Exhibit Index
                                                                   is on page 38

                                  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 September 27, 2002, 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 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 |_|

Common Stock - Shares Outstanding as of November 1, 2002: 40,126,319


                                  Page 1 of 41
<PAGE>

PART I.  FINANCIAL INFORMATION

Item 1:  Financial Statements

                        Technitrol, Inc. and Subsidiaries

                           Consolidated Balance Sheets

                    September 27, 2002 and December 28, 2001
                                  In thousands

                                                   September 27,   December 28,
         Assets                                             2002           2001
                                                            ----           ----
                                                      (unaudited)
Current assets:
     Cash and cash equivalents                         $ 200,150      $ 142,267
     Trade receivables, net                               66,189         63,294
     Inventories                                          58,134         62,404
     Prepaid expenses and other current assets            13,175         18,785
                                                       ---------      ---------
           Total current assets                          337,648        286,750

Property, plant and equipment                            163,826        170,665
     Less accumulated depreciation                        95,888         87,613
                                                       ---------      ---------
           Net property, plant and equipment              67,938         83,052
Deferred income taxes                                     10,576          9,499
Excess of cost over total net assets acquired and
  other intangibles, net                                 101,279        128,512
Other assets                                              26,687         17,207
                                                       ---------      ---------
                                                       $ 544,128      $ 525,020
                                                       =========      =========

         Liabilities and Shareholders' Equity

Current liabilities:
     Current installments of long-term debt            $   9,988      $     122
     Accounts payable                                     23,407         24,780
     Accrued expenses                                     75,495         72,591
                                                       ---------      ---------
           Total current liabilities                     108,890         97,493

Long-term liabilities:
     Long-term debt, excluding current installments        5,493         89,007
     Other long-term liabilities                          10,448          9,289

Shareholders' equity:
     Common stock and additional paid-in capital         206,984         70,184
     Retained earnings                                   216,427        264,055
     Other                                                (4,114)        (5,008)
                                                       ---------      ---------
           Total shareholders' equity                    419,297        329,231
                                                       ---------      ---------
                                                       $ 544,128      $ 525,020
                                                       =========      =========

See accompanying Notes to Unaudited Consolidated Financial Statements.


                                  Page 2 of 41
<PAGE>

                        Technitrol, Inc. and Subsidiaries

                       Consolidated Statements of Earnings

                                   (Unaudited)
                       In thousands, except per share data

<TABLE>
<CAPTION>
                                                                         Three Months Ended                  Nine Months Ended
                                                                   Sept. 27,          Sept. 28,          Sept. 27,         Sept. 28,
                                                                        2002               2001               2002              2001
                                                                        ----               ----               ----              ----
<S>                                                                <C>                <C>                <C>                <C>
Net sales                                                          $ 103,626          $ 100,846          $ 303,231          $370,925
Costs and expenses:
     Cost of sales                                                    77,725             78,693            233,412           273,624
     Selling, general and administrative
       expenses                                                       22,311             23,732             68,162            75,753
     Restructuring and unusual and
       infrequent items                                                  876              8,808             46,632            13,014
                                                                   ---------          ---------          ---------          --------
         Total costs and expenses applicable
             to sales                                                100,912            111,233            348,206           362,391
                                                                   ---------          ---------          ---------          --------
Operating profit (loss)                                                2,714            (10,387)           (44,975)            8,534

Other (expense) income:
     Interest income (expense), net                                      140                (10)              (235)            1,915
     Other                                                               185                496               (772)              594
     Equity earnings of minority-owned
       investments                                                       189                106                382               212
                                                                   ---------          ---------          ---------          --------

         Total other income (expense)                                    514                592               (625)            2,721
                                                                   ---------          ---------          ---------          --------

Earnings (loss) before taxes and cumulative
    effect of accounting change                                        3,228             (9,795)           (45,600)           11,255

Income taxes (benefit)                                                 1,105               (611)           (13,710)            3,798
                                                                   ---------          ---------          ---------          --------
Net earnings (loss) before cumulative
    effect of accounting change                                        2,123             (9,184)           (31,890)            7,457

Cumulative effect of accounting change,
    net of income taxes                                                   --                 --            (15,738)               --
                                                                   ---------          ---------          ---------          --------
Net earnings (loss)                                                $   2,123          $  (9,184)         $ (47,628)         $  7,457
                                                                   =========          =========          =========          ========

Basic earnings (loss) per share before
    cumulative effect of accounting change                         $    0.05          $   (0.27)         $   (0.86)         $   0.23

Cumulative effect of accounting change,
    net of income taxes                                                   --                 --              (0.42)               --
                                                                   ---------          ---------          ---------          --------
Basic earnings (loss) per share                                    $    0.05          $   (0.27)         $   (1.28)         $   0.23
                                                                   =========          =========          =========          ========
Diluted earnings (loss) per share before
    cumulative effect of accounting change                         $    0.05          $   (0.27)         $   (0.86)         $   0.23
Cumulative effect of accounting change,
    net of income taxes                                            $      --          $      --          $   (0.42)         $     --
                                                                   ---------          ---------          ---------          --------
Diluted earnings (loss) per share                                  $    0.05          $   (0.27)         $   (1.28)         $   0.23
                                                                   =========          =========          =========          ========
Cash dividends declared per share                                  $      --          $ 0.03375          $      --          $0.10125
</TABLE>

     See accompanying Notes to Unaudited Consolidated Financial Statements.


                                  Page 3 of 41
<PAGE>

                        Technitrol, Inc. and Subsidiaries

                      Consolidated Statements of Cash Flows

           Nine Months Ended September 27, 2002 and September 28, 2001

                                   (Unaudited)
                                  In thousands

<TABLE>
<CAPTION>
                                                                                              Nine Months Ended
                                                                                       Sept. 27,            Sept. 28,
                                                                                            2002                 2001
                                                                                            ----                 ----
<S>                                                                                    <C>                  <C>
Cash flows from operating activities:
Net earnings (loss)                                                                    $ (47,628)           $   7,457
Adjustments to reconcile net earnings to net cash provided
   by operating activities:
     Depreciation and amortization                                                        15,136               18,582
     Tax benefits from employee stock compensation                                           406                  231
     Amortization of stock incentive plan expense                                            788                1,119
     Restructuring and unusual and infrequent items, net of cash
          payments (excluding loss on disposal of assets and trade
          name write off, net of taxes)                                                    1,004                2,509
     Cumulative effect of accounting change, net of taxes                                 15,738                   --
     Loss on disposal of assets                                                            6,347                4,356
     Trade name write off, net of taxes                                                   19,260                   --
     Changes in assets and liabilities, net of effect of acquisitions:
       Trade receivables                                                                    (307)              44,532
       Inventories                                                                         6,626               20,453
       Prepaid expenses and other current assets                                           4,691               (2,176)
       Accounts payable and accrued expenses                                              (1,133)             (35,226)
     Other, net                                                                          (10,280)                394
                                                                                       ---------            ---------
         Net cash provided by operating activities                                        10,648               62,231
                                                                                       ---------            ---------
Cash flows from investing activities:
     Acquisitions, net of cash acquired                                                   (6,708)            (115,349)
     Capital expenditures                                                                 (3,764)             (10,480)
     Proceeds from sale of property, plant and equipment                                     897                1,104
                                                                                       ---------            ---------
         Net cash used in investing activities                                            (9,575)            (124,725)
                                                                                       ---------            ---------
Cash flows from financing activities:
     Dividends paid                                                                       (1,137)              (3,391)
     Proceeds of long-term borrowings                                                         --              132,865
     Principal payments of long-term debt                                                (75,088)             (60,646)
     Payoff of debt assumed in acquisition                                                    --               (3,944)
     Sale of stock through employee stock purchase plan                                    1,291                6,548
     Proceeds from exercise of stock options                                                  --                   17
     Net proceeds from follow-on offering                                                134,700                   --
                                                                                       ---------            ---------
         Net cash provided by financing activities                                        59,766               71,449
                                                                                       ---------            ---------
Net effect of exchange rate changes on cash                                               (2,956)                (342)
                                                                                       ---------            ---------
Net increase in cash and cash equivalents                                                 57,883                8,613
Cash and cash equivalents at beginning of year                                           142,267              162,631
                                                                                       ---------            ---------

Cash and cash equivalents at September 27, 2002 and September 28, 2001                 $ 200,150            $ 171,244
                                                                                       =========            =========
</TABLE>

     See accompanying Notes to Unaudited Consolidated Financial Statements.


