Teledyne Technologies Incorporated
12333 West Olympic Boulevard
Los Angeles, CA
90064-1021
March 9, 2006
Dear Stockholder:
We are pleased to invite you to attend the 2006 Annual Meeting
of Stockholders of Teledyne Technologies Incorporated. The
meeting will be held on Wednesday, April 26, 2006,
beginning at 9:00 a.m. (Pacific Time), at the
Companys offices at 12333 West Olympic Boulevard, Los
Angeles, California 90064-1021.
This booklet includes the notice of meeting as well as the
Companys Proxy Statement.
Enclosed with this booklet are the following:
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Proxy or voting instruction card (including instructions for
telephone and Internet voting).
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Proxy or voting instruction card return envelope (postage paid
if mailed in the U.S.).
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A copy of the Companys 2005 Annual Report (which contains
our Form
10-K)
is
also included.
Please read the Proxy Statement and vote your shares as soon as
possible. We encourage you to take advantage of voting by
telephone or Internet as explained on the enclosed proxy or
voting instruction card. Or, you may vote by completing, signing
and returning your proxy or voting instruction card in the
enclosed postage-paid envelope. It is important that you vote,
whether you own a few or many shares and whether or not you plan
to attend the meeting.
If you are a stockholder of record and plan to attend the
meeting, please mark the WILL ATTEND box on your
proxy card so that you will be included on our admittance list
for the meeting.
Thank you for your investment in our Company. We look forward to
seeing you at the 2006 Annual Meeting.
Sincerely,
Robert Mehrabian
Chairman, President and
Chief Executive Officer
TELEDYNE TECHNOLOGIES INCORPORATED
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
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MEETING DATE:
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April 26, 2006
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TIME:
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9:00 a.m. Pacific Time
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PLACE:
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Teledyne Technologies Incorporated
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12333 West Olympic Boulevard
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Los Angeles, California 90064-1021
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RECORD DATE:
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March 6, 2006
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AGENDA
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1)
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Election of a class of two directors for a three-year term;
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2)
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Ratification of the appointment of Ernst & Young LLP as
the Companys independent registered public accounting firm
for fiscal 2006; and
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3)
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Transaction of any other business properly brought before the
meeting.
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STOCKHOLDER LIST
A list of stockholders entitled to vote will be available during
business hours for 10 days prior to the meeting at the
Companys executive offices, 12333 West Olympic
Boulevard, Los Angeles, California 90064-1021, for examination
by any stockholder for any legally valid purpose.
ADMISSION TO THE MEETING
Teledynes stockholders or their authorized representatives
by proxy may attend the meeting. If you are a stockholder of
record and you plan to attend the meeting, please mark the
WILL ATTEND box on your proxy card so that you will
be included on our admittance list for the meeting. If your
shares are held through an intermediary, such as a broker or a
bank, you should present proof of your ownership at the meeting.
Proof of ownership could include a proxy from your bank or
broker or a copy of your account statement.
By Order of the Board of Directors,
John T. Kuelbs
Executive Vice President, General Counsel
and Secretary
March 9, 2006
PROXY STATEMENT
TABLE OF CONTENTS
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Page
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Voting Procedures
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1
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Board Composition and Practices
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2
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Corporate Governance
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3
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Item 1 on Proxy Card Election of Directors
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5
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Committees of our Board of Directors
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9
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Director Compensation
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13
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Item 2 on Proxy Card Ratification of Appointment of Independent
Registered Public Accounting Firm
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14
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Fees Billed by Independent Registered
Public Accounting Firm
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15
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Audit Committee Pre-Approval Policies
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15
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Audit Committee Report
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16
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Other Business
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17
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Stock Ownership Information
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18
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Section 16(a) Beneficial Ownership
Reporting Compliance
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18
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Five Percent Owners of Common Stock
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18
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Stock Ownership of Management
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19
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Executive Compensation
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20
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2005 Report on Executive Compensation
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21
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Compensation Committee Interlocks and
Insider Participation
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28
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Summary Compensation Table
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29
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Option Grants in Last Fiscal Year
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32
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Aggregate Option Exercises in Last Fiscal
Year and Fiscal Year End Option Values
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33
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Teledyne Technologies Performance Share
Plan Awards
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34
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Teledyne Technologies Restricted Stock
Award Program
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37
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Pension Plan
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41
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Employment/ Change in Control Agreements
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42
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Certain Transactions
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43
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Cumulative Total Stockholder Return
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45
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Other Information
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46
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Annual Report on Form 10-K
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46
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2007 Annual Meeting and Stockholder
Proposals
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46
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Proxy Solicitation
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46
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Householding of Proxy Materials
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Electronic Access to Proxy Materials and
Annual Report
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47
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Annex A Amended and
Restated Charter of the Audit Committee
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A-1
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DEFINED TERMS
In
this Proxy Statement, Teledyne Technologies Incorporated is
sometimes referred to as the Company or
Teledyne. References to ATI mean
Allegheny Technologies Incorporated, formerly known as Allegheny
Teledyne Incorporated, the company from which we were spun off
on November 29, 1999.
PROXY STATEMENT
FOR 2006 ANNUAL MEETING OF STOCKHOLDERS
VOTING PROCEDURES
Who May Vote
If you were a stockholder at the close of business on
March 6, 2006 you may vote at the Annual Meeting. On that
day, there were 33,852,213 shares of our common stock
outstanding.
Each share is entitled to one vote. In order to vote, you must
either designate a proxy to vote on your behalf or attend the
meeting and vote your shares in person. Our Board of Directors
requests your proxy so that your shares will count toward
determination of the presence of a quorum and your shares can be
voted at the meeting.
