SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[X]þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 30,June 29, 2003

OR

[   ]o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

Commission file number 1-15295

TELEDYNE TECHNOLOGIES INCORPORATED

(310) 893-1600
(Registrant’s telephone number, including area code)

     Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes    [X]               No    [   ]

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes    [X]               üNo    [   ]

     Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

YesüNo

     Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

TELEDYNE TECHNOLOGIES INCORPORATED AND SUBSIDIARIES

TABLE OF CONTENTSItem 2.Management's Discussion and Analysis of Financial

PAGE

Part I

Financial Information

2

Item 1.

Financial Statements

2

Consolidated Condensed Balance Sheets

2

Consolidated Condensed Statements of Operations

3

Consolidated Condensed Statements of Cash Flows

4

Notes to Consolidated Condensed Financial Statements

5

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

12

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

1819

Item 4.

Controls and Procedures

1819

Part II

Other Information

1920

Item 4.

Submission of Matters to a Vote of Security Holders

1920

Item 6.

Exhibits and Reports on Form 8-K

1920

Signatures and Certifications

20

21

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PART I FINANCIAL INFORMATION

Item 1. Financial Statements

TELEDYNE TECHNOLOGIES INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
MARCH 30,JUNE 29, 2003 AND DECEMBER 29, 2002
(Amounts in millions, except share amounts)

				March 30,				December 29,
				2003				2002
				(Unaudited)
Assets
Current Assets
	Cash and cash equivalents			$	15.4			$	19.0
	Receivables, net				108.1				109.2
	Inventories, net				74.3				66.8
	Deferred income taxes, net				19.2				18.9
	Prepaid expenses, notes receivable and other				7.8				8.0
		Total Current Assets			224.8				221.9
Property, plant and equipment, at cost, net of accumulated depreciation and amortization of $131.3 at March 30, 2003 and $126.8 at December 29, 2002					72.5				74.7
Deferred income taxes, net					25.2				22.2
Goodwill, net					44.3				44.3
Other assets					27.4				28.0
Total Assets				$	394.2			$	391.1
Liabilities and Stockholders’ Equity
Current Liabilities
	Accounts payable			$	48.5			$	53.1
	Accrued liabilities				69.1				66.2
		Total Current Liabilities			117.6				119.3
Accrued pension obligation					42.1				40.5
Accrued postretirement benefits					26.5				26.8
Other long-term liabilities					24.5				27.7
Total Liabilities					210.7				214.3
Stockholders’ Equity
	Common stock, $0.01 par value; outstanding shares 32,172,634 at March 30, 2003 and 32,048,827 at December 29, 2002				0.3				0.3
	Additional paid-in capital				131.0				129.8
	Retained earnings				75.4				69.9
	Accumulated other comprehensive income (loss)				(23.2	)			(23.2	)
	Total Stockholders’ Equity				183.5				176.8
Total Liabilities and Stockholders’ Equity				$	394.2			$	391.1

The accompanying notes are an integral part of these financial statements.

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TELEDYNE TECHNOLOGIES INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
FOR THE THREE AND SIX MONTHS ENDED MARCH 30,JUNE 29, 2003 AND MARCH 31,JUNE 30, 2002
(Unaudited — Amounts in millions, except per-share amounts)

			First Quarter
			2003				2002
Sales			$	197.2			$	183.3
Costs and expenses
	Cost of sales			151.6				139.0
	Selling, general and administrative expenses			36.4				35.7
				188.0				174.7
Income before other income and expense and income taxes				9.2				8.6
	Interest and debt expense, net			(0.1	)			(0.3	)
	Other income (expense)			(0.1	)			0.2
Income before income taxes				9.0				8.5
	Provision for income taxes			3.5				3.4
Net Income			$	5.5			$	5.1
Basic earnings per common share			$	0.17			$	0.16
Weighted average basic common shares outstanding				32.2				32.0
Diluted earnings per common share			$	0.17			$	0.16
Weighted average diluted common shares outstanding				32.5				32.5

The accompanying notes are an integral part of these financial statements.

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TELEDYNE TECHNOLOGIES INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
FOR THE THREESIX MONTHS ENDED MARCH 30,JUNE 29, 2003 AND MARCH 31,JUNE 30, 2002
(Unaudited — Amounts in millions)

					First Quarter
					2003				2002
CASH FLOW FROM OPERATING ACTIVITIES
	Net income				$	5.5			$	5.1
	Adjustments to reconcile net income to net cash from operating activities:
			Depreciation and amortization			5.6				5.1
			Deferred income taxes			(3.3	)			3.4
	Changes in operating assets and liabilities:
		(Increase) decrease in accounts receivables				1.2				(11.4	)
		(Increase) decrease in inventories				(7.5	)			1.1
		(Increase) decrease in prepaid expenses and other assets				0.1				(0.7	)
		Increase (decrease) in accounts payable				(4.6	)			5.5
		Increase (decrease) in accrued liabilities				(3.0	)			1.6
		Decrease in prepaid income taxes, net				5.9				0.2
		Decrease in other long-term assets				0.3				—
		Increase (decrease) in other long-term liabilities				(3.1	)			0.6
		Increase (decrease) in accrued pension obligation				1.5				(0.9	)
		Decrease in accrued postretirement benefits				(0.3	)			(0.6	)
			Net cash flow from continuing operations			(1.7	)			9.0
			Net cash flow from discontinued operations			(0.1	)			(0.5	)
			Net cash provided (used) by operating activities			(1.8	)			8.5
CASH FLOW FROM INVESTING ACTIVITIES
	Purchases of property, plant and equipment					(2.9	)			(3.5	)
	Other investing, net					(0.2	)			—
			Net cash used by investing activities			(3.1	)			(3.5	)
CASH FLOW FROM FINANCING ACTIVITIES
	Net repayments of long-term debt					—				(10.5	)
	Proceeds from exercise of stock options and other, net					1.3				0.6
			Net cash provided (used) by financing activities			1.3				(9.9	)
Decrease in cash and cash equivalents						(3.6	)			(4.9	)
Cash and cash equivalents—beginning of period						19.0				11.9
Cash and cash equivalents—end of period					$	15.4			$	7.0

The accompanying notes are an integral part of these financial statements.

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TELEDYNE TECHNOLOGIES INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