                                  Page 4 of 41
<PAGE>

                        Technitrol, Inc. and Subsidiaries

            Consolidated Statement of Changes in Shareholders' Equity

                      Nine Months Ended September 27, 2002

                                   (Unaudited)
                                  In thousands

<TABLE>
<CAPTION>
                                                                                            Other
                                                                                   ------------------------
                                                                                                    Accumu-
                                            Common stock and                                    lated other
                                             paid-in capital                        Deferred        compre-       Compre-
                                           --------------------       Retained       compen-        hensive       hensive
                                           Shares        Amount       earnings        sation         income        income
                                           ------        ------       --------        ------         ------        ------
<S>                                        <C>         <C>           <C>             <C>           <C>           <C>
Balance at December 28, 2001               33,683      $ 70,184      $ 264,055       $(2,430)      $(2,578)            --
Stock options, awards and related
    compensation                               24           378             --           869            --             --
Tax benefit of stock
    compensation                               --           406             --            --            --             --
Stock issued under employee stock
    purchase plan                              71         1,316             --            --            --             --
Follow-on offering                          6,348       134,700             --            --            --             --
Currency translation adjustments               --            --             --            --            25             25
Net loss                                       --            --        (47,628)           --            --        (47,628)
                                                                                                   -------       --------
Comprehensive loss                             --            --             --            --            --       $(47,603)
                                           ------      --------      ---------       -------       -------       ========
Balance at September 27, 2002              40,126      $206,984      $ 216,427       $(1,561)      $(2,553)
                                           ======      ========      =========       =======       =======
</TABLE>

     See accompanying Notes to Unaudited Consolidated Financial Statements.


                                  Page 5 of 41
<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 ("the Company"), refer to Note 1 of Notes to
Consolidated Financial Statements included in the Company's Form 10-K filed for
the year ended December 28, 2001.

      The results for the quarters ended September 27, 2002 and September 28,
2001, have been prepared by Technitrol's management without audit by its
independent auditors. In the opinion of management, the financial statements
fairly present, in all material respects, the financial position and results of
Technitrol's operations for the periods presented. To the best knowledge and
belief of Technitrol, 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, except for a trade name writedown and goodwill
impairment as described elsewhere in this report. Operating results for the nine
months ended September 27, 2002 are not necessarily indicative of annual
results.

      Certain amounts in the prior year financial statements have been
reclassified to conform with the current year presentation. Also refer to Note
10 "Equity Method Investment in FRE."

(2)   Acquisitions

      Excelsus Technologies, Inc.: In August 2001, the Company 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 preliminary purchase price was approximately
$85.9 million, net of $4.8 million of cash acquired and a preliminary purchase
price adjustment of $2.6 million. The fair value of net assets acquired
approximated $18.2 million. Based on the fair value of the assets acquired, the
preliminary allocation of the unadjusted 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. Included in the assets acquired was a $6.3 million tax receivable,
generated by the acceleration and settlement of Excelsus stock options at the
time of closing. The Company filed income tax returns for the period ending on
the closing date, and received the full amount of the tax receivable during the
fourth quarter of 2001. In order to fund the purchase price, the Company used
approximately $19.0 million of cash on-hand and borrowed approximately $74.0
million under its existing credit facility with a syndicate of commercial banks.
Prior to the acquisition, Excelsus recorded revenues of approximately $40.0
million in 2000.


                                  Page 6 of 41
<PAGE>

                        Technitrol, Inc. and Subsidiaries

         Notes to Unaudited Consolidated Financial Statements, continued

(2)   Acquisitions, continued

      During the quarter ended June 28, 2002 the Company recorded an impairment
charge of $32.1 million of the value assigned to the Excelsus trade names before
any tax benefit. The charge was included in line "restructuring and unusual and
infrequent items" on the consolidated statement of earnings. This charge was
triggered by the combined effect of reorganizing Pulse into product-line based
organization and updated financial forecasts for DSL microfilters. In addition,
a purchase price allocation adjustment to record a deferred tax liability of
$16.0 million associated with the trade name was recorded and goodwill in an
equal amount was recognized. As required by FASB Statement No. 109, Accounting
for Income Taxes, approximately $12.8 million of the additional deferred tax
liability was recognized as a tax benefit in the consolidated statement of
earnings for the three months ended June 28, 2002, concurrent with the trade
name impairment.

      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 the Company under a
cooperation agreement. In April 2001, the Company 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 the Company made an additional investment in FRE of
$6.7 million which increased the total investment to $20.9 million. As a result
of the increased ownership percentage to approximately 29%, the Company began to
account for the investment under the equity method in the three months ended
September 27, 2002. The Company also has an option to purchase additional shares
of common stock in FRE in the future. Also refer to Note 10, "Equity Method
Investment in FRE."

      Grupo ECM: In March 2001, the Company acquired Electro Componentes
Mexicana, S.A. de C.V. and affiliates based in Mexico City. These operations are
referred to as Grupo ECM. Grupo ECM manufactured and marketed inductive
components primarily for automotive applications. This business was integrated
into Pulse. The purchase price was not material to the Company's consolidated
financial position.

      Engelhard-CLAL: In January 2001, the Company acquired the electrical
contacts business of Engelhard-CLAL. These operations are located in France and
the United Kingdom. Engelhard-CLAL manufactured electrical contacts, wire and
strip contact materials and related products primarily for the European
electrical equipment market. This business was integrated into AMI Doduco. The
purchase price was not material to the Company's consolidated financial
position.

(3)   Restructuring and Unusual and Infrequent Items

      The Company implemented numerous restructuring initiatives during 2002 and
2001 in order to reduce its cost structure and capacity in response to the
continuing global recession in the electronics and electrical markets.

      In the quarter ended September 27, 2002 the Company accrued $0.9 million
in total for severance and related payments. Pulse accrued $0.6 million and AMI
Doduco accrued $0.3 million. Approximately 130 employees were terminated, of
which 90 were direct personnel in Asia and 40 were indirect personnel in North
America. A majority of these accruals were utilized by the end of the third
quarter in 2002.


                                  Page 7 of 41
<PAGE>

                        Technitrol, Inc. and Subsidiaries

         Notes to Unaudited Consolidated Financial Statements, continued

(3)   Restructuring and Unusual and Infrequent Items, continued

      In the second quarter of 2002, the Company accrued $11.0 million in total
for the shutdown of its Philippines manufacturing facility, severance and
related payments, asset impairments and plant consolidations, all of which were
related to the Company's continuous cost reduction activities in response to the
continuing global recession in the electronics and electrical markets. 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. An
additional $32.1 million of Excelsus trade name impairment was recorded as
discussed in Note 2, "Acquisitions".

      In the first quarter of 2002, the Company 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. Substantially all of
these accruals were utilized by the end of the first quarter in 2002.

      Approximately $13.0 million of restructuring charges were accrued in the
nine months ended September 28, 2001 to provide for severance and related
payments for Pulse manufacturing personnel primarily in Asia, and to provide for
the shutdown of a manufacturing facility in Thailand and Malaysia. The majority
of this accrual was utilized by the end of the first quarter of 2002.

