Ladies and gentlemen, thank you very much for standing by and welcome to the Teledyne first quarter earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. (Operator Instructions). And I would now like to turn the call over to your host, Mr. Jason VanWees. Please go ahead.

Thank you and good morning, everyone. This is Jason VanWees, Vice President, Corporate Development and Investor Relations at Teledyne. I would like to welcome everyone to Teledyne's first quarter 2010 earnings release conference call. We released our earnings earlier this morning before the market opened. Joining you this morning 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 that all 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. 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 about a month. Here is Robert.

Thank you, Jason, and good morning, everyone. Before commenting on the specific results of our individual businesses, I have some general observations about our market, our performance, and our performance during the first quarter. Those of our commercial businesses, which had been impacted most by the 2009 recession, recovered strongly in the quarter. Given this recovery, coupled with a leaner cost structure, our operating margin increased 107 basis points and our earnings per share grew 19.3%. As a reminder, in response to last year's recession, we lowered operating costs by over $80 million and reduced headcount by 9.8%. Due to some encouraging signs in our commercial markets and the stability of our defense businesses, we also increased our 2010 earnings outlook. Some key points including the following. First, sales from our commercial short-cycle electronic businesses such as instrumentation for environmental monitoring and industrial process control increased substantially and order activity remained strong. Second, all prices remained high and our marine instrumentation businesses are positively leverage – leveraged towards this trend. We are also beginning to receive orders for more integrated subsea power and process monitoring solutions. Third, our newly-developed defense microwave products for UAV and counter-IED applications are gaining traction. Fourth, due to dramatic gains in sales of aftermarket engines and parts, we nearly reversed last year's first quarter loss in our aviation engine businesses. And finally, we previously described the 2010 headwinds in three of our government programs. These are lower sales of missile defense engineering services, reduced deliveries of JASSM missile – cruise missile engines, and the lack of a loan guarantee for one of our customers in the nuclear domain. While not a factor for 2010, the long-term outlook for each of these areas has improved recently. The funding for the Ground-based Midcourse Defense program was cut…

Thank you, Robert and good morning, everyone. I will first discuss some additional financials for the quarter not covered by Robert, then I will discuss our 2010 outlook. On cash flow, in the first quarter, cash provided from operating activities was $3 million compared with a use of cash of $7.6 million for the same period of 2009. The cash usage in 2009 resulted from pension contributions of $48.6 million net of tax compared to no pension contributions in 2010. Over the last two years, we have contributed approximately $170 million pretax to our pension trust and our pension plan is now approximately 90% funded on a GAAP PBO basis. Free cash flow for the first quarter of 2010 was a cash usage of $2.3 million compared to a cash usage of $20.7 million for 2009. Excluding the 2009 pension contribution, free cash flow in the first quarter of 2010 declined primarily due to higher working capital, which resulted from early collection of accounts receivable in the fourth quarter of 2009. Capital expenditures were $5.3 million in the first quarter compared to $13.1 million for the same period of 2009. Depreciation and amortization expense was $11.2 million in the quarter compared with $11.7 million last year. We ended the quarter with $230.6 million of net debt. Our balance sheet remains strong with a net debt-to-capital ratio of 25%. Our credit facility has $590 million of bank commitments and expires in July of 2010. We are planning to renew the credit facility prior to its scheduled maturity. In addition, we are anticipating issuing up to $250 million of unsecured debt pursuant to a private placement transaction in 2010. The proceeds would be used to pay down the existing revolving credit facility and for general corporate purposes including acquisitions. If I said…

Before we go to your question-and-answer period, I was just reminded that when I was talking about the commercial nuclear power generation manufacturing order, instead of saying $2.7 million order, I said $2,007 million, which will be over $2 billion in orders. I wish that were true, but unfortunately, it's not. So with that correction, I'd like now to start taking your questions. Operator, if you are ready to proceed with the question and answers, please do go ahead.

