Teledyne Annual Report 2000

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FY2000 Annual Report · Teledyne

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ON THE COVER:

THE COLOR SPECTRUM DEPICTED ON THE COVER REPRESENTS THE

ESSENCE OF THE FIBER OPTICS INDUSTRY. THIS YEAR’S TELEDYNE

TECHNOLOGIES ANNUAL REPORT FEATURES A STORY ON TELEDYNE

OPTOELECTRONICS, A NEWLY FORMED OPERATING UNIT WITHIN THE

TELEDYNE ELECTRONIC TECHNOLOGIES DIVISION. THE PHOTO ABOVE

SHOWS A COMPONENT THAT IS USED IN THE F-22 JET FIGHTER.

2000 Highlights

Year 2000 Stock Price Performance

T E L E D Y N E T E C H N O L O G I E S I N C O R P O R A T E D

$30

Dec. 99

March 00

June 00

Sept. 00

Dec. 00

Financial Information (1)
For the 2000, 1999 and 1998 fiscal years
(Amounts in millions, except per-share amounts)

Sales

Net income from continuing operations

before opto/wireless costs (2)

Opto/wireless costs, net of tax
Net income from continuing operations (2)

Diluted earnings per-share from continuing
operations before opto/wireless costs (2)

Diluted earnings per-share from continuing

operations (2)

Weighted average diluted common

shares outstanding

2 0 0 0

1 9 9 9

1 9 9 8

$ 795.1

761.4

$ 733.0

$
$

46.1

5.6
40.5

40.9

—
40.9

$ 37.5

—
$ 37.5

1.56

$ 1.50

$ 1.33

1.37

$ 1.50

$ 1.33

29.5 (3)

27.3

28.1

(1) On a proforma basis and restated to reflect Teledyne Cast Parts as a discontinued operation
(2) Excludes after tax charges of $8.6 million and $1.8 million in 2000 and 1999, respectively, for product recall

reserves taken in 2000 and 1999 and other charges taken in 2000

(3) Reflects the impact of 4.6 million shares of common stock issued in the third quarter in connection with a required

public offering

Electronics and Communications Segment
2000 vs. 1999 Revenue Growth

Sales by Segment
(Dollars in millions)

12%

45%

25%

30%

Electronics and
Communications

Systems Engineering
Solutions

Aerospace Engines
and Components

$360

$235

$200

T E L E D Y N E T E C H N O L O G I E S I N C O R P O R A T E D

To our stockholders

Robert J. Naglieri
Senior Vice President
and Chief Financial Officer

Robert Mehrabian
Chairman, President and
Chief Executive Officer

John T. Kuelbs
Senior Vice President,
General Counsel
and Secretary

he year 2000, our first full year of operation as an independent company, has been

an exciting and eventful one. Teledyne Technologies has continued directions begun in

1999, at the same time developing strategies for enhanced shareholder value.

We made significant progress in our strategy of investing in our high-growth

communications businesses, while continuing to expand and improve the performance

of our profitable niche market businesses.

In the third quarter, we successfully completed our public offering and fulfilled the

company’s equity issuance requirement related to our spin-off.

We ended the year strategically and financially well positioned to take advantage of the

opportunities in our high-growth communications markets.

Following our spin-off in November 1999, we began implementing a number of strategies designed

to increase revenue growth across our businesses. Besides making substantial investments in

certain growth platforms, we also changed management incentives to emphasize revenue growth,

in addition to profitability, in order to boost our company’s profitable growth.

These programs have already begun to have a positive impact. After a few years of flat

revenue, our Electronics and Communications businesses, as a whole, achieved organic revenue

growth of 5.8% for the year. Compared to prior year periods, quarterly revenue growth in our

Electronics and Communications segment increased in each successive quarter, ending fiscal 2000

with an increase of 10.5% in the fourth quarter.

T E L E D Y N E T E C H N O L O G I E S I N C O R P O R A T E D

Creating A New Growth Platform: Teledyne OptoElectronics

During the year, we began a number of initiatives designed to increase our growth and broaden our

commercial market base. After identifying certain growth platforms, we made a strategic decision to

significantly invest in these areas in order to expand our product offerings, recognizing there would

be a near-term impact on earnings. Specifically, we decided to pursue a strategy of supporting

optoelectronic component OEM customers with their design and manufacturing needs for both

current and next generation products.

The size of the commercial optoelectronics market is growing, and we believe our existing

capabilities are well suited to position us as a leader in this market. Our capabilities include:

Decades worth of experience in high-reliability microelectronics packaging and high-speed

electronics design and manufacturing.

Highly automated, high-reliability microelectronics manufacturing/packaging, gained from

years of producing microelectronic modules for medical applications.

Over ten years of experience in manufacturing complex optoelectronic modules for

aerospace and military applications.

To achieve our goal of serving this growing market, in early March we established a new operating

unit, Teledyne OptoElectronics.

To enhance our existing capabilities for higher-volume production of optoelectronic modules for

the commercial telecommunications market, we made substantial capital investments in state-of-

the-art automatic production and test equipment, and have dedicated a team of highly talented

engineers and technicians to expand our microelectronics expertise.

This initiative has already begun to pay off with the award of contracts for the production and

design of optoelectronic modules from three major component OEMs. As we further develop our

business relationships with our customers, we look forward to increasing our participation in the

commercial optoelectronics markets.

Expanding Opportunities In Existing Markets

We continue to emphasize our goal of becoming the best possible operating company across our

niche market businesses. We are working diligently to expand these businesses by offering

innovative new products and services, while continuously improving our manufacturing and cost

control programs.

T E L E D Y N E T E C H N O L O G I E S I N C O R P O R A T E D

One of our strategies for achieving this is to reposition our wireless communication

businesses to include subsystems in addition to the component-level electronics we currently

supply. By adding capital resources and key engineering talent in this area, we recently received

our first order for wireless transceivers for commercial telecommunications applications.

In 2000, we also extended our position in airborne communication and data acquisition

systems through the initial rollout of our Wireless Groundlink™ service, which we plan to test

aboard two major commercial airlines in 2001. The Wireless Groundlink™ service allows airlines

to transfer large amounts of flight data over wireless networks in real time improving

maintenance scheduling and limiting downtime for their commercial aircraft.

Our Systems Engineering Solutions segment, Teledyne Brown Engineering, Inc., has long

been recognized as a leader in developing engineering solutions for highly complex defense

applications. In 2000, we established a separate and wholly owned subsidiary, Teledyne

Solutions, Inc., so that we could serve as a subcontractor to the Boeing Company on work

being performed for the Ballistic Missile Defense Organization, while continuing to provide

technical assistance to the Army’s Space and Missile Command in the same general area.

Through Teledyne Brown Engineering, we also extended our 20-year involvement with

NASA. As astronauts completed work on the various construction stages of the International

Space Station, we began providing continuous support for the astronauts and scientists living

and working on board.

Our Energy Systems unit, also part of our Systems Engineering Solutions segment,

launched five new products during the year, including a Polymer Electrolyte Membrane (PEM)

fuel cell stack. We believe that our historical presence in both the on-site hydrogen and power

micro generation markets, along with our new product development efforts, provides an

attractive opportunity to create significant value.

Our Aerospace Engines and Components segment made major progress in creating a

consolidated manufacturing excellence center for the production of both piston engines and

turbine engines.

In the piston engine market we made strides in new product development. Our innovative

Powerlink™ FADEC (Full Authority Digital Engine Control) was awarded a landmark FAA
certification for our four-cylinder Continental IOF240-B engine. As other certifications occur this

system can be deployed on new engines, as well as to retrofit existing engines. This was an

achievement for our Piston Engine unit because of the significant business disruption they

experienced associated with the piston engine recall (for which we took a pretax charge of

$12 million). Fortunately, this recall effort is substantially complete.

