UNITED STATES
                        SECURITIES & EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   ----------

                                    FORM 10-Q

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

For the quarterly period ended September 26, 2003, or

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

For the transition period from ______________ to ______________.

Commission File No. 1-5375

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

         PENNSYLVANIA                                     23-1292472
(State or other jurisdiction of             (IRS Employer 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 filer (as
defined in Rule 12b-2 of the Exchange Act.)

      YES |X|    NO |_|

Common Stock - Shares Outstanding as of October 24, 2003:  40,219,387


                                  Page 1 of 31
<PAGE>

                          PART I. FINANCIAL INFORMATION

Item 1: Financial Statements

                        Technitrol, Inc. and Subsidiaries

                           Consolidated Balance Sheets

                                  In thousands

<TABLE>
<CAPTION>
                                                       September 26,    December 27,
                     Assets                                     2003            2002
                                                            --------       ---------
                                                                  (unaudited)
<S>                                                         <C>            <C>
Current assets:
     Cash and cash equivalents                              $ 130,962      $ 205,075
     Trade receivables, net                                    94,106         65,185
     Inventories                                               62,340         60,588
     Prepaid expenses and other current assets                 20,084         13,878
                                                            ---------      ---------
           Total current assets                               307,492        344,726

Property, plant and equipment                                 199,138        163,147
     Less accumulated depreciation                            112,889         98,286
                                                            ---------      ---------
           Net property, plant and equipment                   86,249         64,861
Deferred income taxes                                          12,395         11,743
Goodwill and other intangibles, net                           150,055        100,768
Other assets                                                   24,835         25,608
                                                            ---------      ---------
                                                            $ 581,026      $ 547,706
                                                            =========      =========

       Liabilities and Shareholders' Equity
Current liabilities:
     Current installments of long-term debt                 $     141      $  10,667
     Accounts payable                                          38,458         28,791
     Accrued expenses                                          78,200         69,689
                                                            ---------      ---------
           Total current liabilities                          116,799        109,147

Long-term liabilities:
     Long-term debt, excluding current installments             6,161          5,681
     Other long-term liabilities                               12,658         10,501

Shareholders' equity:
     Common stock and additional paid-in capital              208,388        207,033
     Retained earnings                                        235,902        220,836
     Other                                                      1,118         (5,492)
                                                            ---------      ---------
           Total shareholders' equity                         445,408        422,377
                                                            ---------      ---------
                                                            $ 581,026      $ 547,706
                                                            =========      =========
</TABLE>

See accompanying Notes to Unaudited Consolidated Financial Statements.


                                  Page 2 of 31
<PAGE>

                        Technitrol, Inc. and Subsidiaries

                      Consolidated Statements of Operations

                                   (Unaudited)
                       In thousands, except per share data

<TABLE>
<CAPTION>
                                                                Three Months Ended              Nine Months Ended
                                                        September 26,   September 27,   September 26,    September 27,
                                                                 2003            2002            2003             2002
                                                            ---------        --------       ---------        ---------
<S>                                                         <C>              <C>            <C>              <C>
Net sales                                                   $ 126,260        $ 103,626      $ 374,510        $ 303,231

Costs and expenses:
     Cost of sales                                             92,319           77,725        277,330          233,412
     Selling, general and administrative expenses              24,943           22,311         73,235           68,162
     Severance and asset impairment expense                       998              876          5,396           46,632
                                                            ---------        ---------      ---------        ---------

         Total costs and expenses applicable to sales         118,260          100,912        355,961          348,206
                                                            ---------        ---------      ---------        ---------
Operating profit (loss)                                         8,000            2,714         18,549          (44,975)

Other (expense) income:
     Interest income (expense), net                              (157)             140           (701)            (235)
     Equity method investment earnings                            125              189           (572)             382
     Other (expense) income                                       (87)             185            630             (772)
                                                            ---------        ---------      ---------        ---------

         Total other (expense) income                            (119)             514           (643)            (625)
                                                            ---------        ---------      ---------        ---------

Earnings (loss) before taxes and cumulative effect of
    accounting change                                           7,881            3,228         17,906          (45,600)

Income taxes (benefit)                                          1,469            1,105          2,840          (13,710)
                                                            ---------        ---------      ---------        ---------
Net earnings (loss) before cumulative effect of
    accounting change                                           6,412            2,123         15,066          (31,890)

Cumulative effect of accounting change, net of
    income taxes                                                   --               --             --          (15,738)
                                                            ---------        ---------      ---------        ---------
Net earnings (loss)                                         $   6,412        $   2,123      $  15,066        $ (47,628)
                                                            =========        =========      =========        =========

Basic earnings (loss) per share before cumulative
    effect of accounting change                             $    0.16        $    0.05      $    0.38        $   (0.86)
Cumulative effect of accounting change, net of
    income taxes                                                   --               --             --            (0.42)
                                                            ---------        ---------      ---------        ---------
Basic earnings (loss) per share                             $    0.16        $    0.05      $    0.38        $   (1.28)
                                                            =========        =========      =========        =========

Diluted earnings (loss) per share before cumulative
    effect of accounting change                             $    0.16        $    0.05       $    0.38        $   (0.86)
Cumulative effect of accounting change, net of
    income taxes                                                   --               --              --            (0.42)
                                                            ---------        ---------       ---------        ---------
Diluted earnings (loss) per share                           $    0.16        $    0.05       $    0.38        $   (1.28)
                                                            =========        =========       =========        =========
</TABLE>

      See accompanying Notes to Unaudited Consolidated Financial Statements.