March 30,June 29, 2003

1.		General
		1. General Basis of Accounting
		The accompanying unaudited consolidated condensed financial statements have been prepared by Teledyne Technologies Incorporated (Teledyne Technologies or the Company) pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and disclosures normally included in notes to consolidated financial statements have been condensed or omitted pursuant to such rules and regulations, but resultant disclosures are in accordance with accounting principles generally accepted in the United States as they apply to interim reporting. The consolidated condensed financial statements should be read in conjunction with the consolidated financial statements and the notes thereto in Teledyne Technologies’ Annual Report on Form 10-K for the fiscal year ended December 29, 2002 (2002 Form 10-K).
		In the opinion of Teledyne Technologies’ management, the accompanying consolidated condensed financial statements contain all adjustments (consisting of normal recurring adjustments) necessary to present fairly, in all material respects, Teledyne Technologies’ consolidated financial position as of March 30, 2003, and the consolidated results of operations for the three months then ended and the cash flows for the three months then ended. The results of operations and cash flows for the period ended March 30, 2003, are not necessarily indicative of the results of operations or cash flows to be expected for any subsequent quarter or the full fiscal year.
		Certain financial statements and notes for the prior year have been changed to conform to the 2003 presentation.
		Effective November 29, 1999, Teledyne Technologies became an independent, public company as a result of the distribution by Allegheny Teledyne Incorporated, now known as Allegheny Technologies Incorporated (ATI), of the Company’s Common Stock, $.01 par value per share, to holders of ATI Common Stock at a distribution ratio of one for seven (the spin-off).
		Accounting Pronouncements
		In June 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 143—“Accounting The accompanying unaudited consolidated condensed financial statements have been prepared by Teledyne Technologies Incorporated (Teledyne Technologies or the Company) pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and disclosures normally included in notes to consolidated financial statements have been condensed or omitted pursuant to such rules and regulations, but resultant disclosures are in accordance with accounting principles generally accepted in the United States as they apply to interim reporting. The consolidated condensed financial statements should be read in conjunction with the consolidated financial statements and the notes thereto in Teledyne Technologies’ Annual Report on Form 10-K for the fiscal year ended December 29, 2002 (2002 Form 10-K). In the opinion of Teledyne Technologies’ management, the accompanying consolidated condensed financial statements contain all adjustments (consisting of normal recurring adjustments) necessary to present fairly, in all material respects, Teledyne Technologies’ consolidated financial position as of June 29, 2003, and the consolidated results of operations for the three and six months then ended and the cash flows for the six months then ended. The results of operations and cash flows for the periods ended June 29, 2003, are not necessarily indicative of the results of operations or cash flows to be expected for any subsequent quarter or the full fiscal year. Certain financial statements and notes for the prior year have been changed to conform to the 2003 presentation. Recent Accounting Pronouncements In May 2003, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity”. This Statement establishes standards for classifying and measuring as liabilities certain financial instruments that embody obligations of the issuer and have characteristics of both liabilities and equity. It represents a significant change in practice in the accounting for a number of financial instruments, including mandatorily redeemable equity instruments and certain equity derivatives that frequently are used in connection with share repurchase programs. SFAS No. 150 must be applied immediately to instruments entered into or modified after May 31, 2003 and to all other instruments that exist as of the beginning of the first interim financial reporting period beginning after June 15, 2003. As Teledyne Technologies currently has no financial instruments that would be subject to SFAS No. 150, the adoption will have no impact on the Company. In January 2003, the FASB issued Interpretation No. 46, “Consolidation of Variable Interest Entities” (FIN 46). FIN 46 requires companies to evaluate variable interest entities to determine whether to apply the consolidation provisions of FIN 46 to those entities. Companies must apply FIN 46 to entities created after January 31, 2003, and to variable interest entities in which a company obtains an interest after that date. It applies in the first fiscal year or interim period beginning after June 15, 2003, to variable interest entities in which a company holds a variable interest that is acquired before February 1, 2003. Teledyne Technologies’ adoption of FIN 46 will have no impact on the Company’s consolidated results of operations or financial position. In June 2001, the FASB issued SFAS No. 143, “Accounting for Asset Retirement Obligations,” which addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. Teledyne Technologies’ initial adoption of SFAS No. 143, effective January 1, 2003, did not have a material effect on its financial position or results of operations.
		In April 2003, the FASB issued SFAS No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities.” SFAS No. 149 amends and clarifies accounting for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities under SFAS No. 133. In particular, SFAS No. 149 clarifies under what circumstances a contract with an initial net investment meets the characteristics of a derivative and when a derivative contains a financing component that warrants special reporting in the statement of cash flows. SFAS No. 149 is generally effective for contracts entered into or modified after June 30, 2003 and is not expected to have a material impact on Teledyne Technologies’ financial position or results of operations.
		In November 2002, the FASB issued FASB Interpretation No. 45 (FIN 45), “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others — an Interpretation of FASB Statements No. 5, 57, and 107 and Rescission of FASB Interpretation No. 34.” FIN

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		45 elaborates on the disclosures to be made by a guarantor in its interim and annual financial statements about its obligations under certain guarantees it has issued. It also clarifies that a guarantor is required to recognize, at the inception of a guarantee, a liability for the fair value of the obligation undertaken in issuing the guarantee. The initial recognition and initial measurement provisions of FIN 45 are applicable on a prospective basis to guarantees issued or modified after December 31, 2002, irrespective of the guarantor’s fiscal year end. The Company adopted the initial recognition and initial measurement provisions in the first quarter of 2003. The adoption of FIN 45 had noIn April 2003, the FASB issued SFAS No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities.” SFAS No. 149 amends and clarifies accounting for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities under SFAS No. 133. In particular, SFAS No. 149 clarifies under what circumstances a contract with an initial net investment meets the characteristics of a derivative and when a derivative contains a financing component that warrants special reporting in the statement of cash flows. SFAS No. 149 is generally effective for contracts entered into or modified after June 30, 2003 and is not expected to have a material impact on Teledyne Technologies’ financial position or results of operations.
		Some of the Company’s products are subject to specified warranties. The Company maintains a warranty reserve for the estimated future costs of repair, replacement or customer accommodation and periodically reviews this reserve for adequacy. Such review would generally include a review of historic warranty experience with respect to the applicable business or products, as well as the length and actual terms of the warranties. Changes in the Company’s product warranty reserve during the period are as follows (in millions):

2.		Business Combinations and Discontinued Operations
		On September 27, 2002, Teledyne Technologies acquired Monitor Labs Incorporated from Spirent plc for $24 million in cash. Monitor Labs is a supplier of environmental monitoring instrumentation for the detection, measurement and reporting of air pollutants with locations in Englewood, Colorado and Gibsonia, Pennsylvania. In November 2001, Teledyne Technologies acquired Advanced Pollution Incorporated (API) for $25 million in cash. API is a designer and manufacturer of advanced air quality monitoring instruments, based in San Diego, California. Monitor Labs’ and API’s results are included in the consolidated financial statements since the date of each respective acquisition. Both API and Monitor Labs are part of Teledyne Instruments, a group of electronic instrumentation businesses within Teledyne’s Electronic and Communications business segment. In both acquisitions, the excess of the purchase price over the fair value of net assets acquired has been allocated to identifiable intangible assets including goodwill in accordance with SFAS No. 141.
		In July 2001, Teledyne Technologies combined its Energy Systems business unit with assets of Florida-based Energy Partners, Inc., to create majority-owned (86%) Teledyne Energy Systems, Inc. This transaction was recorded as a transfer of net assets between entities under common control in accordance with SFAS No. 141. The company focuses on supplying hydrogen gas generators and thermoelectric power systems, as well as commercialization of proton exchange membrane (PEM) fuel cell stacks, test stands and systems.
		In December 2000, Teledyne Technologies sold the assets of Teledyne Cast Parts, a provider of sand and investment castings to the aerospace and defense industries. Teledyne Cast Parts was previously reported as part of the Aerospace Engines and Components segment.

In November 2002, the FASB issued FASB Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others — an Interpretation of FASB Statements No. 5, 57, and 107 and Rescission of FASB Interpretation No. 34” (FIN 45). FIN 45 describes the disclosures to be made by a guarantor in its interim and annual financial statements about its obligations under certain guarantees it has issued. It also clarifies that a guarantor is required to recognize, at the inception of a guarantee, a liability for the fair value of the obligation undertaken in issuing the guarantee. The initial recognition and initial measurement provisions of FIN 45 are applicable on a prospective basis to guarantees issued or modified after December 31, 2002, irrespective of the guarantor’s fiscal year-end. The Company adopted the initial recognition and measurement provisions in the first quarter of 2003. The adoption of FIN 45 had no impact on Teledyne Technologies’ financial position or results of operations.

2. Business Combinations and Discontinued Operations

On June 27, 2003, Teledyne Technologies acquired from Spirent plc its Aviation Information Solutions businesses (collectively “AIS”), which include Spirent Systems Wichita, Inc., Spirent Systems — Aerospace Solutions (Ottawa) Limited and assets of United Kingdom-based The Flight Data Company Limited, for $6.85 million in cash. AIS designs and manufactures aerospace data acquisition devices, networking products and flight deck and cabin displays. The acquisition of AIS provides Teledyne Technologies with advanced airborne file servers, data analysis software and information displays that are highly synergistic with Teledyne Controls’ data acquisition and communication systems that enhance flight safety and maintenance efficiency for airline and airfreight customers.

