Teledyne Annual Report 2001

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FY2001 Annual Report · Teledyne

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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

SUMMARY ANNUAL REPORT 2 0 0 1

PA G E 1

2 0 0 1 H I G H L

I G H T S

2001 Pro Forma EPS (1)
(Continuing operations data)

2001 Cash from Operations
(In millions; continuing operations data)

2001 Sales by Segment

$0.25

$0.20

$0.15

$0.10

$0.05

$ 40

$ 20

$ 0

$(20)

$(40)

50%

21%

27%

Electronics and Communications

Systems Engineering Solutions

Aerospace Engines and Components

Energy Systems

Selected Consolidated Financial Data
(In millions, except per-share data)

Summary Pro Forma Financial Data (1)

Sales

$ 744.3

$ 795.1

$ 761.4

$ 733.0

$ 707.4

2 0 0 1

2 0 0 0

1 9 9 9

1 9 9 8

1 9 9 7

Net income from continuing operations

Diluted earnings per-share from

continuing operations

Weighted average diluted common

shares outstanding

Summary Balance Sheet Data

Working capital

Total assets

Long-term debt

22.5

$ 40.5

0.69

1.37

40.9

$ 37.5

$ 27.9

1.50

$ 1.33

$ 1.00

32.4

29.5

27.3

28.1

2 0 0 1

2 0 0 0

1 9 9 9

1 9 9 8

1 9 9 7

$ 115.3

$ 107.6

98.5

72.6

78.2

349.3

30.0

350.9

—

313.4

97.0

246.4

—

250.6

—

Stockholders’ equity

$ 173.0

$ 163.1

$ 44.5

$ 106.4

$ 109.4

(1) Pro forma information represents continuing operations data excluding after tax charges of $15.7 million, $8.6 million and $1.8 million in

2001, 2000 and 1999, respectively. In addition, 1999, 1998 and 1997 data reflect estimated expense impacts (primarily interest expense
and corporate expenses) that would have been incurred had Teledyne Technologies operated as a separate company as of the beginning of
each year and as capitalized at the time of its spin-off for each period presented.

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the “Notes to Consolidated Financial
Statements” in our 2001 Annual Report on Form 10-K for additional information regarding Teledyne Technologies Incorporated financial data.

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T O O U R S T O C K H O L D E R S

Robert J. Naglieri
Senior Vice President
and Chief Financial
Officer

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

Robert Mehrabian
Chairman, President
and Chief Executive
Officer

ur second year as an independent company was a difficult one. A continuously weakening economy, coupled with

the sudden deterioration of the semiconductor and telecommunications markets, significantly affected Teledyne’s
financial performance. After several consecutive years of stable revenue growth, Teledyne Technologies’ revenues
declined by 6.4% in 2001, and earnings per share, excluding charges, declined by almost 50% in 2001. However,
despite the weak market environment facing many of our businesses, our multiple cost reduction actions improved
Teledyne’s financial results throughout the year. Excluding charges taken in the second quarter of 2001, we increased
earnings per share, operating margin and cash from operations in each quarter of 2001. Teledyne Technologies has
begun 2002 as a much leaner and improved company.

Transforming Teledyne Technologies
At the end of the second quarter of 2001, we recorded a pre-tax charge of $26.4 million and announced a number of
specific restructuring and cost reduction initiatives. By the end of the year, we had essentially completed the initiatives
that we outlined. We met our workforce reduction target of approximately 14%, sold or closed five underperforming
product lines, consolidated several manufacturing operations and combined corporate facilities and administrative
functions with our Electronics and Communications segment. Through our aggressive cost reduction actions, we
achieved $25 million in annualized cost savings. All of our efforts were undertaken to enable Teledyne to perform
well during the current economic downturn as well as position the company for stronger performance when the
commercial markets that we serve rebound.

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PA G E 3

Revitalizing our Electronics Businesses
In many of our short-cycle electronics businesses, demand for our products rapidly dropped during the first half of
2001 and continued to decline throughout the year. Simultaneously, after adding significant capital equipment and
engineering resources, the commercial optoelectronics market that we were pursuing collapsed. In response to these
events, we dramatically accelerated a large number of coordinated actions to permanently reduce the cost structure in
our electronics businesses.

First, we substantially reduced general and administrative headcount and expenses. Second, several initiatives were
undertaken to reduce our manufacturing costs, especially in our short-cycle electronics businesses. We ceased
manufacturing electronic relays in Scotland, and moved production to our upgraded low-cost Mexico facilities. We also
increased the amount of analytical instrument manufacturing and high-mix contract manufacturing services performed
in Mexico. We combined two separate manufacturing operations in New Hampshire into one facility. We reallocated
resources from our optoelectronics product line to support the increased demand for military microelectronics. In the
second half of 2001, we expanded our market focus and initiated a significant number of cost reimbursable new
product development programs with small optoelectronics companies. These actions enabled us to retain our
optoelectronics capabilities while significantly lowering our cost structure. We intend to capitalize on both our
engineering and capital resources when the commercial optoelectronics market recovers.

Our financial results in the last three quarters of 2001 reflect these changes, as operating margin, excluding charges,
in our Electronics and Communications segment more than doubled from 4.4% in the second quarter of 2001 to 9.6%
in the fourth quarter of 2001.

Enhancing Focus with Segment Realignment
In 2001, we aggressively refined the business portfolio in our Systems Engineering Solutions segment in order to
sharpen our focus and enhance our growth potential in government programs. Practically all of the commercial
businesses in this segment were sold, closed or transferred to the Electronics and Communications segment.

The two electronic instrumentation business units that were transferred, geophysical instruments and test services,
serve the energy and power markets and have been combined with Teledyne’s other instrument product lines. Our
new group of instrumentation companies also includes Teledyne Advanced Pollution Instrumentation, which was
acquired in November 2001.

We separated our Energy Systems business, whose results were previously reported under the Systems Engineering
Solutions segment, into a standalone segment. Our goal in the Energy Systems business is to leverage the increased
interest in hydrogen infrastructure and fuel cell technology while exploring value creation opportunities for our

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stockholders with this asset. In the meantime, Teledyne Energy Systems, Inc. plans to continue launching new
products in the fuel cell and hydrogen markets while remaining at near-breakeven profitability.

Aerospace Engines and Components Poised for Future Growth
From the weak economic environment to the September 11 tragedy and subsequent flight restrictions, 2001 was a
very tough year for general aviation. Nonetheless, operating leverage in our Teledyne Continental Motors business has
never been stronger. Years of capital investment and manufacturing excellence programs, combined with recent strides
in supply chain management, have substantially improved productivity and customer service. We continue to believe
that we could increase volume by 30% with modest additions to variable costs.

Although revenues declined in 2001 in our turbine engine business, we are comfortable with the outlook for this
business. Our position as the sole source engine provider for the new Joint Air-to-Surface Standoff Missile (JASSM)
program should provide years of new revenue.

Well Positioned in Today’s Environment
In today’s uncertain economic and political environment, our stable portfolio of approximately 45% government and
55% commercial businesses should perform well. Although we have positioned our businesses to rebound in a better
economic cycle, we are not relying on improved markets to boost our financial performance in 2002.

Demand for our defense electronics products, especially military microelectronics, such as those used for secure
communication and traveling wave tubes used in radar and electronic warfare systems, were strong in 2001, as
funding for military programs such as the F-22 increased substantially. Going forward, the long-term outlook for our
defense electronics businesses is stronger than at any time in the last decade, as new product procurement for the
Department of Defense is expected to grow over the next several years.