T E L E D Y N E T E C H N O L O G I E S I N C O R P O R A T E D

Maintaining Focus Through Selective Divestitures

To best maintain a focus on strategic growth initiatives, and to expand and improve our profitable

niche market businesses, we plan to exit those businesses or product lines in markets that are

unrelated and/or do not have a strong position within their niche markets.

To this end, we sold Teledyne Cast Parts (our sand and investment casting business), which had

been part of our Aerospace Engines and Components segment, in the fourth quarter of last year. We

are also currently in the process of exiting certain product lines within our Systems Engineering

Solutions segment that are not related to the core government services businesses within this segment.

Our Course For The Future

Our ultimate goal in all our efforts is to create and maintain a disciplined operating company with an

emphasis on technological excellence and lean manufacturing. We also intend to remain financially

strong in order to pursue high growth market opportunities, both organically and through

acquisitions. With that said, 2001 will be a challenge for Teledyne. A weaker-than-expected economy

will affect our commercial markets and pose operational challenges.

Last, but certainly not least, we would like to acknowledge the people who make our

success possible.

We welcome Robert J. Naglieri, who joined Teledyne Technologies in October as senior vice

president and chief financial officer. Mr. Naglieri brings to Teledyne a strong background in financial

and operational management. His experience includes 24 years with General Electric and five years

with Case Corporation, where he was vice president and controller.

In late 2000, Michael T. Smith, chairman and chief executive officer of Hughes Electronics

Corporation, was elected to Teledyne Technologies’ Board. His insights and background will help to

further our strategy of expanding beyond our existing markets.

All of our employees deserve recognition for their extraordinary efforts over the past year. They

have met the challenges of transitioning into an independent company and delivering strong results.

With their dedication and expertise, we are repositioning our company and building a new history

around the proud heritage associated with the Teledyne name.

Sincerely,

Robert Mehrabian
Chairman, President and Chief Executive Officer

February 20, 2001

T E L E D Y N E T E C H N O L O G I E S I N C O R P O R A T E D

REVIEW 2000 S I G N I F I C A N T E V E N T S A N D A C C O M P L I S H M E N T S O F T H E P A S T Y E A R

Marvin H. Fink
President

New Developments In Our
Microelectronics Business
We have long been a highly respected
supplier of premier microelectronic
hybrid products, with over three decades
of experience in this field. During the
past year, we continued to expand our
markets for these products by
successfully concluding strategic
alliances with two major test and
instrumentation original equipment
manufacturers. Under these

Magnastar® Air Telephone
System marketed by
Teledyne Controls

agreements, TET will supply these
companies with a broad range of
products and services, including
substrates, test boards, amplifier
modules, multichip modules and other
components. These agreements also
anticipate that, in addition to our current
contract manufacturing services, we will
co-develop future microelectronic
modules for use in the next generation
of test and instrumentation equipment.

TELEDYNE ELECTRONIC TECHNOLOGIES

O U R T E L E D Y N E E L E C T R O N I C T E C H N O L O G I E S ( T E T )

D I V I S I O N C L O S E D T H E Y E A R 2 0 0 0 W I T H R E C O R D S A L E S A N D

O R D E R S .

I N C O M E W A S A F F E C T E D B Y O U R S U B S T A N T I A L

I N V E S T M E N T S I N G R O W T H I N I T I A T I V E S F O R O U R W I R E L E S S

A N D O P T O E L E C T R O N I C A C T I V I T I E S .

Perhaps our most significant
development in the microelectronics
area has been our expansion into the
field of commercial optoelectronic
products used in the worldwide fiber
optic networks of the telecom-
munications industry. Our rapidly
expanding activities in this area are
detailed in the feature article later in
this report.

Advanced Techniques For
Producing Implantable Medical
Electronic Devices
Our hybrid technology, originally
developed for military and aerospace
applications, allows us to package
increasingly complex electronic circuits
in a very tiny space with extremely low
power requirements. These advantages
have increased the demand for our
products in the medical implant market.
We currently supply hybrid circuits to
manufacturers of such devices as
implantable cardiac pacemakers,
defibrillators, and drug infusion pumps.
To meet the demand for ever smaller
more efficient devices of this nature we
have recently successfully implemented
a new production method known as flip-
chip processing. This newly emerging
technique greatly simplifies the process
of interconnecting semiconductor chips
with other elements on the hybrid
substrate and permits tighter packaging
densities, and hence more compact
devices. These advantages are
particularly important for such
applications as cochlear implants for
profoundly deaf children.

Expanding Markets For
Our Secure Hybrid Coatings
A third technology in which we are a
leader and which we have continued to
develop has been the production of
secure coatings for hybrid multichip
modules. These modules, which are

often used in highly sensitive
applications, or which contain highly
sensitive proprietary technology, can be
encapsulated in unique coatings we
have developed that discourage
tampering or reverse engineering. With
the growing requirements for secure
transmissions and the need for the
protection of intellectual property, this
technology, which was originally
developed for government applications,
is now finding broader applications in
the commercial electronics area.

New Multi-Year Agreement
With GTE Airfone And Raytheon
GTE Airfone and the Raytheon Company
have renewed their multi-year
agreement with our Teledyne Controls
business unit for continued sales and
support of the MagnaStar® Air Telephone
Systems through mid-2006.
MagnaStar ® is a digital cellular air
telephone system designed specifically
for corporate and regional jet aircraft.
Operating exclusively over GTE Airfone’s
digital network, the system transfers
calls from one ground station site to
another, providing customers with
seamless connectivity across the
continental United States, Mexico and
southern Canada. The system also
handles facsimile and data
transmissions and can work with our
TeleLink TM system when standard VHF
and SATCOM service is not available.
The renewal of this relationship permits
customers to continue to receive high
quality airborne telephone service with
enhanced avionics equipment. The year
2000 also marked the installation of the
2000th MagnaStar ® system. Teledyne
Controls provides marketing, sales,
maintenance and product enhancement
definition services.

T E L E D Y N E T E C H N O L O G I E S I N C O R P O R A T E D

Teledyne’s TeleLinkTM Data
System Selected By Atlantic
Coast Airlines (ACA)
Teledyne Controls TeleLink TM two-way
data system for aircraft has been
chosen by Atlantic Coast Airlines for
their fleet of 66 CRJ and 80 D0328/428
aircraft. The system will link the
aircrafts’ onboard systems with air-to-
ground communications networks, and
allow connection via service providers
for a variety of air traffic management
and flight operations conveniences.
These conveniences include pre-
departure clearances, real-time weather
(including graphics options), digital
Automatic Terminal Information Systems
(ATIS), Terminal Weather Information for
Pilots (TWIP) and messaging. We are
now working with various weather
service providers to develop the next
generation in Weather Information
Services, which is intended to fully
utilize the capability and flexibility of the
TeleLink TM system. FAA certification has
been received for the ACA CRJ system.

In other airline activity, we have received
a Supplemental-Type Certificate (STC)
for our Communications Management
Unit (CMU) for the MD90 aircraft and we
are partnering with Air Tahiti NUI for
Flight Operations Quality Assurance
data analysis.