On May 16, 2003, Teledyne Technologies acquired Tekmar Company, a wholly owned subsidiary of Emerson Electric Co., for $13.5 million in cash. Tekmar Company, also known as Tekmar-Dohrmann, is a premier manufacturer of gas chromatography introduction systems and automated total organic carbon analyzers. Tekmar Company, located in Mason, Ohio, became a business unit of Teledyne Instruments, a group of electronic instrumentation businesses within Teledyne’s Electronics and Communications business segment. Tekmar Company’s product lines include a portfolio of front-end instruments that handle the sample preparation and treatment of volatile organic compounds analyzed in gas chromatographs. Tekmar Company also provides complete analytical systems for laboratory and industrial testing of total organic carbon.

On September 27, 2002, Teledyne Technologies acquired Monitor Labs Incorporated from Spirent plc for $24 million in cash. Monitor Labs is a supplier of environmental monitoring instrumentation for the detection, measurement and reporting of air pollutants with locations in Englewood, Colorado and Gibsonia, Pennsylvania. Monitor Labs became a business unit of Teledyne Instruments.

Tekmar Company’s and Monitor Labs’ results are included in the Company’s consolidated financial statements from the date of each respective acquisition. Since the acquisition of AIS occurred at the end of the second quarter, only the balance sheet accounts have been included at June 29, 2003. In all acquisitions, the excess of the purchase price over the fair value of net assets acquired has been allocated to identifiable intangible assets including goodwill in accordance with SFAS No. 141. The allocations of the purchase price for the acquisitions of Tekmar Company and AIS are preliminary as they were recently acquired.

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3.		Comprehensive Income
		Teledyne Technologies’ comprehensive income is composed of net income, foreign currency translation adjustments and the unrealized gain or loss on marketable equity securities. Teledyne Technologies’ total comprehensive income for the first three months of 2003 and 2002 consist of the following:

In December 2000, Teledyne Technologies sold the assets of Teledyne Cast Parts, a provider of sand and investment castings to the aerospace and defense industries. Payment made against reserves recorded as part of the sale are shown in the discontinued operation caption of the cash flow statement.

3. Comprehensive Income

Teledyne Technologies’ comprehensive income is comprised of net income, foreign currency translation adjustments and the unrealized gain or loss on marketable equity securities. Teledyne Technologies’ total comprehensive income for the second quarter and first six months of 2003 and 2002 consist of the following:

4.		Earnings Per Share
		Basic and diluted earnings per share were computed based on net earnings. The weighted average number of common shares outstanding during the period was used in the calculation of basic earnings per share, and this number of shares was increased by the dilutive effect of stock options based on the treasury stock method in the calculation of diluted earnings per share.
		The following table sets forth the computations of basic and diluted earnings per share (amounts in millions, except per-share data):

4. Earnings Per Share

Basic and diluted earnings per share were computed based on net earnings. The weighted average number of common shares outstanding during the period was used in the calculation of basic earnings per share, and this number of shares was increased by the dilutive effect of stock options based on the treasury stock method in the calculation of diluted earnings per share.

The following table sets forth the computations of basic and diluted earnings per share (amounts in millions, except per-share data):

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5.		Stock-Based Compensation
		The following disclosures are based on stock options held by Teledyne Technologies’ employees and include the stock options that have been converted from ATI options to Teledyne Technologies’ options as noted above. Teledyne Technologies accounts for its stock option plans in accordance with APB Opinion No. 25—“Accounting for Stock Issued to Employees” (APB Opinion No. 25) and related Interpretations. Under APB Opinion No. 25, no compensation expense is recognized because the exercise price of the Company’s employee stock options equals the market price of the underlying stock at the date of the grant. In December 2002, the FASB issued SFAS No. 148, “Accounting for Stock-Based Compensation-Transition and Disclosure.” SFAS No. 148 amends SFAS No. 123, “Accounting for Stock-based Compensation” (SFAS No. 123) and was effective immediately upon issuance. SFAS No. 148 provides alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. SFAS No. 148 also amends the disclosure requirements of Statement No. 123 to require interim and annual disclosures about the method of accounting for stock based compensation and the effect of the method used on reported results. The Company follows the requirements of APB Opinion No. 25 and the disclosure only provision of SFAS No. 123, as amended by SFAS No. 148.
		As noted in the preceding paragraph, Teledyne Technologies accounts for its stock options under APB Opinion No. 25. If compensation cost for these options had been determined using the fair-value method using the Black-Scholes option-pricing model the impact on net income and earnings per share is presented in the following table (amounts in millions, except per-share data):

5. Stock-Based Compensation

The following disclosures are based on stock options held by Teledyne Technologies’ employees. Teledyne Technologies accounts for its stock option plans in accordance with APB Opinion No. 25, “Accounting for Stock Issued to Employees” and related Interpretations. Under APB Opinion No. 25, no compensation expense is recognized because the exercise price of the Company’s employee stock options equals the market price of the underlying stock at the date of the grant. In December 2002, the FASB issued SFAS No. 148, “Accounting for Stock-Based Compensation-Transition and Disclosure.” SFAS No. 148 amends SFAS No. 123, “Accounting for Stock-based Compensation” and was effective immediately upon issuance. SFAS No. 148 provides alternative methods of transition for a voluntary change to the fair-value-based method of accounting for stock-based employee compensation. SFAS No. 148 also amends the disclosure requirements of SFAS No. 123 to require interim and annual disclosures about the method of accounting for stock-based compensation and the effect of the method used on reported results. The Company follows the requirements of APB Opinion No. 25 and the disclosure only provision of SFAS No. 123, as amended by SFAS No. 148.

As noted in the preceding paragraph, Teledyne Technologies accounts for its stock options under APB Opinion No. 25. If compensation cost for these options had been determined under the SFAS No. 123 fair-value method using the Black-Scholes option-pricing model, the impact on net income and earnings per share is presented in the following table (amounts in millions, except per-share data):

6.		Cash and Cash Equivalents
		Cash equivalents consist of highly liquid money-market mutual funds and bank deposits with maturities of three months or less when purchased. Cash equivalents totaled $9.6 million and $15.4 million at March 30,6. Cash and Cash Equivalents Cash equivalents consist of highly liquid money-market mutual funds and bank deposits with maturities of three months or less when purchased. Cash equivalents totaled $2.7 million and $15.4 million at June 29, 2003 and December 29, 2002, respectively.

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7.		Inventories
		Inventories are primarily valued under the LIFO method. Since an actual valuation of inventory under the LIFO method can be made only at the end of each year based on the inventory levels and costs at that time, interim LIFO calculations must necessarily be based on the Company’s estimates of expected year-end inventory levels and costs. Because these are subject to many factors beyond the Company’s control, interim results are subject to the final year-end LIFO inventory valuation. Inventories consist of the following (amounts in millions):

7. Inventories

Inventories are primarily valued under the LIFO method. Since an actual valuation of inventory under the LIFO method can be made only at the end of each year based on the inventory levels and costs at that time, interim LIFO calculations must necessarily be based on the Company’s estimates of expected year-end inventory levels and costs. Because these are subject to many factors beyond the Company’s control, interim results are subject to the final year-end LIFO inventory valuation. Inventories consist of the following (amounts in millions):

