10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended April 1, 2001

OR

[   ] 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

(Exact name of registrant as specified in its charter)

Delaware	25-1843385
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

2049 Century Park East, Suite 1500 Los Angeles, California	90067-3101
(Address of principal executive offices)	(Zip Code)

(310) 277-3311
(Registrant’s telephone number, including area code)

_____________________

          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]     No  [   ]

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

Class	Outstanding at April 1, 2001
Common Stock, $.01 par value per share	31,669,968 shares

TABLE OF CONTENTS

Part I Financial Information
	Item 1. Financial Statements
		Consolidated Condensed Balance Sheets
		Consolidated Condensed Statements of Income
		Consolidated Condensed Statements of Cash Flows
		Notes to Consolidated Condensed Financial Statements
	Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
	Item 3. Quantitative and Qualitative Disclosures About Market Risk
Part II Other Information
	Item 2. Changes in Securities and Use of Proceeds
	Item 6. Exhibits and Reports on Form 8-K
EXHIBIT 10

TELEDYNE TECHNOLOGIES INCORPORATED AND SUBSIDIARIES

TABLE OF CONTENTS

			PAGE
Part I	Financial Information			2
	Item 1.	Financial Statements		2
		Consolidated Condensed Balance Sheets — April 1, 2001 and December 31, 2000		2
		Consolidated Condensed Statements of Income — Three months ended April 1, 2001 and April 2, 2000		3
		Consolidated Condensed Statements of Cash Flows — Three months ended April 1, 2001 and April 2, 2000		4
		Notes to Consolidated Condensed Financial Statements		5
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		10
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk		15
Part II	Other Information			15
	Item 2.	Changes in Securities and Use of Proceeds		15
	Item 6.	Exhibits and Reports on Form 8-K		15

1

PART I   FINANCIAL INFORMATION

Item 1.   Financial Statements

TELEDYNE TECHNOLOGIES INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
APRIL 1, 2001 AND DECEMBER 31, 2000
(Amounts in millions, except share amounts)

			April 1,		December 31,
			2001		2000
			(Unaudited)
Assets
Current Assets
	Cash and cash equivalents		$	4.6	$	14.9
	Receivables, net			120.9		118.5
	Inventories, net			81.3		65.2
	Deferred income taxes, net			13.1		16.9
	Prepaid income taxes			13.6		1.2
	Prepaid expenses, note receivable and other			6.5		6.1
		Total Current Assets		240.0		222.8
Property, plant and equipment, at cost, net of accumulated depreciation and amortization of $116.0 at April 1, 2001 and $111.8 at December 31, 2000				78.2		74.0
Deferred income taxes, net				25.8		27.0
Cost in excess of net assets acquired, net				7.4		7.6
Other assets				23.1		19.5
Total Assets			$	374.5	$	350.9
Liabilities and Stockholders’ Equity
Current Liabilities
	Accounts payable		$	56.7	$	58.7
	Accrued liabilities			54.0		56.5
		Total Current Liabilities		110.7		115.2
Long-term debt				27.7		—
Net unrecognized actuarial gains on pension obligation				2.7		5.2
Accrued postretirement benefits				30.8		31.2
Other				33.1		36.2
Total Liabilities				205.0		187.8
Stockholders’ Equity
	Common stock, $0.01 par value; outstanding shares 31,669,968 at April 1, 2001 (net of 3,576 treasury shares) and 31,586,735 at December 31, 2000			0.3		0.3
	Additional paid-in capital			125.7		124.8
	Retained earnings			42.8		37.9
	Accumulated other comprehensive income			0.7		0.1
	Total Stockholders’ Equity			169.5		163.1
Total Liabilities and Stockholders’ Equity			$	374.5	$	350.9

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

2

TELEDYNE TECHNOLOGIES INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED APRIL 1, 2001 AND APRIL 2, 2000
(Unaudited — Amounts in millions, except per-share amounts)

		First Quarter
		2001		2000
Sales		$	189.7	$	195.4
Costs and expenses
	Cost of sales		146.3		140.5
	Selling, general and administrative expenses		35.3		36.1
			181.6		176.6
Operating profit			8.1		18.8
	Interest and debt expense, net		0.3		1.8
	Other income		0.1		0.1
Earnings from continuing operations before income taxes			7.9		17.1
	Provision for income taxes		3.1		6.8
Income from continuing operations			4.8		10.3
	Discontinued operations, net of tax		—		(0.1	)
Net Income		$	4.8	$	10.2
Diluted earnings per common share:
	Continuing operations	$	0.15	$	0.38
	Discontinued operations		—		—
Diluted earnings per common share		$	0.15	$	0.38
Weighted average diluted common shares outstanding			32.5		27.1