Methods of Voting
All stockholders of record may vote by transmitting their proxy
cards by mail. Stockholders of record can also vote by telephone
or Internet. Stockholders who hold their shares through a bank
or broker can vote by telephone or Internet if their bank or
broker offers those options.
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By Mail.
Stockholders of record may complete, sign, date
and return their proxy cards in the postage-paid envelope
provided. If you sign, date and return your proxy card without
indicating how you want to vote, your proxy will be voted as
recommended by the Board of Directors.
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By Telephone or Internet.
Stockholders of record may vote
by using the toll-free number or Internet website address listed
on the proxy card. Please see your proxy card for specific
instructions.
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Revoking Your Proxy
You may change your mind and revoke your proxy at any time
before it is voted at the meeting by:
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sending a written notice to the Secretary for receipt prior to
the meeting that you revoke your proxy;
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transmitting a proxy dated later than your prior proxy either by
mail, telephone or Internet; or
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attending the Annual Meeting and voting in person or by proxy
(except for shares held in the employee benefit plan).
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Voting By Employee Benefit Plan Participants
Participants who hold common stock in the Teledyne Technologies
Incorporated 401(k) Plan may tell the plan trustee how to vote
the shares of common stock allocated to their accounts. You may
either (1) sign and return the voting instruction card
provided by the plan or (2) transmit your instructions by
telephone or Internet. If you do not transmit
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instructions by 11:59 p.m. (Eastern Time), on
April 21, 2006, your shares will not be voted by the plan
trustee, except as otherwise required by law.
Voting Shares Held By Brokers, Banks and Other Nominees
If you hold your shares in a broker, bank or other nominee
account, you are a beneficial owner of our common
stock. In order to vote your shares, you must give voting
instructions to your bank, broker or other intermediary who is
the nominee holder of your shares. We ask brokers,
banks and other nominee holders to obtain voting instructions
from the beneficial owners of shares that are registered in the
nominees name. Proxies that are transmitted by nominee
holders on behalf of beneficial owners will count toward a
quorum and, except as otherwise provided below, will be voted as
instructed by the nominee holder.
Confidential Voting Policy
We maintain a policy of keeping stockholder votes confidential.
BOARD COMPOSITION AND PRACTICES
Information and Meetings
The Board of Directors directs the management of the business
and affairs of the Company as provided in our Amended and
Restated Bylaws and pursuant to the laws of the State of
Delaware. Except for Dr. Robert Mehrabian, our Chairman,
President and Chief Executive Officer, the Board is not involved
in
day-to
-day
operations. Members of the Board keep informed about our
business through discussions with the senior management and
other officers and managers of the Company and its subsidiaries,
by reviewing information provided to them, and by participating
in Board and committee meetings.
We encourage, but do not require, that all our directors attend
all meetings of the Board of Directors, all committee meetings
on which the directors serve and the annual stockholders
meeting. In 2005, the Board of Directors held nine meetings and
acted two times by unanimous written consent. During 2005, all
directors attended at least 75% of the aggregate number of
meetings of the Board and the Board committees of which they
were members. All of the then serving current directors attended
the 2005 Annual Meeting of Stockholders.
Number of Directors
The Board of Directors determines the number of directors, which
under our Amended and Restated By-laws must consist of not less
than four members and not more than 10 members. The Board has
currently fixed the number at nine members, which number was so
fixed in connection with the appointment of Kenneth C. Dahlberg
to the Board on February 21, 2006. It will be reduced to
eight members upon the retirement of Charles J.
Queenan, Jr. at the 2006 Annual Meeting.
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Director Terms
The directors are divided into three classes and the directors
in each class serve for a three-year term. The term of one class
of directors expires each year at the Annual Meeting of
Stockholders. The Board may fill a vacancy by electing a new
director to the same class as the director being replaced. The
Board may also create a new director position in any class and
elect a director to hold the newly created position until the
term of the class expires.
Directors Retirement Policy
On June 1, 2000, we adopted a retirement policy for
directors. This policy, as amended, generally requires directors
to retire at the Annual Meeting following their
75th birthday. This policy also requires a director to
offer to tender his or her resignation if such director has a
change in professional status. Charles J. Queenan, Jr. will
be retiring at the 2006 Annual Meeting in accordance with this
policy.
Executive Sessions
Our non-management directors meet in executive session without
management on a regularly scheduled basis. The Board has not
formally designated a lead director. Committee chairs rotate as
presiding director in such sessions.
CORPORATE GOVERNANCE
Director Independence
In April 2005, our Nominating and Governance Committee assessed,
and our Board of Directors determined, the independence of each
director in accordance with the then existing rules of the New
York Stock Exchange and the Securities and Exchange Commission.
In order to comply with such items, our Nominating and
Governance Committee considered various relationship categories
including: whether the director is an employee, amount of stock
ownership and commercial, industrial, banking, consulting,
legal, accounting or auditing, charitable and familial
relationships, as well as a range of individual circumstances.
Our Nominating and Governance Committee and the Board also
considered our relationship and the relationship of the director
to ATI, from which we were spun-off in November 1999. See
Certain Transactions at page 43. As a result,
the Nominating and Governance Committee, followed by the Board,
determined that each member of our Board of Directors did not
have any material relationships with us and was thus
independent, with the exception of Dr. Mehrabian, our
Chairman, President and Chief Executive Officer. Our Nominating
and Governance Committee and our Board considered the same items
when it appointed Kenneth C. Dahlberg to the Board on
February 21, 2006. In February 2006, our Board, after
reviewing updated information, continues to determine that eight
of our nine current directors are independent directors. The
Board did consider that certain directors consider themselves to
be social friends. The independent directors by name are: Robert
P. Bozzone, Frank V. Cahouet, Charles Crocker, Kenneth C.
Dahlberg, Simon M. Lorne, Paul D. Miller, Charles J.