                                  Page 3 of 31
<PAGE>

                        Technitrol, Inc. and Subsidiaries

                      Consolidated Statements of Cash Flows

           Nine Months Ended September 26, 2003 and September 27, 2002

                                   (Unaudited)

                                  In thousands

<TABLE>
<CAPTION>
                                                                                 Nine Months Ended
                                                                         September 26,    September 27,
                                                                                  2003             2002
                                                                             ---------        ---------
<S>                                                                          <C>              <C>
Cash flows from operating activities:
Net earnings (loss)                                                          $  15,066        $ (47,628)
Adjustments to reconcile net earnings to net cash provided
   by operating activities:
     Depreciation and amortization                                              18,030           15,136
     Tax benefit from employee stock compensation                                  123              406
     Amortization of stock incentive plan expense                                1,629              788
     Severance and asset impairment accrual, net of cash payments                  200            1,004
     Cumulative effect of accounting change, net of income taxes                    --           15,738
     Loss on disposal of assets                                                    818            6,347
     Trade name write off, net of tax effect                                        --           19,260
     Changes in assets and liabilities, net of effect of acquisitions:
       Trade receivables                                                        (1,704)            (307)
       Inventories                                                              10,025            6,626
       Prepaid expenses and other current assets                                (5,063)           4,691
       Accounts payable and accrued expenses                                    (1,267)          (1,133)
     Other, net                                                                 (5,892)         (10,280)
                                                                             ---------        ---------
         Net cash provided by operating activities                              31,965           10,648
                                                                             ---------        ---------

Cash flows from investing activities:
     Acquisitions, net of cash acquired                                        (83,840)          (6,708)
     Capital expenditures                                                       (4,931)          (3,764)
     Proceeds from sale of property, plant and equipment                           348              897
                                                                             ---------        ---------
         Net cash used in investing activities                                 (88,423)          (9,575)
                                                                             ---------        ---------
Cash flows from financing activities:
     Dividends paid                                                                 --           (1,137)
     Principal payments of long-term debt                                      (11,802)         (75,088)
     Sale of stock through employee stock purchase plan                            928            1,291
     Net proceeds from follow-on offering                                           --          134,700
                                                                             ---------        ---------
         Net cash (used in) provided by financing activities                   (10,874)          59,766
                                                                             ---------        ---------
Net effect of exchange rate changes on cash                                     (6,781)          (2,956)
                                                                             ---------        ---------
Net (decrease) increase in cash and cash equivalents                           (74,113)          57,883
Cash and cash equivalents at beginning of year                                 205,075          142,267
                                                                             ---------        ---------
Cash and cash equivalents at September 26, 2003 and
  September 27, 2002                                                         $ 130,962        $ 200,150
                                                                             =========        =========
</TABLE>

See accompanying Notes to Unaudited Consolidated Financial Statements.


                                  Page 4 of 31
<PAGE>

                        Technitrol, Inc. and Subsidiaries

            Consolidated Statement of Changes in Shareholders' Equity

                      Nine Months Ended September 26, 2003

                                   (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 27, 2002              40,130       $ 207,033        $ 220,836        $(1,177)       $(4,315)
Stock options, awards and related
    compensation                              19             222               --            680             --
Tax effect of stock compensation              --            (123)              --             --             --
Stock issued under employee stock
    purchase plan                             70           1,256               --             --             --
Currency translation adjustments              --              --               --             --        $ 5,930        $ 5,930
Net earnings                                  --              --           15,066             --             --         15,066
                                                                                                                       -------
Comprehensive income                                                                                                   $20,996
                                          ------       ---------        ---------        -------        -------        =======
Balance at September 26, 2003             40,219       $ 208,388        $ 235,902        $  (497)       $ 1,615
                                          ======       =========        =========        =======        =======
</TABLE>

See accompanying Notes to Unaudited Consolidated Financial Statements.


                                  Page 5 of 31
<PAGE>

                        Technitrol, Inc. and Subsidiaries

              Notes to Unaudited Consolidated Financial Statements

(1)   Accounting Policies

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

      The results for the three months and nine months ended September 26, 2003
and September 27, 2002 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 nine months ended September 26, 2003
are not necessarily indicative of annual results.

      New Accounting Pronouncements

      In May 2003, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS" ) No. 150, Accounting for
Certain Financial Instruments with Characteristics of Both Liabilities and
Equity, ("SFAS 150") which establishes standards for how an issuer classifies
and measures certain financial instruments with characteristics of both
liabilities and equity. SFAS No. 150 requires that an issuer classify a
financial instrument that falls within its scope as a liability (or an asset in
some circumstances). SFAS No. 150 is effective for financial instruments entered
into or modified after May 31, 2003, and otherwise is effective at the beginning
of the first interim period beginning after June 15, 2003, which for us was the
quarter ended September 26, 2003. The adoption of this standard did not have a
material impact on our revenue, operating results, financial position or
liquidity.

      In April 2003, the FASB issued SFAS 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 No. 133, Accounting for Derivative Instruments and
Hedging Activities. SFAS No. 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 No.
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 No.
149 is effective for contracts entered into or modified after June 30, 2003,
with certain exceptions. We adopted SFAS No. 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.

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

      In December 2002, the FASB issued SFAS Statement No. 148, Accounting for
Stock-Based Compensation, Transition and Disclosure, an amendment to Statement
No. 123 ("SFAS 148"). SFAS 148 provides alternative methods of transition for a
voluntary change to the fair value based method of accounting for stock-based
employee compensation. In addition, SFAS 148 amends the disclosure requirements
of Statement No. 123, Accounting for Stock-Based Compensation ("SFAS 123"), by
requiring prominent disclosures in both annual and interim financial statements,
about the method of accounting for stock-based employee compensation and the
effect of the method used on reported results. We adopted the provisions of SFAS
123, as amended by SFAS 148, as of the beginning of our fiscal year in 2003. We
used the prospective method of adoption, which recognizes expense for all
employee awards granted, modified or settled after the beginning of


                                  Page 6 of 31
<PAGE>

                        Technitrol, Inc. and Subsidiaries

         Notes to Unaudited Consolidated Financial Statements, continued

(1)   Accounting Policies, continued

the fiscal year in which the recognition provisions are first applied. Adoption
of this standard did not have a material effect on our revenue, operating
results, financial position or liquidity.

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

      In June 2002, the FASB issued SFAS Statement No. 146 Accounting for Costs
Associated with Exit or Disposal Activities ("SFAS 146"). SFAS 146 superceded
the Emerging Issues Task Force Issue No. 94-3, Liability Recognition for Certain
Termination Benefits and Other Costs to Exit an Activity, ("EITF 94-3") The
principal difference between SFAS 146 and EITF 94-3 is that SFAS 146 requires
that a liability for a cost associated with an exit or disposal activity be
recognized when the liability is incurred. Under EITF 94-3, a liability for an
exit cost was recognized at the date of an entity's commitment to an exit plan.
As such, under SFAS 146, an entity's commitment to a plan by itself, does not
create a present obligation meeting the definition of a liability. SFAS 146 also
established fair value as the objective for initial measurement of the
liability. We were required to adopt the provisions of SFAS 146 for all exit or
disposal activities initiated after December 15, 2002. These activities, which
we refer to as severance and asset impairment expense, had a material impact on
our operating results in 2003. Although the underlying activities were material,
the impact in changing from EITF 94-3 to SFAS 146 was not significant.