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

3

TELEDYNE TECHNOLOGIES INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED APRIL 1, 2001 AND APRIL 2, 2000
(Unaudited — Amounts in millions)

				First Quarter
				2001			2000
CASH FLOW FROM OPERATING ACTIVITIES
	Net income from continuing operations			$	4.8		$	10.3
	Adjustments to reconcile net income to net cash from operating activities:
			Depreciation and amortization		5.4			4.1
			Deferred income taxes		5.0			(2.6	)
	Changes in operating assets and liabilities:
		Increase in accounts receivables			(2.4	)		(11.7	)
		Increase in inventories			(16.1	)		(0.1	)
		Increase in prepaid expenses and other assets			(0.5	)		—
		Increase (decrease) in accounts payable			(2.0	)		3.6
		Increase (decrease) in accrued liabilities			(2.5	)		6.7
		(Increase) decrease in prepaid income taxes, net			(12.3	)		4.7
		Decrease in other long-term liabilities			(2.2	)		—
		Decrease in accrued pension obligation			(2.5	)		(2.3	)
		Decrease in accrued postretirement benefits			(0.5	)		(0.3	)
		Other operating, net			0.8			(0.7	)
					(25.0	)		11.7
			Net cash flow from discontinued operations		(0.9	)		2.4
			Net cash (used) provided by operating activities		(25.9	)		14.1
CASH FLOW FROM INVESTING ACTIVITIES
	Purchases of property, plant and equipment				(9.4	)		(3.1	)
	Other investing, net				(3.6	)		(0.3	)
					(13.0	)		(3.4	)
			Investing cash flow from discontinued operations		—			(0.4	)
			Net cash used by investing activities		(13.0	)		(3.8	)
CASH FLOW FROM FINANCING ACTIVITIES
	Net proceeds from (repayments of) revolving credit agreement				27.7			(13.5	)
	Proceeds from issuance of common stock				0.9			0.7
			Net cash provided (used) by financing activities		28.6			(12.8	)
Decrease in cash and cash equivalents					(10.3	)		(2.5	)
Cash and cash equivalents—beginning of period					14.9			7.1
Cash and cash equivalents—end of period				$	4.6		$	4.6

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

4

TELEDYNE TECHNOLOGIES INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

April 1, 2001

1.   General

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 31, 2000 (2000 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 Teledyne Technologies’ consolidated financial position as of April 1, 2001, and the consolidated results of operations and cash flows for the quarterly period then ended. The results of operations and cash flows for the period ended April 1, 2001, 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 2001 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).

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 which was previously reported as part of the Aerospace Engines and Components segment. The consolidated financial statements have been restated to reflect Teledyne Cast Parts as a discontinued operation. Sales for Teledyne Cast Parts were $8.1 million for the first quarter of 2000.

2.   Comprehensive Income

Teledyne Technologies’ comprehensive income is composed of net income and foreign currency translation adjustments. Teledyne Technologies’ comprehensive income was $5.4 million and $10.0 million for the first quarter of 2001 and 2000, respectively.

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3.   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):

		First Quarter
		2001		2000
BASIC EARNINGS PER SHARE
	Income from continuing operations applicable to common stock	$	4.8	$	10.3
	Discontinued operations, net of tax		—		(0.1	)
	Net income applicable to common stock	$	4.8	$	10.2
Weighted average common shares outstanding			31.6		26.8
BASIC EARNINGS PER COMMON SHARE:
	Continuing operations	$	0.15	$	0.38
	Discontinued operations		—		—
Basic earnings per common share		$	0.15	$	0.38
DILUTED EARNINGS PER SHARE
	Income from continuing operations applicable to common stock	$	4.8	$	10.3
	Discontinued operations, net of tax		—		(0.1	)
	Net income applicable to common stock	$	4.8	$	10.2
Weighted average common shares outstanding			31.6		26.8
Dilutive effect of exercise of options outstanding			0.9		0.3
Weighted average diluted common shares outstanding			32.5		27.1
DILUTED EARNINGS PER COMMON SHARE:
	Continuing operations	$	0.15	$	0.38
	Discontinued operations		—		—
Diluted earnings per common share		$	0.15	$	0.38

4.   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. There were no cash equivalents at April 1, 2001. Cash equivalents totaled $11.6 million at December 31, 2000.

