Ladies and gentlemen, thank you for standing by and welcome to the Teledyne Fourth Quarter Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session; instructions will be given at that time. (Operator Instructions). As a reminder, this conference is being recorded. I would now like to turn the conference over to our host, Mr. Jason VanWees. Please go ahead.

Good morning, everyone. This is Jason VanWees, Vice President, Corporate Development and Investor Relations at Teledyne Technologies. I'd like to welcome everyone to Teledyne Technologies' fourth quarter and full year 2007 earnings release conference call. We released our earnings earlier this morning before the market opened. Joining me today are Teledyne Technologies' Chairman, President, and CEO, Robert Mehrabian; Senior Vice President and CFO, Dale Schnittjer; and Executive Vice President, General Counsel and Secretary, John Kuelbs. After remarks by Robert and Dale, we will ask for your questions. However, before we get started, our attorneys have reminded me to tell you all that forward-looking statements made this morning are subject to various assumptions, risks and caveats as noted in the earnings release and our periodic SEC filings, and, of course, actual results may differ materially. Also, in order to avoid potential selective disclosures, this call is simultaneously being webcast and a replay, both via webcast and dial-in, will be available for approximately one month. Here is Robert.

Thank you, Jason and good morning everyone. As per custom, I'll start with some introductory comments about the overall performance of the company. I'll then follow-up with more detailed observations about each of our business segments and markets. Overall, I'm very pleased with both the operational performance and the strategic progress of our company. From an operational perspective, Teledyne achieved record sales of $427.5 million in the fourth quarter driven by overall organic growth of 7.6%. Earnings of $0.73 per share increased 37.7% from last year. For the full year 2007, sales were $1.62 billion and earnings of $2.72 increased 20.4% from last year. This was the 24th consecutive quarterly year-over-year growth in earnings per share and the 15th consecutive quarter of double-digit growth in earnings per share. During the fourth quarter, overall GAAP operating margin increased 129 basis points to 10% largely as a result of our Electronics and Communications segment in which the operating margin of [13.7%] increased 176 basis points compared to last year. Finally, full year 2007 cash flow of $126.4 million was greater than the cumulative free cash flow achieved in 2005 and 2006. Our operational excellence initiatives have continued to improve the quality and the financial performance of our businesses. Strategically, through targeted acquisitions we've been able to increase our technical capabilities, our scale within our major business areas, and the size of our addressable markets. Our recent acquisitions of Teledyne Storm and Teledyne Impulse further expanded our defense microwave and marine instrumentation businesses with additional high reliability interconnect products. Following these acquisitions, Teledyne's annualized sales of harsh environment interconnect products are expected to be approximately $200 million. In addition, following the pending acquisition of Judson Technologies, Teledyne Imaging Sensors will be able to provide a substantially wider range of visible and infrared detectors…

Thank you, Robert and good morning. I will first discuss some additional financials for the quarter and full year not covered by Robert. Then, I will give an update on pension costs and discuss our 2008 outlook. In the fourth quarter, cash provided from operating activities was $43.3 million compared with cash provided from operating activities of $15.9 million for the same period of 2006. The higher operating cash flow was primarily due to higher net income, increased cash from acquisitions, lower pension payments, and lower tax payments. Free cash flow for the fourth quarter was $33.7 million, bringing free cash flow for the full year to $126.4 million. Capital expenditures were $9.6 million in the fourth quarter compared to $10.1 million for the same period of 2006. We ended the quarter with $129.8 million of net debt. Our balance sheet remains strong with the net debt to cap ratio of 19.7%. As noted in the earnings release, we completed two acquisitions and have one acquisition pending following the end of the quarter. Adjusting for these acquisitions, net debt to cap would be approximately 32%. Depreciation and amortization expense for the fourth quarter of 2007 was $9.1 million compared to depreciation and amortization expense of $11.1 million in the fourth quarter of 2006. Moving to pension, in the fourth quarter of 2007, FAS 87 and 158 pension expense was $3 million or negative earnings per share impact of $0.05. This compares to FAS 87 pension expense of $3.2 million or a negative earnings per share of $0.06 in the same period of 2006. Pension expense allocated to contracts pursuant to Cost Accounting Standards or CAS was $2.6 million or a positive earnings per share impact of $0.04 in the fourth quarter of 2007, compared to $2.6 million or positive earnings…

Thanks, Dale. We would like now to take your questions. Operator, if you are ready to proceed with the questions and answers. Please go ahead.