Although new aircraft shipments for the commercial air transport market may be down nearly 25% in 2002, a
variety of factors help insulate Teledyne from the declining commercial aerospace cycle. In 2001, we met several
new product milestones in our avionics businesses. During the fourth quarter, our Wireless GroundLinkTM product,
which uses existing mobile telephony infrastructure to transfer data from our on-board computers to the airline’s
Operations Center, received the FAA’s Supplemental Type Certification for the Boeing 737 series aircraft, and we are
working on extending this certification to other popular aircraft platforms. We also sold our first commercial off-the-
shelf data acquisition system for use on military air transport aircraft. In addition, we are experiencing strong
demand for the latest technology upgrades in the business-jet airborne telephony and communications market where
we are the market leader.

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Both the increased defense budget and the establishment of the Office for Homeland Security suggest an improved
outlook for defense-related engineering services. For example, our largest programs in the Systems Engineering
Solutions segment relate to NMD, the national missile defense, which has received increased funding for 2002. Given
our incumbent status in a variety of high-value programs, combined with focused management resources and the
increased defense budget, the long-term outlook for this segment is attractive.

As we continued to evolve as an independent company, we expanded our Board in 2001 with the addition of two new
Directors: Paul D. Miller, Chairman and Chief Executive Officer of Alliant Techsystems and Charles Crocker, Chairman
and Chief Executive Officer of BEI Technologies. Given our current mix of government and commercial businesses,
Mr. Miller and Mr. Crocker each bring unique and valuable insights to our business operations and the markets that we
serve. We also want to thank retiring Directors, Paul S. Brentlinger and C. Fred Fetterolf, for their dedicated service
and support.

The Year Ahead
We enter 2002 well positioned to emerge from the current economic downturn. Our businesses are more focused and
cost competitive, our manufacturing facilities have never been leaner, and our balance sheet is nearly debt free. We
believe that our company will enjoy a substantial increase in profitability when the commercial markets in which we
participate turn around. Furthermore, we have the financial flexibility to pursue acquisitions that build on our strong
niche market positions, especially in electronics.

Finally, all of Teledyne Technologies’ employees deserve recognition for overcoming many challenges and helping
improve our financial results throughout 2001 despite the challenging economic environment.

Robert Mehrabian

Chairman, President and Chief Executive Officer
February 25, 2002

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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

E L E C T R O N I C S A N D C O M M U N I C A T I O N S S E G M E N T

STRONG ORDERS FOR MILITARY ELECTRONICS WERE OFFSET BY WEAKNESS IN PRODUCT LINES

THAT SERVE THE TELECOMMUNICATIONS AND SEMICONDUCTOR MANUFACTURING MARKETS.

WE ACQUIRED A PRIVATE POLLUTION INSTRUMENTATION COMPANY THAT COMPLEMENTS OUR

EXISTING ANALYTICAL INSTRUMENT PRODUCT LINES, FORMING THE TELEDYNE INSTRUMENTS

BUSINESS UNIT TO FOCUS ON EXPANDING OUR PRESENCE IN THE MARKET FOR SPECIALIZED

MONITORING AND CONTROL INSTRUMENTS.

Cost Reduction
Teledyne’s continued focus on cost reduction and
operational excellence has taken on special significance
because of the difficult conditions in several of our market
segments. During 2001 we discontinued manufacturing
relays in Scotland and have moved more of our
manufacturing operations from California to Mexico and
India. We have added new
streamlined work cells for
several product lines
including microelectronics,
connectors and relays, and
have discontinued
manufacturing certain under-
performing electronic
products during the year.

Defense Electronics
During 2001, the decline in
demand for short-cycle
electronics for
telecommunications and
semiconductor processing was
partially offset by strength in
our defense electronics
markets. Orders for our
military traveling wave tubes
(TWTs) were the highest they
have been since 1987. These orders included new products for
radar and communications applications as well as replacement
spares for electronic warfare systems used in military aircraft

New Acquisition
During the fourth quarter, Teledyne acquired Advanced Pollution
Instrumentation, Inc., a private company that manufactures a broad
line of instruments for monitoring low levels of gases such as sulfur
dioxide, carbon monoxide and ozone. This company’s products have
historically been used in environmental applications, but it recently
introduced instruments for Teledyne’s traditional markets in
semiconductor manufacturing and industrial process control. We
anticipate that the Advanced Pollution Instrumentation product line
will be highly complementary to our existing lines with respect to
distribution channels, technology and manufacturing capabilities.

Concurrent with this acquisition, we have formed Teledyne
Instruments, a group of business units drawn from our Electronics
and Communications segment and the Systems Engineering
Solutions segment, and including Teledyne Advanced Pollution
Instrumentation, Inc. This new group will provide internal operational
synergies and a focal point for the expansion of Teledyne’s presence
in the market for specialized monitoring and control instruments.

Advanced Pollution
Instrumentation’s Model 265A

such as the EA-6B, the B-1B, and the F-16. We significantly
expanded our offerings for high frequency applications in this
market with the introduction of three new Ka band TWTs
providing output powers up to 250 watts.

Microelectronic cryptographic
module with secure coating

Initial production of three other product lines was begun

for the new F-22 Raptor advanced tactical fighter. These
products include the aircraft’s ejection seat sequencing system
and rigid-flex circuit boards. Several hundred of our solid state
relays are used to control power, and our optoelectronic
modules provide onboard communication on each F-22 aircraft.
We anticipate that these or similar products will be employed
on the new Joint Strike Fighter currently in development.

Growth was experienced in orders for custom products

used in secure communications equipment, as well. Our
microelectronic modules for highly sensitive applications, such
as military encryption, are produced with secure coatings that
make it difficult to reverse engineer or otherwise tamper with
them. Shipments of our surface mount printed circuit board
assemblies for jam-resistant battlefield communications
equipment also increased.

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Diversification was achieved, in addition, by marketing
two of our commercial product lines to military customers. Our
Optical Quick Access Recorder, developed for commercial
airliners, was selected for use on the C-17 Globemaster III
aircraft, recognized as the most modern and sophisticated
military transport aircraft in the world. The C-17 will be the
first military transport jet to use a commercial off-the-shelf Data
Acquisition and Recording System meeting the flight data
acquisition requirements of the Air Force’s Aircraft Information
Program Directive of December 2000. In a second area, we
have been able to apply technology developed for offshore oil
industry geophysical surveys to a military antisubmarine
warfare application, using towed arrays of hydrophones.

Commercial Aerospace
2001 marked the FAA certification of our new Wireless
GroundLinkTM system for all series of Boeing 737 aircraft. This
system allows flight data information to be immediately
transmitted from a commercial airliner to the airline’s home
base as soon as the aircraft touches down at virtually any
airport. Automatic wireless data transfer eliminates manually
removing data storage media from the aircraft and physically
transferring them to an operations center, thus greatly
speeding the availability of data for analysis. Since the
system uses existing cellular/PCS data networks, there is no
need for the costly installation of additional dedicated
infrastructure at airports.

Since July 2001, Qantas Airlines has been using our
Wireless GroundLink system in a trial configuration aboard a
Boeing 747-400. Qantas’ Sydney headquarters has successfully
received downloads of 165 flight legs via the Sprint PCS
Network. Teledyne Controls is now developing versions of this
system that will operate with international wireless networks.
Continental Airlines has also conducted successful trials of the
new system on a Boeing 737-800 aircraft on its domestic
routes, and agreements have been made with other European
airlines to do trials on various Airbus aircraft.

