UNITED STATES
                        SECURITIES & EXCHANGE COMMISSION

                             Washington, D.C. 20549

                             ----------------------

                                    FORM 10-Q

|X|   Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
      Exchange Act of 1934

For the quarterly period ended June 27, 2003, or

|_|   Transition Report Pursuant to Section 13 or 15(d) of the Securities
      Exchange Act of 1934

For the transition period from ______________ to ______________.

Commission File No. 1-5375

                                TECHNITROL, INC.
             (Exact name of registrant as specified in its Charter)

                 PENNSYLVANIA                               23-1292472
       (State or other jurisdiction of                    (IRS Employer
        incorporation or organization)                Identification Number)

      1210 Northbrook Drive, Suite 385
            Trevose, Pennsylvania                               19053
  (Address of principal executive offices)                    (Zip Code)

Registrant's telephone number, including area code: 215-355-2900

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

      YES |X| NO |_|

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

      YES |X| NO |_|

Common Stock - Shares Outstanding as of July 25, 2003: 40,182,632


                                  Page 1 of 32
<PAGE>

                          PART I. FINANCIAL INFORMATION

Item 1: Financial Statements

                        Technitrol, Inc. and Subsidiaries

                           Consolidated Balance Sheets

                                  In thousands

<TABLE>
<CAPTION>
                                                            June 27,      December 27,
                           Assets                              2003              2002
                                                               ----              ----
                                                         (unaudited)
<S>                                                       <C>               <C>
Current assets:
     Cash and cash equivalents                            $ 115,830         $ 205,075
     Trade receivables, net                                  91,866            65,185
     Inventories                                             66,010            60,588
     Prepaid expenses and other current assets               18,182            13,878
                                                          ---------         ---------
           Total current assets                             291,888           344,726

Property, plant and equipment                               200,163           163,147
     Less accumulated depreciation                          109,442            98,286
                                                          ---------         ---------
           Net property, plant and equipment                 90,721            64,861
Deferred income taxes                                        10,518            11,743
Goodwill and other intangibles, net                         150,920           100,768
Other assets                                                 25,035            25,608
                                                          ---------         ---------
                                                          $ 569,082         $ 547,706
                                                          =========         =========

          Liabilities and Shareholders' Equity
Current liabilities:
     Current installments of long-term debt               $      83         $  10,667
     Accounts payable                                        39,172            28,791
     Accrued expenses                                        72,552            69,689
                                                          ---------         ---------
           Total current liabilities                        111,807           109,147

Long-term liabilities:
     Long-term debt, excluding current installments           6,203             5,681
     Other long-term liabilities                             12,744            10,501

Shareholders' equity:
     Common stock and additional paid-in capital            207,730           207,033
     Retained earnings                                      229,490           220,836
     Other                                                    1,108            (5,492)
                                                          ---------         ---------
           Total shareholders' equity                       438,328           422,377
                                                          ---------         ---------
                                                          $ 569,082         $ 547,706
                                                          =========         =========
</TABLE>

See accompanying Notes to Unaudited Consolidated Financial Statements.


                                  Page 2 of 32
<PAGE>

                        Technitrol, Inc. and Subsidiaries

                      Consolidated Statements of Operations

                                   (Unaudited)
                      In thousands, except per share data

<TABLE>
<CAPTION>
                                                               Three Months Ended                Six Months Ended
                                                            June 27,        June 28,        June 27,        June 28,
                                                                2003            2002            2003            2002
                                                                ----            ----            ----            ----
<S>                                                        <C>             <C>             <C>             <C>
Net sales                                                  $ 125,706       $ 106,185       $ 248,250       $ 199,605
Costs and expenses:
     Cost of sales                                            92,888          81,519         185,011         155,687
     Selling, general and administrative expenses             24,558          22,372          48,292          45,851
     Restructuring and unusual and infrequent items              505          43,098           4,398          45,756
                                                           ---------       ---------       ---------       ---------

         Total costs and expenses applicable to sales        117,951         146,989         237,701         247,294
                                                           ---------       ---------       ---------       ---------
Operating profit (loss)                                        7,755         (40,804)         10,549         (47,689)

Other (expense) income:
     Interest expense, net                                      (257)           (133)           (544)           (374)
     Equity method investment earnings                           233              --             505              --
     Other                                                      (445)           (542)           (485)           (958)
                                                           ---------       ---------       ---------       ---------

         Total other expense                                    (469)           (675)           (524)         (1,332)
                                                           ---------       ---------       ---------       ---------

Earnings (loss) before taxes and cumulative effect of
    accounting change                                          7,286         (41,479)         10,025         (49,021)

Income taxes (benefit)                                         1,266         (12,434)          1,371         (14,815)
                                                           ---------       ---------       ---------       ---------
Net earnings (loss) before cumulative effect of
    accounting change                                          6,020         (29,045)          8,654         (34,206)

Cumulative effect of accounting change, net of
    income taxes                                                  --              --              --         (15,738)
                                                           ---------       ---------       ---------       ---------
Net earnings (loss)                                        $   6,020       $ (29,045)      $   8,654       $ (49,944)
                                                           =========       =========       =========       =========

Basic earnings (loss) per share before cumulative
    effect of accounting change                            $    0.15       $   (0.75)      $    0.22       $   (0.95)

Cumulative effect of accounting change, net of
    income taxes                                                  --              --              --           (0.44)
                                                           ---------       ---------       ---------       ---------
Basic earnings (loss) per share                            $    0.15       $   (0.75)      $    0.22       $   (1.39)
                                                           =========       =========       =========       =========

Diluted earnings (loss) per share before cumulative
    effect of accounting change                            $    0.15       $   (0.75)      $    0.22       $   (0.95)
Cumulative effect of accounting change, net of
    income taxes                                                  --              --              --           (0.44)
                                                           ---------       ---------       ---------       ---------
Diluted earnings (loss) per share                          $    0.15       $   (0.75)      $    0.22       $   (1.39)
                                                           =========       =========       =========       =========
</TABLE>

     See accompanying Notes to Unaudited Consolidated Financial Statements.


                                  Page 3 of 32
<PAGE>

                        Technitrol, Inc. and Subsidiaries

                      Consolidated Statements of Cash Flows

                                   (Unaudited)

                                  In thousands

<TABLE>
<CAPTION>
                                                                                     Six Months Ended
                                                                                June 27,        June 28,
                                                                                    2003            2002
                                                                                    ----            ----
<S>                                                                            <C>             <C>
Cash flows from operating activities:
Net earnings (loss)                                                            $   8,654       $ (49,944)
Adjustments to reconcile net earnings to net cash provided
   by operating activities:
     Depreciation and amortization                                                11,793          10,543
     Tax benefit from employee stock compensation                                    123             406
     Amortization of stock incentive plan expense                                  1,011             746
     Restructuring and unusual and infrequent items, net of cash payments            600           2,915
     Cumulative effect of accounting change, net of income taxes                      --          15,738
     Loss on disposal of assets                                                      697           6,452
     Trade name write off, net of tax effect                                          --          19,260
     Changes in assets and liabilities, net of effect of acquisitions:
       Trade receivables                                                              96          (5,108)
       Inventories                                                                 6,212           4,736
       Prepaid expenses and other current assets                                  (3,732)          4,799
       Accounts payable and accrued expenses                                      (5,548)         (2,495)
     Other, net                                                                   (5,720)         (5,848)
                                                                               ---------       ---------
         Net cash provided by operating activities                                14,186           2,200
                                                                               ---------       ---------

Cash flows from investing activities:
     Acquisitions, net of cash acquired                                          (81,926)             --
     Capital expenditures                                                         (3,499)         (2,571)
     Proceeds from sale of property, plant and equipment                             347              31
                                                                               ---------       ---------
         Net cash used in investing activities                                   (85,078)         (2,540)
                                                                               ---------       ---------
Cash flows from financing activities:
     Dividends paid                                                                   --          (1,137)
     Principal payments of long-term debt                                        (11,794)        (75,073)
     Sale of stock through employee stock purchase plan                              481             759
     Net proceeds from follow-on offering                                             --         134,700
                                                                               ---------       ---------
         Net cash (used in) provided by financing activities                     (11,313)         59,249
                                                                               ---------       ---------
Net effect of exchange rate changes on cash                                       (7,040)         (2,435)
                                                                               ---------       ---------
Net (decrease) increase in cash and cash equivalents                             (89,245)         56,474

Cash and cash equivalents at beginning of year                                   205,075         142,267
                                                                               ---------       ---------
Cash and cash equivalents at June 27, 2003 and
  June 28, 2002                                                                $ 115,830       $ 198,741
                                                                               =========       =========
</TABLE>

See accompanying Notes to Unaudited Consolidated Financial Statements.


                                  Page 4 of 32
<PAGE>

                        Technitrol, Inc. and Subsidiaries

            Consolidated Statement of Changes in Shareholders' Equity

                         Six Months Ended June 27, 2003

                                   (Unaudited)
                                  In thousands

<TABLE>
<CAPTION>
                                                                                               Other
                                                                                    ----------------------------
                                             Common stock and                                       Accumulated
                                              paid-in capital                                          other
                                          ---------------------        Retained       Deferred     comprehensive     Comprehensive
                                           Shares       Amount         earnings     compensation      income             income
                                           ------       ------         --------     ------------   -------------     -------------
<S>                                       <C>         <C>             <C>            <C>             <C>               <C>
Balance at December 27, 2002              40,130      $ 207,033       $ 220,836      $  (1,177)      $  (4,315)
Stock options, awards and related
    compensation                              16            330              --            433              --
Tax effect of stock compensation              --           (123)             --             --              --
Stock issued under employee stock
    purchase plan                             36            490              --             --              --
Currency translation adjustments              --             --              --             --           6,167          $   6,167
Net earnings                                  --             --           8,654             --              --              8,654
                                                                                                                        ---------
Comprehensive income                                                                                                    $  14,821
                                          ------      ---------       ---------      ---------       ---------          =========
Balance at June 27, 2003                  40,182      $ 207,730       $ 229,490      $    (744)      $   1,852
                                          ======      =========       =========      =========       =========
</TABLE>

See accompanying Notes to Unaudited Consolidated Financial Statements.


                                  Page 5 of 32
<PAGE>

                        Technitrol, Inc. and Subsidiaries

              Notes to Unaudited Consolidated Financial Statements

(1)   Accounting Policies

      For a complete description of the accounting policies of Technitrol, Inc.
and its consolidated subsidiaries, refer to Note 1 of Notes to Consolidated
Financial Statements included in Technitrol's Form 10-K filed for the year ended
December 27, 2002. We sometimes refer to Technitrol as "we" or "our".

      The results for the three months and six months ended June 27, 2003 and
June 28, 2002 respectively, have been prepared by our management without audit
by our independent auditors. In the opinion of management, the financial
statements fairly present in all material respects, the financial position and
results of operations for the periods presented. To the best of our knowledge
and belief, all adjustments have been made to properly reflect income and
expenses attributable to the periods presented. All such adjustments are of a
normal recurring nature. Operating results for the six months ended June 27,
2003 are not necessarily indicative of annual results.

      New Accounting Pronouncements In January 2003, the Financial Accounting
Standards Board ("FASB") issued FASB Interpretation No. 46 Consolidation of
Variable Interest Entities ("FIN 46"). FIN 46 clarifies the application of
Accounting Research Bulletin No. 51, Consolidated Financial Statements, to
certain entities in which equity investors do not have the characteristics of a
controlling financial interest, or do not have sufficient equity at risk for the
entity to finance its activities without additional subordinated financial
support from other parties. We were required to adopt the provisions of FIN 46
for variable interest entities created after January 31, 2003, whereas it is
otherwise effective June 15, 2003 for variable interest entities acquired before
February 1, 2003. Adoption of this interpretation has not had a material effect
on our revenue, operating results, financial position, or liquidity.

