congress by March 1, automatic budget reductions known as sequestration have gone into effect (Pope, 2012). The new U.S. budget will cut defense spending by $150 billion over the next decade (Williams, 2013), along with cuts across the board from the sequester (Abrahamian, 2013). This will affect many different industries that rely on government spending, such as the Defense Department, which is set to incur roughly $46 billion in spending reductions throughout 2013 Masters, 2013). While the United States has decreased its defense budget in response to the fragile state of the economy and the sequester (Robb, 2013), in 2012 China and Russia, the second and third highest military spenders behind the US, both increased their outlays, (Bright, 2013). Last year, China increased defense spending by 7.8% to roughly $166 billion while Russia experienced a 16% increase to $90.7 billion. Despite the sizable spending difference in relation to the United States, whose defense budget dropped 6% to $682 billion in 2012. China and Russias increasing defense budgets demonstrate that this industry is experiencing significant changes that could shift the strategy and global presence of firms within this market. As outlined by the previous section, China is currently attempting to combat the hazardous pollution levels within large cities such as Beijing. The China Daily recently reported that over the next three years, China will spend roughly $16 billion dollars in response to public outcries over current pollution levels. This budget is aimed to improve sewage disposal, garbage treatment and air quality, as well as crack down on illegal construction, (Jourdan, 2013). According to Environmental Expert, the Energy Department recently awarded $54 million to advance transformational technologies and materials that can help American manufacturers dramatically increase the energy efficiency of their operations and reduce cost, ("Energy department announces," 2012). This will improve manufacturers global and domestic competitiveness while reducing the environmental impact through increased energy efficiency.

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Environmental
The following is a brief overview of some of the current environmental trends.

Pollution and Global Warming ! While strategies to combat pollution have been instituted over the years, pollution levels are still adversely impacting the environment and putting public health at risk. The World Health Organization estimates that global temperature increases led to approximately 150,000 deaths in 2000 alone with rates expected to double by 2020, (Blumenthal, 2013). The impact of global warming is widespread, and has contributed to diminishing water and air quality around the globe. For example, an article from the Global Times reports that in China groundwater quality in nearly 60 percent of monitoring sites in 198 cities has been measured as poor, with 17% of sites exhibiting very poor quality (Yiwei, 2013). While some areas experience higher pollution levels than others - such as major cities - global warming presents a risk to public health, calling for increased investment in environmental monitoring and research. While concerns over global warming are not new, approaches to reducing greenhouse gasses have increasingly focused on natural gasses in recent years as estimates of shale gas levels have increased in the U.S. According to Nobel prize winning physicist Carlo Rubbia, natural gas offers the fastest source of clean energy while fulfilling public fuel demand (McMahon, 2013). While there are other economic factors influencing the fracking boom, the environmental benefits have contributed to its growth.

Green Manufacturing ! Lean manufacturing - a strategy for increasing production efficiency - has long been known for its economic benefits, though recently companies have been recognizing the environmental benefits. Beyond decreasing overall spending on waste, increased efficiencies through lean manufacturing can decrease a companys carbon footprint (Bredenberg, 2013). Taking this environmental stance also sends a message to the public, as green manufacturing generates good will by demonstrating corporate values. According to the Economic Times, Understanding the urgent need for environmental reforms, businesses around the world are increasingly adopting green initiatives,("Sustainable development, energy," 2013).

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Natural Gas Deposits ! According to an article written in the Financial Times, many top chief executives believe that lower energy prices and a flexible labour market were triggering a pick-up in growth for the U.S. economy (Farchy, 2013). These executives expressed belief that the U.S. is at a competitive advantage compared to other countries due to the investment opportunities for the commodities industry in the U.S. thanks to the shale boom. The shale boom is the predicted expansion of mining shale for the natural oil produced from shale, with demand steadily increasing as more gas deposits are discovered. Natural gas production has risen 20% in five years to a record high, according to the Department of Energy (Farchy, 2013). According to Salon.com, the potential for fracking is huge in Europe, as there are dozens of regions across Europe believed to be sitting on significant reserves of shale gas, (Ames, 2013). Due to the immense growth of the U.S. natural gas market and increasing discoveries of natural gas deposits around the world, foreign countries are beginning to dabble in fracking. For example, recently the Ukraine signed a $10 billion contract with Shell for shale gas development (Ames, 2013). Similarly, oil companies in Spain are planning to spend up to $1.3 billion to search for unconventional gas reserves estimated at over $900 billion, (Ames, 2013). According to the Global Times, Chinas natural gas market will develop quickly as countries are beginning to realize the economic and environmental benefits that can stem from this cleaner and cheaper fuel source ("Natural gas industry," 2013).

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Social
While the Industrial Equipment and Systems Design and Manufacturing industry primarily markets to business-to-business markets, social concerns and beliefs of people around the globe directly influence the trends and demand within the industries that these firms cater to.

Demography ! Due to the aging American population, there has been increased demand from the healthcare industry for high-tech imaging equipment and software that enhance diagnosis capabilities. While this segment has been growing, doctors are not familiar with the equipment yet and therefore there is a budding demand for "manufacturers to provide innovative, accurate, reliable and patient-friendly equipment," ("New analysis on," 2013).

Attitudes Toward the Economy

! According to a poll done by Gallup World: Although the height of the global economic crisis has passed, world residents are still clearly feeling the effects, with many perceiving only modest improvements in their economies, (Marlar & Cimbaluk, 2013). While this has decreased overall consumer spending it has begun to pick up in recent years as the economy has slowly improved. This attitude impacts the U.S. economy directly, indirectly influencing the Industrial Equipment and Systems Design and Manufacturing industry.
Environmental Sustainability ! Public demand for pollution-control and environmental protection in the energy exploration field are fueling the demand for environmental monitoring products. As the U.S. has increased domestic energy exploration, environmentalists have raised concerns about the detrimental effects that the current hydraulic fracking systems have upon groundwater and other resources. This concern has become more widespread with the release of the documentary Gasland, which outline the current practices in place as well as the overall lack of regulation with regards to the natural gas extraction process. This public outcry has lead to an increase in regulation, though many states are still in the legislation process (Ludwig, 2013). In response to a survey conducted by Stanford University, 74% of adult respondents think that the government should regulate greenhouse gas emissions from power plants, cars and factories to combat global warming (Clemens, 2013). In recent years, there has also been a significant increase in Americans who believe global warming is on the rise, and all political parties agree that their is solid evidence of ort global warming.

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Technological
The Industrial Equipment and Systems Design and Manufacturing industry is largely driven by technological change. While there are many trends, the ones outlined below are relevant to this industry.

Analytical Instrumentation and Detectors ! According to an article published on the Herald Online, market research analysts at Technavio forecast the Global Liquid Analytical Instrument market to grow at a CAGR of 6.39 percent over the period 2012-2016 ("Global liquid analytical,"). The article continues, contributing market growth to the growing need for better analysis, the increasing benefits of real-time data acquisition, and the adoption of analytical equipment in industrial manufacturing processes ("Global liquid analytical,"). Manufacturers are beginning to implement analytical instrumentation for improved precision and speed of measurements, reduction of unnecessary environmental error, decreased human error, and easy monitoring and control capabilities. Infrared detectors will continue to grow at a significant rate driven by the concern for energy savings. In the coming years, they will be increasingly used to switch off/on automatically lighting and appliances such as HVAC, TVs, appliances and many more. The business is growing driven by interest in IR detection: very robust non-contact measurement with a long lifetime. This market has long been dominated by several main companies, yet smaller niche players have started to emerge. Some of these specialized companies include producers of large MEMS. With the arrival of new players and the ability to make large detector applications, the overall IR detector business will grow immensely (Bombourg, 2013).

Digital Imaging ! According to PR Newswire, advances in imaging technology have primed the global medical imaging industry for significant growth through the next decade (Wood, 2013). Improved picture archiving and better data systems have created demand for 3-D imaging technology and better data storage. In recent years, technological advancements in digital imaging have stimulated the growth of machine vision technology. According to the Sacramento Bee: The technology is used in a variety of different industries to automate the production, increase production speed and yield, and to improve product quality, ("Machine vision systems," 2013). This recent growth has stemmed from improvements that have made the technology much more powerful and easier to use, increasing the demand from industrial and nonindustrial sectors.

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Marine Oil and Gas

! Technological changes are driving exploration within the oil and gas industry.
According to an article published in the Daily Reckoning, the momentum for the offshore oil industry has been gaining, with spending on subsea equipment anticipated to grow 66% from last year to $13.9 billion in 2013 (Insley, 2013). This growth has been attributed to new technological capabilities that have allowed for enhanced exploration of resources that long remained untapped due to inaccessibility. Drone Technology ! In June of 2012 Boeing made a giant leap in drone technology by unveiling its new hydrogen-powered super drone. They also developed a solar UAV, which acts like low-altitude satellite. The craft is designed to have a 400-foot wing span, carry a 1,000 pounds of sensors and payload, and remain at 65,000 feet for five years. Boeing is not the only company developing new drone technology; British defense company QinetiQs solar-powered Zephyr broke the world record for flying non-stop without refueling as it stayed airborne for two-straight weeks in Arizona. ("Top 10 unmanned," 2012). These advances in technology are pushing government demand for drones. Universities are expanding the use of the drone technology. Researchers at the University of Colorado and the University of Nebraska developed a UAV to go directly into tornadoes and measure air pressure, moisture, wind speed, and temperature so researchers could better understand these violent storms. The uses of drone technologies are limitless and markets such as agriculture, search and rescue, environmental surveying, weather monitoring, and military are all responding to new advances in drone technology through increased demand ("Top 10 unmanned," 2012).

