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Dec 10

Michelle DeGrand
12/10/2009

BELLEVUE, Wash., December 10, 2009 ― Esterline Corporation, (NYSE: ESL, www.esterline.com), a leading specialty manufacturer serving aerospace/defense markets, today reported fiscal 2009 fourth quarter and full-year results for the period ended October 30, 2009. Income from continuing operations for the quarter was $37.9 million, or $1.26 per diluted share, on sales of $394.7 million. Earnings include year-end tax adjustments resulting in a benefit of $.08 per share. Year-ago income from continuing operations was $41.4 million, or $1.38 per diluted share, on sales of $404.4 million. Including discontinued operations, fourth quarter fiscal 2009 net earnings were $34.5 million, or $1.15 per share, compared with $43.9 million, or $1.46 per share, last year.

For the full year, Esterline reported income from continuing operations of $107.2 million, or $3.58 per diluted share, compared with $113.5 million, or $3.80 per diluted share last year. Net earnings were $119.8 million, or $4.00 per share in FY2009, compared with $120.5 million, or $4.03 per share last year. FY2009 net sales were $1.43 billion compared with $1.48 billion a year ago.

Brad Lawrence, Esterline CEO, said the company’s performance “…exceeded our expectations due primarily to a strong finish from our Canada-based avionics operation where R&D investments in the new T-6B military trainer cockpit and C-130 avionics retrofit programs are beginning to pay off.” Lawrence added that the seamless integration of UK-based Racal Acoustics, acquired earlier in the year, enabled that operation to “…outperform our first-year expectations.”

He also said that a tight focus on cost control and pricing discipline at all of our operations “…helped us sustain margins and keep a lid on expenses during the year.”

Gross margins in FY2009 were 32.4% compared with 33.1% last year, and selling, general and administrative expenses held at $239 million for both years. FY2009 research, development and engineering expenses (R&D) totaled $66.3 million, or 4.6% of sales, compared with $86.8 million, or 5.9% of sales, in FY2008. This continued a trend toward more normalized R&D levels following several years of significant investments to secure important positions on a number of new programs. Lawrence added that the company “…continues to invest in the consolidation of our capabilities to improve operational efficiencies.”

Lawrence said that Esterline’s solid balance sheet, ability to generate cash from operations, and its $1.1 billion backlog “…puts us in a strong position to benefit as market conditions improve.” He also noted that Esterline’s balanced business mix helped dampen the impact of the commercial air transport and business jet market downturn in FY2009, saying that Esterline expects these headwinds to lessen in the second half of FY2010.

FY2010 Outlook

Throughout FY2009, the company generated progressively stronger quarterly results following a soft first quarter. We expect FY2010 to unfold in a similar manner. Anticipated lower margin sales mix early in the year, combined with extended holiday shutdowns and a higher tax rate indicate similar results to last year’s first quarter. We expect to be well positioned for improved performance in the remainder of the year. FY2010 annual revenue is expected to grow 3% to 5% with fully diluted earnings per share in the range of $3.20 to $3.45. The effective tax rate for FY2010 is anticipated to be in the low- to mid-20% range, compared with the 11.2% rate in FY2009.

Conference Call Information

Esterline will host a conference call to discuss this announcement today at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time). The U.S. dial-in number is 866.543.6405; outside the U.S., use 617.213.8897. The pass code for the call is: 94459594.

This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “should” or “will,” or the negative of such terms, or other comparable terminology. These forward-looking statements are only predictions based on the current intent and expectations of the management of Esterline, are not guarantees of future performance or actions, and involve risks and uncertainties that are difficult to predict and may cause Esterline’s or its industry’s actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Esterline's actual results and the timing and outcome of events may differ materially from those expressed in or implied by the forward-looking statements due to risks detailed in Esterline's public filings with the Securities and Exchange Commission including its most recent Annual Report on Form 10-K.