8.		Supplemental Balance Sheet Information
		Goodwill primarily includes goodwill acquired as part of the acquisitions of API in 2001 and Monitor Labs in 2002. Accrued liabilities included salaries and wages of $25.6 million and $27.8 million at March 30, 2003 and December 29, 2002, respectively. Other long-term liabilities included reserves for self-insurance, deferred compensation liabilities and environmental reserves.
9.		Lawsuits, Claims, Commitments, Contingencies and Related Matters
		The Company is subject to federal, state and local environmental laws and regulations which require that it investigate and remediate the effects of the release or disposal of materials at sites associated with past and present operations, including sites at which the Company has been identified as a potentially responsible party under the federal Superfund laws and comparable state laws. The Company has been identified as a potentially responsible party at approximately 17 such sites, excluding those at which the Company believes it has no future liability.
		8. Supplemental Balance Sheet Information The increase in goodwill in 2003 includes goodwill acquired as part of the Tekmar Company and AIS acquisitions as described in Note 2. Accrued liabilities included salaries and wages of $29.3 million and $27.8 million at June 29, 2003 and December 29, 2002, respectively. Other long-term liabilities included reserves for self-insurance, deferred compensation liabilities and environmental reserves. Some of the Company’s products are subject to specified warranties. The Company maintains a warranty reserve for the estimated future costs of repair, replacement or customer accommodation and periodically reviews this reserve for adequacy. Such review would generally include a review of historic warranty experience with respect to the applicable business or products, as well as the length and actual terms of the warranties. Changes in the Company’s product warranty reserve during the period are as follows (in millions):             Balance at December 29, 2002   $ 5.2     Accruals for product warranties     2.2     Cost of warranty claims     (2.2 )   Acquisitions     1.1           Balance at June 29, 2003   $ 6.3           9. Lawsuits, Claims, Commitments, Contingencies and Related Matters The Company is subject to federal, state and local environmental laws and regulations which require that it investigate and remediate the effects of the release or disposal of materials at sites associated with past and present operations, including sites at which the Company has been identified as a potentially responsible party under the federal Superfund laws and comparable state laws. The Company has been identified as a potentially responsible party at approximately 17 such sites, excluding those at which the Company believes it has no future liability. In accordance with the Company’s accounting policy disclosed in Note 2 to the consolidated financial statements in the 2002 Form 10-K, environmental liabilities are recorded when the Company’s liability is probable and the costs are reasonably estimable. In many cases, however, investigations are not yet at a stage where the Company has been able to determine whether it is liable or, if liability is probable, to reasonably estimate the loss or range of loss, or certain components thereof. Estimates of the Company’s liability are further subject to uncertainties regarding the nature and extent of site contamination, the range of remediation alternatives available, evolving remediation standards, imprecise engineering evaluations and estimates of appropriate cleanup technology, methodology and cost, the extent of corrective actions that may be required, and the number and financial condition of other potentially responsible parties, as well as the extent of their responsibility for the remediation. Accordingly, as investigation and remediation of these sites proceeds, it is likely that adjustments in the Company’s accruals will be necessary to reflect new information. The amounts of any such adjustments could have a material adverse effect on the Company’s results of operations in a given period, but the amounts, and the possible range of loss in excess of the amounts accrued, are not reasonably estimable. Based on currently available information, management does not believe that future environmental costs in excess of those accrued with respect to sites with which the Company has been identified are likely to have a material adverse effect on the Company’s financial condition or liquidity. However, resolution of one or more of these environmental matters or future accrual adjustments in any one reporting period could have a material adverse effect on results of operations for that period. Additionally,

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		there can be no assurance that additional future developments, administrative actions or liabilities relating to environmental matters will not have a material adverse effect on the Company’s financial condition or results of operations.
		At March 30, 2003, the Company’s reserves for environmental remediation obligations totaled approximately $2.2 million, of which approximately $0.6 million were included in current liabilities. The Company evaluates whether it may be able to recover a portion of future costs for environmental liabilities from its insurance carriers and from third parties other than participating potentially responsible parties.
		The timing of expenditures depends on a number of factors that vary by site, including the nature and extent of contamination, the number of potentially responsible parties, the timing of regulatory approvals, the complexity of the investigation and remediation, and the standards for remediation. The Company expects that it will expend present accruals over many years, and will complete remediation of all sites with which it has been identified in up to 30 years.
		Various claims (whether based on U.S. Government or Company audits and investigations or otherwise) have been or may be asserted against the Company related to its U.S. Government contract work, including claims based on business practices and cost classifications and actions under the False Claims Act. Although such claims are generally resolved by detailed fact-finding and negotiation, on those occasions when they are not so resolved, civil or criminal legal or administrative proceedings may ensue. Depending on the circumstances and the outcome, such proceedings could result in fines, penalties, compensatory and treble damages or the cancellation or suspension of payments under one or more U.S. Government contracts. Under government regulations, a company, or one or more of its operating divisions or units, can also be suspended or debarred from government contracts based on the results of investigations. Although the outcome of these matters cannot be predicted with certainty, management does not believe there is any audit, review or investigation currently pending against the Company of which management is aware that is likely to result in suspension or debarment of the Company, or that is otherwise likely to have a material adverse effect on the Company’s financial condition or liquidity. The resolution in any reporting period of one or more of these matters, however, could have a material adverse effect on the Company’s results of operations for that period.
		The Company learns from time to time that it has been named as a defendant in civil actions filed under seal pursuant to the False Claims Act. Such cases are under seal and remain so until the U.S. Government decides if it will intervene and the Company therefore does not generally possess sufficient information to determine whether the Company could sustain a material loss in connection with such cases, or to reasonably estimate the amount of any loss attributable to such cases. The Company was informed that the U.S. Government has declined to intervene in a civil lawsuit filed under seal more than four years ago. The Company continues to defend vigorously the on-going civil lawsuit.
		The Tax Sharing and Indemnification Agreement between ATI and Teledyne Technologies provides that the Company will indemnify ATI and its agents and representatives for taxes imposed on, and other amounts paid by, them or ATI stockholders if the Company takes actions or fails to take actions that result in the spin-off not qualifying as a tax-free distribution. If the Company were required to so indemnify ATI, such an obligation could have a material adverse effect on its financial condition, results of operations and cash flow and the amount the Company could be required to pay could exceed its net worth by a substantial amount. The Company believes that it has satisfied all principal spin-off requirements to assure such tax-free treatment.
		A number of other lawsuits, claims and proceedings have been or may be asserted against the Company relating to the conduct of its business, including those pertaining to aircraft and other product liability, patent infringement, contract disputes, employment and employee benefits. While the outcome of litigation cannot be predicted with certainty, and some of these lawsuits, claims or proceedings may be determined adversely to the Company, management does not believe that the disposition of any such pending matters is likely to have a material adverse effect on the Company’s financial condition or liquidity. The resolution in any reporting period of one or more of these matters, could have a material adverse effect on the Company’s results of

uncertainties regarding the nature and extent of site contamination, the range of remediation alternatives available, evolving remediation standards, imprecise engineering evaluations and estimates of appropriate cleanup technology, methodology and cost, the extent of corrective actions that may be required, and the number and financial condition of other potentially responsible parties, as well as the extent of their responsibility for the remediation. Accordingly, as investigation and remediation of these sites proceeds, it is likely that adjustments in the Company’s accruals will be necessary to reflect new information. The amounts of any such adjustments could have a material adverse effect on the Company’s results of operations in a given period, but the amounts, and the possible range of loss in excess of the amounts accrued, are not reasonably estimable. Based on currently available information, management does not believe that future environmental costs in excess of those accrued with respect to sites with which the Company has been identified are likely to have a material adverse effect on the Company’s financial condition or liquidity. However, resolution of one or more of these environmental matters or future accrual adjustments in any one reporting period could have a material adverse effect on results of operations for that period. Additionally, there can be no assurance that additional future developments, administrative actions or liabilities relating to environmental matters will not have a material adverse effect on the Company’s financial condition or results of operations.

At June 29, 2003, the Company’s reserves for environmental remediation obligations totaled approximately $1.9 million, of which approximately $0.3 million were included in current liabilities. The Company periodically evaluates whether it may be able to recover a portion of future costs for environmental liabilities from its insurance carriers and from third parties other than participating potentially responsible parties.