Thank you, ladies and gentlemen. (Operator Instructions). And our first question comes from the line of Michael Lewis with BB&T Capital Markets. Please go ahead. Michael Lewis - BB&T Capital Market: Good morning, everyone.

Good morning, Michael. Michael Lewis - BB&T Capital Market: Okay. Robert, just a quick question on the CapEx. Your guidance next year came in a little bit higher than what I was looking for. It looks like you are having to step up in CapEx investment, if we were to compare it to, say, '05 and '06, what we saw back then. Where exactly are you investing these resources? Is there any specific segment or have you identified higher growth businesses that you want to deploy more resources to? Can you tell me what's going on there?

Yeah Michael, primarily, there's a little bit of carryover from this year to next year. But rest of it really is investments that we intent to make in our new acquisitions like Impulse and Storm. Michael Lewis - BB&T Capital Market: Okay. That's helpful. And then, not to really put you too much on the spot here, but if I look at the guidance that you put out in the potential growth outlook of the company, if I take into account the last three acquisitions including Judson, Impulse and Storm; I think that my numbers might be off a little bit, maybe you can correct them if that's indeed the case. But you should have about $80 million in forward revenue according to my model, and if we take a really conservative net margin here, say, 5% was that you are at about $4 million of net income, that takes into account amortization, as well. So, it's about $0.10 accretion of getting just off the back of the outlook here and then if I take your guidance of 286 to 294, you back out the $0.10, at the end of the day, it's implying flat to about 4% EPS growth. I know that's a lot of numbers to throw at you without you seeing it. But I'm just wondering: what's going on in the core business? Are we seeing a slowdown in the core business growth? Or: we are just not seeing this correctly with regards to the acquisition accretion that we're expecting on these properties?

Yeah, Mike, let me come at this in other way, if I may, and then I'll answer the specific question more from a business side. If you look at the table, we have in our earnings that it talks about the outlook table. You'll note that, if you look at 2006, we have about $0.10 headwinds a combination of pension, stock option and tax benefit. In 2007, those three items combined net it up to zero. In 2008, at the present time, we again expect a headwind of about $0.10 from those three items. So, going into the year, we are already starting with a headwind of $0.10 that we didn't have this year between those three. So, that's part of it. The other part is that, when we make acquisitions like the ones we have mentioned, we have assumptions on intangibles and amortization of intangibles and you may usually don't know where we are going to end up with those because we have an outside firm come in and do that for us, an independent entity, so right now, we think our intangibles are going to be a little higher than we've had experienced with. So, that also plays into it. I think underlying businesses, I don't expect any deteriorations. Coming back to the last part of your question, I think we're going to work very hard to make sure that they perform well. There is some uncertainty obviously, these are the instrumental parts of our business, because that's a book and burned part of our business, so we can't really predict how those are going to be play out throughout the year. Right now, we are optimistic since they are very much dependent on environment and oil and gas production and exploration. That's the best I can do with that complex question, Mike. Michael Lewis - BB&T Capital Markets: No, that's very helpful, Robert, thank you. So, at the end of the day: the core business looks like we still can maintain an internal growth target north of 5% mid-single? That's the goal?

I think 5% is a very good number. Michael Lewis - BB&T Capital Markets: Okay, thank you very much.

Thank you.

Our next question comes from the line of John Harmon with Needham & Company. Please go ahead. John Harmon - Needham & Company: Hello and good morning. A couple of questions. First of all I would just like to talk about the rationale about: how you recombine your businesses? It seems like in these four segments you put most of your energy related businesses, but also turbine engines. Is that -- or just to say a catchall category for non-core businesses? Or: why did those business come together, please?