(2)   Acquisitions

      Eldor High Tech Wire Wound Components S.r.L.: In January 2003, we acquired
all of the capital stock of Eldor High Tech Wire Wound Components S.r.L.
(Eldor), headquartered in Orsenigo, Italy with production operations in Izmir
and Istanbul, Turkey. Eldor produces flyback transformers and switch mode
transformers for the European television market. The acquisition was accounted
for by the purchase method of accounting. The adjusted preliminary purchase
price was approximately $83.8 million net of cash acquired, plus related
acquisition costs and expenses. The fair value of net tangible assets acquired
approximated $12.3 million. Based on the fair value of assets acquired, the
preliminary allocation of the unadjusted purchase price included $18.6 million
for manufacturing know-how, $6.1 million for customer relationships, $1.5
million for tradename and $17.7 million allocated to goodwill. These fair value
allocations are preliminary, and are subject to adjustment. All of the
separately identifiable intangible assets will be amortized, with estimated
useful lives of 20 years for manufacturing know-how, 8 years for customer
relationships and 2 years for tradenames. The purchase price was funded with
cash on hand. 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 for us under a cooperation
agreement. In April 2001, we acquired a minority investment in the common stock
of FRE, which was accounted for by the cost-basis method of accounting. On July
27, 2002, we made an additional investment in FRE of $6.7 million which
increased the total investment to $20.9 million which is accounted for under the
equity accounting method. We also have an option to purchase additional shares
of common stock in FRE in the future and we may make an additional investment in
the future. See discussion in Liquidity and Capital Resources section and Note 8
"Equity Method Investment".


                                  Page 7 of 31
<PAGE>

                        Technitrol, Inc. and Subsidiaries

         Notes to Unaudited Consolidated Financial Statements, continued

(3)   Severance and Asset Impairment Expense

      In the nine months ended September 26, 2003, we accrued $5.4 million for
severance, severance related payments and asset impairments. At Pulse, we
accrued $1.4 million for the elimination of certain manufacturing and support
positions principally located in France, the United Kingdom, Mexico and China
and $0.2 million for other facility exit costs. At AMI Doduco, we accrued $2.2
million for the elimination of certain manufacturing positions principally
located in North America and Germany and $1.6 million to complete the shutdown
of a redundant facility in Spain that we acquired from Engelhard-CLAL. The
majority of these accruals are expected to be utilized by the end of the fourth
quarter of 2003.

      In the nine months ended September 27, 2002, we accrued $14.5 million for
severance, severance related payments, asset impairments and plant
consolidations. At Pulse, we accrued $4.8 million for the elimination of certain
manufacturing and support positions, $2.4 million for asset writedowns related
to the closure of the Philippines facility and $4.9 million for other asset
impairments primarily in Asia. At AMI Doduco, we accrued $1.3 million for
severance and related payments and $1.1 million for asset impairments,
writedowns and relocations in Europe.

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

      Our severance and asset impairment accrual is summarized on a year-to-date
basis for 2003 as follows:

<TABLE>
<CAPTION>
                                                                   AMI
      (in millions):                                            Doduco     Pulse     Total
                                                                ------     -----     -----
<S>                                                               <C>       <C>       <C>
      Balance accrued at December 27, 2002                        $2.0      $2.2      $4.2
      Accrued during the nine months ended September 26, 2003      3.8       1.6       5.4
      Severance and other cash payments                           (3.2)     (2.0)     (5.2)
      Non-cash asset disposals                                    (0.4)     (0.5)     (0.9)
                                                                  ----      ----      ----
      Balance accrued at September 26, 2003                       $2.2      $1.3      $3.5
                                                                  ====      ====      ====
</TABLE>

(4)   Inventories

      Inventories consisted of the following (in thousands):

                                             September 26,    December 27,
                                                      2003            2002
                                                   -------         -------
      Finished goods                               $22,194         $21,446
      Work in process                               13,650          12,390
      Raw materials and supplies                    26,496          26,752
                                                   -------         -------
                                                   $62,340         $60,588
                                                   =======         =======

(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 September 26, 2003, we had 2 foreign exchange forward contracts
outstanding to sell forward approximately 75.5 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
September 26, 2003. In addition, management believes that there is no material
risk of loss from changes in market rates or prices which are inherent in other
financial instruments.


                                  Page 8 of 31
<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 (loss) by
the weighted average number of common shares outstanding (excluding restricted
shares) during the period. We had restricted shares outstanding of approximately
119,000 and 274,000 as of September 26, 2003 and September 27, 2002,
respectively. For calculating diluted earnings per share, common share
equivalents and restricted stock outstanding are added to the weighted average
number of common shares outstanding. Common share equivalents result from
outstanding options to purchase common stock as calculated using the treasury
stock method. Such common share equivalent amounts were approximately 73,000 for
the nine months ended September 26, 2003 and 30,000 for the nine months ended
September 27, 2002. Earnings per share calculations are as follows (in
thousands, except per share amounts):

<TABLE>
<CAPTION>
                                                                     Three Months Ended            Nine Months Ended
                                                                  Sept. 26,      Sept. 27,      Sept. 26,      Sept. 27,
                                                                       2003           2002           2003           2002
                                                                 ----------     ----------     ----------     ----------
<S>                                                              <C>            <C>            <C>            <C>
Net earnings (loss)                                              $    6,412     $    2,123     $   15,066     $  (47,628)
  Basic earnings (loss) per share:
     Shares                                                          40,072         39,826         40,042         37,322
     Per share amount, before change in accounting principle     $     0.16     $     0.05     $     0.38     $    (0.86)
     Change in accounting principle                                      --             --             --          (0.42)
                                                                 ----------     ----------     ----------     ----------
     Per share amount                                            $     0.16     $     0.05     $     0.38     $    (1.28)
                                                                 ==========     ==========     ==========     ==========