Teledyne Controls’ Data Delivery Service and/or Data

Processing Service for flight data replay and analysis, which is
available to airlines by subscription, further enhances the
system. This combination virtually eliminates capital
expenditures associated with implementing Flight Operations
Quality Assurance and/or Maintenance Operations Quality
Assurance Programs.

Teledyne Controls has been a leading supplier of data

acquisition systems for the commercial airline industry for over
30 years. We have now broadened our market for these
systems to include business and commuter aircraft with the

Wireless GroundLink TM

successful certification of our new Mini-Flight Data Acquisition
Unit (MFDAU) on multiple aircraft platforms including the
Embraer ERJ 135/145, the Dassault Falcon series, and the
Gulfstream GV to name a few. The MFDAU will be compatible
with most of the current fleet of regional and business jets,
collecting, formatting and transferring aircraft data to the Flight
Data Recorder, or “black box”. It complies with the latest FAA
directives that increase the number of recorded parameters
used to aid in accident investigations.

Our relay products are also widely used in commercial

aviation, and are specified for use in more than 20 major
aircraft subsystems by Boeing and Airbus. While our
electromechanical relays have traditionally been selected for
these applications, we have seen a growing trend toward the
use of solid state relays in new aircraft designs. In response to
this we have introduced three new solid state relays for this
market, and have four more solid state relays and power
controllers that are nearly developed.

Telecommunications
Despite a significant decline in orders for high frequency relays
used in existing telecommunications systems, our customers
have continued to invest in product development and we have
obtained many new orders for prototypes to be used in next
generation products. Our high frequency relays, for example,
have been designed into over 150 new systems in all market
segments including telecommunications.

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We have also succeeded in obtaining prototype
development and initial production orders for a new line of
microwave transceivers to be used in point-to-point
communication systems. These transceivers, which will enter
production in early 2002, exemplify our strategy to extend our
participation in this field beyond basic microwave amplification
products into complete subsystems for first-tier suppliers of
wireless communications equipment.

As is well known, the optical communications market
which was one of our key areas of focus in 2000 and early
2001 has taken a substantial downturn. We continue,
however, to be actively involved with first-tier optical
companies, as well as with several new companies that have
innovative technology but lack the resources to qualify and
manufacture products in volume. While our customers’ primary
interest through 2000 was in quickly ramping up production,
their current interest is in having us assist in product
development, especially in packaging, and in the manufacture
of initial prototypes and qualification units.

Semiconductors, Process Control and Energy Production
The market for components and subsystems used in
manufacturing and testing semiconductors declined significantly
in 2001 as semiconductor manufacturers reduced capital
spending. This affected sales of our electromechanical relays,
mass flow controllers, and vacuum instruments. During the
year, however, we introduced several new advanced products
targeted at the most demanding semiconductor manufacturing
processes. These include our new Digital METALINETM mass flow
meters and controllers, and our patented BDS line of trace
oxygen analyzers with parts-per-billion sensitivity. Initial
production orders for our new MicroConn line of surface mount

Analytical Instruments
InstaTransTM oxygen transmitter

microprocessor sockets were obtained during the year. This
expands our offerings of surface mount connectors from
products with only a few contacts, to ones with over 1,000
high-density contacts to meet growing technological needs.
Although the broader industrial process market

deteriorated, it did not do so as significantly as the
semiconductor segment. We have introduced several new
competitive products for this market including an advanced
paramagnetic oxygen analyzer, and an economical ultra-fast
oxygen sensor and a thermal conductivity analyzer.

New strength was shown in the market for our

instrumentation products that support natural gas
production, as new wells were brought on line to support
the increased demand for new power generation sources.
Demand for our InstaTransTM oxygen transmitter, used in this
field increased, and we obtained new orders for our
Integrated Valve Testing Systems for nuclear power plants.
In the oil industry market, we received new orders for
hydrophones and towed arrays used in offshore oil
exploration. We also entered into an OEM agreement to
manufacture similar products to a customer’s design.

Medical Electronics
Activity in the medical field has continued with the receipt of
new orders from a major medical equipment manufacturer for
the contract manufacturing of subassemblies for two
sophisticated diagnostic instruments. Pilot production was
performed at Teledyne’s Lewisburg, Tennessee facility, and
volume manufacturing will occur at a Teledyne facility in
Tijuana, Mexico. We have received new orders for power
supplies for medical instruments, and for microelectronic
modules for implantable medical devices used in cardiac,
hearing and neural stimulation applications.

Hastings Instruments
METALINE TM mass flow meter

Medical device used in
hearing application

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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 .

OUR SYSTEMS ENGINEERING SOLUTIONS SEGMENT UNDERWENT MAJOR RESTRUCTURING IN

2001 WITH THE NAMING OF JAMES M. LINK (LT. GENERAL, U.S. ARMY, RETIRED) AS PRESIDENT

OF TELEDYNE BROWN ENGINEERING, INC. ON JULY 17. SOME NON-GOVERNMENT BUSINESSES

WERE TRANSFERRED TO OUR ELECTRONICS AND COMMUNICATIONS SEGMENT, PERMITTING US

TO FOCUS PRIMARILY ON OUR GOVERNMENT CUSTOMERS. THE COMPANY’S STRATEGIC

BUSINESS UNITS ARE NOW CONSOLIDATED INTO THREE GROUPS, SYSTEMS, TECHNOLOGY, AND

ADVANCED PROGRAMS, CREATING A LEANER AND MORE AGILE ORGANIZATION AND

PROVIDING BETTER OPERATING EFFICIENCIES AND A MORE ROBUST STRUCTURE FOR

PURSUING NEW BUSINESS.

James M. Link
President

Defense
Teledyne Brown Engineering is a well-recognized missile
defense contractor with over 40 years experience in missile
defense systems integration. Our diverse customer base in this
field includes the U.S. Army’s Space and Missile Defense
Command, the Missile Defense Agency, formerly known as the
Ballistic Missile Defense Organization, and major prime
defense contractors.

Teledyne Brown has significant continuing roles in

multiple missile defense programs in such diverse areas as
deployment and transition, targets and countermeasures,
survivability, vulnerability and lethality analysis, systems
engineering and integration, test and assessment, and the
development of modeling and simulation test beds.

Within Brown Engineering, our Technologies Group is

responsible for systems design, development, integration and
testing, with specialization in real-time distributed systems. This
expertise is evidenced by wide customer usage of our
capabilities in systems such as our Missile Defense System
Exerciser, formerly known as Theater Missile Defense System
Exerciser, and our ground-based missile defense products.
We have additionally developed and maintained a
variety of world-class modeling and simulation tools, ranging
from architecture/force structure to components requirement
focused tools. Examples include our Extended Air Defense
Simulation, Joint Force Analysis Simulation, and Advanced
Subsystems Element and Systems Simulation software tools.
Many of these products are employed globally for applications
such as training, metrics development, cost/risk assessments,
trade studies, force/architecture investment strategy
development, and operations planning. Our experience with
broad facets of interoperability is a key company strength.
Teledyne Brown has brought these capabilities and
strengths, developed for missile defense applications, to space
control, homeland security, and test and evaluation business
thrust areas as well, and we have enjoyed strategic growth in
each of these thrust areas during 2001.

Building large, highly accurate
apparatus such as this space station
Element Rotation Stand is a specialty of
Teledyne Brown Engineering

Aerospace Programs
A major focus of the Systems Group is to expand our
participation in the aerospace market. Teledyne Brown has
been active in this area for more than 47 years and continues
to be a significant player in NASA programs, with a key role in
the International Space Station (ISS) program. One of the
most complex scientific endeavors ever undertaken, the ISS
recently completed its first year of continuously manned
operations. Teledyne Brown has been a major contributor to
that success, providing full time support of on-orbit operations.
Since March 2001, company personnel have performed
24-hour-per-day service in providing the Payload Operation
cadre for the ISS Payload Operations and Integration Center,
located at the Marshall Space Flight Center.