      In December 2002, the FASB issued Statement No. 148, Accounting for
Stock-Based Compensation, Transition and Disclosure, an amendment to Statement
No. 123 ("SFAS 148"). SFAS 148 provides alternative methods of transition for a
voluntary change to the fair value based method of accounting for stock-based
employee compensation. In addition, SFAS 148 amends the disclosure requirements
of Statement No. 123, Accounting for Stock-Based Compensation ("SFAS 123"), by
requiring prominent disclosures in both annual and interim financial statements,
about the method of accounting for stock-based employee compensation and the
effect of the method used on reported results. We adopted the provisions of SFAS
123, as amended by SFAS 148, as of the beginning of our fiscal year in 2003. We
used the prospective method of adoption, which recognizes expense for all
employee awards granted, modified or settled after the beginning of the fiscal
year in which the recognition provisions are first applied. Adoption of this
standard did not have a material effect on our revenue, operating results,
financial position or liquidity.

      In November 2002, the FASB issued FASB Interpretation No. 45, Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees and Indebtedness of Others ("FIN 45"). FIN 45 elaborates on the
disclosures to be made by a guarantor in its interim and annual financial
statements about its obligations under certain guarantees that it has issued.
FIN 45 also clarifies that a guarantor is required to recognize, at the
inception of a guarantee, a liability for the fair value of the obligation
undertaken in issuing the guarantee. We were required to adopt the provisions of
FIN 45 on a prospective basis to guarantees issued or modified after December
31, 2002. We have not issued any guarantees for performance of third parties
since December 31, 2002. Accordingly, adoption of this interpretation did not
have a material effect on our revenue, operating results, financial position or
liquidity.

      In June 2002, the FASB issued Statement No. 146 Accounting for Costs
Associated with Exit or Disposal Activities ("SFAS 146"). SFAS 146 superceded
the Emerging Issues Task Force Issue No. 94-3, Liability Recognition for Certain
Termination Benefits and Other Costs to Exit an Activity, ("EITF 94-3") The
principal difference between SFAS 146 and EITF 94-3 is that SFAS 146 requires
that a liability for a cost associated with an exit or disposal activity be
recognized when the liability is incurred. Under EITF 94-3, a liability for an
exit cost was recognized at the date of an entity's commitment to an exit plan.
As such, under SFAS 146, an entity's


                                  Page 6 of 32
<PAGE>

                        Technitrol, Inc. and Subsidiaries

         Notes to Unaudited Consolidated Financial Statements, continued

(1)   Accounting Policies, continued

commitment to a plan by itself, does not create a present obligation meeting the
definition of a liability. SFAS 146 also established fair value as the objective
for initial measurement of the liability. We were required to adopt the
provisions of SFAS 146 for all exit or disposal activities initiated after
December 15, 2002. These activities, which we refer to as restructuring and
unusual and infrequent items, did have a material impact on our operating
results in 2003. Although the underlying activities were material, the impact in
changing from EITF 94-3 to SFAS 146 was not significant.

(2)   Acquisitions

      Eldor High Tech Wire Wound Components S.r.L.: In January 2003, we acquired
all of the capital stock of Eldor High Tech Wire Wound Components S.r.L.
(Eldor), headquartered in Orsenigo, Italy with production operations in Izmir
and Istanbul, Turkey. Eldor produces flyback transformers and switch mode
transformers for the European television market. The acquisition was accounted
for by the purchase method of accounting. The adjusted preliminary purchase
price was approximately $83.8 million net of cash acquired, plus related
acquisition costs and expenses. The fair value of net tangible assets acquired
approximated $12.3 million. Based on the fair value of assets acquired, the
preliminary allocation of the unadjusted purchase price included $18.6 million
for manufacturing know-how, $6.1 million for customer relationships, $1.5
million for tradename and $17.7 million allocated to goodwill. These fair value
allocations are preliminary, and are subject to adjustment. All of the
separately identifiable intangible assets will be amortized, with estimated
useful lives of 20 years for manufacturing know-how, 8 years for customer
relationships and 2 years for tradename. The purchase price was funded with cash
on hand. Eldor has formed the nucleus of a new consumer division in the Pulse
segment and will be treated as a separate reporting unit for purposes of SFAS
142.

      Excelsus Technologies, Inc.: In August 2001, we acquired all of the
capital stock of Excelsus Technologies, Inc. ("Excelsus") based in Carlsbad,
California. Excelsus produced customer-premises digital subscriber line filters
and other broadband accessories. The acquisition was accounted for by the
purchase method of accounting. The purchase price was approximately $85.9
million, net of $4.8 million of cash acquired. The fair value of net assets
acquired approximated $18.2 million. Based on the fair value of the assets
acquired, the allocation of the purchase price included $40.0 million for trade
names, $27.0 million for goodwill and $8.0 million for technology. The
technology intangible is subject to amortization and is estimated to have a
5-year life. In order to fund the purchase price, we used approximately $19.0
million of cash on-hand and borrowed approximately $74.0 million under our
existing credit facility with a syndicate of commercial banks.

      Full Rise Electronics Co. Ltd. (FRE): FRE is based in the Republic of
China (Taiwan) and manufactures connector products including single and
multiple-port jacks and supplies such products for us under a cooperation
agreement. In April 2001, we made a minority investment in the common stock of
FRE, which was accounted for by the cost-basis method of accounting. On July 27,
2002, we made an additional investment in FRE of $6.7 million which increased
the total investment to $20.9 million which is accounted for under the equity
accounting method. We also have an option to purchase additional shares of
common stock in FRE in the future and we expect to make an additional investment
during fiscal 2003. See discussion in "Liquidity and Capital Resources" section
of this report. Also refer to Note 8 "Equity Method Investment".


                                  Page 7 of 32
<PAGE>

                        Technitrol, Inc. and Subsidiaries

         Notes to Unaudited Consolidated Financial Statements, continued

(3)   Restructuring

      In the three months ended June 27, 2003, we accrued $0.5 million for
severance and related payments comprising $0.2 million for the elimination of
manufacturing and positions at AMI Doduco, and $0.3 million for severance and
related payments at Pulse facilities in France and the United Kingdom. The
majority of these accruals is expected to be utilized by the end of the third
quarter in 2003.

      In the three months ended March 28, 2003, we accrued $3.9 million for
severance and related payments comprising $1.7 million for the elimination of
manufacturing and support positions at AMI Doduco's facility in Germany, $1.6
million to finalize the shutdown of a redundant facility in Spain acquired from
Engelhard-ECAL by a subsidiary of AMI Doduco and $0.6 million for the
elimination of manufacturing and support positions at Pulse, primarily in France
and Mexico. The majority of these accruals were utilized by the end of the
second quarter of 2003.

      In the three months ended June 28, 2002, we accrued $11.0 million in total
for the shutdown of our Philippines manufacturing facility, severance and
related payments, asset impairments and plant consolidations. The $11.0 million
charge included $3.8 million for the Philippines shutdown of which $1.4 million
represented severance and related payments and $2.4 million was recorded for
asset writedowns. Pulse accrued an additional $1.0 million for severance and
related payments for approximately 67 personnel on a worldwide basis and $4.1
million for asset impairments primarily involved in Asian manufacturing. AMI
Doduco accrued $2.1 million of restructuring and unusual and infrequent items in
the second quarter of 2002. This comprised approximately $1.0 million for
severance and related payments for approximately 45 people in Europe and $1.1
million for asset impairments, writedowns and relocations in Europe.

      During the three months ended June 28, 2002, we recorded an impairment
charge of $32.1 million of the value assigned to the Excelsus trade names before
any tax benefit. This charge was triggered by the combined effect of
reorganizing Pulse into a product-line based organization, and updated financial
forecasts for DSL microfilters.

      In the three month ended March 29, 2002, we accrued $1.8 million for
severance and related payments, related to the termination of approximately 400
manufacturing personnel and approximately 75 support personnel. An additional
accrual of $0.8 million was provided for asset disposals. These accruals were
primarily related to Pulse. The vast majority of these accruals were utilized by
the end of the first quarter in 2002.

      Our restructuring charges are summarized on a year-to-date basis for 2003
as follows:

<TABLE>
<CAPTION>
                                                             AMI
      Restructuring provision (in millions):                Doduco     Pulse      Total
      -----------------------                               ------     -----      -----
<S>                                                          <C>        <C>        <C>
      Balance accrued at December 27, 2002                   $2.0       $2.2       $4.2
      Accrued during the six months ended June 27, 2003       3.4        1.0        4.4
      Severance and other cash payments                      (2.8)      (1.0)      (3.8)
      Non-cash asset disposals                                 --       (0.5)      (0.5)
                                                             ----       ----       ----
      Balance accrued at June 27, 2003                       $ .6       $1.7       $4.3
                                                             ====       ====       ====
</TABLE>


                                  Page 8 of 32
<PAGE>

                        Technitrol, Inc. and Subsidiaries

         Notes to Unaudited Consolidated Financial Statements, continued

(4)   Inventories

      Inventories consisted of the following (in thousands):

                                                      June 27,     December 27,
                                                         2003             2002
                                                         ----             ----
                Finished goods                        $23,430          $21,446
                Work in process                        13,839           12,390
                Raw materials and supplies             28,741           26,752
                                                      -------          -------
                                                      $66,010          $60,588
                                                      =======          =======

(5)   Derivatives and Other Financial Instruments

      We utilize derivative financial instruments, primarily forward exchange
contracts and currency options, to manage foreign currency risks. While these
hedging instruments are subject to fluctuations in value, such fluctuations are
generally offset by the value of the underlying exposures being hedged.

      At June 27, 2003, we had 2 foreign exchange forward contracts outstanding
to sell forward approximately 79.9 million euros in the aggregate, in order to
hedge intercompany loans. The terms of these contracts were approximately 30
days. We had no other financial derivative instruments at June 27, 2003. In
addition, management believes that there is no material risk of loss from
changes in market rates or prices which are inherent in other financial
instruments.

