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 three months ended March 26, 2004, or

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

For the transition period from ______________ to ______________.

Commission File No. 1-5375

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

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

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

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

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

      YES |X|       NO |_|

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

      YES |X|       NO |_|

Common Stock - Shares Outstanding as of April 22, 2004:  40,342,000

(Indicate the number of shares outstanding of each of the issuer's classes of
Common Stock, as of the latest practicable dates.)


                                  Page 1 of 30
<PAGE>

                          PART I. FINANCIAL INFORMATION

Item 1: Financial Statements

                        Technitrol, Inc. and Subsidiaries

                           Consolidated Balance Sheets

                                  In thousands

<TABLE>
<CAPTION>
                                                            March 26,     December 26,
                                    Assets                       2004             2003
                                                          -----------     ------------
                                                          (unaudited)
<S>                                                         <C>              <C>
Current assets:
     Cash and cash equivalents                              $ 155,932        $ 143,448
     Trade receivables, net                                    96,194           96,353
     Inventories                                               63,721           63,086
     Prepaid expenses and other current assets                 16,541           17,435
                                                            ---------        ---------
           Total current assets                               332,388          320,322

Property, plant and equipment                                 200,779          205,885
     Less accumulated depreciation                            118,619          117,836
                                                            ---------        ---------
           Net property, plant and equipment                   82,160           88,049
Deferred income taxes                                          15,280           12,457
Goodwill and other intangibles, net                           152,069          153,083
Other assets                                                   15,047           14,983
                                                            ---------        ---------
                                                            $ 596,944        $ 588,894
                                                            =========        =========

                      Liabilities and Shareholders' Equity
Current liabilities:
     Current installments of long-term debt                 $     108        $     127
     Accounts payable                                          47,690           46,677
     Accrued expenses                                          76,308           73,748
                                                            ---------        ---------
           Total current liabilities                          124,106          120,552

Long-term liabilities:
     Long-term debt, excluding current installments             6,413            6,710
     Other long-term liabilities                               12,923           12,882

Shareholders' equity:
     Common stock and additional paid-in capital              211,078          209,768
     Retained earnings                                        238,589          232,824
     Deferred compensation                                     (1,611)          (1,342)
     Other comprehensive income                                 5,446            7,500
                                                            ---------        ---------
           Total shareholders' equity                         453,502          448,750
                                                            ---------        ---------
                                                            $ 596,944        $ 588,894
                                                            =========        =========
</TABLE>

See accompanying Notes to Unaudited Consolidated Financial Statements.


                                  Page 2 of 30
<PAGE>

                        Technitrol, Inc. and Subsidiaries

                      Consolidated Statements of Operations

                                   (Unaudited)
                      In thousands, except per share data

<TABLE>
<CAPTION>
                                                                Three Months Ended
                                                            March 26,        March 28,
                                                                 2004             2003
                                                            ---------        ---------
<S>                                                         <C>              <C>
Net sales                                                   $ 139,607        $ 122,544
Costs and expenses:
     Cost of sales                                            101,508           92,123
     Selling, general and administrative expenses              27,653           23,734
     Severance and asset impairment expense                     2,857            3,893
                                                            ---------        ---------

         Total costs and expenses applicable to sales         132,018          119,750
                                                            ---------        ---------
Operating profit                                                7,589            2,794

Other income (expense):
     Interest income (expense), net                              (152)            (287)
     Equity method investment earnings                            135              272
     Other                                                       (714)             (40)
                                                            ---------        ---------

         Total other income (expense)                            (731)             (55)
                                                            ---------        ---------

Earnings before taxes                                           6,858            2,739

Income taxes                                                    1,093              105
                                                            ---------        ---------
Net earnings                                                $   5,765        $   2,634
                                                            =========        =========

Basic earnings per share                                    $    0.14        $    0.07
                                                            =========        =========

Diluted earnings per share                                  $    0.14        $    0.07
                                                            =========        =========
</TABLE>

See accompanying Notes to Unaudited Consolidated Financial Statements.


                                  Page 3 of 30
<PAGE>

                        Technitrol, Inc. and Subsidiaries

                      Consolidated Statements of Cash Flows

                                   (Unaudited)

                                  In thousands

<TABLE>
<CAPTION>
                                                                               Three Months Ended
                                                                            March 26,       March 28,
                                                                                 2004            2003
                                                                            ---------       ---------
<S>                                                                         <C>             <C>
Cash flows from operating activities:
Net earnings                                                                $   5,765       $   2,634
Adjustments to reconcile net earnings to net cash provided
   by operating activities:
     Depreciation and amortization                                              6,096           5,628
     Tax effect of employee stock compensation                                     --            (122)
     Amortization of stock incentive plan expense                                 641             466
     Severance and asset impairment expense, net of cash payments                 535           3,100
     Changes in assets and liabilities, net of effect of acquisitions:
       Trade receivables                                                       (2,552)            460
       Inventories                                                             (1,722)          3,658
       Prepaid expenses and other current assets                                1,658          (3,757)
       Accounts payable and accrued expenses                                    3,618           1,947
     Other, net                                                                (1,699)         (2,325)
                                                                            ---------       ---------
         Net cash provided by operating activities                             12,340          11,689
                                                                            ---------       ---------
Cash flows from investing activities:
     Acquisitions, net of cash acquired                                            --         (81,926)
     Capital expenditures                                                      (2,137)         (1,716)
     Proceeds from sale of property, plant and equipment                           36             324
     Foreign currency impact on intercompany lending                            1,991          (1,836)
                                                                            ---------       ---------
         Net cash used in investing activities                                   (110)        (85,154)
                                                                            ---------       ---------
Cash flows from financing activities:
     Principal payments of long-term debt, net                                    (27)           (137)
     Sale of stock through employee stock purchase plan                           417             481
                                                                            ---------       ---------
         Net cash provided by financing activities                                390             344
                                                                            ---------       ---------
Net effect of exchange rate changes on cash                                      (136)           (747)
                                                                            ---------       ---------
Net increase (decrease) in cash and cash equivalents                           12,484         (73,868)

Cash and cash equivalents at beginning of period                              143,448         205,075
                                                                            ---------       ---------
Cash and cash equivalents at end of period                                  $ 155,932       $ 131,207
                                                                            =========       =========
</TABLE>

See accompanying Notes to Unaudited Consolidated Financial Statements.


                                  Page 4 of 30
<PAGE>

                        Technitrol, Inc. and Subsidiaries

            Consolidated Statement of Changes in Shareholders' Equity

                        Three Months Ended March 26, 2004

                                   (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 26, 2003             40,279      $209,768      $232,824      $ (1,342)      $  7,500
Stock options, awards and related
    compensation                             36           893                        (269)
Stock issued under employee stock
    purchase plan                            27           417
Currency translation adjustments                                                                  (2,054)     $ (2,054)
Net earnings                                                          5,765                                      5,765
                                                                                                              --------
Comprehensive income                                                                                          $  3,711
                                         ------      --------      --------      --------       --------      ========
Balance at March 26, 2004                40,342      $211,078      $238,589      $ (1,611)      $  5,446
                                         ======      ========      ========      ========       ========
</TABLE>

See accompanying Notes to Unaudited Consolidated Financial Statements.