6

5.   Inventories

Inventories are primarily valued under the LIFO method. The valuation of LIFO inventory for interim periods is based on management’s estimates of year-end inventory levels and costs. Inventories consist of the following (amounts in millions):

Balance at	April 1, 2001			December 31, 2000
Raw materials and supplies	$	32.9		$	29.6
Work in process		67.2			59.4
Finished goods		15.4			12.1
		115.5			101.1
Progress payments		(3.2	)		(4.0	)
LIFO reserve		(31.0	)		(31.9	)
Total inventories, net	$	81.3		$	65.2

6.   Supplemental Balance Sheet Information

Accrued liabilities included salaries and wages of $25.9 million and $27.4 million at April 1, 2001 and December 31, 2000, respectively. Other long-term liabilities included reserves for self-insurance, the long-term portion of product recall and environmental reserves.

7.   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 15 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 2000 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, 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.

7

At April 1, 2001, the Company’s reserves for environmental remediation obligations totaled approximately $2.3 million, of which approximately $549 thousand were included in other current liabilities. The Company is evaluating 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. However, 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, although 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.

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. Generally, since such cases are under seal, the Company does not in all cases 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.

In connection with the spin-off, ATI received a tax ruling from the Internal Revenue Service stating in principle that the spin-off will be tax free to ATI and ATI’s stockholders. In July 2000, the Internal Revenue Service agreed to a modification of the tax ruling issued in connection with the spin-off of Teledyne Technologies from ATI. The revised ruling required Teledyne Technologies to complete a smaller public offering of its outstanding Common Stock. In the third quarter of 2000, Teledyne Technologies issued 4,605,000 shares of its Common Stock in an underwritten public offering for net proceeds of approximately $84.0 million to fulfill a material requirement of the ruling. The continuing validity of the IRS tax ruling is subject to the use of the proceeds from the public offering for research and development and related capital projects, for the further development of manufacturing capabilities and for acquisitions and/or joint ventures. At April 1, 2001, $24.1 million of the net proceeds remained to be used.

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.

8

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 product liability, patent infringement, commercial, 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, although 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.

8.   Industry Segments

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

		First Quarter
		2001			2000
Sales:
Electronics and Communications		$	89.1		$	85.7
Systems Engineering Solutions			61.8			57.2
Aerospace Engines and Components(a)			38.8			52.5
	Total sales	$	189.7		$	195.4
Operating Profit:
Electronics and Communications		$	6.1		$	9.5
Systems Engineering Solutions			4.5			5.6
Aerospace Engines and Components(a)			0.9			7.6
	Segment operating profit		11.5			22.7
Corporate expense			(3.4	)		(4.1	)
Interest and debt expense, net			(0.3	)		(1.8	)
Other income			0.1			0.3
Income from continuing operations before income taxes			7.9			17.1
Provision for income taxes			3.1			6.8
Income from continuing operations			4.8			10.3
Discontinued operations, net of tax			—			(0.1	)
Net income		$	4.8		$	10.2

(a) The 2000 results were restated to reflect Teledyne Cast Parts as a discontinued operation.

9

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

Results of Operations

Teledyne Technologies’ first quarter 2001 sales were $189.7 million, compared with sales of $195.4 million for the same period in 2000. Income from continuing operations was $4.8 million ($0.15 per diluted share) for the first quarter, compared with income from continuing operations of $10.3 million ($0.38 per diluted share) for the first quarter of 2000. Net income for the first quarter of 2001 was $4.8 million ($0.15 per diluted share), compared with net income of $10.2 million ($0.38 per diluted share) for the first quarter of 2000.

The decrease in sales reflected significantly lower sales in the Aerospace Engines and Components segment, partially offset by higher sales in both the Electronics and Communications and Systems Engineering Solutions segments.

The decrease in earnings in the first quarter of 2001, compared with the first quarter of 2000, reflected lower operating profit in each operating segment. Net pension income for the first quarter of 2001 was $2.4 million, compared with net pension income of $2.2 million for the first quarter of 2000. Earnings from continuing operations before interest, taxes, depreciation and amortization (EBITDA) was $13.6 million and $23.0 million for the first quarters of 2001 and 2000, respectively.

Cost of sales as a percentage of sales was higher in the first quarter of 2001, compared with the first quarter of 2000, for both the Electronics and Communications and the Aerospace Engines and Components segments. The higher cost of sales percentage for the Electronics and Communications segment reflected spending associated with optoelectronic and wireless growth initiatives. The higher cost of sales percentage for the Aerospace Engines and Components segment reflected the impact of semi-fixed and fixed overhead costs with significantly lower sales and sales mix differences. The Company’s effective tax rate for both the first quarter of 2001 and first quarter of 2000 was 39.7 percent.