      Restructuring charges are summarized on a year-to-date basis for 2002 as
follows:

<TABLE>
<CAPTION>
      Restructuring provision (in millions):                      AMI Doduco        Pulse           Total
      -----------------------                                     ----------        -----           -----
<S>                                                                 <C>            <C>             <C>
      Balance accrued at December 28, 2001                          $ 0.6          $ 2.4           $ 3.0
      Accrued during the nine months ended
         September 27, 2002                                           2.8           11.7            14.5
      Severance and other cash payments                              (1.9)          (4.8)           (6.7)
      Non-cash asset disposals                                         --           (6.8)           (6.8)
                                                                    -----          -----           -----
      Balance accrued at September 27, 2002                         $ 1.5          $ 2.5           $ 4.0
                                                                    =====          =====           =====
</TABLE>


                                  Page 8 of 41
<PAGE>

                        Technitrol, Inc. and Subsidiaries

         Notes to Unaudited Consolidated Financial Statements, continued

(4)   Inventories

      Inventories consisted of the following (in thousands):

                                          September 27,     December 28,
                                                   2002             2001
                                                   ----             ----
            Finished goods                      $17,006          $22,159
            Work in process                      12,407           11,723
            Raw materials and supplies           28,721           28,522
                                                -------          -------
                                                $58,134          $62,404
                                                =======          =======

(5)   Derivatives and Other Financial Instruments

      The Company utilizes 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 fluctuations in value of the underlying
exposures being hedged.

      At September 27, 2002, the Company had one foreign exchange contract
outstanding to hedge approximately 46.0 million of euro in the aggregate. The
primary purpose of the forward contract was to hedge intercompany loans. The
term of the contract was less than 30 days The Company had no other financial
derivative instruments. 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.


                                  Page 9 of 41
<PAGE>

                        Technitrol, Inc. and Subsidiaries

         Notes to Unaudited Consolidated Financial Statements, continued

(6)   Earnings (Loss) Per Share

      Basic earnings (loss) per share are calculated by dividing earnings by the
weighted average number of common shares outstanding (excluding restricted
shares) during the period. The Company had restricted shares outstanding of
approximately 274,000 and 333,000 as of September 27, 2002 and September 28,
2001, 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 30,000 and
10,000 as of September 27, 2002 and September 28, 2001, respectively. As the
nine-month period ended September 27, 2002 resulted in a net loss, common share
equivalents are anti-dilutive, and therefore excluded from the earnings (loss)
per share calculation for that period. Earnings (loss) per share calculations
are as follows (in thousands, except per share amounts):

<TABLE>
<CAPTION>
                                                 Three Months Ended              Nine Months Ended
                                              Sept. 27,      Sept. 28,       Sept. 27,       Sept. 28,
                                                   2002           2001            2002            2001
                                                   ----           ----            ----            ----
<S>                                          <C>            <C>             <C>             <C>
Net earnings (loss)                          $    2,123     $   (9,184)     $  (47,628)     $    7,457
     Basic earnings (loss) per share:
         Shares                                  39,826         33,337          37,322          33,200
         Per share amount, before change
            in accounting principle          $     0.05     $    (0.27)     $    (0.86)     $     0.23
         Change in accounting principle              --             --           (0.42)             --
                                             ----------     ----------      ----------      ----------
         Per share amount                    $     0.05     $    (0.27)     $    (1.28)     $     0.23
                                             ==========     ==========      ==========      ==========

     Diluted earnings (loss) per share:
         Shares                                  40,032         33,655          37,606          33,513
         Per share amount, before change
            in accounting principle          $     0.05     $    (0.27)     $    (0.86)     $     0.23
         Change in accounting principle              --             --           (0.42)             --
                                             ----------     ----------      ----------      ----------
         Per share amount                    $     0.05     $    (0.27)     $    (1.28)     $     0.23
                                             ==========     ==========      ==========      ==========
</TABLE>


                                 Page 10 of 41
<PAGE>

                        Technitrol, Inc. and Subsidiaries

         Notes to Unaudited Consolidated Financial Statements, continued

(7)   Business Segment Information

      For the quarters ended September 27, 2002 and September 28, 2001, there
were immaterial amounts of intersegment revenues eliminated in consolidation.
There has been no material change in segment assets from December 28, 2001 to
September 27, 2002, except for the trade name write-off and goodwill impairment
as described elsewhere in this report. In addition, the basis for determining
segment financial information has not changed from 2001. Specific segment data
are as follows:

<TABLE>
<CAPTION>
                                                Three Months Ended             Nine Months Ended
                                              Sept. 27,      Sept. 28,      Sept. 27,      Sept. 28,
Net sales:                                         2002           2001           2002           2001
                                                   ----           ----           ----           ----
<S>                                           <C>            <C>            <C>            <C>
     Pulse                                    $  52,041      $  50,885      $ 151,040      $ 197,870
     AMI Doduco                                  51,585         49,961        152,191        173,055
                                              ---------      ---------      ---------      ---------
         Total                                $ 103,626      $ 100,846      $ 303,231      $ 370,925
                                              =========      =========      =========      =========
Earnings (loss) before income
  taxes:
     Pulse                                    $   2,354      $  (1,616)     $    (267)     $  14,515
     Pulse restructuring and
        unusual and infrequent
        items                                      (624)        (8,267)       (43,799)       (12,473)
     AMI Doduco                                   1,236             37          1,924          7,033
     AMI Doduco restructuring and unusual
       and infrequent
       items                                       (252)          (541)        (2,833)          (541)
                                              ---------      ---------      ---------      ---------
     Operating profit (loss)                      2,714        (10,387)       (44,975)         8,534
     Total other income (expense)                   514            592           (625)         2,721
                                              ---------      ---------      ---------      ---------
     Earnings (loss) before income
       taxes and cumulative effect
       of accounting change                   $   3,228      $  (9,795)     $ (45,600)     $  11,255
                                              =========      =========      =========      =========
</TABLE>

(8)   Adoption of SFAS 141 and SFAS 142

      In July 2001, the FASB issued Statement No. 141, Business Combinations,
("SFAS 141") and Statement No. 142, Goodwill and Other Intangible Assets ("SFAS
142"). SFAS 141 requires that the purchase method of accounting be used for all
business combinations completed after June 30, 2001. SFAS 141 also specifies
that intangible assets acquired in a purchase method business combination must
meet certain criteria to be recognized and reported apart from goodwill. SFAS
142 requires that goodwill and intangible assets with indefinite useful lives no
longer be amortized, but instead they are tested for impairment at least
annually in accordance with the provisions of SFAS 142. SFAS 142 also requires
that other intangible assets with definite useful lives be amortized over their
respective estimated useful lives to their estimated residual values, and
reviewed for impairment in accordance with SFAS 144.


                                 Page 11 of 41
<PAGE>

                        Technitrol, Inc. and Subsidiaries

         Notes to Unaudited Consolidated Financial Statements, continued

(8)   Adoption of SFAS 142, continued

      We adopted the provisions of SFAS 141 in fiscal 2001, and SFAS 142
effective January 1, 2002. Goodwill and intangible assets determined to have an
indefinite useful life acquired in a purchase business combination completed
after June 30, 2001 are not amortized, but will continue to be evaluated for
permanent impairment. Goodwill and intangible assets acquired in business
combinations completed before July 1, 2001 were amortized until December 28,
2001. Since our acquisition of Excelsus was completed on August 7, 2001, the
provisions of SFAS 141 were applied. Therefore, goodwill and certain intangibles
with indefinite lives resulting from the Excelsus transaction have not been
subject to amortization.

      In connection with the transitional goodwill impairment evaluation, SFAS
142 required us to perform an assessment of whether goodwill is impaired as of
the date of adoption. We had approximately $80.3 million of unamortized goodwill
and $48.2 million of other intangible assets as of December 28, 2001, which was
subject to the transition provisions of SFAS 141 and SFAS 142. To accomplish the
impairment valuation, we determined the carrying value of each reporting unit by
assigning the assets and liabilities, including the existing goodwill and
intangible assets, to those reporting units as of the date of adoption. As AMI
Doduco's reporting unit's carrying amount exceeded its fair value, an indication
existed that the reporting unit's goodwill may be impaired and we performed the
second step of the transitional impairment test. In the second step, we compared
the implied fair value of the AMI Doduco's goodwill, determined by allocating
the reporting unit's fair value to all of its assets and liabilities in a manner
similar to a purchase price allocation in accordance with SFAS 141, to its
carrying amount. As a result of the transitional impairment test, we recorded an
impairment loss of $15.7 million in the first quarter of 2002. This loss was
recognized as a cumulative effect of an accounting change during the three
months ended March 29, 2002.

      Goodwill was not amortized for the nine months ended September 27, 2002,
whereas amortization expense was $3.4 million for the nine months ended
September 28, 2001.