John, because our turbine is so specialized and there is a lot of R&D that goes into it and also we're looking at potential standby energy applications for it. The fit with batteries which have a very higher growth rate in business for us, as well as, probably one of our highest margin businesses, and the fact that we also have hydrogen generators, we have other kinds of power generators, radioisotope generators; intellectually and from a market and applications and in customers perspective, these are more military, and they also have technological fit with one another. Actually, we think that this segment has been an area that we intend to grow, and that's frankly why we put them together. We've had some really luck with our hydrogen generators this past quarter and as I said our battery products margins are some of the highest in the company. So, we think this is a core segment for us. John Harmon - Needham & Company: Okay. Thank you. Just out of curiosity, at one point, you thought you might want to bundle your turbine engine business with your piston engine business to find a buyer to make the combination more attractive. My question is: last year when private equity seemed to be buying everything inside it, did you have any nibbles on this business? And: was it then because you didn't get much interest that led to the changes you announced today?

Yeah, but first let me separate the turbine from piston, because turbine is primarily military, it's all military, and piston is all commercial. So, they have very different market. These businesses are not for sale, and that was many years ago, I think that was right after 2001, where there were all kinds of flight restrictions, and the small general aviation market where small aircraft was suffering terribly, that we considered that. But now it's a nice margin business, I think if you look at the margins for our piston engine business in our earnings release, you'll note that it's over 10%, 10.5% GAAP operating margin. So, we're just going to keep it. It fits better in our portfolio than any value we could realize trying to sell it. John Harmon - Needham & Company: Okay, thank you. Just one quick for, Dale: what tax rate should we expect in '08?

You should assume probably 39%. John Harmon - Needham & Company: Thank you

Thank you. Dale, just real quick on that tax question. Last couple of years you've recorded the tax benefit in Q3 versus Q1: is there a particular reason for the timing shift? And second of all: is it fair to assume that your '08 guidance does not include the R&D tax credit which Congress has failed to pass up to this point?

The timing on the tax credit is associated with the year it's involved with, that particular tax credit of 1.3 million in the first quarter is related to a filing for 2007, once we have defined and determined what the number will be and the tax rate and the total is at 39%, but that does not include the tax credit that was in the first quarter, the 1.3 million.

Okay. But I mean, specifically, lot of companies out there are not including, you got the retroactive tax benefit last year for R&D that Congress was late in passing and of course it was a one year fix. There hasn't yet been one approved for '08 and so: did you take that into consideration in the guidance? It doesn't look like it was a 39% tax rate.

We did not. The only tax credit that's in '08 is for the 2007 tax year.

Okay. Robert, if you could in years passed, at the start of the year, you've kind of given us sort of directional heading on a business-by-business rundown, sort of general growth rates for the defense electronics area or ENC in general and margins thing that should be pushing it up and down. Could you do that for us again?

Sure, I'll try. I think defense electronics, the organic growth this year was over 7%. We expect that would continue may be improved a little bit. In terms of instrumentation our organic growth this year was very strong and we expect next year to be in the high single digits. In other electronics, I think we expect to have flat growth, because we're basically again as we've said before we've exited our medical EMS businesses.

Will the negative comparison in the commercial EMS begun? Or: is it still a little bit of a drag?

It would be a little bit of a drag in the first quarter.

Okay.

Because we really didn't exit this business in the middle of the year, we slowly exited in the first half of the year and the business is down about I'll say about $17 million year-over-year from '06 to '07. So, the other electronic, I expect to be flat because of that. Defense Electronics will be up. We think Energy and Power Systems, our new segments will be up. We expect our Engineered Systems to be up some. And we think general aviation, if nothing terrible happens, should keep up with inflation.

Okay. And any significant margin trends or changes in any of those businesses? Or: which one do you think you might have the possibility for the most margin expansion?