Teledyne Technologies intends to continue to follow its long-term strategy of maintaining leadership positions in niche markets while investing in selected growth initiatives; however, it is responding to the current economic environment by accelerating efforts to reduce Teledyne Technologies overall cost structure, monitoring asset utilization, and striving for improved cash management. Teledyne Technologies has reduced its total workforce by 300 people, including salaried and hourly employees, or approximately 5%.

Other specific actions that the Company intends to undertake to improve operating performance include:

• Exiting non-core, under-performing businesses

• Consolidating and realigning operations and management

• Increasing the use of lean manufacturing cells

• Improving supply chain management

• Making additional workforce reductions

As a result of these actions, Teledyne Technologies expects to record a pre-tax charge of approximately $5 million to $10 million in the second quarter of 2001.

In the Electronics and Communications segment the Company recently reduced headcount in certain electronics businesses that have been affected by current market conditions. In addition, Teledyne Technologies is reviewing capital spending plans and foresees opportunities for facility consolidations. Further, the Company plans to exit certain non-core product lines and drive productivity improvements across the segment.

In the Systems Engineering Solutions segment the Company continues to focus on core government services businesses. In the second quarter, Teledyne Technologies expects to close the sale of two non-core product lines within this segment. In addition, the Company continues to explore various strategic alternatives aimed at creating shareholder value with its Energy Systems business.

10

In the Aerospace Engines and Components segment the Company recently reduced headcount by 214 or approximately 21%. Teledyne Continental Motors’ piston engine business unit has introduced automated manufacturing cells that should permit production efficiencies as market conditions improve. Teledyne Continental Motors has also realigned its cost structure and is aggressively reducing controllable expenses.

Review of Operations:

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

		First Quarter
		2001		2000
Sales:
Electronics and Communications		$	89.1	$	85.7
Systems Engineering Solutions			61.8		57.2
Aerospace Engines and Components(a)			38.8		52.5
	Total sales	$	189.7	$	195.4
Operating Profit:
Electronics and Communications		$	6.1	$	9.5
Systems Engineering Solutions			4.5		5.6
Aerospace Engines and Components(a)			0.9		7.6
	Total segment operating profit	$	11.5	$	22.7

(a) The 2000 results were restated to reflect Teledyne Cast Parts as a discontinued operation.

Electronics and Communications

The Electronics and Communications segment first quarter sales were $89.1 million, up 4.0% from 2000 first quarter sales of $85.7 million. First quarter operating profit was $6.1 million, compared with $9.5 million in the first quarter of 2000. The first quarter of 2001 includes $5.1 million of costs associated with optoelectronic and wireless growth initiatives, while there was no similar impact in the first quarter of 2000.

First quarter sales, compared with the same period in 2000, grew in business and commuter aircraft communications equipment, microwave products, and optoelectronics partially offset by lower electronic manufacturing services sales. Orders for business and commuter aircraft communications equipment and microwave products remain strong. The Company continues to see weakness in demand for electronic manufacturing services and commercial electronic products, especially relays used in semiconductor test equipment. Operating profit reflects improvements in business and commuter aircraft communications equipment and microwave product sales partially offset by lower electronic manufacturing services sales.

Systems Engineering Solutions

The Systems Engineering Solutions segment first quarter sales were $61.8 million, up 8.0% from 2000 first quarter sales of $57.2 million. First quarter operating profit was $4.5 million, compared with $5.6 million in the first quarter of 2000.

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First quarter sales, compared with the same period in 2000, reflect growth in systems engineering integration, aerospace programs, energy systems and additional work with small businesses partially offset by continuing weak orders for our marine products for the petroleum exploration market. Operating profit reflects the sales differences and start-up costs and attendant inefficiencies within environmental programs, including the relocation of a lab. Additionally, operating profit for the first quarter of 2000 reflected a gain of $1.4 million in the Company’s chemical weapons demilitarization business related to additional program funding, which was partially offset by lower profit due to a writedown of approximately $0.9 million in our process control software business.

Aerospace Engines and Components

The Aerospace Engines and Components segment first quarter sales were $38.8 million, compared with $52.5 million in the first quarter of 2000. First quarter operating profit was $0.9 million, compared with $7.6 million in the first quarter of 2000.