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Competitors
For the purposes of this report, the selected competitors focus on a few of the larger competitors and a few of the smaller more specialized competitors. Many of the firms listed are primarily within the aerospace and defense and engineered systems markets simply due to the fact that these two industries are more mature, with fewer players that have higher market share. Considering that the digital imaging industry is still in its growth stage and there are many competitors, the digital imaging companies below reflect how the industry is currently very fragmented with many small specialized firms. Similarly, there the instrumentation and environmental monitoring industry has many different firms that are specialized. The competitors below with regard to these two growth segments is in no way a comprehensive list, but the firms chosen are reflective the other firms within the industry.

Small Firms
Many of the small firms listed below are not publicly traded companies, and therefore, many of them do not provide financial information.

Fluid Imaging is a digital imaging instrumentation company that focuses on digital imaging as a method for the automated analysis of microscopic particles in fluids, (Fluid imaging technologies). This includes the particle analyzers as well as the accompanying software for analysis. Industries the Fluid Imaging serves include pharmeceuticals, food and beverage, chemicals, abrasives, and plastics, (Fluid imaging technologies,). The firm produces a variety of fluid digital imaging products that are specialized for a variety of different uses and needs.
*Financials unavailable

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Microwave Communications Laboratories Inc. is a microwave designer and manufacturer company supplying products to the military and commercial companies. By supplying both domestic and international clients, MCLI has become competent in providing efficient service and competing prices to establish a place in the microwave manufacturing industry. ("Microwave communications laboratories,"). Their products include: ! ! ! ! ! ! Microwave components High power combiners Dividers Electromagnetic switches Circulators RF amplifiers.

* Financials unavailable

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Raytek is a subsect of Fluke, which is a world leader in the manufacture, distribution and service of electronic test tools and software, ("Fluke,"). Raytek specializes in supplying infrared, noncontact, industrial temperature measurement instruments in the world, ("Fluke,"). Rayteks products are primarily used for industrial, process control and maintenance applications. Raytek Produces: ! ! ! ! ! ! Fixed Infrared Sensors and Thermal Imagers Maintenance Systems Infrared Linescanners Infrared Process Imaging Systems Portable Thermometers List of Accessories & Calibration Tools

* Financials unavailable

!",#"!"

Ecotech is an Australian based company that provides environmental monitoring services, specializing in service, maintaining, designing, manufacturing, installing and commissioning ambient air and emission monitoring systems around the world, ("Environmental monitoring solutions,"). Ecotech manufactures: ! ! ! ! ! ! ! ! ! ! ! ! Ambient air analyzers Ambient air quality monitoring systems Trace/background Ncore ambient monitoring systems Greenhouse gas analyzers Blast monitoring systems Continuous emission monitoring systems Aurora integrating nephelometers High volume air samplers Gas dilution calibration systems Zero air generators Data acquisition systems Data collection, validation and reporting software

* Financials unavailable

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YOUR STRATEGIC ALLY CIE Automotive is an industrial company specialized in managing high value-added processes. They create components and subassemblies for the automotive market and strive to be the leader in this niche market. Headquartered in Spain, CIE Automotive has an international presence and operates in 15 countries ("Cie automotive,"). Their principal areas of business include: ! ! ! Automotive components Biofuels Technological solutions and services

* Financials unavailable

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Located in the UK, Meggit PLC is an engineering firm who specializes in aerospace and defense components. They employ around 10,000 people at manufacturing facilities around the world. Meggit PLC states that they are able to be successful through evolving group infrastructure with strong functional leadership, ("Meggit plc,"). This company is segmented into the following categories: ! Aircraft Braking Systems - provides aircraft braking systems to a diverse group of customers including airline operators, aircraft constructors, private aircraft owners and charter operators, governments and military operations and distributors and repair stations. Control Systems - supplier of pneumatic, fluid control, thermal management and electro-mechanical equipment and sub-systems. Equipment Group - these business include IT, regional HR, strategic sourcing, operations excellence initiatives and trade compliance and ethics and business conduct programmes. Polymers & Composites - These encompass seals for aircraft and oil platforms; flexible fuel tanks and coatings; the composites that make up smart ice protection systems and sub-assemblies; and helicopter interior panels and accessories Sensing Systems - includes high technology products and systems for civil and military aerospace and the energy, power generation, nuclear, oil and gas, industrial, laboratory measurement, automotive and space markets. ("Meggit plc,")

! !

Meggitt PLCs market capitalization is $3.70 billion. The firm has been successful over the last three years as revenues, net margin, return on assets, and equity have all increased substantially from 2011 to 2012. Revenues have increased by $296 million to $1,455 million, net margin increased from 12.6 to 15.15, return on assets increased from 4.18 to 4.61, and equity increased from 9.60 to 13.16. Meggitt PLC has a price/earnings ratio just above 15, which is above average for the industry.

!",$"!"

Large Firms
Many of the larger firms operate primarily within the more established and mature defense industry.

Well known as one of the worlds largest defense contractors, Lockheed Martin engages in the research, design, development, manufacture, integration, and sustainment of advanced technology systems and products, (Lockheed martin corporation, 2012). While Lockheed Martin serves both domestic and international customers, the U.S. Government is its principal customer, constituting 82% of total sales in 2012. Lockheed Martin focus remains on defense, space, intelligence, homeland security, and information technology, including cyber security, (Lockheed Martin corporation, 2012). With roughly 25.2% market share, Lockheed Martin holds the largest market share within the Space Vehicle and Missile Manufacturing industry (Ibis world,). Lockheed Martin currently employs 120,000 people across the five business segments listed below: ! Aeronautics - with approximately $14.9 billion in 2012 sales which includes tactical aircraft, airlift, and aeronautical research and development lines of business. Information Systems & Global Solutions (IS&GS) - with approximately $8.8 billion in 2012 sales that includes C4I, federal services, government and commercial IT solutions. Missiles and Fire Control - with approximately $7.4 billion in 2012 sales that includes the Terminal High Altitude Area Defense System, Joint Light Tactical Vehicle, PAC-3 Missiles as some of its high-profile programs. Mission Systems and Training - with approximately $7.5 billion in 2012 sales, which includes naval systems, platform integration, simulation and training and energy programs lines of business. Space Systems - with approximately $8.3 billion in 2012 sales which includes space launch, commercial satellites, government satellites, and strategic missiles lines of business. ("Lockheed martin,")

Lockheed Martin is a huge market player, and is currently valued at $31.19 billion. The firms revenues have slightly increased over the last three years, while their debt to equity has increased drastically from 1.44 in 2011, to 6.45 in 2012. The firms inventory turnover has also decreased from 14.64 in December 2012 to 17.19 in January 2012, a sign that defense cuts are impacting production.

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Northrop Grumman Corp. employs 68,100 employees around the world, with a mission to be at the forefront of technology and innovation, delivering superior capability in tandem with maximized cost efficiencies, ("Northrop grumman,"). Northrop Grumman provides the government and commercial customers with systems, products and solutions in aerospace, electronics, information systems, and technical service areas, ("Northrop grumman corporation,"). With 14.9% market share within the space vehicle and missile manufacturing industry, Northrop Grumman has the second largest market share. The company operates four principal business segments: ! ! Aerospace Systems - a premier developer, integrator, and producer of manned and unmanned aircraft, space systems and advanced technologies. Electronic Systems - Systems include high performance sensors and intelligence processing and navigation systems operating in all environments from undersea to outer space. Information Systems - a leading global provider of advanced solutions that deliver timely, enabling information to where it is needed most for our military, intelligence, civilian, state and local, and commercial customers. Technical Services - The sector's global customer base is engaged on the front lines of domestic and regional security, irregular warfare, modernization through sustainment, nuclear security and other activities. ("Northrop grumman,").

Northrop Grumman is currently valued at $17.10 billion. Their financial situation is similar to Raytheon, as the two companies both generate revenues in the 24 billion dollar range. Northrop Grummans revenues declined by $400 million from 2011 to 2012, though their net profit margin helped account for this decrease, increasing from 6.77 to 7.90.

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Raytheon Company describes itself as a technology and innovation leader specializing in defense, security and civil markets throughout the world. Raytheon Co. has a global presence with 67,800 employees across a total of 19 countries, operating primarily out of Australia, Canada, Europe, the Middle East, and India. While much smaller than its competitors, Raytheon sustains roughly 6% of market share within the space vehicle and missile manufacturing industry. The firm is divided amongst four primary business segments: (1) Intelligence, Information and Services, (2) Integrated Defense Systems, (3) Missile Systems, and (4) Space and Airborne Systems ("Raytheon,). Raytheon Companys capabilities include: ! ! ! ! ! ! ! ! Air and Missile Defense Command, Control, Communications, Computers and Intelligence Cybersecurity Electronic Warfare Intelligence, Surveillance and Reconnaissance Naval Solutions Radar Space Solutions

Raytheons current market cap is $20.62 billion. It appears that the firm has struggled with increased budgets cuts as revenues and inventory turnover have declined. Revenues decreased from $24.79 billion in 2011 to $24.36 billion in 2012, while inventory turnover decreased from 59 to 50. However, the firms net margins have increased from 6.77% in 2011 to 7.27% in 2012, which has allowed them to remain fiscally healthy under challenging economic conditions.

!",'"!"