                                 Page 12 of 41
<PAGE>

                        Technitrol, Inc. and Subsidiaries

         Notes to Unaudited Consolidated Financial Statements, continued

(8)   Adoption of SFAS 142, continued

      The following table presents the impact of SFAS 142 on net income and net
income per share had the standard been in effect for the three months and nine
months ended September 27, 2002 and September 28, 2001, respectively (in
thousands, except per share amounts):

<TABLE>
<CAPTION>
                                                Three Months Ended         Nine Months Ended
                                               Sept. 27,   Sept. 28,    Sept. 27,     Sept. 28,
                                                    2002        2001          2002          2001
                                                    ----        ----          ----          ----
<S>                                            <C>           <C>          <C>           <C>
Net income (loss) - as reported                $   2,123     $(9,184)     $(47,628)     $  7,457
Adjustments:
     Amortization of goodwill                         --       1,163            --         3,406
     Cumulative effect of accounting
        change                                        --          --        15,763            --
     Income tax effect                                --         (24)          (25)          (74)
                                               ---------     -------      --------      --------

           Net adjustments                            --       1,139        15,738         3,332
                                               ---------     -------      --------      --------

Net income (loss) - adjusted                   $   2,123     $(8,045)     $(31,890)     $ 10,789
                                               =========     =======      ========      ========

Basic net income (loss) per share -
  as reported                                  $    0.05     $ (0.27)     $  (1.28)     $   0.23

Basic net income (loss) per share -
  adjusted                                     $    0.05     $ (0.24)     $  (0.86)     $   0.33
Diluted net income (loss) per share
  - as reported                                $    0.05     $ (0.27)     $  (1.28)     $   0.23

Diluted net income (loss) per share
  - adjusted                                   $    0.05     $ (0.24)     $  (0.86)     $   0.32
</TABLE>

(9)   Follow-on Equity Offering

      The Company completed a follow-on offering of 6,348,000 shares of its
common stock on April 11, 2002. The proceeds of the offering, net of expenses,
were approximately $134.7 million. The Company used approximately $36.5 million
of net proceeds from the sale of shares for voluntary repayment of outstanding
debt and expects to use the remaining proceeds at approximately $98.2 million
for potential strategic acquisitions and general corporate purposes.


                                 Page 13 of 41
<PAGE>

                       Technitrol, Inc. and Subsidiaries

         Notes to Unaudited Consolidated Financial Statements, continued

(10)  Equity Method Investment in FRE

      During the quarter ended September 27, 2002 the Company's ownership in a
minority owned investment increased from approximately 19% to 29%. In accordance
with generally accepted accounting principles, the Company has adjusted the
prior period to reflect the impact of a change in accounting for the Company's
ownership in this investment from the cost basis method to the equity method of
accounting. The adjustment in 2001 reflects the Company's cumulative earnings as
if the 19% investment was accounted for as an equity method investment for all
periods presented. The Company's cumulative earnings recognized as of September
28, 2001 were $0.2 million, and an additional $0.2 million and $0.4 million of
equity earnings were recorded in the three months and nine months ended
September 27, 2002, respectively. 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. The investment is reflected in the other
assets caption of the Consolidated Balance Sheets.

(11) Application of Statement No. 123, Accounting for Stock Based Compensation
("SFAS 123").

      On October 21, 2002 the Company announced its plan to recognize
compensation expense for all stock option awards granted beginning in the 2003
fiscal year, according to FASB Statement No. 123, Accounting for Stock Based
Compensation (SFAS 123). The Company intends to implement SFAS 123 under the
existing transition rules, whereby compensation expense will be recorded under
SFAS 123 for all awards subsequent to adoption. On a proforma basis, if the
Company applied SFAS 123 for all stock option awards granted thus far in the
fiscal year ending December 27, 2002, it would expect to recognize additional
after-tax compensation expense of approximately $.01 per share for the full
year.

      At September 27, 2002 the Company has approximately 382,000 options
outstanding, representing less than 1% of the Company's 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
inculded in the results of operations for the period ended September 27, 2002
and all prior periods.


                                 Page 14 of 41
<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. Actual results could and probably will differ
materially from those anticipated in these forward-looking statements for many
reasons, including the risks we face described in "Risk Factors" section of this
report on page 29 through 36.

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 the Annual Report on Form 10-K for
the fiscal year ended December 28, 2001 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 allowances, goodwill impairments, restructuring expense and
acquisition related restructuring costs, income taxes, and contingency reserves.
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 Allowances. Inventory purchases and commitments are based upon
future demand forecasts estimated by taking into account actual purchases of our
products over the recent past. 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 increase inventory allowances and our gross margin could be
negatively affected. If we were to sell or use a significant portion of
inventory already reserved, our gross margin could be positively affected.

      Goodwill Impairment. We will 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
recent restructuring activities, 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 and are added to
goodwill. Other restructuring costs are expensed during the period in which we
determine that we will incur those costs, and all of the requirements for
accrual are met.


                                 Page 15 of 41
<PAGE>

      These restructuring costs are recorded based upon our best estimates at
the time. Our actual expenditures for the restructuring activities may differ
from the initially recorded costs. If this occurs, we would adjust our estimates
in future periods. In the case of acquisition-related restructuring costs, and
depending on whether the assets impacted came from the acquired entity and the
timing of the restructuring charge, this 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 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 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 Reserves. 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 reserves we consider
both the likelihood of a loss or incurrence of a liability as well as our
ability to reasonably estimate the amount of accrual. We accrue for contingency
reserves when a liability is probable and the amount can be reasonably
estimated. We periodically evaluate available information to assess whether
contingency reserves should be adjusted.

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 experienced consistent growth in net sales from fiscal 1991
through fiscal 2000. We define net sales as gross sales less returns and
allowances. We sometimes refer to net sales as revenue. From 1994 through 2000,
the growth in our consolidated net sales was due in large part to the growth of
Pulse. However, since late 2000, the electronics markets served by Pulse have
experienced a severe global contraction. While there remains substantial
uncertainty with respect to future demand for our products, particularly at
Pulse, we believe that our markets have begun to stabilize in 2002 and that a
market recovery will be slow and uneven.


                                 Page 16 of 41
<PAGE>

      Throughout the year ended December 28, 2001 demand slowed at AMI Doduco,
mirroring the prevailing economic conditions in North America and Europe. These
anemic market conditions continued into 2002; however, AMI Doduco has seen
increases in design and quoting activities for component subassemblies in
Europe, for automotive applications such as sensor housings, multi-function
switches, motor control sensors and ignition security systems, and
non-automotive uses such as appliance and industrial controls and medical
equipment. Although some of our customers and the popular press generally report
modest economic growth for the remainder of the year, AMI Doduco continues its
cost reduction actions. For example, in addition to workforce adjustments in
line with market demand around the world, AMI Doduco is also continuing certain
product and plant consolidation actions, particularly in Europe.

      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. Our gross margin
is also significantly affected by capacity utilization at both Pulse and AMI
Doduco. Pulse's markets have experienced significant price deflation in 2002,
brought about by global excess capacity and migration of significant
manufacturing capacity to the Far East. However, Pulse products have a
relatively short-term product life cycle. Significant product turnover occurs
each year, resulting in a changing product sales mix. Therefore, Pulse's changes
in revenues do not necessarily provide a meaningful and quantifiable measure of
Pulse's operations. AMI Doduco has a fairly long-term and mature product line,
without significant turnover. While there has been variation over time in the
prices of products sold, changes in unit volume account for most of the sales
growth or contraction at AMI Doduco.

      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. We have maintained
ongoing acquisition activities for many years in both of our business segments.
We are continuously engaged in discussions with a variety of acquisition
candidates and potential strategic partners. Pulse made numerous acquisitions in
recent years which have increased its penetration into its primary markets and
expanded its presence in new markets. Excelsus is a recent example of these
acquisitions. Excelsus was acquired in August 2001 for approximately $85.9
million, net of cash acquired. Excelsus is based in Carlsbad, California and is
a leading producer of customer-premises digital subscriber line filters and
other broadband accessories.