  Diluted earnings (loss) per share:
     Shares                                                          40,170         40,032         40,154         37,606
     Per share amount, before change in accounting principle     $     0.16     $     0.05     $     0.38     $    (0.86)
     Change in accounting principle                                      --             --             --          (0.42)
                                                                 ----------     ----------     ----------     ----------
     Per share amount                                            $     0.16     $     0.05     $     0.38     $    (1.28)
                                                                 ==========     ==========     ==========     ==========
</TABLE>

(7)   Business Segment Information

      For the three and nine months ended September 26, 2003 and September 27,
2002, there were immaterial amounts of intersegment revenues eliminated in
consolidation. There has been no material change in segment assets from December
27, 2002 to September 26, 2003, except for those related to the acquisition of
Eldor by Pulse. In addition, the basis for determining segment financial
information has not changed from 2002. Specific segment data are as follows:

<TABLE>
<CAPTION>
                                                    Three Months Ended                 Nine Months Ended
                                            September 26,    September 27,    September 26,     September 27,
Net sales:                                           2003             2002             2003              2002
                                                ---------         --------        ---------         ---------
<S>                                             <C>               <C>             <C>               <C>
     Pulse                                      $  74,877         $  52,041       $ 214,523         $ 151,040
     AMI Doduco                                    51,383            51,585         159,987           152,191
                                                ---------         ---------       ---------         ---------
         Total                                  $ 126,260         $ 103,626       $ 374,510         $ 303,231
                                                =========         =========       =========         =========
Earnings (loss) before taxes and
   cumulative effect of accounting
   change:
     Pulse                                      $   7,643         $   1,730       $  20,196         $ (44,066)
     AMI Doduco                                       357               984          (1,647)             (909)
     Other income, net                               (119)              514            (643)             (625)
                                                ---------         ---------       ---------         ---------
     Earnings (loss) before income taxes
       and cumulative effect of
       accounting change                        $   7,881         $   3,228       $  17,906         $ (45,600)
                                                =========         =========       =========         =========
</TABLE>


                                  Page 9 of 31
<PAGE>

                        Technitrol, Inc. and Subsidiaries

         Notes to Unaudited Consolidated Financial Statements, continued

(8)   Equity Method Investment

      During the three months ended September 27, 2002, our minority ownership
in FRE increased from approximately 19% to 29%. In accordance with generally
accepted accounting principles, we have adjusted presentations in all relevant
prior periods to reflect the impact of a change in accounting for our ownership
in this investment from the cost basis method to the equity method of accounting
as if the original 19% investment was accounted for as an equity method
investment since the initial investment. All prior period amounts have been
adjusted to reflect this recognition of equity earnings as if it occurred at the
time of the original investment in April 2001. This investment is reflected in
the Other assets caption on the Consolidated Balance Sheets.

(9)   Accounting for Stock Based Compensation

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

      As permitted by the provisions of SFAS 123, we applied Accounting
Principles Board Opinion 25, "Accounting for Stock Issued to Employees" and
related interpretations in accounting for our stock option and purchase plans
prior to adoption of SFAS 123 in fiscal 2003. Accordingly, no compensation cost
was recognized for our stock option and employee purchase plans 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,
our pro forma net income (loss) and earnings (loss) per basic and diluted share
would have been as follows, (amounts are in thousands, except per share
amounts):

<TABLE>
<CAPTION>
                                                                      Three Months Ended                 Nine Months Ended
                                                                    Sep. 26,        Sept. 27,        Sept. 26,        Sept. 27,
                                                                        2003             2002             2003             2002
                                                                  ----------       ----------       ----------       ----------
<S>                                                               <C>              <C>              <C>              <C>
Net earnings (loss), as reported                                  $    6,412       $    2,123       $   15,066       $  (47,628)
Add: Stock-based compensation expense included
  in reported net earnings (loss), net of taxes                          350               25              957              473
Deduct: Total stock-based compensation expense determined
  under fair value based method for all awards, net of taxes            (633)            (259)          (1,805)          (1,200)
                                                                  ----------       ----------       ----------       ----------

Net earnings (loss) adjusted                                      $    6,129       $    1,889       $   14,218       $  (48,355)
Basic net earnings (loss) per share - as reported                 $     0.16       $     0.05       $     0.38       $    (1.28)
Basic net earnings (loss) per share - adjusted                    $     0.15       $     0.05       $     0.36       $    (1.30)
Diluted net earnings (loss) per share - as reported               $     0.16       $     0.05       $     0.38       $    (1.28)
Diluted net earnings (loss) per share - adjusted                  $     0.15       $     0.05       $     0.35       $    (1.30)
</TABLE>

      At September 26, 2003, we had approximately 334,000 options outstanding,
representing less than 1% of our outstanding shares of common stock. The value
of restricted stock has always been and continues to be recorded as compensation
expense over the restricted period, and such expense is included in the results
of operations for the periods ended September 26, 2003 and September 27, 2002,
respectively.


                                 Page 10 of 31
<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 21 through 27.

Critical Accounting Policies

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

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

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

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

      Income Taxes. Except in limited circumstances, where it is
tax-advantageous to repatriate funds, 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 31
<PAGE>

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

Overview

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

      We operate our business in two distinct segments:

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

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

      General. We define net sales as gross sales less returns and allowances.
We sometimes refer to net sales as revenue. From 1996 through 2000, the growth
in our consolidated net sales was due in large part to the growth of Pulse.
However, beginning in late 2000, the electronics markets served by Pulse
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 has been and remains deflationary for Pulse's products. We believe
that a broad-based market rebound in terms of pricing power will be erratic and
gradual, probably requiring several years. In markets where unit demand has
begun to recover, downward pressure on selling prices has kept total revenue
from growing proportionately with unit growth.