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Environmental Programs
Many industrial and military activities have produced seriously
dangerous materials and wastes. Teledyne Brown’s
environmental programs have addressed this problem in
various ways. A prime example is the Rapid Response System,
a mobile chemical waste treatment system developed by the
U.S. Army and operated by Teledyne Brown. This system is
used to process for disposal Chemical Agent Identification Sets
that were used in the past to train military personnel in the
detection, measurement and decontamination of dangerous
chemical agents and industrial chemicals. Related to this is the
company’s ongoing production of high-tech canisters for the
processing, stabilization and storage of nuclear waste products,
and detonation chambers for use in the disposal process of
both chemical weapons and conventional munitions.

A mobile system for safely opening and neutralizing
explosively configured chemical weapons is
being completed by Teledyne Brown Engineering

In addition to payload operations support, we have
performed design and development work on ISS flight systems
and ground support hardware, including the Vacuum Vent
System which supports science payloads, flight support
equipment for Orbital Replacement Units, and the Element
Rotation Stand that manipulates large hardware items during
ground integration activities.

We have also completed development and qualification
of flight hardware for the Observable Protein Crystal Growth
Apparatus for the University of California, Irvine that is used in
protein crystal research. Scientists expect the data from this
research to further the understanding of why crystals grow
differently in the micro-gravity environment.

The Marshall Space Flight Center awarded twenty

Blanket Purchase Agreements for engineering services
provided by individual contractor companies under the
Specialized Engineering and Project Planning Support
program. Teledyne was the only company awarded broad-
range, pre-qualified approval to service all four of the
Center’s participating organizations: the Engineering, the
Science, and the Space Transportation Directorates, and the
Systems Management Office.

Information Technology
The leading-edge field of information technology is another
area Teledyne Brown Engineering is actively pursuing. A prime
example is the web-based program management software
application that the company has developed for NASA’s
Marshall Space Flight Center. This application, called the Space
Transportation Information Network (STIN), enables NASA’s
Advanced Space Transportation Program to centrally manage
its technology development and demonstration projects
distributed across several NASA centers.

STIN, which is a first in the space industry, links a
national network of NASA managers, technologists, industry
contractors and academic partners ensuring better
communication and progress toward mission success. The
functionality of the application provides users with online
access to documents, monthly reviews, risk management,
technical performance metrics, facility usage tracking,
scheduling, and integrated cost reporting.

The STIN project has opened up other opportunities

in the field of enterprise information portal products for
Teledyne Brown, and has generated significant interest in
future applications from other programs within NASA.

Teledyne Brown Engineering developed
and space-qualified this Observable
Protein Crystal Growth Apparatus for
the University of California, Irvine

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

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 , I N C .

DESPITE CHALLENGING MARKET CONDITIONS IN 2001, AND THE AFTEREFFECTS THAT THE

EVENTS OF SEPTEMBER 11 HAVE HAD ON GENERAL AVIATION, TELEDYNE CONTINENTAL MOTORS

REMAINED PROFITABLE FOR THE YEAR. WE CONTINUED TO MAKE SIGNIFICANT STRIDES IN OUR

SERVICE, MANUFACTURING, AND PRODUCT INITIATIVES THAT WILL ENABLE OPPORTUNITIES

FOR OPERATING IMPROVEMENTS AND GROWTH.

Bryan L. Lewis
President

The General Aviation Market
Our revenues are highly dependent upon global conditions in
the general aviation market. Four of five Continental Motors
business units service these markets exclusively. In response to
the impact of the global economic slowdown on this market,
we reduced our work force by 20% during the year.

Following the terrorist attacks of September 11, the

Federal Aviation Administration (FAA) mandated airspace
restrictions that grounded approximately 41,000 general
aviation aircraft, many of which were powered by Continental
engines, further impacting the market for our piston engine
products and services. Actions taken by the FAA resulted in the
grounding of approximately 100,000 pilots conducting nearly
21 million flight hours annually.

The FAA subsequently removed these airspace

restrictions and we regained pre-September 11 business levels
for the closing two months of the year.

Continued Growth
Despite these adverse conditions, our piston engine OEM sales
increased slightly in 2001. Cirrus, Lancair, Diamond and Extra
aircraft companies showed increases ranging from 5% to 25%
over the year as their new composite aircraft continued to gain
market acceptance. Cirrus began production shipments of the
increased horsepower IO550 powered SR22, while Lancair
began certification of the turbocharged Columbia powered by
our 310 horsepower TSIO550 engine.

Lancair Legacy 2000

Cirrus SR22

In addition, our piston engine operation continued to secure
important new customers for its products. Liberty Aerospace
announced the selection of the Continental Motors IOF240 for
their new two-seat training aircraft that is now undergoing FAA
certification. Adam Aircraft also began FAA certification for a
new twin engine centerline thrust composite aircraft powered
by two Continental TSIOF550 engines. Both of these products
feature the Full Authority Digital Electronic Engine Control
(FADEC) developed by our Aerosance business unit in
Farmington, Connecticut.

Engines using the Aerosance PowerLink TM FADEC control

system are also now being installed and flight tested in a
number of currently-in-production OEM products. We expect
these products to be formally launched by our customers in
2002. The PowerLink FADEC is also undergoing testing by the
two most popular domestic experimental aircraft builders, the
Lancair Legacy and the popular RV series aircraft.

Small turbine engine manufacturing cell

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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

Maintaining Our Global Market Position
To reinforce Continental’s position as a global leader in
supplying high quality, low cost aircraft engines and
components, we continued to pursue numerous manufacturing
excellence initiatives in 2001. Lean manufacturing cells, built
around the latest machine tool technology, became operational
for all major engine components during the year. Coupling
modern aerospace quality systems with commercial lean
manufacturing practices has allowed us to achieve a 70%
reduction in the company’s managed manufacturing footprint,
while reducing some component manufacturing cycle times by
as much as 90%. By implementing a build-to-order, lean
manufacturing methodology, we have been able to achieve
increasing levels of service and productivity, accompanied by
work force reductions.

In 2001 we were also able to fully link our company’s

web-based ordering system with our manufacturing and
purchasing control systems for piston engine operations. Over
85% of the piston division suppliers have now adopted an
e-commerce purchasing system which displays actual
supply/demand dynamically updated from incoming orders.

The integration of electronic ordering, e-purchasing,

and lean synchronous manufacturing resulted in a 40%
reduction in inventory levels at the piston engine operations
for 2001 without significant disruptions to market service. By
continuing to refine these methodologies we expect to achieve
inventory turns far in excess of typical aerospace
manufacturing performance.

TCMLinkTM, a Unique Market Service
TCMLink, our company’s unique web-based business-to-
business software system, is designed to deliver uniform and
high quality ordering, service, maintenance and
communications data to the global network of Fixed Base
Operators (FBO), who in turn provide our products and

services to the ultimate Continental Motors customers. We are
completing the development of the next version of TCMLink
that will allow networking of multiple FBO sites to an
integrated logistics package, including automatic replenishment
links to our factory. A version of this system has also been
provided to our OEM customers for improved end customer
support and improved transactional efficiencies.

We believe our TCMLink system is a model for modern

support of our market segment of general aviation, and expect
TCMLink to become a widely used tool.