New Customers For Our Mini
Flight Data Acquisition System
Teledyne Controls’ newly developed Mini
Flight Data Acquisition System is an
intermediary device designed to acquire
and process mandatory FAA aircraft and
engine data for storage in an aircraft’s
flight data recorder or so-called “black
box.” When installed with our Aircraft
Monitoring System (ACMS) option and
our TeleLink TM data link system, the Mini
Flight Data Acquisition System can
transmit real time critical aircraft

Teledyne Wireless MMIC

condition information to ground stations
for analysis. Recent customers for this
system include Gulfstream, Bombardier,
Dassault and Continental Express (for
their Embraer 135/145 fleet).

Significant Growth In Broadband
Traveling Wave Tube Production
During the year, increased demand for
our traveling wave tube (TWT) products
manufactured at our Rancho Cordova
plant required the addition of 20,000
square feet of production space to that
facility. This growth has been primarily
driven by increased demand from the
U.S. Department of Defense for
sustainment of presently fielded
electronic defense systems. Our
traveling wave tube products are widely
used in radar countermeasures
equipment aboard the F-14, F-15, F-16,
F-18 and B-1B aircraft. These products
have also been chosen for use on new
countermeasure systems for the U.S.
Navy’s EA-6B stand-off jamming aircraft
and on F-16s being produced for Korea.

In addition, because of their
exceptionally broadband high power
capability, our multiband TWTs are also
used in up-link transmitters for satellite
communications applications such as
remote television news coverage.

Strong Growth For
Teledyne Wireless Products
Our Teledyne Wireless manufacturing
unit experienced strong growth requiring
a significant increase in engineering
staff at our Mountain View facility. We
received a multi-year contract for our
Monolithic Microwave Integrated Circuits
(MMICs) from Hughes Network Systems
for their Very Small Aperture Satellite
Terminal (VSAT) systems. MMICs provide
small, low-power amplification at
microwave frequencies for a number of
emerging high data rate commercial

Teledyne Lewisburg’s contract
manufacturing services

applications. We have made a significant
effort to broaden our MMIC product
offerings and to reduce their
manufacturing costs. By implementing
lean manufacturing principles we have
more than doubled the production
throughput of these devices without
adding production staff.

We have also made an increased
investment in integrated filter
technology, resulting in Metawave
Communications Corporation adopting
our integrated filter assembly for both
digital and analog versions of its
Spotlight ® smart antenna systems,
which expand wireless networks
capacity.

A reduction in costs was achieved
during the year by moving the
manufacture of certain
electromechanical switches for
microwave radio and test equipment
applications to Asia.

T E L E D Y N E T E C H N O L O G I E S I N C O R P O R A T E D

REVIEW 2000 S I G N I F I C A N T E V E N T S A N D A C C O M P L I S H M E N T S O F T H E P A S T Y E A R

Traveling Wave Tube (MEC)

printed circuit producers worldwide.
Halco has also signed a distribution
agreement with Sigma-Mecer of
Sweden to provide etchant recovery
systems for North American printed
circuit board manufacturers.

At Hastings Instruments we have
introduced the new OBE-2002 vacuum
measurement gauge. This dual sensor
gauge provides wide-range
measurement in a compact, low-cost
electronics package. In addition, by
increasing the performance of its
products and widening product
offerings, Teledyne Hastings Instruments
has become a major supplier of mass
flow controllers to leading fuel cell
development companies throughout
the world.

Successes In Other
Component Products
Our Printed Circuit Technology business
unit has had continued success in its
rigid-flex circuit business growth
initiatives. Our Quick-Turn Prototype
business grew by 40 percent during the
year 2000, and new value-added
assembly orders from our avionics
customers have increased our per unit
revenue. In a major effort to reduce
design and development costs for rigid-
flex circuit customers we introduced
VME-Flex TM. This innovative product
offers all the performance advantages of
custom rigid-flex, while conforming to
the design rules for VME, a form factor
standard that is widely used in the
defense and industrial markets.

During the year, our Interconnect
Devices unit introduced its latest high-
density connector, the MicroConn®
socket connector for microprocessors
and application-specific integrated
circuits. This connector is being

Hastings Instruments
Model OBE-2002

evaluated by several semiconductor and
computer companies and is currently in
pilot production.

The Teledyne Electronic Safety Product
business unit, which provides ejection
seat sequencers for high performance
military aircraft, had another successful
year in which its products enabled 13
pilots to eject safely from disabled
aircraft. A new sequencer is now in
qualification testing by Martin Baker and
the U.S. Navy. It is also planned that our
sequencer will be on both versions of
the military’s Joint Strike Fighter.

Teledyne Relays experienced significant
growth in the year 2000. In order to
meet the demand for these products,
we have added manufacturing capacity
at our facilities in Mexico. In addition, we
have signed a private label agreement
with a safety relay manufacturer to
further expand our product line for
this market.

Contract Manufacturing
Services Continue To Expand
Teledyne Lewisburg has both expanded
and upgraded its operations in the past
year. New surface mount lines were set
up to enable the automatic assembly of
both Ball Grid Arrays and Micro Ball Grid
Arrays which are used in fabrication of
the latest models of insertion and test
equipment. New surface mount lines
were also established at our facility in
Scotland to provide European contract
manufacturing capability. This service
will allow our customers to meet their
foreign offset requirements.

In La Mesa, Mexico, we opened a
second facility that will specialize in
contract manufacturing capabilities for
our test equipment and medical
products customers.

A new initiative was undertaken during
the year to increase our presence in the
broadband wireless radio market. Key
management and engineering personnel
have been recruited and development
contracts have been received from three
manufacturers of wireless infrastructure
equipment. We have also formed
alliances with Asian manufacturing
partners to allow the rapid buildup of
this business as our new products enter
production in 2001.

Advances In Our Manufacturing
and Measurement Equipment
Products
During the year 2000 our Halco
production equipment facility introduced
and began shipping its new E3 (Efficient
Electron Exchange) printed circuit board
plating system. This all new patent
pending system offers the printed circuit
board industry a fourfold increase in
copper plating rates while improving
deposition uniformity. The horizontal
conveyorized design also significantly
reduces floor space requirements as
well as chemistry consumption. Because
of strong customer demand, the E3
plater will be offered in various
configurations to meet the needs of

T E L E D Y N E T E C H N O L O G I E S I N C O R P O R A T E D

TELEDYNE BROWN ENGINEERING

O U R S Y S T E M S E N G I N E E R I N G S O L U T I O N S S E G M E N T, T E L E D Y N E B R O W N

E N G I N E E R I N G ,

I N C . , C O N T I N U E D I T S 4 7 - Y E A R H I S T O R Y O F P R O V I D I N G

A D V A N C E D T E C H N O L O G I C A L S O L U T I O N S F O R M A N Y O F O U R C O U N T R Y ’ S

M O S T S I G N I F I C A N T D E F E N S E , S P A C E ,

I N F O R M AT I O N , E N V I R O N M E N TA L

A N D E N E R G Y P R O G R A M S I N T H E Y E A R 2 0 0 0 .

Richard A. Holloway
President

New Embedded Learning Business
Line For Commercial Markets
To further expand our information
technology expertise into commercial
markets, Teledyne Brown Engineering
launched its Embedded Learning
Applications Solutions business unit in
2000. This unit integrates the
company’s technical and professional
services experience, creating a hybrid
professional services business. This will
provide e-learning and other knowledge-
based applications directly to a user’s
workspace to create a more intelligent
and efficient work environment. These
custom applications will address the
needs of product training and branding,
maintenance, customer support, and
repair activities, and will focus initially on
the financial, automotive and health-care
industries in 2001.