(6)   Earnings Per Share

      Basic earnings per share are calculated by dividing net earnings by the
weighted average number of common shares outstanding (excluding restricted
shares) during the period. We had restricted shares outstanding of approximately
141,000 and 311,000 as of June 27, 2003 and June 28, 2002, respectively. For
calculating diluted earnings per share, common share equivalents and restricted
stock outstanding are added to the weighted average number of common shares
outstanding. Common share equivalents result from outstanding options to
purchase common stock as calculated using the treasury stock method. Such common
share equivalent amounts were approximately 96,000 for the six months ended June
27, 2003. There were 24,000 common share equivalents outstanding for the six
months ended June 28, 2002. Earnings per share calculations are as follows (in
thousands, except per share amounts):

<TABLE>
<CAPTION>
                                                                    Three Months Ended             Six Months Ended
                                                                   June 27,       June 28,        June 27,       June 28,
                                                                       2003           2002            2003           2002
                                                                       ----           ----            ----           ----
<S>                                                              <C>            <C>             <C>            <C>
Net earnings (loss)                                              $    6,020     $  (29,045)     $    8,654     $  (49,944)
  Basic earnings (loss) per share:
     Shares                                                          40,062         38,718          40,026         36,021
     Per share amount, before change in accounting principle     $      .15     $     (.75)     $      .22     $     (.95)
     Change in accounting principle                                      --             --              --           (.44)
                                                                 ----------     ----------      ----------     ----------
     Per share amount                                            $      .15     $     (.75)     $      .22     $    (1.39)
                                                                 ==========     ==========      ==========     ==========

  Diluted earnings (loss) per share:
     Shares                                                          40,160         38,984          40,147         36,332
     Per share amount, before change in accounting principle     $      .15     $     (.75)     $      .22     $     (.95)
     Change in accounting principle                                      --             --              --           (.44)
                                                                 ----------     ----------      ----------     ----------
     Per share amount                                            $      .15     $     (.75)     $      .22     $    (1.39)
                                                                 ==========     ==========      ==========     ==========
</TABLE>


                                  Page 9 of 32
<PAGE>

                        Technitrol, Inc. and Subsidiaries

         Notes to Unaudited Consolidated Financial Statements, continued

(7)   Business Segment Information

      For the three months ended June 27, 2003 and June 28, 2002, there were
immaterial amounts of intersegment revenues eliminated in consolidation. There
has been no material change in segment assets from December 27, 2002 to June 27,
2003, except for those related to the acquisition of Eldor by Pulse. In
addition, the basis for determining segment financial information has not
changed from 2002. Specific segment data are as follows:

<TABLE>
<CAPTION>
                                                Three Months Ended             Six Months Ended
                                              June 27,       June 28,       June 27,       June 28,
Net sales:                                        2003           2002           2003           2002
                                                  ----           ----           ----           ----
<S>                                          <C>            <C>            <C>            <C>
     Pulse                                   $  71,766      $  53,888      $ 139,646      $  98,999
     AMI Doduco                                 53,940         52,297        108,604        100,606
                                             ---------      ---------      ---------      ---------
         Total                               $ 125,706      $ 106,185      $ 248,250      $ 199,605
                                             =========      =========      =========      =========
Earnings (loss) before taxes and
   cumulative effect of accounting
   change:
     Pulse                                   $   6,997      $ (39,427)     $  12,553      $ (45,796)
     AMI Doduco                                    758         (1,377)        (2,004)        (1,893)
     Other income, net                            (469)          (675)          (524)        (1,332)
                                             ---------      ---------      ---------      ---------
     Earnings (loss) before income taxes
       and cumulative effect of
       accounting change                     $   7,286      $ (41,479)     $  10,025      $ (49,021)
                                             =========      =========      =========      =========
</TABLE>

(8)   Equity Method Investment

      During the three months ended September 27, 2002, our minority ownership
in FRE increased from approximately 19% to 29%. In accordance with generally
accepted accounting principles, we have adjusted presentations in all relevant
prior periods to reflect the impact of a change in accounting for our ownership
in this investment from the cost basis method to the equity method of accounting
as if the original 19% investment was accounted for as an equity method
investment since the initial investment. All prior period amounts have been
adjusted to reflect this recognition of equity earnings as if it occurred at the
time of the original investment in April 2001. Equity earnings were not,
however, significant in the first six months of 2002. Therefore no restatement
was made for this period. This investment is reflected in the Other assets
caption on the Consolidated Balance Sheets.

(9)   Accounting for Stock Based Compensation

      We adopted SFAS 123, as amended by SFAS 148, at the beginning of the 2003
fiscal year. We implemented SFAS 123 under the prospective method approach per
SFAS 148, whereby compensation expense is recorded for all awards subsequent to
adoption.

      As permitted by the provisions of SFAS 123, we applied Accounting
Principles Board Opinion 25, "Accounting for Stock Issued to Employees" and
related interpretations in accounting for our stock option and purchase plans
prior to adoption of SFAS in fiscal 2003. Accordingly, no compensation cost was
recognized for our stock option and employee purchase plans prior to fiscal
2003.


                                 Page 10 of 32
<PAGE>

                        Technitrol, Inc. and Subsidiaries

         Notes to Unaudited Consolidated Financial Statements, continued

(9)   Accounting for Stock Based Compensation, continued

      If compensation cost for our stock option plan and stock purchase plan had
been determined based on the fair value as required by SFAS 123 for all awards,
our pro forma net income (loss) and earnings (loss) per basic and diluted share
would have been as follows, (amounts are in thousands, except per share
amounts):

<TABLE>
<CAPTION>
                                                                    Three Months Ended            Six Months Ended
                                                                 June 27,       June 28,      June 27,        June 28,
                                                                     2003           2002          2003           2002
                                                                     ----           ----          ----           ----
<S>                                                              <C>          <C>             <C>          <C>
Net earnings (loss), as reported                                 $  6,020     $  (29,045)     $  8,654     $  (49,944)
Add: Stock-based compensation expense included
  in reported net earnings (loss), net of taxes                       327            325           607            448
Deduct: Total stock-based compensation expense determined
  under fair value based method for all awards, net of taxes         (753)          (819)       (1,033)          (941)
                                                                 --------     ----------      --------     ----------

Net earnings (loss) adjusted                                     $  5,594     $  (29,539)     $  8,228     $  (50,438)

Basic net earnings (loss) per share - as reported                $   0.15     $    (0.75)     $   0.22     $    (1.39)

Basic net earnings (loss) per share - adjusted                   $   0.14     $    (0.76)     $   0.21     $    (1.40)

Diluted net earnings (loss) per share - as reported              $   0.15     $    (0.75)     $   0.22     $    (1.39)

Diluted net earnings (loss) per share - adjusted                 $   0.14     $    (0.76)     $   0.21     $    (1.40)
</TABLE>

      At June 27, 2003, we had approximately 337,000 options outstanding,
representing less than 1% of our outstanding shares of common stock. The value
of restricted stock has always been and continues to be recorded as compensation
expense over the restricted period, and such expense is included in the results
of operations for the periods ended June 27, 2003 and June 28, 2002,
respectively.


                                 Page 11 of 32
<PAGE>

Item 2: Management's Discussion and Analysis of Financial Condition and Results
of Operations

Introduction

      This discussion and analysis of our financial condition and results of
operations as well as other sections of this report, contain certain
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995 and involve a number of risks and uncertainties.
Actual results may differ materially from those anticipated in these
forward-looking statements for many reasons, including the risks faced by us
described in "Risk Factors" section of this report on page 22 through 27.

Critical Accounting Policies

      The preparation of financial statements and related disclosures in
conformity with accounting principles generally accepted in the United States
requires us to make judgments, assumptions and estimates that affect the amounts
reported in the Consolidated Financial Statements and accompanying notes. Note 1
to the Consolidated Financial Statements in our annual report on Form 10-K for
the period ended December 27, 2002 describes the significant accounting policies
and methods used in the preparation of the Consolidated Financial Statements.
Estimates are used for, but not limited to, the accounting for inventory
provisions, impairment of goodwill and other intangibles, restructuring expense
and acquisition-related restructuring costs, income taxes, and contingency
accruals. Actual results could differ from these estimates. The following
critical accounting policies are impacted significantly by judgments,
assumptions and estimates used in the preparation of the Consolidated Financial
Statements.

      Inventory Provisions. Inventory purchases and commitments are based upon
future demand forecasts estimated by taking into account actual purchases of our
products over the recent past and customer forecasts. If there is a sudden and
significant decrease in demand for our products or there is a higher risk of
inventory obsolescence because of rapidly changing technology or customer
requirements, we may be required to write down our inventory and our gross
margin could be negatively affected. If we were to sell or use a significant
portion of inventory already written down, our gross margin could be positively
affected.

      Impairment of Goodwill and Other Intangibles. We assess goodwill
impairment on an annual basis and between annual tests in certain circumstances.
In addition, in response to changes in industry and market conditions, we may
strategically realign our resources and consider restructuring, disposing of, or
otherwise exiting businesses, which could result in an impairment of goodwill.

      Restructuring Expense and Acquisition Related Restructuring Costs. Our
restructuring activities through 2002, which related to our existing and
recently acquired businesses, were designed to reduce both our fixed and
variable costs, particularly in response to the dramatically reduced demand for
our products in the electronics components industry. These costs included the
closing of facilities and the termination of employees. Acquisition-related
costs are included in the allocation of the cost of the acquired business. Other
restructuring costs are expensed during the period in which we incur those
costs, and all of the requirements for accrual are met in accordance with the
applicable accounting guidance. Restructuring costs are recorded based upon our
best estimates at the time of accrual, such as estimated residual asset values.
Our actual expenditures for the restructuring activities may differ from the
initially recorded costs. If this occurs, we would adjust our initial estimates
in future periods. In the case of acquisition-related restructuring costs,
depending on whether the assets impacted came from the acquired entity and the
timing of the planned restructuring, such adjustment would generally require a
change in value of the goodwill appearing on our balance sheet, which may not
affect our earnings. In the case of other restructuring costs, we could be
required either to record additional expenses in future periods if our initial
estimates were too low, or reverse part of the charges that we recorded
initially if our initial estimates were too high.

      Income Taxes. We have not provided for U.S. federal income and foreign
withholding taxes on non-U.S. subsidiaries' undistributed earnings as calculated
for income tax purposes, because, in accordance with the provisions of
Accounting Principles Board Opinion No. 23, Accounting for Income Taxes -
Special Areas ("APB 23") we intend to reinvest these earnings outside the U.S.
indefinitely. If we encounter a significant domestic need for liquidity that we
cannot fulfill through borrowings, equity offerings, or other internal or
external sources, we may experience unfavorable tax consequences as cash
invested outside the U.S. is transferred to the U.S. This adverse


                                 Page 12 of 32
<PAGE>

consequence would occur if the transfer of cash into the U.S. were subject to
income tax without sufficient foreign tax credits available to offset the U.S.
tax liability.

      Contingency Accruals. During the normal course of business, a variety of
issues may arise, which may result in litigation, environmental compliance and
other contingent obligations. In developing our contingency accruals we consider
both the likelihood of a loss or incurrence of a liability as well as our
ability to reasonably estimate the amount of exposure. We record contingency
accruals when a liability is probable and the amount can be reasonably
estimated. We periodically evaluate available information to assess whether
contingency accruals should be adjusted. We could be required to record
additional expenses in future periods if our initial estimates were too low, or
reverse part of the charges that we recorded initially if our estimates were too
high.

Overview

      We are a global producer of precision-engineered passive magnetics-based
electronic components and electrical contact products and materials. We believe
we are a leading global producer of these products and materials in the primary
markets we serve based on our estimates of the size of our primary markets in
annual revenues and our share of those markets relative to our competitors.

      We operate our business in two distinct segments:

      o     the electronic components segment, which operates under the name
            Pulse, and

      o     the electrical contact products segment, which operates under the
            name AMI Doduco.

      General. We define net sales as gross sales less returns and allowances.
We sometimes refer to net sales as revenue. From 1996 through 2000, the growth
in our consolidated net sales was due in large part to the growth of Pulse.
However, beginning in late 2000, the electronics markets served by Pulse have
experienced a severe global contraction. We believe that in late 2002, many of
the markets Pulse serves began to stabilize in terms of unit sales. However,
because of excess capacity, relocation by customers from North America and
Europe to the Far East, and emergence of strong competitors in the Far East, the
pricing environment has been and remains deflationary for Pulse's products. We
believe that a broad-based market rebound in terms of pricing power will be
erratic and gradual, probably requiring several years. In markets where unit
demand has begun to recover, downward pressure on selling prices has kept total
revenue from growing proportionately with unit growth.