The timing of expenditures depends on a number of factors that vary by site, including the nature and extent of contamination, the number of potentially responsible parties, the timing of regulatory approvals, the complexity of the investigation and remediation, and the standards for remediation. The Company expects that it will expend present accruals over many years, and will complete remediation of all sites with which it has been identified in up to 30 years.

Various claims (whether based on U.S. Government or Company audits and investigations or otherwise) have been or may be asserted against the Company related to its U.S. Government contract work, including claims based on business practices and cost classifications and actions under the False Claims Act. Although such claims are generally resolved by detailed fact-finding and negotiation, on those occasions when they are not so resolved, civil or criminal legal or administrative proceedings may ensue. Depending on the circumstances and the outcome, such proceedings could result in fines, penalties, compensatory and treble damages or the cancellation or suspension of payments under one or more U.S. Government contracts. Under government regulations, a company, or one or more of its operating divisions or units, can also be suspended or debarred from government contracts based on the results of investigations. Although the outcome of these matters cannot be predicted with certainty, management does not believe there is any audit, review or investigation currently pending against the Company of which management is aware that is likely to result in suspension or debarment of the Company, or that is otherwise likely to have a material adverse effect on the Company’s financial condition or liquidity. The resolution in any reporting period of one or more of these matters, however, could have a material adverse effect on the Company’s results of operations for that period.

The Company learns from time to time that it has been named as a defendant in civil actions filed under seal pursuant to the False Claims Act. Such cases are under seal and remain so until the U.S. Government decides if it will intervene and the Company therefore does not generally possess sufficient information to determine whether the Company could sustain a material loss in connection with such cases, or to reasonably estimate the amount of any loss attributable to such cases. The Company was informed that the U.S. Government has declined to intervene in a civil lawsuit filed under seal more than four years ago. While the court granted the Company’s motion to dismiss the on-going civil lawsuit, the decision has been appealed.

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		operations for that period.
10.		Industry Segments
		The following table presents Teledyne Technologies’ interim industry segment disclosures (amounts in millions):

The Tax Sharing and Indemnification Agreement entered into with Allegheny Technologies Incorporated (ATI), in connection with the November 29, 1999 spin-off, provides that the Company will indemnify ATI and its agents and representatives for taxes imposed on, and other amounts paid by, them or ATI stockholders if the Company takes actions or fails to take actions that result in the spin-off not qualifying as a tax-free distribution. If the Company were required to so indemnify ATI, such an obligation could have a material adverse effect on its financial condition, results of operations and cash flow and the amount the Company could be required to pay could exceed its net worth by a substantial amount. The Company believes that it has satisfied all principal spin-off requirements to assure such tax-free treatment.

A number of other lawsuits, claims and proceedings have been or may be asserted against the Company relating to the conduct of its business, including those pertaining to aircraft and other product liability, patent infringement, contract disputes, employment and employee benefits. While the outcome of litigation cannot be predicted with certainty, and some of these lawsuits, claims or proceedings may be determined adversely to the Company, management does not believe that the disposition of any such pending matters is likely to have a material adverse effect on the Company’s financial condition or liquidity. The resolution in any reporting period of one or more of these matters, could have a material adverse effect on the Company’s results of operations for that period.

10. Industry Segments

The following table presents Teledyne Technologies’ interim industry segment disclosures (amounts in millions):

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations

Teledyne Technologies’ firstsecond quarter 2003 sales were $197.2$205.4 million, compared with sales of $183.3$188.0 million for the same period in 2002. Net income for the second quarter of 2003 was $6.5 million ($0.20 per diluted share), compared with net income of $6.2 million ($0.19 per diluted share) for the second quarter of 2002. Sales for the first six months of 2003 were $402.6 million, compared with sales of $371.3 million for the same period in 2002. Net income for the first quartersix months of 2003 was $5.5$12.0 million ($0.170.37 per diluted share), compared with net income of $5.1$11.3 million ($0.160.35 per diluted share) for the first quartersix months of 2002.

The second quarter and the first quartersix months of 2003, compared with the same periodperiods in 2002, primarily reflected higher sales in the Electronics and Communications segment and Systems Engineering Solutions segment, partially offset by lower sales in the Aerospace Engines and Components segment. Higher sales resulted from both organic growth and strategic acquisitions, notwithstanding a difficult environment in some of the Energy Systems segments.Company’s commercial markets.

The increase in earnings for the second quarter and the first quartersix months of 2003, compared with the same periodperiods of 2002, reflected improved results in the Systems Engineering Solutions, segment,Aerospace Engines and Components and Energy Systems segments partially offset by lower results in the Company’s other segments.Electronics and Communications segment . The firstsecond quarter of 2003 included pretax non-cash pension expense of $1.7 million compared with pretax non-cash pension income of $0.6 million in the second quarter of 2002. The first quartersix months of 2003 included pretax non-cash pension expense of $3.4 million compared with pretax non-cash pension income of $1.2 million in the first six months of 2002.

Cost of sales in total dollars was higher in both the second quarter and the first quartersix months of 2003, compared with the same periodperiods in 2002, which increased2002. The increase was in line with higher sales and also reflected higher pension expense, as well aspartially offset by product mix differences. Cost of sales as a percentage of sales for the firstsecond quarter of 2003 was slightlylower compared with the same period of 2002 and reflected an improvement due to a booking rate adjustment for the Ground-based Midcourse Defense (GMD) contract, higher year over year award and incentive fees related to the finalization of fee negotiations for fiscal year 2002 for the GMD contract, and a favorable LIFO adjustment, partially offset by higher pension expense and sales mix differences. Cost of sales as a percentage of sales for the first six months of 2003 was higher compared with the same period of 2002 and included the favorable impacts described in 2002,the preceding sentence, which primarily reflectedwere more than offset by higher pension expense.expense and sales mix differences. Additionally, the second quarter and the first six months of 2002 reflect the revised income statement classification of the restructuring and other charges originally recorded in the second quarter of 2001. The classification revision increased cost of sales by $0.6 million and decreased restructuring and other charges by $0.6 million but had no impact on income before taxes in 2002.

Selling, general and administrative expenses, including research and development and bid and proposal expense, in total dollars were higher in the second quarter and the first six months of 2003, compared with the same periods in 2002. This increase was in line with higher sales and also included expenditures from Monitor Labs, acquired in September 2002, and Tekmar Company, acquired in May 2003, as well as increased bid and proposal expense in the Systems Engineering Solutions segment, partially offset by lower research and development expense in the Electronics and Communications segment. Selling, general and administrative expenses for the second quarter and the first quartersix months of 2003, as a percentage of sales were lower, compared with the same periodperiods in 2002, which reflected lowerthe benefit of higher sales combined with selling generalexpenses and administrative and research and development expenses. Selling, general and administrative expenses in total dollars were higher inthat show relatively no change if the first quarterimpact of 2003, compared with the same period in 2002. This increase was in line with higher sales and also included selling, general and administrative expenses from Monitor Labs, acquired in September 2002, and higher severance costs, offset in part, by lower research and development expenses. acquisitions noted above are excluded.

The first quartersix months of 2003 includes a $0.3$2.3 million charge, of which $2.0 million was recorded in the second quarter, in other expense related to the partial write-downwrite-off of the Company’s $2.3 millionremaining cost-based investment in a private company engaged in manufacturing and development of micro optics and microelectromechanical devices.

The Company’s effective tax rate for the second quarter and the first quartersix months of 2003 was 39.0%, compared with an effective tax rate of 39.7% for the first quartersame periods of 2002.