Queenan, Jr., and Michael T. Smith.
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The Nominating and Governance Committee, followed by the Board,
also determined that each member of our Personnel and
Compensation Committee is an outside director within
the meaning of Rule 162(m) of the Internal Revenue Code and
are non-management directors within the meaning of
Rule
16b-3
under
the Securities Exchange Act of 1934.
All of the Boards standing committees consist only of
independent directors.
Corporate Governance and Ethics Guidelines
At the time we first became a public company in 1999, our Board
of Directors adopted many best practices in the area
of corporate governance, including separate standing committees
of the Board for each of audit, nominating and governance and
executive compensation matters, charters for each of the
committees, and corporate ethics and compliance guidelines. Our
ethics and compliance guidelines for employees are contained in
the Corporate Objectives and Guidelines for Employee Conduct.
These guidelines apply to all our employees, including our
principal executive, financial and accounting officers. Our
employees receive periodic ethics training and
follow-up
questionnaires are distributed annually to various personnel in
an effort to ensure compliance with these guidelines. It is our
policy not to waive compliance with these guidelines. We also
have a specialized code of ethics for financial executives that
supplements the employee guidelines. In addition, we have ethics
and compliance guidelines for our service providers.
Our Board of Directors has adopted the Corporate Governance
Guidelines. These Corporate Governance Guidelines were initially
developed by our Nominating and Governance Committee and are
reviewed at least annually by such Committee. These Corporate
Governance Guidelines incorporate practices and policies under
which our Board has operated since its inception, in addition to
many of the requirements of the Sarbanes-Oxley Act of 2002 and
the New York Stock Exchange. Some of the principal subjects
covered by the Corporate Governance Guidelines include:
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Director qualification standards.
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Director responsibilities.
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Director access to management and independent advisors.
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Director compensation.
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Director orientation and continuing education.
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Management succession.
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Annual performance evaluation of the Board and Committees.
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Copies of our Corporate Governance Guidelines, our Corporate
Objectives and Guidelines for Employee Conduct, our codes of
ethics for financial executives and service providers and our
committee charters are available on our website at
www.teledyne.com
. If at any time you would like to
receive a paper copy,
free-of
-charge, please
write to John T. Kuelbs, Executive Vice President, General
Counsel and Secretary, Teledyne Technologies Incorporated,
12333 West Olympic Boulevard, Los Angeles, California
90064-1021.
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Sarbanes-Oxley Disclosure Committee
In September 2002, we formally constituted the Sarbanes-Oxley
Disclosure Committee. Current members include: John T. Kuelbs,
Executive Vice President, General Counsel and Secretary; Dale A.
Schnittjer, Senior Vice President and Chief Financial Officer;
Susan L. Main, Vice President and Controller; Ivars R. Blukis,
Chief Business Risk Assurance Officer; Robyn E. McGowan, Vice
President, Administration and Human Resources and Assistant
Secretary; Melanie S. Cibik, Vice President, Associate General
Counsel and Assistant Secretary; Shelley D. Green, Treasurer;
Brian A. Levan, Director of External Financial Reporting and
Assistant Controller; and Jason VanWees, Vice President,
Corporate Development and Investor Relations. Among its tasks,
the Disclosure Committee discusses and reviews disclosure issues
to help us fulfill our disclosure obligations on a timely basis
in accordance with SEC rules and regulations and is intended to
be used as an additional resource for employees to raise
questions regarding accounting, auditing, internal controls and
disclosure matters.
Since we became a public company in 1999, we have had a
confidential Corporate Ethics/ Help Line, where questions or
concerns about us can be raised confidentially
and anonymously. The Corporate Ethics/ Help line is
available to all of our employees, as well as concerned
individuals outside the company. The toll-free help line number
is
1-877-666-6968.
The receipt of concerns about our accounting, internal controls
and auditing matters will be reported to the Audit Committee.
Communications with the Board
Our Corporate Governance Guidelines provide that any interested
parties desiring to communicate with our non-management
directors may contact them through our Secretary, John T.
Kuelbs, whose address is: Teledyne Technologies Incorporated,
12333 West Olympic Boulevard, Los Angeles, California
90064-1021.
ITEM 1 ON PROXY CARD ELECTION OF DIRECTORS
The Board of Directors has nominated for election this year the
class of two incumbent directors whose terms expire at the 2006
Annual Meeting.
The three-year term of the class of directors nominated and
elected this year will expire at the 2009 Annual Meeting.
The two individuals who receive the highest number of votes cast
will be elected. Broker non-votes are not counted as votes cast.
If you sign and return your proxy card, the individuals named as
proxies in the card will vote your shares for the election of
the two named nominees, unless you provide other instructions.
You may withhold authority for the proxies to vote your shares
on any or all of the nominees by following the instructions on
your proxy card. If a nominee becomes unable to serve, the
proxies will vote for a Board-designated substitute or the Board
may reduce the number of directors. The Board has no reason to
believe that any nominee will be unable to serve.
Background information about the nominees and continuing
directors follows.
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Nominees Terms Expire at 2009 Annual Meeting
(Class I)
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Simon M. Lorne
Vice Chairman and Chief Legal
Officer of
Millennium
Partners L.P.
Director since 2004
Age: 60
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Simon M. Lorne is the Vice Chairman and Chief Legal Officer of
Millennium Partners L.P., a hedge fund. From March 1999 to March
2004, prior to the time he became a Director, Mr. Lorne was
a partner with Munger Tolles & Olson, LLP, a law firm
whose services we have from time to time used. Mr. Lorne
has also previously served as a Managing Director, with
responsibility for Legal Compliance and Internal Audit, of
Citigroup/ Salomon Brothers and as the General Counsel at the
Securities and Exchange Commission in Washington D.C.