      Demand at AMI Doduco typically mirrors the prevailing economic conditions
in North America and Europe. This is true for electrical contacts, and for
component subassemblies for automotive applications such as multi-function
switches, motor control sensors and ignition security systems, and for
non-automotive uses such as appliance and industrial controls and medical
equipment. AMI Doduco continues its cost reduction actions including work force
adjustments and plant consolidations in line with demand around the world.

      In 2002, we recorded a goodwill impairment charge of $15.7 million, net of
income tax benefit, related to AMI Doduco as a cumulative effect of accounting
change. We also recorded a trade name impairment charge of $32.1 million, less a
$12.8 million income tax benefit, related to Pulse.

      Historically, the gross margin at Pulse has been significantly higher than
at AMI Doduco. As a result, the mix of net sales generated by Pulse and AMI
Doduco during a period affects our consolidated gross margin. Over the past
several years, our gross margin has been positively impacted by the savings from
our various restructuring activities and ongoing cost and expense controls. Our
gross margin is also significantly affected by capacity utilization,
particularly at AMI Doduco. Pulse's markets are characterized by a relatively
short-term product life cycle compared to AMI Doduco. As a result, significant
product turnover occurs each year. Therefore, Pulse's changes in average selling
prices do not necessarily provide a meaningful and quantifiable measure of
Pulse's operations. AMI Doduco has a relatively long-term and mature product
line, without significant turnover, and with less frequent variation in the
prices of product sold, unlike Pulse where fixed term price contracts are rare.
Most of AMI Doduco's products are sold under annual (or longer) purchase
contracts. Therefore, changes in prices have not historically had a material
impact on AMI Doduco revenue. Accordingly, a significant portion of the sales
growth and contraction at AMI Doduco is attributable to changes in unit volume,
as well as foreign exchange rates, especially the U.S. dollar to the euro.


                                 Page 13 of 32
<PAGE>

      Acquisitions. Historically, acquisitions have been an important part of
our growth strategy. In many cases, our move into new and high-growth extensions
of our existing product lines or markets has been facilitated by an acquisition.
Our acquisitions continually change the mix of our net sales. Pulse made
numerous acquisitions in recent years, which have increased our penetration into
our primary markets and expanded our presence in new markets. Recent examples of
these acquisitions include Excelsus, and the consumer electronics business of
Eldor Corporation. Excelsus was acquired in August 2001 for approximately $85.9
million, net of cash acquired. Excelsus was based in Carlsbad, California and
was a leading producer of customer-premises digital subscriber line filters and
other broadband accessories. Pulse acquired Eldor's consumer electronics
business in January 2003 for approximately $83.8 million. Eldor is headquartered
in Orsenigo, Italy with production operations in Istanbul and Izmir, Turkey.
Eldor's consumer business is a leading supplier of flyback transformers to the
European television industry.

      Similarly, AMI Doduco has made a number of acquisitions over the years. In
January 2001, AMI Doduco acquired the electrical contact and materials business
of Engelhard-CLAL, a manufacturer of electrical contacts, wire and strip contact
materials and related products. Generally, AMI Doduco's acquisitions have been
driven by our strategy of expanding our product and geographical market presence
for electrical contact products.

      Due to our integration of acquisitions and the interchangeable sources of
net sales between existing and acquired operations, historically, we have not
separately tracked the net sales of an acquisition after the date of the
transaction.

      Recent Cost Reduction Programs. During 1999 and 2000, the electronic
components industries served by Pulse were characterized by unprecedented
growth. Beginning in late 2000 and continuing all during 2001 and a significant
part of 2002, however, the opposite trend was experienced as these industries
experienced a severe worldwide contraction and many of our customers canceled
orders and decreased their level of business activity as a result of lower
demand for their end products. Our manufacturing business model at Pulse has a
very high variable cost component due to the labor-intensity of many processes.
This allows us to quickly change our capacity based on market demand. Just as we
expanded capacity during 1999 and 2000, we reduced capacity during 2001 and
2002. While the electrical contact industry served by AMI Doduco is generally
less dependent on volatile technology markets, it too was negatively impacted by
general economic trends as reflected in slower non-residential construction
spending, and reduced capital spending. AMI Doduco has a higher fixed cost
component of manufacturing activity than Pulse, as it is more capital intensive.
Therefore, AMI Doduco is unable to reduce its capacity as quickly as Pulse in
response to declining market demand, although continuing actions are being taken
to align AMI Doduco's capacity with current market demand. In response to the
decline in demand and deflationary environment for our products, we implemented
a series of cost reduction initiatives and programs, summarized as follows:

      In the three months ended June 27, 2003, we accrued $0.5 million for
severance and related payments comprising $0.2 million for the elimination of
manufacturing and support positions at AMI Doduco, and $0.3 million for
severance and related payments at Pulse facilities in France and the United
Kingdom. The majority of these accruals is expected to be utilized by the end of
the third quarter in 2003.

      In the three months ended March 28 2003, we accrued $3.9 million for
severance and related payments comprised of $1.7 million for the elimination of
manufacturing and support positions at AMI Doduco's facility in Germany, $1.6
million to finalize the shutdown of a redundant facility in Spain acquired by a
subsidiary of AMI Doduco from Engelhard-ECLAL and $0.6 million for the
elimination of manufacturing and support positions at Pulse, primarily in France
and Mexico. The majority of these accruals were utilized by the end of the
second quarter of 2003.

      In 2002, we announced the closure of our production facility in the
Philippines. The production at this facility was transferred to other Pulse
facilities in Asia. We recorded charges of $3.8 million for this plant closing,
comprised of $1.4 million for severance and related payments and $2.4 million
for asset writedowns. The majority of this accrual was utilized by the end of
2002. We also adopted other restructuring plans during 2002. In this regard, we
recorded provisions of $6.0 million for personnel reductions. Approximately 800
personnel were terminated in 2002 and substantially all of the employee
severance and related payments in connection with these actions were completed
as of December 27, 2002. An additional provision of $7.0 million was recorded in
2002


                                 Page 14 of 32
<PAGE>

related to asset writedowns. These assets were primarily Asian-based production
equipment that became idle in 2002.

      As a result of our continuing focus on both economic and operating profit,
we will continue to aggressively size both Pulse and AMI Doduco so that costs
are optimally matched to present and anticipated future revenue and unit demand,
and as we pursue additional growth opportunities. The amounts of additional
charges will depend on specific actions taken. The actions taken over the past
two years such as plant closures, plant relocations, asset impairments and
reduction in personnel worldwide have resulted in the elimination of a variety
of costs. The majority of these costs represent the annual salaries and benefits
of terminated employees, both those directly related to manufacturing and those
providing selling, general and administrative services, as well as lower
overhead costs related to factory relocations. The eliminated costs also include
depreciation savings from disposed equipment.

      International Operations. An increasing percentage of our sales in recent
years has been outside of the United States. Changing exchange rates often
impact our financial results and the analysis of our period-over-period results.
This is particularly true of movements in the exchange rate between the U.S.
dollar and the euro. AMI Doduco's European sales are denominated primarily in
euros. A portion of Pulse's European sales are also denominated in euros.
However, the proportion at Pulse is less than it is at AMI Doduco, although
Pulse's portion has increased as Eldor sells to its customers primarily in
euros. As a result of this and other factors, prior to the acquisition of Eldor,
Pulse used the U.S. dollar as its functional currency in Europe while AMI Doduco
uses the euro. For the acquired Eldor operations, Pulse uses the euro as its
functional currency. The use of different functional currencies creates
different financial effects. AMI Doduco's and Eldor's euro-denominated sales and
earnings may result in higher or lower dollar sales upon translation for our
U.S. consolidated financial statements. We may also experience a positive or
negative translation adjustment to equity because our investment in Eldor and
AMI Doduco's European operations may be worth more or less in U.S. dollars after
translation for our U. S. consolidated financial statements. At Pulse, we may
incur foreign currency gains or losses as euro-denominated transactions are
remeasured to U.S. dollars for financial reporting purposes. If an increasing
percentage of our sales are denominated in non-U.S. currencies, it could
increase our exposure to currency fluctuations.

      In order to reduce our exposure resulting from currency fluctuations, we
may purchase currency exchange forward contracts and/or currency options. These
contracts guarantee a predetermined range of exchange rates at the time the
contract is purchased. This allows us to shift the majority of the risk of
currency fluctuations from the date of the contract to a third party for a fee.
As of June 27, 2003, we had 2 foreign currency forward contracts outstanding to
sell forward approximately 79.9 million of euros in order to hedge intercompany
loans. In determining the use of forward exchange contracts and currency
options, we consider the amount of sales, purchases and net assets or
liabilities denominated in local currencies, the type of currency, and the costs
associated with the contracts.

      Precious Metals. AMI Doduco uses silver, as well as other precious metals,
in manufacturing some of its electrical contacts, contact materials and contact
subassemblies. Historically, we have leased or held these materials through
consignment arrangements with our suppliers. Leasing and consignment costs have
been typically below the costs to borrow funds to purchase the metals and, more
importantly, these arrangements eliminate the fluctuations in the market price
of owned precious metal and enables us to minimize our inventories. AMI Doduco's
terms of sale generally allow us to charge customers for precious metal content
based on the market value of precious metal on the day after shipment to the
customer. Thus far we have been successful in managing the costs associated with
our precious metals. While limited amounts are purchased for use in production,
the majority of our precious metal inventory continues to be leased or held on
consignment. If our leasing/consignment fees increase significantly in a short
period of time, and we are unable to recover these increased costs through
higher sale prices, a negative impact on our results of operations and liquidity
may result. Leasing/consignment fee increases are caused by increases in
interest rates or increases in the price of the consigned material.

      Income Taxes. Our effective income tax rate is affected by the proportion
of our income earned in high-tax jurisdictions (such as Germany) and that earned
in low-tax jurisdictions, particularly in Izmir, Turkey and the PRC. This mix of
income can vary significantly from one period to another. We have benefited over
recent years from favorable tax treatments outside of the U.S. However, we may
not be able to realize similar benefits in the future. Developing countries, in
particular, the PRC, may change their tax policies at any time.

      We have not provided for U.S. federal income and foreign withholding taxes
of our non-U.S. subsidiaries' undistributed earnings (as calculated for income
tax purposes) as per Accounting Principles Board Opinion No. 23, Accounting for
Income Taxes - Special Areas. Such earnings include pre-acquisition earnings of
foreign entities


                                 Page 15 of 32
<PAGE>

acquired through stock purchases, and are intended to be reinvested outside of
the U.S. indefinitely. Where excess cash has accumulated in our non-U.S.
subsidiaries and it is advantageous for tax reasons, subsidiary earnings may be
remitted.

Results of Operations

      Three months ended June 27, 2003 compared to the three months ended June
28, 2002

      Net Sales. Net sales for the three months ended June 27, 2003 increased
$19.5 million, or 18.4%, to $125.7 million from $106.2 million in the three
months ended June 28, 2002. Our sales increase from the comparable period last
year was attributable primarily to the increases from the Eldor acquisition and
stronger sales of Pulse's pre-Eldor products ("Pulse legacy"), tempered somewhat
by ongoing deflationary pressure on selling prices at Pulse, and to a lesser
extent, weaker demand at AMI Doduco, which resulted in lower sales on a
constant-euro basis.

      Pulse's net sales increased $17.9 million, or 33.2%, to $71.8 million for
the three months ended June 27, 2003 from $53.9 million in the three months
ended June 28, 2002. Most of the increase is attributable to sales derived from
our acquisition of Eldor since the date of acquisition in January 2003. Volume
gains in many Pulse legacy product lines were somewhat offset by declining
average selling prices.