Headquartered in Wichita, KS, USA, Spirit AeroSystems is the largest non-OEM designer and manufacturer of aerostructures for commercial, military and business/regional jets in the world ("Spirit aerosystems,"). Spirit AeroSystems is also a leader in manufacturing and designing complex assemblies. This company states that they stay a leader through their extensive dedication to research and development. They currently employ more than 15,000 people in the US, Asia and Europe. Spirit AeroSystems is responsible for the following products:

Airbus A320, A350XWB and A380 Boeing 737, 747, 767, 777 and 777 freighter and 787 Bombardier CSeries Gulfstream G280 and G650 Mitsubishi Regional Jet (MRJ) ("Spirit aerosystems,")

Spirit Aerosystems is valued close to Teledyne at $2.84 billion. The firm has struggled to keep net margins up, decreasing from 5.25% in 2011 to 3.90 in 2012. Spirit Aerosystems has a lot of business tied to Boeing and Airbus, which means they fluctuate with those businesses. However, the companys earnings have rebounded in the first quarter of 2013, and investors have high expectations for the company, as their price/earnings ratio is currently at 92.

! ! ! ! ! ! ! ! ! ! !

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Belden provides a comprehensive portfolio of connectivity and networking products into a variety of markets, including industrial, enterprise, and broadcast. ("Belden,") The company is structured around four primary connectivity platforms: industrial connectivity, industrial IT, enterprise connectivity and broadcast. The products that Belden manufactures include:

Copper, fiber and coaxial cable solutions Fiber and copper connectors Industrial Ethernet switches and related equipment Fiber optic interfaces Media converters

Belden has a market cap of $2.29 billion, and brought in $1.84 billion in revenue last year. The company has had a volatile stock price over the last decade, but has been trending upward in the fourth quarter of 2012 and the first quarter of 2013. The forward P/E ratio is 12.97 and is reflective of the type of growth in their industry ("Belden finances,").

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Competitive Analysis
Due to wider availability of company and financial information provided by the larger publicly traded firms, two small firms and two large firms have been chosen in the competitive analysis below.

Key Performance Indicators

Considering the range of markets served and product offerings within this industry, the following Key Performance Indicators have been identified. These KPIs are based on Key Success Factors from IBIS Worlds reports covering a range of industries, including: Laboratory Supply Wholesaling; Geophysical Services; Navigational Equipment Manufacturing; Mining, Oil & Gas Machinery; and Pump & Compressor Manufacturing ("Us industry report,"). Rank .15 Reliable network of suppliers, manufacturers, distributors and customers: Maintaining close relationships through contracts and a strong network. Having a skilled workforce and technical knowledge: Knowledgeable staff and management is required to liaise with clients, develop innovative products and make strategic decisions. Ability to adapt, develop or having access to the latest available and most efficient technology and techniques: Companies should assess changing market conditions to alter operations and product offerings to meet demand and provide the latest most innovative technology. Economies of scale and scope: It is important for firms in the industry to be able to achieve a lower per unit cost to offer competitive pricing and be diversified across equipment segments to reduce the impact of contracting segments and provide leverage. Effective performance monitoring and quality assurance: Industry firms should offer quality support to customers while monitoring performance to continually quality, track output efficiency and minimize the release of faulty or potentially dangerous products.

.25

.30

.10

.20

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The larger firms have larger buyer power, explaining the discrepancy between the large and smaller firms. All companies were ranked equally in having a skilled and knowledgeable workforce, as this is an essential component within this industry. Similarly, quality/quality assurance was ranked equally across firms, as customer support and ensuring quality products is vital to retaining business and securing contracts. Teledyne was ranked slightly higher than the other companies on innovative technology simple because its diversification across several industries and broad manufacturing capabilities make it more flexible and able to adapt to changing preferences and needs. However, it must be noted that all of these firms still rank quite high on this aspect, as the Industrial Equipment and Systems Design and Manufaturing industry is driven by technological advancement. Economies of scale/scope were ranked equally across the companies because continual improvement on manufacturing efficiency across the firm is essential to provide competitive prices and secure contracts. While these companies are all ranked very closely, it is important to note Teledynes unique position between the smaller firms and the larger firms.

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Strategic Group Map

While not all of the competitors are charted, the other small firms outside of the aerospace and defense industry would be similarly clustered toward the bottom left-hand side.

Raytheon, and Lockheed Martin are government defense contractors, with over 80% of their sales stemming from U.S. government contracts. Meggett on the other hand had only 40% of sales to the government in 2012, with 14% from the energy and 46% from the civil aerospace. ("Meggit plc annual," 2011) Kratos is a defense firm that relies on the government for 65% of sales ("Kratos defense &,"), and Spirit Aerosystems is solely an aircraft parts manufacturer that relies on defense contractors for 97% of its sales ("Spirit aerosystems holdings,"). This leaves Teledyne in an interesting position, with risk diversified across 4 different segments that serve many industries, and 69% reliance on the government. While this number is still quite high, overall firm dependence on government contracts is decreasing, so over the next few years Teledynes position is likely to shift further to the left.

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Summary of Strategic Group Map

This industry is composed many firms that serve a few primary industries. The smaller more specialized firms are not all that dependent on the government for sales, while the larger companies that are almost entirely reliant on the government. Conversely, Teledynes risk of being overly dependent on the government is slowly becoming mitigated by the many industries the different segments serve, in addition to decreasing government reliance for sales.
!

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Firm Analysis

The following analysis of Teledyne illustrates how the firm operates and succeeds within the markets it is involved in.

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Corporate Strategies
Through utilizing economies of scale to cut costs, acquiring firms within their major growth segments, and providing quality products and services, Teledyne is able to provide a broad scope of quality products at prices that create value for their customers. Teledyne differentiates itself through offering a mixture of lower priced functional products in addition to offering more highly specialized products and services to NASA, energy production, environmental equipment, and many other industries. To continually expand and grow, Teledyne outlines that: We intend to strengthen and expand our core businesses with targeted acquisitions and through product development, (Teledyne technologies,). The wide range of products offerings allows the company to have more flexibility, as many of these products can be used in a variety of contexts and industries. Teledynes acquisition strategy facilitates rapid growth and the firm often benefits from vertical integration of acquired companies. This all-encompassing corporate strategy makes Teledyne a best-cost provider of materials and goods, and maximizes their ability to grow in a multitude of industry segments. However, it must be noted that this corporate strategy was deduced externally, as companies within this industry do not openly provide pricing information.

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Assets
The following section outlines Teledynes tangible and intangible assets. The information is based off of what was publicly available, so it must be noted that there may be other factors not included. The information for this section has been provided by Teledynes 10K unless otherwise noted.

Tangible Assets
Intellectual Property Teledyne owns and controls various intellectual property rights, including several hundred patents, trade secrets, confidential information, trademarks, trade names, and copyrights. Property, Plants, and Equipment In 2012, Teledyne acquired $79.1 million in property plants and equipment from acquisitions. Capital expenditures on property plants and equipment last year accounted for $65.3 million. Teledyne currently operates 65 facilities in 17 US states and four countries. 22 are owned and the other 43 are leased.

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Acquisitions and Divestures The following graph demonstrates company acquisitions (blue) and divestures (red) since 2008. While the financing information from these activities is unavailable, the graph below demonstrates the assets acquired in 2012.

This graph from Teledynes 10K illustrates the money spent and the assets from acquisition.

Research and Development While there are several R&D facilities, Teledynes primary R&D operation takes place in Thousand Oaks, California. Last year, Teledyne spent $364.2 million, an increase from the $315.7 spent the previous year. 64% of Teledynes R&D in 2012 was funded by the government. While government funding is high for Teledynes R&D, it is a huge drop from 2010 and 2011, where government funding was 81% and 68% respectively. Human Capital Teledynes current workforce consists of approximately 9,630 employees around the globe.

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Partnerships & Contracts Teledyne is involved in multiple partnerships that gives Teledyne access to resources such as technology, patents, laboratory space, and intellectual property, which allows them to leverage additional resources to advance their market reach, and increase their product portfolio. In Nov. 2012, Teledynes subsidiary Teledyne Brown Engineering Inc. partnered with Dow Chemical Company, a leader in manufacturing and supplying chemical products to consumer companies in multiple industries. The partnership entailed a three year Lab and Office Facility Management contract for Research Services. This agreement gave Teledyne Brown the advantage to provide advance strategic management services in laboratory facilities to Dow Chemical. Robert Mehrabian, CEO of Teledyne Technologies, stated: "This award complements our strategic thrust in test and measurement, broadens our overall market reach, and increases our commercial portfolio," ("Teledyne wins commercial," 2012).

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Intangible Assets
Dynamic Management To compete in an industry that is heavily competitive and extremely reliant on suppliers, buyers and various trends in the external environment, Teledyne has been able to manage risk over the years through dynamic management. Teledynes acquisitions and divestitures explain how the company has been able to sustain growth in revenue and size through continually assessing trends and looking toward the future. Acquisitions, Divestments and Diversification Teledynes management aims to invest in organic growth in imaging, instrumentation and electronics markets while aiming to strengthen and expand core business with targeted acquisitions. As reflected by the financial analysis, Teledynes areas of rapid growth are within the Digital Imaging and Instrumentation segments. The Instrumentation segment has acquired the most firms, constituting roughly 53% of acquisitions since 2008. Digital Imaging represents 29% of acquisitions while Aerospace and Defense makes up only 18%. Teledyne Engineered Systems has not acquired any new companies since 2008, which is reflective of the slowing financial growth of this segment. Acquisition by Segment

One of the most notable investments in recent years was the acquisition of the high-resolution digital imaging company, DALSA. According to Dr. Robert Mehrabian, Chairman, President and Chief Executive Officer of Teledyne, this decision was made due to the synergism between the companies, as "Teledyne and DALSA are each acknowledged leaders in digital imaging technology but our product lines and customer bases are almost entirely complementary. Not only has this acquisition has strengthened Teledynes international presence in Canada, but it has also played an integral role in fueling the growth of Teledyne Digital Imaging in recent years.