                                  Page 5 of 30
<PAGE>

                        Technitrol, Inc. and Subsidiaries

              Notes to Unaudited Consolidated Financial Statements

(1)   Accounting Policies

      For a complete description of the accounting policies of Technitrol, Inc.
and its consolidated subsidiaries, refer to Note 1 of Notes to Consolidated
Financial Statements included in Technitrol's Form 10-K filed for the year ended
December 26, 2003. We sometimes refer to Technitrol as "we" or "our".

      The results for the three months ended March 26, 2004 and March 28, 2003
have been prepared by our management without audit by our independent auditors.
In the opinion of management, the financial statements fairly present in all
material respects, the financial position and results of operations for the
periods presented. To the best of our knowledge and belief, all adjustments have
been made to properly reflect income and expenses attributable to the periods
presented. All such adjustments are of a normal recurring nature. Operating
results for the three months ended March 26, 2004 are not necessarily indicative
of annual results.

      New Accounting Pronouncements

      In December 2003, the Financial Accounting Standards Board "FASB" issued
Statement of Financial Accounting Standards No. 132 (revised 2003), Employers'
Disclosures about Pensions and Other Postretirement Benefits, an amendment of
FASB Statements No. 87, 88, and 106, and a revision of FASB Statement No. 132
("SFAS 132R"). SFAS 132R revises employers' disclosures about pension plans and
other postretirement benefit plans. It does not change the measurement or
recognition of those plans required by SFAS No. 87, Employers' Accounting for
Pensions, SFAS No. 88, Employers' Accounting for Settlements and Curtailments of
Defined Benefit Pension Plans and for Termination Benefits, and SFAS No. 106,
Employers' Accounting for Postretirement Benefits Other Than Pensions. The new
rules require additional disclosures about the assets, obligations, cash flows,
and net periodic benefit cost of defined benefit pension plans and other
postretirement benefit plans. The required information will be provided
separately for pension plans and for other postretirement benefit plans. The new
disclosures are effective for fiscal 2003 year-end financial statements and
certain interim disclosures beginning in 2004.

      In December 2003, FASB issued Interpretation No. 46 (revised December
2003) Consolidation of Variable Interest Entities ("FIN 46R"). FIN 46R clarifies
the application of Accounting Research Bulletin No. 51, Consolidated Financial
Statements, to certain entities in which equity investors do not have the
characteristics of a controlling financial interest or do not have sufficient
equity at risk for the entity to finance its activities without additional
subordinated financial support from other parties. FIN 46R replaces FASB
Interpretation No. 46, Consolidation of Variable Interest Entities which was
issued in January 2003. We were required to apply FIN 46R to variable interest
in variable interest entities created after December 31, 2003. For variable
interests in variable interest entities created before January 1, 2004, the
final interpretation was required to be applied no later than the end of the
first reporting period that ends after March 15, 2004. Adoption of this
interpretation is not expected to effect on our revenue, operating results,
financial position, or liquidity. We do not have any variable interest entities.

      In April 2003, the FASB issued Statement of Financial Accounting Standards
No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging
Activities ("SFAS 149"), which amends and clarifies financial accounting and
reporting for derivative instruments, including certain derivative instruments
embedded in other contracts, and for hedging activities under SFAS 133,
Accounting for Derivative Instruments and Hedging Activities. SFAS 149 requires
that contracts with comparable characteristics be accounted for similarly and
clarifies under what circumstances a contract with an initial net investment
meets the characteristic of a derivative and when a derivative contains a
financing component. SFAS 149 also amends the definition of the term
"underlying" to conform it to language used in FIN No. 45, Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others. SFAS 149 is effective for contracts
entered into or modified after June 30, 2003, with certain exceptions. We
adopted SFAS 149 as of June 1, 2003, and the adoption of this standard did not
have a material impact on our revenue, operating results, financial position or
liquidity.

      Reclassifications

      Certain amounts in the prior year financial statements have been
reclassified to conform with the current year presentation.


                                  Page 6 of 30
<PAGE>

                        Technitrol, Inc. and Subsidiaries

         Notes to Unaudited Consolidated Financial Statements, continued

(2)   Acquisitions

      Eldor High Tech Wire Wound Components S.r.L.: In January 2003, we acquired
all of the capital stock of Eldor High Tech Wire Wound Components S.r.L.
(Eldor), headquartered in Senna Comasco, Italy with production operations in
Izmir and Istanbul, Turkey. Eldor produces flyback transformers and switch mode
transformers for the European television market. The acquisition was accounted
for by the purchase method of accounting. The purchase price was approximately
$83.9 million net of cash acquired, plus related acquisition costs and expenses.
The fair value of net tangible assets acquired approximated $8.3 million. Based
on the fair value of assets acquired, the purchase price allocation included
$18.6 million for manufacturing know-how, $6.1 million for customer
relationships, $1.5 million for tradename and $21.8 million allocated to
goodwill. All of the separately identifiable intangible assets are being
amortized, with estimated useful lives of 20 years for manufacturing know-how, 8
years for customer relationships and 2 years for tradename. The purchase price
was funded with cash on hand. At closing, Eldor had no funded debt. Eldor has
formed the nucleus of a new consumer division at Pulse and will be treated as a
separate reporting unit for purposes of SFAS 142.

      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 to us under a cooperation
agreement. In April 2001, we made a minority investment in the common stock of
FRE, which was accounted for by the cost-basis method of accounting. On July 27,
2002, we made an additional investment in FRE of $6.7 million which increased
the total investment to $20.9 million. As a result of the increased ownership
percentage to approximately 29%, we began to account for the investment under
the equity method of accounting beginning in the three months ended September
27, 2002. In the three months ended December 26, 2003, we recorded an $8.7
million net loss to adjust our original cost basis of the investment to market
value. Shares of FRE began trading on the Taiwan Stock Exchange in January 2003,
and they have experienced considerable price volatility. We maintain an option
to acquire a controlling interest in FRE at its market value at the time of
exercise.

(3)   Severance and asset impairment expense

      In the three months ended March 26, 2004, we accrued $2.9 million for
severance and related payments comprised of $2.2 million related to AMI Doduco's
termination of manufacturing and support personnel at a facility in Germany and
$0.7 million related to Pulse's shutdown of a facility in Carlsbad California.
The vast majority of these accruals will be utilized by the six months ending
June 25, 2004.

      In the three months ended March 28, 2003, we accrued $3.9 million for
severance and related payments comprising $1.6 million related to AMI Doduco's
termination of manufacturing and support personnel at AMI Doduco's facility in
Germany, $1.6 million to finalize the shutdown of a redundant facility in Spain
acquired from Engelhard-CLAL by a subsidiary of AMI Doduco and $0.6 million for
severance and related payments for manufacturing and support personnel at Pulse,
primarily in France and Mexico. The majority of these accruals were utilized by
the six months ended June 27, 2003.