      AMI Doduco's net sales increased $1.6 million, or 3.1%, to $53.9 million
for the three months ended June 27, 2003 from $52.3 million in the three months
ended June 28, 2002. Sales in the 2003 period reflect weak North American and
European markets, which were more than offset by the translation effect of an
increase in the average euro-to-U.S. dollar exchange rate during the period.
Weak net sales resulted primarily from weak demand in the commercial and
industrial machinery, and non-residential construction end markets. Demand for
automotive and residential circuit components, was stronger in the current year
period.

      Cost of Sales. Our cost of sales increased $11.4 million, or 13.9%, to
$92.9 million for the three months ended June 27, 2003 from $81.5 million for
the three months ended June 28, 2002. Our consolidated gross margin for the
three months ended June 27, 2003 was 26.1% compared to 23.2% for the three
months ended June 28, 2002. Our consolidated gross margin in 2003 was positively
affected by:

      o     the gross margin on Eldor sales, which was higher than the average
            gross margin on AMI Doduco sales and sales of some of Pulse's legacy
            products,

      o     a mix of net sales weighted more heavily by Pulse on a relative
            basis, as Pulse's gross profit as a percentage of sales is typically
            higher than that of AMI Doduco, and

      o     better capacity utilization and lower overhead costs at Pulse in
            2003 than in 2002.

      Selling, General and Administrative Expenses. Total selling, general and
administrative expenses for the three months ended June 27, 2003 increased $2.2
million, or 9.8%, to $24.6 million or 19.5% of net sales, from $22.4 million or
21.1% of net sales, for the three months ended June 28, 2002. The increase in
spending is primarily attributable to an increase of $1.3 million in incentive
and stock compensation expense, compared to 2002. The addition of Eldor expenses
was partially offset by savings from restructuring actions that we took over the
last year to reduce costs and tighten spending controls.

      Research, development and engineering expenses are included in selling,
general and administrative expenses. We refer to research, development and
engineering expenses as RD&E. For the three months ended June 27, 2003 and June
28, 2002 respectively, RD&E by segment was as follows (dollars in thousands):

                                            2003        2002
                                            ----        ----
      Pulse                               $3,575      $3,652
      Percentage of segment sales            5.0%        6.8%

      AMI Doduco                          $  972      $  901
      Percentage of segment sales            1.8%        1.7%


                                 Page 16 of 32
<PAGE>

      Although some consolidation of RD&E, particularly design activity, has
occurred through restructuring and relocation activities at Pulse, we have
minimized spending cuts in the RD&E area as we believe that future sales in the
electronic components markets will be driven by next-generation products. Design
and development activities with our OEM customers continued at an aggressive
pace during 2002 and into 2003. The change in RD&E as a percentage of sales at
Pulse relates to the effect of the acquisition of Eldor as Eldor incurs a lower
portion of RD&E compared to its sales as compared to Pulse legacy.

      Interest. Net interest expense was $0.3 million for the three months ended
June 27, 2003 compared to net interest expense of $0.1 million for the three
months ended June 28, 2002. The increase in net interest expense in the current
period is due to lower yields on a lower average cash invested balance, which
more than offset higher average outstanding bank debt and related interest
expense in the prior year.

      Our credit facility, which we entered into on June 20, 2001, has variable
interest rates. Accordingly, interest expense may increase if the rates
associated with, or the amounts borrowed under, our credit facilities move
higher during subsequent quarters. At June 27, 2003, we had no borrowings under
this facility. We may use interest rate swaps or other financial derivatives in
order to manage the risk associated with changes in market interest rates;
however, we have not used any such instruments to date.

      Income Taxes. The effective income tax rate for the three months ended
June 27, 2003 was 17.4% compared to 30.0%, in the form of a benefit, for the
three months ended June 28, 2002. The lower tax rate resulted from a higher
proportion of income being attributable to low-tax jurisdictions, particularly
China and Izmir, Turkey, combined with significant expenses of AMI Doduco which
yielded tax benefits in high-tax jurisdictions.

Six months ended June 27, 2003 compared to the six months ended June 28, 2002

      Net Sales. Net sales for the six months ended June 27, 2003 increased
$48.7 million, or 24.4%, to $248.3 million from $199.6 million for the six
months ended June 28, 2002. Our sales increase from the comparable period last
year was attributable primarily to the increases from the Eldor acquisition and
stronger sales of Pulse's pre-Eldor products, tempered somewhat by ongoing
deflationary pressure on selling prices at Pulse, and to a lesser extent, weaker
demand at AMI Doduco customers, which resulted in lower sales on a constant-euro
basis.

      Pulse's net sales increased $40.6 million, or 41.1%, to $139.7 million for
the six months ended June 27, 2003 from $99.0 million for the six months ended
June 28, 2002. This increase was primarily attributable to the Eldor
acquisition. Volume gains in many legacy product lines were somewhat offset by
declining average selling prices.

      AMI Doduco's net sales increased $8.0 million, or 7.9%, to $108.6 million
for the six months ended June 27, 2003 from $100.6 million in the six months
ended June 28, 2002. Sales in the 2003 period reflect weaker North American and
European markets, which was more than offset by the translation effect of a
stronger average euro-to-U.S. dollar exchange rate during the period. For the
six-month period, the average euro-to-dollar exchange rate was 22.9% stronger in
2003 than in 2002. Lower net sales resulted from lower manufacturing activity
primarily related to customers in the commercial and industrial controls and
non-residential construction industries.

      Cost of Sales. Our cost of sales increased $29.3 million, or 18.8%, to
$185.0 million for the six months ended June 27, 2003 from $155.7 million for
the six months ended June 28, 2002. This increase was due to an increase in net
sales. Our consolidated gross margin for the six months ended June 27, 2003 was
25.5% compared to 22.0% for the six months ended June 28, 2002. Our consolidated
gross margin in 2003 was positively affected by:

      o     a mix of net sales weighted more toward Pulse which typically have a
            higher gross margin than those of AMI Doduco, and

      o     a proportionate increase in sales at Pulse of consumer division
            products, which typically have a higher gross margin than AMI Doduco
            products and certain Pulse legacy products.

      These positive impacts on gross margin in 2003 were partially offset by
manufacturing inefficiencies at AMI Doduco due to under-utilization of capacity
and continued consolidation activities in European, Asian and North American
manufacturing facilities.


                                 Page 17 of 32
<PAGE>

      Selling, General and Administrative Expenses. Total selling, general and
administrative expenses for the six months ended June 27, 2003 increased $2.4
million, or 5.3%, to $48.3 million, or 19.5% of net sales, from $45.9 million,
or 23.0% of net sales for the six months ended June 28, 2002. The increase in
spending is primarily attributable to an increase of $2.2 million in incentive
and stock compensation expense, compared to 2002. The addition of Eldor expenses
in 2003 was partially offset by savings from restructuring actions that we took
over the last year to reduce costs and tighten spending controls.

      Research, development and engineering expenses are included in selling,
general and administrative expenses. We refer to research, development and
engineering expenses as RD&E. For the six months ended June 27, 2003 and June
28, 2002 respectively, RD&E by segment was as follows (dollars in thousands):

                                            2003        2002
                                            ----        ----
      Pulse                               $6,931      $7,489
      Percentage of segment sales            5.0%        7.6%

      AMI Doduco                          $2,019      $1,890
      Percentage of segment sales            1.9%        1.9%

      Although 2002 and the first six months of 2003 have been characterized by
cost reduction activities, we minimized spending cuts in the RD&E area as we
believe that the recovery in the electronic components markets will be driven by
next-generation products. Design and development activity with our OEM customers
continued at an aggressive pace during 2002 and into 2003. The change in RD&E as
a percentage of sales at Pulse relates to the effect of the acquisition of
Eldor, as Eldor incurs a lower portion of RD&E compared to its sales as compared
to Pulse legacy.

      Interest. Net interest expense was $0.5 million for the six months ended
June 27, 2003 compared to net interest expense of $0.4 million for the six
months ended June 28, 2002. The increase in net interest expense in the current
period is due to lower yields on a lower average cash invested balance, which
more than offset higher average outstanding bank debt and related interest
expense in prior year period.

      Income Taxes. The effective income tax rate for the six months ended June
27, 2003 was 13.7% compared to 30.2%, in the form of a benefit, for the six
months ended June 28, 2002. The lower tax rate in 2003 resulted from a higher
portion of income being attributable to low-tax jurisdictions, particularly in
the PRC and Izmir, Turkey, combined with significant expenses of AMI Doduco
which yielded tax benefits in high-tax jurisdictions.

Liquidity and Capital Resources

      Working capital as of June 27, 2003 was $180.1 million compared to $235.6
million as of December 27, 2002. This decrease was primarily due to the cash
purchase of the Eldor business in January 2003, which reduced invested cash as
of June 27, 2003. Cash and cash equivalents, which is included in working
capital, decreased from $205.1 million as of December 27, 2002 to $115.8 million
as of June 27, 2003.

      Net cash provided by operating activities was $14.2 million for the six
months ended June 27, 2003 and $2.2 million in the comparable period of 2002, an
increase of $12.0 million. This increase is primarily attributable to the higher
net earnings during the six months ended June 27, 2003, partially offset by
increased working capital requirements related to higher unit volumes.

      Capital expenditures were $3.5 million during the six months ended June
27, 2003 and $2.6 million in the comparable period of 2002. We make capital
expenditures to expand production capacity and to improve our operating
efficiency. We plan to continue making such expenditures in the future as and
when necessary.

      We used $81.9 million in cash for acquisitions in the six months ended
June 27, 2003 and no cash in the comparable period in 2002. The 2003 spending
was for the acquisition of Eldor. We may acquire other businesses or product
lines to expand our breadth and scope of operations. We expect to exercise our
option to expand our investment in FRE during 2003.


                                 Page 18 of 32
<PAGE>

      We paid off two euro-denominated term loans during the six months ended
June 27, 2003 with $11.7 million of cash on hand. The one remaining
euro-denominated term loan is not due until 2009.

      We paid dividends of $1.1 million in the six months ended June 28, 2002.
After paying a dividend on January 25, 2002 to shareholders of record on January
4, 2002, we no longer intend to pay cash dividends on our common stock. We
currently intend to retain future earnings to finance the growth of our
business, although our policy regarding dividends may be re-evaluated at any
time.

      As of June 27, 2003, we have no outstanding borrowings under our existing
three-year revolving credit agreement. We entered into this credit agreement on
June 20, 2001 providing for $225.0 million of credit capacity. Following the
conclusion of our follow-on equity offering in April 2002, we voluntarily
reduced the size of this credit facility to a maximum of $175.0 million and then
in March 2003 to a current maximum of $125.0 million in order to reduce
commitment fees and to size the facility to estimated future needs given cash on
hand. We also amended the minimum net worth threshold from $275.0 million to
$259.3 million as a result of a cumulative effect of an accounting change,
recorded in the three months ended June 28, 2002. As of June 27, 2003 the
amended facility consists of:

      o     an aggregate U.S. dollar-based revolving line of credit in the
            principal amount of up to $125.0 million, including individual
            sub-limits of:

            -     a British pounds sterling-based or euro-based revolving line
                  of credit in the principal amount of up to the U.S. dollar
                  equivalent of $75.0 million; and

            -     a multicurrency facility providing for the issuance of letters
                  of credit in an aggregate amount not to exceed the U.S. dollar
                  equivalent of $10.0 million.

The amounts outstanding under the credit facility in total may not exceed $125.0
million. Outstanding borrowings are limited to a maximum of three times our
earnings before interest, taxes, depreciation and amortization, (EBITDA) on a
rolling twelve-month basis as of the most recent quarter-end.