The Small Turbine Market
During 2001 our J402 derivative turbojet engine met all its
requirements in nine powered test flights of the new Lockheed
Martin Joint Air-to-Surface Standoff Missile (JASSM). Long-lead
funding was received for the JASSM test units during 2001,
with these units scheduled for delivery in early 2003.
Machining of components for these units has commenced in
the advanced turbine components manufacturing cell, with final
assembly and testing of the engines to be performed at our
Toledo, Ohio facility.

In January 2002, the JASSM Joint Program Office
formally gave go-ahead for the 76 unit first lot of the JASSM
Low-Rate Initial Production (LRIP) program phase. LRIP start
was given based on the favorable Defense Acquisition Board
decision reached in December of 2001. The U.S. Air Force has
additionally increased JASSM production requirements from
2,400 units to 3,700 units. We expect the JASSM missile to
be the permanent precision strike weapon for U.S. military
services, and remain optimistic about the long-term potential of
this program.

In preparation for this program, during 2001 we
completed construction of the small turbine components
manufacturing cell at our Mobile, Alabama facility. Using
state-of-the-art machine tool technology, coupled with
computer aided process planning, we have achieved a cycle
time reduction of up to 75% on some components. The
manufacturing systems developed for this cell provide
computer monitored quality data, and provide a platform
for the continued pursuit of improvements using
Six Sigma methodologies.

As with lean manufacturing cells for our piston engine

components, the new cell is designed not only to ensure

TCM manufacturing and quality data center

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JASSM flight test

order service capability and a reduction of manufacturing space
and inventory of over 40%.

Teledyne Gill Battery Products has also begun prototype
development of a “smart” aviation battery, in conjunction with
our Electronics and Communications Segment, to provide a
unique capability to special segments of the aviation industry
for monitoring and controlling battery service requirements.

Continuing Initiatives In Excellence
Teledyne Continental Motors anticipates market conditions that
prevailed during 2001 will continue for much of 2002. The
potential impact of the September 11 tragedy on the insurance
markets, and increased air space regulations for general
aviation will be closely monitored. We remain committed to the
continuous improvement of our products, services and
manufacturing excellence initiatives to maximize the company’s
ability to deal with these issues.

competitive manufacturing for the next generation of small
turbine engines for military standoff weapons, but also to
position the company for potential subcontract production of
small turbine components.

Gill Battery Product Expansion
Gill battery products continue to be leaders in the aviation
lead-acid battery market. In 2001, our Supplemental Type
Certificates for Gill aircraft battery installations increased by
over 20%. The company has also continued to expand
marketing of its advanced Sealed Recombinant Technology
(SRT) products to niche markets in defense, Uninterruptible
Power Supply (UPS), and standby applications.

Gill SRT batteries have been successfully introduced in

the business jet, helicopter and general aviation markets. Their
impressive reliability and power density advances have been
achieved through careful design tailoring and the
implementation of statistical process control methods in
manufacturing. As with all our other Continental Motors
facilities, we have upgraded equipment to advance
manufacturing performance and measurement accuracy on
critical processes. The use of Six Sigma and lean
manufacturing methodologies has also been expanded. The
result of these efforts has been the achievement of same day

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E N E R G Y S Y S T E M S S E G M E N T

T E L E D Y N E E N E R G Y S Y S T E M S , I N C .

TELEDYNE ENERGY SYSTEMS IS OUR NEW SEGMENT. ITS OPERATIONS WERE FORMED IN 2001

BY COMBINING THE COMPANY’S ENERGY SYSTEMS BUSINESS UNIT, WHICH WAS FORMERLY

PART OF TELEDYNE BROWN ENGINEERING, WITH ASSETS AND INTELLECTUAL PROPERTIES OF

ENERGY PARTNERS, INC., BROADENING OUR BASE OF EXPERTISE IN THIS EXPANDING FIELD.

Rhett C. Ross
President

hydrogen and oxygen, without moving parts and with pure
water as the only byproduct. PEM technology is at the leading
edge of the new global thrust to advance the development of
fuel cell generators for a variety of uses ranging from space
missions, to distributed power generation, uninterruptible power
supplies, and portable power applications using either hydrogen
or natural gas as a fuel. It is one of the most promising
technologies being investigated in the development of
nonpolluting automotive power plants to eliminate or reduce
the use of carbon based fuels.

On Site Gas Generation
The Teledyne TitanTM series hydrogen/oxygen gas generators
utilize the principle of electrolysis to convert water into high
purity hydrogen gas at useable pressures. The compact design
and rugged construction of these generators makes them ideal
for many laboratory and industrial uses. The oxygen byproduct
of these units can be refined to deliver high-purity oxygen free
of hydrocarbons. These gases are used in many applications
such as fuel cell testing, semiconductor fabrication, metals
processing, fiber optics production, and as feedstock in
pharmaceutical manufacture and the hydrogenation of fat and
oil products.

TitanTM On Site Gas System

Viking 2 Mars Lander

Teledyne Energy Systems’ activities include a 50-year history
of supplying high reliability energy conversion devices and gas
generation products based on thermoelectric and
electrochemical processes. Power systems have been provided
for several successful deep-space missions such as the Viking 1
and Viking 2 Mars Landers, and the Pioneer 10 and 11
missions to Jupiter and Saturn. The Pioneer 10 power system
is still operating some 28 years after its launch and is now
more than 7 billion miles from earth. Earthbound applications
have included systems for high reliability unattended power
generation in remote installations such as gas pipeline control
stations, and electrolytic high-purity hydrogen and oxygen gas
generation used in many industrial processes.

The transaction with Energy Partners, Inc. has added its

capabilities in Proton Exchange Membrane (PEM) fuel cell
technology to the company's already broad-based capabilities
in electrochemical conversion processes. Fuel cells produce
electrical energy by direct electrochemical conversion of

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More than 400 Teledyne Titan TM gas generators have

been put in use for traditional industrial applications in the last
25 years. Now this market is expanding because of the
interest in fuel cells using hydrogen as a fuel. In 2001 we
introduced two new products in this series with higher outputs
that meet requirements in alternative fuel development.

Fuel Cell Test Stations
In 2001, we introduced our new line of Teledyne MedusaTM
Fuel Cell Test Stations. These stations are designed to provide
a completely integrated system for fuel cell testing for the PEM
fuel cell development market. They provide industry leading
control and analysis capability in a compact package. At
present they are used for testing fuel cell components and
single cells, but we are expanding this product line to provide
systems capable of testing multi-cell stacks rated from watts
to kilowatts.

Advanced Power Systems
Building on our long history of supplying high
reliability, long endurance power systems for
extreme environment applications, our new
Advanced Power Group is focused on
expanding our success in the Viking and
Pioneer space missions into new programs for
high reliability power. We have
already realized our first
success in this
area with the award of a project to
develop an advanced PEM fuel cell for NASA’s Second
Generation Reusable Launch Vehicle which is expected to
replace the existing Space Shuttle fleet.

Fuel Cells
With the addition of Energy Partners’ PEM fuel cell expertise,
we have been able to move forward rapidly to meet
opportunities in areas such as distributed power generation,
uninterruptible and auxiliary power supplies and portable
power using either hydrogen or natural gas as a fuel. We
have already successfully completed operational tests of our
prototype 3-kilowatt natural gas fueled stationary fuel cell
power system. The results of these tests have demonstrated
the performance needed to meet the power generation
requirements of residential and telecommunications markets.
Development of additional prototypes at the same and higher
powers has begun.