First quarter sales, compared with the same period in 2000, reflect some growth in OEM engines. However, we continue to see significant weakness in the order levels for aftermarket piston engine and high-margin piston engine spare parts. Turbine engine sales are lower than the same period in 2000 due to, as previously disclosed, reduced spare part sales resulting from these parts no longer being on the military critical shortage list, reduced foreign demand for HARPOON missiles and reduced development work. Operating profit reflects the lower level of sales. Cost containment measures, including workforce reductions, have been made as a result of these reduced business levels.

Financial Condition, Liquidity and Capital Resources

Teledyne Technologies’ net cash used by operating activities from continuing operations was $25.0 million for the first quarter of 2001, compared with net cash provided of $11.7 million for the same period of 2000. The 2001 amount reflected lower net income, higher income tax payments due to the payment in 2000 of a one-month liability for the end of 1999 compared to the payment in 2001 for the final required tax payment for the twelve months of 2000 and higher inventory balances, partially offset by a lower increase in accounts receivable, compared to the first quarter of 2000. The $0.9 million in cash used by discontinued operations primarily reflected the payment of a purchase price adjustment as previously disclosed.

During the first quarter 2001, prepaid income taxes increased by $12.3 million, while during the first quarter of 2000 income taxes payable increased by $4.7 million due to the timing of required tax payments.

Working capital increased to $129.3 million at the end of the first quarter of 2001, compared with $107.6 million at the end of the 2000. The increase in working capital was primarily due to higher inventory balances and higher prepaid income taxes.

The higher balance in inventory reflected an increase in government orders with a resulting increase in inventory for the Electronics and Communications segment as well as inventory on hand in anticipation of orders that have been delayed or have not yet been received, in the Electronics and Communications and Aerospace Engines and Components segments, due to the current economic slowdown.

Teledyne Technologies’ net cash used by investing activities from continuing operations was $13.0 million and $3.4 million for the first quarter of 2001 and 2000, respectively, and was primarily for capital expenditures. Capital expenditures were $9.4 million for the first quarter of 2001, compared with $3.1 million for the first quarter of 2000. The first quarter of 2001 capital spending included $5.3 million of capital expenditures that were committed in 2000.

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Financing activities provided net cash of $28.6 million in the first quarter of 2001, compared with cash used of $12.8 million for the same quarter of 2000. The 2001 amount primarily reflected borrowings under the revolving credit agreement while the 2000 amount primarily reflected net payments against the revolving credit agreement.

Teledyne Technologies’ principal capital requirements are to fund working capital needs, capital expenditures and debt service requirements. 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 2001. Teledyne Technologies currently expects to spend approximately $30 million on its capital spending program in 2001.

A $200 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 April 1, 2001 Teledyne Technologies had $27.7 million outstanding under the facility. Excluding interest and fees, no payments are due under the credit facility until the facility terminates. Available borrowing under the credit facility was $172.3 million at April 1, 2001, compared with $200 million at year end 2000. The credit agreement requires the Company to comply with various financial covenants and restrictions. It prohibits the declaration of dividends or making other specified payments in amounts exceeding 25 percent of cumulative net income after the effective date of the credit agreement (which was $10.7 million as of April 1, 2001).

In connection with the spin-off, ATI received a tax ruling from the Internal Revenue Service stating in principle that the spin-off will be tax free to ATI and ATI’s stockholders. In July 2000, the Internal Revenue Service agreed to a modification of the tax ruling issued in connection with the spin-off of Teledyne Technologies from ATI. The revised ruling required Teledyne Technologies to complete a smaller public offering of its outstanding Common Stock. In the third quarter of 2000, Teledyne Technologies issued 4,605,000 shares of its Common Stock in an underwritten public offering for net proceeds of approximately $84.0 million to fulfill a material requirement of the ruling. The continuing validity of the IRS tax ruling is subject to the use of the proceeds from the public offering for research and development and related capital projects, for the further development of manufacturing capabilities and for acquisitions and/or joint ventures. At April 1, 2001, $24.1 million of the net proceeds remained to be used.

In June 1998, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 133—“Accounting for Derivative Instruments and Hedging Activities,” which establishes accounting and reporting standards for derivative instruments and hedging activities. It requires that an entity recognize all derivatives in the statement of financial position and measure those instruments at fair value. In 1999, the FASB issued SFAS No. 137—“Accounting for Derivative Instruments and Hedging Activities—Deferral of the Effective Date of FASB Statement No. 133—an amendment of FASB Statement No. 133,” which defers the effective date of SFAS No. 133 for one year. In June 2000, the FASB issued SFAS No. 138—“Accounting for Certain Derivative Instruments and Certain Hedging Activities—an amendment of SFAS No. 133,” which amends the accounting and reporting standards of SFAS No. 133 for certain derivative and hedging activities. Teledyne Technologies’ adoption of SFAS No. 133 as amended, effective January 1, 2001, did not have a material impact Teledyne Technologies’ financial position or results of operations. See “Item 3 Quantitative and Qualitative Disclosures About Market Risk”.