Right now, we are always looking to increase our margins. We start by aiming to increase them about 25 basis points across the company. Obviously, we think we'll have maybe a little margin improvement in our piston engine business, if we can keep our insurance premiums and our job, first dollar coverage in check. We think in our government businesses, engineered systems business, margins are going to be flat. Maybe even go down a little bit, because we had a good fourth quarter. So overall, we are always aiming for 25 basis points, but obviously, as we go through the year, we push very hard to do better as you know.

Okay. In your press release, you mentioned that a lot of the strength in the defense electronic was in imaging sensors. What specific product lines were they? And: were they related to the Rockwell Scientific business?

Yeah. Primarily, when we talk about our imaging business, we are talking about the former Rockwell Scientific Imaging business that we acquired and we have seen some strength there both in our space sensors, which are for both NASA and DoD. We have also had some very nice progress that we have made in launching our aircrew laser eye protection spectacle for the U.S. Air Force. And that's been a good program for us. So, all in all, I think sales in our, what was former Rockwell Scientific, improved about $5 million year-over-year, quarter-over-quarter. But we also had some improvement in our microwave businesses as well and because we are making better, higher integrated microwave subsystems, because of the combination of acquisitions that we have had.

Okay. And more generally on former Rockwell Scientific: where or how are you progressing in terms of some of the next generation imaging technologies?

That's coming along pretty good. For example, the third gen dual-band infrared cameras that we are developing, we expect to have enough progress in our technical performance and environmental ruggedness of those products to be able to deliver some third gen cameras for field testing to the Army in the next few months. Also, you may recall that we won a High Stare Program in mid year for the next generation of space infrared sensors. And lastly, this Judson acquisition, Chris, is very strategically important to us in that area, because, as you know, most of our imaging work is focused on mercad telluride and large focal plane arrays. What Judson brings and we are making not too many products, 100s of part a year would be on average, is what we make. On the other hand, Judson makes 80,000 to 90,000 products a year and they bring to us, expand our capabilities in detector materials from mercad telluride to include other detector materials like indium antimonide and indium gallium arsenide. They also bring some packaging capabilities and just as importantly, they bring some dewar and cooler capabilities which will help us move higher up in the value chain in our imaging products. So, those combinations make us feel very good about that acquisition.

Great. And final question for you regarding acquisitions. The pipeline: how does it look this year? How do you think both within the defense arena, what the M&A activity is looking like and how the credit market condition help or hurt you?

By in large, I think the fact that some of equity guys have gone to the sideline that could not hurt. Because the competition was very stiff when money was so readily available. From our perspective, our pipeline is -- we are always looking at things. But it has to strategically fit. So, we don't decide we're going to make two or three acquisition or five at any given year. Whatever becomes available, we will hope to get things that strategically fit us. And fit at the platforms that we've established for growth, which are instrumentation, electronics, imaging and so on. And then, from a credit perspective, we have a line of credit which we have even with the acquisitions that Dale added up, we would have sufficient from theirs to do what we need to do and if we need to expand it, we will do that.

Great. Thanks. And congratulation again on a good year.

Thanks, Chris.

Our next question comes from the line of Mr. Karl Oehlschlaeger with Banc of America. Please go ahead. Hello, Karl, your line is open.

Sorry about that. Hi, guys. I wanted to ask on I think a little bit more on the aerospace business, the piston engine business. In the first I think three quarters in 2007, looking at the [academic] data, it looks like the piston engine deliveries were down, and I wanted to see: to what extent that sort of impacted your business? And your business did fairly well, I think, on a relative basis. And kind of get a better idea as to: what trends that you are seeing with respect to the decrease in piston engine deliveries?

Thanks, Karl. In general, as you know, we are in the higher-end aircraft market, the newer aircraft that are gaining share in that business. So even if the overall business would go down, we expect our part of the business to remain fairly flat because companies like Cirrus are gaining market share. A little bit of setback in 2007 had to do with the bankruptcy, the Columbia bankruptcy. But that's behind us since that was bought by Cessna. And our anticipation is that they will continue with our engines since that's the engine that's qualified, certified for that aircraft. Also there is a significant amount of effort, ongoing effort which may not be as productive towards in 2008, but it will be in 2009 and beyond and that is the emergence of light sport aircraft. Interestingly, now Cessna has chosen Teledyne's engine for their light sport aircraft, which would probably enter the market in 2009 and they already have over 800 orders and we unit backlog. And so, we expect this business even if the market goes up at least to remain flat, if not too better.