Teledyne Energy Systems’ fleet of
prototype fuel cell powered vehicles

Teledyne Perry Series PEM
Fuel Cell Stack rated at 20kW

Teledyne MedusaTM Fuel Cell Test Station

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In this report we review our activities in support of our
nation’s global and domestic security, and suggest areas
in which we can make further contributions to those
security efforts.

For many years Teledyne has provided products, services and technologies that have been vital
to both our global and domestic security. In light of the recent escalation in terrorist activities
that have created, in effect, an undeclared guerrilla war within our borders, these products have
taken on a new vital importance in our war on terrorism.

SE E KI NG SEC U R ITY I N
A N I N S E C U R E W O R L D

Airline Safety and Security
Teledyne has been involved in providing systems for airline safety and security since the late 1960s. At that time Teledyne
Controls began designing and producing the first onboard equipment for commercial airlines that acquires and records data on
certain FAA-mandated aircraft flight parameters each time an aircraft flies. The “brain” of this system is known today, after many
generations of development, as the Digital Flight Data Acquisition Unit or DFDAU. Modern versions of this system can acquire and
format more than 1000 individual data parameters representing the condition and operational status of the aircraft.

The DFDAU-acquired and formatted data are recorded on a magneto-optical disk or PC card in a Teledyne Quick Access
Recorder from which it can be retrieved on the ground and sent to the airline flight operations center for analysis. To meet federal
safety requirements, up to 88 of these data parameters critical to flight safety are also selected and sent to an armored Flight
Data Recorder, popularly known as the “black box”. In the event of a catastrophic aircraft failure, this recorder often provides the
only clues to the cause of the failure.

Teledyne also provides software, known as the Aircraft Condition Monitoring System (ACMS), that operates this data
acquisition system. We customize this software to meet each individual airline’s data requirements as to which parameters are
recorded. Much of this information is used in the business and maintenance operations of the airline.

In the original system configuration, the data disk must be physically removed from the aircraft by flight maintenance
personnel after a certain number of flight legs and mailed to the airline’s flight operations center for analysis. This presents
considerable delay in the receipt and analysis of the data, as well as the possibility of losing critical information.

Teledyne Controls has recently developed a new Wireless GroundLink TM system that can automatically download flight
information to the airline’s operations center, using existing cellular and Internet communications systems, as soon as the aircraft
is on the ground. This new system speeds access to the information, and eliminates the logistics of shipping the optical disks and
PC cards from airline hubs to their operations center.

The final link in the system is the Flight Data Replay and Analysis System (FLIDRAS) which carries out analysis, trending

and reporting of the acquired data. This permits flights to be reconstructed, analyzed and even viewed with 3D imagery to aid in
accident/incident analysis and in pilot training.

Our Aircraft Communications Addressing and Reporting System (ACARS) products allow a limited amount of aircraft
information to be automatically transmitted to the ground during critical flight phases or when an abnormal event occurs.
Ultimately ACARS will replace much routine verbal communication required between the pilot and ground controllers, reducing
cockpit workload, eliminating confusion and enhancing flight safety. Our newest product for this system, known as the
Communications Management Unit (CMU), manages the transmission of ACARS data over various communications links. It
employs the latest sophisticated computer technology for efficient routing of this information.

Teledyne Controls also provides datalink equipment and software, known as TeleLink ®, for business and commuter aircraft.

The MagnaStar ® system provides air-ground telephone service for passengers and provides weather and other data to pilots.

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We have provided approximately 70 percent of
in-flight data acquisition and management systems
used worldwide. This equipment is manufactured in
accordance with Boeing and Airbus specifications for
over 200 commercial airline customers. We also
provide mini flight data acquisition units for business
aircraft such as Bombardier’s Global Express and the
Gulfstream V.

Enhancing Airline Security
While aircraft “black boxes” have been remarkably
reliable over the years, a significant delay may occur
before the voice and data recorders are recovered and
the data analyzed. This delay is acutely important

when both aviation safety and national security
organizations are waiting to learn the cause of an
airliner crash. Teledyne is currently addressing this
problem by developing new data and communication
management systems to permit near real-time
transmission of flight data from the aircraft to the
ground.

These systems will use the processing power of

our newer equipment to continuously monitor
parameters such as engine conditions and aircraft flight
dynamics. When conditions suggesting a possible
emergency are detected, the system will automatically
begin transmitting flight data to the ground using radio
or satellite links which are already present on the

aircraft. Transmission of flight data can also be
manually initiated by the pilot. If a pilot is unable to
recover from an emergency, and the aircraft crashes,
security personnel may receive sufficient preliminary
information to determine the causes of the crash far
more quickly than is currently possible.

We are currently cooperating with government
agencies and our airline customers in flight tests to
demonstrate system
enhancements that will permit
flight data information to be
transmitted over existing
communication links.

RAPID RESPONSE IN FLIGHT WITH EXISTING SYSTEMS

A. Data Acquisition Unit

Flight Data Recorder

Engines

Flight Computer

Control Surfaces

F L I G H T
M A N A G E M E N T

D A T A
M A N A G E M E N T

C O M M U N I C A T I O N
M A N A G E M E N T

Digital Flight Data Acquisition

Units (DFDAU) such as this are

used in the aircraft of over 200

commercial airlines worldwide

SATELLITE
COMMUNICATIONS

Wireless GroundLink TM
automatically downloads flight

information to an airline’s

operation center

TELEPHONE
NETWORK

AIR/GROUND
TELEPHONY

RADIOS

CELLULAR
TELEPHONY

CRISIS MANAGEMENT
INFRASTRUCTURE

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Powering Aircraft For Security Missions
Teledyne Continental Motors is one of the two largest producers of piston engines for
certified light aircraft, accounting for approximately half of all light aircraft piston
engines in use throughout the world. Most Continental-powered light aircraft are used
for personal, business, industrial and agricultural applications, but many are also used
by federal and state agencies for airborne surveillance and interdiction missions.
Continental's high performance engines power aircraft used by the FBI, the
INS, U.S. Customs Service, and state agencies in border patrol, drug interdiction and
other missions related to domestic security. Our specially-designed geared engines,
which provide a low sound signature and long endurance, are used by the U.S. Coast
Guard for coastal patrol.

Turbine Power For Military Weapons
Continental has also long been a world leader in providing small low-cost turbine
engines for unmanned U.S. military systems. Our J402 turbine engine powers the
Boeing Harpoon and the Surface Land Attack Missile (SLAM). With over 8,000 of
these systems produced, the J402 is now entering its third decade of service. An
improved version of the J402 was selected to power the new Joint Air-to-Surface
Standoff Missile (JASSM).

For decades, Air Force pilots who play a vital part in our national security have
taken their primary flight training in the T37 trainer powered by our J69 turbojet. Air
Force Academy pilots have also trained in C172 aircraft powered by our injected 360
cubic inch piston engines for almost three decades.

Our piston aircraft engines are used in
a variety of training and surveillance
roles related to domestic security

The Continental J402 Turbojet and
derivatives power first line tactical
missile systems providing precision
strike capability

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The Hide-and-Seek Game of Modern Warfare
Radar, an acronym from the words RAdio Direction And Ranging, is one of the
most important electronic technologies used in modern warfare. From its
relatively primitive beginnings in World War II, radar has been developed into a
variety of sophisticated systems designed to locate and target enemy air, ground
and sea forces, to guide missiles and antiaircraft fire, as well as for navigation,
weather observation and other purposes. As with any weapons system, as soon
as radar was developed means for defeating its purpose were developed as well.
Electronic systems designed to deny or degrade an enemy’s use of radar,
communications and other electronic systems are known as Electronic Counter
Measures or simply ECM.