      The credit facility also contains covenants requiring maintenance of
minimum net worth, maximum debt to EBITDA ratio, as defined above, minimum
interest expense coverage, capital expenditure limitations, and other customary
and normal provisions. We are in compliance with all such covenants.

      We pay a facility fee, irrespective of whether there are outstanding
borrowings or not, which ranges from 0.275% to 0.450% of the total commitment,
depending on our EBITDA. The interest rate for each currency's borrowing will be
a combination of the base rate for that currency plus a credit margin spread.
The base rate is different for each currency. It is LIBOR or prime rate for U.S.
dollars, Euro-LIBOR for euros, and a rate approximating sterling LIBOR for
British pounds. The credit margin spread is the same for each currency and is
0.850% to 1.425% depending on our debt to EBITDA ratio. Each of our domestic
subsidiaries with net worth equal to or greater than $5 million has agreed to
guarantee all obligations incurred under the credit facility.

      We also have an obligation outstanding under an unsecured term loan
agreement with Sparkasse Pforzheim, for the borrowing of approximately 5.1
million euros, due in August 2009.

      We had 3 standby letters of credit outstanding at June 27, 2003 in the
aggregate amount of $0.8 million securing transactions entered into in the
ordinary course of business.

      We had commercial commitments outstanding at June 27, 2003 of
approximately $46.9 million due under precious metal consignment-type leases.

      We believe that the combination of cash on hand, cash generated by
operations and, if necessary, additional borrowings under our credit agreement
will be sufficient to satisfy our operating cash requirements in the foreseeable
future. In addition, we may use internally generated funds or borrowings, or
additional equity offerings for acquisitions of suitable businesses or assets.

      With the exception of approximately $11.6 million of retained earnings as
of June 27, 2003, primarily in the PRC that are restricted in accordance with
Section 58 of the PRC Foreign Investment Enterprises Law, substantially


                                 Page 19 of 32
<PAGE>

all retained earnings are free from legal or contractual restrictions. The
amount restricted in accordance with the PRC Foreign Investment Enterprise Law
is applicable to all foreign investment enterprises doing business in the PRC.
The restriction applies to 10% of our net earnings in the PRC, limited to 50% of
the total capital invested in the PRC. We have not experienced any significant
liquidity restrictions in any country in which we operate and none are foreseen.
However, foreign exchange ceilings imposed by local governments and the
sometimes lengthy approval processes which some foreign governments require for
international cash transfers may delay our internal cash movements from time to
time. The retained earnings in other countries represent a material portion of
our assets. We expect to reinvest these earnings outside of the United States
because we anticipate that a significant portion of our opportunities for growth
in the coming years will be abroad. If these earnings were brought back to the
United States, significant tax liabilities could be incurred in the United
States as several countries in which we operate have rates significantly lower
than the U.S. statutory rate. Additionally, we have not accrued U.S. income
taxes on foreign earnings indefinitely invested abroad. We have also been
granted special tax incentives in other countries such as the PRC. This
favorable situation could change if these countries were to increase rates or
revoke the special tax incentives, or if we were to discontinue manufacturing
operations in these countries. This could have a material unfavorable impact on
our net income and cash position.

New Accounting Pronouncements

      In January 2003, the Financial Accounting Standards Board ("FASB") issued
FASB Interpretation No. 46 Consolidation of Variable Interest Entities ("FIN
46"). FIN 46 clarifies the application of Accounting Research Bulletin No. 51,
Consolidated Financial Statements, to certain entities in which equity investors
do not have a controlling financial interest or do not have sufficient equity at
risk for the entity to finance its activities without additional subordinated
financial support from other parties. We were required to adopt the provisions
of FIN 46 for variable interest entities created after January 31, 2003 whereas
it is otherwise effective June 15, 2003 for variable interest entities acquired
before February 1, 2003. Adoption of this interpretation did not have a material
effect on our revenue, operating results, financial position, or liquidity.

      In December 2002, the FASB issued Statement No. 148, Accounting for
Stock-Based Compensation, Transition and Disclosure, an amendment to Statement
No. 123 ("SFAS 148"). SFAS 148 provides alternative methods of transition for a
voluntary change to the fair value based method of accounting for stock-based
employee compensation. In addition, SFAS 148 amends the disclosure requirements
of Statement No. 123, Accounting for Stock-Based Compensation ("SFAS 123"), by
requiring prominent disclosures in both annual and interim financial statements,
about the method of accounting for stock-based employee compensation and the
effect of the method used on reported results. The provisions of SFAS 148 are
effective for fiscal years ending after December 15, 2002. We adopted the
provisions of SFAS 123, as amended by SFAS 148, as of the beginning of our
fiscal year in 2003. We used the prospective method of adoption, which
recognizes expense for all employee awards granted, modified or settled after
the beginning of the fiscal year in which the recognition provisions are first
applied. Adoption of this standard did not have a material effect on our
revenue, operating results financial position or liquidity.

      In November 2002, the FASB issued FASB Interpretation No. 45, Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees and Indebtedness of Others ("FIN 45"). FIN 45 elaborates on the
disclosures to be made by a guarantor in its interim and annual financial
statements about its obligations under certain guarantees that it has issued.
FIN 45 also clarifies that a guarantor is required to recognize, at the
inception of a guarantee, a liability for the fair value of the obligation
undertaken in issuing the guarantee. We were required to adopt the provisions of
FIN 45 on a prospective basis to guarantees issued or modified after December
31, 2002. We have not issued any guarantees for performance of third parties
since December 31, 2002. Accordingly, adoption of this interpretation did not
have a material effect on our revenue, operating results, financial position or
liquidity.

      In June 2002, the FASB issued Statement No. 146 Accounting for Costs
Associated with Exit or Disposal Activities ("SFAS 146"). SFAS 146 superceded
the Emerging Issues Task Force Issue No. 94-3, Liability Recognition for Certain
Termination Benefits and Other Costs to Exit an Activity, ("EITF 94-3") The
principal difference between SFAS 146 and EITF 94-3 is that SFAS 146 requires
that a liability for a cost associated with an exit or disposal activity be
recognized when the liability is incurred. Under EITF 94-3, a liability for an
exit cost was recognized at the date of an entity's commitment to an exit plan.
As such, under SFAS 146, an entity's commitment to a plan by itself, does not
create a present obligation meeting the definition of a liability. We were
required to adopt the provisions of SFAS for all exit or disposal activities
initiated after December 15, 2002. These activities, which we


                                 Page 20 of 32
<PAGE>

refer to as restructuring and unusual and infrequent items, did have a material
impact on our operating results in 2003. Although the underlying activities were
material, the impact in changing from EITF 94-3 to SFAS 146 was not significant.


                                 Page 21 of 32
<PAGE>

Factors That May Affect Our Future Results (Cautionary Statements for Purposes
of the "Safe Harbor" Provisions of the Private Securities Litigation Reform Act
of 1995)

      Our disclosures and analysis in this report contain forward-looking
statements. Forward-looking statements reflect our current expectations of
future events or future financial performance. You can identify these statements
by the fact that they do not relate strictly to historical or current facts.
They often use words such as "anticipate", "estimate", "expect", "project",
"intend", "plan", "believe", and similar terms. These forward-looking statements
are based on our current plans and expectations.

      Any or all of our forward-looking statements in this report may prove to
be incorrect. They may be affected by inaccurate assumptions we might make or by
risks and uncertainties which are either unknown or not fully known or
understood. Accordingly, actual outcomes and results may differ materially from
what is expressed or forecasted in this report.

      We sometimes provide forecasts of future financial performance. The risks
and uncertainties described under "Risk Factors" as well as other risks
identified from time to time in other Securities and Exchange Commission
reports, registration statements and public announcements, among others, should
be considered in evaluating our prospects for the future. We undertake no
obligation to release updates or revisions to any forward-looking statement,
whether as a result of new information, future events or otherwise.

Risk Factors

Cyclical changes in the markets we serve, including the recent contraction,
could result in a significant decrease in demand for our products and reduce our
profitability.

      Our components are used in various products for the electronic and
electrical equipment markets. These markets are highly cyclical. The demand for
our components reflects the demand for products in the electronic and electrical
equipment markets generally. Beginning in late 2000 and continuing into 2002,
these markets, particularly the electronics market, have experienced a severe
worldwide contraction. This contraction has resulted in a decrease in demand for
our products, as our customers have:

      o     canceled many existing orders;

      o     introduced fewer new products; and

      o     worked to decrease their inventory levels.

      The decrease in demand for our products has had a significant adverse
effect on our operating results and profitability. We cannot predict how long a
contraction will last nor the strength of any recovery. Accordingly, we may
continue to experience volatility in both our revenues and profits.

Reduced prices for our products may adversely affect our profit margins if we
are unable to reduce our costs of production.

      The average selling prices for our products tend to decrease over their
life cycle. In addition, the recent economic contraction has significantly
increased the pressure on our customers to seek lower prices from their
suppliers. As a result, our customers are likely to continue to demand lower
prices from us. To maintain our margins and remain profitable, we must continue
to meet our customers' design needs while reducing costs through efficient raw
material procurement and process and product improvements. Our profit margins
will suffer if we are unable to reduce our costs of production as sales prices
decline.

An inability to adequately respond to changes in technology may decrease our
sales.

      Pulse operates in an industry characterized by rapid change caused by the
frequent emergence of new technologies. Generally, we expect life cycles for our
products in the electronic components industry to be relatively short. This
requires us to anticipate and respond rapidly to changes in industry standards
and customer needs and to develop and introduce new and enhanced products on a
timely and cost effective basis. Our engineering and development teams place a
priority on working closely with our customers to design innovative products and


                                 Page 22 of 32
<PAGE>

improve our manufacturing processes. Our inability to react to changes in
technology quickly and efficiently may decrease our sales and profitability.

If our inventories become obsolete, our future performance and operating results
will be adversely affected.

      The life cycles of our products depend heavily upon the life cycles of the
end products into which our products are designed. Many of Pulse's products have
very short life cycles which are measured in quarters. Products with short life
cycles require us to closely manage our production and inventory levels.
Inventory may become obsolete because of adverse changes in end market demand.
During market slowdowns, this may result in significant charges for inventory
write-offs, as was the case during 2001. Our future operating results may be
adversely affected by material levels of obsolete or excess inventories.

An inability to capitalize on our recent or future acquisitions may adversely
affect our business.

      In recent years we have completed several acquisitions. We continually
seek acquisitions to grow our business. We may fail to derive significant
benefits from our acquisitions. In addition, if we fail to achieve sufficient
financial performance from an acquisition, goodwill and other intangibles could
become impaired, resulting in our recognition of a loss. In 2002, we recorded a
goodwill impairment charge of $15.7 million related to AMI Doduco and a trade
name impairment charge of $32.1 million related to Pulse. The degree of success
of any of our acquisitions depends on our ability to:

      o     successfully integrate or consolidate acquired operations into our
            existing businesses;

      o     identify and take advantage of cost reduction opportunities; and

      o     further penetrate the markets for the product capabilities acquired.

      Integration of acquisitions may take longer than we expect and may never
be achieved to the extent originally anticipated. This could result in slower
than anticipated business growth or higher than anticipated costs. In addition,
acquisitions may:

      o     cause a disruption in our ongoing business;

      o     distract our managers;

      o     unduly burden our other resources; and

      o     result in an inability to maintain our historical standards,
            procedures and controls.

Integration of acquisitions into the acquiring segment may limit the ability of
investors to track the performance of individual acquisitions and to analyze
trends in our operating results.