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Wide Customer Base By having a wide customer base that is divided between commercial firms and the U.S. Government, Teledyne is able to diversify the risk of overly relying upon one customer for sales. This is especially significant, especially as compared to other major firms within the industry such as Lockheed Martin and Northrop Grumman that derive 80%+ of their sales solely from the government. Government In an industry that is highly dependant on government contracts and funding, Teledyne has slowly begun to wean itself off of the government to decrease reliance. Considering the volatility that the industry has experienced due to the weakened U.S. economy in recent years, the threat of budget cuts from the sequester, and a change in administration that decreased overall defense spending, decreasing reliance on the government is a strategic move that mitigates risk. This is significant due to Teledynes relatively small size. According to Congressman Jim Morgan, small defense firms are at risk due to budget cuts as they are often dependent on two or three federal contracts, and thats all they have, (Munsil, 2013). Total U.S. Government sales, which include contracts with the Department of Defense, were approximately 32% of total sales in 2012, 36% in 2011, and 44% of total sales in 2010. This trend shows that Teledynes sales from the U.S. government have decreased steadily over the past few years while sales to commercial customers have increased, therefore mitigating the impending risk of having large amounts of revenue tied-up in government contracts. Government Sales % of Sales by Segment

2012 Instrumentation Digital Imaging Aerospace and Defense Engineered Systems

5.3% 31.0% 40.9% 81.4%

2011
6.3% 31.5% 45.3% 79.4%

2010
6.2% 76.2% 49.2% 88.7%

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Commercial Missile defense and NASA programs use to make up over three-quarters of Teledyne Engineerings work, but that number has decreased over the years to just one-third. Teledyne has had to adapt to the decreasing budget like all other companies within its industry, and the companys focus is now on developing new products for the commercial market, to go and try and create some of own future, because the space industry cant afford to wait for the government to come calling with new business (Morring, Jr.). Teledyne has done this by developing new products such as the Multi-User System for Earth Sensing (MUSES) a digital imaging project that will expand the research capability of the space station and provide other commercial companies with a cost-effective means to collect earth images. The earth observation platform was developed for private commercial operation, and if the project succeeds, the company will make more proposals for commercial space activities. Brand Name Teledyne has won numerous awards, though some of the most notable and distinguished include: The 2011 Boeing Performance Excellence Award - Gold Level awarded in 2012 to Teledyne Brown Engineering company ("Teledyne brown engineering,"). The Boeing Performance Excellence Award is an annual program to recognize superior performance. Boeing gives this award on behalf of its supplier performance recognition program. The 2011 NASA George M. Low Award was awarded in 2012 to Teledyne Brown Engineering company for Large Business/Service Category; NASA's highest honor for quality and excellence ("Teledyne brown engineering,"). This award is dedicated to their sub contractors those who have outstanding technical and managerial achievements ("Nasa,"). Intellectual Assets Teledyne Technologies employs top performers in the industry to secure that their businesses are being managed by leading professionals. For example, Teledyne Benthos Inc, a company that manufactures ocean instrumentation and underwater survey systems, recently employed Justin Manley for the position of Senior Director of Business Management. Benthos VP Thomas W. Altshuler stated, His extensive scientific, engineering and business development experience will play a pivotal role in the continued development and expansion of the business in key and emerging markets, ("Teledyne benthos welcomes," 2011). The subsidiary Teledyne Brown Engineering recently announced its contract with NASA, providing them support on their ISS (International Space Station) and Marshall Space Flight Center missions (Teledyne technologies,). The experts working on these projects are described as: the link between scientists, the astronauts and experiments conducted on the ISS further proving that Teledyne has leading experts in the industries it serves (Teledyne brown engineering,).

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Total Current Assets

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Financial Analysis
The following sections analyze Teledyne and its competitors current and historical financials.

Teledynes Current Financials

Teledyne Technologies market cap for the fiscal year ending in 2012 was 2.92 billion dollars. Revenues have increased 29% over the last three years, and 10% from 2011 to 2012. Teledyne's earnings per share has had great growth as well, increasing over 33% since 2010, and 12% from 2011 to 2012. Teledyne continues to experience above average industry growth due to a strong demand for the companys products, and future financial forecast predict that Teledyne will continue on this positive trend.

("Teledyne technologies everywhere," 2012)

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Teledyne Historical Analysis

After the financial crisis of 2008, Teledynes stock prices dropped sharply, but over the past 5 years they have continued to rebound, and have surpassed their all-time high from 2008.

Teledyne has historically generated over 10% growth in earnings per share over the last decade, and this trend has continued over the last three years as Teledynes EPS has grown 15% on average from 2010-2012. Besides a small dip after the recession in 2009 and 2010, Teledynes revenues have grown above 10% every year. Teledynes net and operating margins have continued to increase as well, while their ROA and ROEs have slightly declined. This decline can be attributed to an increase in assets, as Teledyne acquired multiple firms in 2012, and should reap the benefits in 2013.

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("Teledyne technologies everywhere," 2012) Sales and net income from continuing operations increased by 9.5% and 13.9%, respectively over 2011 results. Earnings per share from continuing operations in 2012 increased 13.6% over 2011. In 2012, sales totaled $2,127.3 million, compared with sales of $1,941.9 million in 2011. Net income for 2012, excluding our discontinued operations, was $161.8 million or $4.33 per diluted share, compared with $142.1 million or $3.81 per diluted share in 2011. The increase in revenue included incremental sales from acquisitions of $180.7 million. Our 2012 net income including discontinued operations totaled $164.1 million or $4.39 per diluted share, compared to $255.2 million or $6.84 per diluted share in 2011. In addition, each business segment experienced higher operating profit growth except for the Aerospace and Defense Electronics segment. The operating profit decrease for the Aerospace and Defense Electronics segment primarily reflected the impact of lower sales, as well as $1.7 million of severance and relocation costs, within certain electronic manufacturing service products businesses. With the recent acquisition of LeCroy in 2012 and DALSA in 2011, as well as growth in commercial markets, Teledynes business mix has continued to change, and for 2012, Teledyne's sales were approximately 68% to commercial customers and 32% to the U.S. Government. This has changed from about 56% commercial and 44% government in 2010. Our international sales also increased to 39% of total sales in 2012, compared to 29% in 2010. We have worked to transform our product portfolio into that of a high technology industrial company that is less dependent on U.S. Government business.

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Current Competitive Financial Analysis

Teledynes trailing and forward price/earnings ratio is strong relative to its competitors, and shows that investors are confident in the firms ability to continue to grow. Teledynes ROA of 7.69% and ROE of 16.51% also show that investors are making substantial returns on their investment. Lastly, Teledynes low debt to equity ratio shows that the company is financially sound - not taking on too much debt as other competitors have. This allows them to continue their market strategy of acquiring smaller firms that can strengthen their core markets for continued market share improvement. Teledynes 1.83 current ratio also signals the firms strength in not over-leveraging their debt. These competitive valuation measures demonstrate that while Teledyne is a small firm that does not bring in nearly as much revenue as its many of its competitors, the firms smaller size allows the company to grow at a much faster rate. Presently, the firm is financially healthy and projected to continue to grow.

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Historical Competitive Financial Analysis

Teledynes 33.23% growth in EPS from 2010 to 2012 is the highest rate of the six companies we assessed. Their revenue growth from 2010 to 2012 was 29.38%, which is the third largest percentage of growth in our sample size for those years, only behind Kratos Defense and Meggitt PLC. The market price history of Teledynes industry competitors shows a general trend of decline during the height of the recession, and a slow recovery over the next three years. Teledyne has been able to achieve a higher growth rate in market price over this time period by investing in high growth commercial industries such as digital imaging and instrumentation, and reducing their dependency on government contracts. Many of the industrys competitors have struggled to earn pre-recession revenues as the declining federal budget has put greater stress on companies to search for business in the private arena. Firms such as Kratos Defense were trading in the low twenties in 2008 are now just above $5.00 a share. Spirit AeroSystems has also had a volatile 5-year period, with a sharp decline in October of 2012, but have slightly recovered. Teledyne however has rebounded in the last five years through strong acquisition and divestment policy. Their stock price has had the second greatest post-recession growth, and is projected to continue growing at an annual rate of 7%-12%.

(Teledyne technologies inc. 2013)

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Segment Analysis
The following is an analysis of each of Teledynes business segment. The following information has been taken from Teledynes 10K unless otherwise noted.

Segment Financial Performance

The following graph demonstrates the breakdown of sales by segment in 2012. Sales by Segment

("Teledyne technologies everywhere," 2012)

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Instrumentation Teledyne Instrumentation is currently the largest source of sales for the firm overall, constituting roughly 32% of sales in 2012. Last year sales increased by approximately 22%, from $616.6 million in 2011 to $749.4 million in 2012. While continual acquisitions have contributed to the increasing the rapid growth in sales within this segment - with $8 million stemming from the acquisition of PDM NepTech and $80.8 flowing in from last years acquisition of LecCroy - operating profits alone grew by 10.9% in 2012 from $122.8 to $136.2 million. This demonstrates that Teledyne Instrumentations growth is explained by the combination of strategic acquisitions in addition to an overall increase in profit from operations. Specifically, increased demand within marine, test and measurement, and environmental instrumentation have contributed to the increasing operating profit and sales.

Teledyne Instrumentation is currently the largest source of sales for the firm overall, constituting roughly 32% of sales in 2012. Last year sales increased by approximately 22%, from $616.6 million in 2011 to $749.4 million in 2012. While continual acquisitions have contributed to the increasing the rapid growth in sales within this segment - with $8 million stemming from the acquisition of PDM NepTech and $80.8 flowing in from last years acquisition of LecCroy - operating profits alone grew by 10.9% in 2012 from $122.8 to $136.2 million. This demonstrates that Teledyne Instrumentations growth is explained by the combination of strategic acquisitions in addition to an overall increase in profit from operations. Specifically, increased demand within marine, test and measurement, and environmental instrumentation have contributed to the increasing operating profit and sales. Capital expenditure for this segment has steadily increased to $13.2 million in 2012, roughly double the $6.4 million in capital expenditures in 2010. While this number is low compared to Digital Imaging, this moderately increasing number is reflective of the steady growth of the segment versus the rapid growth of DI.

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The last point of note with regard to the Instrumentation segment is that government percent of sales dropped by one percent this last year to 5.3. While this is only a slight drop and the overall government percent of sales for this segment is low, it is important to note that this indicates continually decreasing government dependence across the entire firm. (Teledyne technologies incorporated, 2012)

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Digital Imaging Teledynes Digital Imaging sector is the fastest growing segment in the company. From the years 2011 to 2012, digital imaging experienced an 18.9% growth increase. Specifically, selling 349.9 million in 2011 to 415.9 million in 2012. Their operating profit has also seen an enormous increase of 54% from 2011 to 2012. The Digital Imaging segment has also increased their international sales from 7.1 in 2011, up to 46.1% in 2012. This shows a dramatic increase in only 2 years. Another notable accomplishment of this sector is reducing their percentage of government sales significantly. In 2010, 76.2% of their sales were government reliant- taken down to 31% in 2012. This shows a success in strategically trying to decrease their government reliance.

The Digital Imagings capital expenditure have seen more than double the growth from 11.3% in 2010 to 23.5% in 2012. This means they are looking for ways to further grow and invest in this section, as it has been producing extremely well in recent years. A majority of these extreme growth increase stem from acquisitions of related and profitable companies. In particular, the acquisitions of DALSA, NovaSensors, and OPTA have been directly tied to 66.9 million in incremental revenue. These strategic acquisitions have aided this segment tremendously in growth, along with the growing industry overall.

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Aerospace and Defense Aerospace and Defense has seen a fluctuation of sales, increasing from $614.7 million in 2010 to $670.8 in 2011, and decreasing to $660.6 in 2012, resulting in a negative 1.5% decrease in sales. Due to this decrease in sales, this caused the operating profit to decrease over the past three years, beginning at $105 million in 2010 and ending with $90.3 million in 2012, resulting in a -3.8% decrease. As for government percent of sales, A&D has decreased each year by roughly 5%. This is to be expected due to the external environment discussed in the PEST analysis. Sales internationally have increased each year, beginning at 22.3% in 2010, 25.1% in 2011, and 28.1% in 2012.

Over the past years, there has been a constant decrease in electronic manufacturing service products. In 2011, the reduction of sales was 14.1 million and in 2012, it was 37.8 million. This decreasing segment of A&D is offset by the steady increases in avionic production and electronic relays, as well as microwave devices and interconnects. In 2011, $24.1 million increase in avionics, and a $12.4 million in 2012. In 2011, microwave devices and interconnect sales were at 46.1 million, and with the acquisition of Varisystems in 2012, they increase $25 million. With a slight increase of capital expenditures in the A&D segment, Teledyne is still showing confidence in this segment, but is placing more of their efforts in our growing segments such Digital Imaging and Instrumentation. With that, this segment is considered a cash cow for the company, simply from bringing in the most revenue of all segments, with Instrumentation coming in next (Teledyne technologies incorporated, 2012).

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Engineered Systems Engineered Systems segment sales were $304.6 million in 2011, compared with sales of $333.8 million in 2010, a decrease of 8.7%. Operating profit was $28.1 million in 2011, compared with $30.4 million in 2010, a decrease of 7.6%. Sales for 2011 reflected lower sales of $33.7 million from engineered products and services and lower energy systems sales of $2.3 million, partially offset by higher sales of $6.8 million of turbine engines resulting from increased sales for the JASSM program.

The sales decrease from engineered products and services, primarily reflected lower sales of space and defense programs, partially offset by higher sales of $9.0 million for environmental systems and $6.2 million in sales from acquisitions. The lower operating profit in 2011 primarily reflected the impact of lower sales, partially offset by the impact of higher margins for turbine engines. Cost of sales in total dollars decreased by $25.5 million in 2011, compared with 2010, and primarily reflected the decrease in sales. Both cost of sales as a percentage of sales and selling, general and administrative expense as a percentage of sales were comparable from year to year.

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Industry Lifecycle by Segment

Considering that each of Teledynes business segments are affected by multiple industries, this report takes into account the overall industry in addition to focusing on niche market growth that demonstrates what is driving Teledynes growth (most notably within Digital Imaging and Instrumentation). As the Industrial Equipment and Systems Design and Manufacturing Design industry is so broad, this demonstrates the more specific segments in which Teledyne operates.

Instrumentation - Mature with growth in niche segments There is no one industry that encompasses instrumentation, but rather several, including: Navigational Instrumentation Manufacturing, Pump and Compressor Manufacturing, and Mining Oil and Gas Machinery. However, it must be noted that these industries are broad which may explain the disparity between Teledyne Instrumentations growth in recent years as compared to the growth projections below. While the overall growth within these broad mature industries is slow, there is growth within the environmental analytical instrumentation markets. For example, according to, "India Water Analytical Instruments Market Forecast & Opportunities, 2018", the penetration level of water based analytical equipment is likely to increase significantly (India water analytical,). This trend is true for air quality monitors and other such instrumentation devices, as outlined in the PEST. Navigational Instrumentation Manufacturing - ("Ibis world,") According to IBISWorld in the five years to 2018, the Navigational Instrument Manufacturing industry's revenue is forecast to increase at an average annual rate of 2.7% to $64.6 billion, including growth of 1.8% in 2014. Growth will be driven by: increased R&D efforts, increased business spending, and increasing demand from energy, health and biotechnology sectors and laboratory testing services... due to government initiatives and technology advancements. However, while growth in this industry is projected to slowly increase, to stem from new technologies as smaller start-up firms develop new instruments and components to satisfy the needs of newer niche markets, such as alternative energy. This demonstrates that while the overall industry is declining, there are opportunities for growth within specific niche segments.

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Pump and Compressor Manufacturing IBISWorld explains that revenue has been predicted at an annualized rate of 2.5% over 5 years until 2013. It is predicted that this year a gain of 3.4%, which is expected to bring overall industry revenue to an estimated $28.1 billion, as downstream markets continue to improve and overseas buyers expand their demand. Similarly, the industry will benefit from rising activity in the manufacturing sector, as improving economic conditions and inventory restocking lift industrial production. Mining, Oil and Gas Machinery Manufacturing Definition: Establishments in this industry manufacture oil and gas field equipment and underground mining machinery. Products include rotary and portable drilling rigs and parts; crushing, pulverizing, screening and mineral processing machinery; and derricks, substructures and related accessories. Parts are included, but support services are excluded. It is projected that: as global demand picks up, revenue is expected to increase 4.2% during 2013 and total an estimated $28.6 billion, stemming from increasing exports and the trend toward mining shale as an alternative energy. Growth is predicted from demand for more innovative and technologically efficient means to extract hydrocarbons from existing fields, requiring more complex equipment.

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Digital Imaging - Late growth Though the digital imaging industry encompasses a wide range of markets, key segments of the industry are projected to grow. Therefore we have placed them in the late growth stage of the industry life cycle. Specifically, an increased focus on the prevention of chronic diseases, the imaging market is gaining importance and forecasted growth. In projections up to 2015, this market is expected to grow to 6.9% as the systems further diversify and technological advances increase. This is attributed to products such as the portable and handheld units growing in demand which are made from imaging devices ("Digital imaging at," 2010). In a medical imaging blog, they discuss how vendor-neutral medical imaging means steady industry growth overall. These systems aim to make digital images and documents in a standard format and interface- assisting in ease of use. They tell how demand for this segment is on the rise and is experiencing a great amount of profits. They state the four main reasons for the growth of medical imaging data requirements are, increasing average study volumes, evolving regulatory guidelines, growing imaging patient population and continuing reliance on imaging by the clinical enterprise,(Coppa). Another way the digital imaging segment is growing is through new use of infared lasers which are a main aspect of this industry. Analysts at Strategies Unlimited have determined defense and medical applications will drive rapid growth of the mid-IR laser market through 2014. This is due to new military sensing applications that directly use these infrared lasers. Military spending on these applications will help the technology move forward and continue to be in demand (Hatcher, 2010). According to IBIS World database, Medical Device Manufacturing is projected to see growth increase between 2013-2018 of 7.0% to a total of 49.5 million. This huge growth for medical imaging is due to the improving economy, an aging population and technological advances following the recession, ("Ibis world,").