                                  Page 7 of 30
<PAGE>

                        Technitrol, Inc. and Subsidiaries

         Notes to Unaudited Consolidated Financial Statements, continued

      Our severance and asset impairment charges are summarized on a
year-to-date basis for 2004 as follows (in millions):

                                                         AMI
                                                      Doduco   Pulse    Total
                                                      ------   -----    -----
      Balance accrued at December 26, 2003            $ 2.1    $ 1.7    $ 3.8
      Accrued during the three months ended
         March 26, 2004                                 2.2      0.7      2.9
      Severance and other cash payments                (1.8)    (0.6)    (2.4)
      Non-cash asset disposals                         (0.1)      --     (0.1)
                                                      -----    -----    -----
      Balance accrued at March 26, 2004               $ 2.4    $ 1.8    $ 4.2
                                                      =====    =====    =====

(4)   Inventories

      Inventories consisted of the following (in thousands):

                                               March 26,     December 26,
                                                    2004             2003
                                                 -------          -------
            Finished goods                       $24,264          $25,326
            Work in process                       14,967           13,867
            Raw materials and supplies            24,490           23,893
                                                 -------          -------
                                                 $63,721          $63,086
                                                 =======          =======

(5)   Derivatives and Other Financial Instruments

      We utilize derivative financial instruments, primarily forward exchange
contracts, 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 March 26, 2004, we had two foreign exchange forward contracts
outstanding to sell forward approximately 64.3 million euros in the aggregate,
in order to hedge intercompany loans. The terms of these contracts were
approximately 30 days. We had no other financial derivative instruments at March
26, 2004. In addition, management believes that there is no material risk of
loss from changes in inherent market rates or prices in our other financial
instruments.


                                  Page 8 of 30
<PAGE>

                        Technitrol, Inc. and Subsidiaries

         Notes to Unaudited Consolidated Financial Statements, continued

(6)   Earnings Per Share

      Basic earnings per share are calculated by dividing net earnings by the
weighted average number of common shares outstanding (excluding restricted
shares) during the period. We had restricted shares outstanding of approximately
182,000 and 163,000 as of March 26, 2004 and March 28, 2003, 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 9,000 for the three months ended
March 26, 2004. There were approximately 484,000 stock options outstanding for
the three months ended March 26, 2004 and approximately 340,000 as of March 28,
2003. Earnings per share calculations are as follows (in thousands, except per
share amounts):

                                                          Three Months Ended
                                                     March 26,         March 28,
                                                          2004              2003
                                                       -------           -------
Net earnings                                           $ 5,765           $ 2,634
     Basic earnings per share:
           Shares                                       40,121            39,991
           Per share amount                            $  0.14           $  0.07
                                                       =======           =======

     Diluted earnings per share:
           Shares                                       40,320            40,134
           Per share amount                            $  0.14           $  0.07
                                                       =======           =======

(7)   Business Segment Information

      For the three months ended March 26, 2004 and March 28, 2003 there were
immaterial amounts of intersegment revenues eliminated in consolidation. There
has been no material change in segment assets from December 26, 2003 to March
26, 2004. In addition, the basis for determining segment financial information
has not changed from 2003. Specific segment data are as follows:

                                                        Three Months Ended
                                                    March 26,         March 28,
Net sales:                                               2004              2003
                                                    ---------         ---------
     Pulse                                          $  77,538         $  67,880
     AMI Doduco                                        62,069            54,664
                                                    ---------         ---------
         Total                                      $ 139,607         $ 122,544
                                                    =========         =========
Earnings (loss) before income taxes:
     Pulse                                          $   8,670         $   5,556
     AMI Doduco                                        (1,081)           (2,762)
                                                    ---------         ---------
         Operating profit                               7,589             2,794
     Other income (expense), net                         (731)              (55)
                                                    ---------         ---------
     Earnings (loss) before income taxes
                                                    $   6,858         $   2,739
                                                    =========         =========


                                  Page 9 of 30
<PAGE>

                        Technitrol, Inc. and Subsidiaries

         Notes to Unaudited Consolidated Financial Statements, continued

(8)   Accounting for Stock Based Compensation

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

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

      If compensation cost for our stock option plan and stock purchase plan had
been determined based on the fair value as required by SFAS 123 for all awards
(including those made prior to 2003), our pro forma net income (loss) and
earnings (loss) per basic and diluted share would have been as follows, (amounts
are in thousands, except per share amounts):

                                                          Three Months Ended
                                                       March 26,     March 28,
                                                            2004          2003
                                                          ------        ------
Net income - as reported                                  $5,765        $2,634
Add: Stock-based compensation expense included
  in reported net income (loss), net of taxes                385           279
Deduct: Total stock-based compensation expense
  determined under fair value based method for
  all awards, net of taxes                                  (587)         (516)
                                                          ------        ------
Net income - as adjusted                                  $5,562        $2,398
Basic net income per share - as reported                  $ 0.14        $ 0.07
Basic net income per share - as adjusted                  $ 0.14        $ 0.06
Diluted net income per share - as reported                $ 0.14        $ 0.07
Diluted net income per share - as adjusted                $ 0.14        $ 0.06

      At March 26, 2004, we had approximately 484,000 options outstanding,
representing approximately 1% of our outstanding shares of common stock. The
value of restricted stock has always been and continues to be recorded as
compensation expense over the restricted period, and such expense is included in
the results of operations for the period ended March 26, 2004 and March 28,
2003, respectively.

(9)   Pension

      In the three months ended March 26, 2004 we were not required to, nor did
we, make any contributions to our qualified pension plan. Our net periodic
expense was approximately $0.3 million in the three months ended March 26, 2004,
and is expected to be approximately $1.0 million for the full fiscal year in
2004.


                                 Page 10 of 30
<PAGE>

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

Introduction

      This discussion and analysis of our financial condition and results of
operations as well as other sections of this report, contain certain
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995 and involve a number of risks and uncertainties.
Actual results may differ materially from those anticipated in these
forward-looking statements for many reasons, including the risks faced by us
described in "Risk Factors" section of this report on page 20 through 25.

Critical Accounting Policies

      The preparation of financial statements and related disclosures in
conformity with accounting principles generally accepted in the United States
requires us to make judgments, assumptions and estimates that affect the amounts
reported in the Consolidated Financial Statements and accompanying notes. Note 1
to the Consolidated Financial Statements in our Annual Report on Form 10-K for
the period ended December 26, 2003 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
valuation, impairment of goodwill and other intangibles, severance and asset
impairment expense, income taxes, and contingency accruals. Actual results could
differ from these estimates. The following critical accounting policies are
impacted significantly by judgments, assumptions and estimates used in the
preparation of the Consolidated Financial Statements.

