Technitrol Updates Q2 Business Outlook, Outlines 2001 Priorities.

Business Editors/Hi-Tech Writers

PHILADELPHIA--(BUSINESS WIRE)--May 23, 2001

At today's annual meeting of shareholders, Technitrol (NYSE: TNL) said the company's priorities in the very challenging 2001 electronics markets are to reevaluate the most likely scale and scope of its business once the markets resume more normal behavior, realign its market presence to broaden its growth opportunities, and reinforce its leadership in legacy markets.

Chairman and Chief Executive Officer James M. Papada, III said the company anticipates that earnings for its second fiscal quarter ending June 29, 2001 will be at or slightly above breakeven levels. Negatively impacting results are extremely challenging market conditions in the Electronic Components Segment (ECS) and the likelihood that the sum of ECS inventory write-downs, employee severance and plant closing provisions would significantly exceed the $3.8 million after-tax amount reported in the first quarter of 2001. These provisions result from the company's ongoing cost-reduction activities around the world.

Technitrol expects consolidated second-quarter revenues of between $117 million and $122 million, comprising $57 million to $60 million in the ECS and, at current Euro-to-dollar exchange rates, $60 million to $62 million in the Electrical Contact Products Segment (ECPS).

"We believe that we are at or close to the bottom of the cycle in the ECS, but the question remains as to how flat the bottom will be," Papada said. "ECS order cancellations have substantially subsided, but order entry rates have yet to meaningfully rebound. This same phenomenon is true among our customers and peer companies all across the information technology markets. There is still little near-term visibility, but we are beginning to hear encouraging words from our customers and their customers."

Papada said the company's first priority throughout the first five months of the year has been to reevaluate the "real" size of the ECS business, ignoring the sharp electronics market upturn in 2000 and the steep downturn in 2001, and to scale the company's operations accordingly. "This has been very difficult, given the variety of conflicting, incomplete and generally incorrect information coming from our customers early in the year," Papada said. Thus far, the process has resulted in a 40% ECS headcount reduction, a nearly 50% year-over-year capital budget reduction, the decision to close ECS plants in Thailand and other parts of East Asia, and significant selling, general and administrative expense reductions in North America, Europe and Asia.

The second priority is to realign Technitrol's market presence to capture new growth opportunities, Papada said. In the ECS, these opportunities include automotive electronics, highly publicized and widely promoted new video game systems (which will contain Pulse products), end-user broadband products and other consumer electronics applications. The ECPS continues to focus on high-end component subassemblies for automotive and appliance functions and on capturing additional customer outsourcing opportunities.

Regarding the third priority, to reinforce Technitrol's legacy market leadership, Papada noted that design activity in the ECS for networking, telecommunications and power conversion applications is running ahead of the record pace set in 2000. "Our goal is to stay as close to customers as possible, participating in as many design programs as possible," Papada said. "Even with the significant reduction in Pulse's operating expenses, we are doing our best to keep our engineering and R&D budgets on the full side and focused on projects where revenues and profits are likely to follow."

In the ECPS, "AMI Doduco is working very hard to optimize customer relationships by increasing the amount of value-added in our products and services," Papada said, and by "convincing customers of the value of outsourcing the design and production of contact parts and component subassemblies."

Papada said that AMI Doduco is working to further increase efficiency in 2001 by consolidating its eight North American production locations into six including a second facility in Mexico.

Based in Philadelphia, Technitrol is a worldwide producer of electronic components, electrical contacts and assemblies and other precision-engineered parts and materials for manufacturers of networking, broadband/Internet access, telecommunications and computer equipment, electrical switching devices, and other products. For more information, visit Technitrol's Web site at http://www.technitrol.com.

Cautionary Note: This message contains "forward looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially. This release should be read in conjunction with the factors set forth in Technitrol's report on Form 10-Q for the quarter ended March 30, 2001 in Item 2 under the caption "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)."