For over 40 years Teledyne MEC has been involved in the design and
development of vacuum electron devices called Traveling Wave Tubes, or TWTs,
used in sophisticated radar, ECM and communications applications to amplify
microwave radio frequency signals. The advantage of TWTs over other
amplification devices is their extremely broad bandwidth that allows a single
compact tube to cover broad ranges of the microwave frequency spectrum, and
to simultaneously amplify many signals at different frequencies.

Teledyne MEC pioneered metal-ceramic vacuum envelope technology
which has now almost entirely replaced the glass vacuum envelope used in early
tubes. Metal-ceramic technology has permitted the development of compact,
highly efficient TWTs that produce much higher output powers. Teledyne MEC
TWTs can amplify microwave input signals by a factor of one thousand to one
million times, and produce output power ranging from hundreds to thousands of
watts for continuous signals, or from thousands to tens of thousands of watts in
“pulsed” applications.

In radar applications, Teledyne TWTs are used in systems for aircraft and ship
navigation, weather observation, location and targeting of hostile air, sea or
land forces, and targeting for surface-to-air and air-to-air missiles. The broad
bandwidth of modern TWTs often permits one radar to perform multiple
functions that formerly required separate radars. TWTs are also used in airport
runway surveillance radars at domestic and foreign commercial airports.

Electronic Counter Measures
The high output power and broad bandwidth of TWTs make them ideal for use
in ECM systems that “jam” hostile radars. These systems use various
sophisticated methods to confuse enemy radars. In deception jamming, the
radar signal is detected and a return signal transmitted that gives the enemy
radar false information as to range, direction or characteristics of its target.
Barrage or “noise” jamming simply overwhelms the hostile radar’s return

signal with a powerful transmission of random noise.

ECM systems fall into two major categories: Self protection
jammers designed to protect a single friendly aircraft carrying the
jammer, and sophisticated systems aboard dedicated Electronic
Warfare aircraft that protect multiple friendly aircraft, ships

or ground troops. Teledyne MEC’s helix TWT

technology is ideal for these applications.

(cid:1)
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ELECTRONIC JAMMING SYSTEMS

TWO CATEGORIES OF ECM SYSTEMS

Without
Deception Jamming

Without
Noise Jamming

Self Protection
Jammers

Dedicated
Jammers

With
Deception Jamming

With
Noise Jamming

Enemy
plane

Friendly aircraft carrying
the jammer

Apparent position
of planes

Real position of planes
not visible to the radar

The broad bandwidth of these tubes allows a single ECM transmitter to
simultaneously jam multiple radars operating at different frequencies. ECM systems
are also used to disrupt hostile communications systems, thwarting an enemy’s
command and control abilities.

Teledyne’s TWTs are currently deployed in most front-line U.S. fighters,
bombers and other special operations aircraft, as well as in many aircraft of allied
nations. These systems have seen effective use in every U.S. conflict since Vietnam,
including Desert Storm, Bosnia and the current anti-terrorist military campaign.

TWTs for Communications Systems
Secure, reliable broadband communications systems, capable of handling today’s
high volume of message, video and data traffic are vital in military systems, air
traffic control and many other applications related to national security. The broad
instantaneous bandwidth of Teledyne’s TWT amplifiers permits high data transmission

rates and high linear power which are ideal for digital and

video transmission. There has been solid growth
in the demand for our TWT

Traveling Wave Tube

communications products for both military and commercial applications.

Teledyne’s long involvement in ECM products led to development of a solid set

of multi-octave TWT designs in which a single TWT can cover the entire frequency
range that includes both the C and Ku bands frequencies used by the commercial
Satellite News Gathering (SNG) market. On-the-spot news coverage from virtually
anywhere in the world can be uplinked to commercial satellites for real time
broadcast in the U.S. and other countries. News crews employing the type of truck
you see at the Super Bowl, or baggage transportable “flyaway” equipment,
increasingly use modern satellite uplink amplifiers that cover both C and Ku band
frequencies with a single Teledyne TWT.

Military planners were quick to note that these tubes also covered the military

X-band communications frequencies which lie between the C and Ku bands. By
leasing time on the many commercial satellites now in orbit, military forces can use
the C and Ku band frequencies for routine message and data traffic, while continuing
to use X-band for secure military-only purposes. Teledyne was the first to market a
series of tri-band TWTs for Department of Defense and U.S. Army use, and remains
the leading supplier of tri-band tubes.

Protecting Proprietary Electronic Designs
We produce many microelectronic devices for both commercial and military

customers that incorporate unique advanced circuit designs. In commercial
applications these circuits are valuable proprietary property of

their owners that may give them important
competitive advantages. In military applications
these devices are often used in such sensitive
applications as military encryption as well as in
advanced weapons systems. To protect these
designs we can provide our modules with secure
coatings that make it extremely difficult or
impossible to reverse engineer or otherwise copy

these circuits.

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Highly successful tests during 2001,
supported by Teledyne Brown, have
shown the feasibility of hit-to-kill
ballistic missile defense technologies

Extended Air Defense Simulation
(EADSIM), developed and serviced by
Teledyne Brown and with over 390
user agencies worldwide, is the most
widely used tool for modeling
integrated air, missile, and space
warfare

The Pocket Interactive Electronic
Technical Manual (IETM) is one of
Teledyne Brown's revolutionary Enabled
IQ TM products

Engineering Complex Systems
Teledyne Brown Engineering is making major contributions to our country’s most
important defense, space, information, and environmental programs. Founded in
Huntsville, Alabama in 1953 to support Dr. Wernher von Braun’s early rocket
development efforts, Brown continues to make significant contributions today with
sophisticated engineering and systems development programs for the Department of
Defense, NASA, and other customers.

Missile Defense
Given the ever-increasing proliferation of missile technology throughout the world,
and the evolving threat of missile attacks, development of missile defense systems is
at the core of our national security strategy. Teledyne Brown Engineering is providing
extensive support for the Missile Defense program as a major subcontractor to the
Boeing Company. Teledyne Brown served as the Mission Test Director on the
successful hit-to-kill test intercept that took place on July 17, a demonstration of the
much talked about antimissile defense system, and is making other ongoing
contributions to the development of this important program.

Supporting the Military in Meeting Changing Threats
In the area of classical systems engineering, test and evaluation, Teledyne Brown
served as a subcontractor to B3H Corporation on a contract issued through the Air
Force Special Operations Command to develop and update that agency’s Electronic
Combat Map. This key document must be regularly updated in response to changes
in threats, new technological developments, as well as command and operational
decisions and fiscal constraints. Teledyne Brown also provides engineering analysis
for advanced systems such as towed decoys and directional countermeasures.
In 1972, Congress established the Joint Test and Evaluation Program to
integrate the expertise of the defense science community with the experience of the
various military arms, and to investigate and solve complex joint operational
problems. Teledyne Brown has secured a role as part of the team headed by the
Scientific Research Corporation, and is participating in conducting test and
evaluations as needed in this program.

Satellite communications and surveillance have become important factors in

military operations and missile defense. The ability to degrade a hostile nation’s
ability in this area, as well as protect our own capabilities, is a vital part of national
security. Teledyne Brown is a strategic subcontractor on a contract to provide support
to the U.S. Air Force Space Command’s Space Warfare Center in the areas of
mission and information technology systems engineering. These activities will involve
program management and integration, requirements analysis, modeling and
simulation, and analysis.

Homeland Security
More than a year before the September 11 attack, Teledyne Brown established a
new Crisis Management and Counter-Terrorism Technologies Group, recognizing the
need for organized, integrated and coordinated approaches to our domestic security.
This group’s first contract in this area is for the Consequence Management
Infrastructure Services program from the U.S. Marine Corps Warfighting Systems Lab.
It brings all of our well-established expertise in management, planning, simulation,
training and systems engineering to bear on these problems.