Certainly. (Operator Instructions). And our first question comes from Michael Lewis with BB&T Capital Markets. Michael Lewis – BB&T Capital Markets: Hi, Robert, good morning. A quick question for you with regard to the aftermarket part – portion of aircraft engines. Do you think that the 30%-plus revenue growth that you saw in the quarter is sustainable throughout the rest of the year?

We are not counting on that, Michael. I think we probably will have in the range of about 20% overall growth if you pull total year-over-year in our orders. But I think it's going to be stronger than last year, but not as strong as 2008. Michael Lewis – BB&T Capital Markets: Okay. And then just to circle back on the nuclear business and with regards to the loan guarantee, the differential versus this year's guidance for that business versus, say, fiscal year '11 and with the loan guarantee occurring, did you say it's about a $30 million swing in revenue upside?

I would say about that. Last year, Michael, we had $36 million, but that wasn't a full production year. This year we expect, for that specific program, closer to $8 million. And we anticipate next year, if we go into full production, it would be close to $40 million for that specific program. Michael Lewis – BB&T Capital Markets: Okay, thank you. And then just one more question. With regard to the breakout of the business, what proportion of the revenue is now government/defense versus commercial? And where do you see this split moving to, say, two years from now?

Right now, I would say we are about 50-50. We've been that way for a long time. My estimate is that as a function of time, we would be more heavily oriented toward the commercial domain. Maybe in a couple of years, we would be at 55%, closer to 60% commercial. Michael Lewis – BB&T Capital Markets: Okay. Thank you so much.

Thank you, Michael.

Thank you. And our next question comes from Steve Levenson with Stifel Nicolaus. Please go ahead. Steve Levenson – Stifel Nicolaus: Thanks. Good morning, everybody.

Good morning, Steve. Steve Levenson – Stifel Nicolaus: Too bad it wasn't a $2 billion order.

I'm glad I corrected it before somebody asked me about it. Steve Levenson – Stifel Nicolaus: Well, I had a question about the nuclear fuel enrichment. It looks like the likelihood of a loan guarantee is getting better and it looks like it would also cover some business with AREVA. Do you have opportunities with AREVA similar to what you would have with USEC?

Not at this time that we know of. On the other hand, they haven't begun their manufacturing processes like USEC has. To be very honest with you, Steve, we are very aggressively getting ready to participate in any projects that begin, primarily because we do have a very strong position, both in the quality domain, as well as the ASME stamps, requisite stamps that one needs for manufacturing. So we are talking to a large number of other potential people that would be producing nuclear products. Steve Levenson – Stifel Nicolaus: Great, thank you. And second, it looks like the DOD is trying to accelerate the use of third-generation thermal imaging sensors. They've got a solicitation I think they're calling Vista out there. Does Teledyne plan to participate in that?

On the third-gen, Steve, we are currently in discussions with the military and we do expect to receive some additional third-gen funding. We have the – the military, the army remains intent on continuing to promote a competitive environment for the low-rate initial production and other future programs and they show very strong support for our efforts. We are spending our own R&D dollars in technology development and have actually made some very good progress in building demo units for the army to test. Steve Levenson – Stifel Nicolaus: Okay. Thank you very much.

Thank you, Steve.

Thank you. And our next question comes from Robert Kirkpatrick with Cardinal Capital. Please go ahead. Robert Kirkpatrick – Cardinal Capital: Good morning and congratulations.

Thanks, Rob. Robert Kirkpatrick – Cardinal Capital: Dale, could you talk a little bit about kind of rates and timing on both the refinance of the credit facility, as well as the size, and also on the private placement.

We are somewhat limited on what we can discuss right now. We are following the traditional process for issuing private placement debt. And I'd rather not comment any further so as not to violate the private placement issuance regulations at this time. Robert Kirkpatrick – Cardinal Capital: So would that mean that it would, obviously, be probably in the next six months as opposed to right at the end of the year?

Yes. Robert Kirkpatrick – Cardinal Capital: And how about the bank debt market, how is that?