Outlook

The Company expects stable, but modest, revenue growth in the majority of our government businesses that represent approximately 45% of total revenue. In addition, we do not expect current market conditions to significantly affect the outlook for certain long-cycle commercial electronics businesses, such as aircraft communications systems.

Teledyne Technologies continues to see the overall weakness in the economy affecting our near-term revenue and profit performance in certain electronics markets. Based on a lack of revenue visibility and recent comments by several customers in the semiconductor and telecommunication industries, we are not forecasting any improvement and early signs indicate some deterioration in the demand for our products.

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The widely reported downturn in demand for optical components is expected to negatively impact our contract manufacturing sales of legacy products for the balance of 2001. Reduced demand is increasingly causing our customers to cancel or delay orders, especially for components used in lower data rate applications. Based on our current backlog, we expect optoelectronics revenue in 2001 to be approximately $15 million to $20 million. Given the slower than previously anticipated revenue ramp-up, the Company does not expect break-even operating profit for its optoelectronics business unit until the first half of 2002. Teledyne Technologies remains cautiously optimistic about the long-term potential of this market because our customers are increasingly engaging us for the development and prototype manufacturing of new OC-192 and OC-768 components. Production for some of these next-generation products is anticipated to increase in the coming quarters.

Teledyne Technologies currently forecasts year-over-year revenue growth in 2001 of between 4% and 8% for our Electronics and Communications segment and revenue growth of between 3% and 5% for our Systems Engineering Solutions segment. However, based on the current level of orders for aftermarket piston engines and high-margin piston engine spare parts, coupled with the previously announced events in the turbine engine market, we forecast a year-over-year revenue decline of 15% to 25% for our Aerospace Engines and Components segment.

Although the outlined restructuring activities should improve profitability in each of the following quarters, we currently do not expect operating profit to improve at the rates previously forecast. Based on our current outlook, we now estimate that second quarter and full year 2001 earnings per share, excluding one-time charges, will be in the range of approximately $0.16 to $0.18 and $0.70 to $0.80, respectively.

Safe Harbor 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 investments and strategic plans. Actual results could differ materially from these forward-looking statements. Many factors, including the extent and timing of orders and acceptance of fiber optic and other products by customers (including service providers), continued outsourced manufacturing of optoelectronic products, the extent and timing of cost reduction efforts and any facility consolidations, funding and continuation of government programs and economic and political conditions, could change the anticipated results. The individual actions underway to improve operating performance are subject to many variables as well. No assurances can be given as to the Company’s ability to execute timely all or some of these actions or the aggregate result. 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’ 2000 Annual Report on Form 10-K under the caption “Risk Factors”. The Company assumes no duty to update forward-looking statements.

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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’ 2000 Annual Report on Form 10-K. At April 1, 2001, there were no hedging contracts outstanding.

PART II   OTHER INFORMATION

Item 2.   Changes in Securities and Use of Proceeds

In the third quarter of 2000, Teledyne Technologies received net proceeds of approximately $84.0 million from an underwritten public offering of 4,605,000 shares of its Common Stock. Such offering had been required to fulfill a material requirement of the IRS ruling issued to ATI in connection with the spin-off. The effective date of the applicable registration statement (No. 333-41982) was August 16, 2000.

In the 2000 Form 10-K, the Company described its use of the net proceeds through December 31, 2000 and stated $38.9 million of the net proceeds remained to be used at December 31, 2000. Consistent with the IRS ruling, in the first quarter of 2001, Teledyne Technologies spent: $14.4 million for product development and enhancements and process improvements; $9.4 million for capital and facility improvements; and $2.9 million for acquisitions and/or joint ventures. These spending levels have exceeded the Company’s average quarterly historical expenditures of $14.8 million for these types of uses. The increased spending level was funded from the net proceeds of the offering. At April 1, 2001, $24.1 million of the net proceeds remain to be used.

Item 6.   Exhibits and Reports on Form 8-K

     (a) Exhibits

10 Amended and Restated Employment Agreement dated April 25, 2001 between the Company and Robert Mehrabian*

* Denotes management contract or compensatory plan.