ESTERLINE TECHNOLOGIES CORPORATION

Consolidated Statement of Operations (unaudited)

In thousands, except per share amounts

Three months ended Fiscal year ended

Oct 30, Oct 31, Oct 30, Oct 31,

2009 2008 2009 2008

Segment Sales

Avionics & Controls $ 204,222 $ 173,459 $ 672,828 $ 611,467

Sensors & Systems 83,962 89,987 339,732 384,180

Advanced Materials 106,549 140,904 412,878 487,525

Net Sales 394,733 404,350 1,425,438 1,483,172

Cost of Sales 264,781 263,989 963,589 992,853

129,952 140,361 461,849 490,319

Expenses

Selling, general and administrative 65,592 61,200 239,630 239,282

Research, development and

engineering 15,710 18,660 66,270 86,798

Total Expenses 81,302 79,860 305,900 326,080

Other

Other expense 24 -- 7,970 86

Total Other 24 -- 7,970 86

Operating Earnings
From Continuing Operations 48,626 60,501 147,979 164,153

Interest income (685) (1,077) (1,634) (4,374)

Interest expense 7,319 7,405 28,689 29,922

Gain on derivative financial instruments -- -- -- (1,850)

Other Expense, Net 6,634 6,328 27,055 23,698

Income From Continuing Operations

Before Income Taxes 41,992 54,173 120,924 140,455

Income Tax Expense 4,018 12,582 13,511 26,563

Income From Continuing Operations

Before Minority Interest 37,974 41,591 107,413 113,892

Minority Interest (81) (154) (217) (383)

Income From Continuing Operations 37,893 41,437 107,196 113,509

Income (Loss) From Discontinued Operations,

Net of Tax (3,392) 2,445 12,602 7,024

Net Earnings $ 34,501 $ 43,882 $ 119,798 $ 120,533

Earnings Per Share – Basic:

Continuing Operations $ 1.27 $ 1.40 $ 3.61 $ 3.85

Discontinued Operations (.11) .08 .42 .23

Earnings Per Share – Basic $ 1.16 $ 1.48 $ 4.03 $ 4.08

Earnings Per Share – Diluted:

Continuing Operations $ 1.26 $ 1.38 $ 3.58 $ 3.80

Discontinued Operations (.11) .08 .42 .23

Earnings Per Share – Diluted $ 1.15 $ 1.46 $ 4.00 $ 4.03

Weighted Average Number

of Shares Outstanding – Basic 29,763 29,635 29,717 29,507

Weighted Average Number

of Shares Outstanding – Diluted 30,034 29,955 29,951 29,908

Consolidated Balance Sheet (unaudited)

In thousands Oct 30, Oct 31,

2009 2008

Assets

Current Assets

Cash and cash equivalents $ 176,794 $ 160,645

Accounts receivable, net 270,976 297,506

Inventories 275,282 261,973

Income tax refundable 7,638 5,567

Deferred income tax benefits 31,434 37,702

Prepaid expenses 17,425 13,040

Other current assets 17,048 897

Total Current Assets 796,597 777,330

Property, Plant and Equipment, Net 263,251 204,462

Other Non-Current Assets

Goodwill 736,808 576,861

Intangibles, net 422,082 290,440

Debt issuance costs, net 7,136 7,587

Deferred income tax benefits 79,114 55,821

Other assets 9,259 9,601

$ 2,314,247 $ 1,922,102

Liabilities and Shareholders' Equity

Current Liabilities

Accounts payable $ 82,304 $ 89,807

Accrued liabilities 191,667 210,422

Credit facilities 5,896 5,171

Current maturities of long-term debt 5,409 8,388

Deferred income tax liabilities 7,294 2,889

Federal and foreign income taxes 1,669 4,442

Total Current Liabilities 294,239 321,119

Long-Term Liabilities

Long-term debt, net of current maturities 520,158 388,248

Deferred income taxes 130,456 97,830

Pension and post-retirement obligations 94,308 68,966

Other liabilities 19,334 16,801

Minority Interest 2,731 2,797

Shareholders' Equity 1,253,021 1,026,341

$ 2,314,247 $ 1,922,102

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