      Our historical practice has been to quickly integrate acquisitions into
the existing business of the acquiring segment and to report financial
performance on the segment level. As a result of this practice, we do not
separately track the stand-alone performance of acquisitions after the date of
the transaction. Consequently, investors cannot quantify the financial
performance and success of any individual acquisition or the financial
performance and success of a particular segment excluding the impact of
acquisitions. In addition, our practice of quickly integrating acquisitions into
the financial performance of each segment may limit the ability of investors to
analyze any trends in our operating results over time.

An inability to identify additional acquisition opportunities may slow our
future growth.

      We intend to continue to identify and consummate additional acquisitions
to further diversify our business and to penetrate important markets. We may not
be able to identify suitable acquisition candidates at reasonable prices. Even
if we identify promising acquisition candidates, the timing, price, structure
and success of future acquisitions are uncertain. An inability to consummate
attractive acquisitions may reduce our growth rate and our ability to penetrate
new markets.

If our customers terminate their existing agreements, or do not enter into new
agreements or submit additional purchase orders for our products, our business
will suffer.


                                 Page 23 of 32
<PAGE>

      Most of our sales are made on a purchase order basis as needed by our
customers. In addition, to the extent we have agreements in place with our
customers, most of these agreements are either short term in nature or provide
our customers with the ability to terminate the arrangement with little or no
prior notice. Our contracts typically do not provide us with any material
recourse in the event of non-renewal or early termination. We will lose business
and our revenues will decrease if a significant number of customers:

      o     do not submit additional purchase orders;

      o     do not enter into new agreements with us; or

      o     elect to terminate their relationship with us.

If we do not effectively manage our business in the face of fluctuations in the
size of our organization, our business may be disrupted.

      We have grown rapidly over the last ten years, both organically and as a
result of acquisitions. However, in the past two years we have significantly
reduced our workforce and facilities in response to a dramatic decrease in
demand for our products due to prevailing global market conditions. These rapid
fluctuations place strains on our resources and systems. If we do not
effectively manage our resources and systems, our business may suffer.

Uncertainty in demand for our products may result in increased costs of
production and an inability to service our customers.

      We have very little visibility into our customers' purchasing patterns and
are highly dependent on our customers' forecasts. These forecasts are
non-binding and often highly unreliable. Given the fluctuation in growth rates
and cyclical demand for our products, as well as our reliance on often imprecise
customer forecasts, it is difficult to accurately manage our production
schedule, equipment and personnel needs and our raw material and working capital
requirements. Our failure to effectively manage these issues may result in:

      o     production delays;

      o     increased costs of production;

      o     an inability to make timely deliveries; and

      o     a decrease in profits.

A decrease in availability or increase in cost of our key raw materials could
adversely affect our profit margins.

      We use several types of raw materials in the manufacturing of our
products, including:

      o     precious metals such as silver;

      o     base metals such as copper and brass; and

      o     ferrite cores.

      Some of these materials are produced by a limited number of suppliers.
From time to time, we may be unable to obtain these raw materials in sufficient
quantities or in a timely manner to meet the demand for our products. The lack
of availability or a delay in obtaining any of the raw materials used in our
products could adversely affect our manufacturing costs and profit margins. In
addition, if the price of our raw materials increases significantly over a short
period of time, customers may be unwilling to bear the increased price for our
products and we may be forced to sell our products containing these materials at
prices that reduce our profit margins.

      Some of our raw materials, such as precious metals, are considered
commodities and are subject to price volatility. We attempt to limit our
exposure to fluctuations in the cost of precious materials, including silver, by
holding the majority of our precious metal inventory through leasing or
consignment arrangements with our suppliers. We then typically purchase the
precious metal from our supplier at the current market price on the day after
delivery to our customer and pass this cost on to our customer. In addition,
leasing and consignment costs have historically been substantially below the
costs to borrow funds to purchase the precious metals. We currently have four
consignment or leasing agreements related to precious metals, all of which
generally have one year terms with


                                 Page 24 of 32
<PAGE>

varying maturity dates, but can be terminated by either party with 30 days'
prior notice. Our results of operations and liquidity will be negatively
impacted if:

      o     we are unable to enter into new leasing or consignment arrangements
            with similarly favorable terms after our existing agreements
            terminate, or

      o     our leasing or consignment fees increase significantly in a short
            period of time and we are unable to recover these increased costs
            through higher sale prices.

      Fees charged by the consignor are driven by interest rates and the market
price of the consigned material. The market price of the consigned material is
determined by the supply of and the demand for the material. Consignment fees
will increase if interest rates or the price of the consigned material increase.

Competition may result in lower prices for our products and reduced sales.

      Both Pulse and AMI Doduco frequently encounter strong competition within
individual product lines from various competitors throughout the world. We
compete principally on the basis of:

      o     product quality and reliability;

      o     global design and manufacturing capabilities;

      o     breadth of product line;

      o     customer service; and

      o     price.

      Our inability to successfully compete on any or all of the above factors
may result in reduced sales.

Our backlog is not an accurate measure of future revenues and is subject to
customer cancellation.

      While our backlog consists of firm accepted orders with an express release
date generally scheduled within six months of the order, many of the orders that
comprise our backlog may be canceled by customers without penalty. It is widely
known that customers in the electronics industry have on occasion double and
triple-ordered components from multiple sources to ensure timely delivery when
quoted lead time is particularly long. In addition, customers often cancel
orders when business is weak and inventories are excessive, a process that we
have experienced in the recent contraction. Although backlog should not be
relied on as an indicator of our future revenues, our results of operations
could be adversely impacted if customers cancel a material portion of orders in
our backlog.

Fluctuations in foreign currency exchange rates may adversely affect our
operating results.

      We manufacture and sell our products in various regions of the world and
export and import these products to and from a large number of countries.
Fluctuations in exchange rates could negatively impact our cost of production
and sales that, in turn, could decrease our operating results and cash flow.
Although we engage in limited hedging transactions, including foreign currency
contracts, to reduce our transaction and economic exposure to foreign currency
fluctuations, these measures may not eliminate or substantially reduce our risk
in the future.

Our international operations subject us to the risks of unfavorable political,
regulatory, labor and tax conditions in other countries.

      We manufacture and assemble some of our products in foreign locations,
including France, Germany, Hungary, Italy, Mexico, the Peoples' Republic of
China, or PRC, Spain and Turkey. In addition, much of our revenues are derived
from sales to customers outside the United States. Our future operations and
earnings may be adversely affected by the risks related to, or any other
problems arising from, operating in international markets.

      Risks inherent in doing business internationally may include:

      o     economic and political instability;

      o     expropriation and nationalization;


                                 Page 25 of 32
<PAGE>

      o     trade restrictions;

      o     capital and exchange control programs;

      o     transportation delays;

      o     foreign currency fluctuations; and

      o     unexpected changes in the laws and policies of the United States or
            of the countries in which we manufacture and sell our products.

      In particular, Pulse has substantially all of its manufacturing operations
in the PRC. Our presence in the PRC has enabled Pulse to maintain lower
manufacturing costs and to flexibly adjust our work force to demand levels for
our products. Although the PRC has a large and growing economy, the potential
economic, political, legal and labor developments entail uncertainties and
risks. While the PRC has been receptive to foreign investment, we cannot be
certain that its current policies will continue indefinitely into the future. In
the event of any changes that adversely affect our ability to conduct our
operations within the PRC, our business will suffer. In early 2003, we acquired
the consumer business of Eldor Corporation. While this business is headquartered
in Italy, all of its manufacturing operations are in Turkey. These operations in
Turkey are subject to unique risks, including those associated with continuing
Middle East geo-political conflicts.

      We have benefited over recent years from favorable tax treatment as a
result of our international operations. We operate in foreign countries where we
realize favorable income tax treatment relative to the U.S. statutory rate. We
have also been granted special tax incentives commonly known as tax holidays in
other countries such as the PRC. This favorable situation could change if these
countries were to increase rates or revoke the special tax incentives, or if we
discontinue our manufacturing operations in any of these countries and do not
replace the operations with operations in other locations with favorable tax
incentives. Accordingly, in the event of changes in laws and regulations
affecting our international operations, we may not be able to continue to take
advantage of similar benefits in the future.

Shifting our operations between regions may entail considerable expense.

      In the past we have shifted our operations from one region to another in
order to maximize manufacturing and operational efficiency. We may close one or
more additional factories in the future. This could entail significant one-time
earnings charges to account for severance, equipment write-offs or write-downs
and moving expenses. In addition, as we implement transfers of our operations we
may experience disruptions, including strikes or other types of labor unrest
resulting from layoffs or termination of employees.

Liquidity requirements could necessitate movements of existing cash balances
which may be subject to restrictions or cause unfavorable tax and earnings
consequences.

      A significant portion of our cash is held offshore by our international
subsidiaries and is predominantly denominated in U.S. dollars. If we encounter a
significant domestic need for liquidity that we cannot fulfill through
borrowings, equity offerings, or other internal or external sources, we may
experience unfavorable tax and earnings consequences as this cash is transferred
to the United States. These adverse consequences would occur if the transfer of
cash into the United States is taxed and no offsetting foreign tax credit is
available to offset the U.S. tax liability, resulting in lower earnings. In
addition, we may be prohibited from transferring cash from the PRC. With the
exception of approximately $11.6 million of retained earnings as of June 27,
2003, primarily in the PRC that are restricted in accordance with the PRC
Foreign Investment Enterprises Law, substantially all retained earnings are free
from legal or contractual restrictions. The PRC Foreign Investment Enterprise
Law restricts 10% of our net earnings in the PRC, up to a maximum amount equal
to 50% of the total capital we have invested in the PRC. We have not experienced
any significant liquidity restrictions in any country in which we operate and
none are presently foreseen. However, foreign exchange ceilings imposed by local
governments and the sometimes lengthy approval processes which some foreign
governments require for international cash transfers may delay our internal cash
movements from time to time.


                                 Page 26 of 32
<PAGE>

Losing the services of our executive officers or our other highly qualified and
experienced employees could adversely affect our business.

      Our success depends upon the continued contributions of our executive
officers and management, many of whom have many years of experience and would be
extremely difficult to replace. We must also attract and maintain experienced
and highly skilled engineering, sales and marketing and managerial personnel.
Competition for qualified personnel is intense in our industries, and we may not
be successful in hiring and retaining these people. If we lose the services of
our executive officers or cannot attract and retain other qualified personnel,
our business could be adversely affected.

Environmental liability and compliance obligations may affect our operations and
results.

      Our manufacturing operations are subject to a variety of environmental
laws and regulations governing:

      o     air emissions;

      o     wastewater discharges;

      o     the storage, use, handling, disposal and remediation of hazardous
            substances, wastes and chemicals; and

      o     employee health and safety.

      If violations of environmental laws should occur, we could be held liable
for damages, penalties, fines and remedial actions. Our operations and results
could be adversely affected by any material obligations arising from existing
laws, as well as any required material modifications arising from new
regulations that may be enacted in the future. We may also be held liable for
past disposal of hazardous substances generated by our business or businesses we
acquire. In addition, it is possible that we may be held liable for
contamination discovered at our present or former facilities.

      We are aware of contamination at two locations. In Sinsheim, Germany,
there is a shallow groundwater and soil contamination that is naturally
decreasing over time. The German environmental authorities have not required
corrective action to date. In addition, property in Leesburg, Indiana, which was
acquired with our acquisition of GTI in 1998, is the subject of a 1994
Corrective Action Order to GTI by the Indiana Department of Environmental
Management. The order requires us to investigate and take corrective actions.
Monitoring data is being collected to confirm and implement the corrective
measures. We anticipate making additional environmental expenditures in future
years to continue our environmental studies, analysis and remediation
activities. Based on current knowledge, we do not believe that any future
expenses or liabilities associated with environmental remediation will have a
material impact on our operations or our consolidated financial position,
liquidity or operating results, however, we may be subject to additional costs
and liabilities if the scope of the contamination or the cost of remediation
exceeds our current expectations.