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

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

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


                                 Page 12 of 31
<PAGE>

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

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

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

      Recent Cost Reduction Programs. During 1999 and 2000, the electronic
components industries served by Pulse were characterized by unprecedented
growth. Beginning in late 2000 and continuing all during 2001 and a significant
part of 2002, however, the opposite trend was experienced as these industries
experienced a severe worldwide contraction and many of our customers canceled
orders and decreased their level of business activity as a result of lower
demand for their end products. Our manufacturing business model at Pulse has a
very high variable cost component due to the labor-intensity of many processes,
except for Pulse Eldor which is capital intensive. This allows us to quickly
change our capacity based on market demand. Just as we expanded capacity during
1999 and 2000, we reduced capacity during 2001 and 2002. Generally speaking,
during the nine months ended September 26, 2003, Pulse's end markets experienced
increased demand for units, but also increased pressure to reduce selling prices
for Pulse products. 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 non-residential
construction spending and reduced capital spending. AMI Doduco has a higher
fixed cost component of manufacturing activity than Pulse, as it is more capital
intensive. Therefore, AMI Doduco is unable to reduce its capacity as quickly as
Pulse in response to declining market demand, although continuing actions are
being taken to align AMI Doduco's capacity with current market demand. In
response to the decline in demand and deflationary environment for our products,
we implemented a series of cost reduction initiatives and programs, summarized
as follows:

      In the nine months ended September 26, 2003, we accrued $5.4 million for
severance, severance related payments and asset impairments. At Pulse, we
accrued $1.4 million for the elimination of certain manufacturing and support
positions principally located in France, the United Kingdom, Mexico and China
and $0.2 million for other facility exit costs. At AMI Doduco, we accrued $2.2
million for the elimination of certain manufacturing positions principally
located in North America and Germany and $1.6 million to complete the shutdown
of a redundant facility in Spain that we acquired from Engelhard-CLAL. The
majority of these accruals are expected to be utilized by the end of the fourth
quarter of 2003.

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


                                 Page 13 of 31
<PAGE>

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

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

      In order to reduce our exposure to currency fluctuations, we may purchase
currency exchange forward contracts and/or currency options. These contracts
guarantee a predetermined range of exchange rates at the time the contract is
purchased. This allows us to shift the majority of the risk of currency
fluctuations from the date of the contract to a third party for a fee. As of
September 26, 2003, we had 2 foreign currency forward contracts outstanding to
sell forward approximately 75.5 million of euros in order to hedge intercompany
loans. In determining the use of forward exchange contracts and currency
options, we consider the amount of sales, purchases and net assets or
liabilities denominated in local currencies, the type of currency, and the costs
associated with the contracts.

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

      Commitments and Contingencies. We are involved in several legal actions
relating to waste disposal sites. Our involvement in these matters has generally
arisen from the alleged disposal by licensed waste haulers of small amounts of
waste material many years ago. In addition, in Sinsheim, Germany, there is
shallow groundwater and soil contamination that is naturally decreasing over
time. The German environmental authorities have not required corrective action
to date. Also, as a result of the acquisition of GTI Corporation in 1998, we are
involved in studying and undertaking certain remedial actions with respect to
groundwater pollution and soil contamination conditions at a facility in
Leesburg, Indiana. We anticipate making additional environmental expenditures in
future years to continue our environmental studies, analysis and remediation
activities. We are also subject to various lawsuits, claims and proceedings
which arise in the ordinary course of our business. These actions include
routine tax audits and assessments occurring throughout numerous jurisdictions
on a worldwide basis. During 2003, Regal Electronics, Inc. sued Pulse and
several other filtered connector manufacturers, alleging that the manufacture
and sale of certain filtered connectors in the United States


                                 Page 14 of 31
<PAGE>

infringe one of its patents. Pulse has received an opinion of noninfringement
from its legal counsel and believes that none of the products offered by Pulse
infringe the Regal patent. Pulse intends to vigorously defend itself in this
action. AMI Doduco (NJ), Inc., is a defendant in a lawsuit filed by one of its
former employees for a personal injury he sustained many years ago while
performing his job-related duties. AMI Doduco (NJ), Inc. is now an inactive
company. The former employee alleges that the workers compensation law does not
prevent a recovery from AMI Doduco (NJ), Inc. We do not believe that the outcome
of any of these actions will have a material adverse effect on our financial
results. We accrue costs associated with environmental and legal matters when
they become probable and reasonably estimable. Accruals are established based on
the estimated undiscounted cash flows to settle the obligations and are not
reduced by any potential recoveries from insurance or other indemnification
claims. We believe that any ultimate liability with respect to these actions in
excess of amounts provided will not materially affect our operations or
consolidated financial position, liquidity or operating results.

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

      Except in limited circumstances, where it is tax-advantageous to
repatriate funds, we have not provided for U.S. federal income and foreign
withholding taxes on our non-U.S. subsidiaries' undistributed earnings (as
calculated for income tax purposes) as per Accounting Principles Board Opinion
No. 23, Accounting for Income Taxes - Special Areas. Such earnings include
pre-acquisition earnings of foreign entities acquired through stock purchases,
and are intended to be reinvested outside of the U.S. indefinitely. Where excess
cash has accumulated in our non-U.S. subsidiaries and it is advantageous for tax
reasons, subsidiary earnings may be remitted.


                                 Page 15 of 31
<PAGE>

Results of Operations

      Three months ended September 26, 2003 compared to the three months ended
September 27, 2002

      Net Sales. Net sales for the three months ended September 26, 2003
increased $22.6 million, or 21.8%, to $126.3 million from $103.6 million in the
three months ended September 27, 2002. Our sales increase from the comparable
period last year was primarily attributable to the increases from the Eldor
acquisition and stronger sales of Pulse's legacy products, tempered by ongoing
deflationary pressure on selling prices at Pulse, and to a lesser extent, weaker
demand at AMI Doduco, which resulted in lower sales of electrical contacts and
contact materials.

      Pulse's net sales increased $22.8 million, or 43.9%, to $74.9 million for
the three months ended September 26, 2003 from $52.0 million in the three months
ended September 27, 2002. Most of the increase is attributable to sales derived
from our acquisition of Eldor since the date of acquisition in January 2003.
Increased unit revenues in many Pulse legacy product lines were somewhat offset
by declining average selling prices.

      AMI Doduco's net sales decreased $0.2 million, or less than 1%, to $51.4
million for the three months ended September 26, 2003 from $51.6 million in the
three months ended September 27, 2002. Sales in the 2003 period reflect weak
North American and European markets, which more than offset the positive
translation effect of an increase in the average euro-to-U.S. dollar exchange
rate during the period. Lower net sales resulted primarily from weak demand in
the commercial and industrial machinery and non-residential construction end
markets. Demand for automotive and residential circuit components was stronger
in the current-year period.