EADSIM Selected For Continued
Development By U.S. Army Space
And Missile Defense Command
Software-based high-fidelity simulations
are one of Teledyne Brown’s strongest
capabilities. Extended Air Defense
Simulation (EADSIM) is the country’s
premier air-defense modeling and
simulation program, and was selected
for continued development and
sustainment by the Army’s Space and
Missile Defense Command. The air,
space, and missile combat modeling
and simulation capabilities of EADSIM
were combat-proven during Operation
Desert Storm in 1991, and the software
is now used by more than 390 agencies
in 10 foreign countries. EADSIM is
recognized as the world standard for
air-defense simulation and training.

New Information
Technology Initiatives For The
Department Of Defense
We have applied our information
technology solutions and engineering

expertise to a number of programs for
the Department of Defense. New
initiatives include a contract to assist in
the analysis of the Air War Over Serbia
program, and cost-benefit analysis and
program management support for the
Tactical Unmanned Aerial Vehicle
Program Office. We are also involved in
a number of other programs ranging
from modeling and analysis, to the
development of next-generation
hardware.

The U.S. Air Force has also accepted
our Sensor Platform Allocation Analysis
tool for inclusion in its standard tool kit.
Two new modeling and simulation and
analysis products, ASESS (Advanced
Subsystem Element and System
Simulation), and JFAS (Joint Forces
Analysis Simulation) were also
introduced in 2000. ASESS and JFAS
provide modern distributed interactive
simulation capability for the military
system-analysis market and are being
marketed as proprietary products
in 2001.

Other Information Technology
Products And Programs
We provide support for work done on
a long-term wide-area network and
data center used for seismic treaty
monitoring, and are now working on
the development of an Omniview
camera for security monitoring that
uses sophisticated techniques for
sensor queuing and data transformation.

New Subsidiary Formed:
Teledyne Solutions, Inc.
Teledyne Brown has long been
recognized as a leader in developing
engineering solutions for highly complex
defense applications. In 2000, while
serving as a subcontractor to the Boeing
Company on work being performed for
the Ballistic Missile Defense

Organization (BMDO), we wanted to
continue providing technical assistance
to the Army’s Space and Missile
Defense Command (SMDC) in the same
general area. Proactively addressing
potential conflict-of-interest issues, and
working with the government, we
established a separate and wholly
owned subsidiary, Teledyne Solutions,
Inc. This subsidiary continues to provide
systems engineering and technical
assistance on the Ground Based
Interceptor and X-Band Radar segments
of the National Missile Defense
Program, the Theater Targets Program,
and to the Advanced Technology,
Weapons, Battle Lab, and Acquisition
Center Directorates of SMDC.

Other Systems Engineering
Activities In 2000
The U.S. Navy, recognizing our expertise
in distributed systems, purchased our
Shipboard Theater Air and Missile
Defense Exercise Controller, known as
STEC. This software, in combination with
the Navy’s Battleforce Tactical Trainer,
provides the Navy with on-board or in-
port theater ballistic missile training,
using scenario generation and real
ballistic missile threat data.

A future focus in systems engineering
will include continued pursuit of
domestic and international opportunities
for the company’s Total Readiness
Information Management Systems
(TRIMS). This software program has
been tested and evaluated at the Army
Sergeants Major Academy at Fort Bliss,
Texas, and was used by students
attending the Battle Staff Course at the
academy. The results will enable us to
evaluate and improve TRIMS as a tool
for units in the field or garrison.

The Extended Air Defense Simulation
(EADSIM) developed for the U.S. Army,
assists in operational planning, personnel
training, and predicting the outcome of
military conflicts.

T E L E D Y N E T E C H N O L O G I E S I N C O R P O R A T E D

REVIEW 2000

S I G N I F I C A N T E V E N T S A N D A C C O M P L I S H M E N T S O F T H E P A S T Y E A R

1 0

subcontracts on two projects managed
by the Westinghouse Savannah River
Corporation. The first of these, the
Americium/Curium Vitrification Project,
involves the environmentally safe
disposal of these two elements, from
design and engineering of the disposal
system to the fabrication of hardware,
system testing, qualification and training
for this first-of-a-kind system. The
program will establish a production
process for transforming a solution of
these radiological materials, currently
located at the Savannah River site, into
a suitable form for transfer to another
Department of Energy facility. The
second program requires Teledyne
Brown to fabricate and test 1,200
canisters for the Defense Waste
Processing Facility at Savannah River.
These canisters will be used to safely
capture and contain the high-level
nuclear waste glass as it is poured from
the glass melter.

In a related move, we relocated our
Radiological Analytical Laboratory from
Westwood, New Jersey, to Knoxville,
Tennessee. This move will enable the
company to capture a larger share of
the analytical work being done for
commercial nuclear electric utilities.
Teledyne Brown already has a strong
position in the analytical market in the
northeastern U.S., and this move should
enhance our growth in the southeast,
as well as throughout the Department
of Energy.

Deactivation And Disposal Of
Chemical Munitions
The U.S. is a signatory country to the
International Chemical Weapons
Convention Treaty and, as such, must
destroy its chemical weapons and
materiel by 2007. Teledyne Brown is the
prime contractor for the Army on its

Continued Participation In NASA’s
International Space Station Project
And Other Space Programs
NASA’s International Space Station (ISS)
is one of the largest and most complex
international scientific endeavors ever
undertaken. It is now providing a
manned laboratory in earth orbit that will
enable research that may be carried out
only in a micro-gravity environment.
The Space Station will provide important
knowledge for earthbound applications
as well as future space exploration
solutions. Teledyne Brown supports
NASA with design, development and
operations solutions. As astronauts
completed work on the various
construction stages of ISS, we began
providing continuous support for the
astronauts and scientists living and
working on board.

We also provide many other services to
NASA and its prime contractor, Boeing,
including mission planning, payload
integration, launch and flight operations,

data collection and distribution, ground
control center operations, and flight
crew and ground system operations
training. This work is a result of more
than 20-years of involvement in payload
integration for virtually every Space
Shuttle Mission to date.

Our NASA programs expertise has also
resulted in new business on a number
of Department of Defense space
initiatives. We became a subcontractor
on the Technical Acquisition Support
Services (TASS), and the Engineering,
Analysis, Design and Development
(EADD II) projects at the Air Force Space
and Missile Center at Los Angeles Air
Force Base.

Further Growth In Environmental
Program Activities
We continued to expand our operations
in environmental programs in 2000 with
new activities involving the Department
of Energy and the Department of
Defense. We were awarded

1 1

T E L E D Y N E T E C H N O L O G I E S I N C O R P O R A T E D

PEGASUS
Teledyne Energy Systems, a unit of Teledyne
Brown Engineering, has begun shipment of
its Pegasus Polymer Electrolyte Membrane
(PEM) fuel cell stacks, widely regarded as
one of the most advanced emerging
technologies in the power-generation
arena. The fuel cells combine hydrogen and
oxygen to produce 50 to 2,000 watts of
electrical power without combustion, and
with only pure water as exhaust.

Key strategic technology agreements
were put into place in 2000 in the areas
of PEM fuel cells, and PEM electrolysis
gas generators and reformers, which
will be the basis of our developmental
activities in 2001.

These activities are further enhanced by
an agreement with a major corporation
to provide a comprehensive catalog of
solutions for on-site micro generation in
2001, using our global direct sales
network to reach end users.

STEC (Shipboard Theater Air and Missile
Defense Exercise Controller) built by
Teledyne Brown Engineering will be
installed on the U.S. Navy’s AEGIS cruisers
and destroyers, enabling sailors to train
in a real-world environment.

Non-Stockpile Chemical Materiel
Demilitarization program.