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

      Impairment of Goodwill and Other Intangibles. We assess the carrying cost
of goodwill and intangible assets with indefinite lives 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 or other
intangibles.

      Severance and Asset Impairment Expense. Our restructuring activities are
designed to reduce both our fixed and variable costs, particularly in response
to the on-going price competition in both segments. These costs include the
consolidation of facilities and the termination of employees.
Acquisition-related costs are included in the allocation of the cost of the
acquired business. Other restructuring costs are expensed during the period in
which we determine that we will incur those costs, and all of the requirements
for accrual are met in accordance with the applicable accounting guidance.
Restructuring costs are recorded based upon our best estimates at the time. Our
actual expenditures for the restructuring activities may differ from the
initially recorded costs. If this occurs, we adjust our initial estimates in
future periods. In the case of acquisition-related restructuring costs,
depending on whether the assets impacted came from the acquired entity and the
timing of the restructuring charge, such adjustment would generally require a
change in value of the goodwill appearing on our balance sheet, which may not
affect our current 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. Except in limited circumstances, 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. In accordance with
the provisions of Accounting Principles Board Opinion No. 23, Accounting for
Income Taxes - Special Areas ("APB 23") we intend to reinvest these earnings
outside the U.S. indefinitely. If we encounter a significant domestic need for
liquidity that we cannot fulfill through borrowings, equity offerings, or other
internal or external sources, we may experience unfavorable tax consequences as
cash invested outside the U.S. is transferred to the U.S. This adverse
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.


                                 Page 11 of 30
<PAGE>

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

Overview

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

      We operate our business in two distinct segments:

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

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

      General. We define net sales as gross sales less returns and allowances.
We sometimes refer to net sales as revenue.

      From 1997 through 2000, the growth in our consolidated net sales was due
in large part to the growth of Pulse. However, beginning in late 2000, the
electronics markets served by Pulse experienced a severe global contraction. In
late 2002, many of these markets began to stabilize or increase in terms of unit
sales. However, because of excess capacity, relocation by customers from North
America and Europe to the Far East, and emergence of strong competitors in the
Far East, the pricing environment for Pulse's products has been and remains
challenging, preventing total revenue from growing proportionately with unit
growth. Pulse has undertaken a series of cost-reduction actions from 2001
through 2003 to optimize its capacity with market conditions.

      Since late 2000 and continuing through late 2003, the market in both North
America and Europe for AMI Doduco's products has been weak. The markets in both
North America and Europe (except for European automotive markets), have begun to
recover in 2004. Demand at AMI Doduco typically mirrors the prevailing economic
conditions in North America and Europe. This is true for electrical contacts,
and for component subassemblies for automotive applications such as
multi-function switches, motor control sensors and ignition security systems,
and for non-automotive uses such as appliance and industrial controls. AMI
Doduco continues its cost reduction actions including work force adjustments and
plant consolidations in line with demand around the world in order to optimize
efficiency.

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

      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.


                                 Page 12 of 30
<PAGE>

Our acquisitions continually change the mix of our net sales. Pulse made
numerous acquisitions in recent years which have increased our penetration into
our primary markets and expanded our presence in new markets. Recent examples of
these acquisitions include the consumer electronics business of Eldor
Corporation and Excelsus. Pulse acquired Eldor's consumer electronics business
in January 2003 for approximately $83.9 million and this became the Pulse
Consumer Division, and is headquartered in Senna Comasco, Italy with production
operations in Istanbul and Izmir, Turkey. Eldor's consumer business is a leading
supplier of flyback transformers to the European television industry. Excelsus
was acquired in August 2001 for approximately $85.9 million, net of cash
acquired. Excelsus was based in Carlsbad, California, and was a leading producer
of customer-premises digital subscriber line filters and other broadband
accessories.

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

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

      Technology. Our business is continually affected by changes in technology,
design, and preferences of consumers and other end users of our products, as
well as changes in regulatory requirements. We address these changes by
continuing to invest in new product development and by maintaining a diverse
product portfolio which contains both mature and emerging technologies in order
to meet customer demands.

      Management Focus. Our executives focus on a number on important factors in
evaluating our financial condition and operation performance. We use economic
profit which we define as operating profit after tax, less our cost of capital.
Revenue growth, gross margin as a percentage of revenue, and operating profit as
a percent of revenue are also among these factors. Operating leverage or
incremental operating profit as a percentage of incremental sales is a factor
that is discussed frequently with analysts and investors, as this is believed to
represent the benefit of absorbing fixed overhead and operating expenses, and
increased profitability on higher sales. In evaluating working capital
management, liquidity and cash flow, our executives also use performance
measures such as days sales outstanding, days payable outstanding and inventory
turnover.

      The continued success of our business is largely dependent on meeting and
exceeding our customers' expectations. Non-financial performance measures such
as safety statistics, on-time delivery and quality statistics assist our
management in monitoring this activity on an on-going basis.

      Cost Reduction Programs. During 1999 and 2000, the electronic components
industries served by Pulse were characterized by unprecedented growth. Beginning
in late 2000 and continuing all during 2001 and a significant part of 2002,
however, the opposite trend was experienced as these industries experienced a
severe worldwide contraction and many of our customers canceled orders and
decreased their level of business activity as a result of lower demand for their
end products. Our manufacturing business model for Pulse's non-consumer markets
has a very high variable cost component due to the labor-intensity of many
processes, which allows us to quickly change our capacity based on market
demand. Just as we expanded capacity during 1999 and 2000, we reduced capacity
during 2001 and 2002. The Pulse Consumer Division, acquired from Eldor in 2003,
however, is capital intensive and therefore more sensitive to volume changes.
Generally speaking, during 2003, Pulse's end markets experienced increased unit
demand, but the increasing presence of Far Eastern competition also increased
pricing pressure, which in turn put pressure on Pulse to reduce selling prices.
Unit sales and pricing pressures were, however, not uniform across all product
lines, making product mix an important factor in revenue generation. 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 in 2001 and 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 expand or 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 current market demand.

      In response to the decline in demand for our products which occurred
between 2002 and 2003, we implemented a succession of cost reduction initiatives
and programs, summarized as follows:


                                 Page 13 of 30
<PAGE>

      During 2001, we announced the closure of our production facilities in
Thailand and Malaysia. The production at these two facilities was transferred to
other Pulse facilities in Asia. We recorded charges of $3.6 million for these
plant closings, comprised of $2.5 million for severance and related payments and
$1.1 million for other exit costs. The majority of this accrual was utilized by
the end of 2002. We also adopted other restructuring plans during 2001. In this
regard, provisions of $6.4 million were recorded during 2001. Termination costs
for employees at our Thailand and Malaysian facilities have been included in the
separate provisions for exiting those facilities. In addition to these
terminations, headcount was reduced by approximately 12,300, net of new hires,
during fiscal 2001 through voluntary employee attrition and involuntary
workforce reductions primarily at manufacturing facilities in the PRC where
severance payments are not necessary. In addition, a charge of $3.5 million was
recorded during 2001 to writedown the value of certain Pulse fixed assets to
their disposal value.