Right now, with what we are seeing in the bank debt market, the – our banking partners speak very favorably about that and it looks like there is plenty of financing available with our partners. Robert Kirkpatrick – Cardinal Capital: So would you anticipate reducing the size of the commitment or would you keep it roughly the same?

We will look at that when we get to the point of renewing, but at this point, we would look at somewhere in $400 million to $600 million maybe in the revolving credit. Robert Kirkpatrick – Cardinal Capital: And would you – you would do the debt facility after the private placement, correct?

That's correct. Robert Kirkpatrick – Cardinal Capital: Great. And then, Robert, I was wondering if you would perhaps shed a little bit more light for us on two topics; one, the Optical Alchemy [ph] acquisition and how that came about; and then secondly, the new sets of products that you are seeing demand for, for both UAV datalinks and for counter-IED. Thank you.

Thank you, Rob. What – as I mentioned before, we have historically participated in making very sophisticated focal plane arrays for space applications. Those would be focal plane arrays that have 2Kx2K array of pixels. And now, of course, we are even making 4Kx4K – we are beginning to develop 4Kx4K pixel FPAs for both civil space, as well as ground astronomy. Now, what we did about two years ago is we bought a small company called Judson in Pennsylvania to start moving more towards merchant supplier of not just FPAs, but packages. Judson specializes in packaging of FPAs and sells commercially. Where we were doing units of 10s and 20s, Judson was producing units of over 1,000 a month of this product. So we wanted to get into the commercial domain. And as a part of that, as we then moved into the third-gen infrared, it became necessary to start integrating dewars and coolers into our product so that we would produce a subsystem of FPA that was packaged and included coolers and dewars with it. And ultimately, obviously, these become cameras. Now, where Optical Alchemy comes in is that they actually make gimbals, very light-weight gimbals that are geo-reference-capable, which is once you look at a target, you can also give the GPS coordinates of the target to the viewer. And what that enables us to do now is move up the food chain to become a merchant suppliers of cameras that include – that are included in the gimbals. Matter of fact, we are developing what we call a high-temperature infrared camera, which operates at about 150 degrees for a specific application in that one of the small gimbals that Optical Alchemy makes. So it's kind of a very – Rob, it's a very intentional strategy to become a merchant supplier of cameras and gimbals to people that integrate them into large systems. Now, second question that you asked dealt with counter-IED and UAV applications. In the UAV domain, we have a – we are expecting high-power amplifier orders in the second quarter that will enable datalink for the updated Shadow UAV upgrade. And also in the IED domain, we are – one of the acquisitions that we made was in the U.K. and we are working with a customer there on the development of an integrated subsystem for an IDP – IED jamming system that has large production potential. The system is currently in trials with the U.K. MoD and we are expecting low-rate production orders in – later this year. I hope that answers the two questions, Rob. Robert Kirkpatrick – Cardinal Capital: Yes, thank you so much.

(Operator Instructions). And our next question comes from Chris Quilty with Raymond James. Please go ahead. Chris Quilty – Raymond James: Good morning, gentlemen. I wrote slow, so I'm going to ask you, Robert, if you could perhaps help me with the numbers again. And perhaps – I think in the past when you've given the break – breakdown on the E&C segment, you've gone ahead and sort of given us the year-over-year revenues on defense electronics, electronic instruments. Could I get those from you?

Sure. I'll give you any numbers you want, Chris. Chris Quilty – Raymond James: What's the real number for fiscal '10?

I always give you real numbers, Chris. That's very good. The defense electronics year-over-year Q1, if you look at last year, it was about $126 million. I think that does not include scientific and imaging – yes, it does, actually. It's about $126 million. This year, it's closer to $137 million. Chris Quilty – Raymond James: Okay.