     (b) Reports on Form 8-K

          Teledyne Technologies filed no Reports on Form 8-K during the quarter ended April 1, 2001.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	TELEDYNE TECHNOLOGIES INCORPORATED
DATE: May 11, 2001	By:	/s/  Robert J. Naglieri
		Robert J. Naglieri, Senior Vice President and Chief Financial Officer

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EXHIBIT INDEX

EXHIBIT No.	Description
10*	Amended and Restated Employment Agreement dated April 25, 2001 between the Company and Robert Mehrabian

* Filed herewith

EX-10

EXHIBIT 10.

AMENDED AND RESTATED
EMPLOYMENT AGREEMENT

      THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Employment Agreement”) is made and entered into as of the _____ day of April, 2001 by and between Teledyne Technologies Incorporated, a Delaware corporation with its executive offices at 2049 Century Park East, 15th Floor, Los Angeles, California 90067-3101 (the “Company”), and Dr. Robert Mehrabian, an individual residing at 5388 Baseline Avenue, Santa Ynez, California 93460 (the “Executive”).

RECITALS

      WHEREAS, this Amended and Restated Employment Agreement is an amendment and restatement of an Employment Agreement entered into on December 21, 1999 between Teledyne Technologies Incorporated and the Executive and is intended to reflect the additional duties and responsibilities assumed by the Executive subsequent to December 21, 1999 as well as those changes in the Company’s compensation arrangements applicable to the Executive since that date; and

      WHEREAS, the Company hired the Executive and the Executive agreed to serve as the Company’s President and Chief Executive Officer (“CEO”) and the Company has subsequently elect the Executive and the Executive has agreed to serve as its Chairman of the Board of Directors; and

      WHEREAS, the Personnel and Compensation Committee of the Board of Directors (the “Committee”) authorized the Company to enter into and the Company and the Executive entered into a Change in Control Severance Agreement dated as of December 21, 1999 (the “CIC Agreement”); and

      WHEREAS, the CIC Agreement provides for payment of severance benefits if the Executive’s employment is terminated under circumstances described in the CIC Agreement; and

      WHEREAS, the Company wishes to supplement the CIC Agreement with respect to the Executive by specifying in the Employment Agreement and as hereby amended and restated the Executive’s titles and the types and rates of compensation to which he is entitled during his employment with the Company.

      NOW, THEREFORE, in consideration of the respective covenants and agreements hereinafter set forth, and intending to be legally bound, the parties hereto agree as follows:

      1. Term of Agreement. This Employment Agreement, as amended and restated, shall be effective as of the date first above written and shall continue in effect until December 31, 2001, unless extended as described in the next sentence. Effective as of November 1, 2001 and, if previously extended, each November 1st thereafter, the term of this Employment Agreement shall be extended for one additional year unless one party shall give written notice to the other on or before October 31, 2001 or, if previously extended, the then next October 31st that the term

will not be thereafter extended. If such notice is given by either party, the Executive may retire on the first December 31st following receipt of such notice.

      2. Employment Agreement to Supplement the CIC Agreement. This Employment Agreement, as amended and restated, shall supplement the CIC Agreement and the terms and conditions of this Employment Agreement are not intended to alter or vary the terms and conditions of the CIC Agreement. The intention of this Employment Agreement is to memorialize certain terms and conditions of the employment of the Executive, which are particular to him and not specified in the CIC Agreement. Except as specifically set forth herein, initially capitalized terms shall have the meaning ascribed thereto under the CIC Agreement which is incorporated herein and made a part hereof as if set forth at length.

      3. Position and Duties. The Company shall employ Executive and the Executive shall serve as the Chairman, President and CEO of the Company and shall have primary responsibility to manage and direct the day-to-day business of the Company including the generation of income and control of expenses. Subject to the approval of the Board of Directors of the Company, the Executive may serve as a director of charitable organizations and/or for profit corporations, which do not compete with the Company or any of its subsidiaries and affiliates. The Company acknowledges that Executive serves as a director of Mellon Financial Corporation and PPG Industries, Inc. as of the date hereof and agrees that the Executive may continue to serve as a director of those corporations.