      During 2002, we announced the closure of our production facility in the
Philippines. The production at this facility was transferred to other Pulse
facilities in Asia. We recorded charges of $3.8 million for this plant closing,
comprising $1.4 million for severance and related payments and $2.4 million for
asset writedowns. The majority of this accrual was utilized by the end of 2002.
We also adopted other restructuring plans during 2002. In this regard, we
recorded provisions of $6.0 million for personnel reductions, and substantially
all of the employee severance and related payments in connection with these
actions were completed as of December 26, 2003. An additional provision of $7.0
million was recorded in 2002 related to asset writedowns. These assets were
primarily Asian-based production equipment that became idle in 2002.

      During 2003, we accrued $9.0 million in the aggregate for severance and
related payments and asset impairments. At Pulse, we accrued $1.5 million for
the elimination of certain manufacturing and support positions located in
France, the United Kingdom, Mexico and the People's Republic of China ("PRC")
and $0.7 million for other facility exit costs. We additionally accrued $1.9
million for shutdown of Pulse's manufacturing facility in Mexico and $0.5
million to write down the carrying cost of Pulse's facility in the Philippines
which is held for sale. At AMI Doduco, we accrued $2.9 million for the
elimination of certain manufacturing positions principally located in North
America and Germany and $1.5 million to complete the shutdown of a redundant
facility in Spain that we acquired from Engelhard-CLAL in 2001. The majority of
these accruals were utilized by the end of 2003.

      In 2004, we accrued $2.9 million for severance and related payments
comprised of $2.2 million related to the termination of personnel primarily at
AMI Doduco's facility in Germany and $0.7 million related to Pulse's shutdown of
a facility in Carlsbad California. The vast majority of these accruals will be
utilized by the six months ending June 25, 2004.

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

      International Operations. As of December 26, 2003, we had manufacturing
operations in 10 countries and we have no significant net sales in currencies
other than the U.S. dollar and the euro. An increasing percentage of our sales
in recent years has been outside of the United States. For the year ended
December 26, 2003, 76% of our net sales were outside of the U.S. 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 euro. AMI Doduco's and Pulse's Consumer Division
euro-denominated sales and earnings may result in higher or lower dollar sales
upon translation for our U.S. consolidated financial statements. We may also
experience a positive or negative translation adjustment to equity because our
investment in Pulse's Consumer Division and AMI Doduco's European operations may
be worth more or less in U.S. dollars after translation for our U. S.
consolidated financial statements. The Pulse non-consumer operations may incur
foreign currency gains or losses as euro-denominated transactions are remeasured
to U.S. dollars for financial reporting purposes. If an increasing percentage of
our sales is denominated in non-U.S. currencies, increased exposure to currency
fluctuations may result.


                                 Page 14 of 30
<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 March 26, 2004, we had two foreign currency forward contracts outstanding
to sell forward approximately 64.3 million euros in order to hedge intercompany
loans. In determining the use of forward exchange contracts and currency
options, we consider the amount of sales, purchases and net assets or
liabilities denominated in local currencies, the type of currency, and the costs
associated with the contracts.

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

      Income Taxes. Our effective income tax rate is affected by the proportion
of our income earned in high-tax jurisdictions such as Germany and the income
earned in low-tax jurisdictions, particularly Izmir, Turkey and the People's
Republic of China. This mix of income can vary significantly from one period to
another. We have benefited over recent years from favorable tax treatments
outside of the U.S. However, there is no guarantee as to how long these benefits
will continue to exist.

      Except in limited circumstances, we have not provided for U.S. federal
income and foreign withholding taxes on our non-U.S. subsidiaries' undistributed
earnings as per Accounting Principles Board Opinion No. 23, Accounting for
Income Taxes - Special Areas. 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. We have not provided for U.S.
federal income and foreign withholding taxes on approximately $299.4 million of
our non-U.S. subsidiaries' undistributed earnings (as calculated for income tax
purposes) as of December 26, 2003, as per APB 23. Unrecognized deferred taxes on
these undistributed earnings are estimated to be approximately $94.2 million.
Where excess cash has accumulated in our non-U.S. subsidiaries and it is
advantageous for tax reasons, subsidiary earnings may be repatriated.


                                 Page 15 of 30
<PAGE>

Results of Operations

      Three months ended March 26, 2004 compared to the three months ended March
28, 2003

      Net Sales. Net sales for the three months ended March 26, 2004 increased
$17.1 million, or 13.9%, to $139.6 million from $122.5 million in the three
months ended March 28, 2003. Our sales increase from the comparable period last
year was attributable to improvement in the markets for both Pulse and AMI
Doduco. Pulse's increase in net sales was due to stronger demand in networking,
telecommunications, power conversion, military/aerospace and consumer markets.
AMI Doduco's increase in net sales was due to higher prices for precious metals
and favorable translation effect of a stronger euro, as well as early succeses
in AMI Doduco's efforts to increase its market share, particularly in North
America. The sales improvements were offset somewhat by continuing weakness in
European automotive market.

      Pulse's net sales increased $9.7 million, or 14.2%, to $77.5 million for
the three months ended March 26, 2004 from $67.9 million in the three months
ended March 28, 2003. This increase was experienced in Pulse's networking,
telecommunications, power conversion, military/aerospace and consumer division
markets on a worldwide basis. In addition, sales derived from the consumer
division are denominated in euros and therefore experienced a favorable
translation effect of a stronger euro.

      AMI Doduco's net sales increased $7.4 million, or 13.5%, to $62.1 million
for the three months ended March 26, 2004 from $54.7 million in the three months
ended March 28, 2003. Sales in the 2004 period reflect improving demand in North
America, particularly in the commercial and industrial markets, whereas European
markets were flat to down, particularly in the automotive sector. The sales
benefited from an increase in the average euro-to-U.S. dollar exchange rate and
higher prices for precious metals which were passed on to customers. The higher
average euro-to-dollar exchange rate during 2004 versus the comparable 2003
three months increased sales by $6.0 million in the three months ended March 26,
2004.

      Cost of Sales. Our cost of sales increased $9.4 million, or 10.2%, to
$101.5 million for the three months ended March 26, 2004 from $92.1 million for
the three months ended March 28, 2003. Our consolidated gross margin for the
three months ended March 26, 2004 was 27.3% compared to 24.8% for the three
months ended March 28, 2003. Our consolidated gross margin in 2004 was
positively affected by:

      o     the gross margin on higher Pulse Consumer Division sales, which is
            higher than the average gross margin on AMI Doduco sales and sales
            of some of Pulse's other products, and

      o     better capacity utilization at Pulse and AMI Doduco in 2004 compared
            to 2003.