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Review of Operations:

The following table sets forth the sales and operating profit for each segment (amounts in millions):

Electronics and Communications

The Electronics and Communications segment’s firstsecond quarter 2003 sales were $103.6$109.6 million, compared with firstsecond quarter 2002 sales of $90.5$94.2 million. FirstSecond quarter 20022003 operating profit was $7.3$7.6 million, compared with operating profit of $8.3$9.0 million in the firstsecond quarter of 2002. Sales for the first six months of 2003 were $213.2 million, compared with $184.7 million for the same period of 2002. Operating profit for the first six months of 2003 was $14.9 million, compared with $17.3 million for the same period in 2002.

FirstThe second quarter and the first six months of 2003 sales, compared with the same periodperiods of 2002, reflected revenue growth in electronic manufacturing services, electronic instruments, defense electronic products and commercial lighting products. The revenue growth for the second quarter and the first six months of 2003 in electronic manufacturing services was primarily driven by increased sales to military and medical markets. The revenue growth in electronic instruments resulted from the acquisition of Monitor Labs Incorporated at the end of the third quarter of 2002 stronger demandand the acquisition of Tekmar Company on May 16, 2003. Additionally, sales for geophysical sensorselectronic measuring equipment were stronger for the petroleum exploration marketfirst six months of 2003, compared with the same period of 2002. The revenue growth in defense electronic products was driven by traveling wave tubes and stronger demand for other electronic measuring equipment.military microelectronics. These sales increases were partially offset by continued weakness in the commercial aviation market. Segment operating profit was negatively impacted by pension expense of $1.3 million in the first quarter of 2003 compared with pension income of $0.5 million in the first quarter of 2002. In addition, operatingOperating profit was favorably impacted by increased sales, a reduction in the Company’s commercial broadband communications investments and an improved cost structure.structure, partially offset by changes in product mix and higher selling, general and administrative expenses. Additionally, segment operating profit was negatively impacted by pension expense of $1.2 million in the second quarter of 2003 and $2.5 million for the first six months of 2003, compared with pension income of $0.5 million in the second quarter of 2002 and $1.0 million for the first six months of 2002.

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Systems Engineering Solutions

The Systems Engineering Solutions segment’s firstsecond quarter 2003 sales were $52.4$54.6 million, compared with firstsecond quarter 2002 sales of $46.9$51.5 million. FirstSecond quarter 2003 operating profit was $5.7$8.1 million, compared with operating profit of $3.8$5.7 million in the firstsecond quarter of 2002. Sales for the first six months of 2003 were $107.0 million, compared with $98.4 million for the same period of 2002. The first six months of 2003 operating profit was $13.8 million, compared with operating profit of $9.5 million for the same period in 2002.

FirstThe second quarter and the first six months of 2003 sales, compared with the same periodperiods of 2002, reflected revenue growth in core defense and aerospace programs and increased work in environmental programs. Operating profit reflectedfor the mixsecond quarter and the first six months of 2003, compared with the same periods of 2002, was favorably impacted by increased sales, timing of certain government programs, profit improvement due to booking rate adjustments for the close outGMD contract ($0.5 million) and higher year over year award and incentive fees for the GMD and International Space Station contracts. The higher year over year award and incentive fees totaled $0.9 million and $0.7 million, for the comparable second quarters and year to date periods, respectively. The first six months of a number of contracts and2003 also reflected improved margins for environmental programs. Additionally, segment operating profit was unfavorablynegatively impacted by pension expense of $0.1 million in the second quarter of 2003 and $0.2 million for the first quartersix months of 2003, compared with no pension costexpense in 2002.

Aerospace Engines and Components

The Aerospace Engines and Components segment’s firstsecond quarter 2003 sales were $37.8$37.7 million, compared with firstsecond quarter 2002 sales of $41.9$39.0 million. FirstSecond quarter 2003 operating profit was $0.5$1.1 million, compared with operating profit of $0.7$0.1 million in the firstsecond quarter of 2002. Sales for the first six months of 2003 were $75.5 million, compared with $80.9 million for the same period of 2002. Operating profit for the first six months of 2003 was $1.6 million, compared with $0.8 million for the same period of 2002.

FirstThe second quarter and the first six months of 2003 sales, compared with the same periodperiods of 2002, reflected revenue growth in OEM piston engines which was more than offset by reduced sales of aftermarket products and services. Operating profit for the second quarter and the first six months of 2003, compared with the same periods of 2002 in the piston engine business was positively impacted by an improved cost structure, productivity improvements and a $0.8 million reduction in LIFO reserve, which resulted from a reduction in inventory and lower requirements for product liability reserves partially offset by higher insurance premium costs. Sales for the second quarter and the first six months of 2003 from turbine engines, compared with the same periods of 2002, were unfavorably impacted by lower revenue from spare parts for Air Force training aircraft, partially offset by favorable Joint Air-to-Surface Standoff Missile (JASSM) sales. Operating profit for turbine engines was lower infor both the second quarter and the first quartersix months of 2003, compared with the first quartersame periods of 2002, which corresponded withand resulted from lower sales.sales and reduced margins. Additionally, segment operating profit was unfavorablynegatively impacted by pension expense of $0.3 million in the second quarter of 2003 and $0.6 million for the first quartersix months of 2003, compared with pension income of $0.1$0.2 million in the firstsecond quarter of 2002 and $0.3 million for the first six months of 2002.

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Teledyne Energy Systems

The Energy Systems segment’s firstsecond quarter 2003 sales were $3.4$3.5 million, compared with firstsecond quarter 2002 sales of $4.0$3.3 million. The firstsecond quarter 2003 operating loss was $0.5$0.2 million, compared with an operating loss of $0.3$0.9 million in the firstsecond quarter of 2002. Sales for the first six months of 2003 were $6.9 million, compared with $7.3 million for the same period of 2002. The first six months of 2003 operating loss was $0.7 million, compared with an operating loss of $1.2 million for the same period in 2002.

FirstSecond quarter 2003 sales reflected revenue growth in hydrogen generators and fuel cell test stations, partially offset by lower government sales. The first six months of 2003 sales reflected lower revenues from certain government cost-plus-fixed-fee contracts due to an improved cost structure that resulted in lower billable revenue, as well as lower contract billings under ourthe NASA PEMProton Exchange Membrane (PEM) Fuel Cell program as the first phase of the contract came to conclusion. Commercial sales were relatively flatconclusion, partially offset by revenue growth in commercial sales. The second quarter and the first quartersix months of 2003 reduction in operating loss, compared with the first quartersame periods of 2002.

The first quarter 2003 operating loss included charges for contract claims, offset in part by lower manufacturing2002, resulted from an improved overhead cost structure and general administrative expenses.a lack of program cost adjustments that impacted 2002.

Financial Condition, Liquidity and Capital Resources

Teledyne Technologies’ net cash usedprovided by operating activities from continuing operations was $1.7$11.8 million for the first threesix months of 2003, compared with net cash provided from continuing operations of $9.0$34.4 million for the same period of 2002. The lower net usage of cash provided from continuing operations in the first six months of 2003, compared with the first six months of 2002, was due to differences in the cash impact of income taxes, the payment in 2003 for an aircraft product liability settlement and timing differences related to accounts payable. The 2002 net cash provided from continuing operations reflected the receipt of a federal income tax refund of $5.7 million in April 2002, and the deferral of approximately $6.0 million in income taxes payable to the third quarter of 2002 due to IRS rules regarding recognition of taxable income from long-term contracts. In the first six months of 2003, cash was used to pay down accounts payable, compared to an increase in accounts payable for the first six months of 2002 resulting primarily from timing of inventory and capital purchases.

Teledyne Technologies’ net cash used by investing activities was $27.2 million and $7.0 million for the first six months of 2003 and 2002, respectively. The 2003 amount included $20.3 million for the purchase of businesses and $6.6 million for capital spending. The 2002 amount was for capital expenditures.

Financing activities provided net cash of $1.4 million in the first six months of 2003, compared with cash provided inused of $28.6 million for the first quartersame period of 2002. The 2002 wasamount primarily driven by an increase in inventoriesreflected net repayments of long-term debt. Both periods include proceeds from year-end 2002 due to purchasesthe exercise of long lead-time items in our defense electronics and medical businesses.