Mr. Lorne is also a director of Opsware, Inc., a provider
of data center automation software, and currently serves as
co-director of Stanford Law Schools Directors College.
Mr. Lorne is a member of our Audit Committee and our
Nominating and Governance Committee.
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Paul D. Miller
Retired Chairman of the Board
of ATK
Director since 2001
Age: 64
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Paul D. Miller was the Chairman of the Board of ATK (Alliant
Techsystems, Inc.), an advanced weapon and space systems
company, until April 1, 2005. From January 1999 until
October 2003, he had also been Chief Executive Officer of ATK.
Prior to retirement from the U.S. Navy in 1994, Admiral
Miller served as Commander-in-Chief, U.S. Atlantic Command
and NATO Supreme Allied Commander Atlantic. He is
also a director of Donaldson Company, Inc., a filtration
solutions company, and Anteon International Corporation, an
information technology and systems engineering solutions
company. Mr. Miller is a member of our Audit Committee and
our Nominating and Governance Committee.
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Continuing Directors Terms Expire at 2007 Annual
Meeting (Class II)
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Charles Crocker
Chief Executive Officer of the
Custom Sensors
Division of
Schneider Electronics
Director since 2001
Age: 67
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Charles Crocker is the Chief Executive Officer of the Custom
Sensors Division of Schneider Electronics. Mr. Crocker was
the Chairman and Chief Executive Officer of BEI Technologies,
Inc., a diversified technology company, from March 2000 until
October 5, 2005, when it was acquired by Schneider
Electronics. Mr. Crocker served as Chairman, President and
Chief Executive Officer of BEI Electronics from October 1995 to
September 1997, at which time he became Chairman, President and
Chief Executive Officer of BEI Technologies, Inc.
Mr. Crocker also serves as the Chairman of Crocker Capital,
a private investment company and as a director of Franklin
Resources, Inc. and its subsidiary Fiduciary
Trust International. Mr. Crocker is a member of our
Personnel and Compensation Committee and our Nominating and
Governance Committee.
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Robert Mehrabian
Chairman, President and Chief
Executive Officer
of the
Company
Director since 1999
Age: 64
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Robert Mehrabian is our Chairman, President and Chief Executive
Officer. He has been our President and Chief Executive Officer
since its formation in 1999. He became Chairman of the Board on
December 14, 2000. Prior to the spin-off of the Company by
ATI in November 1999, Dr. Mehrabian was the President and
Chief Executive Officer of ATIs Aerospace and Electronics
segment since July 1999 and had served ATI in various senior
executive capacities since July 1997. Before joining ATI,
Dr. Mehrabian served as President of Carnegie Mellon
University. He is also a director of Mellon Financial
Corporation and PPG Industries, Inc.
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Michael T. Smith
Retired Chairman of the Board
and Chief Executive
Officer
of Hughes
Electronics
Corporation
Director since 2001
Age: 62
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Michael T. Smith is the retired Chairman of the Board and Chief
Executive Officer of Hughes Electronics Corporation. He had been
elected to those positions in October 1997. Mr. Smith is
also a director of Alliant Techsystems Inc., Ingram Micro
Corporation, a technology sales, marketing and logistics
company, FLIR Systems, Inc., which produces infrared cameras,
thermal imaging software, and temperature measurement devices,
and Anteon International Corporation. Mr. Smith is the
chair of our Nominating and Governance Committee and is a member
of our Personnel and Compensation Committee.
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7
Continuing Directors Terms Expire at 2008 Annual
Meeting (Class III)
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Robert P. Bozzone
Former Chairman of Allegheny
Technologies
Incorporated
Director since 1999
Age: 72
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Robert P. Bozzone was Chairman of ATI until May 6, 2004.
From December 2000 through June 2001, he was Chairman, President
and Chief Executive Officer of ATI. Mr. Bozzone had been
Vice Chairman of the Board of ATI since August 1996. He had
served as Vice Chairman of Allegheny Ludlum Corporation, a
subsidiary of ATI, since August 1994 and previously was
President and Chief Executive Officer of Allegheny Ludlum. He is
also a director of ATI, Water Pik Technologies, Inc., a
manufacturer of swimming pool and healthcare products, and DQE,
Inc., whose principal subsidiary is Duquesne Light Company.
Mr. Bozzone is a member of our Audit Committee and our
Personnel and Compensation Committee.
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Frank V. Cahouet
Retired Chairman and Chief
Executive Officer of
Mellon
Financial Corporation
Director since 1999
Age: 73
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Frank V. Cahouet served as the Chairman, President and Chief
Executive Officer of Mellon Financial Corporation, a bank
holding company, and Mellon Bank, N.A., prior to his retirement
on December 31, 1998. He is also a director of Korn Ferry
International, a provider of recruiting services, Saint-Gobain
Corporation, a manufacturer of glass, ceramics, plastics and
cast iron, and Avery Dennison Corporation, a pressure sensitive
technology and self-adhesive solutions company. Mr. Cahouet
is Chair of our Audit Committee and a member of our Nominating
and Governance Committee.
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Kenneth C. Dahlberg
Chairman, Chief Executive
Officer and President
of
Science
Applications
International Corporation
Director since 2006
Age: 61
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Kenneth C. Dahlberg is the Chairman, Chief Executive Officer and
President of Science Applications International Corporation
(often called SAIC), a research and engineering
firm, specializing in information systems and technology. Prior
to joining SAIC, Mr. Dahlberg served as executive vice
president of General Dynamics where he was responsible for its
Information Systems and Technology Group. Mr. Dahlberg is a
member of our Personnel and Compensation Committee and our Audit
Committee.