      Cost of Sales. Our cost of sales increased $14.6 million, or 18.8%, to
$92.3 million for the three months ended September 26, 2003 from $77.7 million
for the three months ended September 27, 2002. Our consolidated gross margin for
the three months ended September 26, 2003 was 26.9% compared to 25.0% for the
three months ended September 27, 2002. Our consolidated gross margin in 2003 was
positively affected by:

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

      o     the addition of the Pulse Consumer Division products, which
            typically have a higher gross margin than AMI Doduco products and
            certain Pulse legacy products, and

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

      Selling, General and Administrative Expenses. Total selling, general and
administrative expenses for the three months ended September 26, 2003 increased
$2.6 million, or 11.8%, to $24.9 million or 19.8% of net sales, from $22.3
million or 21.5% of net sales, for the three months ended September 27, 2002.
The increase in the 2003 period compared to the 2002 period is primarily
attributable to an increase of $1.5 million in incentive and stock compensation
expense and $0.7 million of intangible asset amortization related to the Eldor
acquisition. The addition of Eldor expenses was substantially offset by savings
from restructuring actions that we took over the last year to reduce costs and
tighten spending.

      Research, development and engineering expenses are included in selling,
general and administrative expenses. We refer to research, development and
engineering expenses as RD&E. For the three months ended September 26, 2003 and
September 27, 2002 respectively, RD&E by segment was as follows (dollars in
thousands):

                                                      2003           2002
                                                  --------       --------
      Pulse                                       $  3,693       $  3,286
      Percentage of segment sales                      4.9%           6.3%

      AMI Doduco                                  $    956       $  1,038
      Percentage of segment sales                      1.9%           2.0%

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


                                 Page 16 of 31
<PAGE>

sales at Pulse relates to the effect of the acquisition of Eldor, as Eldor
incurs lower RD&E costs relative to its sales as compared to Pulse legacy
products.

      Interest. Net interest expense was $0.2 million for the three months ended
September 26, 2003 compared to net interest income of $0.1 million for the three
months ended September 27, 2002. The increase in net interest expense in the
current period is due to lower yields on a lower average cash invested balance,
which more than offset higher average outstanding bank debt and related interest
expense in the prior year period. Net interest expense includes interest on our
precious metal leases and commitment fees on our unused credit facility.

      Income Taxes. The effective income tax rate for the three months ended
September 26, 2003 was 18.6% compared to 34.2% for the three months ended
September 27, 2002. The lower tax rate resulted from a higher proportion of
income being attributable to low-tax jurisdictions, particularly China and
Izmir, Turkey, combined with significant restructuring expenses of AMI Doduco
which yielded tax benefits in high-tax jurisdictions.

Nine months ended September 26, 2003 compared to the nine months ended September
27, 2002

      Net Sales. Net sales for the nine months ended September 26, 2003
increased $71.3 million, or 23.5%, to $374.5 million from $303.2 million for the
nine months ended September 27, 2002. The sales increase from the comparable
period last year was attributable primarily to the increases from the Eldor
acquisition and stronger sales of Pulse's legacy products, tempered somewhat by
ongoing deflationary pressure on selling prices at Pulse, and to a lesser
extent, weaker demand at AMI Doduco, which resulted in lower sales of AMI Doduco
products on a constant-euro basis.

      Pulse's net sales increased $63.5 million, or 42.0%, to $214.5 million for
the nine months ended September 26, 2003 from $151.0 million for the nine months
ended September 27, 2002. This increase was primarily attributable to the Eldor
acquisition. Increased unit revenues in many legacy product lines were somewhat
offset by declining average selling prices.

      AMI Doduco's net sales increased $7.8 million, or 5.1%, to $160.0 million
for the nine months ended September 26, 2003 from $152.2 million for the nine
months ended September 27, 2002. Sales in the 2003 period reflect weaker North
American and European markets, which was more than offset by the translation
effect of a stronger average euro-to-U.S. dollar exchange rate during the
period. For the nine-month period, the average euro-to-dollar exchange rate was
20% stronger in 2003 than in 2002. Lower net sales in local currencies,
primarily euros, resulted from lower manufacturing activity by customers in the
commercial and industrial controls and non-residential construction industries.

      Cost of Sales. Our cost of sales increased $43.9 million, or 18.8%, to
$277.3 million for the nine months ended September 26, 2003 from $233.4 million
for the nine months ended September 27, 2002. This increase was due to an
increase in net sales. Our consolidated gross margin for the nine months ended
September 26, 2003 was 26.0% compared to 23.0% for the nine months ended
September 27, 2002. Our consolidated gross margin in 2003 was positively
affected by:

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

      o     the addition of the Pulse Consumer Division products, which
            typically have a higher gross margin than AMI Doduco products and
            certain Pulse legacy products, and

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

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


                                 Page 17 of 31
<PAGE>

      Selling, General and Administrative Expenses. Total selling, general and
administrative expenses for the nine months ended September 26, 2003 increased
$5.1 million, or 7.4%, to $73.2 million, or 19.6% of net sales, from $68.2
million, or 22.5% of net sales for the nine months ended September 27, 2002. The
increase in the 2003 period is primarily attributable to an increase of $3.7
million in incentive and stock compensation expense at $1.9 million of
intangible asset amortization related to the Eldor acquisition. The addition of
Eldor expenses in 2003 was more than offset by savings from restructuring
actions that we took over the last year to reduce costs and tighten spending.

      Research, development and engineering expenses are included in selling,
general and administrative expenses. We refer to research, development and
engineering expenses as RD&E. For the nine months ended September 26, 2003 and
September 27, 2002 respectively, RD&E by segment was as follows (dollars in
thousands):

                                                   2003            2002
                                                ---------       ---------
      Pulse                                     $  10,624       $  10,775
      Percentage of segment sales                     5.0%            7.1%

      AMI Doduco                                $   2,974       $   2,928
      Percentage of segment sales                     1.9%            1.9%

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

      Interest. Net interest expense was $0.7 million for the nine months ended
September 26, 2003 compared to net interest expense of $0.2 million for the nine
months ended September 27, 2002. The increase in net interest expense in the
current period is due to lower yields on a lower average cash invested balance,
which more than offset higher average outstanding bank debt and related interest
expense in the prior year period. Net interest expense includes interest on our
precious metal leases and commitment fees on our unused credit facility.