      4. Compensation. The Executive shall receive the following items of compensation at the rates thereof set forth below.

      a. Base Salary. During the Term, the Company shall pay Executive a base salary at the annualized rate of Five Hundred Thousand ($565,000) Dollars (“Base Salary”). Base Salary shall be paid periodically in accordance with normal Company payroll practices applicable to executive employees.

      b. Participation in Compensation Plans and Programs. In accordance with the respective terms and conditions of the respective plans and programs, the Executive shall be entitled to participate in the following compensation plans and programs:

1.	AIP. In the AIP at an annual opportunity at 80% of Base Salary if targets are reached at 100%, or such greater percentage if provided in the AIP for any year.
2.	PSP. In the PSP at an opportunity equal to 150% of Base Salary if targets are reached at 100%, or such greater percentage if provided in the PSP for any measurement period.
3.	Restricted Stock Award Program (RSAP). In the RSAP with annual grants of restricted stock equal to at least 30% of Base Salary as of the date of this grant subject to meeting targets set forth in the RSAP.
4.	SARP. In the SARP at the level approved by the Committee. In the event Allegheny Technologies Incorporated alters to the benefit of participants the

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	terms and conditions of its SARP, to the extent those alterations are not made applicable to the Executive by the terms of those alterations, the Company shall make arrangements so that the Executive is made whole for the benefits of such alterations.
5.	Stock Option. In addition to the initial award of 300,000 stock options made as of November 29, 1999, eligibility to receive future grants of options in a number determined by the Personnel and Compensation Committee of the Board of Directors, each subject to the terms and conditions of the Stock Option Incentive Plan.

      5. Employee Benefits. The Executive shall participate in each qualified, non-qualified and supplemental employee benefit, executive benefit, fringe benefit and perquisite plan, policy or arrangement of the Company applicable to executive level employees, including, but not limited to, expense reimbursement policies, a country club and city club membership, and use of an automobile, in each case, in accordance with the terms and conditions thereof (including tax equalization payments to the extent provided with respect to such plans by Allegheny Teledyne Incorporated on or prior to November 29, 1999) as in effect from time to time. Nothing in this Employment Agreement shall be construed as preventing the amendment or termination of any such plan, policy or arrangement by the Company (including those referred to in paragraph 4.b. hereof) so long as such amendment or termination affects all executive employees of the Company then participating.

      6. Non-Qualified Pension Arrangement. In addition to the employee benefits described in Section 5, the Company will pay to the Executive (or his designee if amounts are payable after the death of the Executive) following his Retirement (as defined below), as payments supplemental to any accrued pension under the Company’s qualified pension plan, an annual amount, paid in equal monthly installments, equal to 50% of his Base Compensation at the rate in effect on the date of his Retirement. Such annual amount shall be paid each year for a number of years following his Retirement equal to the number of whole and fractional years of service, not in excess of ten (10), the Executive has rendered to the Company (including the period from August, 1997 through and including November, 1999 rendered as service to the Company’s predecessor, Allegheny Teledyne Incorporated). For purposes of Section 6 of this Employment Agreement and without effect upon whether the Executive is deemed to be retired under the CIC Agreement, the Executive will be deemed to have a Retirement upon his separation from service with the Company for any reason other than for Cause.

      7. Binding Agreement. The Company will use its best efforts to require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise to all or substantially all of the business and/or assets of the Company) to expressly assume and agree to perform this Employment Agreement and the CIC Agreement in the same manner and to the same extent that the Company would be required to perform them if no such succession had taken place. Failure of the Company to obtain such assumption and agreement prior to the effectiveness of any such succession shall be deemed to be a termination without Cause for purposes of this Employment Agreement and the CIC Agreement. For purposes of implementing the foregoing, the date on which any such succession becomes effective shall be the Date of Termination.

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      8. Notices. Any notice required or permitted under this Employment Agreement shall be given in writing and shall be deemed to have been effectively made or given if personally delivered at the address first above written or such other address as may be given by one party to the other.

      9. Withholding. The Company shall be entitled to withhold, or cause to be withheld, from payment any amount payable under this Employment Agreement of any payroll and withholding taxes required by law, as determined by the Company in good faith.

      10. Governing Law. This Employment Agreement shall be construed, interpreted, and governed in accordance with the laws of the State of California without reference to rules relating to conflict of law.

      11. Headings. The headings of sections are included solely for convenience of reference and shall not control the meaning or interpretation of any of the provisions of this Employment Agreement.

      12. Counterparts. This Employment Agreement may be executed by either of the parties hereto in counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute one and the same instrument.

      IN WITNESS WHEREOF, the parties have executed this Amended and Restated Employment Agreement as of the day and year first above written.

EXECUTIVE
By:	/s/ ROBERT MEHRABIAN
	Robert Mehrabian
TELEDYNE TECHNOLOGIES INCORPORATED
By:	/s/ CHARLES J. QUEENAN, JR.

    Name:  Charles J. Queenan, Jr.

 Title:  Chairman, Personnel and Compensation Committee

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