      Similarly, AMI Doduco has grown through acquisitions. Most recently, 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. AMI Doduco acquisitions are typically driven by
its strategy of expanding its product and geographic market presence for
electrical contact products.

      Due to our quick integration of acquisitions and the interchangeable
sources of net sales between existing and acquired operations, we cannot
separately track the net sales of an acquisition, in any meaningful way, after
the date of the transaction.


                                 Page 17 of 41
<PAGE>

      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, however, the
opposite trend was experienced as these industries experienced a severe
worldwide contraction and virtually all of our customers canceled orders and
decreased their level of business activity as a result of lower demand for their
end products. 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 overall construction
spending, and reduced capital spending. 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 in the first half of 2002. 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 contract its capacity as quickly as Pulse in
response to market demand, although significant actions have been taken to align
AMI Doduco's capacity with market demand. In response to the decline in demand
for our products, we implemented a succession of cost reduction initiatives and
programs, summarized as follows:

      In the third quarter of 2002, the Company accrued for $0.9 million in
total for severance and related payments. Pulse accrued $0.6 million and AMI
Doduco accrued $0.3 million. Approximately 130 employees were terminated, of
which 90 were direct personnel in Asia and 40 were indirect personnel in North
America. A majority of these accruals were utilized by the end of the third
quarter in 2002.

      In the second quarter of 2002, we accrued $11.0 million in total for the
shutdown of the 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 worldwide and $1.1
million for asset impairments, writedowns and relocations in Europe. An
additional $32.1 million of Excelsus trade name impairment was recorded as
discussed in Note 2, "Acquisitions".

      In the first quarter of 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. The majority of these accruals were
utilized by the end of the first quarter of 2002.

      Approximately $13.0 million of restructuring charges were accrued in the
nine months ended September 28, 2001 to provide for severance and related
payments for Pulse manufacturing personnel primarily in Asia, and to provide for
the shutdown of manufacturing facilities in Thailand and Malaysia. The majority
of these accruals were utilized by the end of the first quarter of 2002.


                                 Page 18 of 41
<PAGE>

      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 minimized while we wait for the recovery in demand and 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,
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. The eliminated costs also include depreciation savings from disposed
equipment and the relocation of capacity to factories in lower cost countries,
primarily the PRC. If incoming orders increase substantially, additional hiring
may be necessary to expand capacity. However, we do not anticipate requiring
additional capacity in the foreseeable future.

      Our restructuring charges are summarized for 2002 as follows:

<TABLE>
<CAPTION>
                                                         AMI
      Restructuring provision (in millions):          Doduco       Pulse          Total
      -----------------------                         ------       -----          -----
<S>                                                    <C>          <C>           <C>
      Balance accrued at December 28, 2001             $ 0.6        $ 2.4         $ 3.0
      Accrued during the nine months ended
         September 27, 2002                              2.8         11.7          14.5
      Severance and other cash payments                 (1.9)        (4.8)         (6.7)
      Non-cash asset disposals                            --         (6.8)         (6.8)
                                                       -----        -----         -----
      Balance accrued at September 27, 2002            $ 1.5        $ 2.5         $ 4.0
                                                       =====        =====         =====
</TABLE>

      International Operations. An increasing percentage of our sales in recent
years has been outside of the United States. As of September 27, 2002, we have
operations in 9 countries and we have significant net sales in currencies other
than the U.S. dollar. As a result, 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 much less than it is at AMI Doduco. As a result of this
and other factors, Pulse uses the U.S. dollar as its functional currency in
Europe while AMI Doduco uses the euro. The use of different functional
currencies creates varied financial effects. The euro was 3.4% stronger, on
average, relative to the U.S. dollar during the nine months ended September 27,
2002 than in the comparable prior-year period. As a result, AMI Doduco's
euro-denominated sales resulted in higher dollar sales upon translation for our
U.S. consolidated financial statements. As the euro was 10.5% stronger than the
U.S. dollar at September 27, 2002 versus December 28, 2001, we experienced a
positive translation adjustment to equity in the nine months ended September 27,
2002 because our investment in AMI Doduco's European operations was worth more
in U.S. dollars. If an increasing percentage of our sales is denominated in
non-U.S. currencies, it could increase our exposure to currency fluctuations.
The impact of exchange rate differences on AMI Doduco's European sales will be
partially offset by the impact on its expenses and bank borrowings in Europe,
most of which are also denominated in euros. Despite Pulse's significant
presence in Asia, the vast majority of its revenues from customers in Asia are
denominated in U.S. dollars. As a result, Pulse has less exposure than AMI
Doduco to sales fluctuations caused by currency fluctuations.


                                 Page 19 of 41
<PAGE>

      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 September 27, 2002, we had one foreign exchange contract outstanding to
hedge approximately 46.0 million of euro in the aggregate. The primary purpose
of the forward contracts was 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 many of its electrical contacts, contact materials and contact
subassemblies. Historically, as is the case with most other manufacturers who
use precious metals in their products, we have leased or held these materials
through consignment arrangements with our suppliers. Leasing and consignment
costs have been substantially below the costs to borrow funds to purchase the
metals and these arrangements eliminate the fluctuations in the market price of
owned precious metal. AMI Doduco's terms of sale generally allow us to charge
customers for the market value of silver on the day after we deliver the silver
bearing product to the customer which is also the day on which we purchase the
precious metals from the lessor. 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/decreases are caused by increases/decreases in interest rates or
changes in the market price of the precious metals.

      Income Taxes. Our effective income tax rate is affected by the proportion
of our income earned in high-tax jurisdictions such as Germany and the income
earned in low-tax jurisdictions, particularly in Asia. This mix of income can
vary significantly from one period to another. We have benefited over recent
years from favorable offshore tax treatments. However, we may not be able to
take advantage of similar benefits in the future. Developing countries and, in
particular, the People's Republic of China, may change their tax policies at any
time. We have not provided for U.S. federal income and foreign withholding taxes
on approximately $294.0 million of our non-U.S. subsidiaries' undistributed
earnings (as calculated for income tax purposes) as of December 28, 2001. Such
earnings include pre-acquisition earnings of foreign entities acquired through
stock purchases, and are intended to be reinvested outside of the U.S.
indefinitely. It is not practical to estimate the amount of unrecognized
deferred taxes on these undistributed earnings. Where excess cash has
accumulated in our non-U.S. subsidiaries and it is advantageous for tax reasons,
subsidiary earnings may be remitted.


                                 Page 20 of 41
<PAGE>

Results of Operations

Three months ended September 27, 2002 compared to the three months ended
September 28, 2001

      Net Sales. Net sales for the three months ended September 27, 2002
increased $2.8 million, or 2.8%, to $103.6 million from $100.8 million for the
three months ended September 28, 2001. Our sales increase from the comparable
period last year was attributable primarily to erratically improving end user
markets for our legacy products, gains from acquisitions and a stronger euro to
U.S. dollar conversion rate. Generally, end user markets remain sluggish,
characterized by declining capital expenditures by end-users, excess inventory
levels throughout the supply chain, lack of end user demand for both electronic
and electrical products and continued price deflation.

      Pulse's net sales increased $1.2 million, or 2.3%, to $52.0 million for
the three months ended September 27, 2002 from $50.9 million for the three
months ended September 28, 2001. Net sales in 2002 include sales derived from
our acquisition of Excelsus since the date of its acquisition in August 2001.
Product mix shifts and price deflation contributed to downward pressure on net
sales.

      AMI Doduco's net sales increased $1.6 million, or 3.3%, to $51.6 million
for the three months ended September 27, 2002 from $50.0 million for the three
months ended September 28, 2001. Sales in the 2002 period reflect a stronger
average euro-to-U.S. dollar exchange rate, and continuing weakness in North
American and European markets due to lower manufacturing activity in the
commercial and industrial controls and non-residential construction markets.

      Cost of Sales. Our cost of sales decreased $1.0 million, or 1.2%, to $77.7
million for the three months ended September 27, 2002 from $78.7 million for the
three months ended September 28, 2001. Our consolidated gross margin for the
three months ended September 27, 2002 was 25.0% compared to 22.0% for the three
months ended September 28, 2001. Our consolidated gross margin for the third
quarter of 2002 was positively affected by the following factors:

      o     Capacity reductions, resulting in a higher average capacity
            utilization at both Pulse and AMI Doduco, and

      o     the positive effects of our cost-down initiatives taken throughout
            2001 and 2002.