      Selling, General and Administrative Expenses. Total selling, general and
administrative expenses for the three months ended March 26, 2004 increased $3.9
million, or 16.5%, to $27.7 million, or 19.8% of net sales, from $23.7 million,
or 19.4% net of sales for the three months ended March 28, 2003. Increased
spending as a result of volume gains, particularly on variable costs such as
selling commissions, incentives and stock compensation expense, was partially
offset by restructuring actions that we took over the last year to reduce costs
and tighten spending controls. European expenses that are denominated in euros
also translated to a higher level of U. S. dollars at the higher euro-to-dollar
exchange rate in 2004.

      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 March 26, 2004 and
March 28, 2003 respectively, RD&E by segment was as follows (dollars in
thousands):

                                                   2004          2003
                                                 ------        ------

      Pulse                                      $4,607        $3,357
      Percentage of segment sales                   5.9%          4.9%

      AMI Doduco                                 $1,069        $1,049
      Percentage of segment sales                   1.7%          1.9%


                                 Page 16 of 30
<PAGE>

      We believe that future sales in the electronic components markets will be
driven by next-generation products. Design and development activities with our
OEM customers continued at an aggressive pace during 2003 and into 2004.

      Interest. Net interest expense was $0.2 million for the three months ended
March 26, 2004 compared to net interest expense of $0.3 million for the three
months ended March 28, 2003. Although the average balance of invested cash
increased in 2004 over the comparable period in 2003, a lower interest income
yield resulted in higher net interest expense. Recurring components of interest
expense (silver leasing fees, interest on bank debt and bank commitment fees)
approximated those of 2003.

      Income Taxes. The effective income tax rate for the three months ended
March 26, 2004 was 15.9% compared to 3.8% for the three months ended March 28,
2003. The higher tax rate in 2004 resulted from a higher proportion of income
being attributable to high-tax jurisdictions and an imposition of withholding
tax in Turkey related to the consumer division.

Liquidity and Capital Resources

      Working capital as of March 26, 2004 was $208.3 million compared to $199.8
million as of December 26, 2003. This increase was primarily due to the increase
in cash and cash equivalents offset slightly by an increase in accrued expenses.
Cash and cash equivalents, which is included in working capital, increased from
$143.4 million as of December 26, 2003 to $155.9 million as of March 26, 2004.

      Net cash provided by operating activities was $12.3 million for the three
months ended March 26, 2004 and $11.7 million in the comparable period of 2003,
an increase of $0.6 million. This increase is primarily attributable to higher
net earnings during the three months ended March 26, 2004, partially offset by
increases in working capital.

      We present our statement of cash flows using the indirect method as
permitted under Financial Accounting Standards Board Statement No. 95, Statement
of Cash Flows. Our management has found that investors and analysts typically
refer to changes in accounts receivable, inventory, and other components of
working capital when analyzing operating cash flows. Also, changes in working
capital are more directly related to the way we manage our business for cash
flow, than are items such as cash receipts from the sale of goods, as would
appear using the direct method.

      Capital expenditures were $2.1 million during the three months ended March
26, 2004 and $1.7 million in the comparable period of 2003. We make capital
expenditures to expand production capacity and to improve our operating
efficiency. We plan to continue making such expenditures in the future as and
when necessary.

      We used $83.9 million cash for acquisitions in 2003 related to the
acquisition of Eldor. We may acquire other businesses or product lines to expand
our breadth and scope of operations. We may also exercise our option to expand
our investment in FRE during 2004.

      We do not pay cash dividends on our common stock. We currently intend to
retain future earnings to finance the growth of our business.

      As of March 26, 2004, we have no outstanding borrowings under our existing
three-year revolving credit agreement. We entered into this credit agreement on
June 20, 2001 providing for $225.0 million of credit capacity. Following the
conclusion of our follow-on equity offering in April 2002, we voluntarily
reduced the size of this credit facility to a maximum of $175.0 million in order
to reduce commitment fees and to size the facility to estimated future needs
given cash on hand, and again in March 2003 to a maximum of $125.0 million. We
also amended the minimum net worth threshold from $275.0 million to $259.3
million as a result of a cumulative effect of an accounting change, recorded in
the three months ended March 28, 2003. As of March 26, 2004 the amended facility
consists of:

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

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

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


                                 Page 17 of 30
<PAGE>

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

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

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

      We had two standby letters of credit outstanding at March 26, 2004 in the
aggregate amount of $1.3 million securing transactions entered into in the
ordinary course of business.

      We had commercial commitments outstanding at March 26, 2004 of
approximately $78.9 million due under precious metal consignment-type leases.
Although this represents an increase of $18.3 million from the $60.6 million
outstanding as of December 26, 2003 it is attributable to higher average silver
prices in the early part of 2004. Silver prices have subsequently decreased back
to the approximate prices as of December 26, 2003.

      We believe that the combination of cash on hand, cash generated by
operations and, if necessary, additional borrowings under our credit agreement
will be sufficient to satisfy our operating cash requirements in the foreseeable
future. We are currently discussing a new credit facility with a number of
banks, and expect to replace the expiring $125.0 million facility with a new
facility permitting a similar level of borrowing under terms reflecting current
credit market conditions. In addition, we may use internally generated funds or
borrowings, or additional equity offerings for acquisitions of suitable
businesses or assets.

      All retained earnings are free of legal or contractual restrictions, with
the exception of approximately $13.0 million of retained earnings as of March
26, 2004 in the PRC that are restricted in accordance with Section 58 of the PRC
Foreign Investment Enterprises Law. 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 earnings in the PRC, limited to 50% of the
total capital invested in the PRC. We have not experienced any significant
liquidity restrictions in any country in which we operate and none are foreseen.
However, foreign exchange ceilings imposed by local governments and the
sometimes lengthy approval processes which some foreign governments require for
international cash transfers may delay our internal cash movements from time to
time. The retained earnings in other countries represent a material portion of
our assets. We expect to reinvest these earnings outside of the United States
because we anticipate that a significant portion of our opportunities for growth
in the coming years will be abroad. If these earnings were brought back to the
United States, significant tax liabilities could be incurred in the United
States as several countries in which we operate have rates significantly lower
than the U.S. statutory rate. Additionally, we have not accrued U.S. income
taxes on foreign earnings indefinitely invested abroad.

New Accounting Pronouncements

      In December 2003, the Financial Accounting Standards Board "FASB" issued
Statement of Financial Accounting Standards No. 132 (revised 2003), Employers'
Disclosures about Pensions and Other Postretirement Benefits, an amendment of
FASB Statements No. 87, 88, and 106, and a revision of FASB Statement No. 132
("SFAS 132R"). SFAS 132R revises employers' disclosures about pension plans and
other postretirement benefit plans. It does not change the measurement or
recognition of those plans required by SFAS No. 87, Employers' Accounting for
Pensions, SFAS No. 88, Employers' Accounting for Settlements and Curtailments of
Defined Benefit Pension Plans and for Termination Benefits, and SFAS No. 106,
Employers' Accounting for Postretirement Benefits Other Than Pensions. The new
rules require additional disclosures about the assets, obligations, cash flows,
and net periodic


                                 Page 18 of 30
<PAGE>

benefit cost of defined benefit pension plans and other postretirement benefit
plans. The required information will be provided separately for pension plans
and for other postretirement benefit plans. The new disclosures are effective
for fiscal 2003 year-end financial statements and certain interim disclosures
beginning in 2004.