Non-stockpile refers to those caches
of deteriorated chemical weapons that
must be recovered from Department
of Defense burial sites, located in more
than 30 states, for destruction and
disposal.

Our Munitions Management Device,
Version 1 (MMD-1) is designed to safely
treat and dispose of toxic chemical
agents in weapons where the chemical
and explosive components have been
removed. Testing on this system began
in June at Dugway Proving Ground,
Utah. The Teledyne Brown team has
successfully completed the first round of
testing on cylinders filled with phosgene,
an industrial chemical once used as a
chemical warfare agent. We are also
manufacturing large chemical
processing equipment for the Army’s
planned facility at Pine Bluff, Arkansas,
which will be used to dispose of a
large quantity of chemical materiel
stored there.

The Teledyne Brown–developed Rapid
Response System (RRS) is a group of
mobile units designed for neutralizing
chemical materials on site. The system
began disposal operations in September
at the Deseret Chemical Depot in
Tooele, Utah, and has been certified for
transition to operational status by the
U.S. Army. The RRS will be used to
process the remaining quantities of
Chemical Agent Identification Sets
stored at that location.

These efforts represent significant
advances in the nation’s programs to
safely dispose of these materials.
Teledyne Brown is recognized as a
leader in the use of a technology known
as Solvated Electron Technology (SET),

which converts these toxic materials into
environmentally safe salts without the
need for incineration.

We anticipate continued growth in our
environmental activities in 2001 with
significant opportunities from the
Departments of Defense and Energy.

Five Energy Systems
Products Launched In 2000
Our Energy Systems unit continues to be
a global leader in on-site electric power
micro generation and high-purity
hydrogen and oxygen gas generation.
New products include the Pegasus
2000-watt PEM fuel cell generator, the
Minotaur natural gas and propane-
fueled 2,500 watt generator, and the
Telan 3-watt generator. All are designed
for remote power applications where
access to the power grid is not
available, such as providing power for
instrumentation along gas pipelines.
They are an acceptable alternative to
batteries and solar panels, and the
larger units can provide an unattended,
low-maintenance power source for small
villages and other remote installations.

The new Titan HP series hydrogen-gas
generators and the Pure-T series high-
purity hydrogen and oxygen gas
products provide these gases for various
industrial purposes in volumes as high
as 150 cubic meters per hour. These
new power-generation and gas-
generation products have increased
our backlog for energy systems to
record levels.

We have also been awarded a Phase
One contract from the Department of
Energy to propose a Stirling Engine-
based power system for deep space
missions, and a contract from the Gas
Technology Institute to develop a new
5000-watt Minotaur engine generator.

1 2

T E L E D Y N E T E C H N O L O G I E S I N C O R P O R A T E D

REVIEW 2000

S I G N I F I C A N T E V E N T S A N D A C C O M P L I S H M E N T S O F T H E P A S T Y E A R

Bryan L. Lewis
President

New Manufacturing Excellence
Program
During 2000 our Teledyne Continental
Motors business unit made significant
progress in creating a consolidated
manufacturing excellence center for the
production of small aircraft piston and
turbine engines and components. Lean
manufacturing cells employing the latest
in CNC machining centers were brought
on line for the production of piston
engine camshafts and crankshafts. The
installation of an automated engine test
facility was also completed at our piston
aircraft engine plant. We have also
introduced low cost production cells for
piston engine connecting rods and
rocker arms, to supplement those
previously completed for the production
of engine crankcases and cylinders. We

The TCM turbojet engine for the
Lockheed Martin JASSM vehicle is a
derivative of the highly reliable
J402 engine used in the U.S. Navy
Harpoon missile. The engine
successfully completed qualification
testing in early 2001.

project that our modernization program
for the production of aircraft piston
engines will be completed during the
coming year. The completion of these
activities will reinforce Continental
Motors’ strong position as a global
supplier of high quality, low cost piston
aircraft engines and engine components
and create new opportunities for
manufacturing business development.

TELEDYNE CONTINENTAL MOTORS

D U R I N G T H E Y E A R 2 0 0 0 T E L E D Y N E C O N T I N E N T A L

M O T O R S C O N T I N U E D T O M A K E M A J O R A D V A N C E M E N T S

I N P R O D U C T Q U A L I T Y, M A N U F A C T U R I N G E X C E L L E N C E ,

A N D C U S T O M E R S E R V I C E P E R F O R M A N C E U N D E R

C H A L L E N G I N G B U S I N E S S C O N D I T I O N S .

Continental Engines Chosen For
Important New Aircraft
Our Aircraft Piston Engine business unit
continues to be the supplier of choice
for many new OEM piston-powered
aircraft, as well as for upgrades to
existing aircraft. In 2000, the Continental
Motors IO550 engine was selected to
power the Cirrus SR22, an increased
performance version of the revolutionary
SR20 which began deliveries in 2000.
Continental was also selected to power
the turbo-charged version of the Lancair
Columbia aircraft as well as an updated
model of the popular Mooney Ovation.
For the next generation of light aircraft,
we have continued prototype testing on
an advanced piston engine, being
co-funded by the National Aeronautics
and Space Administration, that will burn
the same widely available Jet-A fuel
used by turbine powered aircraft. It will
provide better performance with lower
emissions for the piston aircraft of the
future, and better access to fuel in
remote areas.

Aerosance, Inc., Develops
Innovative Digital Electronic
Engine Controls For The Light
Aircraft Market
Aerosance, Inc., has continued the
development of its innovative digital
electronic controls for light aircraft
engines. This unique system, known as
the PowerLinkTM FADEC (Full Authority
Digital Electronic Control), underwent
additional development tests during
the year and a landmark Federal
Aviation Administration (FAA)
certification was made on December
6, 2000, with the award of the new
type certificate for our four-cylinder
Continental IOF240-B engine. We have
also continued the development of
other FADEC-equipped engines
targeted at the most popular models of
four and six cylinder piston aircraft
engines in use throughout the world.

By year end 2000, five flight test aircraft
were operating in a program to
introduce this revolutionary technology
to the piston aircraft engine fleet. Widely
regarded as the most promising
propulsion development for this segment
of general aviation in over 50 years, the
Aerosance FADEC has demonstrated
fuel efficiency improvements of over
15% in most applications. It also
provides numerous indirect benefits,
including revolutionary service levels, by
using downloaded electronic data for
maintenance monitoring of light aircraft
engines. The company’s unique
approach to low cost controls also
makes possible applications outside of
the aviation field. We will be evaluating
these possibilities in the coming year.

Continental Turbine Engine For U.S.
Air Force/Navy Joint Air-To-Surface
Standoff Missile
Our small turbine operations completed
the year conducting the final tests
leading to qualification of our 370-2
engine for the Lockheed Martin Joint
Air-to-Surface Standoff Missile (JASSM).
A successful flight test occurred on
November 17, 2000, during which the
engine performed flawlessly. We also
signed an agreement with Lockheed
Martin in March of 2000 to produce the
first 1,165 units of the JASSM engine
through the year 2007. The JASSM
program is expected to become the
standoff missile of choice over the next
decade, with production potential that
may ultimately far exceed the initial
planned production. Continental’s
turbine engine unit also received special
acknowledgment from the Air Force San
Antonio Air Logistics Center training
command for its efforts to achieve
readiness targets for the Air Force’s
primary training system. The company
was able to accelerate engine spares
delivery for the T37 training aircraft, and

T E L E D Y N E T E C H N O L O G I E S I N C O R P O R A T E D

1 3

The new Sealed Recombinant
Technology (SRT) Aircraft Battery
designed for Business and Regional
jets was launched in 2000.