      Income Taxes. The effective income tax rate for the nine months ended
September 26, 2003 was 15.9% compared to 30.1%, in the form of a benefit, for
the nine months ended September 27, 2002. The tax rate in 2003 resulted from a
higher portion of income being attributable to low-tax jurisdictions,
particularly in the PRC and Izmir, Turkey, combined with restructuring expenses
of AMI Doduco which yielded tax benefits in high-tax jurisdictions. In addition,
the prior year's rate reflects a tax benefit recorded in connection with the
trade name impairment write-off.

Liquidity and Capital Resources

      Working capital as of September 26, 2003 was $190.7 million compared to
$235.6 million as of December 27, 2002. This decrease was primarily due to the
cash purchase of the Eldor business in January 2003, which reduced invested cash
as of September 26, 2003 by $83.8 million versus December 27, 2002. Cash and
cash equivalents, which is included in working capital, decreased from $205.1
million as of December 27, 2002 to $131.0 million as of September 26, 2003.

      Net cash provided by operating activities was $30.1 million for the nine
months ended September 26, 2003 and $10.6 million in the comparable period of
2002, an increase of $19.5 million. This increase is primarily attributable to
the higher net earnings during the nine months ended September 26, 2003,
partially offset by increased working capital requirements related to higher
unit volumes.

      Capital expenditures were $4.9 million during the nine months ended
September 26, 2003 and $3.8 million in the comparable period of 2002. We make
capital expenditures to expand production capacity and to improve our operating
efficiency. We plan to continue making such expenditures in the future as and
when necessary.

      We used $81.9 million in cash for acquisitions during the nine months
ended September 26, 2003 and $6.7 million in the comparable period in 2002. The
2003 spending was for the acquisition of Eldor and the 2002 payments


                                 Page 18 of 31
<PAGE>

related to our investment in FRE. We may acquire other businesses or product
lines to expand our breadth and scope of operations. We may exercise our option
to expand our investment in FRE in the future.

      We paid off two euro-denominated term loans during the nine months ended
September 26, 2003 with $11.7 million of cash on hand. The one remaining
euro-denominated term loan is not due until 2009.

      We paid dividends of $1.1 million in the nine months ended September 27,
2002. After paying a dividend on January 25, 2002 to shareholders of record on
January 4, 2002, we no longer intend to pay cash dividends on our common stock.
We currently intend to retain future earnings to finance the growth of our
business, although our policy regarding dividends may be re-evaluated at any
time.

      As of September 26, 2003, we have no outstanding borrowings under our
existing three-year revolving credit agreement. We entered into this credit
agreement on June 20, 2001 providing for $225.0 million of credit capacity.
Following the conclusion of our follow-on equity offering in April 2002, we
voluntarily reduced the size of this credit facility to a maximum of $175.0
million, and then in March 2003, to a current maximum of $125.0 million. These
reductions were made in order to reduce commitment fees and to size the facility
to estimated future needs given cash on hand. We also amended the minimum net
worth threshold from $275.0 million to $259.3 million as a result of a
cumulative effect of an accounting change, recorded in the three months ended
March 29, 2002. As of September 26, 2003 the amended facility consists of:

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

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

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

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

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

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

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

      We had 2 standby letters of credit outstanding at September 26, 2003 in
the aggregate amount of $0.5 million securing transactions entered into in the
ordinary course of business.

      We had commercial commitments outstanding at September 26, 2003 of
approximately $49.8 million due under precious metal consignment-type leases.

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


                                 Page 19 of 31
<PAGE>

      All retained earnings are free from legal or contractual restrictions,
with the exception of approximately $11.6 million of retained earnings as of
September 26, 2003, primarily 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 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 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 tax rates significantly lower than
the U.S. statutory rate. Additionally, we have not accrued U.S. income and
foreign withholding taxes on foreign earnings that have been indefinitely
invested abroad. We have also been granted special tax incentives in other
countries such as the PRC. This favorable situation could change if these
countries were to increase rates or revoke the special tax incentives, or if we
were to discontinue manufacturing operations in these countries. This could have
a material unfavorable impact on our net income and cash position.

New Accounting Pronouncements

      In May 2003, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 150, Accounting for Certain Financial Instruments with Characteristics of
Both Liabilities and Equity ("SFAS 150"), which establishes standards for how an
issuer classifies and measures certain financial instruments with
characteristics of both liabilities and equity. SFAS No. 150 requires that an
issuer classify a financial instrument that falls within its scope as a
liability (or an asset in some circumstances). SFAS No. 150 is effective for
financial instruments entered into or modified after May 31, 2003, and otherwise
is effective at the beginning of the first interim period beginning after June
15, 2003, which for us was the quarter ended September 26, 2003. The adoption of
this standard did not have a material impact on our revenue, operating results,
financial position or liquidity.

      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 No. 133,
Accounting for Derivative Instruments and Hedging Activities. SFAS No. 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 No. 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 No. 149 is effective for contracts entered into or
modified after June 30, 2003, with certain exceptions. We adopted SFAS No. 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.

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

      In December 2002, the FASB issued Statement No. 148, Accounting for
Stock-Based Compensation, Transition and Disclosure, an amendment to Statement
No. 123 ("SFAS 148"). SFAS 148 provides alternative methods of transition for a
voluntary change to the fair value based method of accounting for stock-based
employee compensation. In addition, SFAS 148 amends the disclosure requirements
of Statement No. 123, Accounting for Stock-Based Compensation ("SFAS 123"), by
requiring prominent disclosures in both annual and interim financial statements
about the method of accounting for stock-based employee compensation and the
effect of the method used on reported results.


                                 Page 20 of 31
<PAGE>

The provisions of SFAS 148 are effective for fiscal years ending after December
15, 2002. We adopted the provisions of SFAS 123, as amended by SFAS 148, as of
the beginning of our fiscal year in 2003. We used the prospective method of
adoption, which recognizes expense for all employee awards granted, modified or
settled after the beginning of the fiscal year in which the recognition
provisions are first applied. Adoption of this standard did not have a material
effect on our revenue, operating results, financial position or liquidity.