Under a Department of Defense program for Homeland Defense, Teledyne
Brown has been awarded a contract with the Battelle Memorial Institute to develop a
Consequence Management Interoperability Services Playbook. The Teledyne Brown-
developed playbook is a computer-based field operations guide for local response to
weapons of mass destruction terrorism.

In September, Teledyne Brown also directed and coordinated a 3-day
Counter Terrorism Symposium for the National Institute for Urban Search and Rescue.
This conference involved 32 exhibitors, 50 speakers and 300 attendees at
Huntsville, Alabama.

In the training area, Teledyne Brown has developed a global training program
for the Immigration and Naturalization Service. Its focus is to train airline, cruise ship
and security personnel on entry requirements to the United States, how to detect
fraudulent travel documents, how to identify impostors, and how to develop profiles
for passenger assessment.

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

PA G E 2 2

SUMMARY ANNUAL REPORT 2 0 0 1

Preparing for the Future
Our Advanced Programs activities bring Teledyne Brown’s technical expertise to bear
on solutions to future problems. One thrust of this approach is to provide unique
training solutions using our Enabled IQ (EIQ) Solutions program. This teaching
method shifts learning from conventional classroom events to mobile or just-in-time
training, as the user interacts with unfamiliar hardware or software. The use of a
hand-held Interactive Electronic Training Manual successfully delivers cost-effective
electronic learning in the work environment as needed. The EIQ team provides
training support for NASA, the U.S. Army and other customers, and can provide
faster and more efficient training of security personnel.

Our other Advanced Programs business units are developing mobile

information systems, e-learning and knowledge-based applications to create
effective emergency preparedness tools for security training, and counter-terrorism.
This program uses video, interactive CD-ROM courseware, computer-based training,
and unique tools, such as the Pocket Responder, to help bridge the communications
gap during emergencies for public safety organizations and events.

Significant advances in the development of infrared signature protection,

lightweight armor, and gunnery targets for the U.S. Army have been achieved by
our Advanced Programs Team and its laboratory. These developments assist the
Army in the evaluating the new Battlefield Combat Identification System for
armored vehicles, a system designed to reduce combat losses due to “friendly fire”.

➜

Teledyne Brown's Mobile Fluid Jet
Access System is receiving national
attention for its capability in
opening containers in hazardous
situations

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

SUMMARY ANNUAL REPORT 2 0 0 1

PA G E 2 3

➜

Chemical Agent Identification
Sets are safely unloaded from
containers and neutralized in the
Rapid Response System

Environmental Programs
Industrial and military activities sometimes produce seriously dangerous materials
and wastes. Teledyne Brown’s environmental programs provide safe technological
solutions for this problem. An example is the Rapid Response System, a mobile
chemical treatment system developed by the Army and operated by Teledyne Brown
Engineering. This system is used to process Chemical Agent Identification Sets that
were once used to train military personnel in the detection, measurement and
decontamination of dangerous chemical agents and industrial chemicals.

The Rapid Response System completed testing at the Deseret Chemical Depot

in Utah and is now operational. The system completed processing of more than
1,226 items in 58 Chemical Identification Sets in February, and the system and the
Utah site have since been decontaminated and the site closed.

A related program is the ongoing production of high-tech canisters for the
processing and storage of nuclear waste products, and detonation chambers for the
disposal of both chemical weapons and conventional explosives.

Mobile Fluid Jet Access System
Teledyne Brown recently demonstrated its Mobile Fluid Jet Access System at the FBI’s
Hazardous Devices Training School at Redstone Arsenal, and for major metropolitan
police departments. This system integrates fluid-jet cutting technologies with
hazardous-duty robots, creating a system designed to safely disable explosive devices
and weapons. Using this system, a law enforcement agency can direct the robot to a
suspected bomb or explosive delivery vehicle, cut into the vehicle to examine the

device, and cut into the device using high pressure water with an abrasive as the
cutting agent, to disable it.

In The Final Analysis
There is probably no such thing as absolute security in this dangerous and irrational
world, but by applying our many technologies and sustained creative efforts we can
make it difficult and costly for terrorists to continue to pursue their goals.

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

PA G E 2 4

SUMMARY ANNUAL REPORT 2 0 0 1

C O R P O R A T E I N F O R M A T I O N

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

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

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

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*
Vice President and Controller

James M. Link
President, Teledyne Brown Engineering, Inc.

Bryan L. Lewis
President, Teledyne Continental Motors, Inc.

Rhett C. Ross
President, Teledyne Energy Systems, Inc.

Robert W. Steenberge
Chief Technology Officer

Ivars R. Blukis
Chief Risk Assurance 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

Robert P. Bozzone (1)
Chairman,
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

Charles Crocker (3)
Chairman of the Board and Chief Executive Officer,
BEI Technologies, Inc.

C. Fred Fetterolf (2)(3)
Retired President and Chief Operating Officer,
Alcoa Corporation

Robert Mehrabian
Chairman, President and Chief Executive Officer,
Teledyne Technologies Incorporated

Paul D. Miller (1)
Chairman of the Board and Chief Executive Officer,
Alliant Techsystems, Inc.

Charles J. Queenan, Jr. (1)(3)
Senior Counsel,
Kirkpatrick & Lockhart LLP

Michael T. Smith (2)(3)
Retired Chairman and Chief Executive Officer,
Hughes Electronics Corporation

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

C o r p o r a t e O f f i c e s
Teledyne Technologies Incorporated
12333 West Olympic Boulevard
Los Angeles, CA 90064-1021
Telephone: (310) 893-1600
Fax: (310) 893-1669
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

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 Corporate
Communications and Investor Relations at
the corporate headquarters or visit our
website at www.teledyne.com.

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 24, 2002, at 9:00 a.m.,
at Teledyne Technologies Incorporated,
12333 West Olympic Boulevard,
Los Angeles, CA 90064-1021.

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
Incorporated is available at www.teledyne.com

* Section 16 Officer

FORWARD-LOOKING STATEMENTS CAUTIONARY NOTICE

This summary annual report contains forward-looking statements, as defined in the
Private Securities Litigation Reform Act of 1995, relating to earnings, cost-savings,
growth opportunities, capital expenditures and strategic plans. Actual results could
differ materially from these forward-looking statements. Many factors, including
changes in demand for products sold to the semiconductor and communications
markets, timely development of acceptable and competitive fuel cell products and
systems, funding, continuation and award of government programs, the outcome of
the crankshaft litigation, and economic and political conditions, could change the
anticipated results.

The September 11 terrorist attacks and resulting subsequent events increase
uncertainties associated with forward-looking statements about our businesses. For
example, flight restrictions negatively impact the market for general aviation aircraft
piston engine and components. In addition, reduced shipments of commercial
aviation aircraft, as well as the liquidity of major airlines, could negatively affect our
Electronics and Communications segment.

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

Additional information concerning factors that could cause actual results to differ
materially from those projected in the forward-looking statements is contained in
Teledyne Technologies’ periodic filings with the Securities and Exchange Commission,
including its 2001 Annual Report on Form 10-K.

Credits:

Design: James Robie Design Associates

Writing: Robert McVicker

JASSM photo courtesy of Lockheed Martin

Earth photo courtesy of NASA

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

12333 West Olympic Boulevard • Los Angeles, California 90064 • 310.893.1600 • Fax: 310.893.1669 • www.teledyne.com