On instruments, last year, it was about $145 million. This year, it's closer to $141 million, the overall instruments. And then the last, which is avionics and other electronics, as I mentioned, we are not taking orders in commercial – manufacturing of commercial communication products and some of our medical products. So what we've seen is a decline from about $39 million to $32.5 million in that area year-over-year. But as I mentioned, we think that will stabilize as the year goes on. Chris Quilty – Raymond James: Okay. And did I detect a nuance there on the commercial side? I mean, you guys had already abandoned the medical products market and pure commercial EMS. I thought I heard you also say that you are de-emphasizing some of the telecommunications products also.

Yes, some of the backhaul products like point-to-point cellular backhaul, we were making transceivers. We are getting out of that business, primarily because what – what's happened is the customers are pushing for cost reductions of 15%, 20% a quarter and just that's not the business we want to be in. By the way, if you look at our history over the last five, six years, we probably exited $60 million to $70 million worth of markets in which the margins have declined, markets have become commoditized, customers want to push us to manufacture overseas and that's not where we want to be. So we continuously exit markets that we don't think are in our interest to continuing. Chris Quilty – Raymond James: Now, on the flipside you've seen an increase in your defense related EMS, and can you give us some color there? Is there specific programs or product lines or OEM customers where you are seeing those gains?

Yes, we very methodically decided a few years ago to switch over since the facilities really were operating commercial and defense side by side, same equipment. We very methodically moved to the defense [ph] domain. In – for example, just to give you specifics, termination of the DD(X) destroyer program has resulted in additional requirements to support the Aegis vertical launch programs and we've gotten orders in that domain and forecast that those would continuously increase until 2012. Also, when you look at the cutbacks in the Joint Tactical Radio System, the JTRS program, and cancellation of the transformation of satellite program, those are resulting in new orders for upgraded tactical radios and existing satellite uplink terminals. And there, we've had significant orders in EPLRS, which you know is the Enhanced Position Location Reporting System radio and Advanced Extremely High Frequency, that's the AEHF satellite program, for production later this year and 2011. So all in all, what we are seeing is that our strategy of intentionally shifting into the military domain where we've been down-selected by our customers into reliable providers of manufacturing services, that's worked for us. Chris Quilty – Raymond James: Okay. And separate question, it still hasn't shown up in the jobs numbers, but are you seeing any of that stimulus money with your customers in the government side, environmental?

Very little. We've seen a little bit of ARRA money, especially in some of our environmental programs, but the primary improvement that we've seen in our environmental programs have been overseas, in India and China. Chris Quilty – Raymond James: Okay. And the proposed Obama NASA budget-killing constellation, but extending the space station, net-net, good, bad?

I think net-net, it might not be bad for us. Let me just kind of go through a little detail on that. We – the – we have about – give or take, we have about $90 million with NASA in our programs. About half of that is in the – tied to the space exploration. What – I think we are better positioned than most of our competition in the space programs, because what we have are flexible task order contracts with broad scopes and we don't hold large prime contracts, hardware development programs. Now, the shift that they – that the White House has announced recently – I think it was in April – on April 15 in Kennedy Space Center. The Orion program continuation, that doesn't affect us, because we are not participating in that. But the heavy lift launch, that could have a positive effect on us. And extending the space station would be – to 2020 would be good for us since we do about $23 million of science payload operations there. So all in all, I'd say the whole thing would probably be okay for us. The – the Robotic Precursor Program, that'd probably be good for us. I think with our engineering support structure and the contracts that we have in place that the whole change should be neutral to positive for Teledyne. Chris Quilty – Raymond James: Okay. Very good. That's my list of questions, other than I wanted to know if you could say "dewars and coolers" three times quick for us.

If I could do that, I would be an analyst. Chris Quilty – Raymond James: Cheers.

And there are no further questions in queue. If you have any closing comments?

Thank you, operator. I really appreciate you all participating. I'll now ask Jason to conclude our conference call.

Thanks, everyone. And if you have any questions, please feel free to call me at the number on the earnings release. And again, all our releases are available on our website. Operator, if you could conclude today's call and give the replay information, we'd appreciate it. Thank you, everyone.