      In December 2003, FASB issued Interpretation No. 46 (revised December
2003) Consolidation of Variable Interest Entities ("FIN 46R"). FIN 46R clarifies
the application of Accounting Research Bulletin No. 51, Consolidated Financial
Statements, to certain entities in which equity investors do not have the
characteristics of a controlling financial interest or do not have sufficient
equity at risk for the entity to finance its activities without additional
subordinated financial support from other parties. FIN 46R replaces FASB
Interpretation No. 46, Consolidation of Variable Interest Entities which was
issued in January 2003. We were required to apply FIN 46R to variable interest
in variable interest entities created after December 31, 2003. For variable
interests in variable interest entities created before January 1, 2004, the
final interpretation was required to be applied no later than the end of the
first reporting period that ends after March 15, 2004. Adoption of this
interpretation is not expected to effect on our revenue, operating results,
financial position, or liquidity. We do not have any variable interest entities.

      In April 2003, the FASB issued Statement of Financial Accounting Standards
No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging
Activities ("SFAS 149"), which amends and clarifies financial accounting and
reporting for derivative instruments, including certain derivative instruments
embedded in other contracts, and for hedging activities under SFAS 133,
Accounting for Derivative Instruments and Hedging Activities. SFAS 149 requires
that contracts with comparable characteristics be accounted for similarly and
clarifies under what circumstances a contract with an initial net investment
meets the characteristic of a derivative and when a derivative contains a
financing component. SFAS 149 also amends the definition of an underlying to
conform it to language used in FIN No. 45, Guarantor's Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of
Others. SFAS 149 is effective for contracts entered into or modified after June
30, 2003, with certain exceptions. We adopted SFAS. 149 as of June 1, 2003, and
the adoption of this standard did not have a material impact on our revenue,
operating results, financial position or liquidity.


                                 Page 19 of 30
<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 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 2003,
these markets, particularly the electronics market, experienced a severe
worldwide contraction. This contraction resulted in a decrease in demand for our
products, as our customers:

      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 had a significant adverse effect
on our operating results and profitability. While these markets have recovered
to varying degrees over the last year, we cannot predict the duration or
strength of any recovery. Accordingly, we may continue to experience volatility
in both our revenues and profits.

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

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

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

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


                                 Page 20 of 30
<PAGE>

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

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

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

      In recent years we have completed several acquisitions. We continually
seek acquisitions to grow our business. We may fail to derive significant
benefits from our acquisitions. In addition, if we fail to achieve sufficient
financial performance from an acquisition, goodwill and other intangibles could
become impaired, resulting in our recognition of a loss. In 2002, we recorded a
goodwill impairment charge of $15.7 million related to AMI Doduco and a trade
name impairment charge of $32.1 million related to Pulse. In 2003, we recorded
an equity method investment loss of $8.7 million related to our investment in
FRE. The degree of success of any of our acquisitions depends on our ability to:

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

o     identify and take advantage of cost reduction opportunities; and

o     further penetrate the markets for the product capabilities acquired.

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

o     cause a disruption in our ongoing business;

o     distract our managers;

o     unduly burden our other resources; and

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

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

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

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

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

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

      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


                                 Page 21 of 30
<PAGE>

not provide us with any material recourse in the event of non-renewal or early
termination. We will lose business and our revenues will decrease if a
significant number of customers:

      o     do not submit additional purchase orders;

      o     do not enter into new agreements with us; or

      o     elect to terminate their relationship with us.

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

      We have grown rapidly over the last ten years, both organically and as a
result of acquisitions. However, in 2001 and 2002 we significantly reduced our
workforce and facilities in response to a dramatic decrease in demand for our
products due to prevailing global market conditions. These rapid fluctuations
place strains on our resources and systems. If we do not effectively manage our
resources and systems, our business may suffer.

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

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

      o     production delays;

      o     increased costs of production;

      o     an inability to make timely deliveries; and

      o     a decrease in profits.

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

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

      o     precious metals such as silver;

      o     base metals such as copper and brass; and

      o     ferrite cores.

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

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


                                 Page 22 of 30
<PAGE>

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

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

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

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

      o     product quality and reliability;

      o     global design and manufacturing capabilities;

      o     breadth of product line;

      o     customer service;

      o     price; and

      o     on-time delivery.

      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
experienced in the recent contraction. Although backlog should not be relied on
as an indicator of our future revenues, our results of operations could be
adversely impacted if customers cancel a material portion of orders in our
backlog.

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

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

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

      We manufacture and assemble some of our products in foreign locations,
including the PRC, and Turkey. In addition, approximately 76% of our revenues
for the year ended December 26, 2003 were derived from sales to customers
outside the United States. Our future operations and earnings may be adversely
affected by the risks related to, or any other problems arising from, operating
in international markets.

      Risks inherent in doing business internationally may include:

      o     economic and political instability;

      o     expropriation and nationalization;

      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 operate.


                                 Page 23 of 30
<PAGE>

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

      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 or benefited from special tax incentives in other
countries including the PRC and Turkey. 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 substitute the operations with operations in other locations with favorable
tax incentives. Accordingly, in the event of changes in laws and regulations
affecting our international operations, we may not be able to continue to take
advantage of similar benefits in the future.

Shifting our operations between regions may entail considerable expense.

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

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

      A significant portion of our cash is held offshore by our international
subsidiaries and is predominantly denominated in U.S. dollars. While we intend
to use cash held overseas to fund our international operation and growth, if we
encounter a significant domestic need for liquidity that we cannot fulfill
through borrowings, equity offerings, or other internal or external sources, we
may experience unfavorable tax and earnings consequences if this cash is
transferred to the United States. These adverse consequences would occur if the
transfer of cash into the United States is taxed without sufficient foreign tax
credit to offset the U.S. tax liability, resulting in lower earnings and cash
flow. In addition, we may be prohibited from transferring cash from the PRC.
With the exception of approximately $13.0 million of non-cash retained earnings
as of March 26, 2004 in primarily 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 and management, many of whom have many years of experience and would be
extremely difficult to replace. We must also attract and maintain experienced
and highly skilled engineering, sales and marketing and managerial personnel.
Competition for qualified personnel is intense in our industries, and we may not
be successful in hiring and retaining these people. If we lose the services of
our executive officers or cannot attract and retain other qualified personnel,
our business could be adversely affected.


                                 Page 24 of 30
<PAGE>

Public health epidemics (such as Severe Acute Respiratory Syndrome) or other
natural disasters (such as earthquakes or fires) may disrupt operations in
affected regions and affect operating results.