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

      In June 2002, the FASB issued Statement No. 146 Accounting for Costs
Associated with Exit or Disposal Activities ("SFAS 146"). SFAS 146 superceded
the Emerging Issues Task Force Issue No. 94-3, Liability Recognition for Certain
Termination Benefits and Other Costs to Exit an Activity, ("EITF 94-3"). The
principal difference between SFAS 146 and EITF 94-3 is that SFAS 146 requires
that a liability for a cost associated with an exit or disposal activity be
recognized when the liability is incurred. Under EITF 94-3, a liability for an
exit cost was recognized at the date of an entity's commitment to an exit plan.
As such, under SFAS 146, an entity's commitment to a plan by itself, does not
create a present obligation meeting the definition of a liability. We were
required to adopt the provisions of SFAS for all exit or disposal activities
initiated after December 15, 2002. These activities, which we refer to as
severance and asset impairment expense, did have a material impact on our
operating results in 2003. Although the underlying activities were material, the
impact in changing from EITF 94-3 to SFAS 146 was not significant.

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

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

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

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

Risk Factors

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

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


                                 Page 21 of 31
<PAGE>

      o     canceled many existing orders;

      o     introduced fewer new products; and

      o     worked to decrease their inventory levels.

      The decrease in demand for our products has had a significant adverse
effect on our operating results and profitability. While unit demand has
recovered somewhat in 2003, we may continue to experience volatility in both our
revenues and profits as a result of changes in demand for our products.

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, recent economic conditions have 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.

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

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

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

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

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

o     identify and take advantage of cost reduction opportunities; and

o     further penetrate the markets for the product capabilities acquired.

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

o     cause a disruption in our ongoing business;

o     distract our managers;


                                 Page 22 of 31
<PAGE>

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

      o     do not submit additional purchase orders;

      o     do not enter into new agreements with us; or

      o     elect to terminate their relationship with us.

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

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

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

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

      o     production delays;

      o     increased costs of production;

      o     an inability to make timely deliveries; and

      o     a decrease in profits.


                                 Page 23 of 31
<PAGE>

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

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

      o     precious metals such as silver;

      o     base metals such as copper and brass; and

      o     ferrite cores.

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

      Some of our raw materials, such as precious metals, are considered
commodities and are subject to price volatility. We attempt to limit our
exposure to fluctuations in the cost of precious materials, including silver, by
holding the majority of our precious metal inventory through leasing or
consignment arrangements with our suppliers. We then typically purchase the
precious metal from our supplier at the current market price on the day after
delivery to our customer and pass this cost on to our customer. In addition,
leasing and consignment costs have historically been substantially below the
costs to borrow funds to purchase the precious metals. We currently have four
consignment or leasing agreements related to precious metals, all of which
generally have one year terms with varying maturity dates, but can be terminated
by either party with 30 days' prior notice. Our results of operations and
liquidity will be negatively impacted if:

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

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

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

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

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

      o     product quality and reliability;

      o     global design and manufacturing capabilities;

      o     breadth of product line;

      o     customer service; and

      o     price.

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

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

      While our backlog consists of firm accepted orders with an express release
date generally scheduled within nine months of the order, many of the orders
that comprise our backlog may be canceled by customers without penalty. It is
widely known that customers in the electronics industry have on occasion double
and triple-ordered components from multiple sources to ensure timely delivery
when quoted lead time is particularly long. In addition, customers often cancel
orders when business is weak and inventories are excessive, a process that we
have experienced in the recent contraction.


                                 Page 24 of 31
<PAGE>

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

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

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

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

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

      Risks inherent in doing business internationally may include:

      o     economic and political instability;

      o     expropriation and nationalization;

      o     trade restrictions;

      o     capital and exchange control programs;

      o     transportation delays;

      o     foreign currency fluctuations; and

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

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

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

Shifting our operations between regions may entail considerable expense.

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


                                 Page 25 of 31
<PAGE>

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

      A significant portion of our cash is held offshore by our international
subsidiaries and is predominantly denominated in U.S. dollars. If we encounter a
significant domestic need for liquidity that we cannot fulfill through
borrowings, equity offerings, or other internal or external sources, we may
experience unfavorable tax consequences as this cash is transferred to the
United States. These adverse consequences would occur if the transfer of cash
into the United States is taxed and foreign tax credits are insufficient 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 $11.6 million of retained earnings as of September
26, 2003, primarily in the PRC that are restricted in accordance with the PRC
Foreign Investment Enterprises Law, substantially all retained earnings are free
from legal or contractual restrictions. The PRC Foreign Investment Enterprise
Law restricts 10% of our net earnings in the PRC, up to a maximum amount equal
to 50% of the total capital we have invested in the PRC. We have not experienced
any significant liquidity restrictions in any country in which we operate and
none are presently foreseen. However, foreign exchange ceilings imposed by local
governments and the sometimes lengthy approval processes which some foreign
governments require for international cash transfers may delay our internal cash
movements from time to time.

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

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

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

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

      o     air emissions;

      o     wastewater discharges;

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

      o     employee health and safety.

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

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


                                 Page 26 of 31
<PAGE>

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

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

Item 3: Quantitative and Qualitative Disclosures about Market Risk

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

Item 4: Controls and Procedures

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

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

      Subject to the matters discussed in the preceding paragraph there have
been no significant changes in our internal controls over financial reporting
that could significantly affect internal controls subsequent to the date we
carried out this evaluation, nor were there any significant deficiencies or
material weaknesses in our internal controls. As a result, no corrective actions
were required or undertaken.


                                 Page 27 of 31
<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 29.

            (b)   Reports On Form 8-K

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


                                 Page 28 of 31
<PAGE>

                                  Exhibit Index

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

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

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

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

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

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

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

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

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

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

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

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

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

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


                                 Page 29 of 31
<PAGE>

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

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

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

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

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

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

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

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

10.15       Technitrol Inc. Supplemental Savings Plan

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 30 of 31
<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)


         October 29, 2003               /s/ Drew A. Moyer
              (Date)                    ----------------------------------------
                                        Drew A. Moyer
                                        Vice President, Corporate Controller and
                                        Secretary (duly authorized officer,
                                        principal financial and accounting
                                        officer)


                                 Page 31 of 31