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8
Retiring Director Term Expires at 2006 Annual
Meeting
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Charles J. Queenan, Jr
Senior Counsel, Kirkpatrick &
Lockhart
Nicholson Graham LLP
Director since 1999
Age: 75
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Charles J. Queenan, Jr. is Senior Counsel to
Kirkpatrick & Lockhart Nicholson Graham LLP (formerly
known as Kirkpatrick & Lockhart LLP), attorneys-at-law.
Prior to his retirement on December 31, 1995, he was a
partner of that firm. He is also a director of Water Pik
Technologies, Inc. and Crane Co., a manufacturer of engineered
industrial products. Mr. Queenan is Chair of our Personnel
and Compensation Committee and a member of our Audit Committee.
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The Board of Directors Recommends
a Vote for the Election of the Two Nominees.
COMMITTEES OF OUR BOARD OF DIRECTORS
Our Board of Directors has established an Audit Committee, a
Nominating and Governance Committee and a Personnel and
Compensation Committee. From time to time, our Board of
Directors may establish other committees.
Audit Committee
The members of the Audit Committee are:
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Frank V. Cahouet, Chair
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Robert P. Bozzone
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Kenneth C. Dahlberg
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Simon M. Lorne
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Paul D. Miller
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Charles J. Queenan, Jr.
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The Audit Committee held seven meetings in 2005.
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The primary purpose of the Audit Committee is to assist the
Boards oversight of the integrity of our financial
statements, our compliance with legal and regulatory
requirements, the qualification and the independence of our
independent auditor, and the performance of our internal audit
function and independent auditor. As provided in its charter,
the Audit Committee is directly responsible for the appointment,
retention, compensation, oversight, evaluation and termination
of our independent auditor (including resolving disagreements
between management and the independent auditor regarding
financial reporting). The Audit Committee has been designated as
the qualified legal compliance committee. In
carrying out its responsibilities, the Audit Committee
undertakes to do many things, including:
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Retain and approve the terms of the engagement and fees to be
paid to the independent auditor.
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Evaluate the performance of the independent auditor.
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9
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Receive written periodic reports from the independent auditor
delineating all relationships between the independent auditor
and us.
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Review with the independent auditor any problems or difficulties
the independent auditor may have encountered and any management
letter provided by the independent auditor and our response to
that letter.
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Review our annual audited financial statements and the report
thereon and quarterly unaudited financial statements with the
independent auditor and management prior to publication of such
statements.
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Discuss with management the earnings press releases (including
the type of information and presentation of information).
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Review major issues regarding accounting principles and
financial statement presentations and judgments made in
connection with the preparation of our financial statements.
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Meet periodically with management to review our financial risk
exposures and the steps management has taken to monitor and
control such exposures.
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Review with our General Counsel legal matters that may have a
material impact on the financial statements, our compliance
policies and any material reports or inquiries received from
regulators or governmental agencies.
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The Audit Committee charter provides that our senior internal
auditing executive reports directly and separately to the Chair
of the Audit Committee and Chief Executive Officer. As required
by the charter, our Audit Committee also has established
procedures for the receipt, retention and treatment of
complaints regarding accounting, internal controls and auditing
matters. See Corporate Governance
Sarbanes-Oxley Disclosure Committee at page 5. A copy
of the amended and restated Audit Committee Charter is attached
to this Proxy Statement as Annex A.
The Audit Committee meets the size, independence and experience
requirements of the New York Stock Exchange, including the
enhanced independence requirements for Audit Committee members
under Exchange Act Rule 10A-3. The Board of Directors has
determined that Frank V. Cahouet is an audit committee
financial expert within the meaning of the SEC regulations
and all of the members are independent under the New
York Stock Exchange listing standards. Our Corporate Governance
Guidelines provides that no director may serve as a member of
the Audit Committee if such director serves on the audit
committees of more than two other public companies unless the
Board determines that such simultaneous service would not impair
the ability of such director to effectively serve on the Audit
Committee. Any such determination must be disclosed in the
annual proxy statement. Besides our Audit Committee, each of
Admiral Miller, Mr. Queenan and Mr. Smith
simultaneously serve on the audit committee of two other public
companies and each of Mr. Lorne, Mr. Cahouet and
Mr. Crocker simultaneously serves on the audit committee of
one other public company.
The report of the Audit Committee is included under
Item 2 on Proxy Card Ratification of
Appointment of Independent Registered Public Accounting
Firm at page 16.
10
Nominating and Governance Committee
The members of the Nominating and Governance Committee are:
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Michael T. Smith, Chair
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Frank V. Cahouet
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Charles Crocker
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Simon M. Lorne
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Paul D. Miller
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The Nominating and Governance Committee held four meetings in
2005.
The Nominating and Governance Committee undertakes to:
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Identify individuals qualified to become members of the Board of
Directors and to make recommendations to the Board of Directors
with respect to candidates for nomination for election at the
next annual meeting of stockholders or at such other times when
candidates surface and, in connection therewith, consider
suggestions submitted by our stockholders.
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Develop and recommend to the Board of Directors corporate
governance guidelines.
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Determine and make recommendations to the Board of Directors
with respect to the criteria to be used for selecting new
members of the Board of Directors.
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Oversee the annual process of evaluation of the performance of
our Board of Directors and committees.
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Make recommendations to the Board of Directors concerning the
membership of committees of the Board and the chairpersons of
the respective committees.