      We maintain extensive manufacturing operations in the PRC and Turkey, as
do many of our customers and suppliers. A sustained interruption of our
manufacturing operations, or those of our customers or suppliers, as a result of
complications from severe acute respiratory syndrome or another public health
epidemic or other natural disasters, could have a material adverse effect on our
business and results of operations.

The unavailability of insurance against certain business risks may adversely
affect our future operating results.

      As part of our comprehensive risk management program, we purchase
insurance coverage against certain business risks, including but not limited to
product recalls, product liability, errors and omissions, and general liability.
If any of our insurance carriers discontinues an insurance policy and we cannot
find another insurance carrier to write comparable coverage, we may be subject
to uninsured losses which may adversely affect our operating results.

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

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

      o     air emissions;

      o     wastewater discharges;

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

      o     employee health and safety.

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

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

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 26, 2003.

Item 4: Controls and Procedures

      As of the end of the period covered by this report (Evaluation Date), we
evaluated the effectiveness of the design and operation of our "disclosure
controls and procedures" for purposes of filing reports under the Securities
Exchange Act of 1934 (Exchange Act). This evaluation was done under the
supervision and with the participation of our management, including our
Principal Executive Officer ("PEO") and Principal Financial Officer ("PFO").


                                 Page 25 of 30
<PAGE>

Disclosure controls and procedures are designed with the objective of ensuring
that information required to be disclosed in our reports filed under the
Exchange Act, such as this periodic report on Form 10-Q, is recorded, processed,
summarized and reported within the time periods specified in the SEC's rules and
forms. Disclosure controls and procedures are also designed with the objective
of ensuring that such information is accumulated and communicated to our
management, including the PEO and the PFO, as appropriate to allow timely
decisions regarding required disclosure.

      Our management, including the PEO and PFO, does not expect that our
disclosure controls and procedures will prevent all error and all fraud. A
control system, no matter how well conceived and operated, can provide only
reasonable, not absolute, assurance that the objectives of the control system
are met. Further, the design of a control system must reflect the fact that
there are resource constraints, and the benefits of controls must be considered
relative to their costs. Because of the inherent limitations in all control
systems, no evaluation of controls can provide absolute assurance that all
control issues and instances of fraud, if any, within the company have been
detected. These inherent limitations include the realities that judgments in
decision-making can be faulty, and that breakdowns can occur because of a simple
human or systems error. Additionally, controls can be circumvented by the
individual acts of some persons, by collusion of two or more people, or by
management override of the controls. The design of any system of controls also
is based in part upon certain assumptions about the likelihood of future events,
and there can be no assurance that any design will succeed in achieving its
stated goals under all potential future conditions. Over time, controls may
become inadequate because of changes in conditions, or the degree of compliance
with the policies or procedures may deteriorate. Because of the inherent
limitations in a cost-effective control system, misstatements due to error or
fraud may occur and not be detected timely, in the ordinary course of business.

      We plan to evaluate our disclosure controls and procedures on a quarterly
basis in accordance with the Exchange Act so that the conclusions concerning the
effectiveness of controls can be reported in our quarterly reports on Form 10-Q
and our annual reports on Form 10-K. Our disclosure controls and procedures are
also evaluated on an ongoing basis by personnel in our finance organization and
our internal audit group in connection with their audit and review activities.
The overall goals of these various evaluation activities are to monitor our
disclosure controls and procedures over financial reporting and to make
modifications as necessary. Our intent in this regard is that these controls and
procedures will be maintained as dynamic systems that change to include
improvements and corrections as conditions warrant.

      Among other matters, we sought in our evaluation to determine whether
there were any "significant deficiencies" or "material weaknesses" in our
internal controls and procedures, and whether we had identified any acts of
fraud involving personnel who have a significant role in our internal controls
and procedures. This information was important both for the controls evaluation
generally and because the PEO and PFO certification requirement under items 5
and 6 of Section 302 of the Sarbanes-Oxley Act of 2002 mandates that they
disclose that information to our audit committee and to our independent auditors
and to report on related matters in this section of the quarterly report on Form
10-Q. In the professional auditing literature, "significant deficiencies" are
referred to as "reportable conditions"; that is, those control issues that could
have a significant adverse effect on our ability to record, process, summarize
and report financial data in the financial statements. A "material weakness" is
defined in the auditing literature as a particularly serious reportable
condition where the internal control does not reduce to a relatively low level
the risk that misstatements caused by error or fraud may occur in amounts that
would be material in relation to the financial statements and not be detected
within a timely period by employees in the normal course of performing their
assigned functions. We also sought to deal with other internal control matters
in the controls evaluation, and where appropriate, to consider what revision,
improvement and/or correction to make.

      Based upon an evaluation on the effectiveness of the design and operation
of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-15,
our PEO and PFO have concluded that, subject to the inherent limitations noted
above, as of the Evaluation Date our disclosure controls and procedures are
effective to ensure that material information relating to the company and our
consolidated subsidiaries is made known to management, including the PEO and
PFO, particularly during the period when our periodic reports are being
prepared. There have been no significant changes in internal controls and
procedures or in other factors that could significantly affect internal controls
and procedures, including any corrective actions with regard to significant
deficiencies and material weaknesses.


                                 Page 26 of 30
<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 28.

            (b) Reports On Form 8-K

                We filed a current report on Form 8-K dated January 19, 2004.
                  This report pertains to our press release issued to announce
                  our 2003 results.


                                 Page 27 of 30
<PAGE>

                                  Exhibit Index

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

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

3.1   Amended and Restated Articles of Incorporation (incorporated by reference
      to Exhibit 3.1 to our Form 10-K for the year ended December 26, 2003)

3.3   By-laws (incorporated by reference to Exhibit 3.3 to our Form 10-K for the
      year ended December 27, 2002).

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

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

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

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

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

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

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

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

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

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

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


                                 Page 28 of 30
<PAGE>

                            Exhibit Index, continued

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

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

10.11 Form of Indemnity Agreement (incorporated by reference to Exhibit 10.11 to
      our Form 10-K for the year ended December 27, 2002).

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

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

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

10.15 Technitrol Inc. Supplemental Savings Plan (incorporated by reference to
      Exhibit 10.15 to our Form 10-Q for the three months ended September 26,
      2003)

10.16 Technitrol, Inc. 401(K) Retirement Savings Plan, as amended (incorporated
      by reference to post-effective Amendment No. 1, to our Registration
      Statement on Form S-8 filed on October 31, 2003, File Number 033-35334)

10.17 Pulse Engineering, Inc. 401(K) Plan as amended (incorporated by reference
      to post-effective Amendment No. 1, to our Registration Statement on Form
      S-8 filed on October 31, 2003, File Number 033-94073)

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

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

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

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


                                 Page 29 of 30
<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)


April 27, 2004                          /s/ Drew A. Moyer
-------------------------------         ----------------------------------------
(Date)                                  Drew A. Moyer
                                        Vice President, Corporate Controller and
                                        Secretary (duly authorized officer,
                                        principal financial and accounting
                                        officer)


                                 Page 30 of 30