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stock options.

Working capital increased to $107.2was $97.8 million at March 30,June 29, 2003, compared with $102.6 million at the end of 2002. The increasedecrease in working capital was primarily due to thecash used to acquire businesses and higher income taxes payable, offset, in part, by an increase in inventory noted above.and lower accounts payable. Some of the Company’s customers have been undergoing bankruptcies, none of which currently are expected to have a material adverse effect on the Company.

On June 27, 2003 Teledyne Technologies’ net cash used by investing activities was $3.1Technologies acquired from Spirent plc its Aviation Information Solutions businesses (collectively “AIS”), which include Spirent Systems Wichita, Inc., Spirent Systems — Aerospace Solutions (Ottawa) Limited and assets of United Kingdom-based The Flight Data Company Limited, for $6.85 million in cash. AIS designs and $3.5manufactures aerospace data acquisition devices, networking products and flight deck and cabin displays. The acquisition of AIS provides Teledyne Technologies with advanced airborne file servers, data analysis software and information displays that are highly synergistic with Teledyne Controls’ data acquisition and communication systems that enhance flight safety and maintenance efficiency for our airline and airfreight customers.

On May 16, 2003 Teledyne Technologies acquired Tekmar Company, a wholly owned subsidiary of Emerson Electric Co. for $13.5 million in cash. Tekmar Company, also known as Tekmar-Dohrmann, is a premier manufacturer of gas chromatography introduction systems and automated total organic carbon analyzers. Tekmar Company, located in Mason, Ohio, became a business unit of Teledyne Instruments, a group of electronic

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instrumentation businesses within Teledyne’s Electronics and Communications business segment. Tekmar Company’s product lines include a portfolio of front-end instruments that handle the sample preparation and treatment of volatile organic compounds analyzed in gas chromatographs. Tekmar Company also provides complete analytical systems for the first three monthslaboratory and industrial testing of 2003 and 2002, respectively and was primarily for capital expenditures.total organic carbon.

On September 27, 2002, Teledyne Technologies acquired Monitor Labs from Spirent plc for $24 million in cash. Monitor Labs is a supplier of environmental monitoring instrumentation for the detection, measurement, and reporting of air pollutants with locations in Englewood, Colorado and Gibsonia, Pennsylvania. TheMonitor Labs became a business unit of Teledyne Instruments.

Tekmar Company’s and Monitor Labs’ results are included in the Company’s consolidated financial statements from the date of each respective acquisition. Since the acquisition of AIS occurred at the end of the second quarter, only the balance sheet accounts have been included at June 29, 2003. In all acquisitions, the excess of the purchase price over the fair value of net assets acquired has been allocated to identifiable intangible assets including goodwill in accordance with SFAS No. 141.

Financing activities provided net cash The allocations of $1.3 million in the first three months of 2003, compared with cash used of $9.9 millionpurchase price for the same periodacquisitions of 2002. The 2002 amount primarily reflected net repayments of long-term debt. Both periods include proceeds from the exercise of stock options.Tekmar Company and AIS are preliminary as they were recently acquired.

Teledyne Technologies’ principal capital requirements are to fund working capital needs, capital expenditures and debt service requirements.requirements, as well as to fund acquisitions if and when they arise. It is anticipated that operating cash flow, together with available borrowings under the credit facility described below, will be sufficient to meet these requirements in the year 2003. Teledyne Technologies currently expects capital expenditures to be in the range of approximately $20 million to $21 million in 2003, of which $6.6 million has been spent in the first six months of 2003.

A $200.0 million five-year revolving credit agreement that terminates in November 2004 was arranged with a syndicate of banks in connection with the Company’s 1999 spin-off from Allegheny Technologies Incorporated (ATI). At March 30,June 29, 2003, Teledyne Technologies had no amounts outstanding under the facility. Excluding interest and fees, no payments are due under the credit facility until the facility terminates. Available borrowing capacity under the credit facility was $200.0 million at March 30,June 29, 2003 and at year endyear-end 2002. The credit agreement requires the Company to comply with various financial covenants and restrictions. It prohibits stock repurchases, the declaration of dividends or making other specified distributions in aggregate amounts exceeding 25% of cumulative net income ($18.920.5 million as of March 30,June 29, 2003) after the effective date of the credit agreement.

In March 2003, Teledyne Technologies announced that its Board of Directors authorized the Company to purchase from time to time up to one million shares of its Common Stock in open market or privately negotiated transactions through March 31, 2004. No repurchases have been made under this program.

Critical Accounting Policies

Our critical accounting policies are those that are reflective of significant judgments and uncertainties, and may potentially result in materially different results under different assumptions and conditions. Our critical accounting policies continue to be the following: revenue recognition; impairment of long-lived assets; accounting for income taxes; inventories and related allowance for obsolete and excess inventory; aircraft product liability reserve; and accounting for pension plans. For additional discussion of the application of these and other accounting policies, see Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies and Note 2 of the Notes to Consolidated Financial Statements. included in Teledyne Technologies’ Annual Report on Form 10-K for the fiscal year ended December 29, 2002 (2002 Form 10-K).

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Recent Accounting Pronouncements

In June 2001,May 2003, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 143—“Accounting150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity”. This Statement establishes standards for classifying and measuring as liabilities certain financial instruments that embody obligations of the issuer and have characteristics of both liabilities and equity. It represents a significant change in practice in the accounting for a number of financial instruments, including mandatorily redeemable equity instruments and certain equity derivatives that frequently are used in connection with share repurchase programs. SFAS No. 150 must be applied immediately to instruments entered into or modified after May 31, 2003 and to all other instruments that exist as of the beginning of the first interim financial reporting period beginning after June 15, 2003. As Teledyne Technologies currently has no financial instruments that would be subject to SFAS No. 150, the adoption will have no impact on the Company.

In January 2003, the FASB issued Interpretation No. 46, “Consolidation of Variable Interest Entities” (FIN 46). FIN 46 requires companies to evaluate variable interest entities to determine whether to apply the consolidation provisions of FIN 46 to those entities. Companies must apply FIN 46 to entities created after January 31, 2003, and to variable interest entities in which a company obtains an interest after that date. It applies in the first fiscal year or interim period beginning after June 15, 2003, to variable interest entities in which a company holds a variable interest that is acquired before February 1, 2003. Teledyne Technologies’ adoption of FIN 46 will have no impact on the Company’s consolidated results of operations or financial position.

In June 2001, the FASB issued SFAS No. 143, “Accounting for Asset Retirement Obligations,” which addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. Teledyne Technologies’ initial adoption of SFAS No. 143, effective January 1, 2003, did not have a material effect on its financial position or results of operations.

In April 2003, the FASB issued SFAS No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities.” SFAS No. 149 amends and clarifies accounting for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities under SFAS No. 133. In particular, SFAS No. 149 clarifies under what circumstances a contract with an initial net investment meets the characteristics of a derivative and when a derivative contains a financing component that warrants special reporting in the statement of cash flows. SFAS No. 149 is generally effective for contracts entered into or modified after June 30, 2003 and is not expected to have a material impact on Teledyne Technologies’ financial position or results of operations.

In November 2002, the FASB issued FASB Interpretation No. 45, (FIN 45), “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others — an Interpretation of FASB Statements No. 5, 57, and 107 and Rescission of FASB Interpretation No. 34.”34” (FIN 45) FIN 45 elaborates ondescribes the disclosures to be made by a guarantor in its interim and annual financial statements about its obligations under certain guarantees it has issued. It also clarifies that a guarantor is required to recognize, at the inception of a guarantee, a liability for the fair value of the obligation undertaken in issuing the guarantee. The initial recognition and initial measurement provisions of FIN 45 are applicable on a prospective basis to guarantees issued or modified after December 31, 2002, irrespective of the guarantor’s fiscal year end.year-end. The Company adopted the initial recognition and initial measurement provisions in the first quarter of 2003. The adoption of FIN 45 had no impact on Teledyne Technologies’ financial position or results of operations.