("Ibis world,")

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Aerospace & Defense - Late Maturity The Aerospace and Defense segment of Teledyne is currently in the late maturity stage of the lifecycle. Although there is not one distinct industry that A&D operates in, we chose to use the industry report of The Space Vehicle and Missile Manufacturing from IBISWorld because the description of the industry directly correlates with the products we provide to our clients. From 2010 to 2011, we saw a decline in revenues of 4.1% and 2.5% due to the slow retreat out of the Middle East. The A&D segment is rapidly changing due to its high involvement with the government and warfare products. Because of this dependency, the defense industries revenues are constantly fluctuating, depending on threats of military conflicts. Also, when there is economic distress, government spending is decreased in areas such as defense for it is not seen as a priority until their is a sense of urgency and plan of action needed to be taken, which is when research and development expenditures are put into place. The rise in private investments in aerospace products for exploration of space and innovation of space vehicles gives the extra push to keep the revenue for the overall industry growing. Also, the overall growth of the aerospace industry will rely on the economies of other nations around the world, since the US does supply to countries globally. Lower economic spending worldwide could reduce revenues as well as cause a decline in demand for aerospace products. IBISWorld highlights that the production of new innovative technologies will further the revenue for this industry, with products such as high-powered lasers used as a defense strategy to eliminate potential missile attacks, as well as Kinetic-Energy Interceptors (KEIs) used to dismantle missiles in their early phase of launch. The production of highly sophisticated technological equipment can extend the life stage the stay within the maturity stages. Overall, the industry is directly correlated with the amount of government spending for both segments. The higher the spending on defense, the more manufacturing of new aerospace systems and products there is.

("Ibis world,")

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Engineered Systems - Mature According to IBISWorld, Engineered Systems is in the mature stage. Growth has been slower than the overall economy largely because of the recessions impact on the ability of governments and private firms to access capital. The industry relies heavily on large industrial and manufacturing projects across the transportation, energy, commercial, government, and residential sectors. . `

(Ibis world,) The engineering services industry is directly correlated with the performance of the economy; the industry had its largest revenue increase in 2004, and had modest gains from 2005 2008. After the recession many firms halted large projects and have since been hesitant to invest in capital-intensive products. Going forward IBIS projects that growth will continue at an average rate of 2.9% per year for the next five years. The good news is that as the economy strengthens, and capital becomes widely available to fund large projectsespecially in the energy sector, this industry has the potential to see greater gains than projected.

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Opportunity Analysis

This section aims to outline what factors make Teledyne an attractive acquisition for IE.

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SWOT Analysis
The following strengths, weaknesses, opportunities and threats have been deduced from the preceding industry and firm analysis.

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Strengths
Acquisition Strategy & Strategic Management Teledyne lists one of its strategies as investing in organic growth in imaging, instrumentation and electronics markets, which is reflected by the rapid acquisitions within Digital Imaging and Instrumentation. Expanding into growth markets and acquiring firms that provide economies of scale and vertical integration has proved to be a valuable strategy for Teledyne, and demonstrates the companys ability to expand and adapt to market changes. Compared to many competitors who are limited by focusing on one industry, Teledyne has more potential to expand and grow. This strategy is made possibly by having adaptive management that can anticipate trends, demonstrating the firms stability and flexibility to shareholders, customers, and other industry leaders. Synergy Teledynes various segments are interconnected, allowing for synergies as well as providing customers with a one-stop-shopping experience. Each segment complements the other, and serves similar industries. This overlap allows for utilizing distribution and supply networks efficiently amongst the different segments, increasing economies of scale and decreasing costs for customers. Diversification of Risk Amongst Segments Historically Teledyne has generated sales from Aerospace and Defense, but by acquiring firms and rapidly expanding the newer segments of Instrumentation and Digital Imaging, risk is slowly becoming diversified across the firm, leaving Teledyne less reliant on a single segment as its major source of revenue. Established Relationships Having a large network of suppliers, distributors and customers allows Teledyne to secure the necessary inputs needed for manufacturing and distribute them reliably to a loyal customer base. Compared with other smaller more specialized firms, Teledynes risk is more diversified through this broad network and is able to wield more buyer power to gain access to essential raw materials. Product Innovation Through a combination of firm and government expenditures, Teledyne is able to develop leading technology that allows it to establish its position as a market leader in many of the industries in which the firm operates. Specialization and Product Scope By offering a mix of customized services and specialized products, Teledyne is able to cater to many different customers needs at once, diversifying risk by not being overly reliant on one customer segment. This also increases the likelihood of brand loyalty, as customers who purchased basic components may come back for more specialized products and services in the future.

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Weaknesses
As this report was based off of publicly provided information, there may be other internal weaknesses that are not identified here.

Government Contracts Due to the complexity of this industry, especially in purchasing decision aspects, Teledyne relies heavily on large contracts. Along with most competitors in this industry, a majority of their sales stem from the government contracts they have. In 2012, 64% of Teledynes sales came directly from the government. This is a huge amount, though slowly Teledyne is breaking away from being dependent upon them. This is proven as Teledyne has been decreasing the amount of sales from the government over the past several years. Sales Based Mostly in U.S. In correlation to the high amount of government reliance Teledyne has, another weakness is that the majority of their sales are in the U.S. They currently have manufacturing facilities all over the world, however the amount of sales is still primarily from U.S companies and contracts. While this is a weakness, this is changing as international demand has been increasing in recent years. In 2012, 39%.of sales were from international, compared to 61% domestically; a trend that is continuing to shift.

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Opportunities
Expand growth segments through acquisition A part of Teledynes overall strategy is to grow and prosper through beneficial acquisitions. As this is already something Teledyne specializes in, they have further opportunities to continue to acquire firms specifically in their growth segments. Currently they have pinpointed Digital Imaging and Instrumental as primary areas of growth. By determining this, Teledyne can use vertical integration to acquire strong, related firms that will expand these segments. Tap into commercial manufacturing industry Teledyne is already tapping into this by diversifying its customer base and focusing more on commercial customers, versus government contracts. Encouraging this decrease in reliance would further diversify risk and open future opportunities into the commercial market. Increase presence in foreign markets Being that a majority of Teledynes sales are from the U.S market, this leaves them a great opportunity to enter foreign markets. Teledyne has numerous business strengths and a reputable brand image that will carry over to international markets.

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Threats
Economic deterioration The economic status of the nation considerably impacts our company. While the economy has been improving, we are still in a place of uncertainty. This means that Teledyne needs to be aware of trends that could potentially impact the firm and the stability of each segment; both domestically and internationally. Though global economies are currently in a state of recovery and seem to be on the rise, they are not fully stable yet. Government Budget Cuts Teledynes government sales constituted 64% of total sales, leaving the firm at risk if further budget cuts are made (most notably in the defense segment). Unfavorable Foreign policy or trade regulations Considering the high regulation within this industry, Teledyne is subject to changing regulations that could affect international trade. As foreign sales have steadily been increasing, the implementation of a trade policy with another country or tariffs could adversely affect the sales of the firm. Competing Product Innovation While Teledyne is a market leader in many segments, the more rapidly growing segments of Instrumentation and Digital Imaging face increased competition with many small firms who are similarly competing to introduce the latest and greatest technology.

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BCG Matrix
The BCG Matrix takes into account the segment growth discussed in the firm analysis in addition to expenditures made by segment. Also, note that the numbers listed in this section are in millions.

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Instrumentation
While the capital expenditure is moderately increasing, Teledyne has been rapidly expending money on acquisitions. In conjunction with the steadily increasing operating profit, these factors deem TI a star business segment. 2012 2011 122.8 8.9 0 2010 113.9 6.4 10.8

Operating Profit Acquisitions

136.2 361.3

Capital Expenditure 13.2

Digital Imaging
Digital Imaging has experienced rapid increases in operating profit, sales and revenue in the past few years. Capital expenditures continue to increase, and acquisition expenditures have been substantial in recent years (notably with the acquisition of DALSA in 2010). This combination of increasing profits and increasing expenditures signifies that TDI is a rising star. 2012 2011 122.8 13.8 27.9 2010 113.9 11.3 344.6

Operating Profit Capital Expenditure Acquisitions

24.8 23.5 N/A

Aerospace & Defense

Aerospace and Defense accounts for the second highest operating profit amongst the four segments. While TAD has not experienced substantial growth in recent years, it has remained a large source of cash generation for Teledyne. Capital expenditure has increased slightly and there have been a few acquisitions over the past several years, the amount of money being poured into this segment is small relative to the amount of money being generated. These factors qualify TAD as a cash cow. 2012 2011 93.9 13.1 0 2010 57.8 9.7 43.5

Operating Profit Capital Expenditure Acquisitions

90.3 13.8 0

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Engineered Systems
Engineered Systems represents the segment with the least amount of capital expenditure, demonstrating that Teledyne is focusing less on growing this segment. While there was a slight increase in operating profit from 2011 to 2012, revenues have slightly dropped in recent years, particularly due to declining sales from Engineered Products and Services. The low amount of capital expenditure in relation to the steady operating profit deem TES a cash cow. 2012 2011 28.1 5.9 0 2010 30.4 3.6 0

Operating Profit Capital Expenditure Acquisitions

28.5 4.2 0

It must be noted that due to declines within this segment in recent years, Teledyne Engineered Systems must be monitored closely if a whole-firm acquisition takes place. (Further discussion in the acquisition strategy section).

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Strategic Fit, Scope & Synergies

This section explains the 8% synergies that IE will claim in acquiring Teledyne stemming from vertical and horizontal integration.

Economies of Scale Fit across numerous parts of value chain can increase economies of scale while cost sharing can be combined, overall improving IEs efficiency of productions. The following areas demonstrate an overlap between the two companies, indicating where economies of scope can be claimed:

! ! ! !

Distribution R&D Supply chain Manufacturing

Economies of Scope Economies of scope will be derived from the overlapping industries that IE and Teledyne are involved in. This will allow for vertical and horizontal integration. IE

! Oil and Gas Commodities ! Off Site Design Engineering ! Consulting Services
Teledyne The two companies below are not a comprehensive list of the synergies that can be claimed from the segment, but they are reflective of where the synergies come from. Instrumentation 11% synergies through vertical Integration

! Teledyne Oil and Gas Instrumentation directly overlaps with IE, allowing for vertical integration. ! TI Instruments and Water Quality cater to industrial manufacturers with regard to manufacturing processes.