Dealing With Two Significant
Business Challenges
During 2000, these substantial steps
towards operating excellence were
made as we were overcoming two
significant business challenges. In
March, the piston engine unit
announced a program to inspect up
to 3,000 engines for the possibility
of a crankshaft metallurgical condition
that could result in failure of these
components. This recall effort is
essentially complete. Second,

The TCM/NASA advanced jet fuel burning
piston engine is shown undergoing
propeller system integration testing at our
Mobile, Alabama facility. The innovative low
parts count, high performance design will
move to flight testing in 2001.

Continental Motors received a stop
work order on its development contract
for the expendable turbine engine for
the U.S. Navy Tactical Tomahawk
missile. Despite this setback, we have
independently continued with the
development of the engine
configuration, and are confident that
the engine’s performance levels will be
fully competitive in future applicable
military procurements.

completed the year ahead of contract
schedules for 92% of its contractual
commitments.

operation in the first quarter of 2001,
supplying parts for the Model 370-2
engine used in the JASSM.

Joint Agreement With Pratt &
Whitney Aircraft For Unmanned
Military System Turbine Engines
During fiscal year 2000 our turbine
engine unit also announced an
agreement with Pratt & Whitney Aircraft
to jointly market small turbine aircraft
engines for future unmanned military
systems. Our low cost manufacturing
capabilities and small turbine engine
expertise, coupled with the industry-
leading technical capabilities of Pratt &
Whitney, offer potential synergies which
we will each evaluate during the
coming year.

New Advanced Manufacturing
Cell For Small Turbine Engine
Components
To improve our manufacturing
capabilities for small turbine product
lines, we began construction of an
advanced manufacturing cell for turbine
components at our Mobile, Alabama
manufacturing excellence center. This
new cell couples the best lean
manufacturing methods developed in
our piston engine product lines with
advanced machine tools for small
turbine products. Using these advanced
methodologies, we expect to reduce
the manufacturing footprint of our
turbine product manufacturing activities
by over 75%.

As with the lean manufacturing cells for
our piston engine components, the new
turbine components cell is designed not
only to insure competitive manufacturing
for the next generation of small turbine
engines for military stand-off weapons,
but also to position the company for
potential subcontract production of
small turbine components. The new
turbine components cell will begin

Gill Battery TM Product Line
Continues To Be Undisputed Choice
For Aircraft Battery Power
During this year, our Battery Products
business unit celebrated its 80th year as
the undisputed leader in the field of
aircraft battery power through its Gill
product line. The company’s dedication
to continuous improvement of internal
processes has resulted in an
improvement of nearly 20% in the
facility’s “cost of quality” in 2000.

Also in 2000, we completed the
development of an advanced line of
sealed recombinant technology (SRT)
batteries to secure our position as the
leader in battery power for the
expanding business jet and regional
airline markets. Working with potential
customers, the new Gill SRT battery
includes several unique safety and
maintenance features, while reducing
weight, and improving capacity and
battery life. Engineering development of
the new Gill SRT battery for business
and regional airline markets has resulted
in improvements of over 30% in both
battery life and capacity for this line.

We are also extending our niche design
capabilities into the market for
broadband backup power systems, and
are currently testing a prototype battery
aimed at this market. As with all
Teledyne Continental Motors business
units, our Battery Products facility has
begun to implement lean and demand
flow manufacturing. The facility has
achieved same day order service
capability and a reduction in
manufacturing space of over 40%.

Operator aligns laser diode
submounts prior to reflow
soldering to a thermo-
electric cooler

(right) Laser diode eutectic
attached and wirebonded
to submount

(far right) Thermo-electric
coolers/submounts in
packages ready for test

T E L E D Y N E T E C H N O L O G I E S I N C O R P O R A T E D

BROADENING TELEDYNE’S

PARTICIPATION IN THE

EXPANDING COMMERCIAL

TELECOMMUNICATIONS MARKET.

1 5

ne of our basic corporate strategies for growth is to focus our management’s attention and our capital resources

on those opportunities that will best utilize our strength in engineering and our technical expertise. With this in

mind we have established a new operating unit, Teledyne OptoElectronics, to take advantage of the growing

demand for the optoelectronic components used in commercial fiber optic telecommunications networks. Fiber

optic technology provides the exceptionally broad bandwidth required to meet the explosively growing worldwide demand for

higher speed data communications capacity.

This demand is being driven by several factors, the most significant of which is the Internet. The number of private and

business users of the Internet continues to increase exponentially worldwide. Not only are those users spending more time on

the Internet, they are using it in more sophisticated ways, such as transmitting

complex color graphics and streaming video, all of which require higher speed and

higher volume data throughput. The major telephone trunk lines and

telecommunications systems that span continents and oceans are already highly

dependent on fiber optics to handle their traffic, and these networks are being

expanded daily. Emerging applications such as high definition television, interactive

television, telemedicine, educational use of the Internet and other high data rate

applications all contribute to the growing need for broader bandwidth

communications channels.

RHK, Inc., a leading telecommunications market research firm, estimates

that North American Internet traffic will continue its aggressive growth, increasing 200 percent annually through 2004. The

transport backbone that carries this traffic is optical fiber, connecting the Wave Division Multiplexing (WDM) systems used to

increase the efficiency and capacity of each fiber. Given the importance of WDM in handling Internet traffic, RHK forecasts

that the worldwide telecommunications market for optical components needed to support WDM applications will grow from

$5 billion in 2000 to $24 billion in 2004.

In every year since the early 1980s, when fiber optics were first applied in telecommunications systems in a significant

way, industry projections of the demand for increased bandwidth have underestimated actual demand by substantial amounts.

Why Optical Fiber?

The bandwidth advantage that can be achieved with fiber optic technology is truly amazing. Using a technique known as Dense

Wavelength Division Multiplexing (DWDM), a single optical fiber not much larger than a human hair can transmit over 300

gigabits of information per second, roughly equivalent to the traffic generated simultaneously by over five million Internet users

with 56k modems. Each channel of information transmitted through the optical fiber is carried on a specific wavelength

selected from an optimum band of infrared frequencies. DWDM permits this infrared band to be divided into 64 or more

individual frequencies–and hence information channels–that can be transmitted simultaneously through the same fiber.

Though this occurs in the invisible infrared spectrum, it is analogous to assigning each channel to a different visible frequency

or color. The different frequencies are then divided and sorted out at the final destination by the DWDM system and directed

to the final recipient. The enormous size of the component market for fiber optic systems is easily revealed by the fact that an

individual laser transmitter and laser receiver is required for each of these channels for every leg of a telecommunications

network system.

1 6

T E L E D Y N E T E C H N O L O G I E S I N C O R P O R A T E D

Copper coaxial cable providing the same data throughput would require a multiconductor cable bundle several inches in diameter. AT&T,

in an educational Internet website for students, points out that a single 4.5 pound spool of optical fiber can carry the same amount of messages

as 200 reels of copper conductors that weigh over 1600 pounds.

Fiber cables can also transmit signals over longer distances than copper cables before the signals need to be amplified. Single mode

fibers can transmit signals for distances of more than 200 kilometers without amplification, while an equivalent copper coaxial cable may require

as many as 30 amplifiers to cover that distance. When amplification is required, this can now be done by purely photonic means, with a device

known as an Erbium Doped Fiber Amplifier, which uses an ancillary laser to pump new energy into the signal. This is a more efficient method

than converting the signal back to electrical form, amplifying it and then converting it back to photonic form, as was formerly required.