      Offsetting these positive factors on gross margin was a change in product
mix to lower margin products and decreased average selling prices primarily at
Pulse.

      Selling, General and Administrative Expenses. Total selling, general and
administrative expenses for the three months ended September 27, 2002 decreased
$1.4 million, or 6.0%, to $22.3 million, or 21.5% of net sales, from $23.7
million, or 23.5% of net sales, for the three months ended September 28, 2001.
The decrease in selling, general and administrative expenses in 2002 was due to
aggressive action that we took to reduce costs and tighten spending controls.
During the third quarter of 2002 the positive impact of these actions was
partially offset by expenses relating to compensation related accruals and other
one-time accruals which are not expected to recur in the subsequent quarter. The
aggregate amount of these items was approximately $1.7 million in the quarter
ended September 27, 2002.


                                 Page 21 of 41
<PAGE>

      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 September 27, 2002 and
September 28, 2001 respectively, RD&E by segment was as follows (dollars in
thousands):

                                          2002          2001
                                          ----          ----
      Pulse                           $  3,286      $  3,894
      Percentage of segment sales          6.3%          7.7%

      AMI Doduco                      $  1,038      $  1,026
      Percentage of segment sales          2.0%          2.1%

      Although 2001 and 2002 have been characterized by cost reduction
activities and much lower sales levels, particularly at Pulse, 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 activities with our OEM customers continue at an aggressive pace.

      Interest. Net interest income was $0.1 million for the three months ended
September 27, 2002 compared to essentially zero net interest expense for the
three months ended September 28, 2001. This increase in net interest income is
due primarily to a higher invested cash balance, which averaged $199.4 million
during the quarter ended September 28, 2002 and $173.7 million during the
quarter ended September 27, 2001 offset by a lower interest income rate. The
increase in cash in 2002 is primarily attributable to the follow-on offering
proceeds of $134.7 million less $36.5 million in debt payments to retire
outstanding debt. Also, we reduced total debt from September 28, 2001 to
September 27, 2002 by $104.7 million, primarily due to payments made to retire
outstanding debt, somewhat offset by the effect of euro denominated debt being
valued at a weaker average U.S. dollar to euro rate on the September 27, 2002
consolidated balance sheet.

      Our primary 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. We did not have any borrowings outstanding
under this credit facility as of September 27, 2002. If, in the future, we
borrow under the 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 in 2002.

      Income Taxes. The effective income tax rate for the three months ended
September 27, 2002, was 34.2% compared to 6.2%, in the form of a benefit, for
the three months ended September 28, 2001. The higher tax rate in 2002 resulted
from higher taxable income and a higher proportion of income in high tax
jurisdictions in the three months ended September 27, 2002 versus the comparable
period in 2001. In 2002, we also experienced a higher proportion of
non-deductible restructuring and unusual and infrequent items than in 2001.


                                 Page 22 of 41
<PAGE>

Nine months ended September 27, 2002 compared to the nine months ended September
28, 2001

      Net Sales. Net sales for the nine months ended September 27, 2002
decreased $67.7 million, or 18.3%, to $303.2 million from $370.9 million for the
nine months ended September 28, 2001. Our sales decline from the comparable
period last year was attributable primarily to erratically improving end user
markets for our legacy products. During the first three months of the 2001
period, sales remained at a relatively high level as shipments in the electronic
components industry benefited from high order rates in the closing weeks of
2000. Generally, end user markets remain sluggish, characterized by declining
capital expenditures by end-users, excess inventory levels throughout the supply
chain, lack of end user demand for both electronic and electrical products and
continued price deflation.

      Pulse's net sales decreased $46.8 million, or 23.7%, to $151.0 million for
the nine months ended September 27, 2002 from $197.9 million for the nine months
ended September 28, 2001. This decline was experienced in Pulse's networking,
telecommunications and power conversion markets on a worldwide basis,
particularly in North America and Europe. A significant portion of Pulse sales
during the nine months ended September 28, 2001 were for products ordered in
2000, before the dramatic slowdown began. Net sales in 2002 include full nine
months of sales derived from our acquisitions of Grupo ECM and Excelsus since
the date of their acquisition in March 2001 and August 2001, respectively.
Product mix shifts and price deflation contributed to downward pressure on net
sales.

      AMI Doduco's net sales decreased $20.9 million, or 12.1%, to $152.2
million for the nine months ended September 27, 2002 from $173.1 million in the
nine months ended September 28, 2001. Sales in the 2002 period reflect
continuing weakness in North American and European markets, but a stronger
average euro-to-U.S. dollar exchange rate. 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 decreased $40.2 million, or 14.7%, to
$233.4 million for the nine months ended September 27, 2002 from $273.6 million
for the nine months ended September 28, 2001. This decrease was primarily due to
a decrease in net sales. Our consolidated gross margin for the nine months ended
September 27, 2002 was 23.0% compared to 26.2% for the nine months ended
September 28, 2001. Our consolidated gross margin in 2002 was negatively
affected by:

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

      o     manufacturing inefficiencies at both Pulse and AMI Doduco due to
            under-utilization of capacity and continued consolidation activities
            in European, Asian and North American manufacturing facilities, and

      o     a proportionate increase in sales at Pulse of new products for which
            optimal manufacturing efficiency has yet to be achieved.

      These factors more than offset the effect of our cost-down initiatives
taken throughout 2001 and 2002.


                                 Page 23 of 41
<PAGE>

      Selling, General and Administrative Expenses. Total selling, general and
administrative expenses for the nine months ended September 27, 2002 decreased
$7.6 million, or 10.0%, to $68.2 million, or 22.5% of net sales, from $75.8
million, or 20.4% of net sales for the nine months ended September 28, 2001. The
decrease in selling, general and administrative expenses in 2002 in dollars was
due to aggressive action that we took to reduce costs and tighten spending
controls and lower incentive awards and expenses related to our restricted stock
plan in 2002. The underlying expense for incentive awards is primarily variable
and dependent upon our overall financial performance regarding incentive plan
targets, primarily the achievement of economic profit and net operating profit
objectives. These incentive awards were $0.5 million in the nine months ended
September 28, 2001. Expenses associated with stock-based compensation plans
including the restricted stock plan were lower in the nine months ended
September 27, 2002 versus the comparable period in 2001, due to a lower number
of shares awarded, and a lower average share price of our common stock in 2002
compared to 2001. These expenses were $0.7 million in the nine months ended
September 27, 2002 and $0.9 million in the nine months ended September 28, 2001.

      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 nine months ended September 27, 2002 and
September 28, 2001 respectively, RD&E by segment was as follows (dollars in
thousands):

                                                2002           2001
                                                ----           ----
      Pulse                                $  10,775      $  11,855
      Percentage of segment sales                7.1%           6.0%

      AMI Doduco                           $   2,928      $   3,189
      Percentage of segment sales                1.9%           1.8%

      Although 2001 and the first nine months of 2002 have been characterized by
cost reduction activities and much lower sales levels, particularly at Pulse, 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 activities with our OEM customers continue at an aggressive
pace.

      Interest. Net interest expense was $0.2 million for the nine months ended
September 27, 2002 compared to net interest income of $1.9 million for the nine
months ended September 28, 2001. This decrease in net interest income is due
primarily to commitment fees on our revolving credit agreement, despite a higher
invested cash balance, and a lower interest income rate. Cash and cash
equivalents increased from December 28, 2001 to September 27, 2002 by $57.9
million, from $142.3 million to $200.2 million. The increase in cash is
attributable primarily to the follow-on offering proceeds of $134.7 million less
debt payments of $75.1 million to retirement of outstanding debt. Total debt
decreased from December 28, 2001 to September 27, 2002 by $73.6 million,
primarily due to $75.1 paid to retire outstanding debt, partially offset by the
effect of euro denominated debt being valued at a weaker average U.S. dollar to
euro rate on the September 27, 2002 consolidated balance sheet.