Digital Imaging 9% synergies through vertical & slight horizontal integration Product in Industrial Applications:

! ! ! !

Digital image capture products High performance sensors Cameras Software

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Aerospace and Defense 3% synergies through vertical integration Teledyne Electronic Manufacturing:

! ! ! !

Sub-assemblies and microwave components High density/complexity circuit card assembly Teledyne Lighting and display products Fiber optic illuminators

Engineered Systems 1% synergies through slight vertical integration Though TES does not have many synergies with IE, the gas power generation systems and fuel cell test equipment it manufactures and designs are aligned with IEs involvement in oil and gas. Total Averaged Synergies = 8%

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Acquisition Strategy

The following section outlines the proposal for acquisition and projects future revenues based upon synergies.

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Execution
Based on the 8% synergies and overall attractiveness of Teledyne as an acquisition target, it is proposed that IE fully acquire Teledyne at a premium of 30% for a total of $3.76 billion. This premium was chosen based on the current marketplace, as well as the projected ROI after acquisition (discussed in the next section). It is recommended that after full acquisition, IE monitor the declining segments such as Engineered Products and Services within Teledynes Engineered Systems segment, and consult with current management to consider slow divestment over time. Due to the strength of Teledynes current management, it is suggested that management be kept in place. IE should work directly with management and allow them to continue control over operations immediately after the acquisition to ensure a smooth transition. IE can greatly benefit from Teledynes strong management by using their experience to make strategic acquisition decisions. Over time, it is encouraged that IE utilize Teledynes distribution networks, manufacturing processes and plants, and research & development facilities to benefit from economies of scale.

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Financial Projections
Based on 8% synergies, the following projections have been made concerning IEs ROI. The tables below show the 5-year forecast for Teledyne- with and without IEs acquisition. Teledynes forecasted numbers were retrieved from the Business Source Premier database on April 28th, 2013, and were put together by the brokerage firm Drexel Hamilton.

The first table shows that without the 8% synergies that are projected in IEs acquisition of Teledyne, the company would still have an average growth of 7.10% over the next five years, and an increase of 1.5% in net income over the same time period. Many investment firms such as Drexel Hamilton consider Teledyne to be an above average stock for long-term investment. The bottom table reflects the 8% synergies that IE would accomplish with the acquisition. Through process improvements, merging resources, and cost reductions in multiple areas, IE would be able to push Teledynes growth over the 10% mark to an average of 11.88% growth per year. Increased revenues, and improvements in operations cost would allow Teledyne to gain a better net margin, and increase stockholder returns.

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Masters, J. (2013, February 22). Debt, deficits and defense budget. Retrieved from http://www.cfr.org/us-strategy-and-politics/debt-deficits-defense-budget/p27318 McMahon, J. (2013, April 22). Nobel physicist: Society should convert to natural gas. Forbes. Retrieved from http://www.forbes.com/sites/jeffmcmahon/2013/04/22/nobel-physicistsociety-should-convert-to-natural-gas/ Meggit plc. (n.d.). Retrieved from http://www.meggitt.com/ Microwave communications laboratories inc.. (n.d.). Retrieved from http://www.mcli.com/Capabilities Munsil, L. (2013, March 7). Small defense contractors bearing brunt of cuts. Politico. Retrieved from http://www.politico.com/story/2013/03/small-defense-contractors-bearing-brunt-ofcuts-88516.html Natural gas industry to develop fast in china, says expert. (2013, April 18). Global Times. Retrieved from http://www.globaltimes.cn/content/775748.shtmlN Nasa. (n.d.). Retrieved from http://www.hq.nasa.gov/office/codeq/gml/ New analysis on global trends in medical imaging for cardiology applications. (2013, January 2). Retrieved from http://www.news-medical.net/news/20130102/New-analysis-onglobal-trends-in-medical-imaging-for-cardiology-applications.aspx Northrop grumman. (n.d.). Retrieved from http://www.northropgrumman.com/Pages/default.aspx Northrop grumman corporation. Yahoo Finance , Retrieved from http://finance.yahoo.com/q/pr?s=NOC Profile Northrop grumman corporation (2011) 10k. (n.d.). Retrieved from http://www.sec.gov/Archives/edgar/data/1133421/000119312512045323/d250683d10k. htm

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Northrop grumman corporation (2012) 10k. (n.d.). Retrieved from http://investing.businessweek.com/research/stocks/financials/drawFiling.asp?docKey=1 36-0001133421130000077BKVNGGPGIVA2MOG4FMITOET4D&docFormat=HTM&formType=10-K Marlar, J., & Cimbaluk, L. (2013, April 29). Global economic confidence little changed since 2009.Gallup World. Retrieved from http://www.gallup.com/poll/162071/global-economicconfidence-little-changed-2009.aspx Meggit plc annual report. (2011, December 31). Retrieved from http://quote.morningstar.com/stock-filing/AnnualReport/2011/12/31/t.aspx?t=XLON:MGGT&ft=&d=3c64245993eac2d6e73e134c17906e 10 Morring, Jr., Frank. "Making Markets." Aviation Week & Space Technology 174.39 (2012): 22. Business Source Premier. Web. 6 Apr. 2013. Pope, S. (2012, December 11). Groups warn fiscal cliff could impact aviation read more at http://www.flyingmag.com/news/groups-warn-fiscal-cliff-could-impact-aviation Raytheon. (n.d.). Retrieved from http://www.raytheon.com/ Research and development. (n.d.). Retrieved from http://www.teledynesi.com/html/randd.htmlhttp://www.teledyne-controls.com/company/qa.asp Robb, G. (2013, April 10). U.s. budget deficit narrows sharply in march. The Wall Street Journal. Retrieved from http://articles.marketwatch.com/2013-0410/economy/38427631_1_budget-deficit-budget-plan-long-term-budget-deal Rogov, S. (2013, April 23). Lord of two rings: Americas new foreign policy initiative. Retrieved from http://indrus.in/world/2013/04/23/lord_of_two_rings_americas_new_foreign_policy_initia tive_24049.html

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Sustainable development, energy conservation high on corporate agenda. (2013, April 22). The Economic Times. Retrieved from http://articles.economictimes.indiatimes.com/2013-04-22/news/38736255_1_datacentres-eaft-technologies-samiron-ghoshal Spirit aerosystems. (n.d.). Retrieved from http://www.spiritaero.com/Default.aspx Spirit aerosystems holdings inc, 10k. (n.d.). Retrieved from http://quote.morningstar.com/stockfiling/AnnualReport/2012/12/31/t.aspx?t=XNYS:SPR &ft=10K&d=64082d06a2afb36c9efca8543d8ab6fe Teledyne analytical instruments. (n.d.). Retrieved from http://www.teledyneai.com/pdf/cocat.pdf Teledyne benthos welcomes new senior director of business development. (2011, July 15). Environmental Expert. Retrieved from http://www.environmentalexpert.com/news/teledyne-benthos-welcomes-new-senior-director-of-businessdevelopment-252217 Teledyne brown engineering. (n.d.). Retrieved from http://www.tbe.com/index.php/company_information/awards Teledyne equipment. (n.d.). Retrieved from http://www.environmentalexpert.com/products?keyword=teledyne Teledyne technologies. (n.d.). Retrieved from http://teledyne.com/ Teledyne technologies everywhere you look. (2012). Retrieved from http://www.teledyne.com/2013annualmeeting/TDY_AnnualReport2012.pdf Teledyne technologies inc. (2013, May 3). Yahoo Finance . Retrieved from http://finance.yahoo.com/echarts?s=TDY Interactive Teledyne technologies incoporated (2012) 10k. (n.d.). Retrieved from http://www.investquest.com/iq/t/tdy/fin/10k/tdyk13.htm

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Teledyne wins commercial laboratory services contract. (2012, November 18). Retrieved from http://www.environmental-expert.com/news/teledyne-technologies-incorporatedteledyne-wins-commercial-laboratory-services-contract-356435 Top 10 unmanned aerial vehicles taking flight. (2012, December 12). Discovery News. Retrieved from http://news.discovery.com/tech/robotics/top-ten-uavstakingflight.htmhttp://www.investquest.com/iq/t/tdy/fin/10k/tdyk13.htm United aircraft corporation. (n.d.). Retrieved from http://www.uacrussia.ru/en/ Update 1-proposed weapons programs cuts in white house budget. (2013, April10). Retrieved from http://www.reuters.com/article/2013/04/10/usafiscalweaponsidUSL2N0CX22V20130410?type=companyNews&feedType=RSS&feedN ame=companyNews&rpc=43 Update 2-as shale booms, u.s. crude exports jump to 13-yr high. (2013, April 29). Reuters. Retrieved from http://uk.reuters.com/article/2013/04/29/usa-crude-exportsidUKL2N0DG0VE20130429 Us industry report. (n.d.). Retrieved from http://clients1.ibisworld.com/reports/us/industry/home.aspx Williams, G. (2013, April 12). What the budget means for defense stocks. Retrieved from http://blogs.barrons.com/stockstowatchtoday/2013/04/12/what-the-budget-means-fordefense-stocks/?mod=yahoobarrons Wood, L. (2013, March 27). Medical imaging markets. PR Newswire. Retrieved from http://www.prnewswire.com/news-releases/medical-imaging-markets-200225861.html Yiwei, Z. (2013, April 22). Groundwater pollution grows alarming. Global Times, Retrieved from http://www.globaltimes.cn/content/776504.shtml