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Make recommendations to the Board of Directors with respect to
the remuneration paid and benefits provided to members of the
Board in connection with their service on the Board or on its
committees.
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Administer our formal compensation programs for directors,
including the Non-Employee Director Stock Compensation Plan.
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Make recommendations to the Board of Directors concerning the
composition, organization and operations of the Board of
Directors and its committees, including the orientation of new
members and the flow of information.
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Evaluate Board and committee tenure policies as well as policies
covering the retirement or resignation of incumbent directors.
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While reviewed annually, the charter of the Nominating and
Governance Committee was last amended and restated on
December 15, 2004. The members of the Nominating and
Governance Committee are independent under the New
York Stock Exchange listing standards.
The Nominating and Governance Committee will consider
stockholder recommendations for nominees for director. Any
stockholders interested in suggesting a nominee should follow
the procedures outlined in Other Information
2007 Annual Meeting and Stockholder Proposals at
page 46.
The Nominating and Governance Committee utilizes a variety of
methods for identifying and evaluating all nominees for
directors. The Committee periodically assesses the appropriate
size of the Board and whether vacancies on the Board are
expected due to retirement, change in professional status or
otherwise. Candidates may come to the attention of the Committee
through current Board members, members of our management,
stockholders and other persons. The Committee to date has not
engaged a professional
11
search firm. Candidates are evaluated at meetings of the
Committee and may be considered at any point during the year. As
stated in the Corporate Governance Guidelines, nominees for
director are to be selected on the basis of, among other
criteria, experience, knowledge, skills, expertise, integrity,
diversity, ability to make analytical inquiries, understanding
of or familiarity with our business products or markets or
similar business products or markets, and willingness to devote
adequate time and effort to Board responsibilities. The
Committee may establish additional criteria and is responsible
for assessing the appropriate balance of criteria required of
Board members. The Committee considered these criteria and
Mr. Queenans upcoming retirement at the 2006 Annual
Meeting when it recommended the appointment of Kenneth C.
Dahlberg to our Board of Directors.
Personnel and Compensation Committee
The members of the Personnel and Compensation Committee are:
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Charles J. Queenan, Jr., Chair
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Robert P. Bozzone
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Charles Crocker
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Kenneth C. Dahlberg
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Michael T. Smith
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The Personnel and Compensation Committee held five meetings in
2005.
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The Personnel and Compensation Committees principal
responsibilities include:
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Making recommendations to the Board of Directors concerning
executive management organization matters generally.
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In the area of compensation and benefits, making recommendations
to the Board of Directors concerning employees who are also
directors, consulting with the Chief Executive Officer on
matters relating to other executive officers, and making
recommendations to the Board of Directors concerning policies
and procedures relating to executive officers; provided,
however, that the Committee shall have full decision-making
powers with respect to compensation for executive officers to
the extent such compensation is intended to be performance-based
compensation within the meaning of Section 162(m) of the
Internal Revenue Code.
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Making recommendations to the Board of Directors regarding all
contracts with any officer for remuneration and benefits
(whether in the form of a pension, deferred compensation or
otherwise) after termination of regular employment of such
officer.
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Making recommendations to the Board of Directors concerning
policy matters relating to employee benefits and employee
benefit plans, including incentive compensation plans and equity
based plans.
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Administering our formal incentive compensation programs,
including equity based plans.
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Serving as Named Fiduciary under the Employee
Retirement Income Security Act of 1974, as amended
(ERISA), of all employee benefit plans,
as defined in Section 3(3) of ERISA, maintained by us with
respect to both plan administration and control and management
of plan assets.
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The 2005 report of the Personnel and Compensation Committee as
to executive compensation is included under Executive
Compensation at page 21.
12
DIRECTOR COMPENSATION
Directors who are not our employees are paid an annual retainer
fee of $40,000. Directors are also paid $1,500 for each Board
meeting, Audit Committee meeting, Personnel and Compensation
Committee meeting and Nominating and Governance Committee
meeting attended. The chair of the Audit Committee is paid an
annual fee of $7,000. Each chair of the Personnel and
Compensation Committee and Nominating and Governance Committee
is paid an annual fee of $4,000. Directors who are our employees
do not receive any compensation for their services on our Board
or its committees.
The non-employee directors also participate in the Teledyne
Technologies Incorporated 1999 Non-Employee Director Stock
Compensation Plan, as amended. In lieu of cash annual retainer
fees, cash Committee chair fees and cash meeting fees, this plan
permits non-employee directors to elect to receive shares of our
common stock and/or stock options or to defer compensation under
the Teledyne Technologies Incorporated Executive Deferred
Compensation Plan (including a phantom share fund); provided,
however, that at least 25% of the annual retainer fee must be
paid in the form of our common stock and/or options to acquire
our common stock. It also provides for certain automatic stock
option grants for 4,000 shares of our common stock at the
end of each Annual Meeting of Stockholders. If a non-employee
director is first elected other than at an annual meeting, such
non-employee director would receive an automatic option grant
for 2,000 shares of our common stock.
13
ITEM 2 ON PROXY CARD
RATIFICATION OF APPOINTMENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has appointed Ernst & Young LLP as
our independent registered public accounting firm for fiscal
2006. Ernst & Young LLP has served as our independent
registered public accounting firm since the November 29,
1999 spin-off. The firm had also served as the independent
registered public accounting firm for ATI and its predecessors
since 1980. The Audit Committee believes that Ernst &
Young LLP is knowledgeable about our operations and accounting
practices and is well qualified to act in the capacity of
independent registered public accounting firm.