                                 Page 24 of 41
<PAGE>

      Income Taxes. The effective income tax rate, before cumulative effect of
accounting change, in the form of a benefit for the nine months ended September
27, 2002, was 30.1% compared to 33.7% of income tax expense for the nine months
ended September 28, 2001. The tax benefit reflects a higher proportion of
deductible restructuring and infrequent items, partially offset by certain
losses for which a benefit may not be realized.

Liquidity and Capital Resources

      Working capital as of September 27, 2002 was $228.8 million compared to
$189.3 million at December 28, 2001. This increase was primarily due to higher
invested cash as of September 27, 2002 related to net follow-on offering
proceeds partially offset by $9.9 million reclassified from long-term debt to
current installments of long-term debt as of December 28, 2001. This debt
reflects fixed rate term loans due June 26, 2003. Cash and cash equivalents,
which is included in working capital, increased from $142.3 million as of
December 28, 2001 to $200.2 million as of September 27, 2002.

      Net cash provided by operating activities was $10.6 million for the nine
months ended September 27, 2002 and $62.2 million in the comparable period of
2001, a decrease of $51.6 million. The first nine months of 2001 were
categorized by a dramatic decrease in sales. The resulting decrease in accounts
receivable and inventories generated significant positive cash flow in the first
nine months of 2001.

      During the nine months ended September 27, 2002, net earnings declined as
a result of the continuing slowdown in our markets, primarily those served by
Pulse. However, the lower earnings have been partially offset by decreased
working capital requirements and aggressive cash management actions that we took
in response to the slowdown. Inventory declined by $6.6 million during the nine
months ended September 27, 2002 due to the reduction in Pulse's net sales during
the period and corresponding actions to limit purchases and production activity.

      Capital expenditures were $3.8 million during the nine months ended
September 27, 2002 and $10.5 million in the comparable period of 2001. The level
of capital expenditures decreased due to tight spending controls, lower Pulse
capacity needs resulting from lower sales, and our efforts to maximize cash flow
during this period of slow market activity. We significantly reduced our capital
spending in 2001 as compared to fiscal 2000 and expect that our spending in 2002
will be less than in 2001. We make capital expenditures to expand production
capacity and to improve our operating efficiency. We plan to continue making
such expenditures in the future.

      There was $6.7 million cash used for acquisitions in the nine months ended
September 27, 2002, whereas during the nine months ended September 28, 2001
there was $115.4 million used for acquisitions. The 2002 spending was for the
additional equity investment in Full Rise Electronics, Co., Ltd. We exercised
our option to expand our investment in FRE on July 27, 2002, with an additional
investment of approximately $6.7 million which increased our total investment to
$20.9 million. As a result of the increase in ownership percentage to
approximately 29%, we recognized our investment under the equity method in the
three months ending September 27, 2002. Under the equity method, our
proportionate share of income or loss of FRE as determined under U.S. generally
accepted accounting principles will be reflected in our consolidated statement
of earnings. The 2001 spending included the acquisitions of Engelhard-CLAL,
Grupo ECM, Excelsus and the initial cost basis investment in FRE. We may acquire
other businesses or product lines to expand our breadth and scope of operations.


                                 Page 25 of 41
<PAGE>

      We paid dividends of $1.1 million in the nine months ended September 27,
2002, and $3.4 million in the comparable period of 2001. We received proceeds of
$1.3 million during the nine months ended September 27, 2002, and $6.5 million
in the comparable period of 2001 from the sale of stock through our employee
stock purchase plan. After paying a dividend on January 25, 2002, to
shareholders of record on January 4, 2002, we said that 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.

      As of September 27, 2002, 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, we voluntarily
reduced the size of this credit facility to a maximum of $175.0 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 goodwill impairment charge recorded in
the three months ended March 29, 2002. The amended facility consists of:

      o     an aggregate U.S. dollar-based revolving line of credit in the
            principal amount of up to $175.0 million including individual
            sub-limits of:

            o     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

            o     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.

      At September 27, 2002 we had $175.0 million of unused credit available
under the amended credit agreement. The credit facility also contains covenants
requiring maintenance of minimum net worth, maximum debt to EBITDA ratio,
minimum interest expense coverage, capital expenditure limitations, and other
customary and normal provisions. We are in compliance with all such covenants.
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.

      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 obligations outstanding under two term loan agreements. The
first is with Baden-Wurttembergische Bank for borrowing under two loans, each in
the amount of approximately 5.1 million euro, both due in June 2003. The second
is with Sparkasse Pforzheim, for the borrowing of approximately 5.1 million
euro, and is due in August 2009.

      We had two stand by letters of credit outstanding at September 27, 2002 in
the aggregate amount of $2.2 million securing transactions entered into in the
ordinary course of business.


                                 Page 26 of 41
<PAGE>

      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 short-term and long-term operating cash
requirements. In addition, we may use internally generated funds or borrowings
for acquisitions of suitable businesses or assets. On April 11, 2002 we
completed a follow-on equity offering. The proceeds of the offering, net of
expenses, were approximately $134.7 million. Approximately $36.5 million was
used to retire outstanding debt. The remainder of approximately $98.2 million is
expected to be used for potential strategic acquisitions and general corporate
purposes. We have maintained ongoing acquisition activities for many years in
both of our business segments. We are continously engaged in discussions with a
variety of acquisition candidates and potential strategic partners.

      With the exception of approximately $10.0 million of retained earnings as
of December 28, 2001 in the PRC that are restricted in accordance with Section
58 of the PRC Foreign Investment Enterprises Law, substantially all retained
earnings are free from legal or contractual restrictions. The amount restricted
in accordance with the PRC Foreign Investment Enterprise Law is for employee
welfare programs and is applicable to all foreign investment enterprises doing
business in the PRC. The restriction applies to 10% of our net retained earnings
in the PRC, not to exceed 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.

      In order to reduce interest expense, we commenced an intercompany lending
program during the year ended December 28, 2001, whereby excess U.S. dollar
denominated cash is being used to retire euro denominated debt. There are
several benefits derived from this program, including lower net interest
expense, as the U.S. dollar interest income rates have been decreasing, while
the euro interest expense rates have declined less rapidly. In addition, we
avoid paying a credit facility spread.


                                 Page 27 of 41
<PAGE>

New Accounting Pronouncements

      In July 2002, the Financial Accounting Standards Board ("FASB") issued
Statement No. 146, Accounting for Costs Associated with Exit or Disposal
Activities, ("SFAS 146"). SFAS 146 nullifies EITF Issue No. 94-3, Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an
Activity including Certain Costs Incurred in a Restructuring, ("EITF 94-3"). The
principal difference between SFAS 146 and EITF 94-3 relates to the recognition
of a liability for a cost associated with an exit or disposal activity. SFAS 146
requires that a liability be recognized for those costs only when the liability
is incurred, that is, when it meets the definition of a liability in the FASB's
conceptual framework. In contrast, EITF 94-3 required recognition of a liability
for an exit cost when management committed to an exit plan. SFAS 146 also
establishes fair value as the objective for initial measurement of liabilities
related to exit or disposal activities. SFAS 146 is effective for exit or
disposal activities that are initiated after December 31, 2002. The provisions
of EITF 94-3 apply until adoption of SFAS 146. We plan to continue applying the
provisions of EITF 94-3 for the remainder of our fiscal year 2002. The impact on
our operating results upon adoption of this standard cannot be determined at
this time and depends on our future restructuring actions.

      In October 2001, the Financial Accounting Standards Board ("FASB") issued
Statement No. 144, Accounting for the Impairment or Disposal of Long-Lived
Assets, ("SFAS 144") which addresses financial accounting and reporting for the
impairment or disposal of long-lived assets. While SFAS 144 supersedes FASB
Statement No. 121, Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of, ("SFAS 121") it retains many of the
fundamental provisions of SFAS 121. SFAS 144 also supersedes the accounting and
reporting provisions of APB Opinion No. 30, Reporting the Results of Operations
Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary,
Unusual and Infrequently Occurring Events and Transactions, ("APB 30"). SFAS 144
does however, retain the requirement in APB 30 to report separately discontinued
operations, and extends this reporting requirement to a component of an entity
that either has been disposed of by sale, abandonment, or in a distribution to
owners; or is classified as held for sale. Goodwill is excluded from the scope
of SFAS 144. We were required to adopt the provisions of SFAS 144 during the
three months ended March 29, 2002. Adoption of this standard did not have a
material effect on our net sales, operating results or liquidity.