How Satellite And Wireless Communications Fit In

While it may seem that wireless and satellite communications are competitive with fiber optics, in fact they are complementary to it. They fill

the gap where direct connection to terrestrial networks cannot be made. Most long-distance transmissions through those channels, however,

are ultimately funneled through the global fiber optic networks before they reach their destinations, and thus add to the increasing demand for

land line capacity. Neither microwave nor satellite systems can match the high data throughput, or the price per megabit, of optical fiber at

present. Consequently, where fiber is available, it is the medium of choice.

Installation of new fiber optic cables is expensive, but the ultimate economic advantage for both service providers and users is so great

that fiber optic communication networks are being widely extended. Telephone companies and cable television operators that already have

substantial long-distance fiber optic backbones in place are adding to those systems and are beginning to complete the loop in some areas by

installing fiber directly for the home and business user. New and existing office buildings and other commercial facilities are also incorporating

fiber optic local area networks as part of their basic infrastructure.

An Industry Need For Additional Capacity

The technological advantages of fiber optics will continue to make it the medium of choice for terrestrial data communications in the foreseeable

future, and it is a very attractive market. The use of fiber optic systems has been growing so rapidly that there is also a shortage of production

capacity throughout the industry. Original equipment manufacturers who produce these systems, even those with in-house component

manufacturing capability, often find it difficult to meet the demand for optoelectronic components, and consequently are beginning to seek

outsourcing partners.

There is, however, a high entry price for new or inexperienced companies that wish to establish production in this field. The need for highly

automated robotic manufacturing equipment and clean room manufacturing facilities are factors, but more important are the expertise and

proprietary knowledge of the process engineers who design and implement the production process systems, and the highly trained professional

operators who perform the often esoteric processes with the high precision necessary. The optical fiber that exits from an optoelectronic

transmitter, for example, must be aligned with the internal laser of the component with an accuracy of significantly less than one micron in order

to couple the maximum optical energy into the fiber. A micron is one millionth of a meter, or approximately one twenty-five-thousandths of an

inch. The robotic equipment that accomplishes this is capable of moving the fiber in 50 nanometer increments (billionths of a meter) to achieve

this alignment. So, while there is a large degree of hard science involved in producing these products, it also takes a considerable amount of

art and process knowledge to achieve the high quality and production yields needed to make this business profitable.

Not only do these stringent physical requirements contribute to high startup costs for new entries to this industry, but companies entering

this market must also have a track record of being able to produce components with precision and reliability for systems that carry large

volumes of vital information on a national and global scale.

New Name, New Market, But Well-Established Technology

While Teledyne OptoElectronics is a newly established operating unit, the production of optoelectronic components is not a new technology for

us. The optoelectronic devices required for fiber optic systems are essentially microelectronic hybrids that convert electrical data signals into

optical form for transmission through optical fibers, then convert those optical signals back into electrical form at their destination. Many other

ancillary optoelectronic components, including modulators, multiplexers, amplifiers, signal conditioners, switches and distribution devices, are

also used at various points in these networks and employ similar technology.

T E L E D Y N E T E C H N O L O G I E S I N C O R P O R A T E D

Hybrid Manufacturing Flow

PACKAGE

SUBSTRATE

1 7

Optoelectronics Flow

START

MOUNTED LED
& PIN DIODES

COMPONENT ATTACH &
WIRE BOND ASSEMBLY

ATTACHED SUBSTRATE
TO PACKAGE

COMPLETED PIGTAIL
& FIBER ALIGNMENT

FIBER OPTIC TRANSMITTERS AND

RECEIVERS ARE ESSENTIALLY

MICROELECTRONIC HYBRIDS THAT

HAVE AN OPTICAL CONVERSION

STAGE ADDED TO THE BASIC

ELECTRONICS. THE PRODUCTION

FLOW AT THE RIGHT PRODUCES A

BASIC ELECTRICAL MICROCIRCUIT.

ADDING THE OPTICAL COMPONENTS,

WITH THE ADDITIONAL STEPS ABOVE,

CREATES AN OPTOELECTRONIC

DEVICE. WE’VE HAD OVER 30 YEARS

EXPERIENCE IN PRODUCING

MICROELECTRONIC HYBRIDS, AND

OVER 10 YEARS EXPERIENCE

PRODUCING OPTOELECTRONIC

COMPONENTS.

PRE COVER
ELECTRICAL TEST

PRE COVER
INSPECTION

COVER
SEALED UNIT

MECHANICAL
SCREENS TEMP CYCLE
CENTRIFUGE

BURN-IN

FINAL
ELECTRICAL TEST

FINISH

PACKAGE & SHIP

HERMETICITY FINE
& GROSS LEAK

T E L E D Y N E T E C H N O L O G I E S I N C O R P O R A T E D

1 8

Automatic dual head
epoxy dispensers
prepare devices for
precise die attach

(right) Packets of
semiconductor dice
being staged for
automatic pick and
place machines

1 9

T E L E D Y N E T E C H N O L O G I E S I N C O R P O R A T E D

Approximately 90 percent of the production processes used in manufacturing these optoelectronic components

involves precisely the same process technologies Teledyne has developed and refined over the last 30 years for producing

precision, high reliability microelectronic hybrids for applications where long life and consistent performance are needed.

These include satellite systems, medical implants and other precision instruments, as well as applications for military and

aerospace programs. Our engineering depth in this field encompasses the full range of processes from the classic thick film

and thin film techniques to the more recent fine line thick film, co-fired ceramics and flip-chip processes. We already have

in place robotic machinery for the efficient production and testing of microelectronic hybrids, as well as three decades of

proprietary process engineering know-how that supports high yields and high reliability in our products. In all of these areas

we have developed valuable proprietary methodology designed to produce these precision products in high volume at

affordable prices.

Optoelectronic devices are essentially microelectronic hybrids that incorporate such components as semiconductor

lasers, light emitting diodes, photo diodes and optical modulators that process the optical signals and couple the light energy

into and out of the optical fibers. We have been providing high reliability optoelectronic components for the military and

aerospace markets for over a decade, and our capabilites in producing these devices are well established. Current programs

include providing fiber optic transmitters and receivers for the high speed data bus on the new F-22 fighter aircraft, and

optoelectronic systems for the International Space Station, such as the internal and external video systems, the audio system

links, the high speed data bus and the mobile servicing center video/data link equipment.

(left) Dual channel digital
receiver/transmitter for 1773
data bus applications indicate
the high levels of integration
required for future
transmitter/receiver modules

Ramping Up For
Higher Volume Production

Military and aerospace optoelectronic

components are more complex and

incorporate more functions on a single

substrate than commercial fiber optic

devices, but are usually produced at a

lower volume than commercial products.

The manufacturing processes, however,

are similar. Many of the processes we have

developed for producing microelectronic hybrids for high volume commercial markets, such as medical electronics, are already

engineered for automated production and test processes and are directly applicable to optoelectronic components. We are also

well-versed in the techniques of high volume automated production in many of our other product lines.

In the second half of 2000 we began ramping up our commercial optoelectronic production capacity at Teledyne

OptoElectronics with substantial purchases of additional automated equipment unique to optoelectronic component

production. These include robotic fiber alignment machines, laser welders and automated test equipment. We are also

automating processes that have previously been done manually, and in many cases we are developing our own proprietary

software for these processes.

Testing and qualifying components often represents as much value added as the manufacturing process itself. Military

products are qualified to stringent Mil Spec requirements, and commercial telecommunications products must meet Telcordia

(previously known as Bellcore) requirements, a set of telecommunications industry quality and performance standards that all

fiber optic components and other telecommunications products must meet. We are among the small number of producers who

are qualified to perform Telcordia testing in-house. Others must submit their products to outside testing organizations at

additional time and cost.