Although the appointment of an independent registered public
accounting firm is not required to be approved by the
stockholders, the Audit Committee and the Board of Directors
believe that stockholders should participate in such selection
through ratification. The proposal to ratify the Audit
Committees appointment of Ernst & Young will be
approved by the stockholders if it receives the affirmative vote
of a majority of the shares present in person or represented by
proxy at the meeting and entitled to vote on the proposal. If
you sign and return your proxy card, your shares will be voted
(unless you indicate to the contrary) to ratify the selection of
Ernst & Young LLP as our independent registered public
accounting firm for 2006. If you specifically abstain from
voting on the proposal, your shares will, in effect, be voted
against the proposal. Broker non-votes will not be counted as
being entitled to vote on the proposal and will not affect the
outcome of the vote. If the stockholders do not ratify the
selection of Ernst & Young LLP, the Audit Committee
will reconsider the appointment of an independent registered
public accounting firm. It is expected that representatives of
Ernst & Young LLP will be present at the meeting and
will have an opportunity to make a statement and respond to
appropriate questions.
The Board of Directors Recommends
a Vote for Ratification of the Appointment
of the Independent Registered Public Accounting Firm.
14
Fees Billed by Independent Registered Public Accounting
Firm
The following table sets forth fees billed by Ernst &
Young LLP for professional services rendered for 2005 and 2004
(in thousands).
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2005
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2004
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Audit Fees (1)
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$
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1,361.9
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$
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1,261.2
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Sarbanes-Oxley Act Section 404 Fees
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928.7
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1,519.0
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Statutory audits (Bermuda and United Kingdom subsidiaries)
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87.0
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67.1
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SEC registration Form S-8
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7.9
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Total Audit Fees
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2,385.5
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2,847.3
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Audit-Related Fees
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Employee Benefit Plan Financial Statement Audits
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102.1
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69.8
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Environmental Financial Assurances
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8.3
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5.3
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Total Audit-Related Fees
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110.4
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75.1
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Tax Fees (2)
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20.0
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10.2
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All Other Fees (3)
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1.7
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87.0
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Total
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$
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2,517.6
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$
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3,019.6
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Total Audit and Audit-Related Fees
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$
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2,495.9
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$
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2,922.4
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(1)
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Aggregate fees billed for professional services rendered for the
audit of our annual financial statements and for the reviews of
financial statements included in our quarterly reports on
Form
10-Q
and
accounting consultations on matters reflected in the financial
statements.
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(2)
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In 2005, tax fees related to the preparation of a LIFO study
related to the integration of acquired businesses. In 2004, tax
fees related to an advanced pricing agreement for our Mexican
subsidiary.
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(3)
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All other fees in 2005 related to our access to Ernst &
Youngs online accounting reference library. All other fees
in 2004 related to financial due diligence assistance in
connection with our acquisitions.
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Audit Committee Pre-Approval Policies
In October 2002, our Audit Committee adopted guidelines relating
to the rendering of services by external auditors. The
guidelines require the approval of the Audit Committee prior to
retaining any firm to perform any Audit Services. Audit
Services include the services necessary to audit our
consolidated financial statements for a specified fiscal year
and the following audit and audit-related services:
(a) Statement on Auditing Standards No. 71 quarterly
review services; (b) regulatory and employee benefit plan
financial statement audits; and (c) compliance and
statutory attestation services for our subsidiaries. Subject to
limited exceptions, the guidelines further provide that the
Audit Committee must pre-approve the engagement of
Ernst & Young LLP to provide any services other than
Audit Services. The Chair of the Audit Committee may, however,
pre-approve the engagement of Ernst & Young LLP for
such non-audit services to the extent the fee is reasonably
expected to be less than $150,000. If the fee for any non-audit
services is reasonably expected to be $250,000 or more, we must
seek at least one competing bid from another firm prior to
engaging Ernst & Young LLP, unless there are
exceptional circumstances or if it relates to the public
offering of our securities. The guidelines prohibit us from
engaging Ernst & Young LLP to perform any of the
following non-audit services or other services that the Public
Company Accounting Oversight Board determines by
15
regulation to be prohibited: bookkeeping or other services
related to accounting records or financial statements; financial
information systems design and implementation; appraisal or
valuation services, fairness opinions, or
contribution-in
-kind
reports; actuarial services; internal auditing outsourcing
services; management functions or human resources; broker or
dealer, investment advisor, or investment banking services; or
legal services and expert services unrelated to the audit.
For 2005, all audit and non-audit services rendered by
Ernst & Young LLP were pre-approved in accordance with
our guidelines.
In making its recommendation to ratify the appointment of
Ernst & Young LLP as our independent registered public
accounting firm for the fiscal year ending December 31,
2006, the Audit Committee considered whether the provision of
non-audit services by Ernst & Young LLP is compatible
with maintaining Ernst & Young LLPs independence.
Audit Committee Report
The following report of the Audit Committee is included in
accordance with the rules and regulations of the Securities and
Exchange Commission. It is not incorporated by reference into
any of our registration statements under the Securities Act of
1933. Mr. Dahlberg did not sign this report of the Audit
Committee since he joined the Audit Committee the day the report
was issued.
Report of Audit Committee
The following is the report of the Audit Committee with respect
to the audited financial statements for the fiscal year ended
January 1, 2006 (the Financial Statements) of
Teledyne Technologies Incorporated (the Company).
The responsibilities of the Audit Committee are set forth in the
Audit Committee Charter, as amended and restated as of
December 14, 2005, which has been adopted by the Board of
Directors. A copy of the charter is attached to the Proxy
Statement as Annex A. The Audit Committee is comprised of
five directors. The Companys Board of Directors has
determined that each of the members of the Audit Committee is
independent in accordance with the applicable rules of the New
York Stock Exchange. The Board of Directors has also determined
that at least one director has financial management
expertise under New York Stock Exchange listing standards
and that Frank V. Cahouet is an audit committee financial
expert within the meaning of the Securities and Exchange
Commission regulations.