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Appendix A Management Bios Board of Directors Charles Crocker Chairman and Chief Executive Officer of Crocker Capital Retired Chairman and Chief Executive Officer of BEI Technologies, Inc. Frank V. Cahouet Retired Chairman and Chief Executive Officer of Mellon Financial Corporation Kenneth C. Dahlberg Retired Chairman and Chief Executive Officer Science Applications International Corp. (SAIC) Michael T. Smith Retired Chairman and Chief Executive Officer, Hughes Electronics Corporation Paul D. Miller Retired Chairman of the Board, Alliant Techsystems, Inc. Robert Mehrabian Chairman, President and Chief Executive Officer, Teledyne Technologies Roxanne S. Austin President of Austin Investment Advisors and Former President and Chief Executive Officer of Move Networks, Inc.; former President and Chief Operating Officer of DirectTV, Inc., and former Executive Vice President of Hughes Electronics Corporation Ruth E. Bruch Retired Senior Vice President and Chief Information Officer Kellogg Company

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Simon M. Lorne Vice Chairman and Chief Legal Officer of Millennium Management LLC Wesley von Schack Chairman, AEGIS Insurance Company and Former Chairman, President and Chief Executive Officer of Energy East Corporation Executive Profiles Aldo (Al) Pichelli President & Chief Operating Officer Instrumentation and Aerospace and Defense Electronics Segments Teledyne Technologies Incorporated Cynthia Y. Belak Vice President, Business Risk Assurance Teledyne Technologies Incorporated George C. Bobb III Vice President and Chief Compliance Officer Deputy General Counsel - Litigation Teledyne Technologies Incorporated Jason VanWees Vice President, Strategy and Mergers & Acquisitions Teledyne Technologies Incorporated Melanie S. Cibik Senior Vice President, General Counsel and Secretary Teledyne Technologies Incorporated Patrick Neville Vice President and Chief Information Officer

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Teledyne Technologies Incorporated Rex Geveden President, Teledyne Brown Engineering President, Engineered Systems Segment President and Chief Executive Officer Teledyne Scientific & Imagining, LLC Robert Mehrabian Chairman, President and Chief Executive Officer Teledyne Technologies Incorporated Robert W. Steenberge Vice President and Chief Technology Officer Teledyne Technologies Incorporated Robyn E. McGowan Vice President, Administration, Human Resources and Assistant Secretary Teledyne Technologies Incorporated Susan L. Main Senior Vice President and Chief Financial Officer Teledyne Technologies Incorporated Stephen F. Blackwood Vice President and Treasurer Teledyne Technologies Incorporated Wajid Ali Vice President and Controller Teledyne Technologies Incorporated

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Appendix B Teledyne Technologies 10K PART I Who We Are Teledyne Technologies Incorporated provides enabling technologies for industrial growth markets. We have evolved from a company that was primarily focused on aerospace and defense to one that serves multiple markets that require advanced technology and high reliability. These markets include deepwater oil and gas exploration and production, oceanographic research, air and water quality environmental monitoring, electronics design and development, factory automation and medical imaging. Our products include monitoring and control instrumentation for marine and environmental applications, harsh environment interconnects, electronic test and measurement equipment, digital imaging sensors and cameras, aircraft information management systems, and defense electronic and satellite communication subsystems. We also supply engineered systems for defense, space, environmental and energy applications. We differentiate ourselves from many of our direct competitors by having a customer and company sponsored applied research center that augments our product development expertise.

Total sales in 2012 were $2,127.3 million , compared with $1,941.9 million in 2011 and $1,644.2 million in 2010 . Our aggregate segment operating profit and other segment income were $ 279.8 million in 2012 , $ 260.9 million in 2011and $ 207.3 million in 2010 . These amounts exclude discontinued operations related to our general aviation piston engine businesses that were sold in April 2011. Approximately 68% of our total sales in 2012 were to commercial customers and the balance was to the U.S. Government, as a

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prime contractor or subcontractor. Approximately 59% of these U.S. Government sales were attributable to fixed-price type contracts and the balance to cost plus fee-type contracts. Sales to international customers accounted for approximately 39% of total sales in 2012 .

Our Recent Acquisitions Consistent with our strategy, during 2012, we acquired:

LeCroy Corporation (LeCroy) - LeCroy, headquartered in Chestnut Ridge, New York, is a leading supplier of oscilloscopes, protocol analyzers and signal integrity test solutions. This acquisition broadened Teledyne's portfolio of analytical instrumentation with the addition of electronic test and measurement solutions.

The parent company of PDM Neptec Limited (PDM Neptec) - PDM Neptec, located in Hampshire, United Kingdom, provides underwater cables and fiber optic and electrical subsea connectors. This acquisition expanded our line of harsh-environment marine connectors, added additional engineering talent and strengthened our international sales channels

BlueView Technologies Inc. (BlueView) - BlueView, located in Seattle, Washington, provides compact forward-looking imaging sonar, microbathymetry systems and 3D scanning sonar. BlueView's imaging sonars and microbathymetry systems further increased Teledyne's instrumentation content on autonomous underwater vehicles (AUVs) and remotely operated vehicles (ROVs) used in oil and gas and marine survey applications.

A majority interest in the parent company of Optech Incorporated (Optech) Optech, headquartered in Vaughan, Ontario, Canada, provides light detection

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and ranging (LIDAR) systems used in airborne terrestrial mapping, airborne laser bathymetry, mobile mapping and laser imaging. Optech's LIDAR systems add 3D imaging to Teledyne's portfolio of visible, infrared, X-ray and ultraviolet sensors, cameras and software. Optech's bathymetric LIDAR systems used for coastal mapping and shallow water profiling also complement our marine survey sensors and systems

VariSystems Inc. (VariSystems) - VariSystems, headquartered in Calgary, Alberta, Canada is a leading supplier of custom harsh environment interconnects used in energy exploration and production. This acquisition further expanded Teledyne's portfolio of rugged interconnect solutions used in energy exploration and production and provides greater access to land-based energy markets, specifically hydraulic fracturing and oil sands applications.

In 2012, Teledyne spent $389.2 million on these acquisitions.

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Appendix C Companies/Overview 1. Teledyne Instruments Teledyne Instrumentation is a group of companies that provide monitoring, sensing and analytical instruments to a wide range of industries, including: energy, chemical, food/beverage, power utilities, marine and medical. TIs products include:

Air quality monitors Air quality systems Process analyzers and sensors Medical monitors and sensors Vacuum and flow instruments Marine exploration products Sensors and load cells

Companies Advanced Pollution Instrumentation Analytical Instruments Teledyne Benthos. Teledyne Cormon Leeman Labs Monitor Labs RD Instruments Tekmar Test Services

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2. Teledyne Digital Imaging Teledyne digital imaging segment produces numerous technologies primarily consisting of high performance sensors, cameras, software, and infrared detectors for a variety of industries. This segment also includes state of the art research laboratories benefiting government programs and businesses, as well as major development efforts for innovative digital imaging products for government and space applications. TDI Products Include:

Digital image capture products High performance sensors Cameras Software Specialty semiconductors Micro-electro mechanical systems ("MEMS") Infrared detectors Cameras Optomechanical assemblies

Companies Teledyne DALSA Teledyne Imaging Sensors Teledyne Judson Technologies Teledyne Optimum Optical Nova Sensors Teledyne Scientific Company Optech

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3. Teledyne Aerospace and Defense Electronics Teledyne aerospace and defense sector produces high-end electronic components and communication systems and subsystems. This segment provides harsh environment interconnects, communication equipment for aircrafts, military applications, electronic manufacturing services, wireless and satellite communication systems and data acquisition, and analysis electronics. Teledynes Aerospace and Defense sector has 21 businesses, seven of which operate through the single product and marketing portal Teledyne Microwave. This segment develops and creates the following products:

General Aviation Batteries Helix traveling wave tubes (TWTs) Microwave components Cascadable amplifiers Data acquisition equipment Instantaneous frequency measurement (IFM)-based systems and subsystems

Also provides advanced technology application, software development, and manufacturing solutions to the following areas:

Space Military Environmental Energy Chemical Biological & nuclear systems missile defense requirement

Companies

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Teledyne Battery Products Teledyne Cougar Teledyne Electronic Manufacturing Services Teledyne KW Microwave Teledyne Defence Limited Teledyne Electronic Safety Products Teledyne Europe Teledyne Labtech Teledyne Lighting & Display Products Teledyne MEC Teledyne Microelectronic Technologies Teledyne Microwave Teledyne ParadiseDatacom Teledyne Printed Circuit Technology Teledyne Relays Teledyne Reynolds Teledyne Reynolds, a Division of Teledyne Limited Teledyne RISI Teledyne Storm Products Teledyne VariSystems

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4. Teledyne Engineered Systems Teledyne Engineered Systems segment provides technology development and manufacturing solutions to several private businesses in addition to core government sectors such as NASA, the U.S. Department of Defense, and the U.S. Department of Energy. TES has two product and marketing portals - Nuclear and Space - and consists of three primary businesses: Energy Systems, Brown Engineering, and Turbine Engines.

These products primarily include:

Structural steel assemblies and components for the nuclear power industry Fuel cell systems Cruise missile turbine engines Technology for nuclear waste storage Sensors, actuators, and electronics for extreme environments Space components and subsystems

Companies Teledyne Brown Engineering Teledyne Energy Systems Teledyne Turbine Engines

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Appendix D Teledyne and Key Competitors Financials

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Appendix E Analysis of Teledyne Financials VS. Competitors

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