Technology in this field is progressing rapidly and, because this industry will become increasingly competitive as time

passes, we are putting in place yield enhancement and cost reduction programs and methods that will be needed for future

generations of product.

2 0

T E L E D Y N E T E C H N O L O G I E S I N C O R P O R A T E D

Teledyne’s Position In The Commercial Fiber Optics Market

The commercial telecommunications market is served by a multi-tiered industry with telecommunications service providers at

the top, who are supported by major OEM equipment and systems manufacturers, who, in turn, are supported by major brand

name module suppliers, supported by semiconductor component suppliers. Our strategy is to position ourselves in this market

as an outsourcing supplier of contract manufacturing and engineering services to the major module producers without

competing with them in their marketplace. Outsourcing is common in the general electronics business, but is not yet common

in the photonics area because of the precision and specialized equipment needed, and especially because of the high

standards of reliability and quality that must be met.

As an outsourcing supplier we offer major component producers the turnkey manufacturing of complete optical modules

and subassemblies, engineering and co-development of next generation parts, and contract test and qualification of their in-

house manufactured components. In some cases we will be doing automation design and development–taking a customer’s

component design and engineering a production and process system for building it in an efficient and high volume manner.

Our primary strategy is not to compete with our customers by directly designing and marketing these items ourselves but,

rather, to be a leading provider to module suppliers who desire outsourcing of product development, manufacturing, process

engineering and Telcordia product qualification.

Beyond these services, however, we believe that we can offer our customers a great deal more by partnering with them

in the development of the rapidly evolving next generation of optoelectronic products. In addition to our expertise in high

volume automated production processes, we are highly skilled in the design and

engineering of the far more complex, more highly integrated devices that will be

needed in future commercial optoelectronic products, because of our aerospace

and military experience.

Another valuable skill set we can offer our customers is our experience in the

engineering and production of high frequency devices that we have acquired in our

extensive microwave product lines. This is becoming increasingly important as the

data rates required in telecommunications systems continue to rise. The industry

quickly moved from the early hundreds of megabits per second data rate to the

mainstream 2.5 gigabits per second devices of today, with 10 gigabit per second

(right) The F-22 raptor
aircraft will contain Teledyne-
fiber optic transmitter and
receiver devices

(far right) An F-22 transmitter
with Teledyne designed low
profile detachable fiber optic
connector

devices already overtaking those. Speed enhancement continues with 40 gigabit per second equipment now under early trials

and development. These advances all require increasingly specialized knowledge of the unique properties of electrical signals

at these elevated frequencies.

Regardless of what the short term fluctuations in demand may be, the exceptional bandwidth and other advantages of

fiber optics technology make it the obvious choice for a large part of the worldwide communications infrastructure as it

continues to expand to meet world demand. We are well positioned to take advantage of this opportunity.

Teledyne’s Other Established Communications Equipment Markets

This new venture into the commercial fiber optics market is an addition to our other communications technologies and

marketing efforts and not a replacement of them. Aerospace and military optoelectronics will continue to be an important part

of our business, as will wireless and satellite technologies utilizing our broadband traveling wave tube amplifiers, our Monolithic

Microwave Integrated Circuits (MMICs), high frequency relays, air-to-ground telephony equipment and our many other

sophisticated electronic products. (See Review 2000.)

All these technologies are ultimately complementary in serving the growing needs of our information hungry society, and

the continued growth of our company.

T E L E D Y N E T E C H N O L O G I E S I N C O R P O R A T E D

2 1

(upper) An automatic
fiber aligner and laser-weld
positioner capable of
alignments to sub-micron
accuracies are needed for
single mode fiber devices

(lower) Test head of an HP
82000 D200 digital test
station

T E L E D Y N E T E C H N O L O G I E S I N C O R P O R A T E D

Corporate Information

2 2

E X E C U T I V E M A N A G E M E N T

S T O C K H O L D E R I N F O R M A T I O N

C o r p o r a t e O f f i c e s
Teledyne Technologies Incorporated
2049 Century Park East, Suite 1500
Los Angeles, CA 90067-3101
Telephone: (310) 277-3311
Fax: (310) 551-4369
www.teledyne.com

T r a n s f e r A g e n t a n d R e g i s t r a r
Mellon Investor Services LLC
P.O. Box 3315
South Hackensack, NJ 07606
(800) 356-2017
www.mellon-investor.com

S t o c k h o l d e r P u b l i c a t i o n s
Annual reports and proxy statements are mailed to all
stockholders of record. For additional information, contact
Investor Relations at corporate headquarters.

S t o c k E x c h a n g e L i s t i n g
The common stock of Teledyne Technologies Incorporated is
traded on the New York Stock Exchange (symbol TDY).

A n n u a l M e e t i n g
The annual meeting of stockholders will be held on
Wednesday, April 25, 2001, at 9:00 a.m.,
at the Century Plaza Hotel, 2025 Avenue of the Stars,
Los Angeles, CA 90067-4696.

I n d e p e n d e n t A u d i t o r s
Ernst & Young LLP
Los Angeles, California

C u r r e n t N e w s a n d G e n e r a l I n f o r m a t i o n
Information about Teledyne Technologies is available at
www.teledyne.com.

Robert Mehrabian*
Chairman, President and Chief Executive Officer
Robert J. Naglieri*
Senior Vice President, Chief Financial Officer
John T. Kuelbs*
Senior Vice President, General Counsel and Secretary
Dale A. Schnittjer*
Controller
Marvin H. Fink
President, Teledyne Electronic Technologies
Richard A. Holloway
President, Teledyne Brown Engineering
Bryan L. Lewis
President, Teledyne Continental Motors
Robert W. Steenberge
Chief Technology Officer
Robyn E. Choi
Vice President of Administration and Assistant Secretary
Melanie S. Cibik
Vice President,
Associate General Counsel and Assistant Secretary
Shelley D. Green
Treasurer

B O A R D O F D I R E C T O R S

Robert P. Bozzone (1)
Chairman, President and Chief Executive Officer,
Allegheny Technologies Incorporated
Paul S. Brentlinger (1)
Partner, Morgenthaler Ventures
Frank V. Cahouet (1) (2)
Retired Chairman and Chief Executive Officer,
Mellon Financial Corporation
Diane C. Creel (2) (3)
Chief Executive Officer and President, Earth Tech
C. Fred Fetterolf (2) (3)
Retired President and Chief Operating Officer,
Alcoa Inc.
Robert Mehrabian
Chairman, President and Chief Executive Officer,
Teledyne Technologies Incorporated
Charles J. Queenan, Jr. (3)
Senior Counsel, Kirkpatrick & Lockhart LLP
Michael T. Smith (2) (3)
Chairman and Chief Executive Officer,
Hughes Electronics Corporation

(1) Audit Committee
(2) Governance Committee
(3) Personnel and Compensation Committee

* Section 16 Officer

CREDITS:

Design: James Robie Design Associates

Writing: Robert McVicker

International Space Station image courtesy of NASA

F-22 photo courtesy of Lockheed Martin

The Teledyne logo and marks are licensed from
TDY Holdings, LLC.

CAUTIONARY STATEMENT
This 2000 Annual Report contains
forward-looking statements, as defined
in the Private Securities Litigation
Reform Act of 1995, relating to growth
opportunities and strategic plans, among
other things. Teledyne Technologies’
Form 10-K identifies factors that could
materially affect these statements.

2049 Century Park East, Suite 1500 • Los Angeles, California 90067-3101 • 310.277.3311 • Fax: 310.551.4369 • www.teledyne.com