Management is responsible for the preparation, presentation and
integrity of the Companys financial statements, the
Companys internal controls and financial reporting process
and the procedures designed to assure compliance with accounting
standards and applicable laws and regulations. Ernst &
Young LLP (Ernst & Young), the
Companys independent registered public accounting firm,
are responsible for performing an independent audit of the
Companys Financial Statements and expressing an opinion as
to their conformity with generally accepted accounting
principles. The Audit Committee reviewed and discussed the
Companys Financial Statements with management and
Ernst & Young, and discussed with Ernst &
Young the matters required to be discussed by Statement of
Auditing Standards No. 61 (Codification of Statements on
Auditing Standards, AU Section 380), as amended. The Audit
Committee has received written
16
disclosures and the letter from Ernst & Young required
by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees) and has
discussed with Ernst & Young its independence.
The members of the Audit Committee are not professionally
engaged in the practice of auditing or accounting and are not,
and do not represent themselves to be, performing the functions
of auditors or accountants. Members of the Audit Committee may
rely without independent verification on the information
provided to them and on the representations made by management
and Ernst & Young. Accordingly, the Audit
Committees oversight does not provide an independent basis
to determine that management has maintained appropriate
accounting and financial reporting principles or appropriate
internal controls and procedures designed to assure compliance
with accounting standards and applicable laws and regulations.
Furthermore, the Audit Committees considerations and
discussions referred to above do not assure that the audit of
the Companys financial statements has been carried out in
accordance with generally accepted auditing standards, that the
financial statements are presented in accordance with generally
accepted accounting principles or that the Companys
auditors are in fact independent.
Based on these reviews and discussions, the Audit Committee
recommended to the Board of Directors that the Financial
Statements be included in the Companys Annual Report on
Form
10-K
for the
fiscal year ended January 1, 2006 for filing with the
Securities and Exchange Commission.
Submitted by the Audit Committee of the Board of Directors:
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Frank V. Cahouet, Chair
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Robert P. Bozzone
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Simon M. Lorne
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Paul D. Miller
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Charles J. Queenan, Jr.
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February 21, 2006
OTHER BUSINESS
We know of no business that may be presented for consideration
at the meeting other than the two action items indicated in the
Notice of Annual Meeting. If other matters are properly
presented at the meeting, the persons designated as proxies in
your proxy card may vote at their discretion.
Following adjournment of the formal business meeting,
Dr. Robert Mehrabian, Chairman, President and Chief
Executive Officer, will address the meeting and will hold a
general discussion period during which the stockholders will
have an opportunity to ask questions about our company and
businesses.
17
STOCK OWNERSHIP INFORMATION
Section 16(a) Beneficial Ownership Reporting
Compliance
The rules of the Securities and Exchange Commission require that
we disclose late filings of reports of stock ownership (and
changes in stock ownership) by our directors and statutory
insiders. To the best of our knowledge, all of the filings for
our directors and statutory insiders were made on a timely basis
in 2005.
Five Percent Owners of Common Stock
The following table sets forth the number of shares of our
common stock owned beneficially by each person known to us to
own beneficially more than five percent of our outstanding
common stock. As of February 28, 2006, we had received
notice that the individuals and entities listed in the following
table are beneficial owners of five percent or more of our
common stock. In general, beneficial ownership
includes those shares that a person has the power to vote or
transfer, and options to acquire common stock that are
exercisable currently or within 60 days.
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Number of
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Percent
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Name and Address of Beneficial Owner
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Shares
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of Class
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Barclays Global Investors, N.A. et al (1)
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3,291,872
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9.7
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%
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45 Fremont Street
San Francisco, CA 94105
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Singleton Group LLC (2)
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1,999,990
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5.9
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%
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335 North Maple Drive, Suite 177
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Beverly Hills, CA 90210
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1.
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Barclays Global Investors, N.A. and Barclay Global
Fund Advisors, together with affiliated entities, filed a
Schedule 13G on January 26, 2006. Barclays Global
Investors, N.A. reported sole voting power with respect to
2,227,849 shares, but sole dispositive power with respect
to 2,474,671 shares and Barclays Global Fund Advisors
reported sole voting and dispositive power with respect to
785,101 shares. Barclays Bank plc, together with affiliated
entities, filed a Schedule 13G on January 10, 2006.
Barclays Bank plc reported sole voting and dispositive power
with respect to 32,100 shares.
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2.
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Singleton Group LLC, jointly with William W. Singleton, Carolyn
W. Singleton and Donald E. Rugg, filed a Schedule 13G on
April 19, 2000. Mr. Singleton, Mrs. Singleton and
Mr. Rugg reported that they share voting and dispositive
power with respect to 1,999,990 shares in their capacities
as managers of Singleton Group LLC. Mr. Rugg reported that
he owned an additional 45 shares of common stock directly,
with respect to which he has sole voting and dispositive power.
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18
Stock Ownership of Management
The following table shows the number of shares of common stock
reported to us as beneficially owned by (i) each of our
directors and Section 16 statutory officers and
(ii) all of our directors and Section 16 statutory
officers as a group, in each case based upon the beneficial
ownership of such persons of common stock as reported to us as
of February 28, 2006, including shares as to which a right
to acquire ownership exists (for example, through the exercise
of stock options) within the meaning of
Rule
13d-3(d)(1)
under the Securities Exchange Act of 1934.
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|
|
|
|
|
|
Number of
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|
|
Percent of
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|
|
Beneficial Owner
|
|
Shares
|
|
|
Class
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|
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