Public Health Epidemics such as Severe Acute Respiratory Syndrome May Disrupt
Operations in Affected Regions and Affect Operating Results.

      Pulse maintains extensive manufacturing operations in the PRC, as do many
of our customers and suppliers. A sustained interruption of our manufacturing
operation, or those of our customers or suppliers, as a result of complications
from severe acute respiratory syndrome, could have a material adverse effect on
our business and results of operations.


                                 Page 27 of 32
<PAGE>

Item 3: Quantitative and Qualitative Disclosures about Market Risk

      There were no material changes in market risk exposures that affect the
quantitative and qualitative disclosures presented in our Form 10-K for the year
ended December 27, 2002.

Item 4: Controls and Procedures

      As of the end of the period covering this report, we carried out an
evaluation, under the supervision and with the participation of management,
including the Principal Executive Officer and Principal Financial Officer, of
the effectiveness of the design and operation of our disclosure controls and
procedures pursuant to Exchange Act Rule 13a-14. Based upon that evaluation, and
subject to the limitations of the immediately following paragraph, the Principal
Executive Officer and Principal Financial Officer concluded that our disclosure
controls and procedures are effective in alerting them, on a timely basis, to
material information required to be included in our periodic SEC filings.

      Our review of our internal controls was made within the context of the
relevant professional auditing standards defining "internal controls,"
"reportable conditions," and "material weaknesses." "Internal controls" are
processes designed to provide reasonable assurance that our transactions are
properly authorized, our assets are safeguarded against unauthorized or improper
use, and our transactions are properly recorded and reported, all to permit the
preparation of our condensed consolidated financial statements in conformity
with accounting principles generally accepted in the United States. "Significant
deficiencies" are referred to as "reportable conditions," or control issues that
could have a significant adverse effect on our ability to properly authorize
transactions, safeguard our assets, or record, process, summarize or report
financial data in the condensed consolidated financial statements. A "material
weakness" is a particularly serious reportable condition where the internal
control does not reduce to a relatively low level the risk that misstatements
caused by error or fraud may occur in amounts that would be material in relation
to the condensed consolidated financial statements and not be detected within a
timely period by employees in the normal course of performing their assigned
functions. As part of our internal controls procedures, we also address other,
less significant control matters that we identify, and we determine what
revision or improvement to make, if any, in accordance with our on-going
procedures. However, the design of any system of controls is based in part upon
certain assumptions about the likelihood of future events and there is no
certainty that any design will succeed in achieving its stated goal under all
potential future considerations, regardless of how remote. In addition, our
evaluation of the impact on our controls and procedures of our recent
acquisition of the Eldor consumer business is still in process.

      There have been no significant changes in our internal controls or in
other factors that could significantly affect internal controls subsequent to
the date we carried out this evaluation, nor were there any significant
deficiencies or material weaknesses in our internal controls. As a result, no
corrective actions were required or undertaken.


                                 Page 28 of 32
<PAGE>

                           PART II. OTHER INFORMATION

Item 1  Legal Proceedings                                                   None

Item 2  Changes in Securities and Use of Proceeds                           None

Item 3  Defaults Upon Senior Securities                                     None

Item 4  Submission of Matters to a Vote of Security Holders                 None

        The Annual Meeting of Shareholders was held on May 21, 2003. Messrs.
        John E. Burrows, Jr., Rajiv L. Gupta, and James M. Papada, III were
        elected to a three-year term as directors of the Company. The results of
        the votes were as follows:

                                         For         Withhold Authority
                                         ---         ------------------
        John E. Burrows              34,366,250           623,365
        Rajiv L. Gupta               34,476,260           513,355
        James M. Papada, III         34,317,575           672,040

        In addition, each of the following directors continued in office after
        the meeting: Stanley E. Basara, David H, Hofmann, Graham Humes, C. Mark
        Melliar-Smith, and Edward M. Mazze.

Item 5  Other Information                                                   None

Item 6  Exhibits and Reports on Form 8-K

        (a)   Exhibits

              The Exhibit Index is on page 30.

        (b)   Reports On Form 8-K                                           None

              We filed a current report on Form 8-K dated April 21, 2003.
        This report pertains to our press release issued to announce our
        first quarter 2003 results.


                                 Page 29 of 32
<PAGE>

                                  Exhibit Index

2.1      Agreement and Plan of Merger, dated as of May 23, 2001, as amended as
         of July 6, 2001, by and among Pulse Engineering, Inc., Pulse
         Acquisition Corporation, Excelsus Technologies, Inc., and certain
         principal shareholders of Excelsus Technologies, Inc. that are
         signatories thereto (incorporated by reference to Exhibit 2 to our Form
         8-K dated August 21, 2001).

2.2      Share Purchase Agreement, dated as of January 9, 2003, by Pulse
         Electronics (Singapore) Pte. Ltd. and Forfin Holdings B.V. that are
         signatories thereto (incorporated by reference to Exhibit 2 to our Form
         8-K dated January 10, 2003).

3.1      Amended and Restated Articles of Incorporation (incorporated by
         reference to Exhibit 1 to our Registration Statement on Form 8-A/A
         dated April 10, 1998).

3.2      Amendment to Amended and Restated Articles of Incorporation
         (incorporated by reference to Exhibit 3(i)(a) to our Form 10-Q for the
         quarter ended June 29, 2001).

3.3      By-laws (incorporated by reference to Exhibit 3.3 to our Form 10-K for
         the year ended December 28, 2001).

4.1      Rights Agreement, dated as of August 30, 1996, between Technitrol, Inc.
         and Registrar and Transfer Company, as Rights Agent (incorporated by
         reference to Exhibit 3 to our Registration Statement on Form 8-A dated
         October 24, 1996).

4.2      Amendment No. 1 to the Rights Agreement, dated March 25, 1998, between
         Technitrol, Inc. and Registrar and Transfer Company, as Rights Agent
         (incorporated by reference to Exhibit 4 to our Registration Statement
         on Form 8-A/A dated April 10, 1998).

4.3      Amendment No. 2 to the Rights Agreement, dated June 15, 2000, between
         Technitrol, Inc. and Registrar and Transfer Company, as Rights Agent
         (incorporated by reference to Exhibit 5 to our Registration Statement
         on Form 8-A/A dated July 5, 2000).

10.1     Technitrol, Inc. 2001 Employee Stock Purchase Plan (incorporated by
         reference to Exhibit 4.1 to our Registration Statement on Form S-8
         dated June 28, 2001, File Number 333-64060).

10.2     Technitrol, Inc. Restricted Stock Plan II, as amended and restated as
         of January 1, 2001 (incorporated by reference to Exhibit C, to our
         Definitive Proxy on Schedule 14A dated March 28, 2001).

10.3     Technitrol, Inc. 2001 Stock Option Plan (incorporated by reference to
         Exhibit 4.1 to our Registration Statement on Form S-8 dated June 28,
         2001, File Number 333-64068).

10.4     Technitrol, Inc. Board of Directors Stock Plan (incorporated by
         reference to Exhibit 4.1 to our Registration Statement on Form S-8
         dated June 1, 1998, File Number 333-55751).

10.5     Revolving Credit Agreement, by and among Technitrol, Inc. and certain
         of its subsidiaries, Bank of America, N.A. as Agent and Lender, and
         certain other Lenders that are signatories thereto, dated as of June
         20, 2001 (incorporated by reference to Exhibit 10.(a) to the Company's
         Form 10-Q for the quarter ended June 29, 2001).

10.6     Lease Agreement, dated October 15, 1991, between Ridilla-Delmont and
         AMI Doduco, Inc. (formerly known as Advanced Metallurgy Incorporated),
         as amended September 21, 2001 (incorporated by reference to Exhibit
         10.6 to the Company's Amendment No. 1 to Registration Statement on Form
         S-3 dated February 28, 2002, File Number 333-81286).


                                 Page 30 of 32
<PAGE>

10.7     Incentive Compensation Plan of Technitrol, Inc. (incorporated by
         reference to Exhibit 10.7 to Amendment No. 1 to our Registration
         Statement on Form S-3 filed on February 28, 2002, File Number
         333-81286).

10.8     Technitrol, Inc. Supplemental Retirement Plan, Amended and Restated
         January 1, 2002 (incorporated by reference to Exhibit 10.8 to Amendment
         No. 1 to our Registration Statement on Form S-3 filed on February 28,
         2002, File Number 333-81286).

10.9     Agreement between Technitrol, Inc. and James M. Papada, III, dated July
         1, 1999, as amended April 23, 2001, relating to the Technitrol, Inc.
         Supplemental Retirement Plan (incorporated by reference to Exhibit 10.9
         to Amendment No. 1 to our Registration Statement on Form S-3 filed on
         February 28, 2002, File Number 333-81286).

10.10    Letter Agreement between Technitrol, Inc. and James M. Papada, III,
         dated April 16, 1999, as amended October 18, 2000 (incorporated by
         reference to Exhibit 10.10 to Amendment No. 1 to our Registration
         Statement on Form S-3 filed on February 28, 2002, File Number
         333-81286).

10.11    Form of Indemnity Agreement (incorporated by reference to Exhibit 10.11
         to our Form 10-K for the year ended December 28, 2001).

10.12    Amendment 1 to Revolving Credit Agreement, by and among Technitrol,
         Inc. and certain of its subsidiaries, Bank of America, N.A. as Agent
         and Lender, and certain other Lenders that are signatories thereto,
         dated as of May 15, 2002 (incorporated by reference to Exhibit 10.12 to
         our Form 10-K for the year ended December 27, 2002).

10.13    Amendment 2 to Revolving Credit Agreement, by and among Technitrol,
         Inc. and certain of its subsidiaries, Bank of America, N.A. as Agent
         and Lender, and certain other Lenders that are signatories thereto,
         dated as of December 20, 2002 (incorporated by reference to Exhibit
         10.13 to our Form 10-K for the year ended December 27, 2002).

10.14    Letter modification to Revolving Credit Agreement, by and among
         Technitrol, Inc. and certain of its subsidiaries, Bank of America, N.A.
         as Agent and Lender, and certain other Lenders that are signatories
         thereto, dated as of March 6, 2003 (incorporated by reference to
         Exhibit 10.14 to our Form 10-Q for the quarter ended March 28, 2003).

31.1     Certification of Principal Executive Officer pursuant to Section 302(a)
         of the Sarbanes-Oxley Act of 2002.

31.2     Certification of Principal Financial Officer pursuant to Section 302(a)
         of the Sarbanes-Oxley Act of 2002.

32.1     Certification of Principal Executive Officer pursuant to 18 U.S.C.
         Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
         Act of 2002.

32.2     Certification of Principal Financial Officer pursuant to 18 U.S.C.
         Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
         Act of 2002.


                                 Page 31 of 32
<PAGE>

                                   Signatures

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

                                              Technitrol, Inc.
                              --------------------------------------------------
                                                (Registrant)


     July 30, 2003            /s/ Drew A. Moyer
------------------------      --------------------------------------------------
         (Date)               Drew A. Moyer
                              Vice President, Corporate Controller and Secretary
                              (duly authorized officer, principal financial and
                              accounting officer)


                                 Page 32 of 32