      In August 2001, the FASB issued Statement No. 143, Accounting for Asset
Retirement Obligations ("SFAS 143") which addresses financial accounting and
reporting for obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs. SFAS 143 applies to legal
obligations associated with the retirement of tangible long-lived assets that
result from the acquisition, construction, development and (or) normal use of
the assets. SFAS 143 requires that the fair value of a liability for an asset
retirement obligation be recognized in the period in which it is incurred if a
reasonable estimate of fair value can be made. The fair value of the liability
is added to the carrying amount of the associated asset and this additional
carrying amount is depreciated over the life of the asset. The liability is
accreted at the end of each period through charges to operating expense. If the
obligation is settled for other than the carrying amount of the liability, a
gain or loss on settlement will be recognized. We are required to adopt the
provisions of SFAS 143 during the three months ending March 28, 2003. Adoption
of this standard is not expected to have a material effect on our net sales,
operating results or liquidity.


                                 Page 28 of 41
<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 or the strength of any recovery. Accordingly, we may
continue to experience weakness 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 have continued 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


                                 Page 29 of 41
<PAGE>

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
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 reductions 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. While our acquisitions
have not generally resulted in goodwill impairment in the past, upon the
adoption of SFAS 142, we recorded a goodwill impairment charge in the first
quarter of 2002 of approximately $15.7 million related to AMI Doduco. 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.


                                 Page 30 of 41
<PAGE>

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 practice has been to quickly integrate acquisitions into the existing
business of the acquiring segment and to only 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.

      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 five years, both organically and as a
result of acquisitions. However, in the past eighteen months 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 currently have very little visibility into our customers' future
purchasing intentions 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


                                 Page 31 of 41
<PAGE>

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 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.


                                 Page 32 of 41
<PAGE>

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 current contraction. In addition, when there is
significant over capacity in the electronics business as now exists, customer
lead times become very short (a matter of several weeks), thus reducing backlog.
Lastly, customers are requiring more and more consignment and vendor managed
inventory type arrangements which also serve to reduce backlog. Although you
should not rely on our backlog 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. For
example, there has been a material devaluation of the euro against the U.S.
dollar in the last several years which has negatively impacted our reported
profits. In recent months, the euro has strengthened substantially against the
U.S. dollar. 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.


                                 Page 33 of 41
<PAGE>

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 Estonia, France, Germany, Hungary, Italy, Mexico, the Peoples'
Republic of China, or PRC, and Spain. 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;

      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 a significant portion of its manufacturing
operations in the PRC. Our presence in the PRC has enabled Pulse to maintain
lower manufacturing costs and to flexibly adjust its work force to demand levels
for its products. Although the PRC has a large and growing economy, its
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 addition, 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 writedowns
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 lay offs or termination of employees.


                                 Page 34 of 41
<PAGE>

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 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 were subject to income tax without sufficient foreign tax credits
available to offset the U.S. tax liability. In addition, we may be prohibited
from transferring cash from the PRC. With the exception of approximately $10.0
million of retained earnings as of December 28, 2001 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.

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, 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.


                                 Page 35 of 41
<PAGE>

      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.

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 28, 2001.

Item 4: Controls and Procedures

      Within the 90 day period prior to the filing date of this report, we
carried out an evaluation, under the supervision and with the participation of
Company management, including the Principal Executive Officer and Principal
Financial Officer, of the effectiveness of the design and operation of our
disclosure controls and procedures. Based upon that evaluation, the Principal
Executive Officer and Principal Financial Officer have concluded that our
disclosure controls and procedures are effective.

      There were no signifiant changes in our internal controls or in other
factors that could significantly affect such controls subsequent to the date of
their evaluation.


                                 Page 36 of 41
<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

Item 5  Other Information                                                 None

Item 6  Exhibits and Reports on Form 8-K

        (a)   Exhibits

              The Exhibit Index is on page 38

        (b)   Reports On Form 8-K

              We filed a current report on Form 8-K dated August 9,
        2002. This report pertained to our voluntary compliance with
        the Securities and Exchange Commission's Order No. 4-460.


                                 Page 37 of 41
<PAGE>

                                  Exhibit Index

Document

3.1   Amended and Restated Articles of Incorporation of the Company
      (incorporated by reference to Exhibit 1 to the Company's 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 the Company's Form 10-Q for the quarter
      ended June 29, 2001).

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

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

4.2   Amendment No. 1 to the Rights Agreement, dated March 25, 1998, between the
      Company and Registrar and Transfer Company, as Rights Agent (incorporated
      by reference to Exhibit 4 to the Company's 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 the
      Company and Registrar and Transfer Company, as Rights Agent (incorporated
      by reference to Exhibit 5 to the Company's Registration Statement on Form
      8-A/A dated July 5, 2000).

99.1  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.

99.2  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 38 of 41
<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)


       November 7, 2002              /s/ Drew A. Moyer
------------------------------       -------------------------------------------
           (Date)                    Drew A. Moyer
                                     Vice President
                                     Corporate Controller and Secretary
                                        (duly authorized officer, principal
                                        financial and principal accounting
                                        officer)


                                 Page 39 of 41
<PAGE>

                                 CERTIFICATION

I, James M. Papada, III, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Technitrol;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under with such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of
Technitrol as of, and for the periods presented in this quarterly report.

4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

      a)    designed such disclosure controls and procedures to ensure that
            material information relating to the registrant, including its
            consolidated subsidiaries, is made known to us by others within
            those entities, particularly during the period in which this
            quarterly report is being prepared;

      b)    evaluated the effectiveness of the registrant's disclosure controls
            and procedures as of a date within 90 days prior to the filing date
            of this quarterly report (the "Evaluation Date"); and

      c)    presented in this quarterly report our conclusions about the
            effectiveness of the disclosure controls and procedures based on our
            evaluation as of the Evaluation Date;

5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
The registrant's board of directors (or persons performing the equivalent
function):

      a)    all significant deficiencies in the design or operation of internal
            controls which could adversely affect the registrant's ability to
            record, process, summarize and report financial data and have
            identified for the registrant's auditors any material weaknesses in
            internal controls; and

      b)    any fraud, whether or not material, that involves management or
            other employees who have a significant role in the registrant's
            internal controls; and

6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.


Date: November 7, 2002                          /s/ James M. Papada III
     --------------------                       --------------------------------
                                                James M. Papada, III
                                                Chairman, President and CEO


                                 Page 40 of 41
<PAGE>

                                 CERTIFICATION

I, Drew A. Moyer, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Technitrol;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under with such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of
Technitrol as of, and for the periods presented in this quarterly report.

4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

      a)    designed such disclosure controls and procedures to ensure that
            material information relating to the registrant, including its
            consolidated subsidiaries, is made known to us by others within
            those entities, particularly during the period in which this
            quarterly report is being prepared;

      b)    evaluated the effectiveness of the registrant's disclosure controls
            and procedures as of a date within 90 days prior to the filing date
            of this quarterly report (the "Evaluation Date"); and

      c)    presented in this quarterly report our conclusions about the
            effectiveness of the disclosure controls and procedures based on our
            evaluation as of the Evaluation Date;

5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
The registrant's board of directors (or persons performing the equivalent
function):

      a)    all significant deficiencies in the design or operation of internal
            controls which could adversely affect the registrant's ability to
            record, process, summarize and report financial data and have
            identified for the registrant's auditors any material weaknesses in
            internal controls; and

      b)    any fraud, whether or not material, that involves management or
            other employees who have a significant role in the registrant's
            internal controls; and

The registrant's other certifying officer and I have indicated in this quarterly
report whether or not there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.


                           /s/ Drew A. Moyer
                           -----------------------------------------------------
Date: November 7, 2002     Drew A. Moyer
                           Vice President, Corporate Controller and Secretary


                                 Page 41 of 41