But you are going to start seeing some benefit and in '08 on the SkyCatcher?

I think that would be probably start in early '09, Jack. We are already producing some prototype engines for test and we delivered a couple. But it takes a long time to certify those aircraft. So, I would say early '09, Karl.

Okay. And in terms of, you had some lower insurance cost, and I was hoping that maybe you could kind of break that down into a little bit more detail in terms of the size of your insurance cost that you booked against your margin in '07. How that changed from '06? And: how you expect that to trend in '08 based on the guidance you have given? I know, it's been really high in the past and I think you are accruing some of, I guess, the deductibles at a fairly high rate, but overtime, I think you haven't had to pay the cost and so maybe that accrual rate is coming down. Can you talk about those insurance cost and how it impacts that segment?

Yeah. After 2001, we had a real -- because of the threats that were underway at that time and insurance prices went way up and our premiums went up and our reserves that we were accruing went up. This year, we enjoyed some modest decrease, this year being the past year, 2007, some modest decrease in premium and some decrease in our reserves. The reserves we don't set them, they have to be set based on multiyear experience, 10 year experience, and they are set in coordination with our external auditors. So, we have a little decrease in our reserves in 2007. Going forward, in 2008 if we can maintain those, what we gained in 2007, we would be very happy. We don't at this time anticipate any significant changes, maybe a couple of $300,000 or so but not nothing that would affect our earnings in an important way. We obviously are going to work very hard to improve is in our operations, as we do have room to improve in our operations in that factory.

Okay. Thank you very much.

Thank you, Karl.

And we have a follow up question from Mr. Michael Lewis with BB&T Capital Markets. Please go ahead. Michael Lewis - BB&T Capital Markets: Robert, if we can just circle back on Chris's question earlier where you were providing a little bit of guidance on the specific segments. Energy systems I missed that. What did you say on that, the direction?

I think on energy, we're going to have about -- the energy and power systems are new segments, I think somewhere in the high single digits revenue growth. Michael Lewis - BB&T Capital Markets: Okay. And: would margins be consistent or slightly improved? You talk about the goal of 25 basis points?

I think that would be slightly up, Michael. Michael Lewis - BB&T Capital Markets: Okay. That's fair. And then Dale, if I could just ask you for some forward expectations on: what you think the share count is going to come out at the end of this year?

Well, we think on average it will probably be up about 0.5 million. Michael Lewis - BB&T Capital Markets: Okay, up 0.5 million. And then you guys have been very good about paying down debt with free cash: what do you think a possible goal would be on net debt to cap at the end of the year? Just so, we can kind of model this through.

Well, we might expect that we would have free cash flow in the area of equal to net income. Michael Lewis - BB&T Capital Markets: Okay. And: do you know how much you will deploy to pay down any debt?

Up approximately, the $100 million. Michael Lewis - BB&T Capital Markets: $100 million. Okay, thank you very much.

Thanks, Mike.

And we have no more questions in queue at this time.

Okay, well, thank you operator. I'll now ask Jason to conclude our conference call.

Thanks, Robert. And again thank you everyone for joining us this morning. If you have any follow-up questions, please don't hesitate to call me. My number is on the press release and of course all the releases are available at our website, teledyne.com. Operator, if you can conclude the call and give the replay information, we would appreciate it.

Thank you. Ladies and gentlemen, this conference will be made available for replay after 11:30 am Pacific Time today, until February 25th at midnight. You may access the AT&T executive playback service at any time by dialing 1-800-475-6701 and entering the access code 892590. International participants may dial 320-365-3844. Again those numbers are 1-800-475-6701, access code 892590; international number 1-320-365-3844. That does conclude our conference for today. Thank you for your participation and for using AT&T executive teleconference service. You may now disconnect.