Outlook

Teledyne Technologies maintains a balanced portfolio of approximately 45% government and 55% commercial businesses. The Company’s 2003 outlook reflects anticipated growth in the Company’s defense electronics and instrumentation businesses, but no recovery in the Company’s commercial aviation and certain short cycle markets. In its Systems Engineering Solutions segment, while the Company anticipates receiving government award and incentive fees under certain contracts in 2003, there is no assurance that such award and incentive fees will be equal to similar fees received in 2002.

Furthermore, given the current state of the economy, rising insurance premiums, the increasingly litigious product liability claims environment, and the Company’s dependence on aftermarket aviation sales, the Company does not expect a recovery in 2003 operating profit for the Aerospace Engines and Components segment relative to 2002. The Company’s existing aircraft product liability policy expires in May 2003, and the Company is currently evaluating options relating to its insurance coverage. The Company’s current total cost for its aircraft product liability insurance is approximately $1.4 million per month, and the Company’s management had previously anticipated a 40% increase in cost for its aircraft product liability insurance after May 2003. However, based on recent discussions with several insurance carriers, the Company expects the total monthly cost of its aircraft product liability insurance to increase between approximately 70% and 85% after May 2003. The Company continues to explore strategic alternatives for its Aerospace Engines and Components segment.

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Although 2003 earnings visibility is limited, basedOutlook

Based on its current outlook, the Company’s management believes that second quarter and full year 2003 earnings per share will be in the range of approximately $0.17$0.68 to $0.19 and $0.62 to $0.72, respectively,$0.74, including the higher aircraft product liability insurance costs, noted abovelower anticipated margins in the second half of 2003 in the Company’s Systems Engineering Solutions segment and approximately $0.13 per share of non-cash pension expense for the full year 2003.

The Company’s previous aircraft product liability policy expired in May 2003. As of June 1, 2003, the total cost of the Company’s aircraft product liability insurance increased approximately $1.0 million per month or approximately 75%. In addition, given the finalization of actual fee negotiations for work performed in government fiscal year 2002 for certain contracts, operating margin in the Company’s Systems Engineering Solutions segment is expected to be lower in the second half of 2003, compared with the first half of 2003.

Full year 2002 earnings included $2.3 million or $0.04 per share in non-cash pension income. The Company currently expects approximately $7.0 million or $0.13 per share of non-cash pension expense in 2003. The reduction in non-cash pension income reflects the continued decline in the value of the Company’s pension assets duringthrough 2002 and reductions in the expected rate of return and discount rate assumptions for the Company’s defined benefit plan. The Company’s assumed expected rate of return is currently 8.5%, compared to 9.0% in 2002, and its assumed discount rate is currently 7.0%, compared to 7.5% in 2002. Based on the Company’s current pension assumptions and the value of its pension assets as of March 31,June 30, 2003, the Company expects that non-cash pension expense in 2004 will be in the range of approximately $10.0 million to $12.0 million or $0.18 to $0.22 per share. Currently, Teledyne Technologies does not anticipate making cash contributions to its pension plan until 2004. Also, under one of its spin-off agreements, after November 29, 2004 the Company will be able to charge pension costs to the U.S. Government under various government contracts.

EARNINGS PER SHARE SUMMARY
(Diluted earnings per common share from continuing operations)

Safe Harbor Cautionary Statement Regarding Outlook and Forward-Looking Information

From time to time the Company makes, and this report contains, forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995, relating to earnings, growth opportunities, capital expenditures, pension matters and strategic plans. Actual results could differ materially from these forward-looking statements. Many factors, including changes in demand for products sold to the semiconductor, communications and commercial aviation markets, timely development of acceptable and competitive fuel cell products and systems, funding, continuation and award of government programs, receipt of (or failure to receive) government award and incentive fees based on performance achievements, the terms of the Company’s renewal of its current aircraft product liability insurance policy, customers’ acceptance of piston engine insurance-related price increases, or surcharges, continued liquidity of our customers (including commercial airline customers) and economic and political conditions, could change the anticipated results.

Global responses to terrorism and other perceived threats increase uncertainties associated with forward-looking statements about our businesses. Various responses could realign government programs, and affect the

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composition, funding or timing of our programs. As happened after the September 11th terrorist attacks, reinstatementReinstatement of flight restrictions would negatively impact the market for general aviation aircraft piston engines and components.

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September 11th and various public company governance issues have had adverse impacts on the insurance markets greatly increasing insurance costs. Thecosts, including the Company’s existingrecent renewal of its aircraft product liability insurance policy expires in May 2003 and our directors and officers policy expires in November 2003.policy. In addition, the continuing downturn in the stock market has negatively affectedfluctuations affect the value of the Company’s pension assets. Absent improvedsignificant further improvement in market conditions, the Company will be required to make a contribution to its pension plan in 2004.

The Company continues to take action to assure compliance with the internal controls, disclosure controls and other requirements of the Sarbanes-Oxley Act of 2002. While the Company believes its control systems are effective, there are inherent limitations in all control systems, and misstatements due to error or fraud may occur and not be detected.

While Teledyne Technologies’ growth strategy includes possible acquisitions, wethe Company cannot provide any assurance as to when, if or on what terms any acquisitions will be made. Acquisitions, including the acquisitionrecent acquisitions of Monitor Labs Incorporated,Tekmar Company and AIS, involve various inherent risks, such as, among others, ourthe Company’s ability to integrate acquired businesses and to achieve identified financial and operating synergies. Also, wethe Company may not be able to sell or exit timely or on acceptable terms ourits remaining non-core or under-performing product lines, particularly given the current economic environment.

Additional information concerning factors that could cause actual results to differ materially from those projected in the forward-looking statements is contained in Teledyne Technologies’ periodic filings with the Securities and Exchange Commission, including its 2002 Annual Report on Form 10-K. The Company assumes no duty to update forward-looking statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There were no material changes in the information provided under “Item 7A, Quantitative and Qualitative Disclosure About Market Risk” included in Teledyne Technologies’ 2002 Annual Report on Form 10-K. At March 30,June 29, 2003, there were no hedging contracts outstanding.

Item 4. Controls and Procedures

Teledyne Technologies’ disclosure controls and procedures are designed to ensure that information required to be disclosed in reports that it files or submits, under the Securities Exchange Act of 1934, is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission. Within 90 days prior to the filing of this report, theThe Company’s Chairman, President and Chief Executive Officer and SeniorInterim Chief Financial Officer, Vice President and Chief Financial Officer,Controller, with the participation and assistance of other members of management, have reviewed the effectiveness of the Company’s disclosure controls and procedures and have concluded that the disclosure controls and procedures as of June 29, 2003 are effective in timely alerting them to material information relating to the Company required to be included in its SEC periodic filings.

Subsequent to thatIn connection with its evaluation there wereduring the quarterly period ended June 29, 2003, the Company has made no significant changeschange in ourthe Company’s internal controls over financial reporting that has materially affected or in other factors that could significantlyis reasonably likely to materially affect these controls.the Company’s internal controls over financial reporting. There also were no significant deficiencies or material weaknesses identified for which corrective actions needed to be taken.

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PART II OTHER INFORMATION

Item 4. Submission of Matters to a Vote of Security Holders

This information was provided in Teledyne Technologies’ First Quarter 2003 Annual Meeting of Stockholders (the “Annual Meeting”) was heldForm 10-Q under Part II Item 4, filed on April 23,May 14, 2003. The following actions were taken at the Annual Meeting, for which proxies were solicited pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended: