Exhibit Index
                                                                   is on page 27

                                  UNITED STATES
                        SECURITIES & EXCHANGE COMMISSION

                             Washington, D.C. 20549

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


                                    FORM 10-Q

[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
    Act of 1934 For the quarterly period ended June 29, 2001, or

[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
    Act of 1934 For the transition period from ______________ to ______________.


Commission File No. 1-5375


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


              PENNSYLVANIA                                   23-1292472
(State or other jurisdiction of incorporation      (IRS Employer Identification
             or organization)                                 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 July 27, 2001:        33,623,366


                                     1 of 28
<PAGE>


                          PART I. FINANCIAL INFORMATION

Item 1:  Financial Statements

                        Technitrol, Inc. and Subsidiaries

                           Consolidated Balance Sheets

                       June 29, 2001 and December 29, 2000
                                  In thousands

                                                        June 29,      Dec. 29,
         Assets                                           2001          2000
         ------                                           ----          ----
                                                      (unaudited)
Current assets:
     Cash and cash equivalents                          $176,165      $162,631
     Trade receivables                                    74,465       108,423
     Inventories                                          72,374        86,001
     Prepaid expenses and other current assets            11,913        11,679
                                                        --------      --------
           Total current assets                          334,917       368,734

Property, plant and equipment                            180,024       173,739
     Less accumulated depreciation                        85,989        81,341
                                                          ------      --------
           Net property, plant and equipment              94,035        92,398
Deferred income taxes                                     10,542        11,235
Excess of cost over net assets acquired, net              54,182        47,064
Other assets                                              16,476         1,340
                                                        --------      --------
                                                        $510,152      $520,771
                                                        ========      ========

         Liabilities and Shareholders' Equity
         ------------------------------------

Current liabilities:
     Current installments of long-term debt             $    362      $    151
     Accounts payable                                     19,863        35,046
     Accrued expenses                                     83,270       103,140
                                                        --------      --------
           Total current liabilities                     103,495       138,337

Long-term liabilities:
     Long-term debt, excluding current installments       50,830        48,437
     Other long-term liabilities                           9,939         9,567

Shareholders' equity:
     Common stock and additional paid-in capital          69,068        63,909
     Retained earnings                                   280,398       266,132
     Other                                                (3,578)       (5,611)
                                                        --------      --------
           Total shareholders' equity                    345,888       324,430
                                                        --------      --------
                                                        $510,152      $520,771
                                                        ========      ========

See accompanying Notes to Unaudited Consolidated Financial Statements.

                                     2 of 28
<PAGE>

<TABLE>
<CAPTION>

                                           Technitrol, Inc. and Subsidiaries

                                          Consolidated Statements of Earnings

                                                   (Unaudited)
                                         In thousands, except per share data

                                                            Three Months Ended        Six Months Ended
                                                          June 29,    June 30,      June 29,     June 30,
                                                            2001        2000          2001         2000
                                                            ----        ----          ----         ----

<S>                                                       <C>         <C>           <C>          <C>
Net sales                                                 $112,835    $163,186      $270,079     $315,879

Costs and expenses applicable to sales:
    Cost of goods sold                                      88,064     100,644       194,931      199,196
    Selling, general and administrative expenses
                                                            24,608      32,252        52,021       63,270
    Restructuring and other non-recurring items, net
                                                             2,956         --          4,206        3,305
                                                          --------    --------      --------     --------

         Total costs and expenses applicable to
             sales                                         115,628     132,896       251,158      265,771
                                                          --------    --------      --------     --------

Operating profit (loss)                                     (2,793)     30,290        18,921       50,108

Other income:
     Interest, net                                             714         546         1,925          521
     Other                                                     162         182            98          219
                                                          --------    --------      --------     --------

         Total other income (expense)                          876         728         2,023          740
                                                          --------    --------      --------     --------

Earnings before income taxes                                (1,917)     31,018        20,944       50,848

Income taxes (benefit)                                        (458)      6,134         4,409        9,132
                                                          --------    --------      --------     --------

Net earnings (loss)                                       $ (1,459)   $ 24,884      $ 16,535     $ 41,716
                                                          ========    ========      ========     ========

Net earnings (loss) per share:
     Basic                                                $  (0.04)   $   0.77      $   0.50     $   1.29
     Diluted                                              $  (0.04)   $   0.76      $   0.49     $   1.28

Dividends declared per share                              $ .03375    $ .03375      $  .0675     $  .0675


<FN>
See accompanying Notes to Unaudited Consolidated Financial Statements.
</FN>
</TABLE>


                                     3 of 28
<PAGE>
<TABLE>
<CAPTION>
                               Technitrol, Inc. and Subsidiaries

                             Consolidated Statements of Cash Flows

                       Six Months Ended June 29, 2001 and June 30, 2000
                                         (Unaudited)
                                         In thousands

                                                                           June 29,      June 30,
                                                                             2001          2000
                                                                             ----          ----
<S>                                                                        <C>            <C>
Cash flows from operating activities:
Net earnings                                                               $ 16,535       $41,716
Adjustments to reconcile net earnings to net cash provided by
 operating activities:
     Depreciation and amortization                                           12,229        10,996
     Tax benefit from employee stock compensation                               231           411
     Amortization of stock incentive plan expense                             1,708         3,917
     Loss on sale property, plant and equipment                                 545           699
     Changes in assets and liabilities, net of effect of acquisitions:
       Accounts payable and accrued expenses                                (35,533)       20,069
       Trade receivables                                                     34,036       (25,401)
       Inventories                                                           14,768        (5,017)
     Other, net                                                              (2,974)         (224)
                                                                           --------      --------
         Net cash provided by operating activities                           41,545        47,166
                                                                           --------      --------

Cash flows from investing activities:
     Acquisitions, net of cash acquired                                     (26,784)       (1,731)
     Capital expenditures                                                    (8,691)      (13,026)
     Proceeds from sale of property, plant and equipment                      1,004           242
                                                                           --------      --------
         Net cash used in investing activities                              (34,471)      (14,515)
                                                                           --------      --------

Cash flows from financing activities:
     Dividends paid                                                          (2,256)       (2,203)
     Proceeds of long-term borrowings                                        15,078         9,513
     Principal payments of long-term debt                                    (8,331)      (20,873)
     Payoff of debt assumed in acquisition                                   (3,944)          --
     Sale of stock through employee stock purchase plan                       6,434         1,628
     Proceeds from exercise of stock options                                     17            54
                                                                           --------      --------
         Net cash provided by (used in) financing activities                  6,998       (11,881)
                                                                           --------      --------

Net effect of exchange rate changes on cash                                    (538)         (104)
                                                                           --------      --------

Net increase in cash and cash equivalents                                    13,534        20,666

Cash and cash equivalents at beginning of year                              162,631        88,161
                                                                           --------      --------

Cash and cash equivalents at June 29, 2001 and June 30, 2000               $176,165      $108,827
                                                                           ========      ========

<FN>
See accompanying Notes to Unaudited Consolidated Financial Statements.
</FN>
</TABLE>
                                     4 of 28
<PAGE>
<TABLE>
<CAPTION>

                                      Technitrol, Inc. and Subsidiaries

                      Consolidated Statement of Changes in Shareholders' Equity

                                           June 29, 2001

                                           (Unaudited)
                               In thousands, except per share data

                                                                                           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 29, 2000            33,237      $63,909       $266,132         $(3,871)     $(1,740)

Stock options, awards and related
    compensation                            (6)      (1,506)                         2,587
Tax benefit of stock compensation                       231
Stock issued under employee stock
    purchase plan                          392        6,434
Currency translation adjustments                                                                   (554)      $  (554)
Net earnings                                                        16,535                                     16,535
                                                                                                              -------
Comprehensive income                                                                                          $15,981
                                                                                                              =======
Dividends declared ($.0675 per share)                               (2,269)
                                        ------      -------       --------        --------      -------
Balance at June 29, 2001                33,623      $69,068       $280,398        $(1,284)      $(2,294)
                                        ======      =======       ========        ========      =======

<FN>
See accompanying Notes to Unaudited Consolidated Financial Statements.
</FN>
</TABLE>

                                     5 of 28
<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 29, 2000.

         The results for the quarter ended June 29, 2001 and June 30, 2000, 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 results of Technitrol's operations and the
financial position 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. Operating results for the quarter ended June 29, 2001
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.

(2)      Acquisitions

         Full Rise Electronics Co. Ltd. In April 2001, the Company made a
minority investment in the common stock of 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. This investment was
made by the Electronic Components Segment ("ECS") and the Company has an option
to purchase additional shares of common stock in FRE in the future.

         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 the ECS. 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 based in France with
additional operations in Spain 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 the Electrical Contact Products Segment ("ECPS"). The
purchase price of Engelhard-CLAL assets was not material to the Company's
consolidated financial position.


                                     6 of 28
<PAGE>


                        Technitrol, Inc. and Subsidiaries

         Notes to Unaudited Consolidated Financial Statements, continued

(2)      Acquisitions, continued

         EWC, Inc: In October 2000, the Company purchased certain assets of EWC,
Inc. EWC manufactured magnetic components primarily for the defense and
aerospace industries. This business was integrated into the Specialty Components
Division of ECS. The purchase price was not material to the Company's
consolidated financial position.

         Tool and Die facility in Estonia from AMP: In January of 2000, the
Company completed the acquisition of a tool and die design and manufacturing
operation near Tallinn, Estonia, from AMP, a division of Tyco Electronics
Corporation. This business was integrated into the ECPS. The purchase price was
not material to the Company's consolidated financial position.

 (3)     Restructuring

         In light of the downturn in the markets served by the ECS during the
second quarter of 2001, the Company initiated a restructuring plan with the goal
of reducing the ECS's cost structure. Accordingly, a $1.9 million provision was
recorded in the second quarter, primarily for severance payments to
manufacturing personnel. Approximately 830 personnel, primarily involved in
Asian manufacturing, were terminated. Additionally, approximately 60 support
personnel were terminated in North America and Europe. Essentially all of the
employee severance and related payments in connection with these actions have
been completed as of June 29, 2001. Approximately $0.2 million of the provision
remains for severance payments to be made in the third quarter for
European-based personnel.

         During the second quarter of 2001, the Company also decided to close
its manufacturing facility in Thailand, and to transfer production to other ECS
facilities in Asia. Approximately $1.0 million was provided for this action,
comprised of $0.8 million for severance and related payments and $0.2 million
for other exit costs. The majority of this accrual will be utilized in the third
quarter of 2001.

         In the first quarter of 2001, approximately $1.3 million of severance
was paid to 1,255 manufacturing personnel primarily in Asia, and 35 support
personnel primarily in North America. These amounts were originally recorded as
cost of goods sold and selling, general and administrative expenses of $1.0
million and $0.3 million, respectively, during the quarter ended March 30, 2001.
These amounts have been reclassified on a year-to-date basis in the second
quarter, in order to be consistent with the presentation of the second quarter
provisions discussed above.

                                     7 of 28
<PAGE>


                        Technitrol, Inc. and Subsidiaries

         Notes to Unaudited Consolidated Financial Statements, continued

(3)      Restructuring, continued

         During the first quarter of 2000, the Company initiated a restructuring
plan aimed at reducing the costs of manufacturing in the ECPS's operations. The
Company provided severance and related benefits to approximately 120 employees.
Accordingly, reserves were established for these costs during the quarter ended
March 31, 2000. The affected employees included both direct and indirect
personnel, and a majority were located at the Company's facility in Pforzheim,
Germany.

         Restructuring provision (in millions):    ECPS        ECS      Total
         -----------------------                   ----        ---      -----
         Balance at December 29, 2000              $2.5       $ --      $ 2.5
         New provisions                              --        4.2        4.2
         Severance and other cash payments         (1.2)      (3.0)      (4.2)
         Non-cash asset disposals                  (0.2)       --        (0.2)
                                                   ----       ----      -----
         Balance at June 29, 2001                  $1.1       $1.2      $ 2.3
                                                   ====       ====      =====

(4)      Inventories

         Inventories consisted of the following (in thousands):

                                                    June 29,        December 29,
                                                      2001              2000
                                                      ----              ----
         Finished goods                             $23,547            $28,710
         Work in process                             12,355             15,907
         Raw materials and supplies                  36,472             41,384
                                                    -------            -------
                                                    $72,374            $86,001
                                                    =======            =======

(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 value of the underlying exposures
being hedged.

         At June 29, 2001, the Company had two foreign exchange forward
contracts outstanding. The terms of the contracts were 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.


                                     8 of 28
<PAGE>


                        Technitrol, Inc. and Subsidiaries

         Notes to Unaudited Consolidated Financial Statements, continued

(6)      Earnings Per Share

         Basic earnings per share are calculated by dividing earnings by the
weighted average number of common shares outstanding (excluding restricted
shares) during the period. 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. There were no options outstanding at June 29, 2001, and
there were approximately 27,000 common share equivalents at June 30, 2000.
Earnings per share calculations are as follows (in thousands, except per share
amounts):

<TABLE>
<CAPTION>
                                             Three Months Ended             Six Months Ended
                                           June 29,      June 30,         June 29,      June 30,
                                             2001          2000             2001          2000
                                             ----          ----             ----          ----
<S>                                        <C>           <C>              <C>           <C>
Net earnings (loss)                        $(1,459)      $24,844          $16,535       $41,716
     Basic earnings (loss) per share:
         Shares                             33,253        32,346           33,089        32,272
         Per share amount                  $  (.04)      $   .77          $   .50       $  1.29
     Diluted earnings (loss) per share:
         Shares                             33,578        32,724           33,414        32,650
         Per share amount                  $  (.04)      $   .76          $   .49       $  1.28
</TABLE>

         On October 23, 2000, the Company announced a two-for-one stock split in
the form of a 100% stock dividend payable on November 27, 2000. At that time,
one additional share of stock was issued for each share outstanding to
shareholders of record on November 6, 2000. All per share amounts for periods
before this stock split have been restated to reflect the split.


                                     9 of 28
<PAGE>


                        Technitrol, Inc. and Subsidiaries

         Notes to Unaudited Consolidated Financial Statements, continued

 (7)     Business Segment Information

         For the quarters ended June 29, 2001 and June 30, 2000, there were
immaterial amounts of intersegment revenues eliminated in consolidation. There
has been no material change in segment assets from December 29, 2000 to June 29,
2001. In addition, the basis for determining segment financial information has
not changed from 2000. Specific segment data are as follows:

<TABLE>
<CAPTION>
                                                   Three Months Ended                Six Months Ended
                                                June 29,       June 30,          June 29,       June 30,
                                                  2001           2000              2001           2000
                                                  ----           ----              ----           ----
<S>                                             <C>            <C>               <C>            <C>
Net sales:
     Electronic Components                      $ 55,665       $104,862          $146,985       $197,391
     Electrical Contact Products                  57,170         58,324           123,094        118,488
                                                --------       --------           -------       --------
         Total                                  $112,835       $163,186          $270,079       $315,879
                                                ========       ========           =======       ========

Earnings (loss) before income taxes:
     Electronic Components                      $ (2,325)      $ 26,808          $ 16,131       $ 46,990
     Electronic Components Segment
       restructuring and other
       non-recurring items                        (2,956)           --             (4,206)           --
     Electrical Contact Products                   2,488          3,482             6,996          6,423
     Electrical Contact Products Segment
       restructuring and other
       non-recurring items                           --             --                --          (3,305)
                                                --------       --------          --------       --------
         Operating profit                         (2,793)        30,290            18,921         50,108
     Other income (expense), net                     876            728             2,023            740
                                                --------       --------          --------       --------
     Earnings (loss) before income taxes        $ (1,917)      $ 31,018          $ 20,944       $ 50,848
                                                ========       ========          ========       ========
</TABLE>

(8)      Pending Acquisition

         On May 23, 2001, the Company announced that it had signed a definitive
agreement to acquire all of the capital stock of Excelsus Technologies, Inc.
("Excelsus"), a producer of customer-premises digital subscriber line filters
and other broadband accessories based in Carlsbad, California. The purchase
price for Excelsus is expected to be approximately $87.5 million in cash.
Excelsus recorded revenues of approximately $40.0 million in 2000. The
acquisition is expected to be completed in the third quarter of 2001. See
additional discussion in Item 2, Liquidity and Capital Resources.

                                    10 of 28
<PAGE>



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

         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 differ materially. Please
refer to pages 21 through 24 of this report for a description of
"forward-looking statements" and factors that may affect future results.

Business Overview

         Technitrol, Inc. is a global manufacturer of electronic components and
electrical contact products. We operate two business segments: the Electronic
Components Segment and the Electrical Contact Products Segment. We refer to
these segments as the ECS and the ECPS, respectively.

         Electronic Components Segment

         Our Electronic Components Segment provides a variety of magnetics-based
components, miniature chip inductors and modules. These components modify or
filter electronic signals. They are used primarily in local area network
("LAN"), Internet connectivity, telecommunication and power-conversion products.
We manufacture these products in the United States, France, Malaysia, the
Philippines and the People's Republic of China. We sometimes refer to the
People's Republic of China as the PRC.

         Our strategy is to expand our electronic components business through a
combination of internal growth and acquiring companies in the electronic
components business. We have made numerous acquisitions in recent years. Our
recent acquisitions include:

         o  Grupo ECM: In March 2001, we acquired Electro Componentes Mexicana,
            S.A. de C.V. and affiliates. We refer to these operations as Grupo
            ECM. Grupo ECM manufactured and marketed inductive components
            primarily for automotive applications. It is based in Mexico City
            and had revenues in 2000 of approximately $18 million.

         o  EWC, Inc: We purchased certain assets of EWC, Inc. in October 2000.
            EWC manufactured magnetic components primarily for the defense and
            aerospace industries. We have integrated this business into the
            Specialty Components Division of ECS. The EWC acquisition was not
            material to our consolidated financial position or results of
            operations.

         Our electronic component businesses operate as a unified business
throughout the world under the name Pulse.


                                    11 of 28
<PAGE>



Electrical Contact Products Segment

         Our Electrical Contact Products Segment manufactures electrical
contacts and assemblies, contact materials, thermostatic bimetals, clad metal
products and precision contact subassemblies. We also provide selective
electroplating and refining services.

         We sell these electrical contact products to a wide range of industrial
and consumer product manufacturers. Our products are used in a variety of
applications which affect daily living including:

         o  residential, commercial and industrial circuit breakers;

         o  motor controls;

         o  switches and relays;

         o  wiring devices;

         o  temperature controls;

         o  appliances;

         o  automobiles;

         o  telecommunications products; and

         o  various other electrical products.

         The ECPS has manufacturing facilities in the United States, Mexico,
Puerto Rico, Germany, Spain, Italy, France, Estonia, Hungary and the PRC.

         ECPS acquisitions in recent years include:

         o  Engelhard-CLAL - In January 2001, we acquired the electrical
            contacts business of Engelhard-CLAL. These operations are based in
            France, Spain and the United Kingdom. Engelhard-CLAL manufactured
            electrical contacts, wire and strip contact materials and related
            products primarily for the European electrical equipment market.
            Annualized revenues for these operations are expected to be
            approximately $ 25 million in 2001.

         o  Tool and Mold Fabrication - In 2000, we finalized our acquisition of
            a tool and die design and manufacturing operation near Tallinn,
            Estonia. We also began operations in Hungary building molding tools.
            Virtually all of these tools and molds are for our own use and
            enable us to maintain control over our proprietary tool and mold
            designs.

         o  MEC Betras Italia S.r.l. -In December of 1999, we acquired the
            operating assets of MEC Betras, located in Italy. MEC Betras
            produced electrical contact rivets and stamped electrical contact
            parts.

         o  Tianjin Electrical Metal Works - In November of 1999, we acquired
            the operating assets of this electrical contacts business based in
            Tianjin, PRC.

                                    12 of 28
<PAGE>

         Our recent acquisitions provide the ECPS with additional lower-cost
operating locations and an enhanced market presence in key areas of the
business. All of our electrical contact products businesses now operate globally
under the name AMI Doduco.

         As part of our restructuring of the ECPS operations, we recorded
employee termination and related expenses in the first quarter of 2000. For a
further description of these charges, see the "Results of Operations" section of
this report.

Liquidity and Capital Resources

         Working capital at June 29, 2001 was $231.4 million compared to $230.4
million at December 29, 2000, an increase of $1.0 million. Cash on hand
increased approximately $13.5 million from December 29, 2000 while total debt
outstanding increased approximately $2.6 million. Accounts receivable declined
by $34.0 million and inventories declined by $13.6 million, both reflecting the
significant downturn in our electronics markets since the beginning of the year.

         All previous credit facilities and lines of credit, excluding fixed
term loans, were replaced as of June 20, 2001 under a new multicurrency
revolving credit agreement providing for $225 million of credit capacity. The
total credit capacity under the replaced credit facilities and lines of credit
was $205 million. We pay a facility fee on the total credit facility size,
irrespective of whether there are outstanding borrowings or not. The facility
fee ranges from 0.275% to 0.450% and is based on our EBITDA to debt ratio.
Borrowings can be in U.S. dollars, Euros or British pounds sterling. 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: 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 0.85% to 1.425% depending on our
EBITDA to debt ratio.

         We believe that the combination of cash on hand, cash generated by
operations and, if necessary, additional borrowings under our new credit
agreement will be sufficient to satisfy our operating cash requirements for the
foreseeable future. In addition, we may use internally generated funds or
borrowings for acquisitions of suitable businesses or assets. At June 29, 2001,
we had approximately $188.4 million of unused capacity available under the new
credit agreement.

         We anticipate the completion of our acquisition of Excelsus
Technologies, Inc. during the third quarter in 2001. In order to fund the
purchase price, we expect to incur incremental borrowings under our credit
agreement. Interest expense will increase accordingly during the period
subsequent to the acquisition. Refer to additional discussion of Excelsus
Technologies, Inc. in Note 8 in the Notes to Unaudited Consolidated Financial
Statements.


                                    13 of 28
<PAGE>


         Cash Flows from Operating Activities

         Cash provided by operating activities for the six months ended June 29,
2001 was $41.5 million. Net earnings, adjusted for non-cash depreciation and
amortization charges, contributed $28.8 million to cash flow during the period.
A significant decrease in ECS revenue from the first quarter to the second
quarter of 2001 caused a significant decrease in accounts receivable as
outstanding customer balances were collected and replaced with a much lower
level of receivables. Average weekly revenue declined throughout the quarter.
Decreases in accounts payable and accrued expenses offset the positive cash
impact arising from the decrease in accounts receivable. The decrease in
accounts payable and accrued expenses resulted from payments made for income
taxes and compensation related items, as well as a lower level of trade accounts
payable. Inventory declined by $14.8 million during the six-month period ended
June 29, 2001 due to the significant reduction in ECS revenue during the period
and corresponding actions to limit purchases and production activity. The
reduction also reflects approximately $5.4 million of write-offs for slow moving
inventory during the period.

         Cash Flows from Investing Activities

         Cash used by investing activities was $34.5 million during the six
months ended June 29, 2001. Approximately $8.7 million of cash was used for
capital expenditures. We make capital expenditures to expand production capacity
and to improve our operating efficiency. The level of capital expenditures
decreased from 2000 due to tight spending controls and lower ECS capacity needs
resulting from lower sales. We plan to continue making such expenditures and we
may acquire other businesses or product lines to expand our breadth and scope of
operations. However, we expect spending on capital projects in 2001 to be
significantly below 2000 actual levels. This excludes acquisition-related
projects.

         Other investing activities consumed approximately $26.8 million. This
included $13.9 million for the minority interest investment made in FRE.

         With the exception of approximately $8.5 million of retained earnings
in the PRC which are restricted in accordance with PRC regulations,
substantially all retained earnings are free from legal or contractual
restrictions. 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 such earnings were brought back to the United
States, significant tax liabilities could be incurred in the United States. This
could have a material unfavorable impact on our net income and cash position.


                                    14 of 28
<PAGE>


         Cash Flows from Financing Activities

         Approximately $7.0 million of cash was generated from financing
activities in the six months ended June 29, 2001. We borrowed approximately $6.7
million of debt during the six months ended June 29, 2001, net of repayments. In
connection with our acquisition of Grupo ECM, we immediately repaid
approximately $3.9 million of debt acquired with the operations.

         During the first six months of 2001, we paid dividends of approximately
$2.3 million. We expect to continue paying quarterly dividends for the
foreseeable future. During this same period we received proceeds of $6.4 million
from the sale of stock through our employee stock purchase plan. We do not
expect to continue receiving significant proceeds through our employee stock
purchase plan in the near-term.

         Foreign Currency Effects

         Euro currencies were approximately 6.9% weaker, on average, relative to
the U.S. dollar during the second quarter of 2001 than in the second quarter of
2000. Euro currencies were also 10.8% weaker, on average, relative to the U.S.
dollar at June 29, 2001 versus December 29, 2000. As a result, we incurred
slight foreign currency losses in our ECS European operations, as Euro currency
denominated assets and liabilities were translated to U.S. dollars for financial
reporting purposes. As a result of the downward valuation of Euro currencies, we
also experienced a negative translation adjustment to equity because our
investment in the ECPS's European operations was worth less in U.S. dollars.
This decrease in U.S. dollar value is reflected as a reduction in equity,
although the amount recorded in the second quarter of 2001 was not material to
our consolidated financial position.

         We transact a significant amount of sales in currencies other than the
U.S. dollar. Therefore, changing exchange rates often impact our financial
results. This is particularly true of movements in the exchange rate between the
U.S. dollar and the Euro because ECPS's European sales are denominated primarily
in Euro currencies. In the future, it is possible that an increasing percentage
of our sales will be denominated in non-U.S. currencies. This would increase our
exposure to currency fluctuations. The impact of exchange rate differences on
ECPS's European sales will be partially offset by the impact on its expenses and
bank borrowings, most of which, regarding ECPS's European operations, are also
denominated in Euros.

         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.
At June 29, 2001, we had two foreign currency forward contracts outstanding. The
contracts were short-term in duration (less then 30 days) and were settled in
July. 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.


                                    15 of 28
<PAGE>


New Accounting Pronouncements

         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 will require that goodwill and intangible assets with indefinite useful
lives no longer be amortized, but instead they will be tested for impairment at
least annually in accordance with the provisions of SFAS 142. SFAS 142 will also
require that 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 No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of
"SFAS 121".

         The Company is required to adopt the provisions of SFAS 141
immediately, and SFAS 142 effective January 1, 2002. Furthermore, any goodwill
and any intangible asset determined to have an indefinite useful life that are
acquired in a purchase business combination completed after June 30, 2001 will
not be amortized, but will continue to be evaluated for permanent impairment.
Goodwill and intangible assets acquired in business combinations completed
before July 1, 2001 will continue to be amortized until January 1, 2002.

         In connection with the transitional goodwill impairment evaluation,
SFAS 142 will require the Company to perform an assessment of whether there is
an indication that goodwill is impaired as of the date of adoption. To
accomplish this, the Company must determine 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. The
Company will then have up to six months from the date of adoption to determine
the fair value of each reporting unit and compare it to the reporting unit's
carrying amount. To the extent a reporting unit's carrying amount exceeds its
fair value, an indication exists that the reporting unit's goodwill may be
impaired and the Company must perform the second step of the transitional
impairment test. In the second step, the Company must compare the implied fair
value of the reporting unit'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,
both of which would be measured as of the date of adoption. This second step is
required to be completed as soon as possible, but no later than the end of the
year of adoption. Any transitional impairment loss will be recognized as the
cumulative effect of a change in accounting principle in the Company's statement
of earnings.

         Based on current goodwill balances, the Company will have approximately
$52.4 million of unamortized goodwill as of January 1, 2002, which will be
subject to the transition provisions of SFAS 141 and SFAS 142. Amortization
expense related to goodwill was approximately $3.8 and $1.8 for the year ended
December 31, 2000 and the six months ended June 29, 2001, respectively. Other
than prospective non-amortization of goodwill, we do not expect the adoption of
SFAS 141 and SFAS 142 to have a material effect on our revenue, operating
results or liquidity.

                                    16 of 28
<PAGE>

Results of Operations

         Our results of operations for the quarter ended June 29, 2001 and June
30, 2000 are as follows. Amounts are in thousands:
<TABLE>
<CAPTION>
                                                   Three Months Ended                 Six Months Ended
                                                June 29,         June 30,         June 29,         June 30,
                                                  2001             2000             2001             2000
                                                  ----             ----             ----             ----
<S>                                             <C>              <C>              <C>              <C>
Net sales:
     Electronic Components                      $ 55,665         $104,862         $146,985         $197,391
     Electrical Contact Products                  57,170           58,324          123,094          118,488
                                                --------         --------         --------         --------
         Total                                  $112,835         $163,186         $270,079         $315,879
                                                ========          =======          =======         ========

Earnings (loss) before income taxes:
     Electronic Components                      $ (2,325)        $ 26,808         $ 16,131         $ 46,990
     Electronic Components Segment
       restructuring and other non-recurring
       items                                      (2,956)             --            (4,206)             --
     Electrical Contact Products                   2,488            3,482            6,996            6,423
     Electrical Contact Products Segment
       restructuring and other non-recurring
       items                                         --               --               --            (3,305)
                                                --------         --------         --------         --------
         Operating profit                         (2,793)          30,290           18,921           50,018
     Other income, net                               876              728            2,023              740
                                                --------         --------         --------         --------
     Earnings (loss) before income taxes        $ (1,917)        $ 31,018         $ 20,944         $ 50,848
                                                ========         ========         ========         ========
</TABLE>

         Revenues

         Net sales for the second quarter of 2001 decreased approximately $50.4
million, or 30.9%, from the comparable period in 2000. Our sales decline from
the comparable quarter last year was attributable primarily to the precipitous
downturn in markets served by the ECS that began late in 2000.

         ECS revenues decreased $49.2 million, or 46.9%, from the second quarter
of 2000. ECS sales were significantly lower in 2001 than in comparable periods
in 2000 as new order rates declined and significant customer order cancellations
occurred. Throughout 2000, record ECS growth was achieved due to Pulse's
customers' demand for broadband access technology, latest generation networking
equipment, and feature-rich wireline and wireless connectivity. This trend
reversed abruptly late in 2000, particularly in North America, and has been
reported by virtually all of ECS's major customers, competitors, suppliers and
peer companies. We expect that ECS sales will decline modestly in the third
quarter of 2001 as compared to the second quarter of 2001.

         Sales within the ECPS during the quarter ended June 29, 2001 decreased
$1.2 million or 2.0% from the second quarter of 2000. Sales in the 2001 period
reflect strong European markets and contributions from the Engelhard-CLAL
operations, acquired in early January 2001. However, these positive factors were
more than offset by a slowdown in North American manufacturing activity during
the second quarter. The lower manufacturing activity resulted in lower sales
primarily from machine tool and other customers in the commercial and industrial
controls sector. In addition, the Euro to U.S. dollar exchange rate was
approximately 6.9% weaker than in the second quarter of 2000. Had the Euro to
U.S. dollar exchange rate been the same in the second quarter of 2001 as it was

                                    17 of 28
<PAGE>
in the second quarter of 2000, sales within the ECPS would have been
approximately $3.0 million higher than was actually reported for the quarter
ended June 29, 2001.

         Cost of Sales

         Our consolidated gross margin for the quarter ended June 29, 2001 was
21.9% compared to 38.3% for the second quarter of 2000. Since the ECS gross
profit as a percentage of sales is typically higher than that of the ECPS, our
consolidated gross margin in 2001 was negatively affected by a sales mix
weighted more heavily by the ECPS and by the very low gross margin of ECS
compared to any time in recent history. The ECS recorded pre-tax provisions in
cost of goods sold for inventory and severance of approximately $4.8 million
during the second quarter of 2001. These resulted from the ECS's actions to
reduce production capacity and from the imposition of our normal inventory
valuation policies. ECS's customers are unable to predict the duration or extent
of the current ECS market downturn. Accordingly, it is possible that further
severance and slow-moving inventory provisions may be necessary in 2001. The
lower revenues for ECPS in North America resulted in manufacturing
inefficiencies and lower gross margins in the second quarter of 2001. These
factors more than offset the positive impact of the segment's Strategy 2000 work
force streamlining and process improvement efforts. Strategy 2000 is described
in more detail below.

         Operating Expenses

         Excluding restructuring and other non-recurring items, total selling,
general and administrative expenses for the second quarter of 2001 were $24.6
million, or 21.8% of sales, compared to $32.2 million, or 19.8% of sales, in the
comparable 2000 period. The decrease in selling, general and administrative
expenses in 2001 is due to reduced costs associated with tight spending
controls, lower incentive awards and lower expenses related to our restricted
stock plan. There were no incentive awards in the second quarter of 2001
compared to $2.5 million in the second quarter of 2000. The underlying expense
is primarily variable and dependent upon the Company's overall financial
performance regarding incentive plan targets, primarily the achievement of
economic profit and net operating profit objectives. These targets, which were
set in October of 2000, have not been met. Stock based compensation plans
including the restricted stock plan were $0.7 million lower in the second
quarter of 2001 versus the comparable 2000 period. The underlying expense is
variable and dependent on our common stock price. Operating margins declined for
the ECS due primarily to weak volume, severance and the inventory provisions
recorded in cost of sales. The ECPS operating margin declined due to soft demand
in North America, offset somewhat by improved cost controls and the segment's
Strategy 2000 work force reduction and process improvement initiatives.


                                    18 of 28
<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 six months ended June 29, 2001 and June
30, 2000, RD&E by segment was as follows:
<TABLE>
<CAPTION>
                                      Three Months Ended            Six Months Ended
                                     June 29,      June 30,       June 29,      June 30,
                                       2001           2000          2001          2000
                                       ----           ----          ----          ----
<S>                                   <C>           <C>            <C>          <C>
RD&E:
     Electronic Components            $4,003        $3,735         $8,334       $7,495
     % of Segment Sales                  7.2%          3.6%           5.7%         3.8%

     Electrical Contact Products     $   985        $1,122         $2,163       $2,327
     % of Segment Sales                  1.7%          1.9%           1.8%         2.0%
</TABLE>

Neither segment plans any significant reduction in RD&E efforts in the near
term.

         During the second quarter of 2001, the Company initiated a
restructuring plan with the goal of reducing the ECS's cost structure, in light
of the downturn in the markets served by the ECS. Accordingly, a $2.9 million
provision was recorded in the second quarter, primarily for severances of
manufacturing personnel and shut down of the ECS's manufacturing facility in
Thailand. A total of approximately 830 personnel, primarily involved in Asian
manufacturing were terminated. Additionally, approximately 60 support personnel
were terminated in North America and Europe. Essentially all of the employee
severance and related payments in connection with these actions were paid prior
to June 29, 2001. Approximately $0.2 million of the provision remains for
severance payments to be made in the third quarter for European based personnel.

         Approximately $1.0 million was provided for the shutdown of Thailand,
comprised of $0.8 million for severance and related payments and $0.2 for other
exit costs. The majority of this accrual is expected to be utilized in the third
quarter of 2001.

         In the first quarter of 2001, approximately $1.3 million of severance
was paid to approximately 1,255 manufacturing personnel primarily in Asia, and
35 support personnel primarily in North America. These amounts were originally
recorded as cost of goods sold and selling, general and administrative expenses
of $1.1 million and $0.2 million, respectively. These amounts have been
reclassified on a year-to-date basis in the second quarter, in order to be
consistent with the presentation of the second quarter provisions as discussed
above.

         The ECS expects to continue restructuring efforts throughout the
remainder of 2001, though the amounts will depend on specific actions taken to
reduce manufacturing capacity and improve efficiency. The actions taken so far
(plant closures and reduction in support personnel worldwide) are expected to
result in approximately $5.0 million of annualized savings which will begin in
the third quarter of 2001. The majority of savings is expected to occur in
selling, general and administrative expenses.

         Restructuring and other non-recurring items of approximately $3.3
million, net, were recorded in the quarter ended March 31, 2000 and related to
the ECPS. Our ECPS managers realigned certain operations in 2000 to maximize
market opportunities and reduce costs after an overall strategic reassessment of
ECPS's business, particularly in Europe. An element of Strategy 2000 was aimed

                                    19 of 28
<PAGE>

at reducing our ECPS employment levels by approximately 120 people, primarily in
Germany. This reduction may be partially offset by targeted hiring of
individuals dedicated to certain product lines and initiatives. Other elements
of Strategy 2000 call for relocation of high-volume, repetitive production to
lower-cost locations, worldwide continuous process improvement efforts, and the
expansion of our more profitable and automated business based in Germany.
As a result of the program, we provided approximately $3.7 million for employee
severance and related payments. In addition, we recorded approximately $0.9
million of charges related to the impairment of certain assets within the ECPS
and $0.9 million for other exit costs. Offsetting these Strategy 2000 costs was
a gain of approximately $1.4 million related to the sale of a non-strategic
European product line and a $0.8 million gain related to an insurance
settlement. Both of these items also relate to the ECPS.

         Although we developed the plan for Strategy 2000 during the quarter
ended March 31, 2000 and announced the plan to employees, no employee
termination payments were made under the plan as of that date. Approximately 50
people were terminated under the plan as of June 29, 2001. It is anticipated
that the majority of the payments related to Strategy 2000 will be made during
2001. For many of the terminated employees, severance agreements include
statutory notice-period pay and a lump-sum severance payment at the end of the
notice period. For these employees, a substantial portion of the reserve is not
used until severance payments are made. As part of Strategy 2000, 78 people
elected to leave the Company under a government approved part-time retirement
program as of June 29, 2001. The people in the part-time retirement program will
retire at varying times, the latest of which is in 2002. Cost savings from the
reduction in employment levels will affect both cost of goods sold and general
and administrative expenses.

         Interest

         Net interest income was $0.7 million during the second quarter of 2001
versus $0.5 in the comparable quarter of 2000. This higher net interest income
in 2001 resulted from higher cash levels and higher interest yields resulting
from investments of cash balances.

         Our new credit facility 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
may use interest rate swaps or other financial derivatives in order to manage
the risk associated with changes in market interest rates; however, we have not
used any such instruments to date.

         Income taxes

         Our effective income tax rate during the second quarter of 2001 was
23.9%, compared to 19.8% for the second quarter of 2000. The relatively higher
effective rate in 2001 versus the comparable period of 2000 resulted from a
higher proportionate share of taxable earnings in high-tax jurisdictions. We
recorded income taxes in the second quarter of 2001 as a benefit.


                                    20 of 28
<PAGE>

Other Issues

         Precious Metal

         The ECPS uses silver, as well as other precious metals, in the
manufacturing of electrical contacts, rivets and other products. Historically,
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 leasing and consignment eliminated
the risk of a decrease in the market price of owned precious metal which can be
substantial. The terms of sale within the ECPS allow us to charge customers for
the current market value of silver. 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. We believe this risk is shared
by all of our competitors.

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. You can identify these statements by the fact that they do not
relate strictly to historical or current facts. They often (but not always) use
words such as "anticipate", "estimate", "expect", "project", "intend", "plan",
"believe", and similar terms. From time to time, we also provide oral or written
forward-looking statements in other materials we release to the public.

         Any or all of our forward-looking statements in this report and in any
other public statements we make may turn out to be wrong. 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. Consequentially, no
forward-looking statement can be guaranteed. Actual future results may, and
probably will, vary materially.

         We sometimes provide forecasts of future financial performance. We are
optimistic about our long-term prospects; however, the following issues and
uncertainties, among others, should be considered in evaluating our prospects
for the future.

         We are operating in the midst of the most severe contraction of
technology markets in history, as well as a general slowdown in North American
industry activity.

         ECS operates in technology driven markets that, since the end of 2000,
have experienced the most severe contraction in history. No one can predict
exactly how long this will last or whether we have yet reached the bottom of
this contraction period. In addition, no one can predict what will happen to
average selling prices when markets begin to recover and customers look for even
lower prices from suppliers who have significant unused capacities. The North
American industrial markets are growing anemically and no one can predict when
they will recover.


                                    21 of 28
<PAGE>

Some of Our Products Are Subject to Rapid Technological Changes.

         The ECS operates in an industry known for rapid change, consolidation,
uncertainty and constant new and emerging technologies. Generally, we expect
product life cycles to be very short. Changes in recent years due to the
Internet, on-line services and expansion of networking require the ECS to
maintain a strong engineering and development program. The program is necessary
to avoid product obsolescence and to meet or exceed customer expectations.
Accordingly, we expect to continue to spend money on engineering and development
with no assurances that our efforts in these areas will continue to be
successful.

We Cannot Predict the Market Growth Rate for Our Products.

         The ECS sells its products into markets that are characterized by
rapidly changing growth rates. These markets include LAN, telecommunication
devices and power-conversion products. It is often difficult for our customers
or us to assess worldwide demand for upgrades or replacement of networks, or the
pace at which telecommunication infrastructure will be deployed throughout the
world. The markets may counterbalance one another in terms of growth or they may
move in the same direction. All of these variables will impact ECS growth rates.

         The growth rates of housing, construction, appliance, telecommunication
systems and auto sales, which are highly cyclical, will impact the revenue
growth of the ECPS and the ECS.

We May Receive Lower Prices for Our Products.

         Both the ECPS and the ECS operate in businesses characterized by
continually declining average selling prices on existing products. Future prices
for our products may decrease from historical levels, depending on competition
and other factors, and we may not be able to bring our manufacturing costs down
proportionately or continue to introduce new products, each of which is
necessary to maintain average selling prices and profitability.

We May Not Be Able to Maintain Our Current Gross Margins and Operating Margins
as a Percentage of Sales.

         Cost of sales as a percentage of sales is different for each segment
and can vary greatly based on sales mix and method of distribution. Mix factors
may increase cost of sales as a percentage of sales in the future. Acquisitions
that we make may also reduce our gross margin and operating margin percentages,
temporarily or permanently. We may not be able to reduce selling, general and
administrative expenses at the same rate as a reduction in gross margins.



                                    22 of 28
<PAGE>


We May Not Be Able to Obtain Sufficient Quantities of Raw Materials.

         If we cannot obtain sufficient quantities of raw materials, including
precious metals used by the ECPS, or if the cost of those materials increases
significantly, and we cannot increase our selling prices, future operating
results could be much different from our expectations. Please refer to the
discussion of precious metal on page 21 of this report.

Effectively Managing Our Growth May Be Difficult

         We have grown rapidly in the last five years, and we expect to continue
to grow internally and through additional acquisitions. This growth is likely to
place significant strain on our resources and systems. To manage our growth, we
must implement systems, recruit and develop additional human resources and
control our operations by continually training employees at every level.

We May Not Successfully Identify, Integrate, or Manage Acquisitions.

         We have completed several acquisitions over the past three years. The
degree of success of these acquisitions depends on our ability to:

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

         o  identify and take advantage of cost reduction opportunities; and

         o  further penetrate the market for the products acquired.

Integration of acquisitions may take longer than expected and may never be
achieved to the extent originally anticipated. This could result in business
growth which may be less than anticipated or manufacturing costs which are
higher than anticipated. In addition, acquisitions may cause a disruption in our
ongoing business, distract our managers, unduly tax our other resources and make
it difficult or impossible to maintain our historical standards, procedures and
controls.

         The timing, price, structure and success of future acquisitions are
uncertain. In addition, we may not be able to identify suitable acquisition
candidates at reasonable prices, thereby reducing the aggressive acquisition
component of our growth.

We Operate Internationally and in Developing Countries.

         We are a global company subject to the risks of doing business outside
of the United States, particularly in developing countries.

         There has been a serious devaluation of the Euro currencies against the
U.S. dollar in the last several years and about 60% of our ECPS revenues are
designed in Euros. The industrial slowdown in North America shows signs of
having an adverse impact in Europe later this year. This would adversely impact
our revenues in these countries.


                                    23 of 28
<PAGE>


We Rely on Our Customers' Forecasts

         We have very little visibility into our customers' near-term purchasing
patterns and are therefore, highly dependent on our customers' forecasts,
particularly in the ECS. These forecasts might be wrong and we may not be able
to adequately plan our production scheduling, materials management and working
capital requirements to meet our customers' demand.

Other Factors

         In addition to the factors discussed above, other factors which could
materially affect actual results include, but are not limited to:

         o  business conditions and the degree of optimism affecting the
            economies throughout the world in general;

         o  competitive factors such as competitors seeking increased market
            share based on price;

         o  manufacturing efficiencies and capacity;

         o  legal liability or changes in liabilities unknown at this time;

         o  risk of obsolescence due to shifts in market demand;

         o  information technology issues related to our computer systems or the
            computer systems of our suppliers or customers;

         o  the timing of customer product introductions;

         o  precious metals leasing costs, which cannot always be recovered;

         o  foreign exchange ceilings imposed by foreign governments could
            impact our ability to internally transfer cash balances; and

         o  liquidity requirements could necessitate movements of existing cash
            balances, causing unfavorable tax consequences and potentially
            unfortunate foreign currency exchanges in the spot markets.

         We believe that we have the market opportunities, product offerings,
facilities, personnel and competitive and financial resources for continued
business success. However, future events, costs, margins, product mix and
profits are all subject to unpredictable factors including those discussed
above.

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 29, 2000.


                                    24 of 28
<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

                  The Annual Meeting of Shareholders was held on May
         23, 2001. Messrs. Stanley E. Basara, David H. Hofmann and
         Edward M. Mazze were elected to a three-year term as
         directors of the Company. An increase in the number of
         authorized shares of Technitrol, Inc. common stock from 75
         million shares to 175 million shares was approved; the
         Technitrol, Inc. 2001 Employee Stock Purchase Plan was
         approved; amendments to the Technitrol, Inc. Incentive
         Compensation Plan were approved; the Restricted Stock Plan
         II was approved; and KPMG LLP was selected as the Company's
         independent public accountants for the year ending December
         28, 2001. The results of the votes were as follows:

                                                        Withhold
                                            For        Authority
                                            ---        ---------
         Stanley E. Basara              29,189,159      196,862
         David H. Hofmann               29,156,835      229,186
         Edward M. Mazze                29,189,126      196,895

                                           For         Against      Abstain
                                           ---         -------      -------
         Increase the number of
            authorized shares of
            Technitrol, Inc. common
            stock                       24,672,420    4,624,980      88,621

         2001 Employee Stock Purchase
            Plan                        21,749,648    2,143,823     126,433

         Amendments to the Technitrol,
            Inc. Incentive
            Compensation Plan
                                        21,225,519    2,599,637     224,877

         Restricted Stock Plan II       21,722,725    1,928,936     241,473

         KPMG LLP                       28,762,324      553,710      69,987

                  In addition, each of the following directors continued in
         office after the meeting: John E. Burrows, Rajiv L. Gupta,
         J. Barton Harrison, Graham Humes and James M. Papada, III.

                                    25 of 28
<PAGE>

Item 5   Other Information                                              None


Item 6   Exhibits and Reports on Form 8-K

         (a) Exhibits

                  The Exhibit Index is on page 27

         (b) Reports On Form 8-K

                  We filed a report on Form 8-K dated May 30, 2001.
         This report pertains to the potential acquisition of
         Excelsus Technologies, Inc.




                                    26 of 28
<PAGE>




                                  Exhibit Index

Document

 3.(i)    Articles of Incorporation          Incorporated by reference to
                                               Exhibit 1 from Form 8-A/A
                                               dated April 10, 1998

 3.(i)(a) Articles of Incorporation          Attached to this Form 10-Q
          (Amendment)

 3.(ii)   By-laws                            Incorporated by reference from Form
                                               10-Q for the quarter ended
                                               July 2, 1999

 4.       Instruments defining rights of     Incorporated by reference from Form
              security holders                  8-A/A dated July 5, 2000

10.(a)    Credit Agreement                   Attached to this Form 10-Q

10.(b)    Technitrol, Inc. 2001 Employee     Incorporated by reference from
              Stock Purchase Plan               Exhibit 4.1 from Form S-8
                                                Registration Statement
                                                (333-64060) dated June 28, 2001

10.(c)    Technitrol, Inc. 2001 Stock        Incorporated by reference from
              Option Plan                       Exhibit 4.1 from Form S-8
                                                Registration Statement
                                                (333-64068) dated June 28, 2001

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






                                    27 of 28
<PAGE>




                                   Signatures

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



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



   July 31, 2001               /s/Albert Thorp, III
-----------------------        -----------------------------------------
       (Date)                  Albert Thorp, III
                               Vice President - Finance and
                                    Chief Financial Officer
                                    (Principal Financial Officer)


   July 31, 2001               /s/Drew A. Moyer
-----------------------        -----------------------------------------
       (Date)                  Drew A. Moyer
                               Corporate Controller and Secretary
                                    (Principal Accounting Officer)


                                    28 of 28